GUNASEKARAN,COIMBATORE vs. ITO, WARD-1,, POLLACHI

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ITA 3658/CHNY/2026Status: DisposedITAT Chennai12 October 2026AY 2010-115 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee had initially resided in Pollachi before shifting to Coimbatore. While the assessee had informed the department of the new address by filing a return for AY 2018-19 on 30.08.2018, the AO had issued notices to the old Pollachi address. Consequently, the assessee did not participate in the assessment proceedings or respond to the notices. The Tribunal found that the assessee could not be faulted for non-participation under these circumstances. Therefore, the Tribunal was inclined to grant one more opportunity to the assessee by restoring the assessment to the file of the AO. As a condition for further compliance, the assessee was directed to remit Rs. 10,000/- to the Tamil Nadu State Legal Services Authority, which was complied with. The assessee also undertook to appear, file written submissions, and produce documents to prove the nature and source of the credit card payment of Rs. 21,48,065/-. The Tribunal set aside the impugned order of the Ld. CIT(A) and restored the assessment for de novo assessment by the AO, directing the assessee to file written submissions and produce documents, and the AO to frame a fresh assessment after hearing the assessee. The issue of the nature and source of the credit card payment was expressly left to be decided in the de novo assessment.

What were the facts?

The assessee, an individual and partner in a firm, is in appeal against the order of the Ld. CIT(A) for Assessment Year 2010-11. The Assessing Officer (AO) received information about the assessee's credit card payments totaling Rs. 21,48,065/-. As no return was filed, the AO reopened the assessment under Section 148 of the Income Tax Act, 1961, issuing a notice dated 31.03.2017. The AO noted that the notice was not served by postal authorities and was served by affixation. Despite further notices, the assessee did not respond. Consequently, the AO framed a best judgment assessment under Section 144, treating the entire Rs. 21,48,065/- as income from unexplained sources. The Ld. CIT(A) confirmed the AO's action, noting the assessee's non-response to five notices.

What were the issues?

1. Whether the impugned assessment order and the Ld. CIT(A)'s order are ex parte and liable to be set aside, considering the alleged non-service of notices. (Question of mixed law and fact, turning on Section 148 and Section 142(1) of the Income Tax Act, 1961). Assessee's Contentions: - The assessment order and the Ld. CIT(A)'s order are ex parte. - The assessee had shifted to a new address (G-207, Shriram Vijaya Hyde Park, Bharathi Colony, Peelameedu, Coimbatore 641 004) and had communicated this to the Income Tax Authorities by filing a return for AY 2018-19 on 30.08.2018. - The AO issued the Section 148 notice dated 31.03.2017 to the old address (house no.59, Arumugam Nagar, Mahalingapuram, Pollachi – 642002) and subsequent notices were also sent to the same old address. - Due to non-receipt of notices, the assessee was unaware of the proceedings, leading to the best judgment assessment under Section 144. - The assessee only became aware of the assessment order when his bank account was attached. - Relied on the decision of the Hon’ble Supreme Court in TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC) to pray for one more opportunity before the AO. Revenue's Contentions: - The judgment records no specific contentions from the revenue regarding the service of notices or the ex parte nature of the orders.

Which sections of the Income-tax Act were involved?

Section 148,Section 142(1),Section 144,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 27.08.2026Pronounced: 12.10.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/ADDL/JCIT, (hereinafter referred to as ‘Ld. CIT(A)’), Agra, dated 29.12.2025 for AY 2010-11 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act).

ITA 3658 /Chny/2026 (AY 2010-11) Gunasekaran :: 2 :: 2. Brief facts are that assessee is an individual and was a partner in a Firm engaged in the business of distribution of prepaid telecom products of Airtel and also other businesses during the relevant AY 2010-11. The AO received information indicating that assessee had made payment against credit card bill to the tune of Rs.21,48,065/- during the relevant financial year 2009-10. Noticing that no return of income was filed, he reopened that assessment by issuing notice u/s.148 of the Act dated 31.03.2017 which notice according to the AO was not served by the postal authorities. Hence notice was served by affixtures. According to the AO despite issuance of several notices, assessee neither bothered to file his return nor responded to any of his notices. Hence, the AO presumed that the assessee had no explanation to offer about the nature and source of the credit card payment to the tune of Rs.21,48,065/- and hence framed the assessment u/s.144 “best judgment assessment” by treating the entire cash payment of Rs.21,48,065/- as from unexplained sources of income by passing the assessment order on 15.12.2019.

3.

On appeal, the Ld. CIT(A) has confirmed the action of the AO noticing that the assessee didn’t respond to any of his five (5) notices issued to him.

4.

Aggrieved the assessee is before us. Heard both the parties. The main plea of the assessee is that the impugned order of the Ld. CIT(A) as

ITA 3658 /Chny/2026 (AY 2010-11) Gunasekaran :: 3 :: well as the assessment order are ex parte orders qua assessee. In this regard, the Ld. AR brought to out notice that the assessee was a partner in a Firm and had used various credit card for its business purpose and payments were made out of the business receipts of the Firm to the tune of Rs.21,48,065/-. According to the assessee, he had shifted to a new address G-207, Shriram Vijaya Hyde Park, Bharathi Colony, Peelameedu Coimbatore 641 004, which fact was communicated to Income Tax Authorities by filing return of income for AY 2018-19 on 30.08.2018. And the AO issued notice u/s.148 of the Act dated 31.03.2017 to the old postal address i.e. house no.59, Arumugam Nagar, Mahalingapuram, Pollachi – 642002 and thereafter, also issued notices to the very same old address of the assessee. Hence, assessee wasn’t aware of the 148/142(1) notices issued in this case. Since, assessee was in the dark about the existence of these notices, assessee couldn’t reply, which resulted in the AO passing the ‘best judgment assessment’ u/s.144 of the Act, added the entire credit card payment of Rs.21,48,065/-. He also brought to our notice that since, the assessee didn’t make the payments pursuant to the passing of the assessment order dated 15.12.2019, the AO attached the assessee’s bank account and then only assessee came to know that the assessment order was passed by the AO. Hence, relying on the decision of the of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT

ITA 3658 /Chny/2026 (AY 2010-11) Gunasekaran :: 4 :: reported in [2001] 249 ITR 216 (SC), assessee prayed for one more opportunity before the AO.

5.

In this regard, it is noted that assessee was residing initially at Pollachi prior to shifting his residents to the Coimbatore. Assessee is noted to have filed the return of income for AY 2018-19 on 30.08.2018 informing the Department the new address at Coimbatore, but the AO is noted to have issued notices to the assessee at the Pollachi address, due to which assessee didn’t participate in the assessment proceedings nor responded to his notices. Hence, assessee per se cannot be faulted for non-participating during the assessment proceedings. Hence, we are inclined to grant one more opportunity to the assessee by restoring the assessment back to the file of AO. For ensuring further compliance by the assessee, we directed the assessee to remit Rs.10,000/-(Ten Thousand only) to the Tamil Nadu State Legal Services Authority by an interim order passed on 19th August, 2026 directing the assessee to deposit the same before the 27th August, 2026 which assessee has complied by filing proof of remittance, which is kept on record; and has further undertaken to appear, file written submission and produce documents to prove the nature and source of the credit card payment to the tune of Rs.21,48,065/-. Hence, we set aside the impugned order of Ld CIT(A) and restore the assessment back to the file of AO for de-novo assessment. The assessee is directed to file written submission and produce

ITA 3658 /Chny/2026 (AY 2010-11) Gunasekaran :: 5 :: documents called for by the AO; and especially file documents to prove the nature and source of the credit card payment of Rs.21,48,065/-; and the AO to frame fresh assessment after hearing the assessee in accordance to law.

6.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on the 12th day of October 2026, in Chennai.

Sd/- Sd/-

(प�ावती .एस) (एबी टी. वक�) (PADMAVATHY. S) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 12th October, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF Digitally signed by YASHVIR SINGH YASHVIR SINGH Date: 2026.10.16 11:42:00 +05'30'

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