Loading judgment…
Facts
For AY 2019-20, the assessee did not file an ITR. Based on information about property purchase for Rs. 25,00,000/-, the AO initiated reassessment proceedings, subsequently making a best judgment assessment and adding Rs. 11,50,000/- as unexplained investment under Section 69, as the assessee failed to respond to notices. The FAA upheld this ex-parte.
Held
The Tribunal observed that the assessee attributed the investment source to gifts from his mother and sister but failed to furnish evidence to lower authorities due to lack of representation. In the interest of justice, the Tribunal restored the matter to the AO for fresh examination, directing the assessee to produce all necessary evidences to substantiate the claim.
Key Issues
Whether the addition of unexplained investment could be sustained when the assessee claimed the source to be gifts, and if the matter should be remanded to the Assessing Officer for a fresh opportunity to present evidence.
Sections Cited
250, 144, 148A, 148A(b), 69, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 17.12.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2019-20.
& :- 2 -: SA No.67/CHNY/2026 2. At the very outset, we notice that the First Appellate Authority’s (FAA) order is ex-parte, since there was no compliance from the assessee to the five notices issued from the office of the First Appellate Authority. Further, we also note that the assessment has been completed on best judgment basis u/s.144 of the Act.
Brief facts of the case are as follows: For the assessment year 2019-20, assessee had not filed the return of income. Based on the information received through the Insight Portal regarding purchase of an immovable property for a consideration of Rs.25,00,000/-, the AO initiated proceedings u/s.148A of the Act. The assessee, in response to the notice issued u/s. 148A(b) of the Act, had stated that the property was purchased partly through a bank loan and partly from personal savings, gifts and borrowings from relatives. However, the assessee did not file the return of income nor complied with the statutory notices issued during the course of reassessment proceedings. The AO observed that assessee had availed housing loan of Rs.13,50,000/- from TN Mercantile Bank, which was confirmed by the letter from bank. Consequently, the AO completed the assessment on best judgment basis and considered the balance sum of & :- 3 -: SA No.67/CHNY/2026 Rs.11,50,000/- (Rs.25,00,000 - Rs.13,50,000) as unexplained investment u/s. 69 r.w.s.115BBE of the Act.
3. Aggrieved, assessee filed appeal before the First Appellate Authority (FAA). Before FAA also, the assessee did not respond to the hearing notices and hence, the appeal was decided ex-parte confirming the addition made by the AO.
Aggrieved, assessee filed appeal before the Tribunal. Before us, the Ld. AR submitted that the source of investment was out of gifts received from the assessee’s mother and sister, wherein a sum of Rs.7,00,000/- was received through banking channel from his mother and Rs.4,50,000/- was received in cash from his sister and subsequently deposited into the bank account of the assessee. It was pleaded that due to lack of proper representation before the lower authorities, the relevant evidences supporting the source of investment could not be furnished and therefore the matter may be restored to the file of the AO for fresh examination.
The Ld.DR submitted that adequate opportunities were provided from the offices of the AO and the FAA and there is no & :- 4 -: SA No.67/CHNY/2026 violation of principles of natural justice. Therefore, it was prayed the appeal of the assessee may be dismissed.
We have heard rival submissions and perused the materials on record. It is observed that the assessment was completed by the AO on best judgment basis treating a sum of Rs.11,50,000/- as unexplained investment u/s.69 r.w.s.115BBE of the Act on account of purchase of immovable property, since the assessee neither filed the return of income nor complied with the statutory notices issued during the course of reassessment proceedings. It is further noticed that even before the First Appellate Authority the assessee did not respond to the hearing notices and the appeal was decided ex-parte confirming the addition made by the AO. Before us, the Ld.AR submitted that the source of investment was out of gifts received from the assessee’s mother and sister and requested that one more opportunity may be granted to substantiate the claim by furnishing necessary documentary evidences. Considering the facts and circumstances of the case and in the interest of justice and fair play, we deem it appropriate to restore the issue to the file of the AO for fresh examination, with a direction to the assessee to produce all necessary evidences to explain the source of investment. The AO shall examine the & :- 5 -: SA No.67/CHNY/2026 same and decide the issue in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is directed to co-operate with the Revenue and shall not seek unnecessary adjournment. It is ordered accordingly.
SA No.67/CHNY/2026 7. Since we have disposed off the appeal, the Stay application is rendered infructuous and is dismissed.
In the result, the appeal filed by the assessee is allowed for statistical purposes and the stay application filed by the assessee is dismissed.
Order pronounced in the open court on 12th March, 2026 at Chennai.