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Facts
The assessee, an individual, filed a return of income for AY 2018-19 declaring Rs.3,17,830. Information revealed crypto currency transactions of Rs.38,54,500 and unexplained credit entries of Rs.40,44,044. The AO reopened the assessment under Section 147 and passed a best judgment assessment order.
Held
The Tribunal noted the assessee's non-compliance before lower authorities leading to ex-parte orders. However, considering the interest of justice, the Tribunal set aside the CIT(A)'s order and restored the matter for de novo adjudication, granting one final opportunity.
Key Issues
Whether the reassessment proceedings were validly initiated and whether the additions made for unexplained crypto currency investments and credit entries are justified.
Sections Cited
147, 148, 142(1), 144, 144B, 69B, 69A, 151, 151A
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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
Assessment Year : 2018-19 Pradeep Janardhan Sakhare, ITO, Ward – 1(1), Ashay Regency, Flat No. 9, Aurangabad New Vishal Nagar, Chh. Sambhajinagar, Vs. Maharashtra-431001 PAN : BOBPS8283M अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Shubham N. Rathi (Virtual) Department by : Smt. Indira R. Adakil Date of hearing : 04-12-2025 Date of 18-12-2025 Pronouncement : आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 26.09.2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2018-19.
Briefly stated the facts are that the assessee is an individual. For AY 2018-19, the assessee filed his return of income declaring income of Rs.3,17,830/-. Based on the information received from the Insight portal under „High Risk CRIU/VRU Information‟, it was found that the assessee has done transaction in crypto currency of Rs.38,54,500/-, the source of which requires verification and also there were unexplained credit entries aggregating to Rs.40,44,044/-. As the assessee failed to disclose the above transaction in the ITR filed for the AY 2018-19, the Ld. Assessing Officer (“AO”) had reason to believe that the above income in AY 2018-19 has escaped assessment. Accordingly, the case of the assessee was reopened u/s 147 by issue of notice u/s 148 of the Income Tax Act, 1961 (the “Act”) dated 07.04.2022. In response thereto, the assessee filed his return of income on 09.06.2023. Statutory notice(s) u/s 142(1) and 144 were then issued to the assessee. As the assessee failed to file any compliance to the various notices issued by the Ld. AO, he proceeded to complete the assessment on best judgment u/s 144 on the basis of information available on record. The Ld. AO observed that no supporting documentation has been furnished by the assessee to elucidate the origin or nature of substantial transactions in crypto currency amounting to Rs.38,54,500/-. Also, the assessee has not furnished any supporting documents to establish the genuineness or source of the credit entries totaling to Rs.40,44,044/-which casts uncertainty on their authenticity and legitimacy. Due to lack of any explanation and supporting documentary evidence furnished by the assessee in respect of the above transactions, the Ld. AO completed the assessment at total income of Rs.82,16,374/- vide his order dated 07.03.2024 passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act thereby making an addition of Rs.38,54,500/- on account of unexplained investments in crypto currency u/s 69B and credit entries of RS.40,44,044/- as unexplained money u/s 69A of the Act, to the returned income of Rs.3,17,830/-.
Aggrieved, the assessee filed an appeal before the Ld. CIT(A)/NFAC challenging the aforesaid additions made by the Ld. AO. The assessee also raised a legal ground before the Ld. CIT(A)/NFAC challenging the validity of reopening proceedings. Despite service(s) of various notices of hearing issued during the appellate proceedings, there was non-compliance which resulted in ex-parte decision by the Ld. CIT(A)/NFAC dismissing the appeal of the assessee.
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal :
1. THE CHALLENGE TO REASSESSMENT 1.1 The Learned Commissioner of Income Tax (Appeals) ['the Ld. CIT'] has erred in not considering the ground of challenge to reassessment proceedings. 1.2 On the facts and in the circumstances of the case, the Learned Income Tax Officer, Ward 1(1), Aurangabad ["The Ld. JAO"] has initiated the reassessment proceedings without fulfilling the preconditions required to initiate the reassessment proceedings U/s 148-151 of the Act. 1.3 On the facts and in the circumstances of the case, the sanction obtained u/s 151 for the issuance of notice u/s 148 and the order passed u/s 148A(d) are from the wrong authority.
1.4 In the above circumstances, facts and in law, the Appellant submits that the initiation of reassessment proceedings in the present case is without jurisdiction WITHOUT PREJUDICE TO THE ABOVE 2. THE NOTICE U/S 148 IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 151A 2.1 The Ld. JAO has erred in assuming the jurisdiction to issue the notice u/s 148 which is in non-compliance to the provisions of section 151A of the Act. 2.2 It is submitted that in the facts and in the circumstances of the case and in law, the notice issued u/s 148 of the Act in the present case is bad in law and therefore deserves to be quashed. WITHOUT PREJUDICE TO THE ABOVE 3. ADDITION OF ₹ 38,54,500/- U/S 69B OF THE ACT 3.1 The Ld. CIT(A) erred in confirming the addition made of transaction in crypto currency amounting to ₹ 38,54,500/- as an unexplained investment u/s 69B. 3.2 The Ld. CIT(A) erred in making such addition without considering the fact that the investment amount is much lesser than the transaction and only net profit is taxable and not entire transaction value. 3.3 The addition confirmed by the Ld. CIT(A) deserves to be deleted, being illegal. 3.3 Without prejudice to the above, on the facts and circumstances of the case and in law the provisions of section 69B are not attracted in the present case therefore the addition made u/s 69B is unwarranted and illegal.
4. ADDITION OF ₹ 40,44,044/-AS UNEXPLAINED INVESTMENT U/S 69A 4.1 The Ld. CIT(A) erred in confirming an addition of alleged unexplained entries to the tune of 2 40,44,044/-. 4.2 While doing so, none of the lower tax authorities has even mentioned the credit entries of which account the Ld. AO is alleging to be unexplained. The Ld. CIT(A) has erred in confirming addition made on the basis of such non-speaking assessment order. 4.3 In the facts and circumstances of the case and in law, no such addition is warranted and no provisions of section 69B are attracted in the present case and therefore the said addition made is illegal and deserves to be deleted.
LEAVE The Appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
5. The Ld. AR submitted that the non-compliance before the Ld. CIT(A)/NFAC was not intentional but it was on account of certain unavoidable circumstances beyond the control of the assessee. He submitted that the assessee is now in a position to present and AY 2018-19 substantiate his case by filing all the requisite details/documentary evidence to the satisfaction of the Ld. CIT(A)/NFAC and has therefore humbly prayed that the assessee may be given an opportunity of representing his case before the Ld. CIT(A)/NFAC by remanding the matter back to his file for fresh adjudication.
The Ld. DR, on the other hand, strongly supported the order of the Ld. CIT(A)/NFAC and submitted that inspite of several opportunities granted by the Ld. CIT(A)/NFAC, the assessee remained un-complied. The assessee also failed to file any compliance before the Ld. AO and hence the Ld. CIT(A)/NFAC is completely justified in rejecting the appeal of the assessee.
We have heard the Ld. Representatives of the parties and perused the material available on record. It is admitted fact that the Ld. AO passed an ex-parte order qua the assessee for the reason that the assessee failed to offer any explanation with cogent supporting documentary evidence in respect of transactions done in crypto currency of Rs.38,54,500/- and credit entries of Rs.40,44,044/-. There was non-compliance during the appellate proceedings before the Ld. CIT(A)/NFAC as well which constrained him to pass an ex-parte order dismissing the appeal of the assessee. Before us, the Ld. Counsel for the assessee has submitted that the non-compliance before the lower authorities was not intentional and the assessee has a strong case on merits and is in a position to explain the nature and source of the impugned transactions by filing the requisite details/documentary evidence in support of his claim. Considering the totality of the facts and in the circumstances of the case and without going into the merits of the case, we deem it fit in the interest of justice and fair play, to set aside the order of the Ld. CIT(A)/NFAC and restore the matter back to his file for de-novo adjudication on various ground raised by the assessee before him after affording one final opportunity of being heard to the assessee. Needless to say, the assessee shall appear and make submissions before the Ld. CIT(A)/ NFAC on the appointed date without seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld. CIT(A)/NFAC shall be at liberty to pass appropriate order as per law. Having held so, because of the callous attitude of the assessee in not responding to the notices issued by the lower authorities, we levy a cost of Rs.1000/- on the assessee which shall AY 2018-19 be deposited within one month from the receipt of this order. The Ld. CIT(A)/NFAC shall ensure that the assessee has deposited the same before the disposal of the appeal by him. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.