CHANDRAKANT ATMARAM ACHARYA,AHMEDABAD vs. ITO, WD 3, PATAN, PATAN

The brief facts of the case are that the assessment was reopened on in the case of the assessee on the basis of information received through AIR/CIB that the assessee, along with co-owners, had purchased an immovable property for ₹40,80,000/-, of which the assessee's share was ₹10,20,000/- along with additional expenses of stamp duty and registration, and total investment made by the assessee was for a sum of ₹10,80,230/-. Since the assessee had not filed his return of income for AY 2011-12 and had failed to respond to multiple notices issued under Sections 148, 142(1), and 133(6), as well as a show-cause notice, the Assessing Officer proceeded to complete the assessment ex parte under Section 144 of the Act. The Assessing Officer noted that since the assessee did not furnish any explanation or documentary evidence regarding the source of investment in the said property, he treated the investment as unexplained under Section 69 of the Act and added a sum of ₹10,80,230/- to the total income of the assessee, and also initiated penalty proceedings under Sections 271(1)(c), 271(1)(b), and 271F of the Act.

In appeal, the CIT(A) noted that despite multiple opportunities and service of hearing notices through email as per Rule 127 of the Income Tax Rules, the assessee failed to file any submissions or appear for the hearings. The CIT(A) observed that there was complete non-compliance by the assessee, both during the assessment and appellate proceedings. Citing judicial precedents, including decisions of the Hon’ble Supreme Court and various High Courts, the Chandrakant Atmaram Acharya vs. ITO Asst. Year –2011-12 - 3–

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted that the assessee is a small farmer by occupation and earns his livelihood solely from the sale of agricultural produce. The Counsel for the assessee submitted that the assessee is illiterate and has no understanding of the complexities of tax compliance. The Counsel for the assessee pointed out that the notices issued by the Department were sent through digital means, of which the assessee was completely unaware, and due to his lack of education and knowledge, he did not know that he was required to file an income tax return under Section 139(1) of the Income Tax Act. the Counsel for the assessee submitted that the investment in the property, which has been treated as unexplained by the Department, was made out of his life savings from agricultural income. Since agricultural produce is usually sold in cash, the funds used for the investment were also received and retained in cash. The assessee has expressed his willingness to produce handwritten books of accounts and relevant cash receipts to prove the genuineness of his income and the source of funds used for purchasing the land in question. Accordingly, the Counsel for the assessee requested that the matter may be restored to the file of the Assessing Asst. Year –2011-12 - 4–

In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders.

We have heard the rival contentions and perused the material on record. We have carefully considered the submissions made by the assessee as well as the material available on record. It is an admitted fact that the assessee did not comply with the statutory notices issued by the Assessing Officer under Sections 148, 142(1), and 133(6) of the Act, and also failed to respond to the show-cause notice. Likewise, during the course of appellate proceedings before the CIT(A), the assessee remained non-compliant despite multiple opportunities and duly served hearing notices through email as prescribed under Rule 127 of the Income-tax Rules. At the same time, we take note of the fact that the assessee had filed the appeal before the CIT(A) within the stipulated time. Before us, the assessee has explained that he is a small farmer with limited literacy and no understanding of tax procedures, and that the investment in property was made from cash savings generated through agricultural income. The assessee has also expressed willingness to now cooperate and furnish supporting documents including handwritten books of accounts and cash receipts to substantiate his claim. In the interest of justice, and considering the nature of the explanation now furnished by the assessee, we are of the view that the matter deserves to be restored to the file of the Assessing Officer for de-novo consideration. However, we also find that there was complete failure on the part of the assessee to respond during both assessment and appellate proceedings, despite having due notice. Therefore, to discourage such non-cooperative conduct and to compensate for the time and resources of the Revenue that were wasted, we impose a cost of Chandrakant Atmaram Acharya vs. ITO Asst. Year –2011-12 - 5–

In the result, the appeal is allowed for statistical purposes, with the directions as above. This Order is pronounced in the Open Court on 16/09/2025 (NARENDRA P. SINHA) JUDICIAL MEMBER Ahmedabad; Dated 16/09/2025