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Facts
The assessee's appeal before the CIT(A) was dismissed ex-parte due to non-prosecution, as the assessee claimed they did not receive the hearing notice. The CIT(A) had dismissed the appeal against the assessment order that made additions for unexplained cash deposits, undisclosed professional income, and unexplained bank credits.
Held
The Tribunal noted that the CIT(A) dismissed the appeal without adjudicating on the grounds raised by the assessee. The Tribunal set aside the ex-parte order and restored the appeal to the CIT(A) for de novo adjudication, granting the assessee a reasonable opportunity of being heard.
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex-parte without adjudicating on merits, and whether reassessment proceedings were valid.
Sections Cited
147, 144, 144B, 69A, 115BBE, 44ADA, 234B, 270A, 271AAC(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER Harsha Bojarao Devraj A 602, Lodha Raj Intinia, Off Ramchandra Lane, Near Movie Time Cinema, Evershine Nagar, Malad West, Mumbai – 400064. Maharashtra. [PAN:AIOPD9660P] …………. Appellant Vs Income Tax Officer 41(3)(1), Mumbai Kautilya Bhawan, BKC, Bandra (East), Mumbai – 400051. …………. Respondent Maharashtra. Appearance For the Appellant/Assessee : Shri Tejveer Singh For the Respondent/Department : Ms. Deepika Arora Date Conclusion of hearing : 05.03.2026 Pronouncement of order : 06.03.2026
O R D E R
Per Rahul Chaudhary, Judicial Member:
The present appeal preferred appeal against the order, dated 25/09/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’], whereby the Learned CIT(A) had dismissed the appeal of the Assessee against the Assessment Order, dated 25/05/2023, passed under Section 147 read with Section 144 read with Section 144B of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], for the Assessment Year 2017- 2018.
The Assessee has raised following grounds of appeal in NO. 1: REASSESSMENT PROCEEDINGS UNDER SECTION 148 Assessment Year 2017-2018 ARE VOID The learned CIT(A) erred in confirming the reassessment proceedings initiated under Section 147 of the Act, which are void ab initio and liable to be quashed, as the Assessing Officer failed to comply with the mandatory statutory requirements for recording the requisite satisfaction of the Principal Commissioner of Income Tax before issuing notice under Section 148 of the Act. GROUND NO. 2: ADDITION OF INR 15,37,500 ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS UNDER SECTION 69A OF THE ACT The learned CIT(A) erred in law and on facts in confirming the addition of INR 15,37,500 under Section 69A of the Act on account of alleged unexplained cash deposits without considering the explanations, supporting documents, and reconciliation submitted to the Assessing Officer by the appellant. The learned CIT(A) failed to appreciate that details relating to the cash deposits were fully explained to the Assessing Officer and the same were sourced from past savings of self. parents, family members along with cash withdrawals from earlier years and therefore the addition made is erroneous, unjustified, and bad in law. The learned CIT(A) failed to appreciate that the Assessing Officer made the impugned addition merely on assumptions and surmises, without conducting proper inquiry or verification and without bringing any adverse material on record to prove that the cash represented unexplained income of the appellant. Hence, the addition deserves to be deleted. The learned CIT(A) erred in confirming the action of the Assessing Officer in treating the impugned additions as 'income referred to in Section 115BBE of the Act and in levying tax at 60 percent along with surcharge at 25 percent, which is unjustified, bad in law, and not applicable to the facts of the case. GROUND NO. 3: ADDITION OF INR 6,80,000 ON ACCOUNT OF UNDISCLOSED PROFESSIONAL INCOME IS ERRONEOUS The learned CIT(A) erred in law and on facts in confirming the addition of INR 6,80,000 as undisclosed professional income and further erred in treating the same as business income without appreciating that the alleged receipts ought to have been assessed only after allowing reasonable and legitimate, deduction of expenditure incurred for earning such income. The failure to allow necessary expenses has resulted in an excessive and unjustified addition. Without prejudice to the earlier ground, the learned CIT(A) erred in law and on facts in not allowing the presumptive deduction under Section 44ADA of the Act in respect of the alleged professional receipts of INR 6,80,000. The authorities below ought to have applied Section 44ADA of the Act while computing income instead of taxing the gross amount.
2. Assessment Year 2017-2018 GROUND NO. 4: ADDITION OF INR 1.33,000 ON ACCOUNT OF UNDISCLOSED BANK CREDITS IS ERRONEOUS AND UNJUSTIFIED The learned CIT(A) erred in law and on facts in confirming the addition of INR 1.33,000 as unexplained bank credits without appreciating that the appellant had duly explained the nature and source of the said deposits by submitting to the Assessing Officer that the Income belongs to his major son with whom he holds a joint account. The Assessing Officer failed to conduct proper inquiry, ignored the explanations offered, and made the addition merely on presumptions, rendering the same unjustified and unsustainable in law. The learned CITIA) erred in confirming the action of the Assessing Officer in treating the impugned additions as 'income referred to in Section 115BBE of the Act' and in levying tax at 60 percent along with surcharge at 25 percent, which is unjustified, bad in law, and not applicable to the facts of the case. GROUND NO. 5: EXCESS LEVY OF INTEREST UNDER SECTION 234B OF THE ACT AMOUNTING TO INR 11,12,998 IS CONSEQUENTIAL IN NATURE AND SHOULD BE DELETED The learned CIT(A) erred in upholding the excess levy of interest under Section 234B of the Act. Since the levy is purely consequential and dependent on the final assessed income, the interest computed is excessive and liable to be deleted or recomputed accordingly. GROUND NO. 6: PENALTY PROCEEDINGS UNDER SECTION 270A AND SECTION 271AAC(1) OF THE ACT ARE ILLEGAL AND UNJUSTIFIED The learned CIT(A) erred in law and on facts in failing to delete/quash the very initiation of penalty proceedings made by the Assessing Officer, under Sections 270A and 271AAC(1) of the Act without appreciating that such penalties are consequential in nature and can only arise if the additions made by the Assessing Officer are valid, justified, and supported by evidence. Since the additions are erroneous, arbitrary and bad in law, the consequential levy of penalty is illegal, unjustified, and deserves to be deleted.”
3. When the appeal was taken up for hearing, the Learned Authorized Representative for the Assessee appearing before us, at the outset, submitted that the appeal preferred by the Assessee before the Learned CIT(A) was dismissed on account of non-prosecution since the Assessee could not enter appearance before the Learned CIT(A). It was explained that the notice of hearing was not received by the Assessee and therefore, the same could not be complied with.
3 Assessment Year 2017-2018 Therefore, the Learned Authorized Representative for the Assessee sought another opportunity to make proper representation before the Learned CIT(A).
Per contra Learned Departmental Representative opposed the submission made on behalf of the Assessee and submitted that there was no infirmity in the order passed by the Learned CIT(A) since the Assessee had failed appear before Learned CIT(A) despite issuance of notices of hearing on five different occasions.
In rejoinder, without prejudice to submission advanced, it was submitted on behalf of the Assessee that the Learned CIT(A) has not adjudicated the issues on merits and therefore, a lenient view be taken in respect of the non-compliance of the aforesaid notices by the Assessee.
We have heard both the sides and perused the material on record.
We note that the Learned CIT(A) has dismissed the appeal preferred by the Assessee by way of an ex-parte order. The Learned CIT(A) has observed that no submissions and/or supporting documents were furnished on behalf of the Assessee during the appellate proceedings and therefore, there was no material to deviate from the order passed by the Assessing Officer. We find that while dismissing the appeal the Learned CIT(A) has not dealt with the averments made in the statement of facts and the grounds raised by the Assessee in appeal before the Learned CIT(A). Even the legal Grounds raised by the Assessee challenging the validity of reassessment proceedings have not been adjudicated upon. Irrespective of non-appearance of an Assessee before the Learned CIT(A), the Learned CIT(A) is required to deal with the issue raised by the Assessee on merits in view of the provisions contained in Section 250(6) of the Act. [CIT (Central) Nagpur vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bombay)
4 Assessment Year 2017-2018 25/04/2016]. Accordingly, we deemed it appropriate to set aside the ex-parte order, dated 25/09/2025, and restore the grounds raised in appeal before the Learned CIT(A) for denovo adjudication before Learned CIT(A) as per law after granting the Assessee a reasonable opportunity of being heard. Assessee is directed to be vigilant and track the appellate proceedings through Income Tax Business Application (ITBA) Portal. It is clarified that in case the Assessee fails to file submission and/or fails to enter appearance, the Learned CIT(A) would be at liberty to adjudicate to grounds raised in appeal on merits based upon materials on record. In terms of the aforesaid Ground No.2 to 4 raised by the Assessee are treated as allowed for statistical purposes without returning any finding on merits. Since we have set aside the impugned ex-parte order passed by Learned CIT(A), all the rights and contentions are left open. Therefore, Ground No.1, 5 and 6 raised by the Assessee are not adjudicated upon and dismissed as having been rendered infructuous at this stage.
In terms of the paragraph 8 above, appeal preferred by the Assessee is partly allowed.