NAYAN RAJENDRA KSHATRIYA,MUMBAI vs. INCOME TAX OFFICER, KAUTILYA BHAVAN, MUMBAI

Brief facts of the case are that the assessee is an individual and had filed his return of income for the year under consideration declaring total income at Rs.28,78,640/- and the same was processed u/s. 143(1) of the Act. Subsequently, the assessee filed a revised return dated 31.03.2021 declaring total income at Rs.20,96,060/- and had claimed refund of Rs.2,44,170/-. The assessee’s case was selected for complete scrutiny under CASS for verifying the reason for the reduced taxable income in the revised return. Notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The assessee had not complied with the assessment proceedings completely and on the basis of the partial submission made by the assessee the Ld. AO passed the assessment order dated 30.08.2022 u/s 143(3) r.w.s. 144B of the Act determining the total income at Rs.50,34,946/- after making various additions/disallowances. The Ld. AO also initiated penalty proceedings u/s 270A and 271AAC(1) of the Act. The Ld. AO then passed the penalty order u/s 271AAC(1) of the Act dated 09.03.2023 on the ground that the assessee has been non-compliant to the show cause notices issued u/s 271AAC of the Act thereby levying a penalty amounting to Rs.90,714/-.

Aggrieved, the assessee was in appeal before the first appellate authority, who vide an ex-parte order dated 04.07.2025 upheld the penalty levied by the Ld. AO.

Aggrieved, the assessee is in appeal before us, challenging the order of the Ld. CIT(A).

We have heard the Learned Departmental Representative (“Ld. D.R.” for short) and perused the materials available on record. It is observed that the Ld. AO during the assessment proceedings had sought for details as to the assessee’s investments in securities and purchase value amounting to Rs.11,63,000/-. Inspite of several opportunities, the assessee failed to substantiate the nature and source of the investment thereby resulting in an addition of Rs.11,63,000/- u/s 69 of the Act as unexplained investment and penalty proceeding u/s 271AAC(1) of the Act was also initiated. It is further observed that the assessee was also non-compliant during the penalty proceeding and has failed to offer any explanation as to the unexplained credit/money in the form of cash deposits appearing in the bank accounts neither during the assessment proceedings nor during the penalty proceedings thereby attracting penalty u/s 271AAC of the Act. Even during the appellate proceeding, the assessee has been non-compliant before the Ld. CIT(A) who then upheld the penalty levied by the Ld. AO. Notably even before us neither the assessee nor any of his authorized representative appeared nor was any adjournment application filed by the assessee. On perusal of the acknowledgment of notice of hearing, it is evident that notice has been served upon the assessee. We, therefore, infer that the assessee has no explanation to offer nor has he any cogent evidences in support of his contention. Even on the merits of the case, penalty u/s 271AAC of the Act may be levied by the Ld. AO in a case where & 5530/Mum/2025 Mr. Nayan Rajendra Kshatriya income determined u/s 68, 69, 69A, 69B, 69C or 69D in addition to the tax payable u/s 115BBE of the Act @ 10% of the tax payable u/s 115BBE(1) of the Act has not been paid on or before the end of the relevant previous year. Further, the assessee has also not corroborated the nature and source of the unexplained credit/money assessed during the course of the assessment proceeding before the lower authorities. Further, it is observed that the assessee has been recalcitrant and unwilling to comply with the notices during the assessment proceeding, penalty proceeding and even during appellate proceeding. In the absence of any contrary contentions raised by the assessee, we deem it fit to hold that there is no infirmity in the finding of the Ld. CIT(A) which warrants no interference. We, therefore, dismiss the grounds of appeal raised by the assessee on the above observation.

In the result, the appeal filed by the assessee is dismissed on above terms.

The finding given in this appeal i.e. will apply mutatis mutandis to as well. Accordingly, both the appeals filed by the assessee are hereby dismissed.