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Facts
The assessee filed an ITR for A.Y. 2017-18. The Assessing Officer (AO) received information about an Rs. 8 lakh financial transaction and initiated reassessment proceedings by issuing notices under sections 148A(b) and 148. The assessee failed to comply, leading the AO to make an addition of Rs. 8 lakhs under section 69C as unexplained expenditure, passing an ex-parte assessment order under section 147 r.w.s 144. The CIT(A) dismissed the assessee's appeal without considering its merits, citing non-compliance with notices.
Held
The Tribunal set aside the CIT(A)'s order and remanded the case for de novo adjudication. The CIT(A) was directed to obtain copies of the notices under sections 148A(b) and 148A(d) from the AO, provide the assessee with an opportunity, and decide all grounds of appeal on merits, including the maintainability of the reassessment notice issued after three years for an amount less than Rs. 50 lakhs.
Key Issues
1. Whether the addition of Rs. 8 lakhs under section 69C as unexplained expenditure was justified. 2. Whether the reassessment proceedings initiated under section 147/148 were maintainable, particularly regarding the time limit for issuing notice when income escaping assessment is less than Rs. 50 lakhs. 3. Whether the CIT(A) erred in dismissing the appeal without considering merits or following principles of natural justice.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 147 of the Income Tax Act, 1961, Section 144 of the Income Tax Act, 1961, Section 139 of the Income Tax Act, 1961, Section 148A(b) of the Income Tax Act, 1961, Section 148A(d) of the Income Tax Act, 1961, Section 148 of the Income Tax Act, 1961, Section 69C of the Income Tax Act, 1961, Section 115BBE of the Income Tax Act, 1961, Section 251(1)(a) of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18 dated 29.10.2025 emanating from the Assessment Order passed under section 147 r.w.s 144 of the I.T.Act, dated 10.05.2023. The Assessee has raised the following grounds of appeal :
1. The Hon. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre has wrongly confirmed the Addition made by Ld. Assessing Officer amounting to Rs.8,00,000/- u/s. 69C as Unexplained Source of Expenditure.
The Hon. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erroneously dismissed the Appeal without considering the newly inserted proviso to Section 251(1)(a) by the Finance (No. 2) Act, 2024. This Proviso compulsorily mandate that where Appeal is against order of Assessment made u/s. 144, such order should be set aside and refer the case back to the Ld. Assessing Officer for making a Fresh Assessment.
3. The Hon. CIT(A) has not followed the Principal of Natural Justice.
The appellant craves leave to add, delete, amend, alter, vary and/or withdraw all or any of the above grounds of appeal
.” Findings & Analysis :
2. We have heard both the parties and perused the records.In this case, Assessee had filed Return of Income for A.Y.2017-18 under section 139 of the Act, on 22.11.2017. Assessing Officer received information regarding financial transactions of Rs.8 lakhs with Shri Amol Kashinath Gawade during F.Y.2016-17 by Assessee. Based on the information, Assessing Officer issued notice u/s.148A(b) of the Act. Assessee failed to comply the notice. Then, an order u/s.148A(d) of the Act, was passed. The Assessing Officer issued notice u/s.148, dated 08.07.2022 for A.Y.2017-18 in the case of the Assessee. Assessee failed to file any Return of Income in response to notice u/s.148 of the Act. Assessing Officer issued show cause notice, but Assessee failed to comply. Finally, Assessment Order [A] was passed. The relevant paragraph of the assessment order is reproduced here as under : “From the facts as narrated above and circumstances of the case it is evident that the assessee is complete non-responsive initially from the proceeding of 147 of the Act and he has not submitted any explanation/submission with regard to the source of payment of Rs. 8.00 Lakhs made to above name persons during the year under consideration. The assessee has filed original return u/s 139 of the Act for A.Y. 2017-18 on 22.11.2017 showing total income of Rs.2,13,170/- which also doesn't commensurate the payment of Rs. 8.00 Lakhs to above named person. Despite of ample opportunities extended to the assessee to submit his reply with corroborative evidences to substantiate the nature and source of payments of Rs. 8.00 Lakhs to Sri Amol Kashinath Gawade, the assessee failed to comply with the statutory notices issued as per provisions of Income-Tax Act. As the assessee failed to fulfill the nature and source of payments of Rs. 8.00 Lakhs in question the said payments remains unexplained as per provisions of section 69C of the Act,. The assessee has not produced any Books of accounts, Cash Book, Ledger copy of Account of above named concern and also failed to establish any business connection with the said person.
Keeping in view the above facts the addition of Rs.. 8.00 Lakhs is hereby made as deemed income of the assessee in terms of section 69C of the Act which is chargeable to tax as per provisions of section 115BBE of the Act for the year under consideration.”
Aggrieved by the assessment order, Assessee filed appeal before ld.CIT(A).
4. It is observed from the order of the ld.CIT(A) that Assessee failed to file reply to the notices issued by ld.CIT(A). Ld.CIT(A) dismissed the appeal. Relevant paragraph of the order of ld.CIT(A) is reproduced here as under : “6. In view of the above, the undersigned is left with no option but to decide the case on the basis of material on record. Bare perusal of the facts shows that appellant has not pursued the appeal despite being granted several opportunities as elaborated supra. The assessee has further jeopardized its case by not responding despite several opportunities that were provided. I am constrained to agree with the approach adopted by the AO in making the addition. The AO has passed a reasoned and speaking order considering all the facts and the circumstances of the case and no interference with the order of the AO is called for. The grounds of appeal are therefore dismissed.
5. In this case, admittedly assessee has not filed reply in response to notice u/s.250 of the Act, issued by ld.CIT(A). However, at the same time, ld.CIT(A) has not bothered to bring on record basic facts pertaining to assessment. In this case, notice u/s.148 has been issued on 08.07.2022 for A.Y.2017-18. However, the addition made is only of Rs.8 lakhs. Apparently, it seems that 148A(b) notice was issued on the ground that Assessee has paid Rs.8 lakhs to Mr.Amol Kashinath Gawade. Ld.DR for the Revenue was on rotation duty and could not produce copy of notice u/s.148A(b) of the Act, and order u/s.148A(d) of the Act. Even the Authorised Representative 4
6. Be it as it may be, at the same time, ld.CIT(A) has also not brought on record these basic facts. If the escapement of income is less than Rs.50 lakhs and notice u/s.148 has been issued after a lapse of Three Years, then it is not maintainable. However, though apparently it seems that notice u/s.148 was issued after a lapse of three years from the end of the assessment year for alleged escapement of income which is less than Rs.50 lakhs. But, as we have mentioned above, none of the parties have produced these basic documents for verification.
7. In these facts and circumstances of the case, we set-aside the order of ld.CIT(A) to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall call from the Assessing Officer copies of the notice u/s.148A(b), order under section 148A(d) of the Act, to verify the facts. Ld.CIT(A) shall also provide opportunity to the Assessee. Assessee shall file necessary details before the ld.CIT(A). Ld.CIT(A) shall decide each and every ground raised by the assessee on merits. It is mandatory for ld.CIT(A) to decide each and every ground raised by assessee on merits as held by Hon’ble 5
Accordingly, grounds of appeal raised by the Assessee are allowed for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 16 February, 2026.