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Facts
The assessee's case was reopened due to information regarding repayment of a cash loan of Rs. 25 lakhs, leading to an addition of Rs. 25,00,000/- under Section 69A of the IT Act by the Assessing Officer for "on money payment." The CIT(A)/NFAC subsequently dismissed the assessee's appeal ex-parte due to non-appearance.
Held
The Tribunal found that the CIT(A) had not provided a reasonable opportunity of hearing, issuing three notices within 21 days despite the assessee's prior adjournment requests. Consequently, the Tribunal set aside the ex-parte order of the CIT(A)/NFAC and remanded the matter back for fresh adjudication on merits, directing the CIT(A) to provide a fair hearing.
Key Issues
Whether the ex-parte dismissal by CIT(A) was justified given inadequate opportunity of hearing, and the validity of the addition under Section 69A for unexplained money based on uncorroborated third-party information.
Sections Cited
Section 69A, Section 139(4), Section 148, Section 143(2), Section 142(1), Section 147, Section 144, Section 250(6), Section 269SS, Section 269T, Section 271D, Section 271E, Section 68
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 11.09.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2020-21.
The appellant has raised the following grounds of appeal :-
1. The learned CIT-Appeals erred in upholding the addition of Rs.2500000 made by the Assessing Officer u/s 69A of the Income-tax Act, 1961, merely for non-appearance relying solely on procedural default and ignoring that appellate proceedings are continuation of assessment and must be decided on merits based on record and written submissions already filed.
The learned CIT-Appeals failed to appreciate that the addition of ₹25,00,000 u/s 69A is based solely on unverified Excel sheet and statement of a third party without corroboration. The addition is unsustainable in law as the Department failed to prove the Appellant's actual possession or discovery of the alleged unexplained money.
On the facts and in the circumstances of the case and in law Principles of natural justice were violated as cross-examination of Shri Malpani was denied despite specific requests.
The learned CIT-Appeals erred in ignoring the legally impermissible dual treatment of the same transaction: first, as unexplained income u/s 69A, and simultaneously initiating penalty proceedings by treating it as a loan for the purposes of Sections 269SS/269T (penalty u/s 271D/271E) facts and circumstances of the case.
5. The learned CIT-Appeals failed to address the significant fact that the Department itself had not made any income addition (u/s 68 or 69A) in A.Y, 2017-18 based on the same seized materials, instead treating the alleged receipt as a cash loan (proposing penalty u/s 271D) The present addition of repayment as "unexplained money" is therefore contradictory and inconsistent with the Department's own earlier stand.
The learned CIT-Appeals failed to appreciate that the Department never discharged its initial burden of proof to establish the existence of the alleged transaction with credible, independent evidence, relying only on self-serving, untested third-party material.
7. The order passed by the CIT(A), NFAC dated 11.09.2025 is bad in law and void ab initio as it has been passed ex parte without adjudicating on merits despite detailed grounds and statement of facts on record, violating section 250(6) of the Act which mandates a speaking order on each ground of appeal
Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of natural justice.”
3. Facts of the case, in brief, are that the assessee is an individual and has furnished return of income u/s 139(4) of the IT Act on 31.03.2021 declaring total income of Rs.30,89,600/-. On the basis of information that the assessee has repaid cash loan of Rs.25 lakhs to one Yogesh M. Malpani the case of the assessee was reopened and notice u/s 148 was issued to the assessee after following due procedure. The assessee in response to above notice furnished return of income disclosing same income of Rs.30,89,600/- which was disclosed by him in the original return of income. Subsequently, notices u/s 143(2) and 142(1) and show cause notice respectively were issued to the assessee. Not being completely satisfied with the reply of the assessee, the Assessing Officer completed the assessment proceedings u/s 147 r.w.s. 144 of the IT Act and vide order dated 25.03.2025 determined income at Rs.55,89,600/- as against the income returned by the assessee at Rs.30,89,600/-. The above assessed income includes addition on account of on money payment of Rs.25,00,000/- u/s 69A of the IT Act.
4. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. Since the assessee remained absent, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee.
It is the above order against which the assessee is in appeal before the Tribunal.
We have heard Ld. counsels from both the sides and perused the material available on record. In this regard, we find that Ld. CIT(A)/NFAC dismissed the appeal for want of prosecution. We further find that Ld. CIT(A)/NFAC has issued last three notices of hearing to the assessee in a time period of 21 days which cannot be said to be reasonable opportunity of hearing. We also find that the assessee sought adjournment on two occasions which proves that the assessee was responding to the notices issued by Ld. CIT(A)/NFAC, however due to issue of back-to-back three notices of hearing in a short span of 21 days the assessee could not furnish any reply.
Considering the totality of the facts of the case and in the interest of justice & without going into merits of the case, we deem it fit to set-aside the ex-parte order passed by Ld. CIT(A)/NFAC and remand the matter back to him with a direction to decide the appeal afresh & as per fact and law on all the grounds raised before him after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT(A)/NFAC in this regard and to produce relevant submissions, documents and evidences in support of grounds of appeal without taking any adjournment under any