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Facts
The assessment for AY 2018-19 was reopened, alleging the assessee had paid Rs. 11,25,000/- in unexplained cash for her half share of a property, with the AO adding Rs. 7,50,000/- u/s 69A. The assessee claimed sufficient cash from her husband's FDR maturity and withdrawals, but the AO found the source unexplained. The CIT(A) dismissed the assessee's appeal ex-parte due to non-appearance after sending notices via email to the spouse's ID.
Held
The ITAT set aside the CIT(A)'s ex-parte order, noting the assessee, a senior citizen, claimed she did not receive proper notice and was not given an adequate opportunity to be heard. The matter was remanded to the CIT(A) for fresh adjudication on merits, with a direction to provide both parties a proper opportunity of hearing and for the assessee to present her case and evidence.
Key Issues
1. Whether the CIT(A) was justified in dismissing the appeal ex-parte without providing adequate opportunity of hearing. 2. Whether the addition of Rs. 7,50,000/- as unexplained investment under sections 69A/69B was justified.
Sections Cited
147, 148, 144B, 69B, 69A, 250, 250(6), 148A, Rule 34(4) of ITAT Rules, 1963
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Income Tax Appellate Tribunal, AMRITSAR BENCH, ‘DB’: AMRITSAR
Before: SHRI UDAYAN DAS GUPTA & SHRI BRAJESH KUMAR SINGH
Date of Hearing 28.05.2025 Date of Pronouncement 25.08.2025 ORDER PER BRAJESH KUMAR SINGH, AM,
This appeal by the assessee is directed against the order of National Faceless Appeal Centre (NFAC)/learned Commissioner of Income Tax (Appeals), Delhi (hereinafter referred to ‘ld. CIT(A)’) dated 22.01.2024 pertaining to Assessment Year 2018-19 arising out of assessment order dated 06.03.2023 passed u/s 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’).
None appeared on behalf of the assessee. However, the assessee had 2. filed a written submission before the Tribunal, therefore, this appeal is being decided after hearing the ld. Sr. DR and on the basis of the written submission of the assessee and material available on record.
Brief facts of the case:-The case was reopened u/s 147 by issuing of notice u/s 148 of the Act on 31.03.2022. As per the information available with the AO, it was found that assessee had purchased Flat No. 101A in the project ICON Heights Moga from M/s R.K. City Developers Pvt Ltd amounting to Rs.42,25,000/-. The Assessing Officer had further information that the actual sale price of the flat was Rs. 42,25,000/, while the registered amount was Rs.20,00,000/-. The Assessing Officer observed that there is a difference of Rs.22,50,000/- which represented the amount that was been paid in cash. Further, the Assessing Officer noted that assessee being a 50% partner in said property was deemed to have paid the half amount i.e., Rs.11,25,000/ in cash over and above registration amount from the sources unexplained to the department. The AO issued various notices as detailed on page 2 of the assessment order and also issued as show-cause notice dated 11.02.2023, in which, it was stated that on the basis of reliable incriminating documents and evidence collected during the search and seizure operations at the premises of M/s R.K. City Developers at Moga and Muktsar on 18.01.2016 by the Director General of Central Excise Intelligence (in short ‘DGCEI’), wherein, the adjudicating authority i.e. Assistant Commissioner of CGST ST (quasi-judicial authority) concluded on basis of material seized during the search and seizure that the Flats at ICON Heights, Moga were sold for ranging between 35,00,000/- to 42,25,000/- by M/s R K City Developers.
3.1. Thereafter, the AO in the show-cause notice considered Rs.35 lakhs (considering the lower cost) instead of registration amount of Rs.20 lakhs noted the difference of Rs.15 lakhs and asked the assessee to explain that in absence of any plausible explanation regarding cash payment of Rs.7,50,000/- over and above the amount of the stamp value of the property to the R K City Developers Pvt Ltd, therefore, an addition of Rs. 7,50,000/- was proposed to be added to the income of the assessee as unexplained investment u/s 69B of the Act. In reply, the assessee submitted that the assessee and her spouse i.e. Dr. UR Vashishtha were having sufficient cash available Rs.15 lakhs at the time of purchase of the immovable property. Thereafter, the AO reproduced the written submission of the assessee.
3.2. After considering the reply of the assessee, the AO concluded that the assessee’s claim that an amount of Rs.19,66,000/- claimed to have been withdrawn in cash on 30.08.2017 from bank account was not withdrawal of cash but paid to Jatinder Kum and therefore the said cash was not available to the assessee as claimed by her. In view of these facts, the AO added as sum of Rs.7,50,000/- u/s 69A of the Act. The relevant extract of the finding of the AO on pages 8 to 9 of the assessment order is reproduced as under:-
“From the earlier reply of the assessee, it is evident that the said immovable property has been purchased by the assessee along with her husband Dr. UR Vashishtha by paying Advance (Bayana) of Rs. 5 lacs through State Bank of India vide cheque no.182659 dated 25.09.2017 and by arrangement of Housing Loan of Rs. 15 lacs through Union Bank of India vide Bank Draft no.35287057 dated 12.10.2017. Further on going through the reply of the assessee filed on 16.02.2023, it is observed that the assessee claimed to have sufficient cash at the time of purchase of immovable property as her spouse has withdrawn Cash amounting to Rs. 19,66,000/- from dated 30.08.2017 to 08.09.2017 but from the perusal of Bank account statement A/C No.30059290663 maintained with State Bank of India, it is noted that the amounting to Rs. 19,66,000/- have not been withdrawn by assessee's spouse but paid to Jatinder Kum AT 01550 Talwandi BH, the same may be verified from the bank account statement filed by the assessee, hence the purpose of payment of Cash of Rs. 19,66,000/- to Sh. Jatinder kumar remains unexplained as the spouse of assessee has not withdrawn in cash directly from his bank account. Therefore, assessee's claim of having sufficient cash from known source i.e. from the maturity of FDR amounting to Rs. 19,86,535/- at the time of purchase of immovable property is not valid and hence not acceptable. It is to be noted here that the stamp value of the immovable property was Rs. 20,00,000/- and the same amount had already been arranged vide Advance (Bayana) of Rs. 5 lacs through State Bank of India vide cheque no.182659 dated 25.09.2017 and by arrangement of Housing Loan of Rs. 15 lacs through Union Bank of India vide Bank Draft no.35287057 dated 12.10.2017. But assessee in her reply dated 16.02.2023 has agreed to have sufficient cash at the time of purchase of immovable property but the source of which remain unexplained. From the above it is established that the assessee along with her husband has paid the excess amount i.e. Rs. 15,00,000/- in cash from unknown sources over and above of the stamp value of the immovable property. Therefore, the assessee paid to the tune of Rs.7,50,000/- (half share) in cash over and above of the stamp value of the property for acquiring her share in the immovable property i.e. Flat-101A at ICON Heights, Moga.”
Aggrieved with the said order, the assessee preferred an appeal before the ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee ex-parte.
In para-4 of its order, the ld. CIT(A) noted that the assessee was given hearing notices u/s 250 of the Act dated 28.12.2023, 04.01.2024 and 12.01.2024 but the assessee did not make any submission inspite of availing sufficient time and opportunities. The Ld. CIT(A) held that the approach of the assessee amply shows that the assessee was not interested in prosecuting the appeal. Thereafter, the Ld. CIT(A) held that having considered entire facts of the case and evidences available on record dismissed the appeal of the assessee.
Aggrieved with the said order, the assessee is in appeal before us by raising the following grounds of appeal:-
That, the orders passed by the Ld. Commissioner of Income Tax (Appeal) vide orders dated 22.01.2024 is illegal, uncalled for and against the law de facts.
That, the Ld. Commissioner of Income Tax (Appeal) has sustained the additions merely on conjectures and surmises without any legal basis.
3. That, the grounds of appeal
raised with Ld. Commissioner of Income Tax (Appeal) is as follows: - (1) That, the order passed by the Assessing Officer vide order dated 06.03.2023 is illegal, uncalled for and against the Law.
4. (ii) That, the Assessing Officer has made additions merely on conjectures and surmises without any legal basis.
5. (iii) That, the Ld. Assessing Officer has failed to appreciate facts of the case that the Assessee has duly provided the source of investment of property Rs. 20.00 Lacs jointly purchased with her husband.
Apart from this, the Assessee has not made payment of Rs. 7,50.000.00 in cash for purchase of above said property(Flat). Therefore, the additions of Rs. 7,50,000.00 as unexplained money to the retuned income of Assessee is wrong and is against the natural law of justice; additions made may please be deleted. 6 (iv) That, the reasons of invoking the section 148A of Income Tax Act, 196l is totally third party based who had made entries in their books/documents according to their requirement and system, due to which additions of Rs. 3.09,90.000.00 has already was made in the case of M/s R.K. City Developers Private Limited, The Ld. Assessing Officer has neither given opportunity t0 cross examination of the third party nor provided copy of documents of third party i.e. M/s R.K City Developers Private Limited on the basis of which department has invoked section 148A of Income Tax Act. 1961 and made proposed additions of Rs. 7,50,000.00 m the show cause notice to the returned income of the Assessee. It is also judicially settled law that no addition can be made in the hands of Assessee on third party information without cross examination.
Therefore, the additions of Rs. 7,50.000.00 as unexplained money to the retuned income of Assessee is wrong and is against the natural law of justice; additions made may please be deleted 8. (v) That, the Assessing Officer has also miserably failed to study the State Bank of India bank statement of the Assessee's husband which explains and proves that the Assessee and her husband is having sufficient cash available at the time of purchase of the immovable property. There is maturity of FDR of Rs. 19,86,535.00 (10,41,106.00 + 9,45,429.00) from Canara Bank which has been credited in the State Bank of India Saving Bank Account of Assessee's husband on 30/08/2017 The Assessee's husband have made cash withdrawals from said Saving account amounting Rs. 19.66.000.00 on dates ranging between 30/08/2017 to 08/09/2017 and provided the complete bank statement of the Assessee's husband to the Assessing Officer. Thus, additions of Rs. 7,50,000.00 as anexplained money to the retuned income of Assessee is wrong and is against the natural law of justice: additions made may please be deleted. 9. (vi) That, NIL Addition has been made in Assessment Order passed for AY -2018-19 on the same grounds in the case of Assessee"s Husband i.e. DR UR Vashishtha.
During the hearing before us, the assessee filed a written submission, which is reproduced as under:-
That, the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has passed Ex-parte order u/s 250(6) of Income Tax Act, 1961 and dismissed the appeal of the appellant within the time period of just 22 days from the date of issue of first notice i.e. 28.12.2023 and last due date to furnish the written submissions i.e. 19.01.2024; the detail of the same is as follows: - Notice u/s 250 of Income Tax Act, 1961 Date of Notice Due date to furnish Time Gap provided to received through E- written submissions furnish the written mail submissions 28.12.2023 03.01.2024 6 04.01.2024 11.01.2024 8 12.01.2024 19.01.2024 8 Total Number of days provided to Appellant to 22 days file written submissions Date of order passed u/s 250 is 22/01/2024
Thus, the order passed u/s 250 of Income Tax Act, 1961 is unwarranted and violating the non-observance of the principal of natural law of justice to the appellant by using misusing the powers provided under the law. The time limit to hear & decide the appeal and pass the order u/s 250 by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi is one year from the end of the financial year in which such appeal is filed before such authority which is also suggestive in nature as the Ld. Commissioner of Income Tax (Appeals) is not bound to pass the order within such prescribed time. This is a total case of biasness, illegality and an intention of failing Faceless Appeal Procedure on the part of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. Therefore, the Appellate Order passed u/s 250(6) is illegal and wrong, it may please be set aside and fresh adjudication with Ld. Commissioner of Income Tax (Appeals) may please be provided so that appeal can be heard on the basis of merits.
2. That, the appellant is a Senior Citizen residing in remote area of Punjab being Ferozpur, who is not updated with the advanced technology i.e. checking and responding to E-mails and is using a simple mobile phone. The appellant has not able to respond the notices issued u/s 250 of Income Tax Act, 1961 by the Honorable Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) on 28.12.2023, 04.01.2024 & 12.01.2024 due to the fact that the appellant has not received any physical notice u/s 250 of Income Tax Act, 1961 as all notices mentioned in the order passed are received through E-mails on his spouse mail-id i.e. drurvashishtha1963@gmail.com who is also not updated with the technology. So, the appellant has not been provided sufficient opportunity of being heard. Thus, the Appellate Order passed u/s 250(6) is illegal and wrong, it may please be set aside and fresh adjudication with Ld. Commissioner of Income Tax (Appeals) may please be provided so that appeal can be heard on the basis of merits. Routinely, the appellant was also duly checking the appellate proceedings through the consultant within range of 25-30 days so that none of the notices gets unattended and proper submissions can be made with the department. As the income tax department, usually issues notice with a time gap of 20-25 days. But this didn't happen in the case of appellant. So, the appellant has not been provided sufficient opportunity of being heard. Thus, the Appellate Order passed u/s 250(6) is illegal and wrong, it may please be set aside and fresh adjudication with Ld. Commissioner of Income Tax (Appeals) may please be provided so that appeal can be heard on the basis of merits. It is also judicially supported: - Mr. Khuriram, Mathura vs Ito.- 1(3)(2), Mathura Date of Judgement 16 Mav, 2024, INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA 131 & 147/Agr./2022 Assessment Years: 2011-12 & 2016-17 We have observed that Ld. CIT (Appeals) has dismissed the appeal of the assessee in limine ex parte without deciding the issues on merits as are required u/s. 250(6) of the Act, wherein Ld. CIT(Appeals) was required to decide the issues on merits in accordance with law, which has not been done in the present case. Under these circumstances, order of Ld. CIT(Appeals) cannot be sustained and is liable to be set aside and the issues are restored to the file of Ld. CIT(Appeals) for fresh adjudication on merits in accordance with law. Ld. CIT(Appeals) shall give proper opportunity of hearing to both the parties in set aside proceedings. In lieu of above submissions and judicial pronouncements, the order passed may please be set aside and fresh adjudication with Ld. Commissioner of Income Tax (Appeals) may please be provided so that appeal can be heard on the basis of merits.”
7. The ld. Sr. DR supported the orders of the authorities below.
We have heard the ld. DR and perused the material available on record.
In ground no.8 raised before us, the assessee submitted that the AO miserably failed to study the State Bank of India bank statement of the assessee’s husband on 30.08.2017 to 08.09.2017, which explained and proved that the assessee and her husband were having sufficient cash balance at the time of the purchase of the immovable property and therefore the said addition was wrongly made by the AO and should be deleted. The said ground no.8 of the assessee is again reproduced as under for ready reference:-
8. (v) That, the Assessing Officer has also miserably failed to study the State Bank of India bank statement of the Assessee's husband which explains and proves that the Assessee and her husband is having sufficient cash available at the time of purchase of the immovable property. There is maturity of FDR of Rs. 19,86,535.00 (10,41,106.00 + 9,45,429.00) from Canara Bank which has been credited in the State Bank of India Saving Bank Account of Assessee's husband on 30/08/2017 The Assessee's husband have made cash withdrawals from said Saving account amounting Rs. 19.66.000.00 on dates ranging between 30/08/2017 to 08/09/2017 and provided the complete bank statement of the Assessee's husband to the Assessing Officer. Thus, additions of Rs. 7,50,000.00 as unexplained money to the retuned income of Assessee is wrong and is against the natural law of justice: additions made may please be deleted. 8.1. Further, in ground no.5 of the appeal, the assessee has denied payment of cash of Rs.7,50,000/- and submitted that her investment along with her husband was only Rs.20 lakhs instead of Rs.35 lakhs determined by the AO.
In ground no.9, it was submitted that on similar facts, no addition was made in the case of her husband Dr.(Sri) UR Vashistha for AY 2018-19.
The above contentions of the assessee alongwith other grounds of appeal and her submission requires factual verification which could not be done by the ld. CIT(A) as the assessee failed to appear before the Ld. CIT(A) and the appeal was dismissed ex-parte. Therefore, in the interest of justice, we set- aside the order of the ld. CIT(A) and restore the matter to his file for fresh adjudication as per law. The assessee is also directed to appear before the Ld. CIT(A) to represent her case and is at liberty to file any submission/evidence in support of her appeal.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced as per Rule 34(4) of the ITAT Rules, 1963 on 25th August, 2025.