ITAT Restores ₹31.29 Lakh Unexplained Investment Addition; CIT(A) Faulted for Passing Order on Same Day as Response Deadline

Rathinasamy Sivasankaran Vs ITO (ITAT Chennai)

ITAT Restores ₹31.29 Lakh Unexplained Investment Addition; CIT(A) Faulted for Passing Order on Same Day as Response Deadline

The Chennai ITAT set aside an ex parte reassessment involving an addition of ₹31.29 lakh as unexplained investment under section 69 read with section 115BBE, holding that the assessee deserved one more opportunity to present his case, especially when the CIT(A) passed the appellate order on the very date fixed as the deadline for filing submissions.

The assessee, engaged in real estate consultancy and brokerage services, had not filed a return of income for AY 2020-21. Based on information that he had purchased immovable property worth ₹31.29 lakh, the assessment was reopened under section 147. Since the assessee did not respond to the notices issued during reassessment proceedings, the AO completed the assessment ex parte under sections 147 and 144 and treated the entire investment as unexplained under section 69.

Before the Tribunal, the assessee pointed out that while the CIT(A) had fixed the appeal for hearing on 16.01.2026 with a response due date of 23.01.2026, the appellate order itself was passed on 23.01.2026, before the assessee’s submissions could effectively be placed on record. It was also argued that neither the assessment nor the appellate proceedings had examined the matter on the basis of complete facts and supporting evidence.

Accepting the plea, the Tribunal observed that although there had been lapses on the assessee’s part, substantial justice should prevail over technical considerations, particularly where significant additions under section 69 read with section 115BBE are involved. Accordingly, the Tribunal set aside the orders of both the AO and the CIT(A) and remanded the matter to the AO for de novo adjudication after granting adequate opportunity of hearing. The assessee was directed to fully cooperate and furnish all documents and evidence called for during the fresh proceedings.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

The present appeal is filed by the assessee against the order dated 23.01.2026 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “ld.CIT(A)”), dismissing the appeal filed by the assessee against the assessment order dated 11.02.2025 passed u/s.147 r.w.s.144 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), pertaining to Assessment Year (A.Y.) 2020-21.

2. Brief facts of the case are that the assessee is an individual, engaged in the business of real estate consultancy and brokerage services and did not file his return of income for AY 2020-21. As per information available with the department, the AO found that the assessee purchased an immovable property to the tune of Rs.31,29,000/- during the assessment year. The case was re-opened u/s.147 of the Act, accordingly, a notice u/s.148 of the Act and other statutory notices were issued to the assessee by calling for details. Since the assessee chose to be silent and did not respond to the any of the notices, the AO completed the reassessment by passing an exparte order u/s.147 r.w.s 144 of the Act dated 11.02.2025 by making an addition of Rs.31,29,000/- as unexplained investments u/s.69 r.w.s 115BBE of the Act and by arriving total income of Rs.31,29,000/-.

3. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) on 17.03.2025.

4. At the outset, we observed that ld.CIT(A) has provided six opportunities to the assessee to appear for hearings as detailed in paragraph 4 of the ld.CIT(A) order to support the appeal of the assessee. However, the assessee chose to be silent and did not respond to any of the notices and hence, the ld.CIT(A), NFAC dismissed the appeal filed by the assessee by confirming the order of the AO by passing an order dated 23.01.2026. Aggrieved by the order of the ld.CIT(A), the assessee preferred an appeal before us.

5. The ld.AR for the assessee submitted that the appeal was posted for hearing on 16.01.2026 with response due date 23.01.2026, but the ld.CIT(A) has passed an order on 23.01.2026 itself before filing the details by the assessee on 23.01.2026. In view of the above and in the interest of natural justice, the ld.AR prayed to set aside the order of ld.CIT(A) and remit the issues to the file of AO as the assessee had not participated in the assessment proceedings by providing one more opportunity. Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the AO to complete the assessment proceedings effectively.

6. Per contra, the ld.DR submitted that the AO had provided sufficient opportunity to appear before him. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A).

7. We have heard the rival submissions and carefully perused the materials available on record. It is observed that the AO completed the reassessment proceedings by passing an exparte order u/s.147 r.w.s.144 of the Act dated 11.02.2025, on account of non-compliance by the assessee to the statutory notices issued during the course of reassessment proceedings. Thereafter, the assessee carried the matter in appeal before the ld.CIT(A), NFAC. It is further noticed from the records that though the ld.CIT(A) had granted multiple opportunities to the assessee, the appeal was finally posted for hearing on 16.01.2026 with the response due date fixed as 23.01.2026. However, the impugned appellate order itself came to be passed on 23.01.2026. The contention of the ld.AR is that the assessee was in the process of filing the details on the very same date and before the same could be effectively placed on record, the ld.CIT(A) proceeded to dispose of the appeal.

8. Admittedly, the assessment order as well as the appellate order have been passed exparte without the issues being examined on the basis of complete details and supporting evidences from the assessee’s side. Though there has been lapse on the part of the assessee in not properly responding before the lower authorities, at the same time, it is a settled principle of law that substantial justice should prevail over technical considerations and that a litigant should ordinarily be afforded adequate opportunity to present his case, particularly when additions of substantial nature have been made u/s.69 r.w.s.115BBE of the Act.

10. Considering the facts and circumstances of the case, and in the interest of principles of natural justice, we are of the considered opinion that one more opportunity deserves to be granted to the assessee to substantiate his case before the AO. Accordingly, we set aside the orders of the lower authorities and remit the entire issue back to the file of the AO for denovo adjudication. The AO is directed to re-examine the matter afresh in accordance with law after affording sufficient opportunity of being heard to the assessee. The assessee is also directed to extend full cooperation and promptly furnish all details and evidences as may be called for by the AO, failing which the AO shall be at liberty to proceed in accordance with law.

10. In the result, appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 25^th May, 2026 at Chennai.