ITAT Grants Fresh Hearing but Imposes Cost as Different Email Does Not Excuse Earlier Non-Compliance

Arvind Mevalal Panchal Vs ITO (ITAT Ahmedabad)

ITAT Remands Section 69A Addition Because Entire Bank Credits Cannot Be Treated as Income Without Examination;  Different Email for Final Notice Not Enough to Explain Prior Defaults, Rules ITAT Ahmedabad;  ₹10,000 Cost Imposed Because Assessee Failed to Comply Despite Multiple Opportunities

The assessee filed his return for AY 2018-19 declaring income of ₹2,98,810 and disclosed turnover of ₹34,33,781 with profit offered under Section 44AD. Subsequently, it was found that cash deposits of ₹1,37,54,800 had been made in the assessee’s bank account, resulting in an alleged unaccounted turnover difference of ₹1,00,55,112. The case was reopened under Section 148, and the assessment was completed under Sections 147 read with 144, determining total income at ₹1,40,53,610 and making an addition of ₹1,37,54,800 as unexplained money under Section 69A.

The assessee’s appeal before the CIT(A) was dismissed. Before the Tribunal, the assessee contended that no effective compliance could be made before the CIT(A) because notices were sent to a different email address than the one mentioned in Form 35. The assessee sought another opportunity to present the case on merits.

The Tribunal noted that the CIT(A) had granted four opportunities for compliance. The assessee sought adjournments on two occasions and failed to comply on the remaining occasions. The Tribunal held that the assessee’s claim of not receiving notices could not be accepted because the assessee was aware of the appellate proceedings and had already sought adjournments earlier. It further observed that the email address used for the final notice was available in the Income Tax Department’s database and had been provided by the assessee himself. The Tribunal held that the assessee could not be absolved of earlier non-compliance merely because the last notice was sent to a different email address.

At the same time, the Tribunal observed that the Assessing Officer’s action of treating the entire credit entries in the bank account as income could not be accepted without further examination. Accordingly, the matter was restored to the file of the CIT(A) for fresh adjudication on merits after giving the assessee another opportunity to explain the source of the credit entries. The Tribunal directed the assessee to produce supporting evidence and imposed a cost of ₹10,000 payable to the Prime Minister National Relief Fund within 15 days. The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 04.11.2025 for the Assessment Year (A.Y.) 2018-19 in the proceeding u/s 147 r.w.s. 144 of the Income Tax Act [hereinafter referred as “The Act”].

2. The brief facts of the case are that the assessee had filed his return of income for A.Y. 2018-19 on 31.08.2018 declaring total income of Rs.2,98,810/-. The assesse had declared turn-over of Rs. 34,33,781/- on which profit was disclosed @ 8% u/s. 44AD of the Act. It subsequently transpired that the assessee had made deposits of Rs.1,37,54,800/- in his bank account and the turn-over to the extent of difference of Rs.1,00,55,112/- was found to be unaccounted. Therefore, the case of the assessee was reopened by issue of notice u/s. 148 of the Act. The assessment was completed u/s. 147 r.w.s. 144 of the Act on 20.03.2024 at total income of Rs.1,40,53,610/-, wherein an addition of Rs.1,37,54,800/- was made on account of unexplained money.

3. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

4. Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in confirming addition of Rs. 1,37,54,800/- as unexplained money u/s. 69A of the Act.

2. Whether, on facts and in circumstances of the case and in law, Ld. AO erred in issuing notice u/s. 148 of the Act.

5. Shri Divyang Shah, the Ld. AR of the assessee submitted that no compliance could be made by the assessee before the Ld. CIT(A) and, therefore, he had dismissed the appeal of the assessee without adjudicating the grounds taken by the assessee on merits. According to the Ld. AR, the non-compliance was due to the fact that the notice of the Ld. CIT(A) was sent on different e-mail Id than the e-mail Id as mentioned in Form No. 35. He, therefore, requested that the assessee may be allowed another opportunity of being heard by setting aside the matter to the file of the Ld. CIT(A).

6. Per Contra, Shri R P Meena, the Ld. SR-DR, submitted that the assessee had made request for adjournment on two occasions before the Ld. CIT(A) and in view of this fact the plea taken by the assessee that the notice of the Ld. CIT(A) was not received cannot be held as correct. He, however, had no objection if the matter was set aside to the file of the Ld. CIT(A) for allowing another opportunity to the assessee.

7. We have considered the rival submissions. It is found that the Ld. CIT(A) had allowed four opportunities to the assessee for compliance on 22.07.2024, 02.06.2025, 26.06.2025 and 18.08.2025. The assessee had made request for adjournment on 22.07.2024 and on 25.06.2025 and there was no compliance on the other two occasions. Considering the fact that the assessee had made request for adjournment on two occasions, the plea taken by the assessee that the notices of the Ld. CIT(A) were not received by him, cannot be held as correct. The assessee was aware of the on-going proceeding before the Ld. CIT(A). Merely because the last notice of the CIT(A) was sent on a different e-mail Id, the assessee cannot be absolved of his earlier lapses. Further, the e-mail on which the last notice was sent by the Ld. CIT(A), was the email-id as available in the database of the Income Tax Department and was provided by the assessee only. On the earlier three occasions also, the assessee had not made any compliance apart from seeking adjournment on two occasions. Before the AO also no compliance was made by the assessee and no materials were brought on record to explain the credits appearing in the bank accounts. We, therefore, deem it proper to impose a cost of Rs.10,000/- on the assesse which should be paid to Prime Minister National Relief Fund within a period of 15 days from the date of receipt of this order.

8. At the same time, the action of the AO in treating the entire credit entries in the bank account as income of the assessee also cannot be held as correct. We, therefore, set aside the matter to the file of Ld. CIT(A) with a direction to allow another opportunity to the assessee to explain the source of credit entries in the bank accounts and thereafter adjudicate the grounds taken by the assessee on merits; subject to payment of cost by the assessee as directed earlier. The assessee is also directed to bring evidences on record to explain the nature of credit entries in the bank accounts and also comply to the direction of Ld. CIT(A). If found necessary, the Ld. CIT(A) may call for remand report of the AO on the additional evidence filed before him and thereafter adjudicate the grounds taken by the assessee as per law.

9. In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the Court on 11/06/2026 at Ahmedabad.