Renuka Shetty Vs ITO (ITAT, Bangalore Bench)
Portal Acknowledgement Speaks Louder Than an Ex Parte Assumption—ITAT Restores ₹1.11 Crore Appeal Ignored by NFAC
The controversy
The assessee, Ms. Renuka Shetty of Udupi, was in appeal before the Bangalore ITAT for AY 2015-16 against an order passed by the CIT(A)/NFAC u/s 250.
The assessment involved aggregate additions of ₹1,11,61,525. This comprised an addition of ₹21 lakh as unexplained credits u/s 68 and a further addition of ₹90,61,525 as unexplained investment u/s 69.
The assessee had challenged both additions before the CIT(A). However, the first appeal was dismissed on the ground that she had repeatedly failed to comply with hearing notices and was apparently not interested in prosecuting the appeal.
Before the ITAT, the assessee demonstrated that detailed submissions and a paper book had actually been uploaded on the income-tax portal before the appellate order was passed. The central question therefore became whether an appeal could be dismissed as unprosecuted when the electronic record itself showed compliance.
NFAC recorded repeated non-compliance
The CIT(A) referred to hearing opportunities dated 25 December 2020, 4 October 2024, 23 October 2024 & 11 March 2025.
Since no response was noticed against those communications, the appellate authority concluded that the assessee had “miserably failed” to comply and was unwilling to pursue the appeal. The additions were consequently sustained without examining the detailed factual explanations.
The appellate order was passed on 16 May 2025.
The assessee contended that this conclusion was contrary to the departmental portal. She had uploaded her detailed written submissions together with the complete paper book on 9 May 2025, a week before disposal of the appeal.
The filing was supported by e-proceedings response acknowledgement No. 959949381090525.
₹21 lakh explained through gifts & withdrawals
The addition of ₹21 lakh u/s 68 related to cash deposits or credits that the assessee claimed were sourced from gifts received from her parents and grandparents, besides earlier cash withdrawals.
According to the assessee, the CIT(A) confirmed the addition without applying his mind to the explanation and documents already placed on record.
The merits of this explanation would necessarily require examination of the identities and financial capacity of the donors, their relationship with the assessee, gift confirmations, bank withdrawals or cash availability & the chronological nexus between earlier withdrawals and subsequent deposits.
None of these aspects was considered because the appeal was treated as unprosecuted.
₹90.61 lakh investment also left unexamined
The second and larger addition of ₹90,61,525 u/s 69 concerned allegedly unexplained investments.
The assessee maintained that documentary material explaining the investment had been included in the submissions uploaded before NFAC. Yet the CIT(A) proceeded on the mistaken factual premise that no submission had been made.
As a result, there was no finding on whether the investment belonged to the assessee, whether it was recorded in any books maintained by her, what the actual source was or whether the material furnished reconciled the investment with explained funds.
The assessee characterised the appellate conclusion as perverse because it contradicted the electronic record available within the Department’s own system.
Penalty initiation was also challenged
The assessee had further challenged initiation of penalty proceedings u/s 271(1)(c) r.w.s. 274.
It was argued that the notice dated 28 December 2017 did not clearly specify whether the charge was concealment of income or furnishing inaccurate particulars. According to the assessee, such ambiguity reflected non-application of mind and invalidated initiation of penalty.
This ground, too, was not substantively examined by the CIT(A). The ITAT itself did not pronounce upon the validity or prematurity of the penalty challenge and left the matter open in the restored appellate proceedings.
Revenue fairly conceded the lapse
Before the Tribunal, the Departmental Representative fairly accepted that the submissions dated 9 May 2025 had not been considered by NFAC and that another opportunity could be granted.
The ITAT verified the acknowledgement produced in the paper book and found that the assessee had indeed uploaded detailed submissions and supporting papers before the appellate order was passed.
The foundational assumption behind the ex parte disposal—that nothing had been filed—was therefore factually incorrect.
ITAT’s ruling
In the interest of justice, equity & fair play, the Tribunal restored the entire dispute to the CIT(A)/NFAC for fresh adjudication in accordance with law.
The CIT(A) was directed to grant the assessee a reasonable opportunity of hearing and examine the submissions and evidence on their merits.
The assessee was simultaneously directed to cooperate with the appellate proceedings and furnish all submissions and supporting evidence required to substantiate her claims.
The Tribunal did not delete either the ₹21 lakh addition u/s 68 or the ₹90,61,525 addition u/s 69. It merely set aside the ex parte disposal and restored the assessee’s right to a genuine first appeal.
The appeal was partly allowed for statistical purposes.
Author’s comments
The ruling highlights a recurring weakness in faceless proceedings: the decision-maker may finalise an order without noticing a response already uploaded on the portal.
An assessee should therefore preserve every e-proceedings acknowledgement, filing timestamp & uploaded document list. These become decisive evidence when an order incorrectly records non-compliance.
The CIT(A) is not merely an administrative reviewing authority. Section 250(6) requires a reasoned order identifying the points for determination, the decision and reasons. Even where an assessee remains absent, the appeal must ordinarily be decided on the available record rather than dismissed as though it were a civil suit for default.
Restoration does not validate the explanations. Gifts from relatives and recycling of earlier withdrawals must still be proved through a coherent fund trail. Likewise, the ₹90.61 lakh investment must be reconciled with identified sources.
But an assessee’s evidence can be rejected only after it is read. A portal response uploaded before the order cannot be converted into silence merely because NFAC failed to notice it.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, BANGALORE BENCH
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 16.05.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1076254500(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2015-16.
2. The assessee has raised the following grounds of appeal:-
1. On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has grossly erred in upholding the addition of Rs.1,11,61,525/- as made by the Ld.AO without appreciating the facts and legal submissions placed on record. That the impugned appellate order dated 16.05.2025 as passed u/s 250 of the Act is wholly unlawful, opposed to law and against the principles of natural justice and accordingly the order is liable to be set aside on the grounds of non-consideration of the submissions as made by the appellant on the ITBA portal on 09.05.2025.
2. On the facts and in the circumstance of the case and in law, the Ld.CIT(A), NFAC, Delhi has erred in confirming the addition of Rs.21,00,000/- as unexplained credits U/s.68 of the Act as made by the Ld.AO without application of mind to the facts of the case that the cash deposits are out of the gift received from the parents/grandparents and the cash withdrawals made by the appellant.
3. On the facts and in the circumstance of the case and in law, the Ld.ClT(A), NFAC, Delhi has erred in confirming the addition of Rs.90,61,525/- as unexplained investments u/s. 69 of the Act without properly appreciating the facts and material on record md erroneously concluding that the assessee has failed to make any submission, which is contrary to the record and wholly untenable. The Lad. CIT(A), NFAC, Delhi failed to exercise his appellate jurisdiction judiciously and has rendered a perverse finding, thereby rendering the order unsustainable in law.
4. On the facts and in the circumstances of’ the case and in law, the Ld.ClT(A) has erred in dismissing the ground of initiation of the penalty u/s 271(l)(c) r.w.s 274 of the Act without even addressing the initiation of the penalty. The penalty notice dated 28.12.2017 was issued without application of mind, failing to specify whether the charge was for concealment or furnishing Inaccurate particulars. Such ambiguity renders the initiation invalid and void ab initio. The appellant prays for quashing of the penalty proceedings on this ground.
3. At the outset, the ld. AR of the assessee drew our attention to the ground No.1 as raised by the assessee & vehemently submitted that the ld. CIT(A)/NFAC dismissed the appeal of the assessee vide order dated 16/05/2025 stating that despite availing multiple opportunity of hearing including dated 25/12/2020, 04/10/2024, 23/10/2024 & 11/03/2025, the assessee miserably failed to comply the said notices & this indicates that the assessee is not willing to pursue the appeal and accordingly dismissed the appeal of the assessee. Further, the ld. AR of the assessee drew our attention to the page Nos.44-45 of the Paper book & submitted that in fact the assessee had uploaded her detailed submissions along with the paper book on 09/05/2025 vide e-proceedings Response Acknowledgement No. 959949381090525 which were not considered by the ld. CIT(A)/NFAC before passing the Appellate Order which is a gross violation of principles of natural justice and accordingly prayed that one more opportunity may be granted before the ld. CIT(A)/NFAC in the interest of justice & equity.
4. The ld. DR also fairly conceded that one more opportunity may be granted before the ld. CIT(A)/NFAC as the submissions of the assessee dated 09/05/2025 were not considered by the ld. CIT(A)/NFAC.
5. We have heard the rival submissions & perused the material available on Record. Undisputedly, the ld. CIT(A)/NFAC dismissed the appeal of the assessee by observing that despite availing multiple opportunities of hearing including dated 25/12/2020, 04/10/2024, 23/10/2024 & 11/03/2025, the assessee miserably failed to comply the said notices. However, we take note of the fact that the assessee had uploaded her detailed submissions along with the paper book on 09/05/2025 vide e-proceedings Response Acknowledgement No. 959949381090525 which were not considered by the ld. CIT(A)/NFAC before passing the Appellate Order. This being so, in the interest of justice, equity & fair play and as requested by the ld. AR of the assessee, we deem it fit & proper to remit the entire issues in dispute to the file of the ld. CIT(A)/NFAC to decide afresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to co-operate with the Appellate proceedings & file her submissions along with the evidences in order to substantiate her claim. It is ordered accordingly.
6. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 7th Sept, 2026
