Ramchandra Dhanuskar Vs ITO (ITAT Nagpur)
Material Evidence Explaining Investment Admitted Under Rule 29; Section 69A Addition Restored for Fresh Examination
Background of the Case
The appeal concerned an addition of ₹10 lakh under Section 69A of the Income-tax Act, 1961, arising from an investment with Wasankar Wealth Management Private Limited. The Department received information that the assessee had invested ₹10 lakh with the company during Financial Year 2012-13 but had not filed a return of income for Assessment Year 2013-14. Based on this information, the Assessing Officer initiated reassessment proceedings and issued a notice under Section 148. Further notices under Section 142(1) were issued, calling upon the assessee to explain the investment and its source. However, there was no compliance. The dispute ultimately reached the Tribunal through Ramchandra Dhanuskar, the legal heir of Late Jyoti Dhanuskar.
Ex Parte Assessment Under Sections 147 and 144
The Assessing Officer issued notices and a show-cause communication seeking the assessee’s explanation. Since no response was received, he proceeded on the information available on record. Invoking the best-judgment provisions of Section 144, the Assessing Officer treated the investment amount as unexplained money under Section 69A. Total income was assessed at ₹10 lakh through an order dated 23 March 2022, passed under Section 147 read with Section 144. The addition therefore arose in circumstances where the assessee’s explanation and supporting evidence concerning the investment source had not been placed before the Assessing Officer.
CIT(A) Confirms the Addition
The assessee challenged the assessment before the CIT(A)/NFAC. The first appellate authority considered the grounds of appeal, statement of facts and findings recorded in the assessment order. Hearing notices were also issued on various dates. Nevertheless, the assessee did not respond to those notices. The CIT(A) consequently proceeded ex parte, confirmed the Assessing Officer’s action and dismissed the appeal on the available record. The assessee then approached the Tribunal, seeking an opportunity to substantiate the source of the investment.
Delay in Tribunal Appeal Condoned
There was a delay in filing the appeal before the Tribunal. The assessee submitted an affidavit explaining the circumstances and sought condonation. After considering the facts and information stated in the affidavit, the Tribunal accepted that reasonable cause had been explained. The Departmental Representative had no specific objection. The delay was accordingly condoned, and the appeal was admitted. The order does not specify the number of days involved.
Additional Evidence Filed Under Rule 29
Before the Tribunal, the authorised representative submitted that the earlier non-compliance was neither deliberate nor intentional, but arose from circumstances beyond the assessee’s control. It was also submitted that the assessee had a good case on merits. Significantly, an application was filed under Rule 29 of the Income-tax (Appellate Tribunal) Rules, seeking admission of additional evidence. The supporting material, contained at pages 2 to 37 of the paper book, was presented as substantiating the source of the investment. The Departmental Representative supported the CIT(A)’s order.
Tribunal Finds the Evidence Material to Adjudication
The Tribunal acknowledged that the CIT(A) had issued notices and provided opportunities which had not been utilised. However, it also considered the explanation that non-compliance was attributable to circumstances beyond the assessee’s control. It observed that possible reasons for non-appearance could not be ruled out. More importantly, the Tribunal examined the relevance of the additional evidence to the disputed addition. It found that the documents concerning the investment source played a vital role in deciding the issue. In those circumstances, the assessee should not suffer merely because material information had not been furnished earlier. The Tribunal therefore admitted the additional evidence under Rule 29.
Matter Restored to the Assessing Officer
After admitting the evidence, the Tribunal did not itself determine whether the investment source stood satisfactorily explained. Instead, it set aside the CIT(A)’s order and restored the disputed issue, together with the additional evidence, to the Assessing Officer. The Assessing Officer was directed to verify the evidence and adjudicate the matter afresh on merits. An adequate opportunity of hearing was to be provided to the assessee, who was correspondingly required to cooperate by furnishing the necessary information. The concluding paragraph records that the appeal was partly allowed for statistical purposes.
Author’s Comments
The ruling illustrates the importance of distinguishing admission of evidence from acceptance of the explanation contained in that evidence. The Tribunal accepted that the documents deserved consideration because they were material to determining the source of the investment. It did not conclusively hold that the source was proved or that Section 69A was inapplicable.
The ₹10 lakh addition was not finally deleted on merits. Its sustainability must now be examined afresh after verification of the newly admitted material.
The decision also does not establish an unrestricted right to produce evidence at any stage. Relief was granted on the circumstances of this case, particularly the Tribunal’s finding that the documents were important to a proper decision and warranted examination in the interests of justice.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT NAGPUR
The assessee has filed the appeal against the ex-parte order of CIT(A)/NFAC Delhi passed u/sec147 r.w.s144 of the Act sustaining the addition u/sec69A of the Act made by the Assessing Officer .
2. At the time of hearing, the Ld.AR submitted that there is a delay in filing the appeal before Hon’ble Tribunal and the assessee has filed the affidavit of the assessee for condonation of delay. On consideration of facts and information mentioned in the affidavit, there is a reasonable cause explained and the Ld. DR. has no specific objections. Accordingly, the delay is condoned and the appeal is admitted.
3. The brief facts of the case are that income tax department has received information that the assessee has made investments with M/s.Wasankar Wealth Management Pvt. Ltd. valu of Rs. 10,00,000/- in the F.Y.2012-13 and the assessee has not filed the return of income for A.Y.2013-14.The Assessing Officer (A.O) has reason to believe that the income has escaped assessment and followed the due process of law and issued notice u/sec. 148 of the Act. Further notice u/sec 142(1) of the Act was issued from time to time calling for explanations in respect of investments and there was no compliance. The A.O has also issued show cause and there was no response from the assessee. The A.O find that the assessee has not made submissions on the disputed issues in spite of providing adequate opportunities of hearing and finally the A.O considering the information available on record has invoked the provisions of section 144 of the Act and made addition of unexplained money under Section 69A of the Act and assessed the total income of Rs.10,00,000/- and passed the order u/sec147 r.w.s 144 of the Act dated 23.03.2022.
4. Aggrieved by the order, the assessee has filed an appeal with the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statements of facts and finding of the AO and issued notice of hearings and since there was no compliance by the assessee to the notices, therefore, CIT(A) considering information on record has confirmed the action of the Assessing officer and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon’ble Tribunal.
5. At the time of hearing, the Ld. A.R has restricted his submissions that the CIT(A) has erred in confirming the action of the AO overlooking the information of the assessment proceedings. The Ld.AR mentioned that non-compliance of notices before the CIT(A) is not a wanton act but the circumstances beyond the control of the assessee. Further, Ld A.R. submitted that the assessee has a good case on merits and has filed an application for admission of additional evidence under Rule 29 Of ITAT rules and substantiated the submissions with paper book. Per contra, the Ld. DR supported the order of the CIT(A).
6. Heard the rival submissions and perused the material on record. Prima facie, the CIT(A) has passed the order, considering the facts that there is no compliance in spite of providing adequate opportunity of hearing and notices were issued. Therefore, CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the AO. Whereas the CIT(A) has issued notices of hearing on various dates referred at Para 4 of the CIT(A) order but there was no response and thus, the CIT(A) came to the conclusion that the assessee is not interested and decided the appeal based on the information available on record. The Ld.AR mentioned that the non- compliance to the notices in the appellate proceedings was neither deliberate nor intentional, but circumstances beyond the control of the assessee. Whereas the assessee has raised grounds of appeal challenging the addition u/sec69A of the Act made by the AO and there could be various reasons for non-appearance which cannot be overruled. Further the assessee has filed an application for admission of addition evidences under Rule 29 of the ITAT Rules placed at page 2 to 37 of the paper book substantiating the sources of investment and the evidences play a very important role in decision making in the adjudicating proceedings, Therefore considering the facts, circumstances and additional evidences, the assessee should not suffer for non filing of material information, as the evidences play a vital role in decision making and admit the additional evidence. Accordingly, set-aside the order of the CIT(A) and to meet the ends of justice, restore the disputed issue along with the evidences to the file of the assessing officer to verify and adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. And, the grounds of appeal of the assessee are allowed for statistical purposes.
7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 12th October, 2026.
