Virsinh Chandrashekar Jadhavrao Vs ITO (ITAT Pune)
The assessee appealed against the order dated 23.09.2025 passed by the Commissioner of Income Tax (Appeals)/NFAC for AY 2019-20. The assessee had originally filed a return declaring income of ₹34,38,160. Based on departmental information regarding purchase of immovable property valued at ₹40,99,000, the Assessing Officer reopened the assessment under Section 147 by issuing notice under Section 148 on 27.03.2023. As the assessee did not file a return in response to the notice or comply with notices under Section 142(1) and show cause notices, the Assessing Officer completed an ex parte assessment under Sections 147, 144 and 144B, making an addition of ₹40,99,000 under Section 69 read with Section 115BBE. The CIT(A)/NFAC upheld the addition.
Before the Tribunal, the assessee raised several grounds challenging the reopening, jurisdiction, approval under Section 151, reliance on third-party survey material, denial of cross-examination, addition under Section 69, charging of interest, and the validity of reassessment proceedings. The assessee also specifically contended that despite a written request dated 29.08.2024 seeking a hearing through video conferencing, the CIT(A)/NFAC disposed of the appeal without granting such hearing.
The Tribunal examined the CBDT Notification dated 28.12.2021 governing the Faceless Appeal Scheme, particularly paragraph 12 and paragraphs 12.3 and 12.4, which provide that where an appellant requests a personal hearing, the Commissioner (Appeals) shall allow the request and conduct the hearing through video conferencing or video telephony. The Tribunal found it undisputed that the assessee had requested a video conferencing hearing but that the CIT(A)/NFAC passed the order without considering the request.
Relying on the Pune Bench decision in R R Constructions Vs. ITO, which had followed the decisions of the Madras High Court in C. Chellamuthu Vs. Principal Commissioner (NFAC) and the Bombay High Court in Pico Capital (P.) Ltd. Vs. DCIT, the Tribunal held that the matter should be restored for fresh adjudication after granting the requested video conferencing hearing.
Accordingly, the Tribunal set aside the order of the CIT(A)/NFAC and restored the matter to the file of the CIT(A)/NFAC for de novo adjudication after providing the assessee an opportunity of hearing through video conferencing. Ground No. 3 was allowed, while the remaining grounds were not adjudicated because the matter had been remanded. The appeal was partly allowed for statistical purposes.
Cases Discussed
- R R Constructions Vs. ITO, ITA No. 2609/PUN/2025 for AY 2017-18, order dated 18.12.2025
- Masila Vs. CIT, (2025) 176 taxmann.com 280 (Madras)
- Pico Capital (P.) Ltd. Vs. DCIT (Bombay High Court), (2025) 170 taxmann.com 638 (Bombay)
- Seema Srivastava Vs. ITO, ITA No. 715/PAT/2024 for AY 2017-18, order dated 06.06.2025
- C. Chellamuthu Vs. Principal Commissioner (NFAC) (Madras High Court), (2024) 158 taxmann.com 132
FULL TEXT OF THE ORDER OF ITAT PUNE
The appeal filed by the assessee is directed against the order dated 23.09.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2019-20.
2. Briefly stated, the facts of the case are that the assessee is an individual and filed his return of income for AY 2019-20 u/s 139 of the Income Tax Act, 1961 (the “Act”) declaring income of Rs.34,38,160/-. Based on the information available with the Department, the Ld. Assessing Officer (“AO”) found that the assessee had entered into the transaction of purchase of immovable property amounting to Rs.40,99,000/- during the relevant AY 2019-20 under consideration. However, the said transaction has not been declared by the assessee in its return of income. The case of the assessee was thus reopened u/s 147 of the Act by issue of notice u/s 148 on 27.03.2023. The assessee did not file his return of income in response to the notice u/s 148 of the Act. Notices u/s 142(1) as well as the show cause letters also remained un-complied with by the assessee. The Ld. AO therefore proceeded to complete the assessment ex-parte by making an addition of Rs.40,99,000/- to the income of the assessee u/s 69 r.w.s. 115BBE of the Act vide his order dated 29.12.2023 passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act.
3. Aggrieved, the assessee filed an appeal before the Ld. CIT(A)/NFAC who dismissed the appeal of the assessee and endorsed the findings of the Ld. AO by observing as under :
“5.6 From the proper appreciation and evaluation of the findings of the AO with regards to addition and contention of the appellant in his reply/submission furnished during the appellate proceedings and upon careful examination of the facts and evidence on record. The addition of Rs. 40,99,000 as unexplained investment under sections 69 and 115BBE by the Assessing Officer is fully justified based on cogent evidence and settled legal principles. The AO relied on credible material unearthed during a survey of third parties, where loose papers indicating payments aggregating Rs. 81,00,000 linked to the assessee for immovable property purchase were found. Despite registered sale deed recording only Rs. 40,00,000, the appellant failed to satisfactorily explain or account for the differential amount, which prima facie indicated suppression of income. This non-explanation of the source is a classic instance attracting addition under section 69 as held in Malabar Industrial Co. Ltd. v. CIT (1980) 124 ITR 477 (SC), where the Supreme Court held that unexplained money or investment is to be added to income unless adequately explained. Further, the Supreme Court in K.N.Verma v. CIT 124 ITR 166 underscored that the burden lies on the assessee to explain the source of investment, failing which addition under unexplained investment provisions is warranted. The loose papers found during the survey, though unsanctioned by the appellant, are admissible corroborative evidence in tax proceedings, especially where the appellant has failed to cooperate or furnish accounts, as established in CIT v. Kelvinator of India Ltd. (1981) 128 ITR 303 (SC). The AO need not always produce signed documents where documentary evidence prima facie substantiates the escape of income. The quantum of material relied upon here surpasses mere suspicion, affirming the validity of AO’s reliance as held in ITO v. South India Photos & Prints 87 ITR 488 (SC) and Union of India v. Azadi Bachao Andolan (2003) 263 ITR 706 (SC). Moreover, the contention that the property was co-owned does not exonerate the appellant from explaining his share of investment clearly. Where the investment’s entire sum cannot be satisfactorily explained, the entire amount can be treated as unexplained income. This principle was upheld in Mohanlal Jatia (HUF) v. CIT (2008) 304 ITR 43 (SC) wherein the Supreme Court reiterated that the onus is on the assessee to satisfactorily explain the source of investment irrespective of co-owners. The provisions of section 115BBE further penalize such unexplained investments to curb tax evasions, as also reiterated by the judiciary in recent judgments. The appellant’s failure to file returns despite notices and failure to provide proper accounts or evidence is indicative of concealment and warrants addition and penalty, as upheld in CIT v. Raj K. Lakhotia (1998) 233 ITR 393 (SC). In sum, the AO’s addition is grounded on reliable material, correct application of legal principles, and the assessee’s failure to discharge the onus of explanation. The addition of Rs. 40,99,000 as unexplained investment is fully sustainable in law and merits confirmation. This finding aligns with the concrete judicial precedents safeguarding revenue’s power to tax escaped income, thereby protecting the fiscal fabric from erosion due to concealment. The addition of Rs.40,99,000 as unexplained investment by the Assessing Officer under sections 69 and 115BBE is fully justified based on substantial material and settled legal principles. The AO relied on credible evidence derived from a survey conducted on third parties, where loose papers indicating payments aggregating Rs. 81,00,000 linked to the appellant for property purchase were found. Although the registered sale deed disclosed only Rs. 40,00,000, the appellant has failed to satisfactorily explain this discrepancy or establish the source, resulting in unexplained investment. Thus, the addition by the AO is lawfully sustainable, based on cogent facts and authoritative judicial precedents protecting revenue’s mandate to tax concealed income. Therefore, these grounds of appeal are hereby dismissed.”
4. Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal :
“(1) The AO failed to issue mandatory notice u/s 143(2) of Act, as is evident from the assessment records. This renders the assessment void.
2. AO and CIT(A) addition based on loose papers bundle without incriminating evidence or statutory compliance under Section 65B of the Indian Evidence Act is bad in law. No opportunity of cross-examination of the person in whose premises loose papers were found was provided.
3. That the Ld. CIT (A) erred in disposing of the appeal without granting any effective opportunity of hearing through Video Conferencing despite specific written request made on 29.08.2024. Mere notices seeking written submissions cannot be equated with an opportunity of hearing.
4. For that National Faceless Appeal Centre (in short “CIT (A)”) and Assessment unit/JAO (in short “AO”) erred in law and on facts in reopening the assessment under Section 147 of the Income Tax Act, 1961, without any cogent, specific, valid satisfaction or credible material or tangible material specific against the appellant. Thus violating the statutory preconditions under Section 147 read with Sections 148 of Act. That no incriminating material or document relating to the Appellant was found during the survey action in case of Shreepad Developers on 30/01/2020 and hence issuance of notice u/s 148 is bad in law.
5. AO & CIT(A) has erred in law and on facts that sanction granted by the Ld. PCIT u/s 151 of Act is mechanical and without independent application of mind, merely stating “Yes, I am satisfied/approved that it is a fit case. That the approval granted under Section 151 is mechanical and without application of mind, as it fails to demonstrate any live nexus between the seized material and alleged escapement of income and thus violates the ratio laid down in various decisions including PCIT v. S.G. Asia Holdings (India) Pvt. Ltd. and PCIT v. Pioneer Town Planners (P.) Ltd [2024] 160 com 652 (Delhi).
6. The AO/CIT(A) erred in making the addition u/s 69 of the Act solely on presumptions and third-party loose papers, completely disregarding the fact that the property was jointly purchased by four co-owners, that the registered sale deed and bank statements clearly evidence cheque payments corresponding to the appellant’s share, that there was no cash movement whatsoever, and that Form 26AS itself reflects the appellant’s correct share of the purchase value as reported by the Joint Sub-Registrar, Haveli.
7. The AO has reopened the case on the basis of information received from Central Circle without conducting any enquiry u/s 148A(a) of Act, thereby acting on borrowed satisfaction, contrary to law laid down. That the reassessment proceedings are based on borrowed satisfaction derived from survey operations conducted on unrelated entities, without any direct link to the appellant.
8. That the reliance placed on survey operation on M/s Shreepad Developers without giving opportunity of cross-examination to the appellant violates principles of natural justice. No specific document, material, or statement mentioning the name of the appellant has been brought on record or shared before initiating reassessment.
9. The AO failed to supply the alleged survey evidence (loose papers) with the 148A(b) notice, in violation of Section 148A(b), CBDT Instructions, and principles natural justice. The loose sheets were supplied only at 148A(d) stage, after the decision to reopen had already been made.
10. That the reassessment notice dated 27.03.2023 was illegally issued by the Jurisdictional AO in violation of CBDT Notification dated 29.03.2022, mandating reassessment through faceless regime under Section 144B. Hence, the notice is null and void.
11. That having regard to the facts and circumstances of the case, Ld. A.O. & CIT(A) erred in law and on facts in charging interest u/s 234B and interest u/s 234C of the Income Tax Act, 1961.
12. For that your Appellant assessee craves leave to add or alter and modify the grounds of appeal before or at the time of appeal hearing.”
5. The Ld. AR, at the outset, submitted that the assessee had requested for an opportunity of hearing through Video conferencing before the Ld. CIT(A)/NFAC vide his written request letter dated 29.08.2024. However, the Ld. CIT(A)/NFAC has passed the impugned order without considering the said request of the assessee. Relying on the CBDT Circular No. 139/2021/F. No. 370142/66/2021-TPL dated 28.12.2021, the Ld. AR submitted that the Ld. CIT(A)/NFAC ought to have granted an opportunity of hearing through Video Conferencing to the assessee before deciding the appeal. Further, placing reliance on the following judicial precedents the Ld. AR submitted that the legal position on this issue is no more res-integra and the Courts/Tribunals (including the Co-ordinate Bench of the Pune Tribunal) have taken a view in favour of the assessee wherein the impugned orders have been set aside and the matter has been remanded back to the file of the Ld. CIT(A)/NFAC for de-novo adjudication.
i. R R Constructions Vs. ITO in ITA No. 2609/PUN/2025 for AY 201718, order dated 18.12.2025;
ii. Masila Vs. CIT (2025) 176 taxmann.com 280 (Madras) and
iii. Seema Srivastava Vs. ITO in ITA No. 715/PAT/2024 for AY 2017-18, order dated 06.06.2025.
6. The Ld. DR relied on the order of the Ld. CIT(A)/NFAC.
7. We have heard the Ld. Representatives of the parties and perused the material on record. We have also perused the paper book filed by the Ld. AR on behalf of the assessee as well as various judicial precedents cited before us. We have perused the CBDT Notification Faceless Assessment Scheme dated 28.12.2021 (supra). Para 12 of the said CBDT Notification reads as under :
“12. No personal appearance in the Centres or Units.––(1) A person shall not be required to appear either personally or through authorised representative in connection with any proceedings under this Scheme before the income-tax authority at the National Faceless Appeal Centre or appeal unit set up under this Scheme.
2. The appellant or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the Commissioner (Appeals), through the National Faceless Appeal Centre, under this Scheme.
3. The concerned Commissioner (Appeals) shall allow the request for personal hearing and communicate the date and time of hearing to the appellant through the National Faceless Appeal Centre.
4. Such hearing shall be conducted through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.
5. Any examination or recording of the statement of the appellant or any other person shall be conducted by Commissioner (Appeals) under this Scheme, exclusively through video conferencing or video telephony, including use of any telecommunication application software which supports video conferencing or video telephony, to the extent technologically feasible, in accordance with the procedure laid down by the Board.
6. The Board shall establish suitable facilities for video conferencing or video telephony including telecommunication application software which supports video conferencing or video telephony at such locations as may be necessary, so as to ensure that the appellant, or his authorised representative, or any other person is not denied the benefit of this Scheme merely on the ground that such appellant or his authorised representative, or any other person does not have access to video conferencing or video telephony at his end.”
8. Paras 12.3 and 12.4 of the above CBDT Notification states that the Ld. CIT(A)/NFAC shall grant personal hearing if the assessee/authorized representative has requested for the same and such hearing shall be conducted through Video Conferencing or Video telephony. In the present case it is undisputed fact that the assessee had requested for hearing through Video Conferencing on 29.08.2024 but the said request of the assessee has not been considered by the Ld. CIT(A)/NFAC and he proceeded to pass the impugned order on 23.09.2025 without granting any further opportunity of hearing to the assessee.
9. We find that the Co-ordinate Bench of the Pune Tribunal in the case of R R Constructions (supra) vide its order dated 18.12.2025, in turn relying on the decision of the Hon’ble Madras High Court in the case of C. Chellamuthu Vs. Principal Commissioner (NFAC) (2024) 158 com 132 and the Hon’ble Bombay High Court in the case of Pico Capital (P.) Ltd. Vs. DCIT (2025) 170 taxmann.com 638 (Bombay), has set aside the matter to the Ld. CIT(A)/NFAC for de-novo adjudication since the Ld. CIT(A)/NFAC had not granted opportunity of Video Conferencing as requested by the assessee. The relevant observations and findings of the Tribunal is reproduced below :
“3. We have heard ld.Departmental Representative(ld.DR) for the Revenue. It is observed that Assessee had requested for Video Conference Hearing before the ld.CIT(A). However, it seems from the order of ld.CIT(A) that no opportunity of video conference was provided by ld.CIT(A).
4. We would like to refer to the Hon’ble Madras High Court’s decision in the case of C. Chellamuthu Vs. Principal Commissioner[NFAC] [2024] 158 taxmann.com 132 wherein the Hon’ble Madras High Court held that providing opportunity through video conferencing once asked by assessee is mandatory. The relevant portion of the Hon’ble Madras High Court observations are reproduced as under :
“In the said Email communication is clearly mentioned that since it is high pitch assessment the petitioner has sought video conference hearing. Therefore this Court is of the considered opinion that it is clearly violation of principles of natural justice.”
4.1 Similarly, Hon’ble Bombay High Court in the case of Pico Capital (P.) Ltd., Vs. DCIT [2025] 170 taxmann.com 638 (Bombay) dated 07.01.2025 has held as under :
“9. In the additional affidavit filed by the Respondents, the contentions based on the failure of natural justice are dealt with in paragraph 6(e), which reads as follows: –
“6(e). In the March ending time, the assessee demanded hearing through video conferencing. In this regard, it is to submit that the hearing through video conferencing is available when the assessment proceedings are pending before the faceless assessing officer (FAO). In this case, as already mentioned, the proceedings have been transferred from faceless assessing officer (FAO) to the Jurisdictional Assessing Officer (JAO) on 20.02.2024. Hence, the facility of video conferencing was not available and the assessee was at liberty to approach the office of the Jurisdictional Assessing Officer (JAO) if personal hearing was required because the assessee has already been informed about the change of proceedings from FAO to JAO.”
10. Mr. Gandhi has invited our attention to Circular No.F.No.225/97/2021/ITA-II dated 6 September 2021 in the context of approval for the transfer of assessments/penalties proceedings to jurisdictional Assessing Officers. This Circular provides that the request for personal hearings shall generally be allowed to the assessee with the approval of the Range Head, mainly after the assessee has filed a written submission to the show cause notice. Personal hearings may be allowed for the assessee, preferably through video conference. If Video Conference is not technically feasible, personal hearings may be conducted in a designated area in the Income-Tax Office. The hearing proceedings may be recorded. Given this Circular, the defence raised, or the justification offered in paragraph 6(e) of the Respondents’ affidavit cannot be accepted.
11. In this case, though the assessment order was appealable, we have entertained this petition because a case of complete failure of natural justice was made out. No personal hearing was granted to the Petitioner, and such denial was not for valid reasons.
12. On the above short ground, we set aside the impugned assessment order dated 26 March 2024 and remand the matter to the concerned Respondent to dispose of the show cause notice issued to the Petitioner following the law and after granting the Petitioner a personal hearing. The concerned Respondent should complete the assessment proceedings within three months of uploading this order on this Court’s website. Now that we have set aside the impugned assessment order dated 26 March 2024, the consequential demand notice and penalty notice based on this order are also set aside. However, all contentions of all parties are left open for consideration of the Assessing Officer in the first instance.”
5. Respectfully following the Hon’ble High Court, since the ld.CIT(A) has not granted opportunity of video conference as requested by assessee, the order of ld.CIT(A) is set-aside to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall provide assessee opportunity of video conference. Accordingly, ground no.1 raised by the assessee is allowed.”
10. In view of the CBDT Notification and legal position enumerated above, we set aside the order of the Ld.CIT(A)/NFAC and restore the matter back to his file for de-novo adjudication after granting an opportunity through Video Conferencing to the assessee. Ground No. 3 raised by the assessee is accordingly allowed. Since, we have set aside the order of the Ld. CIT(A)/NFAC for de-novo adjudication, the other grounds raised by the assessee are not adjudicated.
11. In the result, the appeal of assessee is partly allowed for statistical purpose.
Order pronounced in the open court on 26th March, 2026.
