- Madhubhai Shambhubhai Sojitra Vs ITO (ITAT Surat)
- ₹3.12 Crore Financial Transactions Trigger Reassessment
- AO Made ₹3.12 Crore Addition Under Section 69A
- Assessee Challenged Reassessment and Section 69A Addition Before ITAT
- Assessee Sought Final Opportunity to Explain Cheque Discounting Business
- ITAT Grants One More Opportunity on Natural Justice Grounds
- Restoration Subject to ₹10,000 Cost
Madhubhai Shambhubhai Sojitra Vs ITO (ITAT Surat)
₹3.12 Crore Financial Transactions Trigger Reassessment
The appeal before the ITAT Surat arose from the ex-parte appellate order dated 03.09.2025 passed by the CIT(A), National Faceless Appeal Centre, Delhi, relating to Assessment Year 2017-18. The assessee, an individual, had not filed his return of income under Section 139(1) of the Income-tax Act, 1961.
The Income Tax Department received information that the assessee had made cash deposits of Rs.3,07,54,760/- in his bank account maintained with ICICI Bank and cash withdrawals of Rs.4,70,804/-, taking the total financial transactions to Rs.3,12,25,564/-.
Since no return had been filed, reassessment proceedings were initiated. According to the order, the assessee failed to respond, resulting in an order under Section 148A(d) and issuance of notice under Section 148 on 28.03.2024. Despite various notices under Section 142(1), the assessee did not furnish a reply.
AO Made ₹3.12 Crore Addition Under Section 69A
The Assessing Officer consequently completed the assessment ex parte under Section 147 read with Section 144 and treated Rs.3,12,25,564/- as unexplained income under Section 69A of the Income-tax Act, subject to taxation under Section 115BBE.
The assessee challenged the reassessment before the CIT(A). Three opportunities of hearing were given on 05.01.2025, 20.05.2025 and 08.08.2025. Although the assessee sought two adjournments, no written submissions were filed. The CIT(A), therefore, passed an ex-parte appellate order confirming the demand raised by the Assessing Officer.
Assessee Challenged Reassessment and Section 69A Addition Before ITAT
Before the Tribunal, the assessee raised both jurisdictional and merits-based grounds. One of the principal technical objections was that notices under Sections 148A(b), 148A(d) and 148 had been issued by the Jurisdictional Assessing Officer (JAO) and not by the Faceless Assessing Officer (FAO), which the assessee contended was contrary to Section 151A.
The assessee also challenged the addition of Rs.3,12,25,564/- under Sections 69A read with 115BBE. It was contended that the cash withdrawals and deposits represented transactions undertaken in furtherance of a cheque discounting business and that the lower authorities had not appreciated the books of account, statements and explanations.
Further grounds alleged failure to record reasons in the statutory form and failure to obtain prior approval of the higher authority under Section 151.
These were grounds raised by the assessee; the Tribunal did not adjudicate their merits while disposing of the appeal.
Assessee Sought Final Opportunity to Explain Cheque Discounting Business
At the hearing, counsel for the assessee requested one more opportunity to place the books of account and other material before the authorities and explain the cheque discounting business allegedly carried on by the assessee.
It was submitted that, if such an opportunity was granted, the assessee could explain the transactions and the addition made by the Assessing Officer could consequently be modified or cancelled. The assessee also pressed technical grounds concerning reopening of the assessment.
The Revenue supported the orders of the lower authorities and strongly opposed the assessee’s request. The Department further requested that heavy costs be imposed if the matter was restored to the Assessing Officer.
ITAT Grants One More Opportunity on Natural Justice Grounds
The Tribunal noted that both the assessment proceedings before the Assessing Officer and the appellate proceedings before the CIT(A) had been concluded ex parte. It also took note of the assessee’s undertaking to file all necessary details, material and records before the Jurisdictional Assessing Officer.
Considering these circumstances and the principles of natural justice, the Tribunal considered it appropriate to provide the assessee one more opportunity of hearing.
The Tribunal accordingly set aside the orders of the lower authorities and directed the Jurisdictional Assessing Officer to provide another opportunity to the assessee.
Restoration Subject to ₹10,000 Cost
The relief was, however, made conditional upon the assessee paying a cost of Rs.10,000/- to the Income Tax Department within two weeks from receipt of the Tribunal’s order and producing the receipt for such payment.
The Tribunal specifically stated that the assessee should make use of this final opportunity and produce all relevant materials, evidence and documents before the Jurisdictional Assessing Officer, who would thereafter pass the assessment order in accordance with law.
Thus, the ITAT did not delete the Rs.3,12,25,564/- addition under Section 69A on merits. Nor did it decide the assessee’s jurisdictional objections concerning Sections 148, 151 or 151A. Instead, the lower authorities’ orders were set aside and the assessment proceedings were restored to the Jurisdictional Assessing Officer for fresh consideration after providing one more opportunity to the assessee.
The appeal was treated as allowed for statistical purposes. The order was pronounced on 06.07.2026.
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal is filed by the Assessee as against the ex-parte appellate order dated 03.09.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the re-assessment order passed under section 147 r.w.s. 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
2. Brief facts of the case are, the assessee is an individual has not filed return of income u/s 139(1) of the Act for the AY 2017-18. Information received by the Department that the assessee made cash deposit of Rs.3,07,54,760/- in his Bank account maintained with ICICI Bank and also made cash withdrawal of Rs.4,70,804/- and the total financial transaction was Rs.3,12,25,564/-. Since the assessee has not filed return of income, the assessment was reopened by issuing notice u/s. 148A of the Act. The assessee failed to response, which has resulted in passing order u/s 148A(d) of the Act and issued notice u/s 148 of the Act on 28.03.2024. Inspite of various notices issued u/s 142(1) of the Act, the assessee failed to make reply, which has resulted in passing ex-parte assessment order and making addition of Rs.3,12,25,564/- as unexplained income u/s. 69A of the Act and subject to taxation u/s. 115BBE of the Act.
3. Aggrieved against the re-assessment order, assessee filed appeal before ld. CIT(A), who has given three opportunities of hearing on 05.01.2025, 20.05.2025 and 08.08.2025. The assessee asked for two adjournments, however, not filed any written submission, which has resulted in passing ex-parte appellate order confirming the demand raised by the AO.
4. Aggrieved against the appellate order, assessee is in appeal before us raising following grounds of appeal:-
1 On the facts and in the circumstances of the case as well in law, CIT(A) has erred in confirming the re-assessment proceedings completed by JAO u/s 143(3) r.w.s 147 of the Act, where the notice u/s 148A(b)/148A(d) and 148 of the Act were issued by the Jurisdictional Assessing Officer (JAO) and not by the Faceless Assessing officer (FAO), as was required by the provisions of Section 151A of the Act, proceedings initiated u/s 148 of the Act is not sustainable and the order passed u/s 143(3) r.w.s 147 of the Act is bad-in-law and hence, liable to be quashed.
2. On the facts and in the circumstances of the case as well as in law, both the lower authorities has erred in passing ex parte order passed without considering the details on records filed by the appellant, which is in pure violation of the principles of natural justice, without jurisdiction, bad in law, illegal, invalid, arbitrary, void ab initio and hence liable to be quashed.
3. On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC has erred in confirming the order passed by the ITO, Ward 2(3)(1), Surat (for the sake of brevity The JAO) u/s 147 r.w.s. 144 of the Act by making addition of Rs. 3,12,25,564/- u/s 69A r.w.s. 115BBE of the Act, purely on misleading, misconceptual, arbitrary and perverse observations and hence, being without jurisdiction, bad in law, invalid, illegal, unwarranted of facts, is liable to be quashed or annulled in toto.
4. On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously erred in completing the re-assessment proceedings applying the provisions of 69A of the Act treating cash withdrawals and cash deposits made during the year under assessment for the furtherance of cheque discounting business without appreciating the books of accounts, statement and explanation filed in response to the notices issued and hence, the addition made for the alleged unexplained money u/s 69A of the Act, in the absence of any evidences/materials contrary to the detailed explanations substantiated by cogent, credible and corroborative evidences, being without jurisdiction, bad in law, baseless, imaginary, arbitrary, conjectural, perverse, and purely on guess work and surmises, deserves to be deleted.
5. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) NFAC, erred in overlooking the fact that the AO failed in recording the reasons in statutory form and hence, the entire re-assessment proceedings is bad in law and therefore, deserves to be quashed.
6. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) NFAC, erred in overlooking the fact that the AO failed in obtaining the prior approval of Higher Authority u/s 151 of the Act and hence, the entire reassessment proceedings is bad in law and therefore, deserves to be quashed.
7. Your appellant further reserves his rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.
5. Ld. Counsel appearing for the assessee submitted that, if one more opportunity be given to the assessee so that he can explain the books of accounts and the cheque discounting business carried out by the assessee, thereby, the entire addition made by the AO liable to be modified or cancelled. The assessee also raised technical grounds on reopening of the assessment.
6. Per contra, Ld. CIT DR appearing for the Revenue, supported the orders passed by the Lower Authorities and strongly opposed the contention of the assessee and requested to impose heavy cost on the assessee, in the event of setting aside the matter back to the file of AO.
7. We have heard rival submissions and perused the materials available on record. It is undisputed fact that it is an ex-parte assessment before the Ld. AO as well as before the Appellate Authority, as the assessee only sought for adjournment. Now, the assessee undertakes to file all necessary details, materials and records before the Ld. JAO. In the interest of Principle of Natural Justice, we deem it fit to impose a cost of Rs.10,000/- payable by the assessee to the Income Tax Department within two weeks of receipt of the copy of this order and production on receipt for Rs.10,000/- the Lower Authority orders are hereby set aside and direct the Ld. Jurisdictional Assessing Officer to give one more opportunity of hearing to the assessee. Needless to say, the assessee should make use of this final opportunity and produce all relevant materials, evidences and documents for passing assessment order in accordance with provisions of law.
8. In the result, the appeal filed by the Assessee is treated as allowed for statistical purposes.
Order is pronounced under provision of Rule 34[4] of ITAT Rules, 1963 on 06-07-2026.
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal is filed by the Assessee as against the ex-parte appellate order dated 03.09.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the re-assessment order passed under section 147 r.w.s. 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
2. Brief facts of the case are, the assessee is an individual has not filed return of income u/s 139(1) of the Act for the AY 2017-18. Information received by the Department that the assessee made cash deposit of Rs.3,07,54,760/- in his Bank account maintained with ICICI Bank and also made cash withdrawal of Rs.4,70,804/- and the total financial transaction was Rs.3,12,25,564/-. Since the assessee has not filed return of income, the assessment was reopened by issuing notice u/s. 148A of the Act. The assessee failed to response, which has resulted in passing order u/s 148A(d) of the Act and issued notice u/s 148 of the Act on 28.03.2024. Inspite of various notices issued u/s 142(1) of the Act, the assessee failed to make reply, which has resulted in passing ex-parte assessment order and making addition of Rs.3,12,25,564/- as unexplained income u/s. 69A of the Act and subject to taxation u/s. 115BBE of the Act.
3. Aggrieved against the re-assessment order, assessee filed appeal before ld. CIT(A), who has given three opportunities of hearing on 05.01.2025, 20.05.2025 and 08.08.2025. The assessee asked for two adjournments, however, not filed any written submission, which has resulted in passing ex-parte appellate order confirming the demand raised by the AO.
4. Aggrieved against the appellate order, assessee is in appeal before us raising following grounds of appeal:-
1 On the facts and in the circumstances of the case as well in law, CIT(A) has erred in confirming the re-assessment proceedings completed by JAO u/s 143(3) r.w.s 147 of the Act, where the notice u/s 148A(b)/148A(d) and 148 of the Act were issued by the Jurisdictional Assessing Officer (JAO) and not by the Faceless Assessing officer (FAO), as was required by the provisions of Section 151A of the Act, proceedings initiated u/s 148 of the Act is not sustainable and the order passed u/s 143(3) r.w.s 147 of the Act is bad-in-law and hence, liable to be quashed.
2. On the facts and in the circumstances of the case as well as in law, both the lower authorities has erred in passing ex parte order passed without considering the details on records filed by the appellant, which is in pure violation of the principles of natural justice, without jurisdiction, bad in law, illegal, invalid, arbitrary, void ab initio and hence liable to be quashed.
3. On the facts and in the circumstances of the case as well in law, the CIT (Appeals), NFAC has erred in confirming the order passed by the ITO, Ward 2(3)(1), Surat (for the sake of brevity The JAO) u/s 147 r.w.s. 144 of the Act by making addition of Rs. 3,12,25,564/- u/s 69A r.w.s. 115BBE of the Act, purely on misleading, misconceptual, arbitrary and perverse observations and hence, being without jurisdiction, bad in law, invalid, illegal, unwarranted of facts, is liable to be quashed or annulled in toto.
4. On the facts and in the circumstances of the case as well in law, both the lower authorities have grievously erred in completing the re-assessment proceedings applying the provisions of 69A of the Act treating cash withdrawals and cash deposits made during the year under assessment for the furtherance of cheque discounting business without appreciating the books of accounts, statement and explanation filed in response to the notices issued and hence, the addition made for the alleged unexplained money u/s 69A of the Act, in the absence of any evidences/materials contrary to the detailed explanations substantiated by cogent, credible and corroborative evidences, being without jurisdiction, bad in law, baseless, imaginary, arbitrary, conjectural, perverse, and purely on guess work and surmises, deserves to be deleted.
5. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) NFAC, erred in overlooking the fact that the AO failed in recording the reasons in statutory form and hence, the entire re-assessment proceedings is bad in law and therefore, deserves to be quashed.
6. On the facts and in the circumstances of the case as well in law, the CIT (Appeals) NFAC, erred in overlooking the fact that the AO failed in obtaining the prior approval of Higher Authority u/s 151 of the Act and hence, the entire reassessment proceedings is bad in law and therefore, deserves to be quashed.
7. Your appellant further reserves his rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.
5. Ld. Counsel appearing for the assessee submitted that, if one more opportunity be given to the assessee so that he can explain the books of accounts and the cheque discounting business carried out by the assessee, thereby, the entire addition made by the AO liable to be modified or cancelled. The assessee also raised technical grounds on reopening of the assessment.
6. Per contra, Ld. CIT DR appearing for the Revenue, supported the orders passed by the Lower Authorities and strongly opposed the contention of the assessee and requested to impose heavy cost on the assessee, in the event of setting aside the matter back to the file of AO.
7. We have heard rival submissions and perused the materials available on record. It is undisputed fact that it is an ex-parte assessment before the Ld. AO as well as before the Appellate Authority, as the assessee only sought for adjournment. Now, the assessee undertakes to file all necessary details, materials and records before the Ld. JAO. In the interest of Principle of Natural Justice, we deem it fit to impose a cost of Rs.10,000/- payable by the assessee to the Income Tax Department within two weeks of receipt of the copy of this order and production on receipt for Rs.10,000/- the Lower Authority orders are hereby set aside and direct the Ld. Jurisdictional Assessing Officer to give one more opportunity of hearing to the assessee. Needless to say, the assessee should make use of this final opportunity and produce all relevant materials, evidences and documents for passing assessment order in accordance with provisions of law.
8. In the result, the appeal filed by the Assessee is treated as allowed for statistical purposes.
Order is pronounced under provision of Rule 34[4] of ITAT Rules, 1963 on 06-07-2026.
