Case Law Details
Devyani Pravin Solanki Vs CIT (Appeals) (ITAT Mumbai)
The assessee appealed against the order of the CIT(A) arising from an assessment completed under Sections 147 read with 144 and 144B of the Income-tax Act, 1961 for AY 2020-21. The Assessing Officer initiated reassessment proceedings after receiving information that the assessee had purchased an immovable property for ₹70,00,000 and had earned bank interest of ₹69,750 during the relevant financial year. As the assessee did not file a return of income and did not respond to notices issued under Section 142(1), the assessment was completed ex parte.
The Assessing Officer determined the total income at ₹71,11,750 by making an addition of ₹70,42,000 under Section 69 towards unexplained investment in immovable property, including stamp duty and registration charges, and an addition of ₹69,750 under the head “Income from Other Sources”. Penalty proceedings under Sections 271AAC, 270A and 234F were also initiated separately.
The CIT(A) noted that despite issuance of multiple notices during the appellate proceedings, the assessee neither filed submissions nor produced documentary evidence. The appeal was therefore decided ex parte on the basis of the material available on record, and the additions made by the Assessing Officer were confirmed.
Before the Tribunal, the assessee submitted that she could not respond to the notices during the assessment and appellate proceedings due to lack of access to the registered email ID linked to the Income Tax portal, resulting in ex parte orders. It was further submitted that she was a housewife with no independent source of income except nominal interest income. The assessee contended that the investment of ₹70,00,000 in the immovable property had been made from funds received as a gift from her husband, sourced from the maturity proceeds of fixed deposits. In support of this claim, she produced documentary evidence including bank statements, details of fixed deposit closures, and the property purchase agreement. It was submitted that these documents could not be furnished before the lower authorities due to the circumstances explained.
The Departmental Representative submitted that the documentary evidence had not been examined by either the Assessing Officer or the CIT(A) and fairly stated that the matter could be restored to the Assessing Officer for verification without raising any objection.
The ITAT observed that the assessment had been completed under Section 144 read with Section 147 due to non-compliance and that the CIT(A) had also decided the appeal ex parte in the absence of any submissions or supporting evidence. The Tribunal noted that the additions had primarily been made due to the absence of explanation and documentary evidence regarding the source of the investment and the nature of the interest income.
The Tribunal held that the bank statements and fixed deposit details produced before it were material evidence going to the root of the issue relating to the addition under Section 69. In the interest of justice, it held that the assessee should be given an opportunity to substantiate her claim before the Assessing Officer. Accordingly, the Tribunal set aside the order of the CIT(A) and restored the matter to the file of the Assessing Officer with directions to examine the documentary evidence, verify the source of the investment and the claim relating to the interest income, and decide the issues afresh in accordance with law after providing the assessee with an adequate opportunity of being heard. The assessee was also directed to cooperate and furnish all necessary details called for during the proceedings.
The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is directed against the order passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”]by the learned Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(A)”]dated 15.10.2025, arising out of the assessment order passed by the Assessing Officer under section 147 r.w.s. 144 and section 144B of the Act dated 14.02.2025 for Assessment Year 2020-21.
Facts of the Case
2. The facts, as emanating from the assessment order and the order of the learned CIT(A), are that the assessee is an individual. The Assessing Officer noted that the assessee had not filed her return of income for the year under consideration. Information was received through the Insight Portal that the assessee had purchased an immovable property for a consideration of Rs. 70,00,000/- during the relevant financial year and had also earned interest income of Rs. 69,750/- from bank accounts. Based on the said information, proceedings under section 147 were initiated after passing order under section 148A(d) dated 19.03.2024, and notice under section 148 was issued on the same date. The Assessing Officer further observed that despite issuance of notices under section 142(1) along with questionnaires on various dates, the assessee did not comply with the same and failed to furnish any details or documentary evidence in support of the transactions.
3. In view of the non-compliance, the Assessing Officer completed the assessment under section 147 r.w.s. 144 and section 144B on 14.02.2025, determining total income at Rs. 71,11,750/- by making the following additions:
i. Addition of Rs. 70,42,000/- under section 69 on account of unexplained investment in immovable property, including stamp duty and registration charges; and
ii. Addition of Rs. 69,750/- under the head “Income from Other Sources”.
Penalty proceedings under sections 27 1AAC, 270A and 234F were also initiated separately.
4. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). The learned CIT(A), however, noted that despite issuance of multiple notices during appellate proceedings, the assessee did not furnish any submissions or documentary evidence. Accordingly, the learned CIT(A) proceeded to dispose of the appeal ex parte on the basis of material available on record and upheld the additions made by the Assessing Officer.
5. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal:
Ground No.1:
On the facts and in the circumstances of the case and in law, the learned CIT(A) erred by making an addition of Rs. 70,00,000 as unexplained investment u/ s 69. The amount represents a gift received from the appellant’s husband, which was properly accounted for and supported by the source of funds, i.e., maturity of fixed deposits. The appellant prays for the deletion of this addition.
Ground No.2:
On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in making an addition of Rs. 69,750 which is below the taxable limit and, therefore, no tax liability arises on the same. The appellant submits that the income is purely an interest income and does not exceed the basic exemption limit. Therefore, the addition of Rs. 69,750 under the head ‘Income from Other Sources’ is unjustified and should be deleted.
Ground No.3:
On the facts and in the circumstances of the case and in law, the learned A.O. erred in initiating penalty proceedings under section 271AAC, 270A, and 272A(1)(d). Since the appellant had no intention of non-compliance and missed the notices due to reasons beyond her control, the penalties imposed are harsh and should be cancelled.
The appellant craves the liberty to add, alter, amend or delete all or any of the grounds of appeal before or during the course of hearing.
6. During the course of hearing before us, the learned Authorised Representative (AR) submitted that the assessee could not respond to the notices issued during assessment as well as appellate proceedings due to lack of access to the registered email ID linked with the Income Tax portal, resulting in ex parte orders. It was further submitted that the assessee is a housewife having no independent source of income except nominal interest income. The learned AR contended that the investment in immovable property amounting to Rs. 70,00,000/- was made out of funds received as a gift from her husband, which was sourced from maturity proceeds of fixed deposits. In support of this contention, the assessee has now furnished documentary evidences such as bank statements, details of fixed deposit closures, and agreement relating to purchase of property. It was submitted that these evidences go to the root of the issue and could not be filed before the lower authorities due to the aforesaid circumstances.
7. The learned Departmental Representative fairly submitted that since the evidences now produced were not available before the Assessing Officer or the learned CIT(A), the matter may be restored to the file of the Assessing Officer for proper verification. The learned Departmental Representative did not raise any objection to such restoration.
8. We have considered the rival submissions and perused the material available on record. It is an admitted position that the assessment in the present case has been completed under section 144 r.w.s. 147 due to non-compliance on the part of the assessee. It is further observed that the learned CIT(A) has also decided the appeal ex parte in absence of any submissions or evidences from the assessee. The additions made by the Assessing Officer and sustained by the learned CIT(A) are primarily on account of absence of explanation and supporting documentary evidence regarding the source of investment and nature of income. Before us, the assessee has furnished certain documentary evidences, including bank statements and details of fixed deposits, to substantiate the claim that the investment was made out of funds received from her husband. These evidences admittedly were not before the lower authorities.
9. In our considered view, these evidences are material in nature and go to the root of the issue relating to the addition under section 69. In the interest of justice, the assessee deserves an opportunity to substantiate her claim before the Assessing Officer. Considering the totality of facts and circumstances of the case, and in view of the fact that the learned Departmental Representative has not objected to the restoration of the matter, we deem it appropriate to set aside the impugned order of the learned CIT(A) and restore the matter to the file of the Assessing Officer. The Assessing Officer is directed to examine the evidences now furnished by the assessee and verify the claim regarding source of investment and interest income. The Assessing Officer shall decide the issues afresh in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee is also directed to cooperate and furnish all necessary details as may be called for.
10. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 13.05.2026.
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