Facts of the Case

The assessee, Jitendra Kesarwani, was subjected to reassessment proceedings after information was received regarding a cash deposit of Rs. 10,00,000 in his bank account during Financial Year 2010-11. The Assessing Officer issued notice under Section 148 on 31.03.2017. Several notices were issued thereafter, and the assessee filed a return along with written submissions. Reasons for reopening were provided upon request.

Subsequently, fresh notices were issued after change of incumbent, but compliance was not made, resulting in penalty under Section 271(1)(b). A final notice under Section 144 was issued, following which the assessee submitted that the cash deposit represented money received from his father. However, no documentary evidence or supporting records were produced, nor was the father presented for verification despite opportunities.

The AO rejected the explanation and added Rs. 10,00,000 as unexplained income. Additionally, undisclosed interest income of Rs. 13,905 was added. Assessment was completed under Sections 147/143(3) on 07.12.2018.

The assessee appealed before the CIT(A), contending that the deposit came from definite sources and that supporting evidence had been furnished. He also raised legal objections, including that the assessment was time-barred under Section 153 and that objections to reopening had not been disposed of. The appeal was decided ex-parte by NFAC, which dismissed the grounds due to lack of documentary evidence and did not specifically address the limitation issue.

 Issues Involved

  1. Whether the reassessment proceedings initiated under Sections 147/148 were valid.
  2. Whether the assessment order was barred by limitation under Section 153.
  3. Whether the addition of Rs. 10,00,000 as unexplained income under Section 69A was justified.
  4. Whether the ex-parte disposal of appeal by CIT(A) without examining legal grounds was sustainable.

 Petitioner’s Arguments (Assessee)

  • The cash deposit was received from the assessee’s father from definite sources.
  • Necessary evidences had been submitted during assessment proceedings but were ignored.
  • The assessee was not liable to file a return as income was below taxable limits.
  • The assessment was time-barred and therefore invalid.
  • Objections filed against the reasons for reopening were not disposed of before completion of assessment.
  • The CIT(A) passed an ex-parte order without granting reasonable opportunity and without adjudicating legal issues.

 Respondent’s Arguments (Revenue)

  • The assessee was provided numerous opportunities during assessment proceedings but failed to comply adequately.
  • Lack of documentary evidence justified rejection of explanations and addition of unexplained income.
  • If remand was granted, strict compliance conditions should be imposed to avoid further delay.

 Court Order / Findings (ITAT Allahabad)

  • Although the assessee had been given several opportunities by the Assessing Officer, it was unclear what evidence had actually been furnished and why it was found unsatisfactory.
  • The assessee claimed to have submitted substantial evidence, including confirmation from his father, which had not been properly examined.
  • The CIT(A) disposed of the appeal summarily without investigating the factual claims or adjudicating the legal grounds, including limitation and validity of reopening.
  • Failure to address these substantive issues constituted a significant omission.

Accordingly, the Tribunal restored the matter to the file of the CIT(A) for fresh adjudication on merits after considering legal grounds and evidences. The CIT(A) was granted liberty to conduct necessary enquiries to ascertain the factual position.

The assessee was directed to be vigilant in the faceless appeal environment and to comply promptly with electronic notices, failing which adverse inference may be drawn.

 Important Clarification

  • The Tribunal did not decide the merits of the addition or legality of reassessment.
  • The case was remanded due to failure of the appellate authority to examine critical legal and factual issues.
  • Ex-parte orders in faceless proceedings must still address all grounds raised by the appellant.
  • Assessees bear responsibility to respond promptly to electronic notices in faceless systems.
  • Non-compliance may justify adverse conclusions by authorities.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1771231730_JITENDRAKESARWANIKAUSHAMBIVS.ITO26KAUSHAMBI.pdf

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