Facts of the Case

The Assessing Officer received information regarding financial transactions in the assessee’s bank accounts maintained with State Bank of India and Bank of Baroda. Since the assessee had not filed a return of income, reassessment proceedings were initiated under section 147 by issuing notice under section 148.

Despite subsequent notices under section 142(1), no response was received. Consequently, the case was assigned to the Faceless Assessment Unit, which completed a best-judgment assessment under section 144 read with section 147. Additions were made including ₹7,04,400 under section 69A and ₹1,48,738 as income from other sources, and provisions of section 115BBE were invoked along with initiation of penalty proceedings.

Issues Involved

  1. Whether reassessment based solely on bank transactions is legally sustainable without proper enquiry.
  2. Whether additions under section 69A can be made without establishing that deposits represent unexplained money.
  3. Whether dismissal of appeal ex parte violates principles of natural justice.
  4. Whether application of section 115BBE is justified in such circumstances.

Petitioner’s Arguments

The assessee challenged the validity of reassessment proceedings initiated merely on the basis of banking transactions and contended that section 69A was wrongly applied. It was also argued that the bank account cannot be equated with books of account and that additions were made without considering relevant facts, including closing balances and nature of transactions.

Respondent’s Arguments

The Revenue relied on the assessment order but did not object to restoration of the matter to the Assessing Officer for fresh consideration if deemed appropriate by the Tribunal.

Court Order / Findings (ITAT Allahabad)

The Tribunal noted that the assessment had been completed ex parte due to non-compliance and that the assessee had not been given an effective opportunity to substantiate the sources of bank deposits and other income.

Considering the facts and in the interest of substantial justice, the Tribunal held that the assessee deserved one more opportunity to present her case. Accordingly, the entire matter was restored to the file of the Assessing Officer with directions to provide adequate opportunity to produce evidence regarding bank deposits, contract receipts, commission, brokerage, and interest income.

Important Clarification

The Tribunal did not adjudicate the merits of the additions but emphasized that substantial tax liability should not be determined without granting a fair opportunity to explain transactions. Ex-parte reassessment orders are liable to be set aside where principles of natural justice are not adequately followed.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1771066398_SANTOSHKUMARSAHUBHADOHIVS.INCOMETAXOFFICERNFACDELHI.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.