Hearing Notices Sent to Registered E-mail ID went Unnoticed leading to Non-appearance: ITAT Remands file to CIT (A) for Fresh Adjudication [Read Order]

The two member bench of the Income Tax Appellate Tribunal , ( ITAT) ,Pune  has remanded the file to the Commissioner of Income Tax Appeals (CIT(A) for fresh adjudication after finding that the hearing notices sent to the registered email ID went unnoticed, resulting in non-appearance. The assessee, Krunal Kailash Kapoor, an individual employed with SUD Life Insurance Company Ltd, his salary income was duly offered for taxation. For the relevant assessment year, Kapoor filed his income tax return (ITR) declaring a total income of ₹1, 69,070/-.

However, this return was selected for scrutiny under the Computer-Aided Scrutiny Selection (CASS) system to examine the legitimacy of the declared salary income and the sources of cash deposits amounting to ₹12, 62,500 across two savings bank accounts held with Union Bank of India and HDFC Bank.

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The assessee claimed that these cash deposits originated from personal savings, bank withdrawals, and gifts from family members, including an individual named Mr. Ramesh. However, the explanation provided failed to convince the learned Assessing Officer (AO). Consequently, the AO rejected the explanation as unsatisfactory and categorized the entire amount of cash deposits as unexplained income, subject to tax under Section 115BBE of the Income Tax Act, 1961.

Dissatisfied with the addition, the assessee appealed to the first appellate authority. However, the appeal did not progress due to non-prosecution by the assessee. The appellant contended that the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of ₹12, 62,500, asserting that the treatment of cash deposits as unexplained income was unjustified both factually and legally.

The appellant further stated that the notices of hearing were issued electronically and not served physically, leading to a lack of awareness regarding the hearings. He emphasized that he does not regularly check emails and requested a remand of the case to the AO/CIT (A) for fresh adjudication, allowing him another opportunity to be heard in the interest of justice.

Additionally, the assessee argued that the addition of ₹12, 62,500 was unwarranted, as the cash deposits were primarily sourced from a temporary cash advance of ₹10, 00,000 received from his mother-in-law, which was promptly repaid through banking channels. The appellant sought the deletion of the aforementioned addition made by the AO.

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The bench, consisting of Judicial Member Vinay Bhamore and Accountant Member G.D. Pathmashali, carefully reviewed the case facts. It was acknowledged that the appellant failed to appear before the first appellate authority, resulting in the ex-parte dismissal of the appeal by the CIT (A)/NFAC. However, the appellant submitted an affidavit dated July 24, 2024, claiming that the hearing notices sent to his registered email went unnoticed and were only acknowledged upon receiving the impugned order.

In light of these circumstances, the bench determined that the appellant was prevented from pursuing the appeal for valid reasons. Consequently, in the interest of justice, the bench remitted the file to the CIT (A)/NFAC for de-novo adjudication in accordance with the law, ensuring that the appellant was granted a fair opportunity to present his case. The appeal was thus allowed.

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