Repeated Non-appearance before CIT(A) & AO without Justifiable Cause: ITAT Confirms Addition & Penalty on Unexplained Transaction of ₹83.4L [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) confirmed the addition and penalty on unexplained transactions of Rs. 83.4 lakhs due to the assessee's repeated non-appearance before the Commissioner of Income Tax (Appeals) [CIT(A)] and assessing officer (AO) without any justifiable cause.

Dharmendra Shantilal Patel, the assessee did not file an income tax return for the Assessment Year 2014-15. During the financial year 2013-14, the assessee advanced an amount of Rs. 83,45,000 to an individual, Dharmendra S. Patel. This financial transaction was not declared.

The Assessing Officer (AO) issued a notice under Section 148 of the Income Tax Act on March 28, 2017, to investigate the unexplained advance. Multiple follow-up notices were issued due to the absence of a response from the assessee.

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Due to non-cooperation and the absence of an income tax return, the AO added Rs. 83,45,000 to the assessee’s income and initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act.

The assessee appealed against the addition but did not participate in the hearing before the Commissioner of Income Tax (Appeals) [CIT(A)]. Consequently, the CIT(A) upheld the AO’s decision.

The assessee challenged the CIT(A) order before the ITAT questioning the addition confirmed by the CIT(A). However, the assessee did not appear before the tribunal despite multiple opportunities.

On the other hand, the revenue counsel argued that the assessee failed to justify the source of the Rs. 83,45,000 advance, which led to the addition as unexplained income.

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The two-member bench comprising Annapurna Gupta (Accountant Member) and Siddhartha Nautiyal (Judicial Member) noted that the assessee was given adequate opportunities to provide explanations but failed to do so at every stage.

The tribunal referenced Sukhvinder Singh vs. CIT(Appeals), where non-compliance justified an ex-parte decision, and Praveen Garg v. ITO, which confirmed that repeated failure to appear nullified claims of unfair hearing.

Therefore, the tribunal upheld the decision of the CIT(A) to include the sum of Rs. 83,45,000 as the assessee’s taxable income for the relevant assessment year and the penalty of Rs. 24,03,510 due to the failure to disclose the financial transactions properly.

To Read the full text of the Order CLICK HERE

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