Income Tax Notices sent to Old E-mail Address, Made Ex-parte Addition u/s 69A: ITAT Restores Matter to AO [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune, has set aside an assessment order sustaining additions under Section 69A of the Income Tax Act, 1961, on account of unexplained cash deposits. The Tribunal relied on evidence relating to email communication, which revealed that notices were sent to an old email address of the assessee, thereby depriving him of the opportunity to present his case.

Consequently, the matter has been remanded to the Assessing Officer (AO) for fresh adjudication, with the appeal allowed for statistical purposes.

The core issue before the ITAT, was whether the addition of Rs. 1.55 crore under Section 69A read with Section 115BBE of the Income Tax Act, 1961, sustained ex-parte by the Commissioner of Income Tax (Appeals) [CIT(A)], was justified when notices were not properly served to the assessee.

The appellant, Vikram Tatyaba Chatur, an individual from Satara, had not filed his return of income for the assessment year 2017-18. The AO observed that he had deposited Rs. 1,55,23,330 in cash and withdrawn Rs. 2,43,11,902 from his bank account, apart from earning interest income of Rs. 43,641.

Since no explanation was provided, the assessment was reopened under Section 147 of the Income Tax Act, 1961. The assessee failed to respond to notices and the assessment was completed ex-parte under Section 144, treating the cash deposits as “Income from other sources” and taxing them under Section 69A read with Section 115BBE.

Sharad A. Shah, representing the appellant, argued that the failure to respond was due to notices being sent to his old email address, despite the updated email ID being provided in Form 35 at the appellate stage. This, he contended, was a procedural lapse that led to the ex-parte dismissal of his case. He requested that the matter be remanded to allow him an opportunity to furnish evidence substantiating the source of deposits.

Arvind Desai appeared for the revenue, supporting the orders of the AO and the CIT(A), contending that the additions were justified in light of the assessee’s repeated non-compliance with statutory notices.

The Tribunal bench comprising R. K. Panda Vice President and Astha Chandra Judicial Member held that the assessee had been denied an adequate opportunity to explain the nature and source of the deposits due to notices being served at the incorrect email address. The matter was restored before the AO with directions to provide one final opportunity to the assessee to substantiate his case.

The appeal was thus allowed for statistical purposes.

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