ITAT Grants School Principal Fresh Hearing in 3.65 Crore Tax Case, Cites Procedural Lapses [Read Order]

The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, has set aside an appeal order and directed a fresh hearing for a school principal accused of failing to disclose cash deposits worth ₹3.65 crore during the 2014–15 assessment year. The tribunal highlighted procedural lapses in the reassessment process and granted the assessee another opportunity to present his case.

Ganesh Thaware, who served as the Principal of Arvind Indo Public CBSE School in Saoner, Maharashtra, had not filed his income tax return for the relevant year, believing his income fell below the taxable threshold. The Income Tax Department, however, flagged cash deposits of ₹3.65 crore in his accounts and initiated reassessment proceedings under Section 147 of the Income Tax Act. A notice under Section 148 was issued in 2021, but Thaware claimed he was unaware of the proceedings as the contact details linked to his tax portal were incorrect.

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The Assessing Officer (AO) proceeded ex-parte under Section 144, adding the entire deposit amount to Thaware’s income under Section 69A, which deals with unexplained money. Thaware challenged the reopening of the assessment before the Commissioner of Income Tax (Appeals), arguing that the AO had acted without proper investigation or evidence. The CIT(A) set aside the assessment for fresh adjudication but did not address the jurisdictional challenge, prompting Thaware to appeal before the ITAT.

During the hearing, Thaware’s counsel argued that the reassessment was based solely on automated data from the AIMS module without verifying the bank account details or establishing a "live link" between the deposits and Thaware. The tribunal noted that the CIT(A) had failed to examine the legality of the reassessment and directed a fresh review, emphasizing the need for proper verification and adherence to natural justice principles.

V. Durga Rao (Judicial Member), presiding over the case, ordered the CIT(A) to re-examine the matter, including the validity of the reassessment and the merits of Thaware’s claims. The tribunal also instructed Thaware to cooperate with the proceedings and submit all required documents promptly.

The ITAT’s decision underscores the importance of due process in tax assessments, particularly when reopening cases based on unverified information. The case will now return to the CIT(A) for a fresh evaluation.

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