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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeals of the assessee are directed against orders of even dated 20.01.2026 passed by ld. CIT(A)/NFAC, Delhi u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein in the quantum proceedings appeal was dismissed and in the penalty proceedings, the penalty imposed by the Assessing Officer was also confirmed.
By this commo n order, we propose to decide the ITA Nos. 2343 & 2344/Del/2026 as the parties are same and factual matrix is also same and in order to avoid multiplicity of decisio n, the same are being disposed off accordingly. ITA No. 2343/Del/2026 is taken as lead case.
Facts in brief as culled out from the orders of the authorities be low are that the assessee has filed return of income for A.Y . 2012-13 declaring total income as Nil. However, in view of the data availab le with the ITD system, it transp ired that the assessee had some transaction/investment of Rs.50,00,000/- against mutual funds/share bonds during the F.Y. 2011-12 relevant to A.Y. 2012-13 and the source of the said investment remained unexplained and was found no t commensurate with the re turn filed by the assessee. The information available w ith the departme nt was brought to the knowledge of the assessee by writing le tter date d 04.02.2019 and 25.02.2019 u/s 133(6) of the Act with the prior approval of ld. PCIT, Faridabad asking the assessee to furnish response in that regard. In view of these facts, the case of the assessee was reopened u/s 148 of the Act after d uly recording reaso ns and after ob taining approval from PCIT, Faridabad and no tice u/s 148 of the Act was issued to the assessee on 25.02.2019 and sent through speed post. However, in response to no tice u/s 148 of the Act, no re turn was filed, nor any reply was received. Accordingly, notice u/s 142(1) of the Act was issued dated 08.07.2019 and 21.08.2019, respectively. The said notice also remained non-co mp lied . Show-cause notice along with notice u/s 142(1) of the Act was issued o n 03.10 .2019 followed by final show-cause no tice dated 15.11.2019 and were sent by speed post. Since, the assessee has not complied to the statutory notices and show-cause letter, the AO was left with no option and comple ted the assessment ex-parte u/s 144 of the Act. Accordingly, the assessment was completed by making additio n of Rs. 5 0,00,000/- by assessing the total income of the said amount as the returned income was Nil and penalty proceeding u/s 271(1)(c) of the Act were also initiated separately.
Aggrieved by the assessment o rder, the assessee filed appeal before the ld. C IT(A) alleging that the appellant neither received any notice u/s 147 r.w.s. 148 of the Act nor assessment order passed u/s 144 r.w.s. 147 of the Act was ever served upon the assessee. It was further stated that the assessment orde r was not even available on the ITD portal and as such appellant was deprived of an effect ive and meaningful opportunity. The ld. CIT(A) remanded the matter to the ld . AO for verification of the submissio ns made by the appellant and the additio nal evidence sought to be furnished. In the remand report, the ld. AO reiterated the facts recorded in the assessment order and objected to the permission of additional evidence. The ld. AO in his remand report with r espect to the request for additional evidence under Rule 46A o f the Income Tax Act Rules, 1962 stated that the appellant failed to demonstrate any sufficient cause which prevented her from producing such evidence during the assessment proceedings despite the adequate opportunity having been provided. It was therefore submitted that the condition prescr ibed under Rule 46A(1) were not satisfied and ad ditional evidence deserved to be rejected. T he ld. CIT(A) co nsidered the remand report to be true and correct and rejected the request for le ading additional evidence under Rule 46A. It w as observed that the remand report clearly established that opportunities were provided and valid service o f notices were effective and there fore, due to non-compliance, even the assessee was not entitled to the compassionate and sympathetic consideration even on the grounds of CO VID-19 related hardships. The appeal was according ly dismissed.
Aggrieved by the impug ned order, the assesse e is in appeal before us and has raised the following grounds of appeal:
“1 . That on the facts , circ umstanc es of the case and in law, the Ld. CI T(A) has erre d in c onfirmi ng the addi tion of Rs.50,00,000/- u/s.69 and failed to consider the fact tha t the s ale proceeds o f r esidenti al ho use proper ty of Rs.1,47,40,000/- was accepted by the AO and i nvestme nt in NAH I B onds of Rs.50,00,000/- was made on 10/02/2012 from the s ale proc eeds of residential hous e prop erty duly refl ect ed i n the face of the return of income and in t he bank stateme nt for availing deduction u/s . 54EC f rom t he long term capi tal gain, accordi ngly the source of i nvestment is dul y established, thus t he assessee-appellant prays t hat t he addition of Rs.50,00,000/- u/s. 69 des erve s to be del et ed i n full .
2.That on t he facts, circumst ances of the case and in law, the Ld.CIT (A) has erred in confirmi ng t he jurisdictio n of the AO for i nitiati ng income escaped assessment u/s. 147 agai nst the assess ee, and failed to consider the fact that trans fer of residential house prop erty and investme nt u/s .54, u/s.54 EC was duly reflected on the fac e of the ret urn of i nc ome and accepted by the AO, thus the AO has no tangibl e material to form r eason to believe for income escapeme nt assessment , accordi ngly the assessee-a ppellant prays tha t the jurisdiction u/s. 147 ass umed by the AO may ki ndly b e held as invalid, henc e the cons equential reass essme nt order viti ated in law and liable to be quashed.
3.That the appellant craves l eave to a dduce additi onal grounds and / or ame nd or withdraw any o f t he afor esaid Gro unds bef ore or at the time of hearing of appeal.”
We have heard the ld. AR and the ld. DR. T he ld. AR, at the very outset submitted that admittedly the assessment order is ex-parte and the assessee has no t rece ived the notice and even the copy of the assessment order and there is no evidence/material in that regard that the notices sent during the assessment proceedings were ever served upon the assessee. It is further submitted that even the impugned order by the ld. CIT(A) is an un-reasoned order and has been passed in violation of section 250(6) of the Act because the ld. C IT(A) has simply re lied the remand report w hile dismissing the appeal and did not decide the issue after considering the additional evidence sought to be led by the asse ssee . It is therefore prayed that the matter may be restored to the file of the ld. AO for deciding afre sh after giving effective opportunity of hearing.
We have heard the ld. DR who while relying upon the order of the ld. lower authority had submitted that it is the assessee who has failed to avail the opportunity given by the Assessing Officer during the asse ssment proceedings and the ld. CIT(A) has rightly relied the remand report and therefore rightly dismissed the appeal out rightly.
We have considered the rival submissions and e xamined the record. To find out whether the ld. CIT(A) has decided the appeal as per section 250(6) of the Act, the decision part of the ld. CIT(A)’s order contained in para 6.1.5 to para 7 is relevant and extracted below as under:
“6 .1.5. I have car efully and t houghtfull y consi dered t he Assessment Order pass ed by the Ld.AO under sectio n 144 r.w.s. 147 of the Inc ome Tax Act, 1961, the Gr ounds of Appeal raised by the appellant, the Stat ement of Facts, the detailed written submissions filed by the appellant, the remand report submitted by t he Ld.AO. I hav e also exami ned t he mat erial avai lable on rec ord and the rel evant statutory provisions applicable to t he issues under consideration.
6.1.6.The prese nt gr ounds essentially c hallenge t he legal ity and c or rect ness of the reass essment proc eedi ngs, the ex -parte best j udgment assessment, and the a dditi on of Rs. 50,00,000/- made under s ection 69 of the Act, taxed under sec tion 1 15BBE. The appella nt has alle ged lac k of opport unity, non-s ervic e of noti ces, mechanic al approach by the Ld. AO, and erroneous assumpti on of fact s. These c ontenti ons are r equired to be exami ned in t he light of the factual findi ngs recorded by the L d.AO in the ass essment order as well as i n t he remand r eport .
6.1.6.At the outset , i t is no ted that the reass essment proc eedi ngs were initiated by the L d.A O on the basis of specific i nformati on receiv ed t hrough t he A IMS module, indicati ng t hat the appellant had made i nvest ments amo unti ng to Rs. 50,00,000/- duri ng t he F.Y. 2011-12 rel evant t o A .Y. 2012-13. S uc h i nfor mati on c onstituted ta ngibl e mat erial for fo rmatio n o f bel ief tha t inco me chargeabl e to tax had esca ped assess ment. The L d.AO has duly rec orded r easons to believ e and ther eafter issued notice under s ecti on 148 of the Ac t. Therefore, the i nitiati on of reassessment proceedi ngs cannot b e said to be without j urisdiction or b ased on mere suspicion.
6.1.7.The appellant’s c ontenti on that no no tice under section 147 r. w.s. 148 or s ubsequent notices were rec eiv ed has been specifically e xamined i n the remand proc eedi ngs. The Ld.AO , i n the re mand report, has categorically stat ed that stat utory notic es were issued to the appellant thr ough m ultiple modes, i ncl udi ng speed post at the addresses available on rec ord and t hrough electr onic mode on the registe red email address of the appellant. The r emand report further recor ds that electr onic delivery reports confirm ed success ful delivery of notic es . In addition, duri ng penalty procee di ngs, physical ser vice o f notic es was at tempted through t he Verifica tion U ni t, and the Inspect or report ed t hat t he appellant was ava ilable at the give n address but refus ed to acce pt t he notices. In law, refusal to acc ept s ervi ce amo unts to valid service. Theref ore, the plea of non-servic e of notices rai sed by t he appellant is not acceptabl e.
6.1.8.Further, the appella nt has contended tha t she was residi ng outside India duri ng the rel evant peri od and was the refore unable to com pl y wi th notices. Ho wever, the r emand report, aft er verifi cation of passport details furnished by the appel lant hers elf, establishes t hat t he appellant was pres ent i n India during part of the assessment period when statut ory notices were issued. Thus, the claim of conti nuous a bsence from India during the enti re assessment proceedings is factually incorrect . Eve n o therwis e, ser vice of notices thro ugh el ectronic mode is a valid mode of s ervice under t he Act, and physical pres ence in India is not a precondi ti on for complianc e.
6.1.9.As regards the allegation that t he assessme nt was framed mec hanically and wit hout applicati on of mind, the rema nd report demonstrates that the L d.AO initiated proc eedi ngs based on speci fic information, issued statutory notices, and resort ed to best judgment assessment onl y after persistent non-c ompliance by t he appellant. S ection 144 of t he Act empowers the Ld.AO to compl et e ass ess ment to the best o f his j udgment where the assess ee f ails to c omply with statut ory notices. In the present cas e, the app ellant admi ttedly did not furnish any explanation or documentary evidenc e duri ng the assessment pr oceedi ngs. T heref ore, the Ld.AO was left with no alternative but to c omple te t he assessment on the basis of material available on record. The action of the Ld.AO, t hus, cannot be termed as m echanical or arbit rary .
6.1.10.The appellant has s tro ngl y c ontested t he addit ion of Rs. 50,00,000/- under secti on 69 of the Act, contending that t he said amount repres ent ed i nvestment in NHA I bonds made out of disclosed lo ng-term capital gai ns and was already refl ected i n t he ret urn of i nc ome. Ho wever, as noted by the Ld.AO i n t he r emand r epor t, mer e filing of a ret urn of i ncome does not automa tically discharge the onus cast up on the appellant under s ection 69 when a specific quer y is r aised re gardi ng the nat ure and source of i nv estment . The appel lant failed to respond to no tices and did not furnis h any contempo rane ous evidence duri ng the ass essme nt pr oceedi ngs to subst antiat e her clai m. T he explanati on sought to be adv ance d during appellate proceedings was not s upported by suf fi cient cause for non-producti on of evidence at the assessment stage.
6.1.11.In t his context, the Ld.A O has rightly obj ec ted to the admissibility of additional evidenc es under Rul e 46A of the Income Tax R ules, 1962. The appellant has not bee n able to demonstrate that she was preve nted by sufficient caus e from pr oducing s uch evidences before the Ld.AO. Adequate opportuni ties were provided during the assess ment proceedi ngs , which the appellant chos e not t o avail. Ther efor e, the rejectio n o f additional evidences, as rec ommended i n the rema nd report, is found t o be i n accordanc e wit h la w.
6.1.12.The ap pellant has al so relied on various judi cial precedents to c ontend that section 69 cannot be invoked mer ely on s uspicion. While t he legal position is well settled, the facts of the pr esent c as e clear ly i ndicate that the additi on was not m ade o n s uspicion al one, but on t he basis of specific i nf ormation and failur e of the appella nt to explain the s ourc e of i nv estment des pite repeated opportuniti es. The burde n under s ection 69 ini tially lies upon the appellant, and in t he a bsence of a ny explanati on furnished during ass essment proceedi ngs, the Ld.AO was justified in i nvo ki ng the deeming provisions.
6.1.13.With regard to the appellant ’s pl ea see king sympat hetic consideratio n on account of advanced age, widowhoo d, and Covid-19 related hards hi ps, it is ac knowl edged t hat these circ umstanc es deserve empathy. Howeve r, it is equally well settle d that pers onal hardships , howsoever genuine , cannot override statutory obli ga tions cast upon a taxpay er. The remand report clearly establi shes that oppo rtunitie s were provided and valid service of notices was effected. Ther efor e, t he non-compliance cannot be condoned solely on compassionate grounds.
6.1.14.The application of section 115BBE by the Ld.AO is a conseque ntial statutor y mand ate once inc ome is assessed under section 69. The Ld.AO has cor rectly computed t ax liability in acc orda nce with the pr ovisions of the Act , and no i nfirmi ty has bee n poi nted out in the computa tion itsel f.
6.1.15.In view of the detailed fi ndi ngs rec or ded i n the remand report , which effec tively rebut the cont enti ons raised by the appella nt, I am of the considered opi ni on tha t the Ld.AO ha s followed due process of law and that the ass essment order does not s uffer from any legal or fact ual i nfir mity warranti ng int erfe rence. The reass essme nt proc eedi ngs wer e validly initiated, adequate opport uniti es were provided, and t he addition was made only after the appellant fail ed t o discharge t he onus cast upon her under the Act.
Accordi ngly, Ground Nos. 1 to 6 rai sed by the appella nt are dismissed, and t he ass essment order passed by the Ld.AO under section 144 r.w.s. 147 of the Income Tax Act, 1961, incl uding the additi on of Rs. 50,00,000/-under secti on 69 a nd conseque nti al tax levi ed under section 115BBE, is hereby confirm ed.
7.In res ult, the appeal is filed by the appellant is dismissed. ”
The above contents of the impugned order shows that the ld. CIT(A) has not passed the reasoned order as per the requirement of sectio n 250(6) of the Act. The ld. AO has not given any sufficient reasons in the remand report relied by ld. CIT(A) for rejecting the additio nal evidence sought to be led under Rule 46A of the Act by the assessee. Admittedly, there is no material or evidence produced before us to show that the notices sent through speed post were ever served/received by the assessee during the assessme nt proceedings. In the se facts and circumstances, we are of the considered opinion that the assessment order has been passed without giving effe ctive opportunity of hearing. The ld. CIT(A) in appeal has failed to consider the said aspect and in our opinio n has wro ngly rejected the request of additio nal evidence under Rule 46A of the Act by simply relying the remand report of the AO . Even the reque st of the assessee for C OVID-19 related hardships has been rejected without any reasons and consideratio n. For these reasons, the impugned order dated 20.01.2026 is accordingly set aside as the principle of natural justice has not been followed while comple ting the assessment proceedings and deciding the appeal by the ld. CIT(A). The matter is accordingly remitted to the file of the AO for de-novo assessment proceedings after giving effective opportunity of hearing. The assessee/appellant shall furnish necessary evidence, materials and submissions before the AO w ithin a period o f 60 days from this order.
Since, the quantum appeal in ITA No. 2343/Del/2026 has been restored to the file of the Assessing Officer for fre sh adjudicatio n, the penalty appeal in ITA No. 2344/Del/2026 cannot be sustained at this stage. Accordingly, the impug ned penalty order dated 20.01.2026 is also se t aside and the matter is restored to the file of the Assessing Officer for fresh adjudicatio n if required in accord ance with law , after affording adequate opportunity of being he ard to the assessee.
In the result, the appeals of the assessee in ITA Nos. 2343 & 2344/Del/2026 are allowed for statistical purpose s.