Ahmedabad ITAT Restores ₹2.15 Crore Addition Under Section 69A: Penalty Under Section 271AAC Deleted, Section 272A(1)(d) Penalty Confirmed
Overview of the Dispute
In a three-pronged appellate proceeding covering Assessment Year 2020-21, the Income Tax Appellate Tribunal, Ahmedabad, delivered a nuanced ruling in the case of Mukesh Roshanlal Shah Vs The DCIT (ITAT Ahmedabad). The Tribunal addressed three distinct issues arising from a reopened assessment: the validity of a cash deposit addition of ₹2,14,57,800 treated as unexplained money under Section 69A, a consequential penalty of ₹16,57,615 levied under Section 271AAC(1), and a separate penalty of ₹20,000 imposed under Section 272A(1)(d) for non-compliance with statutory notices.
The outcome was a split verdict — the assessment was remanded for fresh adjudication, the Section 271AAC(1) penalty fell away as a consequence, but the Section 272A(1)(d) penalty was independently confirmed, since the assessee could offer no reasonable cause for the procedural defaults that had occurred during the assessment stage.
Background: Reassessment Proceedings and Ex Parte Addition
How the Reassessment Was Initiated and Completed
The assessment for AY 2020-21 was reopened and completed under Section 147 read with Section 144 and Section 144B of the Income Tax Act, 1961. The Assessing Officer (AO) stated on record that the assessee was provided multiple opportunities through notices issued under Section 148, Section 142(1), and various show-cause notices. No response was received from the assessee at any stage, which compelled the AO to finalise the assessment on an ex parte, best-judgment basis.
Nature and Quantum of the Addition
The entire cash amount deposited by the assessee in his bank account, totalling ₹2,14,57,800, was treated as unexplained money under Section 69A of the Income Tax Act, 1961. Accordingly, this sum was subjected to the special rate of taxation prescribed under Section 115BBE.
Penalty Proceedings Initiated in Parallel
Given the apparent and continued non-compliance by the assessee, the AO recorded satisfaction for initiating two separate penalty proceedings:
- A penalty of ₹16,57,615 was levied under
Section 271AAC(1), connected to the income assessed underSection 69Aand taxed underSection 115BBE. - A penalty of ₹20,000 was levied under
Section 272A(1)(d)on account of the assessee's failure to comply with statutory notices issued during the course of the assessment proceedings.
First Appellate Stage: CIT(A)/NFAC Confirms Everything
The assessee challenged all three orders — the assessment order, the Section 271AAC(1) penalty order, and the Section 272A(1)(d) penalty order — before the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The CIT(A) passed an order dated 07.04.2026 under Section 250 of the Income Tax Act, 1961, confirming the addition under Section 69A in its entirety and upholding both penalties without any modification.
This led to three separate appeals being filed before the Ahmedabad Bench of the ITAT, each addressing a distinct limb of the dispute.