ITAT Amritsar: Appellate Authority Cannot Acknowledge Evidence and Simultaneously Claim Nothing Was Filed — Section 69A Addition of ₹26,95,975 Remanded
Overview of the Dispute
The Income Tax Appellate Tribunal, Amritsar Bench, has intervened in a case where an addition of ₹26,95,975 made under Section 69A of the Income Tax Act, 1961 was confirmed by the first appellate authority through an order riddled with a fundamental internal contradiction. The Tribunal found that both the Assessing Officer and the National Faceless Appeal Centre, Delhi (NFAC) had proceeded mechanically — without genuinely engaging with the submissions and documentary evidence placed on record by the assessee. Accordingly, the Tribunal set aside the appellate order and directed de novo adjudication at the level of the Assessing Officer.
The case, Harpreet Singh Vs ITO (ITAT Amritsar), pertains to Assessment Year 2020-21 and highlights critical procedural obligations that arise in faceless assessment and appellate proceedings.
Background: Non-Filing of Return and Cash Deposit Information
The assessee is a resident individual who did not file a return of income under Section 139(1) of the Income Tax Act, 1961 for Assessment Year 2020-21. The Department's system flagged information suggesting that cash deposits had been made during the relevant year in a bank account standing in the assessee's name.
Treating this as an indication that taxable income had escaped assessment, the Assessing Officer initiated reassessment proceedings. During the course of these proceedings, the Assessing Officer examined entries reflected in Form 26AS along with other material available on record and identified cash deposits aggregating to ₹29,96,850 in the assessee's bank account.
The assessee was called upon to explain the source of these deposits. In response, the assessee submitted documentary evidence along with a written reply. Despite this, the Assessing Officer remained unconvinced and proceeded to treat ₹26,95,975 as unexplained money under Section 69A of the Income Tax Act, 1961, adding the same to the assessee's total income.
What the Assessment Order Revealed
A careful reading of paragraph 3.2 of the assessment order made it evident that:
- The assessee had indeed responded to the specific query raised by the Assessing Officer.
- Documentary evidence in support of the explanation had been submitted along with the reply.
- The assessee had additionally requested a personal hearing through video conferencing, which was not granted.
Despite the assessee having exercised the available opportunity to respond, the Assessing Officer neither granted the requested video conferencing hearing nor provided any detailed discussion in the order regarding the nature of the documents submitted or the reasons for rejecting them. The addition under Section 69A was made without a meaningful evaluation of the evidence on record.
The Appellate Order and Its Internal Contradiction
The assessee carried the matter in appeal before the first appellate authority — the National Faceless Appeal Centre, Delhi. The NFAC, however, disposed of the appeal ex parte and confirmed the addition. The stated basis for this confirmation was that the assessee had not filed any submission or produced any evidence in support of the grounds raised.
This reasoning, however, directly contradicted what the appellate authority's own order recorded. The Tribunal noted the following critical inconsistency:
In both the body of the appellate order and specifically in paragraph 5.1 thereof, the First Appellate Authority expressly stated that the assessee had furnished submissions on 09.04.2026 and 13.04.2026 along with documentary evidence — yet proceeded to confirm the addition on the ground that no submissions or evidence had been filed.
The Tribunal described this as "more surprising" and noted that the appellate order contained no discussion whatsoever on the nature, content, or acceptability of the submissions that the authority itself had acknowledged receiving. An order cannot simultaneously record that evidence was filed and then proceed on the premise that nothing was placed before it — without any explanation for the departure.
The Tribunal concluded that there was a complete absence of application of mind on the part of both the departmental authorities with respect to the material furnished by the assessee.