ITAT Chennai Sets Aside ₹31.29 Lakh Addition Under Section 69: CIT(A) Criticised for Disposing Appeal on the Very Date Fixed for Filing Response
Case Reference
Rathinasamy Sivasankaran Vs ITO (ITAT Chennai)
Assessment Year: 2020-21
Order Pronounced: 25th May, 2026
Background and Overview
A recent ruling by the Income Tax Appellate Tribunal, Chennai Bench, has brought into sharp focus the procedural obligations of appellate authorities under the principles of natural justice. The Tribunal intervened in a matter where an addition of ₹31.29 lakh had been made as unexplained investment under Section 69 read with Section 115BBE of the Income Tax Act, 1961, and where the appellate authority — the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi — had disposed of the appeal on the very same date that had been fixed as the deadline for the assessee to file his response.
The Tribunal, while acknowledging that the assessee had been considerably negligent throughout the proceedings, held that the principle of substantial justice must override technical lapses, particularly when additions of a significant magnitude under Section 69 read with Section 115BBE of the Income Tax Act, 1961 are involved. Accordingly, the orders of both the Assessing Officer (AO) and the CIT(A) were set aside, and the matter was restored to the AO for fresh adjudication.
Facts of the Case
Profile of the Assessee
The assessee in this case is an individual carrying on business activities in the field of real estate consultancy and brokerage services. For Assessment Year 2020-21, the assessee had not filed any return of income.
Trigger for Reassessment
The Income Tax Department received information indicating that the assessee had purchased immovable property valued at ₹31,29,000/- during the relevant assessment year. Acting on this information, the AO initiated reassessment proceedings by reopening the case under Section 147 of the Income Tax Act, 1961. Notices under Section 148 along with other statutory notices were duly issued, requiring the assessee to furnish details and explanation regarding the said investment.
Ex Parte Assessment Order
Despite the issuance of multiple notices, the assessee chose not to respond to any of them. Faced with persistent non-compliance, the AO was left with no alternative but to conclude the reassessment proceedings by passing an ex parte order dated 11.02.2025 under Section 147 read with Section 144 of the Income Tax Act, 1961. The entire investment amount of ₹31,29,000/- was treated as unexplained investment under Section 69 read with Section 115BBE of the Income Tax Act, 1961, and the total income of the assessee was accordingly determined at ₹31,29,000/-.
Appellate Proceedings Before CIT(A)
Aggrieved by the ex parte assessment order, the assessee filed an appeal before the CIT(A), NFAC, Delhi on 17.03.2025. The appellate authority, in a demonstrably patient approach, extended six separate opportunities to the assessee to present his case and place supporting materials on record, all of which are duly catalogued in paragraph 4 of the CIT(A)'s order.