ITAT Indore Remands Section 69A Addition After Holding CIT(A) Order Invalid Due to Defective Email Service of Notices

Background and Case Overview

In the matter of Laxminarayan Patidar Vs ITO (ITAT Indore), the Indore Bench of the Income Tax Appellate Tribunal examined whether an appellate order passed by the Commissioner of Income Tax (Appeals), NFAC, could stand when critical hearing notices were not served on the assessee at the email address specified in Form No.35.

The dispute related to Assessment Year 2018-19, where reassessment proceedings under Section 147 read with Section 144B of the Income Tax Act 1961 culminated in substantial additions under Section 69A on account of alleged unexplained money.

The Tribunal ultimately held that:

  • The CIT(A) order was effectively ex parte;
  • Service of some notices on an incorrect email ID vitiated the appellate proceedings;
  • There was a breach of principles of natural justice; and
  • The matter required fresh adjudication by the CIT(A) after proper service of notice.

Accordingly, the order of the CIT(A) was quashed and the appeal was restored for de novo consideration.

Facts of the Assessment and First Appeal

Reassessment and Addition Under Section 69A

  1. The Assessing Officer (“AO”) completed reassessment under Section 147 read with Section 144B.
  2. The assessee had originally filed a return of income under Section 139 declaring Rs. 288 and similarly declared Rs. 288 in the return filed in response to notice under Section 148.
  3. The AO, however, assessed the total income at Rs. 15,22,259, having made an addition of Rs. 15,21,971 under Section 69A on the footing that the assessee failed to explain the source of certain money.
  4. The broad controversy before the appellate authorities thus revolved around the taxability of this alleged unexplained money.

Aggrieved by this reassessment order dated 28.03.2024 (bearing number ITBA/AST/S/147/2023-24/1063537846(1)), the assessee preferred a first appeal under Section 246A before the CIT(A), NFAC.

CIT(A)’s Ex Parte Dismissal of the Appeal

In the impugned appellate order dated 08.12.2025 (ITBA/NFAC/S/250/2025-26/1083405833(1)), the CIT(A) dismissed the appeal, primarily on the ground of non-prosecution and non-compliance with hearing notices.

The CIT(A) recorded that six notices under Section 250 were issued during the appellate proceeding as under:

  • Notice dated 08.07.2025 – hearing fixed on 15.07.2025 – no response
  • Notice dated 04.09.2025 – hearing fixed on 11.09.2025 – no response
  • Notice dated 29.10.2025 – hearing fixed on 05.11.2025 – no response
  • Notice dated 07.11.2025 – hearing fixed on 14.11.2025 – adjournment sought by the assessee
  • Notice dated 14.11.2025 – hearing fixed on 27.11.2025 – no response
  • Notice dated 28.11.2025 – hearing fixed on 05.12.2025 – no response

The CIT(A) noted, relying on the ITBA system records, that all notices had been successfully delivered through the portal, and concluded that the assessee was not interested in prosecuting the appeal.

Judicial Precedents Relied Upon by CIT(A)

In dismissing the appeal, the CIT(A) invoked certain judicial authorities:

  • B.N. Bhattacharjee and Another (118 ITR 461) of the Hon’ble Supreme Court, to emphasize that an appeal entails not only filing the memo but also actively pursuing it.
  • M/s Chemipol vs. Union of India (Excise Appeal No. 62 of 2009) of the Hon’ble Bombay High Court, which recognized the inherent power of appellate authorities to dismiss an appeal for non-prosecution.
  • Observations of Hidayatullah, C.J. in Sunderlal Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260, to underline that when a party who initiates proceedings does not appear, a tribunal has an inherent right to dismiss the matter rather than keep it pending indefinitely.

The CIT(A) also stressed that: