Introduction
In the case of Nitiben Nayaneshkumar Trivedi vs. ITO (ITA No. 2499/AHD/2025, Assessment Year 2018-19), the Income Tax Appellate Tribunal (ITAT), Ahmedabad SMC Bench, delivered a significant order on 09 July 2026. The bench, comprising Dr. B.R.R. Kumar, Vice-President, and Shri Rahul Chaudhary, Judicial Member, addressed a classic tension between procedural non-compliance and the principles of natural justice. The core issue revolved around an addition of ₹16,65,812 made under Section 69A of the Income-tax Act, 1961, for unexplained money, arising from time deposits and interest income. While the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] had dismissed the assessee’s case due to consistent failure to respond, the ITAT, in the interest of justice, remanded the matter for a de novo assessment. This commentary provides a deep legal analysis of the tribunal’s reasoning, the procedural context, and the implications for taxpayers facing similar reopening proceedings under Section 147.
Facts of the Case
The Department possessed information that the assessee, Nitiben Nayaneshkumar Trivedi, had undertaken high-value financial transactions during Financial Year 2017-18 relevant to Assessment Year 2018-19. These comprised time deposits aggregating ₹14,00,000 with HDFC Bank Ltd. and interest income of ₹2,65,812 from the same bank. Crucially, the assessee did not file a return of income for that year. Based on this information, the AO reopened the case under Section 147, issued a notice under Section 148 after recording reasons and obtaining approval, and called for a return. Despite this, the assessee failed to file a valid return or respond to statutory notices. During reassessment, the AO verified bank statements confirming the deposits and interest, but the assessee offered no explanation regarding the source of the funds. Consequently, the AO completed the assessment ex-parte under Section 144 read with Section 147, treating the entire amount of ₹16,65,812 as unexplained money under Section 69A read with Section 115BBE.
Aggrieved, the assessee appealed before the CIT(A), National Faceless Appeal Centre, Delhi. The CIT(A) provided four hearing opportunities—on 01.04.2023, 13.01.2025, 14.02.2025, and 06.03.2025—yet the assessee remained non-compliant, seeking adjournments without furnishing any supporting evidence or explanation. Relying on the material available on record, the CIT(A) upheld the AO’s action and dismissed the appeal. The assessee then approached the ITAT.
Reasoning of the ITAT
The ITAT’s reasoning is noteworthy for its balanced approach between enforcing procedural compliance and preserving substantive justice. The tribunal began by acknowledging the assessee’s failure to respond at both the assessment and appellate stages. It observed that the CIT(A) had granted multiple opportunities, but the assessee did not use them. However, during the hearing before the ITAT, the assessee’s counsel prayed for a final opportunity to produce all necessary details, bank statements, and explanations before the revenue authorities.
The ITAT weighed two competing principles. On one hand, the Revenue had a valid prima facie case: the assessee held time deposits and earned interest yet filed no return and offered no explanation. Section 69A, which deems unexplained money as income in the absence of satisfactory explanation, had been correctly invoked. The AO and CIT(A) had followed due procedure—notice, opportunity, and then ex-parte assessment under Section 144. On the other hand, the ITAT noted the legal maxim that taxation proceedings should not be punitive if the assessee is willing to cooperate at a later stage, provided there is no evidence of deliberate evasion beyond mere non-compliance.
The tribunal specifically stated: “Considering the totality of the facts and in the interest of justice, we deem it appropriate to remand the matter to the file of the Assessing Officer for conducting the assessment de novo.” This phrase is crucial. The ITAT did not adjudicate the merits of the addition—meaning it did not determine whether the deposits were actually unexplained. Instead, it directed the AO to redo the assessment from scratch, with a clear warning to the assessee to “submit all relevant bank statements, documents and explanations… and to strictly comply with the notices… without seeking any unnecessary adjournments.”
The reasoning implicitly recognizes that while the assessee had been non-compliant, the amounts involved were substantial and originated from demonstrable bank transactions. The time deposits were with a scheduled bank, and interest income was recorded. The source of those deposits—whether from disclosed savings, gifts, loans, or income—was never examined on merits because the assessee chose silence. By remanding, the ITAT gave one final opportunity to present evidence. It also directed that the matter be heard de novo, implying that both parties start afresh, and the AO is not bound by the earlier ex-parte determination.
Furthermore, the ITAT allowed the appeal “for statistical purposes.” This procedural outcome means that the CIT(A) order was set aside, and the case is restored to the AO for fresh adjudication. The tribunal did not issue any finding on the correctness of Section 69A applicability or the quantum. The use of the phrase “interest of justice” underscores that even when statutory timelines and procedures have been breached, the appellate authority retains inherent power to remand if substantial justice demands it. However, the bench also underlined that the assessee must cooperate—failure to do so may lead to a fresh adverse order.
Conclusion
The ITAT’s decision in Nitiben Nayaneshkumar Trivedi is a pragmatic illustration of how tribunals balance procedural default with the need to avoid irreparable injustice. While the AO and CIT(A) were legally justified in making and upholding the addition under Section 69A due to the assessee’s non-compliance, the ITAT’s remand provides a procedural safety valve. The de novo assessment directs the AO to consider any evidence the assessee may now submit, provided the assessee cooperates fully. For taxpayers, the case serves as a caution: failure to respond at the assessment and first appeal stages will almost certainly lead to an adverse order, and only a persuasive request for one last chance may—under exceptional circumstances—secure a remand. The strict directive to avoid unnecessary adjournments indicates that the ITAT will not tolerate further delays. The merits of the addition remain untouched; the final outcome depends entirely on the evidence the assessee produces before the AO.