Woman ignores 4 tax notices, faces Rs 1.55 Cr tax additions: What ITAT says next

October 2, 2026 

Delhi ITAT has given a taxpayer another chance to contest nearly Rs 1.55 crore in tax additions after she failed to respond to four notices from the CIT(A). The tribunal said an appeal cannot be dismissed without examining the issues on merits and passing a reasoned order, while also making it clear that the taxpayer must cooperate in the fresh proceedings.

A taxpayer failed to respond to several notices issued during an income-tax reassessment and later did not appear before the Commissioner of Income Tax (Appeals), or CIT(A), either. The CIT(A) dismissed her appeal and upheld the tax additions made by the Assessing Officer.

The matter then reached the Income Tax Appellate Tribunal (ITAT), Delhi. The tribunal has now set aside the CIT(A)’s order and sent the case back for a fresh decision.

The ITAT said that even when a taxpayer does not respond to notices, the CIT(A) cannot simply dismiss the appeal without examining the issues raised and giving reasons for the decision.

However, the tribunal also made it clear that the taxpayer was herself responsible for not complying with the notices. The fresh opportunity comes with a clear condition: she must now cooperate with the appellate proceedings.

How the tax dispute started

The case relates to Jusbinder Kour for assessment year 2020-21.

Kour had filed her income-tax return on January 4, 2021, declaring total income of Rs 10.41 lakh. The income declared was from salary.

The tax department later received information about cash deposits of Rs 21.90 lakh and purchase of an immovable property worth Rs 74 lakh. According to the Revenue, these transactions did not appear to be in line with the income declared by the taxpayer.

The Assessing Officer asked Kour to explain the transactions. However, there was no response.

The department then initiated reassessment proceedings under Section 148 of the Income Tax Act. Several statutory notices were issued under Sections 148, 142(1) and 144, along with show-cause notices. The tribunal noted that there was no response from the taxpayer during the reassessment proceedings.

The Assessing Officer then sought information directly from Punjab and Sind Bank and Union Bank of India under Section 133(6).

The bank information showed total cash deposits and other credits of Rs 80.94 lakh. This figure excluded a Rs 34 lakh loan received by the taxpayer.

Since the taxpayer did not explain the nature and source of the remaining deposits and credits, the AO treated Rs 80.94 lakh as unexplained money under Section 69A and added it to her income.

The AO also made a separate addition of Rs 74 lakh under Section 69 for the investment in the immovable property, as the source of the investment had not been explained.

This meant that the two major additions under dispute were Rs 80.94 lakh and Rs 74 lakh, taking the total to nearly Rs 1.55 crore.

Taxpayer did not respond to four CIT(A) notices

Kour challenged the assessment before the CIT(A). But the problem continued at the first appellate stage.

The CIT(A) issued as many as four notices during the appeal proceedings. According to the ITAT order, Kour did not respond to any of them.

The CIT(A), therefore, concluded that the taxpayer was not interested in pursuing the appeal and dismissed it while confirming the assessment order passed by the AO.

Kour then approached the ITAT. Her counsel argued that the CIT(A) had passed an ex parte order without deciding the issues on merits. The counsel also produced bank statements before the tribunal.

The taxpayer’s counsel said that the bank loan received by Kour needed to be excluded and could be verified by the tax authorities. It was also submitted that she had taken a home loan to purchase the property and had received amounts from relatives for the acquisition.

The counsel also submitted that health conditions had prevented the taxpayer from complying with the proceedings before the AO. Kour sought another opportunity to present the relevant documents and explain the transactions.

What did the ITAT say?

The ITAT agreed that the CIT(A)’s order could not stand. The tribunal noted that the CIT(A) had dismissed the appeal ex parte without deciding the issues on merits. It described the order as a “non speaking cryptic order”.

The tribunal said Section 250(6) requires the CIT(A) to pass a reasoned and speaking order. The appellate authority has to state the points for determination, its decision on those points and the reasons for the decision.

In simple terms, the ITAT said that an appeal cannot be disposed of merely by saying that the taxpayer did not respond to notices. The appellate authority has to examine the issues raised in the appeal and give reasons for its decision.

The tribunal also noted that the CIT(A) had not made any inquiry or even called for the assessment records. This was significant because the taxpayer was claiming that a home loan and amounts from relatives had been used for the property purchase. The tribunal said these claims could be examined by the authorities.

Ignoring notices does not mean the taxpayer automatically wins

The ruling does not mean taxpayers can ignore income-tax notices and expect relief later. In fact, the ITAT specifically pointed out that Kour had failed to comply with the notices issued by the CIT(A).

The tribunal said the taxpayer was “equally responsible” for her difficulties because she had not filed the required documents and details despite the notices.

The distinction is important. The ITAT did not say that the Rs 80.94 lakh or Rs 74 lakh additions were wrong. It only held that the CIT(A) should not have dismissed the appeal without examining the issues and passing a reasoned order.

Case sent back for fresh hearing

The ITAT set aside the CIT(A)’s order and sent the matter back to the CIT(A) for fresh adjudication. The taxpayer will now get an opportunity to present her case. The CIT(A) has been directed to give both sides an opportunity to be heard and decide the issues in accordance with law.

But the taxpayer has also been given a clear warning. She must comply with the notices issued during the fresh proceedings. If she again fails to respond, the CIT(A) can decide the appeal ex parte on merits, while still following the requirements of Section 250(6).

The ITAT also made it clear that it had not expressed any opinion on the merits of the tax additions.

What taxpayers should learn from the case

The case offers an important lesson for taxpayers facing an income-tax notice. Ignoring a notice can make a tax dispute much more difficult. The department can proceed with the assessment based on the information available with it. In this case, the AO obtained information directly from the banks after the taxpayer did not respond.

At the same time, when an appeal reaches the CIT(A), the appellate authority has to deal with the issues raised in the appeal and give reasons for its decision.

Dinkar Sharma, Partner, Jotwani Associates, said, “The ruling highlights an important point for taxpayers: non-compliance with notices can weaken a case, but an appellate authority still has to examine the issues raised and pass a reasoned order. Taxpayers should therefore respond to notices on time and keep proper documents ready to explain the source of deposits, loans and investments.”

The ITAT’s order, therefore, gives Kour another opportunity to explain the disputed transactions. It does not provide a clean chit on the tax additions.

The case has been restored to the CIT(A), and the next decision will depend on the documents and explanations furnished by the taxpayer.

Disclaimer: This story is based on the order of the Income Tax Appellate Tribunal, Delhi, in the case of Jusbinder Kour vs ITO for assessment year 2020-21. The ITAT has not decided the merits of the tax additions. Taxpayers should seek professional advice based on their individual facts and documents.

[The Financial Express]