GURUPADAPPA MALLAPPA HAVINAL,GADAG V. INCOME TAX OFFICER , WARD -2, GADAG

ITA 867/BANG/2025

AI Insights

The case involves an appeal by the legal heir of the late Gurupadappa Mallappa Havinal against the order of the CIT(A)-1, Chandigarh, which confirmed the addition of  11,86,363 as unexplained investment and non-genuine credits under sections 69 and 68 of the Income Tax Act, 1961. The additions were based on findings from a survey and subsequent assessment proceedings, which revealed discrepancies in the financial transactions reported by the assessee and his son's business. The tribunal noted that the CIT(A) had dismissed the appeal ex parte due to non-prosecution, and thus decided to restore the appeal for a detailed examination on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822460 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 14-04-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R. GHALE; STANDING COUNSEL
• Assessee Lawyers: ANUSHA
• Keywords: Unexplained investment
• Section: 148; 143(3); 142(1); 68; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT ITA No.867/Bang/2025 Assessment year : 2012-13 Late Gurupadappa Mallappa Havinal, Through Legal heir Shri Hemagirish Gurupadappa Mallappa Havinal No.1675/A, Hemaraddi Mallamma Nagar, Koppal Road, Mundargi – 582 118. PAN: AEXPH 9407F Vs. The Income Tax Officer, Ward 2, Gadag. APPELLANT RESPONDENT Appellant by : Ms. Anusha, Advocate Respondent by : Shri Ganesh R. Ghale, Advocate, Standing Counsel. Date of hearing : 24.11.2025 Date of Pronouncement : 22.12.2025 O R D E R 1. This appeal is filed by late Gurupadappa Mallappa Havinal (the assessee/appellant) for the assessment year 2012-13 against the appellate order passed by the CIT(A)-1, Chandigarh [ld. CIT(A)] dated 13.8.2024 wherein the appeal filed by the assessee against the Printed from counselvise.com ITA No.867/Bang/2025 Page 2 of 6 assessment order passed u/s. 148 r.w.s 143(3) of the Income-tax Act, 1961 [the Act] dated 31.3.2015 by the ITO, Ward 2, Gadag was dismissed. 2. In this appeal the assessee is aggrieved with the addition of ₹ 1,186,000 on account of the amount standing as credit of his son added under section 69 of the income tax act which is confirmed by the learned CIT – A ex parte. 3. The facts shows that the assessee is an individual and deriving income in the form of pension, interest on saving accounts. He has filed the return of income for the assessment year 2012-13 on 30-09-2012. The return of income filed was processed u/s. 143(1) of the Income Tax Act, 1961, accepting the returned income. Subsequently, a survey u/s.133A of the Income Tax Act, 1961, was conducted at the business premises of M/s. Hemagirish Krishi Kendra, Mundargi, owned by the assessee's son, Shri. Hemagirish.G. Havinal. During the course of survey, loose sheet bundle marked HKK-19 was impounded and on analyzing the loose sheets, it was found that the assessee has given cash advance for purchase of immoveable property. On cross verification of transactions entered in the loose bundle with reference to the return of income filed, it was found that the transaction was not reflected in the return of income. 4. In view of the above, notice u/s' 148 of the Income Taх Act 1961 was issued reopening the assessments. There was no response from the assessee's side with reference to the notice issued. Further, notice Printed from counselvise.com ITA No.867/Bang/2025 Page 3 of 6 142(1) of the Income Tax Act, 1961, was issued and served on the assessee. During the course of assessment proceedings, on verification of return of income along with balance sheet filed by the assessee, it was found that the assessee has shown M/s. Hemagirish Krishi Kendra as creditor for Rs.11,86,363/-. However, on cross verification of return of income along with the enclosures filed for the assessment year 2012- 13 by M/s Hemagirish Krishi Kendra, Mundargi, it was found that the above party has shown the assessee as creditor for Rs.11,86,363/- resulting in the assessee not accounting debtor to the tune of Rs.11,86,363/- and showing non-genuine credits to the tune of Rs.11,86,363/-. In this regard, the authorised representatative present was asked to furnish explanation for the same. However, he has failed to furnish any explanation for the same. As the assessee has failed to furnish any explanation for the nature and source of investment in the above said debt amount and also the creditor shown is non-genuine, the amount of Rs.11,86,363/- is treated as unexplained investment and treated as income of the assessee u/s. 69 of the Income Tax Act 1961 and Rs.11,86,363/-. is treated as unproved creditors and treated as cash creditors and treated as income of the assessee u/s. 68 of the Act . 5. On Appeal Before the ld CIT (A) , assessee did not respond to several notices and therefore CIT (A) passed an ex parte order dismissing appeal of the assessee as under :- \"During the course of assessment proceedings, on verification of return of income along with balance sheet filed by the assessee, it Printed from counselvise.com ITA No.867/Bang/2025 Page 4 of 6 was found that the assessee has shown M/s. Hemagirish Krishi Kendra as creditor for Rs.11,86,363/-. However, on cross verification of return of income along with the enclosures filed for the assessment year 2012-13 by M/s Hemagirish Krishi Kendra, Mundargi, it was found that the above party has shown the assessee as creditor for Rs. 11,86,363/- resulting in the assessee not accounting debtor to the tune of Rs.11,86,363/- and showing non-genuine credits to the tune of Rs.11,86,363/-. In this regard, the authorised representative present was asked to furnish explanation for the same. However, he has failed to furnish any explanation for the same. As the assessee has failed to furnish any explanation for the nature and source of investment in the above said debt amount and also the creditor shown is non-genuine, the amount of Rs.11.86,363/- is treated as unexplained investment and treated as income of the assessee u/s. 69 of the Income Tax Act 1961 and Rs.1 1.86,363/- is treated as unproved creditors and treated as cash creditors and treated as income of the assessee u/s. 68 of the Income Tax Act. 1961, and brought to tax accordingly, (total amount Rs.23,72,726/-)\" 6. The assessee is aggrieved and in appeal before me. It was submitted that the assessee has passed away and the legal heirs have been brought on record. It was stated that the appeal of the assessee is disposed of by the learned CIT – A for non-prosecution in confirming the action of the learned assessing officer as per the reasons given in the assessment order. It was submitted that it's an ex parte order and therefore it needs Printed from counselvise.com ITA No.867/Bang/2025 Page 5 of 6 to be restored back to the file of the learned CIT – A so that proper explanation can be granted before him in the appeal can be decided on the merits. 7. In view of the above facts the learned departmental representative also submitted that the issue needs to be restored back to the file of the learned CIT – A. 8. We have carefully considered the rival contention and perused the orders of the learned lower authorities. Before the learned assessing officer the assessee got proper opportunity of hearing and therefore the assessment order was passed after considering the case of the assessee. However before the learned CIT – A the assessee did not appear and the order was passed ex parte. In such circumstances, the issue needs to be restored back to the file of the learned CIT – A to decide the issue on the merits of the case. This is also relevant for the reason that the learned assessing officer has made an addition to the extent of only ₹ 11 lakhs but the learned CIT – A has confirmed the addition of ₹ 22 lakhs. There is no reference of issuing of any notice under section 251 of the act also. Therefore in the interest of justice we restore the whole appeal back to the file of the learned CIT – A and direct the assessee to submit proper details and avail of the opportunity of hearing. The learned CIT – A may decide the issue after hearing the assessee on its merit in accordance with the law. Printed from counselvise.com ITA No.867/Bang/2025 Page 6 of 6 9. In the result appeal filed by the assessee is allowed for statistical purposes. Pronounced in the open court on this 22nd day of December, 2025. Sd/- ( PRASHANT MAHARISHI ) VICE PRESIDENT Bangalore, Dated, the 22nd December, 2025. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. Printed from counselvise.com "