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Facts
The assessee claimed exempt agricultural income and income from house property. The Assessing Officer (AO) made additions on account of unexplained agricultural income and house property income, disallowing municipal taxes claimed. The CIT(A) confirmed these additions, and the appeal was filed against this order.
Held
The Tribunal found that the CIT(A) passed the order ex-parte due to the assessee's non-compliance. The Tribunal, in the interest of natural justice, set aside the CIT(A)'s order and restored the matter back to the CIT(A) for fresh adjudication after providing the assessee with an adequate opportunity of hearing.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without affording proper opportunity of hearing to the assessee, and whether the additions made by the AO and confirmed by the CIT(A) were justified.
Sections Cited
69A, 143(3), 250, 234A, 234B, 234C, 271(1)(c), 270A, 271AAC, 24(a)
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Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
Date of Hearing 24.09.2025 Date of Pronouncement 12.11.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 28.02.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, CIT(A)-53, Mumbai[hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 04.05.2023 for the Assessment Year [A.Y.] 2021-22. P a g e | 2 A.Y. 2021-22 Narendra Rupchand Madhani 2. The grounds of appeal are as under:
1. (a) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition of Rs. 2,20,721/- under section 69A of the Income-tax Act, 1961, on account of alleged failure to furnish receipts of agricultural income, despite the appellant having duly submitted the copies of receipts evidencing Agricultural Income during the assessment proceedings before the learned AO and more so, when the appellant earned similar agricultural income in the earlier years and has been accepted by the department in the past. (b) On the facts and circumstances of the case and in law, the learned CIT(A) earned in confirming the action of the AD of treating the agricultural income earned as unexplained Income u/s. 69A of the Income Tax Act.
2. (a) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition made by the Assessing Officer [‘AO’] amounting to Rs. 1,21,823/-under the head ‘Income from House Property w.r.t. Rent received from ‘Reliance Infratel by considering the figure as per Form 26AS i.e. Rs. 5,00,000 as against the actual figure of Rent received i.e. Rs. 3,25,967/- which was reduced due to Covid -
19. (b) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition made by the Assessing Officer [‘AO’] amounting of Rs. 1,14,573/-under the head ‘Income from House Property” by denying the deduction of municipal taxes paid for the two properties, Inspite the appellant furnishing proof of payment of the said municipal taxes before the learned AO during the assessment proceedings for half year on sample basis and also reflected in Bank Statements.
Sr. Property Tenant Share in Total Rent Municipal 70% of the No. Details Property received Taxes Municipal claimed Taxes so (Rs.) disallowed after effect of Section 24(a) of the Act (Rs.) 1. F-202, Tresvista 50% 64,35,000/- 48,676/- 34,073/- Lotus Corporate Park 2. 4/16, Aashish S 100% 4,50,000/- 1,15,000/- 80,500/- Vijay Jain- Nagar Mahalaxmi Building Trading Total 1,63,676/- 1,14,573/- P a g e | 3 A.Y. 2021-22 Narendra Rupchand Madhani (c) Without prejudice to the above, On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the addition of 70% of the Municipal Taxes paid w.r.t. the Property at Lotus Corporate Park Le. Rs. 34,073/- included in Rs. 1,14,573/-under the head “Income from House Property” as it constitutes 100% of the share whereas the appellant’s share is only 50% in the said property. 3. (a) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the addition of Rs.58,333/- on account of alleged receipt of money in the nature of Tenancy Right Transfer Fees merely on basis of conjectures and presumptions. (b) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in sustaining the above-mentioned addition of Rs. 58,333/- based on a excel sheet allegedly retrieved from the desktop of one Shri Chetan Sagar during search proceedings, despite no opportunity being given to the appellant to cross-examine the said person regarding the noting in the excel sheet. (c) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in ignoring the fact that the said Shri Chetan Sagar was never questioned or examined by the Assessing Officer regarding the notings of this sheet relied upon to make the addition.
4. On the facts and in the circumstances of the case and in law, the learned CIT(A) as well as the Assessing Officer erred in not appreciating the submissions and supporting documents filed by the appellant during the Assessment proceedings.
5. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-Tax (Appeals) erred in passing the order u/s 250 of the Act, confirming the action of the Learned AO without affording proper opportunity of being heard which is contrary to the principles of natural justice and settled judicial precedents.
6. The learned Assessing Officer erred in relying upon an Excel sheet allegedly retrieved from an employee’s computer system document lacking authenticity, authorship, and evidentiary value, commonly referred to as a ‘dumb document’. The reliance on such unverified material, without any corroborative evidence or opportunity of rebuttal, and its subsequent confirmation by the CIT (A), is unjust, unfair, and violative of the principles of natural justice.
7. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the charging of interest under sections 234A, 234B, 234C and 234D of the Income-tax Act, 1961, without appreciating the facts of the case.
On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the initiation of penalty proceedings under sections 270A and 271AAC of the Income-tax Act, 1961. P a g e | 4 A.Y. 2021-22 Narendra Rupchand Madhani 3. At the outset, it was noticed that the instant appeal is delayed by 96 days as the appeal was filed on 04.08.2025 as against the statutory time line expiring on 30.04.2025.In this regard, an application for condonation of delay has been submitted by the assessee stating that the Senior Accountant dealing with the matter, due to personal exigencies, could not file the appeal in time. The delay is stated to be bonafide and not intentional. In case of rejection, the assessee would suffer irreparable loss and injury and valuable opportunity of being heard on merits. It is a requested to condone the delay.
On careful consideration of the submissions of the assessee, we are of the considered opinion thatthe delay in filing of the present appeal was not intentional but on account of certain unavoidable reasons arising due to the mistake on part of the dealing staff and also due to lack of familiarity with new mode of e-proceedings. Rejection of the request for condonation may cause genuine hardship to the assessee. In this connection, reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v Mst. Katiji and Others- 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late……..Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being P a g e | 5 A.Y. 2021-22 Narendra Rupchand Madhani defeated….Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period…. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.”Accordingly, in the interest of justice, we condone the delay and proceed to adjudicate the grounds of appeal filed by the assessee.
Facts in brief are that the AO has noted that the assessee had claimed exempt agriculture income of Rs. 2,20,721/-. However, the assessee had not submitted any proof and explanation in regard. Therefore, the AO made addition of Rs. 2,20,721/- u/s 69A of the Act as unexplained income of the assessee. Further, in respect of income from house property, the AO has noted that as per Form 26AS the assessee had received rent of Rs 5,00,000/- from M/s Reliance Infratel. However, he offered rental income of Rs. 3,25,967/-only. The assessee had submitted reconciliation before the AO who computed rental income of the said property at Rs. 3,50,000/- (70% of Rs. 5,00,000/-). Accordingly, he made addition of Rs. 1,21,823/- (3,50,000-2,28,177-as per assessee’s computation) on account of house property income.
P a g e | 6 A.Y. 2021-22 Narendra Rupchand Madhani Further, the AO noted that assessee had claimed municipal taxes of Rs. 1,63,676/- paid during the year. However, the assessee had not submitted any proof regarding payment of municipal taxes before the AO. Therefore, AO disallowed the claim of Rs. 1,63,676/- and accordingly, he enhanced house property income to Rs. 1,14,573/- .Besides, the AO had made addition of Rs. 58,333/- being 1/3rd of Rs.1,75,000/- as Undisclosed income of the assessee.
We find that the appellate order has also been passed in ex- parte manner on account of non-compliance by the assessee and none of the issues raised in the grounds of appeal involved have been adjudicated. Consequently, the ld.CIT(A) could not evaluate the points of consideration so as to give his own decision on objective analysis of all relevant facts and circumstances of the case. It is equally important that it is a fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act and the income tax proceedings rely heavily on the cooperation and active participation of the taxpayer. In the present case, despite the issuance of multiple notices under section 250 of the Act by the ld.CIT(A), no response was made or explanation submitted.
P a g e | 7 A.Y. 2021-22 Narendra Rupchand Madhani 6.1 Considering the entirety of the facts and the circumstances of the case and in the interest of principles of natural justice and fair play, we consider it appropriate to send the entire matter back to the file of the ld.CIT(A) in the light of above discussion, granting one final opportunity to the assessee to advance the arguments and submissions before him, so as to provide details in connection with the merits of the case. Accordingly, in the substantial interest of justice, we set aside the appellate order and restore the entire matter back to the ld.CIT(A) for passing the assessment order de novo after allowing adequate opportunity of hearing to the representatives of the assessee who is also directed to attend the assessment proceedings before the ld.CIT(A) without fail and cooperate with him in furnishing relevant details etc as sought by him.
In the result, the grounds of appeal and the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12/11/2025. NARENDER KUMAR CHOUDHRY PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)