ABDUL SALAM PORAHA VALAPPIL,MUMBAI vs. ITO 41(1)(1), MUMBAI

During the reassessment proceedings, the Assessing Officer issued notices under section 142(1) dated 12.07.2024 and 14.11.2024, and also a reminder dated 06.11.2024. The Assessing Officer also issued a show-cause notice under section 144 on 21.11.2024 and a final show-cause notice dated 11.02.2025 requiring compliance by 17.02.2025. The assessee did not furnish any response to these notices. The Assessing Officer, therefore, proceeded to complete the assessment to the best of his judgment under section 144 on the basis of the material available on record.

As regards the export transactions, the Assessing Officer observed that the Customs information showed that the assessee had done exports of ₹11,07,06,433/-. Since the assessee did not furnish details of the goods exported, invoices, mode of receipt, relevant bank statements or details of expenditure incurred in relation to the export business, the Assessing Officer held that the nature and source of the amount could not be verified. The Assessing Officer accordingly treated the entire amount of ₹11,07,06,433/- as unexplained money under section 69A of the Act and subjected the same to the special rate of taxation under section 115BBE.

The Assessing Officer further obtained, by issuing notice under section 133(6), the bank statement of Amana Impex, the proprietorship concern of the assessee, from Unity Small Finance Bank Limited. The Assessing Officer noticed cash deposits aggregating to ₹16,17,000/- in the said bank account. Since the assessee did not furnish any explanation regarding the source of these cash deposits, the Assessing Officer treated the amount of ₹16,17,000/- as unexplained money under section 69A and taxed the same under section 115BBE. The Assessing Officer accordingly computed the total income at ₹11,23,23,433/-.

Aggrieved, the assessee preferred an appeal before the learned CIT(A). The assessee filed the appeal on 21.08.2025 against the assessment order dated 20.02.2025. The learned CIT(A) noted that, even after accepting the assessee's claim that the assessment order had been served on 07.04.2025, the assessee had filed the appeal with a delay of 106 days. The assessee explained that his business had closed down, he was not technologically conversant, he did not receive regular professional advice and the delay was neither deliberate nor intended to evade statutory compliance.

The learned CIT(A), however, did not accept the explanation. The learned CIT(A) observed that closure of business or the fact that the assessee was not familiar with technology did not constitute sufficient cause and further observed that the assessee had not produced documentary evidence with respect to engagement of a consultant or the circumstances which prevented the assessee from filing the appeal within the prescribed period. The learned CIT(A) accordingly held that the assessee had failed to establish sufficient cause for the delay and rejected the request for condonation.

The learned CIT(A), therefore, did not to admit the appeal and dismissed it without going into the merits of the additions made by the Assessing Officer. The learned CIT(A) noted that the appeal was not admitted on account of delay and the issues raised by the assessee were consequently not considered on merits.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

We have heard the rival submissions and perused the material available on record. We find that the Assessing Officer completed the assessment ex parte under section 147 read with sections 144 and 144B of the Act and made substantial additions aggregating to ₹11,23,23,433/-.

We further find that the assessee preferred an appeal before the learned CIT(A) with a delay of 106 days. The learned CIT(A) declined to condone the delay and consequently dismissed the appeal without examining any of the additions on merits. Thus, neither during the assessment proceedings nor before the learned CIT(A) have the facts regarding the export transactions and the cash deposits received adjudication on merits after considering the assessee's explanation and supporting evidence.

We observe the fact that the assessee did not exercise the required diligence either during the assessment proceedings or in filing the first appeal within the prescribed period. At the same time, the object of appellate proceedings is to assess the correct tax liability in accordance with law. In the present case, the assessment involves additions exceeding ₹11.23 crore, which includes treatment of the entire Customs-reported export figure of ₹11.07 crore as unexplained money under section 69A of the Act. The assessee, in the proceedings before the learned CIT(A), has sought to dispute the very basis of the Customs figure and has also submitted that the cash deposits were from his business activities which he had duly disclosed. However, the learned CIT(A) dismissed the appeal at the threshold on the ground of limitation.

Considering the overall facts and circumstances, and the substantial quantum of the additions, we are of the considered view that the assessee deserves one opportunity to present his case on merits. In our view, the cause of justice requires permitting the assessee to substantiate his explanations regarding the export transactions and the cash deposits rather than allowing the assessment involving such substantial additions to attain finality without examination of the merits.

Therefore, we hereby, in the peculiar facts of the present case and in the interest of justice, condone the delay of 106 days in filing the appeal before the learned CIT(A) and set aside the impugned appellate order. We restore the entire matter to the file of the learned CIT(A) for de novo adjudication on merits in accordance with law after providing reasonable opportunity of hearing to the assessee.

However, considering the assessee's earlier lack of diligence and non- compliance, we make the restoration subject to payment of costs of ₹5,000/- by the assessee to the Prime Minister's National Relief Fund (PMNRF). The assessee shall deposit the said amount and furnish proof of payment before the learned CIT(A). Upon production of such proof, the learned CIT(A) shall admit the appeal and decide all the grounds raised by the assessee afresh on merits.

The assessee shall also furnish all necessary details, books of account, bank statements, export documents, shipping bills, realisation particulars and such other supporting evidence as he may seek to rely upon. The learned CIT(A) shall consider the same in accordance with law and, wherever necessary, may obtain a remand report from the Assessing Officer before deciding the issues. The assessee shall cooperate in the appellate proceedings and shall not seek unnecessary adjournments.

Accordingly, the appeal of the assessee is allowed for statistical purposes.