SANTOSH MAHENDRA JAIN,MUMBAI vs. INCOME TAX OFFICER, WARD 19(3)(1), MUMBAI

आदेश / ORDER PER SMT. BEENA PILLAI, JUDICIAL MEMBER:

Present appeal is filed by the assessee against the order dated 26/11/2024 passed by the National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “Ld. CIT(A)”] for A.Y. 2016- 17, on the following grounds of appeal:-

“ON JURISDICTION:

1.1 In the facts and circumstances of the case and in law, the assessment order passed by the Learned Assessing Officer [“the Ld. AO” for short] is bad in law and void and the said order deserves to be quashed for want of jurisdiction. ON MERITS: 2.1 The Learned Commissioner of Income Tax (Appeals) erred in confirming the action of the Ld. AO in initiating the reassessment proceedings by invoking the provisions of Section 147 r.w.s 144B of the Income Tax Act, 1961 (“the Act”). 2.2 While doing so the Ld. CIT(A) failed to appreciate that: (i) in the facts and circumstances of the case and in law the case of the assessee did not fall within the parameters laid down by section 147 r.w.s 144B of the Act, as the necessary conditions for initiation as well as completion thereof were not fulfilled; (ii) in the facts and circumstances of the case and in law the reassessment framed is bad, illegal and void. (ii) The Learned AO at Assessment Unit, ITD has erred in considering Rs. 1,65,00,000/- towards purchase of immovable property as unexplained investments U/s 69 of the Income Tax Act, 1961. (iii) The Learned AO at CPC has erred in considering Rs.9,357/- of Interest Income as Undisclosed Income. 2.3 It is submitted that in the facts and circumstances of the case and in law no such disallowance was called for. 3. The appellant craves leave to add, amend, alter, modify or delete all or any of the grounds raised in the appeal.”

2.1. The assessee has further stated that on 12/03/2024, while checking the Income-tax portal, his tax return filing consultant informed him that an assessment order appeared to have been passed in his case on an ex parte basis. Upon becoming aware of the assessment order passed u/s. 147 r.w.s. 144 of the Act, the assessee sought advice from the said tax consultant, who informed him that no notices had been received by him through email. The assessee was advised to prefer an appeal before the Ld. CIT(A). Accordingly, an appeal was filed before the Ld. CIT(A). It has been stated that the email ID mentioned in Form No. 35 was provided by the said consultant and the assessee was assured that all future notices and communications in the matter would be monitored by him.

2.2. It is further stated in the affidavit that the assessee came to know about the ex parte appellate order only when his bank account was attached by the Income-tax Department on 21/03/2026. On making enquiries, the assessee came to know for the first time that the Ld. CIT(A) had already passed an ex parte order dated 26/11/2024. The assessee has explained that the email ID mentioned in Form No. 35 did not belong to him and was provided by the then Chartered Accountant/Consultant. The assessee had no control over the said email account and, therefore, could not respond to the communications sent thereon. Immediately thereafter, the assessee appointed a new tax consultant, who, upon examining the records, advised him to prefer the present appeal before this Tribunal. The appeal was thereafter filed at the earliest possible opportunity. It has also been affirmed that the delay of 423 days was neither deliberate nor intentional but occurred due to bona fide circumstances beyond the assessee’s control.

2.3. It is noted that there is no mala fide intention on behalf of the assessee in not filing the present appeal before this Tribunal within the period of limitation. Nothing to establish any such intention has been filed by the Revenue before this Tribunal. In our opinion, there was sufficient cause for condoning the delay as observed by the Hon’ble Supreme Court in the case of Collector Land Acquisition vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471.

2.4. We refer to the Third Member decision of Hon’ble Chennai Tribunal in the case of People Education & Economic Development Society vs. ITO, reported in 100 ITD 87 (TM) (Chennai), wherein it was held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, as the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay.

2.5. It is also necessary to ascertain whether there was excessive or inordinate delay in the present facts of the case. Hon’ble Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadar & Ors., reported in 153 ITR 596, considered a situation of condonation of delay and held that where there exists a reasonable cause, the period of delay may not be a relevant factor.

2.6. We also refer to the decision of the Co-ordinate Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. vs. Jt. CIT (AT), reported in 277 ITR 1, wherein this Tribunal condoned the delay of 180 days. It was noted that the Revenue had not filed any counter- affidavit opposing the application of the assessee for condonation of delay. The Hon’ble Supreme Court under similar circumstances in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi, AIR 1978 SC 537, considered the absence of an affidavit in opposition while dealing with an application for condonation of delay.

2.7. In the present facts of the case, we note that no affidavit has been furnished by the Revenue countering the condonation application of the assessee. We also draw support from the observations of the Hon’ble Supreme Court in the case of Collector Land Acquisition vs. Mst. Katiji & Ors. (supra), wherein the importance of advancing substantial justice over procedural technicalities has been emphasised.

Assessee, an individual, did not file return of income u/s. 139(1) of the Act for the year under consideration. The case of the assessee was reopened on the basis of information that the assessee had purchased an immovable property amounting to Rs.1,65,00,000/- and had earned interest income of Rs.9,357/- from Dhanalaxmi Bank during the year under consideration. A show cause notice u/s. 148A(b) was issued on 13/02/2023, to which no reply was filed. Thereafter, order u/s. 148A(d) was passed on 24/03/2023 and notice u/s. 148 was issued on the same date. The assessee did not file return of income in response thereto. Subsequently, notices u/s. 142(1) were also issued.

4.1. The Ld.AO noted that there was no compliance to the notices issued during the assessment proceedings. On the basis of the information available on record and the copy of the purchase deed collected from the Registrar, the Ld.AO treated the amount of Rs.1,65,00,000/- paid towards purchase of the immovable property as unexplained investment u/s. 69 of the Act. The interest income of Rs.9,357/- was also brought to tax as undisclosed income. Accordingly, the assessment was completed u/s.147 r.w.s. 144 and 144B of the Act determining the total income of the assessee at Rs.1,65,09,357/-.

Aggrieved by the assessment order, the assessee preferred appeal before the Ld.CIT(A).

5.1. The Ld.CIT(A), taking note of the non-compliance by the assessee and observing that there was no material available during the appellate proceedings warranting a view contrary to that taken by the Ld.AO, dismissed the appeal vide impugned order dated 26/11/2024.

Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us.

We have perused the submissions advanced by both sides in light of the record placed before us.

6.1. We note that the assessment proceedings culminated in an ex parte assessment u/s.147 r.w.s.144 and 144B of the Act. It is also an admitted position that the proceedings before the Ld.CIT(A) were concluded without effective participation of the assessee. The reasons for such non-compliance have been explained by the assessee in the affidavit filed before us in support of the application seeking condonation of delay.

6.2. Considering the facts and circumstances of the case, particularly the reasons explained by the assessee for non- compliance and the fact that both the assessment order as well as the first appellate order have been passed ex parte, we are of the considered view that the interest of substantial justice would be served by affording the assessee one final opportunity to substantiate his claim. However, the repeated non-participation before the lower authorities has resulted in avoidable litigation and wastage of judicial time. Therefore, while restoring the matter, it is considered appropriate to impose a nominal cost.

6.3. Accordingly, subject to the assessee depositing a sum of Rs.5,000/- with the Legal Aid Cell of the Hon’ble Bombay High Court within 30 days from the date of receipt of this order and furnishing proof of such payment before the Ld. AO, we set aside the impugned orders of the authorities below and restore the matter to the file of the Ld.AO for de novo adjudication. The Ld.AO shall examine the issues afresh after considering the evidence that may be produced by the assessee, afford a reasonable and effective opportunity of being heard, and thereafter pass a speaking order in accordance with law. The assessee shall extend full cooperation and furnish all such details and evidences as may be called for by the Ld.AO.

Accordingly, the grounds raised by the assessee are allowed for statistical purposes.

In the result, appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 11/09/2026.

Sd/- Sd/-

PRABHASH SHANKAR BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 11/09/2026 Shamik Sr. P.S.

Copy to: SANTOSH MAHENDRA JAIN, 705, 7TH FLOOR, ASHIRWAD 1 BUILDING, 10TH KHETWADI, MUMBAI-400004, MAHARASHTRA

INCOME TAX OFFICER, WARD 19(3)(1), PIRAMAL CHAMBER,LALBAUG 2 MUMBAI, MUMBAI-400012, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE