NITIN SHANTARAM SAWARKAR,MUMBAI vs. ITO WARD 41(4)(3), MUMBAI

PER RATNA DASGPUTA, AM

The captioned appeal by the assessee arises from order dated 08/04/2025 passed by the National Faceless Appeal Centre [hereinafter referred to as Ld. CIT(A)] under section 250 of the Income tax Act - hereinafter referred to as “the Act”, on the following grounds:-

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i. On the facts & in the circumstances of the case and in law the Hon'ble CIT (A) erred in passing an exarte order u/s 250 of the Act and confirming the addition made by the Id. Assessing Officer and the reasons assigned for doing so are wrong and contrary to the provisions of Income Tax and rules made there under. ii. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) has erred in dismissing the appeal in limine by rejecting the application for condonation of delay, without appreciating that the delay in filing the appeal was due to sufficient and reasonable cause and not on account of any willful neglect or deliberate inaction on the part of the appellant and the reasons assigned for doing so are wrong and contrary to the provisions of Income Tax Act and Rules made there under. iii. On the facts and in the circumstances of the case and in the law, the Hon’ble CIT(A) erred in confirming the penalty of Rs. 5,44,612/- levied by the Ld. AO u/s 271AAC(1) of the Act and the reasons assigned for doing so are wrong and contrary to the provision of Income Tax and rules made there under. iv. Your appellant crave, leave to add, alter, amend or modify any or all grounds of appeal on or before the date of hearing. 2. Brief facts of the case are that the assessee, an individual, filed his return of income for AY 2017-18 on 20/08/2017 declaring total income of Rs. 8,98,160/-. As per information available with the Income-tax Department, the assessee had made the following transaction during the relevant year:-

Sr. Transaction Date Transaction Stamp duty Description No. Amount value 1. 08.04.2016 Rs. Rs. Property 70,50,000/- 72,50,000/- purchased

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In view of the above, the Ld. Assessing Officer (AO) had reason to believe that income otherwise chargeable to tax has escaped assessment. Accordingly, with the prior sanction of the competent authority under Section 151 of the Act, the case was reopened for assessment as per provisions of Section 147 by issue of notice under Section 148 dated 12/07/2022. The assessee, however, did not file return of income in response to the notice u/s 148 of the Act, nor did he respond to the notices subsequently issued u/s 142(1), or even to the show-cause notice issued on 14/02/2023. In view of such repeated non-compliance, the Ld. AO completed the assessment u/s 144 of the Act to the best of his judgment. He noted that in the absence of any replies from the assessee, the source of investment in the purchase of the impugned immovable property could not be authenticated. Hence, the investment made in the immovable property to the tune of Rs. 70,50,000/- was treated as unexplained investment within the meaning of Section 69B of the Act. Further, since the impugned property was purchased for Rs. 70,50,000/- as against stamp duty value of the property at Rs. 72,50,000/- the differential of Rs. 2,00,000/- was added back to the assessee’s total income as per provisions of section 56(2)(vii)(b) of the Act. Penalty proceedings u/s 271AAC(1) of the Act were simultaneously initiated. After persistent non- compliance from the assessee’s end to notices issued even at the penalty stage, the Ld. AO levied penalty of Rs. 5,44,612/-u/s

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271AAC(1) of the Act for addition made u/s 69B vide his order dated 14/09/2023.

2.1 Aggrieved by the initiation of penalty, the assessee carried the matter in appeal before the Ld. CIT(A). However, there was a delay of 475 days in filing Form- 35. The Ld. CIT(A) issued multiple notices of hearing for providing due opportunity to the assessee, but after seeking an initial adjournment the assessee did not respond to the notices issued by him. The Ld. CIT(A) did not find merit in the reasons given in column No. 15 of Form 35 explaining the delay in filing appeal, and he did not condone the delay. Otherwise also, he held - on the basis of judicial precedents which he has cited in his order - that the law aids those who are vigilant and not those who sleep upon their rights. Taking the stand that the assessee is not interested in prosecuting the appeal, he dismissed the appeal.

2.2 It is against the above order of the Ld. CIT(A) confirming the penalty levied by the Ld. AO u/s 271AAC(1) of the Act that the assessee has preferred further appeal before this Tribunal.

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technical procedure involved in income tax litigation, the assessee was entirely dependent upon his tax consultant for necessary compliance during the income tax proceedings. Referring to the affidavit placed on record, she pointed out that the assessee is not equipped to handle online communications, and that he does not even possess a computer, because of which he was not aware of the proceedings before the Ld. CIT(A). As stated, he came to know about disposal of his appeal only when he received a notice for recovery of outstanding tax dues. The affidavit states that it was only then that he approached his tax consultant who, it seems, was also not aware of the notice issued by the Ld. CIT(A). Through the tax consultant, the assessee thereafter approached a Chartered Accountant who advised him to file second appeal before the ITAT, Mumbai. It is the Ld. AR’s contention that the delay in filing the appeal was in view of all this confusion and that the same was neither intentional nor deliberate.

3.1 We have duly considered the contents of the assessee’s affidavit and have also noted the repeated non-compliance by the assessee both before the Ld. AO and the Ld. CIT(A).The penalty order of the Ld. AO was completed ex parte in the absence of any response from the assessee. Thereafter, there was a delay of 475 days in filing appeal before the Ld. CIT(A). Even after filing the appeal, the assessee did not comply with the notices issued by the

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Ld. CIT(A). The Ld. CIT(A) did not condone the delay in filing the appeal and dismissed the same, holding that the assessee was obviously not interested in prosecuting the appeal. Now, even before this Tribunal, the assessee has made a delay of 315 days in filing Form 36. In this backdrop, the assessee has created for itself a very bad record, which reflects negligence and a cavalier approach. The reasons given in the affidavit are also very general and cannot be an excuse for complete non-compliance at every stage of the income tax proceedings. Given the facts outlined above, it is difficult to accept the assessee’s contention that the persistent non- responsiveness on his part was not intentional. On the contrary, what flows from the sequence of events is that the assessee has displayed utter irresponsibility towards his duties as a tax payer. In view of the above, we have, by our order of even date in quantum appeal for the same year in the assessee’s own case (ITA 5789/Mum/2026) imposed cost of Rs. 10,000/- to be paid in favour of the State Legal Services Authority.

3.2 However, considering that one of the prime functions of this Tribunal is to administer justice, and also considering that both the penalty order of the Ld. AO and the order of the Ld. CIT(A) confirming the penalty imposed, were completed without any explanation or evidence from the assessee’s end, we consider it fit to remand this penalty matter to the file of Ld. CIT(A) for fresh

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adjudication as per law after giving the assessee sufficient opportunity to present his case. The assessee is directed to explain afresh the reasons for his delay in filing appeal, and fully co-operate in the said proceedings and furnish whatever information/documents that may be required.

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

Sd/- Sd/- (BEENA PILLAI) (RATNA DASGPUTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 11/09/2026 Z.U., P.S.

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER,

//True Copy// (Assistant Registrar) ITAT, Mumbai