MUTHUSAMY SELVARAJ,COIMBATORE vs. ITO, NCW-4(1), COIMBATORE

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ITA 3609/CHNY/2026Status: DisposedITAT Chennai20 August 2026AY 2018-197 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay, finding the reasons to be bonafide and not due to wilful negligence. Consequently, the orders of the CIT(A) and AO were set aside.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed in limine due to a 785-day delay. The assessee claimed the delay was due to business closure, a dormant email ID, and subsequent unawareness of proceedings until summons were received.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) was sufficiently explained and whether the ex-parte assessment and penalty orders should be set aside.

Which sections of the Income-tax Act were involved?

Section 250,Section 147,Section 144,Section 144B,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 19.08.2026Pronounced: 20.08.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: These appeals filed by the assessee are directed against two orders of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 22.04.2026 & 30.04.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.

ITA Nos.3608 & 3609/CHNY/2026 - 2 - Muthusamy Selvaraj 2. The assessee has filed these appeals against the First Appellate Authority (FAA) orders in respect of quantum addition and penalty order. First, let us deal with appellate order in respect of quantum addition in ITA No3608/CHNY/2026 for assessment year 2018-19.

ITA No.3608/CHNY/2026 3. At the very outset, we notice that the First Appellate Authority (FAA) dismissed the assessee's appeal in limine without adjudicating the issues on merits. The FAA observed that there was a delay of 785 days in filing the appeal. The reason stated by the assessee in its petition for condonation of delay was that due to continuous losses in business, the business was discontinued and the administrative office was closed. The e-mail ID of the assessee was earlier monitored by the administrative staff and, consequent to closure of the administrative office, the notices sent to the said e-mail ID went unnoticed. The assessee, therefore, remained unaware of the proceedings and the order passed by the AO. It was only upon receipt of summons from the Department in August, 2025, that the assessee came to know about the order and thereafter consulted a lawyer and tax counsel and filed the appeal. The FAA held that the explanation was not acceptable and did not constitute sufficient cause for condoning the inordinate delay of 785 days. Accordingly, the FAA declined to condone the delay and dismissed the appeal in limine.

ITA Nos.3608 & 3609/CHNY/2026 - 3 - Muthusamy Selvaraj

4.

Aggrieved by the order of the First Appellate Authority (FAA), the assessee is in appeal before the Tribunal. The Ld. AR submitted that the assessee is an individual who was engaged in textile business under the name and style of Sri Gayathri Spinning Mills. Due to continuous losses, the bank loans became NPA and the business was discontinued in December, 2017, resulting in closure of the administrative office. During the year under consideration, the assessee sold immovable properties for Rs.9.29 crores and utilised the sale proceeds for settling the bank dues. It was submitted that, as the assessee had not filed the return of income, the assessment was reopened and the statutory notices were sent to the erstwhile business e-mail ID, which was originally monitored by the administrative staff. Since the business and administrative office had already been closed, the said e-mail ID was no longer monitored and the notices sent through e-mail as well as by post went unnoticed. Consequently, the assessee could not respond to the notices and the reassessment was completed ex-parte u/s.147 r.w.s. 144 r.w.s. 144B of the Act on 16.01.2024. The assessment order was also sent to the same dormant e-mail ID and, therefore, remained unnoticed. The Ld. AR further submitted that the assessee became aware of the reassessment proceedings only upon receipt of summons from the Department in August, 2025. Thereafter, the assessee approached a

ITA Nos.3608 & 3609/CHNY/2026 - 4 - Muthusamy Selvaraj lawyer and, subsequently, consulted various tax counsels regarding the appropriate remedy. Since differing opinions were received, including filing a writ petition or approaching the jurisdictional CIT under section 264, the assessee was initially unsure of the appropriate course of action. Finally, on the advice of a senior counsel, the assessee was advised to file an appeal before the CIT(A) along with a petition for condonation of delay. The Ld. AR further submitted that the assessment order passed by the AO u/s.144 of the Act was also an ex parte order, as the assessee had no knowledge of the statutory notices issued during the course of the assessment proceedings. It was contended that the delay in filing the appeal before the FAA was occasioned by sufficient and bona fide reasons and was neither wilful nor deliberate. The Ld. AR, therefore, prayed that the delay be condoned and the matter be restored to the file of the AO for fresh adjudication after affording the assessee a reasonable opportunity of being heard. The Ld. AR also undertook that the she would fully co-operate with the proceedings and furnish all necessary details and evidences as and when called upon to do so.

5.

The Ld.DR supported the orders of the AO & the FAA.

6.

We have heard the rival submissions and perused the material available on record. It is an admitted position that the appeal filed by

ITA Nos.3608 & 3609/CHNY/2026 - 5 - Muthusamy Selvaraj the assessee before the FAA was dismissed in limine on account of delay, without adjudicating the issues on merits. We have considered the reasons stated by the assessee in the petition for condonation of delay and the submissions of the Ld. AR. It is an admitted fact that the assessee’s business had been discontinued in December, 2017 and the administrative office was closed. The Ld. AR submitted that the statutory notices as well as the reassessment order were sent to the erstwhile business e-mail ID, which was no longer being monitored. Consequently, the assessee remained unaware of the reassessment proceedings and the order passed by the AO. The Ld. AR further submitted that, in respect of the immovable properties sold during the relevant period, the assessee had already initiated civil proceedings in 2020 seeking cancellation of the sale deeds, alleging that the properties were sold at distress value and that the sale consideration had not been fully received. The assessee became aware of the reassessment proceedings only upon receipt of summons from the Department in August, 2025. Being unaware of the provisions of the Income-tax Act, he immediately approached a lawyer, who advised him to await the outcome of the proceedings relating to cancellation of the sale deeds. Accordingly, the assessee addressed a letter to the JAO seeking the reasons for issuance of the summons. Since no response was received from the JAO, the assessee thereafter consulted legal and tax professionals and took

ITA Nos.3608 & 3609/CHNY/2026 - 6 - Muthusamy Selvaraj steps to file the appeal. Considering the totality of the facts and circumstances, particularly the closure of the business and administrative office, the fact that the notices and reassessment order were sent to the dormant e-mail ID, the pending civil proceedings concerning the sale of the immovable properties and the steps taken by the assessee upon becoming aware of the proceedings, we are of the considered view that the delay was occasioned by bonafide circumstances and cannot be attributed to wilful or deliberate negligence. In the interest of substantial justice, we are inclined to condone the delay of 785 days.

7.

We further notice that the assessment order was also passed ex-parte for the very same reasons, as the assessee could not respond to the statutory notices issued by the AO. Therefore, in the interest of substantial justice, we set aside the order of the FAA as well as the AO and restore the matter to the file of the AO for denovo adjudication in accordance with law, after affording reasonable opportunity of being heard to the assessee. The assessee is directed to co-operate with the Revenue and furnish all requisite details and evidences in support of its claim and shall not seek unnecessary adjournment. It is ordered accordingly.

ITA Nos.3608 & 3609/CHNY/2026 - 7 - Muthusamy Selvaraj ITA No.3609/CHNY/2026 8. The assessee has filed this appeal against the appellate orders confirming the penalty levied by the AO u/s. 270A of the Act. Since, we have already set aside the quantum appeal in ITA No.3608/CHNY/2026 to the files of the AO for fresh adjudication, we deem it appropriate to set aside the penalty order to the files of the AO to decide along with the quantum appeal afresh. It is ordered accordingly.

9.

In the result, the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in the open court on 20th August,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (गगन गोयल) (GAGAN GOYAL) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 20th August, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Coimbatore 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.08.21 14:27:15 +05'30'

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