LATHA SHRINIVAS,SATTUR vs. ITO, WARD-2, VIRUDHUNAGAR

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ITA 2647/CHNY/2026Status: DisposedITAT Chennai10 August 2026AY 2017-186 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal and set aside the CIT(A)'s ex-parte order. The case was restored to the AO for de novo adjudication, with a direction for the assessee to cooperate and furnish evidence.

What were the facts?

The assessee failed to appear before the CIT(A) despite multiple opportunities, leading to an ex-parte order confirming additions made by the AO. The assessee cited health issues and auditor negligence for the non-appearance.

What were the issues?

Whether an ex-parte order by the CIT(A) confirming substantial additions without adjudication on merits should be sustained, or if the matter warrants restoration to the AO for fresh consideration due to the assessee's default.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 133(6),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA

Hearing: 20.07.2026Pronounced: 10.08.2026

आयकर अपीलीय अधिकरण, ‘ए’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI श्री एबी टी वर्की, न्याययर्क सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2647/Chny/2026 ननिाारण वर्ा / Assessment Year: 2017-18 Latha Shrinivas, The Income Tax Officer, 10, Thillai Nagar, vs. Ward-2, Bye Pass Road, Virudhunagar. Sattur – 626 203 Tamil Nadu. (प्रत्यथी/Respondent) [PAN: ABYPL-9473-F] (अपीलाथी/Appellant)

अपीलाथी की ओर से/Appellant by : Mr. R. Thulasiram, Advocate and Mr. Kumarasubramanian, Advocate प्रत्यथी की ओर से/Respondent by : Ms. R. Anitha, CIT सुनवाई की तारीख/Date of Hearing : 20.07.2026 घोर्णा की तारीख/Date of Pronouncement : 10.08.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM :

The present appeal is filed by the assessee against the order dated 11.07.2025 passed by the learned Commissioner of Income Tax (Appeals), NFAC, Delhi (hereinafter referred to as “ld.CIT(A)”), dismissing the appeal filed by the assessee against the assessment order dated 30.12.2019 passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), pertaining to Assessment Year (A.Y.) 2017-18.

:-2-: ITA. No:2647/Chny/2026. 2. At the threshold, we observe that there is a delay of 216 days in the filing of the present appeal by the assessee. The assessee has furnished an affidavit explaining that the assessee was seriously affected by the jaundice in the first week of September 2025 and taking continuous treatment with complete bed rest and his movement was restricted up to third week of Apr 2026. Further, the assessee has approached an Advocate based in Madurai and immediately filed the appeal before ITAT, Chennai on 04.05.2026. Upon perusal of the affidavit and after affording due opportunity of hearing from both parties, we are satisfied that the assessee has demonstrated sufficient and reasonable cause for not presenting the appeal within the statutory period prescribed under law. Accordingly, in the interest of justice, the delay in filing the appeal is hereby condoned, and the appeal is admitted for adjudication on merits.

3.

Brief facts of the case are that the assessee is an individual, proprietor of Srinivasa Road Lines and has filed her return of income for the AY 2017-18 on 17.04.2018, declaring total income of Rs.4,60,000/-. As per the information available with the department and verification of the return of income, the AO found that the assessee had sold some immovable properties during the assessment year, and she has not admitted any capital gain for the selling of immovable properties. The case was reopened u/s.147 of the Act, accordingly, notice u/s.148 of the Act and statutory notices were issued to the assessee and by calling for details. Subsequently, on perusal of the balance sheet, reply submitted by the assessee and bank statements of the assessee obtained u/s.133(6) of the Act from Corporation Bank and TMB Sattur, the AO found that the assessee has claimed Rs.4,23,75,758/- as sundry creditors as a fresh for the A.Y.2017-18 and she has made cash deposits of SBNs to the tune of Rs.2,19,000/- during the demonetization period. Since the assessee failed to furnish the complete documentary evidence to substantiate her claim, the AO completed the assessment by passing an order u/s.143(3) of the Act dated 30.12.2019 by making the additions of Rs.84,08,483/- as Long Term Capital Gain, Rs.2,19,000/- as unexplained investment u/s.68 of the Act on accounted

:-3-: ITA. No:2647/Chny/2026. Cash in SBNs deposited to Bank and Rs.4,23,75,758/- as unexplained investment u/s.68 of the Act and by arriving total income of Rs.5,14,63,840/-.

4.

Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) on 29.01.2020.

5.

At the outset, we observed that ld.CIT(A) has provided three opportunities for the assessee to appear for hearings as detailed in paragraph 4.1 of the ld.CIT(A) order to support the appeal of the assessee. However, the assessee chose to be silent and did not respond to any of the notices and hence, the ld. CIT(A) passed an exparte order dated 11.07.2025 by confirming the order of the Assessing Officer. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us.

6.

The ld.AR submitted that the assessee was unaware of the impugned order passed by the first appellate authority due to serious health issues of the assessee and the Auditor of the assessee has not taken effective steps to represent the case before the department and hence, she could not submit the documentary evidence before the ld.CIT(A). Therefore, the ld.AR prayed that the Tribunal may be pleased to set aside the order of ld.CIT(A) and remit the issues to the file of AO. Further, ld.AR assured the bench that the ld.AR will represent on behalf of the assessee before the AO to complete the assessment proceedings effectively.

7.

Per contra, the ld.DR submitted that both the Assessing Officer and the ld.CIT(A) provided sufficient opportunity to appear before them. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A).

8.

We have heard the rival submissions, perused the orders of the authorities below and carefully examined the material available on record. The

:-4-: ITA. No:2647/Chny/2026. short question for determination is whether the ex-parte order passed by the ld.CIT(A), confirming the additions made by the AO to the tune of Rs.84,08,483/- towards Long Term Capital Gain, Rs.2,19,000/- u/s.68 towards unexplained cash deposits in SBNs, and Rs.4,23,75,758/- u/s.68 towards unexplained sundry creditors, without any adjudication on merits, deserves to be sustained, or whether the matter warrants restoration to the file of the AO for fresh consideration. 9. It is an admitted position that the assessee did not appear before the ld.CIT(A) despite three opportunities having been afforded, as recorded in paragraph 4.1 of the impugned order, and consequently the ld.CIT(A) was constrained to confirm the additions made by the AO in an ex-parte manner without any discussion on the merits of the additions. The ld.AR has attributed this non-appearance to the assessee's serious health condition and to the failure of the assessee's erstwhile Auditor to effectively represent the case before the first appellate authority, and has undertaken before this Bench that the assessee shall extend full cooperation and place the requisite documentary evidence before the AO if the matter is restored. The ld.DR, on the other hand, has opposed the request, submitting that both the AO and the ld.CIT(A) had afforded sufficient opportunity and that the assessee's conduct has been consistently negligent. 10. We find considerable force in the submission of the ld.DR that the assessee's conduct, both at the assessment stage and at the first appellate stage, reflects a pattern of non-compliance and indifference towards the proceedings. At the same time, we are conscious that the additions confirmed by the ld.CIT(A) are substantial in quantum, running into several crores, and have been sustained purely on account of the assessee's default in appearance, without any examination whatsoever of the explanation, evidence or material that the assessee may have been in a position to place on record, whether in respect of the computation of Long Term Capital Gain, the source of the cash deposited in SBNs, or the genuineness and creditworthiness of the sundry creditors. In these circumstances, and having regard to the fact that the

:-5-: ITA. No:2647/Chny/2026. assessee has already been visited with a delay of 216 days in approaching this Tribunal on account of the very same health condition, we are of the considered view that the interest of substantial justice would be better served by affording the assessee one final opportunity to substantiate her case on merits before the AO, rather than by shutting out the assessee on the ground of default alone. This opportunity, however, cannot be unconditional, given the assessee's demonstrated laxity before both the authorities below. 11. Accordingly, we deem it fit and proper to set aside the order of the ld.CIT(A) and restore the entire assessment to the file of the AO for de novo adjudication of all three additions, namely, the addition towards Long Term Capital Gain, the addition u/s.68 towards cash deposits in SBNs, and the addition u/s.68 towards sundry creditors, after affording due and adequate opportunity of hearing to the assessee. The assessee is directed to appear before the AO and furnish all documentary evidence in support of her case without seeking unnecessary adjournments, failing which the AO shall be at liberty to decide the matter on the basis of material available on record. The ld.AR's undertaking recorded in paragraph 6 above shall bind the assessee to this effect. 12. However, having regard to the assessee's conduct in failing to prosecute the appeal before the ld.CIT(A) despite three opportunities, and the consequent avoidable ex-parte order and the present remand, we are of the view that this indulgence cannot be granted without cost. We accordingly direct the assessee to pay a cost of Rs.25,000/- (Rupees Twenty-Five Thousand only) to the State Legal Aid Authority, Hon'ble High Court of Madras, within 30 days from the date of receipt of this order. The assessee shall produce proof of payment of the said cost before the AO, and compliance with this direction shall be a condition precedent to the AO proceeding to hear the matter afresh.

13.

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

:-6-: ITA. No:2647/Chny/2026. Order pronounced in the open court on 10th August, 2026 at Chennai.

Sd/- Sd/- (एबी टी वर्की ) (एस. आर. रघुनाथा) (ABY T VARKEY) (S. R. RAGHUNATHA) न्याययर्क सदस्य/Judicial Member लेखासदस्य/Accountant Member

चेन्नई/Chennai, दिन ांक/Dated, the 10th August 2026 Devadas आदेश की प्रतिलिपि अग्रेपिि/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. ववभागीय प्रनतननधि/DR 5. गार्ा फाईल/GF Digitally signed by DEVADAS DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.08.12 15:37:28 +05'30'

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