M SHAMJI & CO.,KUTCH vs. THE ITO WARD - 3, GANDHIDHAM, GANDHIDHAM

We first take up ITA No. 298/Rjt/2026. The brief facts of the case are that the Department noticed cash deposits aggregating to Rs.80,41,920/- in the assessee's savings bank account during the relevant previous year. Accordingly, the assessment was reopened under section 147 of the Act by issuing notice under section 148 of the Act. Despite service of the statutory notices, the assessee neither filed the return of income in response to the notice issued under section 148 of the Act nor complied with the subsequent notices issued during the course of assessment proceedings. Consequently, the Assessing Officer completed the assessment ex parte under sections 147 read with 144 and 144B of the Act by treating the cash deposits of Rs.80,41,920 as unexplained income.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). However, there was a delay of 376 days in filing the appeal. The Ld. CIT(A) declined to condone the delay and dismissed the appeal as barred by limitation.

Simultaneously, the Ld. CIT(A) also proceeded to examine the material available on record and adjudicated the appeal on merits.

At time of hearing we, notice that there is a delay of 151 days in filing the present appeal before this tribunal and after considering the reasons stated in the petition for condonation of delay and the affidavit filed in support thereof, and keeping in view the facts and circumstances of the case, the delay is condoned and the appeal is admitted for adjudication.

On the other hand, the Ld. DR fairly submitted that he has no serious objection if the matter is restored to the file of the Ld. AO. However, he requested that the assessee may be directed to cooperate with the remand proceedings and furnish all necessary details.

We have heard the rival submissions and carefully perused the material available on record. We find merit in the contention advanced on behalf of the assessee. Once the Ld. CIT(A) declined to condone the delay and dismissed the appeal as time- barred, he ceased to have jurisdiction to adjudicate the appeal on merits. The two courses cannot coexist in the same order. Either the delay has to be condoned and the appeal adjudicated on merits, or the appeal has to be dismissed solely on the ground of limitation. The impugned order, therefore, suffers from a legal infirmity.

Accordingly, in the interest of justice, we set aside the impugned order passed by the Ld. CIT(A) and restore the matter to the file of the Assessing Officer with a direction to examine the issue afresh in accordance with law after affording a reasonable opportunity of being heard to the assessee. The assessee is also directed to extend full cooperation and participate in the proceedings without seeking

Coming to ITA No. 320/Rjt/2026, the same relates to penalty proceedings initiated under section 271AAC(1) of the Income- tax Act for the same assessment year. Since the quantum appeal has been restored to the file of the Assessing Officer for fresh adjudication, the penalty proceeding, being consequential in nature, is also restored to the file of the Assessing Officer for adjudication afresh in accordance with the outcome of the quantum proceedings and in accordance with law. Accordingly, this appeal is also allowed for statistical purposes.

In the result, both the appeals of the assessee are allowed for statistical purposes.