SIDDALINGAM MULA,MAHBUBNAGAR vs. ITO., WARD-1, MAHBUBNAGAR

Thereafter, the AO vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, 23/03/2022, determined the income of the assessee at Rs.6,48,252/-. As the assessee failed to get his accounts audited and furnish the audit report within the prescribed time as per section 44AB of the Act, the AO initiated proceedings under section 271B of the Act, dated 23/03/2022.

Thereafter, the AO issued show cause notice (SCN) to the assessee and called upon him to explain as to why penalty under section 271B of the Act may not be imposed upon him. In reply, it was stated by the assessee that as he was only deriving commission from chit collections and during the subject year after incurring expenditure was only in receipt of Rs.69,630/- against the gross collections of Rs.1,32,50,000/-, thus the said collections could not be considered as his turnover under section 44AB of the Act. However, the AO did not find favour with the explanation of the assessee and imposed penalty under section 271B of the Act of Rs.66,250/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee had despite having been put to notice about the fixation of appeal on three occasions, failed to participate in the said proceedings, the CIT(A) holding a conviction that the assessee was not interested to pursue the matter dismissed the appeal solely on the ground of want of prosecution.

The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record,.

Shri Mohd. Afzal, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the CIT(A) had grossly erred in law and facts of the case in summarily dismissing the appeal without addressing the specific grounds of appeal on which the impugned penalty order was assailed before him. Elaborating further on his contention, the Ld. AR submitted that even though the assessee who had remained oblivion about the fixation of the appeal could not participate in the proceedings before the first appellate authority, but the latter remained under a statutory obligation to have disposed of the appeal based on a reasoned and speaking order which he had failed to do.

Per contra, Shri Mohan Babu, Learned Senior Departmental Representative (for short, “DR”) relied upon the orders of the authorities below. It was submitted that as the assessee had failed to prosecute the appeal before the CIT(A), therefore, the appellate authority had rightly dismissed the appeal.

We have given thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both parties and the orders of the authorities below.

Admittedly, it is a matter of fact borne from record that the assessee despite having been put to notice on three occasions about the fixation of the appeal, i.e., on 14/05/2025, 22/05/2025 and 04/06/2025 had failed to participate in the proceedings. Although, we principally concur with the CIT(A) that in case if an assessee fails to participate in the appellate proceedings despite having been put to notice, then the said proceedings cannot be stalled, and the appeal has to be disposed based on material available on record vide an ex parte order. However, at the same time, we are unable to persuade ourselves to concur with the manner in which, the CIT(A) had disposed of the present appeal without addressing the specific grounds of appeal based on which the impugned assessment order was assailed before him. In our view, even in a case where the assessee appellant fails to participate in the appellate proceedings, the CIT(A) is obligated to address the specific grounds of appeal based on which the impugned order has been assailed before him in the backdrop of the material available on record and the orders of the authorities below. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). The Hon’ble High Court in the aforementioned case had observed as under:

We thus, in terms of our aforesaid observations, set aside the matter to the file of the CIT(A) with a direction to adjudicate the appeal vide a reasoned and speaking order. Needless to say, the CIT(A) shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee.

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

The present appeal filed by the assessee is directed against the order passed by the CIT(A), NAFAC, Delhi, dated 28/07/2025, which in turn arises from the order passed by the AO under section 147 r.w.s. 144B of the Act, dated 25/03/2022 for AY 2014-15. The assessee has assailed the impugned order on the following grounds of appeal:

Thereafter, the AO vide his order passed under section 147 r.w.s. 144B of the Act, dated 25/03/2022, determined the income of the assessee at Rs.27,04,694/- after making two additions, viz., (i) addition of unexplained money under section 69A of the Act: Rs.19,42,612/-; and (ii) disallowance of the assessee’s claim for deduction of interest on housing loan: Rs.2,50,000/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee despite having been put to notice about the fixation of the appeal on three occasions, i.e., on 09/05/2025, 22/05/2025 and 04/06/2025 failed to participate in the proceedings before the first appellate authority, the latter holding a conviction that the assessee appellant was not interested to prosecute the appeal, dismissed the appeal on the said count itself.

The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.

Shri Mohd. Afzal, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, assailed the CIT(A) order, inter alia, on the ground that the latter had grossly erred in law and facts of the case in summarily dismissing the appeal for want of prosecution and not addressing the specific grounds based on which the impugned order of assessment was assailed before him. The Ld. AR to buttress his contention had taken us through the CIT(A) order. It was submitted by him that the matter in all fairness be restored to the file of the CIT(A) with a direction to re-decide the same after affording an opportunity of being heard to the assessee.

Per contra, Shri Mohan Babu, Learned Senior Departmental Representative (for short, “Sr-DR”) submitted that as the CIT(A) had after affording sufficient opportunity to the assessee disposed of the appeal and dismissed the same for want of prosecution, therefore, no infirmity emerges from his order.

We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties, in the backdrop of the orders of the authorities below.

As observed herein above, the manner in which the present quantum appeal of the assessee has been disposed of by the CIT(A) remains the same as was there in ITA No.1490/Hyd/2022, wherein he had approved the penalty imposed by the AO under section 271B of the Act.

As we have based on our aforesaid observations, while disposing of the appeal in ITA No.1490/Hyd/2025, had set aside the order passed by the CIT(A) on the ground that a summary dismissal of the appeal without addressing the specific grounds of appeal based on which the impugned order was assailed before him cannot be approved on our part, therefore, on a similar footing the present appeal is also set aside to his file with a direction to dispose of the same based on a reasoned and speaking order. Needless to say, the CIT(A) shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee.

In the result, appeal filed by the assessee is allowed for statistical purpose in terms of our aforesaid observations.

We shall now take up the appeal filed by the assessee in ITA No.1492/Hyd/2025 for AY 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us:

Succinctly stated, the assessee had filed his return of income for AY 2015- 16 on 22/01/2016, declaring an income of Rs.5,18,790/-. Subsequently, the AO based on information received from the Dy. Director of Income Tax (Inv), Unit- II(2), Hyderabad that the assessee had carried out substantial financial transactions during the year under consideration, viz., (i) with total credits of Rs.1,18,66,159/- in his bank account; (ii) claimed exemption under section 10(13A) of the Act in respect of HRA receipts; and (iii) claimed deduction of interest on housing loan of Rs.2 lakhs, initiated proceedings under section 147 of the Act. Notice under section 148 of the Act, dated 26/03/2021 was issued to the assessee. However, the AO, being of the view that the assessee had filed his return of income beyond the prescribed time limit on 13/03/2022, thus, treated the same as non-est and invalid. Thereafter, the AO vide his order passed under section 147 r.w.s. 144 r.w.s 144B of the Act, dated 27/03/202 determined the income of the assessee at Rs.1,25,85,129/- after making two additions, viz., (i) addition of unexplained money under section 69A of the Act: Rs.1,18,66,159/-; and (ii) disallowance of claim of deduction of interest on housing loan: Rs.2 lakhs.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee despite having been put to notice about the fixation of the appeal had failed to participate in the proceedings, the CIT(A) holding a conviction that the assessee was not interested to prosecute the appeal, dismissed the appeal on the ground of want of prosecution.

The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record.

Shri Mohd. Afzal, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the present appeal involves a delay of 53 days. Elaborating on the reason leading to the delay, the Ld. AR submitted that the assessee is a retired Teacher of about 67 years of age. The Ld. AR submitted that the assessee’s son, viz., M. Veerender was engaged as a facilitator wherein he would collect money from chit subscribers and would transfer the same to the chit fund company, and in lieu thereof was in receipt of meagre commission income of 3-4%, which after accounting for the expenses fell below the specific exemption limit, as a result whereof no return of income was filed by him. The Ld.AR submitted that the assessee’s son was routing the aforesaid collections of chit fund money by using his bank account held with Canara Bank, Mahabubnagar. The Ld. AR submitted that the AO thereafter had initiated proceedings under section 147 of the Act and had held the entire amount of bank deposits in the assessee’s bank account as his unexplained money under section 69A of the Act.

Carrying his contention further, the Ld. AR submitted that the assessee aggrieved with the assessment order had carried the matter in appeal before the CIT(A), wherein he had in the Memorandum of Appeal, in “Form-35”, specifically opted for not being served with the notices/communications by the CIT(A) office through email. Rather, the assessee had at Column No.17 provided his address for receipt of notices/communications from the CIT(A) office. The Ld. AR submitted that despite the fact that the assessee had opted out from the receipt of notices/communications from the CIT(A) office through email, but the latter as can be gathered from the appellate order had issued all the notices electronically through ITBA. The Ld. AR submitted that though the assessee pursuant to the notice, dated 21/01/2025 had requested for adjournment, it remained a matter of fact that no notice intimating the fixation of the appeal on the remaining two dates, i.e., 23/04/2025 and 09/05/2025 were validly served upon him as requested in Form-35, i.e., through electronical service, therefore, he had remained unaware about the fixation of the appeal on the said dates and failed to participate in the appellate proceedings before the first appellate authority.

The Ld. AR submitted that thereafter, the CIT(A) had disposed of the appeal vide his order, dated 27/05/2025, but the same was also dropped in the email Id contrary to the mode of service as was requested by the assessee. It was submitted that the assessee had gathered about the disposal of the appeal by the CIT(A) only when he was informed about the same by ITO, Mahabubnagar, pursuant whereto he had involving no further loss of time filed the present appeal with the Tribunal, which by the time involved a delay of 53 days. The Ld. AR submitted that as the delay in filing of the present appeal which is not inordinate had crept in because of no fault on the part of the assessee, the same in all fairness be condoned.

Per contra, Shri Mohan Babu, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) relied on the orders of the authorities below. He submitted that as the assessee had failed to come forth with any plausible explanation regarding the delay in filing of the present appeal, thus, the same does not merit to be condoned.

We have given thoughtful consideration and are of the considered view that in the backdrop of the facts leading to the delay in filing of the present appeal, i.e., failure on the part of the CIT(A) office to communicate his order disposing of the appeal in the mode requested by the assessee, i.e., through physical service, the resultant delay therein involved in filing of the present appeal before us merits to be condoned. Our aforesaid view is fortified by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. ITO (2025) 305 Taxman 83 (SC). The Hon'ble Apex Court, while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal.

Coming to the merits of the case, the Ld. AR submitted that the CIT(A) had grossly erred in law and facts of the case in summarily dismissing the appeal for want of prosecution without adverting to and adjudicating the specific grounds of appeal based on which the impugned assessment order was assailed before him. The Ld. AR submitted that the facts leading to the dismissal of the present appeal for want of prosecution by the CIT(A) remains the same as was there in his appeal for AY 2014-15 in ITA No.1491/Hyd/2025, wherein on identical set of facts, the CIT(A) had summarily dismissed the appeal for the failure on the part of the assessee to participate in the appellate proceedings before him.

Per contra, the Ld. Sr-DR admitted that the fact situation relating to the dismissal of the present appeal by the CIT(A) remains the same as was there in the case of the assessee for the immediately preceding year.

We have given thoughtful consideration and are unable to persuade ourselves to subscribe to the summarily dismissal of the appeal by the CIT(A) without adjudicating the specific grounds of appeal based on which the impugned order of assessment was assailed before him, for the reason that the assessee appellant had failed to participate in the proceedings before him. As the fact situation resulting to the dismissal of the present appeal remains the same as was there before us in ITA No.1491/Hyd/2025, AY2014-15, the view therein taken shall apply mutatis mutandis for disposing of the present appeal.

Resultantly, the order passed by the CIT(A) in the present appeal is set aside to his file with a direction to re-decide the appeal based on a reasoned and speaking order. Needless to say, the CIT(A) shall during the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee appellant.

In the result, all the three appeals filed by assessee in ITA No.1490, 1491 and 1492/Hyd/2022 for AYs 2013-14, AY 2014-15 and AY 2015-16 are allowed for statistical purposes in terms of our aforesaid observations.