MUTHUKUMAR PRABHAKARAN,TIRUPUR vs. ITO, WARD-1(4), TIRUPUR

Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) on 20.02.2026 with a delay of 1374 days. The ld.CIT(A) dismissed the appeal in limine without condoning the inordinate delay of 1,374 days by passing an order dated 02.03.2026. 4. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. The ld.AR for the assessee submitted that the assessee was working on a contract basis with a salary of around Rs.8,000/- per month and had not filed the return of income as his income from salary was less than the taxable limit. Further, as per the affidavit filed, the ld.AR reiterated that the assessee was living in a temporary address, which is registered with his PAN and the email id registered in the PAN database is inactive or expired, hence, the :-3-:

Per contra, the ld.DR strongly supported the orders of the Ld. CIT(A) and submitted that the assessee has failed to demonstrate sufficient and reasonable

We have heard the rival submissions, perused the orders of the lower authorities and carefully considered the material available on record. The solitary issue that arises for our consideration is whether the ld.CIT(A) was justified in dismissing the appeal of the assessee in limine on the ground of delay of 1,374 days without adjudicating the issues on merits.

It is an undisputed fact that the assessment in the present case was completed ex parte u/s.144 r.w.s 147 of the Act, since the assessee did not respond to the notices issued by the AO. It is also a matter of record that the assessee preferred the appeal before the ld.CIT(A) with a delay of 1,374 days, which came to be dismissed without condoning the delay. Thus, the assessee has not had the benefit of adjudication either before the AO or before the first appellate authority on the merits of the additions made in the assessment. The explanation offered by the assessee for the delay is that he was employed on a contractual basis through a manpower consultancy and was drawing a monthly salary of approximately Rs.8,000/-, which was below the taxable threshold during the relevant assessment year. It has been further explained that the address and e-mail ID available in the PAN database were outdated and inactive, owing to which the statutory communications issued by the Department never came to his knowledge. Consequently, the assessee remained unaware of the reassessment proceedings as well as the assessment order passed by the AO. The said explanation has also been supported by an affidavit filed before the authorities.

The assessee has further raised a serious factual contention that the impugned cash deposits, commodity transactions and equity share transactions reflected in his bank account were not undertaken by him and that his bank

We also note from the records that the assessee had initially invoked the revisional juri iction of the ld.PCIT u/s.264 of the Act, which ultimately came to be dismissed as withdrawn. Thereafter, the assessee preferred the statutory appeal before the ld.CIT(A), which was dismissed solely on the ground of limitation without examining the merits of the additions. Thus, the conduct of the assessee does not indicate abandonment of his remedies but rather demonstrates that he has been pursuing the matter before different statutory forums, albeit unsuccessfully.

The law relating to condonation of delay is fairly well settled. The expression "sufficient cause" occurring in the provisions governing limitation has consistently received a liberal and justice-oriented interpretation by the Hon'ble Supreme Court. In Collector, Land Acquisition v. Mst. Katiji & Others [(1987) 167 ITR 471 (SC)], the Hon'ble Apex Court held that a pragmatic and liberal approach should ordinarily be adopted while considering applications for condonation of delay, as substantial justice deserves to prevail over technical considerations. Similarly, in N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123], the Hon'ble Supreme Court observed that the length of delay is not decisive and that what is material is the acceptability of the explanation offered. Unless the delay is attributable to deliberate negligence, mala fides or lack of bona fides, the Courts should lean in favour of adjudication on merits rather than shutting the doors of justice on technical grounds.

In the present case, the additions made by the AO aggregate to Rs.1,49,81,021/- against an individual who claims to have earned a monthly salary of merely about Rs.8,000/- during the relevant period. The additions are founded upon substantial cash deposits and financial transactions, which the assessee disputes in toto by contending that his bank account was allegedly misused by another person. Whether such explanation is ultimately acceptable or not is a matter requiring detailed factual verification on the basis of documentary evidence. Such issues cannot be conclusively determined without affording the assessee a reasonable opportunity of producing relevant evidence and without permitting the AO to examine the same in accordance with law.

We are conscious that the delay of 1,374 days is undoubtedly substantial. However, it is equally well settled that procedural laws are intended to facilitate the cause of justice and not to defeat it. In a situation where the assessment itself has been completed ex parte, the first appellate authority has also declined to examine the matter on merits, and the assessee has placed before us certain prima facie material in the form of an affidavit and police complaint explaining both the delay and the nature of the disputed transactions, we are of the considered view that the ends of substantial justice would be better served by affording one final opportunity to the assessee rather than non-suiting him on the technical ground of limitation.

At the same time, we deem it appropriate to observe that the assessee cannot claim repeated indulgence from the tax authorities. The explanation furnished by the assessee shall not automatically absolve him of the burden of proving the genuineness of his claims. The AO shall be at liberty to examine all the documents, including the bank accounts, police complaint, financial transactions, and any other evidence that may be produced by the assessee, and shall also be free to conduct such enquiries as may be considered necessary for arriving at the correct taxable income in accordance with law.

Considering the totality of the facts and circumstances of the case, the magnitude of the additions involved, the principles governing condonation of delay laid down by the Hon'ble Supreme Court, and with a view to advancing substantial justice, we are inclined to condone the delay in filing the appeal before the ld.CIT(A). Consequently, the impugned order of the ld.CIT(A) dismissing the appeal in limine is set aside. Since the assessment itself was completed ex parte and the assessee has raised factual issues requiring detailed verification, we consider it appropriate, in the interest of justice, to restore the entire matter to the file of the AO for framing the assessment afresh after affording the assessee an effective and reasonable opportunity of being heard. The assessee is directed to appear before the AO, file all relevant documents, explanations and evidences in support of his contentions, and extend full cooperation in the reassessment proceedings. The AO shall consider the material placed on record, conduct necessary enquiries, and thereafter pass a speaking order in accordance with law, uninfluenced by any observations contained in this order, after providing adequate opportunity of hearing to the assessee. It is made clear that if the assessee fails to cooperate or seeks unnecessary adjournments, the AO shall be at liberty to proceed in accordance with law on the basis of the material available on record.

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