MALLENAHALLI GURUSIDDAIAH SHIVASHANKARASWAMY,MALLENAHALLI, HASSAN vs. INCOME-TAX OFFICER, WARD -1, HASSAN, HASSAN

Aggrieved by the appellate order, the assessee is in appeal before us and has raised several grounds of appeal.

Briefly stated, the assessee did not file a return of income for assessment year 2017-18. Information was available that the assessee had deposited ₹4,03,43,248 during financial year 2016-17. Accordingly, notice under section 148 was issued on 26 March 2021. Further notices under section 142(1) and a show-cause notice under section 144 were also issued, including on 21 March 2022. Though sufficient opportunities were granted by the learned Assessing Officer, the assessee responded only on 30 March 2022, reiterating that the return of income had been filed on 8 March 2022. The learned Assessing Officer noted that the notice under section 148 had been issued on 26 March 2021, whereas the return was filed only on 8 March 2022, and the assessment was getting time-barred on 31 March 2022. The Assessing Officer therefore passed an ex parte assessment order. He noted from Form 26AS that the assessee had received interest income of ₹8,14,176 from various parties during the year. Although the assessee claimed this as business income, the return for the year had not been filed on time; therefore, the entire interest income was taxed as income from other sources. Further, as per Form 26AS, the assessee had received contract receipts of ₹3,77,28,128 from various parties. The assessee stated that actual sales were ₹3,51,71,939 and that the difference of ₹25,56,183 had already been declared in assessment year 2016-17. After considering reconciliation, the Assessing Officer treated the contract receipts as ₹3,77,28,128 and estimated profit at 6%, considering it reasonable for the line of business and with reference to section 44AD of the Act. Accordingly, income from the contract business was estimated at ₹22,63,687, and the total income was assessed at ₹30,77,863 by order dated 31 March 2022 under section 147 read with sections 144 and 144B of the Income-tax Act.

Aggrieved, the assessee preferred an appeal before the learned CIT(A). The assessee was granted five opportunities at the email address provided but failed to comply. Consequently, the learned CIT(A) dismissed the appeal and confirmed the assessment order by appellate order dated 23 January 2026.

Aggrieved by the appellate order, the assessee has filed the present appeal. During the hearing, the assessee also raised additional grounds challenging the validity of the proceedings under section 147 of the Income-tax Act, as well as grounds on the merits of the case.

We heard Shri Narendra Sharma, learned authorized representative for the assessee, and Shri Ganesh R. Ghale, learned Standing Counsel for the Department.

We have carefully considered the rival contentions. The assessment order was passed under section 144 of the Income-tax Act because the assessee did not furnish the required details before the Assessing Officer in time and filed the return of income only on 8 March 2022. The assessee also failed to represent the matter before the learned CIT(A). It is apparent that, although the lack of proper opportunities arose substantially due to the assessee’s own non-compliance and delayed response, the matter requires reconsideration. The delay in furnishing the return and reply placed the Assessing Officer under pressure, as the assessment was getting time-barred on 31 March 2022. In these circumstances, we restore the matter to the file of the Assessing Officer with directions to the assessee to comply with the notices and furnish complete details regarding the taxability of his income. We also make it clear that all the issues raised before us by way of additional grounds are also required to be raised before the assessing officer which may be decided by the learned AO in accordance with the law. On the issues on the merit, the Assessing Officer shall examine the details and decide the issues afresh in accordance with law.

However, since the assessee did not comply in time with the notices issued either by the learned CIT(A) or by the learned Assessing Officer, restoration of the appeal is subject to the assessee depositing ₹500 as cost within 90 days from the date of receipt of this order to the Prime Minister’s National Relief Fund. Upon verification of such deposit, the Assessing Officer shall grant hearing in accordance with law and decide the matter on merits.

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