SHANMUGAM KATHIRESAN,SALEM vs. THE INCOME TAX OFFICER, WARD - 1(6), SALEM

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ITA 577/CHNY/2026Status: DisposedITAT Chennai27 April 2026AY 2018-196 pages
AI SummaryRemanded

What did the Tribunal hold?

The tribunal held that the CIT(A) erred in dismissing the appeal without condoning the 17-day delay, which was supported by an uncontroverted medical reason. The matter was remanded for denovo assessment.

What were the facts?

The assessee, an individual engaged in lorry transport, failed to file a return for AY 2018-19. The AO initiated reassessment based on cash deposits and contractor payments, leading to an ex-parte assessment. The CIT(A) dismissed the appeal for non-prosecution due to a 17-day delay in filing.

What were the issues?

Whether the CIT(A) was justified in dismissing the appeal for non-prosecution due to a delay without condoning it, and whether the reassessment order was valid.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 147,Section 144B,Section 69A,Section 115BBE,Section 250,Section 139(1),Section 142(1),Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES “D” :: CHENNAI

Before: SHRI INTURI RAMA RAO & SHRI S.S.VISWANETHRA RAVI

For Appellant: Ms. A Nikitha – Advocate
For Respondent: Mr. ARV Sreenivasan – CIT
Hearing: 17/03/2026Pronounced: 27/04/2026

आयकर अपीलीय अिधकरण ”डी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCHES “D” :: CHENNAI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.577/CHNY/2026 �नधा�रण वष� / Assessment Year: 2018-19 Shanmugam Kathiresan, Vs The Income Tax Officer, 2/28, Pallathukadu, Ward-1(6), Salem. Koolagoundanur, Mavelipalayam Post, Sankari Tk, Salem – 637301. PAN: APVPK0057M Appellant / Assessee Respondent / Revenue Assessee by Ms. A Nikitha – Advocate Revenue by Mr. ARV Sreenivasan – CIT Date of hearing 17/03/2026 Date of pronouncement 27/04/2026 आदेश/ ORDER PER INTURI RAMA RAO, AM : This appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], Delhi dated 28.11.2025 passed under section 250 of the Income Tax Act, 1961 for the A.Y.2018-19.

2.

The Assessee raised the following grounds of appeal :

“1 The CIT(A) erred in law and on facts in confirming the reassessment order, without appreciating that the reopening itself is bad in law and void ab initio. 2 The CIT(A) failed to appreciate that the reopening is based merely on information of cash deposits without any independent application of mind or formation of a valid "reason to believe" of escapement of income 3. The CIT(A) erred in confirming the ex-parte assessment, without adjudicating the issues on merits and merely on the ground of alleged non-compliance, thereby violating principles of natural justice. 4 The CIT(A) erred in law and on facts in upholding the addition of Rs. 1,44,21,667/- as unexplained money u/s 69A of the Act, without examining the nature of transactions, business receipts, withdrawals, or the possibility of circulation of funds, thereby rendering the addition arbitrary and unsustainable. 5. The CIT(A) ought to have appreciated that mere cash deposits in bank accounts do not automatically constitute unexplained income. 6. The CIT(A) failed to appreciate that the AO has not brought any cogent material on record to establish that the appellant is the owner of unexplained money or that such amounts represent income chargeable to tax for the year under consideration. 7 The CIT(A) erred in law in confirming the taxation of the alleged unexplained income u/s 115BBE, without satisfying the mandatory conditions for invoking the said provision. 8. The CIT(A) failed to appreciate that the AO wrongly treated payments made to contractors as unexplained expenditure without examining the corresponding business activity or source, resulting in double and unjustified taxation. 9. The CIT(A) erred in confirming the levy of interest u/ss. 234A, 234B, 234C and 234D, which is excessive, and not in accordance with law. 10. The order of the CIT(A) is vitiated for non-application of mind, mechanical confirmation of the assessment order, and failure to discharge the quasi-judicial duty cast u/s 250 of the Act.” 3. Briefly the facts of the case are that appellant is an Individual engaged in the business of Lorry Transport. The appellant had not filed regular Return of Income for the Assessment Year 2018-19 under the provisions of Section 139(1) of the Act. Based on the information that appellant made cash deposits of Rs.88,07,900/- in the bank account maintained with Karur Vysya Bank Limited of Rs.42,43,700/- in the bank account maintained with Tamilnadu Mercantile Bank and made a payment the contracts of Rs.13,17,067/- during the previous year relevant to A.Y.2018-19. The Jurisdictional Assessing Officer formed an opinion that income escaped assessment from tax. Accordingly, notice u/s.148 was issued on 31.03.2022 after duly complying with the procedure laid down u/s.148A of the Act. The appellant neither complied with the notice u/s.148 nor responded to the notices issued u/s.142(1) of the Act. In the circumstances, the e-Assessment Unit of the Department (hereinafter called ‘AO’) had proceeded with the framing of the best judgment assessment order vide order dated 10.03.2023 passed u/s.147 r.w.s 144B of the Income Tax Act at a total income of Rs.1,44,21,667/-. While doing so, the Assessing Officer brought to tax the cash deposits in the bank account of Rs.1,30,51,600/- and payment made the contractors of Rs.13,70,067/- as unexplained money of the appellant and taxed AT THE RATES prescribed u/s.115BBE of the Act.

4.

Being aggrieved by the above order, an appeal was filed before the ld.CIT(A) who vide impugned order dismissing appeal for non-prosecution without referring to the submissions made before him.

5.

Being aggrieved, the appellant is in appeal before us in the present appeal. The ld.AR submits that the ld.CIT(A) ought not to have passed the ex-parte order without giving a reasonable opportunity of being heard to the appellant. The Assessing Officer ought not to have upheld the applicability of provisions of Section 115BBE of the Act. Therefore, he prayed that since the assessment order may be remanded back to the file of Assessing Officer.

6.

On the other hand, ld.Sr.DR vehemently opposed the above submission and submits that the appellant had not cooperated neither during the assessment proceedings nor before the ld.CIT(A) and the appellant does not deserve any sympathetic consideration.

7.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is that whether the ld.CIT(A) was justified in refusing the condonation of delay of 17 days in filing of appeal and dismissing the appeal in limine on the ground of delay.

Admittedly, the appellant had filed a petition seeking the condonation of delay before the ld.CIT(A) by stating that as he is suffering from viral fever under treatment and due to unavoidable circumstances, he was unable to file the appeal in time.

8.

This has resulted in delay of 17 days reckoned from the date of the assessment order. The above averments made by the appellant remain uncontroverted by the ld.CIT(A). The Hon’ble Supreme Court in the case of M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, it was held that an uncontroverted affidavit shall be taken as an affidavit on fact.

9.

Under these circumstances, the appellant was prevented from filing of appeal for the reasons which are beyond his control, this would constitute a reasonable cause for delay in filing appeal late.

10.

Therefore, in our considered opinion, the ld.CIT(A) ought to have condoned the delay, adjudicated the issues in appeal on merit. However, keeping in view that the assessment order also an ex-parte order and we are satisfied with the reasons for non-appearance before the assessing authority, we are of the considered opinion that the matter requires remand to the file of the Assessing Officer for denovo assessment in accordance with law after affording opportunity of hearing to the appellant.

11.

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 27th April, 2026.

Sd/- Sd/- (SS VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; �दनांक / Dated : 27th April, 2026 SGR, Sr.PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT Chennai/Madurai/Coimbatore/Salem. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “डी” ब�च, 4. चे�नई / DR, ITAT Chennai. गाड� फ़ाइल / Guard File. 5.

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