OZONE INFRA PROJECTS,MUMBAI vs. ASSISSTANT COMMISSIONER OF INCOME TAX, THANE

Briefly stated, the facts of the case are that the assessee is a partnership firm and its case was selected for scrutiny. The assessment was thereafter completed by the Assessing Officer under section 144 of the Act vide order dated 20.12.2019, wherein an addition of Rs.12,14,00,000/- was made under section 69 of the Act on the ground that the assessee had failed to respond to the notices issued during the assessment proceedings and, consequently, the source of the investment of Rs.12,14,00,000/- remained unexplained. Aggrieved by the said assessment order, the assessee preferred an appeal before the ld. CIT(A). The appeal before the ld. CIT(A) was also disposed of ex parte vide order dated 27.10.2023, principally on the ground that the assessee had failed to respond to the notices issued during the appellate proceedings. The assessee is, therefore, in appeal before us.

At the outset, the learned Authorised Representative (“ld. AR”) submitted that the appeal before the Tribunal was filed on 31.01.2026 against the order of the ld. CIT(A) dated 27.10.2023. It was submitted that, although the order bears the date 27.10.2023, the assessee actually received knowledge of the said order only on 25.11.2025. According to the ld. AR, it was only on 25.11.2025, when the Tax Recovery Officer (“TRO”) contacted Shri Shashikant Shinde, one of the partners of the assessee-firm, requiring him to make payment of the outstanding demand, that the assessee came to know that the appeal before the ld. CIT(A) had already been disposed of on 27.10.2023. The appeal before the Tribunal was thereafter filed on 31.01.2026.

The ld. AR submitted that, inadvertently, the date of receipt of the impugned order was mentioned as 27.10.2023 in Form No. 36, which resulted in the appeal being reflected as having been filed with a delay of 746 days. It was submitted that, according to the actual date on which the assessee came to know of and received the impugned order, there was no such delay in filing the appeal before the Tribunal. Nevertheless, by way of abundant caution, the assessee had filed a petition seeking condonation of delay. The ld. AR submitted that the apparent delay was attributable to the fact that the communications issued by the Department had not reached the assessee at the e-mail address actually being used for tax-related communications. It was specifically submitted that the correct e-mail address had been furnished by the assessee in Form No. 35 filed before the ld. CIT(A).

The ld. AR further submitted that the records relating to Assessment Year 2017-18 were being maintained at third-party premises known to one of the partners, Shri Santosh Pote, who was responsible for ensuring the tax compliance of the assessee-firm. However, owing to certain personal circumstances and apprehension regarding his safety, Shri Pote became unavailable and could not be contacted. Consequently, the assessee was not in a position to effectively monitor the communications relating to the assessment and appellate proceedings.

It was further submitted that, on 25.11.2025, Shri Shashikant Shinde, another partner of the assessee-firm, received a telephonic communication from the TRO requiring him to make payment of the outstanding demand. It was only upon receipt of the said communication that the assessee came to know that the appeal before the ld. CIT(A) had already been disposed of vide order dated 27.10.2023. On making further enquiries, the assessee found that certain communications issued by the Department had been sent to an e-mail address belonging to Shri Santosh Pote, who was no longer available for communication. Immediately upon becoming aware of the order of the ld. CIT(A), the assessee downloaded the order and took steps to prefer the present appeal before the Tribunal.

The ld. AR further submitted that the assessment itself had been completed under section 144 of the Act for substantially the same reason, namely, that the relevant communications had been received at the e-mail address associated with Shri Santosh Pote, who could not be contacted. It was pointed out that the assessee had subsequently filed an appeal before the ld. CIT(A) on 11.11.2020 and that the delay in filing the said appeal had also occurred in the backdrop of the COVID-19 pandemic and had been condoned by the ld. CIT(A). It was submitted that, although the impugned order refers to several notices having been issued during the appellate proceedings, only some of the communications had been received at the e-mail address furnished by the assessee in Form No. 35, while the assessee was in the process of gathering the relevant records and information. The ld. AR accordingly submitted that the assessee had been denied an effective opportunity to represent its case both before the Assessing Officer and before the ld. CIT(A).

During the course of hearing, the ld. AR also placed before us various notices and communications issued by the Department and demonstrated that several of them had been sent to the e-mail address of Shri Santosh Pote. In support of the prayer for condonation of delay, the ld. AR relied, inter alia, upon the judgment of the Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji & Ors. [167 ITR 471 (SC)]. The ld. AR submitted that the Hon’ble Supreme Court has emphasized that refusal to condone delay may result in a meritorious matter being shut out at the threshold and thereby defeat the cause of justice, whereas the consequence of condoning the delay would merely be that the matter would be decided on merits after hearing the parties.

The ld. AR also placed reliance upon the judgment of the Hon’ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy [(1998) 7 SCC 123], wherein the Hon’ble Supreme Court has held that the acceptability of the explanation furnished for the delay is the relevant consideration and that the length of the delay, by itself, is not determinative. The learned Departmental Representative (“ld. DR”), on the other hand, opposed the prayer of the assessee and submitted that the assessee was required to satisfactorily explain the delay and that a general or vague explanation could not be accepted. The ld. DR submitted that the assessee had been afforded sufficient opportunities by both the Assessing Officer and the ld. CIT(A), but had failed to avail itself of those opportunities. It was accordingly submitted that the orders of the lower authorities deserved to be sustained.

The ld. AR, in addition to the prayer for condonation of delay, submitted that, considering the peculiar circumstances in which the assessment as well as the appellate order had been passed ex parte, the assessee may be granted one effective opportunity to substantiate its case on merits. It was accordingly requested that the matter be restored to the file of the Assessing Officer for fresh adjudication. The ld. DR opposed the said request and submitted that the assessee had been negligent and careless in prosecuting its case and had failed to respond despite sufficient opportunities having been afforded by the Assessing Officer as well as the ld. CIT(A).

We have carefully considered the rival submissions and perused the material available on record. We have also examined the explanation furnished by the assessee in support of its prayer for condonation of delay and the documents placed before us during the course of hearing. The first issue that arises for our consideration is whether, in the facts and circumstances of the present case, the apparent delay in filing the appeal before the Tribunal deserves to be condoned.

The Hon’ble Supreme Court, in Collector, Land Acquisition v. Mst. Katiji & Ors. (supra), has laid down the broad principles which are required to be kept in view while considering an application for condonation of delay. The Court has emphasised that substantial justice should ordinarily prevail over technical considerations and that refusal to condone delay may result in a meritorious matter being dismissed at the threshold without an adjudication on merits. Similarly, in N. Balakrishnan v. M. Krishnamurthy (supra), the Hon’ble Supreme Court has held that the length of delay is not material and that the acceptability of the explanation furnished by the party is the relevant consideration.

In the present case, the assessee has furnished a specific explanation as to why it did not become aware of the order of the ld. CIT(A) dated 27.10.2023 until 25.11.2025. The assessee has also placed before us the relevant communications to demonstrate that notices issued by the Department had, on several occasions, been sent to the e-mail address of Shri Santosh Pote. The explanation furnished is that Shri Pote, who was responsible for ensuring tax compliance of the firm and with whom the relevant records were maintained, had become unavailable and could not be contacted owing to circumstances stated to involve personal issues and apprehension regarding his safety. In such circumstances, the explanation of the assessee cannot be brushed aside as being wholly devoid of substance.

It is also relevant to note that the assessee did not remain inactive after coming to know of the order of the ld. CIT(A). The material placed before us indicates that, upon receiving the communication from the TRO on 25.11.2025 and becoming aware of the disposal of the appeal, the assessee obtained the order and thereafter took steps to approach the Tribunal. The present appeal was ultimately filed on 31.01.2026. We are, therefore, of the considered view that the circumstances leading to the delay, as explained by the assessee, constitute sufficient cause for condoning the apparent delay in filing the appeal before the Tribunal.

We accordingly condone the delay, if any, in filing the present appeal and admit the appeal for adjudication on merits.

Having condoned the delay, we find that there is a further and more fundamental aspect which requires our consideration. The assessment order itself was passed under section 144 of the Act and the appeal before the ld. CIT(A) was also disposed of ex parte. The assessee has consistently contended that it was not effectively receiving the 6 communications issued by the Department because several of them were being sent to an e-mail address associated with Shri Santosh Pote, who had become unavailable. The assessee has also demonstrated before us that certain notices were in fact sent to the said e-mail address.

It is a fundamental principle of natural justice that no person should be condemned unheard. An assessee cannot be expected to effectively defend its case unless it is afforded a reasonable and effective opportunity to place its explanation and supporting material before the adjudicating authority. In the present case, the addition of Rs.12,14,00,000/- under section 69 of the Act has been sustained without the assessee having had an effective opportunity to explain the nature and source of the investment and to place the relevant documentary evidence on record. The issue, therefore, is not merely one of procedural compliance, but also concerns the opportunity available to the assessee to substantiate its substantive claim.

We are conscious of the fact that the assessee is also expected to exercise due diligence in prosecuting its proceedings before the tax authorities and cannot seek repeated opportunities as a matter of right. Nevertheless, in the peculiar facts of the present case, particularly considering that both the assessment proceedings and the first appellate proceedings culminated in ex parte orders and that the assessee has furnished a specific explanation regarding the non-receipt of the relevant communications, we are of the considered view that one effective opportunity ought to be granted to the assessee in the interest of substantial justice.

We, therefore, deem it appropriate to set aside the order of the ld. CIT(A) as well as the assessment order and restore the matter to the file of the Assessing Officer for fresh adjudication in accordance with law. The Assessing Officer shall afford the assessee a reasonable and effective opportunity of being heard and shall consider the explanation and documentary evidence that may be furnished by the assessee in support of its claim. The Assessing Officer shall thereafter adjudicate the issue afresh and pass a speaking and reasoned order in accordance with law.

Before parting, we consider it appropriate to direct the assessee to ensure that its current and active e-mail address is duly communicated to the concerned income-tax authorities, including the Assessing Officer and the National Faceless Assessment Centre, wherever applicable, and that the same is duly updated on the e-filing portal. The assessee shall also ensure that all future communications issued by the Department are duly monitored and acted upon within the time prescribed. This direction is issued with a view to ensuring that the assessee is able to effectively participate in the proceedings and that there is no recurrence of the circumstances which have resulted in the present litigation.

The assessee is further directed to extend full and effective cooperation in the proceedings before the Assessing Officer and to furnish, within the time allowed, all information, explanations and documentary evidence called for in relation to the issue under consideration. The assessee shall not seek unnecessary adjournments. In the event of failure on the part of the assessee to comply with the statutory notices or to extend the requisite cooperation, the Assessing Officer shall be at liberty to proceed in accordance with law on the basis of the material available on record.

We make it clear that we have not expressed any opinion on the merits of the addition of Rs.12,14,00,000/- made under section 69 of the Act. All issues relating to the merits of the addition are left open for consideration by the Assessing Officer in the fresh proceedings. The Assessing Officer shall adjudicate the matter independently, in accordance with law, after considering the material and submissions furnished by the assessee.

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