JAHAN UDDIN,GOALPARA vs. INCOME TAX OFFICER, GOALPARA

The assessee is in appeal before the Tribunal raising the following grounds of appeal which are argumentative:

It is submitted that Section 149(1) of the Income Tax Act governs the limitation period within which the notice under Section 148 can be issued, and reads as under: "(1) No notice under section 148 shall be issued for the relevant assessment year, (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation. In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section."

As per the literal interpretation of Section 149(1), any notice will be deemed issued in accordance with clause (a), ie, within 4 years from the end of the assessment year, unless the case falls under clause (b) and clause (c).

In the notice dated 26.03.2021 issued under Section 148 of the Income Tax Act, since the Ld. Assessing Officer has only provided for the escapement of assessment without providing for any amount which is likely to have escaped assessment, the notice ought to be issued in accordance and within the limitation prescribed under clause (a) of Section 149(1) of the Income Tax Act of 1961. 2. 4. Being that the period of four years from the end of Assessment Year 2013-14 had already lapsed on 31.03.2018, the notice dated 26.03.2021 issued under Section 148 of the Income Tax Act is time barred and merits to be quashed.

Since the very inception of proceedings is time barred, the framing of Assessment is also null and void, and merits to be quashed

That having regard to the facts and circumstances of the case, the National Faceless Assessment Centre has erred in rejecting the income declared by the appellant without first rejecting the books of accounts

The National Faceless Assessment Centre in the assessment order dated 30.03.2022 has rejected the income declared by the appellant from the business amounting to INR 3,62,730/- on the gross turnover of INR 1,56,08,098/-, without rejecting the books of accounts of the Appellant and estimated the net profit of business @10% of the gross turnover, i.e., amounting to INR 15,60,810/-

The Assessment Order, to this extent, is invalid in accordance with Section 145(3) of the Income Tax Act, as the invocation of best judgment assessment under Section 144 of the Income Tax Act can only be done when the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the appellant.

In the Order dated 30.03.2022, the National Faceless Assessment Centre has passed the order under Section 144 of the Income Tax Act only on the ground that the income declared by the appellant in the AY 2013-14 was too low in the wi om of the Assessing Officer. The relevant extract from Para 7 of the Order dated 30.03.2022 is produced herewith for reference: The assessee has declared a profit of Rs. 3,62,730/- out of his gross turnover of Rs. 1,56,08,098/- in the Profit & Loss A/c i.e. @ 2.32% which is considered too low. Hence, a net profit of 10% is estimated and considered as reasonable and added to the total income of the assessee. Thus, Rs. 15,60,810/- is added to the total income of the assessee.

It is clearly evident from the Order dated 30.03.2022 that the Books of Accounts furnished by the Appellant were not rejected by the Assessing Officer. The Ld. Assessing Officer has also not referred to any material on record which justifies the addition made in the Order, except that the profit declared by the Appellant is too low, which is mere presumption without any valid reasoning

Since, the accounts have not been rejected nor any material has been relied upon for presuming the profits earned by the assessee, the invocation of Section 144 of the Income Tax Act while passing the order is invalid and without any juri iction, and that the Order dated 30.03.2022 merits to be quashed on this ground alone.

That having regard to the facts and circumstances of the case, the National Faceless Assessment Centre has erred in not considering the income tax return filed on 02.03.2022 in response to the notice issued under Section 148 of the Income Tax Act, 1961

The Appellant humbly submits that the Ld. Assessing Officer has erred in not considering the income tax return filed on 02.03.2022 by the Appellant in response to the notice dated 26.03.2021 issued under Section 148 of the Income Tax Act, 1961. 4. 2. The Appellant had duly submitted vide letter dated 28.03.2022 that the appellant was ill and due to the second wave of COVID-19 during such period, the offices of tax consultants were closed and the area was under lock down till 15.08.2021, and that prevented the appellant to file income tax return within the due timelines in response to notice dated 26.03. 2021

Despite having the return on record, the Ld. Assessing Officer has erred in law while not taking the income tax return on record in the Show Cause Notice dated 25.03.2022, and taking the return income as "0" in the Order dated 30.03.2022

The Ld. Assessing Officer has also failed in granting credit of taxes duly paid vide income tax return dated 02.03.2022, and made an addition of the entire presumed income of INR 15,60,810/- of business income and INR 45, 130/-as undisclosed interest income and demanded taxes, interest and penalty.

It is clearly evident and on record that the Appellant had duly paid taxes along with interest, and filed the income tax return prior to the issue of Show Cause Notice and Order, and non-consideration of the return pre- judices the entire proceedings, and merits to be quashed on this ground alone.

It is further submitted that the Order dated 30.03.2022 also causes unjust enrichment to the revenue, as the due taxes along with interest paid along with the income tax return has not been credited to the demand raised against the Appellant.

The Appellant also submits that the interest income of INR 45,130/- was also included in the income tax return filed on 02.03.2022, and treating such income as undisclosed is outrightly erroneous and illegal is light of the facts of the case.

The Ld. Assessing Officer has also failed to give due credit to deductions made under Chapter VI A of the Income Tax Act which has been duly disclosed in the income tax return filed on 02.03.2022. 4. 9. Such non-consideration of the income tax return filed on 02.03.2022 has resulted in causing injustice to the appellant. It is clearly evident that the Order dated 30.03.2022 has been passed with pre-judicial mind, without following the due process of law and in violation of the principles of natural justice, and merits to be quashed on this ground alone.

That having regard to the facts and circumstances of the case, the National Faceless Appeal Centre has erred in rejecting the Appeal on the basis of delay despite due explanation of the delay with supporting evidences

The Appellant most humbly submits that the National Faceless Appeal Centre has inadvertently rejected the appeal filed by the Appellant on 24.11.2023 in Form No. 35, on account of delay of 605 days from the date of passing of order dated 30.03.2022 under Section 144 read with Section 147 of the Income Tax Act

The Appellant had duly explained the delay owing to medical issues and provided medical reports of the appellant, clearly depicting continued medical supervision of the appellant owing to prolonged medical issues and regular treatment.

Despite having evidence on record and without calling for any additional evidence (if required), the National Faceless Assessment Centre had rejected the appeal on the technical grounds of limitation, which is unjust and that the delay in filing of Appeal may have been condoned and heard on merits.

To this extent, the Appellant humbly submits that the delay in filing of appeal before the National Faceless Appeal Centre ought to have been condoned rather than being rejected.

That having regard to the facts and circumstances of the case, Ld. Assessing Officer has erred in law and on facts in making above the additions without giving an adequate opportunity of being heard and by not observing the principles of natural justice

The Appellant humbly submits that the opportunity to show cause against the Show Cause Notice dated 25.03.2022 under Section 144 of the ITA No(s). 135/GTY/2026 Assessment Year(s) 2013-14 Income Tax Act was provided to respond against the proposed addition of credits in bank account of INR 1,53,72,100/- under Section 69A of the Income Tax Act, 1961. Per contra the order has been issued by rejecting the income declared by the appellant, and presuming the income earned by the appellant from the turnover generated from the business activities.

It is clearly evident that the estimation of profits by rejecting the income of the appellant was not a part of the show cause notice, and that the assessment order has been framed beyond the proposed addition in the show cause notice.

It is no longer res-integra that the show cause notice forms the very basis of any assessment proceedings, and that the opportunity to show cause ought to be provided before an adverse order is contemplated by the revenue. In the proceedings concluded vide Order dated 30.03. 2022, the Ld. Assessing Officer had not provided any opportunity to show cause against the estimation of income made in the Order.

Being that no opportunity to show cause has been provided restricting the appellant to provide effective response, the Order dated 30.03.2022 has been passed in violation of the principles of natural justice and merits to be quashed on this ground alone.

That the appellant craves, leave to add, alter, amend or vary and/or withdraw any or all of the aforesaid grounds of Appeal or at time of hearing of the above appeal"

Brief facts of the case are that the assessee failed to file the return of income for AY 2013-14 within the prescribed time limit u/s 139 of the Act. Based on the information regarding cash deposits of ₹1,53,72,100/- and interest income of ₹45,130/-, the Assessing Officer (hereinafter referred to as Ld. 'AO') formed a reason to believe that income had escaped assessment and initiated reassessment proceedings by issuing a notice u/s 148 of the Act on 26.03.2021. During the assessment proceedings, the assessee contended that the cash deposits arose from a cement trading business and submitted an audit report declaring a gross turnover of ₹1,56,08,098/- with a profit of ₹3,62,730/-. The Ld. AO rejected the declared profit margin of 2.32% as too low and estimated the net profit @10% of the gross turnover resulting in the business income addition of ₹15,60,810/-, and further added ₹45,130/- as undisclosed interest income. The Ld. AO computed the total assessed income at ₹16,05,940/- vide order dated 30.03.2022 passed u/s 147 r.w.s. 144 and 144B of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) with a delay of 605 days against the assessment order and submitted that the delay was caused due to prevailing medical issues within the family. The Ld. CIT(A) held that the assessee failed to provide cogent evidence or show sufficient cause to explain the inordinate delay and acted in a negligent manner without due diligence. The Ld. CIT(A) thereby declined to condone the delay and express any opinion on the merits of the case and dismissed the appeal of the assessee confirmed the order of the Ld. AO.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. The assessee sought adjournment but since there was no justification for seeking the adjournment, therefore, the same was rejected.

It is stated in the statement of facts filed that the assessee was engaged in the business of Cement of Topcem brand in Khalisabhita Village, Goalpara in the state of Assam. The return was filed in response to the notice u/s 148 of the Act dated 02.03.2022 and the assessee had requested for adjournment of proceedings for a period of three months for filing the return but the same was treated as non-est. The assessee was not aware of the notices issued and therefore, could not reply to the notice. However, the third notice was supplied along with bank statement, income tax return filed in response to the notice u/s 148 of the Act along with the computation of income, Form No. 26AS, ledger confirmation etc. However, the Ld. AO did not consider the submissions and issued a show cause notice and subsequently made the assessment. The assessee was continuously under medical supervision, could not access the demand order on time and further could not travel to Guwahati to avail the services of some tax consultant to assist in filing of the appeal, as the city in which the assessee resides is a small town with no or little access to such services. The assessee was served with multiple statutory notices in the course of the appeal and vide response dated 08.05.2024 and 20.08.2025, filed the details requesting for condonation of delay in filing the appeal on medical grounds. It is stated in the condonation of delay petition that the assessee is a small taxpayer with no or little financial and tax literacy and belongs to a small village in the State of Assam where access to tax consultants is very limited and he has to travel to Guwahati to obtain professional services for filing this appeal before the Tribunal. The assessee was unaware of the rejection of the appeal by the Ld. CIT(A) vide order dated 11.12.2025 as he was advised that the assessment proceedings would be set aside on the basis of documents submitted before the National Faceless Appeal Centre. Since the assessee was under continuous medical supervision since the onset of COVID-19, he could not travel to Guwahati to check the status of the order and later on was made aware that his appeal had been dismissed on the grounds of limitation by the NFAC.

The Ld. DR requested that the order of the Ld. CIT(A) may be upheld as the Ld. CIT(A) had rightly denied the request for condonation of delay in filing the appeal.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Bench was of the view that on the facts as mentioned, the Ld. CIT(A) ought to have condoned the delay and should have decided the appeal on merits which does not appear to have been done. Therefore, in the interest of justice and fair play, as even the assessment order is ex parte, the Bench was of the view that one more opportunity of being heard may be provided to the assessee. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter to the Ld. AO for making the assessment de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission he wants to make in support of his grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 3rd June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 03.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order