MOHD ZAFAR,SANDILA vs. INCOME TAX OFFICER, HARDOI

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ITA 138/LKW/2026Status: DisposedITAT Lucknow28 April 2026AY 2020-215 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that to subserve the principles of natural justice, the assessee should be given a proper opportunity to represent their case, especially given the COVID-19 circumstances. The impugned orders were set aside and the assessment was restored to the Assessing Officer for a fresh assessment.

What were the facts?

The assessee failed to file an income tax return for AY 2020-21 and did not respond to notices, leading to an ex parte assessment. The assessee claimed non-compliance was due to COVID-19 related hardships and medical treatment.

What were the issues?

Whether the ex parte assessment and dismissal of appeal were valid without affording the assessee a proper opportunity to be heard, considering the claimed COVID-19 related hardships.

Which sections of the Income-tax Act were involved?

Section 144,Section 69A,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW

Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA

For Appellant: Shri Jitendra Kumar Yadav, Adv
For Respondent: Shri Mazhar Akram, CIT(DR)

PER KUL BHARAT, VICE PRESIDENT.:

This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 14.08.2025 pertaining to the assessment year 2020-21. The assessee has raised the following grounds of appeal: -

“1. Non-Filing of Return Due to Covid -19 Hardship The appellant was unable to file the return of income for AY 2020-21 due to being quarantined pandemic, which restricted access to digital infrastructure and prevented Authentication via Digital Signature Certificate. The non-filing was due to genuine hardship and not default. 2. Denial of Natural Justice The assessment was completed ex parte u/s 144 without affording the appellant a meaningful opportunity to be heard. Multiple notices were

ITA No.138/LKW/2026 Page 2 of 5

issued, but the appellant was incapacitated and uanable to respond due to health and logistical constraints during the pandemic. 3. Valid Books of Accounts Maintained The appellant had maintained proper books of accounts and had his accounts audited for the relevant financial year. The assessment order incorrectly concludes failure to maintain books and penalty u/s 271A and 271B without verifying the audit report and supporting documentation. 4. No Misrepresentation or Income Escapement The appellant did not indulge in any misrepresentation or suppression of facts. All business sanctions were recorded, and there was no intention to evade tax. The additions made under sections 69A and 115BBE are unjustified and based on assumptions without corroborative evidence. 5 Incorrect Estimation of Business Income The addition of Rs.61,92,754/- under the head "Profits and Gains from Business" based on 20% of GTR-3B turnover is arbitrary and without basis. No opportunity was given to explain the nature of business, expenses, or actual profit margin. 6. Unexplained Cash Deposits - Incorrect Treatment The cash deposits of Rs.2,40,88,845/- part of regular business transactions and duly reflected in the books. The appellant was not given adequate opportunity to explain the source, and the additions ^s 69A are unjustified. 7. Interest Income of Rs.48,332/- De Minimis and Already Accounted The addition of Rs.48,332/- under "Income from Other Sources" is trivial and was already reflected in the bank statement. The appellant was not given a chance to reconcile or clarify. 8. Penalties Initiated Without Justification Penalties initiated u/s 270A, 271AAC, 272A(l)(d), 271A, and 271B are unwarranted and premature. The appellant had no malafide intent and was prevented from compliance due to extraordinary circumstances. 9. Computation of Income Without Return The total income of Rs.5,63.577.21/- was computed without considering actual expenses, business nature reconciliation of bank entries. The computation is excessive and not based on verified facts. 10. That the appellant was undergoing medical treatment due to the infections caused on account of Covid-19 and accordingly, was unable to respond to the notices issued by Ld. AO and Ld. CIT(A). Hence, the additions made by Ld. AO and sustained by Ld. CIT(A) are not in accordance with the principles of natural justice and liable to be set aside.

ITA No.138/LKW/2026 Page 3 of 5 11. That the appellant be granted an opportunity of being heard in the interest of natural justice and tv treatment in law. 12. That the appellant seeks permission to modify and/or add any other ground or grounds of appeal as the circumstances of the case might require or justify.” 2. The facts giving rise to the present appeal are that in this case, the assessee is an individual and has not filed return of income for A.Y. 2020-21. As per information available on record of Assessing Officer (“AO”, for short), the assessee had deposited cash to the tune of Rs.2,40,88,845/- with Bank of India during A.Y. 2019-20. Further, the assessee declared turnover of Rs.3,09,63,768/- for the purpose of GST return. Subsequently, a notice u/s 148 of the Income Tax Act, 1961 (“Act”, for short) was issued and duly served upon the assessee; however, the assessee failed to comply with the said notice. Hence, the AO made ex parte assessment order u/s 144 of the Act against the assessee. Thereby, assessing the income at Rs.3,03,29,931/-. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A), since there was no representation on behalf of the assessee, therefore the appeal was dismissed ex parte to the assessee. Now, the assessee is in appeal before this Tribunal.

3.

Apropos to the grounds of appeal, the Ld. Counsel for the assessee submitted that both the lower authorities have not given adequate opportunity to the assessee and the assessment order as well as the First Appellate Order was passed ex parte to the assessee. He submitted that the impugned appellate order is not a speaking order on the merits of the case. The Ld. CIT(A) dismissed the assessee’s appeal in a summary manner, taking adverse view of non-compliance on the part of the assessee of the notices issued by the Ld. CIT(A). The Ld. Counsel for the assessee

ITA No.138/LKW/2026 Page 4 of 5 contended that the Ld. CIT(A) as well as the Assessing Officer failed to appreciate facts of the case in right perspective. Further, he submitted that the non-compliance of statutory obligation of filing Income Tax Return (ITR) and responding to the notices was owing to the fact that the assessee was infected with deadly virus of Covid-19. He further stated that looking to the facts and circumstances of the present case if assessee is given one more opportunity, he would explain the source of cash deposited in his bank account.

4.

On the other hand, the Ld. Departmental Representative (“DR”) opposed the submissions and supported the orders of the authorities below.

5.

We have heard the rival submissions and perused the material available on record. It is the contention of the assessee that the additions made u/s 69A of the Act are unjustified, being based merely on surmises and conjectures and lacking any corroborative evidence. It is further submitted that the assessee has plausible explanation regarding cash deposited in the bank account. Therefore, looking to the totality of the facts and the material placed before us, we are of the considered view that to sub-serve the principles of natural justice, assessee should be given proper opportunity to represent his case effectively. More particularly in view of the fact that non-compliance by the assessee was due to Covid-19 infection. We hereby set aside the impugned orders and restore the assessment to the file of the Assessing Officer to make assessment afresh, after giving proper opportunity to the assessee. Grounds of appeal of the assessee are allowed for statistical purposes.

ITA No.138/LKW/2026 Page 5 of 5 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 28/04/2026.

Sd/- Sd/- [ANADEE NATH MISSHRA] [KUL BHARAT] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 28/04/2026 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By order // True Copy//

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