SUNNY RAJKUMAR GUPTA,MUMBAI vs. INCOME TAX OFFICER WARD 22(3)(1), MUMBAI

The assessee has raised the following grounds of appeal: 1. The Learned CIT (A) has erred in law & facts of the case in sustaining the addition of Rs 65,00,000/- entire sales consideration as long term capital 1

Briefly stated, the assessee is an individual who had not filed his return of income for the assessment year under consideration. Information available with the Department indicated the sale of immovable property for Rs.65,00,000/-, reported by the Sub-Registrar Office, Thane-7. Information concerning deduction of tax under section 194-IA in respect of the same transaction was also available. The Assessing Officer treated the information as pertaining to a single transaction and initiated reassessment proceedings. Notice under section 148 was issued on 15.03.2024, but the assessee did not furnish a return in response thereto.

During the assessment proceedings, the Assessing Officer issued notice under section 142(1) dated 03.11.2024, a reminder dated 24.11.2024, a show-cause notice under section 144 dated 02.12.2024 and further communications. The table of opportunities in the assessment order records a response dated 07.12.2024 against the notice under section 144, described as “Part/denied”, with the remark “Information denied”. However, the sale deed, computation of capital gains and supporting documents were not furnished. The Assessing Officer accordingly completed the assessment on best judgment basis, treating the entire sale consideration of Rs.65,00,000/-

The assessee filed the first appeal on 25.07.2025. The learned CIT(A) computed a delay of 113 days. Although Form No. 35 mentioned 01.07.2025 as the date of service, the learned CIT(A) proceeded on the basis that the assessment order dated 04.03.2025, having been passed digitally, stood electronically served. The learned CIT(A) further observed that the assessee had selected “No” in column 14 concerning delay and had left column 15, requiring an explanation for delay, blank. Holding that sufficient cause had not been demonstrated and that the relevant columns had not been attended to with due seriousness, the learned CIT(A) declined to condone the delay and dismissed the appeal without adjudication on merits.

Before us, the learned AR submitted that the assessment had been completed ex-parte and the learned CIT(A) had dismissed the appeal on limitation without examining the substantive dispute. Relying upon the affidavit furnished by the assessee, the learned AR requested condonation of the delay before the learned CIT(A) and afford one more opportunity to the assessee.

The Departmental Representative, raised no objection is restoring the matter back to Assessing Officer for examination of the relevant documents and fresh adjudication.

In the affidavit solemnly affirmed on 07.09.2026, the assessee has stated that he was earning income from salary and other sources and believed that his income was below the basic exemption limit, owing to which he had not filed the return. He has further explained that he was unaware of the ongoing proceedings and believed that tax had already been deposited since tax was deducted on the sale of the property. He has also stated that, because

Explaining the delay in filing the first appeal, the assessee has stated that he lacked knowledge of the filing procedure and did not have counsel to assist him in filing the appeal and representing him before the authorities. He has attributed the default to lack of education and awareness and denied any willful intention to avoid statutory compliance. He has specifically affirmed that the delay was referred to in the statement of facts and that a condonation application accompanied Form No. 35. The failure to select the appropriate option concerning delay in the electronic form has been explained as an inadvertent oversight. The assessee has sought an opportunity to furnish the supporting documents and clarify the transaction.

We have considered the submissions of the learned AR and perused the material on record. Section 249(3) of the Act permits admission of a belated appeal where sufficient cause for its delayed presentation is established. The question requiring consideration is, therefore, whether the explanation furnished, viewed in its entirety, satisfactorily accounts for the delay.

For the present purpose, it is unnecessary to determine the difference concerning the date of service. Even accepting the delay of 113 days computed by the learned CIT(A), we are satisfied that the explanation warrants condonation. The assessee has explained his unfamiliarity with the procedure, absence of professional assistance, limited educational awareness and mistaken understanding arising from deduction of tax on the property transaction. These circumstances, considered cumulatively, reasonably explain the failure to institute the appeal within the prescribed period. Our satisfaction rests upon the combined circumstances of this case and not upon ignorance of the statutory requirements in isolation.

Accordingly, we condone the delay of 113 days in filing the appeal before the learned CIT(A) and set aside the finding declining its admission. Ground No. 2 is allowed.

We now turn to Ground Nos. 1 and 3. Although Ground No. 1 describes the addition as having been sustained by the learned CIT(A), the impugned order expressly dismisses the appeal on limitation without adjudication on merits. The substantive controversy concerns the assessment of the entire sale consideration as capital gains without examination of the claimed co-ownership and the cost of acquisition and improvement.

The assessee’s case before the learned CIT(A) was that the property belonged jointly to him and his brother, Shri Karan Rajkumar Gupta, and that the consideration attributable to his share alone required consideration in his hands. The assessee also sought allowance of the admissible cost of acquisition and improvement and examination of the tax deducted in respect of the transaction. These claims require verification of the underlying documents and have not been adjudicated on merits by the learned CIT(A).

We recognize that the assessment order records several opportunities afforded to the assessee. Consequently, we do not proceed on the premise

Accordingly, we set aside the impugned order of the learned CIT(A) and the assessment order dated 04.03.2025 and restore the assessment to the file of the Assessing Officer for fresh adjudication in accordance with law. The Assessing Officer shall examine the acquisition and sale documents, the claim of joint ownership and the assessee’s share therein, the consideration attributable to that share, the admissible cost of acquisition and improvement, including indexation wherever applicable, and the claim for credit of tax deducted at source. The capital gains and consequential tax liability shall thereafter be determined upon verification of the relevant material.

The Assessing Officer shall afford the assessee a reasonable opportunity of being heard and of furnishing supporting evidence. The assessee shall comply with the notices, furnish the requisite documents and explanations within the time allowed, and cooperate with the proceedings. All contentions on merits are left open. Our observations shall not be construed as acceptance of the claimed ownership share, cost or tax credit.

In view of these directions, Ground No. 1 is restored to the Assessing Officer and treated as allowed for statistical purposes. The grievance concerning opportunity of hearing in Ground No. 3 is addressed by the directions for fresh adjudication after affording a reasonable opportunity. No

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