SHALLOO BARAR,MUMBAI vs. INCOME TAX OFFICER - WARD 42(3)(3), MUMBAI

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ITA 4298/MUM/2025Status: DisposedITAT Mumbai18 August 2025AY 2011-128 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the impugned order and assessment proceedings were not legally sustainable. The Tribunal noted that the revenue had not brought any contrary evidence to contradict the assessee's submissions. Upon perusal of the bank statement (page 27 of the paper book), an entry dated 27.06.2015 indicated an amount adjusted and overdue waived off via written-off receipt no. 1111. The Tribunal held that the assessee's claim regarding the write-off needed verification by the AO. If the claim is found correct after verification, the AO is directed to delete the addition made to the total income. The Tribunal concluded that the matter needed to be restored to the AO to verify the assessee's claim and decide the matter afresh after giving the assessee an effective hearing within 60 days. The impugned order was set aside, and the appeal was allowed in these terms. The Tribunal expressly left undecided the merits of the original assessment, focusing instead on the procedural infirmities and the need for verification of the write-off.

What were the facts?

The assessee, Ms. Shallo Barar, is appealing an order from the CIT(A) dated 08.05.2023 for Assessment Year 2011-12. The CIT(A) dismissed the assessee's appeal ex-parte due to non-appearance, despite multiple notices. The original assessment was reopened under Section 147 based on information from the DDIT (Inv) Unit that the assessee had made a one-time settlement of Rs. 12,53,939/- with Axis Bank on 16.11.2010. The Assessing Officer (AO) made an addition of Rs. 12,53,940/- under Section 144. The assessee contends that she was ordered to repay Rs. 12,53,939/- with interest and costs to Axis Bank by the DRT, but never repaid it. Axis Bank subsequently wrote off the amount on 26.06.2015. The assessee's appeal to the CIT(A) was dismissed for non-submission of documents.

What were the issues?

1. Whether the Learned CIT(A) erred in law and on facts in dismissing the appeal under Section 250 without considering the merits of the case and passing a reasoned order? (Question of law and fact, turns on Section 250). 2. Whether the Learned CIT(A) erred in dismissing the appeal solely on the ground of non-appearance, without adjudicating the issues raised by the Appellant on merit? (Question of law and fact, turns on Section 250). 3. Whether the dismissal of the appeal by the CIT(A) without examining the statement of facts and grounds raised by the Appellant is arbitrary, unjust, and bad in law? (Question of law and fact, turns on Section 250). 4. Whether the Appellant was prevented by sufficient and reasonable causes from effectively participating in the appellate proceedings due to mental distress from her husband's demise and unawareness of notices? (Question of fact, turns on principles of natural justice and procedural fairness). 5. Whether the non-appearance before the CIT(A) was neither deliberate nor intentional but due to genuine hardship and lack of knowledge, warranting sympathetic consideration? (Question of fact, turns on principles of natural justice and procedural fairness). 6. Whether the entire appellate proceedings stand vitiated due to non-observance of statutory and procedural safeguards, and if the assessment proceedings were initiated based on incorrect information? (Question of law and fact, turns on Section 147 and principles of natural justice). Assessee's Contentions: The impugned order was passed ex-parte and is not legally sustainable. The revenue authorities were misguided by wrong information from DDIT (Inv) Unit. The assessee claims that Axis Bank wrote off the balance loan amount on 27.06.2015, waiving the overdue amount as no payment was made. Therefore, the addition made by the AO is wrong. The non-appearance before the CIT(A) was due to genuine hardship (demise of husband) and lack of knowledge. The dismissal without considering the merits is arbitrary. The assessment proceedings were initiated based on incorrect information. Revenue's Contentions: The Ld. DR supported the CIT(A)'s order, submitting that the assessee was given sufficient opportunity of hearing, and there is no justification for non-appearance. The appeal has no merit and is liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 250,Section 148,Section 144,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHIR OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN

O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the orderof Ld. Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi [hereinafter referred to as the “CIT(A)”],passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Ms. ShalloBarar Act”] dated 08.05.2023for the A.Y. 2011-12 wherein the appeal of the assessee was dismissed ex-parte because the assessee has failed to appear despite notices issued on 23.01.2021, 14.12.2021, 12.03.2022, 12.05.2022 and 27.04.2023. Ld. CIT(A) has dismissed the appeal by holding that during the appellate proceedings, no documentary evidence has been filed by the assessee despite the multiple opportunities being provided to the assessee.

2.

The brief facts as culled out from the proceedings of authorities below are thatthe assessee is a house wife with no taxable income during the relevant assessment year. Therefore, she had not filed her return of income for the relevant assessment year. The assessee was not aware of the magnitude of notice u/s 148 and considered the same as a routine reminder to file Income Tax Returns. Upon receipt of order u/s. 144 r.w.s. 147 of the Act, the assessee decided to take professional help and realized the magnitude of the notices and the subsequent order. The reason for reopening was "Vide Letter No. DDIT (Inv)/Unit- 5(4)/OTS/2015-16/104 dated 03-11-2015, the DDIT Inv.Unit-5(4), it was informed that the assessee has made one time settlement of Rs.12,53,939/- on 16-11-2010 with Axis Bank on account of outstanding Ms. ShalloBarar liabilities to the bank. It was further stated that it was not known as to whether the assessee has made the payment out of the explained sources and whether the interest payable/paid claimed whatsoever in earlier on such loans were written back in the year under consideration or not." The correct facts of the case are that the assessee was ordered by Mumbai Debts Recovery Tribunal No. 1 on 16-11-2010 to repay Rs. 12,53,939/- with interest and costs to the Axis Bank. However, the appellant has till date not repaid the said amount to Axis Bank Ltd. As per latest Loan account statement from Axis Bank dated 16-01-2019, the Axis Bank written off the above amount on 26-06-2015. Copy of bank statement attached herewith. Hence, there was no repayment and the reasons for re-opening u/s. 148 does not hold good. The AO due to non- receipt of above facts from assessee during the course of the assessment proceedings, has passed an ex-parte order u/s. 144 of the Act and thus made a wrong addition of Rs.12,53,940/-. Penalty proceedings were also initiated separately.

3.

Being aggrieved, the assessee preferred the appeal before Ld. CIT(A) who in turn confirmed the order of AO on the ground that assessee has failed to submit necessary documents as called for despite multiple

4.

Aggrieved by the impugned order, the assessee preferred the appeal before us raising the following grounds:-

1. That the Learned CIT(A) erred in law and on facts in dismissing the appeal u/s 250 without considering the merits of the case and without passing a reasoned and speaking order.

2. That the Ld. CIT(A) erred in dismissing the appeal solely on the ground of nonappearance, without adjudicating the issues raised by the Appellant on merit despite acknowledging the facts and grounds in Page 2 of Appellate Order u/s250.

3. That the dismissal of the appeal by the CIT(A) without examining the statement of facts and grounds raised by the Appellant while filing the appeal is arbitrary, unjust, and bad in law.

4. That the Appellant was prevented by sufficient and reasonable causes from effectively participating in the appellate proceedings, as the Appellant was under mental distress due to the unfortunate demise of her husband during the relevant period and was unaware of the notices of hearing issued by the CIT(A).

5. That the non-appearance before the CIT(A) was neither deliberate nor intentional but was due to genuine hardship and lack of knowledge of the proceedings, which deserves sympathetic and judicious consideration, and the ex-parte order passed in such circumstances causes grave prejudice to the Appellant.

Ms. ShalloBarar 6. That the entire appellate proceedings stand vitiated due to non- observance of statutory and procedural safeguards, and hence the order passed deserves to be quashed as factually there is no income escaped for assessment and the Assessment proceedings itself was initiated based on incorrect information.

7. The appellant craves to add, alter, amend, edit, and/or delete any of the above grounds at the time of hearing.

5.

We have heard Ld. AR and Ld. DR and examined the record. At the very outset, Ld. AR submitted on behalf of the assessee that the impugned order has been passed ex-parte and the same is not legally sustainable in the eyes of law. Ld. AR further submitted that the revenue authorities were misguided due to wrong information from DDIT (Inv) Unitand proceeded to assess the income at Rs. 12,53,940/- wrongly under the impression that the assessee has made thepayment of said amount to the Axis Bank after settlement of the loan account. It is claimed before the Tribunal by the assessee that as per the bank statement of Axis Bank placed at page no. 21 to 28 of the paper book, the Axis Bank has written off balance loan amount on 27.06.2015 by waiving of the overdue amount as the assessee has failed to make the said payment. It is therefore submitted that the impugned order have been passed due to ignorance of these facts regarding the written of the loan amount and no Ms. ShalloBarar money has been paid by the assessee. It is therefore, prayed that the impugned order be set aside and the AO is directed to delete the addition made to the total income of the assessee.

6.

Ld. DR on the other hand supported the judgment of the Ld. CIT(A) and submitted that assessee was given sufficient opportunity of hearing, and there is no justification for non-appearance, hence there is no merit in the appeal and same is liable to be dismissed.

7.

We have considered the rival submissions and examined the record.No contrary evidence has been brought on record by the revenue which may contradict the submissions of the assessee. Therefore, we are of the considered opinion that the impugned order as well as the assessment proceeding are not legally sustainable in the eyes of law. On perusal of the page 27 of the paper book i.e. the bank statement of ofth assessee, it is noticed that on the date 27.06.2015, there is an entry with respect to the amount adjusted and also overdue waived of vide written off receipt no. 1111. The claim of the assessee for these reasons need to be verified by the AO and in case, the claim of the assessee is found to be correct after verification, the AO is directed to delete the addition made to the total income of the assessee vide assessment order passed by him. Page | 6 Ms. ShalloBarar 8. For these reasons, we are of the considered opinion that matter needs to be restored to the file of the AO to verify the claim of the assessee and decide the matter afresh after giving effective hearing to the assessee who shall present its case before him within 60 days. The impugned order is accordingly set aside and appeal filed by the assessee is allowed in above terms.

9.

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

Order pronounced in the open court on 18.08.2025.

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