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Facts
The assessee filed an appeal against an order of the CIT(A) for AY 2016-17. The appeal was delayed by 200 days, which was condoned due to the assessee being a senior citizen with health issues. The case involves additions made by the AO for hardship allowance and unexplained investment in property.
Held
The Tribunal restored the matter to the file of the CIT(A) for de novo adjudication on merits, granting the assessee another opportunity to present their case due to the previous ex-parte order. The assessee is directed to appear before the CIT(A) on all hearing dates.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without giving adequate opportunity of hearing, and if the reassessment proceedings and additions made were legally valid.
Sections Cited
250, 147, 148, 148A(d), 143(2), 142(1), 144B, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANTSHRI SANDEEP SINGH KARHAIL
Date of Hearing – 29/07/2025 Date of Order – 31/07/2025
O R D E R PER SANDEEP SINGH KARHAIL, J.M.
The assessee has filed the present appeal against the impugned order dated 06/05/2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2016-17.
The present appeal is delayed by 200 days. Along with the appeal, the assessee has filed an affidavit seeking condonation of delay. In the affidavit, the assessee submitted that he is a senior citizen aged about 80 years and has been undergoing continuous medical treatment at Lilavati Hospital, Mumbai, for age-related ailments. It is further submitted that he is not well- versed in modern technology and lacks the ability to operate computers, access emails, or navigate the Income Tax e-filing portal. Therefore, it is submitted that he was not aware of any notice or hearing opportunity being granted by the learned CIT(A). In the affidavit, the assessee also submitted that only upon consulting a Chartered Accountant, during the routine tax filing in 2025, he became aware of the impugned order passed by the learned CIT(A) on 06/09/2024. Thus, immediately thereafter, he took the necessary steps to file the appeal before the Tribunal. Having considered the submissions of the assessee, we are of the considered view that there was sufficient cause which prevented the assessee from filing the present appeal within the limitation period. Accordingly, we condone the delay in filing the present appeal.
In this appeal, the assessee has raised the following grounds:
– “1. Reopening is Bad in Law The learned CIT(A) erred in upholding the action of the Assessing Officer (AO) in reopening the assessment under Section 147 of the Act without satisfying the jurisdictional conditions laid down under law. The reopening is bad in law, without proper satisfaction, and deserves to be quashed.
2. Violation of Principles of Natural Justice The learned CIT(A) erred in deciding the appeal ex-parte without granting adequate opportunity of being heard, despite genuine non-receipt and/or non-service of notices, thereby violating principles of natural justice.
3. Hardship Allowance — Not Taxable The learned CIT(A) erred in confirming the addition of Rs. 11,96,995/- received as hardship allowance/compensation from the developer, treating it as "income from other sources". The said receipt is a capital receipt, not arising from any business, profession, or income-yielding activity, and hence, not taxable under the Act.
4. Addition under Section 69 - Unexplained Investment The learned CIT(A) erred in confirming the addition of Rs. 6,71,83,812/- as unexplained investment under Section 69 without appreciating that the said property was purchased by Son. and not by the Appellant personally. The AO failed to establish nexus between the Appellant and the impugned investment.
5. Non-application of Mind and Mechanical Confirmation The learned CIT(A) failed to examine and adjudicate the grounds on merits and merely reproduced the AO's findings without independent reasoning. This amounts to non- application of mind and a mechanical dismissal of the appeal.
6. Failure to Consider Documentary Evidence and Legal Submissions The authorities below failed to appreciate that the Appellant had submitted relevant documents, including the redevelopment agreement and bank statements, establishing that the receipts were not income liable to tax.
7. Erroneous Reliance on Past Settlement under VSV Scheme The learned CIT(A) erred in relying on the assessee's opting for the "Vivad Se Vishwas" scheme in respect of A. Y. 2011-12 as a basis to tax hardship compensation for the present year. Settlement under VSV does not constitute an admission of taxability in other years.”
The brief facts of the case are that the assessee is an individual and for the year under consideration filed his return of income declaring a total income of INR 31,11,540. On the basis of the information in the possession of the Assessing Officer (“AO”) that the assessee has received an amount of INR 11,96,995 on account of hardship allowance and made a purchase of immovable property of INR 6,71,83,812, notice under section 148 of the Act was issued on 30/06/2021. Consequent to the Hon’ble Supreme Court’s decision in Ashish Agrawal, an order under section 148A(d) of the Act was passed on 29/07/2022 after giving adequate opportunity of hearing to the assessee. Thereafter, notice under section 148 of the Act was issued to the assessee on 20/07/2022. In response to the aforesaid notice, the assessee filed his return of income on 26/08/2022, declaring a total income of INR 31,11,540. Subsequently, statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee.
During the reassessment proceedings, a show cause notice was issued to the assessee in respect of the amount received by the assessee as hardship allowance. In response, assessee submitted that he had no business relation with the developer and the amount of INR 11,96,995 was received from the developer as hardship allowance. The assessee submitted that he held a residential flat in MIG CGHS and entered into a redevelopment agreement with the builder for the redevelopment of the building. The assessee further submitted that the hardship allowance is not taxable as it is not received for providing service, and the same can also not be taxed as income from house property, as it is not in the nature of rent for the property. Further, the assessee submitted that the hardship allowance is also not taxable, as the receipt does not arise from the course of business of the assessee. The AO, vide order dated 09/05/2023 passed under section 147 read with section 144B of the Act, disagreed with the submissions of the assessee and held that in the financial year 2010-11, the assessee received an amount of INR 27,73,108 as hardship allowance from the builder, which was added to the total income of the assessee. The AO further noted that the appeal filed by the assessee against the aforesaid addition was dismissed as the assessee opted for the settlement of the tax dispute under the Vivad se Vishwas Scheme. Accordingly, the AO held that the assessee himself did not pursue his argument of non-taxability of hardship allowance. Accordingly, the AO made an addition of INR 11,96,995 to the total income of the assessee as unexplained income.
As regards the issue, i.e. purchase of immovable property for INR 6,71,83,812, on which proceedings under section 147 of the Act were initiated, the assessee was issued a show cause notice during the reassessment proceedings and requested to submit a reply with supporting documentary evidence. However, the assessee failed to respond to the show cause notice. Accordingly, in the absence of any reply from the assessee, the AO vide order passed under section 147 read with section 144B of the Act treated the purchase consideration of the property to the tune of INR 6,71,83,812 as unexplained investment under section 69 of the Act and added the same to the total income of the assessee.
In the appeal before the learned CIT(A), the assessee challenged the additions made by the AO. However, the assessee failed to respond to various notices issued by the learned CIT(A). Accordingly, the learned CIT(A) dismissed the appeal filed by the assessee, vide ex–parte order, in the absence of any material contrary to the findings of the AO. Being aggrieved, the assessee is in appeal before us.
We have considered the rival submissions and perused the material available on record. It is evident that the learned CIT(A) has passed the order ex-parte due to the non-appearance of/on behalf of the assessee. During the hearing, the learned AR placed reliance upon the submissions of the assessee in his affidavit seeking condonation of delay in order to justify non-compliance with the notices issued by the learned CIT(A). Now in appeal before us, the assessee is duly represented by the learned AR and wishes to pursue the litigation against the addition by the AO. In view of the above, we are of the considered opinion that in the larger interest of justice, the assessee be hereby granted one more opportunity to represent its case on merits before the learned CIT(A). Consequently, we deem it fit and proper to restore the matter to the file of the learned CIT(A) for de novo adjudication of the appeal on merits after consideration of all the details/submissions as may be filed by the assessee. Needless to mention, no order shall be passed without affording reasonable opportunity of hearing to the parties, and the learned CIT(A) shall have the liberty to call for any remand report from the AO in respect of any details/submission filed by the assessee. Further, the assessee is directed to appear before the learned CIT(A) on all the dates of hearing as may be fixed without any default. As the matter is being restored to the file of the learned CIT(A) for adjudication on merits, the other grievances raised by the assessee in the present appeal do not call for adjudication at this stage. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 31/07/2025