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Facts
The assessee filed an appeal against the CIT(A)'s order which confirmed the AO's action of making an addition under Section 56(2)(x) of the Income Tax Act. The appeal was filed after a significant delay of 404 days.
Held
The Tribunal condoned the delay considering the assessee's age, illiteracy, reliance on a tax consultant, and communication difficulties during the Covid period. The Tribunal noted that the CIT(A) order was passed ex-parte without deciding on merits and thus set aside the appellate order.
Key Issues
Whether the CIT(A) order passed ex-parte without deciding on merits is sustainable, and if the delay in filing the appeal should be condoned.
Sections Cited
144, 144B, 56(2)(x), 250(6), 250(4), 251(1)(a), 251(2)
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Before: SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
Appellant by : Ms. Dinkle Hariya,AR Respondent by : Mr. Virabhadra S. Mahajan (Sr. DR) Date of Hearing 08.07.2025 Date of Pronouncement 24.07.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 144 r.w.s. 144B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated27.04.2021 for the Assessment Year [A.Y.] 2018-19. P a g e | 2 A.Y. 2018-19 Chetnarayan Sitaram Singh 2. The grounds of appeal are as under:-
1. THE ORDER BAD, ILLEGAL AND WITHOUT JURISDICTION 1.1 In the facts and the circumstances of the case, and in law, the appellate order framed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, [‘Ld. CIT (A)’] is bad in law, illegal and without jurisdiction, as the same is framed in breach of the statutory provisions and the scheme and as otherwise also is not in accordance with the law. 1.2 Otherwise also, in the facts and the circumstances of the case, and law, the appellate order so framed by the Ld. CIT (A) is bad in law, illegal and void as the same is arbitrary and perverse.
2. NATURAL JUSTICE 2.1 The Ld. CIT (A) erred in not granting proper, sufficient and adequate opportunity of being heard to the Appellant while framing the appellate order. 2.2 It is submitted that, in the facts and the circumstances of the case, and in law, the appellate order so framed is bad in law and illegal, as the same is framed in breach of the principles of Natural Justice.
3. EX-PARTE ORDER 3.1The Ld. CIT (A) erred in passing the order ex - parte. 3.2 While doing so, the Ld. CIT (A) failed to appreciate that the non - attendance/non - reply was for the reasons not attributable to the Appellant/beyond the control of the Appellant and not deliberate or intentional. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. WITHOUT PREJUDICE TO THE ABOVE
4. ADDITION OF THE AMOUNT OF RS. 6,17,74,500/- BEING DIFFERENCE BETWEEN THE STAMP DUTY VALUE AND CONSIDERATION U/S. 56(2) (x) 4.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making addition of Rs. 6,17,74,500/- u/s. 56(2)(x) of the Income tax Act, 1961 (‘the Act’), by treating the alleged difference between the stamp duty P a g e | 3 A.Y. 2018-19 Chetnarayan Sitaram Singh value of the document executed by the Appellant and the consideration as mentioned therein as ‘Income from Other Sources’. 4.2 While doing so, the Ld. CIT (A) erred in confirming the action of the A.O. in: (i)The case of the Appellant did not fall within the purview ofsection 56(2)(x) of the Act; (ii) The Appellant was not in receipt of any immovable property / any property within the meaning of section 56(2)(x) of the Act during previous year; (iii) The provisions of section 56(2)(x) of the Act was not applicable in the case of the Appellant, as there was no stamp duty determined under the Stamp Act; (iv) Without prejudice, assuming - but not admitting the Appellant was in receipt of such property during the previous year, the same was for adequate consideration; (v) Without further prejudice, the case of the Appellant was covered by the first proviso to clause (b) of section 56(2)(x) of the Act; (vi) Without further prejudice, the stamp duty value as adopted by the A.O. was not at all fair market value of the property; and (vii) Without further prejudice, the valuation was required to be referred to a Valuation Officer by the Assessing Officer in terms of the provisions of section 56(2)(x) of the Act. 4.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. 4.4 Without prejudice to the above, assuming but not admitting - that some addition was called for, the Ld. CIT (A) failed to appreciate that the computation of the addition made by the A.O. was arbitrary, excessive and not in accordance with the law.
At the outset, it may be stated here that as per the Registry, the instant appeal is delayed by 404 days. In the application and the affidavit filed by the assessee for the condonation of delay, it is P a g e | 4 A.Y. 2018-19 Chetnarayan Sitaram Singh submitted that he, aged 73 yrs, due to old age he left his usual medical and general stores from 2020.He being illiterate could not comprehend the SMS/Emails sent by the department and for which he was dependent on one tax consultant Sri R.S Ashiya who was handling all his tax matters since long. It is further submitted that most of the communications and notices pertained to the second phase of Covid period, which made it difficult to respond in effective manner. Tax consultant was also having health and family issues which also led to the delay. It was only after demand recovery notice dated 8.12.2021, he could come to know of ex parte assessment order and the resultant huge demand of Rs 6.17 cr. Immediately thereafter, appeal was filed. It is pleaded that the delay was due to unavoidable circumstances and there is no case of deliberate carelessness or negligence on part of the assessee which was unintended. No prejudice will be caused to the revenue if the delay is not condoned though the assessee will be greatly prejudiced by the loss of the only remedy available against the appellate order.
3.1 On careful consideration of the submissions of the assessee, we are of the considered opinion that the delay in filing of the present appeal was not intentional but due to certain miscommunication only. Such a bonafide mistake needs to be condoned. In this connection, P a g e | 5 A.Y. 2018-19 Chetnarayan Sitaram Singh reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late……..Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated….Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period…. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.” We therefore, condone the delay.
In this case, assessment order was passed u/s 144 of the Act on account of non compliance to various notices etc. The AO made an addition of Rs. 6,17,74,500/- u/s. 56(2)(x) of the Act, by treating the difference between the stamp duty value of the document executed by the assessee and the consideration as mentioned therein as ‘Income from Other Sources’. In the subsequent appeal, the ld.CIT(A) observed that the appellant did not submit any details in the appellate P a g e | 6 A.Y. 2018-19 Chetnarayan Sitaram Singh proceedings inspite of giving sufficient opportunities He has pointed out that as per records hearing notices were issued to the Appellant as per the table below: Date of Date of Hearing fixed Result Notice as per the Notice No details furnished nor any petition for adjournment was 14/09/2022 29/09/2022 received. No details furnished nor any petition for adjournment was 21/10/2022 07/11/2022 received. No details furnished nor any 09/11/2022 24/11/2022 petition for adjournment was received. No details furnished nor any 04/07/2023 19/07/2023 petition for adjournment was received. The conduct of the Appellant, as inferred from the aforesaid table, evidenced that he was not interested in prosecuting the Appeal.
It is further stated by the ld.CIT(A) that the assessee had challenged the action of the AO in invoking provisions of section 144 of the Act. He submitted that he was prevented from compliance for reasons which was beyond his control. It was noted by him that he did not submit any detail either in the course of assessment proceedings or in the course of present proceedings. Thus, it was concluded that the appellant was avoiding to furnish any details in support of grounds of appeal for reasons best known to him. In view of the same, he upheld action of the AO.
P a g e | 7 A.Y. 2018-19 Chetnarayan Sitaram Singh 6. From the above discussion, it is evident that both the assessment and appellate orders have been passed in ex parte manner mainly on account of lack of proper compliance by the assessee during these proceedings. Moreover, the ld.CIT(A) has not decided the appeal on merits which is contrary to the mandate of section 250(6) of the Act. The same is reproduced here under for your ready reference:
(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.
6.1 A bare perusal of above provision makes it clear that the CIT(A) is bound to dispose of the appeal before him on merits. Once an appeal is preferred before him, then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as per section 250(4) of the Act. Section 251(l)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it dear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not P a g e | 8 A.Y. 2018-19 Chetnarayan Sitaram Singh raised by the appellant in its appeal before the CIT(A). The appellate order is therefore, deficient in this regard.
During the course of hearing, the ld. AR for the assessee prayed that the ld. CIT(A) and the AO both have passed the ex-parte order and the assessee was not provided adequate opportunity of being heard. It may be provided one more opportunity to advance its arguments/submissions before the ld. AO so as to provide details in connection with the merits of his case and additional evidences etc. to support its contentions. The ld.AR did not object to this proposition. He has also pleaded for admitting certain additional evidences filed for the first time before the Bench.
We have heard both the parties and perused the materials available on record. In the light of above observations, in the substantial interest of justice, we set aside the appellate order and restore the entire matter back to the AO for passing the assessment order de novo. In case of any failure on the part of the assessee, the AO would be at liberty to pass order after considering the materials on record. The assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings before the AO.