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Facts
The assessee filed his return of income, and the case was selected for limited scrutiny due to an increase in unsecured loans. The assessee failed to respond to notices from the AO and the CIT(A), leading to ex-parte orders. The appeal before the Tribunal was filed with a significant delay.
Held
The Tribunal condoned the delay in filing the appeal, considering the assessee's illiteracy and reliance on his auditor. The Tribunal set aside the orders of the lower authorities and remitted the issue to the AO for fresh disposal.
Key Issues
Whether the assessee's explanation for the delay in filing the appeal and responding to notices is sufficient, and if an opportunity should be granted for fresh assessment proceedings.
Sections Cited
40(a)(ia), 143(2), 142(1), 144, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of NFAC, Delhi dated 29/03/2024 in respect of the A.Y. 2018-19.
The brief facts of the case are that the assessee filed his return of income in ITR-3 on 27/10/2018. Thereafter the case was selected for limited scrutiny under CASS for considering the large increase in unsecured loans during the year and lower amount disallowed u/s. 40(a)(ia) in the return while comparing the audit report. Thereafter, the AO had issued notice u/s. 143(2) and subsequently, several notices were issued u/s. 142(1) of the Act but the assessee had not responded to any of the notices. The AO had referred the case to the verification unit for address verification and the verification unit also served a letter physically to the assessee on 12/03/2021 but the assessee had not responded thereafter also. The AO issued a show cause notice u/s. 144 on 12/04/2021 and the assessee had not responded to the said show cause notice and therefore the AO based on the records available with him had calculated the difference between the unsecured loans furnished for the year 2018-19 and 2017-18 and treated the said difference as addition u/s. 68 of the Act.
As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) also communicated the hearing notices on four occasions but the assessee had not responded to any of the notices and therefore the Ld.CIT(A) had dismissed the appeal ex-parte.
As against the said order of the Ld.CIT(A), the present appeal has been filed by the assessee before this Tribunal with a delay of 248 days. The assessee also filed an application to condone the said delay. In the said application, the assessee had explained that the assessee is an illiterate person and he has no knowledge in the computer systems and further submitted that the previous auditor had not followed up the appeal and also not communicated the order passed by the Ld.CIT(A) and therefore the said delay has been occurred. The assessee further submitted that after noting that the ex-parte order has been passed by the Ld.CIT(A), the assessee approached an advocate and the appeal was made ready with a delay of 248 days and prayed to condone the said delay .
We have considered the reasons stated in the application for condonation of delay and satisfied that the assessee had sufficient reasons for not appearing before the Tribunal. We, therefore condone the said delay and proceeded to decide the appeal.
At the time of hearing, the Ld.AR submitted that the assessment of the assessee was handled by an auditor but unfortunately, he has not followed up the matter and therefore the AO had made an ex-parte order. Similarly, the said AR also not followed up the appeal and therefore the Ld.CIT(A) had passed an ex-parte order by dismissing the appeal. The Ld.AR further submitted that the assessee is having relevant documents to establish that the addition made u/s. 68 is not warranted and prayed an opportunity to appear before the AO and produce the relevant documents before him.
The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the assessment order in which the assessment was made u/s. 144 of the Act since the assessee had not responded to any of the notices including the letter served by the verification unit. Therefore the AO had treated the increase in the unsecured loans as addition u/s. 68 of the Act. Even though appeal was filed before the Ld.CIT(A) in time, the assessee had not appeared before the Ld.CIT(A) and therefore the Ld.CIT(A) had decided the appeal ex-parte and dismissed the same. Before us, the assessee submitted that he is an illiterate person and he depends on the auditor in respect of the income tax proceedings and therefore one more opportunity may be granted for producing the relevant documents before the AO.
Considering the facts and circumstances of the present case, that the assessment is made u/s. 144 of the Act and also the Ld.CIT(A) had decided the appeal ex-parte, in the interest of justice, we are of the view that one more opportunity may be granted to the assessee to substantiate his case AO. We, therefore set aside the order of the lower authorities and remitted the issue to the file of the AO for fresh disposal, in accordance with law after hearing the assessee. We are giving this concession to the assessee on terms that assessee should pay a sum of Rs. 10,000/- to the income tax department by way of cost and produce the receipt before the AO at the time of prosecuting the assessment proceedings.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12th August, 2025.