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Facts
The assessee deposited a significant cash amount during demonetization and failed to file her return of income within the prescribed time. The Assessing Officer (A.O.) passed an ex-parte order and made additions for unexplained investments. The CIT(A) dismissed the appeal in limine due to delay.
Held
The Tribunal condoned the delay in filing the appeals. Observing that the assessment was ex-parte and the CIT(A) dismissed the appeal without considering merits, the Tribunal set aside the impugned order and remitted the matter back to the A.O. for denovo assessment.
Key Issues
Whether the CIT(A) erred in dismissing the appeal in limine without considering the merits due to delay, and if an opportunity for denovo assessment should be granted.
Sections Cited
142(1), 144, 69, 270A, 271AAC(1)
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid three appeals filed by the assessee are against the orders of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated19.02.2025.
:- 2 -: condonation petitions/affidavits stating the reasons for delay in filing the appeals. We have considered the petitions/affidavits of delay in filing the appeals and satisfied that there was sufficient cause for not filing the appeals within the prescribed time limit. Hence, the delays in all the appeals are hereby condoned.
: 3. The assessee had deposited cash amounting to Rs.10,10,000/- in her savings bank account maintained with ICICI Bank during the demonetization period. The assessee had not filed her return of income within the prescribed time, and therefore, the A.O issued a notice u/s. 142(1) of the Act. In response, the assessee filed her return of income on 08.07.2019 declaring total income of Rs.91,470/-.
However, the said return was treated as invalid. Before the A.O., the assessee was unable to satisfactorily explain the source of the aforesaid cash deposits. Consequently, the A.O passed an ex-parte order u/s. 144 of the Act and made an addition of Rs.9,17,000/- as unexplained investment u/s. 69 of the Act. Aggrieved by the said addition, the assessee preferred an appeal before the Ld. CIT(A) with a delay of 1,325 days. The assessee explained that the delay occurred
:- 3 -: as she was unaware of the income-tax proceedings, and was not properly guided by her income-tax consultant, and subsequently Covid-19 pandemic further delayed the filing of the appeal. However, the Ld. CIT(A) did not find the explanation satisfactory, and declined to condone the delay, and dismissed the appeal in limine.
At the outset, the Learned Authorized Representative (Ld. A.R.) submitted that the assessment order was passed ex-parte and that the Ld. CIT(A) also dismissed the appeal in limine without affording sufficient opportunity to the assessee. It was, therefore, prayed that one more opportunity be granted to the assessee to substantiate her case before the A.O.
On the other hand, the Learned Departmental Representative (Ld. D.R.) relied on the orders of the lower authorities and supported their findings.
We have heard the rival submissions and perused the materials available on record. It is observed that the A.O., in the ex-parte order passed u/s. 144 of the Act, made an addition of Rs.9,17,000/- u/s. 69 of the Act towards unexplained cash deposits made in the bank
:- 4 -: account during the demonetization period. The A.O. rejected the assessee’s explanation in the absence of supporting evidence. The Ld. CIT(A) also did not adjudicate the issue on merits since the appeal was dismissed in limine on account of delay. In our considered view, keeping in mind the principles of natural justice, one more opportunity should be granted to the assessee to substantiate her case before the A.O. Accordingly, we set aside the impugned order and remit the matter back to the file of the A.O. for denovo assessment in accordance with law, after affording reasonable opportunity of being heard to the assessee. This shall, however, subject to payment of costs of Rs.10,000/- (Ten thousand only). The same shall be paid by the assessee to Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras within a period of one month from the date of receipt of this order and produce the receipt before the A.O. The assessee is also directed to comply with all the notices issued by the A.O and furnish all relevant details for fresh consideration. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.
:- 5 -:
This appeal relates to the levy of penalty of Rs.2,959/- for under- reporting of income u/s. 270A of the Act, arising out of the assessment order passed u/s. 144 of the Act, wherein the income was assessed at Rs.12,24,470/-. The Ld. CIT(A) dismissed the appeal in limine. As we have already set aside the assessment order and restored it to the file of the A.O for denovo assessment, the penalty order does not have leg to stand and therefore does not survive. The A.O shall, however, be at liberty to initiate and levy penalty, while passing the fresh assessment order.
ITA No.2178/Chny/2025:
This appeal pertains to the levy of penalty of Rs.56,670/- u/s. 271AAC(1) of the Act in respect of the addition of Rs.9,17,000/- made u/s. 69 of the Act in the assessment order passed u/s. 144 of the Act.
The Ld. CIT(A) dismissed the appeal in limine. As we have already set aside the assessment order and restored it to the file of the A.O for denovo assessment, the penalty order does not have leg to stand and therefore does not survive. The A.O. shall be free to initiate and levy penalty, if so warranted, while passing the fresh assessment order.
:- 6 -:
In the result, all the three appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on 30th day of October, 2025 at Chennai.