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Facts
The assessee, a salaried employee, did not report salary income or the purchase of immovable property. The AO made an ex-parte assessment under Section 144, adding both the salary and the cost of the property, as notices sent to the assessee went to a SPAM account. The CIT(A) dismissed the assessee's appeal due to a delay of 201 days in filing.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause due to the notices going to the assessee's SPAM account, making the assessee unaware of the assessment. It set aside the CIT(A)'s order and remanded the quantum assessment back to the AO for a de novo assessment, emphasizing the lack of opportunity given to the assessee. Consequently, the penalty levied under Section 271(1)(c) was also set aside and remanded to the AO, with costs of Rs.10,000 imposed on the assessee.
Key Issues
Whether the delay in filing the appeal should be condoned due to notices being delivered to a SPAM account; Whether an ex-parte assessment without proper opportunity to the assessee is valid; Whether a penalty order should stand when the quantum assessment is remanded.
Sections Cited
192, 194IA, 144, 271(1)(c)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, both dated 24.12.2024 for the Assessment Year (hereinafter referred to as "AY”) 2016-17.
& 163/Chny/2025 (AY 2016-17) Mr. Thejoananda Balasundaram :: 2 ::
At the outset, the Ld.AR of the assessee submitted that is against the penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act”)
The brief facts in respect of quantum assessment as noted by the AO are that the assessee is an individual who is a salaried employee of M/s.Indian Terrain Fashions Ltd. From the TDS statement [u/s.192/194IA of the Act], the AO noted that the assessee has not shown the income of Rs.6,49,449/- from his employment as well as regarding payment of consideration for purchase of immovable property worth Rs.56 lakhs. The AO asked the assessee to explain why he has not filed return of income (RoI) and directed him to explain the source of purchase of the immovable property. The AO noted that despite issuing several notices, assessee didn’t reply. Therefore, he resorted to best judgment assessment u/s.144 of the Act [ex parte] and made an addition of Rs.6,49,449/- [salary] and since, the assessee failed to explain the source of purchase of the property, he made an addition of Rs.56 lakhs [totaling Rs.62,49,449/- (Rs.56,00,000/- + Rs.6,49,449/-)]. On appeal, the Ld.CIT(A) has dismissed the appeal only on the ground that there was a delay of ‘201’ days in filing of appeal, and he refused to condone the delay and dismissed the appeal.
& 163/Chny/2025 (AY 2016-17) Mr. Thejoananda Balasundaram :: 3 ::
Aggrieved, the assessee is in appeals before this Tribunal.
We have heard both the parties and perused the material available on record. We note that the AO and the Ld.CIT(A) in this case have passed ex parte orders. The AO has made addition considering the TDS statement u/s.192/194IA of the Act i.e. in respect of salary as well as that of purchase of immovable property. According to the Ld.AR, the assessee was not aware of the notices issued by the AO, because, notice were delivered into SPAM account and therefore, the AO has obviously passed the ex parte order by making a huge addition in respect of entire salary as well as the cost of property. Further, according to the Ld.AR, the delay of ‘201’ days in filing of appeals before the Ld.CIT(A) was due to the fact that assessee was not aware of passing of assessment order on 23.03.2024; and by the time, the assessee came to know about the passing of assessment order more than ‘200’ days have elapsed on 10th October, and that too after he received the penalty order dated 11.09.2024. On the aforesaid facts noted, we are of the view that assessee can’t be faulted in this case for not responding to AO’s notices, because, the notices issued to him during the course of assessment proceedings got delivered into his SPAM account and therefore, the assessee was in the dark about the notices and so obviously he didn’t & 163/Chny/2025 (AY 2016-17) Mr. Thejoananda Balasundaram :: 4 ::
respond, which resulted in passing of the impugned sec.144 assessment order and the assessee was not aware of passing of the ex parte assessment order and came to know only about it after ‘200’ days as noted supra, therefore, we are of the view that assessee has explained the delay and since there was sufficient cause for the delay, we condone the delay of ‘201’ days in filing of the appeals before the Ld.CIT(A).
Furthermore, we note that the AO has passed the ex parte order qua assessee without giving opportunity to the assessee. Therefore, relying on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC), and hence, we set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO with a direction to de novo assess the income of the assessee.
Coming to the appeal [ITA No.163/Chny/2025] which is against the action of the Ld.CIT(A) confirming the penalty levied u/s.271(1)(c) of the Act, which penalty undisputedly emanates after quantum assessment has been framed against the assessee. And since, the quantum assessment has been set aside back to the file of the AO for de novo assessment, and therefore, impugned action of the Ld.CIT(A) confirming the penalty is also set aside back to the file of the AO for appropriate action after taking action in respect of quantum assessment.
& 163/Chny/2025 (AY 2016-17) Mr. Thejoananda Balasundaram :: 5 ::
The assessee is directed to be diligent and to file written submissions/relevant documents before the AO and the AO to frame assessment in accordance to law after hearing the assessee. A cost of Rs.10,000/- is imposed which the assessee should remit to the State Legal Aid Authority, Hon’ble Madras High Court, and produce necessary proof of depositing of the same before the AO and thereafter, the AO to frame the de novo assessment after hearing the assessee in accordance to law; and initiate penalty thereafter in accordance to law.
In the result, appeals filed by the assessee are allowed for statistical purposes.