LAXMI DHARAMSOTH,MANCHYA THANDA vs. ITO., WARD-1, WARANGAL

PER RAVISH SOOD, JM:

The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals), National Faceless Appeal Centre,
Delhi dated 27/05/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under Section 147 r.w.s. 144

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Laxmi Dharamsoth vs ITO r.w.s 144B of the Income Tax Act, 1961 (for short, “Act”) dated
29/03/2022, for the Assessment Year 2017-18. The assessee has assailed the impugned order of the CIT(Appeals) on the following grounds of appeal before us:
“1. The Assessing Officer (AO) is erred in reopening the assessment for the verification of information received by him. As it appears
Assessment Order u/s. 147 read with 144 of first para, said the unsecured loan of Rs. 2,56,37,956/- is treated as income. By comparing the unsecured loan amount mentioned as on 31-03-2018
with Election Affidavit filed by the Husband of the Appellant
(Dharamsoth Redya Naik) in November 2018 unsecured loan of Rs.
2,56,37,956/-, with that of ITR figures of 31-03-2017 of Rs.
1,85,50,000/-, and interpreting it as un matched and unsubstantiated
Unsecured Loans by the AO is and treating as escaped Income is a gross error.
2. The assessment was reopened u/s. 148 on 31-03-2021 for reassessment stating that the AO had reasons to believe that the income has escaped assessment. But on what reasons the learned
AD has opted to re-open the assessment and the copy of the approval taken is not provided to the Appellant.
3. The Appellant has been under medical care since 2013 for the Chronic Kidney related alignments. She has been diagnosed with the Chronic Kidney Disease (CKD) along with co-existing conditions of Type Ii Diabetes Mellitus and Hyper Tension. She has under gone dialysis for a prolonged period and was advised to maintain complete bed rest and avoid any form of travel or physical exertion. These health related challenges significantly restricted her ability to actively participate and involve to look after business work. The Appellant is un educated and illiterate could not understand the nuances of the understanding the importance of notices and the requirements of it's compliance.
4. The AO has passed the order u/s. 147 rws 144 on 29-03-2022 and appellant was not aware of the order and was came to know only in the month of September 2023, on receiving the demand notice and then approached the Professionals to file an Appeal with the Honorable CIT Appeals. Aggrieved by the Orders u/s. 147 rws 144,
270A and 272A(1)(d) by the AO, the appellant has preferred appeals against the Tax Demand, Penalties.
5. The appellant has pleaded before the CIT Appeals to condone the delay and kindly look into the merits of the case of income escapement. But the Honorable CIT Appeals has denied the request of condonation and passed the orders.

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6. Without prejudice to the above legal grounds 1-5, on the facts also the Assessing Officer erred in comparing unsecured of two different financial years. (That is comparing unsecured loans mentioned in ITR as on 31-3-2017 with the election affidavit unsecured loans as on 31-
3-2018).
7. The Appellant craves leave to add/alter/modify the grounds as may be necessary for the disposal of the case.”
2. Succinctly stated, the assessee had filed her return of income for AY 2017-18 on 29/10/2017, declaring a loss of Rs.7,38,053/-.
Thereafter, the AO based on information received from the Directorate of Systems, CBDT, New Delhi through the Insight Portal under High
Risk CRIU/VRU category, observed that the assessee had though disclosed an unsecured loan of Rs.2,56,37,956/- in the Election Affidavit filed by her spouse Shri Dharamsoth Reddy Naik, but in her return of income the same was disclosed at an amount of Rs.1,85,50,000/-.
Further, the AO observed that the unsecured loans during the subject year had increased from Rs.95.50 lakhs to Rs.1,85,50,000/-. Also, it was observed that the Election Affidavit disclosed different figures which revealed that the unsecured loans were increasing despite loss.
Accordingly, the AO observed that the unsecured loans shown in the Election Affidavit did not match with the details as were disclosed in the return of income for the year under consideration. The AO based on the aforesaid facts held a conviction that as the creditworthiness of the unsecured loans remained unsubstantiated by the assessee, therefore, there was an escapement of income of Rs.1,85,50,000/- from assessment within the meaning of the provisions of Explantion-2(b) to 4
Laxmi Dharamsoth vs ITO section 147 of the Act. Accordingly, the AO issued notice under section 148 of the Act, dated 31/03/2021. 3. Thereafter, the AO issued notice under section 142(1) of the Act, dated 11/11/2021 and 27/02/2022, wherein the assessee was called upon to file her return of income. Also, a reminder letter dated
08/03/2022 was issued to the assessee calling upon her to file return of income, but the assessee failed to effect compliance to the same. The AO considering the fact that the assessee had neither filed the return of income in compliance to notice under section 142(1) of the Act, dated
31/03/2021 nor complied with the notices/reminder letters issued under section 142(1) of the Act, therefore, proceeded to frame the assessment to the best of his judgment under section 144 of the Act. Accordingly, in the absence of any explanation forth coming from the assessee regarding creditworthiness of the unsecured loans of Rs.1,85,50,000/- as was disclosed in her return of income for the subject year, the AO made an addition of the same to her returned income vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated
29/03/2022, and determined her income at Rs.1,78,11,947/-.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) observed that the same involved a delay of 517
144B of the Act, dated 29/03/2022 was not physically served upon her but was sent to her inoperative email account. It was claimed by her that she had gathered about the assessment order only on 11/09/2023
when a notice under section 221(1) was served upon her. However, the CIT(A) did not find any merit in the explanation of the assessee regarding the inordinate delay involved in the appeal filed before him and dismissed the same on the said count itself.
5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.
6. We find that when the matter was called for hearing neither there was any representation on the part of the assessee nor any application for adjournment was filed before us. Therefore, in the backdrop of the aforesaid facts, we are constrained to proceed with and dispose of the appeal as per Rule 24 of the Income Tax (Appellate Tribunal) Rules,
1963, i.e., after hearing the Learned Departmental Representative (for short, “Ld. DR”) and perusing the records before us.
7. Shri S. Arun Kumar, the Learned Senior Departmental
Representative (for short, “Ld. Sr. DR”) at the threshold of hearing of the appeal supported the order of the CIT(A), and submitted that as the assessee had failed to come forth with any plausible explanation

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Order pronounced in the open court on 19th December, 2025. S (मधुसूदन सावͫडया)
(MADHUSUDAN SAWDIA)
लेखासदèय/ACCOUNTANT MEMBER (रवीश सूद)
(RAVISH SOOD)
ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Hyderabad, dated 19.12.2025. OKK/sps
आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:-

आदेशानुसार / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad.