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Facts
The assessee failed to file ITR for AY 2015-16. Information about a significant time deposit, property sale, and interest income led the AO to reopen the assessment under Section 147 and make ex-parte additions. The CIT(A) dismissed the subsequent appeal on the technical ground of a 442-day delay in filing without condoning it.
Held
The Tribunal found that the CIT(A) should have considered the assessee's reasons for delay, particularly as a non-resident, and decided the appeal on merits rather than technical limitation. Citing judicial precedent, the Tribunal remanded the case back to the CIT(A) with directions to condone the delay and adjudicate the appeal on its substantive grounds.
Key Issues
1. Whether the CIT(A) erred in dismissing the appeal on technical grounds of limitation without condoning the delay. 2. The validity of reassessment proceedings and ex-parte additions for long-term capital gain, unexplained investment, and interest income.
Sections Cited
147, 144, 194A, 148, 69, 115BBE, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 24.02.2025 for the Assessment Year (A.Y.) 2015-16 in the proceedings under Section 147 r.w.s. 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee did not file his return of income for the A.Y. 2015-16. The Assessing Officer had received an information that the assessee had made time deposit of Rs.1,00,00,000/- (Assessment Year: 2015-16) Mukesh Batubhai Desai vs. ITO Page 2 of 6 with Standard Chartered Bank during the Financial Year 2014-15. Further, an immovable property was also sold by the assessee during the year for a consideration of Rs.50,56,000/-. In addition, interest of Rs.64,466/- was received from SBI on which TDS under Section 194A was deducted. On the basis of these information, the case of the assessee was reopened under Section 147 of the Act and a notice under Section 148 of the Act was issued on 30.03.2022. In the course of assessment, there was no compliance by the assessee. Therefore, the Assessing Officer had completed the assessment ex-parte under Section 147 r.w.s. 144 of the Act on 18.03.2023 at total income of Rs.1,51,20,466/- ; wherein additions on account of sale consideration of land, unexplained investment in FDR and interest income were made.
3. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.
Now, the assessee is in second appeal before the us. The following grounds have been taken in this appeal: -
1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Assessing Officer has erred in reopening the assessment u/s.147 of the Act and issuing notice u/s.148 of the Income Tax Act, 1961.
2. On the facts and in the circumstances of the case as well as the law on the subject that the assessment order made u/s 147 rws.144 of the Act by the Ld. AO is bad in law and facts, illegal, without jurisdiction and needs to be quashed.
On the facts and in the circumstances of the case as well as the law on the subject that as per the amended law by Finance Act 2021 and with (Assessment Year: 2015-16) Mukesh Batubhai Desai vs. ITO Page 3 of 6 view to Supreme Court decision, the notice issued after lapse of 5 years is bad in law and illegal and therefore, the same need to be quashed.
4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.50,56,000/- on account of alleged long term capital gain. The Ld. AO has not calculated index cost of acquisition of property and sale consideration treated as long term capital gain; hence it is unwarranted.
On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.1,00,00,000/- on account of time deposit with Standard Chartered Bank treated as alleged unexplained investment u/s.69 rws.115BBE of the Act.
On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO.
On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in initiating penalty proceedings u/s.271(1)(c) of the Income Tax Act, 1961.
8. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper.”
5. Shri P. M. Jagatsheth, the Ld. AR of the assessee explained that the Ld. CIT(A) had dismissed the appeal of the assessee on technical ground that the appeal was not maintainable. He explained that there was delay of 442 days in filing the appeal which was not condoned by the Ld. CIT(A). The Ld. AR explained that the assessee had duly filed a condonation application and reasons for the delay was explained before the Ld. CIT(A). According to the Ld. AR, the assessee was a non-resident and residing in USA since last many years. He had sold a plot of land at Surat on 15.09.2014 and the transaction was done through his father-in- law. Further that the assessee was divorced in the year 2014 itself and, (Assessment Year: 2015-16) Mukesh Batubhai Desai vs. ITO Page 4 of 6 thereafter, there was no communication or any personal relation of the assessee with his ex-wife and her family. As a result, no compliance could be made before the Assessing Officer and there was also a delay in filing the appeal before the Ld. CIT(A). The Ld. AR submitted that considering the facts of the case, the matter may be set aside to the file of Ld. CIT(A) with a direction to condone the delay in filing the appeal and to decide the appeal of the assessee on merits.
6. Per contra, Shri B.P. Srivastava, the Ld. Sr. DR supported the orders of the lower authorities. However, he had no serious objection if the matter was set aside to the Ld. CIT(A) for deciding the matter on merits of the case.
7. We have considered the submissions of the assessee. It is found that the assessee had duly explained the reason for delay in filing the appeal before the Ld. CIT(A); who had rejected the contention of the assessee for the reason that no material evidence was brought on record which prevented the assessee from filing the appeal in time. Considering the fact that the assessee was a non-resident, the delay in filing the appeal should have been sympathetically considered. It is found that the entire sale consideration of land Rs.50,56,000/- was considered as income of the assessee without allowing any set-off for the cost the acquisition of property, which was not correct. Further, the sale consideration of the land being utilised for making the investment in FDR, for which separate addition was made by the AO, was also required to be examined. Considering the nature of additions made by the Assessing Officer, it is found that there are merits in the grounds as taken by the assessee. It has been held by the Hon’ble Gujarat High Court in the case of Vareli (Assessment Year: 2015-16) Mukesh Batubhai Desai vs. ITO Page 5 of 6 Textile Industries vs. CIT, 284 ITR 238 (Guj) that a meritorious case should not be thrown out on the ground of limitation. We are, therefore, of the considered opinion that the Ld. CIT(A) should have examined the appeal filed by the assessee on merits rather than dismissing the appeal on technical grounds of limitation. Accordingly, the matter is set aside to the file of the Ld. CIT(A) with direction to condone the delay in filing the appeal by the assessee and thereafter adjudicate the grounds taken by the assessee on merits. The assessee is also directed to make compliance before the Ld. CIT(A) and produce the documents and clarifications as required by him. In case the assessee doesn’t make any compliance in the course of set aside appeal proceeding, the Ld. CIT(A) will be free to decide the matter on merits on the basis of the facts and material as available on record.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on this 4th September, 2025.