MAHEMUDKHAN AJAMUDDIN RANA,VADODARA vs. THE ITO, WARD-1(3)(1), VADODARA

The brief facts of the case are that the Assessing Officer noted from Departmental records that the assessee had sold an immovable property during the financial year 2017-18 for a consideration of ₹67,90,000/-, but failed to disclose the same or file the return of income. The assessee did not submit any sale or purchase documents nor did he furnish any explanation regarding the transaction in response to various notices issued by the Assessing Officer. The Assessing Officer noted that despite multiple opportunities and notices having been duly served on the assessee, he failed to appear or submit any supporting documents. Given the consistent non- compliance, the Assessing Officer proceeded to make a best judgment assessment under section 144 of the Act. Accordingly, the Assessing Officer treated the entire amount of ₹67,90,000/- as unexplained money under section 69A of the Act and added the same to the total income, which was subject to tax under section 115BBE of the Act. Penalty proceedings under sections 271AAC(1) and 272A(1)(d) were also initiated for unexplained income and non-compliance to statutory notices, respectively.

In appeal, he Commissioner (Appeals) dismissed the assessee’s appeal primarily on the ground of non-prosecution and refusal to condone the delay in filing the appeal. CIT(Appeals) noted that despite multiple opportunities, the assessee failed to appear, file submissions, or seek adjournment. All notices were served through ITBA on the email address provided by the assessee at the time of filing the appeal. CIT(Appeals) observed that the assessee showed no interest in pursuing the appeal and, in view of judicial precedents from various High Courts and the Supreme Court, held that an Mahemudkhan Ajamuddin Rana vs. ITO Asst.Year –2018-19 - 3– appeal may be dismissed for non-prosecution when the assessee fails to participate in appellate proceedings. Further, though the appeal was dismissed for non-prosecution, the Commissioner also adjudicated the matter on merits. It was noted that the assessee had not filed its return of income for AY 2018-19 and the case was reopened under section 147 of the Act based on information that an immovable property was sold for ₹67,90,000/-. Although the assessee subsequently filed a return declaring income of ₹17,840/-, there was no compliance to notices or show cause issued by the Assessing Officer. The assessment was completed ex parte under section 144 and an addition was made under section 69A read with section 115BBE of the Act, which CIT(Appeals) found to be legally and factually justified due to the assessee’s failure to explain the transaction.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders.

We note that the assessee has filed the present appeal with a delay of 207 days. An application has been moved for condonation of the said delay, along with an Affidavit explaining the reasons for the same. After carefully considering the submissions made and the facts placed on record, it is noted that the assessee is a semi-literate person with no formal education in income tax laws or legal procedures. The explanation provided in the condonation application clearly indicates that the delay was neither deliberate nor due to any mala fide intention, but was as a result of lack of knowledge and guidance in legal and procedural matters relating to the filing of appeal. It is well- Mahemudkhan Ajamuddin Rana vs. ITO Asst.Year –2018-19 - 4– settled law that the right to appeal is a substantive right, and should not be denied merely on technical grounds when a sufficient cause is shown. In the present case, we are satisfied that the reasons cited constitute a reasonable cause for the delay and reflect bona fide circumstances that prevented timely filing. There is nothing on record to suggest that the delay was intentional or with an ulterior motive. On the contrary, the record indicates that the assessee took steps to initiate the appeal once proper advice and assistance were received. In the interest of substantial justice, and keeping in view the principles laid down by the Hon’ble Supreme Court in various judicial pronouncements on condonation of delay, we are inclined to condone the delay of 207 days in filing the appeal. The delay is hereby condoned.

On going through the submissions of the Counsel for the assessee and the Ld. DR, we note that the present appeal is directed against the order passed by the Commissioner of Income Tax (Appeals), whereby the assessee’s appeal was dismissed on account of non-appearance. The assessment in this case was completed ex parte under section 144 of the Act whereby, the Assessing Officer treated the sale consideration of ₹67,90,000/- as unexplained money under section 69A of the Act. On perusal of the record and in light of the fact that a substantial addition of ₹67,90,000/- has been made in an ex parte assessment, and further considering that the appeal before the CIT(A) primarily on account of non-appearance, we are of the considered view that the assessee deserves one final opportunity to present his case. The contention of the Counsel for the assessee before us is that the land sold is agricultural land and sale thereof does not attract any taxation. The Counsel for the assessee submitted that if given an opportunity of hearing, the assessee Mahemudkhan Ajamuddin Rana vs. ITO Asst.Year –2018-19 - 5– is in a position to demonstrate that the sale of such agricultural cannot be subject to tax in the hands. Accordingly, in the interest of justice, we deem it appropriate to set aside the order of the CIT(A) and restore the matter to his file for de novo adjudication after affording the assessee an opportunity of being heard. However, considering the assessee’s non-compliance both at the assessment and appellate stages, a cost of ₹5,000/- is imposed on the assessee, which shall be paid to the credit of Prime Minister Relief Fund. The assessee shall produce proof of such payment before the CIT(A) at the time of the first hearing. The appeal shall be heard and decided on merits only upon compliance with this direction.

Accordingly, the matter is restored to the file of the CIT(A) for fresh adjudication.

In the result, appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 30/07/2025