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Facts
The assessee, running a liquor shop, filed his income return, but did not respond to notices issued under sections 143(2) and 142(1). The AO made an assessment estimating net profit at 5.04% of the underreported turnover. The assessee appealed to the CIT(A) with a significant delay, which was dismissed on grounds of limitation.
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A), set aside the order of the CIT(A) and the AO, and remitted the issue back to the AO for a fresh assessment after considering the documents filed by the assessee.
Key Issues
Whether the delay in filing the appeal before the CIT(A) should be condoned, and whether the AO's assessment order warrants reconsideration based on submitted documents.
Sections Cited
143(2), 142(1)
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Income Tax Appellate Tribunal, ‘SMC’ BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE – & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the Ld.Addl/JCIT(A)-4, Hyderabad dated 31/07/2025 in respect of the A.Y. 2017-18.
The brief facts of the case are that the assessee is running a liquor shop and he filed his return of income on 05/01/2018. Thereafter the case was selected for scrutiny under CASS and notice u/s. 143(2) was issued. Subsequently, notice u/s. 142(1) was issued. Two more notices were issued to furnish the details called for in the notice dated 06/08/2019. The assessee had not responded to the said notices and therefore the AO
Page 2 of considering the materials available before him, had made the assessment in which the excess turnover has been taken as the under reported turnover of the assessee and the net profit has been estimated at 5.04% of the under reported turnover. The AO had made the said addition to the total income reported by the assessee. As against the said order, the assessee filed an appeal before the Ld.CIT(A) with a delay of 2540 days. The assessee filed an application to condone the said delay. The Ld.CIT(A) after considering the reasons stated in the delay condonation application, had dismissed the appeal on the ground of limitation.
The said order is under challenge before this Tribunal.
At the time of hearing, the Ld.AR submitted that the assessee is not familiar with the faceless proceedings and he is depending on the accountant for filing the return, etc. The said accountant had not intimated anything about the notices issued by the AO and also the order passed by the AO and therefore the assessee has no knowledge about the assessment proceedings. The Ld.AR further submitted that only after the bank account has been attached, the assessee came to know about the assessment order and thereafter through the another accountant, the portal was viewed and the assessment order was downloaded. The Ld.AR also submitted that the assessment order was passed on 12/12/2019 and thereafter from the month of March, 2020, the Government of India had declared lockdown and therefore the lockdown period which was also extended by the Hon’ble Supreme Court could not be taken into consideration while calculating the said delay. The Ld.AR on merits submitted that there is no underreporting of any turnover since the assessee’s sister-in-law’s business income were also deposited in the bank accounts of the assessee and therefore, the excess turnover was available. The Ld.AR further submitted that the said turnover of his sister-in-laws were separately recorded in her books of accounts and the same were also duly audited and the said amount was also offered to tax by the sister-in-law and therefore submitted that the inclusion of the said income into the account of the assessee would amounts
Page 3 of to double taxation and prayed to allow the appeal. The Ld.AR also filed a paper book enclosing the documents and prayed to allow the appeal.
The Ld.DR submitted that the delay is not a small one and therefore the said delay need not be condoned and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
In the present appeal, the assessment was made by the AO by taking the difference between the turnover reported and the turnover available in the audit report as the underreported turnover and based on that, the income has been estimated by the AO. The AO had arrived the said conclusion since the assessee had not responded to any of the notices. Before the Ld.CIT(A), the assessee filed an appeal with a delay of 2216 days and also enclosed an application to condone the said delay. We have also considered the submission made by the Ld.AR that even though the assessment order was passed on 12/12/2019, the delay period falls under the lockdown period of the covid19. We have also considered the suomto order of the Hon’ble Supreme Court in which the Hon’ble Supreme Court has extended the period of limitation upto 31/05/2022 and therefore if we exclude the said covid19 period, the delay would be about 1771 days. The assessee’s contention that he is not familiar with the faceless proceedings and also because of the covid19 lockdown for almost 2 years, there would be every possibility that the assessee might have missed the deadline for filing the appeal before the Ld.CIT(A). We have also considered the documents filed by the assessee in the paper book in which the assessee had filed the copies of his books of accounts and the copies of the books of accounts of the assessee’s sister-in-law and also bank statements of Bank of Baroda and State Bank of India to show that the turnover of the assessee’s sister-in-law were also treated as the turnover of the assessee.
Further, in the paper book, the Ld.AR filed the submissions made before the Ld.CIT(A) and also the copies of the various documents when the Page 4 of appeal was pending before the Ld.CIT(A). Unfortunately, the Ld.CIT(A) in his order, had not considered about the said submissions dated 20/09/2025 which was uploaded on 22/09/2025 before rejecting the application for condonation of delay. From the paper book, we find that the said documents were not placed before the AO but filed before the Ld.CIT(A). Therefore the AO has no opportunity to verify the said documents and gave a finding on the said documents. In such circumstances, in the interest of justice, we have decided to remit this issue to the file of the AO for doing the assessment in accordance with law.
We therefore set aside the order of the Ld.CIT(A) by condoning the delay in filing the appeal before it and also set aside the order of the AO dated 12/12/2019 and remit this issue to the file of the AO for doing the assessment afresh after considering the documents filed by the assessee and thereafter make the assessment in accordance with law after hearing the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 19th February, 2026.