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Facts
During a survey u/s 133A, the assessee offered additional income for excess stock and cash but did not admit it in the return of income. The Assessing Officer added this income and disallowed a deduction u/s 80TTA, subsequently initiating penalty proceedings. The assessee's appeal before the CIT(A) was dismissed *in limine* due to non-appearance, leading to an appeal to the ITAT where a 170-day delay in filing was condoned.
Held
The Tribunal ruled that the CIT(A) erred by dismissing the appeal *in limine* without considering its merits, citing a Bombay High Court judgment mandating adjudication on merits even in ex-parte orders. It set aside the CIT(A)'s orders for both the quantum addition and the consequential penalty, remitting them back for *de novo* adjudication on merits by the CIT(A)/NFAC.
Key Issues
1. Whether the CIT(A) was justified in dismissing the assessee's appeal *in limine* for non-appearance without considering the merits. 2. Whether the quantum addition and consequential penalty appeals should be remitted back for *de novo* adjudication.
Sections Cited
250, 133A, 143(1), 142(1), 69, 69A, 115BBE, 80TTA, 271AAC, 272A(1)(d), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
Assessee by : None Revenue by : Shri Vishwajit Shinde Date of hearing : 20.01.2026 Date of pronouncement : 11.02.2026 आदेश / ORDER These two appeals filed by the assessee pertain to the Assessment Year 2019-20 and are directed against the separate orders passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income Tax Act, 1961 [in short “the Act"] dated 07.02.2025 and 10.03.2025 which in turn are arising out of the respective Assessment/Penalty order.
When the appeals called for, none appeared on behalf of the assessee despite due service of notice of hearing. I therefore proceed to adjudicate the appeals with the assistance of ld. Departmental Representative and available material on record.
Registry has pointed out that there is delay of 170 days in filing the appeals before the Tribunal. Assessee has filed an affidavit explaining the delay and relevant contents are reproduced below:
“I state that in the above case against the Appellate order was passed on 07.03.2025. Ordinarily the appeal should have been preferred by us to the ITAT against the said order within 60 days namely by 06.05.2025. The date for filing the present appeal is 07.11.2025. I state that there is thus a delay of 185 days. I solemnly state that the delay was caused due to the fact that when the appeal was required to be filed, our authorized representative was undergoing an angioplasty procedure and was under intensive medical care and observation. Subsequently, in July, he underwent major spinal surgery and advised a complete bed rest for the period of 5 months. Due to this unforeseen health condition, the filing of the appeal has remained. Thus, there is a delay of 185 days in filing the appeal. I humbly submit that the delay in filing the appeal was unintentional and the assessee has not been benefitted by causing such delay. It is humbly prayed before your Honour's that the delay of 185 days delay in filing the appeal my kindly be condoned in the principle of natural justice. I state that the above information is true and correct to the best of my knowledge. The assessee shall remain forever grateful for the act of kindness.”
Ld. Departmental Representative opposed the contentions made by the assessee.
After hearing ld. DR and considering the averments made by the assessee stating the reasons which led to delay and also placing reliance on the judgment of Hon’ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 2 SCC 107) I find that due to ‘reasonable cause’ assessee failed to file the appeal within the time limit specified under the Act. I therefore condone the delay of 170 days in filing the appeals and admit the appeals for adjudication. which relates to the addition made by the Assessing Officer.
Brief facts as emanating from the record are that the assessee is an individual who e-filed return of income for A.Y. and 2674/PUN/2025 Vasant Popatlal Patel 2019-20 on 31.12.2019 declaring income at Rs.13,19,400/-. A survey action u/s.133A of the Act was also carried out at the business premises of the assessee on 27.02.2019. During the course of survey proceedings, assessee offered Rs.9,00,556/- as additional income on account of excess stock and excess cash. Case selected for compulsory scrutiny. Valid statutory notices u/s.143(1) and 142(1) were served on the assessee. In the absence of any reply from the side of the assessee, ld. Assessing Officer added Rs.9,00,556/- to the total income of the assessee u/s.69/69A r.w.s.115BBE of the Act as unexplained investment /income/money. He also disallowed Rs.3,118/- which was claimed by the assessee u/s.80TTA of the Act. Assessed income at 22,22,074/- as against the returned income of Rs.13,18,400/-. Ld. Assessing Officer also initiated penalty proceedings u/s.271AAC and 272A(1)(d) of the Act.
Aggrieved assessee preferred appeal before ld.CIT(A) but assessee failed to appear before ld.CIT(A) on the given dates of hearing. Ld.CIT(A) dismissed the appeal in limine by observing as under :
“5. I have perused the order passed by the AO. The issues raised in the grounds, which require adjudication is not admitting the additional income declared during the course of survey carried out in the appellant's case. The issue has been dealt elaborately in the assessment order. When the appellant declared the additional income on account of excess stock found during the physical verification (Rs. 8,02,138/-) and also admitted excess cash found during the survey (Rs. 98,458/-) as the additional income, he ought to have admitted the same in the ROI filed. It is for this reason, this case was selected for compulsory scrutiny and notice u/s 143(2) of the IT Act, was issued. However, the appellant did not respond to various notices issued u/s 142(1) of the IT Act, and that led to addition of this as the undisclosed income. The assessment order was passed on 29.09.2021 and the appeal was filed instantly. However, he failed to substantiate the Grounds of Appeal in spite of several notices issued and served during the course of appeal proceedings. Hence, it is concluded that the appellant is not having any reason for not admitting the excess stock and excess cash detected and 2674/PUN/2025 Vasant Popatlal Patel during the course of survey. For this reason, the addition made by the AO is upheld and the Grounds of Appeal are dismissed.
6. As a result, the appeal is dismissed.
9. Now the assessee is in appeal before this Tribunal assailing the exparte orders passed by the authorities below.
10. I have heard the ld. Departmental Representative and perused the record placed before me. Before this Tribunal, assessee raised Ground No.1 which reads as under :
“1. On the facts and the circumstances of the case and in law, learned CIT (A) erred in passing Ex-parte order u/s 250 of the Income Tax Act, 1961 without discussing the merit of the case, appellant prays for restoring the matters to the file of learned CIT Appeal for considering the appeal on merit. The notice for hearing was send to email address which was not used by the assessee and hence the assessee was unable to comply with the notices.”
10.1 On perusal of the impugned orders passed by the ld. Assessing Officer as well as ld.CIT(A) for the year under consideration, it would be evident that there was no participation from the side of assessee and ld.CIT(A) has dismissed the appeal in limine without discussing any merits of the case as contemplated u/s.250(6) of the Act.
The settled position of law mandates the ld.CIT(A)/NFAC to dispose of the appeal by adjudicating the issues raised in appeal on merits. In this regard, reference is being made to a decision of the Hon’ble Bombay High Court in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) Bombay)/[2017] 297 CTR 614 (Bombay) wherein it was held that ld.CIT(A) NFAC is obliged to dispose of the appeal on merits even in an exparte order.
Considering the totality of the case and in the larger interest of justice, I am of the considered opinion that the issues on merit and 2674/PUN/2025 Vasant Popatlal Patel deserves to be remitted back to the ld.CIT(A)/NFAC for denovo adjudication. In view thereof, without dwelling into merits of the issue, the issues on merits are being remitted to the file of ld.CIT(A)/NFAC. The assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld.CIT(A)/NFAC shall be free to proceed in accordance with law. Findings of the CIT(A)/NFAC is set aside and Grounds of appeal raised by the assessee are allowed for statistical purposes.
Further, I observe that the penalty proceedings are also decided exparte by the authorities below owing to non-compliance by the assessee. Since the issues raised in the quantum addition are remitted back the appeal relating to penalty levied u/s.271AAC(1) raised in being consequential is also remitted back to the file of ld.CIT(A). Impugned order is set aside and the grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced on this 11th day of February, 2026.