Facts of the Case

The assessee, Amarsinh Thakor, did not file his return of income for Assessment Year 2016-17. Based on information that the assessee had sold an immovable property and deposited cash in his bank account, reassessment proceedings under Section 147 were initiated and notice under Section 148 was issued on 23.03.2023.

Due to non-compliance, the Assessing Officer completed the assessment under Section 147 read with Section 144 on 16.01.2024, treating the entire sale consideration of ₹1,00,23,000 as short-term capital gain and cash deposits of ₹36,04,785 as unexplained under Section 69A, determining total income at ₹1,36,27,785.

The assessee’s appeal before the CIT(A), NFAC was dismissed on the ground of delay without adjudicating the issues on merits. Aggrieved, the assessee preferred an appeal before the Tribunal.

Issues Involved

Whether the CIT(A) erred in dismissing the appeal on the ground of delay without adjudicating the issues on merits, whether the Assessing Officer was justified in treating the entire sale consideration as short-term capital gain without allowing cost of acquisition, whether cash deposits could be added under Section 69A without providing effective opportunity, and whether the matter deserved restoration for fresh adjudication.

Petitioner’s Arguments

The assessee submitted that he was an agriculturist with income below the taxable limit and was not conversant with income-tax proceedings. It was contended that no physical notices were received and that the assessee, being not tech-savvy, could not access notices sent through the portal or email. It was argued that the assessee became aware of the assessment only upon initiation of recovery proceedings and that the delay of 216 days in filing appeal before the CIT(A) occurred due to these circumstances. The assessee requested that the matter be restored to the Assessing Officer to allow him an opportunity to explain the transactions.

Respondent’s Arguments

The Revenue supported the orders of the lower authorities but did not object to restoration of the matter to the file of the Assessing Officer for providing another opportunity to the assessee.

Court Order / Findings

The ITAT Ahmedabad observed that treating the entire sale consideration as short-term capital gain without allowing any deduction towards cost of acquisition could not be sustained. The Tribunal held that the CIT(A) should have examined the matter on merits instead of dismissing the appeal solely on the ground of delay.

At the same time, the Tribunal noted that the Assessing Officer had provided multiple opportunities to the assessee and that notices were duly served through registered email, which was not disputed. The plea that emails went to spam folder was not substantiated. Therefore, the Tribunal was not convinced with the assessee’s explanation for complete non-compliance during assessment proceedings.

Balancing the principles of natural justice with the conduct of the assessee, the Tribunal deemed it appropriate to impose a cost of ₹10,000 payable to the Prime Minister’s National Relief Fund. Subject to payment of such cost within 15 days, the Tribunal set aside the matter to the file of the Jurisdictional Assessing Officer with directions to grant one more opportunity to the assessee to explain the capital gain arising from sale of property and the source of cash deposits. The Assessing Officer was granted liberty to decide the matter on merits if the assessee again failed to comply.

Important Clarification

The Tribunal clarified that while ex parte dismissal of appeals without adjudicating merits is not sustainable, repeated non-compliance by the assessee cannot be ignored. Restoration of matters can be made conditional by imposing costs to balance equity and ensure cooperation in reassessment proceedings.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The assessment was set aside and remanded to the Assessing Officer for fresh adjudication on merits subject to payment of cost of ₹10,000 by the assessee within the stipulated time.

 

Link to download order- https://www.mytaxexpert.co.in/uploads/1769061730_AMARSINHTHAKORAHMEDABADVS.THEITOWARD321AHMEDABAD.pdf

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