Facts of the Case

The assessee, Neha Tamrakar, filed her return of income for Assessment Year 2009-10 declaring income of ₹1,02,100. Based on AIR information indicating cash deposits of ₹22,04,600 in a savings bank account during FY 2008-09, the Assessing Officer initiated reassessment proceedings by issuing notice under Section 148 dated 03.03.2016 after recording reasons and obtaining approval under Section 151. Multiple notices under Sections 142(1) and 129 were issued; however, due to non-compliance, the assessment was completed ex parte under Section 144 read with Section 147 on 21.12.2016, treating the entire cash deposit as unexplained income and assessing total income at ₹22,04,600. The CIT(A) dismissed the first appeal, upholding service of notice and confirming the addition. The assessee filed a second appeal before the Tribunal with a delay of 409 days.

Issues Involved

Whether the delay of 409 days in filing the second appeal deserved condonation, whether the ex parte reassessment and appellate order suffered from violation of principles of natural justice, whether the addition of ₹22,04,600 as unexplained cash deposit was sustainable without adjudication on merits, and whether the matter warranted remand for de novo consideration.

Petitioner’s Arguments

The assessee sought condonation of delay on the ground that the impugned appellate order was not received and came to her knowledge only upon accessing the portal later; the email recorded in Form 35 did not belong to her. On merits, it was contended that the assessment and the appellate order were ex parte, passed without effective opportunity and without examination of merits. It was prayed that the impugned orders be set aside and the matter be remanded for fresh adjudication.

Respondent’s Arguments

The Revenue did not object to condonation of delay and expressed no objection to remand, subject to imposition of cost and a direction that the assessee cooperate fully during fresh proceedings.

Court Order / Findings

The ITAT Indore condoned the delay of 409 days, holding that sufficient cause was shown and there was no mala fide intent. On merits, the Tribunal observed that the assessment was completed ex parte under Section 144 and that neither the assessment nor the appellate order adjudicated the issues on merits. Emphasizing the need for a reasoned, merit-based determination and effective opportunity of hearing, the Tribunal set aside the impugned appellate order and remanded the matter to the file of the Assessing Officer for de novo adjudication. The Tribunal directed the assessee to furnish complete details, including a valid email address, to cooperate fully, and cautioned against non-compliance. The remand was made subject to payment of cost of ₹2,500 by the assessee.

Important Clarification

The Tribunal clarified that while non-compliance cannot be condoned indefinitely, substantive justice requires that ex parte assessments based on AIR information be examined on merits after granting effective opportunity. The Assessing Officer was directed to pass a speaking and well-reasoned order.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes, the impugned appellate order was set aside, and the matter was remanded to the Assessing Officer for de novo adjudication on merits, subject to payment of cost of ₹2,500 and compliance with directions for effective participation.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769158869_NEHATAMRAKARBHOPALVS.INCOMETAXOFFICER51BHOPAL.pdf

 

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