Case Law Details
Babubhai Jesangbhai Marand Vs Jurisdiction AO – ITO (ITAT Rajkot)
The appeal pertains to Assessment Year 2012–13 and arises from an order passed by the Commissioner of Income-tax (Appeals) [CIT(A)] under Section 250 of the Income Tax Act, 1961, which upheld the assessment made by the Assessing Officer (AO) under Sections 144 read with 147. The assessee challenged the CIT(A)’s decision primarily on the ground that the appeal was dismissed as time-barred without properly considering the reasons for delay, despite submission of an affidavit seeking condonation.
The assessee, an individual engaged in agricultural activities, had not filed a return of income for the relevant year on the belief that his income, being agricultural, was exempt. During the year, he sold agricultural land for Rs. 60,46,000. Based on information received through AIR, the AO reopened the case by issuing a notice under Section 148. Multiple statutory notices were issued, but the assessee did not respond, citing lack of familiarity with tax laws and a bona fide belief that no taxable income arose. Consequently, the AO proceeded ex parte under Section 144 and computed capital gains of Rs. 54,72,453 after allowing indexed cost deduction, raising a tax demand.
The assessee later filed an appeal before the CIT(A) along with an application for condonation of delay supported by an affidavit. However, the CIT(A) dismissed the appeal in limine under Section 249(3), citing failure to justify the delay, without adjudicating the merits of the case.
Before the Tribunal, the assessee contended that the delay of 935 days occurred due to lack of awareness of the assessment order and genuine belief regarding tax exemption of agricultural income. It was further submitted that the assessee became aware of the assessment only upon receipt of penalty proceedings initiated on 15.03.2022. The appeal was subsequently filed in July 2022 after consulting a tax professional. The delay was also partly attributed to the COVID-19 pandemic and nationwide lockdown between March 2020 and February 2022.
The Tribunal noted that the assessee had provided reasonable cause for the delay, including lack of knowledge of tax provisions, delayed awareness of the assessment order, and disruption caused by the pandemic. It also observed that the Departmental Representative did not object to condonation of delay. Considering these factors, the Tribunal held that the delay was neither deliberate nor due to negligence, but arose from bona fide circumstances. Accordingly, the delay was condoned in the interest of justice.
On merits, the Tribunal observed that the CIT(A) had dismissed the appeal without examining substantive issues, including whether the land sold qualified as a “capital asset” under Section 2(14), and whether capital gains tax was applicable. It also noted that the assessment had been completed ex parte under Section 144 without the assessee’s participation.
In view of these circumstances, the Tribunal deemed it appropriate to provide the assessee with an opportunity to present his case. The matter was remanded to the Assessing Officer for fresh adjudication after granting adequate opportunity of hearing. The assessee was directed to cooperate and participate in proceedings, failing which the AO would be at liberty to pass an order in accordance with law.
Regarding the penalty proceedings under Section 271(1)(c), the Tribunal noted that since the quantum assessment had been remanded, the penalty appeal was also disposed of in similar terms.
Thus, the appeal was allowed for statistical purposes, with the delay condoned and the matter restored for fresh consideration.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
Captioned appeals filed by the assessee, pertaining to Assessment Year 201213, is directed against the order passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) by National Faceless Appeal Centre (NFAC) , Delhi/Commissioner of Income-tax (Appeals), dated 30.10.2025 & 06.12.2025, which in turn arises out of an order passed by the Assessing Officer u/s144 r.w.s. 147 of the Act, on 28.11.2019.
2. The grounds of appeal raised by the assessee are as under:
The Learned CIT(A) erred in dismissing the appeal as time-barred without appreciating that the delay was due to the bona fide reasons for which an affidavit for condonation of delay was also filed by the appellant detailing the reasons of such delay. The learned CIT(A) ought to have condoned the delay in filling appeal before him and disposed of the same on merits. It is submitted that it be so held now.
2. Without prejudice to the above, the learned AO has erred in law and on facts in making an addition of Rs.54,72,453/- on account of alleged capital gains from sale of rural agricultural land. It is submitted that the impugned land does not constitute a ‘capital asset’ within the meaning of Section 2(14) of the Act and, therefore, is not chargeable under the head Capital Gains’. It is respectfully submitted that the addition made by the Assessing Officer be deleted. The learned CIT(A) erred in not adjudicating on this ground as he dismissed appeal in limine.
3. The learned AO further erred in law and on facts in levying of interest under Sections 234A and 234B amounting to Rs.9,48,474/- and Rs. 10,02,984/- respectively. Since the principal addition of Rs.54,72,453/- under the head ‘Capital Gains’ is unjustified and liable to be deleted as stated above, the consequential interest under Sections 234A and 234B does not survive. It is respectfully prayed that the said interest charges be deleted.
Your Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal.
3. Brief facts of the case are that the The Appellant is an individual, having income from agricultural activities. Since he is earning agricultural income, which is exempt from tax, he has not filed his return of income for the year under consideration. During the year under consideration, the Appellant sold his agricultural land, having area of 2.51.92 hectors for a sum of Rs.60,46,000/-. Since the said land was agricultural land situated in mofussil place outside municipal limits, the Appellant was advised that it is not liable to capital gain tax, and hence, there is no taxable capital gain accruing on sale of such asset, and hence, he did not file his return of income. On the basis of AIR details, the case of the Appellant was reopened by issuing notice u/s. 148 on 23.03.2019. Statutory notices were also sent to the Appellant from time to time. However, since the Appellant is not much conversant with the tax laws and also under the bona fide belief that he has no taxable income during the year under consideration, he did not respond to any of the notices. Having not received any response from the Appellant, the learned Assessing Officer issued show cause notice u/s.144 of the Act on 18.11.2019 calling upon the Appellant to explain as to why the amount of sale consideration received for Rs.60,46,000/- in respect of sale of his land should not be added to his income for the year under consideration. The Appellant was called upon to furnish the reply on or before 22.11.2019. However, the Appellant once again, being not conversant with the tax laws and under a bona fide belief that his income is not taxable for the year under consideration, did not file any reply in response to the said show cause notice. The Learned Assessing Officer, thereafter, made the assessment u/s. 144 of the Act. whereby he computed the taxable capital gain of the Appellant at Rs.54,72,453/-after deducting indexed cost of Rs.5,73,547/- from the sale consideration of Rs.60,46,000/- and raised demand on the Appellant.
4. Assessee filed an appeal before CIT against the order of AO Dt. 28.11.2019 alongwith an application for condonation of delay supported by the affidavit the Ld. CIT disposed of the appeal with following order:
“Under such circumstances, the aforesaid appeal cannot be considered for admission in terms of provisions of section 249(3) and accordingly, it is DISMISSED, in-limine, as NOT ADMITTED, without any discussion on merits or any other aspect, owing to appellant’s failure to discharge the statutory onus cast upon him in terms of the provisions of section 249(3).
4. In the result, the instant appeal is DISMISSED for statistical purpose.”
5. Aggrieved by the impugned order dt. 30.10.2025 the assessee is in appeal before us.
During the course of Ld. AR submitted that the appeal was dismissed on the ground of delay. The assesse prayed an opportunity may kindly be provided to present the case before the Lower Authority. Ld. DR relied on the order of assessee however not objected to the prayer of the assessee.
6. We have heard, both the parties and perused the material available on record. We note that the appeal was filed before the CIT(A) on 21.07.2022 against the order of the AO dt. 28.11.2019 since the appeal was delayed by 935-days. However, the assesse was filed an application for condonation of delay alongwith affidavit requesting for that the delay may kindly be condoned and appeal may kindly be heard on merit. According to delay application, the assesse was not aware about the order passed. The assesse is an agriculturist and under the bone fide belief that agricultural income is an exempt that the assesse came to know certain order passed by the AO when the penalty order was passed on 15.03.2022 and the recovery proceedings were initiated by the Department. After open the copy the assesse has filed an appeal before the Ld. CIT(A) on 21.08.2022. We further note that there was a Covid-19 pandemic, lockdown was declared by the Government on 15.03.2020 and was in normal life came to existence on 28.02.2022. Considering, this fact that entire nation was in lockdown up to February, 2022. However, the appeal was filed on July, 2022 from February-2022 to July-2022, there was delay about 144-days so considering that “the assessee was not aware about the intricacies of Income Tax Act and since assessee was under genuine belief that my income was not taxable later on the assesse came to know about the order of assessment then assessee approach to Tax Consultant for filing of an appeal against the order of assessment”.
7. We are of the view of considering the above facts we feel that there was sufficient cause for not filing the appeal in time. However, the DR has also not objected in case delay is condoned. We note that the delay is neither deliberate nor due to any negligence and delay was caused due to heavy bona fide and circumstances we are contrary of the assessee in the interest of justice, we condone the delay.
8. We further accept the request of AR that the assessee must be given an opportunity to explain the case before the lower authority. We acknowledge the request of the assesse, considering the facts and circumstances we deemed fit to give one more opportunity to the assesse to explain the case before the CIT(A). We further, note that assessment was framed under Section-144 of the Act. Considering, this we remand back this matter back to the file of the AO for fresh adjudication after giving opportunity to the assessee. The assessee is also directed to ensure participation in the hearing as may fit by AO and do not seek adjournment, failing which AO shall pass appropriate order in accordance with law.
9. That the appeal of the assessee is allowed for statistical purpose.
10. ITA No.978/Rjt/2025, deals with the penalty u/s-271(1)(c) of the Act, since appeal for assessment year 2012-13 had already been remanded back to the AO and this appeal is also disposed of in above terms.
Order is pronounced in the open court on 06/04/2026.
Author Bio
