Case Law Details
Rishiraj Radheshyam Gupta Vs DCIT (ITAT Mumbai)
Mumbai ITAT set aside an ex-parte assessment involving ₹2.52 crore addition for alleged unexplained property investment, holding that the assessee was denied effective opportunity due to communication and procedural lapses.
The Tribunal observed:
- Assessment was completed u/s 144 ex-parte due to non-compliance
- Notices were sent to old address and email IDs not under assessee’s control
- The assessee, a senior citizen, was dependent on his CA and unaware of proceedings
- CIT(A) also passed order without proper consideration of facts and evidence
The ITAT noted:
- The assessee furnished a detailed affidavit explaining bona fide reasons for non-compliance
- The addition was substantial, and assessee claimed to possess supporting evidence
- Revenue did not dispute the explanation
Accordingly, the Tribunal:
- Condoned delay of 244 days
- Set aside the CIT(A) order
- Restored the matter to AO for fresh adjudication on merits after proper hearing
The appeal was allowed for statistical purposes, emphasizing that substantial justice and fair opportunity must prevail over procedural defaults.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is directed against the order dated 11.06.2024 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi[hereinafter referred to as “CIT(A)”], under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”]for Assessment Year 2016–17, arising out of the assessment order dated 07.12.2018 passed by the Assessing Officer under section 144 of the Act.
Condonation of Delay
2. At the outset, it is noted that there is a delay of 244 days in filing the present appeal before the Tribunal. The assessee has filed an application for condonation of delay supported by a duly sworn affidavit explaining the reasons for the delay.
3. The assessee, in the affidavit, has inter alia stated that he is a senior citizen and not well-versed with technological aspects, that his communications during the relevant period were handled through his Chartered Accountant, and that notices during assessment as well as appellate proceedings were sent to an old address and e-mail ID not under his effective control. It has been further stated that he became aware of the order passed by the learned CIT(A) only in April 2025 upon checking the e-filing portal and thereafter took immediate steps to file the appeal before the Tribunal.
4. We have carefully perused the affidavit filed by the assessee in support of the application for condonation of delay and have given thoughtful consideration to the explanation offered therein. The assessee has deposed that he is a senior citizen, aged about 61 years, and has been regularly assessed to tax for more than twenty-five years. It is further stated that during the relevant period, he was not conversant with technological processes and had limited use of electronic modes of communication, particularly e-mail, and was largely dependent upon his Chartered Accountant and staff for handling tax-related matters. The affidavit thus lays the foundational background explaining the assessee’s limited personal control over electronic communications.
5. The assessee has further explained the aspect of change in residence. It has been stated that though his earlier address was at Goregaon, Mumbai, he had permanently shifted to Vapi, Gujarat as early as in the year 2002 and had been continuously residing there. It is also explained that the Mumbai property continued to remain in existence, having been inherited and thereafter let out on rent, which resulted in the old address continuing in records. This explanation assumes significance in the context of service of notices and communications by the Department.
6. A crucial aspect highlighted in the affidavit is with regard to the e-mail addresses used for communication. The assessee has categorically stated that during the relevant period, the primary and secondary e-mail IDs registered on the e-filing portal belonged to his Chartered Accountant or his staff and were not under his independent access or control. It is specifically affirmed that the assessee was entirely dependent upon his Chartered Accountant for receiving and responding to communications from the Department. This assertion has not been controverted by the Revenue.
7. In relation to the assessment proceedings, the assessee has deposed that notices issued under sections 143(2) and 142(1) were sent to the e-mail ID of the Chartered Accountant and to the old Mumbai address, and no communication was received at his current address at Vapi or on his personal e-mail ID. It has been further stated that the Chartered Accountant did not inform him of such notices and that any physical notices sent to the old address were not brought to his knowledge by the tenants. Consequently, the assessee remained unaware of the assessment proceedings, resulting in non-compliance and ultimately an ex parte assessment under section 144.
8. The affidavit also sets out the sequence of events relating to the first appellate proceedings. It is stated that though the assessee had filed the appeal before the learned CIT(A) and had furnished updated address and personal e-mail ID in Form No. 35, subsequent notices of hearing were again issued on the old e-mail ID of the Chartered Accountant and at the old Mumbai address. The assessee has asserted that he did not receive such notices and was thus deprived of effective opportunity of being heard, resulting in an ex parte appellate order dated 11.06.2024.
9. With regard to the delay before the Tribunal, the assessee has deposed that he became aware of the impugned appellate order only in April 2025 upon making enquiry with his Chartered Accountant and checking the e-filing portal. It is further stated that immediately thereafter he took prompt steps and filed the present appeal without undue delay. The assessee has also affirmed that the delay was neither intentional nor deliberate, but occurred due to bona fide circumstances beyond his control.
10. From the above, it is evident that the affidavit furnishes a detailed and coherent explanation covering the entire chain of events, including the reasons for non-compliance before the lower authorities as well as the delay in filing the present appeal. The explanation is supported by specific facts relating to address, mode of communication, dependence on professional intermediaries and the point of time when knowledge of the appellate order was acquired.
11. Considering the detailed averments made in the affidavit, which satisfactorily explain both the non-compliance before the lower authorities and the delay in filing the present appeal, and further taking note of the fact that the Learned Departmental Representative has not raised any serious objection to the condonation of delay, we are satisfied that the delay has occurred on account of bona fide and reasonable causes beyond the control of the assessee and not on account of any deliberate or wilful negligence. Accordingly, in the interest of substantial justice, the delay of 244 days in filing the appeal is condoned, and the appeal is admitted for adjudication on merits.
Facts of the Case
12. The assessee is an individual. The return of income for A.Y. 2016–17 was filed on 28.03.2017 declaring total income of Rs. 9,03,850/-.The case was selected for limited scrutiny under CASS for verification of “investment and income relating to properties are duly disclosed”. Notice under section 143(2) dated 18.09.2017 was issued, followed by notices under section 142(1) along with questionnaire. As per the assessment order, the assessee did not comply with the notices issued. Despite issuance of show cause notices and granting multiple opportunities of being heard, no compliance was made. Consequently, the Assessing Officer proceeded to complete the assessment ex parte under section 144 of the Act based on material available on record.
13. During the assessment proceedings, the Assessing Officer observed from the Individual Transaction Statement (ITS) that the assessee had made investments in immovable properties amounting to Rs. 2,52,00,000/- (Rs. 2,01,00,000/- + Rs. 51,00,000/-) during the relevant financial year. The assessee was required to explain the source of such investments and furnish supporting evidences such as purchase deeds and source of funds. However, no explanation or documentary evidence was furnished.
14. In absence of any explanation, the Assessing Officer treated the entire investment of Rs. 2,52,00,000/- as unexplained and added the same as deemed income to the total income of the assessee. Accordingly, the total income was assessed at Rs. 2,61,03,850/- vide order dated 07.12.2018 passed under section 144 of the Act.
15. Aggrieved, the assessee preferred an appeal before the learned CIT(A). Subsequently, the appeal was migrated to the National Faceless Appeal Centre (NFAC).As per the appellate order, notices of hearing were issued on multiple dates. The learned CIT(A) recorded that the assessee did not submit any written submissions during the course of appellate proceedings. The learned CIT(A), after reproducing the provisions of section 144 and referring to judicial precedents held that the Assessing Officer was justified in invoking section 144.On merits, the learned CIT(A) observed that the assessee failed to furnish any explanation regarding the source of investment in immovable properties despite multiple opportunities. Relying on the provisions of the Indian Evidence Act relating to burden of proof, the learned CIT(A) held that the assessee failed to discharge the onus cast upon him and accordingly confirmed the addition of Rs. 2,52,00,000/- made by the Assessing Officer.
16. Aggrieved by the order of CIT(A), the assessee has preferred this appeal before us raising following grounds of appeal:
1. THE ORDER IS BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION
1.1 In the facts and the circumstances of the case, and in law, the appellate order framed by the Commissioner of Income – tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [‘Ld. CIT (A)’] is bad in law, illegal and without jurisdiction, as the same is framed in breach of the statutory provisions and as otherwise also is not in accordance with the law.
1.2 Otherwise also, in the facts and the circumstances of the case, and in law, the appellate order so framed by the Ld. CIT (A) is bad in law, illegal and void as the same is arbitrary and perverse.
2. VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE
2.1 In the facts and the circumstances of the case, and in law, the appellate order so framed is bad in law and illegal, as the same is framed in breach of the principles of Natural Justice.
2.2 Without prejudice to the generality of the above ground, in the facts and the circumstances of the case, the Ld. CIT (A) erred in not granting proper, sufficient and fair opportunity of being heard to the Appellant while passing the appellate order.
WITHOUT PREJUDICE TO THE ABOVE [ON MERITS]
3. ADDITION OF RS. 2,52,00,000/- ON ACCOUNT OF PURCHASE OF IMMOVABLE PROPERTIES AS DEEMED INCOME
3.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making addition of the amount of Rs. 2,52,00,000/-, by treating the purchase consideration of the immovable properties as alleged deemed income in the hands of the Appellant.
3.2 While doing so, the Ld. CIT (A) erred in –
(i) Basing his action only on surmises, suspicion and conjecture;
(ii) Taking into account irrelevant and extraneous considerations; and
(ii) Ignoring relevant material and considerations as submitted by the Appellant.
3.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.
3.4 Without prejudice to the above, assuming – but not admitting – that some addition was called for, the Ld. CIT (A) failed to appreciate that the computation of the addition made by the A.O. was not in accordance with the law, is arbitrary, and excessive.
4. LIBERTY
The Appellant craves leave to add, alter, delete or modify all or any of the above ground at the time of hearing.
17. The learned Authorised Representative (AR) submitted that the assessee could not effectively represent the case before the Assessing Officer as well as before the learned CIT(A) due to circumstances explained in the affidavit, including change of address, communication issues and lack of access to the e-mail IDs used for departmental correspondence. It was further submitted that the learned CIT(A) has not considered the additional evidences filed by the assessee and has passed the order without granting effective opportunity of being heard. It was therefore prayed that the matter may be restored to the file of the Assessing Officer for fresh adjudication on merits after considering all evidences.
18. We have given our thoughtful consideration to the rival submissions and have perused the material available on record.
19. It is an admitted position that the assessment in the present case was framed ex parte under section 144 of the Act on account of non-compliance on the part of the assessee. It is equally evident from the impugned appellate order that the learned CIT(A) has disposed of the appeal without effectively adjudicating upon the evidences and explanations which the assessee claims to have placed or intended to place on record.
20. The assessee has furnished a detailed explanation by way of a sworn affidavit elucidating the reasons for such non-compliance before the lower authorities, inter alia, pointing out the change in address, communication through e-mail IDs not under his direct control, and lack of effective knowledge of the proceedings. The said explanation, as discussed hereinabove, has not been controverted by the Revenue nor is there any material to suggest that the same is either false or lacking in bona fides.
21. We further note that the addition made by the Assessing Officer is of a substantial magnitude, amounting to Rs. 2,52,00,000/-, representing alleged unexplained investment in immovable properties. The assessee has contended that he is in possession of documentary evidences to substantiate the source of such investments, which could not be furnished earlier due to the circumstances explained in the affidavit.
22. In our considered view, where substantial additions are made and the assessee seeks to support his claim with relevant evidences, the issues involved ought to be examined on merits after affording adequate and effective opportunity of being heard. The requirement of adherence to the principles of natural justice assumes paramount importance in such circumstances.
23. We also take note of the fact that the Learned Departmental Representative fairly raised no objection to the restoration of the matter to the file of the jurisdictional Assessing Officer for fresh adjudication.
24. Having regard to the totality of the facts and circumstances of the case, we are of the considered opinion that the matter requires fresh examination at the level of the jurisdictional Assessing Officer.
25. Accordingly, the impugned order passed by the learned CIT(A) is set aside and the matter is restored to the file of the jurisdictional Assessing Officer with a direction to adjudicate the issue afresh on merits after duly considering the evidences to be furnished by the assessee and after providing reasonable and adequate opportunity of being heard.
26. The assessee is also directed to extend full cooperation in the set-aside proceedings and to furnish all requisite details and documentary evidences in support of his claim without seeking unwarranted adjournments.
27. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 21.04.2026.
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