Muthusamy Selvaraj Vs ITO (ITAT Chennai)
Summary: These appeals were filed by the assessee against orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 22.04.2026 and 30.04.2026 under Section 250 of the Income-tax Act, 1961, for AY 2018-19. ITA No.3608/CHNY/2026 concerned the quantum addition, while ITA No.3609/CHNY/2026 concerned the penalty imposed under Section 270A.
In the quantum appeal, the FAA had dismissed the assessee’s appeal in limine on account of a 785-day delay without adjudicating the issues on merits. The assessee explained that his textile business, carried on under the name and style of Sri Gayathri Spinning Mills, had suffered continuous losses, resulting in discontinuation of the business in December 2017 and closure of the administrative office. The statutory notices and reassessment order were sent to the erstwhile business e-mail ID, which was no longer monitored. The assessee therefore remained unaware of the proceedings. The reassessment was ultimately completed ex parte under Sections 147 read with 144 and 144B on 16.01.2024.
The assessee submitted that he became aware of the reassessment proceedings upon receipt of summons from the Department in August 2025. He thereafter consulted legal and tax professionals regarding the appropriate remedy and eventually filed the appeal before the CIT(A) with a petition for condonation of delay. The Tribunal also considered the assessee’s submissions concerning civil proceedings initiated in 2020 relating to cancellation of sale deeds for immovable properties sold during the relevant period. Considering the closure of the business and administrative office, the dormant e-mail ID, the pending civil proceedings and the steps taken by the assessee after becoming aware of the proceedings, the Tribunal held that the delay arose from bonafide circumstances and was not wilful or deliberate. It therefore condoned the delay of 785 days.
