High-Pitched Assessment Should Be Decided on Merits, Not Buried Under Delay Technicalities- Bangalore ITAT Condones 140-Day Delay

Nagalinga Reddy Anil Vs ITO (ITAT Bangalore)

High-Pitched Assessment Should Be Decided on Merits, Not Buried Under Delay Technicalities- Bangalore ITAT Condones 140-Day Delay

The Bangalore ITAT condoned a delay of 140 days in filing appeal before the CIT(A), observing that a high-pitched assessment involving major additions should ordinarily be adjudicated on merits rather than dismissed on technical grounds of limitation. The Tribunal noted that the assessee had explained the delay on account of ill health, medical advice for bed rest, and expiry of the digital signature certificate, and such explanation deserved acceptance in the interest of justice.

The reassessment proceedings were initiated on the allegation that the assessee had purchased immovable property at a value lower than the guideline value, leading to addition u/s 56(2)(vii)(b)(ii). The AO also made additions u/s 68 towards alleged unexplained gifts, loans and investment sources since the assessee failed to furnish supporting evidence during assessment proceedings.

The CIT(A), however, refused to condone the delay and dismissed the appeal as non-maintainable without examining the merits. Before the Tribunal, the assessee contended that he had a strong case on merits and the additions were substantial in nature. The ITAT accepted the contention that no assessee stands to gain by deliberately filing an appeal belatedly and that dismissal on limitation deprived the assessee of an effective opportunity of hearing.

Observing that the assessment itself appeared to be “high pitched”, the Tribunal held that the dispute deserved fresh adjudication after granting proper opportunity to the assessee. Accordingly, the delay was condoned, the order of the CIT(A) was set aside, and the matter was restored back for decision on merits.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 19/12/2025 in respect of the A.Y. 2016-17.

2. The brief facts of the case are that the assessee is an individual and filed his return of income on 24/10/2016. The AO based on the information that the assessee had jointly purchased the land for a consideration of Rs. 6,64,10,000/- had arrived the guideline value at Rs. 8,50,00,000/-. The difference in the value has been treated as the value of the property not declared and 50% of the said difference has been added as income from other sources u/s. 56(2)(vii)(b)(ii) of the Act. The AO had issued notices u/s. 148A(b) and thereafter an order u/s. 148A(d) was also passed. Simultaneously, notice u/s. 148 was issued for which the assessee filed a return but the same was not verified and therefore the AO has treated the said return as invalid return. Thereafter notice u/s. 142(1) was issued and the assessee furnished their objections and submitted that the section 56(2)(vii)(b)(ii) would not apply to the facts of the present case. The AO not satisfied with the reply had confirmed the addition u/s. 56(2)(vii)(b)(ii) of the Act. The AO had also sought for the details about the source for the purchase of the said property. The AO also sought for the details about the gift given by his father. Another query was also raised about the unsecured loan. The assessee had not furnished any evidence to explain the source of investment. Therefore the AO had treated the 50% of the investment relates to the assessee and added the gift received from his father and the unsecured loans and the advance received and treated the said amounts as unexplained cash credit u/s. 68 of the Act. As against the said order, the assessee filed an appeal before the Ld.CIT(A) with a delay of 140 days. The assessee had also enclosed an application to condone the said delay and submitted that he was under medical treatment and advised complete bed rest for 3 months and the digital signature certificate got expired and therefore the appeal could not be filed in time. The Ld.CIT(A) had not accepted the reasons as valid reasons and dismissed the appeal as not maintainable.

3. As against the said order, the assessee is in appeal before this Tribunal.

4. At the time of hearing, the Ld.AR submitted that the delay has been occurred in view of the reasons stated in the application but the Ld.CIT(A) had considered the said application and dismissed the same on technicalities and therefore prayed that an opportunity may be granted to appear before the Ld.CIT(A) for deciding the appeal on merits. The Ld.AR further submitted that, on merits also, the assessee is having a good case and the assessment is also a high pitched assessment and therefore the assessee should be granted an opportunity to explain the facts in detail otherwise the assessee would be in great difficulty.

5. The Ld.DR submitted that the assessee had not submitted the details before the AO and also filed the appeal beyond the period of limitation and therefore prayed to dismiss the appeal filed by the assessee.

6. We have heard the arguments of both sides and perused the materials available on record.

7. In the present case, the AO had made additions on the ground that the assessee had not submitted a single piece of evidence and therefore the addition was made. Before the Ld.CIT(A), the assessee had explained the delay of 140 days and explained that because of his ill health and also because of the expiry of the digital signature certificate, the appeal could not be filed in time. We have considered the said fact and of the view that the assessee will not be get benefitted by filing the appeal belatedly. In fact, it will affect the assessee and therefore in the interest of justice, the issue has to be decided on merits. But unfortunately, the Ld.CIT(A) had not inclined to condone the said delay and therefore the assessee was prevented from arguing their case on merits.

8. As argued by the Ld.AR, it seems that the assessment is also a high pitched assessment and therefore it should be decided on merits instead of dismissing the appeal on the ground of limitation. Therefore, we are inclined to condone the said delay of 140 days by accepting the reasons given by the assessee as a valid one. We therefore, set aside the order of the Ld.CIT(A) and remit this issue to its file for deciding the issue afresh, after hearing the assessee.

9. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 22nd May, 2026.