Khurshida Vs Ld. Assessing Officer (ITAT Jodhpur)
Summary: The ITAT Jodhpur “SMC” Bench, in ITA No. 858/Jodh/2024 for Assessment Year 2019-20, condoned a 118-day delay in filing the assessee’s first appeal and restored the disputed additions to the jurisdictional Assessing Officer for fresh adjudication. The assessment had been completed ex parte under Sections 147 and 144 of the Income-tax Act, 1961 after the assessee did not file a return, did not respond to the notice under Section 148 or comply with notices under Section 142(1), following information obtained from Bank of Baroda under Section 133(6). The Assessing Officer noticed total bank-account credits of Rs.42,56,974/-, comprising transfer entries of Rs.39,10,761/-, cash deposit of Rs.1,000/-, pension receipts of Rs.2,77,826/- and interest income of Rs.67,387/-, and treated Rs.39,11,761/- as unexplained credits under Section 68 while also assessing the pension and interest receipts, determining total income at Rs.42,16,970/- after allowing standard deduction of Rs.40,000/- against pension income. The CIT(A) dismissed the assessee’s appeal as barred by limitation after declining to condone the 118-day delay. Before the Tribunal, the assessee submitted that she was an uneducated widow whose deceased husband, employed with the North Western Railway, had died on 23.05.2018, and that the disputed bank credits primarily represented terminal and death benefits, including gratuity, leave encashment, provident fund contributions, pension payments, bank interest and insurance claim settlements. The assessee also produced the death certificate, documents relating to terminal benefits and the relevant bank statement with explanatory remarks. The Tribunal found that the delay was reasonably explained and condoned the 118-day delay, setting aside the CIT(A)’s order and allowing Ground No. 3. On merits, the Tribunal noted that the documents concerning the nature and source of the bank credits had not been examined by the authorities below and therefore restored the matter to the jurisdictional Assessing Officer. The Assessing Officer was directed to determine separately the nature and taxability of each receipt in accordance with law and not to treat the gross bank credits as unexplained without first considering the documentary explanation and corresponding source relied upon by the assessee, while providing a reasonable and effective opportunity of being heard. Grounds Nos. 1 and 2 were allowed for statistical purposes; interest under Sections 234A, 234B and 234C was directed to be recomputed, if applicable, on the basis of the income determined in the fresh assessment, and the penalty proceedings were left to abide by the outcome of the fresh assessment and applicable law. The appeal was ultimately allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This appeal by the assessee is directed against the order dated 08.08.2024 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as “the CIT(A)”], under section 250 of the Income-tax Act, 1961[hereinafter referred to as “the Act”]for the assessment year 2019-20. The impugned order arises from the assessment order dated 19.02.2024 passed by the Income Tax Officer, Ward-1(1), Jodhpur[hereinafter referred to as “Assessing Officer”], under section 147 read with section 144 of the Act.
2. At the outset, the Registry has noted a delay of 14 days in filing the present appeal before the Tribunal. The learned Authorised Representative (AR) prayed for condonation of the delay, having regard to the circumstances in which the appeal arose. The learned Departmental Representative(DR) raised no objection to the said request. Considering the short duration of the delay and the circumstances of the case, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed period. Accordingly, the delay of 14 days is condoned and the appeal is admitted for adjudication on merits.
3. The assessee has raised the following grounds of appeal:
1. Erroneous Assessment Order under Sections 147 and 144: The Assessing Officer’s order was erroneous and based on inadequate verification of facts. The appellant, being uneducated and unaware of the procedural requirements, did not get a fair opportunity to clarify her sources of income, leading to an incorrect application of section 68.
2. Inappropriate Addition under Section 68: The AO incorrectly applied section 68 to the funds received by the appellant from her deceased husband’s posthumous benefits, which were legitimate, identifiable income sources. This application of section 68 was unwarranted and unsupported by evidence.
3. Unjust Disallowance of Condonation of Delay: The CIT (Appeals) overlooked the appellant’s unregistered PAN status and her unawareness of procedural formalities due to her lack of formal education, which led to the delayed filing. The decision to dismiss the appeal on procedural grounds alone deprived the appellant of a fair hearing.
4. Incorrect Imposition of Penalties and Interest Charges: The AO incorrectly imposed penalties and interest under sections 234A, 234B, and 234C, which were disproportionate given the appellant’s circumstances and the nature of the income received from her husband’s benefits.
5. Request for Additional Grounds or Amendments: The appellant reserves the right to present additional grounds or amend the existing grounds during the hearing in pursuit of substantial justice.
4. The facts, in brief, are that the assessee did not file her return of income for the assessment year 2019-20. On the basis of information relating to certain transactions in the assessee’s account maintained with Bank of Baroda, proceedings under section 147 of the Act were initiated. The assessee did not file a return in response to the notice under section 148 and did not comply with the notices issued under section 142(1). The Assessing Officer, therefore, completed the assessment ex parte under section 144 read with section 147 of the Act.
5. On the basis of information obtained from Bank of Baroda under section 133(6) of the Act, the Assessing Officer noticed total credits of Rs.42,56,974/- in the assessee’s bank account. These comprised transfer entries of Rs.39,10,761/-, cash deposit of Rs.1,000/-, pension receipts of Rs.2,77,826/- and interest income of Rs.67,387/-. The Assessing Officer treated Rs.39,11,761/- as unexplained credits under section 68 of the Act. He also assessed pension receipts of Rs.2,77,826/- and interest income of Rs.67,387/-. After allowing standard deduction of Rs.40,000/- against the pension income, the total income was determined at Rs.42,16,971/- and rounded off to Rs.42,16,970/-.
6. Aggrieved, the assessee filed an appeal before the CIT(A) on 16.07.2024. The CIT(A) noticed that the appeal ought to have been filed by 20.03.2024 and that it had been filed with a delay of 118 days. The assessee explained that she was an uneducated widow, that her particulars were not registered on the e-filing portal, and that she became aware of the assessment only upon subsequent receipt of a hard copy of the demand notice. The CIT(A), however, declined to condone the delay and dismissed the appeal as barred by limitation without adjudicating the issues on merits.
7. Before us, the learned AR submitted that the assessee is an uneducated widow and that her husband, Late Shri Ahasan, who was employed with the North Western Railway, expired on 23.05.2018. The amounts credited to the assessee’s bank account primarily represented terminal and death benefits received consequent to the death of her husband, comprising gratuity, leave encashment, provident fund contributions, pension payments, bank interest and insurance claim settlements. These amounts were received by the assessee as the nominee and legal heir of her deceased husband and, therefore, could not be regarded as unexplained income.
8. The learned AR further submitted that the assessee could not respond during the assessment proceedings because her PAN and contact details were not registered on the e-filing portal. Being an uneducated widow, she had neither the knowledge nor the means to access the electronic notices. Her particulars were registered on the e-filing portal only on 29.06.2024. Upon becoming aware of the assessment and demand, she sought professional assistance and filed the appeal before the CIT(A) on 16.07.2024. It was thus contended that the delay of 118 days was neither intentional nor attributable to any deliberate negligence on the part of the assessee.
9. The learned AR also placed on record a copy of the death certificate of the assessee’s husband, copies of the certificate and other documents relating to terminal benefits received from the North Western Railway, and a copy of the relevant bank account statement in which the transactions were highlighted with explanatory remarks. It was submitted that these documents had a direct bearing on the nature and source of the bank credits but were not examined by the Assessing Officer because the assessment had been completed ex parte. The learned AR, therefore, requested that the delay in filing the first appeal be condoned and the matter be restored to the jurisdictional Assessing Officer for verification and fresh adjudication.
10. The learned DR relied upon the orders of the authorities below. However, having regard to the documents now placed on record by the assessee, the learned DR raised no objection to restoring the matter to the file of the jurisdictional Assessing Officer for examination and fresh adjudication in accordance with law.
11. We have considered the rival submissions and perused the material available on record. The CIT(A) dismissed the assessee’s appeal at the threshold on account of the delay of 118 days and did not adjudicate the validity of the reassessment proceedings or the additions made by the Assessing Officer on merits. The explanation of the assessee is that she is an uneducated widow, was not registered on the e-filing portal and became aware of the assessment only upon subsequent receipt of the demand notice. After obtaining professional assistance, she registered her particulars on the portal on 29.06.2024 and filed the appeal before the CIT(A) on 16.07.2024.
12. In the peculiar facts of the present case, we find that the delay has been reasonably explained. The assessee could not have derived any advantage by delaying the institution of the appeal, particularly when an ex parte assessment determining income at Rs.42,16,970/- was outstanding against her. The circumstances placed before us indicate that the delay was occasioned by the assessee’s lack of familiarity with the electronic assessment and appellate process and not by any deliberate inaction. The delay of 118 days is, therefore, condoned. The order of the CIT(A), dismissing the appeal as barred by limitation, is set aside, and Ground No. 3 is allowed.
13. As regards the merits, the assessment was completed ex parte without examination of the assessee’s explanation that the bank credits represented terminal and death benefits received consequent to the death of her husband. The assessee has now placed on record the death certificate, documents relating to the terminal benefits received from the North Western Railway and the relevant bank statement containing explanatory remarks against the transactions. These documents are directly relevant to the determination of the nature and source of the impugned credits. However, the said documents were not examined by either of the authorities below.
14. In these circumstances, and having regard to the fair stand taken by the learned DR, we consider it appropriate to restore the matter to the file of the jurisdictional Assessing Officer. Accordingly, the impugned assessment order is set aside to the extent of the additions disputed in the present appeal, and the jurisdictional Assessing Officer is directed to adjudicate the matter afresh after examining the documents placed on records.
15. The jurisdictional Assessing Officer shall determine separately the nature and taxability of each receipt in accordance with law and shall not treat the gross bank credits as unexplained without first considering the documentary explanation and the corresponding source relied upon by the assessee. Needless to state, the assessee shall be afforded a reasonable and effective opportunity of being heard and of furnishing all supporting documents. The assessee is also directed to cooperate in the proceedings and to comply with the notices issued by the Assessing Officer without seeking unnecessary adjournments.
16. Ground Nos. 1 and 2 are accordingly allowed for statistical purposes. The charging of interest under sections 234A, 234B and 234C is consequential and shall be recomputed, if applicable, on the basis of the income determined in the fresh assessment. So far as the initiation of penalty proceedings is concerned, no separate adjudication is called for at this stage, and the same shall abide by the outcome of the fresh assessment and the applicable provisions of law. Ground No. 4 is disposed of accordingly. Ground No. 5 is general in nature and requires no separate adjudication.
17. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 25.08.2026.
