Case Law Details
Smt. Palaniappan Manonmani Vs ITO (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai, considered the assessee’s appeal against the order dated 18.02.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2018-19. The Tribunal first dealt with a delay of 273 days in filing the appeal. The assessee, a senior citizen, submitted an affidavit stating that limited knowledge of the digital environment, advanced age, medical ailments, regular treatment, health check-ups, and advised bed rest prevented timely action. Medical records were also filed. The Tribunal found sufficient cause for the delay, held that no laches could be attributed to the assessee, condoned the delay, and proceeded to decide the appeal on merits.
The Tribunal noted that the appellate order was passed ex parte due to non-compliance with four notices issued by the First Appellate Authority (FAA). It also observed that the assessment had been completed on a best judgment basis under Sections 147, 144 and 144B of the Income-tax Act, 1961.
According to the assessee, she remained ex parte before the Assessing Officer (AO) due to lack of awareness of the proceedings and consequently the AO made an addition of ₹25,35,700 under Section 56(2)(x)(b) towards the difference between the stamp duty value and the purchase consideration of an immovable property, and a further addition of ₹60,00,000 under Section 69 treating the investment in the property as unexplained due to lack of evidence regarding the source of funds.
The assessee submitted that during the appellate proceedings, additional evidence explaining the source of investment was produced, leading the FAA to restore the issue relating to the Section 69 addition to the AO for fresh examination. However, the FAA declined the assessee’s request for a reference of the property to the District Valuation Officer (DVO) for determining the fair market value in relation to the addition under Section 56(2)(x)(b), observing that no such objection had been raised before the AO. The assessee contended that the objection could not be raised earlier since she had remained ex parte and requested that the entire matter be restored to the AO for fresh consideration.
The Revenue submitted that adequate opportunities had been provided by both the AO and the FAA and contended that there was no violation of the principles of natural justice.
After considering the submissions and the material on record, the Tribunal observed that the assessment had been completed ex parte due to the assessee’s failure to respond to notices. It also noted that the FAA had already restored the issue relating to the Section 69 addition after considering the additional evidence. Regarding the addition under Section 56(2)(x)(b), the Tribunal held that once the assessee disputes the stamp duty valuation adopted for that provision, the AO is required to examine the objection and, where the statutory conditions are satisfied, make a reference to the District Valuation Officer for determination of the fair market value. Accordingly, the Tribunal held that the issue required fresh examination by the AO.
The Tribunal also strongly deprecated the assessee’s nonchalant attitude in not responding to the statutory notices issued by both the AO and the FAA. However, in the interest of justice and fair play, it restored the matter to the file of the AO subject to the condition that the assessee pay costs of ₹10,000 to the Tamil Nadu State Legal Services Authority at the Hon’ble High Court of Madras within one month and produce the receipt before the AO. The AO was directed to examine the issues afresh, including the assessee’s request for reference to the District Valuation Officer, after providing adequate opportunity of hearing. The assessee was directed to cooperate with the Revenue, furnish all necessary details and evidence, and avoid seeking unnecessary adjournments. The appeal was allowed for statistical purposes.
Appellant Represented by : Shri Sri Krishna, CA
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 18.02.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.
2. There is a delay of 273 days in filing the appeal. The assessee has filed an affidavit for condonation of delay stating therein the reasons for the delay. The reason stated is that, the assessee is a senior citizen with limited knowledge of the digital environment and was unaware of the procedures prescribed under the Income-tax Act. Further, owing to her advanced age and various medical ailments, she was undergoing regular medical treatment, health check-ups and was advised bed rest, which prevented the assessee from attending to her tax matters. The assessee has also filed medical records in support of the aforesaid reasons. It was further submitted that only upon receiving calls from the Income-tax Department regarding the outstanding tax demand, the assessee become aware of the pending proceedings, whereupon she immediately took steps to file the present appeal. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as there is sufficient cause for belated filing of this appeal. Hence, we condone the delay and proceed to dispose off the appeal on merits.
3. At the very outset, we notice that the order of First Appellate Authority (FAA) is ex-parte, since there was no compliance from the assessee to four notices issued from the office of the First Appellate Authority. Further, we also note that the assessment has been completed on best judgment basis r.w.s.147 r.w.s 144 r.w.s.144B of the Act.
4. The Ld. AR submitted that the assessee, being a senior citizen with limited knowledge o the digital environment, was unaware of the income-tax proceedings and inadvertently failed to take note of the hearing notices issued by the AO. Consequently, the assessee remained ex-parte before the AO and, in the absence of any compliance or submission, the AO completed the assessment under the best judgment provisions by making an addition of Rs.25,35,700/- u/s. 56(2)(x)(b) of the Act towards the difference between the stamp duty value and the purchase consideration of the immovable property, and a further addition of Rs.60,00,000/- u/s.69 of the Act treating the investment in the property as unexplained for want of evidence regarding the source of funds. The Ld. AR further submitted that, during the appellate proceedings, the assessee furnished additional evidence explaining the source of investment, upon which the FAA restored the issue relating to the addition u/s.69 of the Act to the file of the AO for fresh examination. However, the FAA rejected the assessee’s request for reference of the property to the District Valuation Officer for determination of the fair market value in relation to the addition made u/s.56(2)(x)(b), observing that no such objection had been raised before the AO. It was contended that the assessee could not raise the said objection earlier as he had remained ex parte due to the aforesaid reasons. Therefore, the Ld. AR pleaded that, in the interest of justice, one more opportunity may be granted by restoring the entire matter to the file of the AO to enable the assessee to produce the necessary evidence and effectively present his case.
5. The Ld.DR submitted that adequate opportunities were provided from the offices of the FAA & AO and there is no violation of principles of natural justice. Therefore, it was submitted that the appeal of the assessee may be dismissed.
6. We have heard the rival submissions and perused the material available on record. We find that the assessment was completed ex parte under the best judgment provisions as the assessee failed to respond to the notices issued by the Assessing Officer. The explanation offered by the assessee is that, being a senior citizen with limited knowledge of the digital environment, she was unaware of the income-tax proceedings and, therefore, could not participate in the assessment proceedings. We also note that before the First Appellate Authority, the assessee furnished additional evidence explaining the source of investment, which persuaded the FAA to restore the issue relating to the addition made under section 69 of the Act to the file of the Assessing Officer for fresh examination. However, insofar as the addition made u/s. 56(2)(x)(b) of the Act is concerned, the FAA declined to interfere on the ground that the assessee had not sought a reference to the District Valuation Officer before the AO. In our considered opinion, once the assessee disputes the stamp duty valuation adopted for the purpose of section 56(2)(x)(b) of the Act, the AO is required to examine such objection and, where the statutory conditions are satisfied, make a reference to the District Valuation Officer for determination of the fair market value. Therefore, the issue requires fresh examination at the level of the Assessing Officer. At the same time, we strongly deprecate the nonchalant attitude of the assessee in not responding to the statutory notices issued by both the AO & FAA. However, considering the submissions of the Ld. AR and in the interest of justice and fair play, we are of the view that the matter ought to be restored to the files of the AO with a condition assessee pays a cost of Rs.10,000/-(Rupees ten thousand only) to be paid to Tamil Nadu State Legal Services Authority at the Hon’ble High Court of Madras. The amount of Rs.10,000/- shall be paid within a month’s time from the date of receipt of this order and assessee shall produce the receipt for the said payment before the AO. The AO shall examine the issue afresh, including the assessee’s request for reference to the District Valuation Officer, in accordance with law, after affording adequate opportunity of being heard to the assessee. The assessee is directed to co-operate with the Revenue and furnish all requisite details and evidences in support of his claim and shall not seek unnecessary adjournment. It is ordered accordingly.
7. In the result, the appeal filed by the assessee is allowed for statistsical purposes.
Order pronounced in the open court on 9th July,2026 at Chennai.
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