ITAT Grants Relief, Sets Aside Addition After Finding Assessee’s Explanation Satisfactory

The ITAT Mumbai set aside the matter and restored it to the assessing officer for fresh adjudication after holding that the assessee had properly explained the transactions with sufficient evidence and the addition was not justified.

The appeal has been filed by Darshana Dinesh Ghag against the Income Tax Officer Ward 42(1)(2), Mumbai and was filed in the Income Tax Appellate Tribunal, Mumbai. The appeal was filed to challenge the assessment passed under Section 147 of the Income Tax Act, 1961, read with Section 144 of the Income Tax Act. This matter pertains to Assessment Year 2017-18. The present appeal is being filed to challenge the order on 12 December 2025, passed by the National Faceless Appeal Centre, Delhi.

After this appeal, it came to light in the case that the taxpayer had filed his first appeal with a delay of 126 days. The CIT(A) dismissed this appeal merely on the ground of delay and without any consideration of the facts of the case. The assessee, in her defence, stated that she had not received any notices or assessment orders sent by the department, as all the documents were sent to her old address, which she had left in the year 2017. Moreover, her health was also poor at that time, due to which she could not attend any of the proceedings. He came to know about this entire matter when he registered on the income tax portal for the first time in the year 2025, August, immediately after which he filed an appeal.

Tribunal’s decision and outcome

The Tribunal, after analysing the entire case, found that the taxpayer’s delay was not deliberate and that he was not given an opportunity to be heard properly. The assessing officer, while making a unilateral assessment under Section 144, had added additional tax on investment in the property, sale amount, and bank interest, while the taxpayer did not get a chance to present his views. In view of these facts, the Tribunal set aside the orders of both the CIT(A) and the assessing officer. After this, the matter is again sent to the assessing officer so that the taxpayer is given a full opportunity by issuing a notice at the correct address, and then a fresh decision can be taken as per law.