ITAT Remands Case for Fresh Decision After Granting Hearing Opportunity:

The assessee is Pawan who is a small farmer engaged in agricultural activities, did not file his return of income under Section 139(1) of the Income Tax Act, 1961, for Assessment Year 2012–13. According to the information available through the Annual Information Return (AIR)/Central Information Branch (CIB), he had deposited cash amounting to Rs 61,52,000 in his bank account during Financial Year 2011–12. The AO sought an explanation regarding the source of these deposits through a letter dated 13 March 2019. As the assessee did not respond, reassessment proceedings were initiated under Section 147 of the Act, and a notice under Section 148 was issued on 29 March 2019.

The assessee also failed to comply with notices issued under Section 142(1) and the subsequent show-cause notice. Consequently, the AO completed the assessment ex parte, made an addition of Rs 61,52,000 and initiated penalty proceedings under Section 271(1)(c). A penalty of Rs 52,45,584 was imposed by order dated 16 March 2022. The assessee challenged the penalty before the (CIT(A). However, the appeal was dismissed by an ex-parte order dated 17 February 2025. 

The Tribunal examined the material on record and noted that the assessee had been proceeded against ex parte during the assessment proceedings. The CIT(A) had also dismissed the appeal ex parte, citing a delay of 624 days in filing the first appeal and deciding the matter on merits. The Tribunal took into account the assessee's circumstances as a small farmer engaged in agricultural activities and his limited knowledge of income-tax law. It found that the explanation furnished for the 349-day delay in filing the appeal before the Tribunal did not indicate any mala fide intention, particularly as the assessee had no apparent benefit from not filing the appeal within the prescribed period.

Accordingly, the Tribunal condoned the delay of 349 days in filing the appeal before it. In the interest of justice, the Tribunal set aside both the CIT(A)'s order dated 17 February 2025 and the penalty order dated 16 March 2022 passed by the AO. The matter was restored to the file of the AO for a fresh decision in accordance with law, after providing the assessee with a fair opportunity of hearing.