ITAT Remands Section 270A Penalty Dispute, Critises CIT(A) for Not Adopting Liberal Approach to Condone 144-Day Delay

The ITAT Hyderabad held that the CIT(A) should have adopted a liberal approach and condoned the 144-day delay in filing the appeal by the NRI assessee. It set aside the CIT(A)’s order and remanded the penalty proceedings under Section 270A for fresh adjudication after disposal of the quantum appeal.

The assessee, Satya Srinivas Akella, had purchased shares worth Rs 34.99 lakh of Sai Ganga Panakeia Pvt Ltd during the year under consideration, i.e., Assessment Year 2019-20. However, it did not furnish any return of income for the same year. Consequently, tax authorities initiated proceedings against the assessee under section 147 of the Act. Accordingly, Section 148A(d) order and the Section 148 notice were issued to the assessee.

The assessee still did not furnish any ITR and additionally did not respond to the notice. Thereafter, the assessee was asked to furnish the data and documents relevant to the assessment proceedings. Noting consistent non-compliance from the side of the assessee, the tax authorities treated the purchased shares amounting to about Rs 34.99 lakh as unexplained investments under section 69 r.w.s. 115BBE of the Act and made an addition of the same to the assessee’s income.

Subsequently, penalty proceedings were initiated against the assessee. Later, via a letter dated March 03, 2025, the assessee was asked to show cause the reason why the section 270A penalty should not be imposed on him. Since the assessee failed to reply to the letter, the penalty of Rs 13.64 lakh was confirmed against him.

The aggrieved assessee filed an appeal before the ITAT Hyderabad, arguing that the lower appellate authority, i.e., CIT(A), had arbitrarily rejected their appeal without properly considering the reasons submitted by them for lately filing the appeal before them.

Before the tribunal, the assessee explains that “he is a Non-Resident Indian (NRI), holding a US Green Card and settled abroad, and had learnt about the passing of the assessment order as well as the penalty order only while updating his income tax credentials on 20/04/2025, pursuant whereto he was in receipt of an SMS verification on 15/07/2025 and an email on 14/07/2025.“

When the tribunal analysed the facts of the case, it found the explanation given by the assessee sufficient to condone the delay; hence, in the interest of justice, the tribunal condoned the 144-day delay in filing the appeal before the CIT(A). The tribunal relied on the recent decision of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur, in Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025, and stated that the lower appellate authority should have adopted a liberal approach for condoning the delay. The Section 270A penalty proceedings dispute has been remanded to the CIT(A) with a direction to re-adjudicate the same on its merits in accordance with the law.