Tribunal Gives Second Chance After 328 Day Delay: But Imposes Rs. 10,000 Fine

The assessee filed his initial assessment under Section 147, read with Section 144 on September 10, 2021. The AO observed that the assessee paid another company a cash of Rs. 48.56 lakh for a residential flat, which was wildly out of proportion to his returned income of Rs. 1,98,960. No explanation was submitted in response to notices under Section 142(1). The Ld. CIT(A), National Faceless Appeal Centre (NFAC), issued an ex parte order under Section 250 of the Income Tax Act due to non-compliance, affirming the Rs. 48,56,000 addition made by the AO under Section 69A for AY 2013–14. Further, the appeal filed by the assessee before the ITAT was delayed by 328 days.

Main issue: Whether the assessee, who did not appear before the AO and CIT(A), should be given another chance to explain the cash transaction of Rs. 48.56 lakh, which is allegedly unexplained under Section 69A, and whether the delay in filing the appeal could be excused.

Appellate Tribunal’s Decision: The ITAT upheld CIT (A)’s decision that the assessee was not able to participate due to reliance on his consultant’s email ID was not fully satisfactory and acceptable. However, in the interest of substantial justice, the Tribunal excused the 328 days delay and gave one last chance to the assessee. The Hon’ble ITAT remanded the case back to the AO for a fresh consideration, overturning the NFAC’s order.

As a condition for this relief, the Tribunal directed the assessee to deposit Rs. 10,000 to the Prime Minister’s Relief Fund and to provide proof to the AO. The assessee was warned that if they did not cooperate completely and answer all notices, the AO would have the authority to decide the case on its own merits.

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