In a significant development from the Income Tax Appellate Tribunal (ITAT), Delhi Bench, a set of three appeals filed by Bhishm Chauhan, a resident of Faridabad, have seen a partial resolution in favor of the assessee. The tribunal’s ruling sheds light on the importance of procedural fairness, especially in cases involving ex-parte assessments and the genuine hardships faced by taxpayers.
Background of the Case
Bhishm Chauhan had filed his income tax returns for the Assessment Year (AY) 2016-17, declaring an income of Rs.3,36,300. The case was flagged for complete scrutiny under the CASS mechanism, and subsequent notices under Sections 143(2) and 142(1) of the Income Tax Act, 1961, were issued. However, due to non-compliance, the Assessing Officer (AO) proceeded to pass an ex-parte assessment order under Section 144 of the Act on 29.12.2018, making significant additions of Rs.9,31,000 and Rs.21,02,250.
In addition to this, a separate penalty proceeding under Section 271(1)(c) was initiated, leading to a penalty order on 28.06.2019.
Similarly, for AY 2017-18, another ex-parte assessment order dated 15.12.2019 was passed, resulting in an addition of Rs.14,60,000 to the total income.
Issue of Delay in Filing Appeals
The assessee appealed against the assessment and penalty orders before the National Faceless Appeal Centre (NFAC), Delhi. However, there was a delay of 1716 days in filing the appeals.
In his application dated 24.03.2024, the assessee sought condonation of delay, citing custody and mental health issues as the reasons for his inability to respond or comply during the assessment proceedings. He further requested that the assessments be set aside and that income be computed on a presumptive basis under Section 44AD of the Act, at 8% of the gross receipts.
However, the NFAC rejected the condonation applications and dismissed the appeals.
Tribunal’s Observations and Verdict
During the ITAT hearing, the appellant was represented by Shri Yogesh Sharma, Advocate, while the Revenue was represented by Shri Javed Akhtar, CIT (DR).
The Tribunal took a balanced view, recognizing that the assessee did not comply with notices at the assessment stage but also acknowledging his explanation regarding health and custodial issues. It emphasized the need for natural justice and noted that the ex-parte nature of the assessments and the genuine hardship faced by the taxpayer warranted a second look.
Accordingly, the ITAT:
- Set aside the orders of the Commissioner of Income Tax (Appeals) and the original AO’s assessment and penalty orders for AYs 2016-17 and 2017-18.
- Directed the AO to pass fresh assessment orders in accordance with law.
- Noted that the penalty order, being consequential in nature, stands nullified.
Outcome
- ITA Nos. 3969/DEL/2024 and 3971/DEL/2024 were partly allowed for statistical purposes.
- ITA No. 3970/DEL/2024 (related to penalty) was allowed.
Final words
This case serves as a reminder of the importance of fair hearing and the judiciary’s role in ensuring justice even when procedural delays occur. The ITAT’s decision to allow a fresh assessment offers the assessee an opportunity to present his case afresh and emphasizes that reasonable cause for delay should be carefully considered by appellate authorities.
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