Mr. Kamlesh Kumar Singh vs The ITO

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 2947/Del/2026 for Assessment Year: 2012-13 has arisen form the learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(in Short “Act”) dated 05.02.2026 in DIN & Order No: ITBA/NFAC/S/250/2025-26/1085621009(1), which in turn has arisen from the reassessment order dated 16.12.2019 passed by the AO u/s 144 r.w.s 147 of the 1961 Act .

The brief facts of the case are that the assessee filed return of income for the impugned assessment year, declaring income of Rs. 1,70,090/-. The case of the assessee was reopened by Revenue by invoking provisions of Section 147 of the 1961 Act for the reasons that the assessee deposited cash of Rs. 17,36,607/- in his saving bank account maintained with ICICI Bank, and as per AO the sources of cash deposits in the ICICI Bank are not commensurate with return of income filed by the assessee. Notice u/s 133(6) was issued by the AO to the assessee to explain , but there was no response from the assessee. Proceedings u/s 147 were initiated against the assessee by the AO after taking approvals from the competent authorities. Notice u/s 148 was issued by the AO on 28.03.2019 , but , however, the assessee did not file return of income in pursuant to aforesaid notice nor filed any response thereto. Further , notices were issued u/s 142(1) during course of reassessment proceedings, but there was no response/reply by the assessee. Show Cause Notice(SCN) along with notice u/s 142(1) was issued on 18.09.2019, but again there was no response from the assessee. The AO proceeded to frame best judgment reassessment against the assessee u/s 144 of the 1961 Act , wherein cash deposits of Rs. 17,36,607/- by the assessee in his saving bank account maintained with the ICICI Bank Limited was added to the income of the assessee by the AO by invoking provisions of Section 69A of the 1961 Act.

Aggrieved, the assessee filed first appeal with the ld. CIT(A). The said appeal was filed belatedly by the assessee with ld. CIT(A) beyond the time stipulated u/s 249(2) by 850 days. The assessee submitted before ld. CIT(A) that the reassessment framed by the AO was best judgment reassessment framed ex-parte u/s 144 r.w.s. 147 of the 1961 Act . It was submitted that the assessee was not having any knowledge of the reassessment proceedings, and the assessee became aware of the reassessment order only when recovery proceedings were initiated by Revenue against the assessee. Immediately on becoming aware of the reassessment being framed by the AO, the assessee applied for certified copy of reassessment order It was further submitted by the assessee before ld. CIT(A) that notices and orders of proceedings were never served on him. It was submitted that the assessee applied for copy of reassessment order vide application dated 29.11.2021, and was provided by the AO with the certified copy of the reassessment order on 19.04.2022 , and immediately thereafter on 14.05.2022 i.e. within 30 days, the assessee filed appeal with ld. CIT(A). Thus, it was submitted that reassessment order was dated 16.12.2019 but was served only on 19.04.2022, and the appeal was filed with ld. CIT(A) on 14.05.2022 i.e. within 30 days of service of reassessment order. It was submitted by the assessee before ld. CIT(A) that there is no delay in filing the appeal before ld. CIT(A) as the assessee has filed appeal in time within 30 days of the service of notice of demand and reassessment order by the AO. The ld. CIT(A) rejected the contentions of the assessee, as ld. CIT(A) was of the view that the assessee was duly served by the AO with the notices as well reassessment order. The assessee’s address was the same even while filing return of income for assessment year 2019-20. Thus, in view of above facts and circumstances, the ld. CIT(A) relying on certain judicial precedents, dismissed the appeal of the assessee at threshold by refusing to condone the delay in filing appeal by the assessee, as in the view of ld. CIT(A) the assessee was not having sufficient cause for filing appeal belatedly with ld. CIT(A).

Aggrieved, the assessee has filed second appeal with ITAT. The ld. Counsel for the assessee submitted that the assessee was not aware of the reassessment proceedings. The notices during course of reassessment proceedings were not received. The reassessment order dated 16.12.2019 was not received by the assessee. It was submitted reassessment order was an ex-parte best judgment order passed by the AO u/s 144 read with Section 147. It was submitted that only when recovery proceedings were started against the assessee, the assessee became aware of the proceedings being concluded against the assessee. It was submitted that immediately on coming to know of the reassessment being framed against the assessee ex-parte, the assessee applied for certified copy of the reassessment order, vide application dated 29.11.2021 filed with ld. AO(page 2/PB-application filed with AO). It was further submitted that immediately on receipt of reassessment order on 19.04.2022 , the assessee filed first appeal with ld. CIT(A) within 30 days , on 14.05.2022. It was submitted that there was delay of 850 days in filing appeal with ld. CIT(A). Prayers were made before ld. CIT(A) for condoning the delay, but the ld. CIT(A) did not condone the delay and rather dismissed the appeal of the assessee. The ld. Counsel prayed that delay in filing appeal with ld. CIT(A) be condoned. It was submitted reassessment order passed was an exparte best judgment reassessment u/s 144. It was submitted that the assessee shifted to Pune , Maharashtra and that is the reasons for not receipts of the notices and reassessment order. On being asked about his address by the Bench so that the department can send the notices etc. , the ld counsel for the assessee has submitted the address where the assessee is residing at Flat No. 502, D Wing, Oxy Beaumonde, Phase-1, Viman Nagar , Lohegan, Pune-411014, Maharashtra . On merits, It was submitted that the assessee was working with RMP Infotec Private Limited as a distributor and earning commission on sales. The company was a multi level marketing company and paying commission on sale made by its distributors. The products dealt are Siyaram Suits, Purifier, Morning Walkers, Energy savers , Microwave Owens etc. . It was submitted that customers were paying in cash for purchases which the assessee used to deposits in his bank account , and thereafter payments were made to RMP by way of Demand draft/pay order which was made from his bank account, so that supplies could be made to the customers by RMP. It was submitted that if the assessee had insisted for demand draft/pay orders from the customers, most of them would not have bought the products as it is inconvenient for them to go to bank to get the DD/PO made and hence assessee used to collect cash for customers convenience , deposit in his bank account and from there he used to make DD/PO fvg RMP on behalf of customers who intended to purchase products. It was submitted that great prejudice is caused to the assessee by addition of the entire cash deposits in bank as his income as it cash deposited mainly consisted of sale proceeds of the products against which the payments were made to RMP for purchasing the same for customers. It was submitted that the assessee’s income only constituted commission income from RMP while the entire sale proceeds stood added. It was prayed that delay in filing appeal with ld. CIT(A) be condoned. It was further prayed that reassessment order was ex-parte order , and the matter can be remitted to the file of the AO for denovo reassessment. It was stated that if the matter is restored back , the assessee will co-operate with department and submit all required details as called by authorities below to enable them to compute correct income chargeable to tax in the hands of the assessee. The assessee has relied upon the order dated 15.04.2016 passed by ITAT, Delhi Benches in ITA no. 7314/Del/2025 in the case of Mukesh Soni v. ITO.

I have considered rival contentions and perused the material on record.I have observed that the assessee filed return of income originally declaring income of Rs. 1,70,090/-. The case of the assessee was reopened for framing reassessment on the grounds that there was cash deposits in his ICICI Bank to the tune of Rs. 17,36,607/- . Statutory notices were issued by the AO u/s 148, 142(1) and SCN was also issued. The assessee did not file any return of income in response to notice u/s 148 nor filed any response/reply thereto before the AO. The assessee did not participated in the reassessment proceedings . The AO framed an an ex-parte reassessment order u/s 144 read with Section 147 against the assessee , dated 16.12.2019. The claim of the assessee is that he shifted from the address stipulated in the return of income and this address which was available with the AO, which is the reason for non receipt of notices as well reassessment order. It is submitted that the assessee had shifted to Pune, Maharashtra, while the AO had Faridabad address where the assessee was earlier residing , and this was the main reasons for non receipt of notices as well the reassessment order. It is claimed that when recovery proceedings were started against the assessee , then only he came to know that the AO has passed ex-parte reassessment order, and it is claimed that the assessee immediately made an application before the AO on 29.11.2021 for providing certified copy of reassessment order. The AO provided the certified copy of reassessment order on 19.04.2022 , and the assessee filed appeal with ld. CIT(A) on 14.05.2022 i.e. within 30 days. The prayers were made before ld. CIT(A) for condonation of delay of filing the appeal belatedly beyond time prescribed u/s 249(2) of 850 days, but ld. CIT(A) did not condone the delay and dismissed the appeal of the assessee, as in the opinion of ld. CIT(A), the assessee did not have any sufficient cause for delay in filing the appeal. I have observed that the period from 15.03.2020 to 28.02.2022 , was a period covered by exclusion granted by Hon’ble Supreme Court in Re: Cognizance for Extension of Limitation (Suo Motu WP(C) No. 3 of 2020) owing to Covid-19 disease. Further, 90 days period was provided by Hon’ble Supreme Court wef 01.03.2022 for filing appeals even if remaining statutory time for filing the appeal is less. Strictly speaking, the assessee is not covered by aforesaid order of Hon’ble Supreme Court, as in the instance case , the limitation period has already expired before 15.03.2020 as the appeal is to be filed within 30 days of services of reassessment order which expired on 15.01.2020 itself as the reassessment order is dated 16.12.2019. But, the assessee is disputing service of reassessment order as the same was claimed to be never served on the assessee owing to change of address, and the claim is made that it was served only on 19.04.2022. It is claimed that the appeal was filed on 14.05.2022 i.e. within 30 days of service of reassessment order. I am of the view that the assessee has demonstrated sufficient cause for not filing appeal in time with ld. CIT(A). When substantial justice is pitted against technicalities, the Courts will lean towards advancement of substantial justice, unless malice is at writ large. I donot see any malice on the part of the assessee in filing the appeal belatedly before ld. CIT(A) beyond time prescribed u/s 249(2) , as the assessee is not likely to gain any thing by filing the appeal before ld. CIT(A) belatedly by 850 days beyond the time prescribed u/s 249(2). Reliance is placed on judgment and order of Hon’ble Supreme Court in the case of Collector , Land Acquisition , Anantnag v. Mst. Katiji & Ors. 1987 (2) SCC 107. Thus, taking a liberal view and overall peculiar facts and circumstances surrounding the case, I am condoning the delay by the assessee in filing the appeal belatedly before ld. CIT(A). So far as merits of the additions is concerned , the contention of the assessee requires verification and examination. Since the reassessment order itself is an ex-parte order u/s 144, and now even ld. CIT(A) has been granted powers u/s 251(1)(a) read with proviso to set aside such order to the file of the AO for denovo reassessment. Since in the instant case, even reassessment order is an ex-parte best judgment assessment u/s 144 r.w.s. 147 wherein contentions of the assessee are not examined by both the authorities beloe, thus, keeping in view overall facts and circumstances of the case , in the interest of justice and fairness to both the parties , I am remitting the matter back to the file of the AO for framing denovo reassessment on merits in accordance with law, after providing proper and adequate opportunity to the assessee . The assessee is directed to co-operate in reassessment proceedings before the AO , and submit all the requisite details as may be required by the AO for framing denovo reassessment, otherwise the AO shall be free to frame denovo reassessment on merits in accordance with law. I clarify that I have not commented on the merits of the issue in this appeal. All the contentions are kept open. The appeal of the assessee is allowed for statistical purposes. I order accordingly.

In the result, the appeal filed by the assessee is allowed for statistical purposes.