LAKHUBHAI NATHUBHAI SISODIYA,AHMEDABAD V. ITO, WARD 3(2)(3), AHMEDABAD, CURRENT ITO WARD 3(1)(2), AHMEDABAD, AHMEDABAD

ITA 716/AHD/2025

AI Insights

The case involves Lakhubhai Nathubhai Sisodiya, the appellant, contesting a penalty imposed for concealment of income under section 271(1)(c) of the Income Tax Act, 1961. The penalty was based on unexplained cash deposits and an investment in immovable property during the assessment year 2012-13. The appellant, aged 89, faced difficulties due to his age and unfamiliarity with the e-proceeding system, leading to a significant delay in filing the appeal. The Tribunal found that the CIT(Appeals) erred by dismissing the appeal solely on the grounds of delay without considering the impact of the pandemic and the appellant's circumstances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717373 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 01-04-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATEEK SHARMA
• Assessee Lawyers: P D SHAH
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reassessment proceedings; Unexplained investment; Period of limitation; Principle of natural justice; Right to appeal; Time period of passing order
• Section: 147; 148; 271(1)(c); 69; 139

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.716/Ahd/2025 (Assessment Year: 2012-13) Lakhubhai Nathubhai Sisodiya, 1, Chandisar Chandisar, Dholka, Gujarat-387810 Vs. Income Tax Officer, Ward-3(2)(3), (Current Income Tax Officer, Ward-3(1)(2)), Ahmedabad [PAN No.BXNPS7168A] (Appellant) .. (Respondent) Appellant by : Shri P D Shah, AR Respondent by: Shri Prateek Sharma, Sr. DR Date of Hearing 05.08.2025 Date of Pronouncement 13.08.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 14.12.2022 passed for A.Y. 2012-13. 2. The assessee has raised the following grounds of appeal: “1. That the learned National Faceless Appeal Centre, Delhi has erred in law and facts by confirming the penalty of Rs.1,98,428/-, under section 271(1)(c) of the act, on account of concealment of income, and therefore the learned AO should be directed to delete the said penalty. 2. That your appellant craves leave to add, alter or amend any grounds at the time of hearing.” 3. The assessee has filed application for condonation of delay of 763 days in filing of the present appeal. In the Affidavit submitted by the assessee, Printed from counselvise.com ITA No. 716/Ahd/2025 Lakhubhai Nathubhai Sisodiya vs. ITO Asst. Year –2012-13 - 2– he has stated the assessee is 89 years of age and lacked familiarity with the newly introduced e-proceeding system, does not use email himself, and was unaware that the appellate order of the National Faceless Appeal Centre had been served on his son, who resides abroad and was preoccupied with business commitments. It was only in March 2025 that the assessee learnt about the dismissal of his appeal when penalty proceedings brought the matter to light, and the assessee promptly filed the present appeal upon receiving advice from a chartered accountant. On hearing the submissions and examining the facts, we are of the considered view that the substantial delay was neither deliberate nor negligent, but was due to genuine communication difficulties and the assessee’s advanced age. We are of the considered view that it would not be in the interest of justice to allow technical limitations to deprive an elderly taxpayer of his statutory right to appeal. Accordingly, in view of the hardship and inequity that would result from a rigid application of limitation, we hereby condone the delay of 763 days in filing the appeal On merits: 4. The brief facts of the case are that the case of the assessee was reopened under section 147 of the Act for the reason there was the detection of substantial cash deposits in savings bank accounts, amounting to Rs. 36,50,000/- (Rs. 19,50,000/- in Dena Bank and Rs. 17,00,000/- in Bank of India), and the fact that assessee had purchased immovable property during the relevant financial year. The assessee had not filed return of income under section 139 of the Act for the said year, and notice under section 148 was issued on 30.10.2018. In response, the assessee filed a return declaring Printed from counselvise.com ITA No. 716/Ahd/2025 Lakhubhai Nathubhai Sisodiya vs. ITO Asst. Year –2012-13 - 3– income of Rs. 1,78,290/-. During the reassessment proceedings, the Assessing Officer noted that the assessee had purchased property during the year in which his share amounted to Rs. 8,75,000/-. Since no explanation or supporting documents were submitted by the assessee to explain the source of investment, the said amount was treated as unexplained under section 69 of the Act and added to the income of the assessee. Penalty proceedings under section 271(1)(c) were accordingly initiated for concealment of income. During penalty proceedings, the assessee submitted that the addition was agreed to in order to buy mental peace and avoid prolonged litigation, and the entire demand raised was duly paid. The assessee argued that no penalty should be imposed on this basis alone and relied on various judicial precedents in support of his contention. The assessee submitted that no inaccurate particulars were filed, and the issue was debatable and involved assumptions by the Assessing Officer. The Assessing Officer considered the submissions of the assessee but found them to be untenable. It was noted that the assessee was liable to file a return under section 139 but failed to do so. Upon reopening of the case, the total income was assessed at a figure of Rs. 10,53,290/-, which clearly exceeded the threshold requiring mandatory return filing. The AO held that the assessee deliberately failed to disclose his true income and had not filed any credible documentary evidence in support of investment in immovable property even during the course of penalty proceedings. The Assessing Officer observed that had the case not been reopened, the assessee would have succeeded in concealing the said income, and the addition was made only after it came to light during the reassessment proceedings. Hence, the AO held that this was a fit case for imposition of penalty under section 271(1)(c) for concealment of income. Accordingly, Printed from counselvise.com ITA No. 716/Ahd/2025 Lakhubhai Nathubhai Sisodiya vs. ITO Asst. Year –2012-13 - 4– penalty under section 271(1)(c) was levied on the amount of Rs. 8,75,000/- which was treated as unexplained investment, and the penalty was computed in accordance with the provisions of the Act. 5. In appeal, CIT(Appeals) dismissed the appeal of the assessee on account of delay in filing of appeal, with the following observations: “The facts of the case and the grounds raised by the appellant have been considered carefully. It is noticed that there is a delay in filing of appeal. The appeal is to be filed within 30 days of the date of the service of the order. During the appellate proceedings, it is found from the Form No. 35, the appellant filed the appeal on 26.02.2022 whereas the date of order u/s 200A on 11.11.2021 and as per Form No. 35 date of service for order was 11.11.2021. As per the dates given in Form 35 it appears that the appeal is filed beyond the prescribed due date by 30 days. There is a lapse on the part of the assessee regarding filing of the appeal within stipulated time. This shows that there is a delay of filing of the appeal in terms of section 249 (2) of the Act. In such a situation section 249(2) of the Act envisages that there should be sufficient cause for not prosecuting the appeal within the period prescribed. There is a substantial delay in the filing of appeal for which no reason was given by the appellant. The appellant has failed to explain the delay in filing appeal.” 6. The assessee is in further appeal before us. Before us, the Counsel for the assessee submitted that CIT(Appeals) erred in dismissing the appeal solely on grounds of delay, particularly when that the penalty order dated 11 November 2021 was passed during the COVID‑19 pandemic period. The appeal was filed on 26 February 2022, beyond the 30‑day statutory period, but this was justifiable because the Supreme Court and relevant authorities had extended the limitation period in view of the covid pandemic. It was further argued that the CIT(Appeals) dismissed the appeal without granting the assessee an effective opportunity of being heard, thereby depriving him of the chance to bring all facts and evidence on record. On merits, the Counsel for the assessee submitted in the penalty order passed under section 271(1)(c) of the Act there is no specific finding with regards to any concealment or Printed from counselvise.com ITA No. 716/Ahd/2025 Lakhubhai Nathubhai Sisodiya vs. ITO Asst. Year –2012-13 - 5– furnishing of inaccurate particulars of income by the assessee. In the e‑proceeding dated 22 October 2019 before the Assessing Officer, the assessee had submitted that the ₹8,75,000/- investment in agricultural land was made by his friend, Mr. Jaydeepsingh Vijaysingh Dodhiya, to whom he had earlier provided a loan of ₹9,00,000/- from personal savings; a copy of the purchase deed and an undertaking from Mr. Dodhiya were also furnished. The assessee had clarified that only ₹1,21,250/- out of the total ₹35 lakh payments were made in cash, with the rest via cheques from various banks with which the assessee held no account, clearly pointing out to the fact that the purchase was made on his behalf. The assessee sought an adjournment before the Assessing Officer due to a religious festival, which was not granted, and accordingly, the assessee had agreed to the addition merely to avoid hardship given his old age, holding only a 1/4th share in the joint property in question. The assessee submitted that the assessment and penalty orders were issued long after the transaction i.e. seven and ten years respectively, making it practically difficult to obtain necessary documentation. In light of these circumstances, he prayed for the full deletion of the penalty under section 271(1)(c). 7. We have considered the submissions of both parties and perused the records. In our considered view, the action of the CIT(Appeals) in dismissing the appeal summarily for delay, without affording an opportunity of hearing to the assessee or considering the impact of the Covid-19 pandemic, is not in accordance with the principles of natural justice. The Hon’ble Supreme Court and various High Courts have held that delay should be liberally construed when sufficient cause is shown and the matter should be decided on merits. Printed from counselvise.com ITA No. 716/Ahd/2025 Lakhubhai Nathubhai Sisodiya vs. ITO Asst. Year –2012-13 - 6– Accordingly, in the interest of justice, we are of the view that the delay in filing the appeal before the CIT(Appeals) ought to have been condoned. The CIT(Appeals) should have allowed the assessee a reasonable opportunity to present his case on merits and allowed the assessee to bring complete facts on record, particularly when levy of penalty under section 271(1)(c) of the Act was in question. In view of the above, we set aside the order passed by the CIT(Appeals) and restore the matter to his file for fresh adjudication of the appeal on merits after condoning the delay. The CIT(Appeals) shall grant the assessee an opportunity of being heard and bring all available material on record and thereafter pass a reasoned and speaking order in accordance with law. 8. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 13/08/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 13/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "