The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Commissioner of Income Tax (Appeals) cannot dismiss a statutory appeal merely for non-prosecution without examining and deciding the grounds raised by the taxpayer on their merits.
The bench of Pawan Singh (Judicial Member) and Om Prakash Kant (Accountant Member) observed that the Commissioner (Appeals), being the final fact-finding authority, is under a statutory obligation to examine the issues arising from the assessment order and pass a reasoned and speaking order even when the appellant remains absent.
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The Tribunal noted that the appeal had been filed with a delay of 494 days. The taxpayer sought condonation of the delay through an application supported by a sworn affidavit explaining the circumstances that had prevented him from approaching the Tribunal within the prescribed period.
According to the taxpayer, immediately after receiving the CIT(A)’s order dated August 24, 2024, he forwarded it to his Chartered Accountant and requested that the necessary legal action be taken. As a layperson unfamiliar with income-tax procedures, he believed that the professional would file the appeal before the Tribunal.
The taxpayer stated that he repeatedly followed up with the Chartered Accountant through WhatsApp messages and personal communications. Despite assurances that the matter would be handled, no effective steps were taken to institute the appeal.
The taxpayer claimed that he became particularly concerned after a rectification order was passed on October 9, 2025, revising his income to ₹54,71,047 on the ground that the earlier computation had been incorrectly generated.
When he sought a final update in February 2026, the Chartered Accountant allegedly informed him that the filing work had not been completed and that the professional fee would be returned. The taxpayer thereafter engaged an advocate and discharged the Chartered Accountant and his colleague from handling his matters.
It was submitted that the delay was neither intentional nor motivated by any mala fide purpose. Instead, it arose entirely because the authorised professional failed to act despite the taxpayer’s consistent follow-up.
The Tribunal examined the affidavit as well as copies of the WhatsApp chats and correspondence exchanged between the taxpayer and his Chartered Accountant.
It found that the contemporaneous communications demonstrated that the taxpayer had consistently pursued the matter and repeatedly requested his Chartered Accountant to file the appeal. The documentary evidence, according to the Tribunal, fully corroborated the explanation furnished in the affidavit.
The ITAT observed that applications for condonation of delay must be considered through a pragmatic, liberal and justice-oriented approach when the explanation is bona fide and does not reveal deliberate negligence or lack of diligence on the litigant’s part.
It further stated that a litigant who has entrusted his case to a professional should ordinarily not suffer irreparable prejudice solely because of the omission or inaction of the authorised representative, provided the litigant’s own conduct is found to be bona fide.
Having regard to the circumstances and supporting evidence, the Tribunal concluded that the taxpayer had been prevented by sufficient cause from presenting the appeal within the prescribed period. It consequently condoned the delay of 494 days and admitted the appeal for adjudication.
The reassessment proceedings originated from information relating to cash deposits aggregating to ₹53,44,187 in the taxpayer’s bank account.
The Assessing Officer reopened the assessment and issued statutory notices under the Income Tax Act. Holding that the taxpayer had not satisfactorily explained the source of the cash deposits during the reassessment proceedings, the officer treated the entire amount as unexplained money under Section 69A.
The addition was made through an assessment order dated February 29, 2024, passed under Section 147 read with Section 144B of the Act.
The taxpayer challenged the reassessment before the CIT(A). However, notices issued on three occasions between July 2 and August 1, 2024, did not receive a response.
The CIT(A) consequently concluded that the taxpayer was not interested in prosecuting the appeal. Without discussing or deciding the grounds on their merits, the appellate authority dismissed the appeal for non-prosecution.
The taxpayer submitted that the same Chartered Accountant whose negligence had caused the delayed filing before the ITAT had also failed to attend the appellate proceedings before the CIT(A).
Consequently, the taxpayer remained unrepresented while continuing under the bona fide impression that his authorised representative was properly pursuing the matter.
It was further argued that the taxpayer possessed documentary evidence explaining the source of the disputed cash deposits and was prepared to produce it if granted one effective opportunity.
The taxpayer had also contended that two submissions, dated October 18, 2023, and February 23, 2024, had been filed before the Assessing Officer explaining the cash deposits. However, according to him, the Assessing Officer failed to consider those submissions while framing the reassessment.
The Tribunal found that the CIT(A) had dismissed the appeal merely for want of prosecution and had expressly refrained from deciding the grounds raised by the taxpayer.
The ITAT held that such an approach was inconsistent with the statutory responsibility imposed upon the first appellate authority under Section 250 of the Income Tax Act.
“The Commissioner (Appeals), being the final fact-finding authority, is duty-bound to examine the issues arising from the assessment order and adjudicate the grounds of appeal by passing a reasoned and speaking order, even where the appellant remains absent,” the Tribunal observed.
It added that the dismissal of a statutory appeal simpliciter for non-prosecution, without an adjudication on merits, could not ordinarily be sustained.
The Tribunal also took note of the fact that the taxpayer had remained effectively unrepresented not only before the CIT(A) but also during the reassessment proceedings.
It found the explanation concerning the Chartered Accountant’s conduct plausible and supported by contemporaneous documentary evidence.
Emphasising the principles of natural justice, the ITAT said that a litigant should ordinarily receive an effective opportunity to substantiate his case, particularly when substantial additions have been made under Section 69A.
Since the disputed addition exceeded ₹53 lakh and the taxpayer claimed to possess documentary evidence explaining the source of the deposits, the Tribunal considered it appropriate to provide another opportunity for the evidence to be examined.
Instead of merely remanding the appeal to the CIT(A), the Tribunal restored the entire matter to the Assessing Officer for de novo adjudication.
The Assessing Officer was directed to reconsider the case in accordance with law after providing the taxpayer with a reasonable and effective opportunity of being heard.
The Tribunal also directed the taxpayer to cooperate fully during the remand proceedings, furnish all documentary evidence supporting his explanation and refrain from seeking unnecessary adjournments.
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