Entire Sale Consideration ₹55.80 Lakh Treated as STCG: ITAT Restores Ex-Parte Assessment Citing Delay Due to Non-Registration on IT Portal [Read Order]

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) set aside the ex-parte assessment order and remitted the matter back to the file of the Assessing Officer (AO) for a fresh consideration on the merits of the case.

Puttaraju Hemavathi (assessee), did not file her return of income for Assessment Year (AY) 2015-16. The Income Tax Department received specific information that she had sold an immovable property for a consideration of ₹55,80,000/-. Based on this information, the case was reopened by issuing a notice under Section 148 of the Income Tax Act, 1961.

Since the assessee failed to respond to the statutory notices and did not furnish any details regarding the cost of acquisition, date of acquisition, or improvements made to the property, the AO concluded the assessment ex parte and treated the entire sale consideration of ₹55,80,000/- as Short Term Capital Gain (STCG) in her hands.

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The assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], but it was dismissed due to a delay of 147 days. The CIT(A) held that the reasons provided were not sufficient cause for condonation.

Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The counsel argued that the CIT(A) erred in not condoning the delay and submitted that the assessee was completely unaware of the ongoing proceedings because of her failure to register on the Income Tax portal and the department sending notices to an old address.

The two-member bench, comprising Prashant Maharishi (Vice President) and Keshav Dubey (Judicial Member), noted that the assessment order was undeniably ex parte (passed without the assessee's participation).

The Tribunal observed that the explanation that the assessee was unaware of the notices and the order due to non-registration on the portal and notices being sent to an old address was plausible and constituted sufficient cause.

The tribunal condoned the delay in filing the appeal before the CIT(A). The Tribunal, in the interest of justice and fair play, remitted the entire issue back to the file of the Assessing Officer for fresh consideration in accordance with law by relying that the assessee had not been heard on the merits of the case before either of the lower authorities.

The tribunal directed the assessee to produce all necessary documents to substantiate her claim, with a clear warning that no further leniency would be granted in case of default. In the result, the appeal filed by the assessee was allowed for statistical purposes.

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