Lack of Familiarity with Income Tax Online Portal: ITAT sets aside Ex parte Order, Imposes Rs.1L cost [Read Order]
Taking into account the affidavit explaining the lack of technical familiarity with the e-filing system, the ITAT accepted that there was a reasonable cause for the delay and condoned it in the interest of justice.
Lack of Familiarity - Income Tax - Online Portal - ITAT - taxscan.
Lack of Familiarity - Income Tax - Online Portal - ITAT - taxscan.
The Income Tax Appellate Tribunal ( ITAT ), Chennai Bench has set aside an ex parte income tax assessment order passed under Section 144 of the Income Tax Act, 1961, while imposing a cost of ₹1 lakh on the assessee for non-compliance.
The assessee, Manicam Narayanan, engaged in the business of film distribution and earning income from house property, business, capital gains, and interest, failed to file a return of income for AY 2017-18 under Section 139(1).
The Assessing Officer (AO) noticed abnormal cash deposits amounting to ₹48.43 lakh during the demonetization period in multiple bank accounts and issued notices under Sections 142(1) and 144.
As the assessee did not respond, the AO completed the assessment ex parte under Section 144, adding the unexplained cash deposits under Section 69A, along with income from other heads such as house property, capital gains, and business income.
The assessee’s appeal before the National Faceless Appeal Centre (NFAC) was also dismissed for non-compliance after two hearing opportunities were given.
Before the Tribunal, the assessee sought condonation of a delay of 379 days in filing the appeal, submitting an affidavit explaining that he was not well-versed with the Income Tax e-filing portal and unaware of the procedural requirements for online compliance.
The Authorized Representative (AR) argued that both the AO and the NFAC had passed ex parte orders without giving effective opportunity, and sought one final chance to substantiate the claims before the AO.
The Bench of George George K (Vice President) and S.R. Raghunatha (Accountant Member) noted that the AO and the NFAC had indeed issued statutory notices, but the assessee consistently failed to respond. However, taking into account the affidavit explaining the lack of technical familiarity with the e-filing system, the ITAT accepted that there was a reasonable cause for the delay and condoned it in the interest of justice.
The Tribunal also found that the CIT(A)’s order contained serious procedural lapses, as the appellate authority had erroneously reproduced assessment order details of a different assessee and assessment year, showing lack of application of mind.
The appellate tribunal remitted the matter back to the AO with directions to frame the assessment de novo after providing adequate opportunity to the assessee. It cautioned the assessee to participate diligently and furnish all relevant evidence.
However, considering the assessee’s prolonged inaction and non-compliance with statutory notices, the Tribunal imposed a cost of ₹1,00,000, directing that it be deposited with the State Legal Aid Authority, High Court of Madras, within 30 days, with proof of payment to be filed before the ITAT registry.
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