Only One-Day Granted to Respond to SCN: ITAT sets aside Ex-Parte Order, Condones Delay Caused by Husband’s Death [Read Order]

The Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the appeal, holding that the delay in filing her appeal was due to sufficient cause, namely her husband’s serious illness and subsequent death and that the Assessing Officer (AO) erred in completing the assessment ex parte after granting only one day to respond to the Show Cause Notice.

The assessee, Farida Aboushair, an individual residing in Bangalore, had not filed her return of income for Assessment Year (AY) 2017-18. The AO issued a notice under Section 142(1) of the Income Tax Act, 1961 on November 30, 2017, calling for the return of income, which went unresponded. Another notice under the same section was later issued seeking details of substantial cash deposits and other bank credits, but the assessee again failed to comply.

Subsequently, the AO issued a SCN on 25.09.2019 and directed the assessee to explain by 26.09.2019 the source of cash deposits amounting to ₹25,51,000 and other bank credits totaling ₹1,85,37,040, as to why they should not be treated as unexplained income under Section 69A of the Act.

In the absence of any reply, and despite the fact that the statutory time limit for completing the assessment extended until 31.12.2019, the AO passed a best judgment assessment under Section 144 on 28.09.2019, adding the entire amount of ₹2,10,88,040 as unexplained money.

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Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)), which was dismissed on technical grounds due to a delay of 113 days in filing, without examining the merits.

Before the Tribunal, the Authorised Representative (AR) submitted that the delay occurred because the assessee’s husband had been suffering from severe cardiac complications and was repeatedly hospitalized, ultimately passing away on 27.05.2020. Supporting medical records and the death certificate from BOSH Hospital were placed on record.

The Bench comprising Waseem Ahmed (Accountant Member) and Keshav Dubey (Judicial Member), observed that the assessee was denied reasonable opportunity before the AO, who issued the show-cause notice with only one day’s time to respond and proceeded to complete the assessment hastily. It was held that the explanation offered for the delay was plausible and supported by evidence, and that there was sufficient cause preventing timely filing of the appeal.

Accordingly, the ITAT condoned the delay in filing the appeal, set aside the ex parte assessment order passed under Section 144 and remitted the matter back to the AO for fresh adjudication in accordance with law, directing that reasonable opportunity of being heard be given to the assessee.

The appellant was represented by Joseph Varghese, while Balusamy N appeared for the Revenue.

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