The ITAT Delhi has held that non-receipt of an ex-parte assessment order due to administrative and procedural failures by the tax department, coupled with genuine efforts by the assessee to file an appeal upon actual knowledge, constitutes reasonable cause for delay. This ruling reinforces the principle that technicalities must not override substantive justice in tax proceedings.
Background & Facts
The Dispute
The appellant, Shri Inderjit Singh Kalra, is a taxpayer engaged in the business of goods transportation using 4-5 trucks. During the financial year 2020-21, the peak of the COVID-19 pandemic, he was unable to maintain proper books of account or claim refunds for TDS deducted by third parties. His case was flagged by the Centralised Analysis and Screening System (CASS) as a non-filer of income tax returns.
Key Facts
- The assessee did not file a return for AY 2020-21.
- On 02.03.2024, a notice under Section 148A of the Income-tax Act, 1961 was issued by the ITO, Ward-44(1), Delhi.
- On 17.03.2024, an ex-parte order under Section 148A(d) was passed, followed by a notice under Section 148.
- The assessee filed his return on 26.02.2025 declaring income of ₹4,50,000 under Section 44AE(2)(ii).
- The Assessing Officer passed an ex-parte assessment order under Section 147 read with Section 144B on 18.03.2025.
- The assessee claims he never received a hard copy of the assessment order.
- His email ID registered with the Income Tax Department was that of his tax practitioner, not his own.
- He was informed of the order by phone on 21.05.2025 by his practitioner.
- He received a printed copy only on 15.08.2025 after visiting the practitioner’s office.
- He changed his counsel, email, and mobile number on 16.08.2025.
- He filed Form No.35 for appeal on 01.09.2025.
- Form No.35 recorded the date of service as 21.05.2025.
- The assessee’s PAN database had no registered mobile number or email address.
- He submitted a sworn affidavit detailing these circumstances.
Procedural History
- 18.03.2025: Ex-parte assessment order passed under Section 147 read with Section 144B.
- 21.05.2025: Assessee informed by practitioner of the assessment order (claimed date of service).
- 15.08.2025: Assessee received printed copy of the order.
- 16.08.2025: Assessee updated his contact details and engaged new counsel.
- 01.09.2025: Appeal filed before CIT(A) - 167 days after the assessment order, 73 days after the claimed date of service.
- 29.10.2025: CIT(A) dismissed the appeal as unadmitted, holding delay of 73 days unexplained.
- 30.03.2026: Appeal heard before ITAT Delhi.
Relief Sought
The appellant sought condonation of delay in filing the appeal and setting aside the ex-parte assessment order, requesting a fresh assessment with proper opportunity to present his case and claim allowable expenses.
The Legal Issue
The central question was whether the delay of 73 days in filing the appeal, after the date of service recorded in Form No.35, could be condoned under Section 249(2) of the Income-tax Act, 1961, when the assessee established that he never received the hard copy of the assessment order due to defective communication channels and reliance on a third-party practitioner.
Arguments Presented
For the Appellant
The counsel argued that the assessee had no direct access to the department’s electronic portal, and his registered email was that of his practitioner, who failed to communicate the order promptly. The delay was not due to negligence or laches but due to systemic failure - the department’s failure to serve the order physically or via a verified channel. The affidavit submitted was sworn, detailed, and uncontroverted. The assessee acted promptly upon receiving the order, changing counsel and updating contact details within days. The principle of audi alteram partem was violated by the ex-parte assessment.
For the Respondent
The Senior DR did not dispute the facts narrated in the affidavit. She conceded that the assessment order was ex-parte and that the assessee had not been given an opportunity to present his case. She did not contest the reason for delay, nor did she produce any evidence of service of the order to the assessee personally.
The Court's Analysis
The Tribunal observed that the Section 148A process was initiated correctly, but the subsequent ex-parte assessment under Section 147 read with Section 144B was fundamentally flawed. The Assessing Officer failed to ensure proper service of the notice and order, especially when the assessee’s contact details in the PAN database were incomplete. The Tribunal noted that the department’s own records showed no registered mobile number or email for the assessee, making electronic service unreliable.
"The delay has taken place under the above explained circumstances, without any intention or ignorance by me. In the interest of justice and to avoid any possible injustice against the me if I remains unheard, it is hereby requested very humbly to please condone the delay..."
The Tribunal held that the assessee’s explanation was credible, consistent, and corroborated by the absence of any rebuttal from the Revenue. The fact that the Revenue did not contest the affidavit, and that the assessment itself was ex-parte, reinforced the need for fairness. The Tribunal emphasized that Section 249(2) permits condonation of delay if sufficient cause is shown, and that the burden of proving lack of reasonable cause lies with the Revenue - which was not discharged.
Further, the Tribunal held that an ex-parte assessment, where the assessee was never heard, cannot stand. The law mandates a fair opportunity to be heard before any adverse order is passed. The CIT(A) erred in dismissing the appeal on technical grounds of delay without addressing the substantive injustice.
The Verdict
The appeal was allowed for statistical purposes. The ITAT Delhi condoned the delay in filing the appeal and set aside the order of the CIT(A) dated 29.10.2025. The assessment order dated 18.03.2025 was quashed and the matter was remanded to the Assessing Officer for fresh assessment. The Assessing Officer was directed to provide the assessee a full and fair opportunity to present his case, including evidence of expenses incurred and bank transactions related to transportation business. The fresh assessment must be completed within 12 weeks from the date of receipt of this order.
What This Means For Similar Cases
Non-Receipt of Orders Is a Valid Ground for Condonation
- Practitioners must file affidavits detailing non-receipt, including dates of communication from practitioners, attempts to obtain copies, and discrepancies in departmental records.
- If the taxpayer’s contact details in the PAN database are outdated or incomplete, this supports a claim of non-receipt.
Ex-Parte Assessments Are Per Se Flawed
- Any assessment passed without giving the assessee an opportunity to be heard is legally unsustainable, regardless of whether the assessee filed a return.
- The burden shifts to the department to prove service of notices and orders - mere electronic records are insufficient if the taxpayer’s registered details are defective.
Procedural Compliance Is Non-Negotiable
- The department must ensure physical or verified electronic service before proceeding ex-parte.
- In cases involving small taxpayers or those without digital access, physical service or direct communication is mandatory.
- Appeals should not be dismissed on technical delays when the underlying assessment is ex-parte and unjust.
