Assessee's seven-year delayed appeal remanded for verification of Section 282 service by affixture procedures

ITAT Ahmedabad remanded matter to CIT(A) for verification of proper service procedures after assessee filed appeal seven years late claiming non-receipt of assessment order due to address change. Court found assessee deliberately avoided notices and failed to update PAN database with new address, only filing appeal after bank account attachment. However, ITAT noted unclear compliance with affixture service requirements under Section 282 and Rule 127 of IT Rules. Matter restored to CIT(A) to verify if due process for service by affixture was followed, with direction to condone delay if proper procedures weren't followed and decide case on merits thereafter.

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Issues Involved:
1. Addition of Rs. 62,37,123/- as unexplained cash credit.
2. Addition of Rs. 2,08,67,654/- on account of estimation of net profit @ 8% on gross sales.
3. Condonation of delay in filing of appeal before CIT(A).
4. Imposition of penalty under Section 271(1)(c) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Addition of Rs. 62,37,123/- as Unexplained Cash Credit:
The Assessing Officer (AO) added Rs. 62,37,123/- as unexplained cash credit since the assessee did not furnish any details regarding unsecured loans. The AO's view was based on the absence of details and the unexplained nature of the loans. The CIT(A) confirmed this addition, and the assessee appealed, arguing that the loans had been verified in previous assessments.

2. Addition of Rs. 2,08,67,654/- on Account of Estimation of Net Profit @ 8% on Gross Sales:
The AO estimated the net profit at 8% of gross sales, amounting to Rs. 2,08,67,654/-, due to the absence of details such as opening stock, closing stock, purchases, sales, and various business expenses. The CIT(A) upheld this addition, and the assessee appealed, contending that the accounts were audited under section 44AB and that details were available on record.

3. Condonation of Delay in Filing of Appeal Before CIT(A):
The assessee filed an appeal against the assessment order after a delay of over seven years, citing non-receipt of the assessment order due to a change of address. The CIT(A) refused to condone the delay, noting that the assessee had not provided sufficient cause and had not updated the address with the Income Tax Department. The Tribunal found that the AO had initially tried to serve the order by speed post, which was returned, and then by affixture. However, the Tribunal noted that it was unclear if the complete process of affixture was followed. The Tribunal restored the matter to the CIT(A) to verify whether the due process of service by affixture was followed.

4. Imposition of Penalty Under Section 271(1)(c) of the Income Tax Act:
The AO initiated penalty proceedings under Section 271(1)(c) for concealment of income, which the CIT(A) upheld. Since the quantum appeal was restored to the CIT(A), the penalty proceedings were also restored to the CIT(A) for re-evaluation.

Conclusion:
The Tribunal restored both the quantum appeal and the penalty proceedings to the CIT(A) for verification of the service process and re-evaluation of the issues on merits. The appeals were allowed for statistical purposes, and the CIT(A) was directed to verify whether the due process of service by affixture was followed and to decide the issues after providing due opportunity of hearing to the assessee.

Judgment Pronounced:
The order was pronounced in open court on 23/08/2024.

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