After wife's death, senior citizen missed tax appeal deadline by 191 days; gets major relief

A senior citizen who sold two immovable properties and did not file his income tax return lost his case at the assessing officer and first appellate levels. But the Income Tax Appellate Tribunal, Pune, has now ruled that his appeal was wrongly dismissed merely for delay without examining the merits of his case, providing relief that could benefit a large number of taxpayers who miss appellate deadlines.

In an order dated August 28, 2026, the tribunal set aside the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, who had dismissed the assessee's appeal at the start for a 191-day delay. Further, the tribunal has directed the CIT(A) to condone the delay and decide the appeal on merits after giving the assessee a hearing.

The ITAT order came in the case involved Chandrakant Krishanaji Phule, a senior citizen residing in Pune, who did not file his return for assessment year 2018-19. The assessing officer found that during the year ended March 31, 2018, the assessee had sold two immovable properties for ₹2,62,40,000 and ₹25,44,866 respectively, and earned ₹80,335 as interest on fixed deposits with Central Bank of India.

The case was reopened under section 147 of the Income-tax Act, 1961 and a notice under section 148 was issued. The assessee did not file a return in response. A final show cause notice was issued on March 6, 2023, asking why the case be not completed under section 144, which deals with best judgment assessment in the absence of the assessee's cooperation.

The assessee made his submission, raising his objection to the addition of ₹2,62,40,000 on account of Long Term Capital Gain (LTCG). However, the objections were note found to be acceptable.

The assessing officer (AO) completed the assessment on March 30, 2023, making two additions: ₹80,335 as unexplained investment under section 69, taxed at 60 per cent under section 115BBE, and ₹65,60,000 as the assessee's one-fourth share in the total sale consideration of ₹2,62,40,000, treated as long-term capital gain. The total income was assessed at ₹91,85,201.

Before the CIT(A), the appeal was filed with a delay of 191 days. The assessee's explanation was that his wife was suffering from cancer and passed away on January 7, 2023, causing mental and emotional distress, leading to delay in filing of the appeal. However, the CIT(A) held that this did not constitute "sufficient/reasonable cause" and dismissed the appeal without examining the merits.

The tribunal noted that the assessee's grounds of appeal raised substantial questions, including whether the AO erred by calculating the capital gain by considering the sale consideration being the stamp duty value of property as of March 31, 2018. However, according to the assessee, the property was sold on July 11, 1996, with the entire sale consideration received through account payee pay order dated July 25, 1995.

The assessee also contended that the stamp duty value of a property in village Bavdhan Khurd was "too high and without referring to Government Valuation Officer", and that the ₹80,335 interest income should have been taxed under "Income from other sources" instead of being treated as unexplained investment under section 69.

The tribunal relied on three Supreme Court rulings. In Collector, Land Acquisition vs. Mst. Katiji, the apex court held that "when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred" and that "refusing to condone delay can result in a meritorious matter being thrown out at the very threshold".

In Inder Singh vs. State of Madhya Pradesh, the Supreme Court held: "if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation".

The tribunal also cited Vidya Shankar Jaiswal vs. ITO, where the Supreme Court held that "a justice oriented and liberal approach ought to be adopted while considering the aspect of condoning the delay".

Setting aside the CIT(A)'s order, the bench of Vice President Rama Kanta Panda and Judicial Member Astha Chandra directed the CIT(A) to "condone the delay in filing of the appeal before him and decide the appeal of the assessee on merits and as per fact and law after giving due opportunity of being heard to the parties". The order was pronounced in open court on August 28, 2026.

The tribunal warned that the assessee must comply with notices and "make his submissions before him on the appointed date without seeking any adjournment under any pretext, unless required for the sufficient cause".