No PAN on tax radar, no email, no return, yet the taxman found her: ITAT gives non-working woman another chance to fight ₹27.60 lakh tax demand

A non-working woman's PAN never appeared on the tax department's digital records. She was not registered on the e-filing portal, nor did she had a registered email id. Yet, she found herself with a ₹27.60 lakh income tax demand raised for allegedly receiving a contractual payment of ₹4.80 lakh and selling a property for ₹43.50 lakh.

By the time she appealed against the tax demand, she was 1,315 days late, and the first appellate authority dismissed her case without going into the merits.

How the tax dispute started

The case concerned Seema Narendra Dhavale, a resident of Pune City, for assessment year 2017-18. She had not filed a return for that year. The order noted that she was not registered on the e-filing portal and her PAN was also not on digital footprint. She also didn't have a registered email id.

The tax department's attention was drawn to her following a search in the case of M/s Cludobits IT Solutions Pvt. Ltd., which revealed an undisclosed contractual payment of ₹4.80 lakh received by her from the company. Assessment proceedings under section 147 were initiated, but statutory notices under sections 148 and 142(1) could not be served on her.

Meanwhile, the departmental data showed that Dhavale had sold immovable property during the year for a total consideration of ₹43.50 lakh.

In response to a show cause notice, she said that her income was below the taxable limit and that no capital gain arose on the sale as she had purchased another property. She also furnished computations for immovable property's sale.

However, the assessing officer was not persuaded. Completing the assessment under section 147 read with section 144 on 30 March 2022, he determined the long-term capital gain at ₹26,80,515, added a further ₹80,000 as other income, and assessed her total income at ₹27,60,515.

Why the case reached the tribunal after 1,315 days

Dhavale appealed before the Commissioner of Income Tax (Appeals), NFAC, Delhi, but with a delay of 1,315 days.

The CIT(A) dismissed the appeal on 30 April 2026, holding that the "appellant has not satisfactorily explained the reason for the delay in filing of the appeal with supporting evidences". Her case was never heard on merits.

Before the ITAT, her counsel CA Ritvik Vatsyayan stated that Dhavale "is a non-working woman and not engaged in any business activity," that she "is not aware of legal procedures following in income tax matters," and that the search for professionals dealing with tax matters took some time.

The tribunal noted that "due to 'reasonable cause' assessee could not file the appeal before ld.CIT(A) in time." It observed that "assessee has not gained anything from filing the appeal with delay".

Taking what it described as a "justice oriented approach," the ITA bench condoned the delay, relying on the Supreme Court decisions in Collector, Land Acquisition, Anantnag v. Mst. Katiji, (1987) 2 SCC 107, and Inder Singh v. State of Madhya Pradesh, (2025 INSC 382).

Fresh assessment

The tax demand has not gone away. The ITAT did not itself decide whether the ₹26.80 lakh capital gain or the ₹80,000 addition was correctly calculated.

Noting that "there is no adjudication on merits by ld.CIT(A)," the tribunal set aside the appellate order and remitted all issues back to the jurisdictional assessing officer, directing him to frame the assessment afresh in accordance with law after granting reasonable opportunity of being heard to the assessee.

For taxpayers who have never engaged with the income tax system, there are three takeaways from this case:

First, the Income Tax department can always find ways to trace an undisclosed income even when there is no digital footprint.

Second, where genuine unawareness causes delay, the doors of appeal before ITAT are not permanently shut.

Third, keeping PAN and contact details updated remains the safer route than litigation.