Illiteracy and Dependence as Sufficient Cause: ITAT Bangalore Restores Assessment and Section 271B Penalty in Jayamma vs ITO
Background and Context
The Bangalore Bench of the Income Tax Appellate Tribunal, in Jayamma Vs ITO, ITA Nos. 1267 and 1268/Bang/2026, for Assessment Year 2017–18, delivered a significant ruling on 29 September 2026 concerning the condoning of appeal delay in cases where the assessee's personal circumstances — including illiteracy, ill health, and dependence on others — substantially explain non-compliance. The Tribunal set aside the orders of the first appellate authority and restored both the assessment proceedings and the Section 271B penalty matter to the Assessing Officer for fresh consideration.
This ruling does not exonerate the assessee on merits. Rather, it ensures that she receives a proper opportunity to place her case before the tax authorities — an opportunity that had been denied due to an ex parte assessment followed by a refusal to condone the delay in filing her appeal.
Facts of the Case
The Assessee and Her Business
The assessee in this case is an individual who operates a Hindustan Petroleum dealership — a petrol bunk — located within the jurisdiction of the Income Tax Officer, Ward-1, Shimoga. She did not establish the business herself; the dealership had originally been allotted to her late husband, and ownership and operations were transferred to her following his death. At the relevant time, she was approximately 61 years of age, stated to be illiterate, in poor health, and entirely dependent on employees and advisers for matters relating to business compliance, tax correspondence, and legal proceedings.
The email address associated with the business belonged to a clerk at the petrol bunk. The assessee herself possessed neither an email account nor a mobile phone, and reportedly could not read or write even in her vernacular language.
Return Filing and Scrutiny Selection
The assessee filed her return of income for Assessment Year 2017–18 on 30 March 2018, declaring total income of ₹4,99,870. The return was subsequently selected for scrutiny. A notice under Section 143(2) of the Income Tax Act, 1961 was issued on 10 August 2018, with the postal acknowledgement of service placed on record by the Assessing Officer.
Notwithstanding the service of this initial notice, the assessee failed to respond. Seven further notices were also issued over the course of the assessment proceedings, none of which received any reply. Given the complete absence of participation, the Assessing Officer proceeded to complete the assessment ex parte under Section 144 of the Act on 15 December 2019.
The Ex Parte Assessment
Through the best judgment assessment, the Assessing Officer made seven additions aggregating ₹21,53,957, after examining the profit and loss account and balance sheet. The total income was consequently determined at ₹26,53,827, as against the returned income of ₹4,99,870.
Crucially, information obtained from banks revealed substantial cash deposits across multiple accounts:
- ₹1,20,32,150 — deposits during the demonetisation period
- ₹1,43,83,677 — in one bank account
- ₹1,10,44,947 — in another bank account
- Total: ₹3,74,60,739
The source and nature of these deposits remained unexplained, as the assessee had not participated in the assessment proceedings at all.
The Delay in Filing the First Appeal
The assessee filed her appeal before the Commissioner of Income Tax (Appeals) on 30 September 2021 — nearly two years after the assessment order dated 15 December 2019. The delay was disclosed at serial number 14 of Form No. 35, accompanied by a condonation petition at serial number 15.
In the condonation petition, the assessee submitted the following grounds: