ITAT Bangalore Directs De Novo Assessment in Salary and Capital Gains Dispute; ₹10,000 Cost Imposed for Repeated Non-Participation

Case Overview

Case Name: Marimuthu Durai Singh Vs DCIT (ITAT Bangalore)
Appeal Number: ITA No. 703/Bang/2026
Date of Order: 15/09/2026
Assessment Year: 2017-18
Forum: Income Tax Appellate Tribunal, Bangalore

Background and Factual Matrix

The present appeal arose from an ex parte assessment framed under Section 147 read with Section 144 of the Income Tax Act, 1961, for Assessment Year 2017-18. The assessee, employed in a salaried capacity, was unable to represent himself before the Assessing Officer (AO) during the reassessment proceedings, which led to the AO passing an order without the benefit of any submissions, documents, or explanations from the assessee's side.

The ex parte order resulted in two broad categories of disputed additions:

The assessee's first set of complaints related to the manner in which his salary income had been computed. According to the assessee, the AO brought the gross salary figure to tax without making the following reductions that were already reflected in the Form 16 issued by his employer:

  • Exempt income under Section 10 of the Income Tax Act, 1961
  • Deduction on account of interest paid on house property
  • Deductions permissible under Chapter VI-A of the Income Tax Act, 1961

Since the assessee had not appeared before the AO, none of these items — though visible in the employer-issued Form 16 — were considered during the assessment.

The second major dispute concerned the computation of capital gains. The assessee contended that the AO had committed two distinct errors:

  1. Failure to reduce the cost of acquisition: The entire sale consideration was treated as the taxable gain, without any deduction for the cost at which the capital asset had originally been acquired.
  2. Incorrect classification of the asset: The AO treated the relevant capital asset as a short-term capital asset, whereas the assessee maintained that, by virtue of the period of holding, it qualified as a long-term capital asset.

Both these errors, the assessee argued, resulted in a substantially inflated tax liability.

Proceedings Before CIT(A)/NFAC

Before the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), the assessee obtained only limited relief. The CIT(A) directed the AO to verify Form 26AS and grant due credit for TDS as well as self-assessment tax paid, in terms of Section 199 of the Income Tax Act, 1961 read with Rule 37BA.

The remaining claims — relating to salary exemptions, house property interest, Chapter VI-A deductions, cost of acquisition, and the classification of the capital asset — were not accepted. The CIT(A) declined to engage with these issues on the ground that the assessee had, even during the appellate stage, neither filed written submissions nor placed any supporting documentary evidence on record. The appeal before the CIT(A) was accordingly partly allowed only to the extent of TDS credit verification.

Delay of 86 Days in Filing Appeal Before ITAT

When the assessee approached the ITAT, an immediate procedural hurdle arose: the appeal had been filed with a delay of 86 days beyond the time limit prescribed under Section 253 of the Income Tax Act, 1961.

Grounds Cited for Condonation

The assessee, through his Authorised Representative (AR), submitted a detailed condonation application supported by a time chart and an affidavit. The following grounds were advanced: