ITAT Bangalore Restores Ex-Parte Assessment of Visually Impaired Retired Employee for Fresh Hearing

Background and Overview

The Bangalore Bench of the Income Tax Appellate Tribunal recently examined an appeal filed by Naik Govinda against an order passed by the National Faceless Appeal Centre, Delhi, pertaining to Assessment Year 2017-18. The case raises critical questions around the condonation of delay in filing appeals before the CIT(A) and the validity of ex-parte assessments where the assessee suffers from severe physical disability that prevented meaningful participation in proceedings.

At its core, the matter involves a 66-year-old completely blind retired employee whose income was assessed at ₹33,31,340 under Section 147 read with Section 144 and Section 144B of the Income-tax Act, 1961, primarily on account of unexplained cash deposits. The CIT(A) dismissed the appeal citing a 294-day delay without adequately factoring in the assessee's disability — a decision the Tribunal ultimately found unsustainable.

Profile of the Assessee and Factual Background

Naik Govinda served as an employee of HMT Watches Ltd. for 34 years before opting for voluntary retirement on 30 January 2016. At the time of the proceedings, he was 66 years of age and suffered from complete blindness, constituting 100% permanent disability.

Non-Filing of Return and Reassessment Initiation

For Assessment Year 2017-18, the assessee did not file a return of income under Section 139 of the Income-tax Act, 1961. His reasoning was a genuine belief that his total income fell below the basic exemption threshold, given that he was a retiree with no active business income. As a consequence, he was treated as a non-filer by the Income Tax Department.

The Department subsequently received intelligence that the assessee had:

Deposited cash of ₹27,06,760 with State Bank of Mysore
Held a fixed deposit receipt of ₹46,45,000 with UCO Bank
Earned interest income from various banking institutions

Based on this information, the Assessing Officer initiated reassessment proceedings under Section 147 of the Income-tax Act, 1961.

Assessment Proceedings and Ex-Parte Order

Notices Issued but Not Responded To

Statutory notices were duly served upon the assessee, including a notice dispatched via speed post. However, given his complete blindness and consequent inability to independently access electronic communications or monitor the income-tax portal, the assessee did not respond to any of the notices. No representative appeared on his behalf during the assessment proceedings.

Assessment Order Under Section 144

In the absence of any reply or participation, the Assessing Officer proceeded to pass an ex-parte assessment order under Section 144 of the Income-tax Act, 1961. The following additions were made:

Cash deposit addition of ₹27,06,760 — Credit entries including cash in the assessee's State Bank of India account were treated as unexplained income under Section 69A of the Income-tax Act, 1961, with tax applied at the higher rate prescribed under Section 115BBE.
Business income addition of ₹3,16,351 — Cash deposits of ₹39,54,394 found in a cooperative bank account were treated as business receipts, with 8% thereof estimated as profit and brought to tax.