Reassessment demand error meant appeal delay was only 18 days; ITAT condones delay and sends penalty back for fresh hearing

5-Second Takeaway

The ITAT held that the appeal before the CIT(A) was delayed by only 18 days, not 614 days, because the reassessment computation sheet and demand notice were part of the assessment order and the Revenue’s erroneous figures misled the assessee. The delay was therefore condoned; the related penalty appeal was also set aside for de novo adjudication.

The assessee challenged a reassessment framed under section 147 read with section 144B, where the income was reassessed at Rs. 57,50,739 but the computation sheet mistakenly showed total income of Rs. 4,98,880 and raised a much smaller demand. After the assessee paid that demand, a rectification order under section 154 corrected the assessed income and led to a consequential demand.

When the matter reached the CIT(A), the appeal was dismissed as time-barred on the footing that the delay ran from the original reassessment order and amounted to 614 days. The ITAT held that this approach ignored the fact that the computation sheet and notice of demand under section 156 formed an integral part of the assessment order.

The Tribunal found that the mistake was on the Revenue’s side, since the assessing officer should have issued the correct computation sheet and demand while completing the reassessment. On that basis, the assessee had shown sufficient cause and the real delay in filing the appeal was only 18 days.

The delay was condoned and the appeal allowed. Because the quantum appeal had already been restored to the CIT(A) for fresh adjudication, the penalty appeal under section 271(1)(c) was also sent back for de novo consideration.