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Facts
The assessee filed three appeals with a significant delay of 266 days due to prolonged internal management disputes, court litigation, and the COVID-19 pandemic, which hindered the preparation of accounts. The Assessing Officer (AO) passed ex-parte orders assessing gross receipts. The Commissioner (Appeals) dismissed the appeals.
Held
The Tribunal condoned the delay, citing reasonable cause for the delay and the interest of justice, subject to a cost. The Tribunal set aside the orders of the CIT(A) and remanded the quantum appeals to the AO for fresh adjudication. The penalty appeal was consequential and thus deleted.
Key Issues
Whether the delay in filing the appeals is justifiable, and whether the ex-parte assessment and consequential penalty are sustainable without proper adjudication on merits.
Sections Cited
271(1)(c), 12A, 11, 12
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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha G.
ORDER
Per Vijay Pal Rao, Vice-President.
Theses 3 appeals filed by the assessee are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 14/11/2024 arising from the two assessment orders for the A.Y 2012-13 and 2015-16 and one penalty order under section 271(1)(c) of the Act for the A.Y 2015-16 respectively.
There is a delay of 266 days in filing these 3 appeals. The assessee has filed a petition for condonation of delay which is supported by the affidavit of the President of the assessee’s Trust. The learned Counsel for the assessee has submitted that there was a dispute among the Executive Committee Members of the Assessee Trust and consequentially a long-drawn court litigation was going on from the year 2009 to 2021 till the Additional XXV Addl. Chief Judge, City Civil Court vide order dated 30/07/2021 appointed a Special Officer and directed for conducting elections within three months from the date of finalization of List of Members. Thereafter, the elections were conducted on 12/12/2021 and a new Executive Committee was elected along with one Shri Vade Israel as the President. The next Executive Committee was formed after the covid period towards the end of 2024 and thereafter, the necessary accounting staff was recruited for preparing the accounts of the assessee Trust pending for the last more than 12 years. The learned Counsel for the assessee has thus submitted that because of the turbulent period for the past 15 years, the new Executive Committee lost the track of the tax matters and could not file the appeal within the period of limitation. Only when, a notice under section 226(3) dated 16/09/2025 was received from the A.O for attachment of the Bank Account of the Assessee , the assessee realized the mistake of not filing the appeal against the impugned orders of the Ld. CIT (A) and consequently the present appeals were filed on 24/10/2025. Thus, the learned Counsel for the assessee has Page 2 of 12 submitted that the delay in filing the appeal was neither deliberate nor willful but due to the circumstances which were beyond the control of the assessee. In support of his contention, he has relied upon the following decisions: (a) Western Union Financial Services Inc (2023) 153 Taxmann.com 704 (S.C) (b) Sesh Nath Singh vs. Baidyabati Sheroaphuli Cooperative Bank Ltd (2021) 125 Taxmann.com 357 (S.C) (c) Vedabai alias Vaijayantabai Baburao Patil (2002) 253 ITR 798 (S.C) (d) Collector Land Acquisition, Anantnag & ... vs Mst. Katiji & Ors on 19 February, 1987 ( (1987) 2 SCC 107; AIR 1987 SC 1353; 1987 (2) SCR 387.) 3. On the other hand, the Ld. DR has vehemently objected to the condonation of delay and submitted that it is a case of negligence on the part of the assessee as the assessee has not explained any sufficient cause for the delay of 266 days in filing these 3 appeals. The Ld. DR has further contended that the litigation regarding the Executive Committee was over in the year 2021 and therefore, the said litigation cannot be a cause for the delay in filing the appeals against the impugned orders dated 14/11/2024. He has relied upon the judgment of the Hon'ble Supreme Court in the case of Jharkhand Urja Utpadan Nigam Ltd & ANR vs. M/s. Bharat Heavy Electricals Ltd (Special Leave to appeal (C) No.9580/2025 dated 15/04/2025.
We have considered the rival submissions as well as the relevant material available on record. The assessee has Page 3 of 12 explained the cause of delay of 266 days in filing the present appeal as stated in the affidavit as under:
Thus, the assessee has explained the prolonged internal management dispute and litigation pending in the Courts up to the year 2021 and thereafter the Covid-19 pandemic up to the year 2022 during which the proper accounts were not maintained as there was no proper management and the Executive Committee of the assessee Trust. Subsequently, the management elected was helpless due to non-maintenance of accounts and records. This explanation of the assessee sounds a reasonable cause, however, all these developments happened prior to the impugned orders passed by the Ld. CIT (A). Further, we find from the assessment orders that the A.O passed the orders ex-parte as there was no return of income filed by the assessee and assessed the total receipts/credits to tax. Therefore, if the appeals of the assessee are dismissed on the ground of delay, then it would amount to injustice to the extent that the A.O
Page 6 of 12 has assessed the gross receipts of the assessee to tax instead of taking the net surplus and hence the action of the A.O is also arbitrary to the extent of assessing the total/gross receipts of the assessee without allowing the expenditure as a deduction. Though the assessee was granted registration under section 12A of the Act, however, in the absence of the return of income, it is also a question whether the assessee can claim the benefit of section 11 and 12 of the Act. The Ld. DR has objected to the condonation of delay and has relied upon the judgment of Hon'ble Supreme Court in the case of Jharkhand Urja Utpadan Nigam Ltd & ANR vs. M/s. Bharat Heavy Electricals Ltd (Supra). However, we find that in the said case, the assessee explained the cause of delay of non-communication of the order passed by the Commercial Court, whereas the assessee itself has not filed the application for providing a certified copy within the reasonable time and hence, the Hon'ble Supreme Court found that the assessee cannot take advantage of its own negligence or negligence of the Counsel engaged by them. It was also noted that the assessee was having itself a legal department and employees engaged by the assessee in the Department having a duty to monitor the Court Cases and can tracking the progress of the cases. Therefore, in the facts and circumstances of the case and in the interest of justice, we take a lenient view to condone the delay of 266 days in filing these 3 appeals subject to a cost of Rs.5000/- for each appeal total amounting to Rs.15,000/- to be paid to the Prime Minister’s
The learned Counsel for the assessee has submitted that due to the management dispute and litigation pending in the Courts for a long time, the accounts were not prepared and therefore, the assessee could not file the relevant record and accounts before the A.O as well as before the Ld. CIT (A). He has thus, pleaded that the assessee may be granted one more opportunity to produce the accounts as well as other relevant details and record for the verification and examination of the A.O. Hence, he has pleaded that the matter may be remanded to the record of the A.O.
On the other hand, the Ld. DR has not seriously objected, if the matter is remanded to the record of the A.O for verification and examination of the relevant record to be filed by the assessee.
Having considered the rival submissions and on a careful perusal of the impugned orders, we find that the A.O has passed the ex-parte order and thereby assessed the entire deposits in the bank account to tax. The Ld. CIT (A) has also dismissed the appeals of the assessee and confirmed the additions made by the A.O. Now the assessee has stated that their accounts are prepared and relevant record is ready for verification and examination. Accordingly, in the facts and circumstances of the case, we set aside the orders of the Ld. CIT (A) for the A.Y 2012-13 as well as for the A.Y 2015-16 in quantum appeal and remand the matters to the record of the A.O for fresh adjudication after verification
Page 10 of 12 and examination of the relevant record and details to be filed by the assessee. Needless to say, the assessee shall be given an appropriate opportunity of being heard before passing the fresh order.
& 1732/Hyd/2025 10. In the appeal against the penalty levied under section 271(1)(c) of the Act is consequential to the additions made by the A.O for the A.Y 2015-16. Since we have set aside the matter in the quantum appeal to the record of the A.O, therefore, the penalty levied under section 271(1)(c) of the Act would not survive and hence is deleted. However, the A.O is at liberty to initiate penalty proceeding as per the outcome of the remand proceedings in the quantum matter.