RAJAREDDY PERIYAVARAM,CUDDAPAH vs. ITO., WARD-1, KADAPA

The order of the Appellate Commissioner is contrary to law facts and circumstances of the case.

The Appellate Commissioner erred in dismissing the appeal on the ground thus there is a delay in filling of appeal to the tune of 57 days, without verifying the last the them no delay in filing of the appeal.

The Appellate Commissioner erred in disposing of the appeal only on the premise that there is a delay in filing of appeal

The Appellant submits that the learned list Appellate Authority erred in observing that the Appellant has not made any submissions, while the written submissions of the Appellant are already on record of the appeal file.

The Appellate Commissioner erred in confirming the addition of an amount Rs.1,96,99,406/- being sub contract expenditure

The Appellate Commissioner erred in confirming the action of trade creditors amounting to Rs 1,76,17,345/-

The Appellate Commissioner erred in confirming the disallowance of expenditure to the tune of Rs.7,52,740/-

Any other grounds which the Assessee may urge either before or at the time of the hearing.”

Succinctly stated, the assessee had filed his return of income for the AY 2013-14 on 29/09/2013, declaring an income of Rs. 14,02,590/-. Subsequently, the case of the assessee was selected for scrutiny assessment under section 143(2) of the Act.

Thereafter, the AO vide his order passed under section 143(3) of the Act, dated 30/03/2016, determined the income of the assessee at Rs.3,94,72,080/- after making certain additions/disallowances, viz., (i) disallowance of expenditure: Rs.7,52,740/-; (ii) addition of sub-

Aggrieved, the assessee carried the matter in appeal before the CIT(A). As the appeal filed by the assessee before the CIT(A) involved a delay of 87 days, the CIT(A), in the absence of any reason/explanation regarding the subject delay, dismissed the appeal. Apart from that, the CIT(A) observed that as the assessee had failed to prosecute the appeal and not participated in the proceedings before him, thus finding no infirmity in the view taken by the AO, upheld his order.

The assessee, aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities, and the material available on record.

Shri A. Srinivas, CA, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the 4 The Ld. AR to buttress his contention had taken us through the application filed by the assessee seeking condonation of the delay involved in filing the appeal dated 16/05/2025, along with a supporting “affidavit” dated 27/05/2025. 8. Per contra, Shri D. Praveen, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) submitted that as the assessee had even delayed the filing of the appeal before the CIT(A), therefore, the same reveals his lackadaisical approach regarding the Income Tax proceedings. The Ld. Sr-DR submitted that as the filing of the present appeal was delayed because of the casual approach adopted by the assessee, therefore, the same does not merit to be condoned.

We have given thoughtful consideration and are of the view that considering the totality of the facts involved in the present case, the 5

Coming to the merits of the case, the Ld. AR submitted that both the lower authorities had grossly erred in making/sustaining the additions, viz., (i) addition of sub-contractors (as disclosed in the balance sheet): Rs.1,96,99,406/-; and (ii) addition of trade creditors (as disclosed in the balance sheet): Rs.1,76,17,345/-. Elaborating on his contention, the Ld. AR submitted that the aforesaid outstanding liabilities disclosed in the balance sheet of the assessee for the subject year were brought forward from the immediately preceding year, i.e., the ending 31/03/2012. The Ld. AR to fortify his contention had taken us through the balance sheet of the assessee for the immediately preceding year, i.e., the year ending 31/03/2012, wherein the aforementioned liabilities, viz., sub-contractors: Rs.1,96,99,406/- stood reflected. Apart from that, the Ld. AR submitted that the sundry creditors of Rs. 1,76,17,345/- reflected in the balance sheet of the assessee for the subject year, i.e., 31/03/2013 forms part of the trade creditors of Rs. 1,79,00,627/- reflected in the balance sheet for the immediately preceding year, i.e., the year ended 31/03/2012. The Ld. AR to 6 Rajareddy Periyavaram vs. ITO substantiate his contention had taken us through the balance sheet for the immediately preceding year, i.e., the year ended 31/03/2012, Page No.28 of APB, and that for the subject year, i.e., the year ended 31/03/2013, Page No.9 of APB. The Ld. AR submitted that both the aforementioned liabilities disclosed in the balance sheet of the assessee were the brought forward balances of the preceding year, therefore, there was no justification for both the authorities below to have made/sustained the addition of the same in his hands for the year under consideration.

The Ld.AR submitted that the CIT(A) while dismissing the appeal of the assessee had grossly erred in observing that the same involved a delay of 87 days. Elaborating on his contention, the Ld.AR submitted that the assessee in his Memorandum of Association, i.e., Form-35 had specifically stated that the assessment order, dated 30/03/2016 was served upon the assessee on 30/06/2016. The Ld. AR submitted that the CIT(A) had wrongly observed that the assessment order, dated 30/03/2016 was served upon the assessee on the same date. The Ld. AR to buttress his aforesaid contention had taken us through the observation of the CIT(A) at Page-1/Para1.1 and Page-5/Para 6.1, wherein the CIT(A) had wrongly observed that the assessment order, dated 30/03/2016, was served upon the assessee on the same day. Representative (for short, “Ld. Sr-DR”) relied upon the orders of the authorities below.

We have given thoughtful consideration to the contentions advanced by the Ld. AR in the backdrop of the orders of the authorities below.

Admittedly, it is a matter of fact borne from the record that the assessee in Form-35 had stated at S.No.1(c) that the assessment order, dated 30/03/2016 was served upon him on 30/06/2016. However, we find that the CIT(A) had disposed of the appeal based on his observation that the assessment order was served upon the assessee appellant on 30/03/2016. Our aforesaid view is supported by the observation of the CIT(A) recorded at Page-1/Para 1.1 and Page-5/Para 6.1 of his order. In our view, as the very basis adopted by the CIT(A), to conclude that the appeal filed by the assessee before him is delayed, is factually incorrect, therefore, the order passed by him wherein he had dismissed the appeal as barred by limitation cannot be sustained.

Apart from that, we prima facie find substance in the Ld. AR’s contention that the AO had grossly erred in law and facts of the case in 8 Rajareddy Periyavaram vs. ITO making an addition of the brought forward liabilities in the hands of the assessee for the subject year, viz., (i) liability to sub-contractors: Rs. 1,96,99,406/-; and (ii) liability towards trade creditors: Rs.1,76,17,345/-, but refrain from comment upon the same.

In our view, the matter, in all fairness and in the interest of justice, requires to be restored to the file of the CIT(A) for fresh adjudication. Needless to say, the CIT(A) shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee who shall remain at liberty to substantiate his contention based on fresh documentary evidence, if any.

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.

The Principal Commissioner of Income Tax, Kurnool.

"वभागीय""त"न"ध, आयकरअपील"यअ"धकरण /DR,ITAT, Hyderabad.

The Commissioner of Income Tax 6. गाड"फ़ाईल / Guard file