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Facts
The Assessee, a senior citizen, received an intimation under Section 143(1) for AY 2021-22, raising a demand based on erroneous treatment of rental income as business income instead of 'Income from House Property', leading to double taxation. The Assessee filed a disagreement response and, believing the issue was resolved after receiving refunds for subsequent years, delayed filing an appeal before the CIT(A). The CIT(A) dismissed the appeal solely on grounds of limitation, refusing to condone the 972-day delay without confronting the Assessee on the reasons for delay.
Held
The Tribunal found that the CIT(A) erred in not granting a fair opportunity to the Assessee regarding the condonation of delay. Recognizing the Assessee's age, limited technical knowledge of online procedures, and bona fide belief, the Tribunal condoned the delay of 972 days. The CIT(A)'s order was set aside, and the case was remanded back to the CIT(A) to decide the grounds of appeal on merits after providing a reasonable opportunity of being heard to the Assessee.
Key Issues
Whether the CIT(A) was justified in not condoning the delay in filing the appeal; and the correct head of income for rental income (House Property vs. Business Income).
Sections Cited
143(1), 249, 250, 251
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K (SMC
order : 31.10.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member:
1. 1. The present appeal preferred by the Assessee is directed against the order, dated 24/04/2025, passed by the Additional/Joint Commissioner of Income (Appeals) – 2, Jaipur [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had dismissed the appeal against the Intimation Order, dated 04/07/2022, passed under Section 143(1) of the Income Tax Act, 1961 for the Assessment Year 2021-2022.
2. The Assessee has raised following grounds of appeal : “1. Double Taxation of Rental Income Assessment Year 2021-2022 On the facts and in the circumstances of the case and in law, the Ld. CIT(A), National Faceless Appeal Centre, erred in upholding the intimation under Section 143(1) of the Income-tax Act, 1961 dated 04.07.2022, determining the total income of Rs.21,40,950/- and raising a demand of Rs.3,50,980/-, without appreciating that the sum of Rs.12,75,750/- being rental income – reported separately in Clause 16(d) of Form 3CD but not routed through the Profit & Loss Account – was correctly offered by the appellant under the head “Income from House Property” in the return of income. The Ld. CIT(A) failed to consider the appellant’s submissions and erroneously treated the said amount as business income in addition to house property income, thereby resulting in double taxation of the same income, which is wholly unjustified and contrary to settled principles of taxation.
2. Condonation of Delay in Filing the Appeal On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not condoning the delay in filing the appeal without appreciating that the delay was neither deliberate nor intentional but caused due to bona fide and reasonable circumstances, which are summarized as under: a. The appellant had disagreed with the demand raised under Section 143(1) on 25.08.2022 via the e-filing portal, clearly stating in the remarks column that the rental income had already been offered under the head “Income from House Property”. b. The appellant received refund for A.Y.2022-23 on 07.12.2022, and subsequently for A.Y.2023-24 on 06.12.2023, which reasonably led to the presumption that the demand issue stood resolved and no further action was required. c. The disagreement response filed by the appellant was not acted upon or processed by the CPC or Assessing Officer, which added to the confusion and delay. d. At the relevant time, the appellant was aged 71 years and not conversant with the online portal procedures and electronic notices received via email/SMC. The appellant was under the bona fide belief that he disagreement filed was sufficient, and was unaware that a separate appeal had to be filed within the prescribed time unit.
2 Assessment Year 2021-2022 In view of the above bona fide reasons, the delay in filing the appeal deserves to be condoned in the interest of justice. The appellant, being a senior citizen with limited technical knowledge of online procedures, acted under a genuine belief that the issue was resolved upon filing a disagreement and receiving the refund. Denial of condonation in such circumstances would result in an unreasonable and unjust financial burden of Rs.3,50,980/- on the appellant – an outcome disproportionate to the procedural lapse and contrary to the principles of equity and natural justice.”
3. We have heard both the sides in appeal is the material on record. We find that the Learned CIT(A) had dismissed the appeal preferred by the Assessee as being barred by limitation holding that the Assessee did not have sufficient cause for delay in filing the appeal. Perusal of the record shows that the Assessee was not confronted with the issue of delay in filing the appeal by the learned CIT(A). Before us, the Assessee has filed an affidavit sworn on 05/08/2025, relevant extract of which reads as under: “2. I am filing the present affidavit for the limited purpose of explaining and seeking condonation of delay in filing the appeal before the Ld. CIT(A), in furtherance of the directions of this Hon'ble Tribunal during the hearing on 29 July 2025 in the captioned Appeal.
For the Assessment Year ('AY') 2021-22, I had filed my return of income on 28 January 2022 declaring a total income of Rs. 8,65,200/- (Rupees eight lakhs sixty-five thousand and two hundred).
Subsequently, I received an intimation u/s. 143(1) dated 4 July 2022 ('Intimation') of the Income-tax Act, 1961 from the Centralized Processing Centre ('CPC') raising a demand of Rs. 3,50,980 (Rupees three lakhs fifty thousand nine hundred and eighty).
Such demand erroneously added an amount of Rs. 12,75,750/- (Rupees twelve lakhs seventy-five thousand seven hundred and fifty) to the business income on the basis of the audit report filed in Form 3CD which stated that such amount was not credited to the profit and loss account. I state that such income being rental income had already been offered to tax in AY 2021-22 under the 3 Assessment Year 2021-2022 head 'Income from house property'.
6. In response to the Intimation, I filed my objection on 25 August 2022 ('Disagreement Response") on the Income Tax portal disagreeing with the demand raised for the aforesaid reason. A copy of the Disagreement Response filed is hereto annexed and marked as 'Exhibit A'.
Further, being a senior citizen aged 71 years at that time, I was not conversant with the online portal procedures and electronic notices received via email/ SMS. I was unaware that a separate appeal had to be preferred within the prescribed time period against such Intimation and was, therefore, under the bona fide belief that filing of the Disagreement Response was sufficient. Moreover, the Disagreement Response remained to be acted upon or processed by the CPC, which added to the confusion and delay.
8. The fact that I received refunds for the AY 2022-23 and AY 2023-24 on 7 December 2022 and 6 December 2023, respectively, led me to believe that the issue of demand for AY 2021-22 was resolved and no further action was required on my part.
It was only on 20 March 2025, on receipt of an email from CPC, that I was made aware of the outstanding demand for AY 2021- 22. Immediately thereafter, steps were taken by me to consult a chartered accountant and, on the advice received, an appeal in Form No. 35 was filed with the Ld. CIT(A) on 2 April 2025. The grounds for the unintentional delay were also placed before the Ld. CIT(A) in response to Sr. No. 15 of the Form No. 35, however, the same were rejected by the order impugned in the captioned Appeal. A copy of the said email dated 20 March 2025 is hereto annexed and marked as 'Exhibit B'.
In these circumstances, it was not possible to file the appeal before the Ld. CIT(A) within the limitation period. The delay of approx. 972 days in filing the appeal before the Ld. CIT(A) was unintentional and no advantage accrued to me from such delay. There was no mala fides or wilful default which led to the delay in filing the appeal before the Ld. CIT(A).
Moreover, no prejudice will be caused to the Respondent if the delay is condoned and the matter is disposed of on merits. On the other hand, I will be gravely prejudiced by the loss of the only statutory remedy available against the order impugned in 4 Assessment Year 2021-2022 the captioned Appeal, despite having a good case on merits. The delay occurred on reasonable and sufficient grounds and it is in the aforesaid bona fide circumstances, the present Affidavit is being filed.”
4. We note that in Memorandum of Appeal filed before the Learned CIT(A) in Form 35, the Assessee had stated that that there was a delay in filing the appeal and had provided explanation which has been reproduced by Learned CIT(A) in Paragraph 3 of the order impugned. However, According to the Learned CIT(A) the above reasons stated by the Assessee were not tenable as Assessee had failed to demonstrate sufficient cause or hardship for delay in filing the appeal. The relevant extract of the order passed by the Learned CIT(A) has been reproduced below for ease of reference:
3. Maintainability of appeal on account of delay in filling of appeal: The appellant has filed its return of income for A.Y. 2021-22 on 28.01.2022. The assessment proceedings had completed on 04.07.2022 u/s 143(1) of the I.T. Act. The appellant had filed the present appeal on 02.04.2025. The date of service of order as per Form 35 is 04.07.2022. There was no separate application for condonation of delay but a mention at column no. 15 of Form 35 regarding grounds for condonation of delay reads as under- “I KirtiKumar Champak lal Bhimani (herein referred as Appellant), having PAN AACPB91818, respectfully submit this condonation request letter in response regarding the notice received under section 143(1) for appeal with Form 35. Appellant had received above notice on 04/07/2022 with demand due of Rs. 3,50,980/- and had disagree with demand on 25/02/2022 stating the reason but demand was not deleted. Further appellant received mail on 20/05/2025 for demand due. Hence appellant have to file appeal against this order. The delay in filling appeal is unintentional and occurred due to circumstances beyond our control. In light of the above, I humbly request your kind consideration to condone the delay and allow the appeal to be processed in the interest of justice. We sincerely appreciate your kind understanding and consideration.
Decision on Condonation of Delay: The facts of the case and the grounds raised by the appellant have been considered carefully. 5 Assessment Year 2021-2022 It is noticed that there is a delay in filing of appeal. The appeal is to be filed within 30 days of the date of the service of the order. During the appellate proceedings, it is found from the Form No. 35 that the appellant filed the present appeal on 02.04.2025 whereas the date of order u/s 143(1) was on 04.07.2022 and as per Form No. 35, the date of service of order as 04.07.2022. From the facts of the case, it appears that the appeal is filed beyond the prescribed due date. The reasons stated by the appellant have been perused but are not found to be tenable as the appellant has failed to demonstrate sufficient cause or any other hardship for delay in filing of the present appeal. Considering no hardship or sufficient cause for delay in filing of this appeal, the delay condonation request of appellant is rejected. The above view has also been taken by Hon'ble High Court of Madras in the case of Siva Industries & Holdings Ltd. Vs Assistant Commissioner of Income-tax, Company Circle VI(3), Chennai [2023] 153 taxmann.com 354 (Madras) in a recent decision. Thus, the appeal filed by appellant is not maintainable as the same is filed beyond the time limit permitted u/s 249 of the IT Act for filing of appeal and there is no sufficient cause for delay in filing of appeal, which can be condoned. Accordingly, the appeal of the appellant is treated as dismissed u/s. 250 r.w.s.251 of the Act without considering the merits of the appeal filed.” (Emphasis Supplied)
5. We are not in agreement with the above approach adopted by Learned CIT(A). Perusal of the impugned order shows that the appeal was instituted by the Assessee on 02/04/2025, it was taken up for hearing on 10/04/2025 and thereafter, dismissed vide Order, dated 24/04/2025. In our view the Assessee was required to be confronted, in case the Learned CIT(A) was not convinced with the grounds for delay stated in memorandum of appeal. We hold that in the present case no effective opportunity of being heard was granted to the Assessee to make out a case for condonation of delay in filing the appeal. On perusal of affidavit filed before us, it becomes clear that the Assessee was a senior citizen aged about 71 years at that time, and was not conversant with the online portal procedures and electronic notices received via email/ SMS. When the Assessee 6 Assessment Year 2021-2022 received demand notice on processing of return of income for the Assessment Year 2021-2022, the Assessee had filed objections on 25/08/2022 on the Income Tax Portal disagreeing with the demand raised on the Assessee. In the said objections/disagreement note it was stated that rental income of INR.12,75,750/- had been incorrectly added as business income and the same has been correctly offered to tax as rental income under the head income from house property in the return of income. Thereafter, the Assessee received refunds for the Assessment Years 2022-2023 and 2023-2024 on 07/12/2022 and 06/12/2023. This led the Assessee to believe that the issue of demand for Assessment Year 2021-2022 was resolved and no further action was required. Later, on 20/03/2025, the Assessee received email from CPC regarding outstanding demand pertaining to Assessment Year 2021-2022. Immediately thereafter, the Assessee took steps to consult a chartered accountant and, on the advice received, filed appeal before the Learned CIT(A) on 02/04/2025. Given the aforesaid facts and circumstances, we are of the view that the Assessee had sufficient reason for not filing the appeal before the Learned CIT(A) within the prescribed period.
In the case of Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 (SC) the Hon’ble Supreme Court has, while dealing with the issue of condonation of delay, emphasized that substantial justice should prevail over technical considerations. Every day’s delay must be explained does not mean that a pedantic approach should be taken and that the aforesaid doctrine must be applied in a rational common sense and pragmatic manner, more so in circumstances where a litigant does not stand to benefit by lodging the appeal late (as is the case in appeal before us). Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits 7 Assessment Year 2021-2022 after hearing the parties.
7. Accepting the explanation given by the Assessee to be reasonable, we hold that in the present case the Assessee was prevented by the sufficient cause from filing the present appeal before the CIT(A) within the prescribed time. Accordingly, we condone the delay of 972 days in filing appeal before the CIT(A) is condoned. The order, dated 24/04/2025, passed by Learned CIT(A) set aside with the directions to adjudicate grounds raised by the Assessee in appeal on merits after granting the Assessee a reasonable opportunity of being heard. The Assessee is also directed to file details, documents & submission in support of its claims/contentions before the Learned CIT(A). The Learned CIT(A) would be at liberty to admit/consider the same as per law. In terms of the aforesaid, and without returning any findings on merits, the Grounds No. 2 raised by the Assessee is allowed and Ground No. 1 is dismissed as having being rendered academic on account of setting aside of the impugned order.
In result, in terms of Paragraph 7 above, the Assessee is treated as allowed for statistical purposes.