B vs. OVERSEAS PRIVATE LIMITED,HYDERABAD

Succinctly stated, the AO based on information flagged as per the Risk Management Strategy formulated by the CBDT that the assessee company during the subject year had carried out substantial financial transactions, viz., (i) time deposits (other than a time deposit made through renewal of another time deposit): Rs.3,20,00,000/-; (ii) interest (other than the interest on securities) with Axis Bank Limited: Rs.5,08,189/-; and (iii) sale of motor vehicle exceeding Rs.10 lakhs: Rs. 2 lakhs, but had not filed its return of income for the year under consideration, initiated proceedings under section 147 of the Act. Thereafter, the AO issued a notice under section 148A(b) of the Act, dated 25/03/2022, wherein the assessee company was called upon to explain as to why a notice under section 148 of the Act may not be issued in its case. However, the assessee company failed to submit any reply. Thereafter, the AO passed an order under section 148A(d) of the Act, dated 09/04/2022. Notice under section 148 of the Act, dated 09/04/2022, was issued to the assessee company. However, the assessee company failed to respond to the notice issued under section 148 of the Act, dated 09/04/2022, and did not file its return of income in response thereto.

During the course of the assessment proceedings, the AO issued notice under section 142(1) of the Act, which, however, remained uncomplied with by the assessee company. Thereafter, the AO issued a show cause notice (SCN) under section 144 of the Act, dated 13/07/2023, wherein the assessee company was called upon to explain as to why the assessment in its case may not be framed to the best of his judgment under section 144 of the Act. 4

As is discernible from the record, the assessee company failed to respond to the aforesaid notices, as a result whereof the AO was constrained to proceed with and frame the assessment to the best of his judgment under section 144 of the Act.

Thereafter, the AO vide his order passed under section 147 r.w.s 144 r.w.s. 144B of the Act, dated 05/02/2024 determined the income of the assessee company at Rs.3,27,08,089/- after making certain additions under section 69A of the Act, viz., (i) addition with regard to unexplained time deposits: Rs.3,20,00,000/-; (ii) addition of interest income: Rs.5,06,189/-; and (iii) addition of the sale proceeds of motor vehicle: Rs.2 lakhs.

Aggrieved, the assessee company carried the matter in appeal before the CIT(A). However, as the assessee company, despite having been afforded sufficient opportunity, failed to respond to either of the three notices intimating the fixation of the appeal, i.e., notices dated 05/03/2025, 01/05/2025 and 16/05/2025, the CIT(A), holding a conviction that it was not interested in prosecuting the matter, proceeded with and disposed of the appeal vide an ex- parte order. The CIT(A) observed that the assessee company had nothing to say in support of the various grounds of appeal that were raised before him; thus, it could safely be concluded that it did not want to press any of the said grounds of appeal. Accordingly, the CIT(A), based on his aforesaid conviction, observed that as there was no reason to interfere with the findings of the AO as detailed in the assessment order, upheld the same and dismissed the appeal.

The assessee company, being 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 authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.

Shri Veekaas S Sharma, CA, Learned Authorized Representative (for short, “Ld. AR”) for the assessee company, at the threshold of hearing of the appeal submitted that the same involves a delay of 113 days. Elaborating on the reasons leading to the delay, the Ld. AR submitted that the same had crept in for multi facet reasons, viz., (i) health of mother of one of the Directors, viz., Shri Vidya Sagar Boddu, during the relevant period was quite precarious as she was suffering from multiple serious health ailments, including heart related complications, kidney dysfunction, diabetes mellitus, anemia and general weakness, and due to severe breathlessness and swelling in both legs was admitted to Yashoda Hospitals, Hyderabad and remained under intensive medical care and treatment in the hospital during the period April 2025 to August 2025 (copies of medical reports enclosed at Page Nos.1-58 of the condonation petition); (ii) that during the relevant period the counsel of the assessee company, viz., Shri Korukjonda Sravan was incapacitated due to mental ill-health and was diagnosed as suffering from psychological distress as a result whereof he was unable to attend his professional responsibilities (copies of medical reports placed at Page Nos.59-64 of APB); (iii) that there were two deaths in the family of the present counsel, viz., Shri Veekaas S Sharma, CA, who had lost his paternal aunt and sister-in-law, as a result whereof remained engaged in performing the rituals he had not attended his professional responsibilities; (iv) that the present counsel was thereafter pre-occupied with the timely filing of income tax returns for various clients and entities, as the statutory due date for filing the same was 15/09/2025 which was further extended to 16/09/2025; (v). that the counsel was thereafter engaged in preparation and filing of tax audit reports under section 44AB of the Act which was also due on 10/11/2025 and finalization of the same involved detailed financial reviews, reconciliations, and compliance checks, all of which were time-intensive and required utmost accuracy and diligence. The Ld. AR, in the backdrop of the aforesaid facts, which had cumulatively resulted in the delay in filing of the present appeal, submitted that, in all fairness and in the interest of justice, the same be condoned by adopting a justice-oriented and liberal approach. The Ld. AR in support of his contention had relied upon the judgments of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal vs. Income Tax Officer and that in the case of Aakash Laylesh Leisure (P) Ltd. vs. Income Tax Officer, Civil Appeal No.1975 to 1979/2019, dated 22/02/2019, wherein the delay was condoned by the Hon’ble Apex Court on medical grounds.

Per contra, Shri Mohan Babu, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) objected to the seeking of condonation of delay by the assessee appellant. The Ld. Sr-DR submitted that though it is, inter alia, claimed by the assessee appellant that the delay was attributable to the ill-health of Shri K Sravan, Company Secretary, as he was suffering from deep depression reaction and acute stress reaction and the Directors of the assessee company were exclusively dependent upon him for handling the income tax proceedings, but the medical prescriptions regarding his ill-health pertained only to January, 2025 to February, 2025, whereas the impugned appellate order was passed subsequently on 28/05/2025. Elaborating on his contention, the Ld. Sr-DR submitted that as there is a significant time gap of three months between the prescriptions and the passing of the impugned order, coupled with the fact that the assessee company had failed to produce any material evidence which would irrefutably establish that Shri K Sravan (supra), i.e., the Authorized Representative continued to suffer from such medical ill-health on 28/05/2025 or during the subsequent period of 113 days, the explanation of the assessee company regarding the reason leading to the delay because of the ill-health of the aforesaid representative does not merit acceptance. The Ld. Sr. DR, in support of his contention, had relied upon the order of the ITAT, Hyderabad in Smt. Renuka Datla vs. DCIT, Central Circle-1(3), Hyderabad in ITA Nos.180 to 185/Hyd/2023, A.Ys. 2012-13 to 2017-18, dated 27/07/2023. Elaborating on his contention, the Ld. Sr. DR submitted that a speculative explanation, an uncorroborated plea of missed communication, pre- occupation with other matters, or a claim of strong case on merits cannot be taken as a substitute for proof of diligence and sufficient cause, as what is required to be proved is that there was a reasonable cause which prevented timely filing of the appeal supported by a coherent chronology and cogent material. The Ld. Sr. DR submitted that considering the totality of the facts involved in the present case, the delay of 113 days involved in filing the present appeal in the absence of any justifiable reason does not merit to be condoned and the present appeal be dismissed as barred by limitation.

We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties on the issue of delay involved in the present appeal.

As observed by us herein above, the assessee appellant had come forth with multiple reasons leading to the delay in filing the present appeal, viz., (i) ill-health of mother of one of the Directors; (ii) ill-health of the Authorized Representative who was handling the income tax matters; (iii) deaths in the family of the counsel who was engaged in the appellate proceedings; and (iv) thereafter the counsel remaining busy in filing of income tax returns and preparation of tax audit reports as the deadline for filing/necessary compliance was fast approaching.

We find that, as stated by the Ld. Sr-DR and rightly so, the medical reports of Shri Korukond Sravan, Company Secretary of the assessee company, though relate to the period January to February, 2025; but he has vide his affidavit filed before us stated that the failure to participate in the proceedings before the CIT(A), which had resulted in an ex-parte order, and thereafter delayed filing of the appeal with the Tribunal had crept in for the reason that he during the relevant period was suffering from serious mental health issues, medically diagnosed as Adjustment Disorder with Brief Depressive Reaction and Acute Stress Reaction, resulting in significant psychological strain, emotional instability, and reduced professional efficiency. Accordingly, Shri K Sravan (supra) has admitted that the delay in filing the appeal before the Tribunal was due to his failure to do the needful, as at the relevant time he was suffering from ill-health.

Apart from that, we find that the assessee company had also stated that the delay in filing of the appeal was attributable to the reasons, viz., (i) ill health of mother of one of the Directors; (ii) two deaths within a span of two months in the family of the counsel engaged for filing of the appeal; and (iii) the counsel remained busy in filing of the income tax returns and compliance of filing the audit reports within the stipulated time period.

In our view, considering the totality of the facts leading to the delay in filing of the present appeal, there are justifiable reasons explaining the same, which we are afraid cannot be summarily brushed aside. We thus, in the backdrop of our aforesaid observations, are of a firm conviction that the delay of 113 days involved in filing the present appeal merits to be condoned. Our aforesaid view is fortified by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. ITO (2025) 305 Taxman 83 (SC). The Hon'ble Apex Court, while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Tribunal, had observed that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal.

We shall now deal with the merits of the case based on which the impugned order of the CIT(A), and as a result thereof the assessment framed by the AO vide his order passed under section 147 r.w.s. 144 r.w.s 144B of the Act, dated 05/02/2024 has been assailed before us.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.

Shri Veekaas S Sharma, CA, Learned Authorized Representative (for short, “Ld. AR”) for the assessee appellant, at the threshold of hearing of the present appeal assailed the validity of the jurisdiction that was assumed by the AO for framing the impugned assessment vide his order passed under Section 147 r.w.s 144 r.w.s 144B of the Act, dated 05/02/2024. Elaborating on his contention, the Ld. AR submitted that as the AO had issued notice under section 148 of the Act, dated 09/04/2022, without obtaining approval of the specified authority as contemplated under section 151(ii) of the Act, therefore, the assessment so framed cannot be sustained for want of valid assumption of jurisdiction. The Ld. AR, to buttress his contention, had drawn our attention to the notice issued under section 148 of the Act, dated 09/04/2022, which revealed that the Income Tax Officer, Ward-8(1), Hyderabad had issued the said notice after obtaining the prior approval of the Principal Commissioner of Income Tax, Hyderabad-2 accorded on 08/04/2022, vide Reference No.100000029752149. Apart from that, the order passed under section 148A(d) of the Act, dated 09/04/2022, also states that it was passed with the prior approval of the Principal Commissioner of Income Tax, Hyderabad-2. The Ld. AR in support of his contention has relied on the judgment of the High Court of Telangana in Deloitte Consulting India Pvt. Ltd. vs. Assessment Unit (2025) 481 ITR 175) (Telangana) and the order of the ITAT, Hyderabad in the case of Shri Polavarapu Basaveswara Rao vs. Income Tax Officer, Ward-1, Nizamabad, ITA No.2310/Hyd/2025, dated 24/04/2026. For the sake of clarity, we deem it apposite to cull out the notice issued by the AO under Section 148 of the Act, dated 09/04/2022, as under:

At this stage, it would be relevant to point out that nothing has been placed on our record by the Ld. DR to rebut the aforesaid factual position as had been canvassed by the assessee’s counsel before us.

We have given thoughtful consideration to the aforesaid contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.

As is discernible from the record, the CIT(A) had summarily dismissed the appeal of the assessee company for want of prosecution. Ostensibly, as the assessee, despite being afforded three opportunities to participate in the appellate proceedings, i.e., notices dated 05/03/2025; 01/05/2025 and 16/05/2025 had failed to prosecute the appeal before the first appellate authority, therefore, the latter holding a conviction that the appellant had nothing to say in support of his various grounds of appeal, upheld the assessment order passed by the AO and dismissed the appeal. At this stage, we deem it apposite to observe that though we principally concur with the CIT(A) that on failure on the part of the assessee appellant to respond to the notices intimating the fixation of the appeal, the appellate authority cannot be expected to keep the proceedings in abeyance and is justified in proceeding with and disposing of the same vide an ex-parte order, but at the same time are unable to persuade ourselves to concur with the manner in which the present appeal has been disposed of by the CIT(A) without adverting to and adjudicating the specific grounds of appeal based on which the impugned order of assessment was assailed before him. In our view, even in case the assessee appellant failed to participate in the appellate proceedings, the CIT(A) is obligated to dispose of the appeal in writing after stating the points for determination and rendering a decision on each of the points which arise for consideration with reason in support thereof. Our aforesaid view that the CIT(A) is statutorily obligated to dispose of the appeal based on a reasoned and speaking order is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). The Hon’ble High Court in the aforementioned case had observed as under:

Considering the aforesaid facts, we herein set aside the order passed by the CIT(A) to his file with a direction to re-decide the appeal afresh. 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 company which shall remain at liberty to assail the validity of the jurisdiction assumed by the AO for framing the impugned assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 05/02/2024 as per the extant law.

In the result, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the open court on 19th August, 2026. Sd/- Sd/- MADHUSUDAN SAWDIA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad *Dated: 19th August, 2026. Copy to: BVS OVERSEAS PRIVATE LIMITED, 15-15/31 STREET NO. 2, SUDARSHAN NAGAR, OPPOSITE GHMC OFFICE, 1 LINGAMPALLI S.O. SERILLIGAMPALLY K.V. HYDERABAD-500019, RANGAREDDY, TELANGANA ITO, WARD- 1(1), 2 IT TOWERs, AC GUARDS, MASAB TANK, HYDERABAD-500004, TELANGANA 3 THE PCIT, HYDERABAD.