MADHU SRINIVAS UPPU,NALGONDA vs. ITO, WARD-1, SURYAPET

Succinctly stated, the AO, based on information received through the Actionable Information Monitoring System (AIMS), that the assessee had deposited cash aggregating to Rs.43,77,500/- in his bank accounts during the demonetization period but had not filed his return of income for the AY 2017-18, issued Notice under Section 142(1) of the Act, dated 01/12/2017, calling upon him to file his return of income for the subject year. As the assessee neither filed the return of income nor complied with the statutory notices issued during the assessment proceedings, the AO framed an ex parte assessment under Section 144 of the Act, vide order dated 19.11.2019. The AO, while completing the assessment, held the aforesaid cash deposits of Rs. 43,77,500/- (supra) as the assessee’s unexplained money under Section 69A of the Act. As regards the balance credits of 4,21,92,373/- [Rs. 4,65,69,873/- (-) Rs. 43,77,500/-] in the assessee’s bank account during the year, the AO held the same as the business receipts, and estimated the assessee's business income at Rs.33,75,390/-,i.e., at 8% of the bank credits of Rs.4,21,92,373/- (excluding the cash deposits made during the demonetization period), and further brought to tax commission income of Rs.1,11,893/-, thereby assessing his total income at Rs.78,64,783/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), assailing the additions made by the AO under section 69A of the Act, viz. (i)

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

We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncement pressed into service by the Ld. AR.

Mrs. S Sandhya, Advocate, Ld. Authorized Representative (for short, “AR”) for the assessee, at the threshold of hearing, submitted that there is a delay of 114 days in filing the present appeal. The Ld. AR drew our attention to the application and the affidavit filed by the assessee seeking condonation of the aforesaid delay. The Ld. AR submitted that due to a change in the assessee's e- mail account, the notices issued by the CIT(A), as well as the impugned appellate order, were received in the old e-mail account maintained by the assessee's earlier tax consultant and, therefore, the assessee remained unaware of the disposal of his appeal. It was submitted that immediately upon learning of the impugned order, the present appeal was filed. The Ld. AR relied upon the judgment of the Hon'ble Supreme Court in Vidya Shankar Jaiswal Vs. CIT (2025) 305 Taxman 83 (SC), and submitted that as the delay in filing the appeal was for bona fide reason and not on account of any lackadaisical conduct of the assessee appellant, the same, in all fairness and in the interest of justice, be condoned.

Per Contra, Shri K Prasad, Ld. Senior Departmental Representative (for short, “Ld. Sr-DR”) objected to the seeking of condonation of the delay involved in the present appeal.

We have given thoughtful consideration to the explanation furnished by the assessee regarding the reason leading to the delay in filing the present appeal before us. In our view, the cause leading to the delay in filing the appeal is shown to be bona fide, and the assessee was prevented by sufficient cause from filing the appeal within the prescribed period. Accordingly, respectfully following the judgment of the Hon'ble Supreme Court in Vidya Shankar Jaiswal Vs. CIT (2025) 305 Taxman 83 (SC), we condone the delay of 114 days and proceed to dispose of the appeal on merits. However, as the delay in filing of the appeal has also crept in because the assessee-appellant had not remained vigilant about his pending income tax matters, therefore, in all fairness and interest of justice we impose upon him a cost of Rs.5,000/- which he shall deposit with Prime Minister National Relief Fund within 15 days of receipt of this order, and shall give a copy of the said receipt to the Registry of the Tribunal.

Coming to the issue involved in the present appeal, the Ld. AR submitted that though the assessee-appellant had specifically disclosed in “Form No.35” that he had neither filed the return of income nor paid an amount equal to the advance tax liability, but had inadvertently failed to file an application before the CIT(A) seeking exemption as per the “proviso” to Section 249(4)(b) of the Act. It was submitted that if one opportunity is granted, the assessee shall file the requisite application and diligently prosecute the appeal on merits before the CIT(A). The Ld. AR in support of her aforesaid contention has relied on the order of the Coordinate Bench of the Tribunal in Aneemoni Naga Raju Vs. ITO, Ward-8(1), Hyderabad, ITA No.2074/Hyd/2025, dated 20.03.2026.

Per Contra, Ld. Sr-DR did not seriously object to the seeking of setting aside of the matter to the file of the CIT(A) with a liberty to the appellant to file an application as per the “proviso” to Section 249(4)(b) of the Act, if so advised.

We have given thoughtful consideration to the submissions of the Ld. AR and perused the material available on record. Admittedly, the assessee had neither filed the return of income nor complied with the requirement prescribed under section 249(4)(b) of the Act. However, the “proviso” to section 249(4)(b) empowers the CIT(A), for good and sufficient reasons to be recorded in writing, to exempt an appellant from complying with the said requirement. The grievance of the assessee is that although the relevant facts were disclosed in “Form No.35”, an application invoking the aforesaid proviso could not be filed due to an inadvertent omission.

In our considered view, the omission on the part of the assessee-appellant to file an application under the “proviso” to section 249(4)(b) of the Act ought not to deprive him of the opportunity of invoking the statutory discretion vested in the first appellate authority. We find that in the case of Aneemoni Naga Raju Vs. ITO (supra), the Coordinate Bench, in similar circumstances, restored the matter to the file of the CIT(A) with liberty to the assessee to file an application under the “proviso” to Section 249(4)(b) of the Act. We thus, in terms of our aforesaid observations and considering the totality of the facts and circumstances of the case, deem it fit to restore the matter to the file of the CIT(A).

Accordingly, we set aside the impugned order of the CIT(A) and restore the matter to his file with a direction to afford the assessee an opportunity to file an application under the “proviso” to section 249(4)(b) of the Act. The CIT(A) shall first consider the said application in accordance with law and, if the assessee is granted exemption from the statutory requirement, shall thereafter dispose of the appeal afresh on merits by passing a speaking order after affording adequate opportunity of being heard to the assessee-appellant.

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