GOVINDU GARI ANJANEYULU,HYDERABAD vs. ITO, WARD -8(1), HYDERABAD

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ITA 584/HYD/2026Status: DisposedITAT Hyderabad24 July 2026AY 2016-177 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in dismissing the appeal for non-prosecution and ought to have adjudicated the grounds of appeal on merits. The delay in filing the appeal was condoned due to the counsel's negligence.

What were the facts?

The Assessing Officer initiated reassessment proceedings under section 147 as the assessee had substantial financial transactions but did not file a return of income. The CIT(A) dismissed the assessee's appeal for non-prosecution without adjudicating on merits.

What were the issues?

Whether the CIT(A) can dismiss an appeal for non-prosecution without deciding the merits, and whether the delay in filing the appeal should be condoned due to counsel's negligence.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148,Section 44AD,Section 250,Section 251,Section 246A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

For Respondent: Shri K Prasad, Sr-AR

PER RAVISH SOOD, JM:

The present appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 27/06/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 147 r.w.s 144 r.w.s 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 09/02/2024 for Assessment Year (AY) 2016-17. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal before us:

1) “The Ld. CIT(A) erred in confirming the assessment made u/s 147 r.w.s. 144 without appreciating the facts and circumstances of the case. 2) The Ld. CIT(A) erred in confirming the addition of Rs. 45,45,454/- treating the entire contract receipts as income from other sources. 3) The Ld. CIT(A) failed to appreciate that only net profit can be taxed on contract receipts and not the entire gross receipts. 4) The Ld. CIT(A) ought to have held that the income from contract receipts was liable to be estimated under section 44AD OR on reasonable profit basis. 5) The Ld. CIT(A) erred in dismissing the appeal without adjudicating the issues on merits, thereby violating the principles of natural justice. 6) The Ld. CIT(A) failed to provide a fair and meaningful opportunity of being heard to the appellant. 7) The order passed by the Ld. CIT(A) is arbitrary, mechanical and unsustainable in law. 8) The assessee may be permitted to add, withdrawn, amend OR modify any ground of appeal at the time of hearing with the leave of the Honourable ITAT.” 2. Succinctly stated, the AO, based on information that the assessee during the subject year had carried out substantial financial transactions, viz., (i) cash deposits: Rs.2,90,000/-; (ii) time deposits with Syndicate Bank: Rs.35,00,000/-; (iii) sale of immovable property: Rs.50,00,000/-; and (iv) contract receipts: Rs.45,45,454/-, but had not filed his return of income, initiated proceedings under section 147 of the Act. Notice under section 148 of the Act, dated 31/03/2023, was issued to the assessee.

3.

Thereafter, the AO vide his order passed under section 147 r.w.s 144 r.w.s. 144B of the Act, dated 09/02/2024, determined the income of the assessee at Rs.70,45,454/- after making two additions, viz., (i) addition of long term capital gains (LTCG) on sale of property: Rs.25,00,000/-; (ii) addition of contract payments received during the year: Rs.45,45,454/-.

4.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee, despite having been afforded sufficient opportunity, had failed to participate in the proceedings before the CIT(A), the latter proceeded with and upheld the addition made by the AO.

5.

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

6.

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

7.

Shri SK Gupta, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the same involves a delay of 177 days. Elaborating on the reason leading to the delay, the Ld. AR submitted that the same had crept in because of the failure on the part of his earlier counsel, who had failed to respond to the notices issued by the CIT(A) office and had left the matter unattended. The Ld. AR submitted that though the assessee was forwarding all the communications regarding the fixation of the appeal to his counsel and was expecting that he would duly comply with the same, he had failed to respond to the said notices, which thus had resulted in an ex parte order. The Ld. AR submitted that the assessee had learned about the dismissal of the appeal only when he had logged into the ITBA portal to verify the status of his case and gathered that his appeal had already been disposed of. The Ld. AR submitted that as the delay in filing of the appeal was not on account of any failure on the part of the assessee, but because of the unprofessional approach of his then counsel, the same, in all fairness and in the interest of justice, be condoned. The Ld. AR, to buttress his contention, took us through the affidavit filed by the assessee deposing to the aforesaid reason leading to the delay in filing of the present appeal.

8.

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

9.

We have given thoughtful consideration and are of the view that as the delay in filing of the present appeal had crept in not on account of any intentional or lackadaisical approach of the assessee, but on account of irresponsible approach of his then counsel, the same in all fairness and in the interest of justice merits to be condoned. Our aforesaid view that a liberal and justice-oriented approach should be adopted by an authority while considering the application for condonation of delay is fortified by the judgment 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 Income Tax Appellate Tribunal, Raipur Bench, 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 are thus of the firm conviction that, considering the assessee's explanation for the delay, which has not been proved to be false, the delay involved in the present appeal is hereby condoned.

10.

Coming to the facts of the case, we find that though the assessee has assailed the assessment order based on specific grounds of appeal, viz., (i) the AO had erred in making an addition of entire amount of contract receipts; and (ii) the AO should have assessed the income from the contract receipts @ 8% as per section 44AD of the Act, but the CIT(A) had summarily dismissed the appeal on the ground of non-prosecution.

11.

In our view, the CIT(A) ought to have adverted to and adjudicated the aforesaid grounds of appeal based on which the impugned order of assessment was assailed before him instead of summarily dismissing the appeal for want of prosecution. Our aforesaid view 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:

"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CITIA) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non- prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 12. We thus, in terms of our aforesaid observations, are unable to persuade ourselves to concur with the manner in which the CIT(A) had disposed of the appeal and set aside the matter to his file with a direction to re-decide the appeal considering the specific grounds of appeal based on which the impugned order of assessment has been assailed before him.

13.

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

Order pronounced in the open court on 24th July, 2026.

Sd/- Sd/- MADHUSUDAN SAWDIA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad Dated: 24th July, 2026. *OKK/SPS Copy to: GOVINDU GARI ANJANEYULU, 5-18 BC COLONY ,MANCHIRE VULA 1 RAJENDRA NAGAR., RANGA REDDY-500075, TELANGANA ITO, WARD -8(1), 2 SIGNATURE TOWERS, KONDAPUR., HYDERABAD-500084, TELANGANA 3 THE PCIT, HYDERABAD. 4 THE D.R., ITAT, HYDERABAD BENCH 5 GUARD FILE

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