SRI VENKATESWARA EDUCATION SOCIETY,CHIRALA vs. INCOME TAX OFFICER, EXEMPTION WARD, GUNTUR

Original assessment was framed by the AO vide his order passed under section 144 r.w.s 144B of the Act, dated 19/04/2021, determining the income of the assessee trust at Rs.2,77,433/-, i.e., as was originally returned.

Thereafter, the Principal Commissioner of Income Tax (Exemption), Hyderabad (for short, “PCIT”), vide his order passed under section 263 of the Act, dated 21/03/2024, set aside the order passed by the AO under section 144 r.w.s. 144B of the Act, dated 19/04/2021, with a direction to the AO to re-do the assessment after verification of the issues in accordance with law.

Thereafter, the AO, giving effect to the directions of the PCIT, issued notices under section 142(1) of the Act, dated 28/01/2025 and 11/02/2025, wherein the assessee trust was called upon to furnish the requisite details. However, the assessee trust failed to comply with the aforesaid notices. Also, the assessee trust failed to comply with the notice issued under section 144 of the Act on 24/02/2025, wherein it was called upon to explain why the assessment may not be framed to the best of judgment.

Considering the aforesaid facts, the AO vide his order passed under section 144 r.w.s. 263 r.w.s. 144B of the Act, dated 24/03/2025, determined the income of the assessee at Rs.56,13,749/- after making two additions/disallowances, viz., (i) disallowance of the amount advanced by the assessee trust to Marpu Trust in violation of section 11(5) r.w.s. 13(1)(d) of the Act; and (ii) addition/disallowance of the amount that was claimed by the assessee trust to have been advanced to PSB B.Ed College (Rs.23,79,469/-) and to PSR D.Ed College (Rs.11,90,000/-): Rs.35,69,469/-.

Aggrieved, the assessee trust carried the matter in appeal before the CIT(A). However, as the assessee trust had delayed the filing of the appeal before the CIT(A) by 30 days (sic), the latter dismissed the appeal on the ground of limitation.

The assessee trust, 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.

Shri GVN Hari, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred in law and facts of the case in brushing aside the explanation of the assessee trust and summarily dismissed the appeal in limine on the ground of limitation. Elaborating on his contention, the Ld. AR submitted that the delay of 31 days, which is not inordinate, had crept in the filing of the present appeal for the reason that the assessee trust had initially approached its part-time accountant, who had not brought it to the knowledge of its members that he had failed to submit the requisite reply with the AO, which, thus, had resulted to an ex-parte order under section 144 r.w.s. 264 r.w.s 144B of the Act, dated 24/03/2025. The Ld. AR submitted that as the assessee trust had initially remained unaware of the framing of the assessment vide an ex-parte order, dated 24/03/2025, thus on gathering about the same, had approached a new Tax Professional and acting upon his advice filed the appeal before the CIT(A), which by the time involved a delay of 30 days. The Ld. AR submitted that as the delay in filing of the appeal before the CIT(A), which was not inordinate, had crept in for bona fide reason and not on account of any lackadaisical approach of the assessee trust, the same in all fairness and in the interest of justice ought to have been condoned by him.

Per contra, Shri A.P. Babu, Learned Senior Departmental Representative (for short, “Ld. Sr. DR”), relied upon the orders of the authorities below.

We have given thoughtful consideration to the facts leading to the delay involved in filing the present appeal before the CIT(A). In our view, there is a substance in the Ld. AR’s contention that the delay in filing of the present appeal had crept in because of bona fide reasons, i.e., unawareness of the members of the assessee trust who being dependant upon a part time accountant, had remained oblivion of the fact that the latter had not filed the requisite reply/details in the course of the assessment proceedings, which had resulted to the framing of the assessment vide an ex-parte order under section 144 r.w.s. 263 r.w.s 144B of the Act, dated 24/03/2025. Also, the assessee trust had remained unaware of the assessment framed in its case vide the aforesaid ex parte order of assessment. In our view, as the members of the assessee trust being dependent on their part-time accountant, are stated to have remained unaware about the framing of the assessment vide an ex-parte assessment, therefore, the CIT(A), taking cognizance of the aforementioned facts, ought to have adopted a liberal and justice-oriented approach instead of summarily dismissing the appeal on the ground of limitation.

It is a settled proposition of law that the right of appeal is a valuable statutory right and ordinarily an assessee should not be denied an opportunity of prosecuting the appeal on the merits unless there is deliberate inaction, gross negligence or want of bona fides. In our view, the power vested in the appellate authority under Section 249(3) of the Act is intended to advance the cause of substantial justice and not to defeat it on technical considerations. We are of the firm conviction that an appellate authority should adopt a justice-oriented and liberal approach when considering an application by the appellant seeking condonation of the delay involved in his appeal. 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 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 false, the CIT(A) should have adopted a justice-oriented approach and decided the lis on the merits rather than terminating the proceedings on technical grounds. Accordingly, respectfully following the ratio laid down by the Hon'ble Apex Court in the case of Vidya Shankar Jaiswal Vs ITO (supra), wherein it is emphasized that the approach of the appellate authorities while considering applications for condonation of delay should be guided by the principles of substantial justice rather than by adopting a hyper- technical approach, we are of the considered view that the CIT(A) ought to have liberally considered the explanation offered by the assessee and condoned the delay.

We thus, in terms of our aforesaid observations, set aside the order of the CIT(A) and restore the matter to his file with a direction to condone the delay and dispose of the appeal considering the specific grounds of appeal based on which the impugned order of assessment has been assailed before him.

As we have restored the matter to the file of the CIT(A), we refrain from expressing any opinion on the merits of the additions/disallowances made by the AO, which, thus, are left open to be adjudicated by the CIT(A) in accordance with law.

In the result, the appeal filed by the assessee trust is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 10th July, 2026. Sd/- Sd/- OMKARESHWAR CHIDARA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad. Dated: 10th July, 2026. *OKK/SPS Copy to: SRI VENKATESWARA EDUCATION SOCIETY, D.NO.22-17-2(9), PRATHIPATI 1 NILAYAM, WOOD NAGAR, CHIRALA-523155, ANDHRA PRADESH INCOME TAX OFFICER, EXEMPTION WARD, 2 O/o. ITO, LAKSHMIPURAM ROAD, GUNTUR-522006, ANDHRA PRADESH 3 THE PCIT, GUNTUR. 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE