AR FOUNDATION,CHENNAI vs. ITO, CHENNAI

The order of the NFAC, Delhi dated 27.03.2026 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1088019654(1) for the above-mentioned Assessment Year is contrary to law, fact and in circumstances of the case.

The NFAC, Delhi failed to appreciate that the statutory requirement of filing the appeal before the First Appellate Authority within 30 days from the date of receipt of the order in terms of Section 249(2) of the Act was erroneously considered as mandatory and ought to have appreciated that the said provisions envisaged discretion vested with the authority to entertain belated appeals subject to the satisfaction on the reasons shown for the belated filing in terms of Section 249(3) of the Act, thereby vitiating the impugned order in its entirety.

The NFAC, Delhi failed to appreciate that reason for filing the appeal before the First Appellate Authority belatedly by 1433 days was captured in Form No. 35 / petition for condonation and ought to have been considered the same as 'sufficient cause' and further ought to have appreciated that the non-consideration of the said reasons would vitiate the order under consideration on this preliminary issue.

The NFAC, Delhi erred in sustaining the disallowance of Rs. 11,01,154/- being 30% of the sums deducted at source amounting to Rs. 36,70,512/- for want of documentary evidence in support of remittance of such deducted sums in the Government account by invoking the provisions in Section 40(a)(ia) of the Act and further erred in sustaining the addition of such sums as income of the appellant in the computation of taxable total income without assigning proper reasons and justification.

The NFAC, Delhi failed to appreciate that the provisions in Section 40(a)(ia) of the Act had no application in the present case, there by vitiating the disputed additions made in terms of Section 40(a)(ia) of the Act in the impugned order.

The NFAC, Delhi failed to appreciate that having placed on record the challans evidencing the payments of taxes deducted and remitted to the Government account during the course of assessment proceedings, the disputed addition made mechanically made should in this regard would vitiate the impugned order passed in its entirety.

The NFAC, Delhi ought to have appreciated that having not independently examined the details of alleged non deposit of the taxes deducted by the appellant, the consequential disallowance should be reckoned as nullity in law.

The NFAC, Delhi failed to appreciate that disputed disallowance made was contrary to the provisions of the Act and ought to have appreciated that the mechanical disallowance made in this regard should accordingly be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that the claim of the disputed expenditure incurred and claimed in the computation of taxable total income was correct on various facets and ought to have appreciated that ad hoc /arbitrary disallowance of the expenditure incurred in this regard should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that in the absence of finding of discrepancies in the documentary evidences filed in support of incurrence of such expenditure and further in the absence of specific infirmity in the explanation offered in relation there to, the disputed disallowance made in this regard should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that having not independently examined the expenditure incurred towards building material cost, the disputed ad hoc disallowance of such expenditure incurred and claimed should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that scrutiny assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that having not independently examined the nature of the business income earned by the appellant for the assessment year under consideration, the consequential estimation of business income made in this regard was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that the entire re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential scrutiny assessment and appellate order passed should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.

The Appellant craves leave to file additional grounds/arguments at the time of hearing.

The order of the NFAC, Delhi dated 27.03.2026 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1088020054(1) for the above-mentioned Assessment Year is contrary to law, fact and in circumstances of the case.

The NFAC, Delhi erred in treating the appeal preferred before them as time barred in terms of Section 249(2) of the Act and consequently erred in dismissing the appeal without assigning proper reasons and justification.

The NFAC, Delhi failed to appreciate that the statutory requirement of filing the appeal before the First Appellate Authority within 30 days from the date of receipt of the order in terms of Section 249(2) of the Act was erroneously considered as mandatory and ought to have appreciated that the said provisions envisaged discretion vested with the authority to entertain belated appeals subject to the satisfaction on the reasons shown for the belated filing in terms of Section 249(3) of the Act, thereby vitiating the impugned order in its entirety.

The NFAC, Delhi failed to appreciate that reason for filing the appeal before the First Appellate Authority belatedly by 1211 days was captured in Form No. 35/petition for condonation and ought to have been considered the same as 'sufficient cause' and further ought to have appreciated that the non-consideration of the said reasons would vitiate the order under consideration on this preliminary issue.

The NFAC, Delhi erred in sustaining the levy of the penalty under Section 270A of the Act to the tune of Rs. 5, 31,009/- (50% of the tax payable) on the presumption of under-reporting of income to the tune of Rs. 34, 36,952/- without assigning proper reasons and justification.

The NFAC, Delhi failed to appreciate that the provisions in section 270A had no application to the facts of the present case and ought to have appreciated that the mechanical application of the penal provisions should be reckoned as bad in law.

The NFAC, Delhi failed to appreciate that having issued the show cause notice without incorporating the precise charge would be fatal to the penalty order under consideration and hence ought to have appreciated that such vagueness/defect in the show cause notice would vitiate the consequential penalty order passed.

The NFAC, Delhi failed to appreciate that rejection of replies filed during the assessment proceedings would not automatically result in presumption of under-reporting of income, there by vitiating the related findings in the impugned order.

The NFAC, Delhi failed to appreciate that the order of assessment has not attained finality in view of the various factual and legal discrepancies and the ought to have appreciated that same would have a bearing on the consequential penalty proceedings under consideration, there by vitiating the passing of the impugned order.

The NFAC, Delhi failed to appreciate that in the absence of independent verification of the replies filed during the assessment proceedings, the automatic conclusion of the applicability of penal provisions under consideration was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

The NFAC, Delhi failed to appreciate that in any event the mechanical action to levy penalty in overlooking the factual aspects and the provisions in terms of Section 273B of the Act would vitiate the related findings in the impugned order.

The NFAC, Delhi failed to appreciate that the disallowance of Rs.11,01,154/- being 30% of the sums deducted at source amounting to Rs. 36,70,512/- for want of documentary evidence in support of remittance of such deducted sums in the Government account by invoking the provisions in Section 40(a)(ia) of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law and further ought to have appreciated that the levy of penalty on such incorrect addition should be reckoned as nullity in law.

The NFAC, Delhi failed to appreciate that the disallowance of an ad hoc sum of Rs. 23, 35,798/- being 5% of the total expenses debited to the Profit & Loss account towards building materials amounting to Rs.4, 67, 15,969/-was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law and further ought to have appreciated that the levy of penalty on such incorrect addition should be reckoned as nullity in law.

The NFAC, Delhi ought to have appreciated that the order imposing penalty under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.

The Appellant craves leave to file additional grounds/time of hearing.

The brief facts of the case are that the assessee filed its return of income 17.10.2018 u/s. 139 of the Act declaring total income at Rs. 9,83,604/-. The case of the assessee was selected for scrutiny under CASS on the reasons “Default in TDS & Disallowance for such defaults and Income from Real Estate”. Ultimately, the case of the assessee was assessed u/s. 143(3) r.w.s. 144B of the Act vide order dated: 06.08.2021 after making additions of Rs. 11, 01,154/- u/s. 40(a) (ia) of the Act and Rs. 23, 35,798/- as ad-hoc disallowance under the head building material. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A), who in turn dismissed the appeal of the assessee in limine, as the appeal filed by the assessee was time barred by 1433 days.

The assessee being further aggrieved preferred the present appeal before us. We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee alongwith grounds taken. It is observed that the assessee was fully cooperative during the assessment proceedings before the AO, but filed appeal belatedly before the Ld. CIT (A), hence the same is dismissed in Limine. In our observation the assessee is not casual in nature and wants to participate in the proceedings before the authorities concerned without and default or delay. As far as the delay in filing of the appeal before the Ld. CIT (A) is concerned, this tribunal looking at the behaviour and conduct of the assessee before the AO and as a factual issue is involved, (which can’t be changed by the assessee by virtue of its delay) to carry a substantive justice, we deem it fit to condone the delay in filing of appeal before the Ld. CIT (A).

The matter is restored back to the file of the Ld. CIT (A) with a direction to condone the delay as directed and for rehearing of the matter based on the issue involved and grounds taken by the assessee in Form No. 35 after giving a fresh opportunity of being heard. The assessee is also directed to place an application for

In view of the above, the grounds taken by the assessee are allowed for statistical purposes with above observations and directions.

In the result, the appeal of the assessee is allowed for statistical purposes with the directions above.

As the facts of this appeal similar to the appeal no. ITA-2280/Chny/2026, except the days of delay in this case are 1211 days, our observations and directions will apply mutatis mutandis here also and the matter is restored back to the file of the Ld. CIT(A) for rehearing after giving the assessee a proper opportunity of being heard. The assessee is also directed to place an application for condonation of delay on the record of the Ld. CIT(A) and must convey the reasons for delay. The assessee is further directed to be vigilant enough this time and participate in the appeal proceedings without seeking any adjournment.

In view of the above, the grounds taken by the assessee are allowed for statistical purposes with above observations and directions.

In the result, the appeal of the assessee is allowed for statistical purposes with the directions above.