MAHESH BABU PUJALA,HYDERABAD vs. ITO, WARD-9(1), HYDERABAD

Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A), vide order dated 06.11.2018, partly allowed the appeal by deleting addition made towards unexplained cash deposits in bank account and granting receipts and unexplained investments. Aggrieved by the order of the Ld. CIT(A), the assessee preferred further appeal before the Hon’ble ITAT. The Hon’ble ITAT, vide order in ITA No.132/Hyd/2018 dated 26.09.2022, restored the issue relating to cash receipts of Rs.1,07,35,000/- to the file of the A.O. with a direction to consider the said amount as sale proceeds of a capital asset and determine long-term capital gains after allowing consequential indexation benefit upon verification of details. The Hon’ble ITAT further held that, in respect of cash receipts of Rs.51,80,000/-, estimation of profit at 10% of such receipts would meet the ends of justice, while confirming the addition towards unexplained investment in land.

During the course of assessment proceedings, pursuant to the directions of the Hon'ble ITAT and in the second round of litigation, the A.O. issued notice calling upon the assessee to furnish documentary evidences in support of cost of acquisition for the purpose of granting indexation benefit while computing long-term capital gains on sale proceeds of Rs.1,07,35,000/-. However, according to the A.O., the assessee failed to furnish the required details and evidences. Therefore, the A.O. computed long- term capital gains by considering the entire sale consideration of Rs.1,07,35,000/- without allowing deduction towards indexed cost of acquisition. Further, in respect of cash receipts of Rs.51,80,000/-, the A.O. brought to tax 10% thereof amounting to Rs.5,18,000/- in terms of the directions of the Hon'ble ITAT. The A.O. also retained the addition towards unexplained investment in land amounting to Rs.25,87,000/- as sustained by the earlier appellate authorities and completed the assessment under Section 143(3) r.w.s. 254 of the Act on 31.03.2024 determining total income at Rs.1,85,37,919/-. However, according to the A.O., the assessee failed to furnish the required details and evidences. Therefore, the A.O. computed long-term capital gains by considering the entire sale consideration of Rs.1,07,35,000/- without allowing deduction towards indexed cost of acquisition. Further, in respect of cash receipts of Rs.51,80,000/-, the A.O. brought to tax 10% thereof amounting to Rs.5,18,000/- in terms of the directions of the Hon’ble ITAT. The A.O. also retained the addition towards unexplained investment in land amounting to Rs.25,87,000/- as sustained by the earlier appellate authorities and completed assessment under Section 143(3) r.w.s. 254 of the Act, on 31.03.2024 determining total income at Rs.1,85,37,919/-. Similar assessments were completed for A.Ys. 2013-14 and 2014- 15 pursuant to the directions of the Hon'ble ITAT.

Aggrieved by the assessment orders passed under Section 143(3) r.w.s. 254 of the Act, in the second round of litigation, the assessee preferred appeals before the Ld. CIT(A) for all the assessment years. However, the appeals were filed beyond the period prescribed under the Act. The assessee submitted that, the assessment orders were served on 26.06.2024 and there was a delay of 34 days in filing the appeals. The assessee further requested for condonation of delay and sought admission of the appeals on merits.

The Ld. CIT(A) after considering the facts of the case observed that although the assessee had sought condonation of delay, no affidavit or supporting evidences explaining the reasons for delay were furnished despite sufficient opportunities. The Ld. CIT(A) further observed that, the assessee remained non-responsive and failed to substantiate the existence of ‘sufficient cause’ as contemplated under Section 249(3) of the Act. The Ld. CIT(A), after referring to various judicial precedents governing condonation of delay, held that mere assertion that the delay was not intentional, without supporting material, would not constitute ‘sufficient cause’ for condoning the delay. Accordingly, the Ld. CIT(A) declined to condone the delay of 34 days in filing the appeals and dismissed the appeals in ‘limine’ without adjudicating the issues on merits.

Aggrieved by the orders of Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Smt. S. Sandhya, Advocate, submitted that the Ld. CIT(A) erred in dismissing the appeals filed by the assessee in ‘limine’ without adjudicating the issues on merits. The learned counsel for the assessee submitted that there was a delay of 34 days in filing of the appeals before the Ld. CIT(A) and the assessee could not file the appeals within the prescribed time due to circumstances beyond his control. The learned counsel further submitted that, the assessee has now filed an affidavit explaining the reasons for the delay along with supporting medical records. Therefore, she submitted that, the may be restored to the file of the Ld. CIT(A) for adjudication on merits.

The learned Sr. A.R. for the Revenue, Shri K. Prasad, on the other hand, supporting the order of the Ld. CIT(A), submitted that the assessee failed to furnish necessary details and evidences before the Ld. CIT(A) explaining the delay in filing of the appeals. The learned Sr. A.R. further submitted that the Ld. CIT(A), after considering the facts available on record, has rightly dismissed the appeals in ‘limine’. Therefore, he submitted that the order of the Ld. CIT(A) should be upheld.

We have heard both the parties, perused the material available on record and had gone through the orders of the authorities below. Admittedly, there is a delay of 34 days in filing of appeals before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeals filed by the assessee in ‘limine’ on the ground that the assessee failed to establish ‘sufficient cause’ for condonation of delay. It is the contention of the assessee that although the assessee could not furnish a formal condonation petition and supporting evidences before the Ld. CIT(A), the delay was neither wilful nor intentional. The assessee has filed an affidavit explaining the circumstances under which the appeals could not be filed within the prescribed time. The assessee submitted that during the relevant period, he was aged about 71 years and was suffering from various health issues including Low Back Ache coupled with Sciatica and was undergoing medical treatment and physiotherapy. The assessee has further explained that because of his ill-health, he could not personally meet and brief his counsel for filing of appeals relating to various assessment years and immediately after recovery, necessary steps were taken and the appeals were filed.

We find that the Ld. CIT(A) dismissed the appeals solely on the ground of delay of 34 days in filing of the appeals. The assessee has now explained the reasons for the delay in filing of the appeals through an affidavit supported by medical records. In our considered view, the reasons explained by the assessee for not filing the appeals within the prescribed time appear to be bona fide and reasonable. It is a settled principle of law that substantial justice should prevail over technical considerations and an assessee should not be denied an opportunity of contesting the matter on merits when reasonable cause is shown for the delay. Since the reasons given by the assessee for not filing the appeals within the time are bona fide and reasonable, in our considered view, the Ld. CIT(A) ought to have condoned the delay and adjudicated the issues on merits. Since the Ld. CIT(A) has dismissed the appeals in ‘limine’ for the delay in filing of the appeals without examining the issues raised by the assessee on merits, in our considered view, the delay before the Ld. CIT(A) deserves to be condoned. Thus, we condone the delay of 34 days in filing the appeals before the Ld. CIT(A). Since the Ld. CIT(A) has dismissed the appeals in ‘limine’ without adjudicating the issues raised by the assessee on merits, we deem it appropriate to set aside the impugned orders of the Ld. CIT(A) and restore the matters to his file for fresh adjudication in accordance with law. The Ld. CIT(A) is directed to decide the issues on merits after providing reasonable opportunity of hearing to the assessee.

In the result, all the appeals of assessee are allowed for statistical purposes.

The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file