DHRUVA BAR AND RESTAURANT,HYDERABAD vs. INCOME TAX OFFICER, WARD-8(1), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 1495/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2017-18) Dhruva Bar and Vs. ITO Restaurant Ward 8(1) Hyderabad Hyderabad PAN: AAKFD8092M (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA A Srinivas राज� व �ारा/Revenue by: Smt. Uppaluri Meena, Sr.AR सुनवाई की तारीख/Date of hearing: 10/06/2026 घोषणा की तारीख/Pronouncement: 17/06/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Dhruva Bar and Restaurant (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 22.07.2025 for the A.Y. 2017-18. 2. The assessee has raised the following grounds of appeal:

Assessing Officer (“Ld. AO”) observed that the assessee had deposited cash amounting to Rs.1,38,03,312/- in its bank account and had also withdrawn cash amounting to Rs.59,63,894/- from its bank account during the year under consideration. Since no return of income was filed by the assessee for the relevant assessment year, reassessment proceedings under section 147 of the Income Tax Act, 1961 (“the Act”) were initiated by the Ld. AO. Accordingly, notice under section 148 of the Act dated 31.03.2021 was issued by the Ld. AO to the assessee. However, the assessee neither filed any return of income in response to the said notice nor complied with the subsequent notices issued during the course of assessment proceedings. In the absence of any explanation from the assessee, the Ld. AO treated the entire cash deposits and cash withdrawals aggregating to Rs.1,97,67,206/- as unexplained money under section 69A of the Act and completed the assessment under section 147 read with sections 144 and 144B of the Act vide order dated 29.03.2022 making an addition of Rs.1,97,67,206/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). However, there was a delay of 148 days in filing the appeal before the Ld. CIT (A). The Ld. CIT(A) declined to condone the delay and consequently dismissed the appeal in limine without adjudicating the issues on merits. 5. Aggrieved with the order of the Ld. CIT (A), the assessee is now in appeal before the Tribunal. The Learned Authorized Representative ( “Ld. AR”) submitted that the assessee was engaged in the business of liquor trading. During

the relevant assessment year, the liquor license of the assessee expired and the assessee could not succeed in obtaining its renewal. Consequently, the business activities of the assessee came to a halt and were ultimately discontinued. The Ld. AR further submitted that due to closure of business operations, the assessee was not regularly monitoring the e-mail address through which the notices issued by the Department were being communicated. As a result, the assessee remained unaware of the reassessment proceedings initiated by the Ld. AO and therefore could not comply with the notices issued during the assessment proceedings. It was also submitted that the assessee came to know about the assessment proceedings only upon receipt of the demand notice from the Department. Immediately thereafter, the assessee approached its counsel and took necessary steps for filing an appeal before the Ld. CIT(A). In the process, a delay of 148 days occurred in filing the appeal. The Ld. AR submitted that the delay was neither deliberate nor intentional and was caused due to bona fide circumstances beyond the control of the assessee. Accordingly, he prayed that the delay in filing the appeal before the Ld. CIT(A) be condoned and the matter be restored to the file of the Ld. CIT(A) for adjudication on merits. 6. The Ld. AR further submitted that the assessee has a strong case on merits. According to him, the Ld. AO has treated both cash deposits as well as cash withdrawals as unexplained income, whereas the said transactions pertain to the business activities of the assessee. Therefore, substantial prejudice would be caused if the assessee is denied an opportunity of hearing on merits.

while examining a petition for condonation of delay. The Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal v. CIT (174 taxmann.com 21), has held that a justice-oriented and liberal approach should be adopted while considering applications for condonation of delay. Considering the totality of the facts and circumstances of the case, particularly the fact that the business activities of the assessee had ceased due to non-renewal of the liquor license, we find the explanation offered by the assessee to be reasonable and satisfactory. Further, the delay involved is only 148 days. We are therefore inclined to condone the delay in filing the appeal before the Ld. CIT(A). 9. We also find that the Ld. CIT(A) has dismissed the appeal solely on the ground of limitation without adjudicating the grounds raised by the assessee on merits. It is a settled principle that, wherever possible, disputes should be adjudicated on merits rather than being rejected on technical grounds. Accordingly, in the interest of substantial justice, we condone the delay of 148 days in filing the appeal before the Ld. CIT(A), set aside the impugned order of the Ld. CIT(A) and restore the matter to his file with a direction to adjudicate the issues raised by the assessee on merits in accordance with law after providing adequate opportunity of hearing to the assessee. The assessee is also directed to extend full cooperation during the appellate proceedings and furnish all necessary details and documentary evidences as may be called for by the Ld. CIT(A).