MANDYA ZILLA PADAVIPOORVA COLLEJU UPANYASAKARA GRUHANIRMANA SAH SANGHA NI,MANDYA vs. ITO, WARD-1 & TPS, MANDYA

PER WASEEM AHMED, ACCOUNTANT MEMBER: The present appeal filed by the assessee pertaining to A.Y. 2019-20 is directed against the order of the Ld. Commissioner of Income Tax (Appeals) [hereafter “Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) dated 22.02.2024.

ITA 2155/BANG/2026 MANDYA ZILLA PADAVIPOORVA COLLEJU UPANYASAKARA GRUHANIRMANA SAH SANGHA NI occurred due to circumstances beyond its control. It was submitted that the then manager of the assessee-society had misappropriated its funds and was involved in fraudulent activities. After the fraud was discovered, the said manager absconded. The assessee initiated legal action against him and also lodged an FIR. These events caused serious disruption in the functioning and administration of the society.

2.1 It was further submitted that, due to the above internal crisis, the management of the society was completely restructured and a new management committee took charge. The previous manager had either concealed or failed to communicate the notices and proceedings relating to income tax matters. Consequently, the new management was not aware of the assessment proceedings or the assessment order passed against the assessee.

2.3 The assessee stated that the new management became aware of the assessment order only during an internal review. Thereafter, the assessee obtained professional advice by engaging a tax consultant and filed the appeal immediately thereafter, without any further delay. Thus, according to the assessee, the delay was attributable to the fraudulent conduct of the former manager and the consequential change in management. It was neither deliberate nor due to the assessee's negligence. The assessee, therefore, requested the Ld. CIT(A) to condone the delay of 711 days u/s 249(3) of the Act and decide the appeal on merits.

3.1 The Ld. CIT(A) further observed that the delay of 711 days was inordinate and could not be treated as a marginal delay. According to him, in cases involving such substantial delay, the assessee was required to establish that it had acted diligently and that the delay occurred for reasons beyond its control. It held that the explanation furnished by the assessee did not satisfactorily explain the entire period of delay. The Ld. CIT(A) also observed that there was

ITA 2155/BANG/2026 MANDYA ZILLA PADAVIPOORVA COLLEJU UPANYASAKARA GRUHANIRMANA SAH SANGHA NI nothing on record to show that the assessee had made any effort to file the appeal within the prescribed period.

3.2 In holding so, the Ld. CIT(A) relied upon several case laws, including the decision of the Hon'ble Supreme Court in Ramlal v. Rewa Coalfields Ltd. reported in AIR 1962 SC 361, and the decision of the Hon'ble Supreme Court in Perumon Bhagvathy Devaswom Perinadu Village v. Bhargavi Amma (Dead) by LRs. (2008) 8 SCC 321 and Balwant Singh (Dead) v. Jagdish Singh (2010) 8 SCC 685, and observed that though the expression "sufficient cause" should receive a liberal construction, such benefit cannot be extended where the delay is attributable to negligence, inaction or lack of bona fides. Accordingly, the Ld. CIT(A) held that the assessee had failed to establish sufficient cause for the inordinate delay in filing the appeal. He, therefore, declined to condone the delay and consequently dismissed the appeal in limine without adjudicating the grounds raised by the assessee on merits.

4.1 The Ld. AR, therefore, prayed that the delay in filing the appeal before the Ld. CIT(A) may be condoned. The Ld. AR further submitted that since the assessment was also completed ex parte, the matter may be restored to the file of the AO for fresh assessment after providing reasonable opportunity to the assessee as per law.

ITA 2155/BANG/2026 MANDYA ZILLA PADAVIPOORVA COLLEJU UPANYASAKARA GRUHANIRMANA SAH SANGHA NI limine. It is an admitted position that the assessment was completed u/s 147 r.w.s. 144 r.w.s. 144B of the Act and substantial additions were made to the income of the assessee. The appeal filed before the Ld. CIT(A) was delayed by 711 days.

6.1 The explanation of the assessee is that its earlier manager had misappropriated the funds of the society and was involved in fraudulent activities. After detection of the fraud, the said manager absconded. This resulted in serious disruption in the affairs of the society. The management was thereafter restructured and a new management committee took charge. It was specifically claimed that the earlier manager had concealed or failed to communicate the income tax notices and proceedings to the new management.

6.2 We find that the above explanation cannot be rejected merely on the ground that the FIR against the erstwhile manager was filed on 18.01.2022, whereas the assessment order was passed on 22.02.2024. The Ld. CIT(A) has considered this time gap as a circumstance against the assessee. However, in our view, the events are required to be considered in their entirety.

6.3 The ROI for A.Y. 2019-20 was required to be filed by 31.10.2020. However, no ROI was filed by the assessee. The FIR against the erstwhile manager was thereafter filed on 18.01.2022. The income escaping assessment proceedings were initiated only in February 2023. Thereafter, several notices were issued during the proceedings u/s 148A of the Act as well as during the assessment proceedings. Despite such notices, there was no response filed by the assessee, and ultimately the assessment itself came to be completed ex parte on 22.02.2024 u/s 147 r.w.s. 144 r.w.s. 144B of the Act.

6.4 These circumstances, in our considered view, lend support to the explanation of the assessee. If the new management was actually aware of the income tax proceedings, ordinarily some response to the repeated notices would have been expected. The fact that even the ROI was not filed and that the subsequent proceedings remained unattended despite several notices supports the assessee's claim that, after the fraud committed by the earlier manager and the resulting change in management, the new management was not properly aware of the pending income tax matters. Thus, the absence of compliance during the assessment proceedings cannot, in the peculiar facts of the present case, be viewed only as negligence. It also corroborates the explanation given by the assessee for the delay.

ITA 2155/BANG/2026 MANDYA ZILLA PADAVIPOORVA COLLEJU UPANYASAKARA GRUHANIRMANA SAH SANGHA NI 6.5 We are conscious that the delay of 711 days is substantial. The Ld. CIT(A) has also observed that such delay cannot be treated as a marginal delay and that the assessee must establish sufficient cause. However, while considering an application for condonation of delay, the surrounding circumstances and the conduct of the assessee have to be considered as a whole. The object is to advance substantial justice. Where a reasonable cause is shown and there is no material to establish that the delay was deliberate or intended to derive any undue advantage, a matter should ordinarily be decided on merits rather than being rejected only on the ground of limitation.

6.6 In the present case, the fact of fraud by the earlier manager is supported by the FIR dated 18.01.2022. The subsequent sequence of events, including non-filing of the ROI and non- compliance with several notices issued during the reassessment proceedings, lends support to the explanation regarding disruption in the affairs of the society and lack of awareness of the new management. We therefore find sufficient cause for condoning the delay. Accordingly, in the interest of substantial justice, the delay of 711 days in filing the appeal before the Ld. CIT(A) is condoned. The order of the Ld. CIT(A) dismissing the appeal in limine is accordingly set aside. The record shows that the Ld. CIT(A) had not adjudicated the grounds raised by the assessee on merits.

6.7 We further note that the assessment order itself was passed ex parte. Considering the peculiar circumstances discussed above, we are of the view that the assessee should be provided one more effective opportunity to place all relevant facts and evidence before the AO. We, therefore, set aside the assessment order and restore the entire matter to the file of the AO for making a de novo assessment in accordance with law. The AO shall provide a reasonable opportunity of being heard to the assessee. The assessee is also directed to fully cooperate with the assessment proceedings and furnish the information and documents called for by the AO without seeking unnecessary adjournments.

6.8 At the same time, we cannot completely overlook the fact that the assessee remained non-compliant for a considerable period and the delay in filing the appeal is substantial. Therefore, while granting the above relief, we consider it appropriate to impose a cost of Rs. 5,000/-, which shall be paid by the assessee to the Income Tax Department. The assessee shall furnish proof of such payment before the AO. In the result, the appeal of the assessee is allowed for statistical purposes in the above terms.

ITA 2155/BANG/2026 MANDYA ZILLA PADAVIPOORVA COLLEJU UPANYASAKARA GRUHANIRMANA SAH SANGHA NI 7. In the result, the appeal of assessee is allowed for statistical purposes.

Order pronounced in the open court on 7th October, 2026.

Sd/- Sd/-

SANDEEP SINGH KARHAIL WASEEM AHMED JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore Dated: 7th October, 2026. Vms

Copy to: MANDYA ZILLA PADAVIPOORVA COLLEJU UPANYASAKARA GRUHANIRMANA SAH SANGHA NI, 1 4406/G ,IST CORSS BHANDIGOWDA BADAVANE, MANDYA-571401, KARNATAKA

ITO, WARD-1 & TPS, CAUVERY PARK ROAD, MANDYA - 571401, 2 KARNATAKA, MANDYA-571401, KARNATAKA

3 THE PCIT / CIT, 4 THE D.R., ITAT, BANGALORE BENCH 5 GUARD FILE

By Order

ASSISTANT REGISTRAR / I.T.A.T., BANGALORE P G Digitally signed by P G RAJANI RAJANI Date: 2026.10.21 12:20:25 +05'30'