VENKATA VIJAY KRISHNA PALLA,HYDERABAD vs. ITO, WARD- 11(1), HYDERABAD

Succinctly stated, the assessee had filed his return of income for AY 2022-23 on 23/06/2022, declaring an income of Rs.11,55,390/-. Subsequently, the case was selected for scrutiny through CASS.

Thereafter, the AO vide his order passed under section 143(3) r.w.s 144B of the Act, dated 22/03/2024 determined the income of the assessee at Rs.58,45,090/- after making an aggregate addition of Rs.46,89,702/-, viz., (i) declining of the assessee’s claim for exemption of allowances:

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee had delayed filing the appeal before the CIT (A) by more than 549 days, the CIT (A) did not accept the assessee's explanation for the delay and dismissed the appeal, declining to condone it.

The assessee, 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 R Mohan Kumar, 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 by most arbitrarily rejecting the assessee’s explanation regarding the reason leading to the delay in filing the appeal. Elaborating on his contention, the Ld. AR submitted that the assessment in the case of the assessee was framed by the AO vide his order passed under section 143(3) r.w.s 144B of the Act, dated 22/03/2024, wherein after making an addition of Rs.46,69,702/- under section 69C of the Act, the income of the assessee was determined at Rs.58,45,090/-. The Ld. AR submitted that, based on the aforesaid assessment, a demand under section 156 of the Act for Rs. 19,18,268/- was determined. The Ld. AR submitted that, in order to avoid prolonged litigation, the assessee had paid the tax demand in April, 2022 and decided not to carry the matter any further in appeal. However, the AO, thereafter, vide a rectification order passed under section 154 of the Act, dated 04/09/2025, revised the tax payable as determined by the assessment order passed under section 143(3) r.w.s 144B of the Act, dated 22/03/2024at Rs. 19,18,268/- to Rs. 44,57,482/-. The Ld. AR submitted that the assessee appellant had thereafter consulted a tax professional, who advised him to file an appeal against the additions made in the assessment order, dated 22/03/2024, as a result whereof the present appeal was filed on 21/05/2025, wherein the delay therein involved if reckoned from the date of the rectification order was only 21 days, but the same if from the date of the original assessment order, dated 22/03/2024, worked out at 549 days. The Ld. AR submitted that as the delay in filing the appeal had crept in because of bona fide reasons, wherein the assessee who had initially chosen not to assail the impugned order of assessment passed under section 143(3) r.w.s 144B of the Act, dated 22/03/2024 and had paid the demand of Rs.19,18,268/-, was pushed into litigation pursuant to the order passed by the AO under section 154 of the Act, dated 04/09/2025, wherein the tax liability was revised at Rs.44,57,482/-, there was a justifiable reason for the assessee to have not filed an appeal against the impugned order of assessment passed under section 143(3) r.w.s 144B of the Act, dated 22/03/2024. The Ld. AR submitted that, in all fairness and in the interest of justice, the CIT(A) ought to have condoned the delay in the assessee's appeal before him.

Per contra, Shri K Prasad, Learned Senior Departmental Representative (for short, “Ld. Sr. DR”) submitted that as the delay of 549 days involved in the appeal filed by the assessee before the CIT(A) was inordinate and not supported by any justifiable reason, the CIT(A) had rightly dismissed the appeal on the ground of condonation.

We have given thoughtful consideration to the facts leading to the delay in filing of the appeal by the assessee appellant before the CIT(A). As observed by us hereinabove, the assessee had initially decided not to assail the impugned order of assessment passed under section 143(3) r.w.s 144B of the Act, dated 22/03/2024, and had deposited the demand raised vide notice under section 156 of the Act, dated 22/03/2024. However, it was only pursuant to the order passed by the AO under section 154 of the Act, dated 04/09/2025, wherein the tax liability was revised at Rs.44,57,482/- that the assessee, as advised by a tax professional, decided to assail the impugned demand by filing an appeal before the CIT(A). However, as the assessee had to revisit his earlier view of not contesting the tax liability as was initially raised vide the order passed under section 143(3) r.w.s 144B of the Act, dated 22/03/2024, the appeal which was filed by him before the CIT(A) based on the revised tax liability of Rs.44,57,482/- involved a delay of 549 days. In our view, there is a justifiable reason for the assessee-appellant's delay in filing the appeal before the CIT(A), which the latter, by adopting a justice-oriented and liberal approach, ought to have condoned. We thus, not being able to persuade ourselves to concur with the view taken by the CIT(A), who had declined to condone the delay in the appeal filed by the assessee before him, set aside his order and restore the matter to his file with a direction to condone the delay and decide the appeal on the specific grounds based on which the impugned order of assessment has been assailed before him.

In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.