ASHTALAKSHMI DEVALAYA COMMITTEE,HYDERABAD vs. ITO, EXEMPTION WARD -1(1), HYDERABAD

Succinctly stated, the assessee had filed its return of income for AY 2020- 21 on 18/12/2020, declaring NIL income. Subsequently, the case of the assessee was selected for “limited scrutiny” through CASS.

The AO passed order under section 143(3) r.w.s 144B of the Act, dated 09/09/2022 after declining the assessee’s claim for depreciation of Rs.49,03,592/- and determined its income at the same amount.

Aggrieved, the assessee carried the matter in appeal before the CIT(A).

Ostensibly, a perusal of the CIT(A) order reveals that he had observed that the assessee vide its letter, dated 01/05/2025 had submitted that it had in order to settle the issue/dispute, opted for VSVS, 2024 and accordingly filed declaration in Form-1 before the designated authority, which had issued Form-2 vide its order, dated 16/04/2025. It was further stated that the taxes as determined by the designated authority in Form-2 had been paid. The assessee further had stated that since a proof of withdrawal of appeal was to be filed before the designated authority while filing Form-3, therefore, liberty was sought to withdraw the appeal. For the sake of clarity, we deem it apposite to cull out the letter, dated 01/05/2025 as was filed by the assessee before the CIT(A), as under:

The assessee, aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

Shri T Chaitanya Kumar, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee society, at the threshold of hearing of the appeal submitted that the same involves a delay of 52 days. Elaborating on the reasons leading to the delay, the Ld. AR submitted that the same had crept in solely on account of bona fide and inadvertent mistake, wherein the assessee society, which had filed an application under Vivad-se-Viswas Scheme (VSVS) pertaining to the penalty proceedings under section 270A of the Act for the year under consideration, remained under a bona fide belief that the assessment proceedings would also stand covered by the said application. The Ld. AR submitted that the assessee society, thereafter, on learning about its aforesaid mistaken belief taken necessary steps and filed the present appeal, which by the time involved a delay of 52 days. The Ld. AR had taken us through the application filed by the assessee society seeking condonation of delay a/w an affidavit, dated 15/09/2026 filed by the Chairman of the assessee society. The Ld. AR submitted that as the delay in filing of the present appeal was for bona fide reasons and not on account of any lackadaisical approach, the same in all fairness and in interest of justice be condoned.

Per contra, Shri B. Laxmi Kanth, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) objected to the seeking of condonation of the delay involved in filing the present appeal by the assessee society.

We have given thoughtful consideration and are of a firm conviction that considering the facts leading to the delay involved in filing the present appeal, it can safely be concluded that the same had crept in for bona fide reasons. We thus, in all fairness and in the interest of justice, condone the delay. Our aforesaid view is fortified by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. ITO (2025) 305 Taxman 83 (SC). The Hon'ble Apex Court, while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal.

Coming to the merits of the case, we have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record.

Shri T Chaitanya 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 dismissed the appeal filed by the assessee based on misconceived facts. Elaborating on his contention, the Ld. AR submitted that the assessee had opted for VSVS, 2024 regarding the penalty imposed in its case and not for the quantum assessment, and the CIT(A) had erroneously dismissed the present appeal based on misconceived facts.

We have given thoughtful consideration to the aforesaid contention of the Ld. AR.

In our view, the aforesaid claim of the assessee that it had opted for VSVS, 2024 not regarding the quantum assessment framed in its case by the AO vide his order passed under section 143(3) r.w.s 144B of the Act, dated 09/09/2022, but regarding the penalty imposed in its case, and the CIT(A) on misconceived facts has misconstrued its submission, dated 01/05/2025 and dismissed the appeal is neither discernible from the record before us. We thus, in terms of our aforesaid observations, set aside the matter to the file of the CIT(A) who is directed to verify the correct factual position. In case, the claim of the Ld. AR that he had not opted for VSVS, 2024 is found to be correct and in order, then the CIT(A) shall restore the appeal and dispose of the appeal after dealing with the specific contentions based on which the impugned order of assessment has been assailed before him.

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