Malireddy Srinath, vs. The Income Tax Officer

The present appeal has been preferred challenging the order dated 24.12.2025 passed by the Income Tax Appellate Tribunal (hereinatter rei-erre J to as "the Tribunal")' l. 81 the impu3ned order, the learned Tribunal affirmed the order dated 27'08 2025 passed b1' the Commissioner of Income Tax (Appeals) (hereinafter referred to as "the CIT (Appeals)")' whereby the appeal preferred by the appellant was dismissed on the ground that it was barred by limitation.

The appeal before the CIT (Appeals) was filed with a delay of 570 days, i.e., approximately 18 months. The explanation offered by the appellant for the delay was that he had not been served with a copy of the assessment order dated 01.12.2023 and that he came to know of the said assessment order only when recovery proceedings were initiated. Immediately thereafter, the appeal came to be filed.

Leamed counsel for the appellant submits that the explanation furnished by the appellant for condonation of delay was not properly appreciated by the CIT (Appeals), who dismissed the appeal on a purely technical ground. According to him, the Tribunal also failed to appreciate the explanation while affirming the order of the CIT (Appeals). He, therefore, prays that both the orders be set aside and the matter be remanded to the CIT (Appeals) for consideration of the appeal on its own merits, without being influenced by the question of limitation.

Leamed counsel for the appellant further contends that the appellant has a strong case on merits. Firstly. according to him, the reassessment proceedings themselves were initiated'b'dpnd the period lotat ta'r,. Secondly, it is contended that the assessment e -ral, r,nasmuch as the tax has been computed on the ,u*or",i ins,ead of the taxable income of the assessee' According to him, :hese issues go to the very root of the iurisdiction and tegality of the assossment proceedings and ought to have been examined bY the rPPerllate authoritY irresPectlve of the aPPellant's particiPation in the Proceedings. T. It is further conrended that if the initiation of the reassessment proceedings itself is frlund to be contrary to the statutory provlslons' the entire procee Cings culminating in the assessment order would stand vitiated' According to the appellant' had the CIT (Appeals) examined this aspect' the assessment order under challenge could not have been sustaitred' lnstead' the appeal came to be dismissed solely on the technical 1loutd ofdelay of570 days'

Leamed <;otrnsel tbr the appellant' therefore' submits that' subject to any c'rndiiion that this Court may impose' one opportunity be granted to th: appellant to contest the matter on merits before the CIT (Appeals)' so tttat the legality of the reassessment proceedings as well as the asscssment order may be adjudicated in accordance with law. 'f\

Per contra,leamed Senior Standing Counsel appearing for the Income Tax Department opposes the appeal contending that a delay of 18 months is substantial and that the appellant has failed to fumish any cogent or convincing explanation for such inordinate delay. It is further contended that this not a case where the assessment proceedings were conducted ex parte. On the contrary, the appellant had participated in the proceedings before the Assessing Officer, but failed to prefer the starutory appeal within the prescribed period of limitation. IS 10. At this stage, leamed counsel for the appellant submits that the appellant is a small retail trader dealing in plastic products and that if he is compelled to pay the tax assessed by the Assessing Officer, he would suffer irreparable financial hardship. It is further submitted that unless an opportunity is granted to contest the assessment on merits, the appellant would be left without any effective remedy, particularly when the very initiation of the reassessment proceedings is alleged to be barred by limitation. I l. Having heard the learned counsel appearing fbr the parties and upon perusal of the material available on record, it is not in dispute that there is a delay of 570 days in filing the appeal before rhe crr (Appeals). The explanation offered by the appellant is that the assessment order was never served upon him and that he became aware of the san.e only upon initiation of recovery proceedings' Primafocie, the order llassed by the CIT (Appeals) does not appear to have adequatell corsidered this explanatiou and has instead proceeded to disn.riss ttre appeal on technical grounds'

Atrother aspect ';rhich prima facie emerges from the record is that the notice under Section 148 appears to have been issued on 29.04.2022, rvhere rs. according to the appellant, it ought to have been issued orr or befort: 31.03.2022. Leamed Senior Standing counsel for the Departrnent ltas not been able to fumish any satisfactory explanation, at this stapie, with regard to the said contention'

If the afores rid contention is ultimately found to be correct, the very initiation of [he reassessment proceedings may stand vitiated' This aspect has no, bee:n examined either by the CIT (Appeals) or by the Tribunal, both of 'Nhich conflned themselves to the question of limitation and rejr:cterl the appellant's case primarily on technical grounds.

Be that as it may, considering the prima t'acie case made out by the appellant regarding the legality of the reassessment proceedings, coupled with the contention that the assessment has been made on the total tumover instead of the taxable income of the assessee, we are of the considered opinion that the ends of justice would be served by granting one opportunity to the appellant to contest the matter before the CIT (Appeals) on all available grounds.

At the same time, having regard to the inordinate delay of 570 days in preferring the appeat, we are of the view that the appellant should be put on terms. Accordingly, the delay is condoned subject to the appellant paying costs of Rs.50,000/- to the State Legal Services Authority within a period of two (02) weeks from today. Upon production of the receipt evidencing payment of costs before the CIT (Appeals), the appellate authority shall restore the appeal to its original number and proceed to decide the same on its own merits, in accordance with law, without rejecting it on the ground of limitation.

Consequently, the order dated 24.12.2025 passed by the Income Tax Appellate Tribunal in ITA No. 1721lHyd/2025 fot the Assessment Year 2015-16, as well as the order dated 27.08.2025 passed by the CIT (Appeals) in Appeal No. NFAC/2014- 1 5/ 1 05 I 1724, are hereby set aside. l'

Accordinl;ly, the present appeal stands allowed, subject to the condition regarrling payment of costs as indicated above. All the contentions avarlablr: to both the parties are left open to be urged before the CIT (Appeals), who shall decide the appeal independently and strictly in ac:ordance with law. No order as to costs Pending nriscellaneous applications, if any, shall also stand closed. K, SRINIVASA RAO JOINT REGISTRAR /I// SECTION OFFICER 1 . The lncome Ta>: Appellate Tribunal, Hyderabad Bench 'B', Hyderabad

One CC to Sri A V Raghu Ram, Advocate [OPUC]

One CC to Ms J Sunitha (Senior Standing Counsel for lncome Tax) [OPUC]

Two CD Copies Sa/GNK \q To,