Sri Madhusudhan Reddy Lakkireddy vs. Income Tax Officer, Ward - 1

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ITTA/32/2026HC TelanganaHBHC01011546202625 February 2026Bench: P.SAM KOSHY,NARSING RAO NANDIKONDA7 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the ITAT was not justified in not appreciating the merits of the case and deciding the appeal based on grounds not raised by the parties. The Court observed that the ITAT had focused on the time taken by the CIT(A) to dispose of the appeal, which was filed on 20.02.2020. The Court acknowledged that the COVID-19 pandemic, which lasted for approximately two years, significantly impacted the timelines for disposing of appeals filed during that period. The ITAT's observation that the CIT(A) took more than five and a half years was considered to have missed the context of the pandemic and the subsequent backlog. The Court found that the CIT(A) had indeed considered the grounds raised by the assessee. Consequently, the High Court set aside the ITAT's order and remanded the matter back to the ITAT for a fresh disposal on its merits, after due consideration of all grounds raised by the appellant. The appeal was allowed.

What were the facts?

The assessee, Mr. Madhusudhan Reddy Lakkireddy, filed an appeal before the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2017-2018. The ITAT, by an order dated 31.10.2025, dismissed the appeal. The assessee's primary contention before the High Court was that the ITAT had not decided the appeal on its merits but rather on a technicality. The ITAT's decision was based on the considerable time taken by the Commissioner of Income Tax (Appeals) (CIT(A)) to dispose of the assessee's appeal, which was filed on 20.02.2020 and culminated in an order dated 20.08.2025. The ITAT noted that the assessee had sought adjournments and had not filed written submissions before the CIT(A), but found the 5.5 years taken by the CIT(A) to be incomprehensible.

What were the issues?

1. Whether the Income Tax Appellate Tribunal was justified in not appreciating the merits of the case and deciding the appeal based on grounds which were not raised by either of the parties? (Question of law) Assessee's Contention: The assessee argued that the ITAT failed to decide the appeal on its merits and instead dismissed it on a technicality concerning the delay in the CIT(A)'s order. The assessee contended that the ITAT overlooked the fact that the CIT(A) had considered the grounds raised by the assessee and reached specific findings, which were then challenged before the ITAT. The assessee also pointed out that the delay in the CIT(A)'s proceedings was partly attributable to the COVID-19 pandemic, which was not considered by the ITAT. Revenue's Contention: The judgment does not record any specific contentions made by the revenue before the High Court.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80,Section 56

AI-generated summary — verify with the full judgment below

t3447 1 IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY, I-HE TWENTY FIFTH DAY OF FEBRUARY T\^JO THOUSAND AND TWENTY SIX PRESENT THE HONOI.JRABLE SRI JUSTICE P,SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA INCOME T TRIBUNAL APPEAL 32 0F 2026 lirccme Tax Tribunal Appeal Under Section 260A of the lncome Tax Act,1961 against the Order dated 3^t-10-2025 passed in ITA No. 14161{yd12025 for the Aisessment Year 2017-2AiB on the file of the lncome Tax Appellate Tribunal, Hyderabad'SIUC' Bench, l-{-i'rjerabad. Between Sri tviadhusudhan Reddy Lakkireddy,S-2-238, Shivaji Nagar, Siddipet - 502103 Teiar:gana, lndia. ...APPELLANT AND lncoine Tax Officer, Ward - 1, Siddipet, T.S ...RESPONDENT Counsei t":r the Appellant: Sri. A V Raghu Ram Counsel for the Respondents: Sri. K. Sudhakar Reddy (Senior Standing Counsel for lncome Tax Department) The Courf clelivered the fol!lwing: JUDGMENT

TN TIIE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAI) TI{E IIONOURAIIT,E SRT.ITJSTICti P.SAM KOSHY ANI) THE HONOUITAI}LE SRI JUSTICE NARSTNG RAO NANDIKONDA ITTA No.32 of 2026 Datc:25.02.2026 Between: Mr.Madhusudhan Rcddy Lakkircddy. Siddipet. ... Petitioner And lncome Tax Offlcer. Ward- l. Siddipet, T.S. ...Respondent JUDGMENTz (par llon'ble Sri.Iu.stic.a p.Sant Koshy) Mr.A.v.Raghu Rarn. learned coLrnser appearing lor the petitioner and Mr.K.sudhakar ltcddy,, learned Senior Standing counsel for the lncome '[ax Departulent. appearing {br the respondent and perused the record 2. l'he instant is the appeal r,vhich has been preferred assailing the order passed by the Incorne 1'ax Appellate 'fribunal (for short ..the Tribunal"), [{1'dcrabad 'sMC' Bencl'r. I-lyderabad, in trA.No.14l6lr1ydl2025, for the asscssmenr year z0l7-2olg, dated 31.10.2025. The paramount sround that the appellant had placed is the fact that the -l'ribunal has not decidecl the appcal on its merits but rar.her has decided it on the technicality of the comrnissioner of Income Tax

2 (Appeals).(for short " rhe c.r.T (Appeals),,) taking considerabry rong period of tirnc of rnorc than five ancr harf years in disposing of the appear and therefore. the Tribunar in the process of crosing the proceedings for all time to conle crisrnissed the appear without considering any of the contentions that the appeilant had raised in the rnemo of appear before the Tribunal 3' Upon perusar of the impugned order, it is rerevant to take note of the follor.ving rerevant portion of the impugned order of the Tribunal on I the bastis o{'r.vhich thc appeal stands decided. " r I. wc flnd that trrougrr the assessee on the rast occasiorr i-e. vide.his requesr for ad.iourrin.,,raulo 8.03.2023 had sought fbr t9g days of tinre.for_firrnistring rfr" r"qririr" i""i,., Or*i " specific. query b-v the Bencrr we" were informed that no sucrr leply/su.brnissio,s r.r,ere rrrereafter fired with trre crriel." aiii," $ame tirne, we find it_ incornprehensible tfrui tirl^'.pp"jr"* proceedings befbre the c.t'(A) rvhich were triggered vide an dppeal fifed by rrre assessee on 20.02.2020 took more rhan 5 % years and had finally culmirrated vide an order dated ZOiL.ZLZS. Although, we. deprecate tlre conduct of the assessee who had sought for ad-iournrnerrts and at no occasion fired unv *riii", submission w'ith trre crl(A), but at ttre same time are unabre to persuade ourselves to subscribe the time period of five .rJ fr"if years (approx.) trrat trre c[-(A) rrad taken to dispose ortr.,".ro;""t appeal. 12.. Although. there appears to be no justification for the substarrtial tirne period of' 5 ,/z.v,ears taken in disposing of tlre appeal, but rve ca,not rernairr obrivion of trre fact trrat the assessee 'ad not filed any rvritten subr,ission oreffectivery participated in the appellate proceedings before ttr" *iJ-i,rrt apperate authority. As there is rro.iustification for the ass"sree fb;;Iil;";ril; il, the proceedings before ^the clr(A) una/o. furnish any rvritten submissions in support of his conteniion, on from the art" "i['rirg of rlre .pp.;i;;;;ff t*:::jii;:"; dislodge tne disnrissar of his appear by the crrial *rr*o #;i;"; independent observations arid reaioning tor sustainins trre additions nrade by the AO under sectio, Eqelri r;;#'::"r,:1:

3 56 of the Act. We, thus, in the backdrop of our aforesaid observations finding no substance irr the assessee's appeal. dismiss the sarne." 4. Given the said finding of thc -lribunal. we have no reason to reach to the conclusion that prirna facie the vieu, oI this []ench is that the Tribunal has not ventured into the rnerits o1'the case and has decided altogether on different grounds those r.r,hich rwere not raised by either of the parties belbre the Tribunal. this itsell'bcing substantial question of law as to "whether, the Tribunal rvas justified in nclt appreciating the merits of the case and deciding the appeal based on grounds, r.vhich were not raised by either of the parties?" 5. A reading of the order passed b1, the CIT (Appeals) dated 20.08.2025 r,vould go ro shou, rhar rhe CIT (Appeals) had infacr considered the various grounds that the appellant had raised and reached to a specific finding r,vhich r,vere assailed by thc assessee in the appeal befbre the Tribunal. A reading of the relevant portion of the order of the Tribunal rvhich is reproduced in the preceding paragraph nrakes it arnply clear that the Tribunal has not discussed on an1, of, these grounds which the appellant/Assessee had raised. l'he Tribunal rather had got carried away with the substantial tirne period r,vhich stood consumed befbre the CI'l'(Appeals) in the appeal to be finally decided. ,

4 6. The fact which cannot be brushed aside is that the appeal filed before the clT (Appeals) was one r.vhich was filed on 20.02.2020 immediately thereafter the entirc Country was hit with the Covid-19 pandemic which in itself prevailed for a period of roughly more than tr'vo years till March, 2022. All these appeals f,rled during Covid period r'vere taken-up for consideration only after March, 2022 and in the process, some time took for the Tribunals in clearing of the backlog appeals which were filed in the yeat 2020. This fact seems to have got missed from the sight of the Tribunal rvhile observing that the CIT (Appeals) erroneously took tnore than f-rve and half years in deciding the appeal o[ the appetlant. We are quite aware of the fact even today, there are mally appeals pending those r.r,hich r,vere flled during the Covid-19 pandemic period which still have to bc decided and fbr which there cannot be general observation o['the appellatc authority being responsible for the delay or there \,vere sonlc lapses on the part of the assessee aS well in ensuring that the appeal is not dccided rvithin reasonable period of time. During the relevant periocl certain cornpelling situations arose which were beyond the control ot'either the appcllate authority as also that of the assessee which led to thc delay. 7. In view of the salnc. we are inclined to set aside the impugned order of the Tribulal dated 31.10.2025 passed in

5 I.T.A.No.l4l6rHyd/2025, and remand the marrer back to the Tribunar lor deciding thc appeal on its merits al'ter on ctue considcration of all the grounds that trre appeilant has raised arrd decide the sarne stricr.ry in accordance r.r,ith larv. 8. The irnpugned order dated 3r.10.2025 srands ser aside. The matter stands remanded to the Tribunar for fiesh disposar. 9' Accordingry, the Appear stands ailorr.,ed. There shail bc no order as [o costs. Miscellaneous applications pending, i[-any, srra, stand crosed. SD/. K.SHYLESHI JOINT REGISTRAR //TRUE COPYII 6 ro sEcTtoN oFF|CER 1. The lncome TaxAppeilate Tribunar, Hyderabad ,sMC,Bench, Hyderabad. 2. One CC to SRt..f _V Raghu Ram, Advocate tOpUCt 3' one cc to sri' K'sudnikar Reddy, Senior bianoing counsel for lncome Tax Department [OpUC] 4. T,ryo CD Copies f'}R/psl

HIGH COURT DATED:2510U2A26 ORDER ITTA.l{o.32 of 202fi ALLOWING THE ITTA \1{6 STAIF ,:l 04 APH 2o2B ;ir LIf-spp,tc Z (,', .b, * G) b et,

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