KYORI OREMIN LIMITED,HYDERABAD vs. DCIT, CIRCLE 2(1), HYDERABAD

6. The AO erred in disallowing an amount of Rs.5,41,130/- towards Disallowance of foreign exchange loss on account of reinstatement without appreciating that the loan was taken for the purpose of business and the same should be allowable as revenue expenditure u/s 37(1) of the Act.

3 ITA.No.2037/Hyd./2025 7. The Ld. CIT(A) has erred in rejecting the appeal on technical reason of delay in filing the appeal which amounts to denial of justice to the appellant. 8. The Appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.”

3. At the time of hearing, the learned Authorised Representative of the Assessee has submitted that the learned CIT(A) has declined to condone the delay of 42 days in filing the appeal despite the reasons for delay explained by the assessee before the learned CIT(A). He has also filed an affidavit of the Managing Director of the assessee and submitted that the company becomes non-functional and closed its business due to financial and other difficulties and therefore, the assessment order and other papers got misplaced by one of the office staff of the assessee company resulting the delay of 42 days in filing the appeal before the learned CIT(A). He has thus pleaded that the delay in filing the appeal before the learned CIT(A) be condoned and the matter may be remanded to the record of the learned CIT(A) for adjudication of the same on merits. He has further 4 ITA.No.2037/Hyd./2025 submitted that the Assessing Officer has made disallowance of 100% of expenses u/sec.40(a)(ia) of the Income Tax Act [in short "the Act"], 1961 instead of 30% as provided under the said provisions of the Act. If the delay in filing the above appeal before the learned CIT(A) is not condoned, then, it will result in gross injustice and assessee would be remediless.

4. On the other hand, the learned DR has opposed for condonation of delay and submitted that the explanation of the assessee is very vague as the learned CIT(A) has pointed out in para no.2.4 of the impugned order that even the assessee has given incorrect details of facts in Form-35 and therefore, the assessee does not deserve any lenient view. In support of his contention, he has relied upon the following Orders: (i) Order of ITAT, Hyderabad Bench in the case of MBR Educational Society, Hyderabad vs. ITO Exemption Ward-1(2), Hyderabad in ITA.No.665/Hyd./2025 dated 10.12.2025; (ii) Order of ITAT, Hyderabad Bench in the case of Udayanath Charitable Trust, Odisha vs. CIT(E), Hyderabad in ITA.No.436/Hyd./2025 dated 30.01.2026; 5 ITA.No.2037/Hyd./2025 5. We have considered the rival submissions as well as relevant material on record. The assessee filed the appeal before the learned CIT(A) belatedly after 42 days of delay. The assessee explained the cause of delay as reproduced by the learned CIT(A) in Para no.2.3 of the impugned order as under:

“2.3. The appellant replied on 12.08.2025 and filed a request for condonation of delay without any supporting documents or evidence. The request is reproduced below – "1, Ishoo Narang Managing Director of Kyori Oremin Ltd, hereby state that, I am acquainted with the facts of the case in respect of appeal which has been filed with the CIT (Appeals), for Assessment Year 2013-14, and I state that: The assessment order was passed u/s 143(3) of the Act as on dt. 29.03.2016. However, the appeal before the Honourable CIT-(A) has to be filed within 30 days of the receipt of order. The due date of filing was on 28.04.2016. The appeal on the order could not be filed in time as the papers had been misplaced by one of our office staff and the same has not been brought to the notice of the management, due to which there was delay in the filing of appeal. The appeal could be filed on 09.06.2016 with the delay of 42 days as the appeal was due for filing on 28.04.2016 and instead of that the same is being filed on 09.06.2016. In view of the above reasons, the delay may please be condoned and the appeal may please be considered as due to circumstances which were beyond the control of the assessee."

6 ITA.No.2037/Hyd./2025 5.1. Thus, the assessee has explained that the assessment order dated 29.03.2016 could not be challenged in the appeal before the learned CIT(A) within limitation due to the reason that the papers were misplaced by one of the office staff and the same has not been brought to the notice of the management. In support of this contention, the assessee has also now filed the affidavit of the Managing Director of the company. We further note that the Assessing Officer has made the addition u/sec.40(a)(i) of the Act to the tune of Rs.24.30 crores which appears to be 100% of the freight; legal professional expenses and interest as details are given by the Assessing Officer in Para no.3 of the impugned order. Thus, the disallowance made by the Assessing Officer u/sec.40(a)(i) without verifying the fact whether all the payments are made by the assessee to non-resident falling under the provisions of sec.40(a)(i) or sec.40(a)(ia) of the Act as it appears that in the computation of total income the Assessing Officer has referred the disallowance made u/sec.40(a)(ia). Therefore, in the facts and circumstances of the case and in the interest of justice when the appeal of the 7 ITA.No.2037/Hyd./2025 assessee has not been decided on merits but was dismissed in limine being barred by limitation by the learned CIT(A) after declining to condone the delay of 42 days in filing the appeal, then, we take a lenient view in constructing the ‘sufficient cause’ for the delay in filing the appeal before the learned CIT(A). Accordingly, in the interest of justice, the delay of 42 days in filing the appeal before the learned CIT(A) is condoned.

5.2. Since the learned CIT(A) has not decided the appeal of the assessee on merits, therefore, the impugned order of the learned CIT(A) is set aside and the matter is remanded to the record of the learned CIT(A) for adjudication of the appeal on merits, after giving an opportunity of being heard to the assessee.