SHAVVA SUDHEER REDDY,HYDERABAD vs. DCIT, CENTRAL CIRCLE-3(1), HYDERABAD

The assessee has raised the following grounds of appeal :

2. The leamed CIT (A) erred in deciding the appeal in limini without condoning the delay; 3) The learned CIT(A) ought to have decided the issue on merits and held that no addition u/s 69A of Rs. 40,00,000/- should be made; 4) The learned CIT(A) erred in confirming the action of the Assessing officer without providing proper opportunity to the appellant herein; 5) Any other ground/grounds that may be urged at the time of hearing.”

The brief facts of the case are that the assessee filed an appeal before the Ld. CIT(A) against the assessment order passed by the learned Assessing Officer (“Ld. AO”) u/s.143(3) of the Income Tax Act, 1961 (“the Act”) dated 30.12.2019, for the A.Y. 2018–19. However, there was a delay of 1,149 days in filing the appeal before the Ld. CIT(A). The assessee explained the reasons for the delay as arising primarily due to the COVID-19 pandemic and the knee surgery of the Authorised Representative of the assessee. The Ld. CIT(A) called for an affidavit substantiating the reasons for the delay, but the assessee failed to submit the same during the course of the proceedings before him. After applying the exclusion of the limitation period in terms of the suo motu order of the Hon’ble Supreme Court in Miscellaneous Application No. 21 of 2022 in MA No. 665 of 2021, dated 10.01.2022, the Ld. CIT(A) held that a balance delay of 299 days still remained unexplained. Consequently, the Ld. CIT(A) dismissed the appeal in limine, without condoning the delay.

Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The learned Authorised Representative (“Ld. AR”) submitted that, the assessee has now filed a duly sworn affidavit explaining the reasons for the residual delay of 299 days. The principal reasons cited include prolonged knee surgery and rehabilitation period of the Authorised Representative and the pendency of proceedings before the National Company Law Tribunal (“NCLT”), which occupied significant time and resources of the assessee and its representatives. It was argued that the delay was neither deliberate nor due to negligence, and a lenient view shall be taken considering the exceptional circumstances, particularly in the backdrop of the COVID-19 period and related disruptions. Finally, the Ld. AR prayed before the bench to condone the delay and remand the issue to the file of the Ld. CIT(A) for adjudication on merits.

Per contra, the learned Departmental Representative (“Ld. DR”) objected to the remand of the matter and submitted that the assessee failed to establish sufficient cause for the delay before the Ld. CIT(A), and hence no further indulgence is warranted.

We have heard the rival submissions and perused the material on record including the affidavit filed by the assessee before us. On perusal of the affidavit we are of the view that, the medical condition of the Authorised Representative and the pendency of NCLT proceedings are sufficient and reasonable explanations for the delay. We are also of the view that a liberal approach must be adopted in condoning delay and technicalities should not defeat substantial justice, if the reasons qua the delay is reasonably explained by the assessee. Therefore, we are of the considered view that the balance delay of 299 days deserves to be condoned, particularly when the assessee has now provided sufficient cause supported by affidavit. Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of Ld. CIT(A) with a direction to condone the entire delay, including the balance 299 days, and to decide the appeal on merits, after providing a reasonable opportunity of being heard to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.