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Facts
The assessee, Patna Smart City Limited, a government company, filed an appeal against the CIT(A)'s order dismissing its appeal due to delay. The assessee had filed a writ petition earlier, and the High Court directed them to approach the appellate authority, subject to limitation acceptance. The CIT(A) held that the delay was not condoned as no cogent reason was provided.
Held
The Tribunal found that the assessee had sufficient cause for the delay due to filing a writ petition and being misadvised. In the interest of justice, the Tribunal decided to remand the case back to the AO for reassessment, allowing the assessee a reasonable opportunity to be heard.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal solely on the grounds of delay, and whether the delay should have been condoned in the interest of justice.
Sections Cited
250, 143(3), 144B, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA ‘DB’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2022-23 dated 18.06.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. For that the grounds of appeal hereto are without prejudice to each other.
For that the order of the learned assessing officer is bad both in law and on facts. ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited.
For that the order of the learned assessing officer is based on presumption, surmises and conjectures.
For that the order of the learned assessing officer is wholly perverse in as much as the same are contrary to and at variance with the materials available on record.
For that the learned assessing officer has erred in passing an order ex parte to the best of his judgement making additions to the returned income without grant of adequate opportunity of being heard in the matter contrary to the principles of natural justice.
For that the learned assessing officer has erred in adding a some of 13,54,095 on account of low net profit from construction contractors merely on the ground that the ratio of net profit to turnover for the assessment year under consideration is 1.52% and the ratio of net profit to turnover for the assessment year 2023-24 is 4.08% and in view thereof the same is to be determined at 4.08% of the total receipt without a remote consideration of the fact that the such determination or estimation of net profit is wholly without basis; the entirety of the debit and credit entries in the profit and loss account are verifiable with reference to the books of accounts maintained in the regular course of business which is also audited by a competent accountant as defined under the Act; it does not engaged itself in business; it is a Government Company set up by the State Government of Bihar under the agis of Prime Minister's Smart City Program with a specific object to build a smart city; it is fully funded by the Central Government and the State Government of Bihar and estimation of income on a comparison of figure of the other year is wholly out of place.
For that the learned assessing officer has erred in adding a sum of 72,93,821 on account of high liabilities as compared to low income/receipts merely on the ground that it is seen from the details of liabilities in Form 3 CA (audit report) increased to such an extent without even considering the fact that the same only represented provision for expenditure for the month of March.
For that the learned assessing officer has erred in adding a sum of 42.28 crores on account of high liabilities as compared to low income/receipts merely on the basis of Form 3 CA (audit report) showing increasing liability under the head bank guarantee forfeited of Larsen and Toubro to such an extent without consideration of the fact that the same was a mobilisation advance given to the said party to commence business out of its own funds; the same on account of non-performance of contract was forfeited and was kept under the head liabilities only for the reason of it being a subject matter ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited. of an arbitration proceeding making it contingent and that the same in no view of the matter represent an income chargeable to tax under the Act.
For that the learned assessing officer has erred in charging interest under the provisions of Section 234B and 234 C the Act.
For that in any view of the matter the order of the learned assessing officer making additions in the manner aforesaid without proper consideration is bad in law and is merit to be set aside.
For that other various reasons which may be as under time of hearing”
Brief facts of the case as per the Statement of Facts filed before the Tribunal are that the assessee is a Government Company as defined under Section 2(45) of the Companies Act, 2013 and is set up by the State Government of Bihar with an object to build a Smart city in accordance with the "Prime Minister's Smart City Program". The appellant is fully funded by the Central Government and also the State Government of Bihar. The objects of the appellant are well elucidated in the Memorandum of Association, the same inter-alia are to plan, appraise, approve, release funds, implement, manage, operate, monitor, promote and develop Patna city as a Smart City under the Smart City Mission of the Government of India, to execute the Smart City Development projects through joint ventures, subsidiaries, public private partnership (PPP), turnkey contracts etc., which would result in driving economic growth and improve the quality of life and surroundings and also to design and implement smart solutions in the city. The assessee had filed its return showing total income of ₹10,80,542/- for the assessment year under consideration along with the audited profit loss account and the balance sheet with annexures and had claimed refund of ₹1,66,87,560/-. The return was selected for scrutiny through Computer Assisted Scrutiny Selection (CASS) and statutory notices were issued. Statutory notices were issued which were ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited. responded by the assessee. The Assessing Officer (“the Ld. AO”) considered the submission made and made the additions on account of business profits, the increase in the liabilities and forfeiture of bank guarantee and assessed the income under section 143(3) read with section 144B of the Act after making the following additions: - Sl.No. Particulars Amount (in ₹)
Low net profit construction contractors large claim of refund 13,54,095
High liabilities as compared to low income of/receipts 2,93,821
Forfeiture of bank guarantee 42,28,00,000
1 It is further stated in the Statement of Facts filed that the addition on account of low profit shown by the construction contractors and claim of large refund has been made on the ground that the net profit for the assessment year under consideration is 1.52% and the ratio of net profit to turnover for the Assessment Year 2023-24 is 4.08%. The addition on account of high liabilities as compared to low income/receipts has been made on the ground that the value of liability in the year under consideration has increased by ₹ 72,93,821/-. The third addition of ₹42.28 crores again in respect of high liabilities as compared to low income/receipts (issue number 3 of the show cause notice) is made on the ground that the forfeiture of bank guarantee has been shown under the head liabilities. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, vide the impugned order, dismissed the appeal on account of delay without ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited. adjudicating the merits of the case. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the record and the submissions made have been examined.
It was submitted by the Ld. AR that the assessee had filed the written submission before the Ld. AO and no further query was raised by the Ld. AO. The company being a government company does not work for earning profit. The amount forfeited from L & T is subject of arbitration and was shown in the balance sheet and the sum of ₹42,00,00,000/- has been added to the income of the assessee. Initially the assessee had filed a writ petition before the Hon'ble High Court against the assessment order and the case being selected under scrutiny and the Hon'ble High Court directed the assessee to approach the appellate authority. The assessee filed an appeal before the Ld. CIT(Appeals) with a delay of almost 5 months, as is mentioned in the appeal order, while the delay when counted from the date of the Hon’ble High Court’s order was only of about thirty days in view of the Ld. AR, but has been computed by the Ld. CIT(A) at about 4 months even after excluding the period covered by the pendency of the Writ Petition. The Writ Petition was filed on the ground of the juri iction and violation of the principles of natural justice. The Hon'ble High Court directed the assessee to file the appeal subject to acceptance of limitation. It was submitted that the assessee is a nascent company and the case was given to a nascent Chartered Accountant who could not handle the matter properly. It was requested that the matter may be remand to the Ld. AO, subject to the conditions imposed so that the documents could be filed as adequate opportunity was not provided by the Ld. AO. It was ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited. stated that the project is worth ₹ 10,00,00,00,000/- and is for the benefit of the citizens of Patna. The Ld. DR relied upon the order of the appellate authority and requested that the same may be confirmed.
We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. CIT(A) has mentioned that there was a delay of almost 5 months in filing of the appeal. The assessee had also filed a copy of the order dated 28/08/2024 passed by the Hon'ble Patna High Court in CWJC No. 12174 of 2024 before the Ld. CIT(A), which Writ Petition was heard on 28/08/2024 and it was stated that the delay in filing of the appeal occurred primarily for the reason that the assessee was not aware of the assessment proceedings and also there was the pendency of the Writ Petition and the delay had been caused on the reasons beyond the control of the assessee. The contention that the assessee became aware of the order of the assessment having been passed only after receipt of the notice and penalty proceedings on email, was found to be not verifiable and was found to be a mere self-serving statement and was rejected by the Ld. CIT(A). The conclusion drawn by him was that the assessment order was served upon the appellant on 26.03.2024 and there was a delay of almost 5 months in filing the appeal for which the assessee had not made out any cogent and logical case for the condonation of delay. The Ld. CIT(A) has also reproduced the relevant content of the order of the Hon'ble High Court passed in the writ petition, which states that “we dismiss the writ petition, however, leaving the petitioner to file an appeal, if so desired, subject to just exceptions; including that of limitation.” Relying upon several judicial pronouncements, the Ld. CIT(A) dismissed the appeal primarily relying upon the decision of the Hon'ble Supreme Court in the case of H. ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited. Guruswamy and Ors. vs A. Krishnaiah since deceased by Lrs. [Civil Appeal No. 317 of 2025] (Petition for Special Leave to Appeal (C) No. 9719/2020) and dismissed the appeal in limine without discussing the merits of the case. The relevant extract from the order of the Commissioner appeals is as under: “A party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals (Hon'ble Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540]. An appellant is to explain the delay w.r.t. the period of the delay in chronological manner. It is possible that a genuine and bonafide reason explains part of the delay but that does not entitle the assessee for condonation of full delay period. The reasons for delay on which delay can be condoned cannot be mere the factors contributing or leading to the inconvenience to the appellant. Thus for the condonation of the delay an assessee is required to show those factors which prohibited or which prevented the appellant from filing the appeal can be considered. The appellant has also not shown that the delay is due to bonafide reasons and not for other reasons. The appellant has not shown any such reason which prevented him from filing the appeal in time. As held by the Hon'ble Supreme Court in judgement dated 08.01.2025, in the case of H. Guruswamy & Ors. (supra) concepts such as "liberal approach", "Justice oriented approach", "substantial justice" should not be employed to frustrate or jettison the substantial law of limitation. Further as held by the Hon'ble Supreme Court, question of limitation is not merely a technical consideration. The rules of limitation are based on the principles of sound public policy and principles of equity. And that, while considering the plea for condonation of delay, the court must not start with the merits of the main matter. In view of the discussion, the appeal cannot be admitted due to the delay and being out of period of limitation and the same is hereby dismissed in-liminie.
Accordingly the grounds of appeal are not required to be taken upon merits.
In the result, the appeal of the appellant is dismissed.”
The Bench was of the view that since the assessee had filed a Writ Petition and it was also not properly advised relating to the pending assessment, therefore, there was a delay in filing of the appeal which ought to have been condoned by the Ld. CIT(A) as the assessee had a ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited. sufficient cause for the delay. Since there was no proper compliance before both the Ld. AO as well as before the Ld. CIT(A), in the interest of justice and fair play it was considered by the Bench that the request of the assessee to remand the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. AO for making the reassessment de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in its appeal are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 18th November, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 18.11.2025 Bidhan (Sr. P.S.) ITA No.: 314/PAT/2025 Assessment Year: 2022-23 Patna Smart City Limited. Copy of the order forwarded to:
Patna Smart City Limited, C/o Patna Municipal Corporation, Floor 2, Block-C, Maurya Lok Complex, Dak Bunglow Road, Patna, Bihar, 800001. 2. Income Tax Officer, Ward-(21)(91), Patna.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Patna Benches, Patna.
Guard File. //// By order