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Facts
The assessee society filed an appeal against the order of the CIT(A) which had dismissed the appeal due to a delay of 159 days. The assessee claimed the delay was due to health issues but failed to substantiate it. The CIT(A) dismissed the appeal without seeking further explanation.
Held
The Tribunal held that the assessee was divested of an opportunity to substantiate its explanation for the delay. Therefore, the matter should be restored to the CIT(A) to consider the explanation and decide judiciously. If the delay is condoned, the CIT(A) should also adjudicate the additional grounds of appeal.
Key Issues
Whether the CIT(A) erred in dismissing the appeal in limine due to delay without providing sufficient opportunity to the assessee to substantiate the reasons for delay. Whether the reassessment proceedings were initiated correctly as per faceless regime.
Sections Cited
147, 144, 144B, 148A, 148, 151A, 69A, 234A, 234B, 249(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
The present appeal filed by the assessee society, an Association of Persons (AOP), is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 20/03/2025, which in turn arises from the order
Deepti Social Service Society vs. ITO (Exemption Ward) passed by the Assessing Officer (for short, “AO”) under section 147 r.w.s 144 r.w.s 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 09/10/2023 for the Assessment Year (AY) 2018-19. The assessee society has assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us:
“1.1 The order of the Ld. CIT(A) is contrary to law and facts of the case and is therefore unsustainable. The Ld. CIT(A) and Ld. AO have erred in not considering all the facts of the issues on hand while passing the order. 1.2 The Ld. CIT(A) erred in dismissing the appeal in limine on the ground of delay in filing the appeal disregarding the bona fide reasons and sufficient cause for delay and without considering and adjudicating on the merits of the case. Further, the judicial pronouncements relied by the Ld. CIT(A) for not condoning the delay differs in facts and is not applicable to the case of the appellant. 1.3 The Ld. CIT(A) himself has accepted that an appeal having merits should not be thrown away merely because there is some delay in filing the appeal, however he has contradicted himself by rejecting the appeal on delay in filing without considering the merits of the case. Moreover, there is neither any mala fide intention to take any undue advantage on the part of the appellant nor any loss to the Revenue. 1.4 The Ld. CIT(A) ought to have held that the initiation of proceedings, issuance of notices and service of assessment order under an inoperative and surrendered PAN amounts to a fundamental jurisdictional error and hence the consequential assessment order is void ab initio. Thus, the entire proceedings are vitiated and to be quashed. 1.5 The Ld. CIT(A) grossly erred in concluding that the appellant exhibited "gross negligence and inaction" without appreciating the fact that the assessment proceedings were initiated under an already surrendered PAN and all the digital communications, including notices and orders issued under the incorrect surrendered PAN were linked to an outdated inoperative email and e-filing login which were no longer actively monitored. 1.6 The Ld. Assessing Officer has erroneously concluded the appellant a non-filer and incorrectly assessed the appellant under the surrendered PAN even though the appellant has diligently been filing the returns under the operative PAN (AABTD9983G) for A.Y. 2018-19. 1.7 The Ld. CIT(A) ought to have struck down the order of the Ld.AO considering the fact that the appellant is a society established for educational purpose, running a school and Ld. AO has erred in making
Deepti Social Service Society vs. ITO (Exemption Ward) addition of 21,24,91,245/-u/s.69A as unexplained cash deposits, without appreciating the fact that the same represented regular fee collections from students duly recorded in the books of the society and reflected in the return filed under PAN: AABTD9983G. 1.8 The Ld. Assessing Officer erred in drawing adverse inferences based on the Statement of Financial Transactions (SFTS) filed and bank statements provided by City Union Bank without appreciating the fact that all these transactions do not relate to the inoperative PAN and the entire issue arises due to operational error on the bank's side to update its records on advice from the appellant. 1.9 Further, L.d. CIT(A) and Ld. AO have failed to consider the fact that the appellant was not properly guided by the then consultant, who failed to advice on the significance of the reassessment proceedings and failed to initiate appropriate remedial action in a timely manner in this regard. 1.10 The Ld. Assessing Officer erred in levying consequential interest u/s. 234A & 234B of the Income-tax Act, 1961. 1.11 The appellant seeks your leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.”
Apart from that, the assessee society has raised an additional ground of appeal
, which reads as under:
1. The Ld. Jurisdictional Assessing Officer (JAO) erred in law and on facts in issuing the order under Section 148A(d) and the consequential reassessment notice under Section 148, whereas such notice is required to be issued only through the Faceless regime in accordance with Section 151A r.w.s.144B. The initiation of proceedings by the Jurisdictional Assessing Officer, being contrary to the prescribed faceless procedure, is void ab initio and liable to be quashed.” As the assessee society by raising the aforesaid additional ground of appeal has sought our indulgence for adjudicating a legal issue which will not require looking any further beyond the facts borne on record, we have no hesitation in admitting the same. Our view is supported by the judgment of the Hon’ble Supreme Court in CIT Vs, National Thermal Power Co. Ltd. (1998) 229 ITR 383 (SC).
Deepti Social Service Society vs. ITO (Exemption Ward) 3. Succinctly stated, the AO based on information that the assessee society had during the subject year carried out substantial financial transactions, viz., cash deposits in current accounts held with City Union Bank: Rs.1,04,89,720/-, but had not filed its return of income for the year under consideration, i.e., AY 2018-19, initiated proceedings under section 148A of the Act. The Income Tax Officer, Ward-1, Hindupur, i.e., Jurisdictional Assessing Officer (JAO), passed an order under section 148A of the Act, dated 01/04/2022, Page No.118 to 120 of APB. Thereafter, the JAO issued notice under section 148 of the Act, dated 01/04/2022.
As the assessee society had neither filed its return of income in compliance to the notice issued under section 148 of the Act, dated 01/04/2022, nor complied with the notices/reminder letters issued under section 142(1) of the Act, therefore, the AO was constrained to issue a show cause notice (SCN) under section 144 of the Act, wherein the assessee society was called upon to explain as to why the assessment in its case may not be framed under section 144 of the Act. As the assessee society failed to reply to the aforesaid notice, therefore, the AO issued a final show cause notice (SCN) under section 144B(1)(xii)(b), dated 15/09/2023, whereby the assessee society was called upon to show cause as to why the cash deposits made in its two bank accounts during the subject year, viz. (i) Account
Deepti Social Service Society vs. ITO (Exemption Ward) No.510909010052346 with City Union Bank Limited: Rs.92,40,865/-; and (ii) Account No.510909010067844 with City Union Bank Limited: Rs.32,50,380/- may not be added to its income under section 69A of the Act. As the assessee society failed to respond to the aforesaid show cause notice (SCN), dated 15/09/2023, the AO was constrained to treat the entire amount of Rs. 1,24,91,245/- as the unexplained money of the assessee society under section 69A of the Act. Accordingly, the AO, vide his order under section 147 r.w.s 144 r.w.s 144B of the Act, dated 09/10/2023, determined the income of the assessee society at Rs. 1,24,91,245/-.
Aggrieved, the assessee society carried the matter in appeal before the CIT(A). Ostensibly, the appeal filed by the assessee society involved a delay of 159 days. The assessee society in the Memorandum of Appeal, i.e., “Form-35”, while explaining the reason for the delay in filing the appeal, had stated in Column No. 14 and 15 that the same had crept in because of health issues of the person concerned. However, as the assessee society had failed to upload any material to substantiate its claim that it was for justifiable reasons prevented from filing the appeal within the prescribed time period, the CIT(A), holding a firm conviction that the delay therein involved was not only inordinate but also not supported by any sufficient cause explaining the same, dismissed the appeal in limine.
The assessee society, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
Ms. Sandhyaarti, CA, the Learned Authorized Representative (for short, “Ld. AR”) for the assessee society (joined virtually), at the threshold of hearing of the appeal, submitted that the impugned assessment framed by the AO under section 147 r.w.s 144 r.w.s 144B of the Act, dated 09/10/2023 in absence of valid assumption of jurisdiction cannot be sustained and is liable to be struck down on the said count itself. Elaborating on her contention, the Ld. AR submitted that as the order under section 148A(d), dated 01/04/2022, as well as the notice under section 148 of the Act, dated 01/04/2022, had been both passed/issued by the Jurisdictional Assessing Officer (JAO), therefore, the assessment so framed based on invalid assumption of jurisdiction cannot be sustained and is liable to be struck down. The Ld. AR to support her contention had relied upon the judgment of the Hon’ble High Court of Telangana in the case of Kankanala Ravindra Reddy
Apropos, the dismissal of the appeal by the CIT(A) on the ground of limitation, the Ld. AR submitted that though the delay had crept in because of the serious health issues of the concerned person but the assessee society, in the absence of being afforded a sufficient opportunity, had failed to substantiate its said claim in the course of the appellate proceedings before the CIT(A). The Ld. AR submitted that the matter, in all fairness, may be set aside to the file of the CIT(A) with a direction to consider the explanation of the assessee society regarding the reasons leading to the delay in filing of the appeal and readjudicate the same based on a speaking order.
Per contra, Sri S. Arun Kumar, Learned Senior Departmental Representative (for short, “Ld. Sr. DR”), relied upon the orders of the authorities below.
We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.
Admittedly, it is a matter of fact borne from the record that the appeal filed by the assessee society was dismissed in limine by the CIT(A) for the reason that the same was filed beyond limitation.
Deepti Social Service Society vs. ITO (Exemption Ward) Ostensibly, the assessee society had in its Memorandum of Appeal, i.e., Column No.15 of “Form-35”, stated that the delay involved in filing the appeal had crept in due to the health issues of the person concerned. Admittedly, the appellant had not substantiated its aforesaid explanation, i.e., the reason that had resulted to the delay in filing the appeal. At the same time, we find that the CIT(A) without seeking any explanation on the aforesaid issue, i.e., the delay in filing of the appeal, had summarily based on his observation that the delay of 159 days was not only extraordinary and inordinate, but also not supported by any justifiable reason, dismissed the appeal in limine.
We find on a perusal of the CIT(A) order that the assessee appellant had filed before him its submissions qua the merits of the case, based on which it had assailed the impugned addition that was made by the AO vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 09/10/2023.
In our view, the assessee appellant apparently remained under bona fide belief that the CIT(A) had condoned the delay involved in the appeal and thus, for the said reason, had proceeded with and had advanced its contentions qua the merits of the case. We find substance in the Ld. AR’s contention that as the assessee society was never called upon by the CIT(A) to substantiate its explanation regarding the delay in filing of the appeal, therefore, for the said reason, it had not been able to
We are of firm conviction that as the assessee society had remained divested of an opportunity to substantiate its explanation regarding the reasons leading to the delay in filing the appeal, therefore, the matter in all fairness requires to be restored to the file of the CIT(A) with a direction to call for and consider the explanation of the assessee society regarding the delay in filing the appeal before him and deal with the same judiciously in exercise of the discretion vested with him under section 249(3) of the Act. In case the CIT(A) condones the delay, then he shall deal with the specific grounds based on which the impugned assessment order has been assailed before him. Also, in case the delay is condoned by the CIT(A), then the aforementioned additional ground of appeal that has been raised by the assessee appellant and admitted by us shall also be adjudicated by the CIT(A). Needless to say, the CIT(A) shall, in the course of the set aside proceedings, afford a reasonable opportunity of being heard to the assessee society.
Resultantly, the appeal filed by the assessee society is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the open court on 07th January, 2026.
S Deepti Social Service Society vs. ITO (Exemption Ward) Sd/-Sd/- S Sd/-d/- (मधुसूदन साव�डया) (रवीश सूद) (MADHUSUDAN SAWDIA) (RAVISH SOOD) लेखासद�य/ACCOUNTANT MEMBER �या�यकसद�य/JUDICIAL MEMBER d/- Sd Hyderabad, dated: 07/01/2026. *OKK/sps आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to:- 1. �नधा�रती/The : Deepti Social Service Society, Muddireddy Palli Road, Melapuram, Hindupur, Anantapur, Hindupur, Assessee Andhra Pradesh-515201. 2. राज�व/ The Revenue : Income Tax Officer, Exemption Ward, O/o. ITO, K.T. Road, RS Gardens, Bhavani Nagar, Tirupati, Andhra Pradesh-517501.
The Principal Commissioner of Income Tax, Tirupati. 4. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण /DR,ITAT, Hyderabad.