KAKINADA INFRASTRUCTURE HOLDINGS PRIVATE LIMITED,HYDERABAD vs. DCIT., CIRCLE-2(1), HYDERABAD

ITA 1053/HYD/2025Status: DisposedITAT Hyderabad21 January 2026AY 2021-202262 pages
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What did the Tribunal hold?

The Tribunal condoned the delay of 506 days in filing the appeal. The Tribunal reasoned that the assessee's explanation for the delay was factually not disputed, as the decision to file the appeal was triggered by the subsequent penalty order under Section 270A and the associated risk of prosecution. The Tribunal noted that the assessee acted on the advice of its counsel and that the reasons explained did not indicate any malafide or deliberate delay. Citing the settled proposition of law that courts should take a lenient view in construing 'reasonable and sufficient cause' for delay when the reasons are bonafide, the Tribunal decided to condone the delay. The judgment also extensively discusses the powers of the Tribunal under Section 254 of the Act, referencing decisions like C.I.T. v. Anand Prasad and NTPC, to hold that the Tribunal has jurisdiction to examine questions of law arising from facts on record, even if raised for the first time. Consequently, the Tribunal admitted additional grounds raised by the assessee and the supporting additional evidence, remanding the issue to the CIT(A) for adjudication on merits after verification by the Assessing Officer.

What were the facts?

The assessee, Kakinada Infrastructure Holdings Private Limited, filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the CIT(A) for Assessment Year 2021-2022. There was a delay of 506 days in filing the appeal. The assessee contended that the delay occurred because they initially believed the CIT(A)'s order, which granted substantial relief, meant no further action would be taken. However, the Assessing Officer subsequently passed a penalty order under Section 270A of the Income Tax Act, 1961, levying a penalty of Rs. 9.55 crores on account of disallowance of business loss and advertisement expenses. This penalty order, coupled with the risk of prosecution, prompted the assessee to seek legal advice and file the present appeal. The revenue opposed the condonation of delay, arguing that the penalty order was a consequence of the CIT(A)'s addition and not a reasonable cause for the delay.

What were the issues?

1. Whether the delay of 506 days in filing the appeal before the Tribunal is liable to be condoned on the grounds explained by the assessee? Assessee's arguments: The assessee argued that the delay was not due to negligence but a bonafide belief that litigation would end after the CIT(A)'s order. The subsequent penalty order under Section 270A and the imminent risk of prosecution necessitated filing the appeal. They relied on decisions in S.S.M. Ahmed Hussain vs. ITO, Shri Laxman Nainani vs. DCIT, and Collector, Land Acquisition vs. MST Katiji. The assessee also contended that disallowance of advertisement expenses on personal grounds is not applicable to a corporate entity. Revenue's arguments: The revenue contended that the assessee failed to explain any reasonable cause for the 506-day delay. They argued that the penalty order, being consequential to the CIT(A)'s addition, cannot be considered a valid reason for the delay in filing the appeal.

Which sections of the Income-tax Act were involved?

Section 270A,Section 254

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Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.

For Respondent: MS Reema Yadav, Sr. AR
Hearing: 10.12.2025

PER VIJAY PAL RAO, VICE PRESIDENT :

This appeal by the Assessee is directed against the Order dated 16.11.2023 of the learned CIT(A)-National

Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2021-2022. ITA.No.1053/Hyd./2025

2.

At the outset, there is a delay of 506 days in filing the present appeal before the Tribunal. The assessee has filed an application for condonation of delay which is supported by the affidavit of the Managing Director of the assessee company. The learned Authorised Representative of the Assessee has submitted that the impugned ord

The order continues below.

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