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The case involves KVC Infrastructures, a firm engaged in executing civil contracts for Indian Railways, which appealed against the order of the Commissioner of Income-Tax (Appeals) at the National Faceless Appeal Centre, Delhi. The appeal was initially dismissed by the CIT(A) as barred by limitation due to a 26-day delay in filing. The Tribunal found that the delay was due to bona fide reasons and not intentional, thus setting aside the CIT(A)'s decision and directing a re-examination of the case on merits.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 708210 (ITAT-VISAKHAPATNAM)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-07-2025
Appeal Filed By
Assessee
Order Result
Allowed
Assessment Year
2017-2018
Judgement Text
"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रिीश सूद, माननीय न्याययक सदस्य एिं श्री एस. बालक ृष्णन, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI BALAKRISHNAN. S, HON’BLE ACCOUNTANT MEMBER, आयकरअपीलसं./I.T.A.No.266/Viz/2025 (निर्धारण वर्ा/ Assessment Year: 2017-18) KVC Infrastructures, Visakhapatnam. PAN : AAJFK7691Q. Vs. The Assistant Commissioner of Income Tax, Visakhapatnam. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri Praveen Sompalli, C.A. (HYBRID) राजस्व का प्रतततितित्व/ Department Represented by : Dr. Aparna Villuri, Sr.DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 08.07.2025 घोर्णध की तधरीख/ Date of Pronouncement : 18.07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee firm is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 20.03.2025, which in turn arises from the order passed by the Assessing Officer (for 2 ITA No.266/Viz/2025 KVC Infrastructures short “A.O.”) under Section 143(3) of the Income Tax Act, 1961 (for short “the Act”) dated 27.12.2019 for A.Y. 2017-18. The assessee firm has assailed the impugned order on the following grounds of appeal before us: “1.Arbitrary Estimation of Income at 8% of Gross Receipts: The AO erred in applying an 8% profit rate to the appellant's gross receipts without legal basis. This was done under Section 44AD, which does not apply to the appellant. The profit margin of 2.2% is within industry norms. 2. Invalid Jurisdictional Change: The assessment was passed by ACIT, Circle 2(1), without prior notice of jurisdictional change from DCIT, Circle 3(1), violating Section 124(3) and principles of natural justice. 3. Invalid Service of Notices: Notices and the assessment order were sent to an unregistered email ID, violating Rule 127 and Section 282 of the Income- tax Act. 4. Failure to Consider Detailed Reply to Notice under Section 142(1): The AO ignored the appellant's response to the notice under Section 142(1), which included supporting documents and clarifications. 5. Invalid Invocation of Section 145(3): The AO invoked Section 145(3) without pointing out any defects in the audited books. 6. Arbitrary Estimation of Income Without Evidence: The AO estimated income at 8% of gross receipts without providing any industry benchmarks or supporting evidence. 7. Additional Ground (General Prayer): The appellant craves leave to add, alter, amend, modify, or withdraw any of the above grounds, as may be necessary for the just and proper adjudication of the case.” 2. Succinctly stated, the assessee firm that is engaged in the business of executing Civil Contracts for Indian Railways had filed its return of income for A.Y. 2017-18 on 02.08.2018, declaring an income of Rs. 19,83,719/-. Subsequently, the case of the assessee firm was 3 ITA No.266/Viz/2025 KVC Infrastructures selected for scrutiny assessment u/s 143(2) of the Act. During the course of assessment proceedings, the A.O. called upon the assessee firm to produce corroborative evidence regarding its claim for various expenses debited in its profit and loss account. As the assessee firm failed to substantiate its aforesaid claim of expenses based on supporting documentary evidence, therefore, the A.O. rejected its books of accounts u/s 145(3) of the Act. Thereafter, the A.O. estimated the income of the assessee firm @ 8% of its total turnover/work receipts and determined its income at Rs. 72,45,079/- i.e. @ 8% of Rs. 9,05,63,502/-. As the assessee firm had disclosed its income of Rs.19,83,720/-, therefore, the A.O. restricted the addition to the balance amount of Rs. 52,61,360/-. 3. Aggrieved, the assessee firm carried the matter in appeal before the CIT(A). 4. Although the assessee firm was put to notice about the fixation of the appeal on six occasions i.e., on 26.02.2021, 12.03.2024, 04.06.2024, 31.07.2024, 27.11.2024 and 04.03.2025, but it failed to respond to the same. 5. The CIT(A) observed that the appeal filed by the assessee firm before him involved a delay of 26 days. Although the assessee firm had 4 ITA No.266/Viz/2025 KVC Infrastructures filed an application seeking condonation of the delay involved in the filing of the appeal, but the CIT(A) did not find favour with the same and declined to exercise the discretion vested with him u/s 249(3) of the Act and dismissed the appeal as barred by limitation. For the sake of clarity, the observations of the CIT(A) are culled out as under : 5 ITA No.266/Viz/2025 KVC Infrastructures 6 ITA No.266/Viz/2025 KVC Infrastructures 6. Shri Praveen Sompalli, , C.A. the learned Authorized Representative (for short “Ld.AR”) for the assessee firm, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred in law and on facts of the case in declining the request of the assessee firm for condoning the delay involved in the appeal filed before him and dismissing the same as barred by limitation. Elaborating on his contention, the Ld. AR submitted that the assessee firm in the course of the assessment proceedings had received notice u/s 142(1) of the Act, wherein it was called upon to submit its reply on ten points. The Ld. 7 ITA No.266/Viz/2025 KVC Infrastructures AR submitted that the assessee firm has duly complied with the aforesaid notice and furnished its reply along with necessary enclosures. Elaborating further on his contention, the Ld. AR submitted that the assessee firm has two registered e-mail IDs in its Income-tax e- filing portal account, viz. (i). Primary email ID: kvcinfrastructures2@gmail.com (belonging to the assessee firm); and (ii). Secondary email ID: bharatioffice@gmail.com (belonging to its tax auditor). The Ld. AR submitted that the assessee firm had not received any communication/assessment order from the Department in either of its aforementioned email IDs. Carrying his contention further, the Ld. AR submitted that it was only when as on 14.02.2020, the Managing Partner of the assessee firm had received a phone call from the Income- tax Department wherein he was called upon to pay the outstanding liability of Rs.19.64 lacs (approx.) that he had learnt about the framing of the assessment in the case of the assessee firm by the A.O. vide his order passed u/s 143(3) of the Act, dt.27.14.2019. The Ld. AR submitted that the assessee firm involving no further loss of time filed the appeal with the CIT(A) on 20.02.2020, which by the time involved a delay of 26 days. The Ld.AR submitted that though the delay of 26 days involved in filing of the appeal before the CIT(A) had crept in because of the bonafide reasons and not on account of any lackadaisical approach 8 ITA No.266/Viz/2025 KVC Infrastructures of the assessee firm, but the CIT(A) had most arbitrarily declined to condone the same. The Ld. AR submitted that the CIT(A) had observed that now when as many as 11 communications were validly served upon the assessee firm by dropping the same in its email ID, viz. bharatioffice@gmail.com, therefore, it was incomprehensible that it had remained oblivion of the impugned assessment order that was dropped in the same e-mail ID. Also, the CIT(A) has observed that as per Section 13 of the Information Technology Act, 2000, the time of receipt of an electronic record was the moment the electronic record entered the computer resource designated by the receiver of the record. It was, thus, observed by the CIT(A), that now when the e-mail account, viz. bharatioffice@gmail.com was one of the e-mail address provided by the assessee firm, therefore, the e-mail dropped in the said e-mail account was to be considered as not only received, but also acted upon by it. Accordingly, the CIT(A) based on his aforesaid deliberations, declined to condone the delay of 26 days that was involved in the filing of the appeal before him. The Ld.AR submitted that as the delay involved in filing of the appeal was not deliberate/intentional or due to any lackadaisical approach of the assessee firm, but had crept in for bonafide reasons, therefore, the CIT(A) be directed to condone the same and dispose of the same on merits. 9 ITA No.266/Viz/2025 KVC Infrastructures 8. Per contra, Dr. Aparna Villuri, the learned Senior Departmental Representative (for short “Ld. DR”) relied upon the orders of lower authorities. 9. We have thoughtfully considered the contentions advanced by the learned Authorized Representatives of both parties and perused the material on record. 10. Admittedly, it is a matter of fact borne from the record that the appeal filed by the assessee firm with the CIT(A) involved a delay of 26 days. We principally concur with the CIT(A) that the forwarding/ dropping of the assessment order in the e-mail account of the assessee firm that was provided in its Income-tax e-filing portal i.e. bharatioffice@gmail.com is to be construed as per Section 13(2) of the Information Technology Act, 2000, as having been validly served upon the assessee firm. However, the issue raised by the assessee firm before the CIT(A) was not regarding the validity of the service of the notices, but rather the bonafide omission on its part of having learnt about the assessment order that was passed by the A.O. u/s 143(3) of the Act, dated 27.12.2019. We are of the considered view that as there is substance in the claim of the assessee firm that it had for bonafide reasons remained unaware of the assessment order passed by the A.O. 10 ITA No.266/Viz/2025 KVC Infrastructures u/s 143(3) of the Act, dt.27.12.2019, therefore, the CIT(A) taking cognizance of the fact that the delay of 26 days in the appeal filed before him was not inordinate, ought to have taken a justice oriented and liberal approach and condoned the same, instead of summarily dismissing the appeal, as barred by limitation. Although, we are of the view that the assessee firm ought to be remained vigilant and kept a track of the assessment proceedings, but at the same time are of a firm conviction that the CIT(A) in exercise the discretion vested with him under sub-section (3) of Section 249 of the Act, in all fairness, ought to have condoned the delay involved in the appeal filed by the assessee firm before him. Our aforesaid view that a justice-oriented and liberal approach should be taken while dealing with an application filed by the assessee seeking condonation of the delay in filing of the appeal is supported by the judgment of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310- 26311/2024, dated 31st January, 2025. The Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, that had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed that a justice oriented and liberal approach should be adopted while 11 ITA No.266/Viz/2025 KVC Infrastructures considering the application filed by an appellant seeking condonation of the delay in filing the appeal. 11. Considering the aforesaid facts, we, herein set aside the order of the CIT(A) and restore the matter to his file with a direction to condone the delay involved in the filing of the appeal by the assessee firm before him and dispose of the same on merits. As we have set aside the matter to the file of CIT(A), therefore, we refrain from adverting to the merits of the case, which the assessee firm shall remain at liberty to raise before the first appellate authority. 12. Resultantly, the appeal of the assessee is allowed for statistical purposes, in terms of our aforesaid observations. Order pronounced in the Open Court on 18th July, 2025. Sd/- (एस. बालक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (रिीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 18.07.2025. TYNM/sps 12 ITA No.266/Viz/2025 KVC Infrastructures आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : KVC Infrastructures, 176, Sector IV, MVP Colony, Visakhapatnam – 530017, Visakhapatnam. 2. रधजस्व/ The Revenue : The Assistant Commissioner of Income Tax, Visakhapatnam. 3. The Principal Commissioner of Income Tax, Visakhapatnam. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, / DR, ITAT, Visakhapatnam. 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "
