LAXMI VENKATESHWARA AUTO FINANCE,NALGONDA V. ITO., WARD-1, NALGONDA

ITA 1077/HYD/2024

AI Insights

The case involves Laxmi Venkateswara Auto Finance, which appealed against the order of the Commissioner of Income-Tax (Appeals) at the National Faceless Appeal Center, Delhi. The appeal was initially dismissed due to a delay of 145 days in filing, which the CIT(A) did not condone. The delay was attributed to the assessee's unawareness of the assessment order and other circumstantial factors like the COVID pandemic. The Income Tax Officer had earlier assessed the firm based on unexplained cash deposits and withdrawals, leading to additions under section 69A of the Income Tax Act, 1961. The Tribunal found procedural lapses in the CIT(A)'s handling of the appeal and directed a re-evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668849 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Other Referred Cases: Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Opportunity of being heard
• Section: 147; 148; 144; 142(1)

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘बी’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री रवीश सूद, माननीय न्याययक सदस्य एवं श्री मिुसूदन सावडिया, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.1077/Hyd/2024 (निर्धारण वर्ा/ Assessment Year: 2017-18) Laxmi Venkateswara Auto Finance, Nalgonda. PAN : AAGFL1231L. Vs. The Income Tax Officer, Ward – 1, Nalgonda. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri Mohd Afzal राजस्व का प्रतततितित्व/ Department Represented by : Dr. Sachin Kumar, Sr.A.R सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 11.06.2025 घोर्णध की तधरीख/Date of Pronouncement : 23.06.2025 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 Center (NFAC), Delhi, dated 20.08.2024, which in turn arises from the order passed by the Assessing 2 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. Officer (for short “A.O.”) u/s 147 r.w.s. 144 of the Income Tax Act, 1961 (for short “the Act”), dated 16.03.2022 for A.Y. 2017-18. The assessee firm has assailed the impugned order on the following grounds of appeal before us: “1. The order of the learned Commissioner of Income Tax (Appeals) is against the law, weight of evidence and probabilities of case. 2. The learned Commissioner erred in not condoning the delay 145 considering the petition in which circumstances of delay are explained. 3 The learned Commissioner erred in not deciding the issue on merits. 4. The learned Commissioner ought to have condone the delay of 145 days and should have decided the issue on merits, therefore, erred for not doing so.” 2. Succinctly stated, the A.O. based on the information received from Directorate of Systems, CBDT, New Delhi through the NMS module of ITBA that the assessee firm had during the subject year made aggregate cash deposits of Rs.1,12,36,428/- and cash withdrawals of Rs.1,27,22,000/- in its bank account, but had not filed its return of income, thus holding a belief that income of the assessee chargeable to tax aggregating to Rs.2,39,58,428/- (Rs.1,12,36,428/- + Rs.1,27,22,000/-) had escaped assessment, initiated proceedings u/s 147 of the Act. Notice u/s 148 of the Act, dated 23.03.2021 was issued and served upon the assessee firm. 3 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. However, the assessee firm failed to file its return of income in compliance to the said notice. 3. As the assessee had neither complied with the notice issued u/s 148 and filed its return of income nor furnished the requisite details as were called for vide notice(s) u/s 142(1) of the Act, therefore, the A.O. was constrained to proceed with and frame the assessment to the best of his judgment u/s 144 of the Act. 4. The A.O. considering the fact that the assessee firm had failed to come forth with an explanation regarding the nature and source of cash deposits of Rs.1,12,36,428/- (supra), held the same as having been sourced out of its unexplained money u/s 69A of the Act. Also, the A.O. was of the view that as the assessee firm had not been able to justify or explain the purpose, nature and application of cash withdrawn from its bank account, therefore, held the excess of the cash withdrawals as against the cash deposits of Rs. 14,85,572/- as the assessee’s unexplained money u/s 69A of the Act. Accordingly, the A.O., based on his aforesaid deliberations, made an addition u/s 69A of Rs. 1,27,22,000/- 4 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. 5. Aggrieved, the assessee firm carried the matter in appeal before the CIT(A). As the assessee firm had delayed the filing of the appeal before the CIT(A) by a period of 185 days, therefore, it had requested for condonation of the same. 6. Ostensibly, the assessee firm in its Memorandum of Appeal i.e., Form No. 35, had stated that as it was unaware about the framing of the assessment by the A.O. vide his order dated 16-03- 2022, therefore, it was for the said bonafide reason that there was a delay in filing of the said appeal. It was further stated that the partners of the assessee firm had gathered about the assessment order only when they were physically served with a copy of a penalty notice on 05-08-2022. Elaborating further, it was stated that, on approaching the A.O. the partners of the assessee firm were informed that the assessment proceedings were already closed on 17-03-2022. The assessee firm had claimed that, on learning about the factual position, it had downloaded the assessment order and advised its tax consultant to file the appeal with the CIT(A). The assessee firm had further stated that, as its partners are uneducated persons putting up in a remote village in 5 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. Nalgonda District, and are not aware of the intricacies of the income-tax procedures, therefore, the said factors had also weighed towards the delay in filing the appeal. Apart from that, it was stated that the email ID and phone number provided for correspondence in the Memorandum of Appeal i.e “Form No. 35” did not belong to either the assessee firm or its partners. Also, it was stated that the tax consultant of the appellant firm had failed to keep the partners of the firm informed about the ongoing assessment proceedings and the culmination of the same. It was further stated that, as the business of the assessee firm was hit hard by the COVID pandemic, therefore, it had reduced its staff, including the person who was looking after the tax matters, and the same was also one of the reasons for non-verification of the online status of the assessment proceedings in its case. Carrying its contention further, the assessee firm had stated that it was only when a “Show-Cause Notice” (SCN) for penalty proceedings was served upon the partners of the assessee firm on 05-08-2022 that they had learned about the framing of the assessment in its case. It is further stated that on learning about the framing of the 6 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. assessment, the partners of the assessee firm had instructed their tax consultant for filing the appeal before the CIT(A). The assessee firm, based on the aforesaid facts, had requested the CIT(A) that, considering the facts leading to the delay in filing of the appeal before him, the same, in all fairness, be condoned. 7. Ostensibly, the CIT(A) did not find favour with the explanation of the assessee firm regarding the reasons leading to the delay in filing of the appeal before him, and dismissed the same by observing, as under: -left blank intentionally- 7 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. 8 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. 9 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. 10 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. 11 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. 8. The assessee firm being aggrieved with the order of the CIT(A), the assessee firm has carried the matter in appeal before us. 9. We have heard the learned Authorized Representatives of both parties and perused the material on record in the backdrop of the orders of the lower authorities. 10. Shri Mohammed Afzal, learned Authorized Representative (for short “Ld.AR”) for the assessee firm, at the threshold of the hearing of the appeal, submitted that the impugned order has been passed by the CIT(A) without affording any opportunity of being heard to the assessee firm/appellant. Elaborating on his contention, the 12 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. Ld. AR submitted that the CIT(A), without putting the assessee to notice, had summarily declined its request for condonation of the delay involved in the appeal filed before him. The Ld. AR to fortify his aforesaid contention, submitted that the CIT(A) had on no occasion fixed the hearing of the appeal, as a result whereof, the assessee firm had remained divested of an opportunity of substantiating its explanation regarding the delay in filing of the appeal within the prescribed time period. The Ld. AR submitted that as the delay in filing of the appeal before the CIT(A) had crept in for bonafide reasons and not on account of any lackadaisical conduct on the part of the assessee firm, therefore the CIT(A) ought to have taken a liberal approach and condoned the same. 11. Per contra, Dr. Sachin Kumar, the learned Departmental Representative (for short “Ld. DR”) relied upon the orders of the CIT(A). It was submitted by him that as the assessee firm had failed to explain based on any plausible explanation the inordinate delay of 145 days involved in filing of the appeal before the CIT(A), therefore, he had rightly declined to condone the same. The Ld. DR submitted that as no infirmity emerges from the order of the 13 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. CIT(A), who had rightly declined the assessee’s request for condonation of the delay involved in the appeal filed before him, therefore, the present appeal filed by the assessee/appellant firm being devoid and bereft of any substance is liable to be dismissed. 12. We have thoughtfully considered the contentions of the learned Authorized Representatives of both parties in the backdrop of the orders of the lower authorities. 13. Admittedly, the assessee firm had delayed the filing of the appeal before the CIT(A) by a period of 145 days. Although, the assessee firm had in its Memorandum of Appeal i.e. “Form No. 35” filed before the CIT(A), explained the multi-facet reasons which had resulted to the delay in filing of the appeal viz. (i). that the partners of the assessee firm, who were uneducated persons residing in a remote village in Nalgonda District and not conversant with to the intricacies of the income-tax procedures, had remained unaware of the assessment order that was passed by the A.O. on 16-03-2022; (ii). that the email ID and phone number provided in the Memorandum of Appeal in “Form 35” did 14 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. neither belong to the assessee firm nor to its partners; (iii). that the tax consultant of the assessee firm had not informed the partners of the assessee firm about the framing of the assessment; (iv). that as the business of the assessee firm was hit hard due to COVID pandemic, therefore, it had reduced its staff, including the person who was looking after the tax matters, which was one of the primary reason for non-verification of the online tax proceedings; and (v). that the partners of the assessee firm came to know about the framing of the assessment only when they were served with a penalty notice on 05-08-2022. However, we find that the CIT(A) was not inspired with the aforesaid explanation of the assessee firm and had declined to condone the delay of more than four months involved in the appeal filed before him. 14. On a perusal of the CIT(A)’s order, it transpires that he was of the view that though the partners of the assessee firm had stated in Column No. 15 of “Form No. 35” that they were unaware about the culmination of the assessment proceedings, and had gathered about the same only when a physical copy of penalty notice was received on 05-08-2022, but if that would have been 15 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. so, then, on what basis it was claimed by the assessee firm to have been served with the assessment order or notice of demand on 05- 08-2022. The CIT(A), based on his aforesaid observation had declined to condone the delay involved in the appeal filed by the assessee firm, for the reason that it had failed to come forth with a “sufficient cause” as was required within the meaning of sub- section (2) of Section 249 of the Act. 15. We have given a thoughtful consideration and are unable to comprehend the reasoning given by the CIT(A) for declining the assessee’s request for condonation of the delay involved in the appeal filed before him. All that the partners of the assessee firm had stated before the CIT(A) was that they were unaware about the order of assessment passed by the A.O. u/s 147 r.w.s. 144 r.w.s 144B of the Act, dated 16-03-2022, and had gathered about the same only when a copy of a penalty notice was physically served upon them on 05-08-2022. In our view, as the assessee firm had gathered/learnt about the framing of the assessment in its case vide order dated 16-03-2022 only on 05-08-2022, therefore, in all fairness it had referred to the said date i.e 05.08.2022 as the date 16 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. of service of the order/notice of demand in Column No. 2(c) of “Form No. 35”. We are unable to fathom as to what infirmity emerges from the aforesaid factual statement of the assessee firm. As the CIT(A) had failed to come forth with any plausible reason for rejecting the assessee’s request for condonation of the delay involved in the appeal filed before him, we are unable to approve the same. We are further of the firm conviction that a liberal and justice-oriented approach should have been adopted by the CIT(A) while considering the assessee’s request for condonation of the delayof 145 days involved in the appeal filed before him. Our aforesaid conviction is fortified by the judgment of 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, wherein the Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which 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 17 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. while considering the application filed by an appellant seeking condonation of the delay involved in filing of the appeal. We thus, in terms of our aforesaid observations direct the CIT(A) to condone the delay of 145 days involved in filing of the present appeal by the assessee before him, and restore the matter to his file with a direction to dispose of the appeal qua the issues based on which the impugned order of assessment has been assailed by the assessee firm before him. Thus, the Grounds of Appeal Nos. 1 to 4 are allowed for statistical purposes in terms of our aforesaid observations. 16. The Ground of Appeal No. 5, being general in nature, is dismissed. 17. Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 23rd June, 2025. Sd/--d/- (श्री मिुसूदन सावडिया) (MADHUSUDAN SAWDIA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER 18 ITA No.1077/Hyd/2024 Laxmi Venkateswara Auto Finance. Hyderabad, dated 23.06.2025. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Laxmi Venkateshwara Auto Finance, H.No.6-35, Urumadla, Chityal, Nalgonda – 508114. Telangana. 2. रधजस्व/ The Revenue : The Income Tax Officer, Ward – 1, Nalgonda. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER "