Case Law Details
Kancherla Medical Services Private Limited Vs DCIT (ITAT Hyderabad)
Introduction: In a recent case, the Income Tax Appellate Tribunal (ITAT) Hyderabad addressed the issue of condoning a delay in appealing an order issued under Section 263 of the Income Tax Act, 1961. The case involved Kancherla Medical Services Private Limited, a commercial entity operating in the medical services sector. The Principal Commissioner of Income Tax (PCIT) in Hyderabad had passed an order on March 31, 2022, deeming the assessment for the 2017-18 fiscal year erroneous and prejudicial to the interest of the Revenue. The PCIT’s decision led to the present appeal by the assessee.
Background of the Case: Kancherla Medical Services Private Limited, the appellant, filed its income tax return for the 2017-18 fiscal year, declaring an income of Rs. 20,89,51,930. The assessment was initially completed by the Assessing Officer based on the returned income. Subsequently, the PCIT, upon reviewing the records, discovered that the appellant had executed a business transfer agreement in May 2016 and received a consideration of Rs. 20 crores. However, the Assessing Officer had not adequately verified the details of this agreement, assets sold, consideration received, and payments to creditors. As a result, the PCIT deemed the initial assessment erroneous and prejudicial to Revenue’s interests and set it aside, directing further verification.
Reason for the Delay: The appellant challenged the PCIT’s order with a delay of 324 days. The reason cited for the delay was the belief that the appeal should be filed after the Assessing Officer issued the consequential order under Section 263 of the Income Tax Act. The appellant claimed that the delay occurred because of a lack of proper legal advice. They stated that they later realized that the PCIT’s order needed to be challenged separately.
Contentions of the Parties: The appellant argued that the PCIT’s order was unjustified and that the Assessing Officer had applied due diligence in making the initial assessment. They asserted that a lack of thorough investigation by the Assessing Officer did not warrant the PCIT’s exercise of authority under Section 263. Therefore, the appellant believed that the delay in filing the appeal should be condoned.
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