Ravinder Reddy Munugala Vs ITO (ITAT Hyderabad)
Hyderabad ITAT: Once CIT(A) Decides Appeal on Merits, Delay Is Deemed to Have Been Impliedly Condoned
The Hyderabad ITAT in Ravinder Reddy Munugala v. ITO, ITA No. 327/Hyd/2026, AY 2017-18, dealt with an appeal involving an addition of ₹2.91 crore under Section 69A. The assessee’s first appeal was filed with a delay of about 27 months. The CIT(A) refused to condone the delay and dismissed the appeal as time-barred, but at the same time proceeded to adjudicate and dismiss the case on merits as well.
The ITAT held that once the appellate authority proceeds to examine and decide the appeal on merits despite refusing to condone the delay, the delay must be treated as having been impliedly condoned. It followed its earlier decision in Nafees Sultana v. ITO and the Madras High Court judgment in Vijayeswari Textiles Ltd. v. CIT (2002) 256 ITR 560 (Mad.).
The Tribunal further observed that the CIT(A) had decided the matter ex parte without giving the assessee an effective opportunity to produce documentary evidence and submissions. It therefore set aside the CIT(A)’s order and restored the appeal to the CIT(A) for fresh adjudication on merits after providing adequate opportunity of hearing.
Cases Discussed:
- Nafees Sultana Vs. ITO (ITAT Hyderabad), ITA No. 642/Hyd/2025 for Assessment Year 2014-15, order dated 28.04.2025
- Vijayeswari Textiles Ltd. Vs. CIT (Madras High Court), (2002) 256 ITR 560 (Mad.)
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by Shri Ravinder Reddy Munugala (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 12.11.2025 for the A.Y. 2017-18.
2. The assessee has raised the following grounds of appeal:
“1. The Ld. CIT(A) has erred CIT(A),NFAC erred on facts and in law while dismissing the appeal.
2. The Ld. CIT(A) grossly erred in appreciating the facts of the case of the appellant.
3. The Ld. CIT(A) NFAC erred in upholding the additions Rs.2,91,13,203/- u/s. 69A of the act.
4. The Ld. CIT(A) out to have observed that cash deposits were out of the advances received from customers and the same cannot be treated as unexplained.
5. The Appellant craves to add/leave/alter/modify any other ground of appeal at the time of hearing.”
3. The brief facts of the case are that the assessee had filed an appeal before the Ld. CIT(A) against the assessment order passed by the Learned Assessing Officer (“Ld. AO”) under section 144 of the Income-tax Act, 1961 dated 19.11.2019 for Assessment Year 2017-18. However, there was a delay of about 27 months in filing the appeal before the Ld. CIT(A). The Ld. CIT(A) declined to condone the delay and dismissed the appeal as barred by limitation. Simultaneously, the Ld. CIT(A) also proceeded to adjudicate the issues involved in the appeal on merits and dismissed the appeal of the assessee on merits as well.
4. Aggrieved with the order of the Ld. CIT (A), the assessee is in appeal before this Tribunal. The Learned Authorized Representative (“Ld. AR”), inviting our attention to para no. 1.8 of the order of the Ld. CIT(A), submitted that although the Ld. CIT(A) refused to condone the delay, he nevertheless proceeded to decide the appeal on merits. According to the Ld. AR, once the appellate authority enters into the merits of the controversy, it amounts to an implied condonation of delay. In support of the above proposition, reliance was placed on the order of this Tribunal in the case of Nafees Sultana Vs. ITO, ITA No. 642/Hyd/2025 for Assessment Year 2014-15, order dated 28.04.2025.
5. The Ld. AR further submitted that the appeal before the Ld. CIT(A) was decided ex parte without affording adequate opportunity to the assessee to substantiate his claim by filing relevant documentary evidence and written submissions. It was also submitted that since the assessment itself had been completed ex parte under section 144 of the Act, the matter may be restored directly to the file of the Ld. AO instead of the Ld. CIT(A).
6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities and opposed the request for restoration of the matter to the file of the Ld. AO.
7. We have heard the rival submissions and carefully perused the material available on record, including the case law relied upon. We find considerable force in the submissions of the Ld. AR. A perusal of the impugned order clearly reveals that although the Ld. CIT(A) held that the appeal was barred by limitation and declined to condone the delay, he nevertheless proceeded to examine and adjudicate the grounds raised by the assessee on merits. We have also gone through para nos. 11 and 12 of the order of this Tribunal in the case of Nafees Sultana Vs. ITO (Supra), which is to the following effect:
11. Apropos the contention of the Ld. AR that now when the CIT(A) had disposed of the appeal on both the issues based on which the impugned order was assailed before him, viz., (i) as regards the validity of the jurisdiction assumed by the A.O. for initiating proceedings u/s 147 of the Act; and (ii) the merits of the addition of Rs. 1.10 crore (approx.) made by the A.O., therefore, there was no justification on his part in observing that the delay involved in the filing of the appeal does not merit to be condoned, we find substance in the same. As stated by the Id. A.R, and rightly so, now when the assessee’s appeal had been disposed of by the CIT(A) on both the issues based on which the impugned order was assailed before him, therefore, we are unable to fathom that on what basis he had concluded that the delay involved in filing the appeal was not being condoned by him. Our aforesaid view is supported by the judgment of the Hon’ble High Court of Madras in the case of Vijayeswari Textiles Ltd. Vs. CIT (2002) 256 ITR 560 (Mad) wherein it was, inter alia, observed that as the Tribunal while declining to condone the delay involved in the appeal, had proceeded with and elaborately considered and rejected the appeal on merits, therefore, it was to be inferred that the Tribunal was itself not convinced that the appeal should be dismissed as barred by limitation. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under:
“7. Matters relating to condonation of delay are indeed discretionary and are normally left to the Tribunal and this court will not ordinarily interfere with the discretion. In this case, as we have already pointed out, the Tribunal did not stop with the order declining to condone the delay, but considered the matter on the merits and has practically treated the appeal as being properly before it and has answered the question brought before it with reference to the material placed on record. It is, in the circumstances, we hold that the Tribunal was in error in not condoning the delay. The question regarding the correctness of the Tribunal’s holding that the delay is not to be condoned is therefore answered in favour of the assessee and against the Revenue.”
(emphasis supplied by us)
12. We thus, in terms of our aforesaid observations, are of the firm conviction, that as the CIT(A) did not stop with the order declining to condone the delay but had considered the matter on both the issues based on which the impugned order was assailed before him, viz., (i) as regards the validity of the jurisdiction assumed by the A.O. for initiating proceedings u/s 147 of the Act; and (ii) the merits of the addition of Rs. 1.10 crore (approx.) made by the A.O., therefore, the only inference that can be drawn by drawing support from the judgment of the Hon’ble High Court of Madras in Vijayeswari Textiles Ltd. Vs. CIT (supra) is that he had impliedly condoned the delay involved in the appeal filed before him. We thus, in terms of our aforesaid observation, expunge the observation of the CIT(A) to the extent he had declined to condone the delay involved in the appeal filed before him.
8. On a perusal of the above, we find that under identical circumstances, this Tribunal, relying upon the decision of the Hon’ble Madras High Court in the case of Vijayeswari Textiles Ltd. Vs. CIT (2002) 256 ITR 560 (Mad.), held that where the appellate authority does not stop with the order refusing to condone the delay but proceeds to consider the appeal on merits, it is to be inferred that the delay stood impliedly condoned. Respectfully following the aforesaid decision of the Coordinate Bench and the ratio laid down by the Hon’ble Madras High Court, we hold that the delay in filing the appeal before the Ld. CIT(A) deserves to be treated as condoned.
9. Having held so, we further notice that the appeal was decided by the Ld. CIT(A) ex parte without providing an effective opportunity to the assessee to place the necessary documentary evidence and submissions in support of his case. In our considered opinion, the interest of justice would be best served if the matter is restored to the file of the Ld. CIT(A) for fresh adjudication. Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the matter to his file with a direction to adjudicate the appeal afresh on merits, after affording adequate opportunity of being heard to the assessee and after considering such evidence and submissions as may be filed in accordance with law. The assessee is also directed to extend full cooperation in the appellate proceedings and shall not seek any unnecessary adjournment before the Ld. CIT(A). In case of failure on the part of the assessee to cooperate, the Ld. CIT(A) shall be at liberty to proceed in accordance with law.
10. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 7th August, 2026.
