Madhurima Shukla Vs ITO (ITAT Raipur)
CIT(A) Cannot Dismiss Appeal for Non-Prosecution: ITAT Condones 423-Day Delay
The Income Tax Appellate Tribunal (ITAT), Raipur Bench, in Madhurima Shukla v. ITO, condoned a 423-day delay in filing an appeal and held that the Commissioner of Income Tax (Appeals) cannot dismiss an appeal merely for non-prosecution. The appellate authority must examine the issues and pass a reasoned order on merits.
The consolidated order, pronounced on 5 November 2026, covered ITA Nos. 644 and 646/RPR/2026, relating to Assessment Years 2013-14 and 2015-16. The Bench comprised Judicial Member Partha Sarathi Chaudhury and Accountant Member Avdhesh Kumar Mishra.
Background of the Case
The assessee, who operated a beauty parlour, filed her original return for AY 2013-14 declaring income of ₹2,86,771. The Assessing Officer reopened the assessment by issuing a notice under Section 148 on 29 March 2019. In response, she filed a return declaring income of ₹2,86,770.
Although the assessee furnished submissions during reassessment proceedings, the Assessing Officer found her explanations unsatisfactory. The reassessment was completed under Section 143(3) read with Section 147, determining total income at ₹89,68,786.
The disputed additions comprised ₹35,75,000 towards miscellaneous advances treated as unexplained cash credits under Section 68, and ₹51,07,015 towards investments allegedly made from undisclosed sources.
For AY 2015-16, the disputed additions included ₹15,50,000 under Section 68, ₹49,81,878 towards investments allegedly funded from undisclosed sources, and ₹13,56,440 towards cash found during an Anti-Corruption Bureau raid, treated as unexplained money under Section 69A.
Why the Appeals Were Dismissed
The CIT(A), National Faceless Appeal Centre, dismissed the appeals through orders dated 25 April 2025 and 28 April 2025.
For AY 2013-14, the CIT(A) stated that the assessee had not furnished substantial written submissions or documentary evidence supporting her grounds. On that basis, the appellate authority found no reason to interfere with the assessment and sustained the additions.
Before the Tribunal, the assessee challenged this approach, arguing that the appeals had effectively been dismissed ex parte without proper adjudication of the merits. She also challenged the additions and the validity of the reassessment orders.
Explanation for the 423-Day Delay
The Tribunal recorded a 423-day delay in ITA No. 644/RPR/2026. The assessee supported her condonation request with an application and affidavit.
She explained that she had changed her earlier counsel because she was dissatisfied with his handling of the appellate work. However, the appellate order was communicated to the former counsel’s email address, which remained recorded in Form 35.
Consequently, she claimed that she remained unaware of the disposal of her appeal until July 2026, when recovery proceedings commenced.
Her representative also pointed out that a similar 423-day delay had already been condoned in three other appeals involving the same assessee. The Revenue opposed the request for condonation.
Substantial Justice Favoured Condonation
The Tribunal examined whether the explanation established sufficient and reasonable cause for filing the appeal beyond the prescribed period.
It referred to the Delhi High Court’s decision in H.L. Malhotra & Company Pvt. Ltd. v. DCIT, and the Supreme Court decisions in Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy.
Applying those principles, the Tribunal observed that a liberal approach is appropriate where the delay does not reflect mala fides, culpable negligence or a deliberate delaying tactic. Refusing condonation could prevent consideration of a potentially meritorious dispute, whereas condonation would permit adjudication after hearing the parties.
Considering the affidavit, the explanation and the earlier condonation in connected matters, the Tribunal accepted that sufficient cause existed and condoned the delay.
CIT(A) Must Pass a Reasoned Order
On the appellate order, the Tribunal found that the CIT(A) had failed to discuss the disputed issues in detail or explain the reasons for agreeing with the assessment.
It emphasised that Section 250(6) requires an appellate order to be in writing and contain reasoned findings on each point requiring determination.
Reading that provision with Sections 250(4), 250(5), 251(1)(a), 251(1)(b) and the Explanation to Section 251(2), the Tribunal held that the CIT(A) must apply independent judgment to issues arising from the assessment.
Relying on Prem Kumar Arjun Das Luthra HUF, the Tribunal reiterated that the CIT(A) is not empowered to dismiss an appeal for non-prosecution and must decide it on merits.
Final Decision
The Tribunal set aside the appellate order and restored the matter to the CIT(A) for fresh adjudication, with an adequate opportunity of hearing. It also directed the assessee to cooperate.
The findings were applied to the second appeal, and both appeals were allowed for statistical purposes. The Tribunal expressed no opinion on the merits of the additions; their correctness remains open for examination in the restored appellate proceedings.
Cases Discussed
- H.L. Malhotra & Company Pvt. Ltd. v. DCIT, Circle-12, New Delhi, ITA No. 211/2020 & CM Appeals 32045–32047/2020 (Delhi High Court, 22 December 2020) — liberal condonation absent mala fide or deliberate delay.
- Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors., (1987) 2 SCC 107 — sufficient cause and substantial justice.
- N. Balakrishnan v. M. Krishnamurthy, (1998) 7 SCC 123 — principles of condonation.
- Prem Kumar Arjun Das Luthra HUF, (2017) 291 CTR 614 (Bom.) — CIT(A) must adjudicate on merits.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
Since, issues and facts involved in these two cases are almost similar; hence, these cases were heard together and are being disposed off by the consolidated order.
2. These appeals for Assessment Years (‘AYs’) 2013-14 and 2015-16 filed by the assessee are directed against orders dated 25.04.2025 and 28.04.2025 of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi, passed under section 250 of the Income Tax Act, 1961 (‘Act’).
2.1 Following grounds have been raised in ITA No.644/RPR/2026:
“1. Ld. CIT(A) erred in not adjudicating merits of the case and passing ex- parte order. The appellate order is illegal and unsustainable.
2. On the facts and in the circumstances of the case, Ld. CIT(A) erred in confirming addition of Rs. 35,75,000/- made by the AO on account of cash introduced by the appellant as miscellaneous advances treating it to be unexplained cash credit invoking sec. 68. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, baseless and not justified.
3. On the facts and in the circumstances of the case, Ld. CIT(A) erred in confirming addition of Rs. 51,07,015/- made by the AO on account of various investments made by the appellant holding the same from undisclosed sources. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, baseless and not justified.
4. The reassessment order passed by AO is illegal and bad in law. Ld. CIT(A) erred in confirming additions based on illegal assessment order.
5. The appellant reserves the NIL right to amend, modify or add any of the ground/s of appeal.”
2.2 Following grounds have been raised in ITA No.646/RPR/2026:
“1. Ld. CIT(A) erred in not adjudicating merits of the case and passing ex- parte order. The appellate order is illegal and unsustainable.
2. On the facts and in the circumstances of the case, Ld. in erred CIT(A) confirming addition of Rs. 15,50,000/- made by the AO on account of cash introduced by the appellant as miscellaneous advances treating it to be unexplained cash credit invoking sec. 68. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, baseless and not justified.
3. On the facts and in the Ld. in circumstances of the case, CIT(A) erred confirming addition of Rs. 49,81,878/- made by the AO on account of various investments made by the appellant holding the same from undisclosed sources. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, baseless and not justified.
4. On the facts and in the circumstances of the case, Ld. CIT(A) in erred confirming addition of Rs. 13,56,440/- made by the AO on account of cash found during raid by ACB treating it to be unexplained money invoking sec. 69A. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, baseless and not justified.
5. The reassessment order passed by AO is illegal and bad in law. Ld. CIT(A) erred in confirming additions based on illegal assessment order.
6. The appellant reserves the right to amend, modify or add any of the ground/s of appeal”
ITA No.644/RPR/2026:
3. The relevant facts giving rise to this appeal are that the assessee is running a beauty parlour. She filed her original Income Tax Return (‘ITR’) of the relevant year on 26.03.2014 declaring income of Rs.2,86,771/-. Based on certain information, the Ld. Assessing Officer (‘AO’) reopened the case of the assessee under section 148 of the Act on 29.03.2019. In response, the assessee filed her ITR on 22.05.2019 declaring income of Rs.2,86,770/-. Thereafter, various statutory notices were issued to the assessee. The assessee filed submissions from time to time. However, the Ld. AO was not satisfied with the assessee’s replies. Hence, the Ld. AO made various additions and determined the income at Rs.89,68,786/- vide order dated 26.12.2019 under section 143(3) r.w.s. 147 of the Act. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal as under:
“5.2 It is further noted and as detailed in preceding para above that during the appellate proceedings, the appellant has not furnished any substantial written submission or documentary evidence in support of its grounds of appeal challenging the addition. The onus lies on the appellant to support any claim by bringing in cogent documentary evidence. In absence of any substantial written submission or documentary evidence in support of its grounds of appeal, I have no basis to take a contrary view in the appellate proceedings as I have no reason to interfere with the assessment order. As such, I do not find any infirmity in the order of Assessing Officer. Therefore, Addition of Rs.35,75,000/- and Rs.51,07,015/- is hereby sustained on merits.”
4. The present appeal is delayed by 423 days. At the outset, Shri R. B. Doshi, CA, Ld. Authorized Representative (‘AR’) of the assessee drew our attention to the condonation application dated 21.09.2026 and the affidavit of the assessee. He, reiterating the content of condonation application, submitted that the SMC bench, had condoned the similar delay of 423 days in the case of the assessee in ITA Nos. 642, 643 and 645/RPR/2026. Further, he submitted that the facts of this case were similar; hence, he prayed for delay condonation. Shri Piyush Tripathi, Ld. SR. DR objected and prayed for dismissal of the condonation application.
5. The condonation application along with affidavit is on record. As per the condonation application, the delay appeared not due to any negligence or lack of due diligence on the part of the assessee. The assessee has stated that the erstwhile Counsel looking after her appellate works has not worked upto her satisfaction; hence, she changed him in the middle of the appellate works. Since the appellate order was received on email of the erstwhile Counsel whose email was mentioned in Form-35; therefore, the assessee was not in the knowledge of disposal of the appeal till July, 2026 when recovery proceedings commenced.
6. There is no dispute that under section 254 of the Act, the Tribunal may pass such order as it thinks fit. In case of HL Malhotra & Company Pvt. Ltd. Vs DCIT, Circle-12, New Delhi (ITA No. 211/2020 & CM Appeals 32045-32047/2020 dated 22nd December, 2020), the Hon’ble Delhi High Court has held that in absence of anything malafide or deliberate delay as a dilatory tactic, the Court should normally condone the delay as the intent is always to promote substantial justice following the Hon’ble Supreme Court decisions in the case of Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji and others (1987) 2 SCC 107 and N. Balakrishnan Vs M. Krishnamurthy 1998 (7) SCC 123.
7. The explanation of the appellant assessee therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on her part in not presenting this appeal within the prescribed time. In case of Collector, Land Acquisition vs MST Katiji (Supra), the Hon’ble Supreme Court has held that the expression ‘Sufficient Cause’ employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It is further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merit after hearing the parties. Another principle laid down by the Hon’ble Supreme Court is that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for and the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It is also held by the Hon’ble Supreme Court that there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of this appeal as she does not stand to benefit by resorting to such delay. Therefore, in the factual matrix of the present case emerged from the affidavit along with the condonation petition and also in view of condonation of similar delay of 423 days in the case of the assessee in ITA Nos. 642, 643 and 645/RPR/2026, we find that there exists sufficient and reasonable cause for condoning the delay in this case.
8. In the interest of substantial justice, the delay in filing this appeal deserves to be condoned and this appeal be decided on merit. We do not see any prejudice which would be caused to the Revenue in deciding this appeal on merit. In light of aforesaid discussions, in exercise of powers under section 254 of the Act, we hereby condone the delay in filing this appeal as we are satisfied that there is sufficient cause for not presenting this appeal within the prescribed time.
9. The Ld. AR submitted that the Ld. CIT(A) had decided the appeal ex-parte due to non-prosecution. Non-compliance on the part of the assessee was the sole reason for dismissal of the appeal. He prayed for remanding the case back to the file of Ld. CIT(A) for fresh adjudication.
10. Shri Piyush Tripathi, Ld. Sr. DR, drawing our attention to various paras of the orders of Authorities below, submitted that the reasonable opportunities of being heard had been provided to the appellant assessee by the Ld. CIT(A). However, the appellant assessee did not ensure proper compliance before the Ld. CIT(A). Hence, the Ld. CIT(A) dismissed the appeal. He prayed for dismissal of the appeal. On our specific query, he reluctantly admitted for remanding the case back to the file of the Ld. CIT(A) for adjudication on merit.
11. We have heard both parties and have perused the material available on the record. We have taken note of the fact that the Ld. CIT(A) has not decided the appeal after discussing the issues in detail and his/her reasons for agreeing with the assessment order though he/she, as per provisions of section 250(6) of the Act, is obliged to dispose of the appeal in writing with well-reasoned order on each point of determination arisen for his consideration. It is evident from the perusal of section 251(1)(a), 251(1)(b) and Explanation of section 251(2) of the Act that the CIT(A) is required to apply his/her mind to all the issues which arise from the impugned order before him/her, whether or not the issues have been raised by the assessee before him/her. On cumulative consideration of the provisions of section 250(6) of the Act read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) of the Act and Explanation of section 251(2) of the Act, it is evident that the CIT(A) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merit. Reliance is placed on the decision of the Hon’ble Bombay High Court in case of Prem Kumar Arjun Das Luthra HUF, (2017) 291 CTR 614 (Bom.).
12. Considering the facts of the case and in the interest of justice; we, without offering any comment on merit of the case, find the impugned order deem fit to set aside and remit the matter back to the file of the Ld. CIT (A) for deciding the case afresh/denovo, in accordance with the law, after providing adequate opportunity of being heard to the assessee. We order accordingly. Needless to say that the assessee has to cooperate in remitted appellate proceedings in this case.
13. In the result, the appeal of the assessee is allowed for statistical purposes.
ITA Nos. 646/RPR/2026:
14. The above finding shall apply mutatis mutandis in this appeal also.
ITA Nos. 644 & 646/RPR/2026:
15. In the result, both appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 05/11/2026.
