Dismissal of Appeal on Delay Grounds is Unsustainable if Due Date Computed from Service Date.

By | July 7, 2025
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I. Appeal filed by assessee is not delayed if the due date is calculated from the date of service of the assessment order, not merely its issuance.

II. Remand to CIT(A) is needed to adjudicate whether differences in income from other sources and subsidies are separate or related to the same addition, given incomplete discussion.

I. Dismissal of Appeal on Delay Grounds is Unsustainable if Due Date Computed from Service Date.

Issue:

Whether the Commissioner (Appeals) (CIT(A)) is justified in dismissing an appeal on the ground of delay if the assessee computes the due date for filing the appeal from the date the assessment order was served upon them, rather than the date the order was merely issued.

Facts I:

  • For Assessment Year 2017-18, the assessment order was issued on March 30, 2023.
  • However, the assessment order was served on the assessee on August 7, 2023.
  • Based on the date of service (August 7, 2023), the assessee calculated the due date for filing the appeal as September 15, 2023 (likely taking 30 days from service, plus some grace period or specific rule calculation).
  • The assessee actually filed the appeal on August 25, 2023.
  • The Commissioner (Appeals) dismissed the appeal on the ground of delay, presumably calculating the limitation period from March 30, 2023 (the date of issuance).

Decision I:

The court held in favor of the assessee. It ruled that merely issuing the order on March 30, 2023, would not start the due date for filing the appeal. The calculation of the due date for filing the appeal done by the assessee (from the date of service) was plausible. Therefore, the Commissioner (Appeals) was not right in dismissing the appeal on the ground of delay.

Key Takeaways I:

  • Commencement of Limitation Period: For an appeal (under Section 249 of the Income-tax Act), the limitation period for filing typically commences from the date on which the order sought to be appealed against is served on the assessee. Mere issuance or dating of the order does not trigger the limitation period. This is a fundamental principle of natural justice, ensuring the assessee has knowledge of the order to exercise their right to appeal.
  • Date of Service is Crucial: The date of actual service of the assessment order (August 7, 2023) is the pivotal date for calculating the 30-day limitation period for filing an appeal to the CIT(A).
  • CIT(A)’s Error: The CIT(A) erred by disregarding the date of service and likely computing the limitation from the date of issuance, leading to an incorrect conclusion of delay.
  • “Plausible” Calculation: The court found the assessee’s calculation of the due date (September 15, 2023, from August 7, 2023, service) to be plausible, implicitly confirming its correctness.
  • Consequence of Incorrect Dismissal: Dismissing an appeal on a ground of delay when it was, in fact, filed within the correct limitation period (calculated from service) is a procedural error that warrants setting aside the CIT(A)’s order.
  • “In favour of assessee”: The assessee gets an opportunity to have their appeal heard on merits.

II. Remand to CIT(A) for Adjudication on Nature of Additions (Grants/Subsidies/Other Income).

Issue:

When an assessee’s appeal is partly allowed by the Commissioner (Appeals) (CIT(A)), but a specific issue regarding variations in subsidy/grant and income from other sources (added by the AO under Section 68 or other relevant sections) is not adequately discussed or adjudicated by the CIT(A), whether the matter needs to be remanded for proper adjudication on that issue.

Facts II:

  • For Assessment Year 2021-22, the assessee filed its return of income, declaring nil income after setting off brought forward losses.
  • The Assessing Officer (AO) made additions in respect of:
    1. Variation of subsidy/grant.
    2. Variation in income from other sources.
  • The Commissioner (Appeals) (CIT(A)) partly allowed the appeal of the assessee.
  • However, while the assessee had given a bifurcation in the return of income (presumably explaining the nature of these variations), the CIT(A) had not discussed whether this bifurcation related to the difference in respect of income from other sources or not, in the order dated November 1, 2024. This implies a lack of proper adjudication by the CIT(A) on this specific point.

Decision II:

The court held that this issue needed adjudication and hence the matter was to be remanded back to the file of the Commissioner (Appeals) for deciding whether this issue arose from the same addition or not and to decide as per Income Tax provisions. The matter was remanded.

Key Takeaways II:

  • Speaking Order Requirement (CIT(A)): Like the AO, the Commissioner (Appeals) also has a duty to pass a “speaking order.” This means the appellate order must be reasoned, address all the contentions raised by the appellant, and specifically deal with each ground of appeal, providing reasons for its conclusion on each point.
  • Inadequate Adjudication by CIT(A): The CIT(A)’s failure to discuss or adjudicate whether the assessee’s bifurcation related to the differences in income from other sources, despite the assessee providing an explanation, constitutes an inadequate adjudication.
  • “Variation in Subsidy/Grant” & “Income from Other Sources”: The specific nature of these additions (whether they were treated as cash credits under Section 68, or income under other heads) and their precise reconciliation with the assessee’s books needed a clear finding.
  • Remand for Proper Adjudication: When a lower appellate authority fails to properly adjudicate a specific ground or issue, the higher court typically remands the matter back to that authority for proper and reasoned adjudication on that point. This ensures that the assessee’s appeal is fully heard on its merits.
  • “Whether this issue arose from same addition or not”: This indicates that the court needs clarification from the CIT(A) on the exact nature of the additions and their connection to the assessee’s explanations.
  • “Matter remanded”: This is a procedural relief for the assessee, allowing them a fresh opportunity to have their specific grievance addressed at the appellate level.
IN THE ITAT AHMEDABAD BENCH ‘D’
Madhya Gujarat Vij Co. Ltd.
v.
Dy. CIT
DR. BRR KUMAR, Vice President
and Ms. Suchitra Kamble, Judicial Member
IT Appeal Nos. 109 & 110 (Ahd.) OF 2025
[Assessment years 2017-18 and 2021-22]
MAY  30, 2025
M.K. Patel and Parin Shah, ARs for the Appellant. Prathvi Raj Meena, CIT-D.R. for the Respondent.
ORDER
Ms. Suchitra Kamble, Judicial Member. – These two appeals are filed against the order dated 0711-2024 & 01-11-2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment years 2017-18 & 202122.
2. The grounds of appeals are as under:-
ITA No. 109/Ahd/2025 A.Y. 2017-18

“1. The learned Commissioner of Income Tax (Appeals), NFAC erred in law and on facts has confirmed the additions of 17,91,17,390/- on account of interest accrued but not due on Loans from PFC on the ground that the same have remained unpaid at the end of the year totally ignoring the fact that the same were not payable as on the close of the year.

2. The learned Commissioner of Income Tax (Appeals), NFAC erred in law and on facts has confirmed the additions of Rs. 195,68,27,264/- being the Government Grants, Subsidies & Consumers Contribution transferred to Profit & Loss Account during the year merely following the orders of earlier years.
3. The appellant craves leave to add to, alter, delete or modify any of the above grounds of appeal either before or at the time of hearing of this appeal.
Total Tax Effect 39,31,27,726/-
ITA No. 110/Ahd/2025 A.Y. 2021-22

“1.0 The learned Commissioner of Income Tax (Appeals), NFAC erred in law and on facts has confirmed the additions of Rs. 1,61,31,26,000/- on account of Capital Grants & Subsidies and Consumers’ Contribution on the ground that the appellant should transfer 15% of the total Grants/subsidies/consumer contribution received during the year as against 5.28% offered by the appellant.

The learned Commissioner (Appeals) erred in law and on facts in not considering that the facts of the year under consideration were totally different from that of all the earlier years where similar additions were made.

1.1 The learned Commissioner of Income Tax (Appeals) NFAC erred in law and on facts has not given any Findings whatsoever on the similar additions as above made under section 115JB of the IT Act.

2.0 The learned Commissioner of Income Tax (Appeals) NFAC erred in law and on facts has confirmed the additions of the Interest income amounting to 2,62,08,000/- treating the same as income from other sources.

3.0 The learned Commissioner of Income Tax (Appeals) NFAC erred in law and on facts has dismissed the ground relating to erroneous computation of total income by considering the Returned income Intimation as per passed under section 143(1) of the Ad holding that the same is outside of his jurisdiction.

The learned Commissioner (Appeals) ought to appreciated that the said Income itself formed base of the total income computed in the impugned assessment order.

4.0 The appellant craves leave to add to alter delete or modify any of the above grounds of appeal either before or at the time of hearing of this appeal.”

3. Firstly we are taking up ITA 109/Ahd/2025. The assessee is a company wholly owned subsidiary of Gujarat Urja Vikas Nigam and engaged in the business of distribution of electricity. For the relevant assessment year 2017-18, the assessee filed return of income on 31-10-2017 declaring total income at Rs. 1,16,38,85,400/- u/s. 115JB of the Income Tax Act, 1961. The return was selected for scrutiny and notice u/s. 142(1) and 143(2) of the Act were issued. The Assessing Officer made addition on/or disallowances thereby enhancing the total income before set of unabsorbed business losses and depreciation and completed the assessment vide order dated 19-12-2019. Subsequently, the Pr. CIT passed an order u/s. 263 of the Act, 1961 on 31-03-2022 and set aside the assessment order dated 29-12-2019 and directed the Assessing Officer to pass an order after de-novo verification. The Assessing Officer completed the assessment u/s. 143(3) r.w.s. 263 r.w.s. 144B of the Income Tax Act, 1961 vide order dated 30-03-2023 assessing the total income at Rs. 3,36,54,10,621/-.
4. Aggrieved by the same assessment order, the assessee filed appeal before CIT(A). The CIT(A) dismissed the appeal of the on the ground of delay.
5. The ld. A.R. submitted that the CIT(A) has dismissed the appeal on the ground of delay when there was delay at all as the assessment order was served on the assessee on 07-08-2023 and due date for filing of appeal was 15-092023 prior to which the assessee filed appeal on 25-082023. The ld. A.R. submitted that the CIT(A) held that the assessment order was issued on 30-03-2023 and hence actual due date of filing of appeal was 01-05-2023. The CIT(A) has wrongly calculated delay that of 115 days. The ld. A.R. submitted that the CIT(A) has totally ignored the assessee’s contentions and without deciding anything on record has dismissed the appeal only on the ground of delay.
6. The ld. D.R. relied upon the assessment order and the order of the CIT(A).
7. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee was served assessment order on 0708-2023 and merely issuing the order on 30-03-2023 will not start the due date of filing of appeal, but the calculation of the due date for filing of appeal which was done by the assessee seems to be plausible. Hence, the CIT(A) was not right in dismissing the appeal on the ground of delay. The CIT(A) has not at all considered the appeal on merit and therefore it will be proper to remand back the matter to the file of CIT(A) for proper verification and adjudication of the issues on merit and as per Income Tax Act. The assessee be given opportunity of hearing by following principles of natural justice.
8. In the result, the appeal of the assessee being ITA No. 109/Ahd/2025 is partly allowed for statistical purposes.
9. As regards ITA No. 110/Ahd/2025, the assessee company filed return of income on 12-03-2022 declaring total income at Rs. nil after set of brought forward losses. The return was processed u/s. 143(1) of the Act on 22-092022 and total income of Rs. 2,87,42,32,799/-. The case was selected for scrutiny for assessment year 2021-22 after taking cognizance of the details filed by the assessee. The Assessing Officer made addition of Rs.1,61,31,26,000/- in respect of variation of subsidy/grant and addition of Rs. 20,79,52,000/- as against variation in income from other sources.
10. Aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
11. The ld. A.R. has challenged the addition of 15% on account of capital grants in subsidy and consumer contribution transferred to profit and loss account during the year as against 5.28% offered by the assessee in respect of addition on account of income from other sources.
12. The ld. A.R. submitted that the CIT(A) ignored that fact that the Assessing Officer wrongly considered the return of income at Rs. 2,87,42,32,799/- making additions on account of contingent liability amounting to Rs. 2,56,57,44,365/-, provision for gratuity amounting to Rs. 30,14,35,050/- and provision for bonus amounting to Rs. 70,53,384/-. The CIT(A) dismissed these grounds thereby stating that this issue was not arisen out of the impugned order. The assessee has categorically taken this ground because the interest income amounting to Rs. 2,62,08,000/- treating the same as income from other sources and the facts of the present assessment order were totally different from that of earlier assessment years where similar additions were made and this difference was not taken into account by the Assessing Officer as well as the CIT(A).
13. The ld. D.R. relied upon the assessment order and the order of the CIT(A).
14. We have heard both the parties and perused the all the relevant materials available on record. It is pertinent to note that the assessee has given a bifurcation of the return of income but whether the same is related to the difference in respect of income from other sources or not has not been discussed by the CIT(A) in the order dated 01-11-2024. Therefore, this issue needs adjudication and hence the matter is remanded back to the file of the CIT(A) for deciding whether this issue arises from the same addition or not and decide as per the Income Tax provisions. The assessee be given opportunity of hearing by following principles of natural justice.
15. In the result, the appeal being ITA No. 110/Ahd/2025 for assessment year 2020-21 of the assessee is partly allowed for statistical purposes.
16. In the result, both the appeals are partly allowed for statistical purposes.