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Judgment
PER MANISH AGARWAL, A.M.:
The present appeal is filed by Revenue against the order dated 30.06.2025 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2017-18/10020313 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of rectification order dated 26.04.2021 passed u/s 143(3) r.w.s. 144B of the Act pertaining to Assessment Year 2018-19.
It is observed that the appeal was filed delayed by 113 days before the Tribunal. The reasons given as per the delay condonation petition was that due to change of administrative jurisdiction and engagement of concerned officials in department-wide Swachhata Campaign activities, CPGRAMS grievance redressal involving time-bound disposal and close monitoring of grievance, deployment of administrative resources etc., the present appeal could not be filed within prescribed time limit and the appeal was filed delayed by 113 days. Ld. Sr. DR submits that the delay being bonafide and unintentional and, therefore, it was prayed to condone the delay and decide the appeal on merits. In support of the same, the relevant contents of the application for condonation of delay are reproduced as under:-
“The limitation period for filing the appeal in the present case fell immediately after receipt of the Ld. CIT(A)'s order on 30.06.2025.
The delay in filing the appeal occurred due to a combination of bona fide administrative and procedural circumstances, as explained below:
(a)During this period, there was a change in incumbency at the level of the Ld. PCIT-7, Delhi, under whose administrative jurisdiction the present appeal was required to be examined and authorised. The approval/authorisation for filing the appeal was accorded by the then Ld. PCIT-7, Delhi on 01.09.2025. However, owing to the relieving of the said incumbent and the assumption of charge by the succeeding Ld. PCIT-7, Delhi on 03.09.2025, the charge underwent an institutional transition. As part of the mandatory handing-over and taking-over process, pending litigation matters, including the present case, were required to be reviewed and verified to ensure procedural continuity and correctness, which consumed additiorial time.
(b)Further, during the months of September and October, 2025, the concerned formation was extensively engaged in department-wide Swachhata Campaign activities, undertaken pursuant to directions of the CBDT and the undersigned was also designated the nodal officer for the CCIT chander signed increased the workload manifold Imperatively. The said special drive involved coordinated field-level deployment of administrative resources. Thereafter, during November, action, monitoring, and reporting, necessitating prioritised 2025, the formation was involved in a special audit drive by CAG, which required focused attention towards audit coordination, verification of records, and compliance with prescribed timelines. Subsequently, in December, 2025, a CBDT-mandated special drive relating to CPORAMS grievance redressal was undertaken, involving time-bound disposal and close monitoring of grievances, which further engaged institutional resources.
(c)Owing to the cumulative effect of the above unavoidable administrative and institutional exigencies, the filing of the present appeal could not be completed within the prescribed limitation period. It is respectfully submitted that the delay was occasioned due to circumstances beyond control and is not attributable to any negligence, inaction, or lack of diligence on the part of the Department.
It is further submitted that the appeal involves factual corroboration and substantial questions of law and has significant revenue implications. The Department has a strong case on merits, and non-condonation of delay would result in serious prejudice to the interests of the Revenue.
It is a settled position of law that procedural delays, when adequately explained and supported by bona fide reasons, should not defeat substantive justice. Non-condonation of delay in the present case would result in irreparable prejudice to the interests of the Revenue.
In view of the above, it is humbly prayed that the Hon'ble Tribunal may be pleased to condone the delay in filing the appeal in the case of M/s UNITED HOTELS PRIVATE LIMITED (PAN: AAACU0031C) for A.Y. 2018-19, considering the Doctrine of Equality Before Law' for everyone including the state as the litigant, in the interest of justice and to enable adjudication of the matter on merits.”
Considering the overall facts and the circumstances of the case, in our opinion, there is a reasonable and sufficient cause with the Department in filing the appeal delayed by 113 days before the Tribunal. It must be remembered that in every case of delay, there can be some lapses on the part of the litigant concerned however, that alone is not enough to turn down the plea of litigant and to shut the doors against him. When the explanation does not smack of mala fide or it is not put-forth as a part of dilatory strategy, the Courts must give utmost consideration to such litigant and its right of hearing of appeal on merit ought not to be rejected. Considering the overall facts and circumstances of the case and in the larger interest of justice, we condone the delay in filing the appeal before the Tribunal and admit the appeal for adjudication.
Brief facts of the case are that the assessee company is a company, engaged in the business of running hotels and filed its return of income on 30.10.2018, declaring total income at INR 4,60,81,094/-. The case was selected for scrutiny under CASS and the assessment was completed at a total income of INR 9,02,14,590/- by making disallowance of compensation paid of INR 1.62 crores and disallowance of repairs and maintenance of INR 2,51,40,150/- by holding the same as capital expenditure and depreciation @ 10% was allowed on the said expenditure.
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide impugned order in terms of section 250 of the Act dated 30.06.2025, has allowed the appeal of the assessee.
Aggrieved by the order of Ld. CIT(A), Revenue is in appeal before the Tribunal by taking following grounds of appeal mentioned in the appeal memo:-
1.“Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of compensation paid to Shri Sobha Singh and Sons Pvt Ltd (M/S SSPL) amounting to Rs. 1,62,00,000/-.
2.Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of claimed revenue expenditure of Rs. 2,51,40,150/- for the payment of Rs. 2,79,33,500/- to M/s Sonia Paul Design (Design Consultant/ Interior Designer) being the same of capital nature.
3.The appellant craves to be allowed to add any fresh ground(s) of appeal and or deleted or amend any ground(s) of appeal.”
Ground of appeal No.1 raised by the Revenue is with respect to the deletion of disallowance of INR 1.62 crores made by the AO on account of compensation paid to Sir Sobha Singh & Sons Pvt. Ltd. (“SSPL”) on account of rent.
Heard the contentions of both the parties at length and perused the material on record. As per the assessee, the amount was paid to SSPL as compensation against rent payable on the premises taken for running the hotel in terms of agreement between the parties where it was decided that minimum 5% of the gross operating profit would be paid as compensation for use of land owned by it. It is observed that disallowance of similar nature was made in preceding assessment year wherein the same was deleted by Ld.CIT(A). While making the disallowance for the year under appeal, the AO has observed that the said order of the Ld. CIT(A) in Assessment Year 2015-16 is challenged before the Tribunal. It is further observed that the Co-ordinate Bench of Tribunal in ITA No. 3409/Del/2019 in assessee’s own case for Assessment Year 2015-16, in terms of order dated 08.07.2022, has confirmed the findings of Ld.CIT(A) in deleting the disallowance by following its order in ITA No.2155/Del/2017 for Assessment Year 2013-14 vide order dated 28.07.2021 in assessee’s own case by making following observations:-
10.“We have heard the parties, verified the material on record. On giving our thoughtful consideration, we find force with the contentions of the Ld. Counsel for the assessee. The similar issue has been considered and decided in assessee's own case for the AY 2013-14 in ITA No. 2155/Del/2017, vide order dated 28/07/2021 wherein the Co-ordinate Bench of this Tribunal held as follows:-
"9.We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to allowability of enhanced compensation. AO had disallowed the expenses but CIT(A) has held that AO was not justified in disallowing the expenses. It is an undisputed fact that the assessee had entered into an agreement in 1996 with the owners of the property and pursuant to which the assessee has been paying the enhanced rent. Before us, Learned AR has pointed out that though the clause of the agreement speaks about the payment of rent in proportion of the gross profit but the said clause has not been triggered by the parties. The aforesaid contention of the Learned AR has not been controverted by Revenue. We further find that assessee has paid enhanced rent pursuant to the agreement entered into in 1996, but in any of the earlier years in the assessments that have been framed, no disallowance of rent has been made by Revenue. We agree with the contention of Learned DR that the principle of res judicata is not applicable to income tax proceedings and each assessment year is an independent but at the same time the Hon'ble Supreme court in the case of Radhasoami Satsang vs CIT (1992) 193 ITR 321 (SC) has held that even though principles of res judicata do not apply to income tax proceedings, but where a fundamental aspect permeating through different assessment years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenging the order, then it would not be appropriate to allow the position to be changed in the subsequent year. We further find that based on 7 the view of disallowance of enhanced rent paid in the year under consideration, no reassessment proceedings for earlier years has been initiated by the Revenue. Considering the totality of the aforesaid facts and relying on the aforesaid decision rendered in the case of Radhasoami Satsang (supra), we find no reason to interfere with the order of CIT(A). Thus the ground of Revenue is dismissed."
Admittedly, facts are identical and sole basis for making disallowance by the AO is that the order of Ld. CIT(A) in Assessment Year 2015-16 was not accepted and further appeal was preferred before the tribunal therefore, by respectfully following the order of Co-ordinate Bench in Assessment Years 2013-14 & 2015-16 (supra), we find no error in the order of Ld. CIT(A) who has rightly deleted the disallowance by following the aforesaid orders. Accordingly, Ground of appeal No.1 raised by the Revenue is dismissed.
Ground of appeal No. 2 raised by the Revenue is with respect to the deletion of disallowance of INR 2,51,40,150/- made out of repairs and maintenance expenses by holding the same as capital expenditure.
Heard the contentions of both the parties at length and perused the material on record. It is observed that disallowance of identical nature was made in Assessment Year 2015-16 by holding the revenue expenditure incurred on the repairs and maintenance of the hotels as capital expenditure and depreciation @ 10% was allowed. In first appeal, Ld. CIT(A) in terms of its order dated 29.01.2019 in ITA No.10244/17-18 has deleted such disallowance and allowed total expenditure incurred as revenue expenditure. It is further observed that no appeal was preferred by the Revenue against such observations of Ld.CIT(A) though the appeal was preferred before the Tribunal on the other issues, therefore, the observations of Ld.CIT(A) became final. In the year under appeal, while deleting the disallowance made, Ld.CIT(A) has followed the same observations made in Assessment Year 2015-16 by his predecessors.
In view of the overall discussions made herein above and after considering the facts and circumstances of the case, we find no error in the order of Ld.CIT(A) in deleting the disallowance made by the AO and before us, Revenue has failed to make out the case that the facts in the year under appeal are different from the facts in Assessment Year 2015-16. Therefore, Ground of appeal No.2 raised by the Revenue is dismissed.
In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 27.07.2026.