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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether delay in filing the appeal before the Tribunal should be condoned under Section 253(5) of the Income-tax Act, 1961; (ii) Whether the Commissioner of Income Tax (Appeals) erred in setting aside an ex-parte assessment order under the proviso to Section 251(1)(a) of the Income-tax Act, 1961 without first deciding the jurisdictional issue of validity of reopening under Section 147/148 of the Income-tax Act, 1961 and related fact question whether the assessee advanced Rs.1 crore.
Issue (i): Whether delay in filing the appeal should be condoned under Section 253(5) of the Income-tax Act, 1961.
Analysis: The statutory expression "sufficient cause" in Section 253(5) is to receive liberal construction. The facts show the assessee became aware of the impugned ex-parte order on 08.05.2025 when the AO issued notice for denovo proceedings and the appeal was otherwise bona fide and not a deliberate or dilatory tactic. The circumstances do not indicate mala fides or a strategy to gain time; non-receipt or non-access to the impugned order on the portal is a credible explanation. Established principles require preference for substantial justice over technical rejection of appeals where delay is not deliberately occasioned.
Conclusion: Delay in filing the appeal is condoned and the appeal is admitted for adjudication.
Issue (ii): Whether the ld.CIT (Appeals) erred in setting aside the ex-parte assessment order under the proviso to Section 251(1)(a) without first deciding the validity of reopening and related factual questions about the alleged Rs.1 crore loan.
Analysis: Section 147 requires a live nexus between information possessed by the AO and formation of belief that income has escaped assessment; portal information can only trigger inquiry but is not a substitute for collection of complete material such as full bank statements. The record shows neither the AO nor the ld.CIT (Appeals) adjudicated whether the AO had requisite reasons to form belief for reopening, and there is a factual dispute whether the assessee advanced Rs.1 crore or Rs.30 lakhs which remains unverified. Given that exercise of powers under the proviso to Section 251(1)(a) post-01.10.2024 does not obviate prior determination of jurisdictional validity of reopening under Sections 147/148, the matter requires sequential consideration: first the ld.CIT (Appeals) must decide validity of reopening and the factual question about amount advanced, and only thereafter adjudicate substantive issues on merits.
Conclusion: The impugned order of the ld.CIT (Appeals) is set aside and the issues are restored to the file of the ld.CIT (Appeals) to first adjudicate the validity of reopening of assessment and the factual question regarding the loan amount; thereafter the ld.CIT (Appeals) may proceed to decide substantive points. The appeal is allowed for statistical purposes.
Final Conclusion: The Tribunal condoned the delay and allowed the appeal for statistical purposes while remitting the matter to the ld.CIT (Appeals) to first determine the jurisdictional question of validity of reopening under Sections 147/148 and the disputed factual issue regarding the alleged loan before adjudicating merits.
Ratio Decidendi: For reopening under Section 147 of the Income-tax Act, 1961 a live nexus between information in possession of the AO and formation of belief that income has escaped assessment is required, and portal information alone is insufficient without collection and verification of complete material such as full bank statements.
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