TaxTMI 
TaxTMI 
2026 (1) TMI 10
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....aceless Appeal Centre, Delhi ["Ld. CIT(A)"] has erred, both in law and on facts, in refusing to condone the delay in filing of the appeal by the appellant, and thereby failed to adjudicate the appeal on its merits. The Ld. CIT(A) ought to have appreciated that the delay, was neither deliberate nor intentional but occurred due to bona fide reasons, and thus deserved to be condoned in the interest of substantial justice. 2. Without prejudice to the above, that the Ld.CIT(A) erred in not appreciating that the assessment order dated 03.03.2023 passed by the National Faceless Assessment Centre ["Assessing Officer"] u/s. 147 r.w.s 144 of the Act for the Assessment Year 2018-19 is invalid, void ab initio, and liable to be quashed as being bad in law. 3. That the Ld.CIT(A) erred in not appreciating that the reopening of the assessment is bad in law. 4. That the Ld.CIT(A) ought to have appreciated the fact that the notice u/s. 148 of the Act, dated 31.03.2022 issued by the Income Tax Officer, Non Corporate Ward 15(1), Chennai ["JAO"] is in violation of the provisions of Section 151A of the Act and the faceless assessment scheme notified by the Central Government, ....
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....notice u/s. 148 of the Act was issued by the JAO on 31.03.2022. Subsequently, the case was assigned to the Faceless Assessing Officer (hereinafter referred to as "the FAO") in terms of the e-assessment scheme. 5. During the course of reassessment proceedings, the AO recorded that the assessee failed to comply with any of the statutory notices issued. The reassessment was, therefore, completed ex-parte u/s. 147 r.w.s 144 of the Act vide order dated 03.03.2023, determining the total income of the assessee at Rs. 1,46,60,435/-. In doing so, the AO made the following additions:- i. Treated the fixed deposit of Rs. 50,00,000/- with HDFC Bank as unexplained investment and made an addition u/s. 69 r.w.s 115BBE of the Act; ii. Treated the purchase of motor vehicle amounting to Rs. 65,34,653/- as unexplained money u/s. 69A r.w.s 115BBE of the Act; iii. Added interest income of Rs. 1,39,030/- received from HDFC Bank and State Bank of India under the head "Income from Other Sources"; iv. Treated cash deposits of Rs. 29,83,600/- made in the HDFC Bank account as unexplained money and made an addition u/s. 69A r.w.s 115BBE of the Act; and v. Treate....
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....e that the default occurred due to reasons beyond the assessee's control and not on account of any negligence, or want of diligence. In our considered view, therefore, the assessee has satisfactorily established the existence of "sufficient cause" for the delay in preferring the appeal before the first appellate authority. 12. The Hon'ble Supreme Court has, in a catena of decisions, unequivocally laid down that when an explanation regarding delay does not smack of mala fides and is otherwise reasonable, acceptance ought to be the rule and refusal an exception. A hyper-technical or pedantic approach, resulting in the dismissal of matters at the threshold, is discouraged as it may cause irreparable prejudice by foreclosing adjudication on merits. The expression "sufficient cause" occurring in limitation statutes has consistently been interpreted to receive a liberal and justice-oriented construction, so as to advance rather than defeat the cause of substantial justice. 13. In this regard, we may gainfully refer to the judgment of the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471), wherein it was held that the Courts should adopt a liber....
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.... of the Limitation Act and analogous provisions must be construed liberally so as to advance substantial justice. The Court emphasized that rejection of condonation applications on trivial or fault-finding grounds should be avoided, particularly where negligence, lack of bona fides, or intentional delay cannot reasonably be attributed to the litigant. 15. Further, we note that the Hon'ble Supreme Court in Vidya Shankar Jaiswal v. Income Tax Officer, Ward-2, Ambikapur (SLP (Civil) Nos. 26310-26311 of 2024, order dated 31 January 2025), has reiterated that while dealing with applications seeking condonation of delay in filing appeals, the authorities must adopt a liberal and justice-oriented approach, ensuring that technicalities do not overshadow substantive rights. 16. Having regard to the factual matrix of the present case and guided by the above binding precedents of the Hon'ble Supreme Court, we are of the considered opinion that the assessee has successfully demonstrated sufficient cause warranting condonation of the delay of 259 days. Accordingly, the said delay is hereby condoned. 17. Having condoned the delay, we further note that the ground of appeal relating to va....
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....03.2022. 23. Ground No.4 is reproduced as under: 4. That the Ld.CIT(A) ought to have appreciated the fact that the notice u/s. 148 of the Act, dated 31.03.2022 issued by the Income Tax Officer, Non Corporate Ward 15(1), Chennai ["JAO"] is in violation of the provisions of Section 151A of the Act and the faceless assessment scheme notified by the Central Government, hence the same is bad in law and consequently the impugned assessment order dated 03.03.2023 framed u/s. 147 of the Act is invalid and void ab initio. 24. According to the Ld.AR, the impugned notice issued u/s. 148 dated 31.03.2022, is invalid and bad in law being issued by the JAO which is not in accordance with Sec.151/151A of the Act read with the faceless Scheme notified by CBDT on 29th March 2022 for assessment, reassessment or re-computation u/s. 147/issuance of notice u/s. 148 of the Act or for conducting of inquiry or issuance of show cause notice or passing of order u/s. 148A of the Act or sanction for issuance of notice under section 151 of the Act. In this regard, the Ld.AR, explained that in exercise of the powers conferred u/s. 151A of the Act, CBDT issued a notification dated 29.03.2022 after....
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....A of the Act and the notice u/s. 148 has been passed after CBDT Notification dated 29.03.2022. Hence, the aforesaid CBDT Notification dated 29.03.2022 is directly applicable in this case. 27. The Hon'ble Telangana High Court in Kankanala Ravindra Reddy Vs ITO (2023) 156 taxmann.com 178 (Telangana) and Hon'ble Bombay High Court in Hexaware Technologies Ltd Vs ACIT (2024) 464 ITR 430 (Bom) has decided the controversy in favour of the assessee. 28. Furthermore, the above view is affirmed by the Hon'ble Telangana High Court in M/s.Ta Infra Projects Limited Vs The DCIT [Writ Petition Nos.26645, 26654, 26667, 28497, 26788 of 2024 and 12437, 9561, 14549, 14664, 14674, 12873 of 2025 dated 14.07.2025], following the judgments of the Hon'ble Telangana High Court in Kankanala Ravindra Reddy Vs ITO (2023) 156 taxmann.com 178 (Telangana) and Hon'ble Bombay High Court in Hexaware Technologies Ltd Vs ACIT (2024) 464 ITR 430 (Bom) has set aside the notices issued u/s. 148 by JAO. 29. Further, we take note of the decision of the Hon'ble Telangana High Court in Sri Venkatramana Reddy Patloola Vs DCIT [Writ Petition Nos.13353, 16141 and 16877 of 2024 dated 24.07.2024], following the judgment....
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....gies Ltd Vs ACIT (2024) 464 ITR 430 (Bom) is still pending adjudication before the Hon'ble Supreme Court. 33. The Supreme Court in a landmark judgement in the case of Kunhayammed v. State of Kerala [2000] 113 Taxman 470/245 ITR 360 (SC) has summarised the doctrine of merger as follows:- "Where an appeal or revision is provided before a superior forum against an order passed by a Court, Tribunal or any other authority and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges with the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law". 34. The Supreme Court in the aforesaid case has concluded as follows:- (i) Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye....
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....judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation. 35. In the case of S. Shanmugavel Nadar v. State of Tamil Nadu [2003] 263 ITR 658 (SC), the Apex Court held that what merges is the operative part i.e. the mandate decree issued by the court which may have been expressed in positive or negative form. The application of the doctrine depends on the nature of the appellate or revisional order, the scope of the statutory provisions conferring jurisdiction and the subject matter of challenge with the following remarks:- "...........Though loosely an expression "merger of judgement, order or decision of a Court or forum into the judgement, order or decision of a superior forum" is often employed, as a general rule, the judgment or order having been dealt with by a superior forum and having resulted in confirmation, reversal or modification, what merges is the operative part, i.e., the mandate or decree issued by the Court which may....
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.... authored by one of us (Chief Justice), that it is mandatory for the FAO to issue the concerned notices and issuance thereof by the JAO would make the notice invalid. 5. Counsels for assessee's are ad idem that the law as laid down in Hexaware Technologies Ltd (supra) will apply. Learned Additional Solicitor-General, however, submits that the Revenue does not accept the law as laid down in Hexaware Technologies Ltd (supra); and that there is a special leave petition filed against the order and judgment in Hexaware Technologies Ltd (supra) and the same is expected to be taken up after the Supreme Court reopens. 6. Admittedly, learned Additional Solicitor-General, in fairness, states that there is no stay. Therefore, the law as laid down by Hexaware Technologies Ltd (supra) applies. 7. It is clarified that if the Apex Court reverses the judgment of Hexaware Technologies Ltd (supra), parties will be governed by the decision of the Apex Court. 8. Keeping open all rights and contentions of parties, including liberty to apply to this Court, in case the Revenue succeeds before the Apex Court, for revival of these petitions, the notices issued in these p....
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....en if the notice has been issued by Jurisdictional Assessment Officer and not Faceless Assessment Officer, the notice issued under Section 148A/148 of the Income Tax Act will be valid. 3. Ms.Vardhini Karthik submitted that this Court has, in many matters, held, following the judgment of the Bombay High Court in Hexaware Technologies Limited v. Assistant Commissioner of Income Tax', that notice that has to be issued by Faceless Assessment Officer has to be issued Faceless Assessment Office and if issued by Jurisdictional Assessment Officer, the same is not valid. 4. Ms.Premalatha, who takes notice for the Revenue, states that the law as proposed by Ms.Vardini Karthick is correct and therefore, the Court may quash and set aside the notices, but keep open liberty of the Revenue to re-ignite the notices in case the Apex Court interferes with the order and judgment of the Bombay High Court in Hexaware Technologies (supra). 5. Keeping open the Revenue's rights and contentions, as noted above, the impugned notices dated 15.04.2024 are quashed and set aside. The appeal is disposed of. There shall be no order as to costs. Consequently, the interim applicat....