SREE KAMATCHI CONSTRUCTION,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX-26(1), MUMBAI

This appeal by the assessee is directed against the order dated 09.02.2026 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], under section 250 of the Income-tax Act, 1961 (“the Act”), for the assessment year 2017-18. The impugned appellate order arises from the assessment order dated 18.05.2023 passed under section 147 read with section 144B of the Act, determining the total income of the assessee at ₹42,10,979.

The assessee has raised grounds challenging the validity of the reassessment proceedings on account of violation of sections 149, 151 and 151A of the Act and also challenging, on merits, the addition of ₹42,12,320 made under section 43CA of the Act. The assessee has further challenged the refusal of the learned CIT(A) to condone the delay in filing the first appeal.

Briefly stated, the assessee is a partnership firm engaged in the business of builders and developers. The Assessing Officer reopened the assessment and made an addition of ₹42,12,320 under section 43CA of the Act, being the difference between the consideration stated in the agreements for sale and the corresponding stamp duty valuation in respect of two flats. The assessee filed an appeal before the learned CIT(A) with a delay of about 222 days. It was explained that the assessee was dependent upon its erstwhile Chartered Accountant for handling its taxation matters; that certain disputes had arisen with the said Chartered Accountant; and that the assessment order came to its notice only when the newly appointed Chartered Accountant examined the income-tax portal. The learned CIT(A), however, did not accept the explanation, declined to condone the delay and consequently dismissed the appeal without deciding the grounds on merits.

Before us, the learned Authorised Representative submitted that the assessee had duly explained before the learned CIT(A) the circumstances resulting in the delay and had demonstrated sufficient cause for not filing the appeal within the prescribed period. It was submitted that the delay was neither deliberate nor attributable to any mala fide intention and that the appeal ought to have been decided on merits in the interest of substantive justice.

The learned Authorised Representative further submitted that the notice under section 148 of the Act were issued after obtaining sanction from the Principal Commissioner of Income-tax, who was not the competent specified authority under section 151 of the Act. In support of this contention, reliance was placed on the judgment of the Hon’ble Bombay High Court in Alag Property Construction (P.) Ltd. v. ACIT [2025] 179 taxmann.com 578 (Bom). It was contended that, after the expiry of three years from the end of the relevant assessment year, sanction granted by the Principal Commissioner was without jurisdiction.

The learned Departmental Representative, on the other hand, relied upon the order of the learned CIT(A) and submitted that the assessee had failed to satisfactorily explain the delay in filing the first appeal.

We have heard the rival submissions and perused the material available on record. The learned CIT(A) has dismissed the appeal at the threshold on account of the delay and has, therefore, not examined either the jurisdictional grounds challenging the reassessment proceedings or the addition made under section 43CA of the Act. The explanation furnished by the assessee shows that the delay occurred on account of the circumstances relating to the handling of its taxation matters by the erstwhile Chartered Accountant. Having regard to the overall facts and circumstances of the case, we are of the considered view that the assessee should not be denied an opportunity of having its appeal decided on merits merely on account of the delay. The cause of substantive justice deserves to prevail over technical considerations, particularly when no mala fide intention or deliberate inaction is established against the assessee. We, therefore, condone the delay in filing the appeal before the learned CIT(A).

The assessee has also raised a jurisdictional issue regarding the competence of the authority which granted sanction under section 151 of the Act and has relied upon the judgment of the Hon’ble jurisdictional High Court in Alag Property Construction (P.) Ltd. (supra). However, the primary records relating to the sanction, the identity and designation of the sanctioning authority and the approval granted for passing the order under section 148A(d) and issuing the notice under section 148 are not available before us. These facts are also not borne out from the assessment order or independently examined in the impugned appellate order. Since the learned CIT(A) dismissed the appeal solely on the ground of delay, the legal grounds challenging the validity of the reassessment proceedings have remained undecided.

In view of the above, in the interest of substantive justice, we set aside the impugned order and restore the entire appeal to the file of the learned CIT(A) for fresh decision. The learned CIT(A) shall call for and examine the relevant assessment and sanction records and specifically adjudicate the assessee’s grounds regarding the competent specified authority under section 151 of the Act in the light of the judgment of the Hon’ble Bombay High Court in Alag Property Construction (P.) Ltd. (supra). The other legal grounds as well as the grounds relating to the addition under section 43CA of the Act shall also be decided by a speaking order, after providing reasonable opportunity of being heard to the assessee. We have not expressed any opinion on the merits of any of the grounds raised by the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 30/07/2026.