ITO, WARD-10(1), HYDERABAD vs. MOHAMADI NILOFER, HYDERABAD

During the pendency of the first appellate proceedings, the assessee brought to the notice of the CIT(A) that the reassessment order itself had been challenged before the Hon'ble High Court of Telangana in W.P. No.21273 of 2024. It was submitted that the Hon’ble High Court, following its earlier order dated 14.09.2023 in W.P. No. 25903 of 2022, set aside the impugned show-cause notice and the consequential reassessment order, while reserving liberty to the parties to proceed in accordance with law. The CIT(A), taking note of the aforesaid judgment, held that once the reassessment order itself had been set aside by the Hon'ble High Court, then nothing survived for adjudication in appeal and accordingly treated the appeal as infructuous. 5. The Revenue, aggrieved by the aforesaid order of the CIT(A), has carried the matter in appeal before us.

The Ld. Sr. Departmental Representative (for short “Sr. DR”), at the threshold of hearing of the appeal, submitted that the same involves a delay of 7 days (sic). On the reason for the delay, the Ld. Sr-DR submitted that the same had crept in because the concerned AO, i.e., ACIT (In-Situ), Ward-10(1), Hyderabad, during the relevant period, i.e., from 25/12/2025 to 30/12/2025, had remained on leave for personal reasons. The Ld. Sr. DR, to fortify his claim, had taken us through the “affidavit” filed by the concerned AO, i.e., ACIT (In-situ), Ward- 10(1), Hyderabad.

We have given thoughtful consideration and are of the view that, as the aforesaid delay is not inordinate and had surfaced because of bona fide reasons, the same merits condonation.

On the merits of the case, the Ld. Sr. Departmental Representative (for short “Sr. DR”) submitted that the CIT(A) ought not to have disposed of the appeal merely on the basis of the judgment of the Hon'ble High Court of Telangana, particularly when the Department has already preferred a “Special Leave Petition” (“SLP”) before the Hon'ble Supreme Court bearing Diary No.27649 of 2025, and the issue has not attained finality. It was, therefore, submitted that the CIT(A) ought to have awaited the outcome of the proceedings before the Hon'ble Supreme Court.

We have heard the Ld. Authorized Representatives of both parties, perused the orders of the lower authorities and considered the material available on record.

Admittedly, the reassessment order dated 19.03.2024 passed under Section 147 r.w Section 144B of the Act, which constituted the subject matter of appeal before the CIT(A), stood set aside by the Hon'ble High Court of Telangana in W.P. No.21273 of 2024. Once the very assessment order ceased to exist by virtue of the judicial order passed by the Hon'ble Jurisdictional High Court, the CIT(A) could not have adjudicated the additions made therein on the merits. We are of the firm conviction that as an appellate authority derives its jurisdiction from the existence of a valid assessment order, and when such assessment itself has been annulled or set aside by a superior constitutional court, nothing survives for adjudication in appeal. 11. Apropos the Ld. Sr. DR’s contention that the CIT(A) ought to have deferred disposal of the appeal on account of the pendency of the Department's Special Leave Petition before the Hon'ble Supreme Court, we find no substance in the same. We say so because it is well settled that the mere filing or pendency of an SLP does not eclipse the binding effect of the judgment of the jurisdictional High Court. In our view, unless the operation of the judgment has been stayed or suspended by the Hon'ble Supreme Court, the authorities functioning within the territorial jurisdiction of the Hon’ble High Court are bound to give full effect to the judgment. In the present case before us, the Revenue has neither placed on record nor even contended that the judgment of the Hon'ble High Court of Telangana has been stayed by the Hon'ble Supreme Court. Our aforesaid view is supported by the judgment of the Hon’ble Supreme Court in Union of India v. Kamlakshi Finance Corporation Ltd., 1992 Supp (1) SCC 443, wherein, emphasizing the principle of judicial discipline, it was observed as under: “The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.” (emphasis supplied by us)

In our considered opinion, the CIT(A) committed no error in following the binding judgment of the Hon'ble Jurisdictional High Court and holding that the appeal before him had become infructuous in view of the reassessment order itself having been set aside. Insofar as the apprehension expressed by the Revenue that the issue should be kept alive because an SLP is pending cannot provide a legal basis for interfering with the impugned appellate order. 13. Before parting, we may, however, observe that the liberty reserved by the Hon'ble High Court of Telangana to the parties to proceed in accordance with law remains unaffected by this order. Consequently, if any proceedings are initiated or any order is passed pursuant to the directions of the Hon'ble High Court or in consequence of any subsequent order passed by the Hon'ble Supreme Court, the rights and remedies available to the parties under the Act shall remain open in accordance with law. 14. In view of our aforesaid deliberations, we find no infirmity in the impugned order of the CIT(A), and thus uphold the same.

In the result, the appeal of the Revenue is dismissed. Order pronounced in open court on 15th July, 2026. Sd/- Sd/- Sd/- Sd/- (मधुसूदन साविडया) (रवीश सूद) (MADHUSUDAN SAWDIA) (RAVISH SOOD) लेखासद�/ACCOUNTANT MEMBER �ाियकसद�/JUDICIAL MEMBER Hyderabad Dated: 15th July, 2026. *OKK/SPS 6 Copy to: ITO, WARD-10(1), ROOM NO.516, IT TOWERS, 1 AC GUARDS, HYDERABAD-500004, TELANGANA MOHAMADI NILOFER, FLAT NO.102 PRASAD ENCLAVE, 2 CHILKALGUDA, SITAPHALMANDI S.O, SECUNDERABAD-500061, TELANGANA 3 THE PCIT, HYDERABAD. 4 THE D.R., ITAT, HYDERABAD BENCH 5 GUARD FILE