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Facts
The assessee, an NRI, filed an appeal before the CIT(A) challenging an order passed under Section 250 of the Income Tax Act. The CIT(A) condoned a delay of 264 days, accepted additional evidence, and remitted the matter back to the AO for verification. The assessee raised several grounds, including violation of natural justice and failure to adjudicate legal grounds.
Held
The Tribunal held that the CIT(A) could not have remitted the matter back to the AO, as the assessment order was not passed ex parte. The CIT(A) was statutorily required to consider the legal grounds raised by the assessee, which it failed to do.
Key Issues
Whether the CIT(A) erred in remitting the matter back to the AO without adjudicating the grounds on merits and violating principles of natural justice. Whether the reassessment proceedings were validly initiated and adjudicated.
Sections Cited
250, 147, 144, 251, 144B, 148, 149(1)(b), 151, 271(1)(c), 271(1)(b), 271F, 234A, 234B
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Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN & HON’BLE SHRI PRABHASH SHANKAR
Sunil Suresh Rane Vs. ITO Ward 42(3)(4) 301 Amrita, Apts, Rajaji Kautilya Bhawan C41- Path Lane 43, Avenue 3, near No.4 Dombivli Videsh Bhavan, G Block Mumbai - 421201 BKC, Gilban Area, BKC, Bandra East Mumbai - 400051 PAN/GIR No. ABTPR2589P (Applicant) (Respondent) Assessee by Shri Aakash Parekh (Virtually Present) Revenue by Shri Brajendra Kumar (SR. DR) Date of Hearing 12.02.2026 Date of Pronouncement 10.03.2026 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order 29.09.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2016-17. The following grounds are reproduced below:
1. Ground No. 1: Gross Violation of Principles of Natural Justice On the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in passing the appellate order u/s 250 of the Act dated 29-09-2025 without issuing a mandatory notice of hearing u/s 250 and without providing any opportunity of personal hearing, thereby violating the fundamental principles of natural justice and rendering the entire appellate proceeding void ab initio.
2. Ground No. 2: Failure to Adjudicate Legal Grounds Before Remand On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in law in failing to first decide the pure legal grounds raised
by the appellant, particularly the challenge to the very validity and jurisdiction of the assessment proceedings u/s 147 r.w.s. 144, before invoking his powers u/s 251 of the Act to set aside the assessment and the CIT(A) ought to have decided these legal issues which went to the root of the matter and did not require any fresh fact- finding.
3. Ground No. 3: Improper Invocation of Power u/s 251 On the facts and in the circumstances of the case and in law, the Leamed CIT(A) erred in law and on facts in mechanically invoking the power to set aside the assessment u/s 251 of the Act, when: a) The entire factual matrix and complete documentary evidence were already available on the appellate record; b) Detailed written submissions on both facts and law had been filed by the appellant; c) No finding was recorded that the facts were insufficient or incomplete to decide the appeal on merits; d) The remand resulted in unnecessary prolongation of the litigation and harassment to the appellant, defeating the very purpose of the appellate remedy.
4. Ground No. 4: Not dealing with Specific grounds of appeal raised On the facts and in the circumstances of the case and without prejudice to any other grounds, the Ld. CIT(A) has erred in passing an order under section 250 of the Act without adjudicating the matter on merits and without dealing with the specific grounds raised by the appellant, in violation of the mandate of section 250(6) of the Act and therefore, the impugned order, being non-speaking and devoid of proper reasoning, is bad in law and deserves to be quashed.
5. Ground No. 5: Failure to Adjudicate Validity of Reassessment Proceedings 5.1. On the facts and in the circumstances of the case and in law, the assessment order passed u/s 147 r.w.s. 144 read with section 144B of the Act dated 29-02-2024 is without jurisdiction, illegal and bad in law and Ld. CIT-Appeal should have quashed the impugned assessment order instead of setting aside the said order to the file of AO. 5.2. On the facts and in the circumstances of the case and without prejudice to any other grounds, the Ld. AO and CIT- Appeal have erred in law and on facts in passing the assessment under section 147 of the Act and issuing notice under section 148 of the Act, without complying with the various jurisdictional preconditions and statutory safeguards under Income Tax Act, rendering the reassessment proceedings bad in law and liable to be quashed. 5.3. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in framing the assessment in pursuance of a time-barred notice issued under section 148 of the Act, wherein the alleged escapement of income is only Rs 5,36,290, which is admittedly below the monetary threshold of Rs 50,00,000 as prescribed under section 149(1)(b); therefore, the impugned notice is without jurisdiction and bad in law and the consequential reassessment deserves to be quashed. 5.4. On the facts and in the circumstances of the case and in law, Ld. NFAC has erred in upholding the illegal order passed by the Ld. NaFAC since the Notice u/ 148 dated 16-03-2023 was issued by Jurisdictional Assessing Officer (ITO Ward 42(3)(4), Mumbai) and not by the NaFAC and hence, the assumption of jurisdiction by Ld. JAO u/s 148 is in violation of mandatory jurisdictional conditions as stipulated in Notification No 18/2022 dated 29th March 2022, which has been upheld by Jurisdictional Honble Bombay High Court in case of Hexaware Technologies Ltd. 464 ITR 430 (Bombay) as mandatory Jurisdictional condition and therefore, the impugned reassessment proceedings and the consequential reassessment order may please be quashed. 5.5. On the facts and in the circumstances of the case and in law and without prejudice to other grounds the assessment order passed u/s 147 r.w.s. 144 of the Act is bad in law inasmuch as there was no valid and proper sanction by the prescribed authority under section 151 of the Act and hence the said order deserves to be quashed. 5.6. On the facts and in the circumstances of the case and without prejudice to any other grounds, the Ld. AO has erred in issuing notice under section 148 of the Act in a standard format without striking off the inapplicable reasons or specifying the exact basis for reopening, thereby the use of a generic, unmodified template without application of mind renders the notice vague, nonspeaking, and invalid in law, as held in various judicial precedents and consequently, the reassessment proceedings initiated pursuant to such defective notice are liable to be quashed.
6. Ground No. 6: Failure to Adjudicate on Capital Gains Computation 6.1. On the facts and in the circumstances of the case and in law and without prejudice to any other ground, Ld. AO has erred in making addition of Rs 5,36,290/- as Long Term Capital Gain which is incorrect both on facts and in law and hence, the said addition deserves to be deleted. 6.2. On the facts and in the circumstances of the case and in law and without prejudice to the other grounds, the Ld. CIT- Appeal/ AO has erred in not considering the legitimate statutory payment of Stamp Duty and Registration Charges amounting to Rs 3.52.500/- paid at the time of purchase of property as part of cost of acquisition while computing Long Term Capital Gain and therefore, the addition to the LTCG of Rs 5.36,290 made by the Ld. AD may please be deleted.
7. Ground No. 7: Failure to Adjudicate on TDS Credit On the facts and in the circumstances of the case and in law and without prejudice to the other grounds, the Ld. CIT- Appeal/ AO, without assigning any reasons and overlooking 26AS statement, has erred in not giving the credit of Tax Deducted at Source of Rs 1,18,050/- while computing the tax liability of the Appellant, and therefore, the same may please be allowed.
8. Ground No. 8: Failure to Adjudicate on Incorrect Tax Rate On the facts and in the circumstances of the case and in law and without prejudice to the other grounds, the Ld. CIT- Appeal/ AO has grossly erred in computing tax payable on Long Term Capital Gain by applying the Normal Tax rate i.e. slab wise instead of applying Special tax rate of 20% and thus, the Ld. AO may please be directed to apply the correct rate of taxation while computing tax on LTCG.
9. Ground No. 9: Failure to Adjudicate on Additions and Demand On the facts and in the circumstances of the case and in law and without prejudice to other grounds, the Ld. AO has erred in making addition of Rs 5,36,290/- under head Long term Capital Gain to the total income of the appellant and thereby further erred in raising the illegal tax demand of Rs 5,62,933/- and hence, the said addition as well as demand may please be deleted and set aside.
10. Ground No. 10: Failure to Adjudicate on Interest u/s 234A & 234B On the facts and in the circumstances of the case and in law and without prejudice to any other ground, the Ld. AO has erred in levying interest u/s 234A and 2348 of the Act, and the same may please be deleted.
11. Ground No. 11: Failure to Adjudicate on Penalty Proceedings On the facts and in the circumstances of the case and in law and without prejudice to any other ground, the Ld. AO has erred in initiating penalty u/s 271(1)(c). 271(1)(b) and 271F of the Act.
12. Ground No. 12: Prejudicial and Unwarranted Observations/Directions On the facts and in the circumstances of the case and in law and without prejudice to any other ground, the Leamed CIT(A) erred gravely in making the following prejudicial, speculative and wholly unwarranted observations/directions which were beyond the scope of the appeal and have severely prejudiced the appellant's case: a) Directing that "in case, the appellant remains non- cooperative... the AD may proceed to treat the above transactions as unexplained..." b) Directing the AO to "initiate recovery proceedings by provisionally attaching the property of the appellant..." The Appellant craves leave that these observations be expunged from the order as they pre-judge the issue, assume non-cooperation, and are contrary to the appellant's consistent cooperation throughout the proceedings.
Ground No. 13: General Ground The Appellant craves leave to add, amend, alter, modify, vary, or withdraw all or any of grounds of appeal, in the interest of justice, if necessary, at the time of hearing of the appeal.”
At the outset we noticed that the assessee is an NRI.
Ground Nos. 1 and 2 raised by the assessee are interrelated and interconnected and relates to challenging the order of the Ld. CIT(A) in restoring the matter back to the file of the AO without providing proper and sufficient opportunity of hearing to the assessee. Therefore, we have decided to adjudicate these grounds through the present consolidated order.
We have heard the counsels for both the parties, perused the material placed before us, the judgments cited before us, and the orders passed by the Revenue authorities. From the records, we noticed that assessee is an NRI and at the time of filing the appeal before the Ld. CIT(A), there was a delay of approximately 264 days. However, Ld. CIT(A), considering the reasons put forth, condoned the delay and consequently took the same for adjudication on merits. It was further noticed that the assessee had submitted additional evidence under Rule 46A of the Act before Ld. CIT(A). Therefore, the matter was remitted to the file of the AO to verify the claim regarding re-computation of capital gains and the availability of TDS as per Form 26AS for the year under consideration.
After having gone through the legal propositions and submissions of the parties, we are of the view that the Ld. CIT(A) could not have remitted the matter back to the file of the AO. As per the provisions of Section 251 of the Act, the only power given to the Ld. CIT(A) is to restore the matter back to the file of the AO in a case where the assessment order was passed ex parte.
After analysing the records, we find that the assessment order in this case was passed under Section 143(3) read with Section 147 and Section 144B of the Act; therefore, it was not an ex parte assessment.
Thus, under these circumstances, the Ld. CIT(A) could not have remitted the matter back to the file of the AO. Even otherwise, the assessee had raised legal grounds which were not at all considered by the Ld. CIT(A), though it was statutorily required.
Be that as it may, without going into the merits of the allegations, we set aside the order of Ld. CIT(A) and restore the matter back to the file of Ld. CIT(A) with a direction to adjudicate all the grounds raised by the assessee on merits, needless to mention after providing sufficient and adequate opportunity of hearing to the assessee.
Before parting, we want to make it clear that our decision to restore the matter back to the file of CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute which shall be adjudicated by CIT(A) independently in accordance with law.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 10.03.2026
Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 10/03/2026 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलार्थी / The Appellant 1. प्रत्यर्थी / The Respondent. 2. संबंधित आयकर आयुक्त / The CIT(A) 3. 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण,मुम्बई/ DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file. आदेशानुसार/BY ORDER, सत्याधपत प्रधत //True Copy//
उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai