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Facts
The assessee challenged the CIT(A)'s order for AY 2018-19, which failed to condone a 146-day delay in appeal filing and upheld an addition of Rs. 1,45,07,096/-. The assessee contended that the firm was dissolved in 2014, making it a non-existent entity, and the assessment was reopened by a Jurisdictional AO (JAO) on 30.03.2022, which lacked jurisdiction after 29.03.2022 as per notifications requiring reopening by a Faceless Assessment Unit.
Held
The Tribunal condoned the delay in filing the appeal, noting the assessee's lack of knowledge due to the firm's dissolution. It held that the re-assessment notice issued by the Jurisdictional AO after the specified date was without jurisdiction, and an assessment order passed against a dissolved/non-existent entity is void ab initio. Consequently, the assessment order was quashed.
Key Issues
1. Whether the delay in filing the appeal before the CIT(A) should be condoned. 2. Whether the assessment reopened by the Jurisdictional AO instead of the Faceless Assessment Unit was valid. 3. Whether an assessment order passed against a dissolved and non-existent entity is valid.
Sections Cited
Section 253(5) of Income Tax Act, Section 249(3) of Income Tax Act, Section 5 of Indian Limitation Act, 1963, Section 148 of Income Tax Act, Section 143(2) of Income Tax Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
आयकर अपीलीय अिधकरण,च�ीगढ़ �ायपीठ, च�ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ �नधा�रण वष� / Assessment Year: 2018-19 Shaheed Darshan Filling Station, The ITO, Village-Iraq, Kohara Road, Vs Ward-3, Machhiwara, SO-Irak, Ludhiana. Khanna. �थायी लेखा सं./PAN NO: AARFS1129H अपीलाथ�/Appellant ��यथ�/Respondent & S.A. No. 5/CHD/2026 in आयकर अपील सं./ �नधा�रण वष� / Assessment Year: 2018-19 Shaheed Darshan Filling Station, The ITO, Village-Iraq, Kohara Road, Vs Ward-3, Machhiwara, SO-Irak, Ludhiana. Khanna. �थायी लेखा सं./PAN NO: AARFS1129H अपीलाथ�/Appellant ��यथ�/Respondent Assessee by : Shri Sifatpreet Singh, CA and Shri Amanjot Singh, CA Revenue by : Dr. Ranjit Kaur, Addl. CIT Sr. DR Date of Hearing : 28.01.2026 Date of Pronouncement : 03.02.2026 PHYSICAL HEARING O R D E R PER RAJ PAL YADAV, VP
The assessee is in appeal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 21.11.2025 passed for assessment year 2018-19.
& SA-5/CHD/2026 A.Y.2018-19 2
2. The assessee has taken 7 grounds of appeal, however, its grievance revolves around three issues, namely ; a) The ld.CIT (Appeals) has erred in not condoning delay of 146 days in filing the appeal and dismissing the appeal being time barred; b) The ld.CIT (Appeals) has erred in not taking cognizance of the fact that assessment has been reopened by JAO on 30.03.2022 whereas JAO has no jurisdiction to reopen an assessment after 29.03.2022. It has to be reopened by the Faceless Assessment Unit. c) The ld.CIT (Appeals) has erred in upholding the addition of alleged unaccounted transactions of Rs.1,45,07,096/-.
3. With the assistance of ld. Representative, we have gone through the record carefully. The first aspect is, whether delay before the ld.CIT (Appeals) deserves to be condoned or not. It has been submitted by the ld. counsel for the assessee that assessee firm was dissolved on 24.03.2014 and it was non- existing during assessment year 2018-19. Therefore, service of notice or assessment order through electronic mode was not a good service and it was not in its knowledge. The ld.CIT (Appeals) failed to appreciate this aspect.
& SA-5/CHD/2026 A.Y.2018-19 3
4. We have duly considered the rival contentions and gone through the record carefully.
Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub- section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353:
& SA-5/CHD/2026 A.Y.2018-19 4 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
"Every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical & SA-5/CHD/2026 A.Y.2018-19 5 grounds but because it is capable of removing injustice and is expected to do so.
Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N. Balakrishnan Vs. M. Krishnamurthy (1998) 7 SCC 123 dated 03.09.1998. It reads as under:
“Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC & SA-5/CHD/2026 A.Y.2018-19 6 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.
7. In the light of above, we are of the opinion that assessee was prevented by sufficient reasons in not filing the appeal before ld.CIT (Appeals) well in time, because it was not in its knowledge whether impugned assessment order was passed or not.
In view of the above, we deem it appropriate to condone the delay in filing appeal before the ld.CIT (Appeals). Since issue of re-opening made by jurisdictional AO instead of Faceless AO is involved, therefore, instead of relegating the issue to the file of CIT (Appeals) for deciding on merit, we deem it appropriate to decide ourselves.
& SA-5/CHD/2026 A.Y.2018-19 7
Copy of the notice issued u/s 148 of the Act is being placed on page No. 1 of the Paper Book. It has been issued on 30.03.2022 by Shri Ashok Kumar, ITO, Ward-3, Khanna.
We find that an identical issue was decided by this Bench in with C.O. No.41/CHD/2024. The finding of the Tribunal read as under:
“6. We have duly considered the rival contentions and gone through the record carefully. Admittedly, notice under Section 148 was issued after the Notification issued by the Ministry of Finance, Government of India on 29.03.2022. The notice under Section 148 has been issued on 29.03.2023 i.e. almost one year from the Notification. Thus, facts of other year are squarely applicable. The issue in dispute is covered by the judgement of Hon'ble jurisdictional High Court which read as under : “DEEPAK SIBAL, J. (Oral)
Challenge made through the instant petition is to the notice dated 01.03.2025 (Annexure P-l) issued to the petitioner by the respondents tinder Section 148 of the Income Tax Act, 1961. The primary ground of challenge raised by the petitioner is that the impugned notice has been issued by the Jurisdictional Assessing Officer which could not have been done because in terms of the notification dated 29.03.2022 (Annexure P-2), issued by the Ministry of Finance. Government of India, the impugned notice could have been issued only by way of faceless assessment.
In support of his afore submission, learned counsel for the petitioner places reliance on the following two judgments of this Court:- i. CWP-15745-2024, titled Jatinder Singh Bhangu Vs. Union of India and others, decided on 19.07.2024; and ii. CWP-21509-2023, titled Jasjit Singh Vs. Union of India and others, decided on 29.07.2024.
& SA-5/CHD/2026 A.Y.2018-19 8 3. Learned counsel for the respondents does not dispute the fact that the case of the petitioner is covered in his favour by the law laid down through the aforesaid two judgments rendered by two different co- ordinate Benches of this Court in Jatinder Singh Bhangu and Jasjit Singh’s case (supra).
In the light of the above, in terms of the law laid down in Jatinder Singh Bhangu's and Jasjit Singh's cases (supra) the impugned notice dated 01.03.2025 (Annexure P-1) issued by the Jurisdictional Assessing Officer, is hereby quashed with liberty to the respondents to proceed against the petitioner in accordance with law.
5. The petition is allowed in the above terms.
[DEEPAK SIBAL] JUDGE [ LAPITA BANERJI] 30.04.2025 JUDGE
Respectfully following the judgement of the Hon'ble High Court, we allow the ground of appeal of Cross Objection and hold that notice issued under Section 148 of the Income Tax Act in assessment year 2019-20 is bad in the eyes of law. It was without jurisdiction. Accordingly, re-assessment order is quashed.”
11. Apart from the above, ld. counsel for the assessee has submitted that assessee firm was dissolved on 24.03.2014 and this assessment order has been passed on a non-existing entity. A reference has been to the following decisions : i) Hon'ble Supreme Court in the case of PCIT v. Maruti Suzuki India Ltd. (2019) have held that a notice and subsequent assessment order issued in the name of a non-existent entity is void ab initio . This is considered a substantive jurisdictional defect, not a mere procedural irregularity that could be cured. ii) Hon'ble Punjab & Haryana High Court have held in the case of CIT Vs. Rakesh Kumar , Mukesh Kumar [2009] (303 ITR 305) that & SA-5/CHD/2026 A.Y.2018-19 9 the reassessment proceedings initiated and assessments completed in the case on a dead person by the AO to be void ab initio. iii) Hon'ble Delhi High Court have held in the case of Savita KapilaVsCIT (2020) Reassessment notice issued to deceased person is invalid even if legal heir participated. iv) Hon'ble Delhi HC in the case of Vipin Walia Vs Income Tax Officer has held that AO must issue fresh notice to legal heirs; old notice is void. v) Legal Heirs of Late Sh Virendra Kumar Bhatnagar (Deceased) Vs ACIT (Delhi High Court) : W.P.(C) 12215/2021 Date of Judgment: 09/11/2022 In the present case, the jurisdictional notice under Section 143(2) of the Act was issued against the dead person and the assessment order has also been passed against the dead person on his PAN , without bringing on record all his legal representatives, therefore, the said assessment order and the subsequent notices are null and void and are liable to be set aside. vi) Meet Lalwani, Legal Heir of Late Mrs. Amita Lalwani Vs ITO (Madhya Pradesh High Court) Appeal Number : Writ Petition No. 9697 of 2022 Date of Judgment 23/1 1/2023
In this case it has been held as under:-
" In view of the above and that various High Courts have observed that the notice issued to a dead person for reopening of assessment of a dead person is null and void, this Court holds that the notice and all consequential proceedings arising therefrom in the name of the deceased assessee are not sustainable." vii) The Gujarat High Court in case of Bhupendra Bhikhalal Desai v. ITO [2021] have held that notice issued to a dead person is not valid. The said decision was also upheld by the honourable Supreme Court in Income Tax Officer v. Bhupendra Bhikhalal Desai, [2021] (131 taxmann.com 40) (SC).
In view of the above legal position and the case laws the assessment completed in the name of a deceased person, being legally invalid , deserves to be quashed.
& SA-5/CHD/2026 A.Y.2018-19 10
Since we have already quashed the re-assessment order and both the authorities have not adjudicated upon this issue, whether the firm was dissolved or not, therefore, at this stage, we do not deem it necessary to deal with this issue. However, in case our order is being set aside by higher authority or recalled on account of change in law, then assessee will be at liberty to raise all the pleas.
In view of the above, this assessment order is not sustainable and is accordingly, quashed.
As far as Stay Application is concerned, we have quashed the assessment order and allowed the appeal of the assessee, therefore, it becomes redundant and dismissed accordingly.
In the result, appeal of the assessee is allowed and Stay Application is dismissed.
Order pronounced on 03.02.2026.