Mehboob Khan Vs Assessing Officer (ITAT Agra)
Check the Jurisdiction Before Checking the Capital Gain
The dispute: Property sales lead to reassessment
The assessee filed his original return for AY 2014-15 on 2 March 2015, declaring total income of ₹2,18,920. Subsequently, the Department received information that he had sold two immovable properties for consideration lower than the value relevant for applying section 50C.
After recording reasons and obtaining approval, the Assessing Officer reopened the assessment through a notice under section 148 dated 31 March 2021. The assessee filed a return in response on 31 July 2021, declaring income of ₹3,39,441.
The assessee also objected to the reopening. These objections were disposed of on 15 March 2022. Thereafter, the Assessing Officer completed the reassessment on 23 March 2022, making additions aggregating to ₹33,50,000, comprising ₹17 lakh and ₹16.50 lakh relating to the two properties.
Non-compliance leaves the factual record incomplete
The Assessing Officer issued notices under sections 143(2) and 142(1) seeking details of the property transactions. According to the assessment narration, the assessee did not furnish the information requested.
The assessment was consequently completed using the material available on record. The order describes the additions as based on the values attributed to the two properties.
The assessee challenged this assessment before the CIT(A). However, his appeal involved more than the factual computation of capital gains. He also questioned whether the Assessing Officer had validly assumed jurisdiction to reopen the assessment.
That distinction became decisive before the Tribunal.
The CIT(A)’s approach: Send the computation back to the AO
By order dated 24 December 2025, the CIT(A) set aside the assessment and remanded the matter to the Assessing Officer, invoking the proviso to section 251(1)(a).
The direction was to verify the computation of short-term capital gains and frame the assessment after providing a reasonable opportunity of hearing.
While this gave the assessee another opportunity to explain the transactions, it left an important question unanswered: Could the reassessment proceedings themselves lawfully continue?
The assessee approached the Tribunal, contending that the CIT(A) had failed to properly address his objections to the validity of proceedings under section 147.
A 162-day delay was condoned
The Tribunal appeal was delayed by approximately 162 days. The assessee explained that he was a villager, had been ill, and had undergone treatment at different places during the relevant period. Medical papers accompanied the condonation application.
The Tribunal accepted the explanation as sufficient cause and condoned the delay in the interest of justice and fair play.
Although no one appeared for the assessee at the Tribunal hearing, the Bench examined the record and heard the Departmental Representative. The appeal was therefore considered on the material available rather than rejected merely for non-appearance.
The overlooked grounds concerned the foundation of reassessment
The Tribunal found that the assessee had raised pure legal grounds before the CIT(A). These included a challenge to the assumption of jurisdiction under section 147 instead of section 153C, and the allegation that reopening rested on borrowed satisfaction.
The Tribunal did not decide whether either objection was ultimately correct. Its finding was that the CIT(A) had not adjudicated these grounds at all before sending the matter back for verification of capital gains.
A direction to rework the computation could not substitute for a decision on objections questioning the legal foundation of the assessment.
The precedent: The appellate authority must address its own omission
The Tribunal relied on the Delhi High Court decision in Akasaki Technology (P) Ltd. v. PCIT, ITA No. 241/2025, dated 27 November 2025.
As recorded in the Tribunal’s order, the High Court had held that, where no valid order under section 144 had been passed, remand to the Assessing Officer was impermissible, particularly when jurisdictional grounds had been raised.
The High Court further explained that an infirmity arising at the level of the CIT(A), while exercising powers under section 251, required correction by the CIT(A), rather than the Assessing Officer.
Applying that reasoning, the Tribunal set aside the appellate order and restored the matter to the CIT(A) for fresh adjudication, including consideration of the assessee’s legal grounds.
Author’s comments: A fresh computation cannot answer a jurisdictional objection
The practical lesson is that an appellate order must deal with grounds challenging jurisdiction, even when the factual record calls for further examination. An objection that proceedings should have been taken under section 153C, or that reopening reflects borrowed satisfaction, requires a reasoned decision.
However, the outcome must be described accurately. The Tribunal neither quashed the reassessment nor deleted the ₹33.50 lakh additions on merits. It also did not hold that section 153C necessarily applied.
The appeal was allowed for statistical purposes, with the matter returned to the CIT(A). The assessee secured adjudication of his neglected legal grounds. The validity of reopening and the ultimate tax liability remain to be decided.
Cases Discussed
- Akasaki Technology (P) Ltd. v. PCIT, ITA No. 241/2025, Delhi High Court, order dated 27.11.2025 — followed by the Tribunal for the principle that where the infirmity arises at the level of the CIT(A) in exercise of appellate jurisdiction under section 251, the jurisdictional issue must be decided by the CIT(A) and cannot simply be left to the Assessing Officer through remand.
FULL TEXT OF THE ORDER OF ITAT AGRA
This appeal is directed against the impugned order dated 24.12.2025 passed in appeal No NFAC/2013-14/10120633 by the ld. Commissioner of Income Tax/NFAC (Delhi) [(hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2014-15, wherein ld CIT(A), set aside the assessment order and remanded the matter back to the file of ld assessing officer in exercise of powers vested in him vide proviso to section 251(1)(a) of the Act to frame the assessment order after verifying the computation of short term capital gain and after affording reasonable opportunity of hearing to the assessee.
2. At the outset, we notice that, according to registry’s report, the assessee filed this second appeal on 11.08.2026 against the impugned order dated 24.12.2025 by a delay of about 162 days. The reasons mentioned in assessee’s delay condonation application are that, the assessee is a villager, who was ill and was undergoing treatment (medical papers attached) at different places during the relevant period thus could not file the appeal timely. In the interest of justice and fairplay, we treat the cause shown as sufficient and condone the delay caused in filing this appeal. The appeal is admitted for hearing.
3. Briefly stating, the assessee filed original return of income for A.Y. 2014-15 on 02.03.2015, declaring total income at Rs. 2,18,920/-. It came to the notice of the revenue that two immovable properties were sold by the assessee for the consideration of less than the fair market value of the properties, attracting section 50C of the Act, thus after recording satisfaction and after obtaining approval from the competent authority, assessee’s case was reopened u/s 147 by issuance of notice u/s 148 of the Act dated 31.03.2021. The assessee filed return in response thereof on 31.07.2021 belatedly, declaring income of Rs. 3,39,441/-. Objections against the reopening filed by the assessee were disposed of by the assessing officer on 15.03.2022. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee, seeking the details in respect of the sale of aforesaid two immovable properties, however, the assessee failed to file any details sought by the revenue. Hence, the assessment proceedings were completed by treating the fair market value of two properties, on the basis of material available on record and addition of Rs. 33,50,000/- (17,00,000+16,50,000) and added in the income of the assessee, vide assessment order dated 23.03.2022 passed u/s 147/144B of the Act.
4. Aggrieved, assessee preferred an appeal before ld CIT(A), who remanded the matter back to the assessing officer with the observations noted hereinabove.
5. Assessee has challenged the impugned order on the ground that ld CIT(A) has erred in upholding the validity of proceedings u/s 147 of the Act, by ignoring assessee’s submissions.
6. Perused the records. None responded for the appellant assessee. Heard ld Sr DR for the respondent revenue.
7. We notice that assessee raised legal grounds before the ld CIT(A) such as wrongful assumption of jurisdiction u/s 147 as against such assumption u/s 153(C) of the Act and such initiation being based on borrowed satisfaction. However, without adjudication of these pure legal grounds, ld CIT(A) has set aside the issue to the ld assessing officer merely for the verification of factual details in respect of STCG.
8. It is relevant to refer order dated 27.11.2025 passed by the Hon’ble Delhi High Court in ITA No. 241/2025 Akasaki Technology (P) Ltd v. PCIT, wherein, Hon’ble Delhi High Court (DB) held that where no valid order u/s 144 was passed, the matter could not be remanded back to A.O by ld CIT(A), more so, where jurisdictional grounds were raised before him. Hon’ble Delhi High Court further observed as under:-
“15. Since an infirmity has arisen at the level of the CIT(A), who was exercising jurisdiction under Section 251 of the Act, the issue raised need to be decided by the CIT(A) and not by the AO. We accordingly, set aside the order passed by the ITAT dated 07.05.2025 and also the order of the CIT(A) dated 25.10.2024 and remand the matter back to the CIT(A) who shall decide the appeal afresh including on the plea advanced by Mr. Krishnan, as noted above.”
9. In view of the above, impugned order dated 24.12.2025 passed by ld CIT(A), is set aside. The matter is restored back to the file of ld CIT(A) for passing order a fresh in view of legal grounds raised by the assessee in accordance with the observations made by the Hon’ble Delhi High Court in Akasaki Technology Pvt Ltd (Supra).
10. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on – 29.09.2026
