When approval for reassessment was granted by unauthorised authority, such jurisdictional error cannot be shielded by the law of limitation – High Court
In a recent judgment, Calcutta high Court has held where approval for reassessment was granted by an authority not “specified” under the statute, such jurisdictional error cannot be shielded by the law of limitation.
ABCAUS Case Law Citation:
5128 (2026) (04) abacus.in HC
In the instant case, the reassessment proceeding against the appellant assesse was initiated under Section 147 of the Act for the relevant Assessment Year. The Assessing Officer (AO) passed an ex parte order making an addition by invoking Section 50C (or Section 56(2)), alleging that the purchase price of an immovable property was lower than its stamp duty value.
Aggrieved thereby, the assessee preferred an appeal before the National Faceless Appeal Centre (NFAC). However, the appeal was dismissed in limine due to a delay of 430 days. This dismissal was subsequently affirmed by the Tribunal through the impugned order, primarily on the ground that the appellant had failed to produce documentary evidence, specifically a death certificate of the counsel, to substantiate his claim of “sufficient cause.”
The High Court admitted the appeal on the following Substantial Questions of Law
a. Whether the act of the Tribunal in dismissing an appeal solely on the grounds of delay, without considering the merits of a jurisdictional challenge, constitutes a “perverse” exercise of discretion?
b. Whether the death of an authorized representative and the transition of files in a faceless regime constitute “sufficient cause” within the meaning of Section 5 of the Limitation Act?
c. Whether the underlying assessment is a jurisdictional nullity for failing to obtain mandatory approval from the Principal Chief Commissioner (PCCIT) under Section 151, given the escaped income was below Rs. 50 lakhs and the notice were issued beyond three years?
The appellant argued that he was a victim of circumstances beyond his control. It was submitted that his erstwhile authorized representative who was handling the tax matters and possessed all relevant files, suffered from a terminal illness and passed away. It was contended that in the current Faceless Assessment regime, a taxpayer is entirely dependent on the digital portal managed by their professional. The death of the professional created a communication vacuum, leading to the delay.
Furthermore, on the merits, the appellant raised a fundamental jurisdictional objection, contending that the notice under Section 148 was issued with the approval of the Principal Commissioner (PCIT) instead of the Principal Chief Commissioner (PCCIT), as required under the amended Section 151 for cases exceeding three years where the escaped income is below Rs. 50 Lakhs.
The High Court observed that the primary issue was whether a procedural threshold can be used to validate an order that is potentially void ab initio. The Hon’ble Supreme Court had unequivocally held that the judiciary should adopt a “liberal approach” toward condonation of delay to ensure substantial justice. It was observed that technicalities should not be allowed to result in a miscarriage of justice, as a litigant does not stand to benefit from a delayed filing.
The High Court further noted that in a recent decision, the Apex Court reiterated that a flexible view is mandatory when a limitation ground undermines the merits of the case. In a digital environment, the death of an authorised representative is a “force majeure” event for an assessee who lacks digital literacy. In the present case, the “sufficient cause” was the death of the counsel, a fact that goes to the heart of the right to legal representation.
The High Court further observed that more importantly, the jurisdictional defect raised by the appellant regarding Section 151 strikes at the very root of the matter. If the approval for reassessment was granted by an authority not “specified” under the statute, as held by the Court, the entire proceeding was a nullity. A jurisdictional error of such magnitude cannot be shielded by the law of limitation.
The High Court held that the Tribunal adopted an overly rigid and hyper-technical approach. By refusing to condone the delay caused by a professional’s death and failing to address a patent jurisdictional nullity, the Tribunal failed to exercise its discretion in a just and proper manner. To shut the doors of justice at the threshold is improper when the very legality of the tax demand was in question.
The impugned order of the ITAT was accordingly set aside and matter was remanded to the ITAT for a fresh adjudication on its merits and also the preliminary Jurisdictional issue.
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