Draft assessment order under section 144C with demand notice and penalty initiation is invalid as final order; mandatory procedure violation jurisdictional and incurable, quashing assessment.

ORDER

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals), Bengaluru-12, Bengaluru dated 07.01.2025 vide DIN & Order No. ITBA/APL/S/250/2024-25/1071941288(1) passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for the AY 2013-14. The assessee has also filed a cross objection in CO No. 24/BANG/2025 against the said appeal of the Revenue in ITA No.1317/BANG/2025.

2. The Revenue has raised the following Grounds of appeal: -

3. At the outset, the ld. DR submitted that there is a delay of 65 days in filing the appeal before this Tribunal by the Revenue. Before us, the ld. D.R. drew our attention to a letter dated 15.12.2025 stating therein the cause for delay, which is reproduced below for ease of reference and convenience:-

4. On going through the above letter, we observed that the main cause cited for delay was solely attributable on account of unintentional and unavoidable reasons and in lieu of assessment proceedings getting time barred on 31.3.2025 and reopening proceedings getting time barred on 30.6.2025, and therefore the appeal could not be filed within the prescribed period by the Revenue. 4.1 Perused the record and having heard both the parties, it is perceived that the explanation offered in the condonation application is plausible and sufficient cause has been shown by the Revenue, which prevented them from filing the appeal within the prescribed period before the ITAT, and accordingly, we are inclined to condone the delay in filing the appeal by the Revenue before this Tribunal & admit the appeal for adjudication.

5. The assessee company has raised the following Grounds in the Cross objection:-

6. Per contra, the ld. A.R. of the assessee submitted that there is a delay of 20 days in filing the Cross objection before this Tribunal. Further, the ld. A.R. of the assessee also drew our attention on an affidavit along with a petition for condonation of delay dated 19/08/2025 stating the cause for such delay, which is reproduced below for ease of reference and record:-

7. Perused the record and having heard learned counsel for the respective parties, it is perceived that the explanation offered in the condonation petition is plausible and sufficient cause has been shown by the assessee, which prevented them from filing the appeal within the prescribed period before this Tribunal, and accordingly, we are inclined to condone the short delay of 20 days in filing the appeal before this Tribunal and admit the cross objection filed by the assessee also for adjudication.

8. The assessee has raised the following additional grounds of cross objection by filing a petition for admission of additional grounds, which are reproduced below: 5.

9. We have heard the rival submissions on admission of additional grounds. The Lucknow bench of the Hon’ble Allahabad High Court in the case of CIT Vs. Sahara India (2012) 347 ITR 331 held that a legal issue can be raised at any stage but there shall be good reason for admitting the additional ground. In our considered opinion all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of the adjudication of above ground. Further we are also of the opinion that the additional ground raised in the present case are purely legal in nature & goes to the root of the matter & therefore these are critical for a fair adjudication. The Hon’ble Madras High Court in the case of CIT Vs Indian Bank (2015) 230 Taxman 635 (Madras) held that Rule 11 of the I.T. Rules makes it clear that the as