The Commissioner (Appeals) allowed my client's appeal on merits but rejected his challenge to the reopening. The department has appealed to the Tribunal and my client filed no cross-objection. Can he still argue that the reassessment was without jurisdiction?
Yes, under Rule 27 of the Income-tax (Appellate Tribunal) Rules 1963, which provides that the respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. The Tribunal admitted the assessee's Rule 27 application challenging the validity of the s.147 proceedings, found the reasons recorded to be founded on facts that were demonstrably wrong, held the assumption of jurisdiction invalid, quashed the assessment order and dismissed the Revenue's appeal as infructuous.
Decided by the ITAT (Smt. Annapurna Gupta, Accountant Member, and Ms. Madhumita Roy, Judicial Member) on 2025-06-20, reported as ITA No. 9441/Del/2019, Income Tax Appellate Tribunal, Delhi Benches 'F', assessment year 2011-12. It bears on section Rule 27 ITAT Rules 1963, section 253, section 253(4), section 147, section 148, section 151, section 143(3) of the Income Tax Act 1961, in Appeals and Reassessment & Reopening matters.
This is Rule 27 doing the maximum work it can do. The respondent filed nothing — no appeal, no cross-objection — and left the Tribunal with the Revenue's appeal on merits alone; by raising the jurisdictional ground under Rule 27 he obtained an order quashing the whole assessment, which is more than the Commissioner (Appeals) had given him. The Tribunal was careful about the boundary: at paragraph 8 it recorded that the ground had 'admittedly been decided by the Ld. CIT(A) against him', which is what brings Rule 27 into play, and that there was 'no dispute in relation to the scope of Rule 27'. So this is authority on a ground the Commissioner (Appeals) DID decide against the respondent, and it does not decide how far Rule 27 reaches a ground she never touched at all — for that, the library already carries Sanjay Sawhney v. PCIT. The practical lesson is the disposal formula: where the respondent succeeds under Rule 27 on jurisdiction, the Revenue's appeal on merits is not dismissed on the merits, it becomes infructuous, and nothing is decided on the additions.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For assessment year 2011-12 the Assessing Officer reopened the assessment on information routed from the Investigation Wing through Circle-20(1) that the company was taking accommodation entries in the guise of share application money from bogus companies and passing them on for commission. The recorded reasons stated that the company had received share application money of Rs 5,50,00,000 in the year from one Pradeep Kumar Dixit, that Dixit had mainly salary income with returned incomes of about Rs 37.20 lakh, Rs 34.65 lakh and Rs 43.08 lakh for assessment years 2009-10 to 2011-12 and so lacked creditworthiness, and that no return had been filed by the company so that clause (b) of the Explanation to s.147 applied. The Commissioner (Appeals) allowed the assessee's appeal on merits but decided against it the ground that the reopening was bad. The Revenue appealed to the Tribunal on the merits. The assessee filed no cross-objection but moved an application, filed before the hearing, invoking Rule 27 to press the ground that the reasons recorded were factually incorrect, vague, without material basis, mechanically approved and passed without application of mind.
The Rule 27 application was admitted (paragraph 8): the respondent is given the right to defend the order of the Commissioner (Appeals) by raising issues decided against him by her, and the assessee's legal challenge to the s.147 order had admittedly been decided against him even though his appeal was allowed on merits. On the substance, the formation of belief was based on incorrect facts and the reasons were recorded without any application of mind, so the jurisdiction assumed to reopen under s.147 was invalid and the assessment order was held invalid and directed to be quashed (paragraph 14). The Revenue's appeal, raising only merits grounds, merited no consideration and became academic (paragraph 15). In the result the assessment order was quashed as invalid, the assessee succeeded on the Rule 27 ground, and the Revenue's appeal was dismissed as infructuous (paragraph 16).
The Tribunal reproduced Rule 27 at paragraph 5 and recorded at paragraph 8 that there was no dispute about its scope, the only question being whether this ground had been decided against the respondent; finding that it had, it admitted the ground. On the merits of the reopening it compared the recorded reasons with the record and found two factual errors, each going to the root of the belief. First, Dixit was described as having mainly salary income of about Rs 34 lakh, whereas his return for 2010-11 also disclosed exempt long-term capital gains under s.10(38) of Rs 17,67,06,813, so the finding that he was not a man of sufficient means was wrong (paragraph 12). Second, the reasons stated that no return had been filed and no assessment made, whereas the assessment order itself recorded a return declaring losses assessed under s.143(3) at Rs 18,92,566 (paragraphs 12 and 13). Both limbs of the belief being founded on incorrect facts, there had been no application of mind at all (paragraph 14).
In the result, the assessment order passed in the present case is quashed as invalid. The assessee succeeds on the ground raised before us by invoking Rule 27 of the ITAT Rules, 1963 and the appeal filed by the Revenue is dismissed as infructuous.
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Handle my notice → Ask a CA on WhatsAppYes, under Rule 27 of the Income-tax (Appellate Tribunal) Rules 1963, which provides that the respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. The Tribunal admitted the assessee's Rule 27 application challenging the validity of the s.147 proceedings, found the reasons recorded to be founded on facts that were demonstrably wrong, held the assumption of jurisdiction invalid, quashed the assessment order and dismissed the Revenue's appeal as infructuous. This was decided by the ITAT (Smt. Annapurna Gupta, Accountant Member, and Ms. Madhumita Roy, Judicial Member) and bears on section Rule 27 ITAT Rules 1963, section 253, section 253(4), section 147, section 148, section 151, section 143(3) of the Income Tax Act 1961. It is reported as ITA No. 9441/Del/2019, Income Tax Appellate Tribunal, Delhi Benches 'F', assessment year 2011-12. This is Rule 27 doing the maximum work it can do. The respondent filed nothing — no appeal, no cross-objection — and left the Tribunal with the Revenue's appeal on merits alone; by raising the jurisdictional ground under Rule 27 he obtained an order quashing the whole assessment, which is more than the Commissioner (Appeals) had given him. The Tribunal was careful about the boundary: at paragraph 8 it recorded that the ground had 'admittedly been decided by the Ld. CIT(A) against him', which is what brings Rule 27 into play, and that there was 'no dispute in relation to the scope of Rule 27'. So this is authority on a ground the Commissioner (Appeals) DID decide against the respondent, and it does not decide how far Rule 27 reaches a ground she never touched at all — for that, the library already carries Sanjay Sawhney v. PCIT. The practical lesson is the disposal formula: where the respondent succeeds under Rule 27 on jurisdiction, the Revenue's appeal on merits is not dismissed on the merits, it becomes infructuous, and nothing is decided on the additions. If it applies to you, the first step is this: Where the Commissioner (Appeals) allowed your appeal on merits but rejected a jurisdictional or legal ground, do not assume you need a cross-objection to keep that ground alive — move a Rule 27 application before the Tribunal, in writing and in advance of the hearing, as was done here by an application filed before the hearing date.
For assessment year 2011-12 the Assessing Officer reopened the assessment on information routed from the Investigation Wing through Circle-20(1) that the company was taking accommodation entries in the guise of share application money from bogus companies and passing them on for commission. The recorded reasons stated that the company had received share application money of Rs 5,50,00,000 in the year from one Pradeep Kumar Dixit, that Dixit had mainly salary income with returned incomes of about Rs 37.20 lakh, Rs 34.65 lakh and Rs 43.08 lakh for assessment years 2009-10 to 2011-12 and so lacked creditworthiness, and that no return had been filed by the company so that clause (b) of the Explanation to s.147 applied. The Commissioner (Appeals) allowed the assessee's appeal on merits but decided against it the ground that the reopening was bad. The Revenue appealed to the Tribunal on the merits. The assessee filed no cross-objection but moved an application, filed before the hearing, invoking Rule 27 to press the ground that the reasons recorded were factually incorrect, vague, without material basis, mechanically approved and passed without application of mind. The matter was decided on 2025-06-20 by the ITAT (Smt. Annapurna Gupta, Accountant Member, and Ms. Madhumita Roy, Judicial Member). On those facts the ITAT held as follows. The Rule 27 application was admitted (paragraph 8): the respondent is given the right to defend the order of the Commissioner (Appeals) by raising issues decided against him by her, and the assessee's legal challenge to the s.147 order had admittedly been decided against him even though his appeal was allowed on merits. On the substance, the formation of belief was based on incorrect facts and the reasons were recorded without any application of mind, so the jurisdiction assumed to reopen under s.147 was invalid and the assessment order was held invalid and directed to be quashed (paragraph 14). The Revenue's appeal, raising only merits grounds, merited no consideration and became academic (paragraph 15). In the result the assessment order was quashed as invalid, the assessee succeeded on the Rule 27 ground, and the Revenue's appeal was dismissed as infructuous (paragraph 16).
The Tribunal reproduced Rule 27 at paragraph 5 and recorded at paragraph 8 that there was no dispute about its scope, the only question being whether this ground had been decided against the respondent; finding that it had, it admitted the ground. On the merits of the reopening it compared the recorded reasons with the record and found two factual errors, each going to the root of the belief. First, Dixit was described as having mainly salary income of about Rs 34 lakh, whereas his return for 2010-11 also disclosed exempt long-term capital gains under s.10(38) of Rs 17,67,06,813, so the finding that he was not a man of sufficient means was wrong (paragraph 12). Second, the reasons stated that no return had been filed and no assessment made, whereas the assessment order itself recorded a return declaring losses assessed under s.143(3) at Rs 18,92,566 (paragraphs 12 and 13). Both limbs of the belief being founded on incorrect facts, there had been no application of mind at all (paragraph 14). In the words reproduced by the source cited on this page: "In the result, the assessment order passed in the present case is quashed as invalid. The assessee succeeds on the ground raised before us by invoking Rule 27 of the ITAT Rules, 1963 and the appeal filed by the Revenue is dismissed as infructuous." The decision followed or applied Sanjay Sawhney v. Pr. CIT (Delhi High Court) — relied on by the assessee on the scope of Rule 27; ITO v. IME International Pvt. Ltd., ITA No. 1873/Del/2012, order dated 8 January 2016 — relied on by the assessee; National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC) — relied on for raising a legal ground at any stage; the report as retrieved prints the citation as '299 ITR 383'.
It was decided by the ITAT on 2025-06-20 and is reported as ITA No. 9441/Del/2019, Income Tax Appellate Tribunal, Delhi Benches 'F', assessment year 2011-12. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section Rule 27 ITAT Rules 1963, section 253, section 253(4), section 147, section 148, section 151, section 143(3), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Rule 27 application was admitted (paragraph 8): the respondent is given the right to defend the order of the Commissioner (Appeals) by raising issues decided against him by her, and the assessee's legal challenge to the s.147 order had admittedly been decided against him even though his appeal was allowed on merits. On the substance, the formation of belief was based on incorrect facts and the reasons were recorded without any application of mind, so the jurisdiction assumed to reopen under s.147 was invalid and the assessment order was held invalid and directed to be quashed (paragraph 14). The Revenue's appeal, raising only merits grounds, merited no consideration and became academic (paragraph 15). In the result the assessment order was quashed as invalid, the assessee succeeded on the Rule 27 ground, and the Revenue's appeal was dismissed as infructuous (paragraph 16). It arises in Appeals and Reassessment & Reopening matters, on section Rule 27 ITAT Rules 1963, section 253, section 253(4), section 147, section 148, section 151, section 143(3) of the Income Tax Act 1961, and was decided by Smt. Annapurna Gupta, Accountant Member, and Ms. Madhumita Roy, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Set out in the application the exact ground as it was raised before, and before, the Commissioner (Appeals), and identify where in her order it was decided against you; that record is what admitted the ground here. Where the ground is a pure question of law, plead National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 as well, as counsel did here, so that admission does not depend on Rule 27 alone. On the merits of a reopening challenge, compare the reasons recorded line by line against the record. Here the reasons said the share subscriber had only salary income when his return disclosed Rs 17.67 crore of exempt long-term capital gains, and said no return had been filed when the assessment order itself recorded a return assessed under s.143(3). If you act for the department, note that the answer to a Rule 27 application is not that no cross-objection was filed; it is that the ground was not decided against the respondent, or that it does not bear on the order sought to be supported.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns nothing. A case-name search returns 54 documents, all Delhi High Court commercial and arbitration litigation involving this company (Religare Finvest, Lohia Corp), none of them income-tax. The use of rule 27 of the Tribunal Rules to quash the reassessment in the Revenue's own appeal has not been followed or doubted, and no s.260A appeal was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has sixteen numbered paragraphs and ends at paragraph 16 with the disposal; paragraphs 5 to 8 and 16 were read on the plain document URL and paragraphs 9 to 16 on the print route, so the whole of the operative part was seen on at least one route and the disposal on both. Paragraph 10 reproduces the Assessing Officer's recorded reasons, which carry their own internal numbering 1 to 10; those numbers belong to the reasons, not to the Tribunal's order, and no locator here refers to them. The reproduced reasons contain evident transcription noise from the original ('know n', 'commis sion', 'w ay'), and are described rather than quoted for that reason. Rule 27 is quoted at paragraph 5 in the form 'The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him', under the marginal heading 'Respondent may support order on grounds decided against him'; the departmental rule page for the ITAT Rules was not consulted, and rule pages in any event carry no 'Year:' stamp by which they could be dated. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Rule 27 application was admitted (paragraph 8): the respondent is given the right to defend the order of the Commissioner (Appeals) by raising issues decided against him by her, and the assessee's legal challenge to the s.147 order had admittedly been decided against him even though his appeal was allowed on merits. On the substance, the formation of belief was based on incorrect facts and the reasons were recorded without any application of mind, so the jurisdiction assumed to reopen under s.147 was invalid and the assessment order was held invalid and directed to be quashed (paragraph 14). The Revenue's appeal, raising only merits grounds, merited no consideration and became academic (paragraph 15). In the result the assessment order was quashed as invalid, the assessee succeeded on the Rule 27 ground, and the Revenue's appeal was dismissed as infructuous (paragraph 16).
TaxSphere, “ITO v Plus Corporate Ventures Pvt Ltd — Rule 27 lets a respondent who won on merits still knock out the assessment on jurisdiction, and the Revenue's appeal then goes as infructuous”, https://taxnotice.vittsphere.com/caselaw/case/ito-v-plus-corporate-ventures-rule-27-used-to-quash-the-reassessment-in-the-revenues-own-appeal/ (validity last checked 2026-09-08)
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