Section 253

Section 253 — the law in short

What the courts have decided on section 253, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Office of the Chief Post Master General v Living Media India Ltd — a government department has no separate period of limitation, and red tape is not sufficient cause Supreme CourtHelps taxpayer
  The department has filed its appeal hundreds of days late and its condonation application recites nothing but a list of file movements. Does the usual latitude for government litigants save it?
  Not on an explanation of that kind. The Supreme Court refused to condone a delay of 427 days by the Postal Department, holding that the department could not claim a separate period of limitation when it had competent persons familiar with court proceedings, that the plea of impersonal machinery and note-making cannot be accepted given modern technology, and that the law of limitation binds the Government like everyone else. The appeals were dismissed on the ground of delay alone and the merits were left open.
• CIT v Pawan Kumar Laddha Supreme CourtCuts both ways
  Is payment of admitted tax under s.249(4) a condition that must be satisfied again when the appeal goes on to the Tribunal?
  The Supreme Court treated s.249(4)(a) as a mandatory condition for the admission of a first appeal by the CIT(A), but held that the condition belongs to s.249 alone and cannot be read into s.253(1)(b). Once satisfied at the first-appeal stage, the assessee does not have to pay the admitted tax over again to appeal to the Tribunal.
• Collector, Land Acquisition, Anantnag v Mst. Katiji Supreme CourtCuts both ways
  Your appeal is late. How strictly will 'sufficient cause' be read?
  Liberally. A litigant gains nothing by filing late, refusal can destroy a meritorious cause at the threshold, and where substantial justice and technical considerations clash, substantial justice must win.
• Pradeep Kumar Jindal v PCIT High CourtHelps taxpayer
  The Tribunal dismissed my appeal for non-appearance and now says my restoration application is barred by the six months in section 254(2). Is that right?
  No. The Delhi High Court held that Rule 24 of the Income Tax (Appellate Tribunal) Rules 1963 requires the Tribunal to decide an appeal on merits even if the appellant does not appear, that an ex parte dismissal for non-prosecution is void, and that an application under the proviso to Rule 24 to set aside such an order carries no period of limitation. The six-month limit in s.254(2) does not govern it.
• Sanjay Sawhney v PCIT High CourtHelps taxpayerNo later treatment found
  I won before the CIT(A) but lost the jurisdiction point. Can I raise it in their appeal?
  Yes. Rule 27 lets a respondent who has not appealed support the order on a ground decided against him, provided the ground relates to the subject matter of the appeal and bears on the outcome. Not filing a cross-objection is not acceptance of the adverse findings, and the Rule prescribes no written application.
• Dahod Sahakari Kharid Vechan Sangh v CIT High CourtCuts both ways
  Does failing to file a cross-objection make the findings decided against you final?
  The Tribunal had treated findings against the assessee as final because no cross-objection had been filed, even though the assessee had succeeded before the Commissioner (Appeals). The Gujarat High Court held that this reasoning would render Rule 27 redundant and nugatory, and set it aside.
• CIT v Edward Keventer (Successors) High CourtCuts both ways
  How far can a respondent go under Rule 27 - can it reopen matters outside the subject-matter of the appeal?
  The Delhi High Court set the outer boundary of Rule 27 of the Appellate Tribunal Rules: a respondent may support the order under appeal on grounds decided against it, but may not use the rule as a device to travel outside the subject-matter of the appeal. At the same time the Court insisted the subject-matter be understood broadly, so that interconnected grounds are looked at together.
• B.R. Bamasi v CIT High CourtCuts both ways
  Can a respondent who did not appeal use Rule 27 to get the assessment annulled?
  The Bombay High Court held that a respondent invoking Rule 27 may deploy a ground decided against him only to sustain the order under appeal. He cannot use it to obtain further relief, and certainly not to have the assessment itself annulled. The ceiling on a Rule 27 plea is therefore the order he already holds.
• CIT v Sundaram & Co High CourtCuts both ways
  Is Rule 27 a concession the Tribunal may refuse, or a right the respondent can insist on?
  The Madras High Court held that Rule 27 confers a right on the respondent and that the Tribunal has no discretion to deny him its benefit. It is an enabling provision, rooted in natural justice, which allows a party who won below to defend that result on every ground he had urged, whether or not it found favour.
• ITO v Primary Agricultural Cooperative Society Ltd — the Rs 60 lakh Tribunal limit applied, but with liberty to the department to have the dismissal recalled if an exception is shown ITATHelps taxpayerNo later treatment found
  The department's Tribunal appeal against my client is below the monetary limit. Will the Tribunal simply dismiss it, and is that the end of the matter?
  It will dismiss it, but the dismissal is not always final. The Tribunal applied CBDT Circular No. 09/2024 dated 17 September 2024, which fixes the monetary limit for a departmental appeal before the Tribunal at Rs 60,00,000, and dismissed the Revenue's appeals because the tax effect was below that figure; the assessee's cross-objections were allowed to that extent. But on the Departmental Representative's request the Tribunal expressly reserved liberty to the department to point out, after verification, that the appeals fall within one of the circular's exceptions and to seek recall and restoration.
• ACIT v Md. Illyas Hussain — the section reads "issue", not "serve": the Revenue's side of the section 143(2) point in a block assessment ITATHelps departmentNo later treatment found
  The Commissioner (Appeals) annulled the block assessment because no section 143(2) notice was served. Can the department save it by showing the notice was issued?
  The Patna Tribunal held that it could. It read section 158BC as requiring only the ISSUE of a notice under section 143(2) and not its service, found on the record that a notice had been issued on 20 August 1999 and received at the assessee's address, and added that in any event the assessee's block return, filed after the time allowed, was an invalid return so that no section 143(2) notice was required at all. It set aside the annulment and restored the appeal to the Commissioner (Appeals) to be decided on the merits.
• Lakulish Sanatan Sanskriti Prabodhan Abhiyan v CIT (Exemption), Ahmedabad ITATHelps taxpayerNo later treatment found
  I did not file the Rule 17A documents in time and the CIT(E) rejected my Form 10AB, cancelled the provisional registration and directed computation of tax under s.115TD. Can a rejection for non-filing carry all that?
  Not without an inquiry into the merits. The Tribunal set the order aside and restored the matter for de novo consideration, holding that the CIT(E) had rejected the application solely for non-filing of documents, after only two notices at very short intervals, without any verification or inquiry, and that procedural lapses alone should not result in denial of substantial justice. It did not decide the s.115TD point, which was raised only in argument.
• 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 ITATHelps taxpayerNo later treatment found
  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.
• Imam Ahmed Raza Educational and Welfare Trust v CIT (Exemptions), Bangalore ITATHelps departmentNo later treatment found
  I withdrew my Form 10AB before the CIT(E), he then passed an order recording the withdrawal and rejecting the form, and now the portal will not let me file a fresh one. Can I appeal against that order?
  No. Where the trust itself withdrew the application, no cause of action arises to prefer an appeal against the order that records the withdrawal and rejects the form, and the appeal is not maintainable. The Tribunal dismissed both the s.12AB and the s.80G appeals on that footing and gave no direction about the portal difficulty that had prompted them.
• Statutory position — s.275 as substituted: penalty limitation now runs from the end of the QUARTER CBDT Circulars & InstructionsCuts both ways
  I am checking whether a penalty order is out of time. Is the old six-months-from-the-end-of-the-month rule still the test?
  No. Section 275 has been substituted, and under the substituted provision no penalty order under Chapter XXI may be passed after the expiry of six months from the end of the QUARTER in which the triggering event occurs, with five separate triggers in clauses (a) to (e). The financial-year limb and the month-end limb of the old sub-section (1), and the old proviso giving one year from the end of the financial year in which the appellate order was received, are gone.
• Statutory position — section 253: the appeal to the Tribunal is now due within two months from the END OF THE MONTH of communication, not sixty days CBDT Circulars & InstructionsCuts both ways
  How long do I actually have to appeal to the Income Tax Appellate Tribunal? I have always worked on sixty days from receipt of the order.
  Sixty days is no longer the rule. With effect from 1 October 2024 the Finance (No. 2) Act 2024 (Act 15 of 2024) substituted the opening of s.253(3): an appeal under s.253(1) or s.253(2) must now be filed 'within two months from the end of the month in which the order sought to be appealed against is communicated to the assessee or to the Principal Commissioner or Commissioner, as the case may be'. A memorandum of cross-objections under s.253(4) is still due within thirty days of receipt of notice of the other side's appeal, and s.253(5) still lets the Tribunal admit a late appeal or cross-objection on sufficient cause.
• Statutory position — the block charge: sixty per cent under section 113, interest at one and a half per cent, and a flat fifty per cent penalty under section 158BFA(2) CBDT Circulars & InstructionsCuts both ways
  What will a block assessment actually cost my client, and is there any way to keep the penalty off?
  Tax at sixty per cent of the total undisclosed income of the block period under section 113, plus surcharge under the proviso; interest under section 158BFA(1) at one and a half per cent per month where the block return is late or not filed; and a penalty under section 158BFA(2) of a sum 'equal to fifty per cent of tax so leviable' on the undisclosed income determined by the Assessing Officer. The first proviso to section 158BFA(2) gives complete immunity from that penalty, and from penalty under sections 271AAD(1), 271D, 271DA and 271E for the block period, if four conditions are met — the return was furnished under section 158BC(1)(a), the tax on it was paid or the seized money offered for adjustment, evidence of payment accompanied the return, and no appeal is filed against the assessment of the income shown in the return.
• Statutory position — section 115TD: the exit tax on accreted income, and the Finance Act 2022 extension to a mere failure to re-apply in time CBDT Circulars & InstructionsCuts both waysNo later treatment found
  We simply missed the deadline for the fresh application under s.12A(1)(ac). We have not been cancelled and nobody has rejected anything. Can the exit tax under s.115TD really apply to us?
  Yes. Since the Finance Act 2022, s.115TD(3)(iii) deems a specified person to have been converted into a form not eligible for registration where it simply fails to make the application required by s.12A(1)(ac)(i), (ii) or (iii), or by the corresponding clauses of the first proviso to s.10(23C), within the period specified, where that period expires in the previous year. The consequence is tax on accreted income at the maximum marginal rate, payable within fourteen days of the end of that previous year, in addition to any income tax otherwise chargeable, with no credit and no deduction against it.
• Statutory position — s.144C(15)(b): who is an "eligible assessee", the two limbs, and the substitution by Act No. 12 of 2020 with effect from 1 April 2020 that brought in every non-resident not being a company CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has forwarded a draft order to our partnership firm, which is non-resident but is not a company, and there is no Transfer Pricing Officer's order in the case. Is the firm an eligible assessee at all, and does it matter which assessment year we are in?
  It matters a great deal which year you are in. As s.144C(15)(b) stands on the departmental edition stamped Year 2025 it reads: "(b) 'eligible assessee' means,— (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company:". Sub-clause (ii) in that form was substituted by Act No. 12 of 2020 with effect from 1 April 2020 — footnote 97 on the departmental edition stamped Year 2021 reads verbatim "Sub. by the Act No. 12 of 2020, w.e.f. 1-4-2020.", and footnote 91 on the Year 2022 edition repeats it. Before that substitution, and as printed on the editions stamped Year 2009 and Year 2019 (No. 2), sub-clause (ii) read simply "any foreign company". So a non-resident firm, a non-resident individual, a non-resident association of persons — any non-resident that is not a company — became an eligible assessee in its own right on 1 April 2020 and was not one before, unless it was brought in by limb (i). Limb (i) is independent of status: it catches ANY person, resident or not, company or not, where the variation in sub-section (1) arises as a consequence of an order of the Transfer Pricing Officer under s.92CA(3). Two things were added with effect from 1 September 2024 by Act No. 15 of 2024: a proviso to clause (b) reading "Provided that such eligible assessee shall not include person referred to in sub-section (1) of section 158BA or other person referred to in section 158BD.", and s.144C(16), "The provisions of this section shall not apply to any proceedings under Chapter XIV-B."
• Sections 15 to 19 of the Black Money Act - the appeal machinery CBDT Circulars & InstructionsCuts both waysNo later treatment found
  What are the time limits, forms and fees for an appeal under the Black Money Act, and where do they differ from the Income-tax Act?
  An appeal to the Commissioner (Appeals) lies under s.15(1) against the amount of tax on undisclosed foreign income or assets, against liability to be assessed under the Act, against a penalty, and against a rectification order or a refusal to rectify. It is filed in Form 2 with a fee of Rs 10,000 within thirty days, and Rule 6(4) bars admission unless the tax with penalty and interest on the liability not objected to has been paid. An appeal to the Tribunal lies within sixty days in Form 3 with a fee of Rs 25,000, with cross-objections in Form 4 within thirty days. An appeal to the High Court on a substantial question of law lies within 120 days. The critical departure from the Income-tax Act is that the power to condone delay is capped: one year before the Commissioner (Appeals) under s.15(4) and one year before the Tribunal under s.18(5), where ss.249(3) and 253(5) of the Income-tax Act contain no such ceiling.
• Statutory position — s.144C(1) to (5): the Assessing Officer must, notwithstanding anything to the contrary in the Act, forward a draft order to an eligible assessee before he makes any prejudicial variation, and the assessee has thirty days to accept or to object to the Dispute Resolution Panel AND to the Assessing Officer CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer has served a final assessment order on our foreign company raising a transfer pricing addition, without ever serving a draft order. Was he obliged to serve one first, and what was I supposed to do with it if he had?
  He was obliged to serve one first, if the company is an eligible assessee and the variation is prejudicial. Section 144C(1), as printed on the departmental edition stamped Year 2025, reads: "The Assessing Officer shall, notwithstanding anything to the contrary contained in this Act, in the first instance, forward a draft of the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation which is prejudicial to the interest of such assessee." Three things follow from the words themselves. The obligation is cast in the mandatory "shall"; it operates "notwithstanding anything to the contrary contained in this Act", so it overrides the ordinary assessment machinery; and it bites "in the first instance", that is, before and not after the order that would otherwise be the assessment order. Sub-section (2) gives the eligible assessee thirty days of the receipt by him of the draft order to do one of two things: "(a) file his acceptance of the variations to the Assessing Officer; or (b) file his objections, if any, to such variation with,— (i) the Dispute Resolution Panel; and (ii) the Assessing Officer." The "and" in clause (b) is conjunctive: an objection is filed with the Panel and with the Assessing Officer, not with one or the other. Sub-section (3) requires the officer to complete the assessment on the basis of the draft order if the assessee intimates acceptance of the variation or if no objections are received within the period specified in sub-section (2). Sub-section (4) fixes the time for that order — one month from the end of the month in which the acceptance is received or the period of filing objections expires, notwithstanding s.153 or s.153B. Sub-section (5) is the Panel's charging provision: where any objection is received under sub-section (2), the Panel "shall ... issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment".
• Statutory position — s.144C(2), (4), (5), (12) and (13): the thirty days to object run from receipt, but the officer's one month and the Panel's nine months both run from the END OF THE MONTH, and the two one-month clocks start on different events CBDT Circulars & InstructionsCuts both ways
  We received a draft order on 12 March. Nobody objected. When was the final order due, and if we had objected, by when must the Dispute Resolution Panel have issued its directions and by when must the officer have given effect to them?
  Four clocks, and only one of them runs from a date. Section 144C(2) gives the eligible assessee thirty days "of the receipt by him of the draft order" to file acceptance with the Assessing Officer or objections with the Panel and the Assessing Officer — that one runs from the date of receipt. The other three run from the end of a month, and that is where the counting goes wrong. Section 144C(4): where the assessee accepts or files no objection, "The Assessing Officer shall, notwithstanding anything contained in section 153 or section 153B, pass the assessment order under sub-section (3) within one month from the end of the month in which,— (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires." Section 144C(12): "No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee." Section 144C(13): "Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." Note the four different starting EVENTS. The thirty days in (2) start on RECEIPT by the assessee. The nine months in (12) start at the end of the month in which the draft order is FORWARDED — the officer's act of despatch, not the assessee's receipt, so the (2) clock and the (12) clock can start in different months on the same draft order. The one month in (4) starts at the end of the month in which the acceptance is received or the thirty-day period expires. The one month in (13) starts at the end of the month in which the DIRECTION is received by the officer. Both (4) and (13) run notwithstanding s.153 and s.153B.
• Statutory position — s.144C(8) with its Explanation, and s.144C(10) and (11): the Panel may confirm, reduce or ENHANCE but may not set aside or remit, the Explanation inserted by the Finance Act 2012 is retrospective to 1 April 2009, the direction binds the Assessing Officer, and no direction may issue without an opportunity of being heard — with what s.253 and s.246A provide about appeal CBDT Circulars & InstructionsCuts both ways
  We are considering objecting to a draft order. Can the Dispute Resolution Panel make our position worse, can it send the matter back for fresh enquiry, and if we lose before it, do we appeal to the Commissioner (Appeals) or straight to the Tribunal?
  It can make your position worse; it cannot send the matter back; and the appeal lies to the Tribunal, not to the Commissioner (Appeals). Section 144C(8), as printed on the departmental edition stamped Year 2025, reads: "The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order." The Explanation to that sub-section reads: "For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee." Footnote 76 on the departmental edition stamped Year 2014 records that Explanation verbatim as "Inserted by the Finance Act, 2012, w.r.e.f. 1-4-2009" — note the date: it is retrospective to 1 April 2009, the date the section itself was inserted from, and not 2012. The original edition stamped Year 2009 prints sub-section (8) with no Explanation at all. Sub-section (10): "Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer." Sub-section (11): "No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively." Sub-section (9) resolves a difference of opinion among the members by the opinion of the majority. On appeal: s.246A(1)(a), on the departmental edition stamped Year 2025, excepts from the first appeal "an order passed in pursuance of directions of the Dispute Resolution Panel", and s.253(1)(d), on the edition stamped Year 2024 (No. 2), gives a direct right of appeal to the Appellate Tribunal against "an order passed by an Assessing Officer under sub-section (3), of section 143 or section 147 or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order". Sub-sections (2A) and (3A) of s.253 are printed as "[***]" on the current editions, and the departmental edition stamped Year 2016 carries footnotes against both reading "Omtt. by Act No. 28 of 2016 (w.e.f. 1-6-2016)."
• Statutory position — rule 24 of the ITAT Rules, 1963: the Tribunal may dispose of the appeal on merits when the appellant does not appear, it may not dismiss it for default, and the proviso gives it the power to recall CBDT Circulars & InstructionsCuts both ways
  My appeal was called on a day my counsel was in another court and the Tribunal passed an order against me without hearing anybody on my side. Can that order be recalled, and under what?
  Under the proviso to rule 24, and it is expressed as a duty rather than a discretion. Rule 24 of the Income-tax (Appellate Tribunal) Rules, 1963, headed 'Hearing of appeal ex parte for default by the appellant', provides that where, on the day fixed for hearing or on any other date to which the hearing may be adjourned, the appellant does not appear in person or through an authorised representative when the appeal is called on for hearing, the Tribunal may dispose of the appeal on merits after hearing the respondent. The proviso then provides that where an appeal has been disposed of as provided above and the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non-appearance when the appeal was called on for hearing, the Tribunal shall make an order setting aside the ex parte order and restoring the appeal. Rule 25 is the mirror image for a default by the respondent. What the rule does not permit is a dismissal for want of prosecution: the only course open on non-appearance is disposal on merits after hearing the other side.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.