The Allahabad High Court has directed the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), to decide two pending income tax appeals within three months, observing that an administrative circular prescribing priorities for disposal of appeals must yield to the statutory provisions governing their adjudication.
The bench of Justice Vikas Budhwar directed the appellate authority to provide a proper and reasonable opportunity of hearing before deciding the appeals and clarified that it had not adjudicated the merits of the underlying tax disputes.
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The petitioner/assessee was engaged in trading ghee and sugar under the name of M/s Vansh Trading Company. The order also recorded that he held a 25% share in M/s Babu Ram Raj Kumar.
For Assessment Year 2015–16, he electronically filed his income tax return on September 22, 2015, declaring a total income of ₹2,82,890. The return was initially processed under Section 143(1) of the Income Tax Act.
The case was subsequently selected for scrutiny through the Computer Assisted Scrutiny Selection system. A notice under Section 143(2) was issued on September 26, 2016, followed by a notice under Section 142(1), along with a query letter, on February 7, 2017.
During the assessment proceedings, the department noticed cash deposits aggregating to ₹1,82,46,673 in two savings bank accounts maintained with Punjab National Bank, Meerut, during Financial Year 2014–15. This was against declared sales of ₹75,68,723.
An assessment order was passed on November 16, 2017. The petitioner challenged it before the Commissioner of Income Tax (Appeals), Meerut, by filing an appeal on December 16, 2017.
The appeal was heard before the Commissioner (Appeals), Meerut, on October 9, 2019, when the petitioner also submitted a detailed statement of facts and grounds of appeal.
According to the petitioner, the proceedings were subsequently transferred to NFAC, Delhi. Thereafter, notices under Section 250 were issued on January 16, 2021; April 19, June 28 and September 13, 2023; January 18, 2024; and July 11, 2025.
The petitioner maintained that he responded to each notice, with the latest reply submitted on July 14, 2025. Despite these compliances, the appeal remained undecided.
He therefore approached the High Court seeking a direction for expeditious disposal within a fixed period. The connected petition raised the same grievance for Assessment Year 2016–17.
The petitioner argued that the appellate authority was obliged to adhere to the statutory framework for timely disposal, particularly when the information and responses sought from him had been furnished.
The Court examined Section 250(6A), which provides that the Joint Commissioner (Appeals) or Commissioner (Appeals), as applicable, may, where possible, hear and decide an appeal within one year from the end of the financial year in which it is filed or transferred under the specified provisions.
The provision’s wording is qualified by the expression “where it is possible.” The Court’s order nevertheless emphasised the statutory framework when addressing the prolonged pendency of the appeals.
The department relied on CBDT’s communication dated March 7, 2024, prescribing guidelines for priority or out-of-turn disposal of pending appeals.
The guidelines contemplate consideration of requests arising from genuine and exceptional circumstances. The categories include cases involving demands above ₹1 crore, cases carrying VIP or PMO references for expedited disposal, matters covered by court directions, requests from senior or super senior citizens, and other cases involving genuine hardship.
For appeals within the faceless appellate system, the communication provides for such requests to be referred to the Principal Chief Commissioner of Income Tax, NFAC, for onward communication to the respective appeal units.
The department submitted that these priorities operated against the backdrop of a large volume of pending appeals. However, on instructions, its counsel stated that the petitioner’s appeals would be decided within three months.
The High Court acknowledged the existence of the March 7, 2024 circular but held that the statutory provisions remained controlling.
It observed that where an appeal had been filed and remained undecided as contemplated by the statute, the administrative circular would have to yield to the statute.
The decision thus addresses the relationship between administrative arrangements for managing pending appeals and the statutory framework for appellate disposal. The Court did not treat the priority guidelines as a sufficient answer to the petitioner’s grievance over the continued delay.
Taking note of the department’s statement, the High Court disposed of both petitions and directed the second respondent to decide the respective appeals within three months.
The direction was expressly subject to giving the petitioner a proper and reasonable opportunity of hearing.
The relief concerns disposal of the pending appeals. The Court did not set aside the assessment orders, determine the tax liability, or express any view on the merits of the disputed cash deposits or other assessment issues.
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