The assessee had filed its return of income for A.Y. 2005-06 declaring loss of Rs. 48.82 lakhs and the same was accepted in regular assessment completed u/s. 143(3) of the Act. The assessee did not offer arbitral award of Rs. 9.90 crores as the same was contested by Government of Rajasthan and the same was considered as not taxable as award had not attained finality. The CIT issued notice u/s. 263 and passed order on 25.2.2010 holding that the arbitral award of Rs.9.90 crores given to the Appellant was taxable income on mercantile basis and directed the AO to pass fresh order following decision of Supreme Court in the case of CIT v A. Gajapathy Naidu (1964)53 ITR 114(SC). On 26.02.2010 the AO passed order giving effect to the order passed u/s. 263 and added Rs. 9.90 crores to the income of the Appellant. The CIT(A), vide order dated 9.08.2012, dismissed appeal against assessment order holding appeal was not maintainable against order which simply gave effect to the findings of the Commissioner. The assessee filed appeal before the Tribunal on 26.03.2019 i.e. after delay of 2359 days. The assessee explained the delay pointing out that new arbitration award was passed on 8.8.2015 and the application for its execution was dismissed on 17.8.2017. The assessee had filed application u/s. 155(16) on 28.11.2018 which was dismissed by the AO on 11.3.2016. Therefore, taking into account the facts of the case and that the assessee was not negligent, proactively pursuing alternative remedy u/s. 115(16) of the Act, in the interests of justice, the Tribunal condoned the delay.

On the issue of maintainability of the appeal, the Tribunal held that the CIT(A) had dismissed the appeal on the ground that that no appeal lay against the order of the Assessing Officer which simply gave effect to the findings of the learned Commissioner of Income-tax. The Tribunal found that the CIT had not given any factual finding that the amount of arbitral award of Rs. 990 lakhs accrued as right to receive to the assessee in the impugned year. In the fact, there is no possibility of such finding in the order of the CIT since he has noted in his order that the assessee did not file copy of the arbitral award before him. The AO was required to examine the facts of the case and thereafter adjudicate upon the taxability of the arbitral award of Rs. 990 lakhs in view of the judgment of the Supreme Court in the case of CIT v.A. Gajapathy Naidu (1964)53 ITR 114(SC). The Tribunal restored back the issue to the file of the AO to verify the facts of the case and pass order accordingly. (AY. 2005-06)