CIT-A can decide appeal against CIT revision order us 263 when no direction given to make assessment in a particular way-ITAT

CIT-A can decide appeal against CIT revision order us 263 when no direction given to make assessment in a particular way except to invoke Section 50C-ITAT

ABCAUS Case Law Citation:
1057 (2016) (11) ITAT

Brief Facts of the Case:
The appellant assessee had filed his return of income admitting total income of Rs. 1,92,206/- and scrutiny assessment u/s 143(3) of the Income Tax Act (Act) was completed on a total income of Rs. 3,54,460/-. Subsequently, Commissioner of Income Tax (CIT) noticed that the Assessing Officer (AO) had not made any enquiries and failed to examine various issues and initiated proceedings u/s. 263 of the Act.

CIT set aside the assessment with a direction to the AO to re-do the same by invoking the provisions of Section 50C of the Act. He is also directed that the correctness of the claim of cost of improvement had to be examined. The CIT also directed that assessee is to be given due opportunity of being heard before finalising the ‘re-assessment proceedings’.

Acting on the above order of CIT, the AO completed the reassessment, determining total income at Rs. 74,03,860/-.

Aggrieved with the revised assessment, the assessee had preferred an appeal before the CIT(A). However CIT(A) dismissed the appeal stating that the AO had made additions based on the directions of the Commissioner of Income Tax and As the Commissioner of Income Tax and the Commissioner of Income Tax (Appeals) are the equal authorities. Thus an appeal against the assessment completed as per the directions of the Commissioner of Income Tax u/s 263 could not be decided by the Commissioner of Income Tax (Appeals).

Observations made by the Tribunal:
The Tribunal observed that the CIT had not given any direction to make an assessment in a particular way.

In fact he merely directed AO to invoke the provisions of Section 50C. To that extent, assessee had accepted the order but AO had examined the issue afresh under the provisions of Section 50C.

The ITAT opined that CIT(A) can examine the contention of assessee with reference to the working under Section 50C and computation of Capital Gains, as those were not covered by the order of CIT u/s 263.

Held:
It was held that the CIT(A) was not correct in dismissing the appeal.

The  order of the CIT(A) was set aside and restored for examination of the contentions raised by assessee on merits.