CIT-Appeals has no power u/s 251 to send back file to AO to verify claim of the assessee.

CIT-Appeals has no power u/s 251 to send back file to AO to verify claim of the assessee.


ITA No. 196/Kol/2013 : Asstt. Year : 2009-2010

ITO (APPELLANT)  vs. Satyapriya Joardar (RESPONDENT)

Date of Order: 04-03-2016


Per Shri S.S.Viswanethra Ravi, J.M.

This appeal is filed by the Revenue having aggrieved by the order dated 19.09.2012 passed by the CIT(Appeals), Durgapur in Appeal No.236/CIT(A)/DGP/11-12 for the assessment year 2009-10 framed under section 143(3) of I.T.Act.

2. Challenging the above impugned order, the appellant Revenue raised the following grounds:

“1. The Ld. CIT(A)-Durgapur, has erred in directing the AO to verify the documents which is not in accordance with the power given u/s 251 of the IT Act, 1961.

2. Your appellant humbly reserves the right to adduce/ amend any ground, which may arise in the course of appeal proceedings.”

3. At the time of hearing it is noted that the appeal has been filed by the Revenue belatedly by 51 days and for condonation of delay, the Revenue has filed an affidavit duly endorsed by the Assessing Officer. After going through the affidavit filed by the Revenue and considering the same, we are of the view that there was a sufficient cause for delay in filing the appeal by the Revenue and accordingly the delay is condoned and appeal is admitted for hearing.

4. Brief facts of the case are that the assessee is an individual having dealing with the business in providing security services. The assessee filed its return of income through method of e-filing declaring income of Rs.5,31,380/- which was duly processed and subsequently, on scrutiny notices under section 143(2) and 142(1) were issued and in response to which the assessee appeared before the AO, produced documents in support of his payments relating to PF and service tax. During the course of assessment, the AO found that the assessee debited various expenses from his P&L a/c. and the same were not verifiable from the cash book as produced by the assessee. Therefore, the AO by invoking section 145(3) estimated the income of the assessee @8% against the total receipts of Rs.2,00,92,324/-, thus added Rs.16,07,425/- to the income of the assessee. The AO also found on examining bank statements furnished by the assessee relating to State Bank of India, City Centre branch and Union Bank of India, Benachiti branch wherein the assessee has pledged various fixed deposits amounting to Rs.32.70 lakhs as collateral security to obtain overdraft. On examination, it was found by the AO that the said fixed deposits were not reflected in the balance-sheet and for the non-submission of the explanation of the assessee, the AO added an amount of Rs.32.70 lakhs to the income of the assessee as undisclosed asset. Further, the AO added Rs.1,45,923/- towards accrued interest on above fixed deposits for not disclosing the same in the return of income. Thereby, in total the AO computed the income of the assessee at Rs.50,23,349/-.

5. Aggrieved by the assessment order under section 143(3), the assessee preferred appeal before the CIT-A, Durgapur wherein he contended that with regard to addition on estimation at 8% can be verified from the cash book referring to the circumstantial evidence for verification of his claim of expenses. But however, the CIT(A) was of the view that there is no primary evidence in verifying the expenses claimed by the assessee. The verification of secondary evidence cannot be considered in the absence of primary evidence. Thereby the CIT(A) confirmed the order of the AO in estimating the income of the assessee @8% as against the total receipts thereon.

6. Regarding the addition under undisclosed fixed deposits, the CIT(A) in the interest of natural justice remanded the matter to AO with a direction to verify the claim of the assessee relating to submission made by the assessee that the assessee could not explain the source of the said fixed deposits. Aggrieved by the said order, the Revenue is in appeal before this Tribunal questioning the action of the ld. CIT(A) in remanding the matter to the AO to verify documents which is beyond the scope of power available to him under section 251 of the Act.

7. None appeared for the Revenue. The ld. Counsel for the assessee submitted that during the course of reassessment proceedings, he could not explain the source of funds in purchasing the fixed deposits totaling to Rs.32.70 lakhs which was offered to as collateral security in order to obtain overdraft. Therefore, the assessee contended before the CIT(A) to direct the AO to verify the claim of the assessee in explaining the source of funds in purchasing the fixed deposits.

8. Heard assessee’s representative and perused the record. The main stand of the Revenue as taken in grounds of this appeal is that the Commissioner does not have the powers in remanding the matter to AO with a direction to verify the claim of the assessee under section 251 of the Act whereas it is observed from the provision of section 251 of the Act that the Commissioner is not having the power to send back the file to AO to verify the claim of the assessee. The only power available to him to exercise under section 251 of the Act is that he may confirm, reduce, enhance or annul the assessment, besides the other clauses contained therein. We, therefore, set aside the impugned order of the ld. CIT(A) on this issue and remit the matter back to him with a direction to decide the same on merit, after giving the assessee proper and sufficient opportunity of being heard.

9. In the result, the appeal filed by the Revenue is allowed for statistical purposes.

Order Pronounced in the Open Court on 4th March, 2016.

(P.M.Jagtap) ACCOUNTANT MEMBER      (S.S.Viswanethra Ravi)  JUDICIAL MEMBER

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