Once ITAT set-aside order of CIT(A) for denovo adjudication, CIT(A) do not have any power to direct the Assessing Officer to frame Fresh Assessment.
In a recent judgment, ITAT Pune has held that once ITAT set-aside the order u/s 250 for denovo adjudication, the CIT(A)/NFAC do not have any power to direct the Assessing Officer to frame Fresh Assessment.
ABCAUS Case Law Citation:
4769 (2025) (10) abcaus.in ITAT
Important Case Laws relied upon by Parties:
Pr.CIT(Central) Vs. Premkumar Arjundas Luthra
In the instant case, the assessee had challenged the order of the CIT(A)/NFAC passed under section 154 r.w.s 250 of the Income Tax Act, 1961 (the Act) in rejecting the rectification application filed by the Assessing Officer (AO).
In the case of the respondent assessee an Assessment Order was passed u/s.143(3) r.w.s 144B of the Act. Aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A).
The CIT(A) passed order u/s 250 of the Act directing the Assessing Officer to recompute the total income considering the peak credit in the accounts. Aggrieved by the order of CIT(A)/NFAC, Revenue filed appeal before the Tribunal.
The Tribunal observed that CIT(A) after considering the issue at length failed to adjudicate the issue conclusively in terms of section 250(6) of the Act but directed the AO for recomputing the total income in accordance with direction.
The Tribunal opined that the said direction to the AO had the effect of setting aside the original assessment therefore and suffered from clause (a) of s/s (1) of section 251 r.w.s. 250(6) of the Act.
As a result, the Tribunal quashed the directions by setting-aside the impugned order under challenge and remanded the matter back to the file of NFAC for de-nova adjudication.
The CIT(A) while giving effect to the order of ITAT, set-aside the Assessment Order to the Assessing Officer for Fresh Assessment. Aggrieved by the said order, the AO filed Rectification Application before the CIT(A). The CIT(A) rejected Revenue’s Rectification Application. As a result, the Revenue again approached the Tribunal.
The Tribunal opined that once ITAT set-aside the order of CIT(A), the CIT(A) has to follow the directions of ITAT and CIT(A)[NFAC] do not have any power to set it aside to the Assessing Officer. The CIT(A) had not followed the directions of the ITAT and merely set-aside the Assessment Order to the Assessing Officer for Fresh Assessment, whereas ITAT had directed to decide the issues raised by the Assessee afresh.
The Tribunal stated that as per Section 251 of the Act, the CIT(A) has to decide each and every ground raised by the Assessee on merits. The CIT(A) has power to call for information and to issue summons u/s.131 of the Act. However, the CIT(A) had not adjudicated the grounds, but merely directed Assessing Officer to frame Assessment Order Afresh. This amounted to violation of directions issued by ITAT and also violation of Section 251 of the Act.
The Tribunal further observed that CIT(A) erred in referring the Proviso to Section 251(1) of the Act. The Proviso to Section 251(1) is applicable only when Assessment Order is passed u/s.144 of the Act. In the case of the Assessee, Assessment Order was passed u/s.143(3) r.w.s 144B of the Act. In the Assessment Order, it was specifically mentioned that Assessee appeared and filed Balance Sheet, Profit and Loss Account, Computation of Income and submitted that Assessee was engaged in the business of retail sale and purchase of Ayurvedic Products.
The Tribunal held that Revenue was right in filing Rectification Application before CIT(A) as the mistake of not following the directions of ITAT was apparent from records.
As a result, the Tribunal directed the CIT(A)/NFAC to follow the order of ITAT wherein it had set-aside the order for denovo adjudication.
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