Order giving effect to appellate order is also appealable u/s 246A of the Income Tax Act. If appeals allowed on the legal ground, additions on merits cannot be sustained
ABCAUS Case Law Citation:
ABCAUS 2771 (2019) (02) ITAT
Important Case Laws Cited/relied upon by the parties
CIT Vs. John Tinson & Co. Pvt. Ltd.
Caltex Oil Refining (India) Ltd. vs. CIT 202 ITR 375
The appellant assesseees had challenged the act of the CIT (A) in holding that the orders of the AO denying grant of appeal effect were not appealable orders.
A search and seizure operation was carried out in the business premises of a Group of cases. Subsequently, assessments u/s 153C of the Act were completed in the cases of appellant assessee(s).
On appeal, the CIT (Appeals) decided the issue in favour of the assessee by holding that since there was no incriminating material found during the course of search belonging to the assessee, there could not be any addition in the hands of the assessee and, thus, the legal issue was decided in favour of the assessee.
However, on merits the CIT (A) confirmed the addition in the hands of the assessee/s.
In view of the legal issue was decided in favour of the assessee, no further appeal/s were preferred by the assessees and no appeals were filed by the revenue also.
Thereafter, the assessees filed applications before the AO for giving the appeal effect requesting the AO to give effect to the order/s of the CIT (A). However, the AO disposed of the said applications stating that the order/s by the CIT (A) had been passed in the favour of revenue and thus the effect to the application/s of the assesse companies could not be granted and that the demand/s raised by the AO remained as they were.
Aggrieved, the assessees approached the CIT (A) once again challenging the action of the AO in denying the grant of appeal effect to the assessee/s. However, the CIT (A) dismissed the appeals by simply stating that the appeals filed by the assessee/s were not maintainable under the provisions of section 246A of the Act.
Before the Tribunal, the assesses contended that the appeal effect order is appealable under section 246A of the Act because the order passed by the Assessing Officer giving effect to the decision of the appellate authority is as much an assessment order as the one passed by him u/s 143 of the Act.
It was further submitted that the appeal-effect order passed by the AO in contravention of the order of the CIT (A) was an appealable order and the appeal lied before the CIT (A).
It was submitted that the CIT (A) had erred in holding that the impugned orders were not appealable orders. It was prayed that the appeals of the assessee/s be allowed.
The Tribunal observed that CIT (A) had decided the appeals in favour of the assessee/s by holding that since there was no incriminating material found during the course of search and seizure which could be said to be belonging to the assessee/s, there cannot be any additions in the hands of the assessee/s. On the other hand, the Ld. CIT (A) has confirmed the additions on merits.
The Tribunal opined that this act of the CIT(A) was contrary to the settled legal position that if the appeals are allowed on the legal ground, then additions on merits cannot be sustained. The CIT (A) had given contradictory findings in the same appellate order.
Durtherm the Tribunal opined that it is also settled law that an order giving effect to the appellate order is also appealable u/s 246A of the Act as held by the various High Courts.
The Tribunal, accordingly held that the CIT (A) was legally incorrect in holding that the appeal effect order is not appealable and, therefore, his action of dismissing the assessee’s appeals in limine could not be upheld.
The Tribunal restored all the appeals to the file of the CIT (A) to re-adjudicate them and pass the orders in accordance with law after giving due opportunity to the assessee to present its case.