Power of CIT(A) u/s 251(1)(a) to remand case can be exercised only in best judgment assessment

Power of CIT(A) under section 251(1)(a) to remand case could be exercised only when the assessment is passed u/s 144 of the Act only.

In a recent judgment ITAT has held that the power to remand case entrusted to CIT(A) under newly inserted proviso to section 251(1)(a) of the Act could be exercised only when the assessment is passed u/s 144 of the Act only.

ABCAUS Case Law Citation:
5184 (2026) (07) abacus.in ITAT

In the instant case, the Revenue had challenged the order passed by the CIT(A) in restoring the assessee’s first appeal to the file of assessing officer in exercise of his powers under the proviso to section 251(1)(a) of the Income Tax Act, 1961 (the Act).

The assessment proceedings were completed u/s 143(3) r.w.s 144B of the Act. In the first appeal, the CIT(A) set aside the assessment order in exercise of the powers vested under the proviso to section 251(1)(a) of the Act and restored the matter back to the file of the assessing officer for fresh assessment order after affording reasonable opportunity of hearing to assessee.

Before the Tribunal, the Revenue contended that the CIT(A) had erred in law and facts in interpreting provision of section 251(1)(a) of the Act as the assessment order in this case was passed u/s 143(3) of the Act which is not in the purview of proviso of section 251(1)(a) of the Act.

It was submitted that the case was heard with assessee’s representative through video conferencing during the assessment proceedings. Therefore, the impugned order was not in the purview of the proviso to section 251(1)(a) of the Act.

The Tribunal observed that the proviso inserted by the Finance (No. 2) Act, 2024 wef 01.10.2024, empowers CIT(A) that when the first appeal filed before him is against the order of assessment made u/s 144, he may set aside the assessment and refer the case back to the assessing officer for making a fresh assessment.

The Tribunal further noted that assessment order showed that in response to the notice u/s 142(1), assessee had filed his replies and assessee also responded to show cause notice and requested for V.C., which was conducted. The representative of the assessee also stated to have appeared and participated during the assessment proceedings. The Assessing Officer had further mentioned that the representative for the assessee explained the issues. Thus, the assessment order was not passed u/s 144 of the Act but after considering assessee’s submissions on merits.

The Tribunal held that the power entrusted to CIT(A) under newly inserted proviso to section 251(1)(a) of the Act could be exercised only when the assessment is passed u/s 144 of the Act only, which was not as such in case in hand.

Accordingly, the Tribunal held that CIT(A) erred in remanding the case to the assessing officer and the impugned order cannot thus be sustained in the eye of law and hence, set aside. The case was restored back to the file of CIT(A) for passing order a fresh on merits.

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