2014 (11) TMI 149 - HC - Income Tax

Mandatory provisions u/s 250 complied or not Proceedings to be remitted to CIT(A) instead of AO - Whether the Tribunal is justified in reversing the order of the CIT (A) and restoring the order of AO on the ground that CIT (A) has without verifying books of accounts or without admitting additional evidence has given relief on merits to the assessee ignoring that CIT (A) in exercise of power u/s 250 has called for remand report before allowing the relief to the assessee Held that - The Tribunal found fault with the CIT(A) for not having either verified the books and for not having furnished an adequate opportunity to the AO to verify them CIT(A) allowed the appeal of the assessee merely on the basis of the written submission which was forwarded to the AO for his comments the AO was not furnished an opportunity to submit his comments on the basis of any additional evidence, which was sought to be produced by the assessee before the CIT(A). The Tribunal was justified in holding that the CIT(A) proceeded to allow the appeal of the assessee without the books of account or supporting vouchers being produced before him, only on the basis of the remand report which was called for - there is no reason for the Court to take a different view since it is clear that before the AO sufficient adjournments had already been allowed from time to time - the proper course of action would have been for the Tribunal to have restored the proceedings back to the file of the CIT(A) for disposal of the appeal filed by the assessee, once the Tribunal had found fault with the procedure which was followed by the Appellate Authority - the operative order of the Tribunal, setting aside the order of the CIT(A) cannot be faulted, but the Tribunal ought to have restored the proceedings back to the file of the CIT(A) instead of restoring the original order passed by the AO thus, the operative part of the order passed by the Tribunal is upheld and the matter is remitted back to the CIT(A) for fresh disposal Decided partly in favour of assessee.

Summary

Issues:
Delay in filing the appeal; Questions of law raised by the assessee; Assessment order by the Assessing Officer; Appeal before the Commissioner (Appeals); Tribunal's observations on the Commissioner (Appeals) decision; Tribunal's findings and reasoning; Court's analysis and decision.

Delay in filing the appeal:
The appellant filed an appeal with a delay of 242 days, attributing it to pursuing a miscellaneous application before the Tribunal. The Tribunal dismissed the application on 5 August 2014. The Court condoned the delay, considering the appellant's bona fide pursuit of the application.

Questions of law raised by the assessee:
The assessee raised two questions of law regarding the reversal of the CIT (A) order by the ITAT and the justification for not considering the plenary power of the CIT (A) under Section 250 of the Income Tax Act, 1961. These questions formed the basis of the appeal.

Assessment order by the Assessing Officer:
The Assessing Officer passed an assessment order under Section 143 (3) of the Act on 22 December 2010, assessing the total income of the assessee at Rs. 18.24 lacs. The order detailed the proceedings and interactions with the assessee during the assessment period.

Appeal before the Commissioner (Appeals):
The assessee filed an appeal before the Commissioner (Appeals), who called for a remand report from the Assessing Officer. The Commissioner (Appeals) allowed the appeal based on the remand report, which led to further appeal by the Revenue before the Tribunal.

Tribunal's observations on the Commissioner (Appeals) decision:
The Tribunal criticized the Commissioner (Appeals) for not verifying the books and records or providing an opportunity to the Assessing Officer to do so. It highlighted that the relief granted to the assessee was based on inadequate evidence and lack of proper verification.

Tribunal's findings and reasoning:
The Tribunal found fault with the Commissioner (Appeals) for allowing the appeal without proper verification of books and records. It emphasized the importance of providing the Assessing Officer with an opportunity to verify the evidence presented by the assessee.

Court's analysis and decision:
The Court reviewed the Tribunal's findings and agreed that the Commissioner (Appeals) had not conducted a thorough examination before allowing the appeal. The Court upheld the Tribunal's decision to set aside the Commissioner (Appeals) order but directed the proceedings to be restored to the Commissioner (Appeals) for a fresh disposal. This decision aimed to ensure a fair opportunity for both the assessee and the Department to present their cases adequately. The Court allowed the appeal in part, confirming the Tribunal's decision but directing a fresh disposal by the Commissioner (Appeals).