2016 (2) TMI 1195 - AT - Income Tax

Manner in which the income earned by the assessee is to be treated in the subsequent assessment years - Held that - We find ourselves in agreement with the learned counsel that the CIT(A) has indeed made certain observations which pre-empt the case of the assessee for the subsequent assessment years as well. We, therefore, make it clear that the observations made by the CIT(A), so far as period outside the assessment year 2009-10 is concerned, are devoid of any basis and stand vacated. A fresh call on merits will have to be taken for the assessment years, uninfluenced by the stand taken by the CIT(A) in the assessment year 2009-10, and the observations in this order, to that extent, stand expunged. Learned counsel, in this background, does not press the ground of appeal on merits and he is content with the unwarranted observations of the CIT(A) being held to be devoid of legal force.

Summary

Issues:
Challenge to correctness of order under section 143(3) for assessment year 2009-10.
Observations by CIT(A) affecting subsequent assessment years.

Analysis:
1. The appellant challenged the order passed by the CIT(A) for the assessment year 2009-10 under section 143(3) of the Income Tax Act, 1961. The appellant raised objections primarily regarding the CIT(A)'s findings related to subsequent years. The appellant contended that the CIT(A) made observations about the treatment of income in the following assessment years, which led to the appeal before the tribunal.

2. The Departmental Representative relied on the orders of the lower authorities. After considering the arguments presented by both sides and examining the material on record, the tribunal agreed with the appellant's counsel that the CIT(A) had indeed made observations that could impact the case of the appellant in the subsequent assessment years. The tribunal clarified that the CIT(A)'s observations beyond the assessment year 2009-10 lacked a basis and were therefore set aside. The tribunal emphasized that a fresh assessment must be conducted for the subsequent years without being influenced by the CIT(A)'s stance in the assessment year 2009-10.

3. Consequently, the tribunal allowed the appeal in favor of the appellant based on the above considerations. The tribunal pronounced the decision on 29th February 2016, stating that the appellant's grounds of appeal on merits were not pressed as the unwarranted observations of the CIT(A) were deemed to lack legal force. The tribunal's decision aimed to ensure that the assessment for subsequent years would be conducted independently without the influence of the CIT(A)'s observations from the assessment year 2009-10.