2017 (9) TMI 1163 - HC - Income Tax

Decline on entertaining claim on technical grounds - ITAT remanding the matter to the CIT (A) for re-adjudicating on merits - appellant inadvertently added the reversal of provision instead of reducing the same from its taxable income - brought forward business losses - Held that - When the factual and legal position was clear there was no need at all for the ITAT to have remanded the matter to the CIT (A). Recently in Alcatel-Lucent India Ltd. v. Deputy Commissioner of Income Tax case 2017 (9) TMI 1108 - DELHI HIGH COURT this Court to observed that practice of remand to the TPO should be resorted to by the ITAT only where it is absolutely necessary. It could be either because of lack of clarity on factual aspects or because some facts have emerged since the order of the TPO that require to be taken into consideration since it would have a bearing on the outcome. Further the remand order in such circumstances should clearly spell out what the scope of the remand is. Where all the relevant facts are already before the ITAT and the parties have no new material to provide simply remanding the issue to the TPO without rendering a finding thereon would be an abdication of the functions of the appellate body. Question framed by the Court is answered in the affirmative i.e. in favour of the Assessee and against the Revenue.

Summary

Issues:
- Appeal against the order of the Income Tax Appellate Tribunal (ITAT) remanding the matter to the Commissioner of Income Tax (Appeals) for re-adjudicating on merits.
- Dispute regarding the inadvertent mistake in adding back a provision to taxable income.
- Applicability of previous court decisions on similar matters.
- Question of whether the ITAT erred in remanding the matter to the CIT (A) despite clear factual and legal positions.

Analysis:
1. The appeal was filed under Section 260 A of the Income Tax Act 1961 against the ITAT's order for the Assessment Year 2002-03. The primary question raised was whether the ITAT erred in remanding the matter to the CIT (A) for re-adjudicating on merits despite the CIT (A) agreeing with the Assessee on the claim but declining it on technical grounds.

2. The Assessee had inadvertently increased its taxable income by adding a provision to its income, resulting in double the amount being offered for tax. The CIT (A) acknowledged the mistake but declined relief, citing a distinction between claiming a deduction and correcting an accounting error based on previous court decisions.

3. The ITAT, while agreeing with the Assessee, remanded the matter to the CIT (A) for re-deciding the issue on merits. However, the High Court criticized this approach, emphasizing that when the factual and legal position is clear, there should be no need for remand unless absolutely necessary. The High Court cited a previous order to support this stance.

4. Ultimately, the High Court ruled in favor of the Assessee, allowing the claim to delete the added amount from taxable income. The Court directed the Assessing Officer to pass an appeal effect order accordingly, disposing of the appeal in favor of the Assessee against the Revenue.

This comprehensive analysis highlights the key legal issues, the sequence of events, the arguments presented by both parties, and the final judgment delivered by the High Court, providing a detailed understanding of the case.