2020 (6) TMI 648 - AT - Income Tax

Rectification of mistake u/s 154 - orders passed u/s.154 that the revenue has relied on the CBDT Circular No.1725 dated 22.8.2016 of the CBDT - HELD THAT - By virtue of amendment to the provisions of section 251 of the Act w.e.f. 1.6.2001, the first appellate authority does not have any power to set aside an assessment or issue for consideration by the AO. Hence, as rightly contended by the assessee, the aforesaid Instruction cannot be the basis for passing the impugned orders. Secondly, the Tribunal 2016 (9) TMI 1572 - ITAT BANGALORE has held that the assessment order framed by the ITO is not valid and that the assessment has to be framed de novo by a competent Officer either ACIT/DCIT. By virtue of this order of Tribunal, the order of the AO which is sought to be rectified in the proceedings u/s. 154 of the Act is no longer in existence and even on this ground, the proceedings u/s. 154 of the Act are thoroughly misconceived, and in our view, deserves to be quashed. Thirdly, it was also brought to our notice by the ld. counsel for the assessee that pursuant to the order of the Tribunal, the ACIT, Circle 4(3)(1), Bangalore has passed an order u/s. 254 of the Act r.w.s. 143(3) dated 30.12.2017 determining the total income of assessee. By virtue of this order of assessment, the previous determination of total income and tax payable no longer survives and therefore the orders passed u/s. 154 of the Act are purely academic. The assessee has already filed an appeal against the order dated 30.12.2017 and the same is stated to be pending for adjudication before the first appellate authority. We are of the view that the orders passed u/s. 154 of the Act are required to be quashed and are accordingly quashed.

Summary

Issues:
1. Appeal against order dated 28.02.2018 of CIT(Appeals)-4, Bangalore for assessment year 2009-10.
2. Correctness of orders u/s. 154 of the Income-tax Act, 1961 modifying the refund and determining outstanding demand.

Analysis:
1. The appeals arose from the order of the CIT(Appeals)-4, Bangalore for AY 2009-10. The assessee, a partnership firm in real estate, filed returns showing different incomes. The CIT(Appeals) upheld the initial assessment order, but the Tribunal later deemed it invalid, directing a de novo assessment by ACIT/DCIT. Subsequently, the AO recalculated the income, leading to a refund. However, the AO, citing CBDT Instruction No.1725, modified the refund order to keep the demand in abeyance until a fresh assessment. Another order was issued rectifying the demand amount, which the CIT(A) upheld, prompting the appeals.

2. The Tribunal analyzed the CBDT Instruction No.1725, noting its inapplicability to the current scenario due to changes in the law. Additionally, a previous Tribunal order had invalidated the AO's assessment, rendering the subsequent 154 orders redundant. The ACIT had already issued a revised assessment order superseding the need for the challenged orders. Consequently, the Tribunal quashed the 154 orders, deeming them unnecessary and academic, and allowed the appeals.

This detailed analysis highlights the progression of events leading to the legal dispute, the application of relevant legal provisions, and the Tribunal's rationale for its decision to quash the orders in question.