2024 (2) TMI 327 - AT - Income Tax

Jurisdiction of CIT (A) while passing an order in appeal u/s 250 - Validity of assessment framed without issue of notice u/s. 143(2) - whether CIT (A) has exceeded his jurisdiction by directing the Ld. AO to proceed in terms of section 150 of the Income Tax Act, 1961 and reframe assessment order as per law and after complying with the prescribed procedure? - In the first round of litigation the quarrel travelled upto the Hon ble High Court in Vishnu Packaging Private Limited Versus Income Tax Appellate Tribunal 2022 (3) TMI 1576 - DELHI HIGH COURT . wherein set aside the matter and remanded back to the ITAT to justify the matter afresh. HELD THAT - The undisputed fact is that the assessment has been framed without issue of notice u/s. 143(2) of the Act which means that the assessment has been framed without assuming jurisdiction making the assessment order null and void. This fact has also been accepted by the first appellate authority. However, the following observations of the CIT(A) are not only unnecessary but also bad in law in view of the same the impugned assessment order is deleted and the AO is directed to proceed in terms of the provisions of section 150 of the Act and reframe the assessment order in the case of the assessee as per law and after complying with the prescribed procedure . This finding of the CIT(A) means that the CIT(A) has set aside the assessment the power which he does not have, therefore, the order of the CIT(A) to this extent is bad in law as the CIT(A) has exceeded his jurisdiction. The appeal of the assessee is allowed. The assessment order and the order of the CIT(A) are quashed.

Summary

Issues involved:
The issues involved in this case include the jurisdiction of the CIT(A) in directing the Assessing Officer to proceed under section 150 of the Income Tax Act, 1961 and reframe the assessment order, as well as the validity of the assessment order due to lack of notice under section 143(2) of the Act.

Jurisdiction of CIT(A) - Observations of the CIT(A):
The CIT(A) had directed the Assessing Officer to proceed in terms of section 150 of the Act and reframe the assessment order, which was deemed unnecessary and beyond the CIT(A)'s jurisdiction. The CIT(A) setting aside the assessment order was considered as exceeding his powers, leading to the quashing of both the assessment order and the order of the CIT(A).

Validity of Assessment Order - Lack of Notice under Section 143(2):
The assessment in question was framed without issuing a notice under section 143(2) of the Act, rendering the assessment null and void. This fact was acknowledged by the first appellate authority, indicating that the assessment was conducted without proper jurisdiction, thereby leading to the decision to allow the appeal and quash both the assessment order and the CIT(A)'s order.

High Court Directions and Remand:
The matter had previously reached the Hon'ble High Court, which set aside the issue and remanded it back to the ITAT for fresh consideration. The High Court's findings highlighted discrepancies in the Tribunal's orders and the necessity for a fresh decision. With the consent of both parties, the impugned orders were set aside, and the matter was remanded back to the ITAT for a fresh decision, leaving the rights and contentions of all parties open.

Conclusion:
In conclusion, the appeal by the assessee was allowed based on the jurisdictional issues surrounding the CIT(A)'s directions and the lack of proper notice under section 143(2) for the assessment. The decision to quash both the assessment order and the CIT(A)'s order was made, emphasizing the importance of adhering to procedural requirements and staying within the bounds of jurisdiction. The final decision was announced in the open court on 29.11.2023.