2018 (4) TMI 1987 - AT - Income Tax

Revision u/s 263 - CIT (A) refused to exercise the jurisdiction u/s 250 on the ground that the order impugned before him was passed by the learned AO pursuant to the directions given by the CIT u/s 263 of the Act and inasmuch as the CIT and CIT (A) are coequal authorities, the remedy of the assessee is not before the CIT (A) but it is only before the ITAT - Whether CIT (A) was not justified in not deciding the issues i.e. addition u/s 36(1)(iii) and addition u/s 80IB(7A) on merits stating that the directions u/s 263 have been given by co-equal judicial authority which is illegal and not correct? HELD THAT - We are unable to understand the stand taken by the learned CIT (A) because what was challenged before him was the order passed by AO when the matter was set aside for the consideration of certain aspects suggested by the CIT. If the order u/s 263 is challenged before the CIT (A) then it was open for the learned CIT (A) to refuse to exercise jurisdiction inasmuch as the authority who passed the order u/s 263 of the Act and the authority who has to consider the appeal were equal in authority. The directions given by the CIT (A) u/s 263 of the Act passed to consider the aspects in respect of which the income might have escaped assessment. If we accept the logic adopted by the learned CIT (A) in this matter, it would result in reading something which is not to be found in the Act because in that case all the assessment orders passed giving effect to the orders u/s 263 of the Act will be directly appealable to the ITAT but not before the CIT(A), which is not contemplated by the scheme of appeals in the Act. Refusal of exercise the appellate jurisdiction by the learned CIT (A) is improper and the matter needs to be set aside to the file of CIT (A) for considering the appeal on merits and to give a finding thereon according to law. With this view of the matter, we set aside the order of the learned CIT (A) and remit it back to him for disposal according to law. Appeal of the assessee is allowed for the statistical purposes.

Summary

Issues:
Challenge to orders of CIT (A) in appeal, refusal to exercise jurisdiction by CIT (A), interpretation of authority between CIT and CIT (A), appealability of assessment orders passed after directions u/s 263 of the Act.

Analysis:
The appellant challenged the orders of the CIT (A) in appeal, which originated from the completion of assessment under section 143(3) of the Income-tax Act, 1961. The learned CIT, Meerut revised the order under section 263 of the Act, leading to subsequent additions by the AO. The appellant appealed against these additions, but the CIT (A) refused to exercise jurisdiction, citing the directions given by the CIT under section 263. The ITAT Delhi analyzed the situation, noting that the CIT (A) should have considered the appeal on its merits instead of deferring to the CIT's directions. The ITAT emphasized that the authority who passed the order under section 263 and the authority considering the appeal were coequal, thus the CIT (A) had the jurisdiction to review the matter. The ITAT highlighted that if the CIT (A) were to refuse jurisdiction based on the directions under section 263, it would disrupt the appeal process outlined in the Act. Therefore, the ITAT concluded that the refusal to exercise appellate jurisdiction by the CIT (A) was improper, and the matter was remitted back to the CIT (A) for proper consideration and disposal according to law.

The ITAT's decision clarified the interpretation of authority between the CIT and CIT (A) in the context of appeals following directions under section 263 of the Act. By emphasizing the importance of considering appeals on their merits, the ITAT ensured that the appeal process remains consistent with the statutory framework. The judgment underscored the need for each authority to fulfill its role within the appeal process to maintain the integrity of the assessment and appeal mechanisms under the Income-tax Act, 1961. Ultimately, the ITAT allowed the appeal for statistical purposes, indicating a procedural victory for the appellant in terms of having the matter reconsidered on its merits by the appropriate authority.