2025 (2) TMI 1143 - HC - Income Tax

ITAT remanding the matter back to CIT(A) to decide the purely legal issue even after admitting the additional ground as purely legal ground under Rule 27 itself - HELD THAT - Tribunal itself has reached to the conclusion that there does not seem to be any dispute so far as the legal issues raised before the CIT(A) are concerned. There is also no dispute so far as the assessee having raised the ground of applicability of Rule 27 of the Rules. The Tribunal also does not seem to be in quarrel to the contention of the appellant that they had in fact raised the ground of Rule 27 before the Tribunal and which has been left undecided though the CIT (A) had decided the matter in favour of the assessee. Rather than again remitting the matter back to the CIT (A) for fresh adjudication of the matter and thereafter again facing another round of appeals by either of the parties it would have been more appropriate if the Tribunal itself would had decided the said issue rather than remitting the matter back to the Tribunal. The view taken by the Income Tax Appellate Tribunal in the instant case does not seem to be proper legal and justified. The Tribunal should have itself decided the said matter on merits in accordance with law. Hence the order of remand by the impugned order deserves to be and is accordingly set aside and the matter stands remitted back to the Income Tax Appellate Tribunal for the Tribunal itself to decide the grounds.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the Income Tax Appellate Tribunal was correct in law in remanding the matter back to the Commissioner of Income Tax Appeals to decide a purely legal issue after admitting an additional ground as a purely legal ground under Rule 27 itself.The detailed analysis of the issues is as follows:The appellant, a private limited company engaged in real estate business, was subjected to search and seizure under Section 132 of the Income Tax Act, 1961. The appellant initially filed a return of income showing Rs. 2,01,44,670. During the search proceedings, it was discovered that certain expenses were not allowable under Section 40A(3) of the Act, leading to the appellant disclosing additional income totaling Rs. 6,84,95,860. Penalty proceedings were initiated under Section 270A for alleged misrepresentation of income. The Commissioner of Income Tax (Appeals) allowed the appeal of the assessee without addressing the issue of the validity of the notice issued under Section 274 read with Section 270A. The Revenue appealed to the Income Tax Appellate Tribunal.The Tribunal remanded the matter back to the Commissioner of Income Tax Appeals to consider the legal issue raised by the assessee regarding the validity of penalty proceedings based on a vague notice. The appellant contended that the Tribunal should have decided the matter itself instead of remanding it. The Tribunal acknowledged that there was no dispute on the legal issues raised and the applicability of Rule 27 of the Rules.The Court referred to legal precedents emphasizing that the Appellate Tribunal is a final fact-finding body and should examine both facts and legal positions before making a final decision. The Court held that the Tribunal should have decided the matter on its merits instead of remanding it to the Commissioner of Income Tax Appeals. Therefore, the Court set aside the order of remand and remitted the matter back to the Income Tax Appellate Tribunal for it to decide the grounds on which the matter was remanded and other grounds raised by the Revenue.The significant holdings of the judgment include the Court's determination that the Income Tax Appellate Tribunal should have decided the matter on its merits rather than remanding it back to the Commissioner of Income Tax Appeals. The Court emphasized the Tribunal's role as a final fact-finding body and its obligation to decide cases based on available materials without the need for remand.In conclusion, the Court allowed the appeals, set aside the order of remand, and remitted the matter back to the Income Tax Appellate Tribunal for a decision on the grounds raised by the Tribunal and the Revenue. There were no costs awarded, and any pending miscellaneous petitions were closed.