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2012 (9) TMI 32 - AT - Income TaxJudicial discipline - Power of CIT(A) u/s 251 vis a vis administrative Commissioner u/s 263 - enhancement of income adding new sources of income, not subject matter of original assessment - assessee contended that CIT(A) wants to add to the income of various assessees whose assessment orders have traveled upto CIT(A) and the Tribunal - Held that - In present case, what CIT(A) is attempting to do is that under the guise of provisions of section 250(4), he is trying to act as if he is the administrative CIT and as such has got revisionary powers. In the guise or order passed u/s 250(4), CIT(A) is trying to even reopen the completed assessments of other assessees which have reached finality to the level of the Tribunal which is not permissible under law. We may observe that even administrative CIT by exercising powers u/s 263, is not permitted to direct the AO to revise the assessment by adding the income of other assesses whose assessments are either quashed or additions have not only been deleted by his predecessor but which were confirmed by the Tribunal also. CIT(A) has no power to find out new source of income which was not the subject matter of original assessment. If any part of the income has escaped assessment, it is the jurisdiction of the administrative CIT u/s 263 and not of CIT(A). In the impugned order, CIT(A) exceeded his jurisdiction and it appears that the orders have been framed by assuming the revisionary jurisdiction of Administrative Commissioner u/s 263 which is not permissible under the Act. Order of the CIT(A) passed u/s 250(4) is set aside and first appellate authority is directed to decide the appeals on merits.
Issues Involved:
1. Enhancement of income without reasonable opportunity to the assessee. 2. Validity of the remand order as a notice under Section 251(2) of the IT Act. 3. Jurisdiction and powers of CIT(A) under Section 250(4) of the IT Act. 4. Introduction of new sources of income by CIT(A). 5. Harassment and litigation due to repeated inquiries. Detailed Analysis: 1. Enhancement of Income without Reasonable Opportunity: The assessees argued that the CIT(A) was determined to enhance the income without giving a reasonable opportunity to the assessee to show cause against such enhancement as required under Section 251(2) of the IT Act. The CIT(A) directed inquiries on several points, causing unnecessary harassment and litigation. The assessment years involved were from 1998-99 to 2004-05, and the assessment orders had already been passed with the prior approval of the Joint Commissioner of Income Tax. 2. Validity of the Remand Order as Notice under Section 251(2): The assessees contended that the impugned remand order could not be treated as a notice under Section 251(2) of the Act. The remand report admitted that no search warrant was executed upon one of the assessees, Smt. Vandana Gupta. The CIT(A) had passed an order under Section 250(4) identical to other assessees without deciding the said ground, which was not permissible. 3. Jurisdiction and Powers of CIT(A) under Section 250(4): The CIT(A) has wide powers under Section 250(4) but is not expected to examine aspects that have already reached finality. The CIT(A) tried to introduce new sources of income under the guise of the impugned order, which is not permissible. The CIT(A) is expected to confine himself to the subject matter addressed in the original assessment. The assessees relied on several judicial decisions to support their argument that the CIT(A) cannot use revisionary powers available under Section 263 of the Act by passing an order under Section 250(4). 4. Introduction of New Sources of Income by CIT(A): The CIT(A) attempted to add income of various assessees whose assessment orders had already been quashed or additions deleted by the Tribunal. The Tribunal had already decided those cases, and the CIT(A) was not expected to sit over the decision of the Tribunal, thereby crossing the principle of judicial discipline. The CIT(A) tried to introduce new sources of income which were not the subject matter of assessment in the present cases. This action was deemed as an indirect attempt to include the income of other assessees. 5. Harassment and Litigation due to Repeated Inquiries: The CIT(A)'s directions for further inquiries led to unnecessary harassment and litigation for the assessees. The assessments for the years 1998-99 to 2004-05 had already been framed after detailed inquiry and approval from the Joint Commissioner of Income Tax. The CIT(A)'s actions were seen as an overreach of his jurisdiction, causing undue burden on the assessees. Conclusion: The Tribunal found that the CIT(A) had exceeded his jurisdiction by attempting to introduce new sources of income and acting as if he had revisionary powers. The CIT(A) is confined to the subject matter of the original assessment and cannot travel beyond it. The Tribunal set aside the order of the CIT(A) passed under Section 250(4) and directed the CIT(A) to decide the appeals on merits, providing due opportunity of being heard to the parties. The appeals were allowed for statistical purposes only.
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