2024 (7) TMI 282 - AT - Income Tax

Withdrawal of appeal against the revision order u/s. 263 - CIT(A) allowing the assessee to withdraw the appeal against the order u/s. 263 on the ground that the Tribunal has quashed the section 263 order and that the CIT(A) has erred in not deciding the appeal on the merits of the case - Revenue contended that the ld. CIT(A) does not have the power to allow withdrawal of appeal on the request of the assessee without deciding the issue on the merits. HELD THAT - Commissioner of Appeals has in his order discussed the power of ld. CIT(A) as per section 251 of the Act whereby he can confirm, reduce, enhance or annul the assessment while deciding the appeal u/s. 246A of the Act filed by the assessee which are within the purview of section 251(1)(a) of the Act. The ld. CIT(A) had also relied on the decision of Premkumar Arjundas Luthra 2016 (5) TMI 290 - BOMBAY HIGH COURT wherein it was held that the power of allowing withdrawal of appeal is not within the provision of section 251(1)(a) of the Act and has further held that the ld. CIT(A) has to decide the issue on the merits of the appeal. CIT(A) has further stated that inspite of the fact that the assessee has filed an application seeking withdrawal of appeal, the appeal cannot be dismissed in limine without getting into the merits of the case. CIT(A) has further proceeded to conclude by saying that since the revisionary order u/s. 263 of the Act has been quashed, the consequential order which is the very edifice of the impugned consequential order u/s. 143(3) r.w.s. 263 of the Act would not survive in the eyes of law, is according to us has rightly been held so by the ld. CIT(A). Thus, no justification in the Revenue s objection that it is evident that the appeal has not been dismissed on the basis of the withdrawal application filed by the assessee, in holding so, we find no merits in the grounds of appeal raised by the Revenue.

Summary

Issues:
Challenging order of Commissioner of Income Tax (Appeals) under Income Tax Act for A.Y. 2016-17 and 2017-18.

Analysis:
The Revenue challenged the order allowing the assessee to withdraw the appeal against the order u/s. 143(3) r.w.s. 263 of the Act, claiming that the ld. CIT(A) erred in not deciding the appeal on its merits. The assessee, a Singapore resident investing in the Indian capital market, filed its return declaring income and losses, carrying forward losses u/s. 74 of the Act. The ld. PCIT invoked revisionary powers u/s. 263, questioning the treatment of capital gains under the DTAA and carry forward of losses. The Tribunal quashed the revisionary order, leading the ld. CIT(A) to dismiss the appeal as infructuous, a decision challenged by the Revenue.

The Revenue contended that the ld. CIT(A) lacked power to allow appeal withdrawal without deciding on merits, citing legal precedents. The ld. AR opposed, arguing that the order was not a withdrawal but based on the quashing of the section 263 order. The ld. CIT(A) discussed his powers under section 251 of the Act, emphasizing the need to decide on appeal merits, not allowing withdrawal without merit consideration. Relying on legal decisions, the ld. CIT(A) concluded that since the revisionary order was quashed, the consequential order would not survive, rejecting the Revenue's objections.

In ITA No. 1698/Mum/2024, identical facts led to the same conclusion as in ITA No. 1711/Mum/2024. The Tribunal dismissed both appeals filed by the Revenue based on the above analysis. The decision was pronounced on 03.07.2024 in open court.

This detailed analysis covers the issues involved in the legal judgment, highlighting the arguments presented by both parties and the Tribunal's reasoning in dismissing the Revenue's appeals.