2019 (3) TMI 532 - AT - Income Tax

Tax Tribunal Limits Commissioner's Jurisdiction on Assessments

The Tribunal held that the Commissioner of Income Tax (Appeals) exceeded his jurisdiction by directing the Assessing Officer to take action under sections ... Power of CIT(A) u/s 251 to give direction to reopen the assessment - Can CIT(A) set aside the assessment framed u/s 153C - scope of section 150(1) - allegation of accommodation entries provided by the appellant - HELD THAT:- Before the amendment by Finance [No. 2] Act, 2014 the provisions of section 251 empowers the appellate authority in an appeal against the order of assessment to confirm, enhance or annul the assessment. Before 1.6.2001, there was one more power and the same reads as under - “Or he may set aside the assessment and refer the case back to the AO for making fresh assessment in accordance with the directions.” The CBDT in its Circular has also clarified that the power of the appellate commissioner does not include the power to set aside the assessment. In our considered opinion, action of the first appellate authority has no sanction of law as powers of the CIT(A) have been set out in section 251 of the Act. The CIT(A) has more power to send the matter back to the file of the AO for making fresh decision on the issue. Once the assessment order was quashed the CIT(A) has transgressed the power given to him u/s 251(1) of the Act by giving direction to the AO to take action u/s 147/148 of the Act. Such directions are uncalled for and deserve to be expunged from the findings of the first appellate authority. We accordingly direct the AO to read the order of the first appellate authority without direction to take action u/s 147/148 of the Act. Decided in favour of assessee. Issues:- Jurisdiction of CIT(A) in issuing directions to AO post quashing of assessment order under section 153C of the Income-tax Act, 1961Analysis:1. The appeals before the Appellate Tribunal ITAT DELHI involved challenges against orders of the Commissioner of Income Tax [Appeals] related to assessment years 2009-10 and 2010-11.2. The grievance in all appeals was common, leading to a joint hearing and disposal for convenience.3. The central issue revolved around the jurisdiction of the CIT(A) after invalidating the AO's jurisdiction under section 153C of the Act but subsequently directing the AO to take action under section 147/148 of the Act.4. The appellants argued that the CIT(A) exceeded his jurisdiction by instructing the AO to initiate proceedings under section 147/148 post quashing the assessment under section 153C.5. The case involved additions based on alleged accommodation entries provided by the appellants, leading to the issuance of notice under section 153C. The CIT(A) found the AO's assumption of jurisdiction under section 153C invalid and quashed the proceedings.6. Despite quashing the assessment under section 153C, the CIT(A) directed the AO to take action under section 147/148, which was contested by the appellants as exceeding the CIT(A)'s powers under section 251 of the Act.7. The argument presented by the appellants was that once the assessment order under section 153C was annulled, the CIT(A) had overstepped his authority by instructing the AO to proceed under section 147/148.8. The Tribunal analyzed the relevant provisions of the Act and concluded that the CIT(A) had transgressed his powers by directing the AO to take action under section 147/148 after quashing the assessment under section 153C.9. The Tribunal emphasized that the CIT(A) lacked the legal sanction to issue such directions post quashing of the assessment order, highlighting the specific powers vested in the CIT(A) under section 251 of the Act.10. The Tribunal's decision was based on the statutory framework and clarified that the CIT(A) did not have the authority to direct the AO to initiate proceedings under section 147/148 once the assessment under section 153C was invalidated.11. The Tribunal's ruling underscored the importance of adhering to the prescribed powers and limitations of appellate authorities, ensuring that directives issued are within the statutory framework.12. Ultimately, the Tribunal allowed all four appeals, setting aside the directions given by the CIT(A) to the AO to take action under section 147/148 of the Act, emphasizing the need for adherence to legal provisions.13. The Tribunal's comprehensive analysis and decision highlighted the significance of statutory provisions governing the powers of appellate authorities and the necessity to operate within the confines of the law.