2024 (2) TMI 327 - AT - Income Tax

CIT(A) lacks power to direct AO to reframe assessment under section 150 after finding original assessment invalid

ITAT Delhi held that CIT(A) exceeded jurisdiction by directing AO to reframe assessment under section 150 after finding the original assessment invalid ... Assessment framed without notice under section 143(2) null and void - appellate authority exceeding jurisdiction by setting aside assessment - direction to Assessing Officer to proceed afresh under section 150 - quashing of assessment and first appellate orderAssessment framed without notice under section 143(2) null and void - Validity of the assessment framed without issuance of notice under section 143(2). - HELD THAT: - The Tribunal found and recorded that the assessment had been framed without issuing the notice required by section 143(2), which is a jurisdictional prerequisite. Framing the assessment in the absence of that notice meant the Assessing Officer proceeded without assuming jurisdiction; consequently the assessment order was devoid of jurisdictional validity and is null and void. This factual and legal conclusion is accepted as undisputed by the parties and by the first appellate authority. [Paras 4]The assessment framed without notice under section 143(2) is null and void and cannot stand.Appellate authority exceeding jurisdiction by setting aside assessment - direction to Assessing Officer to proceed afresh under section 150 - Whether the CIT(A) had jurisdiction to set aside the assessment and direct the AO to reframe the assessment under section 150. - HELD THAT: - Although the CIT(A) accepted that the assessment was framed without jurisdiction, the CIT(A)'s order went further by directing the Assessing Officer to proceed under section 150 and to reframe the assessment. The Tribunal held that this amounted to the CIT(A) setting aside the assessment - a power the appellate authority does not possess. The direction to the AO to reframe the assessment therefore exceeded the jurisdiction of the CIT(A) and was held to be bad in law. Accordingly, the Tribunal quashed that portion of the CIT(A)'s order as beyond jurisdiction. [Paras 5, 6]The CIT(A)'s direction to the AO to proceed under section 150 and reframe the assessment exceeded the CIT(A)'s jurisdiction and is quashed; the CIT(A) order is bad in law to that extent.Final Conclusion: The appeal is allowed: the assessment for A.Y.2010-11, having been framed without notice under section 143(2), is quashed as void for want of jurisdiction; the CIT(A)'s direction to the AO to reframe the assessment under section 150 exceeded the appellate authority's jurisdiction and is also quashed. Issues involved:The issues involved in this case include the jurisdiction of the CIT(A) in directing the Assessing Officer to proceed under section 150 of the Income Tax Act, 1961 and reframe the assessment order, as well as the validity of the assessment order due to lack of notice under section 143(2) of the Act.Jurisdiction of CIT(A) - Observations of the CIT(A):The CIT(A) had directed the Assessing Officer to proceed in terms of section 150 of the Act and reframe the assessment order, which was deemed unnecessary and beyond the CIT(A)'s jurisdiction. The CIT(A) setting aside the assessment order was considered as exceeding his powers, leading to the quashing of both the assessment order and the order of the CIT(A).Validity of Assessment Order - Lack of Notice under Section 143(2):The assessment in question was framed without issuing a notice under section 143(2) of the Act, rendering the assessment null and void. This fact was acknowledged by the first appellate authority, indicating that the assessment was conducted without proper jurisdiction, thereby leading to the decision to allow the appeal and quash both the assessment order and the CIT(A)'s order.High Court Directions and Remand:The matter had previously reached the Hon'ble High Court, which set aside the issue and remanded it back to the ITAT for fresh consideration. The High Court's findings highlighted discrepancies in the Tribunal's orders and the necessity for a fresh decision. With the consent of both parties, the impugned orders were set aside, and the matter was remanded back to the ITAT for a fresh decision, leaving the rights and contentions of all parties open.Conclusion:In conclusion, the appeal by the assessee was allowed based on the jurisdictional issues surrounding the CIT(A)'s directions and the lack of proper notice under section 143(2) for the assessment. The decision to quash both the assessment order and the CIT(A)'s order was made, emphasizing the importance of adhering to procedural requirements and staying within the bounds of jurisdiction. The final decision was announced in the open court on 29.11.2023.