2025 (5) TMI 2215 - AT - Income Tax

Appeal fails as CIT(A) validly remands reassessment u/s 144 r.w.s.147 under proviso to s.251(1)(a) for fresh adjudication

ITAT Delhi dismissed the assessee's appeal challenging the order of CIT(A)/NFAC, which had set aside the ex parte reassessment order passed u/s 144 r.w.s. ... Validity of order passed by CIT(A)/NFAC arising out of assessment order u/s 144 r.w.s. 147 - CIT(A) set aside order with the directions to the AO to frame the assessment order afresh after giving adequate opportunity of being heard to the appellant/assessee. HELD THAT:- Appellant/assessee failed to file reply. Ld. AO on submissions made by the assessee, during assessment proceedings, passed order u/s 144 r/w section 147 - CIT(A) in order as per proviso to section 251, sub-section (1) clause (a) of the Act, set aside the assessment order passed under Section 144 r.w.s. 147 of the Act and remand the matter back to the Ld. AO for making fresh assessment. The arguments of Learned Authorised Representative for the appellant/assessee that the specific request for adjudication of post-submission of remand report is de void of merit because the assessment order under Section 144 of the Act was set aside as per the proviso to section 251 sub-section (1) sub-clause (a) of the Ac. The argument of fresh adjudication granting second inning is de void of merit because Ld. AO has to pass a fresh order by considering all facts including non-issuance of notice under Section 143(2) of the Act and examination of other documentary evidences. Appeal of the assessee is dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the first appellate authority was justified, under the proviso to section 251(1)(a) of the Income-tax Act, in setting aside an ex parte reassessment order passed under section 144 read with section 147 and remanding the matter to the assessing authority for a fresh assessment. 1.2 Whether the first appellate authority erred in not adjudicating the appeal on merits, despite the assessee's specific request for adjudication after remand report and opportunity for rejoinder, and in thereby allegedly granting a 'second inning' to the assessing authority to cure defects including alleged non-issuance of notice under section 143(2). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Validity of appellate remand under section 251(1)(a) and refusal to decide on merits Legal framework (as discussed) 2.1 The Tribunal referred to the proviso to section 251(1)(a) of the Income-tax Act, under which the first appellate authority may set aside an assessment and remit the matter to the assessing authority for making a fresh assessment. Interpretation and reasoning 2.2 The Tribunal noted from the record that the assessee failed to file any reply to the notice under section 142(1) and the show-cause notice, and that the assessment order dated 24.12.2019 was passed under section 144 read with section 147. 2.3 It was observed that the first appellate authority set aside this best judgment reassessment order and remanded the matter to the assessing authority for a fresh assessment after granting adequate opportunity of being heard, explicitly exercising power under the proviso to section 251(1)(a). 2.4 The Tribunal held that the assessee's contention that the first appellate authority ought to have adjudicated the appeal on merits after obtaining a remand report and allowing a rejoinder was devoid of merit in view of the express statutory power to set aside the ex parte assessment and direct fresh assessment. 2.5 The argument that remand amounted to giving a 'second inning' to the assessing authority to remove infirmities, including alleged non-issuance of notice under section 143(2), was rejected. The Tribunal reasoned that, upon remand, the assessing authority is required to pass a fresh order considering all facts, including the question of issue or non-issue of notice under section 143(2) and examination of documentary evidence. Conclusions 2.6 The Tribunal upheld the order of the first appellate authority setting aside the ex parte reassessment and remanding the matter for fresh assessment under the proviso to section 251(1)(a). 2.7 The Tribunal concluded that there was no error in the first appellate authority's refusal to decide the appeal on merits at that stage, and that the complaint of granting a 'second inning' to the assessing authority, or failure to adjudicate the alleged non-issuance of notice under section 143(2), was not sustainable. 2.8 All grounds of appeal challenging the remand and seeking adjudication on merits were dismissed, and the appeal of the assessee was rejected.