ACIT Vs Sunjewels Private Limited (ITAT Mumbai)
CIT(A) Cannot Set Aside 143(3) Assessment; ITAT Sends Case Back to CIT(A) to Decide on Merits
In scrutiny assessment, the AO disallowed purchases of ₹2.21 crore from one supplier and legal/professional expenses of about ₹28.93 lakh for want of supporting evidence. In appeal, the assessee produced detailed additional evidence such as invoices, confirmations, registration details and bank payment proofs. These were sent to the AO for verification in remand proceedings.
In his remand report, the AO verified all documents and made no adverse comments, instead stating that the additional evidence “may be accepted on merits”.
Despite this favourable remand report, the CIT(A) did not decide the issues on merits but simply set aside the entire assessment and sent it back to the AO for fresh adjudication.
The Tribunal held that under section 251(1)(a), a CIT(A) has no power to set aside or remand a regular scrutiny assessment made under section 143(3); such power exists only for best-judgment assessments under section 144. Therefore, the CIT(A)’s blanket remand was beyond his statutory jurisdiction.
Since factual verification had already been completed by the AO in remand and no defects were found in the new evidence, sending the matter back again to the AO served no purpose. Instead, the CIT(A) himself ought to have decided the appeal on merits based on the remand findings.
Accordingly, the ITAT set aside the CIT(A)’s order and restored the matter to him with a direction to adjudicate the additions on merits, after hearing the assessee and duly considering the favourable remand report of the AO.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
