Jyoti Prakash Deshmukh Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai recently ruled that the Commissioner of Income Tax (Appeals) [CIT(A)] does not have the authority to set aside an assessment order and remand the case back to the Assessing Officer (AO). This decision came in the case of Jyoti Prakash Deshmukh vs. ITO, where the assessee appealed against the CIT(A)’s order. The ITAT held that the CIT(A) had exceeded their powers under Section 251 of the Income Tax Act, 1961, which outlines the appellate authority’s powers. The tribunal emphasized that after amendments to Section 251 effective from June 1, 2001, the power to set aside an assessment no longer exists.
The case involved an individual who deposited a substantial amount of cash during the demonetization period. The assessee failed to file an income tax return and did not cooperate with the AO’s inquiries regarding the source of the deposited funds. Consequently, the AO completed a “Best Judgment Assessment” under Section 144 of the Act. The CIT(A) partly allowed the assessee’s appeal, deleting some additions but sustaining others. Dissatisfied, the assessee appealed to the ITAT. The ITAT, while acknowledging the assessee’s lack of cooperation, found that the CIT(A) had erred in setting aside the assessment.
The ITAT cited the precedent set in Arun Kumar Bose vs. ITO; Siliguri, which reinforces the limitation on the CIT(A)’s powers regarding setting aside assessments. The tribunal pointed out that the CIT(A) should have called for a remand report from the AO and then adjudicated the matter based on the complete information. The ITAT stressed that the CIT(A)’s order to re-compute the income was technically faulty and beyond the powers granted by the statute.
The ITAT, therefore, restored the matter to the CIT(A)’s file with the specific instruction to obtain a remand report from the AO and subsequently adjudicate the case afresh. While the ITAT allowed the assessee’s appeal on this specific ground related to the CIT(A)’s powers, it rejected all other grounds raised by the assessee, deeming them baseless. The overall appeal was thus partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
