ITO Vs Shamsundar Kaliram Agarwal (ITAT Pune)
ITAT Pune: CIT(A) Cannot Remand 143(3)/144B Assessment – Must Decide on Merits- New 251(1) Proviso Not Applicable – Tribunal Quashes NFAC’s Remand to AO
Pune Tribunal considered whether CIT(A) was justified in remanding an assessment back to AO by invoking the new proviso to section 251(1) inserted by Finance Act 2024.
Assessee’s assessment was originally completed u/s 143(3) r.w.s 144B on 20.04.2021 at ₹50.80 crore against returned income of ₹2.93 lakh. CIT(A) by order dated 29.05.2023 had directed AO to recompute income based on peak credits. On Revenue’s appeal, ITAT (order dated 14.03.2024 in ITA 853/PUN/2023) set aside CIT(A)’s order for fresh adjudication on merits, holding that CIT(A) could not merely remit to AO without deciding grounds.
Subsequently, CIT(A)/NFAC, while giving effect to ITAT, again remanded matter to AO on 23.12.2024 relying on the new proviso to section 251(1) (effective 01.10.2024) which empowers CIT(A) to set aside best judgment assessments u/s 144. Revenue filed rectification plea, arguing that assessment was not u/s 144 but u/s 143(3) r.w.s 144B, hence proviso inapplicable. CIT(A) rejected rectification on 28.03.2025.
Tribunal observed that ITAT had already directed CIT(A) to adjudicate de novo on merits. CIT(A) wrongly invoked section 251(1) proviso which applies only to ex parte assessments u/s 144, whereas this case was a regular scrutiny with assessee’s participation. Relying on Bombay HC ruling in Pr.CIT v. Premkumar Arjundas Luthra (HUF) (297 CTR 614), Tribunal reiterated that once appeal is filed, CIT(A) must dispose on merits & cannot dismiss or remand unless statute specifically permits.
