INCOME TAX OFFICER, AYAKAR BHAWAN vs. ARJUN SOOD, NOTRTH AVENUE OPPOSITE

ITA 216/CHANDI/2025Status: DisposedITAT Chandigarh05 October 20263 pages
AI SummaryDismissed

What were the facts?

The appeals by the revenue for Assessment Year 2014-15 arise from separate orders of the first appellate authority. ITA No.216/Chandi/2025 concerns an assessment framed by the Assessing Officer (AO) on a best judgment basis under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961, on March 28, 2022. The AO made an addition of Rs. 379.49 Lacs under Section 68, as the assessee failed to make any representation. The Commissioner of Income Tax (Appeals) [CIT(A)], considering the assessee's submissions, exercised remand power under Section 251(1)(a) and directed the AO to conduct a fresh assessment after granting a hearing opportunity. ITA No.301/Chandi/2025 is a penalty appeal where the AO levied a penalty of Rs. 128.98 Lacs under Section 271(1)(c) against the quantum addition. Since the quantum addition was set aside by the CIT(A), the penalty issue was also restored to the AO. The revenue is aggrieved by these orders.

What did the Tribunal hold?

The Tribunal held that the learned CIT(A) had validly exercised the power of remand under Section 251(1)(a) of the Income Tax Act, 1961. The reasoning was that the original assessment was framed on a best judgment basis. The remand was carried out after considering the assessee's submissions, and therefore, it could not be faulted. This exercise of power was in adherence to the established principles of natural justice. Consequently, both appeals filed by the revenue were dismissed. The Tribunal did not expressly leave any issue undecided. The ratio decidendi is that a remand by the CIT(A) is justified when the original assessment was on a best judgment basis and the remand is done after considering the assessee's submissions, upholding principles of natural justice.

What were the issues?

1. Whether the learned CIT(A) validly exercised the power of remand under Section 251(1)(a) of the Income Tax Act, 1961, by directing a fresh assessment after the original assessment was framed on a best judgment basis under Section 147 read with Sections 144 and 144B, considering the assessee's failure to appear before the AO. Contentions: Assessee: Not recorded as none appeared. Revenue: Assailed the action of the learned CIT(A) in remanding back the appeals. 2. Whether the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, is sustainable when the underlying quantum addition has been set aside by the first appellate authority. Contentions: Assessee: Not recorded as none appeared. Revenue: Assailed the action of the learned CIT(A) in remanding back the appeals, which implicitly covers the penalty issue.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 68,Section 251(1)(a),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM

For Respondent: Smt. Jaishree Sharma (CIT) - Ld. DR (Virtual)

RAJESH DAMODARLAL SHARMA (Judicial Member)

1.

Aforesaid appeals by revenue for Assessment Year (AY) 2014- 15 arises out of separate orders of learned first appellate authority.

The appeal in ITA No.216/Chandi/2025 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 24-12-2024 in the matter of an assessment framed by Ld. Assessing

Officer [AO] on best judgment basis u/s 147 r.w.s 144 r.w.s 144B of the Act on 28-03-2022. In the as

The order continues below.

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