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Facts
The revenue's appeal was against the order of the CIT(A) for AY 1997-98. The CIT(A) had noted that the AO completed set aside assessment proceedings as per directions of the CIT under Section 263. However, the ITAT had annulled the CIT's order under Section 263.
Held
The Tribunal observed that the AO's order was based on the CIT's order which was annulled by the ITAT. Therefore, the additions/disallowances made by the AO in the set-aside assessment were treated as allowed.
Key Issues
Whether the additions/disallowances made in a set-aside assessment are valid when the order directing the set-aside has been annulled by a higher authority.
Sections Cited
263, 143(3)
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
This appeal filed by the revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals), Chennai-19, [CIT(A)] dated 19.08.2025 for Assessment Year 1997-98.
At the outset, we find from the impugned order that the ld.CIT(A) has noted as under:
“6.1 The undersigned has carefully examined the order of the AO and the order u/s 263 of the Act passed by the CIT, Central-II, Chennai. On examination of records, it can be seen that the AO completed the set aside assessment proceedings as per the direction(s) of the CIT, Central-II, Chennai in the order passed u/s 263 of the Act dated 21.03.2003.
6.2 The appellant has challenged the order u/s 263 of the Act before the Hon’ble ITAT Chennai. During the pendency of the appeal before the Hon’ble ITAT Chennai, the AO completed the set aside proceeding vide order u/s 143(3) r.w.s 263 of the Act on 21.03.2003.
6.3 The Hon’ble ITAT Chennai vide its order in dated 11.01.2008 has allowed the appeal of the appellant. During the course of appellate proceedings, the AR made available a copy of the order of the Hon’ble ITAT Chennai, vide letter dated 14.03.2008. On perusal of the order of the Hon’ble ITAT Chennai, passed in the case of appellant for the year under consideration, it is understood that the understood that the Hon’ble ITAT Chennai has annulled the order of the CIT passed u/s 263 of the Act.
6.4 The AO completed the set aside assessment on the basis of the order of order passed u/s 263 of the Act by the CIT, Central-II, Chennai. As the order u/s 263 of the Act of the CIT, Central-II, Chennai was annulled by the Hon’ble ITAT Chennai, the consequent order passed by the AO dated 21.03.2003 has become redundant. Therefore, all the ground raised by the appellant upon the addition(s)/disallowance(s) made by the AO in the set side assessment proceeding are hereby treated as allowed.
In the result, the appeal filed for the AY 1997-98 is treated as allowed.”
The ld.AR for the assessee pleaded that the present appeal has no legs to stand. Per contra, the ld.DR-CIT for the revenue stated that against the ITAT order in dated 11.01.2008, the appeal of the revenue is pending before the Hon’ble Jurisdictional High Court.
We have heard the rival submissions and perused the record. We are of the opinion that keeping this appeal pending is not justified.
Therefore, we also dismiss the present revenue appeal in view of above factual matrix, however we grant liberty/leave to the revenue to revive this appeal if the order of the ITAT in dated 11.01.2008 is reversed by the Hon’ble Jurisdictional High Court.
In the result, appeal filed by the revenue is dismissed in above terms.
Order pronounced on the 22nd day of December, 2025, in Chennai.