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Facts
The appellant, an individual, did not file a regular return of income. Based on information of cash deposits in a bank account, the AO formed an opinion of escaped assessment and issued a notice u/s 148. The AO completed a best judgement assessment u/s 144 r.w.s. 147, taxing the entire cash deposit as unexplained money.
Held
The Tribunal held that an order passed by the Assessing Officer giving effect to the directions of the appellate authorities is an order of assessment and is appealable under Section 246A of the Income Tax Act. The reasoning of the CIT(A) for dismissing the appeal as not maintainable was not sustained.
Key Issues
Whether an order passed by the Assessing Officer giving effect to the directions of the appellate authorities is a fresh assessment order and is appealable. Whether the CIT(A) was correct in dismissing the appeal as not maintainable.
Sections Cited
139(1), 148, 142(1), 144, 147, 246A, 143(3), 251, 33(4), 23, 30, 254, 246, 246(c)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: HON’BLE SHRI GEORGE GEORGE K & BEFORE HON’BLE SHRI INTURI RAMA RAO
Assessment Years: 2011-12 Raja Satheeshkumar, Income Tax Officer, H.No.2/167, CECG Nagar, Alagapuram, Ward-1(6), Periyapudur, Salem, Salem. Tamil Nadu-636 016. [PAN: AUQPS9210G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr.Bhupendran S, Advocate प्रत्यर्थी की ओर से /Revenue by : Ms.R.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 16.12.2025 घोषणा की तारीख /Date of Pronouncement : 17.12.2025 आदेश / O R D E R PER INTURI RAMA RAO, A.M :
This appeal filed by the assessee against the order of the Learned. Commissioner of Income Tax (Appeal) / NFAC, [‘CIT(A)’ in short], Delhi dated 06.08.2025 for Assessment Year-2011-12. 2.0 Briefly the facts of the case are, the appellant is an individual, no regular return of income under the provisions of section 139(1) of the Act, was filed by the appellant. Based on the information that the appellant made cash deposits in the bank account, the assessing officer formed an opinion that income got escaped assessment from tax. Accordingly, a notice u/s 148 was issued on 23.03.2018. The appellant neither complied with the notice issued u/s 148 nor the notices issued u/s 142(1) of the Act. In the circumstances, the assessing officer was constrained to pass best judgement assessment order by bringing to tax the entire cash deposit of Rs.33,90,360 as unexplained money of the appellant. Accordingly, the AO completed the assessment vide order dated 02.12.2019 u/s/ 144 r.w.s.147 of the Income Tax Act, 1961. 3.0 Being aggrieved, an appeal was filed before the CIT(A), who vide order No.ITBA/NFAC/S/250/2022-23/1047540323(1) dated 21.11.2022, disposed the appeal with following directions:-
…As claimed by the appellant, treating the entire deposists as income is not fair and justice will end if the income is estimated @ 8% of all the deposits in the bank account including cheque deposits. The AO shall adopt the above procedure for estimating the income provided there are deposits and continuous withdrawals in the bank account. If there are no withdrawals of cash deposited, then in that case, the action of the AO treating the whole deposits as Income is upheld… 4.0 Pursuant to the order passed by the Ld.CIT(A), the assessing officer passed consequential order giving effect to the directions of CIT(A) vide order dated 04.03.2023 after granting relief of Rs.5,56,978 and reiterated the balance addition made in the original assessment order.
5.0 Being aggrieved by the consequential assessment order, an appeal was filed before the Ld.CIT(A), who vide the impugned order Page - 2 - of 6 dismissed the appeal as not maintainable by holding that it is not an appealable order u/s 246A of the Income Tax Act, 1961. Being aggrieved, the appellant is in appeal before us in the present appeal.
6.0 We have heard the rival submissions and perused the material available on record. The issue that arises for our considerations whether or not an appeal lies against the order of the assessing officer giving effect to the directions given by the CIT(A). The consequential order passed by the AO giving effect to the directions of the CIT(A), is an order passed u/s 143(3) therefore is clearly appealable under clause(a) of sub-section(1) of section 246A of the Income Tax Act. We are fortified in taking this view by the decision of Hon’ble Bombay High Court in the case of Caltex Oil Refining(India) Ltd wherein it was held as under:
“….10. We have carefully considered the rival submissions. There is no dispute about the proposition that there is no inherent right of appeal. It is to be specifically conferred by the statute providing for an appeal. But as stated by the Supreme Court in CIT v. Ashoka Engg. Co. [1992] 194 ITR 645, it is an equally well-settled proposition or law that, if there is a provision conferring a right of appeal, it should be read in a reasonable, practical and liberal manner. We are, therefore, to construe the provisions of section 246 in the light of this well-settled legal position. So far as the first submission is concerned which relates to the nature of an order passed by the ITO in consequence of orders of the appellate authorities with a view to giving effect to the directions contained therein, it is difficult to hold that such an order is an administrative order. The power of the ITO is to make assessment under section 143 or 144. It is that assessment which is the subject-matter of appeal. The appellate authority, on an appeal against an order of assessment, has power to confirm, reduce, enhance or annul the assessment or to set aside the assessment and refer the case back to the ITO for making a fresh assessment in accordance with the directions given by such authority (section 251). Evidently the effect of an appellate order is that the assessment either stands confirmed, reduced or enhanced or it stands annulled or set aside. In case of confirmation, reduction or enhancement the original order of assessment stands modified to the extent of the directions given by the appellate authority. In the case of annulment the order Page - 3 - of 6 becomes non est. In case an order is set aside, the authority has to start the entire process afresh and make a fresh order of assessment complying with the directions given by the appellate authority. It is, thus, clear that what remains as a final order after giving effect to the orders of the appellate authorities is an order of assessment under section 143 or 144. It cannot be anything else.
This aspect of the matter also came to be considered by the Calcutta High Court in Kooka Sidhwa & Co. v. CIT [1964] 54 ITR 54 in which it was held that where, pursuant to the directions of the Tribunal in an order under section 33(4) of the Indian Income-tax Act, 1922 (section 254 of the 1961 Act) to revise and amend the assessment made by the ITO, the ITO revises the assessment, the order passed by the ITO partakes of the character of a fresh assessment order and is referable only to section 23 of the 1922 Act (corresponding to sections 143 and 144 of the 1961 Act). An appeal would, therefore, lie under section 30 of the Act (section 246 of the 1961 Act) to the AAC against an order of the ITO amending or revising an assessment pursuant to the directions of the Tribunal under section 33(4) (section 254 of the 1961 Act). It was observed: "...The Income-tax Officer's duty to assess the total income of the assessee and to determine the sum payable by him on the basis of the return under section 23 of the Act is the whole process of assessment which may end with his order or may be revised by the higher appellate authorities including the Appellate Assistant Commissioner and the Tribunal recognised by the Income-tax Act. If, therefore, such higher appellate authorities such as the Appellate Assistant Commissioner or the Tribunal directs or orders him to do something again with regard to the assessment he has already made and that by way of revision or amendment, the Income-tax Officer must be held to be still under section 23 of the Act on the process of assessing the total income of the assessee and determining the sum payable on the basis of the return already filed by him. No other construction or interpretation of section 23 of the Act seems to me to be sensible or consistent with the scheme of the Act." (p. 65) This view is also fully supported by a decision of the Supreme Court in Garikapati Veeraya v. N. Subbiah Choudhry AIR 1957 SC 540 where it was observed: "The legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding." (p. 540) This view was reiterated recently by the Supreme Court in Umaji Keshao Meshram v. Smt. Radhikabai AIR 1986 SC 1272 where it was observed that an appeal is not a fresh proceeding but merely a continuation of the original proceedings.
Page - 4 - of 6 12. In the light of these decisions and for the reasons given above, we are of the opinion that the impugned order of assessment passed by the ITO pursuant to the directions of the appellate authorities with a view to giving effect to the directions contained therein is an order of assessment within the meaning of section 143 or section 144 of the Act and an appeal lies under section 246(c) against such an order….” Similar view is taken by the Hon’ble High Court of Andra Pradesh in the case of Commissioner of Income Tax Vs Warner Hindustan Ltd 117 ITR 15 Hon’ble Madras High Court in the case of CIT Vs Sundaram Industries Ltd (1999) Tax LR 506, 507(Mad). Thus, the law is well settled to the extent that an order passed by the assessing officer giving effect to the directions of appellate authority is clearly appealable. In view of this well settled position of the law, the reasoning adopted by the learned CIT(A) cannot be sustained in the eyes of law. Accordingly, the order passed by the CIT(A) is hereby set aside. We remand the matter back to the file of the Ld.CIT(A) for de novo adjudication in accordance with law after affording an opportunity of being heard to the appellant.