NATURAL POWER ASIA PRIVATE LIMITED,HYDERABAD vs. ITO., WARD-16(1), HYDERABAD

Aggrieved the assessee company carried the matter in appeal before the CIT(A).

Ostensibly, the assessee company despite having been afforded sufficient opportunity failed to participate in the proceedings before the CIT(A). The CIT(A) considering the fact that the A.O. had framed the assessment vide an ex parte order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 27.03.2024, therefore, pressed into service the powers vested with him u/s 251(1)(a) of the Act, and restored the matter to the file of the A.O. with a direction to frame 4 Natural Power Asia Pvt. Ltd. a fresh assessment in light of the documentary evidence as may be placed before him after carrying out such enquiries as may be necessary. Accordingly, the CIT(A) allowed the appeal filed by the assessee company for statistical purposes.

The assessee company being aggrieved with the order of CIT(A), has carried the matter in appeal before us.

We have heard the learned Authorized Representatives of both parties, perused the orders of lower authorities and the material available on record.

Smt. S. Sandhya, Advocate, the learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred in law and on facts of the case by summarily setting aside the matter to the file of A.O. for framing of a de novo assessment. Elaborating on the contention, the Ld. AR submitted that thought the CIT(A) w.e.f. 01.10.2024 as per the “Proviso” to Section 251(1)(a) of the Act, is vested with jurisdiction to set aside an assessment in a case when the order of the assessment made u/s 144 of the Act and direct the A.O. for making fresh assessment, but 5 Natural Power Asia Pvt. Ltd. he remains under a statutory obligation to deal with the specific legal issue based on which the validity of jurisdiction assumed by the A.O. for initiating proceedings/framing the assessment has been assailed before him. The Ld. AR has submitted that as in the case of the present assessee company the validity of the jurisdiction that was assumed by the A.O. for issuing notice u/s 148 of the Act was specifically assailed by raising “Ground of appeal No.2” before the first appellate authority, therefore, the latter was statutorily obligated to have taken a call on the same and instead of summarily set aside the matter to the file of the A.O. making a fresh assessment.

We have thoughtfully considered the contentions advanced by the learned Authorized Representatives of both parties in the backdrop of the orders of authorities below.

Admittedly, it is a matter of fact discernable from the record that the assessee company by the Ground of Appeal no.2 had inter alia assailed the validity of jurisdiction that was assumed by the A.O. for issuing notice u/s 148 of the Act.

Be that as it may, it is however a matter of fact borne from record that the assessee company in its “Ground of appeal No.2” before the Ld.CIT(A), had specifically assailed the validity of jurisdiction that was assumed by the AO for issuing notice u/s 148 of the Act, dated 05.04.2022. For the sake of clarity, the “Ground of appeal No.2” raised by the assessee company before the CIT(A) is being culled out as under:

Adverting to the facts pertaining to the challenge thrown by the assessee company, qua the validity of the jurisdiction assumed by the AO for initiation of the reassessment proceedings, on the 11 Natural Power Asia Pvt. Ltd. ground that the same was beyond the prescribed time limit as contemplated under the “1st Proviso” to section 147 of the Act, we are of the view that the Ld.CIT(A) ought to have adjudicated the same instead of adopting an evasive approach in the guise of exercise of the extended jurisdiction vested with him vide the “Proviso” to section 251(1)(a) of the Act as made available on the statute by the Finance (No.2) Act 2024 w.e.f. 01.10.2024. We find substance in the Ld. AR’s contention that in case the lack of jurisdiction on the part of the A.O for framing the assessment is not addressed by the CIT(A), but, in the garb of the powers vested with him as per the “Proviso” to Section 251(1) of the Act the matter is referred back to the file of the AO for fresh adjudication, then, it would afford a second inning to the A.O who would simply give effect to the directions of the CIT(A) and reframe the re-assessment order despite lack of valid assumption of jurisdiction which was the very foundation for initiating the impugned proceedings.

Be that as it may, we are of the firm conviction that in the totality of the facts involved in the present appeal before us, the CIT(A) instead of summarily setting aside the matter to the file of the AO for making a fresh assessment, ought to have taken a call 12 Natural Power Asia Pvt. Ltd. as regards the specific ground based on which the validity of the jurisdiction that was assumed by the AO for framing the reassessment was assailed by the assessee-appellant before him. Our aforesaid conviction that it is not obligatory on the part of the CIT(A) to set aside all best judgment assessment orders passed u/s 144 of the Act to the file of the AO is further fortified on looking at the language used by the legislature in the “Proviso” to Section 251(1) of the Act, i.e, “…..may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment ….” which, thus, does not compulsorily require the CIT(A) to set aside and refer the assessment in every case where it is made u/s 144 of the Act.

We thus, in terms of our aforesaid deliberations set aside the order of the CIT(A), and restore the matter to his file with a direction to adjudicate the specific “Ground of appeal No.2” based on which the jurisdiction assumed by the A.O for framing the impugned assessment order u/s 147 r.w.s 144 r.w.s. 144B of the Act, dated 27.03.2024 was assailed by the assessee appellant before him.

Before parting, we may herein clarify, that as we have in terms of our aforesaid observations set aside the matter to the file of the 13 Natural Power Asia Pvt. Ltd. CIT(A), therefore, we have refrained from expressing any view, regarding the issues based on which validity of jurisdiction assumed by the AO for initiating the reassessment proceedings, and also the merits of the addition have been assailed by the assessee appellant before us. The Ground of appeal Nos.2 and 3 are allowed for statistical purposes in terms of our aforesaid observations.

The Grounds of appeal Nos.1 and 4 being general in nature are dismissed as not pressed.

Resultantly, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations.