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Facts
The Revenue filed appeals against the CIT(A)'s orders for assessment year 2018-19. ITA No.59/2025 was against an assessment order passed under Section 143(3) read with Section 144B, and ITA No.60/2025 was against a penalty order under Section 270A(2).
Held
The Tribunal held that the CIT(A) erroneously set aside the assessment order under Section 251(1)(a) as it was not passed ex-parte or under Section 144. Therefore, the CIT(A) should have decided the appeal on merit. The penalty appeal was dependent on the quantum appeal.
Key Issues
Whether the CIT(A) had the power to set aside an assessment order passed under Section 143(3) and not under Section 144.
Sections Cited
143(3), 144B, 270A(2), 144, 251(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ & 60/CHD/2025 �नधा�रण वष� / Assessment Year: 2018-19 The ITO, Shri Rakesh Nagpal, Ward – 1, Vs House No. 39A, Model Town, Fatehabad. Fatehabad. �थायी लेखा सं./PAN NO: AALPN1386K अपीलाथ�/Appellant ��यथ�/Respondent Assessee by : Shri Suraj Bhan Nain, Advocate Revenue by : Dr. Ranjit Kaur, Addl. CIT Sr.DR Date of Hearing : 11.09.2025 Date of Pronouncement : 15.09.2025 HYBRID HEARING O R D E R PER RAJPAL YADAV, VP
The present two appeals are directed at the instance of the Revenue against the separate orders of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 27.11.2024 passed for assessment year 2018-19. has arisen against the assessment order dated 22.09.2021 passed u/s 143(3) read with Section 144B whereas & 60/CHD/2025 A.Y.2018-19 2 arises from the penalty order dated 13.01.2022 passed u/s 270A(2) of the Income Tax Act.
First we take ITA No. 59/CHD/2025. The Revenue has taken six grounds of appeal, however, its preliminary grievance is that ld. First Appellate Authority has set aside the assessment order by exercising the powers contemplated in provision of Section 251(1)(a) of the Act. The ld. Sr.DR submitted that in this case, assessment order has not been passed ex-parte or according to the best judgement of the AO u/s 144 of the Income Tax Act, rather it has been passed u/s 143(3), therefore, CIT (Appeals) has no power to set aside the assessment order.
3.1 The ld. counsel for the assessee was unable to controvert this submission of the ld. Sr.DR.
We have duly considered the rival contentions and gone through the record carefully. We deem it appropriate to take note of relevant part of Section 251(1)(a) of the Income Tax Act, which reads as under : “Powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals) 251.(1) In disposing of an appeal, the Commissioner (Appeals)shall have the following powers- & 60/CHD/2025 A.Y.2018-19 3 (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment Provided that where such appeal is against an order of assessment made under Section 144, he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment. x x x 5. A perusal of the proviso appended to Section 251(1) would reveal that it authorizes the CIT (Appeals) to set aside an assessment order for passing fresh assessment order if assessment order was passed ex-parte or according to the best judgment of the AO u/s 144 of the Income Tax Act. If it was not passed, then CIT (Appeals) has no power to set aside the assessment order. We find that in the present case, assessment order has been passed u/s 143(3) after hearing the assessee. Therefore, it is not an ex-parte order. The ld. CIT (Appeals) ought to have decided the appeal on merit. Accordingly, we allow the appeal of the Revenue and set aside the impugned order of the CIT (Appeals) with a direction that ld. First Appellate Authority would decide the appeal on merit within a period of six months from receipt of this order because earlier the appeal was instituted before the CIT (Appeals) on 09.11.2021 and it remained pending for more than three years.
& 60/CHD/2025 A.Y.2018-19 4 is concerned, the penalty appeal would be dependent upon the outcome of the quantum appeal. Since we have set aside the quantum appeal to the ld. CIT (Appeals) and income of the assessee is yet to be determined at the level of the First Appellate Authority, therefore, we set aside the order of ld. CIT (Appeals) in this appeal also and restore the issue, whether assessee deserves to be visited with penalty or not, to the file of CIT (Appeals) for fresh adjudication. The penalty appeal will be decided after adjudication of the quantum appeal.
In the result, both the appeals of the Revenue are allowed.
Order pronounced on 15.09.2025.