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Facts
The Revenue filed an appeal against the CIT(A)'s order which remanded the matter back to the Assessing Officer for a fresh assessment. The original assessment was completed under Section 143(3) of the Income Tax Act, 1961. The CIT(A) invoked a newly inserted proviso to Section 251(1)(a) to allow the remand.
Held
The Tribunal held that the assessment was indeed made under Section 144, read with Section 145(3), constituting a best judgment assessment. Therefore, the CIT(A) was empowered to remand the case back to the AO for a fresh assessment as per the newly inserted proviso to Section 251(1)(a).
Key Issues
Whether the CIT(A) erred in invoking the proviso to Section 251(1)(a) to remand the case for a fresh assessment when the original assessment was completed under Section 143(3) and not Section 144.
Sections Cited
251(1)(a), 145(3), 144, 143(3)
AI-generated summary — verify with the full judgment below
सुनवाई की तारीख/Date of Hearing : 07/07/2025 उदघोषणा की तारीख/Date of Pronouncement : 08/07/2025 आदेश/Order PER LALIET KUMAR, J.M:
This appeal is filed by the Revenue against the order of the CIT(A), NFAC, dated 04.10.2024 for the assessment year 2017–18. 2. At the time of hearing, none appeared on behalf of the assessee despite service of notice. Hence, the appeal is being decided ex parte qua the assessee, on the basis of the material available on record and the submissions of the Ld. DR.
The Ld. CIT-DR submitted that the CIT(A) erred in invoking the newly inserted proviso to section 251(1)(a) of the Income Tax Act, 1961, to remand the matter to the file of the Assessing Officer for a fresh assessment. It was argued that the assessment in this case was completed under section 143(3) of the Act and not under section 144, and therefore the remand power introduced by Finance Act, 2024, w.e.f. 01.10.2024, was not applicable to the facts of the case.
The Ld. DR submitted that the order of assessment dated 31.12.2019, though mentioning that the assessee’s books were rejected under section 145(3), ultimately culminated in an assessment passed under section 143(3), and that the mention of section 144 in the concluding paragraph was only incidental or procedural. Thus, it was contended that the CIT(A) had exceeded his jurisdiction in setting aside the assessment under the pretext of a best judgment assessment.
We have heard the submissions of the Ld. DR and carefully perused the orders of the authorities below.
5.1 On perusal of paragraph 5.6 of the assessment order, it is clearly recorded by the AO as under:
...the book version of assessee cannot be accepted as true and correct, hence, the same is rejected as per provisions of section 145(3) of I.T. Act, 1961 and the taxable income of the assessee is computed as per provisions of section 144 of I.T. Act, 1961, to the best of Judgment...
Thus, the AO has explicitly invoked section 144 while computing the income, and the assessment is in the nature of a best judgment assessment under section 144 read with section 145(3), notwithstanding the procedural reference to section 143(3) in the assessment heading.
5.2 Once the assessment is made under section 144, the Ld. CIT(A) was fully empowered under the newly inserted proviso to section 251(1)(a) effective from 01.10.2024 to set aside such assessment and remand the matter back to the AO for a fresh assessment. The Ld. CIT(A) has rightly done so after recording that the assessee had not filed submissions and that the principles of natural justice warranted a fresh opportunity.
5.3 Accordingly, we find no merit in the Revenue’s contention. The order passed by the Ld. CIT(A) is legally tenable and in accordance with the statutory provisions as they now stand.
In the result, appeal of the Revenue is dismissed.