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Facts
The assessee filed its return of income for AY 2017-18, declaring Rs.26,38,56,942/-. The AO found a discrepancy in sales turnover between the VAT return and ITR, leading to an addition of Rs.9,02,74,840/- under section 69 of the Act. The assessee preferred an appeal before the CIT(A).
Held
The CIT(A) set aside the AO's order and restored it to the AO for fresh assessment, citing a proviso that allows for this when an assessment order is made under section 144 of the Act. However, the Tribunal noted that the assessment order was passed under section 143(3) r.w.s. 144B of the Act, with a clerical error mentioning section 144. Therefore, the proviso to section 251(1) was not applicable.
Key Issues
Whether the CIT(A) was justified in setting aside the assessment order and remanding it back to the AO when the assessment order was passed under section 143(3) r.w.s. 144B, and not section 144 as erroneously mentioned.
Sections Cited
250, 144, 143(3), 144B, 69, 251(1)
AI-generated summary — verify with the full judgment below
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 24.12.2024 by the National Faceless Appeal Centre, Delhi/ Commissioner of Income-tax (Appeals), [in short, ‘NFAC/CIT(A)’] for assessment year (AY) 2017-18, which in turn arises out of the assessment order passed by National Faceless Assessment Centre, Delhi/Assessing Officer (in short, ‘AO’ u/s 144 r.w.s. 144B of the Act on 31.03.2022.
(1) The learned CIT(A) was not justified in setting aside the appeal by totally misinterpreting and misreading as though the assessment order was passed u/s144, particularly when the assessment order was evidently passed u/s 143(3). (2) The learned CIT(A) was not justified in setting aside the case, particularly when nothing remained to be verified at the AO level and the addition that sprung only was as a result of complete verification. (3) The learned CIT(A) misconstrued the facts while passing the appellate order. (4) With all the facts on record, the learned CIT(A) ought to have been decisive. (5) The above grounds are without prejudice to each other. (6) The appellant craves leave to add, alter or delete any grounds either before or in course of hearing of the appeal”
Facts of the case in brief are that the assessee filed its return of income for the assessment year 2017-18 declaring total income of Rs.26,38,56,942/-. The case was selected for limited scrutiny under CASS. Thereafter, notice u/s 143(2) of the Act was issued and served upon the assessee. Thereafter, various notices u/s 142(1) were issued, in response to which assessee has filed replies from time to time, which is noted at para-2 of the assessment order. The AO found discrepancy regarding the sales turnover in VAT return with that in the ITR. After receiving reply from the assessee, AO added Rs.9,02,74,840/- u/s 69 of the Act. Total income was determined at Rs.35,41,31,782/- as against Rs.26,38,56,942/-. Aggrieved by the addition made by the AO, assessee preferred appeal before CIT(A).
A.Y 17-18 Kalamandir Jewellers Ltd.
The CIT(A) issued notices of hearing and after considering the reply of assessee and materials on record observed that though the AO completed u/s 144 of the Act, it was not strictly a case of complete non-compliance by the assessee. Thereafter, he referred to the proviso of Section 251(1) of the Act and observed that as per the new provisions, inserted by the Finance(No.2) Act, 2024, with effect from 01.10.2024, the CIT(A) may set aside the assessment and refer the case back to the AO for making a fresh assessment if the appeal is against an order of assessment made u/s 144 of the Act. He, accordingly, set aside the order of AO and restored it to the file of AO for fresh assessment after considering all evidences produced by the assessee after granting reasonable opportunity to explain the case.
Aggrieved by the order of Ld.CIT(A), appellant filed present appeal before the Tribunal. The Ld. AR submitted a paper book and submitted that that assessment order does not qualify for application of section 144 of the Act. The CIT(A) was not justified in restoring the matter to the file of AO because the only limited issue before the CIT(A) was reconciliation of turnover as per VIT return and audited profit and loss account. He submitted that the assessee had filed replies on 19 occasions, which is acknowledged by the AO himself in the assessment order. He further submitted that the AO himself at para-6 of the order has mentioned that the order was passed u/s 143(3) r.w.s. 144B of the Act but inadvertently mentioned 144 r.w.s. 144B of the Act at column No. 12 of the details of the assessee at page-1 of the order. He, A.Y 17-18 Kalamandir Jewellers Ltd. therefore, requested to allow appeal on merit or set aside the matter to the CIT(A) for re-adjudication on the limited point of reconciliation.
On the other hand, Ld. CIT-DR for the Revenue supported the order of the lower authorities. He submitted that the CIT(A) rightly set aside the order of AO and restored the matter to his file for fresh assessment.
We have heard both parties and perused the materials available on record. It is seen from para-2 of the assessment order that the appellant had filed replies on 19 occasions. The reply of the appellant regarding discrepancy in turnover as for VAT return and audited profit and loss account is also reproduced by the AO in the assessment order. After considering the reply, the AO has added Rs.9,02,74,840/- u/s 69 of the Act and passed the order u/s 143(3) r.w.s 144B of the Act, as evident from para-6 of the assessment order. However, he has wrongly mentioned in page-1 at column 12 of the assessment order that the order was passed under section “144 read with section 144B of the Income-tax Act, 1961”. It was evidently a apparent mistake, which cannot disprove the fact that the order was in fact passed u/s 143(3) and not u/s 144 of the Act. Hence, the proviso to section 251(1) of the Act was not applicable in the instant case. Therefore, we set aside the order of CIT(A) and remit the matter back to the file of CIT(A) for re-adjudication of the grounds raised before him in the appellate proceedings. The appeal is allowed for statistical purposes.
Order pronounced in accordance with Rule 34 of ITAT Rules, 1963 on 26/09/2025 in the open court.