The Income Tax Appellate Tribunal ( ITAT ), Chennai has held that section 251(1) (a) of the Income Tax Act, 1961 does not provide power to the CIT(A) for setting aside the matter to the file of the AO. The power given to the CIT (A) in terms of section 251(1)(a) of the Act relates to confirming, reducing, enhancing or annulling the assessment after giving reasonable opportunity of being heard to the AO.
Theappeal by the Department is arising out of the order of
Commissioner of Income Tax (Appeals) against the assessment order passed by ACITu/s. 143(3) r/w section 147 of the Income Tax Act, 1961.
The assessee is an individual who earned income from salary, house property and other sources and filed the return of income declaring the total income of Rs. 27,43,766/-. Later, the case was re-opened u/s. 147 of the Act vide notice u/s. 148 of the Act. Statutory notices were issued and the assessment was completed by making addition u/s. 68 towards gift for Rs. 3,62,50,000/-, u/s. 69C for unexplained expenses of Rs. 15,58,456/- and disallowance made u/s. 14A r/w Rule 8D of the Act for Rs. 4,04,395/-. The total income was assessed at Rs. 3,99,56,617/-. From the impugned assessment order it is noticed that the AO called for the details to substantiate the claims of the assesse for which assesse failed to submit the required details and documents which led to the additions and disallowances. Aggrieved, assesse went into appeal before the CIT(A).
Before the CIT(A), the assesse made the submissions alongwith relevant documents and details based on which the CIT(A) gave partial relief to the assesse. Based on the documentary evidence CIT(A), prima facie, accepted the explanation for the gift and directed the AO to verify the particulars and to delete the addition if the assesse’s submission is factually correct with supporting documents. Further, in respect of disallowance made u/s. 14A of the Act, the CIT(A) while giving his finding noted the contention of the assesse that the AO had included the interest payment towards housing loan of Rs. 4,20,000/- while complying Rule 8D, whereas, said interest payment was not related to the investment which yielded dividend income, but it was related to the houseproperty. Considering the contention of the assesse, CIT(A) gave partial relief on the disallowance. Aggrieved by the relief given by the CIT(A) without affording reasonable opportunity of being heard to the AO in terms of calling for a remand report in respect of documentary evidence and details furnished by the assesse for the first time before the CIT(A), the Revenue is in appeal before the Tribunal.
It was submitted by the revenue that, that the assesse has furnished the relevant particulars and documentary evidences for the first time before the CIT (A) which ought to have been filed in compliance to Rule 46A of the Rules. Further, the CIT(A) ought to have given an opportunity to the AO for making his submissions and explanations in respect of these particulars and documentary evidences by way of remand report.
The Coram of Sri Mahavir Singh, Vice Presidentand Sri Girish Agrawal, Accountant Member while allowing the appeal held that, “we set aside the order of the CIT(A) with a direction to adjudicate on the matter in accordance with provisions of section 251(1)(a) after giving reasonable opportunity of being heard to the AO by calling remand report in respect of documentary evidences and details furnished by the assesse and comply with the provisions of Rule 46A of the Rule.”. It was observed by the bench that “section 251(1) (a) of the Act does not provide power to the CIT(A) for setting aside the matter to the file of the AO. The power given to the CIT(A) in terms of section 251(1)(a) of the Act relates to confirming, reducing, enhancing or annulling the assessment”.
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