The High Court of Delhi held that the Assessing Officer should not have rejected the claim made by the assessee merely on the ground of it being raised for the first time. The finding returned by the ITAT in the impugned order is erroneous since the Tribunal has not appreciated the scope and nature of the remand ordered by it by its earlier order. Therefore, set aside the impugned order.
The Assessing Officer passed the assessment order under Section 144 of the Income Tax Act. Eventually, the Income Tax Appellate Tribunal (ITAT) set aside the matter to the file of the Assessing Officer to adjudicate afresh after considering the documents and submissions of the assessee. The Assessing Officer then passed a fresh assessment order under Section 143(3) read with Section 254 of the Act, making certain additions and disallowances. The said order was upheld by the CIT (A) .On further appeal; once again, the ITAT set aside the matter to the file of the Assessing Officer with a direction to reframing a fresh assessment. On this occasion, the Assessing Officer deleted the additions and the disallowances made in the first two rounds. The assessee made a fresh claim regarding nontaxability of income arising from the write-off of liability by Canara Bank, which earlier had been offered to tax as income. The Assessing Officer without examining the said claim of the assessee rejected the same at the threshold on the ground that in remand proceedings, the assessee could not raise a fresh claim. The appeal preferred by the assessee before the CIT (A) was rejected.
The appellant submitted in the perusal of the order of remand would show that the ITAT had completely set aside the assessment order of the lower authorities – which included the Assessing Officer, to be “highly unjustified and regrettable”. The Tribunal had found the assessment to be excessive, harsh and arbitrary. The assessment order and the first appellate order were set aside and “restored to the file of the Assessing Officer to frame the same afresh”. Learned counsel submits that in view of the aforesaid, the finding returned by the Tribunal in the impugned order that the remand to the Assessing Officer vide the earlier order was limited, is incorrect. He further submits that the Assessing Officer had also made fresh additions while passing the fresh assessment order, precisely on the same basis that a fresh assessment was being framed.
The respondent submits that the Assessing Officer had not examined the merits of the fresh claim made by the assessee regarding non-taxability of income arising from the write-off of liability by Canara Bank on the threshold objections that in remand proceedings a fresh claim could not be raised by the assessee.
The division bench comprising of Justice Vipin Sanghi and Justice Sanjeev Narula, held that the remand made by the Tribunal to the Assessing Officer was a complete remand for framing a fresh assessment. The remand was not limited in its scope and was occasioned upon the Tribunal finding the approach of the Assessing Officer and the CIT (A) to be excessive, harsh and arbitrary. The Assessing Officer ought to have evaluated the claim made by the assessee for the write-off of liability by Canara Bank and should not have rejected the same merely on the ground of it being raised for the first time. The finding returned by the Tribunal in the impugned order is erroneous since the Tribunal has not appreciated the scope and nature of the remand ordered by it by its earlier order. Therefore, set aside the impugned order. Since the Assessing Officer has not evaluated the appellant’s claim regarding non-taxability of income arising from the write-off of liability by Canara Bank on merits, we remand the matter back to the Assessing Officer for evaluation of the said claim on its own merits.
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