While criticizing the action of the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal (ITAT) said that CIT(A) has no power to adjudicate an issue which was subject matter of Revisional Order passed by Commissioner of Income Tax under section 263 of the Income Tax Act, 1961.
In the instant case, Assessee while filing its income tax returns for the relevant assessment year claimed exemption under section 80IA of the Income Tax Act, 1961. The claim was later withdrawn by the Commissioner by invoking his revisional jurisdiction. Though the assessee challenged the revisional order before the Tribunal, the same was sustained. Consequently, the Assessing Officer denied the same through his order against which the assessee approached the Commissioner of Income Tax (Appeals) and managed to get relief.
Before the Tribunal, the department challenged the action of the CIT (Appeals) by contending that the assessment order was a consequential order issued in pursuant to the revision order under Section 263 and therefore, the disallowance made by the Assessing Officer is nothing but the decision taken by the Commissioner in the revision order under Section 263 which has been upheld by this Tribunal.
The bench noted that the Tribunal has upheld the revision order passed under Section 263 and consequently issue on merits was finalized till the stage of the Tribunal. “Therefore, though the consequential order passed by the Assessing Officer in pursuant to the revision order can be challenged before the CIT (Appeals) to keep the issue alive as per the final outcome of the appeal against the revision order however, the jurisdiction of the CIT (Appeals) is very limited and circumscribed only to the extent where the Assessing Officer could have or has taken a decision but in the case where the Assessing Officer has to pass a giving effect order of the revision order passed under Section 263 then the issue which was decided on merits by the CIT in the revision order is not open to the CIT (Appeals) to entertain and adjudicate.”
The Tribunal said that there is a clear separation of jurisdiction and powers of CIT under Section 263 and CIT (Appeals) under Section 250 of the IT Act. “One of the authorities assumes and invokes the jurisdiction on an issue the jurisdiction of the other authority is specifically excluded. Therefore, neither the CIT while exercising the jurisdiction under Section 263 can entertain an issue which is pending in an appeal before the CIT (Appeals) nor the CIT (Appeals) can entertain an issue which was subject matter proceeding or order passed under Section 263 of the Act,” the bench said.
Before concluding, the bench added that “We take a serious view of the conduct of the CIT (Appeals) which is clearly a judicial indiscipline as the issue on merits was already confirmed by the Tribunal vide order dt.13.11.2009 and as such the CIT (Appeals) was not supposed to take a contradictory view on the same issue in assessee’s own case and that too in the proceedings arising in pursuant to the order under Section 263 of the Act. Thus it is clear case of violation of judicial discipline by the CIT (Appeals).”
Read the full text of the Order below.
