CIT (A) has No Power to direct AO to Re-Open Assessment: ITAT [Read Order]

While dismissing a departmental appeal, the Income Tax Appellate Tribunal, Kolkata bench recently pronounced that CIT (A) has no jurisdiction to direct Assessing Officer to re-open assessment under the provisions of the Income Tax Act.

The tribunal held so while relying on the judgment of Hon'ble Supreme Court in the case of Murlidhar Bhaghubabu (supra) and concluded that CIT (A) has no power under the provision of law for giving any direction to AO for reopening of assessment.

The assessee in the present appeal is a graphic designer who derives income from the business of graphic designing. The assessee has not been filing his income tax return and he declared several bank accounts, Postal Savings, MIS, fixed deposits and investment made in the mutual fund in his deposition u/s. 131 of the Act. It was also observed that assessee also had bank accounts in the name of his two minor daughters. Thus, the re-assessment proceedings were initiated against the assessee u/s 147 of the Act.

But on perusal of records AO found difference of Rs. 58, 81,982/- between gross receipts declared in the income tax return and gross receipt appearing in the bank statement. However the AO calls for the explanation, in reply assessee failed to reconcile the difference as discussed above. Therefore AO treated the difference in the amount as undisclosed investment and added to the total income of assessee.

Aggrieved assessee contested an appeal before CIT (A) and submitted that AO passed the assessment order without the application of his mind and also added that bank statement contains certain receipts from realization of MF. The STCG on realization of mutual fund was duly offered for tax and argued that entire sum cannot be subjected to tax. The CIT (A) declared that no effort was made by AO in assessment order and even in remand to figure out unaccounted receipts and allowed the appeal of assessee.

The Revenue, being aggrieved is in appeal before ITAT. Now the Revenue has agitated before the tribunal that Ld. CIT (A) erred in not giving direction to reopen the case of earlier years of the assessee in which investments were made.

Based on this tribunal observed that CIT(A) has been given power u/s. 251 of the Act to confirm the order of AO reduce, enhance or annul assessment order under the provision of Act there is no power available to Ld. CIT(A) to give direction to AO for reopening the case of other years.

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