Commissioner of Income Tax (Appeals) cannot set aside an Assessment Order: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) held that the Commissioner of Income Tax (Appeals) has no power to set aside an Assessment Order under the provisions of the Income Tax Act, 1961.

The Revenue made an addition on account of alleged accommodation entries provided by the assessee to Shri Ajay Sharma and Shri Pankaj Sharma, after conducting the search in the premises. On the first appeal, the CIT(A) quashed the order finding that in the satisfaction note there is no reference to any seizure of assets or documents nor it is clear which documents/money/books of account seized from the bank belong to the appellant.

The bench noted that the CBDT in its Circular has also clarified that the power of the appellate commissioner does not include the power to set aside the assessment.

The bench held that “the action of the first appellate authority has no sanction of law as powers of the CIT(A) have been set out in Section 251 of the Income Tax Act. The CIT(A) has more power to send the matter back to the file of the AO for making the fresh decision on the issue. Once the assessment order was quashed the CIT(A) has transgressed the power given to him u/s 251(1) of the Act by giving direction to the AO to take action u/s 147/148 of the Act. Such directions are uncalled for and deserve to be expunged from the findings of the first appellate authority. We accordingly direct the AO to read the order of the first appellate authority without direction to take action u/s 147/148 of the Act.”