Kerala HC Sets aside Consequential Order Passed By Assessing Authority Beyond Terms of Remand By Commissioner [Read Order]
It was observed that the concern of the Assessing Authority, while passing a consequential order, has to be limited to those specific issues that have been remanded to it for consideration by the Commissioner.
Kerala HC – Kerala High Court – Kerala HC Sets – Consequential Order – Consequential – Assessing Authority – Remand By Commissioner – Commissioner – taxscan
Kerala HC – Kerala High Court – Kerala HC Sets – Consequential Order – Consequential – Assessing Authority – Remand By Commissioner – Commissioner – taxscan
The Kerala High Court sets aside consequential order passed by Assessing Authority beyond terms of remand by Commissioner. It was observed that the concern of the Assessing Authority, while passing a consequential order, has to be limited to those specific issues that have been remanded to it for consideration by the Commissioner.
The assessee/appellant , Manjoo and Company underwent an assessment which was completed under Section 143(3) of the Income Tax Act. The assessee did not appeal this assessment order. Subsequently, the Commissioner of Income Tax (CIT) initiated revision proceedings under Section 263 of the Act by issuing a notice, proposing to revise the assessment order concerning four specific issues. In response, the assessee submitted a reply.
Section 263 of the Income Tax Act, 1961 empowers the Commissioner of Income Tax to revise any order passed under the Income-tax Act, 1961, which is erroneous insofar as it is prejudicial to the interest of the revenue.
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The CIT directed the Assessing Authority to re-examine only two of issues. While implementing the order, the Assessing Authority expanded the scope, addressing additional issues not directed by the CIT, leading to a significant tax demand.
On appeal, the First Appellate Authority ruled in favor of the assessee, holding that the expanded consequential order was legally unsustainable. Aggrieved by the order of the First Appellate Authority, the Revenue preferred an appeal before the Appellate Tribunal which was allowed. The assessee has challenged the order passed by the Appellate Tribunal before the High Court.
It was noted that the Appellate Tribunal, have completely overlooked the fact that the First Appellate Authority, against whose order the Revenue had come in appeal before the Tribunal, was actually considering a consequential order passed pursuant to an order of the Commissioner under Section 263 of the I.T. Act. and not an original assessment order passed under Section 143(3) of the I.T. Act.
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The Division Bench comprising Justices A.K. Jayasankaran Nambiar and Syam Kumar V.M.viewed that the Assessing Authority, who passed the consequential order, apparently strayed beyond the terms of the remand by the Commissioner under Section 263 of the Income tax act which is unacceptable.
While allowing the appeal,the court directed the Assessing Authority to pass a fresh consequential order based on the order passed by the Commissioner of Income Tax under Section 263 of the Act within a period of three months after hearing the appellant/assessee.
Anil D. Nair appeared for the petitioner and P.K. Ravindranatha Menon and Jose Joseph appeared for the respondent.
To Read the full text of the Order CLICK HERE
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