ITAT bars CIT(A) from Remand Without First Deciding Jurisdiction in Time-Barred Reassessment Case [Read Order]

Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has set aside an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), observing that the CIT(A) failed to adjudicate on the question of jurisdiction in a time-barred reassessment proceeding before remanding the case.

The appeals were filed by Eyegear Optics India Private Limited against the Deputy Commissioner of Income Tax, Circle 8(1), Hyderabad, for the Assessment Years 2012–13 and 2013–14.

The assessee challenged the validity of reassessment orders passed under Section 147 read with Section 144 of the Income Tax Act, 1961, on the ground that the proceedings were initiated beyond the permissible time limit under the first provisio to Section 147. In particular, the company argued that its original assessment under Section 143(3) had been completed on 26.03.2016, and the reopening notice under Section 148 issued on 31st March 2019 was barred by limitation in the absence of any failure on the part of the assessee to disclose material facts.

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The company contended that despite raising this legal ground (Ground No. 2) before the CIT(A), the appellate authority chose not to adjudicate it and instead remanded the case to the Assessing Officer (AO) for fresh consideration under the newly inserted proviso to Section 251(1)(a), effective from August 1 2024.

This provision empowers the CIT(A) to set aside best judgment assessments made under Section 144 and refer them back to the AO. However, the Tribunal held that this enabling provision does not override the CIT(A)’s duty to first decide on jurisdictional issues, especially when such challenges go to the root of the assessment’s legality.

The assessee was represented by Suvibha Nolkha, who also pointed out that the reopening was merely based on a change of opinion and lacked any fresh tangible material, further vitiating the jurisdiction assumed under Section 147. She relied on the Supreme Court’s decision in New Delhi Television Ltd. v. DCIT (2020) regarding limitation under the first proviso and Kelvinator of India Ltd. (2010) on the impermissibility of reassessment on mere change of opinion.

The ITAT Bench, comprising Ravish Sood ( Judicial Member) and Madhusudan Sawdia (Accountant Member), found that the CIT(A)’s action of remanding the case without examining the legality of the jurisdiction assumed was incorrect.

The Bench noted that if such jurisdictional defects are not adjudicated and the matter is simply remanded, it indirectly legitimizes a reassessment that might be fundamentally void.

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Accordingly, the ITAT set aside the CIT(A)’s order and restored the matter back to him with a direction to decide on the specific jurisdictional ground raised by the assessee. The appeals for both AY 2012–13 and 2013–14 were allowed for statistical purposes.

The Bench noted that if such jurisdictional defects are not adjudicated and the matter is simply remanded, it indirectly legitimizes areassessment that might be fundamentally 

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