|CORAM:||Annapurna Mehrotra (AM), H. L. Karwa VP|
|DATE:||November 3, 2015 (Date of pronouncement)|
|DATE:||November 4, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 263: CIT’s action of stepping into shoes of AO and virtually redoing assessment by issuing specific directions to AO is unlawful. Remand to AO with direction to give opportunity of hearing to assessee is meaningless|
(i) It is abundantly clear that CIT has exceeded its jurisdiction in virtually reassessing the case. It is true that the revisional authority itself has wide power to examine the case whether the decision has been erroneous and prejudicial to the interest of Revenue and in exercise of these power modifications are permissible, and furthermore that if the Commissioner comes to this conclusion that the assessment is required to be redone, that such direction can still be issued to the Assessing officer. However, it is trite law that it is not permissible for the CIT being a revisional authority to step into the shoes of the Assessing officer and to redo the assessment and pass fresh assessment order. In the instant case, the Commissioner has set aside the order of the Assessing officer on the aforesaid issues with a direction to the Assessing officer to pass a fresh assessment order. At the same time, the Commissioner has directed the Assessing officer to make the addition of Rs. 5,95,970/- on account of understatement of closing stock, disallow interest u/s / 36(1)(iii) in respect of mixing plant and depreciation in respect of mixing pant and disallow of deduction on account of interest, salary etc. paid to the partners. In our considered view, remanding the matter to the Assessing officer is of no consequence, particularly when the CIT himself has reframed the assessment. In the facts and circumstances of the present case the CIT has not left any scope for the Assessing officer to redo the assessment or pass a fresh assessment order. It is also observed that CIT has directed the Assessing officer to give an opportunity of being heard to the assessee before passing the fresh assessment order. In our view, giving opportunity of being heard to the assessee by the Assessing officer is also meaningless, particularly when the CIT himself has reframed the assessment order. The direct ions given by the Ld. CIT in para 7 of the impugned order are also contrary to the settled position of law. When the CIT directs the Assessing officer to pass a fresh assessment order, the only proper course for the Commissioner was not to express any final opinion as regards to the controversial points. While taking such a view, we are fortified by the decision of Hon’ble Gujrat Hon’ble High Cour t in the case of Addl. CIT v Mukur Corporation (1978) 111 ITR 312 (Gujarat). It is also observed that in the concluding part of the order of the Commissioner he has issued a direction to the Assessing officer to pass a fresh assessment order then he was not required to express any final verdict as regards the controversial points. In this case, the Commissioner has directed the Assessing officer to make the specific additions / disallowances, as mentioned in the impugned order. Therefore, the directions given to the Assessing officer to frame a fresh assessment order is bad in law as this is clearly a case in which the Ld. CIT has exceeded his jurisdiction in reassessing the case. Even the direction given by the CIT to the Assessing officer to provide an opportunity of being heard to the assessee is also of no consequence.
(ii) When a fresh assessment is done, there could always be grounds on which one of the parties is aggrieved and the law prescribes a corrective remedy by way of appeal, revision etc. If the CIT who is a highly placed authority of the Revenue, is to exercise the powers of which doing a fresh assessment, then the right of appeal, revision etc is totally annihilated and this could never be the intention of the Legislature.