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2016 (1) TMI 1410 - AT - Income TaxCIT(A) power to correct jurisdictional errors - Disallowance u/s 14A - Non-recording of satisfaction results - whether the basic functions assigned to the assessing officer in the Act can be discharged by CIT(A) while exercising his coterminous power or not? - HELD THAT:- Under section 251 CIT(A) in an appeal against an order of assessment is empowered to confirm, reduce, enhance or annul the assessment but if the assessment order suffers from jurisdictional errors then CIT(A) has no power to correct such jurisdictional errors. The coterminous powers vested in CIT(A) does not imply that he can clothe himself with powers to correct the jurisdictional defects in the assessment order. It is well settled law that where the very initiation of assessment proceedings by the AO was invalid then Ld. CIT(A) cannot direct for making a fresh assessment. CIT(A) should annul the assessment where the assessment proceeding is a nullity in the sense that the AO had no jurisdiction ab initio to take the proceeding. AO could take up the issue regarding disallowance u/s 14A only after recording satisfaction. Non-recording of satisfaction results into creeping of illegality in the assessment order and not a mere irregularity. The jurisdiction of recording satisfaction for invoking section 14A lies with the assessing officer and once he has not recorded such satisfaction then the said basic function of AO which clothes him jurisdiction to make disallowance u/s 14A cannot be usurped by CIT(A). We, therefore set aside the order of CIT(A). - Decided in favour of assessee.
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