2025 (7) TMI 377 - AT - Income Tax

Maintainability of appeal before ITAT V/S CIT(A) against the order passed u/s 143(3) r.w.s 254 - HELD THAT - Once the appeal of the assessee is set aside by the Coordinate Bench of Tribunal with certain directions for reconsideration of the facts then the consequential proceedings are fresh proceedings and the assessee is at liberty to file appeal against the order of the AO before CIT(A) in case he has not opted to prefer the filing of objections before Ld.DRP u/s 144C of the Act. This being so the action of CIT(A) in dismissing the appeal of the assessee is contrary to the provisions of law and therefore the order of CIT(A) is set aside and is directed to decide the appeal of the assessee afresh on the grounds taken against the order passed u/s 143(3) r.w.s. 254 in accordance with law. With these directions Ground Nos. 1 to 3 raised by the assessee are allowed for statistical purposes.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this appeal are:

• Whether the Commissioner of Income Tax (Appeals) [Ld.CIT(A)] erred in dismissing the assessee's appeal as non-maintainable on the ground that the appeal should have been filed before the Income Tax Appellate Tribunal (ITAT) instead of Ld.CIT(A), particularly when the appeal was filed against an order passed under section 143(3) read with section 254 of the Income Tax Act, 1961 ("the Act") after remand from the ITAT.
• Whether the Ld.CIT(A) correctly appreciated the facts and legal provisions regarding the maintainability of appeal against the order dated 22.03.2024 passed under section 143(3) r.w.s. 254 of the Act, which was a fresh assessment order passed pursuant to directions from the Coordinate Bench of the ITAT.
• Whether the appeal filed by the assessee before Ld.CIT(A) against the set-aside order dated 22.03.2024 is maintainable or should have been filed directly before the ITAT.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability of the appeal before Ld.CIT(A) against the order passed under section 143(3) r.w.s. 254 of the Act dated 22.03.2024

Relevant Legal Framework and Precedents: Under the Income Tax Act, appeals against assessment orders passed under section 143(3) are generally preferred before the Commissioner of Income Tax (Appeals) as per section 246A. However, where an assessment order is passed under section 254 (which relates to the directions of the Tribunal), the question arises whether the appeal lies before the Ld.CIT(A) or directly before the ITAT. Section 254 empowers the Tribunal to pass orders setting aside the assessment and remanding the matter back to the Assessing Officer (AO) for fresh consideration in accordance with the directions given by the Tribunal. The subsequent order passed by the AO pursuant to such directions is a fresh order of assessment.

Court's Interpretation and Reasoning: The Tribunal observed that the Ld.CIT(A) misapprehended the appeal as being filed against the original final assessment order dated 30.06.2021, which was passed under section 143(3)/144C(13) of the Act. The Ld.CIT(A) held that appeal against such final assessment order lies directly before the ITAT and not before Ld.CIT(A). However, the Tribunal clarified that the appeal was in fact filed against the fresh assessment order dated 22.03.2024 passed under section 143(3) read with section 254 of the Act, which was passed pursuant to the remand directions of the Coordinate Bench of the ITAT.

The Tribunal emphasized that once the ITAT remands the matter to the AO for fresh consideration, the subsequent order passed by the AO is a fresh assessment order. The assessee is therefore entitled to file an appeal against this fresh order before the Ld.CIT(A), unless the assessee has opted to file objections before the Dispute Resolution Panel (DRP) under section 144C. This position is consistent with the statutory scheme and the procedural safeguards provided to the assessee.

Key Evidence and Findings: The Tribunal noted that the Ld.CIT(A) had acknowledged in the initial part of the order that the appeal was filed against the order dated 22.03.2024 but later proceeded to dismiss the appeal on the basis of the final assessment order dated 30.06.2021, evidencing a flawed appreciation of facts.

Application of Law to Facts: Applying the above principles, the Tribunal found that the appeal before Ld.CIT(A) was maintainable since it challenged the fresh assessment order passed pursuant to remand. The Ld.CIT(A)'s dismissal of the appeal on the ground of maintainability was therefore contrary to law.

Treatment of Competing Arguments: The Ld.CIT(A) relied on the procedural provisions and the finality of the original assessment order to hold that the appeal should lie before the ITAT. The Tribunal rejected this view, clarifying that the remand order creates a fresh assessment proceeding, which is appealable before Ld.CIT(A).

Conclusions: The Tribunal set aside the order of the Ld.CIT(A) dismissing the appeal as non-maintainable and directed the Ld.CIT(A) to decide the appeal on merits in accordance with law.

Issue 2: Consequences of the Coordinate Bench ITAT's Remand and the Nature of Proceedings Post-Remand

Relevant Legal Framework and Precedents: The Tribunal's power under section 254 includes remanding the matter to the AO for fresh consideration. The fresh assessment order passed in compliance with such directions is treated as a new order and is subject to appeal as per the normal appellate hierarchy.

Court's Interpretation and Reasoning: The Tribunal reiterated that the remand order by the Coordinate Bench of ITAT dated 07.01.2022 was binding and the AO's compliance with the directions by passing the order dated 22.03.2024 created a fresh assessment order. Accordingly, the procedural rights of the assessee to file appeal before Ld.CIT(A) were preserved.

Key Evidence and Findings: The Tribunal relied on the sequence of events, including the initial assessment, appeal before ITAT, remand order, fresh assessment, and subsequent appeal before Ld.CIT(A).

Application of Law to Facts: The Tribunal applied the statutory scheme to hold that the fresh order passed after remand is appealable before Ld.CIT(A), confirming the procedural entitlement of the assessee.

Treatment of Competing Arguments: The Ld.CIT(A)'s contrary view was found to be a misinterpretation of the effect of remand proceedings.

Conclusions: The Tribunal held that the appeal before Ld.CIT(A) against the fresh order dated 22.03.2024 is maintainable and must be adjudicated on merits.

Issue 3: Effect of Allowing Technical Grounds and Impact on Remaining Grounds of Appeal

Relevant Legal Framework and Precedents: When preliminary or technical grounds are allowed, subsequent grounds may become academic if the matter is remanded for fresh adjudication.

Court's Interpretation and Reasoning: The Tribunal noted that since the appeal was allowed on technical grounds relating to maintainability and remanded for fresh consideration, the remaining grounds of appeal had not been adjudicated and thus became academic.

Key