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I-T - Revenue must not agitate new issues under remand proceedings in defiance of ITAT's Directions, which were never subject matter of controversy in first round of litigation: HC

 

By TIOL News Service

MUMBAI, JULY 31, 2018: THE ISSUE IS - Whether Revenue Officers are permitted to rake up new issues in remand proceedings which were never the subject matter of controversy in the first round of litigation. NO IS THE VERDICT.

Facts of the case:

The assessee company had filed its return claiming benefit of deduction u/s 80IB(10), which was however denied by the AO on the ground that commercial construction was in excess of prescribed limits and the project was not completed by Mar 31, 2008. On appeal, the Tribunal set aside the order of AO and restored the matter to him for deciding grant of benefit of Section 80IB(10). The AO therefore, while giving effect to the Tribunal's order u/s 143(3) r/w/s 254, had rejected the benefit of Section 80IB(10) on new grounds, which were not subject matter u/s 80IB(10) in the first round of litigation leading to order of the Tribunal.

The assessee then approached the CIT(A) who held that the assessee was entitled to benefit of Section 80IB(10) by relying on the decision of Special Bench of the Tribunal which was affirmed by this Court in Brahma Associates - 2011-TIOL-125-HC-MUM-IT. On further appeal, the Tribunal held that, when there was a specific direction to the AO by the ITAT to follow the Special Bench decision, it had to be assumed that the direction was with reference to the issues which were originally objected to by the AO and the AO could not take advantage of the order of ITAT for repeating the addition, defying the directions of ITAT.

High Court held that,

++ it is to be noted that the officers of Revenue Department cannot defy directions of the Tribunal and agitate new issues which result in unnecessary harassment and inconvenience to taxpayers. The AO was bound by the directions given in the first order of the Tribunal, and hence, he was obliged to strictly follow directions and decide issues as directed by the Tribunal. It is not open to the AO to rake up new issues which were never the subject matter of the controversy in the first round of litigation and ignore the directions of the Tribunal to examine claim of assessee in respect of two issues. Thus, in these facts, there is no reason to entertain this Appeal.

(See 2018-TIOL-1486-HC-MUM-IT)


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