Stricture against ITAT

 

In the case of PCIT vs. N R Portfolio Pvt Ltd (W.P.(C) 10846/2016) the Hon’ble Delhi High Court in its Order dated 25.2.2019 has deprecated in strong terms the action of the ITAT to invoke powers under section 254(2) to revive a finalised proceedings. The Court also directed the asssssee to pay costs of Rs. 1.5 lakhs.

 

In this case the AO had reopened the assessment and made some addition u/s 68. The assessee challenged the order on merits as well as on technical ground of reopening. The CIT(A) deleted the addition u/s 68 but sustained the reopening. The Revenue filed an appeal to ITAT. The assessee filed a cross objection as to reopening of assessment. The ITAT dismissed the appeal of Revenue and treated the CO as infructuous. The Revenue went in appeal u/s 260A. The assessee did not take any action concerning the dismissal of its CO. The High Court allowed Revenue’s appeal.

 

After nearly 2 years, the assessee moved a M.A. before the ITAT claiming that since its CO was not decided on merits, the same should be revived. The ITAT allowed assessee’s MA and recalled the order to consider the CO on merits. The Revenue filed another MA asking the ITAT to reconsider its decision as it was against the doctrine of merger etc. The ITAT dismissed the same. The Revenue challenged this dismissal before the High Court.

 

The High Court has strongly deprecated the action of ITAT and has held that it has exceeded its jurisdiction. It has explained that the powers of ITAT u/s 254(2) are narrower than the powers available to the AO u/s 154. It has also discussed various case laws of Supreme Court on merger and finality of proceedings. The Court has taken an unusual step to even name the ITAT Members {Mr CM Garg and Mr Saini} and has imposed cost on the assessee.

 

A very well reasoned order by the High Court.