Facts of the Case

The assessee, Akasaki Technology (P) Ltd., filed its return of income for Assessment Year 2012–13 on 28.09.2012 declaring total income of ₹48,51,840. The assessment was reopened under Section 147 of the Income-tax Act after recording reasons and obtaining approval. Notice under Section 148 was served on 31.03.2019 through the ITBA portal. In response, the assessee sought reasons for reopening, which were supplied on 09.09.2019. A notice under Section 142(1) was issued, to which the assessee claimed to have filed replies. The Assessing Officer passed an assessment order dated 24.12.2019 under Section 144 read with Section 147, making additions of ₹8,38,50,800. The assessee filed an appeal before the CIT(A)/NFAC.

By order dated 25.10.2024, the CIT(A) set aside the assessment order and remanded the matter to the Assessing Officer for fresh adjudication, observing that certain explanations of the assessee were not examined by the Assessing Officer. Aggrieved, the assessee appealed before the ITAT, which by order dated 07.05.2025 upheld the remand. The assessee thereafter preferred an appeal before the Delhi High Court.

Issues Involved

Whether the CIT(A) was justified in remanding the assessment to the Assessing Officer without adjudicating the jurisdictional plea regarding non-issuance of notice under Section 143(2), whether an assessment order allegedly invalid under Section 144 could be remanded for fresh adjudication, and whether the ITAT erred in upholding such remand without deciding the jurisdictional issue.

Petitioner’s Arguments

The assessee contended that the assessment order passed under Section 144 read with Section 147 was a nullity as none of the conditions prescribed under Section 144 were satisfied and no mandatory notice under Section 143(2) was issued. It was argued that once a jurisdictional defect was raised, the CIT(A) was required to adjudicate the issue and could not remand the matter to the Assessing Officer, thereby granting a fresh opportunity to cure a fatal defect. It was further submitted that the ITAT failed to examine this core jurisdictional issue and mechanically upheld the remand.

Respondent’s Arguments

The Revenue submitted that during reassessment proceedings, the assessee failed to respond to the show cause notice dated 23.12.2019 and therefore the assessment under Section 144 was justified. It was also argued that in reassessment proceedings initiated under Section 147, issuance of notice under Section 143(2) was not mandatory, and therefore the remand by the CIT(A) was valid.

Court Order / Findings

The Delhi High Court observed that both the CIT(A) and the ITAT failed to adjudicate the specific jurisdictional plea raised by the assessee regarding non-issuance of notice under Section 143(2). The Court noted that the CIT(A), while exercising powers under Section 251, was required to first determine whether the assessment order itself was valid in law. Without recording any finding on whether notice under Section 143(2) was issued or the effect of its non-issuance, the CIT(A) mechanically remanded the matter to the Assessing Officer. The ITAT also upheld the remand without dealing with the jurisdictional challenge. The Court held that such an approach was legally unsustainable and that the issue had to be decided by the appellate authority itself rather than being sent back to the Assessing Officer.

Important Clarification

The Court clarified that where a jurisdictional defect going to the root of the assessment is specifically raised, the appellate authority must adjudicate the issue and cannot bypass it by remanding the matter. Remand is permissible only against a valid assessment order; it cannot be used to grant the Assessing Officer an opportunity to rectify a potentially void assessment.

Final Outcome

The appeal was allowed. The orders of the ITAT dated 07.05.2025 and the CIT(A) dated 25.10.2024 were set aside. The matter was remanded to the file of the CIT(A), who was directed to decide the appeal afresh on merits, including the jurisdictional plea relating to non-issuance of notice under Section 143(2), in accordance with law.

Link to Download order- https://mytaxexpert.co.in/uploads/1769502329_AKASAKITECHNOLOGYPLTDVsPRINCIPALCOMMISSIONEROFINCOMETAX.pdf

 

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