Any unnecessary remand by the ITAT cannot be allowed as it amounts to injustice
The Bombay High Court in the case of Coca¬ Cola India Pvt. Ltd. vs. The Assistant Registrar, The Income Tax Appellate Tribunal & Others, being W.P. No. 3650 OF 2014, held that unnecessary remands by the ITAT should be considered as failure to exercise jurisdiction and cannot be allowed.
In the instant case, a Writ Petition under Article 226 of the Constitution of India was directed against the order of the ITAT at Pune, on 6.12.2013 in a Misc. Application being M.A. No.150/PN/2010 arising out of Income Tax Appeal Nos.1258/PN/2003,182 and 610/PN/2004.
The relevant assessment years were 1998¬- 99 to 2004¬-05.
Brief facts of the case:
The petitioner was a company incorporated under the Companies Act, 1956 having its registered office at the address mentioned in the cause title of the Petition.
The petitioner had approached the ITAT against the order of the Commissioner of Income Tax (Appeals). The case of the petitioner was in connection with the allowance of service charges and travelling expenses.
The petitioner¬ being an assessee challenged the order passed by the AO on 30 .3.2001 on the ground that the AO had erroneously refused to grant the claim of the assessee relating to service charges and travelling expenses.
Before the Commissioner of Income Tax (Appeals), the documents in connection with service charges were filed but the Commissioner remanded the same and called for a report from the AO to be provided after fresh consideration. The report was received by the CIT (Appeals) who in turn proceeded and passed an order on 14.8. 2003.
It was held that the disallowance for service charges including traveling expenses should not be increased to the extent as claimed by the assesee. The petitioner’s appeal was decided against it. Being aggrieved by the said order of the CIT (Appeals), the petitioner filed an appeal before the ITAT.
The petitioner was aggrieved by the enhancement in the disallowance to the extent made by the CIT (Appeals) as during the proceedings of the appeal, the CIT (Appeals) had before him the necessary materials including a report from the AO but those were not taken into account. It was contended that the disallowance could not have been increased and the claim towards service charges and traveling expenses should have been granted.
The revenue contended that the petitioner¬ assessee did not place the said facts before the Assessing Officer. It was also argued that the findings regarding the prior assessment years cannot be of any help for the petitioner and the claim should be decided on the earlier findings.
The petitioner argued before the Tribunal that the matter should be decided upon the available materials and the contentions recorded in the Tribunal’s order.
However, the petitioner observed from the final order of the Tribunal that the Tribunal has erroneously held that there was no data before the Assessing Officer. Therefore, the Tribunal remanded the matter to the file of the AO.
The Bombay High Court held that the appeal filed by the petitioner¬ should be restored to the file of the ITAT, Pune for deciding the same on merits.
It was held that the Tribunal should decide the claim without being influenced by the original order which should not survive.
The High Court held that the Tribunal should not have refused to consider the issue relating to service charges. It was reminded that the Tribunal had the duty to deal with all factual issues. But it failed to do so. An unnecessary remand causes serious prejudice to people. It was a failure of duty by the Appellate Authority. It was stated that there has been a serious error of law on behalf of the Tribunal.
The similar view was taken by the Bombay High Court in the case of Kansai Nerolac Paints Ltd. vs. DCIT on 5.6.2014.