Income Tax - In De novo proceedings, AO cannot travel beyond directions of CIT(A) - ITAT
YOU go in appeal against an order of an Assessing Officer and the Appellate Authority is pleased to set aside that order and remand it to the AO for a fresh consideration. The Over-active AO in de novo proceedings is angry with you and adds a few more demands which were not there in the original assessment proceedings.
You go in appeal to be in a better position and for the sin of appealing you can't be punished and placed in a worse position.
In a recent order the ITAT observed,
In the de novo assessment, the AO has travelled beyond the directions of the Ld. CIT(A) by making additions which were not at all there in the original assessment proceedings. As the AO has failed to carry out the legal duty imposed on him, which has resulted into the destruction of a basic principle of natural justice, such action of the AO cannot be upheld. The additions made by the AO were not made in the original assessment and by making such addition the AO has travelled beyond the directions of the CIT(A). It is a settled law that the scope of the proceedings after remand will necessarily have to be determined with reference to the terms of the order whereby the appellate authority has remitted the case to the AO. The AO has same powers in making fresh assessment as he had originally when making the assessment order u/s. 143 of the Act. However, this power can be used only when the First Appellate Authority set aside the assessment and direct the AO to make a fresh assessment, without imposing any restrictions or limitations as to how the fresh proceedings are to be conducted by the AO which means that as long as no restrictions have been placed by the Appellate authority on the scope of the proceedings after remand by directing a fresh assessment to be made by the AO, the AO is competent to redo the assessment in accordance with law after taking into account all matters and aspects that would be relevant in making the original assessment, which also means that it is open to the First Appellate Authority to limit the scope of the enquiry by the AO to any specific aspect or issue. It is well settled that an Appellate Authority while setting aside the case can give directions and lay down limits for the inquiry to be made by the assessing authority. When such a direction is made and limits are laid down, the power and jurisdiction of the assessing authority to deal with the case, after remand, depend on the specifications of the remand order, which means that the assessing officer has no jurisdiction to enter into any question which falls outside the limits laid down .