ITAT Cannot Decide On Grounds Not Addressed By Commissioner Of Income Tax (Appeals): Delhi High Court

The Delhi High Court recently said aside an order passed by the Income Tax Appellate Tribunal, deciding grounds that did not arise from the impugned order passed by the Commissioner of Income Tax (Appeals). A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela observed, “The Assessee's challenge to the addition of ₹4,30,00,000/- under Section 68 of the Act had remained unaddressed by the learned CIT(A) but had been affirmed by the learned ITAT, without the same arising from the order passed by the learned CIT(A). The learned ITAT has clearly erred in entering into the said controversy without the learned CIT(A) rendering any finding on merits in regard to the petitioner's appeal.” Appellant-assessee is in the business of real estate development. Pursuant to search and seizure operations conducted by the Department in premises of one Jagat Group, the Assessing Officer issued notice to Appellant under Section 153A of the Income Tax Act, 1961. Though the Appellant contended that no incriminating material was found against it during the search operations, the AO determined certain accommodation entries and added of a sum of ₹4,30,00,000/- to the income declared by the Appellant (on account of unexplained cash credits). On Appellant's appeal, CIT(A) held that Section 153A was inapplicable to the Appellant as no incriminating material was found during the search proceedings. However, CIT(A) did not consider Appellant's challenge to the addition on merits. However, the ITAT on Revenue's appeal, affirmed the additions aggregating ₹4,30,00,000/- as unexplained cash credit. Before the High Court, the Appellant contended that no arguments on the issue of addition were advanced before the ITAT by either side. The High Court agreed that the ITAT had proceeded to decide a ground that did not arise from the order passed by CIT(A). “CIT(A) had decided the Assessee's appeal confined to the question whether Section 153A of the Act was applicable in the given facts; the learned CIT(A) had not decided the Assessee's challenge to the addition of ₹4,30,00,000/- under Section 68 of the Act. Thus, clearly the question whether the said addition had been rightly made by the AO did not arise for consideration of the learned ITAT notwithstanding that the ground to the aforesaid effect was raised by the Revenue,” Court held and set aside ITAT's order to the extent it determined merits of the addition. The matter was restored to CIT(A) to decide the grounds not addressed by it. Appearance: Mr Salil Aggarwal, Senior Advocate with Mr Mr Madhur Aggarwal, Advocate for Appellant; Mr Vipul Agrawal, Senior Standing Counsel with Mr Gibran Naushad and Ms Sakshi Shairwal, Advocates for Department Case title: Divine Infracon Pvt Ltd v. Pr Commissioner Of Income Tax 3Citation: 2025 LiveLaw (Del) 51 Case no.: ITA 426/2024 Click Here To Read/Download The Order

ITAT Cannot Decide On Grounds Not Addressed By Commissioner Of Income Tax (Appeals): Delhi High Court

Kapil Dhyani

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