CIT(A) lacks jurisdiction to make additions on issues not considered by AO

1. The assessee has filed the return of income declaring an income of Rs. 1,44,19,770/- on 31.12.2008 which was processed by the AO u/s. 142(1) (of Income Tax Act, 1961). The case of the assessee was picked up for scrutiny and notice u/s. 143(2) (of Income Tax Act, 1961) was issued and served on the assessee. Another notice u/s. 143(2) (of Income Tax Act, 1961) was also issued. A detailed questionnaire was issued on 13.9.2010. In response to the same A.R. of the assessee appeared and filed necessary documents which was examined by the AO and lastly the AO made the addition of Rs. 22,82,98,179/- on account of unexplained loans from various persons. AO also made addition on a/c house hold expenses of Rs. 3 lacs. Thereafter, he assessed the total taxable income at Rs. 24,30,17,952.

2. CIT(A) partly allowed the assessee's appeal.

3. On cross appeals, the ITAT held as under:

"4. We have gone through the assessment order as well as the impugned order passed by the Ld. CIT(A) on the additions in dispute, we are of the view that after admitting the additional evidence, Ld. CIT(A) has held that the stand taken by the Revenue that amount received by the assessee from the company is unexplained cannot be sustained is a correct one and therefore, we are in agreement with this finding, but later Ld. CIT(A) has diverted his view and wrongly applied the provisions of sections 2(22)(e) read with section 2(24)(ii) (of Income Tax Act, 1961) and section 56(2)(vi) (of Income Tax Act, 1961), which is not in his jurisdiction and also not sustainable in the eyes of law.

We are of the considered view that Ld. CIT(A) have made these addition u/s 2(22)(e) (of Income Tax Act, 1961) and 56(2)(vi) of the I.T. Act, 1961 under different heads which has not been discussed / adjudicated by the AO in the assessment order which is not sustainable in the eyes of law. The AO has not considered any of these issues pertaining to these sections. In our view Ld. CIT(A) did not have any jurisdiction to make any such additions on the issues which were never considered by the Assessing Officer in the assessment order. Although the powers of the CIT(A) are co-terminus with the powers of the AO, yet the Ld. CIT(A) has jurisdiction only on those issues which have been considered by the AO irrespective of the fact that whether the issue is subject matter of the Appeal or not. The Ld. CIT(A) does not have any jurisdiction over those issues which have not been considered by the AO.

4.1 Respectfully following the aforesaid decisions rendered by the Hon'ble Supreme Court as well as Hon'ble High Court, we hold that Ld. CIT(A) did not have any jurisdiction to make such additions on the issues which were never considered by the AO as has been done in the present case. Therefore, the impugned order on the issues involved in the grounds of appeal are without jurisdiction and is not sustainable in the eyes of law, hence, we cancel the impugned order dated 26.11.2012 being without jurisdiction by accepting the Appeal filed by the Assessee.”

Case Reference - Sh. Vikrant Puri, Vs. ACIT, Central Circle-13

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH "H", NEW DELHI

BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND

SHRI O.P. KANT, ACCOUNTANT MEMBER

ITA Nos. 142 & 5789/DEL/2013

A.Y. : 2008-09