ITAT defines meaning of ‘set aside’; AO can’t do fresh assessment if assessment order was set aside by ITAT

Case details: Jaya Prakash v. ITO - [2021] 133 taxmann.com 189 (Bangalore - Trib.)

Judiciary and Counsel Details

• • Chandra Poojari, Accountant Member and Smt. Beena Pillai, Judicial Member
  • H. Guruswamy and Ravi Kiran, C.A. for the Appellant. 
  • IC Prabhakar, JCIT (DR) for the Respondent.

Facts of the Case

In the instant case, the Tribunal had set aside the assessment framed by AO on the basis of Form 26AS. After that, Assessing Officer (AO) initiated fresh assessment considering the remarks made by Tribunal in its order. The assessee filed appeal contended that the AO misunderstood the order of the Tribunal.

The AO believed that the disputed issue was remitted to him to do a fresh assessment. However, there was no such direction issued by the Tribunal.

ITAT Held

The Tribunal held that it is essential to clarify the meaning of the word ‘set aside’. As per Black’s Law Dictionary, Sixth Edition at page 1372, the words “set aside” means:
‘To reverse, vacate, cancel, annul or revoke a judgment, order, etc.’
Further, the meaning of the word ‘annul’ on page 90 of the Black’s Law Dictionary has given as under:

“To reduce to nothing; annihilate; obliterate; to make void or of no effect; to nullify; to abolish; to do away with. To cancel; destroy; abrogate. To annul a judgment or judicial proceeding is to deprive it of all force and operation, either ab initio or prospectively as to future transaction.”

Furthermore, the meaning of the word ‘annulment’ is given on page 91 as under:
“To nullify, to abolish, to make void by the competent authority. An “annulment” defers from a divorce in that a divorce terminates a legal status, whereas an annulment establishes that a marital status never existed. Whealton v. Whealton, 67 Cal. 2 d 656, 63 Cal Rptr. 291, 294, 432 P. 2 d 979. Grounds and procedures for annulment of marriage are governed by State Statutes.”

Thus, the word ‘set aside’ means that the earlier assessment order has been quashed, and there was no direction by the Tribunal to do any fresh assessment on the same issue. When there is no direction to do the fresh assessment and the earlier assessment year has been set aside, the AO cannot take advantage of passing remark/observation on the Tribunal order to frame fresh asst. on the same issue.

Case Review

• • Dy. CIT v. Jaya Publications [2010] 123 ITD 53 (Chennai) (para 10)
  • Fu Sheen Tannery v. ITO [2004] 134 Taxman 25/[2003] 262 ITR 456 (Cal.)(para 9) followed.

List of Cases Referred to

• • Dy. CIT v. Jaya Publications [2010] 123 ITD 53 (Chennai) (para 10)
  • Fu Sheen Tannery v. ITO [2004] 134 Taxman 25/[2003] 262 ITR 456 (Cal.)(para 9) followed.