High Court – If the High Court finds that the Tribunal has not answered some issues which arose before it in an appeal, instead of itself answering those issues, it should remit the case back to the Tribunal.

The assessee-respondent filed a return for the assessment year 2000-01, declaring taxable income of Rs.1,72,980/- inter alia after claiming deduction u/s. 80IA of Rs.89,74,875/-. The assessment was completed accepting the return submitted by the assessee, except denying the deduction u/s. 80IA to the extent of Rs.1,72,985/- in respect of interest credited to the Profit & Loss Account. Since the assessee-firm was held eligible for deduction u/s. 80IA, the rate of gross profit at 75.8% was examined by the Assessing Officer.

The Commissioner of Income Tax, exercising his jurisdiction u/s. 263 passed an order setting aside the assessment order and directing the Assessing Officer to frame fresh assessment, after giving reasonable opportunity of being heard to the assessee, the effect of which was to disallow deduction granted u/s. 80IA.

The Tribunal cancelled this order of the Commissioner in an appeal filed by the assessee.

The High Court in the appeal preferred by the Department, came to the conclusion that the Tribunal had not answered some of the issues, which stood decided by the Commissioner of Income Tax u/s. 263. In the circumstances, the High Court set aside the order of the Tribunal.

Against the Order of the High Court, the assessee approached the Supreme Court by way of Special Leave Petition. On 5-1-2011, the Supreme Court permitted the Department to proceed with reassessment without prejudice to the rights and contentions of the parties. In September 2014, when the matter came up for hearing, it was pointed out to the Supreme Court that the Assessing Officer had passed a fresh order on 5-5-2011, in which he had disallowed the claim for deduction u/s. 80IA and that the assessee had preferred an appeal to the Commissioner of Income Tax (Appeals) against the said order.

The Supreme Court was of the view that, instead of the High Court itself answering the issues which were held to be not answered by the Tribunal, it ought to have remitted the case to the Tribunal which it had not done in the present case.

The Supreme Court, in the peculiar facts and circumstances of the case, directed the Commissioner of Income Tax (Appeals) to decide the matter uninfluenced by the earlier order of the Commissioner of Income Tax u/s. 263. The Supreme Court set aside the order of the High Court and disposed of the appeal accordingly.