ITAT: Duty of Tribunal to decide appeals: Section 254(1): A. Y. 1997-98 and 1998-99: Unnecessary remand by ITAT causes prejudice and amounts to a failure to exercise jurisdiction:

For the A. Y. 1997-98 as regards the assessee’s claim for deduction of service charges the Tribunal had remanded the matter back to the Assessing Officer for fresh consideration. Allowing the writ petition filed by the assessee against the said order, the Bombay High Court (see 290 ITR 464) had held that as the CIT(A) had given specific grounds for the disallowance , the Tribunal ought to have decided the specific issues on merit and not simply remanded it. Thereafter, the Tribunal decided the issue on merits and allowed the assessee’s claim. For A. Y. 1998-99, though the CIT(A)’s order was passed on the same date as the order passed for A. Y. 1997-98 and the Tribunal was aware of the High Court order for A. Y. 1997-98, it still remanded the issue to the Assessing Officer for fresh consideration. Miscellaneous application filed by the assessee was dismissed on the ground that the remand order was a conscious “decision” and not an apparent mistake.

The assessee filed a writ petition challenging the order. The Bombay High Court allowed the writ petition and held as under:

“i) T he Tribunal should not have refused to consider and decide the issue relating to service charges, more so, when an identical view taken by it earlier has not found favour of this Court. This Court repeatedly reminded the Tribunal of its duty as a last fact finding authority of dealing with all factual and legal issues. The Tribunal failed to take any note of the caution which has been administered by this Court and particularly of not remanding cases unnecessarily and without any proper direction.

ii) A blanket remand causes serious prejudice to parties. None benefits by non-adjudication or non-consideration of an issue of fact and law by an Appellate Authority and by wholesale remand of the case back to the original authority. This is a clear failure of duty which has to be preformed by the Appellate Authority in law. Once the Appellate Authority fails to perform such duty and is corrected on one occasion by this Court, and in relation to the same assessee, then, the least that was expected from the Tribunal was to follow the order and direction of this Court and abide by it even for this later assessment year.

iii) I f the same claim and which was dealt with by the Court earlier and for which the note of caution was issued, then, the Tribunal was bound in law to take due note of the same and follow the course for the later assessment years. We are of the view that the refusal of the Tribunal to follow the order of this Court and equally to correct its obvious and apparent mistake is vitiated as above. It is vitiated by a serious error of law apparent on the face of the record. The Tribunal has misdirected itself completely and in law in refusing to decide and consider the claim in relation to service charges.

iv) O rder of the Tribunal is set aside for reconsideration of the issue on service charges in accordance with law.”