The Income-tax Appellate Tribunal (‘Tribunal’) has been vested with wide powers under the Income-tax Act, 1961 (‘IT Act’) to pass orders as it thinks fit, including the power of remand. This power of remand has been a subject matter of judicial scrutiny and the Courts have cautioned the Tribunal repeatedly against the exercise of such power in a routine manner.

The compulsion to remand a matter may arise on account of: (i) lack of opportunity to be heard at the lower levels; (ii) an inability to produce the relevant documents for reasons beyond the control of the assessee; (iii) non-consideration of material already on record; and (iv) any such similar situation. Be that as it may, when all necessary facts and documents are on record, the scale of balance would tilt in favour of deciding the issue at hand by the Tribunal, which is the last fact-finding authority. This approach would also be efficient and spare needless additional cost, time and energy. The Revenue would also stand to gain from this approach since the tax revenues would not get blocked by incessant remands, and consequently, would not cast a burden on the state exchequer and its resources. Needless to add, the right of the Revenue to investigate new facts presented at the appellate level must be protected.

A draconian aspect of exercise of the power of remand by the Tribunal is the grant of a blanket remand. The Bombay High Court^[1] had the occasion to consider this issue and it held that a blanket remand causes serious prejudice to the parties. The Court further held that no one benefits from the non-adjudication/non-consideration of an issue of fact or law by the Tribunal. Consequentially, it leads to granting unfettered investigative powers to the Assessing Officer resulting in a second innings and leaving the tax payer exposed to additional issues. Therefore, defining the scope should be an indispensable aspect of any order of remand and a deviation from the same could potentially give rise to a remedy in writ jurisdiction.

It is also worth considering that as per the IT Act, the matters remanded back to the lower authorities are subject to statutory limitations and non-adherence to such limitations renders the consequential order bad in law. Apart from statutory remedies, such time barred orders are also amenable to writ jurisdiction under Articles 226 and 227 of the Constitution of India.^[2]

Even though the power of remand is discretionary, it must adhere to the guiding principles detailed above. An order of remand must be evaluated to be in compliance of these said principles and a digression from the same establishes a good case for challenge of such order.

[1]  Coca-Cola India (P.) Ltd. v. Assistant Registrar Income-tax Appellate Tribunal, [2014] 52 taxmann.com 399 (Bombay High Court).

[2]  Nokia India (P.) Ltd. v. DCIT, judgement dated September 21, 2017 in W.P. No. 1773/2016 (Delhi High Court).