Adv. (CA.) Deep Agarwal – [2026] 186 taxmann.com 778 (Article)
The system of tax adjudication in India is built upon the foundational principles of fairness, natural justice, judicial discipline, and effective dispute resolution. Within this framework, the Income Tax Appellate Tribunal (ITAT) occupies a unique and revered position. Popularly referred to as the “Mother Tribunal,” the Tribunal has historically been regarded as the final fact-finding authority under the Income-tax Act, 1961. Its institutional motto “Nishpaksh Sulabh Satvar Nyay” (Impartial, Easy, and Speedy Justice) reflects the expectation that disputes reaching the Tribunal should ordinarily attain meaningful adjudication and closure.
In practical litigation, however, one often encounters a recurring phenomenon – matters are frequently “set aside” or remanded back to the Assessing Officer (“AO”) or the Commissioner of Income Tax (Appeals) [“CIT(A)”]. While remand may, in certain circumstances, serve the cause of justice, the larger jurisprudential question that arises is:
Can a matter truly be said to have been adjudicated when the Tribunal merely sets it aside despite the existence of sufficient material on record?
This issue assumes immense significance in income tax litigation where proceedings already span several years, and repeated remands often prolong uncertainty, increase costs, and dilute the very objective of judicial finality.
The Statutory Position of the Tribunal – Under Section 254 of the Income-tax Act, the Tribunal is empowered to pass “such orders thereon as it thinks fit.” the provision grants extremely wide powers to the Tribunal. Judicial precedents have recognised that the Tribunal possesses powers co-extensive with those of lower authorities in relation to fact-finding and adjudication.
The Tribunal is not merely an appellate body correcting procedural defects. It is expected to adjudicate disputes comprehensively, especially when all relevant materials are already available on record.
The importance of this role was emphasised by the Supreme Court in several judgments where it was held that the Tribunal, being the last fact-finding authority, must decide issues conclusively whenever possible instead of unnecessarily prolonging litigation.
1. When Setting Aside a Matter is Justified?
There can be no dispute that the power to remand is an important and necessary judicial tool. In many situations, setting aside a matter is not only justified but also essential to preserve the principles of natural justice. Income tax litigation frequently witnesses cases where assessments are completed ex parte under Section 144 of the Income-tax Act or appeals are dismissed by the CIT(A) without granting adequate opportunity of hearing to the assesse, specially in the faceless regime of income tax assessments and appeals. In such circumstances, the Tribunal may justifiably restore the matter to the lower authority for fresh adjudication.
Where books of account were never examined, documentary evidences were ignored, verification of facts is needed or relevant submissions were not filled at all, a remand order becomes a mechanism to ensure fairness. Such orders cannot be criticised as avoidance of adjudication because the factual foundation itself remains incomplete. A judicial authority cannot conclusively decide issues where the underlying facts have not been properly brought on record.
Therefore, in cases involving denial of opportunity or absence of factual verification, the Tribunal’s decision to restore the matter serves the larger cause of justice. It ensures that no assessee is condemned unheard and that the assessment process remains consistent with the principles of fair play.
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