Case Number: ITA 872/DEL/2020
Appellant: ITO, Ward-58(6), New Delhi
Respondent: Amba Construction Co., Delhi
Assessment Year: 2011-12
Result: Appeal dismissed due to low tax effect
Case Filed on: 2020-02-20
Order Type: Final Tribunal Order
Date of Order: 2023-07-26
Pronounced on: 2023-07-26
This case involves an appeal filed by the Income Tax Officer (ITO), Ward-58(6), New Delhi, against the respondent, Amba Construction Co., Delhi, concerning the assessment year 2011-12. The primary issue under consideration was the legality of the re-assessment proceedings initiated by the ITO.
Amba Construction Co. is a construction company based in East Delhi. The assessment for the year 2011-12 was initially completed by the Assessing Officer (AO), who later initiated re-assessment proceedings under Section 147/143(3) of the Income Tax Act, 1961. The re-assessment order dated 24th December 2018, led to the addition of Rs.39,00,000/- to the assessee’s income, based on a purported sale transaction that took place on 21st July 2010.
The ITO challenged the order of the Commissioner of Income Tax (Appeals)-30, New Delhi, dated 11th December 2019, which quashed the re-assessment proceedings as bad in law. The grounds for the appeal were:
The tribunal hearing was conducted on 26th July 2023, before Shri M. Balaganesh, Accountant Member, and Shri Anubhav Sharma, Judicial Member. The appellant was represented by Mr. Kanv Bali, Sr. DR, and the respondent by Mr. C.S. Anand, Advocate.
The appellant argued that the re-assessment was initiated based on concrete information and that the CIT(A) had wrongly quashed the proceedings. The respondent countered that the re-assessment was based on erroneous facts and that the CIT(A) was correct in its judgment.
The tribunal noted that the CIT(A) had categorically held that the addition of Rs.39,00,000/- was incorrect, as the assessee had not entered into any sale transaction on the mentioned date. This fact was confirmed by the Sub-Registrar upon enquiry by the AO. The Revenue did not appeal this finding on merit. The only addition that could be contested was related to unverified loss in Futures and Options transactions amounting to Rs.1,31,91,367/-.
The tribunal observed that the Revenue’s grounds on the legal issue were purely academic, as the tax effect on the disputed addition was less than the prescribed monetary limits for filing an appeal, as per CBDT Circular No.17/2019 dated 08.08.2019.
The tribunal concluded that the appeal filed by the Revenue was not maintainable due to the low tax effect and dismissed the appeal.
The final judgment was pronounced in the open court on 26th July 2023, dismissing the appeal filed by the Revenue.
This case underscores the importance of factual accuracy in re-assessment proceedings and highlights the judicial approach to handling disputes involving minimal tax effects. The decision reflects the tribunal’s adherence to procedural guidelines and the CBDT circular, promoting efficiency in tax litigation.
1. Income Tax Appellate Tribunal Order, ITA 872/DEL/2020.
2. CBDT Circular No.17/2019 dated 08.08.2019.
3. The Income Tax Act, 1961.
4. Official records and submissions from Amba Construction Co.
The re-assessment proceedings were initiated under Section 147 of the Income Tax Act, 1961, which allows the AO to re-assess the income of an assessee if he has reason to believe that income chargeable to tax has escaped assessment. However, this power is subject to strict conditions and procedural safeguards to prevent arbitrary or baseless re-assessments.
The CIT(A) plays a crucial role in ensuring that the re-assessment proceedings adhere to the legal framework. In this case, the CIT(A) thoroughly examined the reasons recorded by the AO and found them to be based on factual inaccuracies. This led to the quashing of the re-assessment order, which the tribunal upheld.
The CBDT Circular No.17/2019 prescribes monetary limits for the filing of appeals by the Revenue to reduce litigation and ensure that only substantial tax disputes reach higher judicial forums. This policy aims to promote judicial efficiency and focus on significant tax matters. The tribunal’s decision to dismiss the appeal based on this circular demonstrates its effective implementation.
The addition related to unverified loss in Futures and Options transactions of shares amounting to Rs.1,31,91,367/- was a critical aspect of the case. However, the tribunal noted that the Revenue did not raise any specific grievances regarding the non-adjudication of this addition by the CIT(A), rendering the legal grounds of the appeal academic.
This case sets a precedent for future re-assessment proceedings, emphasizing the need for accurate factual foundations and adherence to procedural requirements. It also reinforces the importance of judicial scrutiny at the appellate level to prevent arbitrary tax assessments and re-assessments.
The dismissal of the appeal based on the low tax effect highlights the judiciary’s support for policies aimed at reducing frivolous litigation, thereby ensuring that the tax administration system functions efficiently and effectively.
The case of ITO, Ward-58(6), New Delhi vs. Amba Construction Co., Delhi, serves as a crucial reference for understanding the nuances of re-assessment proceedings and the importance of factual accuracy and procedural compliance. The tribunal’s decision to dismiss the appeal underscores the significance of CBDT guidelines in streamlining tax litigation and ensuring judicial efficiency.
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