Case No.: ITA 971/DEL/2021
Appellant: Om Prakash Jakhotia, Telangna
Respondent: ACIT, CC-26, New Delhi
Assessment Year: 2012-13
Result: Final Tribunal Order
Case Filed On: 2021-08-12
Date of Order: 2022-02-21
Pronounced On: 2022-02-21
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘E’ : NEW DELHI) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER and DR. B.R.R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCE) ITA Nos.968, 969, 970 & 971/Del./2021 (ASSESSMENT YEARS : 2009-10, 2010-11, 2011-12 & 2012-13) Shri Om Prakash Jakhotia, 3 – 6, 323, Basheerbagh, Hyderabad – 500 029 (Telangana) (PAN : ABSPJ3944P) vs. ACIT, CC – 26, New Delhi.
The appellant in this case, Shri Om Prakash Jakhotia, filed appeals against the orders passed by the Commissioner of Income-tax (Appeals)-29, New Delhi dated 09.06.2021 for the quantum of assessment passed under section 153A/143(3) for the AYs 2009-10 to 2011-12 and under section 143(3) for the Assessment Year 2012-13. Given the common issues and identical set of facts permeating through all the appeals, they were heard together and disposed of by this common order.
A search and seizure operation under section 132(1) of the Income Tax Act, 1961, was carried out on 20.01.2012 at the residential premises of the assessee at 3-6-323, Jakhotia House, Basheerbagh Hyderabad-500029, and at the business premises of M/s Jakhotia Plastics Private Limited and Jakhotia Polymers Private Limited. The assessee is a director in these two companies, which are engaged in manufacturing High Density Poly Propylene (HDPP) bags/PPE woven sacks bags supplied to cement and sugar companies. The assessee derives income from salary, rental income, and interest income from two partnership firms, M/s Jakhotia Filling Station and M/s Jakhotia Transport Company. During the course of the search, two diaries, A/OPJ/03 and A/OPJ/01, were found and seized, which pertained to FY 2011-12 up to the date of the search. These seized diaries contained various ledger accounts depicting numerous debit and credit entries of cash sales & purchases of raw material and bags, waste sales, loans, commission on sale expenses, sales expenses, advertisement expenses, factory wages, office salary, and other cash expenses, investment in property, and chit funds, etc. The assessee made a disclosure of income of Rs. 21.50 crores during the search, which was later retracted. The assessee filed a settlement application with the Income Tax Settlement Commission (ITSC) disclosing additional income, which was eventually quashed by the Delhi High Court, directing the Assessing Officer to complete the assessments afresh.
The main argument of the assessee is that the assessment made by the Assessing Officer under section 153A r.w.s. 143(3) ought to be quashed since no return of income under section 139(1)/ 153A was filed by the assessee and, therefore, the assessment could only be made under section 144 of the Act. The ld. AR argued that since no return of income was filed, no notice under section 143(2) was issued for examining the return. The ld. AR also highlighted that section 144 mandates a best judgment assessment if no return of income has been filed under section 139(1) or in response to a notice under section 142(1). The ld. AR contended that section 292B of the Act does not come to the aid of the Assessing Officer since the mistake, defect, or omission is not purely technical but substantive and affects the validity of the assessment made in the case of the assessee.
The Income Tax Appellate Tribunal, Delhi Bench, in its decision, quashed the assessment orders for the AYs 2009-10, 2011-12, and 2012-13, stating that the orders should have been passed under section 144 of the Act. The Tribunal emphasized that the income must be assessed in the hands of the correct person, i.e., the person who has earned it, following the judgment of the Hon’ble Supreme Court in the case of Ch. Atchaiah.
The Tribunal also addressed the issue of the seized diaries and concluded that the entries therein did not pertain to the individual assessee but to the group companies. As a result, the income assessed based on these diaries could not be attributed to Shri Om Prakash Jakhotia individually.
The Tribunal relied on various judicial precedents, including the judgments of the Hon’ble Supreme Court in the case of CIT v Segu Buchiah Setty, and the Hon’ble Calcutta High Court in Maya Debi Bansal v. CIT, among others, to substantiate its conclusions and decision.
Om Prakash Jakhotia vs ACIT: Income Tax Appellate Tribunal Decision
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