In the Income Tax Appellate Tribunal, Delhi Bench ‘E’, New Delhi, a significant case involving Om Prakash Jakhotia from Telangana and the Assistant Commissioner of Income Tax, Central Circle-26, New Delhi, was heard. The case, numbered ITA 970/DEL/2021, pertained to the assessment year 2011-12. The final tribunal order was pronounced on February 21, 2022.
The appellant, Shri Om Prakash Jakhotia, filed appeals against the orders passed by the Commissioner of Income Tax (Appeals)-29, New Delhi, dated June 9, 2021. These appeals arose from assessments made under sections 153A/143(3) for the assessment years 2009-10 to 2011-12 and under section 143(3) for the assessment year 2012-13.
The case involved multiple assessment years, and the grounds of appeal were based on various legal and factual issues. For the assessment year 2012-13, one of the primary grounds was that no return of income was filed under section 139 or in response to the notice issued under section 142(1). Consequently, it was argued that the assessment should have been made under section 144, rendering the assessment order under section 143(3) illegal and void.
Another significant ground of appeal for the assessment years 2009-10 and 2011-12 was that no returns of income were filed under section 139 or in response to the notice under section 153A. Therefore, the assessments should have been made under section 153A read with section 144, instead of section 153A read with section 143(3), which rendered the assessments invalid.
A search and seizure operation under section 132(1) of the Income Tax Act was carried out on January 20, 2012, at the residential premises of Shri Om Prakash Jakhotia and the business premises of Jakhotia Plastics Pvt. Ltd. and Jakhotia Polymers Pvt. Ltd. The seized diaries contained various ledger accounts depicting numerous debit and credit entries related to cash sales, purchases of raw materials, loans, commission on sales, factory wages, and other expenses.
During the search, Shri Om Prakash Jakhotia made a disclosure of income amounting to Rs. 21.50 crores in his statement recorded under section 132(4). This disclosure was later retracted by filing an affidavit on October 29, 2013. The retraction was explained on the grounds that the disclosure was not voluntary and was obtained under duress.
Shri Om Prakash Jakhotia and two related companies filed settlement applications under section 245C(1) of the Act before the Income Tax Settlement Commission (ITSC). The disclosure of additional income for the assessment years 2006-07 to 2013-14 was made, which was later increased during the course of the settlement proceedings. The ITSC passed an order under section 245D(4) settling the undisclosed income of the assessee at Rs. 7,56,53,170/-.
The department filed a writ petition against the order of the ITSC before the Delhi High Court, which quashed the settlement order and remitted the matter to the Assessing Officer. The Assessing Officer finalized the assessments for the assessment years 2009-10 to 2011-12 under sections 153A/143(3) and for the assessment year 2012-13 under section 143(3).
The ITAT, after considering the arguments and submissions made by both parties, concluded that the assessment orders passed under section 153A/143(3) and 143(3) were not legally tenable as they should have been made under section 144 of the Act. The Tribunal highlighted the importance of assessing the right person and ensuring that assessments are made following the correct legal provisions.
The Tribunal’s order quashed the assessments for the assessment years 2012-13, 2011-12, and 2009-10. However, it proceeded to adjudicate the other issues raised for the assessment year 2010-11, where the return of income was filed, and the assessment was correctly framed under section 153A read with section 143(3).
This case underscores the importance of adhering to procedural requirements in tax assessments and ensuring that the correct person is taxed in accordance with the law.
Om Prakash Jakhotia vs. ACIT: ITAT Delhi Bench ‘E’ Tribunal Order
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