Case Number: ITA 968/DEL/2021
Appellant: Om Prakash Jakhotia, Telangana
Respondent: ACIT, CC-26, New Delhi
Assessment Year: 2009-10
Case Filed on: 2021-08-12
Order Type: Final Tribunal Order
Date of Order: 2022-02-21
Pronounced on: 2022-02-21
The case involves an appeal filed by Om Prakash Jakhotia against the orders passed by the Commissioner of Income-tax (Appeals)-29, New Delhi, dated 09.06.2021. The quantum of assessment was passed under section 153A/143(3) for the assessment years 2009-10 to 2011-12 and under section 143(3) for the assessment year 2012-13.
The tribunal addressed the primary contention regarding the validity of the assessment orders passed under section 153A read with section 143(3). It was noted that no return of income was filed by the appellant for the assessment years in question. As per the provisions of section 144, in the absence of a return of income, the Assessing Officer is mandated to make a best judgment assessment. The tribunal emphasized that the assessment order under section 143(3) in such scenarios is not legally tenable and should have been made under section 144.
The tribunal relied on various judicial precedents, including the Hon’ble Supreme Court’s decision in CIT v. Segu Buchiah Setty, which mandated that in the absence of a return of income, the assessment must be completed under section 144. The tribunal also referred to several high court and tribunal decisions supporting this legal position.
Consequently, the tribunal held that the assessment orders for the assessment years 2009-10 and 2011-12, passed under section 153A read with section 143(3), suffered from a jurisdictional defect and were quashed.
Another significant issue was the attribution of income. The appellant argued that the seized documents and the transactions recorded therein did not belong to him individually but pertained to the various group companies he was associated with. The tribunal examined the seized diaries and noted that the transactions recorded were related to the business activities of the group companies, including Jakhotia Plastics Pvt. Ltd., Jakhotia Polymers Pvt. Ltd., and others.
The tribunal observed that the appellant did not have any business activities in his individual capacity, and the income recorded in the seized diaries could not be attributed to him. The tribunal emphasized that income must be assessed in the hands of the correct person, as per the legal principle established in the Hon’ble Supreme Court’s decision in ITO v. Ch. Atchaiah.
Based on the evidence and the legal precedents, the tribunal directed that the income assessed in the hands of the appellant be deleted, as it rightly belonged to the group companies.
The tribunal also addressed other grounds of appeal, including the retraction of the disclosure made during the search, the additions made by the Assessing Officer, and the validity of penalty proceedings. The tribunal found merit in the appellant’s contentions and provided appropriate relief.
In conclusion, the tribunal quashed the assessment orders passed under section 153A read with section 143(3) for the assessment years 2009-10 and 2011-12 due to the jurisdictional defect arising from the non-filing of returns. The tribunal also deleted the income assessed in the hands of the appellant, as it belonged to the group companies. The other grounds of appeal were also decided in favor of the appellant, providing comprehensive relief in this case.
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