Case Number: ITA 697/DEL/2021
Appellant: Jaguar Equity Ltd, New Delhi
Respondent: ACIT Central Circle-13, New Delhi
Assessment Year: 2016-17
Case Filed on: 2021-06-10
Order Type: Final Tribunal Order
Date of Order: 2023-08-25
Pronounced on: 2023-08-25
This article explores the case of Jaguar Equity Ltd, New Delhi, versus the ACIT Central Circle-13, New Delhi, which revolves around the challenge to the validity of assessments made under Section 153C of the Income Tax Act for the assessment year 2016-17. The appeal was filed following the order of the Commissioner of Income Tax (Appeals)-26, New Delhi, which upheld certain disallowances made by the Assessing Officer.
On 23.07.2015, a search and seizure operation under Section 132 of the Income Tax Act was conducted at the residential and office premises of Shri Deepak Aggarwal, Shri Mukesh Kumar, and others. This group was alleged to be involved in providing accommodation entries to beneficiaries. Various incriminating documents were found during the search, leading to satisfaction notes being drawn on 23.03.2018 for initiating proceedings under Section 153C against Jaguar Equity Ltd.
ITA No. 697/DEL/2021 pertains to the assessment year 2016-17. The appeals were directed against the order dated 07.02.2020 passed by the CIT(A)-26, New Delhi, which upheld certain disallowances made by the Assessing Officer.
The primary grounds for appeal were twofold:
The hearing for these appeals took place on 21.08.2023. Representatives from both sides presented their arguments, and the case records were carefully reviewed. The representatives agreed that the underlying facts in the issues were identical across multiple appeals.
The ITAT Delhi Bench, comprising Shri N.K. Billaiya (Accountant Member) and Shri Kul Bharat (Judicial Member), reviewed the submissions and the material on record. The Tribunal noted that the assessments made under Section 153C were based on satisfaction notes that lacked direct correlation with the additions made by the Assessing Officer.
The satisfaction notes, which triggered the assessment proceedings under Section 153C, were found to be identically worded across multiple cases. However, the notes did not establish any direct link between the impounded documents and the alleged business of providing accommodation entries by Jaguar Equity Ltd.
The Tribunal referred to the Hon’ble Supreme Court’s decision in the case of Sinhgad Technical Education Society (397 ITR 344), which held that assessments based on seized documents that do not establish a clear correlation with the assessment years in question are legally unsustainable. This principle was further supported by the CBDT Circular No. 1/2015, which clarifies the application of Section 153C post-amendment.
The Tribunal concluded that the assessments made under Section 153C were devoid of any incriminating material found during the search. Therefore, the assessment orders could not be sustained and deserved to be quashed. Consequently, the appeals were allowed, and the assessment orders were set aside.
The detailed analysis of the procedural background shows the sequence of events leading to the reassessments and subsequent appeals. The original assessments were followed by search operations, leading to reassessments under Sections 143(3) and 153A.
The ACIT’s assessment orders were challenged by Jaguar Equity Ltd., leading to relief granted by the CIT(A). The CIT(A) re-evaluated the additions, applying a more precise calculation method that aligned with judicial precedents and CBDT guidelines.
The Tribunal referred to the CBDT Circular No. 17/2019, which provided clear guidelines on the monetary limits for filing appeals. The Tribunal also emphasized that the dismissal of appeals due to low tax effect ensures efficient litigation management.
The final judgment emphasized that the appeals filed by the Revenue were not maintainable due to the low tax effect. The Tribunal’s approach was consistent with CBDT guidelines, ensuring that resources were allocated effectively for higher-value cases.
This case highlights the importance of judicial consistency and adherence to CBDT guidelines in managing tax litigation. The Tribunal’s ruling reinforces the principles of efficient resource allocation and fair assessment practices, ensuring that appeals are filed only when the tax effect meets the prescribed limits. This decision serves as a significant precedent for future cases involving the applicability of CBDT Circulars and the importance of managing litigation efficiently.
Jaguar Equity Ltd vs ACIT: Assessment Dispute for AY 2016-17
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