The Income Tax Appellate Tribunal (ITAT) Delhi, in a significant ruling, addressed the case between the Deputy Commissioner of Income Tax (DCIT), Central Circle-1, Noida, and Business Bay Corporate Parks Pvt. Ltd., Noida for the assessment year 2009-10. This case, filed under ITA No. 475/Del/2019, brings to the forefront issues related to the assessment process under Section 153C of the Income Tax Act.
The DCIT appealed against the order of the Commissioner of Income Tax (Appeals)-IV, Kanpur, which had addressed several discrepancies and legal issues in the assessment for the years 2009-10 and 2010-11. The primary contention was regarding the applicability and execution of Section 153C notices.
The hearing, conducted via video conferencing, was presided over by Sh. Anil Chaturvedi, Accountant Member, and Sh. Anubhav Sharma, Judicial Member. The case discussions focused on the procedural aspects and the substance of the incriminating evidence which led to the issuance of the Section 153C notices.
Assessee’s representation was made by Shri Premjit Singh Kashyap, FCA, while the Revenue was represented by Shri J.K. Mishra, CIT(DR). The hearing took place on February 16, 2022, with the order being pronounced on February 24, 2022.
The tribunal reviewed the consolidated order of the CIT(A) for the assessment years 2009-10 and 2010-11. The key issue revolved around the validity of the Section 153C notice issued to the assessee. It was argued that the notice was not based on any specific incriminating material that was undisputedly pertaining to the assessee, which is a requisite for the application of Section 153C.
Furthermore, the appeals for both years were discussed together due to their similar factual matrix, focusing primarily on the technical grounds and the substantive legality of the proceedings initiated against the assessee.
The ITAT found that the notices issued under Section 153C by the AO lacked the necessary statutory backing as required under the Income Tax Act. Specifically, the tribunal noted that the satisfaction note, which forms the basis for issuing such notices, was deficient in several respects including the specificity of the incriminating material and its direct relation to the assessee.
The tribunal upheld the decision of the CIT(A), which had earlier quashed the assessment on the grounds that the notice issued was invalid and thus, the subsequent assessments based on such notices were unsustainable legally.
The tribunal’s decision to dismiss the Revenue’s appeal reaffirms the need for strict adherence to procedural requirements in tax assessments, especially concerning the issuance of notices under Section 153C. This case serves as a crucial reminder of the judiciary’s role in ensuring that tax assessments are conducted within the bounds of law, providing a clear precedent for similar cases.
This judgment has significant implications for the practice of issuing notices under Section 153C, emphasizing the importance of a detailed and clear satisfaction note that unequivocally links the incriminating material to the assessee. It also underscores the necessity for tax authorities to maintain rigorous standards of proof and procedure in tax assessments, enhancing the fairness and legality of the tax administration process.
DCIT vs Business Bay Corporate Parks: Dispute Over Assessment for AY 2009-10 – ITA 475/DEL/2019
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