The case of DCIT Central Circle-14 vs. Param Dairy Ltd (ITA 5026/DEL/2019) involves a detailed examination of tax disputes pertaining to the assessment year 2011-12. This case was filed on 31st May 2019, with the final order pronounced on 19th November 2019, by the Income Tax Appellate Tribunal (ITAT), Delhi.
Param Dairy Ltd., a leading manufacturer and exporter of dairy products, was subject to a search and seizure operation under Section 132 of the Income-tax Act on 28th February 2014. This operation targeted the Param and Rama Group, leading to significant legal scrutiny. Following the search, Param Dairy Ltd. was issued a notice under Section 153A of the Act, prompting the company to file a return of income.
In response, Param Dairy Ltd. asserted that the previously filed return should be considered as filed in response to the Section 153A notice. This initiated the assessment proceedings, resulting in several contentious additions by the Assessing Officer (AO).
The assessment order was framed under Section 143(3) read with Section 153A of the Act, including the following key additions:
The appeal was heard by a bench comprising Shri N.K. Billaiya, Accountant Member, and Ms. Suchitra Kamble, Judicial Member. Both the appellant and respondent presented their arguments, with the counsel for Param Dairy Ltd. emphasizing that the additions were not based on any incriminating material found during the search.
The counsel for Param Dairy Ltd. argued that the additions were not supported by any new material found during the search, thus making them illegitimate under the Act. They referenced the judgments of the Hon’ble High Court of Delhi in Kabul Chawla and the Hon’ble Supreme Court in Singhad Technical Educational Society to support their position.
The Tribunal examined the assessment orders and noted that the additions were indeed not based on any new material. The Tribunal reviewed past assessments and financial statements, highlighting that the purchases and expenses were part of the audited financial statements submitted prior to the search.
The Tribunal quashed the assessment orders for the assessment years 2008-09 and 2009-10, concluding that the additions were not based on any new evidence or incriminating material found during the search. For the subsequent assessment years 2010-11 to 2012-13, it was determined that the period for issuing notice under Section 143(2) had expired before the date of the search, thus rendering those assessments as final and not open to scrutiny without new material evidence.
The Tribunal, therefore, quashed the assessments made under Section 143(3) read with Section 153A of the Act for being bad in law and unsupported by incriminating material. This judgment underscores the importance of having substantive evidence directly resulting from search operations to justify additions in such assessments.
The decision sets a precedent in ensuring that assessments based on search operations are grounded in solid, incriminating evidence, thereby protecting taxpayers from arbitrary additions.
DCIT Central Circle-14 vs. Param Dairy Ltd: ITA 5026/DEL/2019 and the 2011-12 Assessment Year
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