This article provides an in-depth analysis of the case ITA No. 4797/DEL/2019, where the appellant, Aash Trading Company Pvt. Ltd., from Delhi, filed an appeal against the Income Tax Officer (ITO), Ward-1(2), New Delhi, for the assessment year 2011-12. The appeal was filed on May 27, 2019, and the final tribunal order was pronounced on November 25, 2020.
Aash Trading Company Pvt. Ltd., represented by Shri Kapil Goel, Advocate, filed its return of income for the assessment year 2011-12, declaring NIL income on March 30, 2012. The case was reopened under Section 147 of the Income Tax Act, 1961, by issuing a notice under Section 148 on March 31, 2018, with the prior approval of the competent authority. The assessment was completed under Section 148 on December 17, 2018, with an addition of Rs. 15,00,000 under Section 68 of the Act. Aggrieved by the assessment order, the appellant appealed to the CIT(A), who dismissed the appeal. The appellant then appealed to the tribunal.
The appellant raised several grounds of appeal, summarized as follows:
During the hearing, the appellant’s counsel argued that the AO had not applied his mind when issuing the notice under Section 148, which mentioned an escapement of income of Rs. 75,00,000. However, the AO made an addition of only Rs. 15,00,000 under Section 68. The counsel contended that this discrepancy indicated a lack of proper consideration and non-application of mind by the AO.
The counsel further supported the argument by citing various cases where similar issues were adjudicated in favor of the assessee. He particularly highlighted the case of Smt. Meena Gupta (ITA No. 7372/Del/2012, AY 2011-12) decided on September 10, 2020, where the assessment was quashed due to similar discrepancies.
The tribunal, comprising Judicial Member Shri H.S. Sidhu and Accountant Member Shri Prashant Maharishi, reviewed the facts and arguments presented. The tribunal noted that the AO, in the reasons recorded, mentioned an escapement of Rs. 75,00,000 but made an addition of only Rs. 15,00,000, which contradicted the initial notice and indicated non-application of mind.
The tribunal referred to the decision in the case of Smt. Meena Gupta, where the assessment was quashed due to the AO’s failure to verify information and apply his mind properly. The tribunal found the circumstances in the present case to be similar and concluded that the assessment framed by the AO was bad in law and deserved to be quashed.
Consequently, the tribunal quashed the assessment and allowed the appeal. Since the assessment was quashed, the other grounds raised by the appellant became academic and were not adjudicated.
In conclusion, the case ITA No. 4797/DEL/2019 highlights the importance of proper application of mind by the Assessing Officer in the assessment process. The tribunal’s decision to quash the assessment due to discrepancies and non-application of mind ensures that the principles of natural justice are upheld. This case serves as a reminder for tax authorities to exercise due diligence and thorough verification in their assessment procedures.
This case sets a precedent for other taxpayers facing similar issues of non-application of mind by the AO. It underscores the necessity for tax authorities to follow due process and provide reasonable opportunities for taxpayers to defend their positions. Taxpayers can take solace in the fact that the tribunal is willing to intervene and ensure fair treatment in the adjudication of tax disputes.
Aash Trading Company vs. ITO Ward-1(2), New Delhi: Non-Application of Mind in Assessment
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