Appeal of Sanjeev Kumar Gupta vs Pr. CIT, Ghaziabad for the Assessment Year 2017-18 at ITAT Delhi

Introduction

This article provides an exhaustive analysis of Income Tax Appellate Tribunal Delhi Bench’s decision on ITA No. 1089/DEL/2022. The dispute involves Appellant Sanjeev Kumar Gupta and the Respondent Principal Commissioner of Income Tax (Pr. CIT), Ghaziabad concerning the assessment year 2017-18. The case delves into substantial issues under the Income Tax Act, 1961, highlighting procedural and substantive legal questions. The primary focus of this detailed exploration is to decode the tribunal’s rationale behind allowing Sanjeev Kumar Gupta’s appeal.

Background

The appellant, Sanjeev Kumar Gupta, lodged an appeal against the order dated 24.03.2022 under Section 263 of the Income Tax Act 1961, passed by the Pr. CIT, Ghaziabad. The appeal challenged the order for being erroneous in nature and prejudicial to the interest of the assessee for the assessment year 2017-18. This case highlights the contentious assessment order dated 09.12.2019 under Section 143(3) by the Assistant Commissioner of Income Tax, Circle 2(1)(1), Ghaziabad.

Issues Raised

The appeal underscored several discrepancies and alleged errors in the assessment order. A pivotal point of contention revolved around the alleged failure to substantiate the source of payment of Rs. 18,00,000/- on 18-11-2016 as income tax of Rs. 40,00,000/- declared under the Income Declaration Scheme (IDS), 2016. This was deemed to be a significant omission, meriting adjustment under Section 68 read with 115BBE of the Income Tax Act 1961, potentially leading to a considerable revenue loss.

Analysis of Proceedings

At the heart of the proceedings was the assessment of the source of the aforementioned payment. The appellant contended that the payment was made from the account of M/s. Summer Cool Home Appliances Ltd, where he served as Director. This claim was substantiated with the submission of the company’s ledger account. However, the Pr. CIT held the assessment order to be lacking in inquiry and verification regarding the source of payment, thereby terming it as prejudicial to the revenue’s interest.

Final Judgment and Its Implications

The Income Tax Appellate Tribunal, after detailed scrutiny of the submissions and documents, ruled in favor of the appellant. The Tribunal found that necessary inquiries had been adequately conducted by the Assistant Commissioner regarding the source of payment during the assessment. It was determined that the Pr. CIT had erred in alleging a lack of inquiry and consequently setting aside the assessment order without justifiable grounds. Therefore, the appeal was allowed, setting aside the Pr. CIT’s order.

Conclusion

This case serves as a crucial precedent for the principles of justice and thorough examination in tax assessment cases. It underscores the necessity for tax authorities to base their decisions on solid evidence and reasonable inquiries rather than presumptions. The decision marks a significant victory for the taxpayer, reinforcing the importance of substantiated facts and legal diligence in tax litigation.

Appeal of Sanjeev Kumar Gupta vs Pr. CIT, Ghaziabad for the Assessment Year 2017-18 at ITAT Delhi