Introduction

The Income Tax Appellate Tribunal (Delhi Bench ‘B’, New Delhi) has released its verdict on the much-anticipated case number ITA No.790/Del./2022. This case involved Goel And Sons Associates, an appellant from Ghaziabad, Meerut, Uttar Pradesh, against the respondent, Ward 1(1)(3), also based in Uttar Pradesh. The assessment year in question was 2017-18. The case’s resolution, which favored the appellant, marking it as ‘Allowed’ for statistical purposes, brings forward several legal and procedural intricacies worthy of a detailed examination.

Background of the Case

The dispute centers around the order passed by the Principal Commissioner of Income Tax (Pr.CIT), Ghaziabad, dated 17.03.2022, concerning the assessment year 2017-18. Goel And Sons Associates had filed their income tax return declaring a total income of Rs.1,01,700. The return was subsequently selected for complete scrutiny under the Centralized Automated Scrutiny Selection (CASS) due to reasons including ‘real estate business with high closing stock and introduction of larger capital.’

The assessing officer (AO) completed the assessment under section 143(3) of the Income-tax Act, 1961, on the declared total income. However, the Pr.CIT, invoking provisions of section 263, identified that the assessment order was erroneous and prejudicial to the interests of revenue, primarily because the assessee did not deduct tax at source on payment of interest as mandated by section 194A of the Act.

Grounds of Appeal

Goel And Sons Associates raised several grounds of appeal, contending that the Pr.CIT, Ghaziabad, had violated principles of natural justice by not providing adequate opportunity to respond to the show-cause notice. Further, they argued that the order under section 263 was arbitrary, unjust, and illegal.

Final Judgment

During the proceedings, it was found that there was a lack of proper opportunity given to the assessee to make their case. The Tribunal, led by Shri Shamim Yahya, Accountant Member, and Shri Yogesh Kumar US, Judicial Member, observed that justice would be best served by remanding the issue back to the file of the ld. CIT (A), directing a fresh consideration after allowing the assessee an opportunity to be heard.

Implications of the Judgment

The outcome of this appeal has significant implications for the principles of natural justice in the context of income tax assessments. It underscores the importance of granting taxpayers adequate opportunities to present their case. Moreover, it highlights the need for clear and precise application of the legal provisions, ensuring that orders are not arbitrary or unjust.

Conclusion

The ITA No.790/Del./2022 case represents a pivotal moment in the interpretation of the Income-tax Act, particularly the application of section 263. By allowing the appeal for statistical purposes and remanding the issue back for fresh assessment, the Tribunal has set a precedent for how similar cases should be handled in the future, emphasizing fairness, adequate opportunity for defense, and strict adherence to legal provisions.

ITA No.790/Del./2022: Goel And Sons Associates vs. Ward 1(1)(3) – An Analysis of the Final Judgment