The Delhi High Court has held that the Commissioner of Income Tax (CIT (A)) has the power to Annul the Assessment Order under the Income Tax Act, 1961.
Mr. Shafiq Khan, the counsel appeared on behalf of Sateesh Kumar, the petitioner challenged the assessment order passed by the Assessing Officer under the Income Tax Act.
The record showed that the order under Section 148A(d) of the Income Tax Act, 1961 [Act] was passed by the Assessing Officer (AO) as far back as 28.07.2022, which was followed by an assessment order dated 31.05.2023. The assessment order has been passed under Section 147, read with Section 144 of the Income Tax Act.
The AO appeared to have formed the view that income amounting to Rs.30,85,500/-, which is otherwise chargeable to tax, has escaped assessment.
Petitioner contended that he had moved from Quetta in West Pakistan. While moving to India, he brought with him cash amounting to approximately Rs.27,50,000/-, and jewellery weighing 150 grams.
The cash is concerned, Rs. 27,50,000 was deposited by the petitioner in Bank of India, Khanpur Branch, Delhi. It was alleged that the cash and the value of the jewellery that forms the income have escaped assessment. The AO has valued the jewellery at Rs.3,85,500/-, which has been added to Rs. 27,00,000/-, i.e., cash brought by the petitioner from Pakistan. Consequently, the escaped income was pegged, as noticed above, at Rs. 30,85,500/-.
Mr Khan argued that under Section 251 of the Income Tax Act, the appellate authority will not be able to set aside the impugned assessment order dated 31.05.2023.
It was evident that the provision, inter alia, confers the power of annulment on the appellate authority. The expression “annul” is wider in scope than the power to set aside.
The bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia prime facie viewed that the appeal was not maintainable and held that “the Commissioner of Income Tax (Appeals) [“CIT(A)”] had wide powers, whereby, if he was convinced of the case set up by the assessee, he could annul the assessment order, which would include the power to set it aside. Annulment of the assessment order would lead to its cancellation. In other words, the assessment order would cease to exist, relegating parties to the position obtained before the order was passed.”
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