ITAT quashes Income Tax Assessment against TTV Dhinakaran [Read Order]

ITAT - Income Tax Assessment - TVV Dhinakaran - Taxscan

The Income Tax Appellate Tribunal ( ITAT ), Chennai has quashed an Income Tax Department assessment order determining the undisclosed income of about ₹57.43 crores against Amma MakkalMunnetraKazhagam (AMMK) general secretary TTV Dhinakaran.

While quashing the order on the ground of limitation, the Tribunal held that the assessment was not completed within the time-frame permitted under the provisions of the Income Tax Act.

Earlier, the department re-opened an assessment against Mr. Dhinakaranfor the block period April 1, 1986, to March 31, 1996, and April 1, 1996, to July 15, 1996, consequent to searches made by the Enforcement Directorate, Chennai for alleged violation of the Foreign Exchange Regulation Act. In 1997, the department made an assessment of undisclosed income of ₹57.43 crores for the subject block period, which Mr. Dhinakaran had challenged before the Tribunal wherein the order was quashed and directed the AO to start fresh proceedings against Mr. Dhinakaran.

Later, Mr. Dhinakaran moved the Madras High Court against the assessment proceedings and the Court had passed an interim order and stayed the second round of block assessment proceedings till further orders. However, the plea was dismissed.

In 2019, Mr. Dhinakaran told the Income Tax Department that the assessment proceeding is time-barred by limitation. The Department rejected the grounds taken by him and determined the income to be ₹57.43 crore, which was the same as determined in the first round of proceedings.

Against the second assessment, Mr. Dhinakaran moved the ITAT citing that it was barred by limitation as per provisions of section 153(2A) of the Income Tax Act and not sustainable both on facts and in law.

The Tribunal on last April noted that the reasons were given by the Assessing Officer to consider the time limit prescribed under sub-section (3) of section 153 of the Act and found that the Assessing Officer has made a fundamental mistake in applying subsection (3) of section 153 because the present assessment is completed in pursuant to the order of Appellate Tribunal in setting aside the assessment order.

“We further noted that Tribunal has set aside the order passed by Assessing Officer for de novo consideration in accordance with material available on record and after affording reasonable opportunity of hearing to the assessee. We further noted that Tribunal has considered the fundamental issue raised by the assessee in light of principles of natural justice and has not gone into discuss various additions made by the Assessing Officer in the assessment order. From the above, it is clear that the assessment order is set aside in total for fresh consideration by the assessing officer. Therefore, when the order is set aside for de novo assessment, then it is as good as afresh assessment is made in accordance with the law, and the earlier assessment made by the Assessing Officer is either cancelled or non-est in the eyes of law.”

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