Non-Compliance of Section 153C Income Tax: ITAT quashes Issuance of Scrutiny Notice [Read Order]
The tribunal referred to recent judicial precedents, including the Delhi High Court's decision in Pr. CIT & Anrs. vs. Ojjus Medicare P. Ltd., which clarified the interpretation of search assessment procedures
![Non-Compliance of Section 153C Income Tax: ITAT quashes Issuance of Scrutiny Notice [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/12/Scrutiny-Notice-1.jpeg "Non-Compliance of Section 153C Income Tax: ITAT quashes Issuance of Scrutiny Notice [Read Order]")
In a landmark decision, the Income Tax Appellate Tribunal ( ITAT ) Delhi Bench struck down an assessment order due to non-compliance with Section 153C of the Income Tax Act, highlighting critical procedural requirements in search and seizure cases. The case involved assessee Mukul Rani Thakur, a senior citizen, whose assessment for the Assessment Year 2021-22 was quashed because...
In a landmark decision, the Income Tax Appellate Tribunal ( ITAT ) Delhi Bench struck down an assessment order due to non-compliance with Section 153C of the Income Tax Act, highlighting critical procedural requirements in search and seizure cases.
The case involved assessee Mukul Rani Thakur, a senior citizen, whose assessment for the Assessment Year 2021-22 was quashed because of procedural irregularities in the tax assessment process.
The case originated from a search operation conducted on January 6, 2021, at the premises of Jainco Ltd., which is part of the HANS Group. During the search, digital evidence, including WhatsApp chats, allegedly revealed undisclosed income related to a property sale.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The Assessing Officer ( AO ) proceeded with a regular assessment under Section 143 (3) instead of following the mandatory procedures under Section 153C.
The ITAT identified several key legal issues in the assessment process. First, the tribunal found that the assessment for the year 2021-22 should have been carried out under Section 153C, not Section 143 (3). It also emphasized that the date of the search should be substituted with the date when the documents were handed over, which was June 28, 2022, falling within the previous year relevant to the Assessment Year 2022-23.
Furthermore, the AO failed to issue a notice under Section 153C, a mandatory requirement when assessing income based on findings from a search.
The tribunal referred to recent judicial precedents, including the Delhi High Court's decision in Pr. CIT & Anrs. vs. Ojjus Medicare P. Ltd., which clarified the interpretation of search assessment procedures. This case reinforced the importance of following the correct legal procedures in such cases.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The ITAT's decision has several significant implications for both tax assessees and tax authorities. It stresses the need for strict adherence to procedural requirements in search assessment cases, precise interpretation of jurisdictional provisions, and the importance of following specific legal procedures when dealing with search and seizure assessments. The order effectively quashed the entire assessment, finding it void ab initio due to non-compliance with legal provisions.
This decision of two member Bench comprising of Vimal Kumar Kedia ( Judicial Member ) and Pradip Kumar Kedia ( Accountant Member ) offers crucial guidance on the interpretation of Section 153C and procedural requirements in search assessment cases. It serves as a reminder of the need for meticulous compliance with tax laws and the potential consequences of procedural lapses.
The case also highlights the judiciary's commitment to ensuring procedural fairness and strict adherence to tax laws, providing an important check on administrative discretion in tax assessment proceedings.
To Read the full text of the Order CLICK HERE
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