S. 143 Assessment Void Ab Initio: ITAT Rules AO Misapplied Jurisdiction Despite Satisfaction Note u/s 153C [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed the assessment framed under Section 143 of the Income Tax Act, ruling it as void due to misapplied jurisdiction by the Assessing Officer (AO).

Reena Mittal, (assessee) in the case where the AO made an addition of Rs. 2,03,03,850. Aggrieved by the AO’s order, the assessee filed an appeal before the CIT(A). The assessee challenged the validity of the assessment order for Assessment Year 2021–22 passed under Section 143(3) of the Income Tax Act.

The Commissioner of Income Tax (appeals) [CIT(A)] upheld the order of the AO. The CIT(A) dismissed the appeal of the assessee by solely relying on the basis of assessment order of the AO.

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Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The counsel for the assessee contended that the CIT(A) passed order without giving opportunity of being heard which was violation of principles of natural justice.

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The assessee contended that it was based on incriminating material found during a search conducted on a third party, Hans Group. The assessee submitted that since the AO had already recorded satisfaction under Section 153C, the assessment ought to have been framed under Section 153C and not under regular assessment provisions.

The assessee raised an additional legal ground challenging the validity of the assessment, which was admitted by the Tribunal, relying on the Supreme Court’s decisions in NTPC v. CIT and Jute Corporation of India Ltd. v. CIT.

The counsel for the assessee submitted that in the case of a co-owner, Arti Dhall, arising from the same set of facts and assessment year, the Tribunal had already quashed the assessment in Arti Dhall v. DCIT.

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The assessee submitted that the case was quashed on the ground that the assessment under Section 143(3) was invalid when satisfaction under Section 153C had been recorded and the documents were handed over in a subsequent year.

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The two-member bench comprising Shamim Yahya (Accountant Member) and Vimal Kumar (Judicial Member) observed that the case of a Co-owner Arti Dhall was same in facts and similar in grounds which was decided in the favour of the assessee.

The tribunal following the decision of Arti Dhall v. DCIT held that the AO had not issued any notice under Section 153C therefore the assessment completed under Section 143(3) was without jurisdiction and liable to be quashed.

The appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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