REENA MITTAL vs. DCIT, CENTRAL CIRCLE-31, NEW DELHI, ITA NO. 1238/Del/2024, ITAT Delhi
The Income Tax Appellate Tribunal (ITAT) Delhi has ruled in favor of the assessees, quashing their assessment orders for AY 2021-22. The tribunal determined that the assessments were incorrectly conducted under Section 143(3) instead of Section 153C, making them legally untenable.
Case Overview
The appeals were filed against the orders of the Commissioner of Income Tax (Appeals) [CIT(A)], Central Circle-31, New Delhi. The disputed assessments were based on documents seized during a search operation on a third party.
Key Findings by ITAT
- Incorrect Application of Section 143(3):
- The AO conducted the assessments under Section 143(3) instead of the appropriate Section 153C, which applies when materials are seized from a third-party search.
- The tribunal held that this procedural lapse made the assessments void ab initio.
- Reliance on Precedents:
- The ITAT referred to its decision in Arti Dhall vs. DCIT (ITA No. 1239/Del/2024), where a similar misapplication of assessment provisions led to the quashing of the order.
- Following the same reasoning, the tribunal ruled in favor of the assessees.
Key Takeaways
- Assessments based on third-party search materials must be conducted under Section 153C.
- Failure to follow proper legal provisions renders an assessment invalid.
- Taxpayers can contest improper tax proceedings based on procedural lapses.
Final Decision
- The assessment orders for AY 2021-22 were declared void ab initio.
- The appeals were allowed in full.
- No additional tax liabilities were upheld.
This ruling highlights the necessity of strict adherence to statutory procedures in tax assessments and provides clarity on the application of Section 153C in search-related cases.