Case Law Details
Royal Bombay Yacht Club Vs ITO (ITAT Mumbai)
Introduction: The case of Royal Bombay Yacht Club vs. ITO was brought before the Income Tax Appellate Tribunal (ITAT) Mumbai, addressing the issue of an appeal filed by the assessee against an order passed by the National Faceless Appeal Centre (NFAC), Delhi. The case involves the assessment for the assessment year 2017-18 and focuses on the applicability of the faceless assessment system, as well as various additions and disallowances made by the authorities.
Analysis: The appeal filed by the Royal Bombay Yacht Club challenges the assessment order passed by the NFAC, Delhi, for the assessment year 2017-18. The assessee raised multiple grounds of appeal, including challenges to the disallowance of royalty received from non-residents, disallowance of sundry creditors under section 41(1), decapitalization of certain amounts, and taxation based on the principles of mutuality.
One of the key arguments presented by the assessee was that the new faceless system caused unawareness, leading to non-compliance and inadequate representation in the assessment proceedings. The assessee argued that due to its unfamiliarity with the new system, it could not respond adequately, resulting in a lack of proper representation during the assessment.
The ITAT Mumbai noted that the assessee’s concerns regarding the new faceless system were valid. The tribunal ruled that the unawareness of the assessee towards the new faceless system cannot be a reason for making significant additions or disallowances. The ITAT emphasized the importance of proper representation and due process in assessment proceedings.
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