Case Law Details
ACIT Vs Kamal Kapoor (ITAT Delhi)
In a crucial judgment passed by Income Tax Appellate Tribunal (ITAT), Delhi, the approval of a reassessment order by Joint Commissioner of Income Tax (JCIT) was invalidated as it was made without recording the requisite reasons. ITAT order, brings to light the crucial need for due diligence, thorough examination and application of the mind by the assessing authorities before initiating any reassessment proceedings.
The case primarily revolves around the interpretation of section 151 of the Income Tax Act. The appeal made by the revenue against the order of CIT(A) was scrutinized, with particular attention drawn to the JCIT’s approval for reassessment. The approval in question was labeled as “mechanical” and deemed insufficient, lacking the necessary recorded satisfaction for the initiation of reassessment proceedings. It was argued that the approval was not based on the proper examination of the material relied upon by the Assessing Officer (AO), but was merely a formality.
Furthermore, the order highlights that the AO did not address the objections raised by the assessee regarding the issuance of notice under section 148 of the Act, which is a mandatory requirement as laid down by the Supreme Court in the case of GKN Driveshaft (India) Ltd vs ITO. This significant non-compliance was viewed as a substantial procedural flaw, leading to the conclusion that the reassessment proceedings were invalid.
The order passed by ITAT, Delhi reemphasizes the importance of adhering to legal protocols and maintaining due diligence in the proceedings of reassessment. Any oversight or failure to follow these protocols can result in the invalidation of the reassessment proceedings. The order serves as a reminder to revenue authorities to ensure that due process is followed in their procedures, and also assures taxpayers that reassessments will not be upheld without rigorous scrutiny and requisite due process.
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