Case Law Details
Tekchand Vs ITO (ITAT Delhi)
Introduction: In a recent judgement involving Tekchand and the Income Tax Officer (ITO) issued by the Income Tax Appellate Tribunal (ITAT) in Delhi, it was declared that the mere initiation of penalty proceedings cannot be challenged unless a formal order has been passed. This conclusion arose in relation to an appeal filed by the appellant (Tekchand) concerning the assessment year 2015-16, disputing an addition to taxable income due to a perceived error during the assessment process.
Analysis: The case revolved around the addition of Rs 9,13,100 to the appellant’s taxable income due to interest received on land compensation from the Noida Authority. The appellant argued that the addition wouldn’t have been made if the ITR-V filed against the notice issued under section 147 had been appropriately processed. The appellant contended that the additional income had already been declared in their ITR, and the applicable taxes had been adjusted, resulting in a refund.
The ITAT, however, dismissed the appeal on the grounds that both the appellant and the Revenue agreed on the taxability of the interest on income compensation. They further clarified that the appeal is considered ‘infructuous’, meaning futile or unfruitful, as no formal penalty order had been issued. This ruling underscores the necessity of a formal order for any challenge to penalty proceedings.
FULL TEXT OF THE ORDER OF ITAT DELHI
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