Can ITAT Annul Assessment On Issue Taxpayer Did Not Challenge In Cross-Appeal Delhi High Court Issues Notice

The Delhi High Court has recently issued notice on appeals filed by the Income Tax Department challenging an ITAT order which had annulled certain assessment orders on the ground of non-compliance with the requirements of Section 153C of the Income Tax Act, 1961, despite the assessee not having filed a cross-appeal on that issue.

The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta was hearing Revenue's challenge in connection with nine assessment years from 2010-11 to 2018-19.

The assessments had arisen pursuant to proceedings under Section 153C read with Section 143(3) following a search conducted in the JBM Group of companies and associates on October 5, 2017.

Before the High Court, Revenue drew attention to paragraph 8 of the ITAT's order. It submitted that one of the grounds on which the Tribunal had set aside or annulled the assessment orders was that the Assessing Officer had not recorded satisfaction under Section 153C.

However, it was pointed out that the Commissioner of Income Tax (Appeals), while deciding ground No. 2, had rejected the assessee's contention on this issue.

The Revenue argued that in the absence of any cross-appeal by the assessee challenging that finding, the ITAT “ought not to have rather could not have” annulled the assessment orders on that ground.

ITAT had held that the assessments for assessment years 2010-11 to 2013-14 were non est in law, finding that the statutory requirements relating to the recording of satisfaction under Section 153C had not been specifically complied with.

It had further upheld the CIT(A)'s findings on merits for assessment years 2014-15 to 2017-18 and quashed the Section 143(3) assessment for assessment year 2018-19 before dismissing all nine Revenue appeals.

For Appellant: Advocates Gaurav Gupta, SSC with Shivendra Singh, Yojit Pareek, JSCs and Advocate Surya Jindal