2019 (4) TMI 1165 - AT - Income Tax

Tribunal quashes assessment order for lack of jurisdiction, emphasizes Settlement Commission role

M/s Radico Khaitan Ltd Versus The D.C.I.T Central Circle - New Delhi

The Tribunal allowed the appeal, quashing the assessment order under section 153A due to lack of jurisdiction. It held that once the Income Tax Settlement ... Assessment u/s 153A - jurisdiction of AO to assess the assessee for the year under consideration on the basis of subsequent search -  issues  attained finality by the order of the Settlement Commission for assessment year covered in first search - DR contended that disclosure before the Settlement Commission was not true and correct and, therefore, the AO was well within his power to frame the assessment u/s 153A  - HELD THAT:- Revenue is free to approach the Income Tax Settlement Commission as held by the Hon'ble High Court of Delhi M/S. OMAXE LTD. AND ANOTHER VERSUS DEPUTY COMMISSIONER OF INCOME TAX AND ANOTHER [2014 (5) TMI 147 - DELHI HIGH COURT]. Respectfully following the judgments of the Hon'ble Delhi High Court [supra], we hold that the assessment order framed u/s 153A of the Act is without jurisdiction and deserves to be quashed. Issues involved:1. Jurisdiction of the Assessing Officer in framing the assessment order under section 153A of the Income-tax Act, 1961.2. Disallowance of expenditure of Rs. 1.78 crores on merits of the case.Issue-wise detailed analysis:1. Jurisdiction of the Assessing Officer in framing the assessment order under section 153A of the Income-tax Act, 1961:The assessee challenged the jurisdiction of the Assessing Officer (AO) in framing the assessment order under section 153A of the Income-tax Act, 1961, for the assessment year (AY) 2005-06. The primary contention was that the income for AY 2005-06 had already been settled by the Income Tax Settlement Commission (ITSC) vide order dated 13.03.2008, and thus, the AO did not have the jurisdiction to reassess the same income under section 153A following the subsequent search conducted on 15.02.2011.The AO, however, believed that the transaction involving Rs. 1,78,30,714/- with M/s Count Trade Links Pvt Ltd was not part of the earlier settlement and thus proceeded with the assessment under section 153A. The AO drew support from section 245-I of the Act, which states that the order of settlement is conclusive only on the matters stated therein and made the addition of Rs. 1,78,30,714/-.Upon appeal, the CIT(A) upheld the AO's decision, leading the assessee to further appeal before the Tribunal. The Tribunal considered the chronological events and the legal precedents, particularly the judgments of the Hon'ble Delhi High Court in the cases of Omaxe Ltd. 209 Taxmann 443 and Omaxe Ltd. 364 ITR 423. These judgments established that once the ITSC has passed a final order of settlement for an assessment year, the assessment becomes conclusive, and the AO does not have the jurisdiction to reopen any matter relating to that assessment year unless it involves fraud or misrepresentation.The Tribunal noted that the ITSC had exclusive jurisdiction over the assessee's case once the application for settlement was allowed to be proceeded with. The Tribunal concluded that the AO's assessment order dated 03.06.2013 under section 153A was without jurisdiction and deserved to be quashed. The Tribunal also highlighted that if the Revenue believed there was non-disclosure or misrepresentation, it should approach the ITSC under section 245D(6) for appropriate relief.2. Disallowance of expenditure of Rs. 1.78 crores on merits of the case:Given that the Tribunal quashed the assessment order under section 153A for lack of jurisdiction, the issue of disallowance of expenditure of Rs. 1.78 crores on merits became moot. The Tribunal did not delve into the merits of the disallowance as the primary jurisdictional issue was decided in favor of the assessee.Conclusion:The Tribunal allowed the appeal filed by the assessee, quashing the assessment order dated 03.06.2013 framed under section 153A of the Act due to lack of jurisdiction. The Tribunal emphasized that the Revenue should approach the ITSC if it believed there was any non-disclosure or misrepresentation in the settlement application. The order was pronounced in the open court on 11.04.2019.