HASMUKH DIPCHAND GARDI,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5(2), MUMBAI

Q: Which sections of the Income-tax Act were involved?

Section 153A, Section 143(3), Section 144C, Section 35AC

ITA 1307/MUM/2024Status: DisposedITAT Mumbai29 November 2024AY 2018-1930 pages

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue regarding the non-passing of a draft assessment order under Section 144C was a significant procedural flaw. The Tribunal noted that Section 144C mandates the AO to forward a draft assessment order to an 'eligible assessee' if any variation prejudicial to the assessee's interest is proposed. The assessee, being a non-resident, clearly falls within the definition of an eligible assessee. The AO's failure to follow this mandatory procedure renders the assessment order void and without jurisdiction. Therefore, the Tribunal decided to quash the assessment orders on this ground. Consequently, the Tribunal did not delve into the other grounds of appeal, as the primary issue of jurisdiction was decided in favour of the assessee. The Tribunal's reasoning is based on the clear mandate of Section 144C and the definition of an eligible assessee. The ratio decidendi is that an assessment order passed without adhering to the mandatory procedural requirements of Section 144C, when applicable, is a nullity. The operative direction is to quash the assessment orders. No issue was expressly left undecided.

What were the facts?

The assessee, Hasmukh Dipchand Gardi, is an individual who has been a non-resident of India since 1973, residing in the UK and later in Dubai. The appeals concern assessment years 2013-14 to 2020-21. The assessment orders were passed under Section 153A/143(3) of the Income-tax Act, 1961, following search proceedings. The assessee challenged these orders before the Commissioner of Income-tax (Appeals) [CIT(A)]. The assessee's appeals were filed against the orders of the CIT(A) which upheld certain additions made by the Assessing Officer (AO). The assessee had also filed writ petitions before the Bombay High Court, which allowed the filing of additional grounds of appeal before the CIT(A).

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the assessment order passed by the AO is void, bad in law, and without jurisdiction for not issuing a draft assessment order as required under Section 144C of the Act, given the assessee is a non-resident and an 'eligible assessee' (Question of law). 2. Whether the assessment order passed under Section 153A is liable to be quashed due to the absence of any incriminating material for the assessment year in question (Question of law). 3. Whether the CIT(A) erred in directing the AO to assess Long-Term Capital Gain at Rs. 1,01,48,320/- instead of Rs. 70,30,000/- offered by the assessee (Question of mixed law and fact). 4. Whether the CIT(A) erred in confirming the disallowance of Rs. 20,00,000/- claimed as deduction under Section 35AC (Question of mixed law and fact). 5. Whether the ad-hoc addition of Rs. 1,00,000/- made by the CIT(A) should be deleted (Question of mixed law and fact). 6. Whether the rental income of Rs. 1,30,360/- should be assessed under the head 'Income from House Property' as offered by the assessee, or 'Income from Other Sources' as directed by the CIT(A) (Question of mixed law and fact). 7. Whether Article 22 ('Other Income') of the India-UAE Double Taxation Avoidance Agreement (DTAA) should have been applied to determine the country of taxation for the income, and consequently, whether the income should not be taxed in India (Question of law). Assessee's contentions: - The AO failed to issue a draft assessment order under Section 144C, making the final assessment order void and without jurisdiction, as the assessee is an eligible assessee (non-resident). - The assessment under Section 153A is invalid due to the lack of incriminating material. - The Long-Term Capital Gain should be assessed at Rs. 70,30,000/-. - The deduction of Rs. 20,00,000/- under Section 35AC should be allowed. - The ad-hoc addition of Rs. 1,00,000/- should be deleted. - Rental income should be assessed under 'Income from House Property'. - Article 22 of the India-UAE DTAA should be applied, and the income should not be taxed in India. Revenue's contentions: - The judgment records no specific contentions for the revenue on these grounds.

Which sections of the Income-tax Act were involved?

Section 153A,Section 143(3),Section 144C,Section 35AC

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.