The Delhi High Court held that AO can’t object to ITAT’s decision allowing assessee to set up fresh claim.
The court observed that while ordinarily an assessee may be bound by the Return of Income as furnished, in case the Tribunal were to admit a question and proceed to accord relief, the same cannot be denied or be made subject to a Return of Income being revised. The insistence of the respondents on a revision of the return being a precondition clearly fails to take into consideration the plenary powers which stand conferred upon the Tribunal by virtue of Section 254 of the Act.
It was further observed that the challenge to the Circular of the CBDT does not really merit further consideration. All that need be observed is that once the Tribunal had called upon the AO to examine the issue afresh, the said direction could not have been disregarded by reference to a Circular issue by the CBDT.
The bench allowed the writ petitions and quashed the final assessment orders insofar as they negate consideration of the additional grounds which had been urged by the writ petitioners.
The court directed that the AO shall consequently consider the same and pass fresh orders in accordance with law.
“In light of the above, the court quashed the consequential demand and penalty notices.
Facts
The writ petitions Challenge the order passed by the Assessing Officer, and who while framing a draft assessment order has chosen to rely upon CBDT Circular No. 549 dated 31 October 1989, to hold that the petitioner cannot be accorded relief which would result in the assessed income falling below that which was disclosed in the Return of Income. It has, in the aforesaid context, also sought to draw sustenance for the aforesaid view by relying upon the judgment of the Supreme Court in Commissioner of Income Tax vs. Sun Engineering Works.
Counsel for the Petitioner submitted that since the additional grounds had come to be accepted by the Tribunal and peremptory directions framed for the issue being reexamined, the AO was clearly unjustified in taking the view that those aspects could not be considered.
Counsel for the petitioner further submitted that while ordinarily an assessee may be bound by a return as submitted and stand restrained from advocating any deviations therefrom, except by way of filing of a revised return, that restriction would have no application when an assessment is liable to be undertaken pursuant to a direction framed by a Court or a Tribunal.
Case Information
Case Name: Mitsubishi Corporation V/S Assistant Commissioner Of Income Tax, Circle International Tax (2)(2)(1) Delhi & Anr.
Judicial Level & Location : High Court Of Delhi
Case Number : W.P.(C) 12911/2021 & CM APPL. 40691/2021
Date of Ruling : 30/07/2024
Ruling in favor of: Petitioner
Judges: Justice Yashwant Varma And Justice Ravinder Dudeja
Counsel for Petitioner: Mr. Mayank Nagi & Mr. Tarun Singh, Advocates.
For Respondents : Mr. Sanjay Kumar & Ms. Easha Kadian, Advocates.
