JANARDHAN KAPUR,HARYANA V. ITO,WARD 29(1), DELHI

ITA 4754/DEL/2024

AI Insights

The case involves Janardhan Kapur, a non-resident individual, who appealed against the final assessment order passed by the Income Tax Officer (ITO), Ward-29(1), Delhi. The assessment order was challenged on the grounds that it was issued without a prior draft assessment order, which is a procedural requirement under section 144C(1) of the Income Tax Act, 1961 for eligible assessees such as non-resident individuals. The Tribunal admitted the additional ground raised by the assessee regarding the jurisdiction of the AO to pass the final assessment order and found that the AO had indeed failed to follow the prescribed procedure, leading to the quashing of the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314658 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2019-2020
• Other Referred Cases: PCIT vs. Sumitomo Corporation India Pvt. Ltd., 166 taxmann.com 55
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: SANJIV SAPRA
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: C : NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.4754/Del/2024 Assessment Year: 2019-20 Janardhan Kapur, C/o Sanjiv Sapra & Associates LLP, Chartered Accountants, C-763, New Friends Colony, New Delhi – 110 025. PAN: AOJPK8128G Vs ITO, Ward-29(1), Delhi. (Appellant) (Respondent) Assessee by : Shri Sanjiv Sapra, FCA Revenue by : Shri Om Parkash, Sr. DR Date of Hearing : 28.04.2025 Date of Pronouncement : 09.05.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the Assessee against the order dated 13.09.2024 of the Commissioner of Income-tax (Appeals), NFAC, Delhi (hereinafter referred to as the Ld. First Appellate Authority or ‘the Ld. FAA’, for short) in Appeal No.NFAC/2018-19/10092978 arising out of the appeal before it against the order dated 23.09.2021 passed u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Assessment Unit, Income-tax Department (hereinafter referred to as the Ld. AO). ITA No.4754/Del/2024 2 2. On hearing both the sides, we find that amongst other grounds on merits the assessee has raised ground No.2. This ground was not raised before the CIT(A). However, before us, a separate application is moved requesting to raise this as an additional ground. Considering that the ground no. 2 questions the assumption of jurisdiction to pass final assessment order and can be decided on the basis of admitted facts, the same is admitted. 3. The ground No.2 as raised is reproduced below:- “That the order passed by the Assessing Officer (AO) under section 143(3)/144B of the Income-tax Act, 1961 (Act) was without jurisdiction, null and void since no prior draft assessment order as required under section 144C(1) was passed and provided to the Appellant being a non- resident and “eligible assessee” as per section 144C(15)(b)(ii) of the Act.” 4. As from the assessment order itself it can be observed that the appellant is an individual who was assessed in the status of non-resident and, therefore, falls in the definition of ‘eligible assessee’ as per section 144C(1) r.w.s. 144(15)(b)(ii) of the Act and, thus, for the purpose of section 144C the AO was required to first issue a draft assessment order. However, we find that the AO issued a final assessment order u/s 143(3)/144B of the Act and raised the income-tax demand and also initiated penalty proceedings. 5. The ld. DR has defended it by submitting that in any case the assessee was given a show cause during the assessment of the proposed addition. However, that does not lead to defiance of express provision of law of issuing a draft assessment order in case of an eligible assessee. The Hon’ble Delhi High ITA No.4754/Del/2024 3 Court in the case of PCIT vs. Sumitomo Corporation India Pvt. Ltd., 166 taxmann.com 55, has decided a bunch of cases including the case of Aditya Talwar which was also a case of a non-resident individual and where also without issuing draft assessment order as per the mandate of section 144C of the Act, the AO had proceeded to pass the final assessment order and the Hon’ble High Court had held the final assessment order to be a nullity. 6. In the light of the aforesaid discussion, we sustain the ground No.2 and the appeal of the assessee is allowed. The impugned assessment is quashed. Order pronounced in the open court on 09.05.2025. Sd/- Sd/- (S. RIFAUR RAHMAN) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 09th May, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "