ITAT Revokes Order Since Assessee Does Not Incur Variation in Income Return

The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT), denied the assessment order as void ab initio since there was no deviation in income returned by the taxpayer Super Brands Ltd [UK].

On the furnished tax return by the taxpayer, the assessing officer has assumed the jurisdiction, and legal notices were provided and served on the taxpayer.

Under the provisions of sections, 144C and 92B of the income tax act in which the taxpayer has performed international transactions or the same would be the foreign company as a qualified taxpayer specified in Section 144C of the income tax act for his income or loss, the assessing officer would incur a variation where the same would be prejudicial to the interest of the taxpayer, the assessing officer would need to pass the sought order of assessment called as Draft assessment order.

In Assessment Years 2007-08, 2010-11 to 2015-16 the assessing officer would merely recharacterize the income which represents the royalty income via taxpayer and was getting taxed as business income via the assessing officer without any deviation in the income return via the taxpayer.

A Division Bench, Saktijit Dey, Judicial Member, and N K Billaiya, Accountant Member “In our understanding of the provisions of section 144C of the Income Tax Act mentioned hereinabove, we are of the considered view that the Assessing Officer wrongly assumed jurisdiction u/s 144C of the Income Tax Act when there is no variation in the income returned by the assessee.”

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Tribunal held “We hold that the Assessing Officer wrongly assumed jurisdiction u/s 144C of the Income Tax Act, and therefore, the final assessment order framed in Assessment Years 2007-08 and 2010-11 to 2015-16 are barred by limitation and accordingly, the impugned assessment orders are liable to be quashed as void ab initio”