Delhi High Court Directs Department To Remove Demands, Penalty From ITBA Portal For Non-Compliance With ITAT Order

Delhi High Court Directs Department to Remove Demands, Penalty from ITBA Portal for Non-Compliance with ITAT Order

The Delhi High Court has ruled that the Department failed to adhere to the Income Tax Appellate Tribunal's (ITAT's) order by not issuing a fresh assessment order within the prescribed timeframe.

The bench of Justices Yashwant Varma and Purushaindra Kumar Kaurav has observed that the legislative intent behind Section 153(3) of the Income Tax Act and its limitations should not be construed to extend the timeframe for issuing a fresh assessment. Instead, the provision mandates strict compliance with the specified time limit for fulfilling the remand order in this case by the department.

The petitioner/assessee submitted its Income Tax Return (ITR) for Assessment Year 2008–09, declaring a total income of Rs. 19,92,354. Subsequently, the respondents scrutinized the petitioner's ITR under Section 143(1) of the Income Tax Act, 1961. Following scrutiny, an assessment order was issued under Section 143(3) by the respondents, determining the petitioner's total income to be Rs. 100,42,66,390 for the relevant assessment year. Additionally, the department seized two properties belonging to the petitioner.

The petitioner appealed to the CIT(A), contesting the department's additions. The CIT(A) partially granted the appeal in favor of the petitioner. Out of the total disallowance of Rs. 22,74,040, only a disallowance of Rs. 5,27,321 was upheld.

Nevertheless, the petitioner challenged the CIT(A)'s order before the ITAT. The ITAT remanded the matter back to the Assessing Officer (AO) for a fresh assessment. Additionally, as per the ITAT's order, the demand reflected on the Income Tax Business Application (ITBA) portal in terms of quantum was deleted.

Between July 30, 2020, and August 10, 2021, the petitioner submitted multiple representations to the respondents, urging rectification of the error regarding the demand shown on the ITBA portal and the matter of refund.

Upon receiving the information, the petitioner submitted an application to the registry of the ITAT to inquire about the service of the order issued on October 8, 2018. The registry informed the petitioner that the order pertaining to the petitioner's case had been duly dispatched to the CIT (Judicial) for further proceedings. Despite subsequent representations made by the petitioner to the respondents to correct the error regarding the demand displayed on the ITBA portal and to issue a refund, no action was taken.

The petitioner argued that the respondents' failure to implement the ITAT's order and issue the income tax refund is entirely unjustified and unreasonable. Despite the ITAT's order being conveyed to the relevant authority of the Income Tax Department within the specified timeframe, the respondents have neglected to issue a fresh assessment order.

The department argued that as the ITAT's order never reached the relevant authority of the department, they could not comply with the remand as directed by the ITAT order. The responsibility to provide the order to the concerned authority lies with the ITAT, which it failed to fulfill.

The court observed that the argument presented by the department, stating that the order was not received by the concerned authority through proper channels, lacked merit.

The court ordered the department to remove the demands of the quantum amounting to Rs. 34.70 crore and the penalty amounting to Rs. 33.98 crore, as reflected in the ITBA portal, within two weeks of the issuance of this judgment.

The court, upon granting the petition, ordered the release of the petitioner's properties within a two-week period.