ITAT Delhi Quashes Rs 1.2 Crore Addition Due to Delayed Tax Notice and Lack of Jurisdiction

The Income Tax Appellate Tribunal (ITAT), Delhi, has given major relief to the taxpayer by quashing an assessment order worth Rs 1.2 crore related to alleged unexplained income.

During a search operation conducted in December 2018, cash amounting to Rs 1.2 crore was found in the assessee’s locker. The Assessing Officer treated this amount as unexplained income under Section 69A of the Income Tax Act and made an addition to the assessee’s income.

The assessee said that the cash was earned from commission and from his regular business. He also said that the transactions were not recorded in the books. The Commissioner of Income Tax (Appeals) rejected the assessee’s appeal, saying that it was time-barred.

Therefore, the assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT), where it raised various grounds, including a delay in issuing notice under Section 143(2) and a lack of jurisdiction by the tax officer.

The Tribunal noted that the appeal filed by the assessee before the CIT(A) was wrongly dismissed as time-barred, as the date on which the assessee had filed the appeal fell during the period of COVID-19, and the Supreme Court had issued its extension order condoning the delay that occurred during that period.

Additionally, the Tribunal observed that the notice under Section 143(2) was issued after the prescribed time limit and also by an assessing officer who did not have jurisdiction over the assessee.

Based on these findings, the Tribunal held that the assessment order was invalid and quashed it.