The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT), quashed the assessment order as void ab initio as there was no variation in income returned by assessee, Super Brands Ltd [UK].
The Assessing Officer assumed jurisdiction over the assessee on filing of return by the assessee and accordingly, statutory notices were issued and served upon the assessee.
As per provisions of section 144C and 92B of the Income Tax Act where the assessee had entered into international transactions or it is a foreign company being an eligible assessee as defined in Section 144C of the Income Tax Act in respect of his income or loss, the Assessing Officer has made variation which is prejudicial to the interest of such assessee, the Assessing Officer is mandatorily required to pass proposed order of assessment, which is termed as ‘Draft Assessment order’.
In Assessment Years 2007-08, 2010-11 to 2015-16 the Assessing Officer has only recharacterized the income which was shown as royalty income by the assessee and was taxed as ‘business income’ by the Assessing Officer without there being any variation in income returned by the assessee.
A Division Bench consisting of Saktijit Dey, Judicial Member and N K Billaiya, Accountant Member observed that “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.”
“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” the Tribunal ruled.
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