Bombay high court quashes ITAT order on technical grounds, as the tribunal had gone beyond its scope
Mumbai, Oct 25, 2023
The Bombay high court has recently quashed an order passed by the Income-tax Appellate Tribunal (ITAT), which had upheld addition of ‘unaccounted income’ of Rs 90 lakh in the hands of Naresh Manakchand Jain, who was purported to be engaged in rigging of prices of a few select scrips and in money laundering by providing bogus entries – such as of tax exempt long term capital gains, to other parties.
The main reasons for quashing the order was that the ITAT’s order was passed ex-parte (without giving an opportunity to Jain of being heard). Further, the high court held that the powers of the ITAT are limited to passing an order which is confined to the issues in appeal. The Bombay high court has directed the ITAT to hear the matter afresh and uninfluenced by its earlier order, which now stands quashed.
In this case, as reported by TOI in its edition of September 12, the ITAT had referred to Jain as a kingpin and had gone beyond upholding the order of the lower I-T authorities. It had directed Jain’s jurisdictional Income-tax (I-T) official to provide details of 30,000 plus individuals and entities involved in the modus operandi to various regulatory authorities, such as the concerned jurisdictional I-T officials of these parties, the Securities and Exchange Board of India, the stock exchanges, the Reserve Bank of India, the Registrar of Companies, et all, for further investigation and action. These details were to be provided within the 90 days of the ITAT order.
Subsequent to the ITAT’s order, the Bombay high court had granted an interim stay. Now, in its final order, the high court stated that, “These directions could not and in any case should not have been passed because this was an appeal filed by the taxpayer and not an appeal that was filed by the revenue authorities.”
According to tax experts, this stand was taken by the Bombay high court, on technical grounds, as the ITAT order was passed based on an ex-parte hearing, without giving Jain a reasonable opportunity of hearing. He had not responded to the notice for hearing owing to the ill-health of his legal representative and the ITAT proceeded with passing an order. Second, the Bombay high court, relied on an earlier order, in the case of Indira Balakrishna had held that the powers of the ITAT are limited and must be confined to the issues that arise in the appeal before it.
[The Times of India]
