The Income Tax Appellate Tribunal (ITAT) has quashed an order assessing Rs 759 crore as income in the hands of Tata Sons as due provisions were not followed as regards jurisdiction over the assessment and transfer of the case. Tata Sons had declared an income of Rs 22 crore in its I-T return for 2003-04. The determination of a higher income by the additional commissioner of income-tax led to Tata Sons filing additional grounds of appeal before the ITAT. Tata Sons submitted that the assessment order was bad in law and illegal. The additional CIT had failed to establish that he possessed legal and valid jurisdictions under section 120(4)(b) of the I-T Act to pass this order. Under the provisions of this section, the additional CIT can exercise the powers of an assessing office only if he is specifically directed by higher authorities. Further, section 127(1) provides that a proper order transferring the case needs to be passed by the commissioner, after recording the reasons for doing so.
The ITAT noted that in this case the I-T department had not been able to demonstrate that the additional CIT, who had passed the assessment order, had valid authority. Nor was a written order for transfer made available to the ITAT. Based on these facts and previous judicial decisions, including that of the ITAT in the case of Tata Sons for earlier years, the ITAT quashed the assessment order. The cross appeal filed by the I-T department was also dismissed. A Tata Sons spokesperson declined to comment on the matter. Tata Sons, the holding company of the $111-billion Tata Group, earns its income through dividends, royalty fees, among others. The bulk of its income comes from its investment in TCS, which has a market cap of nearly Rs 8 lakh crore.