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Whether Doctrine of Estoppel Applicable to Income Tax Act?

In this article, we will discuss the above question and how the same has been viewed by the Judiciary.

This is much debated issue since long time and every time the Income Tax Department tries to take the stand that the claim of Assessee is not tenable as it may be contrary to the Assessee's own previous contentions / actions.

Estoppel in its ordinary sense means - "the principle which precludes a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination."

Many times, In Income Tax Proceedings and Litigation, the Assessee takes a different stand or an alternate contention than his previous take on the matter. Can he do so under the Income Tax proceedings? Delhi High Court, in its landmark judgment in the case of CIT V Bharath General Reinsurance Co. Ltd. [reported in (1971) 81 ITR 303] has held as under: -

It is true that the assessee itself had included that dividend income in its return for the year question but there is no estoppel in the Income-tax Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resiled from the position which it had wrongly taken while filing the return. Quit apart from it, it is incumbent on the income-tax department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. We are therefore of the view that the income from dividend was not assessable during the assessment year 1958-59, but it was assessable in the assessment year 1953-55. It cannot, therefore, be taxed in the assessment year 1958-59.

Therefore, it is never late for the Assessee to take an alternate contention at any point of time in the litigation even though same may be contrary to his previous take on the issue (provided relevant facts are available on record).

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