The Delhi High Court dismissed the Income Tax Department’s appeal against Boeing’s Indian subsidiary, with Justices V Kameswar Rao and Vinod Kumar rejecting reliance on ITBA portal glitches for invalid assessment orders.
NEW DELHI: The Delhi High Court dismissed an appeal from the Income Tax Department against Boeing’s Indian subsidiary, criticizing the department for attributing an assessment order to a technical glitch in its internal tax portal related to a non-existent company.
A bench comprising Justices V Kameswar Rao and Vinod Kumar ruled that the Revenue cannot invoke issues within the Income Tax Business Application (ITBA) portal to defend a legally invalid assessment order. The court emphasized that the operation of the department’s digital systems falls under the government’s responsibility, not that of taxpayers.
It stated,
“Regarding the issue of glitches in the ITBA portal, the Revenue ought to take this opportunity to improve the system so that such technical problems do not hinder/vitiate the assessment process.”
The case concerns the Assessment Year 2016–17. Boeing International Corporation India Pvt Ltd (BICIPL) submitted its income tax return on November 29, 2016, reporting an income of approximately ₹60.55 crore.
Subsequently, under a merger scheme sanctioned on February 27, 2018, BICIPL merged with Boeing India effective from April 1, 2017. The tax authorities were notified of this merger via a letter dated April 10, 2018. Nevertheless, the assessing officer issued a final assessment order on March 30, 2021, in the name of BICIPL, the entity that had already ceased to exist.
This order assessed the company’s income at about Rs 1.21 crore, adding roughly Rs 61 crore to the original declared income. Boeing challenged this assessment before the ITAT, which annulled the order on the grounds that it had been issued in the name of a non-existent entity.
Before the High Court, the Revenue argued that the error stemmed from limitations within the ITBA portal, the electronic system employed for managing tax processes. They claimed that since scrutiny proceedings had begun under the PAN of the predecessor company, the system automatically generated the name of the old entity for the final order. The department asserted that this was merely a procedural defect, which could be rectified under Section 292B of the Income Tax Act that protects tax proceedings from being invalidated due to technical errors.
The High Court rejected this argument, noting that the tax authorities had been advised of the merger long before the issuance of the final assessment order. Yet, the assessment referred solely to the predecessor company, even using its PAN.
The Court remarked that the order did not address the merger or indicate that the use of the predecessor company’s name resulted from any technical limitations in the ITBA portal.
The Court stated,
“An assessee cannot be held accountable for the glitches or the functioning or malfunctioning of the ITBA portal, which would be the sole responsibility of the Revenue,”
It reiterated that assessing a company that has already ceased to exist constitutes a jurisdictional defect, not merely a procedural irregularity, and cannot be rectified under Section 292B.
As a result, the court dismissed the Revenue’s appeal and upheld the ITAT’s ruling.
The Revenue was represented by Advocates Debesh Panda, Zehra Khan, Vikramaditya Singh, Nivedita, Delphina Shinglai, Harshpreet Singh, A. Shankar, and Ravicha Sharma. Boeing India was represented by Senior Advocate Sachit Jolly along with Advocates Sherry Goyal, Viyushti Rawat, Devansh Jain, Sohum Dua, and A. Shankar Bajpai.
Case Title: Principal Commissioner of Income Tax v. Boeing India Pvt Ltd.
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