“Adequate and Effective Opportunity of Being Heard must be Provided”: ITAT Remands the Case to Assessing Officer [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) passed an order remanding the case of the assessee to the Assessing Officer (AO) with directions to pass an order after providing effective and adequate opportunity of being heard.

The assessee, Swastik Enterprises, is a partnership firm engaged in the business of trading of Iron and Steel scrap from its business places at New Delhi and Gurgaon. The assessee makes purchases majorly from the automobile sector which are then  sold in bulk and retail to scrap melting units and steel manufacturing companies.

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Pursuant to filing of return of income on 31.10.2017, the case of the assessee was selected for scrutiny assessment through Computer-Assisted Scrutiny Selection (CASS) to examine “Large value cash deposits during demonetization period as compared to pre demonetization period” and “Low income from TCS Receipts Scraps”. Accordingly, notices were issued and served upon the assessee under sections 142 (1)  and 143(2A) of the Income Tax Act, 1961.

Read more: “Reasonable and Effective Opportunities” should be given to Taxpayers during Income Tax Proceedings: ITAT

The AO, in his findings, made an addition of ₹1,39,23,500 in absence of any proper justification for making cash sales and keeping cash in hand out of cash withdrawals made from the banks. An addition of ₹10,37,362 on account of concealment of correct income was also made. Penalty proceedings u/s 271 AAC(1) of the Income Tax Act, 1961 were separately initiated. 

Aggrieved by the order of the AO, an appeal was preferred by the assessee before the Commissioner of Income Tax (Appeals) [CIT (A)]. The CIT (A) also affirmed the findings of the AO and confirmed the addition of income under the head unexplained cash deposit invoking the provisions of Section 68 of the Income Tax Act, 1961 and partly allowed the appeal of the assessee. Hence, the assessee has filed the present appeal.

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The bench comprising Shamim Yahya (Accountant Member) and Sudhir Pareek (Judicial Member) considering the requirement of proper verification and in the interest of justice, provided one more opportunity to the assessee/appellant to defend its case. The matter was restored to the file of the Assessing Officer along with direction to pass an order after affording reasonable opportunity of being heard.

Hence, the order of the CIT (A) was set aside and the appeal was allowed.       

Pranshu Goel, Chartered Accountant appeared for the assessee. Aditya Gupta, Advocate and Sahi Kumar Bansal, SR. DR appeared for the revenue.      

To Read the full text of the Order CLICK HERE

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