The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has taken a stern stance against the lack of diligence by Rajeshbhai Mohanbhai Prajapati, an assessee whose negligence led to delayed income tax proceedings. The case pertains to unexplained cash credits totaling Rs. 107.8 crore (AY 2016-17) and Rs. 74.49 crore (AY 2017-18). The tribunal has imposed a cost of Rs. 10,000 and remanded the matter for fresh adjudication.
The matter revolved around transactions with entities M/s Orange Tradex Pvt. Ltd. and M/s Krrish Enterprise, identified as shell companies providing accommodation entries. These entities were flagged for non-genuine business activities, and their VAT registrations had been canceled by the Gujarat VAT Department. Consequently, the Assessing Officer (AO) treated the large sums credited to the assessee’s bank accounts as unexplained income under Section 68 of the Income Tax Act, 1961.
During the initial reassessment and appellate stages, the assessee failed to provide any substantial response or evidence despite multiple notices. This resulted in the completion of assessments under Section 144 of the Act on an ex-parte basis.
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The ITAT noted that the assessee’s failure to respond in a timely manner not only delayed the proceedings but also placed an undue burden on the judicial system. While the tribunal acknowledged the stress and technical difficulties cited by the assessee as reasons for the delays, it emphasized that taxpayers must remain diligent in complying with statutory requirements.
During the ITAT hearing, the assessee submitted additional evidence, including ledger accounts, confirmations, and statutory records to support the transactions. The assessee attributed the delay in providing this evidence to personal and professional challenges, including an inadvertent error in email communication during the appellate proceedings.
In the interest of justice, the ITAT condoned the delay and admitted the additional evidence. However, it was remarked that negligence of such magnitude cannot go unchecked. To ensure future compliance, the tribunal imposed a cost of Rs. 10,000 per appeal on the assessee, payable to the Income Tax Department.
The tribunal set aside the orders of the CIT(A) and directed the AO to conduct a fresh assessment, ensuring the assessee receives a fair opportunity to present its case. It warned the assessee to cooperate fully in future proceedings or face adverse consequences.
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The remand offers the assessee a chance to present its case afresh, albeit at the cost of a financial penalty and the burden of stricter scrutiny in the next round of proceedings.
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