Assessment Order passed in Violation of Natural Justice Principle: ITAT remands Matter to CIT(A) [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the appeal of an assessee and remanded the matter back to the Commissioner of Income Tax (Appeals) (CIT(A)) for re-hearing. The tribunal found that the CIT(A) had violated the principles of natural justice by dismissing the assessee’s appeal without giving her an opportunity to be heard.

The assessee, Sadhana Goyal, submitted her income tax return for the financial year 2021-22, stating an income of Rs.4,12,090/-. The Assessing Officer (AO) increased the assessee's income by Rs.1,01,05,696/-. The AO also levied an amount of Rs.9,32,448/- for jewelry discovered during the search. In addition, the AO added Rs.91,73,248/- under Section 68 of the Act on account of credits showing in the assessee's bank account.

The assessee filed an appeal with the Commissioner of Income Tax (Appeals) (CIT(A) against the AO's decision. The CIT(A) rejected the assessee's appeal without examining the merits of the case. The assessee has filed an appeal with the Income Tax Appellate Tribunal (ITAT) against the CIT(A) ruling.

The assessee argued that CIT(A) dismissed the assessee's appeal without allowing her to be heard, violating natural justice principles. The AO's additions were based on incorrect assumptions and interpretations of the law. The assessee provided evidence that the jewelry was gifted to her by her parents and the credits in her bank account were from explained sources.

The CIT(A) contended that it dismissed the assessee's appeal without violating natural justice principles. The assessee had ample opportunity to present her case and did not raise objections. The CIT(A) considered the assessee's evidence and rejected her arguments. The AO's additions were based on correct assumptions and interpretations of the law.

The ITAT observed that the assessee had provided evidence to show that the jewelry found during the search was gifted to her by her parents and that the credits appearing in her bank account were from explained sources. However, the ITAT did not go into the merits of the case as the matter had been remanded back to the CIT(A) for re-hearing.

The Two Member Bench comprising Dr. B. R. R. Kumar (Accountant Member), and Astha Chandra (Judicial Member) has found that the CIT(A) has erred in dismissing the appeal of the assessee without adjudicating the issue on merits. The matter has been remanded to the CIT(A) to adjudicate the issue on merits. As the result, the appeal of the assessee is allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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