Denial of video conferencing without Justification: ITAT sets aside NFAC Order [Read Order]

The Panaji Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the National Faceless Appeal Centre ( NFAC ) order after finding that the appellant’s request for a video conference hearing was denied without valid justification.

Ganga Suresh Rathod, appellant-assessee, filed her income tax return for AY 2015-16 on September 25, 2015, declaring a total income of ₹8,97,453, which was processed under section 143(1).

The AO reopened the case based on a document from Director General of Income Tax ( DGIT ) (Inv) Kolkata, which listed beneficiaries involved in tax evasion. A notice under section 148 was issued on March 30, 2021.

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It was found that the assessee had earned ₹8,29,400 as long-term capital gain (LTCG) from speculative transactions in the scrip ‘OJASASSET.’ She couldn’t explain the legitimacy of the LTCG, so the AO treated it as bogus and added it to her income. The assessment was made under section 147 read with section 144B.

The assessee’s appeal to the NFAC against the reopening and addition was unsuccessful, leading her to appeal before the tribunal.

Read More: Denial of Request for Hearing Via Video Conferencing: Delhi HC sets aside Assessment order under Income Tax Act

The two member bench comprising Pavan Kumar Gadale (Judicial Member) and G.D.Padmahshali ( Accountant Member ) reviewed the case and found that the assessee had asked for a video conference to explain her case better, but the NFAC rejected this request and made its decision based on the submissions.

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The appellate tribunal highlighted that the right to be heard is essential in natural justice. The assessee’s request for video conferencing was denied without valid reasons, which the ITAT viewed as a breach of natural justice. As a result, it decided to set aside the order and send the case back to the  NFAC.

Read More:NFAC Fails to Provide Video Conferencing Personal Hearing, Violating Principles of Natural Justice: Madras HC Remands Matter

The tribunal directed that a hearing be conducted via video conferencing, and the issue be decided from scratch, following the law, with a detailed order as per section 250(6) of the Act.

In short,the appeal filed  by the assessee was allowed for statistical purposes.

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