The Surat bench of the Income Tax Appellate Tribunal ( ITAT ) in the case of Jagdishbhai Karamshibhai Bodra, ordered for reassessment in the case of an alleged fraud case highlighting the importance of upholding the principles of Natural Justice.
In the Instant case, the assessee, Jagdishbhai Karamshibhai Bodra, filed four appeals against the order passed by the Commissioner of Income Tax (Appeals) CIT(A), National Faceless Appeal Centre ( NFAC ) under Section 250 of the Income Tax Act, for the assessment years (AYs) 2013-14 and 2014-15. Two appeals are against an order under Section 147 of the Act, and the other two are against the penalty orders under Section 271(1)(c) for the AYs as mentioned above.
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During the initial assessment, the assessee had an income of ₹63 lakhs, but the authorities discovered, after further scrutiny, that the assessee had been involved in a ₹128 Crore bank fraud. It was alleged that the assessee had forged documents to obtain loans, obtained money from banks through companies, etc. After the assessment, the assessing officer (AO) added 6.61 Crore as undisclosed income. Simultaneously, the assessee also had to go through penalty proceedings under Sections 271(1)(c) and 271(1)(b) for concealment of income and non-compliance.
Dissatisfied in this the assessee filed for appeal before the CIT(A), but such an appeal was delayed by 177 days. The assessee argued that it was due to the seizure of his office by the bank due to the fraud allegations, which left him unable to access his records or even receive notices. The CIT(A), however, upheld the order of the AO, cited the delay as the assessee’s negligence, and dismissed the appeal.
The assessee approached the ITAT against these orders, and the assessee’s authorised representative (AR) argued that the circumstances were beyond the assessee’s control. He also asserted that the assessee acted immediately after gaining access to the orders and notices. The AR also argued that procedural technicalities should be overlooked for the due course of justice.
The departmental representative ( DR ) supported CIT(A)’s order and maintained that the assessee had failed to notify the department about his address change. The DR argued that the assessee acted negligently.
ITAT, after considering both sides, noted that the assessee had gone through a challenging and complex circumstance due to the seizure of his office. The Tribunal pointed out procedural lapses on the part of the assessee but asserted the importance of upholding the principles of natural justice.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The two-member bench, consisting of Pawan Singh ( Judicial Member ) and Bijayananda Pruseth, noted that the CIT(A) dismissed the case solely based on the delay in appeal rather than addressing the merits. The ITAT condoned the delay, and the assessee was ordered to pay ₹15000 to the Gujarat High Court Legal Aid Authority.
The Tribunal set aside the addition of 6 Crores made by the AO and remanded the case to the AO for reassessment. The Tribunal further quashed the penalties imposed on the assessee under Section 271(1)(b) and 271(1)(c) based on the lack of solid grounds for such penalties; however, it ordered the initiation of such penalties if the assessee was found to be guilty of it after the reassessment.
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