Ignoring Assessee’s Submissions and Additional Evidence is ‘Patently and Legally Wrong’: ITAT condemns NFAC’s Approach [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chandigarh bench has slammed the National Faceless Appeal Centre (NFAC) for not acknowledging the submissions and additional evidence produced by the assessee stating that the same is patently and legally wrong.

The assessee, Mr. Naveen Kumar had filed his return of income declaring taxable income of Rs. 2,34,920/-. The case was selected for limited scrutiny through CASS for the reason of large value cash deposits during the demonetization period. The assessee was required to explain, by the AO, the source of cash deposits in the Yes Bank account amounting to Rs. 10,06,500/- and further cash deposits against credit card amounting to Rs. 1,29,000/-. Since the assessee did not file any documentary evidence nor furnished any explanation before the AO, the AO proceeded to complete the assessment u/s 144 of the Act after making an addition of Rs. 11,35,500/- u/s 69A of the Act by treating the impugned cash deposits as unexplained money. The AO also invoked the provisions of section115BBE of the Act for the purpose of taxing such income.

Sudhanshu Srivastava , Judicial Member observed that the assessee, during the course of First Appellate proceedings, did furnish various evidences and submissions before the NFAC like copy of bank statement and the credit card statement as well as copy of employments letter with the telecom company etc.

“The assessee sought to file these documents as additional evidences before the Ld. NFAC. However, the Ld. NFAC simply ignored the submissions and the documents being sought to be filed as additional evidences and dismissed the assessee’s appeal without even commenting on the submissions or the documents being sought to be so admitted. It is my considered view that the Ld. NFAC was patently and legally wrong in adopting this kind of practice. Natural justice required that the assessee’s submissions and documents beconsidered on merits. I do agree with the argument of the Ld. Sr. DR that there is an apparent contradiction in the version of the assessee regarding the source of cash deposits before the AO and later before the Ld. NFAC but all the same, law required that the Ld. NFAC should have adjudicated the assessee’s case on merits,” the Tribunal said.

Sh. Amitaoz Singh Kamboj, CA appeared for the assessee.

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