In a recent ruling, the Karnataka High Court remanded the matter for fresh consideration due to income tax authorities’ failure to consider the submission of the petitioner on lender identity and creditworthiness.
Kiran Kumar, the petitioner received an assessment order from the Income Tax Department claiming he failed to prove the identity and creditworthiness of individuals from whom he had borrowed cash.
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Aggrieved, the petitioner challenged the assessment order, arguing that he complied with the notices by providing responses and documentation. Even though he provided all the documents, the respondent (Income Tax Department) rejected all his submissions without considering them.
The petitioner’s counsel requested the court to quash the assessment and remand the matter for fresh consideration.
On the other hand, the respondent’s counsel submitted that the petitioner failed to establish the identity and creditworthiness of his alleged lenders and acknowledged receiving responses from the petitioner after the notices were issued.
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Justice M.I. Arun heard the case and observed that the petitioner submitted a reply and relevant documents, but were disregarded without proper reasoning. The court noted that there was a lack of explanation for dismissing the petitioner’s evidence.
Therefore, the court set aside the assessment order and remanded the matter back to the tax authorities. The authorities were directed to consider the petitioner’s replies and documents thoroughly and issue a speaking order as per law.
The court also quashed the demand notice under Section 156 of the Income Tax Act for the 2015-16 assessment year. The petitioner was granted the option to submit any additional documents if necessary.
The writ petition was disposed of with directions.
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