ITAT remands Assessment back to AO for Fresh Review due to Non-Receipt of Notices and Disputed Cash Payments [Read Order]

In the recent case, the Cuttack Bench of the Income Tax Appellate Tribunal (ITAT) partially allowed the assessee’s appeal, remanding the assessment for assessment year(AY) 2020-2021 back to the assessing officer(AO). The tribunal noted issues with non-receipt of notices and directed a fresh review of disputed cash payments for salary and wages, ensuring the assessee’s opportunity to present their case.

Sitaram Fruits Co., the appellant-assessee, filed an appeal against the order passed by the Commissioner of Income Tax (Appeals)[CIT(A)] dated 12-04-2024 for the AY 2020-2021.

The counsel for the assessee had submitted that the assessee was engaged in the business of wholesale and Retail Trading of fruits,acting on behalf of growers and earning a commission. Despite filing the return with the Section 44AB report, details were not provided during the assessment due to non-receipt of notices from the AO. The counsel requested that the matter be sent back to the AO for readjudication, assuring full cooperation from the assessee.

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Section 44AB of the Income Tax Act mandates that a taxpayer must get their accounts audited if their turnover exceeds a certain limit. The auditor provides a report, known as the Section 44AB report, which includes details on various aspects of the taxpayer's financials and compliance with tax laws. This report must be filed along with the income tax return. It ensures transparency and helps the tax authorities verify the accuracy of the taxpayer's financial statements.

The tribunal, on reviewing the matter, considered the rival submissions. During the hearing, the counsel for the assessee was asked to provide the email address for serving notices, which was confirmed as sridhara.paanigrahy@gmail.com, as mentioned in Form 35 filed before the CIT(A).

The main dispute involved the salary and wages paid in cash, which the AO had not accepted. The tribunal decided that this claim should have been reconsidered by the AO during the fresh readjudication of the assessment.

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The division bench, comprising George Mathan (Judicial Member) and Manish Agarwal (Accountant Member), remanded the issues to the AO for a fresh review, ensuring the assessee had sufficient opportunity to present his case. The tribunal further noted that if the assessee failed to cooperate, the AO could issue physical notices and take an unfavorable view if necessary.

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