In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has remanded a case back to the Assessing Officer (AO) for fresh adjudication, citing a lack of reasonable opportunity provided to the assessee during the assessment proceedings.
This case pertains to EFY Technologies, a Jaipur-based firm, which had challenged an addition of Rs. 1.5 crore made under Section 69A of the Income Tax Act, 1961, for the Assessment Year (AY) 2017-18.
The dispute arose when the Income Tax Officer (ITO), Jaipur, added Rs. 1.5 crore to the assessee’s income, citing unexplained cash deposits and credit entries in the firm’s Punjab National Bank (PNB) account.
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The AO completed the assessment under Section 144 of the Act after the assessee failed to respond to notices issued under Section 142(1). The assessee did not file its income tax return for the relevant year, leading to the addition and initiation of penalty proceedings under Sections 271AAC, 271F, and 272A(1)(d).
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On appeal, the Commissioner of Income Tax (Appeals) CIT(A) dismissed the case, noting that the assessee had neither filed a return nor paid advance tax, as required under Section 249(4)(b) of the Act. The CIT(A) also rejected the assessee’s request to admit additional evidence, which allegedly proved that the firm had no business activities during the financial year in question.
Before the ITAT, the assessee argued that it had no business operations during FY 2016-17 and, therefore, had no obligation to file a return or pay advance tax. The assessee also claimed that it was not provided a reasonable opportunity to present its case before the AO. The ITAT Bench, comprising Narinder Kumar(Judicial Member) and Rathod Kamlesh Jayantbhai(Accountant Member), observed that the assessee’s claim of no business activity warranted examination of the additional evidence.
While acknowledging the assessee’s casual approach in not responding to the AO’s notices, the ITAT remanded the matter to the AO for fresh adjudication, directing that the assessee be given a reasonable opportunity to present its case. The tribunal also imposed a cost of Rs. 6,000 on the assessee, to be deposited in the Prime Minister’s National Relief Fund.
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