In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) Mumbai Bench, remitted a case back to the Assessing Officer ( AO ) for fresh consideration after the assessee failed to respond to multiple notices and provide critical documentation.
Rahul Kumar Singh, appellant-assessee filed a return of income declaring a total income of Rs. 8.11 lakh for the assessment year 2018-19. The AO had initiated reassessment proceedings after receiving information from the “Insight Portal” and the Central Goods and Services Tax ( CGST ) Department, indicating that the appellant was a beneficiary of fake invoices provided by Himadri Foods Ltd.
The AO’s investigation revealed that Himadri Foods Ltd. had issued fake invoices for Rs. 11.88 lakh, and further payments were credited into Rahul Kumar Singh’s bank accounts. Despite the AO issuing several notices and opportunities to explain the transactions, the appellant failed to provide any substantial explanation or documentation. As a result, the AO concluded that the amounts were unexplained and made an addition of Rs. 37.83 lakh under Section 69 of the Income Tax Act, invoking the best judgment assessment under Section 144 of Income Tax Act,1961.
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In the appeal to the Commissioner of Income Tax (Appeals) CIT(A), the appellant argued that he had only provided manpower services to Himadri Foods Ltd. and not engaged in the purchase or sale of goods. He also claimed that TDS was deducted on the payments received. However, the CIT(A) upheld the AO’s addition, citing the appellant’s failure to submit the necessary documents such as the balance sheet, Profit & Loss account, invoices, and proof of statutory payments like ESIC and PF.
The case was subsequently brought before the ITAT, where the appellant submitted a paper book containing audited financial statements, invoices, GST certificates, and other relevant documents. The appellant’s legal counsel argued that the reassessment proceedings were invalid due to procedural lapses in the AO’s actions.
Two Member Bench composed of M S Kavitha Rajagopal ( Judicial Member ) Omkareshwara Chidhara ( Accountant Member ) acknowledged that the AO had based the assessment on available information, it also noted that the appellant’s non-compliance in submitting necessary documents led to the disputed additions. Therefore, the Tribunal remitted the case back to the AO with specific instructions to consider the new evidence submitted before the ITAT and provide the appellant with an opportunity to explain his case.
The case is now remitted back to the AO for a fresh assessment in accordance with the law.
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