ITAT Remits matter back to AO as Assessee was denied Sufficient Time to Respond [Read Order]

The ITAT Raipur bench of the Income Tax Appellate Tribunal ( ITAT ) remitted the income tax matter to the file of the assessing officer (AO) as the assessee was not given sufficient time to reply.

In this case, the assessee has appealed against the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year 2018-19.

Coming to the facts of the present case, the appellant, a resident partnership firm, was initially formed to trade in food grains but later shifted to trading in iron, steel, and cement. It filed its return of income declaring Rs. 1,61,706.

India’s New Tax Era Begins – Are You Ready for the Changes? - Click Here

The case was selected for scrutiny under the E-assessment Scheme 2019 to examine business purchases and expenses. Multiple notices were issued, but the assessee failed to respond to the final show cause notice. Consequently, the assessment order under Section 143(3) of the Income Tax Act, 1961, was passed, adding Rs. 1,23,97,06,013 as bogus purchases under Section 69C of the Income Tax Act, resulting in a total assessed income of Rs. 1,23,98,67,719.

The assessee, who was aggrieved by the decision of the AO, appealed before the CIT(A), but there were no favourable results.

It was submitted by the counsel on behalf of the assessee that reasonable opportunity of being heard was not given to the assessee to reply, particularly when a huge variation was proposed in the draft assessment order, and thus there was a huge violation of natural justice principles.

India’s New Tax Era Begins – Are You Ready for the Changes? - Click Here

The bench noted that in the present case, the Show Cause Notice was issued to the assessee on 19-04-21, directing time to respond to the SCN by 21-04-21, which cannot be considered as a reasonable time to reply.

The bench relied on the judgement of the High Court of Chhattisgarh in the case of MM Wonder Park Private Limited vs. Union of India & Others, in Writ Petition (T) No.172/2022, dated 17.06.2022, in which the court, referring to the facts of that case, held that the notice period of 7 days provided to the assessee company under Section 148A(b) of the Act was unreasonably short and violated.

India’s New Tax Era Begins – Are You Ready for the Changes? - Click Here

The ITAT, comprising Ravish Sood ( Judicial Member) and Arun Khodpia ( Accountant Member ), allowed the appeal filed by the assessee for statistical purposes and restored the matter to the file of AO for fresh adjudication.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates