The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) set aside the assessment order in the case of Harish Pandey, directing the assessing officer (AO) to conduct a fresh assessment.
The assessee, Harish Pandey, engaged in the transportation of construction material, had not filed his income tax for the assessment year (AY) 2018-19. Based on information from bank transactions and contract receipts, the Income Tax Department initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961. Notices were issued, but the assessee did not respond, leading to an ex-parte assessment under Section 144.
The Future of Tax and Finance: Upskill with Us
The AO made additions amounting to ₹4.16 crore. Since the assessee did not cooperate during the assessment, the AO treated the entire amount as taxable income and denied him the benefit of deductions or presumptive taxation under Section 44AD.
Aggrieved by the addition made by the AO, the assessee filed for an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre [NFAC], Delhi. The CIT(A) also sent multiple notices to the assessee, but the assessee remained non-compliant with the notices and the legal proceedings. As a result, the CIT(A) upheld the assessment order pronounced by the AO regarding the additions made to the assessee.
Aggrieved by this, the assessee appealed to the Income Tax Appellate Tribunal, asserting that
the that he was engaged in genuine business, and the entire amount could not be taxed as unexplained income. The counsel or the assessee further stated that he was unwell during the assessment period, preventing him from responding to notices and that his tax deduction at source (TDS) records showed contract payments from multiple companies, proving his business operations. The authorised representative(AR) asserted that the AO did not independently verify transactions before making the additions.
The department representative defended the assessment, stating that the assessee repeatedly failed to provide explanations despite multiple opportunities and remained non-compliant to the entire legal proceeding.
The Future of Tax and Finance: Upskill with Us
After reviewing the case and the submission made by both parties, the ITAT found that while the assessee had been non-cooperative to the proceedings, the AO also failed to conduct proper inquiries. The tribunal noted that the AO did not verify the nature of contract receipts despite TDS deductions were reflected in Form 26AS submitted by the assessee. The Tribunal stated that the entire amount in the assessee’s bank accounts was taxed without distinguishing between revenue and capital transactions. It was also observed that the CIT(A) failed to conduct any independent verification despite having powers to examine new evidence.
The ITAT bench consisting of Ravish Sood and Arun Khodpia stated that taxing the assessee, his entire bank deposits without verification was excessive. The matter was remanded to the AO for a fresh assessment, where the assessee will get another chance to present his case. The tribunal also directed the AO to conduct a proper inquiry into his business activities and provide him with a fair opportunity to explain his financial transactions.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
