ITR Not Filed Despite High Value Transaction in Savings Account Due to Illiteracy: ITAT Directs for Fresh Adjudication on Rs.5k Costs [Read Order]

The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) remanded for fresh adjudication with cost of Rs. 5000 in the case involving high value transactions in savings accounts for which Income Tax Return ( ITR ) was not filed due to the illiteracy of the assessee.

Marappa Gounder Balakrishnan (assessee), an individual engaged in job work for the power loom industry, faced scrutiny for high-value cash deposits and withdrawals in his savings bank account. The AO observed that the assessee had not filed a return of income for AY 2013-14 and had total credits of Rs. 1.03 crore in his bank account.

The AO issued a notice under Section 148 on 27.03.2021, followed by multiple notices under Section 142(1) on 27.07.2021, 13.12.2021, 25.01.2022, and 11.02.2022, and a show-cause notice under Section 144 on 02.03.2022. The assessee failed to respond to these notices.

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The AO treated the entire Rs. 1.03 crore as unexplained money under Section 69A read with Section 115BBE of the Act. Aggrieved by the AO’s order, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)].

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The CIT(A) dismissed the appeal for want of prosecution, as the assessee did not comply with the hearing notices issued by the CIT(A). Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT.

The assessee’s counsel argued that the non-compliance was neither wilful or deliberate but due to the assessee’s illiteracy and lack of awareness of income tax proceedings. The counsel requested one more opportunity for the assessee to present his case before the AO.

The Counsel for the Revenue opposed the plea, highlighting that both the AO and CIT(A) had provided ample opportunities, which the assessee failed to utilize. The Counsel submitted that imposing costs if the matter were to be remanded.

The two-member bench, comprising S.S. Viswanethra Ravi (Judicial Member) and Jagadish (Accountant Member) observed the assessee’s non-compliance to the notices issued by the AO and CIT(A).

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The Tribunal set aside the CIT(A)’s order and remanded the matter to the AO for fresh adjudication. The tribunal also imposed a cost to the assessee amounting to Rs. 5,000 to the State Legal Aid Authority, Hon’ble Madras High Court, within 30 days of receiving the order.

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The tribunal directed the AO to verify the payment and decide the issue afresh after considering the assessee’s written submissions and documentary evidence. The appeal of the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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