Kidney Failure a “Reasonable Cause” for Non-Compliance during Assessment Proceedings: ITAT directs Re-Adjudication

Kidney Failure - Reasonable Cause - Assessment Proceedings - ITAT - Re-Adjudication - Taxscan

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has while directing re -adjudication observed that kidney failure has a reasonable cause for non-compliance during assessment proceeding.

Assessee Sunil Kumar Garg, carrying the business of trading of menthol oil and when the assessment proceedings carried out the assessing officer found that the list of sundry creditors included an amount of Rs.2,17,85,150/- due in the name of M/s Suraj Trading Company, Gangyal, Jammu and Kashmir.

The Assessing Officer required the assessee to file a conformed copy of the account of this creditor along with Bank Statement which was not submitted. A notice under section 133(6) Income Tax Act 1961 was issued to the above creditor to verify the creditworthiness and genuineness of the transactions with the appellant.

 A notice was issued to the above creditor to verify the creditworthiness and genuineness of the transactions with the assessee.

Creditor submitted to the AO among other details a list of Sundry Debtors. In the list of Debtors, AO found mismatches and sought assessee to clarify the mismatches by issuing notice .While issuing repeated show cause notice assess did not reply to it. Hence the AO considered the difference amount of Rs.1 ,47,10,075/- as the amount representing remission or cessation of trading liability under section  41 (1) of the Income Tax Act 1961.Against the order assesee filed apoeal before ITAT.

V.K. Sabharwal Counsel for the assessee submitted that there were some genuine reasons because of which documents and replies could not be submitted to the AO also the assessee was suffering from failure of kidney.

Indu Bala Saini, Counsel for the revenue, supported the decision of the lower authorities. After considering the contentions of the both parties the division bench of the ITAT comprising Shamim Yahya, (Accountant Member) and Astha Chandra,(Judicial Member) allowed the appeal filed by the assessee and further observed that, “there was reasonable cause of ailment that prevented the assessee to supply the documents and replies to the AO. Thus the bench directed for re-adjudication of the above matter” .

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