In a recent case, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) remanded the assessee’s case to the assessment officer (AO) for proper verification concerning the returns filed in the assessment year 2014-15. The appeal to the ITAT was made against the order of the Commissioner of Income Tax (Appeals)[CIT(A)], National Faceless Appeal Centre (NFAC).
The assessee, Anup Nayak, was engaged in contractual business and declared an income of ₹17 lakhs for the AY 2014-15. During scrutiny conducted on the assessee, the AO found that the appellant paid a sum of ₹12 Lakhs to financers. The AO instructed the assessee to produce the necessary documents for TDS on account of interest paid to financers.
The authorised representative appeared and filed the statement of transportation charges and a few self-made vouchers, which were insufficient to convince the AO. Therefore, the AO disallowed ₹12 Lakhs under Section 40(a)(ia) of the Income Tax Act.
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Aggrieved by the order of the AO, the assessee filed an appeal to the CIT(A), but none appeared on behalf of the assessee for the hearing, and the order was made ex-parte. This ex-parte order was again met with an appeal to the ITAT. The assessee delayed the appeal as the AR for the assessee suffered a severe illness between July 20123 and January 2024, impacting his professional responsibilities. The Tribunal acknowledged this valid cause and condoned the delay.
The tribunal noted that while the financial institutions involved are regular taxpayers, the assessee failed to produce evidence supporting the claim that the interest had been shown in their income returns, the responsibility of which lies on the assessee. The tribunal held that even before the CIT(A), the assessee could not correctly comply. The Tribunal noted that the second proviso to Section 40 (a)(a) permits relief if the payees include interest payments in their returns. Considering the need for fairness and verification, the tribunal determined that further assessment was required.
The ITAT, consisting of Sanjay Garg (Judicial Member) and Rakesh Mishra (Accountant Member), set aside the orders of CIT(A) and A. It directed the AO to conduct a fresh assessment and required the assessee to provide all relevant documents as required by the AO for such an evaluation. As a result, the appeal was allowed.
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