Natural Justice Prevails: ITAT Grants Assessee Fresh Hearing Opportunity Subject to Rs. 2,000 Cost Payment [Read Order]

The Panaji Bench of the Income Tax Appellate Tribunal (ITAT), upheld the principles of natural justice by providing the assessee with another opportunity to present their case before the Commissioner of Income Tax (Appeals) [CIT(A)], along with the condition that the assessee must pay a cost of Rs. 2,000 to the Income Tax Department within one month from the date of receiving the order and submit proof of payment. 

In this case, the assessee,  Naeemakhtar Faniband, had not filed Income Tax Returns (ITR) for the assessment year (AY) 2015-16. The Assessing Officer (AO) initiated proceedings under Section 147 of the Income Tax Act, 1961, after noticing discrepancies in the market value of a property purchased by the assessee compared to the sale consideration mentioned in the sale deed. The AO issued notices under Sections 148, 143(2), and 142(1) of the Income Tax Act, calling for explanations regarding the sources of investment and cash deposits in the bank account.

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As the assessee did not respond to the above-mentioned notices, the AO passed an order under Section 144, making additions under Sections 69A, 56(2)(vii)(b), and 69 of the Act, totaling Rs. 6,09,61,777. Aggrieved by the above order, the assessee appealed before the CIT(A).

The CIT(A) dismissed the assessee’s appeal due to the reason of non-compliance with notices and failure to adhere to Rule 46A(1) of the Income Tax Rules, 1962, which governs the submission of additional evidence. The CIT(A) upheld the AO's additions, and the assessee appealed before the ITAT for relief.

The assessee’s counsel contended that the CIT(A) had overlooked critical information and erroneously rejected additional evidence. The assessee’s counsel further contended that they had a strong case on merits and requested for an opportunity to present evidence.

The Departmental Representative supported the CIT(A)'s order. 

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The ITAT observed that while the assessee had failed to comply with procedural requirements, the principles of natural justice always prevailed and granted them one final chance to substantiate their case.

The Tribunal directed the assessee to cooperate fully with the CIT(A) and provide all necessary evidence. The ITAT set aside the CIT(A)'s order and remanded the matter for fresh adjudication, subject to the payment of Rs. 2,000 as a cost. 

The ITAT, comprising Pavan Kumar Gadale (Judicial Member) and GD Padmashali (Accountant Member), allowed the appeal of the assessee for statistical purposes.

To Read the full text of the Order CLICK HERE

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