The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) held that substance of assessee’s case is that the non-acquaintance with the new procedure resulted in denial of opportunity to the assessee, and since assessee is willing to furnish evidences to prove the huge expenditure not incurred on his own rather by use of credit card by friends and relatives, ITAT set aside Commissioner of Income Tax (Appeals) [CIT(A)] order and remitted matter to the files of Assessing Officer (AO).
The assessee Venugopal Reddy Yeravally is an individual and a salaried employee. During the scrutiny of the return of income for the assessment year 2017-18, AO found that the assessee made a payment of Rs. 13,68,503/- towards discharging of credit card payments.
According to the AO assessee had no other income than from salary and, therefore, the amount paid towards credit card payments were to be treated as undisclosed income and chargeable to tax.
Assessee challenged such an addition before the CIT(A) and by way of statement of facts, contended that his credit cards were used by friends and relations for their purchases and they credited such amounts to the account of the assessee which the assessee in turn paid towards credit card payments.
The CIT (A) observed that the assessee failed to avail the same and, therefore, it shall be construed that either the assessee had no case to defend or he must have lost interest in prosecuting the appeal. Therefore CIT (A) passed an ex-parte order in which it upheld the addition made by AO.
Further aggrieved the assessee filed an appeal before the Tribunal.
The Authorised Representative of the assessee (AR) submitted that the notices sent to the authorized representative were automatically shown in the spam folder, and since the professionals are not accustomed to this procedure, missed the attention of the authorized representative resulting in the ex-pate order.
The AR further submitted that is only a salaried employee and will not incur such huge expenditure to the tune of Rs. 13 lakhs on his own, but it was the usage of the card by his friends and relatives, who remitted back the amounts also needs consideration.
The Departmental Representative (DR) placed reliance on the impugned order and submitted that though reasonable opportunity was granted, the assessee failed to avail the same and hence, there is no point in giving such opportunity.
The Single Member Bench comprising of K. Narasimha Chary, Judicial Member observed that the sum and substance of assessee’s case is that the non-acquaintance with the new procedure resulted in denial of opportunity to the assessee.
The Tribunal further noted that since the assessee expressed willingness to produce all the relevant evidence to prove his contentions giving an opportunity to the assessee would meet the ends of justice.
Therefore the Bench set aside the impugned order and restored the issue to the file of the AO with a direction to the assessee to co-operate with the AO by producing all the relevant material he relies upon for disposal of the matters and in getting the matters disposed of on merits.
Hence, appeal of the assessee was allowed for statistical purposes.
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