Non Compliance to Income Tax Notices Due to working in Saudi Arabia: ITAT Remands Rs.1.90 Cr Matter for Fresh Adjudication [Read Order]

The Lucknow Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case involving an addition of Rs. 1,90,90,465 back to the Assessing Officer (AO) for fresh adjudication, citing the assessee’s non-compliance to the Income Tax Notices due to he was working in Saudi Arabia.

Mohammad Faheem (assessee), an individual operating as Shan Timber Broker & Supplier, faced scrutiny for the Assessment Year (AY) 2014-15. The Income Tax Department noted cash deposits amounting to Rs. 1,90,90,465 in the assessee’s bank account. The assessee had not filed an Income Tax Return (ITR) for AY 2014-15.

The AO reopened the case under Section 147 of the Income Tax Act, 1961, by issuing a notice under Section 148. The assessee did not respond to the notice or subsequent statutory notices seeking details of the cash deposits.

Also Read: Income Tax Portal Woes: Is Infosys or FinMin to Blame?

Complete Ready to Use PDFs of 200+ Agreements Click here

The AO completed the assessment by treating the entire cash deposit of Rs. 1,90,90,465 as unexplained money under Section 69 of the Act. The AO also invoked Section 115BBE and initiated penalty proceedings under Sections 271F and 271(1)(c).

Aggrieved by the AO’s order, the assessee appealed to the National Faceless Appeal Centre (NFAC), Delhi. The NFAC dismissed the appeal due to the assessee’s non-compliance with hearing notices.

Aggrieved by the NFAC’s order, the assessee appealed to the ITAT. The assessee’s counsel argued that the non-compliance was not deliberate. The counsel submitted that the assessee was working as a driver in Saudi Arabia during the period of the Section 148 proceedings, making it impossible to respond to the AO’s notices.

The counsel also submitted that the assessee was unable to comply with the NFAC’s notices as he was attending to his ailing parents. The counsel submitted that there was reasonable cause for non-representation of the assessee before the income tax authorities.

The two-member bench  comprising Sudhanshu Srivastava (Judicial Member) and Nikhil Choudhary (Accountant Member) observed that the assessee’s non-compliance before the AO and NFAC was due to his absence from India and personal circumstances.

Also Read: ITAT Orders Fresh Appeal Hearing for Assessee, Cites Denial of Proper Opportunity by CIT(A) [Read Order]

Know the complete aspects of tax implications of succession, Click here

The tribunal observed that the assessee deserved another opportunity to present his case, especially to substantiate the withdrawals and explain the cash deposits.

The tribunal set aside the orders of the AO and NFAC and remanded the matter to the AO for fresh adjudication. The tribunal directed the AO to provide the assessee a fair opportunity to present his case and submit necessary evidence regarding the impugned transactions.

The tribunal also directed the assessee to fully comply with the AO’s directions in the set-aside proceedings, failing which the AO could pass an order based on available material, even ex-parte. The appeal of the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates