The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) directed a fresh hearing in a case involving unexplained cash deposits during the demonetization period citing assessing officer (AO) had issued notices to an inactive email ID.
Mr. Krishnan Gopikrishnan, the assessee, challenged the assessment order for the Assessment Year 2017-18. The AO had added Rs. 24,74,680 to his income, including Rs. 14,56,000 under Section 69A of the Income Tax Act, 1961, as unexplained cash deposits, and Rs. 10,56,000 from other unexplained sources, based on limited hearings.
The AO issued only two notices on March 12, 2018, and September 6, 2018, both sent to an inactive email address, leading to non-receipt by the assessee and an inability to respond or file relevant documents.
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Aggrieved by the AO’s final assessment order, the assessee approached the Commissioner of the Income Tax (Appeals). The Commissioner of the Income Tax (Appeals) [CIT(A)] upheld the assessment without addressing these procedural issues.
On appeal, the assessee’s counsel argued before the ITAT that the procedural lapse in serving notices violated the principles of natural justice. The assessee’s counsel relied on the Supreme Court’s ruling in “TIN Box Co. v. CIT,” advocating for a fair opportunity to present evidence and a de novo assessment.
The two-member bench comprising Aby T. Varkey ( Judicial Member ) and Manoj Kumar Aggarwal (Accountant Member) considered the arguments. The tribunal observed that the AO failed to ensure proper service of notices and that the CIT(A) passed the order without addressing these huge procedural flaws.
The tribunal explained the need to uphold natural justice and fair assessment procedures. The tribunal set aside the order of the CIT(A) and remanded the case to the AO for reassessment. The tribunal directed the AO to issue fresh notice, provide sufficient hearing opportunities, and reassess the case in compliance with the Income Tax Act, 1961. The tribunal directed the assessee to submit relevant documents during the reassessment process and the appeal was allowed for statistical purposes.
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