In a recent ruling, the Bangalore bench of the Income Tax Appellate Tribunal (ITAT) remanded the case back to the assessing officer (AO) in an appeal around the addition of ₹1.46 Cr, made on alleged unexplained income for the Assessment Year (AY) 2019-20.
The appellant-assessee, Eapen George, was assessed under Section 147 of the Income Tax Act after failing to file a return of income for the 2019-20 AY. The assessment was based on information from the CBDT’s insight portal. The Information stated that the appellant had earned a taxable income of ₹14.6 Cr, including salary income, short-term capital gains and unexplained investments under Section 69 of the Act. The assessee countered these findings, asserting that his actual income was on ₹33,710 below the basic exemption limit.
The assessee stated that the income attributed to him was inflated due to duplicate entries and errors in the insight portal. He further contested that the notice for the AO was sent to an inactive email address and an incorrect residential address, preventing him from responding to it. The assessee also stated that the investments marked as unexplained were made from foreign income sources, as he was a Non-Resident Indian (NRI) during the period under consideration.
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The AO upheld the addition and was aggrieved by it. The assessee filed an objection before the Dispute Resolution Panel (DRP), where the assessee also filed additional evidence. However, the DRP did not admit the evidence, citing procedural lapses and time constraints. The assessee’s objections were dismissed altogether, and the AO passed the final assessment order stating the assessee’s total income as ₹14.6 Cr.
Aggrieved by the order, the assessee filed an appeal to the ITAT. The authorised representative (AR) of the assessee contested that the actual income of the assessee for the AY under consideration was ₹33,710, which was below the basic exemption limit, making it non-taxable. The AR further submitted that the assessee did not respond to the notice as they were sent to an inactive email and an incorrect residential address. The addition made under Section 69 was submitted to be inaccurate as the investments were sourced from foreign income as the assessee was an NRI at the time. The AR also asserted that the assessment process denied the assessee the opportunity to present his case, substantiate his claims and present evidence before the DRP.
On hearing all the submissions made by both sides, the ITAT observed that the assessee was denied an adequate opportunity to present his case due to procedural discrepancies and miscommunication. The DRP’s rejection of additional evidence by the assessee based on technical grounds deprived the assessee of a chance for a fair hearing. The ITAT asserted that “nobody should be condemned unheard” and restored the case to the AO for fresh assessment.
The ITAT, consisting of Soundararajan K (Judicial Member) and Prashant Maharishi (Vice President), directed the AO to provide the assessee with an opportunity to present evidence to substantiate its claims of non-taxable income. The ITAT also directed a fresh draft assessment order to be issued, allowing the assessee to file objections, if any, before the DRP. As a result, the appeal filed by the assessee was allowed.
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