Assessee’s Non-Compliance before AO & CIT(A): ITAT slaps ₹5,000 Costs and Remands ₹3.2 Cr Income Tax Addition, ₹1.07 Cr Penalty Issue [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a matter back to the Commissioner of Income Tax (Appeals) ( CIT(A) ) for fresh adjudication, due to the non-compliance by the assessee before, both the Assessing Officer (AO) or before the CIT(A).

The Tribunal also imposed costs of ₹5,000 on the appellant and set aside an income tax addition of ₹3,20,48,140 and the penalty of ₹1,07,82,129 imposed under the Income Tax Act, 1961.

The appellant-assessee, Vijayaben Rajubhai Thakor had one-fifth ownership in a property sold for ₹16,15,40,700 and the documents uncovered during a search conducted at the premises of one Rohit Chanduji Thakor revealed the same.

The assessment for the Assessment Year (AY) 2009-2010 was reopened under Section 147 of the Act since the capital gain arising from the property sale was not disclosed, and the sale consideration was not offered to tax.

In the reassessment proceedings, no compliance was made by the assessee. The assessment was completed ex parte under Section 144 read with Section 147 of the Act. The Assessing Officer (AO) made an addition of ₹3,20,48,140, on account of short-term capital gain arising on the sale consideration of the property.

The CIT(A) also dismissed the appeals without adjudication on merits, stating that the assessee had not made any compliance during the appellate proceedings.

Before the Tribunal, the assessee’s counsel requested that the matter be restored to the CIT(A) for a fresh hearing on merits. The Tribunal, observing that the appeals were decided ex parte at both levels without examining the merits, allowed the request.

The Bench comprising Siddhartha Nautiyal (Judicial Member) and Narendra Prasad Sinha (Accountant Member) observed that no explanation was provided for the non-compliance at any stage. The Tribunal imposed costs of ₹5,000 which was to be paid to the Income Tax Department within 15 days of receipt of the order.

The Tribunal directed the CIT(A) to provide an opportunity of being heard to the assessee and also directed to fully co-operate and comply with notices in the remanded proceedings.

The Assessee was represented by Tushar Hemani along with Parimalsinh B. Parmar, while Ashok Kumar Suthar represented the Revenue.

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