ITAT Remands Case in Reassessment Dispute after Assessee Seeks Fresh Opportunity, Imposes Cost for Non-Compliance [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) remanded a reassessment matter involving the assessee, Naimishbhai Kantibhai Patel, to the file of the Assessing Officer (AO) for de novo adjudication. The Tribunal found that the assessee had not complied with the procedural requirements before both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals). It imposed a cost of ₹5,000 for the non-compliance, payable to the Prime Minister’s Relief Fund.

The case relates to Assessment Year (AY) 2016–17, in which the appellant, Naimishbhai Kantibhai Patel, filed an appeal against the order dated October 21, 2024, passed by the National Faceless Appeal Centre (NFAC). The order confirmed the reassessment proceedings initiated under Section 147, read with Section 144, of the Income Tax Act, 1961.

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The authorised representative for the assessee raised multiple grounds in the appeal, challenging the legality of the reassessment order passed under Section 147, read with Section 144, the dismissal of his appeal on technical grounds due to a delay of 234 days, and the additions made under Section 69C for alleged bogus purchases despite submission of banking proofs and third-party evidences.

The ITAT observed that the assessee had failed to respond to multiple hearing notices. Moreover, the NFAC had dismissed the appeal primarily on the ground that the assessee was unable to show sufficient cause for the delay of 234 days in filing the appeal.

The appellant argued that the reassessment order was never physically served, and he was unaware of communication through email. It was submitted that the delay was unintentional and came from a lack of communication, and that the appellant was willing to furnish all necessary clarifications if given a fair opportunity.

The Tribunal, comprising Dr. B.R.R. Kumar (Vice President) and T.R. Senthil Kumar (Judicial Member), asserted that the assessee had failed to participate not only at the appellate stage but also during the assessment proceedings. However, considering the principles of natural justice, the Bench was of the view that a final decision on merits should not be denied merely on technical grounds if the assessee is willing to cooperate.

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The ITAT remanded the matter to the AO with a direction to conduct a fresh assessment. In doing so, it warned the assessee to comply fully and promptly with all notices and proceedings, and to avoid unnecessary adjournments. The Bench also imposed a cost of ₹5,000 on the assessee for his earlier non-cooperation, directing him to deposit the amount into the Prime Minister’s Relief Fund and submit proof of the same to the AO before further proceedings.

The Tribunal made it clear that this cost would be taken into account before the AO proceeds with the assessment and that fresh proceedings are to be conducted strictly by the law, with due opportunity for the assessee to present their case. As a result, the appeal was allowed for statistical purposes.

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