No Merit in Assessee’s Objection of Lack of Hearing Opportunity u/s 144A: ITAT Upholds Income Tax Assessment on Best Judgment by AO [Read Order]

ITAT upheld best judgment assessment under section 144 and rejected assessee’s claim of being denied opportunity under section 144A as without merit. The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the best judgment assessment by the Assessing Officer (AO) under section 144 of the Income Tax Act, 1961 and dismissed the assessee’s contention that it was denied an opportunity of hearing under Section 144A as it was without merit.

The assessee-appellant, Genius Money Changer, a partnership firm engaged in currency exchange, had not filed its return of income for Assessment Year(AY) 2017–18 within the prescribed time under Section 139(1) of the Act. In response to notices issued under Section 142(1), the assessee filed a return which declared an income of ₹81,603.

The AO treated the return as invalid due to non compliance within the time period in the notice under Section 142(1) .The AO ultimately framed the assessment order under section 144 of the Act whereby the income returned as per ITR was ignored and addition of ₹ 52,34,050 was made under section 69A of the Act towards unexplained money.

On appeal, the Commissioner of Income Tax (Appeals) ( CIT(A) ) upheld the assessment.

Before the Tribunal, the assessee argued that the assessment was invalid as it was framed without a valid return and without issuing notice under section 143(2) of the Act. The assessee also contended that the directions under section 144A were obtained from the Joint Commissioner without giving the firm an opportunity of hearing.

 Know How to Prepare Estimation and Viability for Project Reports? Know more Click here

However, the Tribunal observed that no directions under Section 144A were actually issued by the Joint Commissioner, and hence, the objection of the assessee was without merit. It further held that in the absence of a valid return and with partial compliance of notices, the AO was well within his powers to complete the best judgment assessment under Section 144.

The bench comprising Pradip Kumar Kedia (Accountant Member) and Vimal Kumar (Judicial Member) affirmed the order by the AO and upheld the assessment proceedings.

The assessee was represented by Vipin Jain, while Ram Kishan Meena represented the revenue.