Karam Veer Vs ITO (ITAT Delhi)
In Karam Veer vs ITO, the ITAT Delhi remanded the matter back to the Assessing Officer after observing that the assessee’s contentions and additional evidence had not been properly examined by the lower authorities. The reassessment was initiated due to cash deposits of ₹19.88 lakh and other unexplained credits in the assessee’s bank account, coupled with the failure to file returns under section 139. The Assessing Officer treated these amounts as undisclosed income and disallowed deductions claimed under Chapter VI-A. Although the assessee later filed a return under the presumptive taxation scheme and contended that section 44AD, rather than section 44AE, was applicable, supporting evidence was not adequately considered. The Tribunal held that, in the interest of natural justice, the assessee should be allowed to furnish evidence and establish eligibility under section 44AD. Accordingly, the additions were set aside and the case was restored for a de novo assessment.
Core Issue Whether additions made in reassessment proceedings could be sustained when the assessee’s evidence and claim for presumptive taxation were not examined on merits, and whether the assessee could be permitted to claim benefit of section 44AD despite originally filing a return under section 44AE.
