Harish Pandey Vs ACIT (ITAT Raipur)
In the case of Harish Pandey Vs Assistant Commissioner of Income Tax (ACIT), the Income Tax Appellate Tribunal (ITAT) Raipur addressed the assessment of unexplained income under Section 69A of the Income Tax Act, 1961. The case arose from the assessment year 2018-19, where the Assessing Officer (AO) reopened the assessment under Sections 147, 144, and 144B based on transactions in the assessee’s bank account. The AO deemed the receipts, including cash withdrawals and contract payments, as unexplained income and added them entirely to the taxable income. The assessee, however, did not respond to multiple notices during the assessment and appellate stages, prompting an ex-parte decision.
The assessee contended before the ITAT that the receipts reflected legitimate business activities, including transportation services for which tax was deducted at source (TDS). However, the AO and Commissioner of Income Tax (Appeals) [CIT(A)] failed to conduct independent inquiries with the parties involved or consider documentary evidence such as TDS records. Citing non-compliance by the assessee, the AO taxed the gross bank receipts and withdrawals totaling ₹4.16 crore. The CIT(A) upheld the AO’s findings without affording the assessee adequate opportunity to present evidence, raising questions about adherence to natural justice principles.
The ITAT noted that the AO did not verify the genuineness of transactions or ascertain whether the receipts were taxable in their entirety. Judicial precedents, such as CIT Vs Premkumar Arjundas Luthra (HUF) (2016) 69 taxmann.com 407 (Bombay), emphasize the need for a fair inquiry before making additions. The Tribunal observed procedural lapses, including failure to consider the assessee’s medical condition and reliance on assumptions. The assessee’s additional evidence, though limited, indicated potential business activity, warranting further examination.
ITAT concluded that the addition of entire bank receipts as taxable income without verification was unjustified. The Tribunal remanded the case to the AO, directing an opportunity for the assessee to furnish evidence supporting the legitimacy of transactions. The ruling underscores the importance of natural justice and due process in income tax assessments, particularly when significant amounts are involved.
This case highlights the need for both taxpayers and tax authorities to comply with procedural requirements. While taxpayers must respond to notices promptly, assessing officers are obligated to conduct thorough inquiries to avoid arbitrary taxation.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
