Case Law Details
Arunachalam Vijayakumar Vs ITO (ITAT Chennai)
Introduction: The recent verdict given by the ITAT Chennai in the case of Arunachalam Vijayakumar Vs ITO has brought to light significant issues related to the violation of natural justice principles in tax proceedings. This appeal revolved around the non-issuance of a notice to the assessee, preventing him from presenting his side and thus violating principles of natural justice.
Assessment Background: The case stems from Arunachalam not filing an income return for the fiscal year 2017-18. An observation was made, based on information from the Statement of Financial Transactions (SFT), about cash deposits amounting to ₹.34,76,000/- made by Arunachalam during the demonetization phase in an Axis Bank branch. Given the lack of explanation from the assessee, the assessment was completed, treating this sum as an unexplained investment.
Appeal and Delay: A significant delay of 233 days occurred in filing an appeal before the Tribunal by Arunachalam. While the reasons for the delay were documented through an affidavit, the tribunal, taking note of the cause, decided to condone the delay, admitting the appeal for further proceedings.
The Absence of Communication: The central issue was the lack of communication or any notice sent to Arunachalam. The CIT(A) dismissed the assessee’s appeal due to the lack of response from him. However, it was emphasized that not even a single notice was responded to. The main contention presented by the assessee’s counsel was the absence of any notice sent to the registered e-mail ID as per the PAN database, which violates the principles of natural justice.
ITAT’s Decision: Hearing both sides and after a thorough examination of records, ITAT Chennai found merit in the assessee’s claim. The tribunal highlighted the necessity of abiding by the principles of natural justice. As a result, the appellate order was set aside, and the case was sent back to the CIT(A). The direction was clear: issue a notice to the registered e-mail ID and allow the assessee to present his evidence.
Conclusion: The decision by the ITAT Chennai stands as a testament to the importance of upholding principles of natural justice, especially in legal proceedings. It also emphasizes the significance of clear communication, especially when rights and duties are at stake. In the future, such precedents can act as a guiding light for similar cases, ensuring that justice is not only done but also seen to be done.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 01.09.2022 relevant to the assessment year 2017-18.
2. The appeal of the assessee is filed with a delay of 233 days in filing the appeal before the Tribunal. The assessee has filed a petition for condonation of delay in the form of an affidavit mentioning the reasons for delay in filing the appeal. By referring to the above affidavit, the ld. Counsel for the assessee has submitted that there is reasonable cause for the delay and the delay in filing the appeal is neither wilful nor wanton and prayed for condonation of delay and to admit the appeal for adjudication. Against the above submissions, the ld. DR has not raised any serious objection. Considering the affidavit filed for condonation of delay, we hereby condone the delay in filing the appeal and admit the appeal for adjudication.
3. Brief facts of the case are that the assessee has not filed return of income for the assessment year 2017-18. The case was selected under NMS category as potential case for enquiry where return of income has not been filed. As per the information available in SFT, the assessee has made cash deposits in Axis Bank, Ayanavaram Branch, Chennai during the demonetization period to the extent of ₹.34,76,000/-. In the absence of proper explanation or response from the assessee, the Assessing Officer has completed the assessment under section 144 of the Act dated 28.11.2019 by assessing total income of the assessee at ₹.37.82,720/-after treating the cash deposit during demonetization period of ₹.34,76,000/- as unexplained investment under section 69 of the Act. Onappeal, the ld. CIT(A) dismissed the appeal since there was no response from the assessee.
4. On being aggrieved, the assessee is in appeal before the Tribunal.
5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the addition made by the Assessing Officer, the assessee preferred further appeal before the ld. CIT(A). The ld. CIT(A) dismissed the appeal of the assessee for want of prosecution by stating that not a single notice has been responded to in any manner.
6. Before us, the ld. Counsel for the assessee has submitted that no notice to the registered e-mail ID of the assessee as per the PAN data base/ Income Tax Web Portal was issued is in gross violation of principles of natural justice and provisions of the Income Tax Act and prayed that the assessee shall be afforded reasonable opportunity of being heard to substantiate his claim. Under the above facts and circumstances, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) to decide the issue afresh in accordance with law by issuing notice to the registered e-mail ID of the assessee enabling the assessee to substantiate his claim with supporting evidences. The assessee is also directed to furnish convincing explanation with supporting evidences before the ld. CIT(A) for consideration.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 26th July, 2023 at Chennai.
