Madras HC Grants Final Chance in Rs. 214 Cr Income Tax Case

Facts-

• The petitioner, Anguraj Saravana Prabu, engaged in the retail business of coconut coir, filed his income tax return for the assessment year 2018-19 declaring an income of Rs. 24,22,680.
• His case was selected for scrutiny on grounds of non-furnishing quantitative details and business expenses.
• The petitioner was issued notices to furnish documentary evidence but failed to respond or produce any documents.
• The Assessing Officer, therefore, passed an order under Section 144 read with Section 144B of the Income Tax Act making an addition of Rs. 2,14,81,90,432 as unexplained income and disallowing certain deductions, besides levying interest and penalties.
• The petitioner appealed to the National Faceless Appeal Centre (CIT Appeals) which dismissed the appeal due to lack of documentary evidence.
• The petitioner then appealed to the Income Tax Appellate Tribunal (ITAT), which allowed the appeal, set aside the CIT(A)’s order, and remanded the matter back for fresh consideration with a direction to grant a personal hearing.
• Despite the remand and opportunities given by the CIT(A), the petitioner again failed to produce documents, resulting in the dismissal of his appeal and initiation of recovery proceedings.
• The petitioner attributed his failure to produce documents to severe financial constraints after Covid-19, having closed his business and now working as a taxi driver.
• He approached the Madras High Court seeking quashing of the CIT(A)’s dismissal order and requested one final opportunity to contest the case with documentary evidence.

Issues- whether the petitioner should be granted a final opportunity to produce the documentary evidence and contest the case after repeatedly failing to do so during the assessment and appellate proceedings?