Facts of the Case

The assessee, Shri Indresh Kumar, was subjected to assessment proceedings by the Income Tax Department. During the course of the proceedings, statutory notices were issued seeking information and explanations. The Assessing Officer ultimately completed the assessment by making additions to the returned income, allegedly due to non-compliance or insufficient response.

The assessee challenged the assessment order before the Commissioner of Income Tax (Appeals), contending that adequate opportunity to present the case was not granted and that the additions were made without proper verification. Being dissatisfied with the outcome at the appellate stage, the assessee filed an appeal before the Income Tax Appellate Tribunal, Allahabad Bench.

Issues Involved

  1. Whether the assessment order was passed in violation of principles of natural justice.
  2. Whether adequate opportunity of hearing was granted to the assessee.
  3. Whether the additions were made without proper inquiry and verification.
  4. Whether the matter required restoration for fresh adjudication.

Petitioner’s (Assessee’s) Arguments

  • The assessment was completed without providing sufficient opportunity to present evidence and explanations.
  • Notices were either not effectively served or insufficient time was granted for compliance.
  • The additions were made mechanically without proper examination of facts.
  • The order was therefore arbitrary and liable to be set aside.

Respondent’s (Revenue’s) Arguments

  • Statutory notices were duly issued and compliance was expected from the assessee.
  • The Assessing Officer acted within the powers conferred by the Act.
  • The additions were based on material available on record due to lack of adequate response.
  • The assessment order should be sustained.

Court Order / Findings (ITAT)

  • Principles of natural justice require that an assessee be given a fair and effective opportunity of being heard.
  • An assessment framed without proper opportunity or without considering relevant material cannot be sustained.
  • Tax authorities must conduct inquiries and verify facts before making additions.
  • Where procedural fairness is lacking, the appropriate course is to restore the matter for fresh consideration.

Important Clarification by the Tribunal

  • Compliance with principles of natural justice is fundamental to valid assessment proceedings.
  • Even where there is non-compliance by the assessee, authorities must ensure fairness and reasonable opportunity.
  • Remand is appropriate where facts require proper verification.

Link to download the order  https://itat.gov.in/public/files/upload/1658302871-106A2020%20Indresh%20Kumar.pdf

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