This article provides a comprehensive analysis of the Income Tax Appellate Tribunal’s (ITAT) decision on ITA No. 1666/DEL/2020, involving Ramesh Kumar and the Income Tax Officer (ITO) Ward-37(1), New Delhi. The case focuses on the non-compliance with statutory notices and the procedural requirements for assessment under the Income Tax Act, 1961, for the assessment year (AY) 2011-12.
Ramesh Kumar, a resident of New Delhi, filed an appeal against the order dated 25.02.2020 by the Commissioner of Income Tax (Appeals), Delhi-13, under Section 250 of the Income Tax Act, 1961. The primary issue contested was the addition made by the Assessing Officer (AO) due to non-compliance with statutory notices issued to ICICI Bank.
The primary legal issues in this case were:
The appellant did not file any return of income or comply with the notice issued under Section 148 of the Income Tax Act. Consequently, the appellant argued that the assessment should be annulled due to the non-issuance of a notice under Section 143(2).
The respondent, represented by Sh. Shankar Gupta, Sr. DR, maintained that the assessment could not be annulled based on the alleged non-issuance of a notice under Section 143(2), as the appellant failed to file a return of income or comply with the notice under Section 148.
The ITAT, comprising Sh. Saktijit Dey (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member), observed that the appellant did not file any return of income or comply with the notice issued under Section 148. Consequently, the tribunal dismissed the ground that the assessment should be annulled due to the non-issuance of a notice under Section 143(2), as it lacked a legal basis.
The tribunal found that the AO issued notices under Section 133(6) to ICICI Bank in New Delhi and Mumbai, requisitioning the bank statements for the appellant. However, the bank did not comply with these notices, and the AO proceeded to make additions based on the non-compliance.
The tribunal emphasized the duty and responsibility of the AO to enforce compliance with statutory notices. The tribunal criticized the AO for not invoking the relevant provisions of the Income Tax Act, such as Sections 131 and 272A, to ensure compliance. The tribunal noted that ignoring non-compliance perpetuates a habit of cavalier attitude on the part of the recipients of such notices.
The tribunal highlighted the importance of using the statutory powers vested in the AO to enforce compliance rather than making additions in a routine manner due to non-compliance. The tribunal remanded the case back to the CIT(A) to adjudicate the issue on merits and directed the AO to take necessary actions to enforce compliance with statutory notices.
The tribunal’s final judgment included the following key points:
The appeal was allowed for statistical purposes, and the tribunal underscored the importance of adherence to procedural correctness and the enforcement of statutory provisions in tax assessments.
This case highlights the critical importance of enforcing compliance with statutory notices in tax assessments. The ITAT’s decision underscores the necessity of using the statutory powers vested in the AO to ensure compliance and maintain the integrity of the assessment process. Proper enforcement of statutory provisions is essential for fair and accurate tax assessments.
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