Income Tax Appeal Case: Sonia Chowdhry vs DCIT for Assessment Year 2018-19

Income Tax Appeal Analysis: Sonia Chowdhry vs DCIT, Central Circle-31, New Delhi for AY 2018-19

The Income Tax Appellate Tribunal (ITAT) in Delhi delivered a significant judgment concerning the appeal filed by Sonia Chowdhry against the Deputy Commissioner of Income Tax, Central Circle-31, New Delhi, pertinent to the assessment year (AY) 2018-19. This piece provides a detailed examination of the case, encapsulating the arguments presented, evidence produced, and the tribunal’s rationale behind its final decision.

Background

The case, bearing the number ITA No.1034/Del/2022, emerged against the backdrop of an order dated 28.04.2022 by the Commissioner of Income Tax (Appeals) – 30, New Delhi. The dispute centered on the income assessment for the AY 2018-19.

Sonia Chowdhry, the appellant, is described as an individual with a primary income source from her role as Managing Director at M/s. Franchise India Brand Ltd. A search under section 132 of the Income Tax Act, 1961, was conducted at her residential premises on 14.09.2017. Following this, Chowdhry filed her return for the AY 2018-19 on 31.08.2018, declaring an income of Rs. 11,87,560.

However, discrepancies arose when the Assessing Officer (AO) compared the declared income with the amount reflected in Form 26AS, revealing a significant difference. The AO identified that Chowdhry had received a salary of Rs. 24,65,000 from the organization, whereas she only accounted for Rs. 13,71,000 of this for taxation purposes. This discrepancy led to an additional income assessment of Rs. 10,94,000.

Moreover, during the search, authorities discovered jewellery valued at Rs. 9,95,345 at Chowdhry’s residence and Rs. 46,92,380 in her bank locker. The AO added these amounts to Chowdhry’s income, categorizing them as unexplained jewellery. Additionally, cash amounting to Rs. 6,00,000 found in the same locker was also added as unexplained cash, leading to a total assessed income of Rs. 85,69,285, in stark contrast to the declared Rs. 11,87,560.

Appeal to CIT(A)

Discontent with the AO’s findings, Chowdhry appealed to the CIT(A). However, her appeal faced hurdles as notifications for hearings went unattended, resulting in an ex parte decision by the CIT(A), further dismissing her complaint. This outcome prompted Chowdhry to escalate the matter to the ITAT, seeking redressal and a fair hearing.

Tribunal’s Decision

The tribunal, upon review, acknowledged the extraordinary circumstances posed by the Covid-19 pandemic, affecting the appellant’s ability to comply with the proceedings. Considering these factors, along with the absence of objection from the department, the tribunal decided to set aside the CIT(A)’s order, remanding the case for a fresh assessment.

In its conclusion, the tribunal treated the appeal as allowed for statistical purposes, advocating for a fair and just reconsideration. This resolution underscores the tribunal’s commitment to ensuring justice and fairness, particularly in navigating the complexities introduced by unprecedented global challenges.

Conclusion

The ITAT’s decision in the Sonia Chowdhry vs. DCIT case highlights the importance of equitable proceedings and the impact of external factors such as pandemics on legal processes. It sets a precedent for addressing similar cases with empathy and understanding, while also emphasizing the fundamental principles of justice and fair play in the realm of income tax appeals.

Income Tax Appeal Case: Sonia Chowdhry vs DCIT for Assessment Year 2018-19