ITAT Criticises Lower Authority for Harassing Taxpayer Without Solving Their Issues

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has set aside CIT(A) ‘s order and sent the matter back to the jurisdictional Assessing Officer (AO) for reconsideration, observing that none of the lower authorities properly addressed the genuine grievances of the taxpayer.

The case started when the assessee company, Swayat Trading Co., filed its income tax return declaring income only from capital gains and other sources. However, the CPC, while processing the assessee’s ITR, issued a notice saying that the company had shown receipts from a “business or profession” of more than Rs 1 crore but did not submit an audit report.

Even though the company made it clear that it had not earned any business income and no audit report was required, the CPC rejected the rectification application and directed the assessee to reach out to the jurisdiction assessing officer for their grievance.

Accordingly, the company filed a rectification application before the assessing officer, which was also rejected, saying that CPC has jurisdiction to validate the return.

The company then appealed to the CIT(A), who also dismissed the appeal, saying that the issue needs factual determination and the same was not covered within the scope of section 154 of the Income Tax Act. Therefore, the assessee finally approached the ITAT.

The Tribunal criticised the lower authorities for making the assessee shuttle between the CPC and the jurisdictional AO rather than solving the issue.

The tribunal also criticised the CIT(A) for mechanically rejecting the appeal instead of going into the merits of the case. It said that the matter could have been resolved at the lower stages.

“The irresponsible attitude and callous approach of the income-tax authorities, in this case, is highly deprecated. We request the higher authorities to take corrective steps, so that taxpayers are not harassed in this manner without redressal of their genuine grievances,” the tribunal said.

The CIT(A)’s order was set aside, and the matter was restored to the jurisdictional AO, who was directed to carefully examine the company’s submissions.