ITAT imposes Cost on Taxpayer for Non-Cooperation during Income Tax Proceedings

The ITAT set aside the ex parte orders and granted the assessee another opportunity, subject to payment of Rs 10,000 costs.

The present appeal has been filed by Dharmeshkumar Ishwarbhai Patel against the ITO, challenging the ex parte order dated 05.09.2024 passed by the CIT(A) under Section 144 of the Income Tax Act 1961 for A.Y. 2017-18.

Background of the case

The assessee failed to file its return of income for the A.Y. 2017-18. However, he made a cash deposit in his bank account with the Bank of Baroda of Rs. 49,23,120, which was selected for scrutiny. The AO also issued notices; however, the assessee did not reply. As a result, the AO passed an ex parte assessment order making an addition to the credit entries in his bank accounts of Rs. 1,61,00,699.

Being aggrieved by the AO’s decision. The assessee then approached CIT(A). CIT(A) provided multiple chances to the assessee for hearings. However, no one replied. Lastly, CIT(A) confirmed the addition made by the AO.

ITAT’s Ruling

The assessee was not satisfied with the CIT(A)’s order, so he approached the ITAT. During the hearing, the AR could not explain why the assessee failed to appear before the AO as well as the CIT(A).

The ITAT observed that the assessee filed the appeal 185 days late. It also said the assessee did not properly cooperate with the lower authorities earlier.

Considering these points, and in the interest of justice, the tribunal decided to set aside the orders passed by the lower authorities. However, this relief is given with a condition.

The assessee must pay a cost of Rs 10,000 to the Income Tax Department within two weeks of receiving this order. Proof of challan must be submitted to the Jurisdictional Assessing Officer (JAO).

The ITAT directed JAO to give the assessee one more opportunity to present their case along with all relevant documents and evidence.

As a result, the appeal filed by the assessee is allowed for statistical purposes.