ITAT Remands Rs 23.53 Lakh Business Income Case to AO for Fresh Adjudication After Assessee Fails to Respond to Notices:

The ITAT Guwahati has remanded the case of Heimon Hinge to the Assessing Officer (AO) for fresh consideration after the assessee had failed to respond to notices despite the grant of multiple opportunities during the assessment and first appellate proceedings [CIT(A)].

In the present case, the assessee had not filed any income tax return (ITR) for the Assessment Year (AY) 2018-19, under Section 139(1) of the Income Tax Act, 1961. The Assessing Officer (AO) had received information that during the year under consideration, the assessee had made substantial cash deposits into his HDFC Bank account; however, he had not explained the source of the same. Consequently, the AO served a notice to the assessee under Section 148 of the Act. However, the assessee did not file any response to the notices under Section 142(1).

The AO subsequently obtained information from HDFC Bank under Section 133(6) and found that the bank deposits were used for business purposes. Information obtained from Lunia Marketing Pvt. Ltd. and Lunia Enterprises also confirmed that the assessee was engaged in trading rice, sugar and pulses. The suppliers reported purchases of Rs 2.94 crore by the assessee.

Due to the continued non-compliance, the AO estimated income at 8% of the purchases, resulting in business income of Rs 23.53 lakh. An additional Rs 6,032 was also assessed as interest income.

The assessee challenged the assessment before the National Faceless Appeal Centre (NFAC). However, he again failed to comply with notices, following which the CIT(A) dismissed the appeal for non-representation.

Before the Income Tax Appellate Tribunal (ITAT), the assessee submitted that he was unaware of the income tax proceedings and was conducting business in a remote area. He requested one more opportunity to substantiate his case with supporting documents.

While analysing the facts of the case, the tribunal noted that "the assessee is a non-filer and accordingly, notice u/s 148 of the Act was issued to the assessee but during the course of assessment proceedings, the assessee did not respond to any of the notices issued by the AO. Accordingly, the AO got information u/s 133(6) of the Act and on the basis of purchases information supplied by the suppliers, he added 8% income on the purchases and business income was calculated. During the course of first appellate proceedings, there was no response from the assessee side."

In the interest of natural justice, the Tribunal found it fair to set aside the impugned order and remand the case back to the AO for fresh adjudication after providing a reasonable opportunity of hearing. The Tribunal directed the assessee to support his claims with proper documents and cautioned that no further leniency would be granted in case of non-compliance. The appeal was partly allowed for statistical purposes.