Illiterate Assessee Running Mobile Shop fails to Comply with Income Tax Notice: ITAT imposes Fine [Read Order]
The assessee filed an appeal late, with a delay of 48 days. He explained in an affidavit that the email address of his tax consultant, Malay Shah, was provided in the appeal form, and all notices and the appeal order were sent to his tax consultantтАЩs email
By Adwaid M S – On December 12, 2024 1:55 pm – 3 mins read
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the order made income tax addition on unexplained income due to non compliance considering the assessee being an illiterate running a small mobile recharging shop. The bench also imposed a cost of Rs.5,000 as fine.
Krintesh Rameshbhai Patel, the appellant-assessee, carrying on a small business of mobile recharging, failed to comply with notices, prompting the Assessing Officer to treat cash deposits of Rs.54,94,100 as unexplained income for A.Y. 2017-18.
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The assessee filed an appeal late, with a delay of 48 days. He explained in an affidavit that the email address of his tax consultant, Malay Shah, was provided in the appeal form, and all notices and the appeal order were sent to his tax consultantтАЩs email. However, due to the tax consultantтАЩs non-compliance, the notices and order were not communicated to the assessee. The assessee, who is illiterate and runs a small mobile recharging business, stated that he was unaware of the income tax provisions and that this caused the delay in filing the appeal. The email address mentioned in the appeal form did not request communication to be sent there, and based on the assesseeтАЩs explanation, the delay was condoned.
The case involves the assessee, who filed a return for AY 2017-18 declaring an income of Rs.2,96,350. The return was selected for scrutiny, and the AO found cash deposits totaling Rs.54,94,100 in two bank accounts. Since the assessee did not provide an explanation, the AO treated the entire amount as unexplained income and added it to the total income under Section 69A, completing the assessment under Section 144 with a total income of Rs.57,90,450.
The assessee appealed, but the CIT(A) dismissed the appeal ex-parte, as the assessee did not comply with notices. The matter is now before the Tribunal, where the assessee contends that the cash deposits were business-related, as he runs a small recharging business and earns commission. He claims that the deposits were daily amounts from customers, transferred immediately to telecom companies after retaining his commission.
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B T Thakkar,counsel representing the assessee requested that the case be sent back to the AO for further examination.
The DR argued that the assessee failed to comply with the AO or CIT(A), so the addition was justified. However, the DR did not object to sending the matter back to the AO for re-examination.
The two member Bench comprised of Suchitra Kamble(Judicial Member) and Narendra Prasad Sinha(Accountant Member) noted that the AO did not fully consider the bank transactions, and it was important to assess the deposits and transfers as part of the same business activity. Therefore, the Tribunal decided to send the matter back to the AO with directions to give the assessee another opportunity to explain the deposits and produce the necessary evidence.
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Additionally, the Tribunal imposed a fine of Rs.5,000 on the assessee for failing to comply with the CIT(A) despite multiple opportunities. The cost needs to be paid to the Income Tax Department within two weeks, and a copy of the payment challan should be submitted to the Registry before the AO proceeds further.
In Conclusion,the appeal was allowed for Statistical Purposes.To Read the full text of the Order CLICK HERE
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Krintesh Rameshbhai Patel vs DCIT
CITATION: 2024 TAXSCAN (ITAT) 1568
Case Number: I.T.A. No. 836/Ahd/2024
Date of Judgement: 12 November 2024
Counsel for Appellant: B. T. Thakkar
Counsel for Respondent: Prateek Sharma
Topics
Assessing OfficerITAT AhmedabadJudicial Member Suchitra Kamble
Next Story
Mahindra Lifespace Receives тВ╣2.09 Crore Tax Demand from TN GST Dept
Mahindra Lifespace Developers faces a тВ╣2.09 crore GST demand from Tamil Nadu authorities, the company plans to appeal
By Kavi Priya – On December 12, 2024 1:40 pm – 2 mins read
Mahindra Lifespace Developers, a well-known real estate firm has received a Rs. 2.09 crore tax demand by the Goods and Services Tax ( GST ) department in Tamil Nadu.
The demand includes interest and penalties and was issued under Section 74 of the Goods and Service Tax (GST) Act 2017 alleging underpayment of GST liability. The company disclosed the development in a regulatory filing on Wednesday stating it strongly disputes the claim.
The demand order was issued by the Office of the Assistant Commissioner of State Tax, Chengalpattu, Tamil Nadu, and covers the alleged GST shortfall along with associated interest and penalties. The GST authorities accused the company of non-compliance regarding the payment of its GST dues.
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According to the Economic Times, Mahindra Lifespace stated: тАЬBased on the companyтАЩs assessment, there has been no non-compliance. A general penalty has been imposed which we intend to challenge.тАЭ
Mahindra Lifespace announced its intention to appeal the order and is confident in achieving a favorable resolution. The company explained that it does not expect this demand to have any material financial impact on its operations. тАЬWe are hopeful of a positive outcome at the appellate level and remain steadfast in our commitment to compliance,тАЭ the company added.
About Mahindra Lifespace
Mahindra Lifespace is one of IndiaтАЩs leading real estate development companies, operating thoughtfully designed residential projects across the country. It offers both value and premium apartments, focusing on sustainability and innovative designs. The company maintains that the allegations in the tax demand do not align with its established track record.
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The firm is set to appeal against the GST departmentтАЩs order and expects the appellate process to prove its stance. These disputes are not uncommon in the real estate sector and Mahindra Lifespace strongly believes that the resolution of this matter will not adversely impact its financial position or operations.
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