Fundamental principle of justice requires the AO to discover and collect evidence, confront assessee before making any disallowance, says ITAT

Last updated: 13 March 2021

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The Income Tax Appellate Tribunal (ITAT) has ruled that a fundamental principle of justice requires Assessing Officers (AOs) to discover and collect evidence. Furthermore, AOs must confront the assessee with any findings before making any disallowance. This decision highlights the importance of due process in tax assessments.

Court :
ITAT New Delhi

Brief :
The present appeal has been fi led by the assessee against the order of the ld. CIT(A)-20, New Delhi dated 26.02.2019.

Citation :
ITA 3234/DEL/2019

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘C’, NEW DELHI

Before Sh. Amit Shukla, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
(Through Video Conferencing)

ITA No. 3234/Del/2019 : Asstt. Year : 2012-13

J.S.P. Constructions,
C/o Kapil Goel, Adv.,
F-26/124, Sector-7, Rohini,
New Delhi-110085
(APPELLANT)

Asstt. Commissioner of Income
Tax, Circle-62(1),
New Delhi-110002
PAN No. AACFJ9831E
(RESPONDENT)

Assessee by : Sh. Kapil Goel, Adv.
Revenue by : Sh. Ved Prakash Mishra, Sr. DR
Date of Hearing: 14.01.2021 Date of Pronouncement: 01.03.2021

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been fi led by the assessee against the order of the ld. CIT(A)-20, New Delhi dated 26.02.2019.

2. Fol lowing grounds have been raised by the assessee:

“The initiation of action u/s 148 is bad in law,

(i) being based on bald al legations;

2. That the Ld. CIT(A) erred in not appreciatingthat the proceedings initiated u/s 147/148 by Ld.A.O. are inval id and i l legal as the vague reasons recorded do not reflect any independent appl ication of mind on the part of the assessing officer, so as toform a reason to bel ieve that income has escaped assessment. Further corroborate from the fact that,

Firstly, no basis is avai lable, as to how figure of Rs. 1.10 Crore has been arrived in the reasonsmentioned, whereas assessment framed on Rs.1,24,84,178/-.

Secondly, After reopening Ld. A.O. gathered thebasic information of contracts awarded to the assessee during the tenure of Mr. Yadav Singh videletter .dated 19/12/2016 issued u/s 133(6) of I.T.Act just few days before the final isation of assessment,

Thirdly, Contents of statement of Ramendra Singhare nowhere described in the reasons mentioned.Fourthly, No evidence worth name to l ink theassessee with Ramendra Singh/ Yadav Singh has been described in the reasons mentioned.

To know more in details find the attachment file

FAQ :

The fundamental principle of justice requires the Assessing Officer (AO) to discover and collect evidence and confront the assessee before making any disallowance.

An AO must discover and collect evidence and confront the assessee with their findings before making any disallowance.

The appeal concerned whether the initiation of action under section 148 was invalid and illegal due to vague reasons recorded by the AO, lacking independent application of mind and failing to link the assessee with certain individuals or evidence.

The ITAT noted issues with the basis for the disallowance, including discrepancies in figures and a lack of clear evidence linking the assessee to individuals mentioned in the assessment proceedings.