Facts of the Case

The assessee, Om Prakash Kushwaha, was subjected to assessment proceedings by the Income Tax Department during which certain additions were made to the returned income.

These additions were based on information and material considered by the Assessing Officer. The assessee challenged the assessment on the ground that adequate opportunity to explain the transactions and evidence was not properly granted.

After the order of the lower authority, the matter reached the ITAT.

Issues Involved

  1. Whether the additions made by the Assessing Officer were legally sustainable without proper examination of the assessee’s explanation and supporting evidence.
  2. Whether assessment proceedings complied with the principles of natural justice.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that sufficient opportunity to present explanations and documents was not provided.
  • It was argued that the additions were made without proper verification of facts.
  • The assessment order was alleged to be arbitrary and unjustified.

Respondent’s (Revenue’s) Arguments

  • The Revenue supported the assessment order and maintained that the additions were based on available material.
  • It was argued that the Assessing Officer acted within statutory powers during assessment proceedings.
  • The order of the lower authorities was defended as legally valid.

 Court Findings / ITAT Order

  • Proper opportunity of hearing is a fundamental requirement in assessment proceedings.
  • Additions cannot be sustained solely on the basis of information without allowing the assessee to explain the same.
  • Adequate verification of facts is essential before determining taxable income.

Important Clarification by ITAT

Assessment orders that do not provide adequate opportunity to the assessee or fail to properly verify explanations may violate principles of natural justice and may not be sustainable in law.

Link to download the order -   https://itat.gov.in/public/files/upload/1663071847-ita%20no.%2021%20Alld%202022%20Om%20Prakash%20Kushwaha.pdf

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