A woman's failure to respond to multiple income tax notices proved so costly that the department added 1.5 crore rupees to her tax. The entire matter has now reached the ITAT.
Action on ignoring income tax notice
A woman's failure to respond to numerous Income Tax notices has proved costly. Consequently, the Income Tax Department has now taken action against her. The department had issued notices asking questions about the woman's bank balances and property purchases, but she failed to respond to several notices. Later, she also failed to present her case before the CIT(A), the Income Tax Commissioner (Appeals).
Following this, the CIT(A) dismissed the woman's appeal and upheld the tax addition of approximately ₹1.55 crore made by the Income Tax Officer. The matter was then referred to the Income Tax Appellate Tribunal (ITAT) in Delhi. The ITAT has now set aside the CIT(A)'s order and ordered a rehearing of the case.
What is the whole matter?
This case relates to the assessment year 2020-21, for which a woman named Jasbinder Kaur filed her return on January 4, 2021, declaring her income as ₹10.41 lakh. The Income Tax Department later discovered cash deposits of ₹21.90 lakh in her bank accounts and property purchases worth ₹74 lakh. The department inquired about the source of the money, but the woman did not respond to the notice.
During the investigation, information obtained from banks revealed cash deposits and other credits totaling ₹80.94 lakh in the accounts. Except for a loan of ₹34 lakh, the source of the remaining funds was not explained. Furthermore, no satisfactory information was provided regarding the purchase of a property worth ₹74 lakh. Based on this, a tax deduction of approximately ₹1.55 crore was made.
The CIT(A) dismissed the appeal.
The woman appealed against this order to the CIT(A), but did not respond to four notices sent for a hearing. Following this, the CIT(A) dismissed her appeal.
The case then reached the
ITAT, where the woman's lawyer argued that the property was purchased using a home loan and funds from relatives. She was unable to attend the earlier proceedings due to health issues. The ITAT stated that the CIT(A) should not have dismissed the appeal solely on the basis of a lack of response to the notice. He was required to examine the facts and documents of the case and provide a reasoned decision.
The ITAT set aside the CIT(A)'s order and remanded the case for rehearing. However, the ITAT did not rule that the tax addition of Rs 1.55 crore was incorrect. The woman will now have to provide bank statements, loan documents, and documents related to the property purchase. If she fails to respond to the notice again, the case can be decided in her absence.
Lessons for Taxpayers:
This case offers valuable lessons for income taxpayers. Taxpayers should respond to notices in a timely manner, rather than ignoring them. Failure to provide timely responses and required documents may result in the department adding tax based on the available information.
