NE LEGAL BUREAU
CHENNAI, FEB 21
The e-proceedings facility introduced by the income tax (I-T) department from 2017-18 can lead to erroneous assessments as officials conclude these without “personal hearing” of the assessees, the Madras high court has said.
Though it is a laudable step towards e-governance, officers may not be able to understand transactions and statements of accounts of assessees, said Justice C Saravanan, quashing an assessment order passed by the deputy commissioner of income tax, Circle 1(1), Salem in Tamil Nadu. Further, the HC sent it back to the same I-T officer for a fresh order in two months.
“It is a laudable step taken by the income tax department to pave way for an objective assessment without human interaction. At the same time, such proceedings can lead to erroneous assessment if officers are not able to understand the transactions and statements of accounts of an assessee without a personal hearing. The officer should have at least called for an explanation in writing before proceeding to conclude that the amount collected by the petitioner was unusual.”
The Salem Sree Ramavilas Chit Company had moved the court for quashing a December 27, 2019 order passed by the deputy commissioner. The I-T official had held that the company had not properly explained cash deposits of Rs 67.37 lakh collected during the demonetisation period in 2016, The Times of India reported.
Challenging the order, the company said the demonetisation order came on November 8, 2016, whereas the company had collected Rs 57.85 lakh during the first week of that month. It is the usual chit fund collection made during the period, it said, adding that the amount was properly accounted for.
Standing by its assessment, the I-T counsel said the well-reasoned order did not require judicial interference and added that from the 2017-18 assessment year onwards, assessments were done only through e-proceedings. The new method negated the visit of the assessee to the department and made scrutiny easy.
Under the circumstances, Justice Saravanan said, “In my view, the petitioner (company) has prima facie demonstrated that the assessment proceeding has resulted in distorted conclusion on facts that amount collected by it during the period was huge and remained unexplained.”
