Recently on 24th Aug 2012, ITAT held that Revenue should furnish AIR information received to Assessee - Principles of natural justice
Assessee invested in mutual funds along with his wife. The assessing authority, after receiving information from Annual Information Return (AIR) issued notice to the assessee without furnishing the details received from the AIR and also rejected the claim of assessee that had no occasion to object to the information said to be received by the assessing authority from AIR.
The Ld. representative Shri C.V. Varghese on behalf of assessee, before the lower authorities submitted that the peak credit may be considered for addition, if at all any addition is warranted, further it was also submitted that the Assessee has no knowledge of AIR, therefore, the matter may be remanded back to the file of the assessing authority for re-consideration after giving an opportunity to the Assessee with regard to the information received from AIR and for the same reliance was placed on the decision reported in (2011) 5 Taxcorp (A.T.) 24215 (MUM),
Whereas the ld.DR submitted that the assessing authority received information from AIR with regard to investment of Rs. 50,63,940 in the mutual fund. The assessing authority specifically asked for source of deposit in the banks and the investment. The Assessee has not explained the source of investment in the bank which resulted unexplained investment in the mutual funds to the extent of Rs.39,63,940. The Assessee has not filed any cash flow statement to explain the specific sources for each investment made in the mutual fund. In the absence of any material the lower authority confirmed the addition made by the assessing authority. The lower authority found that the assessee has not explained the investment in the mutual fund with a cash flow statement. Therefore, the first appellate authority has rightly confirmed the addition.
Held, The principles of natural justice requires that whenever an information is received by the taxing authority such information shall be furnished to the assessee before placing any reliance on such information for levying tax. The matter would be entirely different if the information received by the taxing authority was not relied upon for levying tax. It is not the case of the taxing authority that the copy of the information received from AIR was furnished to the assessee while calling for explanation with regard to the investment made in the mutual fund. In these circumstances, this Tribunal is of the considered opinion that the copy of the AIR shall be furnished to the assessee by the taxing authority since the taxing authority has placed reliance on such information. Therefore, there is a clear violation of the principles of natural justice. The issue is remitted back to the file of the assessing authority. The assessing authority shall furnish a copy of the information said to be received from AIR to the assessee and thereafter decide the issue in accordance with law after giving reasonable opportunity to the assessee.
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Rupesh Srivastava
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