ITAT Kolkata Remands ₹92.67 Crore Addition Against Addhya Forex, Upholds Right To Fair Hearing

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) on 6 April remanded reassessment proceedings against Addhya Forex (P) Ltd., holding that the addition of Rs. 92.67 crore was based on ex parte orders and directing the Assessing Officer to give the taxpayer a fresh opportunity to present its case.

A Bench comprising Judicial Member George Mathan and Accountant Member Rakesh Mishra set aside the order of the Commissioner of Income Tax (Appeals), observing:

“Since no compliance was made before the Ld. AO as well as before the Ld. CIT(A) and both the orders are in effect ex parte orders, therefore, in the interest of justice and fair play it was considered that the request of the assessee to set aside the case before the Ld. AO may be allowed.”

Addhya Forex, a Reserve Bank of India-licensed full-fledged money changer engaged in buying and selling foreign currencies and travellers' cheques. It challenged reassessment proceedings for AY 2016-17, in which the Assessing Officer treated bank credits aggregating to Rs. 92.67 crore as unexplained money under Section 69A of the Income Tax Act, 1961. The provision allows the tax authorities to treat money found in a taxpayer's possession as taxable if the source is not satisfactorily explained.

The company had filed its original return declaring income of Rs. 2.40 lakh, which the Assessing Officer assessed under Section 143(3). The assessment was later reopened under Section 147.

During reassessment, the Assessing Officer requested documentary evidence to explain credits in multiple bank accounts. As the company failed to furnish explanations, the officer added the entire credited amounts as unexplained money, assessing total income at Rs. 92.70 crore. The Commissioner of Income Tax (Appeals) upheld the addition, noting the assessee's non-compliance despite multiple opportunities.

Before the Tribunal, Addhya Forex argued that miscommunication with its tax consultant prevented proper representation and requested a remand.

The Tribunal accepted the request and directed the Assessing Officer to provide a reasonable opportunity of hearing while cautioning the assessee against seeking unnecessary adjournments.

Accordingly, the ITAT set aside the reassessment proceedings and ordered de novo proceedings.