ITAT Indore Sets Aside Assessments for Denial of Natural Justice Due to Non-Supply of Section 132A/133A Documents; Confirms Penalties for Non-Compliance

Overview of the Tribunal's Decision

The Income Tax Appellate Tribunal, Indore Bench, pronounced a bifurcated judgment in a series of appeals filed by Anuj Tiwari concerning assessment years spanning from 2015-16 through 2021-22. The case involved a total of thirteen appeals, encompassing both substantive assessment matters and penalty-related issues. The Tribunal adopted contrasting approaches toward the quantum and penalty components, granting relief in the former while denying the same in the latter.

Background and Factual Matrix

The assessee had approached the Tribunal challenging multiple orders passed by the lower appellate authority, Commissioner of Income-tax (Appeals)-3, Bhopal. The genesis of these disputes lay in assessments completed by the Assessing Officer, ACIT (Central-2), Indore, utilizing materials purportedly obtained through two distinct channels:

  • Documents received under Section 132A from Police Station Rajendra Nagar
  • Evidence gathered during survey operations conducted under Section 133A

The assessment orders under challenge included:

  • Six assessments for AYs 2015-16 to 2020-21 completed under Section 144 read with Section 153A through a consolidated order dated 19.03.2022
  • One assessment for AY 2021-22 finalized under Section 143(3) vide order dated 29.09.2022
  • Six penalty orders imposed under Section 271(1)(b) and Section 272A(1)(d) for the years 2015-16 to 2020-21

Detailed Analysis of Quantum Appeals

Primary Grievance of the Assessee

The central contention raised by the assessee revolved around a fundamental procedural deficiency. The assessee maintained that despite repeated requests and formal communications, the Assessing Officer failed to furnish the documentary evidence upon which the additions were founded. This included materials allegedly seized or impounded and utilized as the foundation for income determinations.

Documentary Evidence of Non-Supply

The assessee placed on record substantial evidence demonstrating persistent efforts to obtain the relied-upon material:

  1. Formal application dated 28.05.2025
  2. First reminder communicated via electronic mail dated 18.06.2025
  3. Second reminder dispatched through letter dated 20.11.2025

Despite these documented attempts, the revenue authorities remained non-responsive to the assessee's legitimate requests for access to the materials forming the basis of the impugned additions.

The authorized representative appearing for the assessee advanced compelling arguments grounded in principles of natural justice. The core submissions included:

Inability to Contest Additions: Without access to the foundational documents, the assessee was rendered incapable of formulating meaningful responses either before the first appellate authority or the Tribunal. This created an insurmountable barrier to effective legal defense.

Violation of Natural Justice: Assessments framed exclusively on materials obtained under Section 132A and Section 133A, without providing copies to the affected party, constitute a fundamental breach of natural justice principles. Such procedural irregularities render the entire assessment exercise legally unsustainable.

Request for Remand: Given the procedural infirmities, the assessee sought restoration of matters to the Assessing Officer with appropriate directions ensuring compliance with natural justice requirements.

Revenue's Counter-Arguments

The Departmental Representative mounted a vigorous defense of the lower authorities' actions, raising several counter-points:

Knowledge Through Survey Statements: The assessee possessed adequate awareness of the evidence discovered during survey operations, as demonstrated by admissions of undisclosed income recorded in statements under Section 133A. These admissions were necessarily based on the impounded material shown during survey proceedings.

Absence of Retraction: Following the survey, the assessee never retracted or challenged the statements recorded during the proceedings, suggesting acceptance of the findings.

Non-Cooperation at First Appeal Stage: Before the Commissioner of Income-tax (Appeals), the assessee demonstrated non-responsiveness to notices issued by that authority, indicating a pattern of non-cooperation.

Timing of Requests: The applications and reminders seeking supply of documents were filed only after the first appellate orders were passed (dated 28.05.2025, 18.06.2025, and 20.11.2025), whereas the CIT(A) orders were dated 24.02.2025. This suggested an afterthought rather than genuine pursuit of documents.

Tribunal's Reasoning and Findings

After detailed consideration of competing contentions, the Tribunal delivered a well-reasoned decision favoring the assessee on quantum matters. The key findings included: