The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) recently addressed a case where Marappa Gounder Balakrishnan, a power loom job worker, faced tax scrutiny for not filing an Income Tax Return (ITR) despite Rs. 1.03 crore in bank transactions. Citing illiteracy as a reason for non-compliance, the ITAT remanded the case for fresh adjudication with a Rs. 5,000 cost. This ruling highlights the challenges illiterate taxpayers face and the need for a fair tax system. Let’s explore the case, its implications, and key takeaways.
Marappa Gounder Balakrishnan, engaged in job work for the power loom industry, had significant cash deposits and withdrawals in his savings account during Assessment Year (AY) 2013-14, totaling Rs. 1.03 crore. The Assessing Officer (AO) noted that no ITR was filed and initiated scrutiny by issuing a notice under Section 148 on March 27, 2021. This was followed by multiple notices under Section 142(1) on July 27, 2021, December 13, 2021, January 25, 2022, and February 11, 2022, and a show-cause notice under Section 144 on March 2, 2022. The assessee’s failure to respond, attributed to his illiteracy, led to the ITAT’s intervention.
The ITAT recognized illiteracy as a genuine barrier to compliance and ordered a fresh adjudication to give the assessee a fair chance to present his case. However, a Rs. 5,000 cost was imposed to stress the importance of responding to tax notices. The ruling balances empathy for the assessee’s limitations with the need for accountability in tax matters.
The case involved key sections of the Income Tax Act, 1961:
The ITAT’s decision prevented an unfair assessment under Section 144, ensuring the assessee’s right to a fair hearing.
This ruling has broader implications:
1. Why was the assessee’s ITR non-filing an issue?
High-value transactions of Rs. 1.03 crore in his bank account raised suspicions of unreported income, prompting scrutiny.
2. How did illiteracy affect the case?
The assessee’s inability to read or respond to tax notices due to illiteracy led to non-compliance, which the ITAT considered.
3. What does fresh adjudication mean?
The case was sent back to the AO for a new assessment, giving the assessee a chance to present his case.
4. Why was a Rs. 5,000 cost imposed?
The cost was a penalty for non-compliance, emphasizing the need to respond to tax notices despite challenges.
5. What should taxpayers with high-value transactions do?
File ITRs, maintain records, and respond to notices promptly to avoid scrutiny or penalties.
The ITAT Chennai Bench’s ruling in Marappa Gounder Balakrishnan’s case is a step toward a more inclusive tax system. By recognizing illiteracy as a barrier and ordering fresh adjudication, the tribunal ensures fairness while imposing a Rs. 5,000 cost to maintain accountability. Taxpayers must file ITRs, document transactions, and seek assistance to navigate tax obligations, especially if illiterate. This case underscores the need for simplified tax processes to support vulnerable taxpayers while upholding compliance standards.
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Post By : Tax E-Filing
May 24, 2025