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Issues involved: Assessment for the year 1998-99, delay in filing appeals, deduction of expenses, penalty under sections 271B and 271(1)(c) of the Income-tax Act, 1961.
Assessment for the year 1998-99: The assessee, an individual with multiple businesses, failed to file a return for the assessment year 1998-99, leading to an ex parte assessment under section 144 read with section 147. An income of Rs. 45,91,505 from on-money receipts was determined based on a survey conducted. The Commissioner of Income-tax (Appeals) confirmed this addition, prompting the assessee to seek rectification for double taxation. The Tribunal directed reconsideration of the on-money issue. Delay in filing appeals: The delay in filing appeals was attributed to personal circumstances and reliance on a section 154 petition seeking deduction of expenses. The Tribunal condoned the delay, finding it justified due to the assessee's financial difficulties and absence caused by threats to life. Deduction of expenses: The Tribunal noted that the assessing authority had initially allowed a deduction of 40% of on-money receipts as expenses. However, the Commissioner of Income-tax (Appeals) failed to consider this deduction and mechanically upheld the full addition. The Tribunal directed the assessing authority to allow the deduction of 40% of on-money receipts as expenses. Penalty under section 271B: The penalty for non-filing of audit report under section 44AB was explained by the assessee as a result of uncertainty regarding the addition of on-money receipts for the year 1998-99. The Tribunal found the explanation convincing and deleted the penalty. Penalty under section 271(1)(c): The penalty was imposed based on the initial addition of on-money receipts. However, the Tribunal found that the addition was treated as a regular business item with corresponding expenses deducted, indicating no concealment of income. The penalty under section 271(1)(c) was deleted. In conclusion, the appeals filed by the assessee were allowed, with directions for deduction of expenses and deletion of penalties under sections 271B and 271(1)(c) of the Income-tax Act, 1961.
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