2011 (10) TMI 609 - AT - Income Tax

Summary

Issues Involved:
1. Proceedings u/s 144 without adequate opportunities
2. Sustaining additions on account of estimation of income and unexplained cash credit
3. Levy of penalty u/s 271(1)(b) for non-compliance with notices

Summary:

1. Proceedings u/s 144 without adequate opportunities:
The appellant contended that the CIT(A) erred in upholding the AO's action to proceed u/s 144 without granting adequate opportunities for furnishing required details, violating principles of natural justice. However, this ground was not pressed by the appellant's counsel and was dismissed.

2. Sustaining additions on account of estimation of income and unexplained cash credit:
In ITA No. 226/Ahd/2011, the AO added Rs. 50,000 to the assessee's income due to the absence of books of accounts. The CIT(A) reduced this addition to Rs. 25,000, which was confirmed by the Tribunal as no interference was deemed necessary. In ITA No. 228/Ahd/2011, the AO added Rs. 17,500 as unexplained cash credit. The CIT(A) upheld this addition, and the Tribunal confirmed the order, noting that the addition was not seriously pressed by the appellant.

3. Levy of penalty u/s 271(1)(b) for non-compliance with notices:
The AO levied a penalty of Rs. 50,000 for each assessment year due to non-compliance with notices issued u/s 143(2) and 142(1). The CIT(A) confirmed the penalty, stating that the appellant did not provide valid reasons for non-compliance. The Tribunal, however, found that the assessee's consistent contention was that details were provided simultaneously for all group cases, including HUFs, and that the AO did not initiate penalty proceedings in individual cases on similar facts. The Tribunal held that the assessee was under a bona fide belief of compliance and deleted the penalty, setting aside the CIT(A)'s order.

Conclusion:
- ITA Nos. 226/Ahd/2011 and 228/Ahd/2011: Dismissed.
- All other 19 appeals: Allowed, with the penalty u/s 271(1)(b) deleted.

Order pronounced in open Court on 31.10.2011.