2012 (11) TMI 1200 - AT - Income Tax

Summary

Issues involved: Delay in filing appeal, addition under section 40(a)(ia), disallowance under section 40A(2)(b), addition under section 28, cash credits under section 68, penalty under section 271(1)(c).

The appeal before the Appellate Tribunal ITAT Ahmedabad involved a delay of 61 days in filing the appeal, which was condoned by the Tribunal. The issues for the assessment year 2005-2006 included grounds related to additions and disallowances made by the Commissioner of Income-Tax (Appeals).

Addition under Section 40(a)(ia): The assessee contested the addition of Rs. 11,00,574 on account of disallowance under section 40(a)(ia) for non-deduction of tax. The assessee did not press this ground, leading to its dismissal.

Disallowance under Section 40A(2)(b): The assessee challenged the addition of Rs. 4,33,920 under section 40A(2)(b) for transactions with related parties. The Tribunal found that the addition was made without providing an opportunity for the assessee to be heard, thus directing the Assessing Officer to re-examine the issue considering the submissions made by the assessee.

Addition under Section 28: The assessee disputed the addition of Rs. 4,33,920 under section 28, alleging a contravention of section 251(2) of the IT Act. The Tribunal directed the Assessing Officer to reconsider the issue after providing a fair opportunity for the assessee to present evidence and arguments.

Cash Credits under Section 68: The assessee objected to the addition of Rs. 1,08,09,988 on account of cash credits under section 68. The Tribunal noted that the Assessing Officer failed to issue summons to the creditors despite a specific request from the assessee. Consequently, the Tribunal directed the AO to re-evaluate the issue, including summoning the creditors and allowing the assessee to cross-examine them.

Penalty under Section 271(1)(c): The penalty imposed under section 271(1)(c) was deemed invalid due to the decision to set aside the addition related to unproved creditors under section 68. The Tribunal canceled the penalty, with the option for the AO to re-initiate penalty proceedings if necessary.

In conclusion, the Tribunal partially allowed ITA No.405/Ahd/2009 for statistical purposes and allowed ITA No.3289/Ahd/2011, with directions for the Assessing Officer to re-examine certain issues in accordance with the law and provide opportunities for the assessee to present their case.