2019 (2) TMI 1195 - AT - Income Tax

Addition u/s 68 - HELD THAT - We are of the view that the matter requires re-consideration at the level of the A.O. Since this amount of ₹ 2,04,329/- is opening balance, therefore, the A.O. should re-decide this issue by verifying the facts of the case. We, accordingly, set aside the Orders of the authorities below and restore this ground to the file of A.O. with a direction to re-decide the issue as per Law, by giving reasonable, sufficient opportunity of being heard to the assessee. - Assessee allowed partly for statistical purposes.

Summary

Issues:
1. Challenge against the levy of penalty under section 271(1)(c) of the I.T. Act, 1961 for A.Y. 2007-2008.
2. Addition under section 68 of the I.T. Act in a sum of ?4,42,166/- on account of sundry creditors.

Analysis:
1. The appeals by the Assessee were against the Orders of the Ld. CIT(A)-IV, Delhi, challenging the penalty under section 271(1)(c) of the I.T. Act, 1961 for A.Y. 2007-2008. The Tribunal noted that one appeal was dismissed for default but later re-fixed for hearing on merits. The Assessee's counsel argued on specific grounds, leading to the dismissal of the remaining grounds not pressed. The main issue was the challenge against the penalty levied.

2. Regarding the addition under section 68 of the I.T. Act in the amount of ?4,42,166/- on account of sundry creditors, the A.O. treated it as unexplained liability due to the lack of confirmation. The Ld. CIT(A) upheld this addition. The Assessee's counsel pointed out an opening balance from the previous year, stating that the addition was not justified. The Tribunal agreed that the matter needed re-consideration by the A.O. as the opening balance was crucial. Therefore, the Orders were set aside, and the issue was restored to the A.O. for re-decision with proper opportunity for the Assessee to be heard.

3. In the judgment related to the penalty on the aforementioned addition, the Tribunal observed that since the issue was sent back to the A.O. for re-decision, no penalty was applicable at that stage. The Orders below were set aside, and the penalty was canceled. However, the A.O. retained the authority to impose a penalty after deciding on the quantum. Consequently, the appeal on this issue was allowed.

4. In conclusion, one appeal was allowed partly for statistical purposes, and the other appeal was allowed entirely. The Tribunal provided detailed reasoning for each issue, emphasizing the importance of proper consideration and adherence to the law in tax matters.

Order pronounced in the open Court.