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2021 (6) TMI 442 - AT - Income Tax


Issues:
1. Deletion of addition made under section 68 of the Income Tax Act.
2. Addition made on estimate basis and subsequent deletion by the Commissioner.
3. Levy of penalty under section 271(1)(c) and its deletion by the Commissioner.

Deletion of addition made under section 68 of the Income Tax Act:
The case involved two appeals filed by the Revenue against the orders of the Ld. CIT (A)-3, Hyderabad for the AY 2013-14. The first issue pertained to the deletion of an addition of ?3,58,10,000 under section 68 of the Act by the Ld. CIT (A). The Ld. AO had added this amount as the source was unexplained. The Ld. CIT (A) deleted the addition based on examination of confirmation letters and other documents provided by the assessee. However, the Revenue argued that the Ld. CIT (A) did not follow Rule 46A(3) of the Rules by not obtaining a remand report from the Ld. AO. The Tribunal found that essential documents were not submitted before the Ld. AO and directed a fresh consideration by the Ld. AO, allowing the assessee to present any additional evidence.

Addition made on estimate basis and subsequent deletion by the Commissioner:
The second issue involved an addition of ?34,82,514 made by the Ld. AO on an estimated basis, which was agreed upon by the assessee during assessment proceedings. The Ld. CIT (A) deleted this addition, stating it was made hypothetically without evidence. However, neither the Ld. AO nor the Ld. CIT (A) provided detailed reasoning in their orders. Consequently, the Tribunal remitted this issue back to the Ld. AO for a fresh assessment to ensure justice and proper consideration of evidence.

Levy of penalty under section 271(1)(c) and its deletion by the Commissioner:
The third issue was related to the penalty imposed under section 271(1)(c) of the Act, which was deleted by the Ld. CIT (A) along with the additions made by the Ld. AO. Since the quantum appeal was remitted back to the Ld. AO for reconsideration, the Tribunal decided to remit the penalty appeal as well for appropriate decision in accordance with law. Ultimately, both the quantum appeal and the penalty appeal of the Revenue were allowed for statistical purposes.

This judgment from the Appellate Tribunal ITAT Hyderabad addressed various issues concerning additions made by the Ld. AO and subsequent deletions by the Ld. CIT (A). The Tribunal emphasized the importance of providing cogent evidence and following procedural rules for a fair assessment process. The decision highlighted the need for detailed orders with proper reasoning to ensure transparency and justice in tax matters.

 

 

 

 

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