2006 (6) TMI 160 - AT - Income Tax

Summary

Issues:
1. Addition under section 69 of the Act
2. Charging of interest under sections 234A, 234B, and 234C

Issue 1: Addition under section 69 of the Act
The case involved an appeal against the confirmation of an addition of Rs. 22,075 under section 69 of the Act. The dispute centered around the source of funds for the purchase of an FDR and an investment made by the assessee. The AO questioned the cash in hand amount shown by the assessee, leading to the addition. However, the Tribunal found the AO's reasoning based on suspicion and conjectures, as the cash in hand was supported by the balance sheet. The Tribunal concluded that the addition was unjustified, ordering its deletion.

Issue 2: Charging of interest under sections 234A, 234B, and 234C
The assessment order did not specify the charging of interest under sections 234A, 234B, and 234C. The debate revolved around whether interest could be charged without explicit mention in the assessment order. The Tribunal noted conflicting decisions by different High Courts on this matter. While some courts upheld charging interest as mandatory, others required specific directions in the assessment order. Citing relevant case law, the Tribunal followed the opinion of the jurisdictional High Court, ruling that interest under sections 234A and 234B could not be charged without explicit directions in the assessment order. Consequently, the Tribunal allowed the appeal on this ground, holding that the levy of interest in the given circumstances could not be upheld.

In conclusion, the Appellate Tribunal ITAT JODHPUR ruled in favor of the assessee, ordering the deletion of the addition under section 69 of the Act and disallowing the charging of interest under sections 234A and 234B due to the absence of specific directions in the assessment order.