ITAT allows appeal for late filing, orders reassessment, and sets aside penalty.

The ITAT allowed the appeal in ITA no.7524/Mum./2011 due to genuine reasons for the delay in filing, admitting the appeal for hearing on merit. In relation to disallowances and additions made by the Assessing Officer, the ITAT directed a denovo assessment by the Assessing Officer considering additional evidence provided by the assessee. The penalty imposed under section 271(1)(c) was set aside by the ITAT in ITA no.7309/Mum./2011 as the basis for the penalty ceased to exist after the matter was sent back for reassessment.

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Issues:
1. Delay in filing the appeal in ITA no.7524/Mum./2011.
2. Disallowance and additions made by the Assessing Officer.
3. Imposition of penalty under section 271(1)(c) of the Income Tax Act.

Issue 1: Delay in filing the appeal in ITA no.7524/Mum./2011:
The appeal faced a delay of 360 days due to a change in the partnership firm's constitution, resulting in a dispute between continuing and retired partners. The delay was condoned by the ITAT as genuine reasons were presented, allowing the appeal to be admitted for hearing on merit.

Issue 2: Disallowance and additions made by the Assessing Officer:
The Assessing Officer completed the assessment under section 144 of the Act, adding amounts under section 69 and estimating profit on the sale of property and rental income. The learned Commissioner (Appeals) upheld these additions, stating the assessee failed to substantiate its claims. The ITAT found that the disallowances/additions were made due to the lack of supporting evidence. The ITAT directed the matter to be sent back to the Assessing Officer for a denovo assessment considering additional evidence provided by the assessee.

Issue 3: Imposition of penalty under section 271(1)(c) of the Income Tax Act:
The penalty imposed under section 271(1)(c) was challenged in ITA no.7309/Mum./2011. Since the matter was sent back for denovo assessment, the basis for the penalty no longer existed. Therefore, the ITAT set aside the penalty and allowed the appeal. The ITAT clarified that the Assessing Officer could initiate penalty proceedings if necessary after the completion of the assessment.

In conclusion, the ITAT allowed the appeal in ITA no.7524/Mum./2011 for statistical purposes, directing a denovo assessment by the Assessing Officer. Additionally, the ITAT allowed the appeal in ITA no.7309/Mum./2011 by setting aside the penalty under section 271(1)(c) due to the restoration of the matter for reassessment.

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