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of <h1>Assessee's appeals partly allowed, CIT(A) to reconsider legal issues. Expense disallowance modified, penalty order restored for review.</h1> <h3>Nandlal Sachdeva Versus Income-tax Officer</h3> The appeals of the assessee were allowed in part. The Tribunal directed the CIT(A) to reconsider the legal issues related to the assessment order under s. ... - Issues involved:Appeal against order under s. 143(3) of the IT Act, 1961 and levy of penalty under s. 271(1)(c) of the IT Act, 1961.Issue 1: Assessment Order under s. 143(3) based on s. 154/143(1)(a)- The assessee, engaged in cloth trading, declared excess cash as additional income during a survey.- AO rectified intimation under s. 154 to add the income in the assessment.- CIT(A) annulled assessment due to lack of notice u/s 143(2).- Tribunal restored the matter to CIT(A) to decide on merits.- Legal issue raised on validity of assessment order under s. 143(3) not considered by CIT(A).- Assessee contended that proceedings under s. 154 after notice u/s 143(2) were not sustainable.- Tribunal directed CIT(A) to decide the legal issue as per law.Issue 2: Ad hoc disallowance of expenses- CIT(A) deleted trading account addition but confirmed disallowance of expenses.- Assessee appealed against the disallowance of telephone and vehicle expenses.- Disallowance of Rs. 5,000 deemed excessive.- AO directed to restrict disallowance to 1/10th of the expenditure.Issue 3: Penalty under s. 271(1)(c)- Penalty imposed by CIT(A) is consequential to the confirmed addition.- Since quantum appeal is restored, penalty order also restored for reconsideration.- CIT(A) directed to decide penalty after considering the legal issue raised by the assessee.Conclusion:- Appeals of the assessee allowed in part, with directions given for reconsideration of legal issues and expenses disallowance.
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