Tribunal rules in favor of assessee, deletes addition, and penalty based on lacking foundation. The Tribunal allowed the assessee's appeals, directing the assessing officer to delete the Rs. 52,14,000 addition as it lacked foundation. Consequently, ...
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Tribunal rules in favor of assessee, deletes addition, and penalty based on lacking foundation.
The Tribunal allowed the assessee's appeals, directing the assessing officer to delete the Rs. 52,14,000 addition as it lacked foundation. Consequently, the penalty of Rs. 14,40,710 imposed under section 271(1)(c) was also deleted since it was based on the now-deleted addition. The Tribunal set aside the Ld. CIT (Appeals) order and ruled in favor of the assessee, with the decision announced on 01.10.2019.
Issues: 1. Quantum addition of Rs. 52,14,000 in the assessment. 2. Imposition of penalty under section 271(1)(c) of the Income Tax Act.
Analysis:
Issue 1: Quantum Addition of Rs. 52,14,000 The case involved a partnership firm engaged in real estate business, where the assessing officer added Rs. 52,14,000 as income under section 68 of the Act due to unconfirmed booking advance deposits. The Ld. Commissioner of Income Tax (Appeals) upheld the addition citing lack of bank statements from third parties to prove the source of income. The Tribunal, in the first round, remitted the matter to the assessing officer for fresh investigation. The subsequent remand report revealed that out of 14 parties, 13 confirmed the transactions, with one party unavailable for statement due to being abroad. The Tribunal noted that the remand report supported the assessee's claim, leading to the deletion of the addition as it lacked foundation to survive.
Issue 2: Imposition of Penalty under Section 271(1)(c) The assessing officer imposed a penalty of Rs. 14,40,710 under section 271(1)(c) based on the addition of Rs. 52,14,000. The Ld. CIT (Appeals) confirmed the penalty. However, since the quantum addition was deleted due to lack of foundation, the Tribunal also deleted the consequential penalty as it did not survive.
In conclusion, both the appeals of the assessee were allowed, with the Tribunal setting aside the Ld. Commissioner of Income Tax (Appeals) order and directing the assessing officer to delete the impugned addition. The consequential penalty under section 271(1)(c) was also deleted. The decision was pronounced in open court on 01.10.2019.
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