2021 (6) TMI 442 - AT - Income Tax

ITAT Hyderabad allows Revenue's appeal, directs fresh assessment under IT Act

The Appellate Tribunal ITAT Hyderabad allowed the Revenue's appeals concerning additions made under the Income Tax Act for AY 2013-14. The Tribunal ... Addition u/s 68 - Whether CIT (A) has erred in deleting the addition made by the Ld. AO relying on the additional evidence filed by the assessee without calling for remand report from the Ld. AO? - HELD THAT:- As evident from the paper-book filed before us that the income tax return of the creditors were not filed before the Ld.AO which was filed before the Ld.CIT(A). From the Order of the Ld.CIT(A) we find that he has not stated proper reasons with cogent evidence to substantiate that the transactions of creditors are genuine. Only the conformation statements of the creditors will not suffice to establish the genuineness of the creditors. The onus is on the assessee to prove the genuineness of the creditors with cogent evidence - AO has also powers to examine the creditors U/s.131 or u/s.133(6) of the Act which it appears he has not exercised, probably he might not have had proper details of the creditors at the time of assessment proceedings. Thus the entire matter is required to be revisited by the Ld. AO for fresh consideration. Therefore, in the interest of justice, we hereby remit this issue back to the file of the Ld. AO for de-novo consideration, granting liberty to the assessee to file any fresh evidence before him to substantiate its stand. Estimation of income - AO estimated the income of the assessee @ 8% of the gross receipts and also added the interest income - HELD THAT:- As addition was agreed by the assessee at the time of assessment proceedings as per the Ld.AO. On appeal, the Ld. CIT (A) deleted the addition by stating that the addition was made on hypothetical basis without any evidence. We find that nether the Ld. AO nor the Ld. CIT (A) has come out with a speaking order on the issue. Therefore, in the interest of justice, this issue is also remitted back to the file of the Ld. AO for de-novo consideration. Levy of penalty u/s. 271(1)(c) - HELD THAT:- Since, we have remitted back the quantum appeal back to the file of the Ld. AO for de-novo consideration, We find it appropriate to remit the penalty appeal also back to the file of the Ld. AO in order to pass appropriate order in accordance with law and merit based on the assessment order passed in lieu of the appeal being remanded to the file of Ld.AO by the Bench. 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 Rs. 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 Rs. 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.