NAGAIAH KEKKIRENI,SURYAPET vs. ITO., WARD-1, SURYAPET
Facts
The assessee filed his return of income for AY 2009-10 declaring an income of Rs. 4,48,780. During scrutiny assessment, it was found that the assessee purchased land worth Rs. 42.84 lakhs, and the source of these funds was not satisfactorily explained. The Assessing Officer (AO) made an addition for unexplained investment and initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.
Held
The Tribunal held that the penalty proceedings are an outcome of the assessment, and if the assessment itself is debatable and the issue has been admitted as a substantial question of law by the High Court, then the penalty cannot survive. Relying on various High Court judgments, the Tribunal found that since the substantial addition was admitted by the High Court, the penalty was not sustainable.
Key Issues
Whether the penalty under section 271(1)(c) of the Income Tax Act, 1961, is sustainable when the addition forming the basis of the penalty has been admitted as a substantial question of law by the High Court?
Sections Cited
271(1)(c), 143(2), 133A, 131, 143(3), 147, 260A, 43CA
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Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to:- 1. �नधा�रती/The : Nagaiah Kekkireni, 1-1-109/A, Thallagadda Suryapet-508213, Telangana. Assessee 2. राज�व/ The Revenue : Income Tax Officer, Ward-1, Suryapet, Telangana. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण /DR,ITAT, Hyderabad. 5. The Commissioner of Income Tax 6. गाड�फ़ाईल / Guard file
आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Hyderabad.