When substantial question of law admitted by High Court, it is apparent that addition is debatable – ITAT

When substantial question of law admitted by High Court, it is apparent that addition is debatable – ITAT

ABCAUS Case Law Citation:
ABCAUS 1274 (2017) (06) ITAT

Assessment Year : 1999-2000
Date/Month of Pronouncement: May, 2017

Important Case Laws Cited relied upon:
Rupam Mercantile vs. DCIT (2004) 91 ITD 237
Smt. Ramila Ratilal Shah vs. ACIT (1998) 60 TTJ (Ahd) 171
CIT vs. Aditya Birla Power Co. Ltd. in ITA No.851 of 2014

Brief Facts of the Case:
The return of the appellant assessee firm was taken for scrutiny. The assessment was completed and an addition was made under section 68 of the Income Tax Act, 1961 (‘the Act’). The matter went to the Tribunal and The ITAT partly allowed the appeal but confirmed the addition.

The Assessing Officer (ÁO’) levied penalty for the addition made u/s 68 which was under the challenge in the present appeal.

Contentions of the appellant assessee:
It was submitted that the quantum addition confirmed by the Tribunal was challenged before Hon’ble High Court and Hon’ble High Court has admitted the appeal of the assessee. It was further submitted that since the Hon’ble High Court had admitted the substantial question of law on the addition made by the Tribunal, therefore this addition wa certainly debatable. And in this circumstances the penalty cannot be levied as held in various judgments of Hon’ble Delhi High Court, Hon’ble Bombay High Court and Hon’ble Karnataka High Court etc. therefore, penalty may be deleted.

Observations made by the Tribunal:
It was observed that the addition had been confirmed by the Tribunal and assessee was before the Hon’ble High Court and Hon’ble High Court had admitted the question of law.

The Tribunal opined that,

“when the substantial question of law has been admitted by High Court on addition, it becomes apparent that addition is certainly debatable.”

Held:
Following the judgment of Hon’ble Jurisdictional High Court, the penalty was deleted.