ITAT directs to delete Addition made by AO on ground of Wrongful Assessment of Tax Liability [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to delete the addition made on the ground of wrongful assessment of tax liability. 

Babusinh P. Thakor, the appellant assessee was an individual and declared income under the head capital gain, other sources and agriculture income in response to the notice issued under section 148 of the Income Tax Act,1961. 

The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer. 

Biren Shah, the counsel for the assessee contended that the assessee cannot be charged for the tax on the amount paid to another company. 

It was further submitted that the assessee had shown the transaction to avoid tax liability before the adjudicating authority and the assessing officer without considering the evidence made in addition to the income of the assessee. 

Rakesh Jha, the counsel for the revenue relied on the decisions made by the lower authorities and contended that to avoid the payment of tax liability has adopted a colorable device by showing the payment of an amount to another company. 

The bench observed that the assessee had made the payment to the company to avoid such litigation. Therefore, the assessee cannot be subjected to tax for the capital gain on the amount mentioned in such a memorandum of understanding. 

The two-member bench comprising Waseem Ahmed (Accountant) and Siddhartha Nautiyal (Judicial) quashed the order passed by the Commissioner and directed the assessing officer to delete the addition made to the income of the assessee while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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