Arpita Constructions, Hyderabad V. ITO, Hyderabad

ITA 650/HYD/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5830 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 09-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained expenditure; Business income; Initiation of penalty proceedings; Corroborative evidences; Assessment record; Revised return; Reassessment proceedings
• Section: 133A; 148

Judgement Text

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