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2024 (2) TMI 1346 - SC ORDER
Reopening of assessment u/s 147 - transactions in question were in the nature of partners’ capital withdrawal - subjective satisfaction and reasons to believe that the income had escaped the assessment - as decided by HC [2022 (12) TMI 1281 - GUJARAT HIGH COURT] communication whereby the reasons recorded were supplied, no satisfaction was recorded by the assessing officer that the income chargeable to tax has escaped assessment. Not only the said requirement was not satisfied, but there was no actual escapment of income as well - HELD THAT:- We are not inclined to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (2) TMI 1345 - SC ORDER
Action on the complaint of the petitioner sent through speed post - Request for necessary investigation may be done against private respondents - Writ of Mandamus - as decided by HC [2020 (2) TMI 842 - ALLAHABAD HIGH COURT] present writ petition is liable to be dismissed on the ground of concealment of facts in respect of the filing of the earlier writ petitions - HELD THAT:- The special leave petition stood dismissed owing to the defects not being cured within the permitted time, in terms of the order [2023 (7) TMI 1376 - SC ORDER] - The defects having been cured thereafter, the subject applications have been filed seeking condonation of the delay of 36 days in filing a restoration petition and to restore the case.
Both the applications are ordered, condoning the delay of 36 days and permitting the restoration of the case. In consequence, SLP shall stand restored to the file.
Miscellaneous application shall stand disposed of accordingly.
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2024 (2) TMI 1344 - ALLAHABAD HIGH COURT
Notice of reassessment proceedings issued on a wrong E-mail ID - primary and secondary email ID - there exists two email ID of the petitioner-Company - what is the registered e-mail address of the petitioner as on 07.03.2023 i.e the date of issuance of notice under Section 148A (b) of the Act, 1961? -
HELD THAT:- If the registered email address of the assessee cannot be determined from (a) e-filing account of the addressee registered in designated portal or (b) from the last income tax return furnished, or (c) from the permanent Account number data base relating to the addressee or (d) from the official website of the Ministry of corporate affairs, etc. then only the authority may resort to any e-mail address made available by the assessee. Further, the word “available” is of significance as it records a positive action on the part of the assessee in making available the e-mail ID, so that the same may be construed as the registered email ID of the assessee.
As far as the present case is concerned, it has been the consistent stand by the petitioner that he has used or made available the e-mail ID: taxmohit56@gmail.com for e-filing of his income-tax return even since the Assessment Year 2020-21 and the same has been used by him even for filing of the latest income-tax return for the Assessment Year 2022-23. Further, the said email ID has been also mentioned by him in the income-tax return and the same is relatable to PAN data base and also mentioned in the master data of the petitioner’s Company as available from the official website of the Ministry of Corporate Affairs at the relevant time. Therefore, taking a holistic view of the matter, it has to be held that the e-mail ID: taxmohit56@gmail.com is the registered e-mail address of the petitioner company and it is the e-mail ID, which has been made available to the Authority by the assessee.
Recently, the Delhi High Court in the case of Jyoti Narang Vs Income tax Officer [2023 (7) TMI 1377 - DELHI HIGH COURT] has also set aside the penalty and demand notice on the ground that the show cause notice was issued on a wrong E-mail ID.
In the present case, the notice under Section 148A(b) of the Act, 1961 has not been issued on the registered email address of the petitioner’s company. Thus the order passed by the Assessing Authority under Section 148-A (d) and the consequential notice issued under Section 148 as also the consequential proceedings are quashed.
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2024 (2) TMI 1343 - BOMBAY HIGH COURT
Reopening of assessment u/s 147 - reason to believe - Reliance on audit objection - assessee had debited an amount under the head ‘Employee benefit expenses’ on account of reimbursement of proportionate expenses paid to the ultimate holding company, for ESOP granted to the assessee’s employees and break-up of income from arbitrage business shown under the head ‘Other Operating Revenues’ on account of delivery based purchase and sale of shares - HELD THAT:- In the reason to believe itself, it has been admitted that Assessee had filed a copy of audited Profit and Loss Account and Balance-sheet along with return of income where information/ material was disclosed. Reason to believe does not, however, disclose the fact that these two items mentioned in the reason to believe, i.e., the debit under the head ‘Employee Benefit Expenses’ and the break-up of income from arbitrage business shown under the head ‘Other Operating Revenues’ on account of delivery based purchase and sale of shares were subject of consideration during the assessment proceedings. Petitioner had received a communication dated 11th January 2016 calling upon Petitioner to produce the accounts and/or documents specified in the annexure to said notice.
As regards, the employee benefit expenses on account of Employee Stock Option (“ESOP”), there is no discussion in the assessment order. As held by this Court in Aroni Commercials Limited [2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The Court held that only requirement is that AO ought to have considered the objections now raised in the grounds for issuing notice under Section 148 of the Act during the original assessment proceedings. If that has been done, it would follow that the reopening of assessment by impugned notice will merely be on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and that change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. Since both the issues raised in the reason to believe for reopening the assessment have been subject matter of consideration during the assessment proceedings, it can be based only on change of opinion which is not permissible.
Reopening as based on audit objections - It is settled law as laid down in Indian & Eastern Newspaper Society [1979 (8) TMI 1 - SUPREME COURT] that in every case, the Income Tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has come to his notice, he can reasonably believe that income has escaped assessment - the true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income Tax Officer. Therefore, the AO cannot reopen the assessment relying on audit objections. Moreover, there is nothing on record to indicate that the AO had applied his mind afresh without being influenced by the audit objections. The reason to believe should be of the AO and he cannot be acting on the dictates of other parties.
Decided in favour of assessee.
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2024 (2) TMI 1342 - BOMBAY HIGH COURT
Bad Debts - Loans advanced to the Group Company utilized for purchase of properties and shares - whether it can be termed as proper debt for the purpose of claim as bad debt u/s. 36(1)(vii) r.w.s. 36(2)? - HELD THAT:- As position before the amendment was that assessee could claim deduction in respect of the bad debt or part thereof which is established to have become bad in the previous year relevant to the assessment year in which the claim is made, whereas the position after the amendment is that assessee is entitled to deduction in respect of the amount of bad debt or part thereof which is written off as irrecoverable in the account of assessee in the previous year.
In our view, it is not necessary that assessee should establish that the debt has gone bad during the previous year relevant to the assessment year in question. If assessee could show that it bona fidely believed that the debt had gone bad and the claim could be made, it is to be allowed for the year in which it is written off in the books of accounts.
One of the reasons the AO has disallowed the claim of assessee is that assessee is not a money lender and hence, it could not be said that the amount advanced had become bad. We agree with the ITAT that it is not necessary that every businessman should register himself under Money Lending Act and make the claim in relation to any advance made by it only in the capacity of carrying on money lending business.
As per the balance sheet of assessee, the said M/s. Ganges Soaps Pvt. Ltd. was assessee’s debtor because assessee had given advance loan to it. ITAT has come to a factual finding that the money was advanced during the course of business.
As relying on a judgment of Bazpur Co-op. Sugar Factory Ltd. [1988 (5) TMI 4 - SUPREME COURT] the ITAT has given a finding that entries in the books of accounts were not determinative of the character of a transaction but it is the nature and the quality of receipt/transaction and not the head under which it is entered in the account books that will prove decisive. In the grounds of appeal this view taken by the ITAT has also not been disputed. Decided in favour of assessee.
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2024 (2) TMI 1341 - BOMBAY HIGH COURT
TDS u/s 194I or 194C - storage charges paid by assessee - TDS @ 20% or 2% - HELD THAT:- The storage tanks in question do not qualify either as land or as building within the meaning of Section 194I of the Act. In terms of Section 194I of the Act, there has to be a lease, sub-lease or tenancy or any other agreement involving land or any building excluding factory building. It is not the case of the Revenue that the storage tank was taken on lease or sub-lease or tenancy. Assessee’s case would fall under the part “or any other agreement involving land or any building, together with furniture, fittings and the land appurtenant thereto”. It is nobody’s case that assessee has taken any land or building together with furniture, fittings and the land appurtenant thereto.
Thus we hold that the payments in question are liable for deduction of tax at source under the provisions of Section 194I - Decided in favour of assessee.
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2024 (2) TMI 1340 - BOMBAY HIGH COURT
Unexplained cash credits u/s 68 - allegation of involvement in multi crore securities transactions scam of nineties infamously known as Harshad Mehta Scam, Assessee got labelled as party under the Special Court's (TORTS) Act, 1992 - assessee had failed to meet all the three criteria i.e. identity, creditworthiness and genuineness of the transaction - ITAT deleted addition - HELD THAT:- ITAT has very elaborately dealt with each of the additions. For the first addition relating to Rita Chopra, ITAT came to a finding that there is no reason to suspect the credit obtained from this party. ITAT, therefore, directed the AO to delete this addition.
Cash credit in the name of Ronak Patel, though assessee did not obtain any confirmation letter, he produced evidence on repayment of Rs. 93,000/- made on 10th May 1991 to Ronak Patel. Assessee also showed evidence of having paid interest of Rs. 11,890/- to Ronak Patel during the year under consideration and, therefore, the Tribunal considered that for a sum of Rs. 12,000/- there was satisfactory explanation given by assessee. ITAT, therefore, modified the additions and reduced it from Rs. 40,000/- to Rs. 28,000/-.
Cash credit received from Saurin Patel, the ITAT has accepted the explanation and evidence from assessee that he paid an interest of Rs. 12,600/- in February and August 1986. It has also noted that assessee has obtained fresh credit of Rs. 12,000/- on 3rd December 1986. ITAT, therefore, expressed a view that the interest payment of Rs. 12,600/- was sufficient to explain the sources for the fresh credit of Rs. 12,000/-.
As regards cash credit received from Vikram Patel, opening balance of Rs. 1,00,000/- available in this account and interest payment made to the creditor, the ITAT did not find any reason to sustain the addition of Rs. 10,000/-.
Interest expenditure debited as interest on securities - ITAT deleted addition by holding that the AO did not show any reason to the conclusion that the expenditure is excessive in nature - The admitted position is that payments have been made by cheques to bank accounts. AO should have considered the vouchers submitted by assessee and examined the genuineness of the expenditure with reference to the underlying invoices, bills of payment details, party details etc., and not straightaway come to the conclusion that the expenditure accounted through journal vouchers are bogus without verifying the factors and evidence that necessitated the passing of journal entries. ITAT, therefore, rightly concluded that passing of entries through journal vouchers are part and parcel of accounting proceedings in any type of business and any expenditure accounted through journal vouchers cannot be doubted on the only reason that they have been accounted through journal vouchers. Nothing prevented the AO to examine the entries with the underlying evidence.
AO has also expressed the view that expenditure incurred was excessive in nature but has not given any reason for coming to this conclusion. ITAT noted that the AO cannot arrive at the conclusion on certain presumptions and by making general observations. ITAT has also correctly observed that CIT(A) has simply confirmed the order of the AO without critically examining the same. Therefore, even here no substantial question of law arise.
Addition on account of negative balance of securities - ITAT deleted addition - AO has made observation, which has been confirmed by CIT(A) on the basis of stock summary prepared by the AO himself without furnishing the basis for arriving at alleged negative stock. The addition has been made without providing relevant materials and the ITAT has accepted that the relevant materials have not been submitted. The revenue was not been able to furnish materials on the basis of which the stock statement was prepared.
ITAT has correctly concluded that the revenue has failed to appreciate that there is no difference in the quantity of units of UTI because the debit and credit of face value of units of UTI are the same. There is no difference in the quantity of units of UTI alleged to have been purchased or sold. AO has arrived at a presumed figure simply by looking at the cost price of the units and the sale price of the same. We would agree with the findings of the ITAT.
No substantial question of law arise.
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2024 (2) TMI 1339 - ITAT SURAT
Addition u/s 68 - unexplained cash credit - Onus to prove - HELD THAT:- We note that assessee has sufficient evidence and document to prove the claim and for that assessee also submitted bank statement and cash-flow statement, which clearly shows the availability of cash balance.
Assessee has submitted relevant documents and evidence to prove his claim and Assessing Officer has not made any adverse finding in any of these documents even though all the details were furnished by the assessee before Assessing Officer. AO ought to have examined all these documents and rebutted them with a cogent adverse findings and discernable line of reasoning in order to arrive at conclusion and to make addition on account of unexplained cash credit.
We also find merit in the submission of the assessee that since assessee is not maintaining books of accounts, therefore addition made by the AO u/s 68 of the Act, is not tenable. Therefore, we note that AO has just brushed aside the documents and evidences submitted by the assessee, without even a word on why they are not acceptable.
It is a well settled law that when assessee has all plausible evidence in support of his claim, they cannot be brushed aside on surmise and conjecture. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence, this ground of assessee is allowed.
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2024 (2) TMI 1338 - ITAT DELHI
Non following Procedure laid down u/s 144C - Action of the AO/NeAC not proposing all the variation in the Draft Assessment Order - HELD THAT:- AO did not complete the assessment in conformity with the directions of DRP which did not contained any variations on account of addition of PF & ESI, Fees paid for Authorised Capital increase and Profit on sale of fixed assets. Action of the AO/NeAC not proposing all the variation in the Draft Assessment Order has denied the assessee of its legal right of filing objections before the DRP
In the draft Assessment Order passed by the Assessing Officer has only proposed adjustment on account of the Transfer Pricing Order to the total loss as per ITR. DRP deleted the addition proposed on account of Transfer Pricing determining adjustment on account of ALP at NIL.
Then the AO passed an order making addition on account of PF & ESI, ROC Fess and profit on sale of fixed assets. These three items were either two were not part of the draft Assessment Order. Hence, in view of the provisions of Section 144C(13)-“[Upon receipt of the directions issued under sub-section(5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 [or section 153B], the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.], the AO was not empowered to make any other addition which was not proposed in the draft Assessment Order an hence the order of the cannot be sustained.
Appeal of the assessee is allowed
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2024 (2) TMI 1337 - ITAT SURAT
Bogus LTCG - unexplained cash credit u/s 68 - accommodation entry of bogus exempted long term capital gain - onus of proof - scrip named "Lifeline Drugs & Pharma Ltd" was having no financial strength as well as no substantial business activities in the company during the period of purchase of shares to period of sales by the assessee - HELD THAT:- Hon`ble Jurisdictional High Court of Gujarat in the case of Jagat Pravinbhai Sarabhai, [2023 (1) TMI 44 - GUJARAT HIGH COURT] held that where AO noted that assessee had indulged in scrip of shell company and had claimed long term capital gain on sale of shares and made addition u/s 68 holding that entire transaction was bogus and in the nature of penny stock, however, since genuineness of investment in shares by assessee was substantiated by him by producing copy of transaction statement for period from 1-6- 2001 to 1-10-2010 and shares were retained for more than ten years and were sold after such long time, hence investment was not bogus therefore it cannot be treated that investment was made in penny stock.
It is well settled position of law that, an assessee receiving a credit has to testify its case through the 'triple marker test' of identity, Creditworthiness and Genuineness of Transactions. It is imperative, therefore, that the case be analysed in light of these three well- settled canons of adjudication, as embedded in the statute, as also promulgated by various judicial pronouncements. The onus of proof requires the assessee to furnish the proof of identity, creditworthiness and genuineness of the transaction. We note that in assessee`s case under consideration, the assessee has submitted the copy of Contract note. The said contract notes show the quantity, rate, time, stamp, value, taxes and charges viz. STT, brokerage, SEBI and exchange turnover charges, service tax and stamp duty incurred on all the transactions done on stock exchange platform. These documents have been accepted by the assessing officer. The transactions are done through proper banking channel and the sale is done at prevailing price quoted on the Stock Exchange. Hence, by submitting these documents, the assessee has proved identity, creditworthiness and genuineness of the transactions.
AO having failed to bring on record any material to prove that the transaction of the assessee was a collusive transaction could not have rejected the evidences submitted by the assessee. In fact, in this case nothing has been found against the assessee with aid of any direct evidences or material against the assessee, under these circumstances nothing can be implicated against the assessee.
One is bound to consider and rely on the evidence produced by the assessee in support of its claim and base decision on such evidence and not on suspicion or preponderance of probabilities, no material was brought on record by the AO to controvert the evidence furnished by the assessee.
The evidence filed by the assessee is accepted and the claim that the income in question is a bona fide Long Term Capital Gain arising from the sale of shares is allowed and hence exempt from income tax. Based on the above factual position, we deleted the addition - Decided in favour of assessee.
Addition u/s 69C on account of commission paid @ 3% of bogus long term capital gain - Since, we have deleted the alleged addition u/s 68 hence addition made by Assessing Officer does not have leg to stand, therefore it is hereby deleted, and hence ground No.3 raised by the assessee is allowed.
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2024 (2) TMI 1336 - ITAT DELHI
TP Adjustment - interest charged on foreign currency loan - HELD THAT:- As comprehensible that interest has been earned by assessee at arm’s length rate and accordingly, no adjustment on account of arm’s length rate is required to be carried out. Therefore the addition sustained is hereby directed to be deleted. Decided in favour of assessee.
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2024 (2) TMI 1335 - ITAT MUMBAI
Excess grant of interest contrary to the practice followed by the Department - recomputation of interest u/s 244A - As alleged CIT – A directing the AO to adjust the refund granted first towards interest amount refundable and thereafter consider the balance amount of tax amount refundable - HELD THAT:- CIT – A by directing the AO to verify the details of tax payment submitted by the assessee and the amount of tax paid on period of tax payment to recompute the amount of interest u/s 244A of the act till date of granting of refund. He has further held that in view of the observation of the honourable Supreme Court in [2006 (1) TMI 55 - SUPREME COURT] and the provisions of section 244A should be considered. Nothing was shown to us that how the learned AO is aggrieved when he is directed to recompute the interest by following the decision of the honourable Supreme Court and considering the provisions of the act. Further, coordinate bench decision has also been referred to.
Section 244A of the Income Tax Act pertains to the payment of interest on refunds. It states that if the taxpayer is entitled to a refund, they shall be paid an additional interest amount as determined by the Act.
According to assessee from the tax refund, nothing is to be reduced and tax and refund already determined should be reduced from interest refund, so that tax on which interest is eligible u/s 244A is always higher than the amount determined by the dl AO because tax amount eligible for interest would always be higher, resulting into higher interest out go.
Therefore, we do not find any merit in the appeal of learned AO as ld. AO is directed to verify the claim of assessee in accordance with law - ground of appeal raised is that if the order of the learned CIT – A is followed it will lead to excess grant of interest which is contrary to the practice followed by the Department and the intention of the legislation. We find that the practice followed by the Department should be in consonance with the provisions of the income tax act - Appeal of AO dismissed.
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2024 (2) TMI 1334 - ITAT AHMEDABAD
Addition based on entries appearing in a diary seized from the assessee - addition as unexplained income of the assessee and also initiated Penalty proceedings u/s. 269SS, 269T and 271AAB - money transaction received for various housing projects - CIT(A) deleted addition - HELD THAT:- CIT(A) has already held that the AO did not disprove that the entries in the diary seized are relating to the money transaction received for various housing projects of the Partnership Firms and the assessee was maintaining the accounts of the Partners of the various Firms.
AO nowhere in the assessment order rebutted the claim of the assessee with any material evidence. Further the Assessing officer did not give any basis for working out the figure of Rs. 2,53,04,000/- as unexplained cash in the hands of the assessee, as against the workings of Rs. 5,79,61,200/- found in the seized diary. Whereas the assessee produced before us the Return of Income filed by the partnership firm M/s. Yash Buildcon and M/s. Dev Corporation relating to the AY2014-15 and Ld. CIT(A) order in the case of M/s. Yash Buildcon wherein the undisclosed income declared by the assessee.
Therefore the ground raised by the Revenue is devoid of merits and the same is liable to be dismissed.
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2024 (2) TMI 1333 - ITAT RAJKOT
Revision u/s 263 - Validity of limited scrutiny proceedings - as per CIT AO has passed assessment order without proper verification and interest expenses claimed as deduction u/s 57 were required to be disallowed - assessee submitted that the assessment proceedings were selected for limited scrutiny with the specific purpose of enquiry into claim of interest expenses u/s 57.
HELD THAT:- On going through the contents of the 263 order and the assessment records, we observe that firstly there was no evidence lack of enquiry on part of the AO on the aspect of allowability of claim of deduction u/s 57 of the Act.
We observe that the case of the assessee was opened under limited scrutiny to examine whether the deduction against interest income from other sources has been correctly shown in the return of income and also to examine whether deduction claimed on account of interest expenses is deductible. The assessee had also filed replies to the query raised by the Assessing Officer during the course of assessment proceedings.
Even before PCIT, the assessee had filed written submissions giving the basis for claim of deduction of interest expenses u/s 57 by stating that the aforesaid interest income had been incurred exclusively for the purpose of earning interest income and accordingly the order passed by the AO was not erroneous and prejudicial to the interest of the Revenue.
Assessee had filed detailed written submission before Ld. PCIT explaining that the notice issued u/s 263 was on an incorrect understanding / appreciation of the facts of the assessee’s case and the assessee had submitted that the interest expenditure had been incurred wholly for the purpose of earning interest income. Assessee had also submitted that only that part of interest expenditure had been claimed by way of deduction u/s 57 which had been incurred for earning interest income and the proportionate part of the interest expenditure which was not utilized for earning interest income had not been claimed by the assessee as deduction under Section 57 of the Act.
As PCIT did not give any specific finding to controvert the written submissions filed by the assessee during the course of 263 proceedings and proceeded to hold that the assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue.
Accordingly, PCIT has erred in facts and law in holding that the assessment order passed by the Assessing Officer in the instant case is erroneous and prejudicial to the interest of the Revenue. Appeal of the assessee is allowed.
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2024 (2) TMI 1332 - ITAT DELHI
Scope of Limited Scrutiny - Accrual of income - Addition towards advance fees and deposits from old students - AO attempt to convert limited scrutiny into complete scrutiny - HELD THAT:- AR before us made a statement from the Bar that similar accounting treatment of advance fees and deposits from old students done by the assessee was duly accepted by the revenue in the earlier years even in scrutiny assessment proceedings and that there was no change in factual matrix during the year when compared to earlier years.
Even in AY 2015-16, the treatment of the same in the books of accounts was accepted by the ld. AO u/s 143(3) proceedings dated 18.12.2017. In any event, he also stated that the entire issue is revenue neutral as assessee has been consistently following the practice of offering the earlier advance fees to income and whatever fee that is received for the period beyond the financial year is treated as advance fees, which would become income in the succeeding year. DR could not bring any contrary material to this argument.
We find that CIT(A) had elaborately dealt with the issues in dispute and had granted relief to the assessee both on legal issue as well as on merits. As per the scheme of the Act, AO if he desires to convert limited scrutiny into complete scrutiny, he has to obtain prior permission from the competent authority to do so and only then could assume jurisdiction to examine other issues.
In the instant case, the same was admittedly not done by the AO. CIT(A) was duly justified in quashing the additions made by the ld. AO on this ground. CIT(A) had elaborately given a categorical finding that the income had been properly accounted and offered by the assessee in accordance with the provisions of the Act and there is no scope for making any addition even on merits. Appeal of the revenue is dismissed.
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2024 (2) TMI 1331 - ITAT RAIPUR
Addition u/s 68 - unexplained cash credit - capital contribution in cash by the partners - Addition in the hands of firm v/s partners - As per AO Assessee has not furnished any supporting document like bank statement of the partners from where the cash amount have been withdrawn or any corroborative evidence to explain the source and nature of the cash so deposited - HELD THAT:- Since the partners have substantial returned income to the tune of Rs. 24.45 Lac and Rs. 24.00 lac, who have made the capital contribution of Rs. 14.50 lac and 10 lacs, thus, the identity and creditworthiness of such partners cannot be doubted.
If the Ld. AO was not convinced with the source of amounts deposited by the partners, then such addition could have been made in the hands of such partners by invoking the relevant provisions of law but no addition was called for in the case of assessee firm, who have discharged its primary onus u/s 68 by providing the details of the partners from whom such funds were received.
Thus the addition made by the Ld. AO and affirmed by the Ld. CIT(A) w.r.t. capital contribution in cash by the partners cannot be sustained in the hands of assessee firm. Our decision is supported by various judgments relied upon by. Ground no. 1 of the present appeal is decided in favor of the assessee.
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2024 (2) TMI 1330 - ITAT AHMEDABAD
Condonation of delay in filing the appeal - delay of 326 days - sufficient cause - misguidance of the former Tax Consultant - HELD THAT:- It is always to be kept in mind that the condonation of delay is always a double edged sword, which has sharp edges on both sides and to be handled carefully by any party. - In our considered view, the assessee has demonstrated a reasonable cause for not filing the appeals within the statutory period of limitation, on the mis-representation of former Tax Consultant resulting in passing exparte orders and filing appeals with delay. - Delay condoned.
Assessment u/s 153A - unexplained cash credits - incriminating material found in search or not? - Penalty levied u/s 271(1)(c) - HELD THAT:- When an assessment has to be made in relation to the search or requisition u/s 153A of the Act, namely, in relation to material disclosed during the course of search or requisition, if in relation to any particular assessment year, at the same time when there is no incriminating material found, no addition or disallowance can be made in relation to that assessment year in exercise of powers u/s 153A and the earlier assessment shall have to be reiterated.
This legal preposition is now settled in the batch of cases namely PCIT, Central-3 -Vs- Abhisar Buildwell Pvt. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] holding that in respect of completed assessments/unabated assessments, no addition can be made by AO in the absence of any incriminating material found during the course of search u/s 132 or requisition made u/s 132A of the Act.
We have no hesitation in deleting the additions made on account of unexplained cash credit made by the AO without any incriminating material found during the course of search from the premises of the assessee.
Penalty u/s 271(1)(c) - Since the additions made on the quantum appeals for the above assessment years are already deleted vide paragraphs 10 and 11 of this order, consequently the present penalty appeals has no legs to stand and therefore the penalty levied is hereby deleted.
Assessee appeal allowed.
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2024 (2) TMI 1329 - ITAT AHMEDABAD
Non-prosecution of appeal by assessee - Undisclosed investment - as alleged assessee could not prove identity, genuineness of the transaction and creditworthiness of the parties - HELD THAT:- As none appeared on behalf of the assessee in spite of service of notices, the assessee in its letter head sought for adjournment on 16.03.2021, whereby the appeals were adjourned to 15.04.2021. Again another adjournment was sought for 29.12.2022 and the appeals adjourned to 13.02.2023. It is thereafter, eleven occasions the above appeals were adjourned from time to time and finally on 01.02.2024, none appeared on behalf of the assessee, in spite of service of notices to the assessee. This clearly shows that the assessee is not interested in pursuing the appeal. Further the assessee failed to file any documents in support of its Grounds of appeal.
Also noticed there is delay of 790 days in filing this appeal, but the assessee has not filed any Affidavit explaining the delay. In the absence of condonation petition explaining the delay, the present appeal is not maintainable and liable to be dismissed in limine.
Appeal filed by the assessee is hereby dismissed.
Where the appellant in spite of notice is persistently absent and the Tribunal on facts of the case is of the view that the appellant is not interested in prosecuting the appeal, it can in exercise its inherent power to dismiss the appeal for non- prosecution. In the case of CIT Vs. B. N. Bhattacharya [1979 (5) TMI 4 - SUPREME COURT], it was held that appeal does not mean merely filing of appeal but effectively pursuing it. Appeal filed by the Assessee is dismissed in limine.
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2024 (2) TMI 1328 - ITAT SURAT
Addition u/s 69 - repayments of loan/creditor - CIT(A) deleted the addition as observed that only those ‘investments’ that are found to have been ‘not recorded in the books’ qualify for addition under the said section, if assessee fails to offer proper/satisfactory explanation. HELD THAT:- In the instant case the transactions made by the assessee that are subjected to addition under this section are all reflected in the books of account maintained by him. Nowhere did the assessing officer state that these repayments were made from undisclosed sources.
AO perused 3CD report and found that that repayments have been disclosed in clause 31(c) of the Tax Audit Report.
CIT(A) as observed that repayments of loan/creditor cannot be regarded as 'investments' for the reason that investments are assets of the investor which are likely to yield returns and investment as such can be redeemed to obtain the principal. So, the repayment of loan disclosed in the books of account would not come under the purview of Section 69. We also note that repayment of amount was made through banking channel and also duly recorded, in the books of accounts.
As gone through the party-wise, unsecured loan, findings given by the ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). Hence, we dismiss ground No.1 raised by the Revenue.
Addition on the account of Section 24 v/s business head u/s 37 - interest paid on housing loan - CIT(A) deleted addition as per Section 36(1)(iii) which is the relevant provision regarding Interest on borrowed capital, according to which the amount of interest paid in respect of capital borrowed for the purpose of Business and Profession of assessee shall be allowed - HELD THAT:- The provisions of Section 37 is a general in nature allowing deduction of an expenditure laid out or expended wholly and exclusively for the purposes of the business. Since, AO in the assessment order had given a categorical finding that the assessee had availed a loan by mortgaging a business asset and that the loan is utilised for the purposes of business, then the deduction claimed by the assessee towards interest paid on such loan utilised for the purpose of business is an allowable deduction under the head “income from business” and not under the head “income from house property”.
CIT(A) correctly observed that section 36(1)(iii) of the Act, which is the relevant provision regarding Interest on borrowed capital, according to which, the amount of interest paid in respect of capital borrowed for the purpose of Business & Profession of assessee shall be allowed subject to the section 43B - CIT(A) observed that when the capital is borrowed for acquisition of a capital asset, then interest liability pertaining to the period till the date such asset is put to use shall not be allowed as deduction. Going by the fact noted by AO, in the assessment order and the relevant provisions of the IT Act, it is held by ld CIT(A) that the disallowance of interest claim to made by AO is not in accordance with the provisions of the statute and therefore, ld CIT(A) deleted the same correctly - Decided against revenue.
Addition of cash deposit u/s 68 - during the demonetization period, the assessee has deposited cash in three banks - CIT(A) deleted addition - HELD THAT:- CIT(A) noted from the assessee`s balance sheet that the bank accounts in question in which the cash deposits were made by the assessee during the demonetization period formed part of its books of account. Considering the aforesaid facts, when the bank accounts in question, are all duly been accounted for by the assessee in its books of account for the year under consideration, therefore, AO by not rejecting the said books of account had clearly accepted that the cash deposited by the assessee firm during the year under consideration in the said bank accounts was out of its disclosed sources. Based on this factual position, the ld CIT(A) deleted the addition. We note that ld CIT(A) has passed a reasoned and speaking order. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us - Thus dismiss the ground raised by the Revenue.
Admission of additional evidenced by CIT(A) - allegation of violation of Rule 46A of the Income Tax Rules - HELD THAT:- We note that ld CIT(A), during the appellate proceedings, vide its letter dated 07.12.2022, the additional evidences submitted by the assessee before ld CIT(A), were forwarded to Assessing Officer for his examination and remand report thereon. The additional evidences were resent to Assessing Officer also, however, Assessing Officer failed to submit the remand report. Hence, we note that there was no violation of provisions of Rule 46A of the I.T. Rules, therefore, we dismiss both the grounds raised by the Revenue.
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2024 (2) TMI 1327 - ITAT DELHI
Accrual of income in India - Fixed place Permanent Establishment ("PE") for business in India, to carry on the business of sale of software products - HELD THAT:- The issues involved have been squarely covered by the order of the coordinate bench [2023 (4) TMI 1303 - ITAT DELHI] wherein as find merit into the contention of the assessee that the Assessing Authority was not justified in making addition in the hands of the assessee when in the case of alleged PE of the assessee, the transactions have been treated to be arm’s length price. Furthermore, the assessee has pointed out that while making addition, the AO has also included the transaction related to hardware whereas allegation of PE is related to software. In the light of the binding precedents, we are of the considered view that the authorities below erred in making the impugned additions. We therefore, direct the AO to delete the same. Decided in favour of assessee.
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