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Income Tax - Case Laws
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2024 (11) TMI 1071
Overriding effect of Provisions of section 153C on the provisions of section 147 - interplay between the provisions of Section 153C and Section 147 of the Act - It is the Assessee’s case that recourse to Section 147 would be unavailable in cases where the AO is empowered to proceed u/s 153C - HELD THAT:- The provision of Section 153C enables the AO to assess or re-assess the income of the assessee where any incriminating assets, material, books of account or documents are found (which either belongs to the assessee a person other than the searched person or contains information pertaining to the assessee), in a search conducted u/s 132 of the Act or requisition made u/s 132A of the Act in respect of another person.
As stated above, the AO must be satisfied that the assets or material found or information contained in documents and books of account has a bearing on the income of the assessee for the six assessment years immediately preceding the AY relevant to the previous year in which the search was conducted or the requisition under Section 132A of the Act was made this is in terms of second proviso, which was inserted by Finance Act, 2012 with effect from 01.07.2012. By its very nature, Section 153C of the Act is an enabling provision, which enables the Assessing Officer to assume jurisdiction to assess/reassess the income of the Assessee, in cases where the jurisdictional conditions as set out in Section 153C are satisfied. The non obstante provision as contained in Section 153C(1) of the Act must necessarily be construed in the aforesaid context.
In the facts of the present case, the Revenue disputes that a satisfaction note by the AO of the searched person (Jain Brothers) was forwarded to the AO of the Assessee along with the requisite documents. Thus, in the facts of the present case, the jurisdictional conditions to initiate further steps under Section 153C of the Act were not satisfied. However, the AO had received certain information from the AO. A report was also received from the Investigation Wing, Mumbai regarding the Assessee purchasing units of a penny stock during the financial year 2010-11.
Based on the aforesaid information, including the information received from the Investigation Wing, Mumbai, the AO issued a notice dated 23.08.2018 under Section 148 of the Act. Admittedly, there is nothing on record to indicate that the AO of the searched person had recorded a satisfaction note and transmitted the relevant material containing information regarding the Assessee to the AO. There is also no material that the AO had on receipt of the said information issued a notice under Section 153C of the Act.
Thus, in fact the AO did not assume jurisdiction under Section 153C of the Act. Absent assumption of any jurisdiction, the question of Sections 147, 148 and 149 of the Act being overridden by virtue of the non obstante clause of Section 153C of the Act, does not arise. The said clause would be operative only if the AO had in fact assumed jurisdiction under Section 153C of the Act. In that eventuality, recourse to the provisions as named in the opening sentence of Sections 139, 147, 149, 151 and 153 of the Act would be ousted.
In the present case, the re-assessment proceedings are initiated under Section 147 of the Act not only on the basis of the material containing information that was found during the search conducted in respect of Jain Brothers, but is also founded on the basis of other information as obtained by the Investigation Wing, namely, that the Assessee had purchased units of a penny scrip named SVC Resource Ltd. This being the case, the decision of the Assessing Officer to re-assessee the income of the Assessee under Section 147 of the Act cannot be faulted.
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2024 (11) TMI 1070
Assessment u/s 147 v/s 153C - choice of correct course of assessment - name of the Assessee featured in the list of beneficiaries of accommodation entries by way of share capital premium / loan - HELD THAT:- As in the present case, no satisfaction note was recorded by the AO of the search person or forwarded to the AO of the Assessee. Thus, in any event the conditions for reopening of the assessment u/s 153C of the Act were not satisfied. For this reason as well, recourse to Section 147 of the Act based on information as received by the Investigation Wing was not precluded.
AO could not be faulted for proceedings under Section 147/148 of the Act instead of Section 153C of the Act. It is also material to note that the search in the case of Jain Brothers was conducted on 14.09.2010.
Section 153C(1) of the Act as in force at the material time postulated that the assessment/reassessment of income of person (other than the searched person) u/s 153C of the Act could be initiated only if the assets, documents or books of accounts or material found during the search under Section 132 of the Act or requisitioned u/s 132A of the Act in respect of another person, “belongs or belong to” such person other than the one searched who could then be assessed u/s 153C of the Act subject to other conditions being satisfied.
Thus, on the date on which the AO had received the information from the Investigation Wing, which is stated to be 12.03.2013, reassessment under Section 153C of the Act, was impermissible. Section 153(1) of the Act was amended subsequently by virtue of the Finance Act, 2015.
As in Sujit Kumar Bhatia [2023 (4) TMI 296 - SUPREME COURT] clarified that the amendment would also be applicable to search conducted prior to 01.06.2015.
The present case is covered squarely by the decision of Abhisar Buildwell (P.) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] as the jurisdictional condition for the AO of the Assessee to assume jurisdiction under Section 153C of the Act was not satisfied.
Present appeal is allowed and the Assessee’s appeal is restored before the learned ITAT for consideration on other grounds as raised by the Assessee.
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2024 (11) TMI 1069
Revision Application u/s 264 against an ex-parte assessment order passed u/s 143(3) read with the provision of Section 144B - HELD THAT:- As observed that by remedying such mistake by orders being passed u/s 264 of the Act, any illegality or injustice which would otherwise be caused to the assessee can be corrected, so as to maintain a lawful course of action being followed in the course of assessment. The Court also observed that the object of such provision appears to be that the law would not be oblivious to any bona fide human mistake which may occur at the end of the assessee and which if otherwise permitted to remain, may lead to injustice or the provisions of law being breached.
Considering the aforesaid position in law, we are of the clear opinion that the cause in the present case warranted that the revision be decided on merits and more particularly considering the case of the petitioner, which although was noticed in the impugned order, was not taken to its logical conclusion, merely on a erroneous presumption in law that the revision is not maintainable for a reason that the petitioner had failed to produce certain materials in response to notice dated 15 April, 2021. In our opinion, there is a manifest error on the part of PCIT in coming to such conclusion to hold the revision not maintainable in the facts of the present case.
The impugned order is quashed and set aside. The petitioner’s Revision application are remanded to PCIT to be decided in accordance with law.
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2024 (11) TMI 1068
Disallowance of loss - Bogus/sham transaction of sale and purchase of dies - HELD THAT:- It is settled law that the AO cannot supplant its view as to the commercial expediency of transactions in place of that of the Assessee. In the present case, the AO’s decision to disallow the loss is based on surmises and assumptions. The fact that the Assessee had purchased some of the dies from HTIPL, which may be an affiliate of HCIL, did not in any manner indicate that the loss suffered by it was not genuine.
It is material to note that neither HTIPL nor TITC are affiliate entities of the Assessee. There is also no allegation that the Assessee is affiliated to HCIL. It is, thus, apparent that the transaction for sale and purchase of dies was a pure commercial transaction entered into by the Assessee in its commercial wisdom. The fact that the Assessee had incurred a loss in the said transaction is also not disputed.
There is no allegation that the Assessee was paid any undisclosed consideration from the parties in a clandestine secret transaction to reverse the loss. We find that the AO had made the additions solely on the basis of what the AO thought was commercially expedient – an area which the AO was not required to tread.
In the present case, the Assessee has also justified its commercial decision by reflecting the enhanced turnover and the profits earned by it from its business from HCIL. However, it would be apposite to add that even if the Assessee had not been able to earn profits in later years, the same would make no difference. It is not necessary that every business decision made by an assessee yields profit. The area of examination is only confined to whether the transactions entered into by the assessee are genuine and not whether they are commercially expedient.
In the present case, there is no material other than just a sense of suspicion that has persuaded the AO and the CIT(A) to make the addition in question. Decided in favour of assessee.
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2024 (11) TMI 1067
Addition of receipt not been offered for tax by the assessee - Impugned amount was apparently debited internally and shown as advance to Govt. account, while at the same time, it was credited to the Income and Expenditure Statement under the head ‘grant-in-aid’ for establishment expenses - CIT(A) has recorded that in reality, no funds were received by the institution from any third party and this transaction was merely an inter head adjustment - HELD THAT:- It is seen that in the department’s ground of appeal it is specifically mentioned that the mandate provided in Accounting Standard -12 (‘AS-12’) has not been kept in mind while ensuring an appropriate treatment of the impugned amount in the accounts. This Accounting Standard deals with treatment of Govt. grants in the books of account.
As noticed that the AS-12, in question, as an individual issue was neither before the AO nor was it before the CIT(A). However, it needs to be mentioned that for recognition of an amount as a receipt under this Accounting Standard two conditions are required to be present viz. (a) if the Govt. grant is expected to be realised or its collection is reasonably certain, (b) conditions pertaining to the said Govt. grant have been complied with.
As has been mentioned earlier, this issue of the specific Accounting Standard was not dealt with either by AO or CIT(A), hence, we deem it fit to remand the matter back to the file of the AO for verifying whether the said amount was actually receivable, whether the assessee has been accounting for such grants on receipt or mercantile basis in the past and finally whether there are any terms and conditions pertaining to the said arrangement between the assessee and the Govt. regarding the receipt of such amounts.
AO would do well to analyse these issues and thereafter come to a conclusion as to whether the impugned amount would be treated as income for the year under consideration or alternatively treated as income in the year of actual receipt.
Delayed filing of Form 10 which was required u/s 11(2) r.w.s. 13(9) - CBDT has its powers u/s 119(2)(b) of the Act to condone the delay and in case, the said action is done then the assessee would get consequential benefits u/s 11(2) r.w.s. 13(9) of the Act.
This appeal is allowed for statistical purposes.
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2024 (11) TMI 1066
Disallowance of excess depreciation claimed on building relying on the provisions of section 50C - computation of the ‘written down value’ (WDV) as per the provision of section 43(6)(c)(i)(B) - According to the assessee for computing ‘written down value’ of the block of the assets, consisting building, the actual sale consideration in respect of an asset sold from the block of the asset should be reduced from opening WDV, whereas according to the Revenue, the notional sale consideration of the asset sold as prescribed u/s. 50C should be reduced from opening WDV.
HELD THAT:- We find that legislature has created the legal fiction u/s. 50C of the Act for the purpose of computing the capital gain on sale of capital assets. Similarly, while computing the profits and gains of the business, the legislature has introduced a legal fiction under section 43CA of the Act for substantiating the sale consideration by the Stamp Duty Value while transfer of an assets other than the capital asset, i.e., stock-in- trade, but no specific fiction has been created while computing deprecation on the block of the assets for substantiating the sale consideration by the Stamp Duty Valuation Authority.
The present definition of the ‘moneys payable’ therefore, cannot be construed as including as the Stamp Duty Valuation of the property and, therefore, the legal fiction for substantiating the sale consideration by the Stamp Duty Value created under either section 50 or section 43CA of the Act cannot be extended to section 32 of the Act for claiming depreciation on the block of the asset. In the instant case, the AO could have examined the applicability of section 41(2) for taxing the quantum of depreciation claimed on building in earlier years, which we don’t know whether he had examined or not.
The fiction of section 50C can’t be extended to the facts of the case, accordingly, we set aside the finding of the ld. CIT(A) on the issue in dispute and we delete the disallowance made by the lower authorities. Ground no. 1 raised by the assessee in appeal is accordingly allowed.
Disallowance of expenses - assessee submitted that it had already disallowed certain expenses appearing in the profit and loss account in computation of total income, but in absence of any details or supporting documents, the ld. A.O. disallowed 5% on ad-hoc basis - HELD THAT:- Before us, assessee fairly agreed and submitted that details were not filed before the lower authorities, therefore, the matter should be restored back to the file of the ld. AO. We find that the assessee is willing to produce all the necessary evidence in support of the expenses claimed and the ld. DR did not object to the proposal of the ld. Counsel for the assessee - restore this matter back to the file of the ld. A.O. with the direction to the assessee to produce all the necessary documentary evidence/voucher in support of the voucher claimed for verification by the ld. A.O. and, thereafter the A.O. shall decide the issue in accordance with the law. Ground no. 2 raised by the assessee in appeal is accordingly allowed for statistical purpose.
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2024 (11) TMI 1065
Penalty u/s 271(1)(c) - disallowance of factory garden maintenance expenses - As argued no case of furnishing any inaccurate particulars of income was proved by the AO as assessee had submitted the details of invoices, ledger and payment details in respect of the expenses - HELD THAT:- There is no dispute that the said expenses were incurred by the assessee and all the information at the time of quantum addition have been provided by the assessee and same has not been disputed by the A.O. The penalty u/s. 271(1)(c) of the Act cannot be levied merely for the rejection of the claim of the assessee as held by the Hon'ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT]
Respectfully following the same, we are of the opinion that the penalty levied by the ld. A.O. and upheld by the ld. CIT(A) is not sustainable. The ground of appeal of the assessee is accordingly allowed.
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2024 (11) TMI 1064
Error in selection of section code in application for registration u/s 12AB - assessee was granted provisional registration u/s 12A(1)(ac)(vi) - assessee made an application under section 12A(1)(ac) of the Act by selecting the code (vi) instead of (i) - CIT(E) noticed that on an earlier occasion, the assessee applied under 12A(1)(ac)(vi) of the Act instead of 12A(1)(ac)(i)
HELD THAT:- The assessee did not avail the opportunity of extension of time for filing application in Form 10A, if really its intention is to apply for 02-Sub clause (i) of clause (ac) of sub--section (1) of section 12A of the Act, by bringing the mistake to the notice of the authorities, since the assessee holds the registration under section 12A of the Act.
When the CBDT took cognizance of the matter and by way of circulars extended the due date for filing Form 10A, it cannot be said that the learned CIT(E) can exercise jurisdiction to condone the delay in applying the Form 10A on the ground of mistake, because the time extended for such purpose by the CBDT expired by 30/06/2024. In these circumstances, we do not find anything illegality or irregularity in the rejection of application by the learned CIT(E).
The fact remains that finally vide Circular No.7/2024 dated 25/04/2024, CBDT extended the date up to 30/06/2024, whereas the assessee filed Form 10A by 13/06/2023. Assessee filed another application on 30/06/2024 in Form 10AB by that date. Though in a wrong Form, the request of the assessee was pending before the due date.
In this peculiarity of the circumstances, we deem it just and proper to condone the mistake committed by the assessee while applying registration by making a selection of wrong section code, namely, 02-Sub clause (vi) of clause (ac) of sub--section (1) of section 12A of the Act instead of 02-Sub clause (i) of clause (ac) of sub--section (1) of section 12A of the Act. We accordingly condone such a mistake. Learned CIT(E) will proceed to hear and dispose the request of the assessee by allowing it to apply now under Form 10A. Appeal of the assessee is allowed.
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2024 (11) TMI 1063
Addition u/s 56(2)(viib) - assessee had introduced funds by way of issue of share capital - first contention of the assessee is that that there was no fresh inflow of funds in respect of allotment of shares and that it was only an accounting entry for conversion of loans into share capital and provision to Section 56(2)(viib) of the Act was not at all attracted - HELD THAT:- The provision of the Act as well as the Memorandum for introduction of this provision made it explicit that if the consideration was received for issue of shares that exceeded the fair value of such shares, then the consideration received for such shares, as exceeding the fair market value of the shares, shall be chargeable to tax under the head income from other sources. There is no stipulation in the section that it will be applicable only in the case of receipt of any ‘amount’ or ‘money’ on account of share application money. Rather the word used in the section is ‘any consideration for issue of shares’ which has a very wide implication.
ITAT, Mumbai in the case of Keep Learning Resources Pvt. Ltd.[2023 (8) TMI 1480 - ITAT MUMBAI] had categorically held that the conversion of loan amount into equity shares will not exonerate the assessee from application of provision of section 56(2)(viib) of the Act. Keeping in view, the language of section which uses the term ‘consideration’ which is of wider import when compared with word ‘amounts’, we are inclined to agree with the decision of ITAT, Mumbai and ITAT, Kolkata on the issue. Therefore, the contention of the assessee that provision of section 56(2)(viib) of the Act will not be attracted in the case of conversion of loan amount into share capital is rejected. In our considered opinion the provisions of Section 56(2)(viib) of the Act do apply in the present case of conversion of loan into share capital and the view adopted by the ITAT Chandigarh Bench [2023 (12) TMI 702 - ITAT CHANDIGARH] will make the provisions of section 56(2)(viib) otiose for all such transactions of conversion of securities.
Second contention of the assessee is that there was no prescribed method of valuation of shares during the year from 01.04.2012 to 28.11.2012 and, therefore, the machinery provision had failed - Since, the assessee had filed the valuation report of a much later date, the Revenue had rightly concluded that this valuation did not reflect the real and correct value but was only an afterthought to justify the valuation as adopted at the time of issue of first tranche of shares. It is true that the assessee has an option to adopt DCF or NAV method to determine the FMV of the shares.
Whatever method is chosen by the assessee the same is required to be consistently applied. The basic question raised by the Revenue is that if the valuation of the share was so high to justify premium of Rs. 90/- on 03.11.2012, why premium of Rs. 31.67 per share only was charged in the subsequent allotment of shares on 26.03.2013 and this aspect has not been explained by the assessee. There cannot be such a wide fluctuation in the value of shares within a period of less than 5 months and that too within the same financial year. In the absence of any explanation for charging premium of Rs. 31.67 per share only in the subsequent allotment of shares on 26.03.2013, we are of the considered opinion that the Revenue had rightly made the disallowance u/s. 56(2)(viib) of the Act in respect of excess premium over and above FMV of the shares allotted on 03.11.2012.
We are of the view that the Ld. CIT(A) was justified in confirming the addition made u/s. 56(2)(viib) of the Act in respect of excess share premium. We, therefore, uphold the order passed by the Ld. CIT(A).
Appeal filed by the assessee is dismissed.
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2024 (11) TMI 1062
Addition u/s 56(2)(X) - Joint ownership of the property - HELD THAT:- On reading of the first and second proviso if the date of agreement, the amount of consideration is fixed for the transfer of immovable property and the date of registration is not the same, then the Stamp duty Value on the date of agreement is to be taken.
The section further provides that the value as on date of agreement can be taken only when, the amount of consideration in the agreement was paid by account payee cheque or through electronic clearing system through a bank account on or before the date of registration of such immovable property.
In the present facts of the case there is no dispute regarding the payments made by any of the mode other than through banking channels. Thus, the aforesaid proviso carves out exception by taking the stamp duty value as on the date of agreement when the payments have been made through banking channels.
AO has stated that allotment letter is not a registered agreement, therefore, the value of the property has to be taken as on the date of sale registration. First of all, when builder gives an allotment letter with terms and conditions and all the rights and the value of purchase is agreed upon which was accepted by the assessee and acted upon then it is clearly covered under aforesaid proviso to section 56(2)(x) of the Act.
The assessee in the present facts agreed to purchase the immovable property in an under construction premises in the year 2016 in terms of allotment letter and also made the payments before the sale was registered. Therefore, based on the above discussions and the decisions relied by the Ld.AR on this issue, we are of the opinion that, the value as on date of allotment has to be treated as stamp duty value for the purpose of aforesaid provision of section 56(2)(x) of the Act.
We further note that on the date of allotment the stamp duty value was admittedly Rs. 5,67,18,369/-, whereas, the agreement value was Rs. 5,30,87,707/-. Further, as the difference is within the 10% tolerance limit applicable as per the amendment to section 56(2)(X)(b)(ii) brought into the statute w.e.f. 1.04.2021, no addition is to be made in the present facts of the assessee or his wife. Ground raised by the assessee stands allowed.
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2024 (11) TMI 1061
Default u/s 201 - deducting TDS on certain payment of leave encashment to certain employee - Revenue held that the payments are in excess of Rs. 3 lakhs, and since the recipients are neither State Government nor Central Government employees, hence the exemption limit cannot exceed Rs. 3 lakhs and accordingly the tax has to be deducted by the disbursing authorities - HELD THAT:- Section 10(10AA) specifically deals with tax exemption of the leave encashment at the time of retirement. Clause (i) of sub-section (10AA) deals with employees of Central Govt. or State Govt. Clause (ii) of sub-section (10AA) deals with employees other than Central Govt. or State Govt. The sub-section (10AA) specifically deals with Govt. and Non-Govt. employees under two different clauses.
Sub-section 10CC includes all employees who are individuals deriving income other than by way of monies. This includes every employee irrespective of category of employers.
Leave encashment at the time of retirement, benefits received at the time of voluntary retirement or termination of services, and perquisites received by the employees are all defined and subjected to various provisions of the Act, namely 10(10AA) – for leave salary, 10C – for retirement benefits and 10CC - for perquisites etc. In the governance of the Nation, three arms work in tandem namely Union Govt., State Govt. and Local Authorities.
We have also gone through the notification issued by the Dy. Secretary, Govt. of Gujarat, Panchayat, Housing and Urban Development Department dated 30th January, 1978 which has transferred some functions and also included some villages near Vadodara to carve out Vadodara Development Authority from the erstwhile Vadodara Municipal Corporation.
Even on that lines, the VUDA will become a subset of local authority. The municipal corporations, panchayats, district boards, cantonment boards are part of local authorities as per sub-section 10(20) of the Income Tax Act, and under clause (d) and (e) of Article 234 and Article 234P of the Constitution.
Thus, the local bodies are distinct from State and Central Govt. Since the exemption given on account of leave encashment, retirement and perquisites varies according to the category of employees and since exemption of leave encashment is allowed to State and Central Govt. employees in full and exemption to other than State and Central Govt. employees is upto Rs. 3 lakhs as per the provisions of Section 10(10AA), it is hereby held that the assessee is liable to deduct tax on the payments made against leave encashment to their employees. The Revenue Authorities shall re-compute the quantum of tax deductible taking into consideration the exemption limit of Rs. 3 lakhs prescribed by the Act. Appeals of the assessee are dismissed.
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2024 (11) TMI 1060
Validity of proceedings u/s 153C - determination of 6 Assessment Years - HELD THAT:- In the present case, the satisfaction has been recorded on 26/09/2018 by the A.O. of the Assessee which falls in the AY 2018-19, the immediate preceding six years would be AY 2013-14 to 2018-19, thus, in our considered opinion, the notice issued by the A.O. u/s 153C of the Act for AY 2011-12 and 2012-13 are beyond the jurisdiction of the A.O.
Amendment to Section 153C of the Act w.e.f 01/04/2017 having prospective effect as clarified by the CBDT Circular of 2/2018 dated 15/02/2018, thus we find no reason to justify the action of the A.O. to issue notice u/s 153C for Assessment Year 2011-12 and 2012-13 as the same are not filing in the ‘previous six years’, accordingly, assumption of jurisdiction in reopening of assessment u/s 153C for Assessment Year 2011-12 and 2012-13 are void ab initio. Thus the impugned assessment orders for Assessment Year 2011-12 and 2012-13 are hereby quashed.
Order to reopen the assessment of the other person u/s 153C - Addition based no no valid satisfaction recorded - Addition of 1% representing the income from commission and total credits and debits reflected in the bank statement of the Assessee company - HELD THAT:- AO failed to narrate the specific documents which he was relying upon for initiating the proceedings u/s 153C of the Act and not year wise satisfaction was recorded so as to assess or reassess the total income of the Assessee for the years under consideration.
It is found that the A.O. satisfied with the documents seized containing the information relating to ‘searched person’ and decided to issue notice to ‘other person’ who is Assessee u/s 153C r.w. Section 153A of the Act. Thus the satisfaction note fails to depict the details of information. In the case of the one of the Company which was also subject to the proceedings u/s 153C pursuant to the very same search and seizure operation conducted on 21/07/2016, in the case of M/s Marconi Infratech[2024 (7) TMI 129 - ITAT DELHI] as deleted the addition on account of absence of valid satisfaction having been recorded.
On plain reading of the provision of Section 153C it is clear that in order to reopen the assessment of the other person u/s 153C for the Assessment Years earlier to the year of search, direct co relation must exist between the existence of incriminating material and relevant Assessment Year and the reasoning should be logical while recording the satisfaction. In the present case, the seized document at Annexure A-3 does not speak about the issue in respect of the respective Assessment Years sought to be reopened which could ultimately be said to be unexplained and addition thereupon could be made and the said document is not establishing any co-relation, document wise with years under consideration. The essential element for invoking the provision of Section 153C is found missing in the satisfaction recorded on 25/09/2018. Assessee appeal allowed.
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2024 (11) TMI 1059
Search and Seizure proceedings - cash found in the locker - HELD THAT:- Cash in two lockers were belonged to RNB Temple Trust and Ram Bajaj Foundation.
What is relevant is cash available with the Trust. As per the Balance Sheet submitted before us, it clearly indicates that the Trust holds cash in hand to the extent of Rs. 1,79,00,000/-. Therefore, the cash found in the locker which pertains to RNB Temple Trust is already brought on record to the extent of Rs. 1,79,00,000/-. Accordingly, the addition sustained by the ld.CIT(A) to the extent of Rs. 4,00,000/- is already explained. Therefore, this addition of Rs. 4,00,000/- is also allowed.
Cash found in other locker of SBI no doubt, the Balance Sheet finalized by the foundation was accepted in its assessment. It is also fact on record that the Balance Sheet was finalized subsequent to the search and further, the locker was also operated one day before the search operation.
Keeping the overall facts on record, we observed that all the cash of RNB Temple Trust and the Ram Bajaj foundation was kept in the lockers operated by the family members of Bajaj Group and it is a fact on record that almost all the cash kept in the locker were belonged to the RNB Temple Trust and Ram Bajaj Foundation and 95% of the submissions made by the assessee are accepted by the ld. CIT (A). All the cash kept in the lockers which were specifically earmarked for the purpose of construction of temple and running of Ram Bajaj Foundation.
Cash declared in the Balance Sheet of both the entities are matching with the cash found in the locker, one has to go by the circumstantial presumption that the cash found in the lockers are meant for the temple construction and for the purpose of running of educational institution. Therefore, there is no evidence brought on record to show that this cash belongs to the members of Bajaj Family except applying presumption. Accordingly, we are inclined to delete the addition made by the ld. CIT (A). Decided in favour of assessee.
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2024 (11) TMI 1058
Reopening of assessment u/s 147 - Addition u/s 68 - bogus Long Term Capital Gains (LTCG) - AO relied on the statement of the principal officer of stock exchange and other persons - HELD THAT:- As the Assessee has demonstrated the genuineness of its claim by producing the payment voucher of purchase of shares, contract notes, shares in physical mode, Demat statement, broker ledger, statement bill cum transaction and bank statement etc. and none of the persons whose statements have been relied on by the AO, have made any allegations against the Assessee. Even otherwise the AO has not granted any opportunity to cross-examine the witnesses whose statements were recorded by the investigation wing as relied on by the AO. Further, there were/are no orders by the SEBI against the Assessee qua any irregularities or penalty. Whereas the Assessee has been able to discharge its prima-facie onus cast upon him u/s 68 of the Act, therefore the addition u/s 68 of the Act is at all unsustainable.
Reopening of assessment - As we have observed above that in the case of South Yara Holdings [2019 (3) TMI 582 - BOMBAY HIGH COURT] has quashed the reopening of proceedings in the identical facts and circumstances, as involved in this case and therefore on that aspect as well, the impugned assessment made on the basis of the reasons recorded and the notice issued u/s 148 of the Act, is liable to be quashed.
In cumulative effects, the addition on legal as well as on merits, is liable to be deleted, hence the same is deleted. In the result, the appeal filed by the Assessee stands allowed.
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2024 (11) TMI 1057
Addition based on Professional Receipt in the Original Return of Income - Assessee filed a Revised Return of Income to correct the same - HELD THAT:- There is no reason why Six Sigma Medicare & Research Limited should refund Rs. 1,89,909/- out of the total deposit of Rs. 28 lakhs, when assessee continues to be Consultant in the said hospital! Even otherwise, it is beyond comprehension that why a hospital shall refund an odd amount of Rs. 1,89,909/-.
As an admitted fact that hospital has made total payment of Rs. 47,26,546/- to the Assessee during the year, which were shown as professional receipts by the assessee in the Original Return of Income. Out of the total Professional Receipts received from Six Sigma Medicare & Research Ltd., there is no evidence to suggest that Rs. 1,89,909/- pertains to partial refund of deposits. Therefore, the addition of Rs. 1,89,909/- is confirmed.
Payment made to Anesthetist - Assessee has proved that assessee had made payment to Anesthetist. Hence, we accept the assessee’s contention and direct the Assessing Officer to delete the addition.
Payment to Kochar(Anesthetist) as professional charges - We agree that these Operation Notes were not filed before the AO/CIT(A). These Operation Notes have been considered by us as an evidence only to substantiate the primary evidence filed by the assessee before AO and CIT(A). We have already discussed in earlier paragraphs the evidences filed by assessee before the AO and CIT(A) in the form of copy of bank statement of Dr.RK, copy of TDS Return etc.
We are convinced that assessee had made payment to Dr. RK as professional fees. The said amount was wholly and exclusively for the purpose of the business of the assessee. Hence, we direct AO to delete the addition.
Petrol and Diesel Expenditure - Accountant only considered Rs. 5,955/- and failed to consider remaining amount of Rs. 1,05,230/-. No specific evidence has been filed by the assessee before us to prove the Diesel Expenditure. Assessee merely filed a Ledger Account at page no.60 and 61 of the paper book. The Ledger Account shows certain cash payments at periodic intervals. However, that does not prove that the expenditure has been incurred wholly and exclusively for the purpose of the business of the assessee. Accordingly, addition of Rs. 1,05,230/- is upheld.
Salary and Wages - The amount was the salary of March, 2020; hence, remained payable. It is observed from the submission of assessee before the AO dated 28.03.2022 that assessee had filed copy of salary register, name, PAN and Address of all the employees. Before us also assessee filed copy of ledger extract, copy of salary register - DR has not pointed out any discrepancy in these documents. On perusal of the Ledger Account, it is observed that Rs. 48,950/- was shown as payable on 31.03.2020. In these facts and circumstances of the case, we are convinced that it is an allowable expenditure. Accordingly, AO is directed to delete the addition.
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2024 (11) TMI 1036
Reopening of assessment u/s 147 - procedure prescribed for reassessment - intra Court appeal by the Revenue against the order of this Court - Non furnishing of reasons - Without passing the preliminary order, AO has passed the final assessment order - As decided by HC [2023 (1) TMI 1261 - KARNATAKA HIGH COURT] after receipt of the letter A.O. has called the assessee for final hearing keeping in view the paucity of time. No explanation is forthcoming as to why the reasons were not furnished, though it is an admitted position that reasons were sought as back as in April 2018. The order sheet and assessment order clearly indicate that entire proceeding has been hurriedly completed between 18.12.2018 and 28.12.2018 in order to complete the same within the time limit i.e. 31.12.2018.
This is an intra-court appeal. There is no patent error to interfere with the view taken by the Hon’ble Single Judge more so, when a Division Bench of this Court following an authority of the Hon’ble Supreme Court of India has held that provision is mandatory in nature. Decided against revenue.
HELD THAT:- There is a delay of 380 days in filing the Special Leave Petition which has not been satisfactorily explained. Even otherwise, we have gone through the Special Leave Petition and do not find any merit in the same.
Special Leave Petition is, therefore, dismissed on the ground of delay as well as on merits.
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2024 (11) TMI 1035
Assessment u/s 144C - TP adjustments were not received in time and the AO has confirmed the draft assessment order and the same is in violation of Section 144C - Delay filling SLP - As decided by HC assessee is right in his submission that under Section 144C of the IT Act, the Assessing Officer is bound by the directions issued by the DRP and required to pass the assessment order in conformity with the directions issued within one month from the end of month in which such directions are issued. ITAT has recorded that impugned order is not in conformity with the provisions of Section 144C of the IT Act and barred by time. Revenue appeal dismissed.
HELD THAT:- There is a gross and unexplained delay of 294 days in filing the Special Leave Petition.
We see no good reason to interfere with the impugned order passed by the High Court of Karnataka at Bengaluru.
Special Leave Petition is, accordingly, dismissed on the ground of delay as well as on merits.
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2024 (11) TMI 1034
Computation of undisclosed income of the block period - Scope of section 158-BB of the Income Tax Act for assessment of undisclosed income in search cases - HELD THAT:- We find that the words which have been added are rightly interpreted by the Tribunal to include two types of material which may be considered by the assessing officer. First, the material found during search and relatable to such evidence and the second part is such other materials or information as are available with the AO.
Thus, apart from the evidence which may be collected and noticed during search, if the assessing officer has any other information and such other material with him, which is relatable to such evidence, the same can also be looked into for the purpose. Therefore, an assessment u/s 158-BC of the Act is required to be made both on the basis of result of search as well as post search enquiry and other proceedings which are in the nature of consequences of the evidence found as a result of search.
Affidavit of the employees have not been considered - It is argued that the assessee was not provided sufficient opportunity and fair hearing has not been provided to him - Large number of documents relating to correspondence with Excise Department, police cases, court cases relating to the firms carrying out liquor business, which were not in the name of the assessee, have also been found from his premises.
Copies of number of maps of godowns and vends, which were operated by various companies were also recovered from his premises. There were 7+9+7 truck loads recovered from three different places. Stock position of various liquor vends was also found. During the courses of search, statements of number of persons were also recorded, who stated that they were salesmen working in those vends. The assessee was their employer and real owner of the vends. Merely because the license was issued by the Excise Department for various liquor vends, income from which the learned assessing officer has found to be undisclosed income of the assessee cannot absolve the concerned assessee. We agree with the Tribunal that the assessing officer is not flattered by the technical rule of evidence and if he reaches to the conclusion that the vends are all being owned and managed by the concerned person singularly through employees, merely because the licenses are not in the name of the concerned assessee, it would not make any difference to reach to the conclusion that there is undisclosed income.
There is cross-examination of almost all persons, whose statements were relied upon, was afforded to the assessee and after the cross-examination was conducted when nothing contrary to the earlier statements was emerged and in some cases the assessee did not even come forward to cross-examine, the inference could be drawn.
There was also a document of rent agreement for premises taken on record in the name of one M/s Chander Bhan Om Parkarsh and Company, which was signed by the assessee as a contractor. Thus, the Tribunal has found that there was undisclosed income of the assessee which he was earning through ghost and benami companies, which were running on the properties taken on rent by him. The assessment order was found to have been correctly re-assessed by the three Judges Bench of the Tribunal. Decided against assessee.
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2024 (11) TMI 1033
Deduction u/s. 80IA - initial assessment year for claiming deduction - Tribunal held that the unabsorbed depreciation and carried forward losses of the earlier years which had already been set off against the other income, could not be notionally carried forward and taken into consideration for the purpose of computation of deduction u/s. 80IA - HELD THAT:- The issue arising in the first two substantial questions of law are covered in favour of the assessee by a judgment of Supreme Court in the case of Velayudhaswamy Spinning Mills Ltd [2010 (3) TMI 860 - MADRAS HIGH COURT].
Disallowance of agency commission paid to non-resident without deducting tax at source, u/s. 40[a][i] - HELD THAT:- The facts are admitted to the effect that the commission agents are situated abroad. The factum of rendition of services abroad is also admitted. It is also not in question that no payments were made in India and that the commission was remitted through banking channels directly to the agents.
In the facts of the present case, Circular No.786 issued by the Central Board of Direct Taxes, is clear to the effect that export commission would not be liable to tax. There has admittedly been no determination of tax made by any other authority holding the recipients of the commission to be taxable in India. Hence, the determination of taxability made by the assessee, and the decision to remit without deduction, is, in this case, unimpeachable. Hence, we see no infirmity in the order of the Income Tax Appellate Authority having accepted the case of the assessee. The third substantial question of law is also answered in favour of the assessee.
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2024 (11) TMI 1032
Reopening of assessment u/s 147 - Income chargeable u/s 5(2) - assessment funds transferred from the NRE account of the petitioner's husband to the petitioner's domestic bank account - HELD THAT:- The question as to whether the petitioner's husband was a non resident Indian was found as not having been established by the petitioner with documentary evidence. Similarly with regard to the amount it is found that the petitioner failed to prove the genuineness of the sources with material evidence.
All these are essential questions of fact which are disputed. It is trite law that this Court under Article 226 of the Constitution, would be loathe in interfering with the orders of assessment when there is an effective alternative remedy available, more so, when there is a need to examine disputed questions of facts, for examination of disputed question of facts is normally alien to jurisdiction under Article 226 of the Constitution.
This Writ Petition challenging the impugned order is rejected. The petitioner is at liberty to file an appeal, if any appeal is filed within a period of 3 weeks from the date of receipt of copy of this order, the same shall be entertained without reference to limitation, subject to complying with other conditions relating to appeal including pre-deposit if any. It is made clear that have not examined the merits and the observation is only for the limited purpose of examining whether the writ petition ought to be entertained or otherwise.
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