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Income Tax - Case Laws
Showing 101 to 120 of 164067 Records
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2024 (5) TMI 641 - ITAT CHANDIGARH
Addition on account of ‘cash deposits’ during the demonetization period - books of accounts have been accepted and not rejected u/s 145(3) - source of such cash deposits as explained by the assessee as out of its cash sales so undertaken and such cash sales are subject to VAT where VAT has been collected and deposited with the government treasury - HELD THAT:- Assessee has furnished the cash book containing the entries towards the cash sales, bank statement for the relevant period, VAT returns, copy of trading and profit/loss account and balance sheet which are duly audited. No defect has been pointed out by the AO in terms of availability of stock or in any of the documentation so submitted by the assessee or in the books of accounts
Merely the fact that certain cash deposits have been made by the assessee during the period of demonization and such deposits are on a higher side considering the past year figures cannot be basis to hold the explanation so made by the assessee as unsustainable and treat the cash sales as bogus and bringing the cash deposits to tax u/s 68 of the Act.
The comparative figures for past years can no doubt provides a starting point for further examination and verification but basis such comparative analysis alone and without any further examination which points out any defect or manipulation in the documentation so submitted or in terms of availability of requisite stock in the books of accounts, the sales so undertaken by the assessee which is duly recorded in the books of accounts cannot be rejected and treated as bogus.
We agree with the contention of the AR that where the cash sales duly offered to tax have been accepted, bringing the realization of sale proceeds in cash to tax will amount to double taxation and the same is clearly unsustainable in law and cannot be upheld. Appeal of the assessee is allowed.
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2024 (5) TMI 640 - ITAT MUMBAI
Estimation of income - bogus purchases - CIT(A) in restricting the disallowance to 12.5% instead of Entire addition made by the ld. AO - HELD THAT:- We find that AO has made addition on account of entire purchases which is wholly unjustified, because once the source of purchases have been debited in the books of accounts and corresponding quantity of material purchased had been recorded in the books and corresponding quantity of sales has also been accepted then, it cannot be held that purchases are outside books.
It could be the case of purchases made from hawala dealers for inflating the cost and suppressing GP rate. If parties have not confirmed the transaction then in such a case the principle laid down in the case of PCIT vs. Vishwashakti construction [2023 (5) TMI 278 - BOMBAY HIGH COURT] wherein GP rate of 12.5% has been held to be reasonable in such cases, is applied in the present case also, then CIT (A) is justified. Appeal of the Revenue is dismissed.
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2024 (5) TMI 639 - ITAT CHANDIGARH
Addition u/s 68/69A/69B and taxed the same u/s 115BBE - Surrendered income in survey action u/s 133A on account of excess stock, discrepancy in cost of building and expenditure in violation of Section 40A(3) - AO observed that the surrender relates to unexplained investment - HELD THAT:- In particular, for the deeming provisions of Section 69B to be attracted in the instant case, there has to be a finding that the assessee has made investments in the stock during the financial year and such investments are not fully recorded in the books of accounts so maintained by the assessee, and the assessee offers no explanation about the nature and source of the investments or the explanation so offered is not found satisfactory in the opinion of the AO, the latter can proceed and the value of the investment may be deemed as income of the assessee for such financial year.
As we refer to the statement so recorded of the assessee during the course of survey, Revenue has not pointed out that the excess stock has any nexus with any other receipts other than the business being carried on by the assessee. There is thus a clear nexus of stock physically so found with the stock in which the assessee regularly deals in and recorded in the books of accounts and thus with the business of the assessee and the difference in value of the stock so found is clearly in nature of business income. Apparently, the AO has failed to appreciate the statement of the assessee recorded during the course of survey and other documents and findings of the survey team which are very much part of the records in correct perspective. We therefore find that the nature and source of such unaccounted stock is nothing but arising out of assessee’s business operations.
There is no physical distinction between the accounted stock and unaccounted stock. No such physical distinction was found by the Revenue either. We therefore find that the difference in stock so found out by the authorities has no independent identity and is in terms of value terms only and thus part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as business income.
Surrender on account of cost of building the fact that the assessee has honoured the surrender so made inspite of the fact that there is no corroborative material against the assessee, the same can’t be held against the assessee and more so, cannot form the basis for invocation of deeming provisions as has been done in the instant case as the conditions stated therein are not satisfied. Merely the fact that survey has taken place and certain expenditure on estimated basis has been surrendered doesn’t satisfy the requirements for invoking the deeming provisions as has been done in the instant case. Accordingly, the order of the ld CIT(A) is set-aside and the AO is directed to tax the surrendered income at normal rates as applicable to the business income.
Disallowance of depreciation on such cost of construction, we find that there is no legal and justifiable basis to disallow the depreciation. Once the assessee has surrendered the amount on account of cost of extension, renovation and the same has been brought in the books of accounts, the same will form part of block of the building and the assessee will be eligible for claim of depreciation thereon. As we have noted earlier, no bills/vouchers have been found during the course of survey, therefore, there is no basis to invoke section 43(1) in the instant case and thus, the depreciation so claimed is directed to be allowed.
Surrender on account of disallowance u/s 40A(3) there is no finding that cash expenditure has been found and which has not been accounted for and in such a situation, we fail to understand as to how the deeming provisions can be invoked in this regard. Where the expenditure has been held disallowable in terms of section 40A(3) of the Act which means that certain expenditure has been incurred, accounted for in books of accounts and has been found to be incurred in cash in violation of section 40A(3), the question of unexplained expenditure or unaccounted expenditure doesn’t arise for consideration. Hence, the action of the AO in invoking the deeming provisions in this regard is set-aside.
Thus the income so surrendered during the course of survey cannot be brought to tax under the deeming provisions and has to be assessed to tax under the head “business income”. In absence of deeming provisions, the question of application of section 115BBE doesn’t arise and normal tax rate shall apply. The AO is thus directed to assess the income under the head “Income from Business/profession” and apply the normal rate of tax. Assessee appeal allowed.
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2024 (5) TMI 638 - ITAT KOLKATA
Set off of loss against income referred to in section 68 r/w.s115BBE - HELD THAT:- Issue is already held to be in favour of the assessee in the case of Vijaya Hospitality & Resorts Ltd. (2019 (11) TMI 1106 - KERALA HIGH COURT] wherein the amendment brought in section 115BBE(2) are effective from 01.04.2017. We also note that CBDT in its circular referred above has categorically allowed to claim the set off of loss against the income determined u/s. 115BBE after AY 2016-17.
In the present case before us, the year under consideration is AY 2011-12 and 2015-16 in which the claim of set off of loss is permissible. Accordingly, in terms of the CBDT Circular and respectfully following the decision of (supra) we allow ground taken by the assessee in this respect.
Addition made u/s. 40A(2)(b) for excess payment made to related party - HELD THAT:- AO has considered the purchase transaction of only one unrelated party to compare it with the purchases made by the assessee from the related party and arrived at the conclusion to make the disallowance. Contrary to this, assessee has furnished details of purchase transactions from several other unrelated parties which demonstrates that purchases have been made at higher rates from them as compared to the one from the related party. Also, it is undisputed that there is a loss scenario both, in the hands of the assessee and the one from whom purchases have been made which is a related party. Thus, from a tax advantage objective, there seems to be no incentive to inflate the purchase - We delete the addition made u/s. 40A(2)(b) - Decided in favour of assessee.
Disallowance made u/s. 14A - As per AO assessee has held investment in shares of bodies corporate which were capable of yielding exempt income - HELD THAT:- We find that this issue is settled as no addition can be made u/s. 14A where assessee has not earned any exempt income in the year - As decided in M/S. ERA INFRASTRUCTURE (INDIA) LTD. [2022 (7) TMI 1093 - DELHI HIGH COURT] no disallowance is required to be made in the case of the assessee because it has not earned any tax-free income and allowed the appeal of the assessee by deleting the addition so made. Considering this, the disallowance made in this respect is deleted. Decided in favour of assessee.
Addition for advance outstanding during the year under consideration - assessee contended that the amount received were returned back and out of the three parties, accounts of two parties were squared off during the year itself - HELD THAT:- The presumption made by the Ld. AO that advances have been booked for purchase of material and production thereof is not justified when the money received has been returned back within a year for two parties out of the three parties and even for the 3rd party the details are on record which show that only Rs. 32,89,807/- is outstanding out of total of Rs. 81,63,076/-, balance has been received through banking channel. Considering all these facts, we delete the addition made by the Ld. AO and allow this ground raised by the assessee.
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2024 (5) TMI 637 - ITAT CHANDIGARH
Addition u/s 69B r.w.s.115BBE - during the course of survey action discrepancies were found on account of physical verification of stock vis-a-vis regular books of account - assessee surrendered an amount on account of excess stock over and above its normal business income in order to buy peace - HELD THAT:- We find that the difference in stock so found out by the authorities has no independent identity and is part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as undeclared business income.
Following the said decision of Shri Ram Narayan Birla [2016 (9) TMI 1354 - ITAT JAIPUR] has taken a similar view holding that the excess stock so found during the course of survey was part of the stock and the Revenue has not pointed out the excess stock has any nexus with any other receipts other than the business being carried on by the assessee.
There is no physical distinction between the accounted stock and unaccounted stock. No such physical distinction was found by the Revenue either. We therefore find that the difference in stock so found out by the authorities has no independent identity and is in terms of value terms only and thus part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as business income.
Thus the income so surrendered on account of investment in excess stock during the course of survey cannot be brought to tax under the deeming provisions of section 69B of the Act and the same has to be assessed to tax under the head “business income”. Thus question of application of section 115BBE doesn’t arise and normal tax rate shall apply - Decided in favour of assessee.
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2024 (5) TMI 636 - ITAT KOLKATA
Revision u/s 263 by CIT - disallowance of provision for nonperforming assets (NPA) in computing books profits u/s 115JB - HELD THAT:- We find that the Tribunal in the assessee’s own case for Assessment Year 2008-09 and 2011-12 [2020 (1) TMI 490 - ITAT KOLKATA] as held that provision for Non-performing assets cannot be said to be provision for diminution in value of assets to attract disallowance as per clause (i) of Explanation 1 to sec. 115JB(2) of the Act. In other words, by making a provision for NPA, there will be no reduction in NPA. Hence, clause (i) of Explanation to Sec. 115JB(2) does not apply since there is no reduction in value of asset. Accordingly, this ground of the assessee is allowed and Assessing Officer is directed to delete addition in computing book profit u/s 115JB - Thus Pr. CIT erred in holding the order of the Assessing Officer as erroneous and prejudicial to the interest of the revenue based on this issue raised in Ground No. 4.
Additional depreciation on windmill capitalized in Assessment Year 2012-13 - As decided in M/s. Rittal India Pvt. Ltd [2016 (1) TMI 81 - KARNATAKA HIGH COURT] only 10 per cent can be claimed in one year, if plant and machinery is put to use for less than 180 days in the said financial year. This would necessarily mean that the balance 10 per cent additional deduction can be availed in the subsequent assessment year, otherwise the very purpose of insertion of clause (iia) would be defeated because it provides for 20 per cent deduction which shall be allowed. Similar is the view taken in the case of Century Enka Ltd. vs. DCIT [2015 (5) TMI 647 - ITAT KOLKATA]. Thus Pr. CIT erred in holding the order of the Assessing Officer as erroneous and prejudicial to the interest of the revenue.
Disallowance of short term capital loss claimed in the return for transfer of rights in land and building and in - exclusion of capital profits from computation of books profits u/s 115JB - need for referring the matter on account of short term capital loss to the file of the A.O. to verify the applicability of Sec. 50C - It is now settled law that if, while making the assessment, the AO examines the accounts and other details, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income, the ld. C.I.T., while exercising his power under sec. 263 of the Act, is not permitted to substitute his own view about the computation of income in place of the income assessed by the A.O., unless the order of the A.O. is patently unsustainable in law”. The ld. D/R, could not controvert these submissions of assessee.
CIT erred in holding the order of the Assessing Officer as erroneous and prejudicial to the interest of the revenue based on this issue raised - Assessee appeal allowed.
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2024 (5) TMI 635 - ITAT DELHI
Income Taxable in India or not - Royalty/FTS income - revenue received by the Appellant from provision of background screening and investigation services - scope of India - USA DTAA - HELD THAT:- As decided in HIRERIGHT LTD. [2023 (9) TMI 478 - ITAT DELHI] online access to background screening results cannot be construed as providing access to database maintained by the assessee. The consideration received by the assessee under the terms of its agreement with its client is purely towards provision of background screening services and does not include any consideration for use or right to use any copyright or a literary, artistic or scientific work, patent, trademark, design, model, plan, secret formula, or process or information. Thus, the impugned receipts of the assessee from its clients in India cannot be regarded as 'Royalties’ under the provisions of Article 13 of the India-UK DTAA
What is delivered to the client is validation report assuring its clients about the authenticity of information contained in the report on the basis the information collated in the process of validation. Hence it cannot tantamount to imparting of commercial experience. The screening report which is issued does not involve any transfer of commercial experience to the client or getting the right to use the experience. There is also no transfer of any skill or knowledge of assessee to the customers in the issuance of screening reports, as the client is only given access to findings of the assessee in the form of a report which contains factual information but nowhere the assessee imparts its experience, skill of carrying out background screening services to its client. It is thus clear that there is no imparting of information concerning industrial, commercial or scientific experience by assessee when it issues the reports to its clients.
15. As regards the characterisation of impugned receipts as FTS, in our view, the services rendered by the assessee do not involve any technical skill/knowledge or consultancy or make available any technical knowledge, experience, skill, know-how or processes to the clients. Assessee's role is restricted to the verification of information provided by various candidates proposed to be hired by its clients. It involves seeking information from various sources that is accessible on specific requests and no advice/guidance on the credentials of the candidate is provided by the Assessee to its client. The role of the assessee is limited to validation of data provided by the candidate and provide relevant facts captured during the course of validation. The clients make an independent decision to hire the candidate. Hence, in our view the services should not be considered as FTS under Article 13(4) of the India-UK DTAA
Hence, in the absence of any material change on the facts of the issue and the legal preposition, we hold that no addition on account “Royalty” is warranted in this case.
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2024 (5) TMI 634 - ITAT MUMBAI
LTCG - exemption claimed u/s 54F - fractional ownership - AO denied the benefit for the reason that the assessee is owning 16.67% of six flats in another house property and therefore does not fulfill the condition u/s 54F - whether the joint ownership of 16.67% in 6 flats amounts to owning more than one residential house in assessee's case and that the assessee is the "owner" of the 6 flats jointly? - HELD THAT:- It is an admitted fact that there is no clear demarcation with regard to the Flats jointly owned, though as per the submissions of the assessee each flat is occupied by each of the joint owners. Therefore it cannot be said that one of the joint owners i.e. the assessee in this case is the absolute owner of the 6 flats and no individual person on his own can sell the entire property of all 6 flats.
At best the joint owner can sell his share of interest in the property but the property would still continue to be owned by the rest of the co-owners. Joint ownership is therefore different from absolute ownership and in the case of residential unit which is jointly owned none of the co-owners can claim that he is the owner of residential house. Accordingly where a house is jointly owned by two or more persons, none of them can be said to be the absolute owner of the house. So, the word "own" would not include a case where a residential house is partly owned by one person or partly owned by other person(s).
As decided in Seth Banarsi Dass Gupta case [1987 (4) TMI 7 - SUPREME COURT] wherein, it was held that a fractional ownership was not sufficient for claiming even fractional depreciation u/s 32 of the Act and as a consequence to this decision the Legislature had to amend the provisions of section 32 with effect from 1-4-1997 by using the expression "owned wholly or partly". Since no such words are expressively mentioned in section 54F, in our considered view the word "own" in section 54F would include only the case where a residential house is fully and wholly owned by assessee and consequently would not include a residential house partly owned by the assessee along with other persons.
Thus we hold that the assessee cannot be denied the benefit of exemption u/s. 54F on the ground that he is jointly owning 16.67% in 6 flats since joint ownership/part ownership cannot be treated as absolute ownership in the absence of any specific words to that effect in section 54F - Appeal filed by the assessee is allowed.
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2024 (5) TMI 633 - ITAT CHANDIGARH
TDS u/s 194C - Tripartite agreement - Payment of freight charges w/o deducting TDS on behalf of third party - payment made to the Truck Operator Union (through the assessee company) - Assessee in default u/s 201(1) r.w.s 201(1A) - As per AO information furnished by the Truck Operator Union reveals that the Truck Operator Union has done the business of plying, hiring or leasing goods carriage having 892 trucks of its members and has not shown freight receipts received from the assessee in its books of account as well as not offered the same to tax in its return of income - HELD THAT:- We are in agreement with the contention advanced by the ld AR that in the instant case, the understanding has been that the Truck Operator Union will provide the requisite trucks for transport of goods belonging to M/s Pepsico India Holding Pvt. Ltd. and the assessee company will facilitate and provide the necessary coordination and the logistical support as well as raise necessary invoices on behalf of the Truck Operator Union and collect freight payment and disburse the same subsequently to the Truck Operator Union.
We are of the view that the person responsible for making the freight payment and the responsibility to deduct TDS u/s 194C for freight payment made to the Truck Operator Union (through the assessee company) is that of the M/s Pepsico India Holding Pvt. Ltd. and not that of the assessee company. The provisions of Section 194C are not attracted where the assessee subsequently raises the invoices on behalf of the Truck Operator Union and collects and disburse the freight payment received from M/s Pepsico India Holding Pvt. Ltd to the Truck Operator Union. Appeal of the Revenue is dismissed.
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2024 (5) TMI 609 - BOMBAY HIGH COURT
Validity of search and seizure u/s 132 - Information and material enough to indicate a reason to believe or not? - basis of which a reasonable belief can be founded? - HELD THAT:- The position, that the Authority must have information in his possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce the books of accounts or other documents for production of which summons or notice has been issued or such person will not produce such books of accounts or other documents even if summons of notice is issued to him, or such person is in possession of any money, bullion or other valuable articles which represents either wholly or partly income or property which has not been or would not be disclosed has to be the basic fulcrum on which, the exercise of the power u/s 132 would revolve.
The Hon’ble Apex Court in Laljibhai Mandalia [2022 (7) TMI 639 - SUPREME COURT] has specifically held that such reasons may have to be placed before the High Court in the event of a challenge to formation of the belief of the Competent Authority in which event the Court would be entitled to examine the reasons for formation of the belief, though not the sufficiency or adequacy thereof.
We are not satisfied with the satisfaction of the requirement of Section 132 (1) of the said Act. It is also necessary to note that no notice has been issued to the Petitioners soliciting any information from them, in this regard, at any point of time earlier to the action under Section 132 (1) of the said Act, though it may not be necessary, in case the file would demonstrate the information and material enough to indicate a reason to believe. In absence of the same, we are, therefore, unable to sustain the action of the Respondents taken under Section 132 (1) of the said Act. The same is, therefore, hereby quashed and set aside.
Referring to original file of the Department having perused the same in extenso, we are of the considered opinion that it does not disclose any information which would lead the Authorities to have a reason to believe that any of the contingencies as contemplated by Section 132 (1) (a) to (c) of the said Act are satisfied. That apart, the note also does not contain anything altogether regarding any reason to believe, as regards what has been stated in Section 132 (1) (a) to (c) of the said Act, on account of which, in our considered opinion, there is total non-compliance with the requirements as contemplated by Section 132 (1) of the said Act which vitiates the search and seizure.
Respondents cannot rely upon what has been unearthed on account of opening of the lockers of the Petitioners, as the information and reason to believe as contemplated under Section 132 (1) of the said Act has to be prior to such seizure.
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2024 (5) TMI 600 - DELHI HIGH COURT
Penalty proceedings u/s 271AAC(1) - Unexplained expenditure u/s 69C - cumulative amounts as mentioned by CBIC relied upon - HELD THAT:- AO had relied solely on the assumption that the information provided by CBIC was correct notwithstanding that it had not disclosed the details of any import bills and that no reconciliation in this regard was carried out. AO had faulted the assessee for not reconciling the information regarding the quantum of purchases made as received from CBIC with that as disclosed by the assessee.
AO also had no knowledge as to which import or purchase made by the assessee was not disclosed by the assessee as the AO also had no such information. We accept the contention that apart from stating that it had not imported goods of the value as disclosed, it was impossible for the assessee to dispute the alleged additional purchases. The assessee could not be faulted for not reconciling the data as the information available with the AO is wholly insufficient for carrying out any reconciliation exercise.
If any addition was proposed to be made on the basis that the purchases as reflected in the assessee’s books is not correct and it has made certain imports that had not been recorded in the books of accounts, the least that the Assessing Officer was required to do was to identify the entries that ought to have been made in the Books of Accounts of the assessee and which it had failed to do. Merely proceeding on the basis that CBIC is an apex body and therefore, information provided by it cannot be doubted, without even identifying or meaningfully analysing such information, is wholly insufficient to proceed to make an addition.
We find merit in the contention that the impugned order is unsustainable and has been passed in violations of principles of natural justice. It is obvious that the AO must have some material to indicate that an expenditure has been made to make such an addition. The only material in this case are the cumulative amounts as mentioned by CBIC without details of any such expenditure.
Thus the impugned order is set aside. The matter is remanded to the Assessing Officer for decision afresh in accordance with law.
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2024 (5) TMI 599 - GAUHATI HIGH COURT
Legality of search and seizure conducted at the residential premises of the petitioner - legality and validity of the notice issued u/s 131 (1A) - petioner submitted that since search has already been conducted, no notice u/s 132 (1A) issued to the petitioner - mandation to state 'Reason to suspect' that any income has been concealed or likely to be concealed - HELD THAT:- A bare perusal of sub-section (1A) of Section 131 of the Act mandates that notice u/s 131 (1A) is issued before the authority, takes action under clauses (i) to (v) of Section 132 (1) of the Act. Pertinent that the designation of officers for exercise of powers are different as mentioned in Section 131 as compared to Section 131 (1A) of the Act. The designation as mentioned in Section 131 are of the Officers of Assessment Wing who makes assessment and those mentioned in Section 131 (1A) are of the Investigation Wing who carries out search & survey and as such both the sections operates in different fields.
Thus before making of a search, a notice under Section 131 (1A) of the Act has to be issued and since the taxing provisions of the statutes are to be interpreted strictly, the issuance of the notice under Section 131 (1A) of the Act in the instant case after conducting of the search is absolutely illegal & without jurisdiction.
Taxing Statutes are to be interpreted strictly - It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment - See Ajmera Housing Corporation & Anr. 2010 (8) TMI 35 - SUPREME COURT]
Ambiguity in the taxing provision - The words of a taxing statute must never be stretched against a tax-payer and if the legislature has failed to clarify its meaning by use of appropriate language, the benefit must go to the tax-payer. The Apex Court held that even if there is any doubt as to interpretation, it must be resolved in favor of the subject - See M/s Murarilal Mahabir Prasad [1975 (9) TMI 155 - SUPREME COURT]
The taxing provisions has to be interpreted strictly, and on the strict interpretation of Section 131 (1A) of the Act, it is clear that before making of the search, a notice under Section 131 (1A) is mandatorily required to be issued. When the legislature in clear words under Section 131 (1A) of the Act has provided that notice has to be issued under Section 131 (1A) prior to making of the search, notice under Section 131 (1A) cannot be issued after conducting of the search and thereby, the notice issued under Section 131 (1A) of the Act is illegal and without jurisdiction contrary to the provision of the Section 131 (1A) of the Act.
In the facts of the instant case, there could not have been any material that could be a reason to suspect that any income has been concealed or likely to be concealed by the petitioner. Section 131 (1A) of the Act consist of two conditions which are required to be fulfilled before any action is taken under Section 131 (1A). Both the conditions has to co-exist before any action of search and seizure is undertaken. These conditions are; a) Assessing Officer has reasons to suspect any income that is concealed or likely to be concealed and, (b)Upon existence of such reasons, issues notice for the purpose of making enquiry or investigation relating thereto. After fulfillment of the aforesaid two conditions, the Assessing Officer is empowered to take action under clauses i to v of sub-section 1 of Section 132. It is only after fulfilment of the aforesaid two conditions the Assessing Officer can conduct a search and seizure.
In the present case, the respondent has not placed any materials whatsoever to indicate that Assessing Authority had any materials on the basis of which he has reasons to suspect that the petitioner has concealed or is likely to conceal any income. The affidavit filed on behalf of the authority is absolutely silent in this regard. The very fact that the respondent issued notices under Section 131 (1A) of the Act after the search and seizure operation under Section 132 of the Act was conducted, goes to show that there was neither any reasons to suspect nor materials before the Authorizing Officer on the basis of which search operation could have been conducted under Section 132 of the Act. Thus, the two essential conditions being absent before the impugned search under Section 132 was conducted, the same is without jurisdiction.
Thus the subject search is absolutely illegal inasmuch as it is contrary to the express provisions of Section 131 (1A) of the Act. WP allowed.
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2024 (5) TMI 598 - BOMBAY HIGH COURT
Validity of reopening of assessment - order passed u/s 148A (d), but officer does not deal with any of the submissions made by Petitioner - Non independent application of mind - Directorate General of GST, Mumbai has identified one Curzen Infraprojects Pvt. Ltd was generating fake/bogus invoices for passing of fraudulent Input Tax Credit (ITC) without supply of goods to various companies, and EMI Transmission Ltd. was one of them, because Petitioner dealt with EMI Transmission Ltd., the said transaction is non-genuine - HELD THAT:- AO is only referring to the information received from the Directorate General of GST. There is absolutely nothing to indicate that he independently applied his mind to the material received or that he has analysed the response from Petitioner with the material received, which reflects total non-application of mind.
Petitioner has submitted various documents to show that the goods purchased from EMI Transmission Ltd. were actually supplied to third parties and we would agree with Petitioner that without purchase there cannot be a sale.
Thus we hereby quash and set aside the impugned order and remand the matter for denovo consideration.
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2024 (5) TMI 597 - ALLAHABAD HIGH COURT
Non delivery of possession of property purchased in auction conducted by the Tax Recovery Officer - Certificate of Sale was issued in his favour on 22.02.1995. Yet the petitioner has remained deprived of possession over the property since then - HELD THAT:- Today, though objection has been raised to the Certificate of Sale not stamped at the same time, learned Additional Chief Standing Counsel would submit, reserving the right to the State to proceed in accordance with law under the Stamp Act, the said authorities would remain obligated to ensure that adequate police force is made available to the Tax Recovery Officer such that possession under the Certificate of Sale may be handed over to the petitioner within reasonable time.
ORDER:- The Tax Recovery Officer/ respondent no.2 shall make proper application to respondent no.3 to make available adequate police force to give effect to the Certificate of Sale dated 22.02.1995. Such application may be made within a period of two weeks from today. Upon that application being received by respondent no.3 he shall make available to respondent no.2 necessary police force and also other arrangements within a further period of four weeks
It is thus expected that due possession would be made over to the petitioner on or before 30.06.2024.
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2024 (5) TMI 596 - DELHI HIGH COURT
Penalty u/s 271C - failure to deduct TDS u/s 194C on External Development Charges - Waiver of penalty u/s 273B - Reasonable cause - HELD THAT:- As decided in Puri Construction Pvt. Ltd [2024 (2) TMI 756 - DELHI HIGH COURT] various airlines were deducting tax at source under section 194H at that time, this does not necessarily mean that the position of law was settled. Rather, it appears to us that while one set of air carriers acted under the assumption that the Supplementary Commission would come within the ambit of the provisions of the Income-tax Act, another set held the opposite view. The assessees before us belong to the latter category. Furthermore, as we have highlighted earlier, there were contradictory pronouncements by different High Courts in the ensuing years which clearly highlights the genuine and bona fide legal conundrum that was raised by the prospect of section 194H being applied to the supplementary commission.
There is nothing on record to show that the assessees have not fulfilled the criteria under section 273B of the Income-tax Act. Though we are not inclined to accept their contentions, there was clearly an arguable and “nascent” legal issue that required resolution by this court and, hence, there was “reasonable cause” for the air carriers to have not deducted tax at source at the relevant period. The logical deduction from this reasoning is that penalty proceedings against the airlines under section 271C of the Income-tax Act stand quashed.
We dispose of the instant writ petition with liberty to the respondent to finalize the show cause notice proceedings bearing in mind the legal position as explained hereinabove.
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2024 (5) TMI 595 - BOMBAY HIGH COURT
Rectification of mistake u/s 254 - Deduction u/s 80IB - Delay in filing of return of income (ITR) - ITAT rejected the application for rectification - HELD THAT:- Though we would agree with the view expressed by the ITAT that in the order dated 4th May 2022 there was no error, the ITAT failed to appreciate the spirit in which the order dated 23rd August 2022 was passed by the Hon’ble High Court. The High Court had very categorically observed that the authority should refrain from over analysis which leads to paralysis of justice.
High Court in its order [2022 (12) TMI 1019 - BOMBAY HIGH COURT], condoned the delay by observing that the Income Tax Authority should consider the claim for deduction u/s 80IB (10) of the Act for AY 2011-12 made by Petitioner in accordance with law, as if there was no delay in filing the return - By an order pronounced [2023 (7) TMI 1405 - ITAT PUNE] the Tribunal rejected the MA by observing that the High Court states the Income Tax Authority and the ITAT is not an authority and there was no apparent mistake in its order as required within the four corners of Section 254 (2) of the Act. It is this order, which is impugned in this Petition
HELD THAT:- Though we would agree with the view expressed by the ITAT that in the order [2020 (5) TMI 718 - ITAT PUNE] there was no error, the ITAT failed to appreciate the spirit in which the order dated 23rd August 2022 was passed by the Hon’ble High Court.
The High Court had very categorically observed that the authority should refrain from over analysis which leads to paralysis of justice. Therefore, the delay having been condoned by the High Court, we hereby quash and set aside the assessment order and remand the matter to the stage of AO who shall pass fresh assessment order in accordance with law by considering the claim for deduction under Section 80IB (10) of the Act for AY 2011-12 made by Petitioner as if there was no delay in filing the return. In fact, what we understand from paragraph 22 of the order dated 23rd August 2022 of the High Court is that the matter was being remanded to the AO. Instead, Petitioner has approached the ITAT by filing an application under Section 254 (2) of the Act.
AO shall pass fresh assessment order on or before 31st August 2024 and before he passes any order, shall give a personal hearing to Petitioner, notice whereof shall be communicated atleast five working days in advance. The assessment order shall be a reasoned order dealing with all submissions of Petitioner.
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2024 (5) TMI 594 - MADRAS HIGH COURT
Addition of excess jewellery found in search - addition of 1099.96 gms of gold out of 10514.960 gms of gold and 14.05 carats of diamond that was found at the residence of the petitioner at the time of search - HELD THAT:- Circular No.1916 of CBDT, dated 11.05.1994 on Instances of seizure of jewellery of small quantity in the course of operation u/s 132 makes it clear that the Authorized Officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case decide to exclude a larger quantity of jewellery and ornaments from seizure.
Para (iv) makes it clear that a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes.
Thus, the purport of the above circular is confined only at the stage of investigation of seizure and not to the stage of assessment. Therefore the complaint of the petitioner that the circular has not been followed cannot be countenanced.
Under these circumstances, no case is made out for interfering with the impugned order. However, liberty is given to the petitioner to pursue the alternate remedy before the Appellate Commissioner in terms of Section 246A of the Income Tax Act, 1961.
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2024 (5) TMI 593 - ITAT PUNE
Addition u/s 41(1) - cessation of liability - HELD THAT:- DR failed to pinpoint any specific material in assessee’s books of account in support of the learned lower authorities impugned action invoking sec. 41(1) of the Act.
Faced with this situation, we quote Sugauli Sugar Works [1999 (2) TMI 5 - SUPREME COURT] that the impugned addition does not get attracted merely because of lapse of long time or in absence of any actual cessation in assessee’s books of account. Thus deem it as a fit case to delete the impugned addition in very terms. Assessee appeal allowed.
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2024 (5) TMI 592 - ITAT PUNE
Validity of reopening of assessment u/s 147 - Cash deposits in bank account - HELD THAT:- DR fails to dispute the clinching fact that the impugned re-assessment dated 26.12.2019 had assessed the assessee’s alleged customer advance(s) in tuition activity(ies) of Rs. 63,52,600/- after deducting 35% thereof as the corresponding expenditure; resulting in the impugned addition of Rs. 41,29,190/- as well as interest of Rs. 1,76,082/- received from fixed deposits with M/s. Baramati Sahakari Bank Ltd.; respectively.
That being the case, there is no addition made regarding the foregoing sole reason of reopening. Faced with this situation, Jet Airways (I) Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] that the impugned reopening/re-assessment itself is not sustainable in law once the AO had not added the foregoing sum.
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2024 (5) TMI 591 - ITAT PUNE
Reopening of assessment u/s 147 - Disallowance of depreciation on new Honda City car - as per revenue depreciation had been rightly restricted to 50% as per Rule 5 of Income Tax Rules, 1962; New Appendix-1; III Plant & Machinery (3)(via) in very terms - HELD THAT:- No merit in Revenue’s arguments since it clearly appears to be an instance of change of opinion not sustainable in law going by Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT] - It is deemed appropriate to observe herein that the assessment order herein is AY 2010-2011 and the AO had framed his sec. 143(3) assessment on 26.03.2013 followed by his sec. 148 notice issued in the year 2017.
This chronology of events makes it clear that the AO had initiated his impugned action beyond a period of four years from the end of the relevant assessment year without even satisfying that assessee had not disclosed the relevant particulars “fully” and “truly” in the foregoing former round. That being the case, we quote Hindustan Lever Ltd. v. R.B. Wadkar [2004 (2) TMI 41 - BOMBAY HIGH COURT] that such reopening reasons have to be read on standalone basis without any scope of improvement or substitution or addition therein; as the case may be.
Revenue’s case hardly carries any merit as well once it is evident that the assessee had duly got it’s vehicle(s) insured on 30.09.2009 which has been treated “put to use” in absence of any evidence to the contrary. Be that as it may, find no merit in the Revenue’s vehement arguments regarding validity of the impugned reopening as well as on merits. It fails in it’s instant appeal in very terms. Decided against revenue.
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