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Income Tax - Case Laws
Showing 121 to 140 of 168846 Records
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2024 (11) TMI 773
Reopening notice to issued in a faceless manner or the Jurisdictional AO - Proceedings against company whose name has been struck off - the notice as required to be issued in a faceless manner in terms of Section 151A but has been issued by the Jurisdictional Assessing Officer which renders the said notice bad.
HELD THAT:- Having heard the learned advocates appearing for the respective parties, by keeping the point of maintainability open, since the jurisdictional issue has been raised, the present writ petition should be heard upon exchange of affidavits.
Taking note of the prima facie case and the order of the Hon’ble Division Bench of this Court in the case of Girdhar Gopal Dalmia v. Union of India,[2023 (9) TMI 1555 - CALCUTTA HIGH COURT] the impugned notice dated 1st May 2023 issued by the Jurisdictional Assessing Officer under Section 148 of the said Act, is required to be stayed till December 2024 or until further orders whichever is earlier.
Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date. Reply thereto, if any, be filed within four weeks thereafter.
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2024 (11) TMI 772
Rectification of mistake apparent on record u/s 154 - addition of GST amount and non-payment of taxes u/s 43B - HELD THAT:- It is fact on record that assessee has failed to withdraw the appeal but, in the meantime, CIT (A) has adjudicated the issue based on the information available on record. Basically, he has accepted the fact that GST amount was not to be added in the hands of the assessee. However, he proceeded to sustain the addition to the extent of non-payment of GST u/s 43B.
However, this is not the issue contested by the assessee before the CIT(A). Leaving that as it may, the grievance raised by the assessee before the CIT (A) was already addressed by the CPC by rectifying the order passed u/s 154 of the Act, there is no grievance to the assessee. The impugned order passed by CIT (A) becomes infructuous. Accordingly, we direct the AO not to proceed with the order giving effect to the findings of CIT (A).
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2024 (11) TMI 771
Deduction u/s 80-IA on retention money offered to tax in the original return of Income - HELD THAT:- CIT(A) for the assessment year 2017-18 has deleted the disallowance made by the Assessing Officer for retention money to the extent of Rs. 11,36,37,740/-. Therefore, the finding of the ld.CIT(A) is not correct to that extent. In our view, the Revenue should take a consistent view unless there is a change of fact or law. We do not approve the approach of the ld.CIT(A) for deciding the issue when the issue has already been considered and examined by the ld.CIT(A) in the earlier assessment year i.e., 2017-18.
CIT(A) while deciding the issue against the assessee, has relied upon the decision of M/s. McNally Bharat Engineering Co. Ltd, Kolkata [2017 (3) TMI 207 - ITAT KOLKATA] - Section 43CB as reproduced hereinabove which was inserted in the statute book w.e.f 01.04.2017 provides the how the retention money was required to be treated while computing the profit and gains arising from the construction contract. Section 43CB(2)(i) clearly provides that for the purposes of percentage completion method, the project completion method or straight-line method, the contract revenue shall include retention money. In view of the clear provision of law, the assessee was right in including the retention money in contract receipts.
It is consistent case of both the parties that the retention money was retained by the contractor pertaining to the construction activities for which the assessee was eligible for section 80IA of the Act. The retention money cannot have a different characteristics than that of the principle amount of the contract as both are part and parcel of the revenue which would be received by the assessee or was received by the assessee for carrying out the construction activities. In view of the above, the order passed by the ld.CIT(A) is without any merit and therefore, the appeal of the assessee is required to be allowed.
In the present case, the reliance of the ld.CIT(A) in the case of DCIT, Circle – 1 Vs. M/s. McNally Bharat Engineering Co. Ltd (supra) form basis of deciding the issue against the assessee. However, we find that Section 43CB, which came into the statutue w.e.f. 01.04.2017 clearly provides for considering the retention money as a contract receipt for computing the profit and gains arising from the construction contract. In light of the above, the appeal of the assessee is allowed.
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2024 (11) TMI 770
Reopening of assessment u/s 147 - notice issued beyond 4 years - escaped assessment on account of under assessment of Long-Term Capital Gain represents excess indexed cost allowed while computing capital gain from sale of property - HELD THAT:- As going by the reasons recorded by the Assessing Officer, and the basis for such reasons, the Assessing Officer refers to only evidences filed by the assessee during the course of original assessment proceedings, which was held on record before the Assessing Officer, when the assessment order has been passed u/s 143(3) of the Act. Therefore, in our considered view, the assessee has made disclosure of all necessary facts for completion of his assessment, for that A.Y and thus, unless the Assessing Officer allege that, the assessee has failed to disclose fully and truly all material facts necessary for his assessment, the assessment cannot be re-opened beyond 4 years from the end of the relevant A.Y.
The reopening of the assessment in the facts of the present case is bad in law, because the Assessing Officer has reopened the assessment beyond 4 years from the end of the relevant A.Y without any allegation, on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The learned CIT (A) without considering the relevant facts, simply upheld the reopening of the assessment. Thus, we set aside the order of the learned CIT (A) and quash the re-assessment and passed by the Assessing Officer u/s 143(3) r.w.s. 147 - Decided in favour of assessee.
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2024 (11) TMI 769
Exemption u/s 11 denied - Trust had not e-filed the Audit Report in Form 10BB on or before filing of the return of income - appellant filed application for condonation of delay in filing Form 10BB before the DGIT and application filed by the assessee has been rejected vide order u/s 119(2)(b)
HELD THAT:- The argument of the assessee is that although the delay in the present case is more than 365 days, in general, but if we exclude the delay covered by the Covid period, then the delay is less than 365 days and accordingly, the appellant ought to have filed petition before the CIT (Exemption) but not before the DGI(Inv.). Further, in the circular issued by the CBDT, there is no clarification as to who will condone the delay, if delay is beyond 3 years. Since there is an ambiguity in the process of condonation of delay in filing of audit report, the assessee has filed further application before the CBDT seeking clarification and also condonation of delay in filing Form 10BB for both the A.Ys.
We find that in the Board’s Circular No.15 of 2022, dated 19/07/2022, there is a provision for the authorities to condone the delay up to 3 years and there is no provision for condonation of delay or there is no clarification as to who will condone the delay, if delay is beyond 3 years.
Since there is an ambiguity in the Circular issued by the CBDT on the issue of condonation of filing of Form 10BB and further the appellant submitted that it has filed a further application before the CBDT for condonation of delay, in our considered view, there is a merit in the argument of the assessee that the learned CIT (A) should have waited till the CBDT finally decides application filed for condonation of delay. Further, in our considered view, when the appellant is otherwise entitled for exemption under the Act, having satisfied all the conditions, the authorities should have taken a lenient view on belated filing or late filing of Form 10BB of the Act.
Since the appellant claims that it has filed further application before the CBDT for considering the condonation of delay in Form 10BB for both the A.Ys, in our considered view, the matter needs to be kept alive till such time, the CBDT takes a final decision on the delay in filing Form 10BB. Therefore, we are of the considered view, that the issue needs to go back to the file of the Assessing Officer for fresh consideration.
Thus, we set aside the order passed by the learned CIT (A) for both the A.Ys and set aside the issue to the file of the AO and also direct the Assessing Officer to decide the issue of exemption u/s 11 of the Act, for both the A.Ys after the outcome of the application, if any, filed by the assessee, before the CBDT for condonation of delay in filing Form 10BB for both the A.Ys.
Assessment of gross receipts as income of the appellant derived from property held under the Trust - Once any Trust/Institution loses its of exemption u/s 11 for any reason, including withdrawal of exemption granted u/s 12AA of the Act, the income of the Trust should be assessed as an AOP and only surplus/profits needs to be taxed. In the present case, it was the contention of the assessee before us that, the Assessing Officer has taxed gross receipts for both the A.Ys without allowing deduction towards various expenditure/application of income towards charitable purposes. If at all, the claim of the assessee is correct, then, in our considered view, the Assessing Officer is grossly erred in taxing gross receipts because in any case, the appellant needs to be assessed as an AOP on surplus/profit only.
Therefore, we direct the AO to verify the claim of the assessee and in case as claimed by the assessee, if the gross receipts are brought to tax, then the Assessing Officer is directed to assess only income/profit to tax for both the A.Ys, in case finally the Assessing Officer holds that the assessee is not entitled for exemption u/s 11.
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2024 (11) TMI 768
Addition in respect of unsecured loans received - As argued appellant satisfied all the ingredients viz. identity, genuineness and creditworthiness - HELD THAT:- AO and the CIT(A) have not accepted the creditworthiness of the lender but to rebut the said finding, the Ld. AR has stated that the lender was staying at Bhulabhai Desai Road in the upmarket Breach Candy locality of South Mumbai. Further, he was treated at Breach Candy Hospital which is a very expensive hospital. His legal heir and wife also migrated to London after his death.
The lender was also operating a diamond factory at Kandivali, Mumbai. Therefore, it would be wrong to infer that the lender was not a man of means and lacked creditworthiness.
Assessee has given PAN, ITR and confirmation of the lender to show that the loan was genuine. The loan was also undisputably advanced through account payee cheque. The immediate source of the fund was the repayment received by the lender in cheque and not in cash from one M/s Pranjal Star, who has given the confirmations from AY.2013-14 to 2015-16. Bank extracts of loan receipt and loan repayment by M/s Pranjal Star are enclosed at pages 35 and 44 of the paper books. Since the lender expired on 29.06.2016 in Breach Candy Hospital, he was not able to respond to the notices issued to him u/s 133(6) of the Act. This fact alone cannot negate the overwhelming factual and circumstantial evidences advanced by the appellant. In view of this fact discussed above, we are of the considered view that the appellant has satisfactorily explained the nature and source of the credit of Rs. 25,00,000/- in its books for the subject assessment year. Accordingly, the order of CIT(A) is set aside and the AO is directed to delete the addition made u/s 68 of the Act.
Disallowance of interest paid to creditor - AR submitted that interest was paid through banking channel and assessee has made TDS wherever interest was paid - HELD THAT:- As we have already deleted the addition of cash credit u/s 68 of the Act of the impugned loan. Hence, disallowance of interest is also deleted and the ground is allowed.
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2024 (11) TMI 767
Rejection of Rectification application u/s 154 - Charging of interest under sections 234A, 234B, and 234C - return processed by CPC u/s 143 (1) holding that the due date for filing the return falls on 05.08.2013 and wrongly charged interest u/s 234A, 234B and 234C - case of the assessee was selected for scrutiny and notice u/s 143(2) was issued to the assessee. The rectification rights were then transferred from CPC Bangalore to the AO - HELD THAT:- As decided in Pankaj Bansal case [2024 (4) TMI 1199 - ITAT DELHI]. As per provisions of section 139(1) of the Act, the due date for the partnership firm not liable for tax audit would be 05.08.2013 for the year under consideration end the due date for partnership which is eligible for tax audit would be 31.10.2013. This is very clear from Explanation to section 139 of the Act, which defines the expression "due date".
Hence, the department in the hands of the firm holding had accepted the fact that it is liable for tax audit and accordingly had accepted the due date of filing of return of income u/s 139(1) to be 31.10.2013. Hence, the department cannot take the divergent stand for the assessee herein by holding that the firm in which assessee is a partner is not liable for tax audit u/s 44AB of the Act and consequently, the due date for assessee would get advanced to 05.08.2013, instead of 31.10.2013. In view of this, we have no hesitation to direct the AO to delete the chargeability of interest u/s 234A and u/s 234B - Decided in favour of assessee.
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2024 (11) TMI 766
Penalty u/s 271(1)(c) - allegation of defective notice - non specification of clear charge - assessee has held that assessee concealed particulars of income of deposited cash in the bank account without satisfactory explanation - HELD THAT:- As decided in Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind.
It is important to mention here that decision of the Hon'ble Karnataka High Court has been upheld in the case of CIT vs. SSA'S Emerald Meadows [2016 (8) TMI 1145 - SC ORDER] wherein the Hon'ble Apex Court has held no penalty can be levied without specifying which limb of Section 271(1)(c) of the Act would be applicable in case of the assessee.
Thus, as AO has passed an order u/s 271(1)(c) of the Act on two limbs; (i) concealed particulars of income and (ii) furnishing inaccurate particulars of income. Accordingly, we are in this opinion that penalty notice issued in this case suffers from infirmity that lack of satisfaction and lack of notice being issued in making the assessee aware regarding exact charge against him and hence, the same is liable to be quashed. Decided in favour of assessee.
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2024 (11) TMI 765
Reopening of assessment - Bogus LTCG - Addition u/s 68 - HELD THAT:- During the assessment proceedings, the Assessee stated that he is a regular investor and making investments in the shares and the said fact has not been denied by the A.O. while passing the assessment order. Merely because alleged script to be a penny stock does not mean that actually that script is a penny stock as it is not the case where the Assessee had invested only in the said script.
In the present case, the Assessee has produced the document to show that he has made a genuine transactions of the aforesaid script and sold the same when the prices are high and there is no allegation from the Department that there is any adverse report from SEBI or any other authorities against the said script. A perusal of the assessment order shows that the A.O. has relied on the report of the Investigating Wing during the assessment proceedings. The A.O. has not made any enquiry from relevant parties or independent source or evidence, but the A.O. heavily relied upon the statement recorded by the Investigating Wing as well as information received from the Investigating Wing. Even the statement recorded by the Investigating Wing has not been confirmed or corroborated by the person during the assessment proceedings. In our opinion, the A.O. ought to have conducted a separate and independent enquiry and any information received from the Investigating Wing is required to be corroborated and confirmed during the assessment by the Assessing Officer by examining the concerned persons who can affirm the statement already recorded by any other authority or the Department.
No allegation in the assessment order or the order of the CIT(A) that the Assessee was involved in any price rigging or price increase. Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain scrips based on market information and try to exit at an appropriate time the moment they make their profits.
In this case, no adverse inference in regard to the scrip of M/s Wagend Infra Venture Ltd in context of SEBI report etc, finds place in the reassessment order or the CIT (A) order and thus the transaction carried out by the assessee cannot be termed as bogus.
Assessee has specifically asked for cross examination of the person who alleged that he has provided accommodation entries through Long Term Capital Gain, but the said request has been turned down by the A.O. stating that in “these type cases, the spread of the network of the entry operators and the number of persons taking accommodation entries are large and therefore, it is not possible for every A.O. to summon every entry operator/broker and record his statement. The entry operator in this case before the Investigation wing. Income tax department has accepted oath that M/s Wagend Infra Venture Ltd. was being used for the purpose of providing bogus entries of LTCG. A.O. committed grave error in denying the opportunity of cross examination by the Assessee. Decided in favour of assessee.
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2024 (11) TMI 764
Income from "lease rental" eligible for deduction u/s 80HHC - HELD THAT:- We are of the view that when a certain profit or gain has already been granted deduction under section 80-IA, to extent specified in first part of sub-section (9) of section 80-IA, claim of deduction under other provisions, including section 80HHC of the Act, would not be available for “lease rental” income in view of Section 80IA(9) of the Act. This also finds support from a concurrent reading of the orders of Ahmedabad Tribunal in the case of Madhusudhan Industries [2023 (6) TMI 726 - ITAT AHMEDABAD], the decision of Supreme Court in the case of E.I.H. Ltd. [2019 (2) TMI 2118 - SC ORDER] - Accordingly, on this issue, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference.
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2024 (11) TMI 763
Validity of notice u/s. 148 /148A as barred by limitation - main contention of the revenue is that the notices issued u/s. 148 have been deemed to be extended by Section 3 of TOLA, therefore, all the notices sent are within time limit and same is in consonance of the judgment of Union of India vs. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] - HELD THAT:- Firstly, after 01/04/2021, the Income Tax Act has to be read alongwith substituted provisions of TOLA will continue to apply after 01/04/2021 if any action or proceedings provided under the substituted provision of the Income Tax falls for completion between 21/03/2020 to 31/03/2021 and Section 3(1), overrides Section 149 - Similarly, TOLA will extend the time limit for grant of sanction by the authorities specified u/s.151 and if the time limit of three years falls between 21/03/2021 and 31/03/2021 then the specified authority u/s. 151(i) has extended time limit till 30/06/2021.
The direction of Shri Ashish Agarwal will extent to all re-assessment notice issued in old regime i.e. from 01/04/2021 to 30/06/2021 and finally Court held that ld. AO was required to issue re-assessment notice u/s. 148 under the new regime within the time limit surviving u/s. 148 of the Income Tax Act r.w. TOLA. Thus, in all such instances for the relevant assessment years under question the time limit was extended only up to 30/06/2021 for issuance of notice u/s. 148.
Now here in this case as noted above for A.Y.2013-14 after 148A (b), notice u/s. 148 was issued on 29/07/2022; for A.Y. 2014-15 it was issued on 31/07/2022; and for A.Y.2015-16 it was issued 28/07/2022. Thus, in all these years as noted above the original time limit for six years for A.Y.2013-14 was upto 31/03/2020; for 2014-15 it was 31/03/2021; and for A.Y. 2015-16 it was 31/03/2022.
Even under the TOLA, the time limit for issuance of notice u/s 148 had expired on 30/06/2021 both for A.Y. 2013-14 & A.Y. 2014-15. For the A.Y.2015-16, the Revenue itself has contended before the Hon’ble Supreme Court as noted above, all the notices issued on or after 01/04/2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. Here notice u/s. 148 for the A.Y. 2015-16 has been issued on 28/07/2022 which is admittedly barred by limitation under the new provision of Section 149(1) and it is not covered under TOLA. Accordingly, all the notices are quashed being barred by limitation on the reasons given above and we are not going on the reasons given by the ld. CIT (A) for quashing the notice. Appeals of the Revenue are dismissed.
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2024 (11) TMI 762
Addition made on account of an offshore unit in Dubai - Unit treated as a proprietary concern of the assessee and all its profits were held to be taxable in the hands of the assessee by the AO - HELD THAT:- As pointed out from the order of the CIT(A) that this issue had been consistently arising in the case of the assessee right from the AY 2006-07 and had been consistently ruled and decided in favour of the assessee by the ITAT. That the CIT(A), taking note of these facts, had accordingly decided the issue in favour of the assessee and directed deletion of the addition made.
Disallowance of excess depreciation claimed on furniture and fittings - DR was unable to distinguish the present case with that relating to the preceding assessment years decided in favour of the assessee by the ITAT, therefore we have no hesitation in confirming the order of the CIT(A) directing deletion of both the additions/disallowances made in the hands of the assessee by the AO.
Disallowance of depreciation on goodwill generated on amalgamation - HELD THAT:- CIT(A) has dismissed all the contentions raised by the assessee before him in a cryptic manner by simply stating that the AO has rebutted all the submissions of the appellant diligently.
CIT(A) has not passed a speaking order pointing out how all the contentions of the assessee are rebutted by the AO. The fact we note is to the contrary. The assessee in his detailed submissions filed to the CIT(A) has countered every basis with the AO for holding the claim of depreciation not allowable as per law. CIT(A) without noting any fallacy in the contention of the assessee has upheld the order of the AO.
Assessee has also pointed out that the issue stands covered in favour of the assessee by the decision of Urmin Marketing Pvt. Ltd. [2020 (11) TMI 47 - ITAT AHMEDABAD] wherein ITAT notes that once the scheme of amalgamation is approved by the Hon’ble High Court after receiving no objection from the Income Tax Department, the consideration for the value of goodwill cannot be taken as Nil in terms of 6th proviso to Section 32(1), Explanation 7 to Section 43(1), Explanation 2(b) to Section 43(6)(c), Section 55(2)(a)(ii) and Section 49(1)(iii)(e), since they applied only to assets actually transferred from the amalgamating company to amalgamated company and goodwill resulting due to amalgamation was not an asset which was transferred from an amalgamating company to the amalgamated company. That such goodwill represents only the difference between the purchase consideration and the net asset value of the assets acquired by the amalgamated company and was not on account of any asset acquired by the amalgamating company or transferor-company. Therefore, the ITAT held that the provisions of 6th proviso to Section 32(1), Explanation 7 to Section 43(1), Explanation 2(b) to Section 43(6)(c), Section 55(2)(a)(ii) and Section 49(1)(iii)(e) cannot be applied in such facts situation. The ITAT, therefore, held that depreciation on such goodwill, therefore, was allowable in view of the proposition laid down by the Hon’ble Supreme Court in the case of Smifs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] DR was unable to distinguish the said case before us.
Thus, he goodwill generated in the scheme of amalgamation is acquired by the assessee. Thus, in our considered view the assessee has complied all the conditions provided under section 32 - Decided in favour of assessee.
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2024 (11) TMI 761
Penalty proceedings u/s. 271D - violating provisions of sec.269SS - Assessee had received a sum of Rs. 18 lakh from its trustee by way of bank transfer - other amounts were received from the employees of the trust as security deposits and the said amounts were utilized in the construction activities carried out by the trust - HELD THAT:- In the present case before us, the jurisdictional Assessing Officer as well as the JCIT and the CIT(A) had not doubted about the transactions and to that effect no addition or nothing has been made by the AO while framing the assessment. To prove that the transactions are genuine, the assessee also filed various documents including notarized affidavit to show that the security deposits are genuine and would not attract provisions of sec.269SS and consequently sec.271D- jurisdictional AO had not made further inquiries to ascertain the genuineness of the security deposits and in fact the CIT(A) also not considered the notarized affidavit filed before him, but relied on the findings of the JCIT and affirmed the levy of penalty u/s. 271D of the Act.
Further, the dispute involved in this appeal is only penalty which was levied mechanically without giving any contra evidences to show that the assessee is indulging in the mischief and also without proving that the said security deposits are unaccounted money, the penalty could not be sustained. In respect of the levy of penalty, the Hon’ble Supreme Court in the judgment reported in Hindustan Steel Ltd. v. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] wherein the Hon’ble Supreme Court had elaborated the circumstances under which the penalty need not be levied.
By taking into account of the facts and the various documents filed by the assessee before the ld.CIT(A) and also considering the fact that there is no unaccounted money or some false entries in the books of account, we are also of the view that the penalty needs not be levied in this case. Further, in support of the case of the Revenue, the Revenue had not established that there is some unaccounted money and for which false entries were made in the books of account. Assessee appeal allowed.
Penalty u/s 271E - returning the deposits by cash - As already discussed the assessee received the deposits by way of security from the newly appointed employees and the same deposits were returned back to the employees when they left the service. The payments were made by cash since they insisted for cash.
Also perused the details furnished by the assessee as annexure 1 and from which we are able to find that not the entire deposits were repaid in cash. A sum of Rs 28.50 lakhs were paid through bank and a sum of Rs 29 lakhs were paid by cash to the assessee’s ex-employees. In order to reduce their genuine hardships the assessee had repaid their deposits by cash at the time of their retirement or resignation which can not be found fault with. Even the payment by cash was because of their insistence.
Further the ledger account produced by the assessee would support the case of the assessee. Moreover the assessee also filed affidavits in support of their claim from their ex employees to show that the transactions are genuine. The department has no other documents to disprove the claim of the assessee except relying on the provision. There is not even a single allegation about the unaccounted money or false entries in the books of accounts. The object for the introduction of the provision was not defeated since the assessee had established the facts in detail and therefore we are of the view that it is not a fit case for imposing the penalty u/s 271 E of the Act. Decided in favour of assessee.
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2024 (11) TMI 760
Deemed income on unsold stock as house property income - units vacant completed unsold units in various projects developed by the assessee - HELD THAT:- As per decision of Co-ordinate Bench in assessee’s own case [2019 (5) TMI 1689 - ITAT MUMBAI], following the rule of consistency, we delete the addition made by AO for deemed income on unsold stock under the head ‘Income from house property’.
Disallowance u/s. 43CA - owing to difference in agreement value and value determined by the ld. Departmental Valuation Officer (ld. DVO) - difference between the actual consideration and the value arrived at by the ld. DVO is less than 10% of the ld. DVO value - HELD THAT:- We are in agreement with the submissions of the ld. Counsel that the issue is no longer res integra and has been dealt with by several Co-ordinate Benches. Ld. Counsel had referred to a recent decision of the Co-ordinate Bench of ITAT, Mumbai in the case of Ravi Development [2023 (3) TMI 1539 - ITAT MUMBAI] wherein also amendment made to Section 43CA is held to be retrospective in nature and the tolerance band of 10% was taken into consideration for allowing the appeal of the assessee on account of difference between the reported consideration and value arrived at by ld. DVO. We un-hesitantly delete the addition made by the ld. Assessing Officer. Accordingly, ground is allowed.
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2024 (11) TMI 759
Disallowance of deduction claimed u/s 36(1)(vii) - HELD THAT:- The co-ordinate bench of the Tribunal has decided this issue in favour of the assessee [2024 (2) TMI 1036 - ITAT BANGALORE] in which decision of the assessee in its case for the AY 2014-15 [2022 (5) TMI 1537 - ITAT BENGALURU] order dated 26.05.2022 relied as held that the assessee has claimed deduction towards PBDD under clause (a) to sec. 36(1)(viia) of the Act, meaning thereby, the clause (a) is applicable to rural advances only as per the decision given by Hon’ble Supreme Court in the case of Catholic Syrian Bank [2012 (2) TMI 262 - SUPREME COURT] Hence the bad debts relating to non-rural branches are not required to be adjusted against PBDD allowed under clause (a) of sec. 36(1)(viia) of the Act in terms of the proviso to sec. 36(1)(vii) and sec. 36(2)(v) of the Act.
We are unable to agree with the view expressed by Ld CIT(A) on this issue. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the bad debts relating to non-rural branches u/s 36(1)(vii) of the Act without adjusting the same against the PBDD a/c, since the said PBDD a/c relates to rural advances only.
Addition u/s.14A being expenditure in relation to exempt income to the book profit u/s. 115JB - AO has calculated the disallowance u/s. 14A and this issue was raised before the CIT(A) and the CIT(A) has also decided the issue in favour of the assessee. Against the deletion by the CIT(A), the revenue has raised this issue before us in ground no.2 to 9 of revenue’s appeal. After considering the submissions we have dismissed the appeal of the revenue on this issue observing that there should not be disallowance u/s. 14A and decided this issue in favour of assessee, therefore no question arises for adjudication u/s. 115JB.
Addition being provision for wage arrears and towards Ex-gratia and Bonus while computing book profits computed u/s. 115JB - AO noted that while computing taxable income these provisions has been added back by the assessee, however, while computing the book profit, these provisions have not been added back and the assessee’s view is that the provisions made were not unascertained liability - AO further noted that while computing the income of the subsequent year the actual arrears of salary has been claimed as expenses, therefore the amount remained contingent liability. This would not alter the nature of provision and accordingly required to be added back to the book profits.
AO noted from the submissions that the provisions have been computed on approximate basis on the basis of previous wage revision and the quantification pending discussion with unions. Accordingly it cannot be said that it is ascertained liability. The claim of future liability is to be held as unascertained liability and not being capable of quantification with certainty.
Accordingly these amounts were added back to the book profit. This issue was raised before the CIT(A), however, the CIT(A) has observed that the income under normal provisions as per the return itself is higher than the book profit calculated u/s. 115JB. During the course of hearing, both the parties agreed that the CIT(A) should have decided the issue in detail, therefore we are remitting this issue back to the file of the CIT(A) for fresh decision.
Disallowance u/s. 14A r.w.s. 8D - HELD THAT:- We note that this issue was considered by this Tribunal in the case of Canara Bank (erstwhile Syndicate Bank) [2023 (11) TMI 1146 - ITAT BANGALORE] as held the assessee has admittedly not incurred any expenditure. This case pertains to income on dividend, which by no stretch of imagination can be treated to be an expenditure to attract the provisions of Section 14A of the Act.
Deduction u/s. 36(1)(viia) in the computation of income filed - As per assessee’s case [2024 (2) TMI 1036 - ITAT BANGALORE] for AYs 2016-17 & 2017-18 we hold that for claiming deduction u/s. 36(1)(viia) in respect of rural branches, the latest/provisional census available should be considered. Accordingly this issue is remitted back to the AO. The assessee is directed to provide the latest/provisional census which was available for the respective assessment year. This ground is allowed for statistical purposes.
Payments to National Payments Corporation of India managed by Reserve Bank of India and the company is registered u/s. 25 of the Companies Act being switch charges and ATM charges and ATM usage charges paid to Visa Worldwide - HELD THAT:- Tribunal in assessee’s own case for AY 2013-14 [2022 (1) TMI 583 - ITAT BANGALORE] uphold the order of ld CIT(A) in deleting the disallowance of payments made to NFS and Cash Tree. We also set aside the order passed by ld CIT(A) inspect of payment to Visa International towards visa fee, as the same is not liable to tax deduction at source as per the decision rendered by Hon’ble Supreme Court in the case of Kotak Securities Management [2016 (3) TMI 1026 - SUPREME COURT] Accordingly we direct the AO to delete the said disallowance also.
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2024 (11) TMI 758
Reopening of assessment - Estimation of income - bogus purchases - HELD THAT:- After completion of assessment u/s 143(3), this case is sought to be reopened after four years, and there is no mention in the recorded reasons that there has been any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment year for formation of belief that income has escaped assessment.
On this aspect of the matter also the case is covered in favour of the assessee by the decision of Canara Bank [2023 (9) TMI 1043 - SC ORDER] where the Hon’ble High Court observed that where the AO had not even stated or alleged that there was failure on the part of the assessee to disclose fully and truly all material facts in respect of claim of deduction under section 36(1)(viia), Tribunal rightly held that reopening assessment initiated beyond four years was bad in law - Whether SLP filed by revenue against said impugned order was to be dismissed - Held YES. In favour of assessee.
Similar views has been taken in the case of ACIT Vs Virbac Animal Health India (Pvt.) Ltd [2023 (5) TMI 554 - SC ORDER] where special leave petition filed against the order of the High Court was dismissed, where the High court held that there was no failure on the part of the assessee to truly and fully disclose all material facts necessary for purpose of assessment which were carefully scrutinized by AO during original assessment and thus reopening notice issued after four years on account of change of opinion was to be set aside.
Bogus purchases - The entire sales are considered as part of gross turnover and duly reflected in books of accounts and considered for determination of disclosed profits, and the entire turnover of sales has been subjected to taxation, which are also supported by VAT returns, and the output tax on such sales (after adjustment of input credit) has been deposited to credit of state revenue.
Assessee has travelled a step further and explained with materials on record that the goods purchased from both the sellers, has been sold to M/s AVN Construction Company, who in turn sold the same to various contractors, the ultimate destination and utilization of the goods being the Thermal Plant, and the entire details of purchase and sales has been examined by the AO in course of original assessment, in course of proceedings u/s 143(3) and no defects has been found.
The entire facts of the case both on merits as well as on legal aspects of the matter, we hold that the reassessment proceedings initiated by the AO are not legally valid being commenced on the basis of wrong reasons recorded which are factually incorrect flowing from non-application of mind by the concerned officer, that too after a period of four years without pointing out as to how the assessee has failed to disclose truly and fully material facts necessary for assessment and on merits also we are of the opinion that purchases and supply of construction materials made by the assessee are genuine in nature, because the ultimate destination and utilization of the goods are fully transparent apart from other facts already discussed in paragraphs above.
Addition on account of bogus purchase as unjustified and uncalled for. Decided in favour of assessee.
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2024 (11) TMI 757
Non disposal of appeal on merits by CIT(A) - as alleged CIT(A), NFAC decided the issue on ex-parte basis without considering the merits of the issue - HELD THAT:- In the present case, admittedly, the conduct of assessee cannot be taken at a par with a compliant assessee. The assessee remained absent before Ld. AO as well as before the Ld. CIT(A). Ld. AO was compelled to complete the assessment u/s 144, wherein certain additions / disallowances were made and the same were approved by the Ld. CIT(A) in absence of any further explanations / supporting corroborative evidence furnished by the assessee. However, Ld. CIT(A) have not decided the issues on merits also the information regarding rectification of assessee’s assessment for which, though the order of rectification dated 12.02.2019 could not be placed before us by the either party, Ld. CIT(A) would have inquired on this issue from the Ld. AO to clarify as to what was the fate of the said rectification order.
Since, the original demand imposed on the assessee as per order u/s 144 has been reduced to Rs. 4.73 Crore by the Ld. AO on account of rectification carried out, as emanating from Ld. AO’s letter dated 09.04.2019, the entire addition / disallowances confirmed by the Ld. CIT(A) found to be misconceived and under improper appreciation of facts on record. The order of Ld. CIT(A) has no discussion on merits of the issues rather, his attention was totally on the non-compliance on the part of the assessee, shows that Ld. CIT(A), NFAC has decided the issue on ex-parte basis without considering the merits of the issue, in light of the settled judicial precedents on the issue that “to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support.”, therefore, we are of the considered view that the order of Ld. CIT(A) is suffering with error which needs to be corrected by fresh adjudication.
Thus as CIT(A) has not disposed of the appeal of the assessee on merits, then the matter requires to be restored back to the files of Ld. CIT(A) to decide the same after due deliberations on the merits.
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2024 (11) TMI 756
Addition u/s 68 and 69C - bogus LTCG - denial of exemption u/s 10(38) concluding that the case was within the ambit of 'Penny Stocks - transaction of purchase and sale were of shares were not genuine - HELD THAT:-Assessee has furnished various documentary evidences in support of purchase and subsequent sale of the shares leading to earning of LTCG by the assessee, as mentioned in brief herein above and mentioned in detail in the submission of the ld. AR. The assessee has purchased 265 shares for Rs. 53,000/- and made payment through banking channel which stood debited in the bank account of the assessee. These shares were dematerialized on 22.01.2011 and deposited in the D- MAT account maintained by Zuari Investments Ltd., an independent third party.
Thus, it is clear that 265 shares were purchased by the assessee and same is quite evident not only from the books on accounts of the assessee but also D- MAT account of the assessee maintained by independent third party, duly recognized by the concerned authorities. The amount of purchase consideration stood debited in the bank account of assessee. These facts and evidences more particularly the shares being reflected in D-MAT account of the assessee, maintained by independent third party, clearly lead to infer the holding of the share and consequently also the purchase of these shares by assessee cannot be disputed.
Now coming to the sale of share, it is seen that assessee has sold these shares (shares of Bakra Pratisthan Ltd.) through online transaction via recognized stock broker M/s Fix Fit Securities Pvt. Ltd. Transaction of sale is supported by contract note and as per the contract note, these shares were sold on 30.03.2012. The contract note is having time stamped, trade number, order time and trade time etc. As the sale of shares have been made through online system on stock exchange, obviously same has been made at the prevailing market rate of the shares. Accordingly, the sale rate so shown by the assessee cannot be doubted.
Once the assessee has produced all the supporting evidences not only of sales but also of the purchase of the shares which include purchase bill, bank account showing payment of the purchase consideration, DMAT account reflecting holding of the shares in the D-MAT account of the assessee, sale of shares through online on stock exchange which are also reflected in the D-MAT account, contract notes for sale and receipt of sale consideration in the bank account of the assessee as is evident from the bank account, then in absence of any contrary material or evidence brought on record by the ld. AO, the transaction of purchase and sale of shares in question cannot be held as bogus merely on the basis of investigation carried out by the department in some other case behind the back of the assessee where some persons were found to be indulged in providing accommodation entry and more particularly when even those persons have not specifically stated anywhere in their statement that the assessee is one of the beneficiary of arrangement of accommodation entry provided by them. In the entire assessment order the AO has not made any reference to any documentary evidence which can be said to be an incriminating material against the assessee which may reflect that the assessee has availed the accommodation entry of bogus long term capital gain.
Mere uncorroborated statement of third person with which assessee has not at all dealt with in purchase and sale of share and even the person has not named the assessee being beneficiary from him / them or through his / their companies cannot be a ground for treating the transaction of purchase and sale of shares so made by the assessee as bogus, in absence of any cogent evidence or material brought on record by the AO. The statement of those third person about accommodation entry may be the starting point for doubting the transaction (though it is evident that assessee has not carried out any transaction through these persons or their companies) but for converting a doubt into certainty, the AO is required to produce the contrary material evidence and evidence produced by the assessee need to be controverted, but the AO has failed to do so -
Thus, as per Pooja Agarwal [2017 (9) TMI 1104 - RAJASTHAN HIGH COURT] and Pramod Jain & ORs. [2018 (7) TMI 2161 - RAJASTHAN HIGH COURT] it is held that claim of long term capital gain of exemption u/s 10(38) of I.T. Act does not suffer from infirmities and cannot be held as bogus and accordingly, the addition so made by the AO and confirmed by the CIT(A) is hereby deleted. Decided in favour of assessee.
Addition u/s 69C - As the transaction of purchase and sale of shares and consequent long term capital gain so earned has been held to be not bogus, therefore, addition made by the AO on account of notional commission allegedly paid, is not sustainable too.
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2024 (11) TMI 704
Addition made u/s 68 - ITAT deleted addition - Appellant department would strenuously contend that on examination of the documents which were produced by the share subscribing companies, it is evidently clear that none of those companies had any creditworthiness to invest in the shares of the assessee company, that too, at a high premium.
HELD THAT:- Unfortunately, examination of the factual position as sought for cannot be done in an appeal filed u/s 260A of the Income Tax Act and it is the duty of the Assessing Officer to have done such an exercise.
Tribunal on facts found that all the share subscribing companies have responded to the notices issued u/s 138(6) of the Act and made their submissions and produced documents. Therefore, it is the duty on the Assessing Officer to deal with those documents, point out any discrepancies and then make the addition. However, the Assessing Officer failed to do so and the CIT(A) also committed same error.
Therefore, we find the Tribunal was well justified in allowing the assessee’s appeal and in doing so, the learned Tribunal has also taken note of various decisions of this Court and recorded its reasons for allowing the appeal.
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2024 (11) TMI 703
Assessment against name of an entity which had ceased to exist much prior to the initiation of proceedings - Affect of change of name - whether curable defect u/s 292B - HELD THAT:- As decided in Sky Light Hospitality LLP [2018 (2) TMI 1093 - DELHI HIGH COURT] wherein, the Supreme Court held that the wrong name given in the notice was merely a clerical error which could be corrected under Section 292-B of the Act.
As there was no change of entity, there being only change of name of the company, Show Cause Notice issued and the Penalty Order passed in the name of M/s. Infovision Information Services Pvt. Ltd. is not such a defect which cannot be cured and is therefore not fatal. We, accordingly, set aside the finding returned by the ITAT to the aforesaid extent and answer the question of law in favour of the appellant.
Penalty order imposed beyond period of limitation - As the survey was conducted in January 2008 to verify whether the TDS has been correctly deducted and deposited timely into Government’s account. The order was passed by the AO on 30.03.2011, holding the assessee to be in default for not paying the relevant TDS and the penalty proceedings were referred to the Additional CIT, Range-50 for levy of penalty. Thus, the last date by which the penalty order could have been passed was 30.09.2011 as the six months from the end of the month from which action for imposition of penalty was initiated, would expire on 30.09.2011. However, in this case, admittedly, penalty order was passed on 29.07.2013, and therefore, ITAT had rightly concluded that the orders were barred by limitation.
ITAT was correct in law in deleting penalty levied by the AO on the ground that penalty order dated 29.07.2013 was passed beyond the time period framed by Section 275 (1) (c) of the Act and the same having been passed after the lapse of six months from the end of the month in which the penalty proceedings were initiated by the AO. Decided in favour of assessee.
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