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Income Tax - Case Laws
Showing 441 to 460 of 168845 Records
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2024 (10) TMI 1578
Rejection of stay petition filed u/s 220(6) - importance of considering prima facie case, financial stringency, and balance of convenience in stay petitions - HELD THAT:- The law on this aspect has been settled by this Court in its decision rendered in Kannammal Vs. Income Tax Officer [2019 (3) TMI 1 - MADRAS HIGH COURT] as held that Circulars and Instructions as extracted above are in the nature of guidelines issued to assist the assessing authorities in the matter of grant of stay and cannot substitute or override the basic tenets to be followed in the consideration and disposal of stay petitions. The existence of a prima facie case for which some illustrations have been provided in the Circulars themselves, the financial stringency faced by an assessee and the balance of convenience in the matter constitute the 'trinity', so to say, and are indispensable in consideration of a stay petition by the authority. The Board has, while stating generally that the assessee shall be called upon to remit 20% of the disputed demand, granted ample discretion to the authority to either increase or decrease the quantum demanded based on the three vital factors to be taken into consideration.
The assessing officer has merely rejected the petition by way of a non-speaking order. Assessing Officer ought to have taken note of the conditions precedent for the grant of stay as well as the Circulars issued by the CBDT and passed a speaking order. Of course the petition seeking stay filed by the petitioner is itself cryptic.
The issue on this aspect is also covered by a decision of the Hon'ble Supreme Court in LG Electronics India Private Limited [2022 (5) TMI 120 - SC ORDER]
Thus we set aside impugned order and AO is directed to pass orders de novo on the stay application filed by the petitioner in the light of the discussion as aforesaid.
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2024 (10) TMI 1577
Levy of late fee u/s 234E - processing TDS statements under Section 200A - HELD THAT:- In the present case, the respondent had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014. However, Section 200A of the Act was not introduced during the said assessment years and it was introduced only with effect from 01.06.2015.
Therefore, in the absence of any provisions under Section 200A of the Act, the respondents ought not to have imposed late fee under Section 234E while processing the applications for TDS under Section 200A. Hence, in such view of the matter, this Court is of the opinion that the impugned Demand Intimation Letters are liable to be set aside.
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2024 (10) TMI 1576
Validity of Faceless Assessment order passed w/o perusing documents filed by the Petitioner - HELD THAT:- Considering the submissions made by Petitioner, in the present case since the 2nd Respondent Faceless Assessment Officer had no occasion to peruse the documents filed by the Petitioner, at the time of personal hearing since those are yet to be uploaded in the web portal.
Petitioner submitted that now the Petitioner is ready to upload the documents in the web portal as sought for by the Respondents and seeks three months time.
This Court is inclined to set aside the impugned Assessment Orders. Accordingly, this Court passes the following order:
(i) The orders impugned herein are set aside and the matters are remanded back to the authority concerned.
(ii) The Respondents concerned shall take steps to open/activate the Department Portal within a period of three months from the date of receipt of a copy of this order.
(iii) The Petitioner is directed to upload the documents sought for by the Respondents within a period of three months from the date of activation of the Department Portal.
(iii) On uploading of such documents by the Petitioner, the respondent concerned shall consider the same and issue a 14 days clear notice by fixing the date for personal hearing to the petitioner and the Faceless assessment officer shall provide personal hearing through video conferencing and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible as contemplated u/s 144B.
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2024 (10) TMI 1575
Validity of order made u/s 147 r.w.s. 144 and penalty order for the same year -petitioner would submit that the petitioner is a non tax payer - sale consideration received on the sale of the immovable property should be assessed as income from short term capital gain - as contended that the petitioner is an illiterate and do not know online filing of replies to the assessment, etc., in this regard, the petitioner relied on the Power of Attorney Agent to file give suitable replies to the respondents, but, the said Power of Attorney did not respond to the notices properly, which resulted in the impugned orders passed against the petitioner.
HELD THAT:- Petitioner, being an unlettered and also a non-tax payer, was ignorant of any of the notices/communications which were sent by the respondent-Income Tax Department through online Portal only when the recovery proceedings came to be initiated against the petitioner, the petitioner became aware of the impugned proceedings.
Though Respondents raised strong objection to the plea taken by the petitioner by stating that ''Ignorantia Juris Non Excusat”, since the petitioner is common plebian, there wouldn't have been any occasion for him to open and view the online portal then and there. In the said scenario, it is sheer clear that the petitioner is totally unaware of the proceedings being initiated by the respondent- Income Tax Department. That apart, the sale was made in the year 2013-14, whereas, impugned proceedings were initiated in the year 2021, therefore, the petitioner, being a non-tax payer, cannot be expected to view the Portal after a lapse of 8 eight years. Thus, the reasons assigned by the petitioner for not responding to the communications sent by the respondent- Department is genuine and reasonable.
Thus, this Court, in the interest of justice, is inclined to set aside the impugned orders, as the same were passed in violation of principles of natural justice, however, the same subject to the payment of Rs. 5,000/- to the Advocate Clerk Association, High Court.
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2024 (10) TMI 1574
Exclude interest earned from securities on accrual basis for the purpose of income tax - assessee is entitled for deduction of bad debts on the total average outstanding rural advances made by the bank at the end of the accounting year without restricting the deduction to incremental advance made during the year - non-rural bad debts written off and debited to reserve account can be claimed as deduction of bad debt u/s 36(1)(vii) - balances lying unclaimed with the bank for more than 3 years cannot be treated as income of the assessee - assessee is a banking company bound to follow mercantile system of accounting as per Income Tax Act, Indian Companies Act, RBI guidelines - HELD THAT:- The issue was covered by the decision of this Court in the case of City Union Bank Limited, [2007 (2) TMI 187 - MADRAS HIGH COURT] and that of the Hon'ble Supreme Court in the case of Brooke Bond India Ltd. vs. Commissioner of Income Tax [1997 (2) TMI 11 - SUPREME COURT] - Substantial question of law at Sl.No.1 and 4 require no further deliberation as the substantial questions of law has already been answered by this Court in the above case.
Allowance of deduction of amortization loss/expenses on Government securities classified as Held to Maturity Category - Tribunal held that share listing fees is allowable as revenue expenditure and cannot be treated as capital expenditure - HELD THAT:- Hon'ble Supreme Court has answered the issues arising in Brooke Bond India Ltd. [1997 (2) TMI 11 - SUPREME COURT] placing reliance on its earlier decision in the case of Punjab State Industrial Development Corpn. Ltd [1996 (12) TMI 6 - SUPREME COURT] held though the increase in the capital results in expansion of the capital base of the company and incidentally that would help in the business of the company and may also help in the profit making, the expenses incurred in that connection still retain the character of a capital expenditure since the expenditure is directly related to the expansion of the capital base of the company.
Deduction u/s 36(1)(vii) and 36(1)(vii)(a) - We are inclined to remit the issue back to the Assessing Officer to re-examine the issue afresh in the light of the decision of SC in Catholic Syrian Bank Limited [2012 (2) TMI 262 - SUPREME COURT] as the matter would require a proper redetermination as to whether the Respondent/Assessee had correctly computed the deduction under Section 36(1)(vii) (a) of the Income Tax Act, 1961 to limit deduction to the extent of difference between the debt or part thereof written off in the previous year and credit balance in the provision for bad and doubtful debts account made under clause (vii)(a) to Section 36. Proviso to Section 36(1)(vii) relates to cases covered under Section 36(1)(vii)(a) and has to be read with Section 36(2)(v) of the Act.
Depreciation is to be allowed on on account of shifting of securities from available for sales category (AFS) to held to maturity category (HTM) - HELD THAT:- This issue is covered by the decision of United Commercial Bank [1999 (9) TMI 4 - SUPREME COURT] as held whether the assessee is entitled to the particular deduction or not will depend upon the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. In the present case, the question is slightly different. For reasons, the Central Government, in exercise of the powers conferred by Section 53 of the Banking Regulation Act, and on the recommendation of the RBI, permitted the assessee not to disclose the market value of its investment in the balance sheet required to be maintained as per the statutory form. But as the assessee was maintaining its accounts on mercantile system, he was entitled to show his real income by taking into account market value of such investments in arriving at real taxable income. On that basis, therefore, the Assessing Officer has taxed the assessee.
Entitlement for deduction of amortization loss/expenses on Government securities classified as Held to Maturity Category - HELD THAT:- The issue is answered against the revenue in terms of the decision of The Lakshmi Vilas Bank Limited, Karur [2020 (11) TMI 945 - MADRAS HIGH COURT]
In the result, Substantial Question of Law are answered against the revenue in favour of the Respondent/Assessee. However, for re-examination of the benefit claim under Section 36(1)(vii) and 36(1)(vii)(a) of the Income Tax Act, 1961 are concerned they are remitted back to the Assessing Officer to pass a fresh order on merits and in accordance with law.
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2024 (10) TMI 1573
Deposits made in the Non-Resident Ordinary (NRO) Account and the TDS was already deducted for the said deposits - petitioner is not liable to pay any tax amount for the same and since the shares were transferred from his deceased wife's account due to her demise, same is also not taxable - respondents had classified the petitioner as a “Resident” and demanded tax amount by adding the deposits made in his account as “unexplained investments” and also adding the shares, which were transferred to his account, after the demise of his wife, as “purchase securities”
HELD THAT:- In the present case, it appears that the due to the demise of petitioner's wife, her shares were transferred to the NRO account of petitioner. According to the petitioner, the said transaction is not taxable. Further, it appears that the alleged deposits were made in the Non- Resident Ordinary (NRO) Account of the petitioner, for which, the TDS was already deducted. Hence, the petitioner was under the impression that he is not liable to file any returns - show cause notice dated 21.03.2024 was issued and draft assessment order dated 28.03.2024 was also passed by the respondents. However, due to the demise of his wife and other personal commitments, the petitioner was not in a position to explain these aspects to the respondent. Therefore, the impugned order came to be passed by the 1st respondent on 21.05.2024.
In the present case, it appears that the due to the demise of petitioner's wife, her shares were transferred to the NRO account of petitioner. According to the petitioner, the said transaction is not taxable. It appears that the alleged deposits were made in the Non- Resident Ordinary (NRO) Account of the petitioner, for which, the TDS was already deducted. Hence, the petitioner was under the impression that he is not liable to file any returns.
Under these circumstances, the show cause notice dated 21.03.2024 was issued and draft assessment order dated 28.03.2024 was also passed by the respondents. However, due to the demise of his wife and other personal commitments, the petitioner was not in a position to explain these aspects to the respondent. Therefore, the impugned order came to be passed by the 1st respondent on 21.05.2024.
It appears that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Hence, this Court is of the view that the impugned order was passed in violation of principles of natural justice since it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. That apart, the reason assigned by the petitioner for non-filing of reply, appears to be genuine. In such view of the matter, this Court is inclined to provide an opportunity to the petitioner by setting aside the impugned order dated 21.05.2024 passed by the 1st respondent.
Accordingly, this Court passes the following order:-
(i) The impugned order dated 21.05.2024 is set aside and the matter is remanded to the 1st respondent for fresh consideration.
(ii) The petitioner shall file their reply/objection along with the required documents, if any, within a period of three weeks from the date of receipt of copy of this order.
(iii) On filing of such reply/objection by the petitioner, the 1st respondent shall consider the same and issue a 14 days clear notice, by fixing the date of personal hearing, to the petitioner and thereafter, pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible.
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2024 (10) TMI 1572
Rejection of compounding application - application was filed beyond the period of limitation, as stated in Para 7(ii) of the CBDT circular dated 16.09.2022 - petitioner submits that there is no time limit for filing of the compounding application - HELD THAT:- The judgment of this Court in Jayshree's case [2023 (11) TMI 1110 - MADRAS HIGH COURT] this Court has categorically held that the CBDT cannot issue a circular contrary to the object of the provisions. The explanation, which empowers the CBDT to issue circular, is only for the purpose of implementation of the provisions of the Act with regard to compounding of offences and not for the purpose of fixing a time limit for filing the application for compounding of offences and therefore, the same is contrary to the provisions of the Act and hence, it is not permissible in terms of Section 279(2) of the IT Act.
As already stated even as per the guidelines issued by the authorities in the circular dated 06.09.2022, the petitioner cannot be considered as a habitual offender, as he has committed default only in two cases and in one case, the offence has already been compounded.
This Court is of the view that once the nature of offence is compoundable by virtue of the provisions of the Act, nature of compoundability of the said offence cannot be taken away by fixing a time limit for filing the compounding application. The law laid down by this Court in the aforesaid judgment is squarely applicable to the facts of the present case. Hence, the impugned order is liable to be set aside and it is accordingly set aside.
Writ petition Allowed - The matter is remanded back to the respondent and the respondent is directed to take up the application for compounding of offences on record.
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2024 (10) TMI 1571
Calculation of deemed rent on unsold stock in trade - Addition representing notional rental income in respect of unsold flats forming part of closing inventory of the appellant - HELD THAT:- It is an admitted fact that Income Tax Appellate Tribunal, Pune Benches, Pune is consistently of the view that prior to assessment year 2018-19 notional rent/deemed rent cannot be calculated on the unsold flats/properties held as stock in trade.
As respectfully following the above decision passed in the case of Jayant Avinash Dave [2023 (11) TMI 334 - ITAT PUNE] we hold that during the period under consideration deemed rent/notional rent on the annual letting value of flats/shops held as stock in trade cannot be calculated. Therefore, we direct the AO to delete the addition made on account of deemed rent/notional rent on the property held in closing stock as stock in trade. Thus, the ground of appeal raised by the assessee is allowed.
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2024 (10) TMI 1570
Disallowance u/s 43B for non-payment of Service Tax - neither the tax amount was received from the customer nor was the service tax amount debited to profit and loss account - HELD THAT:- We find that the assessee is a works contractor mainly doing contract work for BSNL. It is the contention of assessee that due to cash crunch BSNL was unable to make payment to various contractors including the assessee. It is his submission that the assessee has not received service tax and Goods & Service Tax amount for the period under consideration and other contract amount was also not received by him since last 3 years.
The assessee is said to have filed case against the BSNL under MSME Samadhan and also wrote various letters to Finance Minister of Government of India for early settlement of his dues. The case of the assessee is that he has not received payment of service tax and Goods & Service Tax for the period under consideration and in the cases relied on by Addl./JCIT(A)-3, Bengaluru the amount of service tax was already received by the parties and not paid to the Government Exchequer. Accordingly, in our considered opinion, the case laws relied on by ld. Addl./JCIT(A)-3, Bengaluru do not apply in the present case.
We find in the case of CIT vs. Ovira Logistics Pvt. Ltd [2015 (4) TMI 684 - BOMBAY HIGH COURT] dismissed the departmental appeal and confirmed the order passed by ITAT wherein disallowance made u/s 43B was deleted.
As in the present case it is the case of the assessee that it has not at all received the service tax and Goods & Service Tax from the contractee. Since it is the contention of the ld. Counsel for the assessee that it has not at all received the service tax and Goods & Service Tax, therefore, we deem it proper to restore the matter back to the file of the ld. Addl./JCIT(A)-3, Bengaluru with a direction to verify as to whether the assessee has actually received the services tax and Goods & Service Tax from the contractee and decide the issue in the light of judgements passed by the Hon’ble Bombay High Court.
Addl./JCIT(A)-3, Bengaluru shall provide due opportunity of hearing to the assessee. The assessee is hereby also directed to respond to the notices issued by the ld. Addl./JCIT(A)-3, Bengaluru and furnish requisite documents and evidences in support of his claim that it has not received the amounts in question. Thus, the grounds of appeal raised by the assessee are allowed for statistical purposes. Appeal filed by the assessee stands allowed for statistical purposes.
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2024 (10) TMI 1569
Validity of reopening of assessment - service of notice u/s. 148 as barred by limitation - HELD THAT:- CIT(A) has noted that the notice u/s. 148 was issued on 31.03.2017 which was the last day for validly issuing notice u/s. 148. Since the AO had issued the notice u/s. 148 of the Act on 30.03.2017 and there is no evidence to prove that the same has been issued after 31.03.2017, and even if the assessee received the notice only on 03.04.2017, according to us, it would not vitiate the notice issued u/s. 148 of the Act; and in the absence of any evidence to show that the notice has been issued after 31.03.2017, we are not inclined to accept such a plea and reject the same being devoid of merit.
Challenging action of the PCIT granting approval for re-opening of assessment - PCIT has granted sanction/ approval for 172 cases on a single day - Since the assessee didn’t file any RoI, the AO reopened the assessment to verify the source of the deposits. Therefore, the action of the AO to re-open the assessment can’t be faulted as such; and it is further noted that like assessee, department flagged the cases of 172 similar persons who all didn’t file any return of income for the year under consideration and similarly deposited cash in their respective bank account, therefore, the AO in order to verify the nature and source of the cash deposit, has consolidated the cases for approval of the PCIT to reopen which was granted by Ld.PCIT, which action cannot be faulted. It is further noted that the AO in this case has given the reasons for reopening in the format on 27.03.2017, which proposal was put up before the JCIT who gave his recommendation on 29.03.2017 and the Ld.PCIT granted approval on 30.03.2017 and pursuant thereto, AO had issued notice u/s. 148 of the Act on 31.03.2017 which action can’t be faulted on the peculiar facts and circumstances of the case.
Addition of cash deposits - Since the bank account maintained in Corporation Bank has not been disclosed by the assessee to the department, and the assessee has owned up the money deposited and withdrawn as her own money, the highest bank balance in the bank during the relevant year under consideration is deemed to be undisclosed money of the assessee.
The Hon’ble Allahabad High Court in the case of Bhaiyalal Shyam Behari. [2005 (1) TMI 424 - ALLAHABAD HIGH COURT] observed that the assessee was entitled to take up the plea of the addition of the peak credit which only need to be treated as the income of the assessee. In order to make a plea of peak credit, the assessee has to lay down the factual foundation that all cash credit entries in the books of accounts belongs to the assessee i.e. it is the assessee’s own money. Then only the question of peak credit can be validly raised. In the present case, the assessee has owned up the cash which was deposited & withdrawn as her own money, and therefore, the plea of the assessee that the peak-credit need to be only taken into consideration as her income in the facts and circumstances of the case needs to be accepted especially considering the fact that the AO for AYs 2011-12 & 2012-13 has accepted the RoI filed by the assessee to the to the tune of Rs. 1,79,420/- and Rs. 2,19,610/- and finding that the peak-credit in the bank is to the tune of Rs. 5,66,533/- and taking opening balance as on 01.04.2009 i.e. Rs. 54,526/-, the maximum highest balance in the bank during ‘365’ days in respect to AY 2010-11 is found to be Rs. 5,12,007/- and the assessee returned income is Rs. 2,47,280/-, balance amount of Rs. 2,64,727/- is directed to be sustained and the balance amount to be deleted [i.e. assessee gets a relief of Rs. 26,74,240 minus 2,64,727 = Rs. 24,09,513/-].
Appeal filed by the assessee is partly allowed.
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2024 (10) TMI 1568
Disallowance of deduction claimed u/s. 80P - non filing of ROI within the due-date u/s. 139(1) - delay in filing of return u/s. 139(1) of the Act was due to belated statutory audit carried out as per the Tamil Nadu Co-operative Societies Act, 1983 on 31.12.2018 - HELD THAT:- Assessee being an Agricultural Cooperative Society registered under the Tamil Nadu Co-operative Societies Act, 1983 had to carry out statutory audit as per the said Act and pursuant to that statutory audit under the Tamil Nadu Co-operative Societies Act, 1983, was over only on 31.12.2018. And the assessee belatedly filed the return on 20.03.2019 and had filed condonation application on 19.03.2019, which is pending before the CBDT.
In this context it is noted that in the case of Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] held that deduction claimed u/s. 80P of the Act shouldn’t be denied, because, it is benevolent provision enacted by the Parliament to encourage and promote the cooperative sector in general.
Therefore, we set aside the impugned order and restore the appeal back to the file of the CIT(A) with a direction to adjudicate the grounds of appeal raised by the assessee (u/s.80P of the Act) after CBDT passes order on the condonation petition filed before it. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (10) TMI 1567
Addition made after rejecting the books of accounts of the assessee - HELD THAT:- AO has nowhere given a finding that the assessee has not regularly followed the method of accounting as specified u/s.145(1). And it is also not the case of the AO that the assessee has not computed the income in accordance with the accounting standard notified u/s. 145(2) of the Act. Thus, according to us, the condition for invoking sec.145(3) of the Act is not satisfied in the facts of the case.
And merely based on suspicion, conjectures and surmises, the action of the AO to express his dissatisfaction about the correctness or completeness of the accounts, when assessee’s books are audited cannot be accepted. By merely copying/reproducing Rule 6F of the Rules, and sec.145(3) AO cannot justify his action of rejecting the books of accounts which was regularly maintained by the assessee and which have undergone auditing u/s. 44AB of the Act.
Therefore, we don’t countenance the action of the CIT(A) upholding the action of the AO rejecting the books of accounts of the assessee. And since we accept the log-book maintained by assessee in accordance to Rule 6F of the Rules and note that there is no other material referred to in assessment order or impugned order to support the addition. Hence, the addition can’t be legally sustained.
It is a settled position of law that the statement of a person can’t be used against a person/ assessee without it being tested on the touch stone of cross-examination as held in the case of CIT v. Odeon Builders (P) Ltd. [2019 (8) TMI 1072 - SUPREME COURT] - Therefore, looking from any angle, even if the statement of Ms. G. Subhadra is considered, still the addition cannot be sustained, without it being tested by cross-examination. Appeal filed by the assessee is allowed.
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2024 (10) TMI 1566
Deduction u/s 80IA - interest income from FDRs can be considered as income "derived from" the eligible infrastructure business - term "derived from" has been interpreted in various judicial pronouncements to require a direct and immediate nexus between the income and the business - HELD THAT:- In the present case, the FDRs were created as a direct consequence of the loan condition imposed by PNB, which was essential for financing the infrastructure project. The FDRs were not independent investments but were integral to the business’s financing structure. The interest income arising from these FDRs was incidental to the core business activity of infrastructure development and thus should be considered as "profits derived from" the business for the purposes of Section 80IA(4) of the Act.
Hon’ble Gujarat High Court, in CIT v. Shah Alloys Ltd. [2016 (8) TMI 1191 - GUJARAT HIGH COURT] held that interest income earned on FDRs maintained as margin money for securing business loans qualifies as business income when the FDRs are closely linked to the business’s financial structure. This principle is squarely applicable to the present case, as the FDRs were created to fulfil the bank’s conditions for the loan used to finance the infrastructure project.
We note that the reliance on Tuticorin Alkali Chemicals & Fertilisers [1997 (7) TMI 4 - SUPREME COURT] by AO and the CIT(A) is misplaced. In Tuticorin Alkali Chemicals & Fertilisers, the interest income arose from surplus funds that were parked in FDRs, unrelated to the core business activity. Here, the FDRs were created as part of the business financing for the infrastructure project, and the interest income is a direct outcome of the financial requirements of the business. Therefore, the principle laid down in Tuticorin Alkali Chemicals & Fertilisers does not apply to the facts of this case.
The assessee's audited financial statements, as presented by the AR, clearly confirm that the loan obtained from PNB was exclusively used for the infrastructure project. No unsecured loans or other financial obligations appear on the balance sheet. Thus, the FDRs were solely for the project, further supporting the claim that the interest income earned from the FDRs is part of the business income eligible for deduction.
SPV nature of the assessee, and the judicial precedents discussed, the interest income earned from the FDRs, which were created as part of the financing arrangement for the infrastructure project, qualifies as business income derived from the eligible business u/s 80IA(4). AO’s disallowance as upheld by the CIT(A) was incorrect. The disallowance is hereby set aside, and the assessee’s claim for deduction u/s 80IA(4) of the Act is allowed.
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2024 (10) TMI 1565
Deemed dividend u/s. 2(22)(e) - assessee was a director and substantial shareholder in M/s. Mahavir Submersible Pvt. Ltd., holding 49.71% of the total shares and the assessee had received a loan from the aforesaid company - AO held that any payment made by a company, particularly one not substantially held by the public, to a substantial shareholder or a concern in which that shareholder has a significant interest, should be treated as deemed dividend to the extent of the company's accumulated profits - assessee contended that the provisions of Section 2(22)(e) of the Act only apply to actual cash payments, not journal entries,
HELD THAT:- The subsequent hearings revealed that the addition of deemed dividend was based on the advances from MSPL, which were presented as mere journal entries, suggesting that no actual loan had been received. During these proceedings before us, it emerged that the explanation concerning the journal entry had already been presented to PCIT in earlier proceedings u/s 263 as noted that the AO had not adequately examined the issue in the original assessment, rendering the order erroneous and prejudicial to revenue interests. Consequently, the AO was directed to revisit the matter.
We observe that the assessee had also reiterated this explanation before the CIT(A), emphasizing that the advance was recorded as a journal entry. This Bench acknowledged that this information had been consistently available with the Revenue Authorities throughout the proceedings. Given this context, this Bench decided that there was no need for further hearings regarding the admission of evidence, as these were not indeed new submissions. Therefore, it is clear that the AO and CIT(A) had not verified or considered the appellant's explanation adequately during their assessments, especially when the assessee has all throughout contended that the advance was recorded as a journal entry. However, this aspect / submission was omitted to be considered by the AO / CIT(A).
Accordingly since the contention of the assessee has all throughout been that no sum was received by the assessee, but a mere journal entry was passed and therefore there is no occasion to invoke the provisions of section 2(22)(e) of the Act has not been examined or verified by the Revenue Authorities, we are of the considered view that the order passed by Ld. CIT(Appeals) is liable to be set aside in absence of any finding on the above contention of the assessee. Assessee appeal allowed.
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2024 (10) TMI 1564
Rejection of deduction u/s 54F - assessee has purchased a new house property beyond the period of two years from the date of sale - HELD THAT:- Tax authorities are not right in taking into consideration the events that took place in the subsequent years. Accordingly, we are of the view that they are not justified in rejecting the deduction claimed by the assessee u/s 54F of the Act.
With regard to the events that took place subsequently, i.e., purchase of land, the Ld.AR disputed the assertion of the AO that the said land consisted of residential building. He submitted that the same was watchman out house, which cannot be considered to be a house. He further submitted that the assessee has started construction of the building thereon subsequently. In any case, in our view, all these facts need to be examined only in the subsequent years and not during the year under consideration. Accordingly, we set aside the order passed by Ld.CIT(A) on this issue and direct the AO to allow deduction u/s. 54F of the Act claimed by the assessee. Appeal filed by the assessee is allowed.
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2024 (10) TMI 1563
Addition ex–parte and taxed the assessee u/s 115BBE - unexplained money u/s 69A - Consideration of cash deposits as business receipts - HELD THAT:- Assessee being a distributors of sim card, vouchers and easy vouchers of Vodafone Mobile Services Limited and earned commission on sale of Sim Card sale to various retail shops in and around the city. The amount received out of the sales were business receipts deposited in the bank account of the assessee and reinvested in purchase of new sim cards and vouchers from Vodafone Mobile Services Limited. There is a consistent rotation of funds in the Bank statement.
We also find that the assessee has furnished bank statement of Bank of Maharashtra showing the entire deposits and payments made to Vodafone Mobile Services Limited.
CIT(A), NFAC, has not considered the fact as well as documents submitted by the assessee and has not pointed out any defect in the documents furnished by the assessee and made addition of entire sale as business income and confirmed the addition made by the AO at ₹ 1,53,31,937, without considering the same being business turnover and consequent abatement of payment were made to Vodafone Mobile Services Limited for purchase of Sim Card and vouchers. He only harped upon about the non–compliance of various notices.
Considering the facts of the case, we hereby direct the AO to calculate estimated profit @1% at ₹ 1,53,311, on transactions of ₹ 1,53,31,060, being the net income of the assessee which will meet the ends of justice. Consequently, the addition made u/s 69A of the Act is hereby quashed since the nature and source of deposit is clearly established. Needless to mention here that there will be tax liability in the hands of the assessee since income is below basic exemption limit. Thus, grounds no.1 to 9, are allowed in terms indicated above and the assessee gets relief of ₹ 1,51,77,749 i.e., [₹ 1,53,31,060 (–) ₹ 1,53,311].
Levy of interest u/s 234A, 234B and 234C - Assessee has denied the liability of interest charged under section 234A, 234B and 234C of the Act. Since the income of the assessee is below taxable limit, there is no scope of charging any interest.
We need to add here that these types of cases should be dealt with very carefully and the Assessing Officer being an adjudicator and investigator cannot remain a silent spectator.
Assessee appeal allowed.
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2024 (10) TMI 1562
Disallowance of contingency expenses - AO rubbished the contention of the assessee that the entire contingency expenditure is accounted in the books of accounts, though the AO categorically admitted that the total cost figure in the CTC report matches the total cost figure in the books of accounts, the cost booked under each head is different in the CTC report and the books of accounts - HELD THAT:- As it happens in this line of business, the business-man makes a budgeted figure of project cost and after few months of execution of the work, the budgeted figures are revised. As it always happens, the actual expenditure is always higher than the budgeted figure and the actual expenditure is recorded in the books of accounts. There is no dispute that the total expenditure recorded in the CTC is reported as accounted expenditure.
The entire addition revolves around the contingency expenditure recorded in the CTC report. As mentioned above, the contingency expenditure is mentioned at the time of preparation of the budget but when the actual figures are known, the same are recorded in the books of accounts. Therefore, it cannot be said that that the contingency figure are not recorded in the books of accounts. In fact, the AO himself admitted this fact at para 4 of his order where he has categorically accepted that the total cost figure in the CTC report matches the total cost figure of the books of accounts.
Since the figure of contingency has been recorded against the figure of total expenditure incurred, it is illogical to assume that the assessee has booked bogus expenditure and generated cash outflow from it. The impounded material shows the expenditure on mercantile basis and no cash expenditure, therefore, the presumption of the AO that the assessee has generated cash out of bogus expenditure, is without any basis.
Thus, the presumption is only in search cases where it is presumed that the contents of such books of account and other documents are true whereas, the appeals under consideration are cases of survey operations where there is no such scope of presumption.
This means that in the cases of survey operations, the onus is on the revenue to bring the cogent material evidence on record to show that the assessee has incurred expenditure which are not recorded in the books of accounts. As mentioned elsewhere, in the appeals under consideration, all the expenditure has been found to be recorded in the books of accounts and no error or infirmity has been pointed out by the AO nor by the ld. CIT(A). Even the books of accounts have been accepted and no defect has been pointed out.
The allegation that the assessee has not followed the Standard Operating Procedure (SOP) is not relevant as long as the impugned expenditure are found recorded in the regular books of account maintained by the assessee.
Though the ld. First Appellate Authority has admitted that the entire expenses cannot be disallowed yet, he himself went on to estimate the disallowance which is again not a proper procedure. Once the expenses have been found to be fully recorded in the books of accounts, the same cannot be disallowed only on the whims and surmises of the revenue authorities.
Considering in totality the facts of the case in hand in light of the documentary evidence referred during the course of proceedings, we do not find any merit in the impugned additions. We direct the AO to delete the additions from the captioned appeals.
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2024 (10) TMI 1561
Condonation of delay in filing the appeal before the CIT(A) - “sufficient cause” for delay - HELD THAT:- Hon’ble Apex Court in the case of Collector Land Acquisition vs. Mst. Katiji & Ors. [1987 (2) TMI 61 - SUPREME COURT] has held that liberal approach should be adopted while dealing with an application praying for condonation of delay. Refusing to condone delay can result in meritorious matter being thrown out at the very threshold and cause of justice being defeated. Pedantic and hyper technical approach should not be adopted while dealing with an application for condonation of delay.
As decided in the case of Ram Nath Sao @ Ram Nath Sahu And Others vs Gobardhan Sao and Others [2002 (2) TMI 1280 - SUPREME COURT] that the expression “sufficient cause” within the meaning of Section 5 of the Limitation Act or Order 22 Rule 9 of CPC or any other similar provision should receive a liberal construction so as to advance substantial justice. The courts should not proceed with the tendency of finding fault with cause shown and reject the petition by a slipshod order in over jubilation of disposal derive. Acceptance of explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bonafides can be imputed to the defaulting party.
Thus, delay in filing of appeal is condoned before the CIT(A). The appeal is restored to the file of CIT(A), for deciding appeal of the assessee on merits after affording reasonable opportunity of hearing/make submissions to the assessee, in accordance with law. Appeal of the assessee is allowed for statistical purpose.
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2024 (10) TMI 1560
Deduction u/s 54F - bringing the amount of Rs. 1 crore, i.e. the amount withdrawn by the assessee from his CGAS account in the succeeding year to tax during the year under consideration - net consideration received by the assessee on transfer of its capital asset, which is not appropriated by him towards the purchase of the “new asset” made within one year before the date on which the transfer of the original asset took place
HELD THAT:- A perusal of Section 54F reveals that though the assessee is entitled to withdraw the unutilized amount in accordance with the CGAS, 1988, but the same would be liable to be assessed in his hand u/s. 45 of the Act during the previous year, in which the period of three years from the date of the transfer of the original asset expires.
Although the AR had tried to impress upon us that as the withdrawals made from the CGAS account, 1988 had been carried out by the assessee with the approval of the A.O, and thus, had rightly been offered for tax in the respective years of withdrawals but we are unable to concur with the same.
The amount parked by the assessee in the CGAS account, which had not been utilized for the purchase or construction of the new residential house within the prescribed period, has to be brought to tax in the previous year, in which the period of three years from the date of the transfer of the original asset expires.
As in the present case before us, the assessee had transferred the “capital asset: i.e the unlisted shares and securities of HDIPL and had, inter alia, claimed exemption u/s. 54F that was deposited by him in Capital Gain Account Scheme, 1988, therefore, the period of three years from the date of transfer of the aforesaid “original asset” expires on 29.07.2018, i.e. during the period relevant to A.Y.2019-20. Accordingly, as per the mandate of the “1st proviso” to Section 54F(4) of the Act, the amount that was not utilized by the assessee for the specified purpose, for which, the same was deposited in CGAS, 1988, i.e. for the purchase or construction of a residential house can only be brought to tax in Assessment Year 2019-20.
As per our aforesaid deliberations the amount of Rs. 1 crore (supra), i.e. the unutilized amount lying in the assessee’s CGAS account, 1988 that was withdrawn by him in the immediately succeeding year, i.e. A.Y.2019-20, as per the mandate of the “1st proviso” to Section 54F(4) of the Act could have only be brought to tax in the said latter year.
We, thus, are unable to concur with the view taken by the lower authorities who had brought the amount of Rs. 1 crore (supra) to tax as LTCG in the hands of the assessee u/s. 45 of the Act during the year under consideration. Decided in favour of assessee.
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2024 (10) TMI 1559
Rejection of registration u/s 12AB - objects of the Trust were confined to the "Chhasath Prajapati Community", thus attracting the provisions of section 13(1)(b) of the Act, which disallows exemption for trusts benefiting a particular community - HELD THAT:- Hon’ble Supreme Court in the case of Dawoodi Bohara Jamat [2014 (3) TMI 652 - SUPREME COURT] has categorically held that section 13(1)(b) of the Act is applicable at the stage of assessment for determining exemption under section 11 of the Act, and not at the stage of granting registration u/s 12AB of the Act. This principle was reiterated in the case of Jamiatul Banaat Tankaria vs. CIT(Exemption), Ahmedabad [2024 (3) TMI 376 - ITAT AHMEDABAD]
The assessee’s has categorically stated that all documents were uploaded online through the official portal as per the notices issued. CIT (Exemption) has not pointed to any specific document that remained unfiled. In the absence of any specific deficiency in documentation being highlighted, we do not find merit in the Department’s argument that the assessee failed to comply with the document submission requirement.
Upon examination of the Trust's objectives, we find that the Trust is engaged in various educational, social, and economic activities that serve the public at large, not limited to the Chhasath Prajapati Community. These include scholarships, hostel facilities for students, social reform programs, and efforts to uplift the community economically. Therefore, the Trust’s activities cannot be said to benefit only a particular religious or caste-based community.
The registration u/s 12AB is merely a recognition of the charitable status of the Trust. The application of section 13(1)(b) of the Act would only arise at the stage of assessment when determining exemption under section 11, depending on the actual income and activities of the Trust. CIT (Exemption) erred in rejecting the application for registration under section 12AB - Decided in favour of assessee.
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