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Case Laws
Showing 361 to 380 of 420205 Records
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2024 (11) TMI 1118
Revision u/s 263 - AO failed to conduct proper verification regarding the nature and source of the undisclosed income admitted during the survey u/s 133A - CIT observed that the undisclosed income was taxed at the normal rate of 30%, instead of the higher rate of 60% u/s 115BBE which applies to income covered under Sections 68 to 69D and by failing to tax the undisclosed income u/s 69A and at the higher rate prescribed by Section 115BBE AO's omission led to a potential revenue loss, which renders the assessment order prejudicial to the interests of the Revenue
HELD THAT:- We find that the AO made sufficient inquiries during the original assessment proceedings. The undisclosed income admitted during the survey was included in the profit and loss accounts of the assessee firms, and the submission before PCIT clearly indicated that the receipts related to business activities (i.e., extra work, development charges, and maintenance charges).
The cash receipts were in multiple transactions, each of which did not exceed Rs. 2 lakh per transaction, as required by Section 269ST - assessees had already provided this information to the PCIT during the revisionary proceedings, confirming that the receipts did not violate Section 269ST - PCIT did not present any evidence to contradict the assessee’s explanation, and therefore, the invocation of Section 263 on the ground of potential Section 269ST violations was based on conjecture rather than facts.
Reliance placed by the AR on judgement in the case of Dharti Estate [2024 (1) TMI 1197 - GUJARAT HIGH COURT] is valid. In that case, the court held that if the AO has made adequate inquiries and treated the undisclosed income as business income, the revisionary powers u/s 263 cannot be invoked simply because the PCIT holds a different view. This legal principle applies here, where the AO took a plausible view after considering the evidence and treating the undisclosed income as business income.
Application of Section 115BBE - AO correctly assessed the undisclosed income at the normal rate since it was explained and connected to business receipts. There was no basis for taxing the income at the higher rate of 60% under Section 115BBE of the Act, as the income was neither unexplained under Section 69A nor considered unexplained investments.
AO exercised a plausible and legally valid view in treating the undisclosed income as business income and taxing it at the normal rate. The revisionary jurisdiction under Section 263 of the Act cannot be invoked merely because the PCIT holds a different view. Decided in favour of assessee.
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2024 (11) TMI 1117
Unexplained investment’ u/s. 69 - Assessee has failed to explain the nature of source of the impugned amount - Onus to prove - HELD THAT:- The assessee has substantiated the nature of source of the investment over and above the sale consideration paid by him for the purchase of property along with the other incidental charges incurred by him at the time of the said purchase.
We are of the considered view that the assessee has discharged the onus of proof casted upon him to explain the source of the investment made by him, as per the provisions of the I.T. Act. We, therefore, deem it fit to allow the grounds of appeal raised by the assessee and hereby direct the ld. A.O. to delete the addition made in the hands of the assessee.
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2024 (11) TMI 1116
Import of plastic granules of various grades under Transferred Duty Free Import Authorisation Scheme/'DFIA Scheme' read with Notification No.40/2006-Customs dated 01.05.2006 regarding the imports which were cleared prior to 19.02.2009 - notification was issued in Notification No.17/2009-Cus dated 01.09.2009 amending Condition No.3 of the earlier notification and introducing Condition Nos.3A and 3B with retrospective effect
HELD THAT:- A Division Bench of this Court, by order dated 01.11.2017 disposed of those writ petitions in the matter of Tarajyoth Polymers Ltd., [2017 (11) TMI 494 - MADRAS HIGH COURT] where, the amendment giving retrospective effect from 01.05.2006 has been set aside by allowing the said writ petitions. Also Special Leave Petitions filed against the judgment of this Court have been dismissed by order [2023 (4) TMI 1376 - SUPREME COURT] and as on date the prevailing law on this point would be Tarajyoth Polymers Ltd., -Vs- Union of India alone.
Since that has been followed by the Tribunal in dismissing these cases through the impugned order, we do not find any error in the said order passed by the Tribunal. Hence, all these appeals are dismissed and the questions of law are answered in favour of the assessee.
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2024 (11) TMI 1115
Validity of assessment/re-assessment proceedings against entity as amalgamated/ non existent entity - HELD THAT:- The petitioner entity was amalgamated into MPIDC and liabilities were transferred thereunder. The respondent, in reply, no where stated that the department was not aware with the facts of amalgamation or the petitioner had ever suppressed the amalgamation proceedings, rather, the respondent himself admitted that the after the amalgamation in the year 2018, during the course of 148A proceedings for Assesment Year 2019-20, the assessee has made complete compliance with respect to the notices issued u/s 148A(b) of the Act and accordingly, established that the information flagged for verification for Assesment Year 2019-20 were duly accounted in the audited financial statement of MPIDC.
The respondent did not deny the fact that the PAN Number alloted to petitioner entity was surrendered, deactivated after its amalgamation and merged with the MPIDC. Hence, in the instant case as pointed out earlier the fact of amalgamation was well within the knowledge of the assessing officer.
In the case at hand, admittedly, the order under Section 148A(d) of Act, has been passed by the respondent against a non existent entity. Therefore, the impugned order is bad in the eyes of law. Decided in favour of assessee.
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2024 (11) TMI 1114
Addition u/s 68 - source and genuineness of the cash deposited was held to be unexplained - cash book produced was rejected by AO -appellant had deposited an amount in old demonetized currency, Partly out of which an amount had been declared by the appellant in PMGKY 2016 scheme and balance old currency was claimed to be deposited out of the cash in hand
HELD THAT:- AO was not justified in rejecting the cash book produced before him as fabricated and unreliable without pointing any specific defect therein. He has completely overlooked the comparative figures of sales vis-à-vis cash sales as also the percentage of cash sales going down during the year. There appears no abrupt jump in the quantum of cash sales during the year under consideration.
The reasons for keeping sufficient cash in hand by a widow lady running a retail liquor business cannot be brushed aside without any cogent reason. Moreover, the assessee was fair enough to disclose almost 50% of the impugned sum under PMGKY rather than squabbling over it also.
The amount of cash kept at home which is also to be evident from one seized paper during survey could not be considered unreasonable considering the nature of business. It is also not disputed that the accounts of the assessee have been consistently audited by qualified Chartered Accountant over the years.
Besides, there being no other evidence of any other undisclosed source of income, the cash deposits were evidently business receipts which could not be considered as unexplained cash credit liable to be added u/s 68 - Thus, no hesitation in concluding that the impugned amount was incorrectly added to the income without appreciation of all relevant facts of the case and the Ld. CIT(A) was not justified in upholding the addition. The addition made is, therefore, deleted. Assessee appeal allowed.
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2024 (11) TMI 1113
Penalty levied u/s. 271(1)(c) - concealment of income - Difference of income returned in the original return vis-à-vis that of the revised return after survey filed pursuant to notice u/s. 148 - HELD THAT:- After having gone through the Assessment Order as well as the penalty order, we couldn’t find as to what amount has been concealed by the assessee. AO has not bothered to at least bring on record the original returned income filed by the assessee for AY 2009-10 & for AY 2010-11 u/s 139 - AO has merely made a bald statement to the effect that the assessee has understated her turnover and thus, concealed her income and that the assessee’s original return failed to reflect the true state of affairs.
We find that neither the impugned order of the Ld.CIT(A) nor the Assessment Order/penalty order of the AO, doesn’t even spell out as to what amount assessee returned in the original return in both the years.
AO/Ld.CIT(A) didn’t bother to even point out how much amount the assessee has concealed. Neither the Assessment Order nor the penalty order spells out as to what was the original returned income as well as the revised returned income.
Therefore, merely based on projected financials contained in the hard disc found during survey and the statement which would have been recorded u/s. 133A of the Act, can’t be the ground for levy of penalty, because, the AO failed to show that the assessee had deliberately under estimated her income.
Survey team found the turnover not matching with books maintained by the assessee. Only the profit embedded in turnover can be brought to tax. Unless the assessee while estimating her income has deliberately suppressed her income by under estimating her income, an inference of concealment couldn’t have been drawn.
Penalty deleted - Decided in favour of assessee.
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2024 (11) TMI 1112
Penalty u/s 271(1)(c) - disallowance made u/s 43B regarding expenses claimed by the assessee - as argued there was a confusion in the mind of AO about which limb penalty is to be levied - HELD THAT:- The disallowance confirmed by this Tribunal is u/s 43B, of the expenditure claimed by the assessee. This disallowance is not due to any concealement of income by the assessee. The assessee had filed all details pertaining to the expenditure claimed by it. However, certain expenditure could be allowed only on actual payment and therefore the disallowance was made u/s 43B of the Act.
In respect of the addition on increase in liability, we note that assessee provided details like confirmation regarding the increase in liability. There is no whisper about veracity of the confirmation filed by the assessee before the CIT(A). Merely because the addition has been partly confirmed by the Tribunal cannot be a reason to ipso facto levy penalty. CIT(A) it is discernable that the confirmations filed by the assessee not been verified.
Levy of penalty is not a mechanical procedure and has to be issued with lot of checks and balances. Additions sustained by this Tribunal is not a fit case to levy penalty u/s. 271(1)(c) of the Act. Assessee appeal allowed.
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2024 (11) TMI 1111
Power and jurisdiction to extend the period, after the expiry of the Arbitral Tribunal's mandate - Whether the application filed by the appellant under Section 29A(4) of the Arbitration and Conciliation Act, 1996 for extension of the mandate of the Arbitral Tribunal ought to have been allowed by the High Court?
Whether the application for extension can be entertained if it is filed after the expiry of the Arbitral Tribunal’s mandate? - HELD THAT:- When must an application under Section 29A(4) be filed - The effect of the provision is that if the arbitral award is not made within 12 months from when the pleadings are completed, extendable by a further 6 months by mutual consent of parties, the Tribunal’s mandate will terminate, unless the court either prior or after the expiry of the period, extends it. The wording of subsection (4) clearly and explicitly enables a court to extend the Tribunal’s mandate after expiry of the statutory and extendable period of 18 months.
The issue is no longer res integra in view of a recent decision of this Court in Rohan Builders [2024 (10) TMI 1393 - SUPREME COURT (LB)] The case squarely covers the issue against him - This Court in Rohan Builders has held that the application for extension of time can be filed even after the expiry of the period in sub-sections (1) and (3). Even if sub-section (4) provides for the termination of the Tribunal’s mandate on the expiry of the period, it recognises party autonomy to move an application before the Court for further extension. Thus, the termination of mandate under the provision is only conditional on the non-filing of an extension application, and cannot be taken to mean that the mandate cannot be extended once it expires.
The wording of Section 29A(4) and the decision in Rohan Builders clearly answer the first issue in favour of the appellant, i.e., an application for extension can be filed either before or after the termination of the Tribunal’s mandate upon expiry of the statutory and extendable period.
Whether an extension of time should be granted in the present case? - HELD THAT:- As per Section 29A(5), the decision to extend the time is an exercise of discretion by the court and must be done on sufficient cause being shown, and on such terms and conditions that the court deems fit.
The issue is not whether the application under Section 29A(4) is filed within the permissible time for seeking extension, i.e., 12 months, followed by another 6 months at the consent of the parties. The real issue is whether there is a sufficient cause for the Court to extend the period for making of the award. For considering whether there is a sufficient cause or not, it is necessary to take into account the following events. As indicated earlier, even before expiry of the period of 12 months under Section 29A(1), commencing from 09.10.2019 (date of completion of pleadings), the COVID pandemic had started. The period between 15.03.2020 and 28.02.2022 is anyways mandated to be excluded from periods of limitation - thus, it is clear that the reasoning adopted by the High Court in holding that there is a delay of 2 years, 4 months in filing the application is erroneous.
The meaning of 'sufficient cause' for extending the time to make an award must take colour from the underlying purpose of the arbitration process. The primary objective in rendering an arbitral award is to resolve disputes through the agreed dispute resolution mechanism as contracted by the parties. Therefore, 'sufficient cause' should be interpreted in the context of facilitating effective dispute resolution.
Having taken note of the fact that the pandemic had commenced even before the expiry of 12 months from the completion of pleadings, this Court excluding the period between 15.03.2020 to 28.02.2023 in Re: Cognizance for Extension of Limitation [2022 (1) TMI 385 - SC ORDER], and the agreement between the parties on 05.05.2023 to seek extension of time by filing an application before the Court, it is opined that there is sufficient cause for extension of time.
The order and judgment passed by the High Court is set aside - civil appeal allowed.
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2024 (11) TMI 1110
Locus standi of appellant, M.R. Ajayan, to prefer this SLP against the impugned order - proceedings in question to be hit by the bar under Section 195(1)(b) Cr.P.C. or not - Correctness of de novo steps to be taken against the appellant.
Whether M.R. Ajayan, appellant in SLP(Crl.)No.4887 of 2024 has the locus standi to prefer this SLP against the impugned order? - HELD THAT:- The locus of a private individual seeking the exercise of jurisdiction of this Court under Article 136 of the Constitution is no longer res integra. This Court in National Commission for Women [2010 (7) TMI 1131 - SUPREME COURT] has observed that an appeal by a private individual can be entertained, both sparingly and after due vigilance, following the exposition of law in Arunachalam [1980 (2) TMI 271 - SUPREME COURT]. Furthermore, in Amanuallah [2016 (4) TMI 1474 - SUPREME COURT], this Court dealt with this issue in detail and observed 'From the material placed on record, it is clear that the appellants have precise connection with the matter at hand and thus, have locus to maintain this appeal.'
More recently, similar to the case at hand, in Naveen Singh v. State of U.P. (2- Judge Bench) [2021 (3) TMI 1466 - SUPREME COURT], while considering the locus of the Petitioner therein, this Court observed that since the allegations concerned tampering with the order of the Court, hence locus is not that important but, in fact, insignificant with the State not carrying forward the matter any further.
The locus standi of the appellant in SLP(Crl.)No.4887 of 2024, does not come in the way of this Court hearing the same. The case at hand, which has been quashed by the High Court, involves serious allegations of interference with judicial processes which strike at the very foundation of both dispensation and the administration of justice. Therefore, the first issue is answered in the affirmative as it is incumbent upon this Court to check the correctness of the approach adopted by the High Court, and the locus of the appellant would not come in the way of the same.
Whether the High Court has rightly held the proceedings in question to be hit by the bar under Section 195(1)(b) Cr.P.C.? - HELD THAT:- In the instant case, the High Court, on the basis of the above bar on taking cognizance, has quashed the order taking cognizance and proceedings emanating therefrom. This approach was not correct - On a perusal of the FIR, it is clear that based on the letter issued by the Kerala High Court dated 27th September, 1994 and by the District Judge, Trivandrum, the offence was registered against the accused persons. The criminal proceedings clearly do not arise from a complaint by a private individual.
The initiation of the present proceedings in the present case, was from the judgment and order dated 5thFebruary, 1991 of the Kerala High Court in Criminal Appeal No. 20 of 1991, in acquitting Andrew Salvatore directing the matter of planting of Mo2 be positively looked into. This was followed by an investigation by the vigilance officer of the Court. Therefore, in the impugned order, the High Court has erroneously observed that there is no judicial order concerning the present proceedings.
There is no distinction between a judicial or administrative order by a “Court to which that Court is subordinate - the question is answered in the negative.
Independent of the above, whether the High Court could have ordered de novo steps to be taken against the appellant? - HELD THAT :- Reference made to the judgment of this Court in Sunita Devi v. State of Bihar & Anr. (2-Judge Bench) [2024 (5) TMI 1489 - SUPREME COURT], wherein it was stated 'An Appellate Court has got ample power to direct re-trial. However, such a power is to be exercised in exceptional cases. The irregularities found must be so material that a re-trial is the only option. In other words, the failure to follow the mandate of law must cause a serious prejudice vitiating the entire trial, which cannot be cured otherwise, except by way of a re-trial. Once such a re-trial is ordered, the effect is that all the proceedings recorded by the Court would get obliterated leading to a fresh trial, which is inclusive of the examination of witnesses.'
Applying the above principles to the case at hand, the alleged forgery of evidence in a criminal investigation has resulted in acquittal in the NDPS case and, thereafter, an FIR has been registered, in the circumstance referred to hereinbefore. But then, the interference by the High Court in quashing the criminal proceedings was unwarranted.
In view of the above the impugned order is set aside - Appeal allowed.
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2024 (11) TMI 1109
Challenge to SCN - Section17(5)(d) of the CGST Act, 2017 and Section 17(5)(d) of the TNGST Act, 2017 - HELD THAT:- The validity of the said provisions of both CGST and TNGST Act is concerned, it is brought to our notice by the learned counsel appearing for both sides that, by the recent decision of the Hon'ble Supreme Court in the matter of Chief Commissioner of Central Goods and Service Tax and Others Vs. M/s.Safari Retreats Private Limited and Others [2024 (10) TMI 286 - SUPREME COURT], the Hon'ble Supreme Court has upheld the validity of the said provisions.
In view of the said decision where the law has been declared, the challenge that has been made against the said provisions in W.P.No.23572 of 2022 has to be rejected, hence, W.P.No.23572 of 2022 is dismissed.
Petition dismissed.
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2024 (11) TMI 1108
Penalty u/s 271(1) (c) - defective notice u/s 274 - non specification of clear charge - Assessee had claimed inaccurate expenses - ITAT deleted penalty as notice u/s 274 r.w.s. 271(1)(c), AO has not marked the specified limb for which the penalty notice is issued - HELD THAT:- Two phrases i.e. “conceal” and “furnishing of inaccurate particulars” are separate and distinct. Concealment of income and furnishing of inaccurate particulars of income in Section 271(1) (c) of the Act carry different meanings and connotation.
On principle where the penalty proceedings are said to be initiated by the Revenue under Section 271(1) (c) of the Act, the specific ground which forms the foundation thereof needs to be spelt out in clear terms. Otherwise, the assessee would not have proper opportunity to put forth his defence.
The proceedings for initiating the penalty are penal in nature, which may result in imposition of penalty ranging from 100 to 300% of the taxability and therefore the charge must be unequivocal and unambiguous. Where the charges are either of concealment of particulars of income or furnishing of inaccurate particulars thereof, revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both.
Following the decision of Manjunath Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and the other decisions of different High Courts, the ITAT rightly held that the levy of penalty u/s 271(1)(c) of the Act in the case of the assessee was not valid. Decided in favour of assessee.
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2024 (11) TMI 1107
Benefit of Direct Tax Vivad Se Vishwas Act, 2020 - Review petition as a pending appeal under DTVSV Act - scheme was intended to give quietus to the tax legislation and collect the disputed taxes by granting waiver of penalty and interest - Applicability of CBDT circulars and clarifications - whether the case of the petitioner would fall within the four corners of Section 2(1)(j).
HELD THAT:- Admittedly, as on the cutoff date, no Appeal, Writ Petition or Special Leave Petition was pending before the Appellate Forum. Petitioner has drawn our attention to Clarification dated 22.04.2020, issued by the Central Board of Direct Taxes. As per response to Question-1, the proceedings initiated by the declarant by giving any notice for arbitration, conciliation or mediation are covered under the Act. Response to Question-2 clarifies that the assessee whose case is pending in arbitration, is eligible to apply for settlement under “Vivad Se Vishwas”, even if no appeal is pending. Reply to Question No. 61 provides that even if the Miscellaneous Application [“MA”] in respect of an appeal which was dismissed in limine was pending on before 31st January 2020, such MA is eligible.
As apparent from the CBDT Circulars that pendency of arbitration proceedings and miscellaneous applications in certain cases, as on cutoff date would meet the requirement of Section 2(1)(j), even though no Appeal, Writ Petition or Special Leave Petition may be pending in any Appellate Forum in terms of Section 2(1)(j).
It is well settled law that Department is bound by the circulars/instructions and has to comply with the same. The Hon’ble Supreme Court has held in the case of Paper Products Ltd. [1999 (8) TMI 70 - SUPREME COURT] that circulars/instructions issued by CBE&C are binding on the departmental authorities. They cannot take contrary stand and department cannot repudiate a circular on the basis that it was inconsistent with the statutory provision. Thus, the respondent is bound by the circular of CBDT issuing clarification.
Even though, the scope of review is limited and statutorily different from an appeal, the jurisdiction of the Court extends to the power to modify, review or recall its own order and that being so, the SLP cannot be said to have attained finality since the review petition was still pending on the cutoff date.
Department itself has mellowed down the strict interpretation of Section 2(j) by including the pending arbitration proceedings and miscellaneous applications under the “Vivad Se Vishwas Scheme”. There is no reason why the pendency of the review petition after the dismissal of the Special Leave Petition should not get covered under “Vivad Se Vishwas Scheme”. The review petition will also partake the character of pending proceedings and therefore the petitioner should not have been non-suited or treated as ineligible for claiming benefit under DTVSV Act.
DTVSV Act, in a sense, provides for a deviation from the strict application of tax laws towards achieving this purpose. If the provision in Section 2(j) and the Board Circular is to be construed in a restrictive manner as is contended by learned counsel for the respondent, the same will run contrary to the scheme of the Act of 2020.
We are conscious that review petition has since been dismissed by the Supreme Court but we have to consider the right of the petitioner as on the cutoff date, when admittedly, the review petition was still pending. As on the cutoff date, the possibility of reaching a different conclusion could not have been ruled out.
We are therefore unable to persuade ourselves to confine the benefit of the scheme to only such cases where an Appeal, Writ Petition or Special Leave Petition were pending.
In our view, petition for review against the orders passed in the SLP would also be covered in the definition of “Disputed Tax” under Section 2(1)(j), thereby, making them eligible to take benefit of “Vivad Se Vishwas Scheme”.
The remarks/reasons given by the first respondent in the impugned order thereby rejecting the declaration in Form-1 & 2 filed by the petitioner on 28.01.2021, cannot be sustained, for the said reasons are not in consonance with the scheme of the Act and also do not conform to the intent and purpose of the legislation.
Writ petition is allowed and the impugned orderis hereby set aside. The first respondent is directed to accept the revised declaration form filed by the petitioner on 28.01.2021 and process the same in accordance with DTVSV Act, 2020 and pass requisite orders.
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2024 (11) TMI 1106
Validity of assessment u/s 153C or 147/148 - information was received through insight portal from the Investigation Wing to the effect that the petitioner was a beneficiary of accommodation entries provided by one Sh. Joginder Pal Gupta (DAG Group) - HELD THAT:- It is not disputed that in the present case, the AO was not handed over any books of accounts or material by the AO of the searched person (Sh. Joginder Pal Gupta of DAG Group). Thus, the necessary threshold condition for the AO of the Assessee, initiating the proceedings u/s 153C of the Act was not satisfied.
Thus, in any event the AO was not precluded from initiating proceedings u/s 148A of the Act on the basis of the information available on the insight portal, which is suggestive of the fact that the petitioner’s income for AY 2015- 16 had escaped assessment.
The present case is covered squarely by the decision of the Supreme Court in Principal Commissioner of Income Tax v. Abhisar Buildwell (P.) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] as the jurisdictional condition for the AO of the Assessee to assume jurisdiction u/s 153C of the Act was not satisfied
The question whether the provisions of Section 153C of the Act precludes recourse to reopening assessments u/s 147/148 of the Act, on the basis of information found during the search conducted u/s 132 or requisition made u/s 132A of Act in respect of another person, is also covered against the petitioner.
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2024 (11) TMI 1105
Reopening of assessment u/s 147 - deemed show cause notice under section 148A(b) - applicability of Section 151 of the provisions of the Act as the sanction has not been granted by the appropriate authority as specified under the said provisions - HELD THAT:- Once the petitioner has availed of an alternate remedy as provided under the Income Tax Act, namely of a substantive appeal being filed, and if the assessment order as also the notices issued to the petitioner prior thereto under Section 148A and under Section 148 are contrary to the substantive provisions of Section 151A and Section 151 of the Act, as interpreted by this Court in Hexaware and Siemens [2023 (9) TMI 552 - BOMBAY HIGH COURT] the Appellate Authority as also the Revisionary Authority being bound by the said decisions of the jurisdictional High Court, need to consider such legal position.
Thus,the petitioner is not precluded from raising all such contentions, as raised before us in the present proceedings, before the said authority.
The proceedings which are pending before the CIT(A) as also the Revisionary proceedings, be decided considering the contentions of the petitioner namely as to whether the impugned assessment order as also the notice under Section 148 of the Act is illegal when tested on the law as declared by this Court in the aforesaid decisions.
An approach ought not to be followed that when the appellate authority is already seized with the proceedings, we entertain writ petitions to adjudicate, what can certainly be adjudicated by the appellate authority, considering the said decisions of this Court. As rightly pointed by Mr. Mohanty to entertain writ petitions in such circumstances, would create a situation that all matters which are pending before the Appellate Authority and which are supposed to be decided in accordance with law involving issues on applicability of the decisions of this Court, in disposing of the proceedings would be required to be entertained by this Court. Certainly, such approach cannot be adopted by the Court. We are hence of the opinion that it would be appropriate that the assessee pursues the pending proceedings as filed before the appropriate Appellate Authority.
Accordingly, we are not persuaded to entertain the present proceedings which assail the assessment order when appeal is already filed by the petitioner, which is pending.
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2024 (11) TMI 1104
Denial of Foreign Tax Credit - delay in filing Form- 67 - mandatory or directory formality - HELD THAT:- In the present case, the petitioner, who was working in foreign country, had filed his return of income for the assessment years 2019-20, 2020-21 and 2021-22 in India showing the income earned in the foreign country. But due to Covid out break, he inadvertently had not uploaded the Form-67. However, later the petitioner uploaded the Form-67 for all the Assessment Years.
The reasons stated by the petitioner appears to be reasonable and further this Court in a similar case reported in Duraiswamy Kumaraswamy [2023 (11) TMI 1000 - MADRAS HIGH COURT] held that filing of foreign tax credit in terms of Rule 128 is only directory in nature and not mandatory. In the present cases the petitioner was working in United Kingdom and earned income there. The petitioner filed return of income in India for the assessment years 2019-20, 2020-21 and 2021-22 showing the income earned in the foreign country, in which he claimed TDS credit before United Kingdom, as FTC u/s 90 of the Income Tax Act.
But the petitioner uploaded Form 67 with delay, which he suppose to upload while filing the return of income. It is to be noted that Section 90, Section 90A and Section 91 of the Income Tax Act of 1961 have been drafted specifically to avoid the burden of double taxation.
In the present case, even though the petitioner had not uploaded Form-67 while filing return of tax, later he uploaded the same with delay and that too due to Covid out break, which appears to be genuine. Therefore this Court is inclined to condone the delay in filing Form 67 and the impugned orders are liable to be set aside.
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2024 (11) TMI 1103
Correct head of income - Gain on sale of shares - 'Short Term Capital Gain’ OR ‘Business Income’ - HELD THAT:- CBDT unequivocally accepted that it is possible for the assessee to have two portfolios i.e. an Investment Portfolio and a Trading Portfolio. The income from sale of shares held in investment portfolio is liable to be taxed under the head capital gains and the income from sale of shares held under trading portfolio is subject to tax as ‘Business Income’.
After examining the documents on record in the instant case, we have already held that the assessee was holding shares under investment portfolio. Accordingly, the assessee rightly offered gain on sale of shares as Short Term Capital Gains. The action of the AO in treating gain on sale of shares as, ‘Business Income’ is unwarranted and without any basis. The AO completely disregarded the intention of assessee and the accounting treatment.
Hon'ble Jurisdictional High Court in the case of CIT vs. Rohit Anand [2010 (8) TMI 232 - DELHI HIGH COURT]; CIT vs. Ess Jay Enterprises P Ltd. [2007 (8) TMI 709 - DELHI HIGH COURT]; & CIT vs. Gulmohor Finance Ltd.[2008 (2) TMI 867 - DELHI HIGH COURT] in similar set of facts has upheld the order of Tribunal, wherein income from sale of shares was declared by assessee as capital gains, the Revenue re-characterised it as Business Income. On appeal the Tribunal allowed appeal of assessee, accepting gain on sale of shares as capital gains. Appeal of the assessee is allowed.
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2024 (11) TMI 1102
Disallowance u/s. 40(a)(ia) - Sum actually been paid by the assessee to the Maharashtra Government - HELD THAT:- Such payment would not get covered under the TDS Provisions. In so far as payment to Village Level Entrepreneurs is concerned, the assessee has furnished before us documentary evidence to demonstrate that in the year under consideration neither the amount in dispute was paid nor credited to the concerned vendors. Assessee has further demonstrated that as and when, the amount was paid in subsequent years, TDS provisions have been fully complied with.
In so far as the amount alleged to have been paid towards various expenses/outsourcing of cost DOP. The assessee has demonstrated before us that though the provision was made for the amount in dispute, however, it was never paid or credited. On the contrary, the provision made was subsequently reversed. No contrary evidence has been brought on record by the Revenue to controvert the aforesaid factual position. In view of the aforesaid, we have no hesitation in holding that the payments made do not attract the TDS provisions in the year under consideration. Therefore, the disallowance made u/s. 40(a)(ia) of the Act is unsustainable.
Non deduction of tax at source on payments alleged to have been made on factual verification it is observed that out of the said amount, the assessee has made payment of Rs. 5,000/- only towards payment of telephone bill, whereas, the balance amount was never paid. Thus, in our view, no disallowance even in respect of payment made can be made u/s. 40(a)(ia) - Thus, the AO is directed to delete the disallowance - This ground is allowed.
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2024 (11) TMI 1101
Disallowance of Foreign Tax Credit (FTC) - delay of filing Form No. 67 - rectification order u/s 154 - HELD THAT:- It is an undisputable fact that the assessee has paid taxes in India as well as abroad and the tax paid in the foreign country are eligible to be credited towards the total tax payments.
Since the factum is not in dispute, delay in filing cannot prejudice the right of the assessee to claim Foreign Tax Credit (FTC). Keeping in view the specificities of the instant case, the Revenue is hereby directed to accord Foreign Tax Credit (FTC) to the assessee and carry out rectification. Appeal of the assessee is allowed.
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2024 (11) TMI 1100
Disallowance of section 11 exemption - belated filling of form 10B audit report - Revenue’s case is that this tax audit report compliance is a mandatory provision for an assessee who claims section 11 exemption - HELD THAT:- The instant issue is no more res-integra in light of ACIT v. Xavier Kelvani Mandal Pvt. Ltd. [2011 (6) TMI 863 - ITAT AHMEDABAD] wherein their lordships have already settled the same at rest in assessee’s favour and against the department that such a compliance could be even made in first appellate proceedings before the CIT(A)/NFAC.
Thus accept the assessee’s instant sole substantive grievance in principle and direct the learned CIT(A)/NFAC to read-judicate the lower appeal on merits as per law preferably within three effective opportunities subject to a rider that it shall be the taxpayer’s risk and responsibility only to plead and prove all the relevant facts within three effective opportunities in consequential proceedings. Assessee’s appeal is allowed for statistical purpose
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2024 (11) TMI 1099
Assessment u/s 153A - computing the income under the head Income from House Property - Addition for unabated assessment years - whether no incriminating material found during the search ? - HELD THAT:- Additions proposed by the Assessing Officer relates back to AY 2013-14 onwards. It is clear from the above information that the assessee has not disclosed any rental income for the abovesaid properties during the AY 2013-14 onwards.
It is not clear how the property at Goa was utilised by the family. If these properties were under utilisation of the family members during the AYs 2013-14 to 2015-16, we noticed that all these properties were already disclosed in the Balance Sheet of the Trust dated 31.03.2013.
Therefore, the emails found during the search are not an incriminating material for the AYs 2013-14 and 2014-15. Considering the fact that the family has started the discussion of exploring the various options only through email dated 20.02.2015. Accordingly, the assessments u/s 153A for AYs 2013-14 & 2014-15 are unabated and without any incriminating material, therefore, the addition made in these assessment years are accordingly directed to be deleted.
These assessment years are unabated assessment years and no addition can be made without there being any incriminating material. Accordingly, ground no.1 raised by the assessee in AYs 2013-14 & 2014-15 are allowed and other grounds raised by the assessee are also allowed due to the fact that the legal ground raised in ground no.1 is allowed. The grounds are consequential in nature. Accordingly, the appeals in AYs 2013-14 & 2014-15 are allowed.
Coming to the AYs 2015-16 and 2016-17, we observed that there is trail of emails exchanged by the family members as per which the property under consideration are under commercial exploitation by one of the beneficiaries of the trust. It is a fact on record that the beneficiary has disclosed the income earned from the property in his personal return of income, however it should have been income of the assessee. We cannot say that there is no incriminating material for these assessment years under consideration i.e. 2015-16 and 2016-17. Accordingly, ground no.1 raised in AYs 2015-16 & 2016-17 are dismissed.
Assessment of annual lettable value - trust has utilised the properties at Goa for commercial exploitation and gave the same to one of the beneficiaries - HELD THAT:- Considering the AY 2016-17 as the base year, since the property was exploited fully during this year. The amount lettable value cannot be more than Rs.8.39 lakhs. Therefore, we direct the Assessing Officer to treat the ALV as Rs.8.39 lakhs for both the years and allow the standard deduction of 30% on the above ALV and bring to tax the net ALV at Rs.5,87,300/- to the income for the AY 2015-16 and AY 2016-17
Vatika Professional Point commercial property held by the assessee - As brought to our notice that property under consideration was finally disposed off by the assessee in AY 2025-26 without actually any profit till such time the property was never let out due to various conditions prevailing during the period. Therefore, there is no incriminating material found during the search relating to this property. Accordingly, the additions made by the Assessing Officer from AYs 2013- 14 to 2016-17 are deserved to be deleted and without any incriminating material, considering the fact that these assessment years are unabated.
Determination of ALV of property - property at Gurugram - Assessee should have disclosed annual municipal value as rental income as against the ALV adopted by the Assessing Officer which is determined by the AO through commission as per which it was estimated on the information gathered from the properties located in the same vicinity. However, it is only an estimation and as submitted by the beneficiary, it clearly shows that it does not give such rental income. It is also a fact that assessee has not properly exploited the property still the assessee has incurred huge loss. It is not commercially viable from the information available on record. Further there is no material brought on record by the AO that the assessee has exploited the property subsequent to AY 2016-17.
Keeping the information available on record, it is not fair to estimate the rental income on the presumption basis. Therefore, we direct the AO to adopt the municipal value of the property as ALV as per municipal valuation and we direct AO accordingly. As per the information available on record, we observed that assessee was not in a position to let out the property on rent and various information available on record clearly show that it was not commercially lettable. It was also brought on record that assessee has disposed off abovesaid properties in AY 2025-26 without letting out the property and absorbing the maintenance charges over the years. After considering the facts on record, it is not appropriate for estimating the income when the property itself was not let out as held in the case of Rustomjee Evershine Joint Venture [2023 (7) TMI 1305 - ITAT MUMBAI] and Chalet Hotels Ltd. [2023 (10) TMI 837 - ITAT MUMBAI]
It was held that ALV may be adopted alternatively keeping the generally expected rent from these properties. As per the information available on record, it is appropriate to estimate the same. We noticed that the assessee has prayed for 2% of the investment. But in actual, the commercial properties fetch 8% to 10% in the Metro Cities. In our view, estimating at 5% of the investment value is appropriate. Accordingly, we direct the Assessing Officer to adopt 5% of the value of investment as ALV for the properties under consideration. After standard deduction, the annual income of Rs.6.65 lakhs may be added as income of the assessee.
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