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2025 (2) TMI 57
Validity of Revision u/s 263 - computation of book profit u/s 115J - whether the order u/s 263 gives a conclusive finding on issue relating to Section 115J so as to permit the Appellant-Assessee to agitate the issue on merits? - HELD THAT:- Admittedly and undisputedly there is no examination of computation of book profit by the assessing officer at the time of assessment, thus there is no infirmity in the exercise of revisional jurisdiction by the CIT and upheld by the Tribunal.
Appellant-Assessee cannot pick up one sentence of the operative order and contend that the Commissioner has given a definite finding on the merits of the case. There has to be a holistic reading of whole of the operative parts of the order and if one reads holistically the whole of the operative parts, it can be safely concluded that for coming to the satisfaction of twin conditions mandated by Section 263 of the Act, the CIT had to make some observations on the merits of the case moreso because the issue was not examined during the course of the assessment proceedings. The CIT having said so has directed the assessing officer to recompute the book profit afresh by applying the correct provision of law, and after providing an opportunity to the assessee.
In our view on a complete reading of the operative paragraphs of order under Section 263, it cannot be said that the observations made by the Commissioner on computation of book profit was definite and conclusive, but he had to make these observations for satisfaction of the twin conditions mentioned in Section 263 for assumption of jurisdiction. If he had not made such observation, then the order under Section 263 would have fallen foul of the mandatory conditions required for exercising jurisdiction under Section 263. Therefore, on a holistic and complete reading of the operative paragraphs, we cannot accept the submission made by the Appellant-Assessee that the observation made by the CIT on computation of book profit is definite and therefore he is entitled to challenge the same on merits before the Tribunal and before this Court. Decided in favour of the Respondent-revenue.
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2025 (2) TMI 56
Reopening of assessment u/s 147 - reason to believe - as argued assessment cannot be opened twice for the same reason - value of the immovable property held by TREPL (Friends Colony property).
HELD THAT:- Information on the basis of which the impugned order has been passed was subject matter of examination in the earlier round of reassessment u/s 147 - AO’s reason to believe that the petitioner’s income had escaped assessment, which had led to the issuance of notice dated 31.03.2021, was founded on an assumption that the petitioner had sold the shares of TREPL at a price below its correct value.
The notice issued u/s 143 (2) during the said proceedings and the petitioner’s response dated 24.03.2022 issued to the said notice clearly establishes that the examination revolved around the value of the immovable property held by TREPL (Friends Colony property).
The petitioner’s response dated 24.03.2022 indicates that the petitioner had forwarded the audited balance sheet and the profit and loss account of TREPL and had also explained that TREPL owned only two floors of the Friends Colony property.
AO had examined the said response and accepted the same. Clearly, the impugned order has been passed in respect of the same issue that was subject matter of examination in the earlier round.
The question whether the TREPL owned the entire Friends Colony property is one that is easily verifiable by the AO. As noted above, the AO has completely ignored the petitioner’s response to the notice issued u/s 148A(b) in this regard in the impugned order. Similar approach has also been adopted in the counter affidavit as well.
Section 148A (d) of the Act mandates that the AO is required to pass an order on the basis of record and considering the response to the notice u/s 148A(b). In this case, the record indicates that the information on the basis of which the assessment is sought to be reopened was fully examined in the earlier round of reassessment under Section 147 read with Section 144B of the Act.
Petitioner’s response clearly stated that TREPL owned only two floors of the Friends Colony property and there is nothing credible on record that controverts it. The impugned order does not even advert to the said issue. Decided in favour of assessee.
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2025 (2) TMI 55
Validity of reopening of assessment beyond period of limitation - applicability of the TOLA in the context of provisos to Section 149 (1) of the Act - whether the impugned order and the impugned notice was issued beyond the period as prescribed u/s 149 (1)? - HELD THAT:- The time granted to the petitioner to respond to the notice dated 30.05.2022 – the period of two weeks –is also required to be excluded by virtue of the third proviso to Section 149 (1) of the Act. The petitioner had furnished its response to the notice under Section 148A (b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date.
As noted above, by virtue of TOLA, the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice u/s 148 - The said notice was required to be accompanied by an order u/s 148A (d) - AO was required to pass an order under Section 148A (d) within the said twenty-nine days notwithstanding the time stipulated u/s 148A (d) of the Act. This period expired on 12.07.2022.
Since the period of limitation, as provided u/s 149 (1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation.
Time available to the AO to pass an order under Section 148A (d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Act did not come into play as the time period available for the AO to pass an order u/s 148A (d) of the Act was in excess of the seven days.
Thus, we find merit in assessee contention that the impugned notice dated 30.07.2022 has been issued beyond the period of limitation.
Petition is allowed and the impugned order passed un/s 148A (d) and impugned notice issued u/s 148 quashed - Decided in favour of assessee.
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2025 (2) TMI 54
Dismissal of application for condonation of a delay of around 10 months in filing the return of income - Authority and procedure for issuing orders u/s 119 (2) (b) - HELD THAT:- Section 119 (2) (b) empowers the CBDT to decide such applications. The CBDT, as a part of its functioning, may have allocated the work amongst its members. Nothing was shown to us regarding any further allocation or delegation to the Additional CIT (OSD) (OT & WT).
We do not make any observations on the permissibility of any such further delegation. Similarly, there is nothing in the Central Boards of Revenue Act, 1963 or at least nothing was shown to us based upon which the making of the order by the Additional CIT (OSD) (OT & WT) could be held as valid or validated.
Therefore, we quash and set aside the impugned order dated 24 January 2024 and remand the matter to the CBDT or its duly allocated member to pass an order on the Petitioner’s application for condonation of delay. Needless to add the Petitioner / its representatives must be heard before such an order is made. A reasoned order must be communicated to the Petitioner. This exercise must be completed within 3 months of uploading this order.
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2025 (2) TMI 53
Duty of the party making the payment, to deduct TDS and deposit the same with the income tax authority - complainant’s case is that TDS certificate is false and fake documents manufactured by the accused no. 1 (employee of the complainant) in collusion and connivance with the accused no. 1 - complainant company alleged that the TDS certificates used in the arbitration were forged - remedy for cheque being dishonoured - individuals responsible for the alleged crime within the company, like directors or key decision-makers - prosecution of only the company as the sole accused (of the company) or it employees is required to be done - complainant had participated in the arbitration process and only initiated criminal proceedings after an unfavorable award was passed
HELD THAT:- When a company is accused of a crime, the individuals responsible for the actions that led to the offense, usually those in senior management positions, can be held vicariously liable.
As such the prosecution of only the company as the sole accused (of the company) is prima facie bad in law.
Admittedly, there is existence of an agreement between the parties for the business transaction which included an arbitration clause and by invoking the said clause the reference was made to the Arbitrator by the petitioner herein who has been made the accused no. 2 in the proceedings before the trial Court.
In the present case the arbitral award has been passed on 4th March, 2014. The complainant having initially participated in the arbitral proceeding has initiated the present criminal proceeding on 29th March, 2023.
The arbitral award was granted in favour of the petitioner company herein on the basis of documents and evidence before the learned arbitrator.There is no whisper of the said arbitral proceedings nor its award in the petition of complaint.
The complainant having suffered an arbitral award, initiated the criminal proceedings after 9 long years, which prima facie appears to be malafide and motivated.
Having admitted, making payment by way of cheque to the petitioner herein (later dishonoured), the income tax rules requires mandatory deduction of TDS by the complainant.
Thus considering the said facts and circumstances the materials on record prima facie do not contain the ingredients required to constitute the offences alleged and as such, continuation of the said proceeding in the present case shall be an abuse of the process of law/court.
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2025 (2) TMI 52
Bank account 'property' liable to attachment u/s 281B - HELD THAT:- Section 281B (1) provides for provisional attachment of “any property”. The prefix “any” to the word property has much significance. It indicates that the word ‘property’ occurring therein, is not to be comprehended in a restricted sense. Therefore, “any property” mentioned in Section 281B (1) would take within its sweep, money lying in Bank account also.
Section 281B (1) provides for provisional attachment of any property belonging to the assessee in the manner provided in the Second Schedule to the Act. The Second Schedule to the Act is titled, “Procedure for Recovery of Tax”. It provides the mode for recovery of Tax.
Evidently, except for the property exempted from attachment under the Code of Civil Procedure, 1908(CPC), other properties are liable to attachment. Section 60 CPC provides the property liable to attachment.
Noticeably, Section 60(1) CPC specifically states that money is an attachable property. Properties which are not liable to attachment have been specified in the proviso to the section. Therefore, money in Bank account is property liable to attachment.
There could be instances where the assessee does not own immovable property sufficient enough to secure the likely demand, but there are sufficient funds in the bank account. The power for provisional attachment is provided to protect the interest of the revenue. There is no warrant to hold that money lying in a Bank account is not liable to attachment.
The mere fact that Bank account is not explicitly provided under Section 281B unlike the GST Act, 2017 which specifically mentions the same, cannot lead to the conclusion that Bank account is not liable to be attached under Section 281B of the Act.
We hold that money in Bank accounts is a property liable for provisional attachment under Section 281B of the Act. We are unable to concur with the finding of the learned Single Judge to the contrary.
Whether the security furnished before the Judicial First Class Magistrate’s Court could be considered as sufficient security for the purposes of the Act - Evidently, the authorities need to form an opinion with regard to the probable demand, which of course could not be stated with exactitude at that stage. However, the extent of the property attached, including attachment of the money in the Bank accounts, should be commensurate with the probable demand including the penalty. The proviso to Section 281B (3) indicates that the security required need only be to the extent sufficient to protect the interest of the revenue. Therefore, orders of provisional attachment u/s 281B should be commensurate with the probable demand including penalty, and should not be blanket orders attaching properties, the value of which would be much higher than the probable demand.
WP allowed.
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2025 (2) TMI 51
Reopening of assessment u/s 147 - requirement to separately dispose of objections before proceeding with the assessment - consolidated order/combined order disposing of the Petitioner’s objections to reopening the assessment and assessing the Petitioner's income - HELD THAT:- There being no infirmity in the impugned consolidated order.
Petitioner has, no doubt, instituted an Appeal after the filling of this Petition. As clarified that this was only to protect from the bar of limitation. He further pointed out that the factum of the institution of this Petition and the reason for the institution of the Appeal were clarified in the appeal memo.
Since the impugned consolidated order warrants interference due to noncompliance with jurisdictional parameters, relegating the Petitioner to the alternate remedy would not be appropriate. As noted earlier, this Court has interfered with consolidated orders in almost identical circumstances, making assessments and disposing of objections. Therefore, Mr Suresh Kumar’s objection based on exhaustion of alternate remedy cannot be sustained in the facts of the present case. WP Allowed.
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2025 (2) TMI 50
Validity of reopening of assessment - validity of a notice issued u/s 148A(b) - issuance of a fresh notice under the amended provisions of the Income Tax Act - HELD THAT:- The reasons for issuance of notice on 28.06.2021 u/s 148 as communicated to the petitioner vide notice dated 23.02.2022 issued u/s 143(2) and the reasons stated in the notice issued u/s 148A(b) of the Income Tax Act, 1961 on 1.06.2022 read almost identically.
As decision of the Hon'ble Supreme Court in Ashish Agarwal's case[2022 (5) TMI 240 - SUPREME COURT] has been passed under Article 142 of the Constitution of India in view of the peculiar circumstances arising out of the amendment to the Income Tax Act, 1961 vide Finance Act, 2021. In order to put the issue at rest, the Hon'ble Supreme Court had given the above direction.
Hon'ble Supreme Court has not given a direction to the Assessing Officer to reopen the assessment even when the assessment was completed earlier by treating the notice issued u/s 148 as the notice issued u/s 148A(b) as amended with effect from 01.04.2021.
This is also the view in Anindita Sengupta's case [2024 (4) TMI 96 - DELHI HIGH COURT]. Therefore, we are inclined to allow this Writ Petition.
This reassessment order dismissed.
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2025 (2) TMI 49
Benefit of Direct Tax Vivad Se Vishwas scheme - petitioner has challenged Form-3 issued by the respondent u/s 5(1) - scope of “tax arrear” as defined in Section 2(o) of the said Act on the “disputed tax”
Whether for the purpose of determining the “amount payable” by the petitioner under the Direct Tax Vivad Se Vishwas Act, 2020 would include the amount that was refunded back to the petitioner u/s 244A? - HELD THAT:- The definition of the expression “Disputed Tax” in Section 2(1)(j) of the said Act will be the amount of tax that is payable by an assessee, if an appeal or writ petition or a special leave petition is pending was to be decided against the assessee. Therefore, the interest paid to the petitioner under Section 244-A of the Income Tax Act, 1961 will be recoverable, if the appeal filed by the Income Tax Department before the Tribunal (ITAT) [2021 (8) TMI 1434 - ITAT CHENNAI] is decided against the petitioner.
In this case, if the Department's appeal before the Tribunal is accepted, the petitioner will not only be liable to pay the amount of differential tax but also the interest paid to the petitioner under Section 244-A. Hence, there is no merit in the submission of the petitioner. WP dismissed.
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2025 (2) TMI 48
Black Money proceedings continue despite the settlement of the petitioners' income - Assessee's statement that it has already been offered to tax under the Income Tax Act, 1961 - scope of income liable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 settlement under Chapter XIX-A (19-A) of the Income Tax Act, 1961 - HELD THAT:- In this case admittedly, the Return of Income was filed by the respective petitioners on 21.05.2015 which is prior to the implementation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 with effect from 01.07.2015.
Therefore, continuance of the proceedings under the provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 cannot be countenanced.
Court taking note of the above by its Order [2016 (7) TMI 402 - MADRAS HIGH COURT] has clearly held that merely because the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 came into force would not be a bar on the respective petitioners to settle the dispute under Chapter XIX-A of the Income Tax Act, 1961.
Court also took note of the Explanatory Note in Circular No.12 of 2015 dated 02.07.2015 of the Central Board of Direct Taxes to substantiate the Order dated 10.07.2015 of the Settlement Commission.
Thus, the continuance of the proceedings under the Impugned Notices dated 27.02.2018 cannot be countenanced.
It would defeat from the purpose of Chapter XIX-A of the Income Tax Act, 1961. It would have been different if the petitioner had not filed Return of Income and had also operate to settle the dispute under Chapter XIX-A of the Income Tax Act, 1961.
Since the dispute has been settled under Chapter XIX-A of the Income Tax Act, 1961, the continuance of the proceedings under the Impugned Notices dated 27.02.2018 issued under Section 10(1) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 cannot be allowed to continue.
The Order of the Interim Board of Settlement-II dated 26.08.2022 is a fait accompli.
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2025 (2) TMI 47
Non issuance of show cause notice before making huge additions and adequate opportunity was not provided - addition on Deposits in bank account - whether the assessment was conducted without providing adequate opportunity for the appellant to explain the transactions and present evidence? - HELD THAT:- AO failed to issue a show cause notice before making huge additions and adequate opportunity was not provided. No reply on the remand report was filed before the CIT(A) as well. Therefore, in the interest of justice and fair play it is considered to imperative to set aside the order of the Ld. CIT(A) and restore the appeal to the CIT(A) who shall allow one more opportunity of being heard to the assessee and after considering the reply of the assessee, decide the appeal on the additions upheld by him.
The assessee shall file evidence in his possession to substantiate the claim that the transactions related to the business and also for the relief claimed and the Ld. CIT(A) shall also provide an opportunity of being heard to the Ld. AO as per Rule 46A of the Income Tax Rules, 1962.
Appeal filed by the assessee is allowed for statistical purposes.
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2025 (2) TMI 46
Reopening of assessment u/s 147 - notice issued beyond period of four years - Addition u/s 69C - unexplained expenditure on presumption that assessee had paid commission @ 2.5% for obtaining such accommodation entry - HELD THAT:- In case of Haryana Acrylic Manufacturing Co.[2008 (11) TMI 2 - DELHI HIGH COURT] it was held that notice u/s 148, giving reason that it had come to his notice that assessee had taken accommodation entries from 'H' during relevant year when assessee, in course of original assessment proceedings, had supplied all relevant details; in assessment order which were verified and moreover, in reasons supplied to assessee there was no allegation that it had failed to disclose fully and truly all material facts necessary for assessment and because of its failure there had been an escapement of income chargeable to tax, reopening of assessment after expiry of four years from end of relevant assessment year was without jurisdiction.
Hence it is felt that since there was no independent application of mind neither by AO while initiation of reassessment proceedings by issue of notice u/s 148 nor by CIT(A) – 4, Jaipur while deciding the issue under consideration.
They simply proceeded on borrowed satisfaction reached by some other officials and even without making any enquiry before reaching to the conclusion of escapement of income, which is apparent from the perusal of the reasons where no specific transaction with any of the company alleged as paper companies is specifically mentioned and on general observations that no such transaction was shown by the assessee and no tax was paid on such transaction, the case was reopened. Hence, in this view of the matter, we do not concur with the findings of the ld CIT(A) and this issue raised by the ld. AR of the assessee is allowed.
Addition u/s 68 - assessee had paid cash and in turn received accommodation entry - As during the course of reassessment proceedings as well as in the present submission that the amounts received from these two companies is against the sales made to them in preceding years and AO while recording the reasons has alleged the same as the assessee’s own money routed through RTGS in the shape of accommodation entries and while completing the assessment changed his stand from unsecured loan to share application money without any basis or material brought on record to allege the same more particularly when no amount whatsoever was received by the assessee as share application money in the year under appeal as is clearly evident from the perusal of the financial statements of the assessee company available with the AO. We also noticed that AO has further alleged that assessee could not provide evidences regarding transportation of goods from its place to the destination companies.
As submitted that assessee not only furnished ledger copies of both the parties but also furnished copies of invoices, which contained the necessary details of transporters and details of vehicle through which goods were transported, but the AO brushed aside the same without any cogent reason. We find that it is a matter of fact that the AO made addition by relying upon the information received from Investigation Unit and some enquiries made, without even providing assessee an opportunity to cross examine.
CIT(A) has confirmed the additions so made by AO by solely relying upon the information of Investigation wing. Hence, the bench noticed that addition confirmed by ld. CIT(A) is contrary to the facts on record and is against the principle of taxation, whereas assessee has substantiated its claim by furnishing all the necessary documentary evidences, therefore, the Bench does not concur with the findings of the ld. CIT(A) and addition so sustained is directed to be deleted. Thus ground of the assessee is allowed.
Unsecured loan / share application money - Uncontroverted fact that the sales were made to these two parties in preceding year and assessee has received outstanding amount in the year under appeal. It was also submitted that sale made by assessee in F.Y. 2011-12 is completely genuine as has been stated in ground of appeal No. 2 above, and assessee has not taken any loan/share capital as has been alleged.
Thus, no question of any commission payment. Secondly, the ld. AR submitted that this addition also is solely based upon the information received from third party absolutely uncorroborated in much as there is no material available on record to rebut the documentary evidences furnished by assessee. It is therefore submitted that the addition so confirmed by CIT(A) are on the basis of assumptions and presumptions deserves to be deleted.
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2025 (2) TMI 45
Revision u/s 263 - assessee has under reported sale consideration as per section 50C & the same is not considered by assessing officer during the assessment proceedings - HELD THAT:- We find that the assessee entered into registered agreement to sell on 27/12/2007 for transfer of land in fixing the sale consideration and part payment thereof by way of cheque is clearly mentioned on the registered agreement to sell.
Thus. we find that the assessment order is not erroneous. AO has taken a legally sustainable view on the issue on which the assessment was reopened.
Once the AO has taken a legally sustainable view, the revision on the same issue by ld. Pr.CIT is nothing but a change of opinion. Thus, we find that the revision order passed by ld. Pr.CIT does not fulfill the requirement of twin condition of Section 263 of the Act. Hence, the same is quashed.
AO has not verified the record before passing the assessment order in said case. However, in the present case, the Assessing Officer has specifically examined the issue by issuing specific show cause notice dated 12/03/2022 which was duly responded by assessee and on consideration thereof, no further addition was made. In the result, ground of appeal raised by the assessee are allowed
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2025 (2) TMI 44
Revision u/s 263 - failure to make necessary inquiries or verifications regarding the genuineness of certain sundry creditors - HELD THAT:- As evident from the record that even the assessee also failed to furnish the details as sought during the assessment proceedings. Accordingly, the AO concluded that the initial onus upon the assessee to prove the genuineness of the transaction was not discharged by the assessee
From the perusal of the assessment order, we find that even though the AO doubted the genuineness of the transaction with 10 parties, as noted in the foregoing paragraph, however, proceeded to make the addition u/s 41(1) in respect of only two sundry creditors. We find that as regards the remaining 8 parties shown as sundry creditors by the assessee, there is no examination by the AO nor any addition was made.
During the hearing, AR furnished a copy of the ledger account of AJS Impex Pvt. Ltd. in the books of the assessee.
From the perusal of the same, we find that there is a credit balance as against the debit balance noted of the assessment order. Thus, it is ostensible that even despite coming to the conclusion that the genuineness of the transaction in respect of afore-noted 10 parties is not proved, the addition was only made in respect of two parties on the basis that liability has ceased to exist under section 41(1) without giving any reasoning as to why the same conclusion cannot be reached in respect of remaining 8 parties.
Thus, assessment order passed under section 143(3) r.w.s. 144B of the Act has been passed without making inquiries or verification which should have been made, and therefore, the present case clearly falls within the ambit of provisions of Explanation 2 to Section 263 of the Act. Decided against assessee.
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2025 (2) TMI 43
TDS u/s 195 - payment was in the nature of consultancy/advisory services - PE in India or not? - payment made to the Star Consortium Pvt. Ltd., Singapore as ‘Fees for Technical Services’ u/s 9(1)(vii) and Article 12 of the India Singapore-DTAA, as the services provided by foreign entity was consultancy in nature - HELD THAT:- During the year both the assessee as well as the recipient were non-resident. The assessee was a Director with 50% share holding in SCPL of Singapore. However, SCPL was a company registered in Singapore, a non-resident and the director was also a non-resident.
Merely because for some period the director may have been resident in India, it cannot be said that the key management decisions took place in India so as to hold that M/s. SCPL had a PE in India and the assessee was required to deduct TDS on the payment made to it.
Assessee was rendering advisory services to DOTEPL through The Safe Consortium and was working as Investment Banker and Strategic Management Consultant and The Safe Consortium was appointed as advisors and facilitators for raising funds for DOTEPL. TSC had further appointed SCPL Singapore as its advisor for raising funds for DOTEPL and advisory fee of 0.75% of the amount of fund raised for DOTEPL was to be paid to the advisor SCPL by the mandator TSC.
Thus, by no stretch of imagination the payment of advisory fee could be termed as a royalty or fee for technical services as it was in the nature of commission for the financial services rendered. It has been stated that no disallowance u/s 40(a)(i) was made in the initial assessment order and the subsequent proceedings initiated in response to the notice u/s 263 of the Act were quashed by the Tribunal, thereby rendering the consequential assessment order made to give effect to the finding in order u/s 263 of the Act as non-est. The income of the non-resident accrued outside India.
It is not comprehensible as to on what basis the Ld. AO has apportioned the income in the ratio of 55% to 45% between India and Singapore and allowed 10% as expenses. Thus, in the absence of a PE, the income was neither liable to be assessed as business profit of the payee nor as royalty as per the finding of the Ld. CIT(A) and therefore, the finding of the Ld. CIT(A) in this regard is upheld and the appeal of the revenue is dismissed.
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2025 (2) TMI 42
Penalty proceedings u/s. 271(1)(c) - Defective notice - Non specification of clear charge - AO held that the assessee had offered incorrect amount of “short term capital gains” on the transactions in securities in the return of income and added a sum as “short term capital gains” which were not offered to tax by the assessee - HELD THAT:- From the contents of the notice initiating penalty proceedings as well as order levying penalty u/s. 271(1)(c) of the Act on assessee, we observe that the AO has not given clear cut classification as to whether the penalty has been levied for “concealment of income” or “furnishing inaccurate particulars of income”. It is a well settled principle that the AO has to give an absolute and categorical findings while levying the penalty u/s. 271(1)(c) of the Act, whether the same is being levied for “concealment of income” or “furnishing inaccurate particulars of income".
Thus, in the absence of specific findings whether the penalty has been levied for “concealment of income” or “furnishing inaccurate particulars of income” the penalty order is liable to be set-aside. Appeal of the assessee is allowed.
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2025 (2) TMI 41
Levy of penalty u/s. 270A - under-reporting of income which is in consequences of mis-reporting of income” - Assessee argued AO is not sure as to whether the penalty have been levied for “under-reporting” of income or “mis-reporting” of income - HELD THAT:- It is a well settled law that penalty cannot be sustained u/s. 270A of the Act, without specifying any specific limbs of the section 270A of the Act under which the penalty is being levied.
From the contents of the notice for initiating penalty proceedings as well as appellate order u/s. 270A AO has no clarity under which specific limb of section 270A the AO is proceeding to levy penalty.
Therefore, in view of the well settled Judicial precedents on the subject as cited above and in the absence of any clarity on specific limb u/s. 270A of the Act, where the penalty have been levied on the assessee, in our considered view penalty u/s. 270A of the Act is not liable to be sustained.
Also AO has not specified which specific offence under section 270A(9) of the Act has been committed by the assessee.
Addition made on account of late payment of Employees Contribution to PF & ESI - As observe from the record that disallowance regarding late deposits of Employees Contribution towards PF & ESI were adequately disclosed in Form No.3CD(Tax Audit Report). In the instant case, the return of income for the impugned year i.e AY 2017-18 was filed on 30.11.2017 and Assessment Order was passed on 28.11.2019, therefore, at the time of passing of the Assessment Order, issue of delayed payment towards PF & ESI was debatable issue and issue got settled fully after passing of order in the case of Checkmate Services private limited [2022 (10) TMI 617 - SUPREME COURT] Therefore, in our considered view, the case of the assessee does not fall under any of the provisions of section 270A (9) of the Act viz. (a) misrepresentation of suppression of facts and (c) claim of expenditure not substantiated by any evidence.
Disallowance of non-deduction of TDS interest on car loan payable - The details regarding non-deduction of tax from the interest were furnished in Form 3CD (Tax Audit Report) at the time of filing of return of income and the Ld. Counsel for the assessee submitted before us that the assessee had not made disallowance in anticipation of submission of certificate u/s. 201 of the Act from the deductee. Accordingly, even with respect to second disallowance made by the AO provision of section 270A(9)(a) or 270A(a)(c) of the Act are not attracted.
Decided in favour of assessee.
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2025 (2) TMI 40
Validity of reassessment proceedings - "reason to believe" to have escaped assessment - addition u/s 41(1) v/s credits in bank account are unexplained - as argued AO exceeded his jurisdiction by making additions unrelated to the reasons for reopening the assessment - HELD THAT:- There is material substance advanced on behalf of the assessee that notice u/s 148 of the Act was related with credits in bank account are unexplained as its source is unascertainable whereas addition made u/s 41(1) of the Act on account of remission / cessation of liability in form of creditors was never been an issue forming part of reasons recorded u/s 148 (2) of the Act and addition in question made on an issue which is quite different from the issue on which case was re-opened u/s 148 of the Act.
Thus, for every new issue coming before the Ld. AO during the proceedings of assessment or re-assessment of escaped income and which he intends to take into account, it is required to issue fresh notice u/s 148 but in this case fresh notice u/s 148 of the Act as aforesaid containing fact regarding remission/ cessation of liability does not appears to be issued and if it is crystal clear that the Ld. AO without issuance of fresh notice required by law, on issue made alleged addition u/s 41(1) of the Act, which was not included in the reasons to believe as recorded for initiation of proceedings and the notice, is quite unwarranted by law and against the mandatory provisions and consequently addition in question is not sustainable in the eye of law. In conclusion ground no. 4 and 5 deserve to be allowed.
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2025 (2) TMI 39
Addition on account of unexplained investments u/s 69 - HELD THAT:- All payments were made through banking channel right from the F.Y. 2012-13 to A.Y. 2018-19. Therefore, conclusion drawn by the ld. AO is against the facts on record available in the assessment folder as all the materials were before the AO. CIT (A) has not appreciated these facts correctly and simply confirmed the addition made by the ld. AO. We note that the AO has wrongly made the addition and similar ld. CIT (A) affirmed the same.
Addition u/s 56(2)(x) - difference between the stamp valuation and set forth value - HELD THAT:- The first payment of the flat was made on 12th June, 2012 and all the payments were completed till the F.Y. 2018-19. So far as the observation of the AO is concerned that the difference between the purchase consideration and the value as per stamp valuation authority is to be taxed at 56(2)(x), we note that the provisions of clause (x) of sub section (2) of sub section 56 were inserted by Finance Act 2017, with effect from 01.04.2017 and was not applicable because this flat was brought prior to that.
As per the first proviso to section 56(2)(x), it is stated that when the date of agreement fixing the amount for transfer of immovable property and the date of registration are not same. The stamp valuation on the date of registration may be taken for the purpose of this sub clause but in any case, the insertion of this clause was made by the Finance Act, 2017 and was not applicable when the flat was bought.
So far as the provisions of Section 56(2)(vii)(b) of the Act are concerned, the clause b was inserted by finance act 2015 with effect from 01.04.2014, which provides that in case consideration which is less than the stamp value of the property by an amount exceeding 50,000/- than the stamp value of such property as exceeded amount shall be added to the income of the assessee.
The proviso provides that the stamp value of the property on the date of agreement may be taken for the purpose of this consideration. Even this clause does not apply to the assessee as this is applicable for A.Y. 2014-15 and therefore, these provisions are not applicable to the present transaction which was agreed to in A.Y. 2013-14. We also note that this new charging section brought under statute book is applicable prospectively not retrospectively.Decided in favour of assessee.
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2025 (2) TMI 38
Disallowance u/s 14A r.w.r. 8D - expenditure incurred for the purposes of earning exempt income - HELD THAT:- We noted that this issue is covered by the decision of Joint Investment India Private Limited [2015 (3) TMI 155 - DELHI HIGH COURT] wherein it is held that disallowance is be restricted to the extent of exempt income earned by assessee. Even this view is held in the case of State Bank of Patiala[2018 (11) TMI 1565 - SC ORDER] - Hence, we direct the AO to restrict the addition at Rs. 5,631/- only. This issue of assessee’s appeal is partly allowed.
TDS u/s 194A - Disallowance u/s 40(a)(ia) - disallowance of expenses made representing interest paid by assessee without deduction of TDS - HELD THAT:- We are of the view that assessee has to file the prescribed certificate as prescribed in the proviso to section 40(a)(ia) of the Act and also will file the details whether the recipient parties have disclosed the interest income in their respective returns of income earned in term of law. Accordingly, we restore this issue back to the file of the AO. Accordingly, this issue of this appeal is allowed for statistical purposes.
Unexplained cash credit u/s 68 - bogus share capital - HELD THAT:- We are of the view that assessee is unable to prove the identity, genuineness of transaction and creditworthiness of First Hi Fin Ltd. Hence, we confirm the order of Ld CIT(A) and dismissed this issue of assessee’s appeal.
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