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Income Tax - Case Laws
Showing 461 to 480 of 695 Records
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2012 (11) TMI 425
Penalty u/s 271 (1) (c) - addition on LTCG - Held that:- As per the return of income filed by the assessee the assessee declared long term capital loss of Rs.13,83,666/- but the A.O. assessed long term capital gain at Rs.23,05,136/- but the penalty is imposed by the A.O. on the positive capital gain computed and no penalty on long term capital loss declared by the assessee.
Since as per the tribunal order in quantum proceedings, it is held by the tribunal that fair market value of the flat as on 01.04.1981 as declared by the assessee has to be adopted by the A.O. and after effect is given to this tribunal order in quantum proceedings, the resultant capital gain will not be in positive figure but it will be a long term capital loss only although the same may be at a lesser amount than declared by the assessee. But still since no penalty is imposed by the A.O. in respect of capital loss declared by the assessee the present penalty cannot survive because penalty has been imposed by the A.O. on the positive capital gain - in favour of assessee.
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2012 (11) TMI 424
Penalty u/s 271(1)(c) - Whether penalty can be levied in case of disallowance of expense towards payment to contractors and procession fee for violation of provisions of section 40(a)(ia) of the Act - Held that:- when the disallowance is made by the A.O. due to non payment of TDS in time, the addition is technical in nature and hence, the same does not amount to concealment of income or furnishing of inaccurate particulars of income - Penalty u/s 271(1)(c) is not justified in these circumstances. In the present case, the facts are similar and even better because in the present case, TDS was deducted and paid also although belatedly. Hence, by respectfully following the tribunal decision, issue in the present case is decided in favour of the assessee and decline to interfere in the order of Ld. CIT(A) - In the result, the appeal of the revenue is dismissed.
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2012 (11) TMI 423
Penalty u/s 271(1)(c ) - CIT(A) deleted the levy - Held that:- Issue regarding disallowance of addition of deferred revenue expenditure was set aside & G.P. addition made by the A.O. of Rs.64,25,615/- was scaled down to only Rs 17,74,615/- & estimation of turn over to Rs. 3.75 crores from Rs.5 crores and the rate of G.P. was also scaled down to 30% as against 32%.
As decided in Jumabhai Premchand (HUF) Versus CIT [1998 (6) TMI 538 - GUJARAT HIGH COURT] estimated addition is not sufficient for levy of penalty u/s 271(1)(c) - the addition in the assessment order is alright but in the proceeding for imposition of penalty, that fact alone was not sufficient and the burden was on the department to prove concealment of income which was not discharged by the department - in favour of assessee.
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2012 (11) TMI 422
Disallowance u/s 14A r.w.r. 8D - CIT(A) deleted the addition - Held that:- In view of the factual position that own funds were many times more than the amount of investment and in view of the judgment of CIT Versus Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY) wherein held that no disallowance u/s 14A when assessee had interest free funds of its own and also in view of the fact that Rule 8D is not applicable in the present year, no interference is called for in the order of CIT(A) on this issue - in favour of assessee.
Reopening of assessment - valuation of closing stock, disallowance u/s 14A & escaping of FBT - Held that:- As in the course of original assessment proceedings, the A.O. has made proper queries regarding valuation of closing stock as well as regarding disallowance to be made u/s 14A and on both the counts, reply were submitted by the assessee before the A.O. in course of original assessment proceedings and thereafter, the assessment was completed by the A.O. u/s 143(3) and therefore, it is abundantly clear that opinion was made by the A.O. in course of original assessment proceedings on the basis of queries and its reply and no new material has been indicated which has come to the notice of the A.O. for reopening.
FBT which cannot be the ground for issuing notice u/s 148 because for issuing notice in respect of escaping of FBT, there is a separate section 115 WG in the I.T. Act and therefore, no notice can be issued u/s 148 of the I.T. Act - Hence, in the facts of the present case, the reopening is on the basis of mere change of opinion which is not permissible as per law - against revenue.
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2012 (11) TMI 421
Unexplained expenditure u/s. 69C - addition to income - Held that:- On the basis of the loose sheets impounded the fact that it represents expenditure is not in doubt. From the sheet it was seen that in the remarks column there were notings which indicate that in certain occasions the amounts were returned/repaid. On the basis of query from the Bench, the assessee agreed to verify the figures and after verification recalculated the figures after considering the amounts repaid/returned to the partners and the net figure of expenses worked out to ₹ 31,46,500/- also checked and confirmed by the Revenue - thus the addition made by the AO be restricted to ₹ 31,46,500/- instead of ₹ 1,32,57,366/- made by AO - partly in favour of assessee.
Addition u/s.68 - Held that:- The Revenue has not been able to prove that the notings in the loose sheet belong to the assessee & represents the amount received/spent by the assessee. The loose sheet being undated, unsigned, without the name nature of transaction thus cannot be considered for the basis of making addition. In view of these facts, we are of the view that no addition can be made on the basis of loose sheets - There is no evidence found by the Revenue in the form of extra cash, jewellery or investment outside the books - in favour of assessee.
Unaccounted loan - Held that:- the assessee has obtained aggregate loan of ₹ 5,70,000/- from six parties. The assessee had submitted the copies of confirmation of account of the lenders, copy of their pass book, copy of acknowledgement of Income tax returns in case of Income tax payers, copy of 7/12 utara, copy of PAN card etc. before the A.O. and has thus discharged the initial onus cast u/s. 68. The Revenue has not placed on record any material to controvert the submissions made by the assessee - the assessee is not required to prove the source from which the lenders have acquired the money deposited with the assessee - in favour of assessee.
Non deduction of TDS - Addition u/s. 40(a)(ia) - Held that:- As decided in Merilyn Shipping & Transports Versus ACIT, Range-1, Visakhapatnam the provisions of section 40(a)(ia) are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS - issue remitted back for verification - in favour of assessee for statistical purposes.
Interest u/s 234A - Held that:- The assessment order reveals that the assessee filed its return of income on 28-12-2006. The due date of filing of return in the case of assessee was 31-10-2006. CBDT vide order issued u/s.119 dated 13-10-2006 extended the date of filing of return for the assessees in the state of Gujarat to 31st December, 2006. Since the assessee had filed the return of income on 28-12-2006 which is within the extended due date of filing of return, we are of the view that assessee is not liable to pay interest u/s. 234A - in favour of assessee.
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2012 (11) TMI 420
Interest u/s 36(1)(iii) - disallowance as interest bearing funds have been utilized for making investments - CIT(A) allowed the claim - Held that:- Persuing the P/L A/C of assessee net profit after tax for the year ending 31-3- 2003 is ₹ 488.04 lakhs and the depreciation in that year is of ₹ 150.14 lakhs and hence total generation of own fund in that year is ₹ 638.18 lakhs, whereas investment in shares in that year is only of ₹ 352 lakhs & similarly in the year ending as on 31-3-2004 profit after tax is ₹ 214.25 lakhs and the depreciation in this year is ₹ 195.16 lakhs and hence total generation of funds is ₹ 309.41 lakhs whereas the investment in shares in this year is of only ₹ 55.25 lakhs - it is not justified to make any disallowance of interest claimed by the assessee u/s. 36(1)(iii) in the absence of any direct nexus between the investment in shares and interest bearing borrowed funds - in favour of assessee.
Deduction u/s. 80IA - disallowance as undertaking is not a distinct entity with no separate plant and machinery owned by the enterprise having not approved by the Central Government - Held that:- The facts in the year under appeal are identical to that of A.Y. 2004-05 and A.Y. 2005-06, thus following the order of co-ordinate Bench, restore the matter back to the file of A.O. for examining the allowability of deduction u/s. 80IA. The assessee has to furnish the required information called for by the A.O. that enterprise or undertaking is a distinct entity with a separate plant and machinery owned by the enterprise approved by the Central Government/State Government or local authority & maintaining separate books of accounts - in favour of Revenue for statistical purpose.
Consumption of closing stock - addition for excise duty debited to P/L A/C - Held that:- No contrary material has been shown proving that any excise duty has been debited in the profit and loss account relating to the finished gods. It is also not shown by the Revenue that cost of finished goods as worked out by the assessee did not contain the element of excise duty paid by it on the raw material consumed in the making of the finished goods. On the other hand, assesse has submitted that excise duty component of raw material has been duly debited to the profit and loss account addition considered in the costing of closing stock. This ground of Revenue is therefore also rejected - in favour of assessee.
Disallowance u/s.40A(2)(a) - CIT(A) allowed the claim - Held that:- A.O. has not proved that excessive payment has been made to an associate concern of the assessee. The genuineness of the transactions is not in dispute. The reliance by A.O. on the order of associate concern of the assessee is not proper as that order has been reversed by the CIT (A) and confirmed by the Tribunal. The assessee had provided calculation of fair value of services before the CIT (A) which was sent to the A.O. during remand proceedings. There is no material to justify the disallowance made by the A.O. Further, Tribunal in the case of associate concern of the assessee decided on 30-9-2009 held that there is no excessive payment for services provided to assessee. Thus once factum of excessive payment for services are not proved, there is no case of any addition even in the case of the assessee - in favour of assessee.
Software expenses - Revenue v/s capital - Held that:- As assessee has not been able to demonstrate as to how the expenses are of revenue in nature, thus need to be treated as capital - against assessee.
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2012 (11) TMI 419
Unaccounted deposits in bank - Held that:- The assessee has explained the source of cash deposits from cash withdrawal, opening balance consisting of gifts and business Income. The assessee’s explanation that the gifts received in earlier years were of small amounts and not liable to tax and therefore no return was filed. This explanation, considering the amount appears to be plausible explanation - no addition is called for in the present case - in favour of assessee.
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2012 (11) TMI 418
Unaccounted investment in house property and cash deposits - Held that:- Entire submission of the appellant is not supported by documentary proof. The appellant has shown to have earned income by way of business including income for A.Y. 2001-02 of Rs.41,931/- during the year under consideration, then also it is difficult to accept that appellant was able to make investment in house property to the extent of Rs.1,05,000/- and to deposit an amount of Rs.22,000/- in the bank.
From the chart furnished and placed on record it is seen that the total funds available with the assessee was to the extent of Rs.1,16,581/- and the additions made by the A.O. was to the extent of Rs.1,27,000/-, thus the addition seems to be on higher side. Thus to meet the end of justice the disallowance be estimated and restricted to Rs.35,000/- instead of Rs.1,27,000/- made by the A.O. - partly in favour of assessee.
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2012 (11) TMI 417
Taxability of profits on sale of DEPB license for working out deduction u/s.80HHC - Held that:- Co-ordinate Bench had relied on the decision of Bombay High Court while deciding the issue of profit on sale of DEPB.
As decided in M/s Topman Exports Versus Commissioner of Income Tax, Mumbai [2012 (2) TMI 100 - SUPREME COURT OF INDIA] that profit on transfer of DEPB would be sale value of DEPB less its face value which represents the cost of DEPB and not the entire sum received by assessee on such transfer & ACIT vs. Saurashtra Kutch Stock Exchange Ltd. [2008 (9) TMI 11 - SUPREME COURT] that non consideration of a decision of jurisdictional court or of the Hon’ble Supreme Court can be said to be “mistake apparent from the record ” - in favour of assessee.
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2012 (11) TMI 416
Surplus/shortage of closing stock - suppression of purchases of maida and soji - Held that:- Persuing the copy of the reconciliation statement of the quantitative details as per the statement of accounts and as per the audited accounts of the closing stock of raw-material and the finished goods, as filed by the assessee the assessee has tried to explain the reasons for the difference in the two statements of accounts of the closing stock in the written submissions filed before the CIT(A). However, in such type of case, at the most the value of the difference between the stock as per the statement of accounts and stock as per the audited quantitative details of raw-material and finished goods of closing stock could be added as income in the hands of the assessee. Thus the actual difference is slightly more in besan account as per the two account statements and which comes to 9.826 MTs and the value thereof comes to Rs.2,47,850/- and accordingly, the addition on account of difference in besan account is restricted to Rs.2,50,000/- . In other accounts of maida, soji and atta there is in fact shortfall thus the total addition is sustained at Rs.3,00,000/- out of the addition of Rs.19.33 lakhs and Rs.7.42 lakhs sustained by the CIT(A) - partly in favour of assessee.
Penalty u/s 271(1)(c) - Held that:- It was the assessee who has filed both the accounts statements with regard to quantitative details of the raw-material and finished goods in various products and they were filed by the assessee at the time of assessment itself. The assessee has filed a reconciliation statement and has tried to reconcile the two statements of account. The mistake on account of difference in two accounts is clearly bona fide and merely because the some part of the addition made on that ground has been sustained by the Tribunal, is no ground to visit the assessee with the penalty under Section 271(1)(c) - in favour of assessee.
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2012 (11) TMI 415
Disallowance of Commission – Held that:- Commission to the extent it exceeds 40% of the brokerage received by the assessee from the clients is clearly prohibited by law and to that extent, as per, Explanation to section 37(1) will clearly be applicable, thus disallowed - AO shall re-decide this issue after considering Bye-Law 218 of the Stock Exchange Ahmedabad after giving proper and reasonable opportunity to the assessee and to allow the commission only to the extent it is permissible in accordance with Bye-Law 218 of the Ahmedabad Stock Exchange - In the result, appeal of the assessee is allowed for statistical purpose.
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2012 (11) TMI 414
Interest on FDR - disallowance as income derived is not from “industrial undertaking” u/s 10(B) - Held that:- The Excise Department has issued security bond after lien of 5% of FDR & assessee was required to keep a security deposit with the Central Excise Department for smooth export-business, but the interest earned on such security deposit could not be said to be derived from industrial undertaking - against assessee.
Disallowance of balance written off - Held that:- Written off of sundry balances could not be attributed to the previous year and relates to the earlier years and could not be said to be related to the business income or income derived from export activities of the assessee - against assessee.
Disallowance of building material sale - Held that:- the sale of building material could not be accepted to be derived from “industrial undertaking” eligible for deduction under section 10(B) of the Act - against assessee.
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2012 (11) TMI 413
Addition u/s 68 - opening cash balance - Held that:- Assessee was of 58 years of age and was engaged in the business since past many years and was regularly filed return of income year after year, could not be controverted by the Revenue. The accumulated balance of Rs.1,40,886/- could not be said to be unbelievable or excessive - in favour of assessee.
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2012 (11) TMI 412
Profit earned from undisclosed trading turnover - CIT(A) confirmed the addition - Held that:- CIT(A) has sustained an addition by merely observing that the annexures are recorded in the books of account cannot be accepted since the AO has given such finding after examination of the books of account and seized document which are in the custody of the I.T. department, but this approach of the CIT(A) is not sustainable as the assessee in its written submission filed before the CIT(A) has elaborately cited the figure of the turnover as per the seized material, recorded in its sale register and page number of the sale register along with date, amount and full narration has been detailed therein. Also not considered the submissions that the GP rate as per the I.T. records comes to 14.07% and the NP therein is about 8% only. The CIT(A) has not even rejected the same and has not considered the submissions - as per the pleading of the assessee itself there were some arithmetical inaccuracies in the calculations of the unaccounted turnover of the assessee and petty lapses in the recording of the turnover in the sales register could not be ruled out, thus ends of justice shall be met if the addition on account of profit earned by the assessee not accounted is restricted to Rs.8 lakhs out of the addition of Rs.67.22 lakhs confirmed by the CIT(A) - partly in favour of assessee.
On money receipt on sale of timber - Held that:- CIT(A) has dismissed the ground of the appeal of the assessee in a summary manner. The Revenue could not justify with evidence to prove its case regarding receipt of “on money” in respect of sale of premium timber - in favour of assessee.
Difference in stock - search - Held that:- As assessee could not establish the nexus between the shortfall in stock found at the time of search and addition made by the AO on account of profit earned from undisclosed trading of timber. Accordingly, the GP element at the rate of 14% on shortfall of timber of Rs.1.14 lakhs which comes to Rs.16,000/- be sustained as addition out of the addition of Rs.1.14 lakhs sustained by the CIT(A) and the balance addition is deleted - partly in favour of assessee.
Unexplained expenditure - Held that:- CIT(A) has sustained the addition by observing that the AO appears to have verified the material, and accordingly worked out the amount of expenditure. These observations of the CIT(A) is not sustainable considering the submissions of the assessee and to cover up the possible petty lapses and expenditure which could not have been accounted for by the assessee the ends of justice shall be met if the addition of Rs.7 lakhs is confirmed out of addition of Rs.64.59 lakhs sustained by the CIT(A) and the balance addition is deleted - partly in favour of assessee.
Set off of unaccounted profit - Held that:- CIT(A) has observed that further addition equal to 15% of the seized items contained in Annexure BS-43 is made, which works out to Rs.1,81,694/- with the remarks that the same will be set off against the above income on account of unaccounted turnover. We find that separate addition on account of undisclosed turnover was made by the Revenue, and therefore the CIT(A) was wholly justified in allowing the set off of this amount of Rs.1,81,694/- against the income from undisclosed turnover of the assessee - in favour of assessee.
Unaccounted initial investment - Held that:- the assessee’s timber business is very old, and therefore there is no justification for addition on account of initial investment in block period, and accordingly the order of the CIT(A) on this issue is confirmed - in favour of assessee.
Unaccounted profit on stock found short - GP rate of 15% OR 20% - Held that:- GP rate of the assessee as per the income-tax records comes to 14.07% which could not be controverted on behalf of the Revenue. Thus there is no mistake in the order of the CIT(A) in applying the GP rate of 15% instead of 20% - in favour of assessee.
Unexplained cash - Held that:- As at the time of search cash amounting to Rs.1,17,000/- was found at the premises of the assessee, and the AO has recorded that the assessee has admitted it to be unexplained. The assessee later on tried to explain the cash as belonging to the father, mother, brother personal etc. which is to held as an after thought - against assessee.
Unexplained cash of Rs.1,17,000/- is covered with the addition sustained above accordingly the assessee is entitled to telescopic benefit, and the issue is decided in favour of the assessee.
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2012 (11) TMI 411
Penalty u/s.271(1)(c) r.w.s. 158BFA(2) - disallowance of educational and traveling expenses of the son - CIT(A) deleted the levy - Held that:- Perusal of the scrutiny assessment u/s 143(3) for the AY 2001-2002 and 2002-2003 revealed that the similar expenses on educational and traveling expenses of the son has been disallowed by the AO holding the same as non-business expenditure but no penalty u/s 271(1)(c) in these two assessment years were initiated.
The assessee has filed explanation and there is no material brought on record to suggest that the explanation of the assessee regarding the claim of educational expenses was not bona fide. It is a case of difference of opinion between the assessee and the Revenue regarding allowability of certain claim of expenses claimed by the assessee, as an allowable deduction out of its taxable income. In these facts of the case, the penalty levied was rightly deleted by the CIT(A) by observing that the expenses were claimed by the assessee under a bona fide belief that such expenses were allowable expenses to the assessee - in favour of assessee.
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2012 (11) TMI 401
Penalty u/s 271(1)(c) - unaccounted cash credits - Held that:- The assessee had placed on record the confirmation of HUF, details of bank account along with details of land holding as per 7/12 and 8A details. It is also noted by CIT(A) that the assessee has also placed on record the confirmation, details of bank account along with details of land holding of 12 HUFs who had advanced money to the assessee HUF. On the basis of these facts, this finding is given by CIT(A) that the assessee has not only proved the immediate source of the credit but also the source of the source - addition & penalty deleted - in favour of assessee.
Penalty u/s. 271E - loan repayment in cash - Held that:- Persuing the two lists of names, it is clear that the names are not the same regarding receipt of loan by cheques and repayment of loans in cash. Thus, argument of D.R. is not valid that when the persons are having bank account at the time of giving the money to the assessee, how they were not having bank account when repayment was made to them. A clear finding is given by CIT(A) that these persons were residing in small villages and the nearest bank was situated about 15 km away from their villages. He has also given a finding that out of 11 persons, 4 persons were not having by bank account and one person had expired and, therefore, the assessee was compelled to make repayment in cash to his legal heirs on their request. Regarding the remaining 6 persons, he has given finding that they were residing in the villages where no bank and banking facilities were available to them and the assessee has repaid in cash to them - addition & penalty deleted - in favour of assessee.
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2012 (11) TMI 400
Penalty u/s 271(1)(b) of the Act for not attending assessment proceedings Held that:- Assessment has been completed u/s 143(3) and not u/s 144 of the Act and none of the addition is attributed to any default on the part of the assessee in submitting the details., all the details have been filed on behalf of the assessee and thereafter, assessment completed. As decided by court in case of [[CIT Vs. Standard Marcantile Co., 1985 (7) TMI 44 - PATNA HIGH COURT ]held that:- absence of mens rea or failure of the Revenue to establish mens rea, are entirely irrelevant in penalty proceedings u/s 271(1)(b) of the Act. issue involved in the present case is squarely covered in favour of the assessee by this Tribunal’s decision and therefore, respectfully following the same penalty is deleted - In the result, the appeal of the assessee is allowed.
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2012 (11) TMI 399
Penalty u/s 271(1)(c) - Held that:- As the Addition was deleted by the tribunal in quantum proceedings itself, penalty cannot survive and is deleted - appeal of the assessee is allowed.
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2012 (11) TMI 398
Penalty u/s 271(1)(c) - disallowance on interest - Held that:- The penalty could not have been imposed merely on the basis that the addition made by the AO has been confirmed by the CIT(A) - It is the assessee who has to decide about the business need and expediency in the particular circumstances, and it has to demonstrate that the interest bearing fund was utilized for business purpose and commercial expediency. Whether there was a business expediency or not is a debatable issue & it has been well settled now that penalty cannot be imposed where the issue is debatable - in favour of assessee.
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2012 (11) TMI 397
Sharafi account - difference in account and disclosure made by the assessee during the search - CIT(A) deleted the addition - Held that:- No infirmity into the order of the CIT(A) as the relief has been granted on the basis of telescoping the income of A. Y. 1992-93 (on account of the excess of assets over liabilities as on 31-03-1992) confirmed by my predecessor against the income for A. Y. 1993-94 (on account of the excess of assets over liabilities as on 31.03-1993). The disclosure for both the years was made on the basis of balance sheets found during the course of search. There is nothing on record to show that the income disclosed and confirmed by my predecessor for A Y 1992-93 was invested elsewhere or spent by the appellant.
In agreement with the observation of the CIT(A) that the same income cannot be taxed year after year. This observation of the CIT(A) is not controvered by the Revenue by placing any other evidence suggesting that the income was not earlier taxed. In this view of the matter, this ground of the Revenue’s appeal is dismissed - in favour of assessee.
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