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Income Tax - Case Laws
Showing 81 to 100 of 641 Records
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2021 (3) TMI 1231 - ITAT CUTTACK
Levying penalty u/s 271(1)(c) - whether the show cause is issued to the assessee for concealment of particulars of income or for furnishing inaccurate particulars of income? - HELD THAT:- Bare perusal of the notice issued u/s 271(1)(c) of the Act apparently goes to prove that the Assessing Officer initiated the penalty proceedings by issuing the notice u/s 274/271(1)(c) of the Act without specifying whether the assessee has concealed ''particulars of income" or assessee has furnished "inaccurate particulars of income", so as to provide adequate opportunity to the assessee to explain the show cause notice. Rather notice in this case has been issued in a stereotyped manner without applying any mind which is bad in law, hence is not a valid notice sufficient to impose penalty u/s 271(1)(c).
There is no specific order as to whether any concealment of inaccurate particulars in view of the decision in the case of Reliance Petro Products Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] and in the case of Manjunatha Cotton & Ginning Factor [2013 (7) TMI 620 - KARNATAKA HIGH COURT] - we direct the AO delete the penalty in all the captioned appeals for the years under consideration - Decided in favour of assessee.
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2021 (3) TMI 1230 - ITAT BANGALORE
Computation of deduction u/s 80HHC - as per CIT-A while arriving at business income for the purpose of deduction u/s 80HHC, 90% of other income should be excluded under clause (baa) of the explanation below Section 80 HHC which includes receipts like rental income, commission, notice pay, income from cancelled orders and miscellaneous/sundry income etc - CIT-A directing the AO to exclude 90% of the 'net interest income' instead of 'gross interest receipts' from the 'profits and gains of business or profession' to arrive at 'business profit' under clause (baa) for the purpose of computation of deduction u/s 80HHC particularly in view of use of expression -receipt- and not "income" in the said clause - HELD THAT:- Taking a consistent view, we direct accordingly as directed in the Tribunal order for the AY 2000-01. However, we make it clear that while considering the income, the AO shall take net income after setting off the expenditure incurred to earn that income. Thus, the ground by the assessee is allowed, while the grounds of the revenue on this issue are dismissed.
Head office expenses as required to be allocated while arriving at the profit of the industrial undertaking for the purpose of allowing deduction u/s 80-I / 80-IA - HELD THAT:- As all expenses, whether they are direct or indirect or fixed, semi-fixed or variable, must be adjusted to determine the profits derived from the industrial undertaking. Of course, any component of Head Office expenses, which has been incurred exclusively for the purposes of the business of any particular unit/ undertaking/division will have to be adjusted against the receipts of that particular unit/undertaking/division only.
Similarly, Head Office expenses or expenses which are common to all the units/undertakings/divisions expenses will have to be spread over and charged against the receipts of all the units/ undertakings/divisions. If this course is not followed, then what would stand allowed u/s 80IA would be inflated profits and not the net profits derived from the industrial undertaking in terms of the provisions of sections 29 to 43. In this view of the matter and in the absence of any better alternative, the CIT(A) is justified in holding assessee is entitled to deduction of the eligible amounts in respect of the profits derived from the eligible undertakings after the allocation of head office expenses in the ratio of turnover - Decided against assessee.
Deduction claimed u/s 80-0 at 50% of fees received for supply of engineering designs and drawings - as submitted that the claim is for fees received for developing and providing designs and drawings - HELD THAT:- Merely raising invoices for the purpose of having provided engineering designs cannot be a yardstick to determine the exact amounts received by the assessee for the services rendered by it. Mere raising of invoices and on the basis of which claiming deduction u/s 80-0 of the Act running into crores of rupees can neither be justified nor allowed without any sheer of documentary proof. In view of the above facts and circumstances of the issue, we inclined to agree with the reasoning of the CIT (A), which does not require our intervention.
Expenditure being amount spend towards Repairs and renovation of Leasehold premises - Revenue or capital expenditure - HELD THAT:- CIT (A) has not erred in holding that expenditure being amount spend towards Repairs and renovation of Leasehold premises is capital expenditure.
Disallowance of reversal of provision made for the obsolete stock in earlier years - CIT(A) was of the view that the only issue to be seen is whether any fresh provision was made towards obsolescence in the accounts for the year under consideration - HELD THAT:- Before the CIT(A), it was explained that the provision is normally made based on the accounting standards. On subsequent verification, the CIT(A) found that excess provision had been made in Nasik and Peenya units. Therefore, the excess provision was reversed. Since no fresh provision was made towards obsolescence, the addition deleted by the CIT(A).
Now the contention of the ld. AR is net reversal of ₹ 5,72,796 has to be allowed as a deduction in the assessment year under consideration. In our opinion, this amount of ₹ 5,72,796 was allowed as a deduction in the earlier years when the provision was created. Now non-taxing of the same amounts to allowing double relief. Hence reversal of provision of ₹ 5,72,796 has to be brought to tax in the assessment year under consideration. As such, we confirm the order of CIT(Appeals) on this issue and dismiss this ground of appeal by the assessee.
Disallowance u/s 14A - expenses incurred for earning the dividend from the investment made out of the interest bearing funds - HELD THAT:- As decided in own case it is clear that own funds of the assessee were much more than the investments that yielded tax-free dividend income. In such circumstances, we are of the view that the revenue authorities were not right in concluding that the borrowed funds on which interest was paid was used for the purpose of making investments that yielded tax-free dividend income. In that view of the matter, we are of the view that the addition made by the revenue authorities cannot be sustained. The same is directed to be deleted.
Disallowance being provision made for loss order on the ground that same is contingent in nature and there is no scope for allowance of any liability that is unascertainable - HELD THAT:- AO says that the loss in question is contingent he is deemed to have questioned the basis on which the Assessee has quantified the loss. Without assigning a basis on which the loss is said to be accrued loss, the Assessee cannot claim deduction on account of foreseeable loss. We deem it fit and proper to remand the issue to the AO for fresh consideration with a direction that the Assessee will furnish the basis on which he claims that there would be loss in the three contracts, the details of which are given above. The AO will consider the same and decide the issue afresh in accordance with law after affording Assessee opportunity of being heard.
Disallowance of bad debts written off - HELD THAT:- The issue is remitted to the assessing officer to ascertain twin questions viz., (i) whether debt which was written off during the relevant year was offered to income in Previous year or earlier years, (ii) whether the assessee has debited the amount of doubtful debt to profit and loss account and has reduced the same from the asset side of the balance sheet. The matter is remitted to the AO for de novo consideration of the aforementioned aspect.
Deduction u/s 80HHB when no separate books in respect of foreign project were maintained - HELD THAT:- If we examine the nature of work done by the assessee in the foreign country, we fully subscribe to the factual finding recorded by the CIT (A). It has to be borne in mind that Section 80HHB of the Act is a provision, which grants incentive to the assessee for growth and development and as held by the Hon’ble Supreme Court in several decisions, such provision should be liberally construed, as it will promote economic growth of the country. We therefore uphold the order of CIT(A) and find no merits in the relevant ground of appeal (iii) raised by the revenue.
Nature of expenditure - Club membership fee paid by the company is an admissible business and cannot be regarded as capital expenditure.
Allowance of R & D expenditure u/s 35(I)(iv) when the activity claimed to be the R&D activity is part of normal business of the assessee - HELD THAT:- As decided in own case identical issue was decided by the Hon’ble Karnataka High Court in the case of Tejas Network Ltd. [2015 (4) TMI 1064 - KARNATAKA HIGH COURT] and it was held that where assessee claimed deduction under section 35(2AB) pursuant to certificate issued by prescribed authority, i.e., Department of Scientific & Industrial Research (DSIR), approving such claim, Assessing Officer could not have denied weighted deduction under section 35(2AB) in respect of scientific expenditure. It was held that Assessing Officer cannot sit in judgment over report submitted by prescribed authority . It was held that where Assessing Officer does not accept claim of assessee made under section 35(2AB), he should refer the matter to Board, which will then refer question to the prescribed authority.
Expenses on the basis of purchase of packing materials, loose tools and consumables in the year of purchase - HELD THAT:- As decided in own case Assessee submitted before Assessing Officer that; (i) packing material shown as purchases as on 31-3-2005 was actually purchased in earlier months and such packing material was consumed during process; (ii) on account of some computer problem, bills were posted on 31-3-2005, and (iii) entire packing material left after end of year became obsolete and, therefore, it was not shown in closing stock. Assessing Officer rejected account books of assessee and made certain addition to his income. The Tribunal held that:- (i) it was not case of revenue that purchases as debited as on 31-3-2005 were not genuine, and (ii) assessee was following a consistent method of valuing closing stock by including packing material as consumed at time of purchase. Rejection of account books of assessee and addition to his income was held to be not justified.
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2021 (3) TMI 1229 - ITAT SURAT
Revision u/s 263 - Scope of amendment of Explanation-2(c) to Section 263 - whether the Assessing Officer has passed the order after taking into account the directions or instructions issued by the CBDT under section 119 of the Income Tax Act? - whether Explanation-2(c) to Section 263 of the Act is prospective or retrospective in nature? - HELD THAT:- We find that the case before us pertains the Assessment Year 2014-15 and impugned Explanation-2(c) to Section 263 was applicable w.e.f. 01.06.2015. Therefore, we note that Explanation-2(c ) to section 263 of the Act as inserted by the Finance Act, 2015 authorizing the ld. PCIT to hold the order of the Assessing Officer erroneous in so far as prejudicial to the interest of Revenue, is prospective in nature, as held by the various Coordinate Benches of ITAT.
Therefore, in our considered view the provision as specified in explanation 2(c) to section 263 of the Act cannot be applied for the year under consideration. Therefore, order passed by the assessing officer under section 143(3) dated 09.11.2016 for A.Y.2014-15, is neither erroneous nor prejudicial to the interest of revenue, and hence the order passed by the ld PCIT under section 263 of the Act is hereby quashed. - Decided in favour of assessee.
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2021 (3) TMI 1223 - ITAT DELHI
Exemption u/s 11 - activity of the various city development authorities as charitable or not? - CIT- A allowed the exemption - HELD THAT:- The issue of treating the activity of the various city development authorities as charitable or not has been adjudicated by various Courts and Tribunals which consistently held that the activity of acquiring land, development of plots and construction of residential as well as commercial places is an activity considered as charitable in nature.
“Infrastructure Development Fund” in the instant case , the AO held that the amount should have been first credited in the income and expenditure account and the amount spends out of the same should have been debited to this account. It is an undisputable fact that the fund is not under the exclusive control of the assessee and the expenditure to be incurred out of the infrastructure funds are approved on the recommendation of high powered committee.
Hon’ble Allahabad High Court in the case of Lucknow Development Authority [2013 (9) TMI 570 - ALLAHABAD HIGH COURT] has held that the money transferred to the Infra structure fund account is to be utilized for the purpose of the projects as specified by the Committee having constituted by the State Government and cannot be treated as belonging to the authority or receipt is taxable nature in its hand.
In the absence of any change in the factual matrix brought to our notice by either of the parties, we hereby decline to interfere with the order of the ld. CIT (A). - Decided against revenue.
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2021 (3) TMI 1221 - MADRAS HIGH COURT
Disallowance u/s 36(1)(ii) - Director's remuneration paid - commission to the Director shareholders disallowed - CIT-A deleted the addition as confirmed by tribunal - HELD THAT:- As decided in AMD Metplast Pvt Ltd [2011 (12) TMI 320 - DELHI HIGH COURT] Managing Director entitled to receive commission for services rendered to the company - It is a term of employment on the basis of whichhe had rendered service. Accordingly, he was entitled to the said amount. Commission was treated as a part and parcel of salary and TDS has been deducted. Ashok Gupta was liable to pay tax on both the salary component and the commission. Payment of dividend is made in terms of the Companies Act, 1956. Dividend has tobe paid to all shareholders equally. This position cannot be disputed by the Revenue. Dividend is a return on investment and not salary or part thereof. Herein the consideration in the form of commission which was paid to Ashok Gupta was forservices rendered by him as per terms of appointment as a Managing Director. - Decided in favour of assessee.
Disallowance of deduction under section 801B(10) - CIT-A deleted the addition as confirmed by tribunal - HELD THAT:- As decided in Sanghvi and Doshi Enterprise [2012 (12) TMI 84 - MADRAS HIGH COURT] it is an admitted fact that the approval was granted for construction, both by the Chennai Metropolitan Development Authority and the local authority, namely, Chennai Corporation. The letter of the Chennai Metropolitan Development Authority according sanction to the project as early as 23.9.2003 clearly points out that the sanction was also subject to the approval by the Corporation.
With the planning details being subjected to the approval by the Corporation as the competent local authority and it having certified as to the completion as early as 28.12.2007, we are satisfied that the completion being on or before 31.3.2008, the reliance placed on Explanation (2) to reject the assessee's case could not be sustained. In any event, given the fact that the approval, which is an administrative process, is purely at the hands of the Statutory Authority concerned, over which, the assessee could not have any control, the Explanation cannot, in any manner, have a negative effect on a factual aspect of the matter, namely, completion of the construction. Thus, in a case like this, where, the local authority, being the Corporation, had already certified about the completion of the project as per the approved plan, the fact that one of the Authorities, namely, Chennai Metropolitan Development Authority had issued a letter only on 13.6.2008, per se, cannot negative the assessee's claim for deduction - Decided in favour of assessee.
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2021 (3) TMI 1215 - KARNATAKA HIGH COURT
TDS u/s 195 - payments made by the appellant for purchase of computer software by holding that the said payments are in the nature of ‘royalty’ - income chargeable to tax in India or not? - disallowance made under Section 40(a)(i) - HELD THAT:- As decided in the case of ENGINEERING ANALYSIS CENTRE FOR EXCELLENCE PRIVATE LIMITED [2021 (3) TMI 138 - SUPREME COURT] amounts paid by resident Indian end-users/distributors to non-resident computer software manufacture/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in Section 195 of the Income Tax Act were not liable to deduct any TDS under Section 195 - Decided in favour of assessee.
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2021 (3) TMI 1212 - DELHI HIGH COURT
Disallowance u/s 14A - correctness of such claim of the Respondent in respect of such expenditure in relation to income which does not form part of the total income under this Act - license fee paid to the Department of telecommunication by the assessee - whether exemption under section 10A of the Act should not be computed after excluding telecommunication expenses and foreign currency expenditure from the export turnover - HELD THAT:- In view of the decision rendered in HCL COMNET SYSTEMS & SERVICES LTD. [2021 (3) TMI 1182 - DELHI HIGH COURT]These questions of law as suggested by the revenue cannot be entertained. In brief, the questions of law as suggested by the revenue stand covered by various judgments of either this Court or the Supreme Court.
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2021 (3) TMI 1211 - ITAT BANGALORE
Claim of deduction u/s 80P(2)(a)(i) denied - assessee was also dealing with associate / nominal members - HELD THAT:- The Hon’ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd [2021 (1) TMI 488 - SUPREME COURT] had held that the expression “members” is not defined under the Income-tax Act. Hence, it is necessary to construe the expression “members” in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. Also providing credit facilities to associate or nominal members would be entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act unless they are not considered as members of co-operative under the respective State Act.
A.O. has merely denied the benefit of deduction u/s 80P(2)(a)(i) for the reason that the assessee was also dealing with associate / nominal members, which is against the dictum laid down by the Hon’ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. & Ors. (supra). The Hon’ble Apex Court has settled many issues. The instant case needs to be examined by the A.O. in light of the principles enunciated by the Hon’ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. & Ors. (supra). Accordingly, the CIT(A) order on this issue is set aside and the same is restored to the files of the A.O. for Re -examination
Rejection of claim of deduction u/s 80P(2)(a)(i) of the I.T.Act with regard to interest income earned from fixed deposit kept with Co-operative Banks - Whether the Income Tax Authorities has erred in holding that the interest earned by the assessee from deposit made with Co-operative Banks is chargeable to tax u/s 56? - HELD THAT:- On identical facts the co-ordinate bench of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO [2019 (1) TMI 282 - ITAT BANGALORE] had restored the matter to the A.O. for de novo consideration. We restore the issue of claim of interest income received from other co-operative banks to the files of the A.O. for de novo consideration. The A.O. shall follow the directions of the Tribunal contained (supra)
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2021 (3) TMI 1210 - ITAT MUMBAI
Eligibility of Deduction u/s 80P - CIT(A) held that the interest income earned by the appellant from investment of surplus funds with co-operative banks is not eligible for deduction u/s 80P(2)(d) or 80P(2)(a)(i) - assessee is a co-operative credit society and doing banking business ; it collects deposits from members from various schemes ; its major source of income as evident from the profit and loss account is on account of interest on loan given to members and interest on deposits with banks - HELD THAT:- In CIT v. Kalpadi Co-operative Township Ltd. [2016 (9) TMI 952 - MADRAS HIGH COURT] the Hon’ble Madras High Court held that “a Cooperative Credit Society providing credit facilities to its members alone and not to general public large nor it did receive moneys by way of deposits on general public, would not be treated as Co-operative Bank ; it would be entitled to deduction u/s 80P.”
As per Mavilayi Service Co-operative Bank Ltd. v. CIT [2021 (1) TMI 488 - SUPREME COURT] limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public .
To sum up: In Totagars Co-operative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] the Hon’ble Karnataka High Court has held that for purpose of section 80P(2)(d) a Co-operative Bank should be considered as a Co-operative Society. In Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] the Hon’ble Supreme Court has held that “Section 80P of the IT Act, being benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be liberally and reasonably, and if there is any ambiguity, in favour of the assessee.
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2021 (3) TMI 1209 - ITAT DELHI
Deduction u/s 80HHC on DEPB in full as claimed by the assessee in his return of income - HELD THAT:- As both the parties have to be looked into the context of the law laid down by various decisions passed by the Hon’ble High Courts as well as the Supreme Court in cases of Avani Exports [2015 (4) TMI 193 - SUPREME COURT] and Carpet India [2019 (9) TMI 738 - SUPREME COURT]. Hence, we are remanding back both the issues to the file of the Assessing Officer for fresh adjudication in light of the provisions of law settled by the judicial forums including Hon’ble Apex Court.
Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Hence, Ground Nos. 2 and 3 of the assessee’s appeal are partly allowed for statistical purpose.
Disallowance on account of interest - HELD THAT:- It is pertinent to note that from the paper books pointed out by the Ld. AR during the hearing, it can be seen that these advances were not from the interest bearing borrowed funds. Thus, the advances were exclusively for the purposes of business of the assessee and the Assessing Officer has not taken cognizance of the same. Further while disallowing the claim of the assessee, the Assessing Officer failed to establish the nexus between the amount not given and the advances. Thus, the CIT(A) was not correct in confirming this addition.
Allowability of deduction u/s 80HHC by the Assessing Officer only after reducing the amount of deduction u/s 80IB from the amount of business profit - HELD THAT:-We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Hon’ble Delhi High Court in case of Great Eastern Exports Ltd. [2010 (11) TMI 91 - DELHI HIGH COURT] held that the deduction allowed u/s 80-IA had to be reduced from the profits for computing deduction u/s 80HHC. The same principle will be applicable in the present case, hence, Ground No. 8 is dismissed.
Depreciation @ 50% on machinery purchased under TUF Scheme - HELD THAT:- As assessee is in the business of manufacturing and export of handloom goods, floor coverings and made ups which are covered under the TUF scheme, though the Assessing Officer has not denied these facts. The assesse in fact, has demonstrated before us by giving details which was produced before the Assessing Officer as well, as to how each machinery is covered under which clause of TUF Scheme. Thus, the CIT(A) has rightly held that after comparing the bills, the description of the machines and the relevant entry in schedules to TUF Scheme, it is clear that item no. 1 to 30 and 36 are covered under TUF Scheme and the same are eligible for depreciation accordingly @ 50%, whereas, item no. 31 to 35 totaling for value of ₹ 97,000/- only are not covered under any clause of the schedules of TUF Scheme, therefore, the machinery worth ₹ 97,000/- are eligible for depreciation at the normal rate of 25% and accordingly directed the Assessing Officer. Therefore, there is no need to interfere with the findings of the CIT(A).
Difference in the value of stock as per stock statement submitted to the Bank and as declared in the trading results of the assessee - HELD THAT:- As the books of accounts of the assessee were never rejected by the assessee during the year. Further, from the perusal of the details filed by the assessee, it can been seen that the assessee received/ purchased goods worth ₹ 4,66,94,618/- before 01.03.2004. The said purchase is evident from the bills and vouchers. All these documents/evidences were before the Assessing Officer. Thus, the CIT(A) rightly deleted this addition with justifiable reasoning. Therefore, there is no need to interfere with the finding of the CIT(A). Hence, Ground No. 2 of the Revenue’s appeal is dismissed.
Disallowing foreign traveling expenses - DR submitted that the assessee other than the partners of the firm or the supporting bills could not produced any other evidence to establish that these expenses have been wholly and exclusively for the business purposes - HELD THAT:- From the perusal of the order of the CIT(A) as well as the Assessment Order, it can be seen that the evidences/documents were produced by the Assessee during the assessment proceedings to establish the claim of the assessee that the foreign travel was exclusively for the business purpose only. Hence, there is no need to interfere the findings of the CIT(A).
Addition on account of building repair and maintenance expenses - HELD THAT:- AO has not disputed the expenditure incurred on repair and maintenance but held the same as capital expenditure. The assessee’s factory is on rented premises and there is no new structure created by the assessee. These facts were also not disputed by the Assessing Officer. Hence, there is no need to interfere with the finding of the CIT(A). Ground No. 5 of the Revenue’s appeal is dismissed.
Disallowing export promotion expenses - HELD THAT:- It is pertinent to note that the AO has allowed the export promotion expenses to the extent of 9/10th of the expenses claimed by the assessee. AO never disputed that there is export promotion expenses. In fact, there is no observation by the AO that certain portion of these expenses were utilized for personal use.The disallowance is only on the basis of presumption and assumptions.Therefore, the CIT(A) rightly deleted this addition.
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2021 (3) TMI 1208 - ITAT HYDERABAD
Validity of notice u/s.143(2) at this belated stage - notice beyond the statutory period of six months from the end of the financial year in view of the revised return dt.16.11.2015 - HELD THAT:- There is no dispute between the parties about the assessee having filed the original return on 4.7.2014 followed by Section 143(2) notice, revised return dt.16.11.2015 and the subsequent section 143(2) notice dt.18.11.2016; respectively, in seriatum. Mr. Pandey fails to dispute that the Assessing Officer notice u/s. 143(2) dt.18.11.2016 turns out to be beyond the statutory period of six months from the end of the financial year in view of the revised return dt.16.11.2015. This period of six months has to be counted from 31.03.2016 therefore. We go by this analogy and find that this latter section 143(2) notice dt.18.11.2016 is not a valid notice since issued beyond the said period of six months.
Whether the Assessing Officer must issue afresh section 143(2) notice; going by the assessee or by the earlier notice issued before the assessee's revised return dt.16.11.2015 shall continue to hold the field, we find that the same is no more res integra as per learned co-ordinate bench’s decision [2017 (6) TMI 1344 - ITAT CHENNAI] is no more res integra.
Learned co-ordinate bench has held in other words that such an issuance of fresh section 143(2) notice is a condition precedent going by the honourable apex court land mark decision in Hotel Blue Moon case [2010 (2) TMI 1 - SUPREME COURT] We adopt the very reasoning mutatis mutandis to accept the assessee's additional substantive grounds 20 to 25. The impugned assessment stands annulled therefore. Ordered accordingly. All other rival pleadings in assessee's and Revenue’s cross appeals on merit are rendered infructuous as the necessary corollary.
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2021 (3) TMI 1207 - DELHI HIGH COURT
Withholding of refund u/s 241A - Non-finalization of tax demand - Period of limitation for sending intimation of withholding of refund - ITR being processed under Section 141(1) - notice under Section 143(2) of scrutiny assessment - HELD THAT:- Section 241A however does not prescribe the time limit within which order thereunder is to be made. The question which thus arises is, whether the order under Section 241A of the Act issued on 15th July, 2020, was within time, inasmuch as if it is beyond time, direction for refund will have to be issued and need to go into challenge to validity thereof will not arise. - In the facts of the present case, the order under Section 241A thus had to be before 31st March, 2020 and the order dated 15th July, 2020 is beyond that date.
For the writ Court to quash the order under Section 241A of the Act on the ground that no tax is due and thus question of refund likely to adversely affect the revenue does not arise, this Court has to conclusively hold that the petitioner has no tax liability in India. Once it is so held, there will be nothing left to be determined in the assessment underway pursuant to notice under Section 143(2) of the Act.
A determination of tax liability in a challenge to an order under Section 241A would set at naught the entire statutory scheme of assessment and appeals, ultimately to this Court, opening the doors to every assessee to whom a notice under Section 143(2) of the Act is issued, to approach this Court contending that the ITR filed and being processed under Section 143(1) of the Act admits / permits of no scrutiny and should be accepted. This Court would then be appropriating to itself the entire statutory mechanism of assessment, First Appeals and Appeals to Income Tax Appellate Tribunal and thereafter to this Court.
Rather, the AO and Principal Commissioner also, in exercise of powers under Section 241A, are concerned largely with the question of grant of refund likely to adversely affect revenue i.e that the tax, if ultimately found due, being not recoverable; though the AO and Principal Commissioner have in the impugned order given detailed reasons, but in our view were not required to, as the same is likely to prejudice the assessment underway. We thus clarify that the same will have no bearing in the final assessment.
Petition dismissed.
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2021 (3) TMI 1199 - ITAT ALLAHABAD
TDS u/s 194C OR 194J - Short deduction of tds - payment of Special Services - assessee in default u/s 201(1A) - assessee has claimed that these are payments of confidential/secret nature and the details of payees and other details cannot be disclosed and no income tax was deducted at source while making payments under this head as otherwise confidentiality would have been breached if the PAN and other details such as of payees etc are uploaded into the system while filing TDS returns - HELD THAT:- Only bald assertion made that the amount was spent for supply of pre-printed examination papers while there are no evidence on record before us to hold that these payments were made for the aforesaid purposes. Even affidavit from Secretary, Lok Seva Aayog, U.P.(UP Public Service Commission) averring the nature of expenses incurred has not been filed. It is equally true that the assessee has got allocation from UP State Government for expenditure for secret services.
The assessee has to maintain secrecy and confidentiality of these payments and hence it is claimed that no income-tax was deducted at source as otherwise it will breach the confidentiality once PAN of the payee is uploaded while filing TDS returns. The assessee is facing genuine hardship as on the one hand it is bound to maintain complete secrecy of payments as is mandated by State Government as the nature of expenses is claimed to be for supply of pre-printed examination paper, while on the other hand, the provisions of the 1961 Act requires the deduction of income-tax at source under Chapter XVII-B if the payment falls under the said provisions. The assessee has not obtained any certificate from the AO for non deduction of TDS on these payments as is mandated under the provisions of Section 197 of the 1961 Act. Provisions of Section 119 empowers CBDT to grant exemption from rigours of provisions of the 1961 Act to redress genuine hardship of the taxpayers. The assessee has also filed additional evidences before tribunal(pb/page 8-11) by way of allocation of budget of the assessee by State Government which also contains allocation for Secret Services Expenses, these evidences are vital to resolve the issue but the same requires verification by the authorities below. It is equally well settled that the duty of all taxing authorities to assist taxpayers so that they get reliefs which they are entitled to. Reference is drawn to Circular issued by the Central Board of Direct Taxes Circular No: 14 (XL-35) dated April 11, 1955.
We are of the considered view, that one more opportunity need to be granted to the assessee and the issue is restored to the file of the AO for fresh adjudication.
We clarify that all the contentions are kept open. The AO shall give proper and adequate opportunity to the assessee in accordance with principles of natural justice in accordance with law.
Default in deduction of income tax at source on payments made towards Rent and other charges - Assessee is claiming that these are payments towards house tax and water tax- HELD THAT:- As observed that apart from house tax and water tax payments, there were further payments as discovered by AO during proceedings conducted for submission of remand report to ld. CIT(A) during the appellate proceedings, which facts is stated by AO in its remand report that payments to the parties covered under the head ‘Rent and other charges ’ were also made from other heads of expenditure, on which no income tax was deducted at source.
Complete details of the payee, nature of payment, rent agreement details, premises hired details etc. are neither specified by AO in its remand report nor by ld. CIT(A) in its appellate order. Thus, complete facts are not emerging from the orders passed by the authorities below as the orders passed are cryptic in nature and we are of the considered view that the matter need to be restored to the file of the AO for fresh adjudication of the issue on merits in accordance with law. The evidences filed by assessee in its support shall be admitted by AO and adjudicated on merits in accordance with law. The AO is directed to pass speaking and reasoned order.
Invocation of provisions of Section 206AA - HELD THAT:- Since, we have already restored the issue back to the file of the AO for denovo adjudication of the issues concerning deduction of income-tax at source on payments made towards Suspense Service Expenses as well on Rent and other charges as above, since this issue is interlinked with the above issues, it will be appropriate that this issue is also restored back to the file of the AO for denovo adjudication on merits in accordance with law.
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2021 (3) TMI 1198 - ITAT MUMBAI
Disallowance of loss in share trading activity - Genuineness of loss claimed by the assessee - HELD THAT:- We notice from the record that in the first round of appeal, Co-ordinate Bench [2019 (6) TMI 1592 - ITAT MUMBAI] had noted that “as seen from the written submission before the CIT(A) also the assessee was referring to various documents placed before AO in proving the genuineness of the transactions. Neither the AO nor the CIT(A) examined or referred to these documents. Be that as it may, the fact remains that neither the AO nor CIT(A) examined these documents in its correct perspective, but carried away mere by the observations of SEBI and JPC in the group cases.” With the above observation, the case was remitted back to AO. But in the second round also, we notice that AO has given notices to assessee and called for information once again. AO observe that assessee has not substantiated the genuineness of the transaction and accordingly, he sustained the disallowance of loss. The Co-ordinate Bench has clearly observed that all the relevant information was submitted by the assessee, AO should have referred those information which was already available on record. If there is any short coming or any documents, which is not proper, AO should have discussed in his order before sustaining the disallowance. He has not discussed any merits of the case based on the information submitted by the assessee in the original assessment proceedings. AO simply completed the proceedings blaming the assessee without taking cognizance of the earlier direction from ITAT.
Even the Ld. CIT(A) dismissed the appeal filed by the assessee blaming the non-appearance of the assessee and its submission. The Ld. CIT(A) also not verified the genuineness of the documents filed by the assessee in the original assessment proceedings.we are inclined to accept the submission of Ld. AR. Accordingly, the grounds raised by the assessee are allowed.
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2021 (3) TMI 1197 - ITAT VISAKHAPATNAM
Revision u/s 263 - AO estimated the income at 8% on the cash deposits without examining source of each cash deposit - HELD THAT:- AO has verified the source of cash deposits and taken a conscious decision that the source of deposits made in the bank account was related to the turnover. The cash deposits made in the savings bank was duly verified by the AO. As discussed earlier, this case was selected for limited scrutiny for verification of deposits made in the savings bank account and the case was not converted into full scrutiny.
AO is not permitted to travel beyond the scope of the case for which it was selected, unless the case is being converted into full scrutiny with the approval of Chief Commissioner of Income Tax or Commissioner of Income Tax as the case may be, as per the instructions given by the Board to the field functionaries. Calling for the details of movable and immovable properties, unexplained investments and any other information not related to limited scrutiny amounts to travelling beyond the scope of scrutiny for which the case was selected.
AO acted within the scope of limited scrutiny and assessed the income, after verification of the details. The Ld.Pr.CIT intends to substitute his view in place of decision taken by the AO, which is not permissible in the guise of revision u/s 263. No other evidence was collected by the department to show that the assessee has understated the income.
As argued by the Ld.AR, inadequate enquiry is not the reason for taking up the case for revision u/s 263 as decided by the Tribunal in the case of M/s Naveena Rice Industries [2018 (7) TMI 2170 - ITAT VISAKHAPATNAM] relied upon by the assessee. Though the Ld.DR tried to distinguish the case of the assessee with the Naveena Rice Industries, we find that the observation of the Tribunal is squarely applicable to the assessee’s case also. In the cited case, this Tribunal held that though lack of enquiry is the reason or for taking up the case for revision, inadequate enquiry cannot be held to be erroneous and prejudicial to the interest of the revenue.
We hold that there is no error which is prejudicial to the interest of the revenue in the order passed by the AO u/s 143(3) dated 16.08.2016. Hence, we set aside the order of the Ld.Pr.CIT and allow the appeal of the assessee.
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2021 (3) TMI 1196 - ITAT DELHI
Jurisdiction of Assessing Officer u/s 120 - Transfer of case u/s 124 - jurisdiction of DCIT, Circle-3, Gurgaon and ACIT, Circle-13(1), New Delhi - HELD THAT:- The assumption of jurisdiction by DCIT, Circle-3, Gurgaon in AY 2012-13 is not free from doubt in the light of the undisputed fact that jurisdiction in other years was exercised by ACIT, Circle-13(1), New Delhi. Moreover, from perusal of the Paper Book filed by the assessee, it is obvious that the assessee had filed details before the Ld. CIT(A) on merits of the additions made by the Assessing Officer, alongwith supporting evidence. It is also clear that the Ld. CIT(A) had obtained Remand Report from the Assessing Officer and further that the assessee had submitted Rejoinder to the Remand Report of the AO. In view of the foregoing, it is obvious that the Ld. CIT(A) was in error in making observation at para 3.8 of his impugned appellate order dated 15.12.2016 that the appellant had not filed any written submissions on the issue of disallowances/ additions made by the AO.
Assessee had a legitimate expectation from the DCIT, Circle-3, Gurgaon, that the objection raised against the jurisdiction assumed by DCIT, Circle-3, Gurgaon will first be decided by the DCIT, Circle -3, Gurgaon, before he would proceed to make assessment. When the jurisdiction exercised by DCIT, Circle-3, Gurgaon, is not free from doubt; the jurisdiction of Ld. CIT(Appeals)-1, Gurgaon, who passed the impugned appellate order against which assessee has filed the present appeal, is also not free from doubt; because jurisdiction of CIT(Appeals) is related to jurisdiction of the Assessing Officer.
CIT(A) was in error in disregarding the submissions made by the assessee on mertis of the additions made in the assessment order; and in wrongly observing that the assessee had not filed any written submissions on the issue of disallowances / additions made by the Assessing Officer. In view of the foregoing, we are setting aside all the disputes raised in the present appeal before us, to the file of the Assessing Officer with the direction to pass fresh assessment order as per law. We direct the Assessing Officer to first decide the dispute raised by the assessee regarding the jurisdiction assumed by the DCIT, Circle-3, Gurgaon
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2021 (3) TMI 1194 - ITAT INDORE
Assessment u/s 153A - Addition on account of admission of additional income u/s 132(4) - addition made by the Ld. A.O based on the statement given u/s 132(4) of the Act and subsequently deleted by the first appellate authority - HELD THAT:- As during the course of assessment proceedings Ld. A.O did not refer the case to the Departmental Valuation Officer nor made any efforts to arrive on the variation in the book figures and value estimated at the project site and resorted to make the addition purely on the basis of statement. Ld. A.O also failed to take note of the fact that in the case of M/s S.V. Infra Developers till the time of search there was not a single bunglow that was completed for sale therefore no sale or any possession of house is handed over to any customer.
The volume of the material at site was also too small which cannot justify the undisclosed income of ₹ 5 crores. Ld. CIT(A) after appreciating the above stated facts concluded that the addition made was purely on the basis of the statement given u/s 132(4) of the Act and deserves to be deleted.
Since the impugned addition is purely made on the basis of statement u/s 132(4) of the Act without establishing any nexus with incriminating material found during the course of search, the finding of Ld. CIT(A) deleting the addition in the case of Shri Nitin Agrawal and M/s S.V. Infra Developers needs no interference and the same is confirmed.
Unexplained cash - panchnama cash was found from the residence of the assessee and from the office premises - CIT-A deleted the addition - HELD THAT:- Shri Nitin Agrawal is one of the key person controlling the various business. The department has taken the basis of statement of Shri Nitin Agrawal for making various additions which interalia included surrender on behalf of various business concerns so this is an undisputed fact that though there are different entities running under the business group but they all are inter connected and controlled by some common persons of which one is Shri Nitin Agrawal. In the reconciliation statement cash balance as per the books is stated at ₹ 87,82,341/-.
Revenue has not confronted this fact. The assessee has stated that the cash in hand found during the course of search from his residence was part of the cash in hand of the group. There is no contrary finding by Ld. A.O to the figures narrated in the reconciliation statement about the cash balance in books of business concern named therein. Under these given facts where the cash in hand available in books is much more than the cash found during the course of search and the same has been rightly explained in the reconciliation statement, we find no justification in the addition made by Ld. A.O for unexplained cash and Ld. CIT(A) has rightly deleted the addition and the finding is thus confirmed.
Unexplained jewellery - jewellery was found/ seized at the residence and locker of the assessee as per the panchnama drawn during the course of search action - HELD THAT:- From findings of Ld. CIT(A) we observe that he has rightly considered the wealth tax return submitted by the assessee during year 1991-92 and 1992-93 and also considered the Instruction No.1916 of CBDT dated 11.5.1994 and after referring to settled judicial precedents has confirmed the addition partly. Since the revenue authorities has failed to bring any other material contrary to the finding given by Ld. CIT(A) and considering the fact that the assessee has filed wealth tax and assessed as well as considering the limit of jewellery of 500 grms for female and 100 grams for male member provided in CBDT Instruction No.1916 dated 11.5.1994, we find no reason to interfere in the finding of Ld. CIT(A) duly supported by judicial precedence deleting the addition - Ground No.3 of the Revenue’s appeal dismissed.
Unexplained advance to Shri Lilwani family - HELD THAT:- As there was sufficient cash in hand with the assessee and its group concerns, secondly Ld. A.O has not provided opportunity of cross examination of the assessee with Shri Dinesh Lilwani before relying on the statement of Shri Dinesh Lilwani, thirdly Ld. A.O over looked the statements of Shri P. Raju and Shri Nitin Agrawal and gave only credit to the statement of Shri Dinesh Lilwani and fourthly the Ld.A.O failed to consider the fact that the case of the appellant for advance of loan to Shri Dinesh Lilwani is still pending in the court.Under these given facts, in our considered view Ld. A.O was not justified in making addition for unexplained advances.
Branded watches seized in search - HELD THAT:- A.O has not taken any step to bring on record the valuation of the watches found during the course of search which thus makes the addition merely on the estimated basis and same therefore have been rightly deleted by Ld. CIT(A) relying on settled judicial precedents.
Addition on account of foreign travel expenses - various documents were found about the foreign travel carried out by the assessee and his wife - HELD THAT:- As the assessee who is into the business of construction has conducted various foreign visits and expenses of the same were also debited in the books of accounts. Ld. A.O estimated the undisclosed expenditure at ₹ 2 lakh. We are however of the view that Ld. CIT(A) being fair to both the parties has rightly considered the issue and partly deleted the addition at ₹ 1 lakh which thus do not call for any interference.
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2021 (3) TMI 1193 - ITAT INDORE
Revision u/s 263 - addition u/s 56(2)(viib) - transaction of excess premium received from Non Resident companies - HELD THAT:- In the show cause notice issued, Ld. PCIT has only referred to the provisions of Section 56(2) stating that the excess amount received from two non resident companies on allotment of shares should be treated as income of the assessee u/s 56(2)(viib) of the I.T. Act: So the finding of Ld. PCIT is only to the effect that Ld. A.O should have examined the transaction of excess premium received from Non Resident companies which needs to be brought to tax u/s 56(2)(viib) - this finding of Ld. PCIT is factually incorrect and is not sustainable in law since the provisions of Section 56(2)(viib) of the Act are not applicable to the consideration received from Non Residents for issuing of shares.
DR was fair enough to accept this fact that Section 56(2)(viib) of the Act s only applicable to residents and not to Non Residents. Therefore since the very basis of issue of show cause notice u/s 263 of the Act is factually incorrect and the provisions of Section 56(2)(viib) of the Act has been wrongly interpreted by Ld. PCIT by directing the Ld. A.O to tax an amount under a section namely 56(2)(viib) for the consideration received for issue of equity shares which is not applicable to the Non Residents, the proceedings u/s 263 of the Act deserves to be quashed.
Whether the Ld. A.O has made sufficient enquiry with regard to the alleged transaction of allotment of equity shares to resident and non resident companies? - There was a specific enquiry from the Ld. A.O to which the specific reply along with supporting documents were submitted by the assessee during the course of scrutiny assessment proceedings itself. It can be safely concluded that the Ld. A.O had raised queries which were complied by the assessee. Considering these facts in totality, it can be safely concluded that the Assessing Officer made complete enquiry regarding share capital and share premium received from Non resident companies and also called for a report from Ld. TPO on the arms length price of this international transaction. It is a settled position of law that the powers under section 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i. e., the assessment order should be erroneous and prejudicial to the interests of the Revenue. By "erroneous" is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue.
Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous.
This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of the hon'ble High Court of Bombay in the case of CIT v. Nirav Modi [2016 (6) TMI 1004 - BOMBAY HIGH COURT]
In the instant case also Ld. A.O had considered various submissions of the assessee and taken a possible view. Therefore merely because Ld. PCIT did not agree to the opinion/information of the Ld. A.O who has conducted sufficient enquiry regarding the issue raised in this show cause notice issued by Ld. PCIT, provisions of Section 263 of the Act cannot be invoked in order to substitute his own information. It has been held in several decisions (few of them have been relied by the Ld. Counsel also) that if the Ld. A.O has made enquiry to his satisfaction and it is not a case of no enquiry then Ld. PCIT cannot assume the jurisdiction u/s 263 of the Act to again investigate or approach in a particular manner. - Decided in favour of assessee.
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2021 (3) TMI 1192 - ITAT MUMBAI
Disallowance u/s 40(a)(ia) - Non deduction of TDS - HELD THAT:- As the assessee had not deducted tax at source on the service tax component by following the CBDT Circular No. 4/2008 dated 28.4.2008 in that regard. We find that the ld CITA had rightly appreciated the same and directed the ld AO to delete the disallowance made u/s 40(a)(ia) of the Act for this sum.
Sub-contractor (labour charges), we find that the assessee had during the remand proceedings explained that he had deducted tax at source in respect of expenditure to the tune of ₹ 1,12,32,333/-. With regard to the remaining sum of ₹ 11,290/-, it was proved by the assessee before the ld AO that he was not required to deduct tax at source. We find that the ld CITA had rightly appreciated these facts and the same was also confirmed by the ld AO in the remand report. Accordingly the ld CITA rightly directed the ld AO to delete the disallowance u/s 40(a)(ia) of the Act to the tune of ₹ 48,16,981/-.
Legal and Professional fees, we find that the assessee had explained that out of disallowance of ₹ 1,16,715/- made by the ld AO, expenditure to the tune of ₹ 41,715/- was not liable for deduction of tax at source for which necessary documentary evidences were duly furnished before the ld AO in remand proceedings and assessee accepted for confirmation of disallowance of remaining ₹ 75,000/-.Accordingly, we find that the ld CITA had rightly deleted the disallowance in the sum of ₹ 41,715/- and rightly sustained the disallowance for ₹ 75,000/- u/s 40(a)(ia) of the Act.
Testing and Surveying Charges (labour contract charges), we find that the ld AO observed that the assessee had not deducted tax at source on payment made to Kuber Trading Co. to the tune of ₹ 10,00,000/- in respect of interior work. We find that the ld AO in the remand proceedings verified the fact that assessee had purchased material from Kuber Trading Co. for ₹ 14,36,045/- plus MVAT of ₹ 57,442/- thereon, which is not liable for deduction of tax at source u/s 194C of the Act. It was proved before the ld AO that only a sum of ₹ 1,17,476/-was debited to interior work labour charges for which due TDS compliance was made by the assessee. We find that this was duly appreciated by the ld CITA by rightly directing the ld AO to delete the disallowance of ₹ 10,00,000/- u/s 40(a)(ia) of the Act.
Consultancy Charges, we find that the ld AO had observed that tax was not deducted at source on payment of ₹ 9,69,573/- out of total expenditure of ₹ 29,64,463/-. We find that in the remand proceedings, the assessee proved that tax was duly deducted at source on the total expenditure of ₹ 23,97,633/-. In respect of ₹ 5,66,800/-, it was explained that tax is not deductible at source for ₹ 5,61,800/-, being the payment made to National Institute of Oceanography (Government Company) and similarly, tax is not deductible at source for ₹ 5000/- being payment made to PR Consultancy. It was further explained that remaining sum of ₹ 4,02,773/- was out of the purchase of material from Kuber Trading Co. of ₹ 14,93,487/- supra.
We find that the ld CITA on perusal of the remand report had rightly sustained the disallowance u/s 40(a)(ia) of the Act to the tune of ₹ 5,61,800/- being the amount paid to National Institute of Oceanography for want of submission of certificate for non deduction of TDS. Hence we do not find any infirmity in the said order of the ld CITA in respect of this issue.
All the aforesaid items were practically accepted by the ld AO in the remand proceedings by not making any adverse comments on the evidences submitted by the assessee. Hence when the ld CITA grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon’ble Madras High Court in the case of B Jayalakshmi vs ACIT [2018 (8) TMI 208 - MADRAS HIGH COURT] - Gound No. 1 raised by the revenue is dismissed.
Disallowance made on account of BMC expenses - verification of the ledger account of those expenses and bills submitted by the assessee, some of the bills were not in the name of the assessee nor in any of its project name - HELD THAT:- We find that the assessee had explained that he has various projects for which he had paid the charges to Bombay Municipal Corporation (BMC) by account payee cheques. Copy of receipts for the payment and relevant pages of the bank statements reflecting the payments made together with the copy of ledger accounts were duly furnished by the assessee in the remand proceedings.
As stated that the BMC raised the bill in the name of original landlord even though the original landlord sold the property or entered into development agreement. As per the agreement, the buyer is liable to pay all the BMC charges for the property purchased. This explanation was practically accepted by the ld AO in the remand proceedings by not making any adverse comments on the evidences submitted by the assessee. Hence when the ld CIT-A grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon’ble Madras High Court in the case of B Jayalakshmi vs ACIT [2018 (8) TMI 208 - MADRAS HIGH COURT] - Accordingly, the Ground No. 2 raised by the revenue is dismissed.
Disallowance on account of SRA Project expenses - HELD THAT:- We find that the assessee submitted evidences to prove the fact these expenses are included in the closing stock of work in progress and therefore addition made by the ld AO would result in double addition. We find that the ld CITA had given a categorical finding that the SRA project expenses are duly substantiated and supported by proper documents which was not controverted by the ld DR before us. We find that the ld CIT-A had duly appreciated the fact that this disallowance made by the ld AO would only result in double addition, on which we find no infirmity and accordingly order of the ld CITA is not interfered with. Hence the Ground No. 3 raised by the revenue is dismissed.
Levy of penalty u/s 271(1)(c ) - HELD THAT:- Once the quantum additions are deleted, then the penalty on those additions would have no legs to stand, which has been rightly deleted by the ld CIT-A. Accordingly, the appeal of the revenue challenging the deletion of penalty is hereby dismissed.
Penalty u/s 271(1)(c) on Disallowance of genuine expenditure incurred for the purpose of business u/s 40(a)(ia) - HELD THAT:- We find that the ld AO had made an addition towards personal expenses of ₹ 50,000/- on an estimated basis. It is well settled that there cannot be any levy of penalty on an estimated addition. Moreover, from the perusal of the quantum assessment order, we find that the ld AO had chosen not to initiate any penalty proceedings u/s 271(1)(c ) of the Act in respect of this addition, whereas while passing the penalty order, he has directly levied the penalty. On this ground also, the penalty levied deserves to be deleted and is hereby deleted.
Shifting of head of income i.e from income from house property shown by the assessee to income from business by not allowing 30% flat deduction for repairs among others - We find that the ld CIT-A had gone by the premise that the levy of penalty is automatic since the quantum addition is confirmed and had attained finality. We find that the assessee in the instant case had duly disclosed the rental income under the head income from house property in the return of income, which was sought to be shifted by the revenue under the head ‘ income from business’. Hence there cannot be any concealment of income or furnishing of inaccurate particulars of income that could be attributed on the assessee. We hold that there was absolutely no concealment of income or furnishing of inaccurate particulars of income by the assessee in the return of income as every detail thereon could be deciphered easily from the return itself. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in the case of Pricewaterhouse Coopers [2012 (9) TMI 775 - SUPREME COURT] - no hesitation in directing the ld AO to delete the penalty levied u/s 271(1)(c ) of the Act in respect of this addition.
Addition of Cash Payment to the retiring partner - addition based on loose papers - HELD THAT:- As the name of the brokers and the details of the property in respect of which brokerage paid was nowhere mentioned on the said impounded loose paper. We find that the ld. CIT(A) had categorically observed that the said impounded paper does not have any acceptable narration and do not bear the certificate of the assessee or any authorised person and they are merely in the nature of dumb documents having no evidentiary value and hence, cannot be taken as the sole basis for making the addition in the hands of the assessee. He has also recorded a finding that the ld. AO had neither in the assessment proceedings nor in the remand proceedings corroborated noting in the loose paper by bringing some cogent material on record and conclusively prove that the noting in the impounded paper reveal the unaccounted transaction of the assessee. We also find on perusal of the remand report of the ld. AO that the ld. AO had indeed accepted to the contentions of the assessee and that is the reason he had not drawn any adverse inference on the explanation furnished by the assessee in the remand proceedings. Hence, it could be safely concluded that the ld. AO had indeed accepted to the contentions of the assessee in the remand report.
Moreover, when the ld CIT(A) grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. Reliance in this regard has been rightly placed by the ld AR on the decision of Hon’ble Madras High Court in the case of B Jayalakshmi vs ACIT [2018 (8) TMI 208 - MADRAS HIGH COURT]. Accordingly, the ground No.4 raised by the Revenue is dismissed.
Addition made on account of differential net profit - HELD THAT:- From the perusal of the aforesaid remand report, it could be safely concluded that the ld. AO had not drawn any adverse inference against the explanations given by the assessee in the remand proceedings.
Hence, it could be safely concluded that the ld. AO had indeed accepted to the contentions of the assessee in the remand report. Moreover, when the ld CIT-A grants relief on the ground that in remand report, the ld AO had accepted to the contentions of the assessee, the revenue ought not to have preferred further appeal before us as there could not be any logical grievance for the revenue. B Jayalakshmi vs ACIT [2018 (8) TMI 208 - MADRAS HIGH COURT]. Accordingly, the ground No.5 raised by the Revenue is dismissed.
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2021 (3) TMI 1191 - ITAT MUMBAI
Exemption u/s 11 - cancellation of registration under section 12AA(3)/(4) - effective date of cancellation of registration - Authority to cancel the registration under section 12AA(3)/(4) - Whether power of cancellation of registration vests in the authority who has the jurisdiction to grant registration? - Principal Commissioner of Income-Tax-17 cancelling the registration of the Appellant - HELD THAT:- Commissioner had the duty, much more than the power, to cancel the registration under section 12A upon the fact of admitted violation of section 13(1) coming to his notice, and that such cancellation had to effective from the date on which the disability for exemption under section 11 is attracted (which is not ascertained on the facts of this case), the date of this fact coming to the notice of the Commissioner (i.e.11th March 2015), from the date on which the first show-cause notice was issued (i.e. 13th March 2015), or,at the minimum, from the date on which hearing in this regard was concluded and the order thereon was reserved (i.e. 20th March 2015).
We see no reasons to take any other view of the matter than the view so taken by the coordinate bench in the case of Navajbai Ratan Tata Trust vs PCIT[2021 (3) TMI 1146 - ITAT MUMBAI]. These observations will apply mutatis mutandis in the present case as well. Respectfully following the same, we hold that the impugned order cancelling registration granted to the assessee trust will have effect from the date on which hearing, on the first show cause notice requiring the assessee to show cause as to why registration under section 12A not be cancelled, and the assessee formally acquiesced to the said notice 10.03.2015, i.e on 20th March 2015.
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