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Income Tax - Case Laws
Showing 1 to 20 of 790 Records
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2023 (1) TMI 1476
Validity of orders passed u/s 144C without compliance with the directions of the Dispute Resolution Panel (DRP) - HELD THAT:- As under section 144C(13) AO is expected to give effect to the directions of the learned DRP. If the AO did not comply with the directions of DRP, whatsoever may be the reason, may be oversight or due to lack of or improper understanding of the directions, the proper course is to seek the AO or the superior authorities, the compliance with the order of the DRP, but not to quash the entire proceedings thereby nullifying the entire exercise conducted by DRP. What is applicable for non-compliance with the directions of the Tribunal, if any by AO would equally be made applicable to the directions of the DRP.
With this view of the matter, we are inclined to follow the decision of Yokogawa India Ltd [2022 (3) TMI 1563 - ITAT BANGALORE] matter needs to be remanded to the file of the AO in case there is non-compliance with the directions of DRP. We, therefore, find it difficult to direct the AO to delete the impugned addition. Instead, while respectfully following the view taken in Yokogawa India Ltd., [2022 (3) TMI 1563 - ITAT BANGALORE] and M/s. Apollo Health Street [2014 (12) TMI 515 - ITAT HYDERABAD] we set aside the final assessment order and remand the issue to the file of AO/ TPO to pass appropriate order. Appeal is treated as allowed for statistical purpose.
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2023 (1) TMI 1475
Applicability of provisions of Section 167B - Assessee agitated against the action of the AO in determining the status of the assessee as Association of Person (AOP) as against Artificial Juridical Person (AJP) - HELD THAT:- The issue has been decided in the case of M/s Anand Educational Society [2018 (9) TMI 2156 - ITAT VISAKHAPATNAM] wherein the Tribunal following its earlier order in the case of Vidyodaya Educational Society [2018 (4) TMI 2007 - ITAT VISAKHAPATNAM] held that once the society is registered under the Societies Registration Act the applicability of maximum marginal rates u/s 167B of the Act would not arise.
Thus hold that the provisions of section 167B have no application to the Assessee and the income of the assessee cannot be taxed at maximum marginal rates.
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2023 (1) TMI 1472
Reopening of assessment - Reason to believe - change of opinion - applicability of section 43CA(3) has got violated as the condition that the amount of consideration or part thereof should have been received by modes other than cash was not satisfied - HELD THAT:- As gone through the annexures to the petition, to conclude that it is a clear case of "change of opinion"; no specific reasons are given, or discovery of new material is mentioned in the reasons to show a failure on the part of the assessee to disclose.
The petitioner has fully and truly disclosed all material facts necessary for its assessment, he has no further duty to disclose as there was nothing embedded. Inference of law on the given facts is for the Assessing Officer.
In the present case, a query was raised with regard to the sale of the shop and the details called for as can be evinced from the letter dated June 26, 2015. The two letters with their enclosures attached to the petition evince that the queries were answered by the petitioner.
In our view, the notice in the present case is a review of the earlier decision based on a change of opinion. Decided in favour of assessee.
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2023 (1) TMI 1471
Validity of reopening of assessment - approval taken for triggering the reassessment proceedings is not in accordance with Section 151 - HELD THAT:- The issue raised in the instant petition also obtains in Twylight Infrastructure Pvt. Ltd.[2024 (1) TMI 759 - DELHI HIGH COURT]
Accordingly, issue notice. Notice on behalf of the respondent/revenue accepted.
Counter-affidavit will be filed within the next four weeks. Rejoinder thereto, if any, be filed before the next date of hearing.
List the matter on 23.03.2023.
As noticed in Twylight Infrastructure, since the issue involved goes to the root of the jurisdiction of the concerned authority, proceedings under Section 148 of the Act shall remain stayed, till further directions of the Court.
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2023 (1) TMI 1468
Undisclosed cash credit u/s 68 - assessee has failed to prove the genuineness of transaction and creditworthiness of the subscribers - Bogus share capital issued by the assessee company - CIT(A) considering the entire details on record observed that all the share subscribers were group entities and that the money was also received by the appellant from them even on earlier occasions also and further that the creditworthiness and identity has been accepted by the AO in the earlier years deleted addition - only contention raised by the AO was that the directors did not appear for personal examination - HELD THAT:- CIT(A) after examining all the documents and relying upon the judicial decisions observed that merely because the directors did not appear before the AO, that itself, was not sufficient enough to hold that the entire transaction was bogus. The \CIT(A) considered the relevant documents on record and also considering that the share subscriber companies were having sufficient net worth to invest in the assessee company has deleted the addition so made by the AO.
Assessee has further submitted that even otherwise, there was no doubt / suspicion raised by the AO either about the identity or of the creditworthiness of the share subscribers. He, in this respect, has submitted that the assessee company, during the year, had received share capital from four companies out of which three companies were group concerns of the assessee company and the fourth company i.e. Fort Projects Pvt. Ltd was a reputed company of Kolkata engaged in the profession of real estate developer/builder. That the said company i.e. Fort Projects Pvt. Ltd had a net worth and profits/turnover in millions of rupees. That even in the earlier years, the share application money was received by the assessee from the said company which was accepted by the Department.
For Nortex Reality Ltd., was group company of the assessee company and the company’s net worth and profits/turnover was also in millions of rupees. The company has furnished all the details in respect of notice u/s 133(6) of the Act. That the company was also enjoying bank overdraft facility and that the Assessing Officer in the remand report has not made any adverse comment against the said company.
For Hope Enterprises Pvt. Ltd.there was no doubt about the identity of the said company. The company has duly filed the response to the notice u/s 133(6) of the Act. The share application money received by the aforesaid group entities by the assessee company in the earlier years has been accepted by the Department.
For Poddar Projects Pvt. Ltd. the Income Tax Office of the Department was run in the hired building owned by the Poddar Group. He, therefore, has submitted that there was no question of suspicion about the identity and creditworthiness, not only of the assessee company but also its group companies.
Thus no reason to interfere with the order of the CIT(A) and the same is accordingly upheld. The appeal of the Revenue is hereby dismissed.
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2023 (1) TMI 1464
Income deemed to accrue or arise in India - Absence of business connection and Permanent Establishment (PE) in India - assessee, a non-resident corporate entity, is incorporated in the United Kingdom (UK) - HELD THAT:- As respectfully following the consistent view in assessee’s own case [2021 (10) TMI 1023 - ITAT DELHI] and [2022 (2) TMI 1058 - ITAT DELHI] we decide these grounds against the assessee by holding that the assessee has business connection and PE in India. These grounds are dismissed.
Attribution of profit to PE at 25% of the total turnover - As decided in assessee’s own case in past assessment years, we hold that 15% of the booking fees should be attributed to the PE in India.
Disallowance of various expenses, including distribution expenses/distributors fee while computing the profit of the PE - While deciding identical issue in past assessment years, the Tribunal has held that 100% deduction of distribution expenses/distributors fee has to be allowed. Whereas, in respect of all other expenses, 70% deduction has to be allowed.
Allowance of head office expenses u/s 44C - While deciding identical issue in assessee’s own case in assessment year 2016- 17 [2022 (2) TMI 1058 - ITAT DELHI] remit this issue to the file of the AO for allowing the correct claim of the head office expenditure to the assessee in the light of the details/information/ documents already on record and which he may require the assessee to furnish before him - Ground is allowed for statistical purposes.
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2023 (1) TMI 1463
Assessment u/s 153A - Undisclosed income - Credits Transferred from Nagaland based entities - sufficient incriminating material found n search or not? - HELD THAT:- As AR submitted that in the absence of any incriminating material on record, no such additions could have been made by AO. This plea could not be accepted since this is not a case wherein no incriminating material has been found. Rather, it is the finding of CIT(A) that several incriminating materials were seized which include blank letter head of Nagaland based persons / entities, blank cheques, notes / diaries containing details of payments received and transferred. The evidence relating to unexplained investment made in cash towards purchase of immoveable properties was also seized. Thus, this is a case where sufficient incriminating material has been found by investigation team which indicates undisclosed income of the assessee - Decided against assessee.
Best judgement basis u/s 144 - As alleged by assessee no notice u/s 143(2) was issued - Assessment Proceedings for AY 2018-19 - HELD THAT:- As it was to be held that none of the conditions for invoking jurisdiction u/s 144 was satisfied by Ld. AO which would vitiate the assessment proceedings. Further, the assessee has filed valid return of income and no notice u/s 143(2) has ever been issued before making assessment. The non-issuance of notice u/s 143(2), in non-curable defect and therefore, assumption of jurisdiction and subsequent order passed u/s 144 becomes bad-in-law. The case laws as cited above clearly support the legal ground raised by the assessee. Therefore, we hold that the assessment order passed for this year fails on legal grounds and the consequential additions made therein become unsustainable. We order so. This being so, no further adjudication is required in the appeal for AY 2018-19. The assessee’s appeal stand allowed on this ground alone.
Addition based on statements recorded by investigation wing during the course of search operations from various persons - HELD THAT:- The pre-existing statements recorded by the Investigation Wing could not form the sole basis of assessment. It could also be seen that Shri G.K. Rengma retracted the statement vide affidavit dated 01.04.2019 wherein he clarified that the statement was recorded incorrectly. The said retraction was supported by the audited financial statements of Shri G.K. Rengma as placed on record. The total turnover of Shri G.K. Rengma as reflected in these financial statements is much higher than the figures recorded in the statement. Under these circumstances, the third-party statements recorded from Shri G.K. Rengma as well as from other persons would lose evidentiary value. The statements of remaining persons i.e., land owners / various other contractors have never been independently examined by Ld. AO. The copies of statement were never confronted to the assessee and no opportunity of cross-examination was ever provided to the assessee. Accordingly, the ratio of decision of Hon’ble Apex Court in Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] would apply to the facts of the case and support the case of the assessee. Considering the same, no much weightage could be given to such statements and the same, on standalone basis, would not be sufficient to support the impugned additions.
Addition under provisions of Sec.68 or 69 or 69A to 69D - as argued additions have been made merely on the basis of surmises, conjectures and on borrowed satisfaction without specifying the relevant sections under which additions have been made - HELD THAT:- The onus of the assessee has to remain confine to the extent of credits received by the assessee in his own books of accounts and not any further. To hold any contrary position, Ld. AO must establish this fact otherwise no such debits / credits appearing in bank accounts of other parties could be deemed to be the income of the assessee. The assessee’s onus u/s 68 in respect of entries in books / bank accounts of other persons is only secondary i.e., consequential upon the successful discharge of the primary onus by the A.O of establishing the assessee to be the actual owner of the books of account / bank accounts held in the names of other persons. This position has been held by Hon’ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmull [1972 (9) TMI 9 - SUPREME COURT].Therefore, the credits appearing in the other bank accounts could not be held to be income of the assessee.
Adjudication on Merits - Credit Entries Received from Nagaland bases entities / individual - HELD THAT:- As we find that the debit / transfer entries aggregating to Rs.243.19 Crores have been treated to be the assessee’s income on the allegation that assessee’s unaccounted income has been routed through these accounts for the benefit of group as a whole. However, in para 7.10, we have already taken a position that the credit transfer received by the other family members and group concerns could not be assumed to be assessee’s undisclosed income since it is nowhere been established by the lower authorities that the assessee was de-facto owner of either Nagaland based bank accounts or the owner of bank accounts of various recipients. The other family members and group concerns of the assessee were separate Income Tax assessee and subjected to separate assessment. Therefore, the credit received in those accounts could not be held to be the assessee’s income. Under these circumstances, the assessee’s onus would remain confine to explain the credit received by it in his own bank accounts. Further, the assessment proceedings for AY 2018-19 have already been quashed by us on legal grounds. Therefore, at the outset, the addition, to that extent, could not be sustained in the hands of the assessee.
Assessee’s onus to prove the ingredients of Sec.68 with respect to unsecured loan received from Shri G.K. Rengma and M/s Excellence Associates - Undisputedly the transactions have taken place through banking channels. On the basis of all these documentary evidences, it could be said that the requisite onus as required to be discharged u/s 68 was duly discharged by the assessee and it was the onus of the revenue to dislodge the same - upon perusal of orders of lower authorities, we find that no cogent material or evidences are on record to dislodge the claim of the assessee rather the additions are based more on allegations, surmises, conjectures and mere suspicion. In such a case, these amounts could not be considered to be the assessee’s undisclosed income. We order so. In the result, the addition to the extent of Rs.5,44,90,000/- is sustained under this head and the balance additions stand deleted. The corresponding grounds raised by the assessee in all the years stands partly allowed.
Cash deposit in the bank accounts of the assessee - Since the assessee group has incorporated the alleged cash payment of Rs.16.10 Crores for purchase of immoveable properties in these cash flow statements, the separate addition made to that extent would also not be sustainable. Even otherwise, the properties have not been purchased by the assessee rather this addition is subject matter of consideration in other family members / entities which are separate taxable entities and therefore, the addition for those entities would not be sustainable in the hands of the assessee.
Other Credit Entries in Bank Account of the assessee and other family members / entities - Since the assessment for AY 2018-19 has been quashed by us, the additions to that extent are otherwise not sustainable. The remaining credit entries for Rs.353.64 Lacs pertain to AYs 2012-13 & 2017-18. Out of this amount, the assessee has identified amount of Rs.88.50 Lacs being the entries which are lacking complete details / supporting evidences. The remaining entries are either not in the nature of income and a part of these entries has already been disclosed under IDS 2016. Few of the entries have already been disclosed in the Income Tax Returns of the assessee. The complete details of these entries have been placed by the assessee on page numbers 58 and 59 of Paper Book No.3A. We have perused the same. We find that all the other credit entries are in the nature of maturity proceeds of LIC, Chit money received by the assessee, directors loan withdrawn, mutual funds proceeds from UTI, refunds etc. These entries are not in the nature of assessee’s income. Therefore, the additional amount of Rs.88.50 Lacs as worked out by the assessee is found to be correct and therefore, sustained in the hands of the assessee. The remaining addition stands deleted since the same is not the in nature of income.
Credit for income disclosed under IDS 2016 has not been given to the assessee - We find that this credit was not given in the absence of requisite declarations / certificates forthcoming form the assessee. The assessee has now placed all these documents in the paper book which has been detailed in Table 35 of written submissions. Further, the assessee has already considered such declaration while working out additional income which has also been accepted by us. Therefore, the assessee is left with no grievance on this account.
Non consideration of additional evidences / documents as filed by the assessee before Ld. CIT(A) on 15.03.2021 and 16.09.2021 - Since, we have substantially accepted the working of the assessee which has been considered after incorporating all these evidences, the assessee is left with no grievance on this issue. The remaining grounds are either general or consequential in nature which does not require any specific adjudication on our part.
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2023 (1) TMI 1462
Eligibility of exemption as per section 10(2A) - share of profit received from the partnership firm - assessee (LLP) is deriving income from business in the form of running of plant and machineries and share of profit from partnership firm - HELD THAT:- Assessee (LLP) is a partner in M/s. M.S. Enterprises and assessee has claimed exemption u/s 10(2A) of the Act on the share of profit received from M/s. M.S. Enterprises. The section 10(2A) of the Act grants exemption to a person being a partner of firm which is separately assessed as such, his share in the total income of the firm. The firm has been defined in section 2(23) of the Act, which includes LLP also. The Act is very clear that the LLP is to be treated as a firm. A firm can be a partner in other partnership firms. There is no restriction in the income tax Act for becoming partner by firm in other partnership firms. The assessee is a LLP and has received share of profit from other partnership firm which has been claimed as exempt income.
As relying on case of Radha Krishna Jalan [2007 (8) TMI 42 - HIGH COURT , GAUHATI] we hold that the assessee is eligible for exemption u/s 10(2A) of the Act from the share of profit received from the partnership firm. No much weightage on the case law relied by the ld. DR. Accordingly, allow the appeal of the assessee.
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2023 (1) TMI 1456
Exemption u/s 11 - requirement of filing of audit report and income tax return by the trust or institutions registered u/s 12A - CPC while processing u/s 143(1)(a) denied the said exemption on account of two reasons; firstly the return of income was not filed before due date as prescribed u/s 139(4) of the Act and secondly audit report on Form 10B not uploaded before due date prescribed under the Act - HELD THAT:- As per Circular issued by CBDT on 23.04.2019 giving clarification with regard to time allowed for filing of return of income subsequent to insertion of clause (ba) in sub-section 1 of section 12A CBDT has issued and while dealing with this issue, the returns filed within the time allowed u/s 139 of the Act have been directed to be accepted for the purpose of considering benefit of deduction u/s 11 of the Act. Now, since only section 139 of the Act has been mentioned and does not specify whether it is about u/s 139(1) of the Act or section 139(5) of the Act, the view beneficial to the assessee needs to be accepted and, since section 139(1) and section 139(5) are part of section 139 only and in this section 139 and sub-section (5) provides the mechanism to file a belated return, therefore, for A.Y 2018-19, even if the assessee files the return before the last date of filing of belated return the same should be treated as due compliance to section 12A(1)(ba) of the Act.
For the year under appeal, the belated return could have been filed before 31.03.2019, and since the assessee has filed the return on 15.11.2018, therefore, considering the directions of CBDT Circular dated 23.04.2019, which are binding on the Revenue authorities, we are of the view that the assessee has fulfilled the conditions provided under sub-clause (ba) of section 12A(1) of the Act and has filed the return of income within the time allowed.
Filing the belated audit report on form 10B - As in the given facts and circumstances and respectfully following the judgment of Sarvodaya Charitable Trust [2021 (1) TMI 214 - GUJARAT HIGH COURT] we are of the considered view that since the case of assessee is for A.Y 2018-19 and CBDT came up with a circular dated 23.04.2019 specially for A.Y 2018-19 providing that return of income to be filed within the time allowed u/s 139 of the Act, the assessee has complied with the conditions provided in sub-clause (b) and (ba) to section 12 and there is no dispute at the end of the revenue authorities that the assessee is carrying on charitable activities, for which it has been granted registration u/s 12A of the Act, the benefit of section 11 and 12 should be given to the assessee and deductions claimed by the assessee are, therefore, allowed. Thus, Ground Nos.1 to 4 of the assessee are allowed.
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2023 (1) TMI 1455
Completion of the assessment in the name of the deceased assessee without bringing on record his legal heirs - HELD THAT:- Scrutiny proceedings in the case of the assessee were initiated vide notice dated 01/08/2012, issued under section 143(2) of the Act. Thereafter, notice under section 142(1) of the Act was issued along with the questionnaire. In response thereto, assessee’s wife vide letter dated 26/06/2013, informed the AO that the assessee expired on 17/04/2013, due to renal failure. Assessee’s wife also expressed her inability to respond to queries and produce the documents as required vide aforesaid notice.
It is evident from the record that thereafter neither the legal heir of the assessee was brought on record nor the AO issued statutory notices on the legal heir seeking any information. The above aspect becomes more evident from the fact that the assessment was concluded ex parte under section 144 of the Act and in column 11 at page 1 of the assessment order ‘no attendance’ is mentioned against the date(s) of hearing.
AO also proceeded to pass the assessment order dated 14/03/2014, under section 144 of the Act in the name of the deceased assessee, despite being informed vide letter dated 26/06/2013, about the fact that the assessee expired on 17/04/2013. Thus, the very fact that the assessment has been concluded in the name of a deceased person renders the assessment order to be null and void - It cannot be disputed that the assessee died before the proceedings for assessment were completed. Therefore, it was incumbent u/s 159(2) of the Act on the AO to bring the legal heir of the deceased assessee on record and proceed further. Since the same was not done by the AO, therefore the assessment order is void ab initio. Accordingly, the assessment order passed in the name of the deceased assessee is set aside.
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2023 (1) TMI 1454
Validity of order of assessment passed u/s 143(3) r.w.s. 144B - non considering the reply submitted by the petitioner to the show-cause notice - HELD THAT:-We have no reason to disagree with the arguments so advanced, as the reply to the show-cause notice, unless and until, considered in its entirety, would render the opportunity so granted to the petitioner, quite illusory. Principles of natural justice would certainly be said to have been violated, if a proper consideration was not accorded to the documents, and the response in its correct perspective.
It goes without saying that in case, the documents filed by the petitioner were not legible, the petitioner could have been asked to furnish legible copies of the same, instead of rushing through the matter for purposes of passing the order impugned.
AO might be constrained to pass the orders of assessment, keeping in view the period of limitation for passing such orders, yet the same cannot be upheld, in violation of principles of natural justice, writ large on the face of such order of assessment.
We set aside the order impugned and all consequent actions based thereupon. AO will pass fresh orders, after considering the reply and the documents, legible copies whereof would be furnished by the petitioner within one week from today.
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2023 (1) TMI 1441
Reopening of assessment u/s 147 - improper service of notice - process of service of notice by affixture - HELD THAT:- In the case on hand there is no any evidence of any independent person having been associated with identification of place of the assessee, local person of area where the place of the assessee to be served is suggested are to be associated to identify the place of the assessee and such report may not be prepared by the process server and other persons sat in their office without involving local person of area. For obvious reasons it is very much necessary that local persons of the area are to be associated in the process of service of notice by affixture.
The Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Kishan Chand [2009 (11) TMI 535 - PUNJAB AND HARYANA HIGH COURT] affirmed the decision of the Tribunal in holding that resort to affixture could not be straight away taken without taking other modes of service.
In the case on hand also the AO except sending the notice through Speed Post in the month of March, 2018 no efforts have been made to serve notice u/s 148 of the Act on the assessee through other modes. Since the notice returned un-served the AO could have sent notice through notice server for service of notice on the assessee which process was not followed and at the fag end of the due date for completion of assessment i.e. in December, 2018 the AO chose to serve the notice by way of affixture on 4.12.2018 and complete the assessment immediately on 06th December, 2018 not even giving time for the assessee to file return of income in response to the said notice even though the said notice specifies filing of return within 30 days of time from the date of service of notice. Decided in favour of assessee.
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2023 (1) TMI 1438
Broken period interest paid on purchase of securities - entitlement to claim deduction of interest paid on purchase of securities constituting stock for the broken period till the date of acquisition in terms of Section 37 - whether interest paid by the assessee on purchase of securities constituting stock-in-trade but paid for the broken period is allowable as a deduction? - HELD THAT:- Revenue has accepted the fact that respondent had been holding the securities as stock-in-trade. Circular No. 665 dated 05.10.1993 of the CBDT has clarified the decision of the Supreme Court in Vijaya Bank Ltd.[1990 (9) TMI 5 - SUPREME COURT] CBDT has clarified that where the banks are holding securities as stock-in-trade and not as investments, principles of law enunciated in Vijaya Bank Ltd. would not be applicable.
Therefore, CBDT has clarified that assessing officer should determine on the facts and circumstances of each case as to whether any particular security constitute stock-in-trade or investment taking into account the guidelines issued by Reserve Bank of India from time to time.
It is in the above back drop that Tribunal has held that the respondent had purchased securities to hold them as stock-in-trade. Therefore, interest paid on such securities would be an allowable deduction.
We are in agreement with the finding returned by the Tribunal. That apart, this is a finding of fact rendered by the Tribunal and in an appeal under Section 260A of the Act, we are not inclined to disturb such a finding of fact, that too, when the legal position is very clear. Decided in favour of assessee.
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2023 (1) TMI 1437
Validity of reopening of assessment - As alleged approval for reopening the assessment was granted in a mechanical manner - HELD THAT:- On perusal of the order of the Tribunal in assessee’s own case for the assessment year 2010-11 [2022 (10) TMI 1154 - ITAT DELHI] Tribunal after considering various judgements held that there is non-application of mind by the AO while filling up the proforma for obtaining the approval from Commissioner u/s 151 of the Act and the ld. CIT also has granted approval in a mechanical manner.
Tribunal observed that in the Form for recording the reasons for initiating proceedings u/s 148 for obtaining approval of the Pr. CIT, column 7 i.e. the provisions under which the re-opening was sought for are applicable has been mentioned as section 147(b) and the provisions of section 147(b) are non-existent in the statute book for the assessment year 2010-11. Therefore, the co-ordinate bench of the Tribunal came to the conclusion that there is complete non-application of mind by in obtaining the approval from Pr. CIT and in similar manner the approval was granted by Pr. CIT.
The decision taken in Shyam Products Private Limited [supra] applies mutatis mutandis of the appeal of the assessee. Thus, the re-assessment order u/s 143(3) r/w/section 147 is quashed and Ground of appeal of the assessee is allowed.
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2023 (1) TMI 1435
Addition u/s 68 - share capital/ share premium treated as unexplained cash credits - CIT(A) deleted addition - HELD THAT:- CIT(A) did not quantify the cash amount deposited in the Lenders bank accounts before giving loan to the assessee company. The said source of cash deposit is from assessee company or from Lenders, has not been explained by CIT(A) in his order. Just to say that 2 or 3 credits followed by equivalent debit, is not sufficient.
CIT(A) has to examine that such cash deposit is from genuine sources and it is not the cash of the assessee-company. Therefore, we note that source has not been explained properly.
CIT(A) has given combined findings in respect of share capital/share premium and unsecured loans. Therefore, we are of the view that this issue should also be remitted back to the file of the assessing officer to examine the source of cash deposit in respect of unsecured loan.
The scope of Section 68 is not confined to the issue of deposits or loan credit but encompasses of all such credits whose nature remains unexplained.
Therefore, we deem it fit and proper to set aside the order of the CIT(A) and remit the matter back to the file of the assessing officer to adjudicate the issue afresh on merits and the assessee is also directed to furnish relevant documents and evidences to prove the source of cash deposit. For statistical purposes, ground no.2 raised by the Revenue is treated as allowed.
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2023 (1) TMI 1434
Disallowance u/s 14A r.w.r. 8D - Mandation to record satisfaction for invoking Rule 8D - HELD THAT:- We had an occasion to consider an identical issue in Keshoram Industries Ltd.[2022 (1) TMI 995 - CALCUTTA HIGH COURT]wherein it was pointed out as to how the power u/s 14A[2] read with Rule 8D could be invoked and it was held that the assessing officer needs to record satisfaction that having regard to the kind of the assessee suo moto disallowance u/s 14A was not correct and it will be in those cases where the assessee in his return has himself apportioned but the assessing officer did not accept the apportionment. In any event, the assessing officer will have to record its satisfaction to the said effect.
On perusal of the assessment order passed u/s 143[3] of the Act we find that the assessing officer was not recorded any satisfaction for invoking Rule 8D of the Rules. Decided in favour of assessee.
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2023 (1) TMI 1432
Unexplained money u/s. 69A - cash deposits during demonetization period - taxation u/s. 115BBE - HELD THAT:- As there is no blanket prohibition on receiving demonetized currency notes up to 31.12.2016, we are of the considered view that, when the assessee has explained reasons for accepting specified bank notes even after 08.11.2016, AO ought to have accepted the explanation furnished by the assessee when he is not disputing the nature of business and source for cash deposits. In our considered view, what is relevant to decide the issue is, whether the assessee is able to explain source for cash deposits or not. In case, the assessee explains the source for cash deposits, even though there is certain violation of any other Acts or Rules, the AO cannot make addition towards cash deposits.
We further noted that a similar issue has been considered in the case of ITO vs Sri Tatiparti Satyanarayana [2022 (3) TMI 896 - ITAT VISAKHAPATNAM] where the Tribunal after considering cash deposits out of specified bank notes after 08.11.2016 and also by considering Specified Bank Notes (Cessation of Liability) bill, 2017 held that the AO is incorrect in treating receipt of specified bank notes from cash sales as illegal and thereby, by invoking provisions of section 69 of the Act.
AO as well as the CIT(A) has erred in sustaining addition towards cash deposits to bank account u/s. 69 of the Act and also levied tax u/s. 115BBE of the Act. Hence, we direct the AO to delete addition made towards cash deposits u/s. 69 of the Act. Appeal filed by the assessee is allowed.
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2023 (1) TMI 1431
Validity of the Transfer Pricing Order passed in the name of a non-existent entity/entity has been merged - HELD THAT:- As relying on Fedex Express Transportation and Supply Chain Services (India) Private Limited [2019 (7) TMI 1554 - ITAT MUMBAI] and Boeing India Private Limited [2020 (8) TMI 410 - ITAT DELHI] Transfer Pricing Order and the Draft Assessment Order have been passed in the name of non-existent entity. Therefore, respectfully following the above decisions of the Tribunal, we hold that the Draft Assessment Order framed u/s 144C(1) of the Act in the name of non-existent entity is void-ab-initio, making all subsequent proceedings nonest in the eyes of law. Accordingly, the Final Assessment Order is set aside. Assessee appeal allowed.
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2023 (1) TMI 1429
Validity of an assessment order passed u/s. 143(3) by an AO having no jurisdiction - assessee contended that the notice issued by ITO, Ward-1(3), Raipur, was invalid as the jurisdiction at the time was vested with ITO, Ward-2(3), Raipur
HELD THAT:- AR had on the basis of supporting documentary evidences apparently substantiated his claim that the territorial jurisdiction over the case of the assessee at the relevant point of time was vested with the ITO, Ward-2(3), Raipur, therefore, there is substance in his claim that in the absence of any notice u/s. 143(2) having been issued by the said A.O within the stipulated time period i.e. latest by 30.09.2013, the assessment order thereafter passed by the ITO, Ward-3(1), Raipur u/s. 143(3) of the Act, dated 30.03.2015 cannot be sustained and is liable to be vacated on the said count itself.
As the assessee in order to drive home his aforesaid claim had placed on record certain fresh documents, viz. municipal receipts, copy of sale deed and affidavit of the partner of the assessee firm, neither of which were there before the lower authorities, therefore, considering the fact that contradictory claims as regard vesting of jurisdiction over the assessee’s case at the relevant point of time i.e. on 19.08.2013, have been raised before me both by the assessee and the revenue, which would require a foolproof verification in the backdrop of the aforesaid documents, thus, the matter in all fairness requires to be revisited by the A.O.
Thus, in terms of our aforesaid observations for the aforesaid limited aspect i.e. for verifying as to whether or not the territorial jurisdiction over the case of the assessee firm as on 19.08.2013 was vested with the ITO, Ward-1(3), Raipur i.e. the A.O who had issued notice u/s. 143(2) of the Act dated 19.08.2013, thus, restore the matter to the file of the A.O. In case it is found that the territorial jurisdiction over the case of the assessee on the date of issuance of notice u/s. 143(2) on 19.08.2013 was not vested with the ITO, Ward-1(3), Raipur, then the assessment so framed u/s.143(3) of the Act dated 30.03.2015 would stand vacated.
As observe, that the A.O in the course of the set-aside proceedings shall before arriving at a final conclusion as regards the territorial jurisdiction over the case of the assessee at the relevant point of time i.e. on the date of issuance of notice u/s. 143(2) dated 19.08.2013, keep in view the observations recorded by me hereinabove. Accordingly, the matter is restored to the file of the A.O for the aforesaid limited purpose. Thus, the additional ground of appeal raised by the assessee is allowed for statistical purposes.
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2023 (1) TMI 1428
Addition of lease rental accrued - addition of lease rental accrued did not book - AR submitted that the assessee has stopped business during the year under consideration - HELD THAT:- We noticed the auditor has given very same note in his report given for the year ending 2000 & 2001. Accordingly, there may be merit in the submission of AR that the note given by auditor during the year under consideration may be a case of inadvertent error committed in inclusion of the note relating to earlier years.
This view is further reinforced for the fact that the agreement with M/s. Datar Switchgear Ltd. has expired in August, 2000 itself and the other agreement has expired in April, 2001. When the agreement expires, the assessee may not getting right to receive the income.
It is the submission of the assessee that both the assets have been classified as non-performing assets. It is the submission of the assessee that these assets have been classified as non-performing assets due to default in receiving installments and as per accounting standard-7, income can be recognised only when its realisation is certain. In our view, there is merit in this legal contention also. This addition could not have been made by the AO. Decided in favour of assessee.
Disallowance of expenses - We noticed that the assessee does not have explanation for the expenses other than interest expenditure. Hence, disallowance of other expenses made by the AO is required to be confirmed.
With regard to interest expenditure we noticed that a sum is the interest payable to Scheduled banks. Admittedly the assessee has not made payment and hence the same is required to be disallowed under section 43B of the I.T. Act. On this count, the interest expenditure payable to the bank is the liable to be disallowed. With regard to the remaining amount of interest of Rs. 10.05 lakhs, the assessee does not have any detail. CIT (A) was justified in confirming disallowance of entire expenses and his decision does not call for any interference. Accordingly we confirm the order passed by the learned CIT (A) on this issue.
Disallowance of depreciation - addition it related to sale and leased back transaction - HELD THAT:- The proposition expounded by the Coordinate Bench in assessee’s own case [2018 (10) TMI 130 - ITAT MUMBAI] relating to A.Y. 1997-98 is that the disallowance of depreciation on assets, where seller of the assets and lessee are different is not required to be made. It is not discernible from the record that the assets on which depreciation was disallowed fall under the above said category. Accordingly, we set aside this issue to the file of the AO with the direction to examine the nature of asset. If he finds that the seller of the asset and lessee are two different persons, then no disallowance of the depreciation is called for.
Addition of liability made u/s 68 - We noticed that the increase in secured loan and the increase in outstanding expenses are on account of the above said expenses only. Since we have confirmed the disallowance of expenses, in our view, making addition of increase in liability would result in double disallowance, since there was no fresh flow of funds. Accordingly, we direct deletion relating to interest and expenses respectively.
Fresh loan taken from M/s. Akash Farms Pvt. Ltd. and Akash Enterprises, we noticed that the assessee has only furnished confirmation letters. In our view, mere filing of confirmation letters would not discharge the assessee from the burden placed on its shoulder u/s 68. Accordingly, we confirm the addition made under section 68 of the Act in respect of the above said two loans.
Non-granting of set off of brought forward losses - It is the duty of the AO to grant set off of brought forward losses while computing total income of the assessee. Without allowing set off of brought forward losses, the total income could not have been computed correctly. Hence the direction sought by the assessee is for implementation of provisions of the Act only. In any case the CIT(A), has already directed the AO to allow set off of brought forward losses after verifying the record. We do not find any reason for not implementing the said order of the learned CIT(A). Accordingly, we direct the AO to implement the order of the learned CIT (A) granting set off of brought forward losses after verifying record.
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