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Income Tax - Case Laws
Showing 121 to 140 of 889 Records
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2019 (7) TMI 1733 - ITAT MUMBAI
Penalty u/s 271(1)(c) - defective notice - non specification of charge - HELD THAT:- As decided in SMT. BAISETTY REVATHI [2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT] when the proceedings are penal in nature, resulting in imposition of penalty ranging from 100 per cent to 300 per cent of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting one or between the two.
Considering the above factual and legal discussions narrated above, in our view the penalty order levied by assessing officer and confirmed by ld CIT(A) is not sustainable on factual as well as on legal aspect. Therefore, we direct the assessing officer to delete the entire penalty levied under section 271(1) (c) - Decided in favour of assessee.
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2019 (7) TMI 1731 - ITAT COCHIN
Entitled for deduction u/s 80P on account of addition u/s. 68 - HELD THAT:- Since the assessee’s business is to accept deposits and lend advance inter alia with other activities, we are inclined to hold that income resulting on account of addition made u/s. 68 cannot be considered as income derived from business though it is income of the assessee. Even if the addition is made u/s. 68, it does not necessarily follow that such credit represents business income of the assessee as a general practice unless there is clear evidence that it represents business receipts. In the present case, it relates to granting of deduction with regard to profit/grain derived from business and unless it is proved that it is from business, deduction u/s. 80P cannot be granted. The contention of the assessee is not acceptable in view of the clear provisions of section 80P of the Act and the impugned additions cannot be said to be business receipts.
Merely because the assessee is running a business in which are found certain unexplained cash credits, it does not necessarily follow that such credits represent suppressed business receipts and there would be no error of law in regarding the unexplained cash credits as income of the assessee from some independent and unknown sources unless there are strong reasons for connecting the unexplained cash credits with known sources of income of the assessee, there would be no alternative to treating them as income from other sources.
Reliance is also placed on the judgment of Deviprasad Viswanath Prasad [1968 (8) TMI 5 - SUPREME COURT] wherein it was held that when the assessee pleads that the impugned cash credits came out of suppressed profit, it is for him to prove that it is so. If these receipts are allowed by treating as business receipts, then the assessee will be entitled to set off of business expenditure against these receipts which is not permissible. The assessee's business is to accept deposits and lend advance inter alia with other activities. Being so, we are inclined to hold that the assessee is not entitled for deduction under section 80P of the Act on account of addition u/s. 68 of the Act. Thus, this ground of appeal of the assessee is partly allowed for statistical purposes.
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2019 (7) TMI 1729 - ITAT MUMBAI
Deduction u/s 80P - interest income earned - HELD THAT:- Assessee a cooperative society is eligible for deduction u/s.80P(2)(d) of the Act in respect of the interest income earned by the assessee from either any other cooperative society or from a cooperative bank. Grounds raised by the assessee are allowed. See KSHATRIY GADKARI MARATHA COOPERATIVE CREDIT SOCIETY LTD. [2019 (4) TMI 1932 - ITAT MUMBAI] and KALIANDAS UDYOG BHAVAN PREMISES CO-OP SOCIETY LTD. [2018 (4) TMI 1678 - ITAT MUMBAI] - Appeals of the assessee are allowed.
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2019 (7) TMI 1728 - ITAT MUMBAI
Reopening of assessment u/s 147 - Non disposing off appellant’s objections - HELD THAT:- The fact that the assessee had raised objections against the reopening of the assessment and the same was not disposed-off by Ld. AO, remain uncontroverted. Nothing on record would establish that the assessee’s objections against reopening of assessment were ever considered and rejected by Ld. AO at any point of time, during reassessment proceedings.
Thus the action of Ld. first appellate authority in upholding the reassessment proceedings, could not be said to be in accordance with law. Therefore, we quash the reassessment order - Decided in favour of assessee.
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2019 (7) TMI 1726 - ITAT MUMBAI
TP Adjustment - adjustment to the arm's length price of international transaction with the Associated Enterprises (AEs) relating to export of finished goods - Whether or not learned DRP is empowered under the Act to enhance the income in respect of a transaction for which neither any variation has been proposed in the draft order nor the assessee has raised any objection? - HELD THAT:- In respect of an assessee availing the DRP route, power of enhancement would be restricted only to the variations objected to by the assessee. In our humble opinion, this cannot be the intention of the legislature while enacting the provision of section 144C(8) of the Act. The power of enhancement conferred upon the DRP under section 144C(8) of the Act cannot be interpreted in a manner to restrict it only to the variations objected by the assessee - any interpretation of section 144C(8) of the Act leading to curtailment of DRP's power of enhancement would defeat the purpose for which section 144C(8) was enacted. - Explanation brought to section 144C(8) of the Act does not expand the scope of the main provision, but only clarifies it and brings to the fore the intention of the legislature for enacting such provision.
Identical view was expressed by the tribunal also in case of M/s. Hamon Shriram Cottrell Pvt. Ltd. v/s ITO [2014 (1) TMI 69 - ITAT MUMBAI]. In our view, the aforesaid decisions of the Tribunal clearly clinch the issue in favour of the Revenue. In view of the aforesaid, we hold that learned DRP has validly exercised its power under section 144C(8) of the Act. Ground no.2.2 is dismissed.
Whether the internal TNMM, as applied by learned DRP to determine the arm's length price of the export of HPC and beverages to the AEs, is the most appropriate method? - On a perusal of learned DRP's directions, it appears, learned DRP has not at all considered the objections of the assessee in an objective manner. In fact, the segmental results of AE and non-AE segments furnished by the assessee have been rejected by learned DRP on the flimsy ground that the auditor's certificate showing such segmental results is not acceptable since he had not initially audited the books of account of the assessee. What was required to be examined by learned DRP is the correctness of assessee's claim and not who has audited the books of account of the assessee. Further, learned DRP has not provided any valid reason why the benchmarking done by the assessee under external TNMM is not acceptable. Merely because the assessee had entered into transactions both with the AEs and non-AEs, it does not render applicability of external TNMM redundant.
While in the transactions with the AEs creation of market and the end users is not the responsibility of the assessee but in the transaction with non-AEs, it is the responsibility of the assessee to create and maintain the market and end users. Thus, it affects the FAR profile materially which ultimately would have an impact on the profitability. It is quite noticeable, various submissions made by the assessee regarding non-applicability of internal TNMM have been disregarded/ignored by learned DRP without proper examination. Similarly, learned DRP has not provided any valid reasoning why external TNMM is not applicable.
Though, we hold that external TNMM applied by the assessee has to be treated as the most appropriate method in the given facts and circumstances of the case, however, since neither the Transfer Pricing Officer nor learned DRP have examined the acceptability or otherwise of the comparables selected by the assessee, we restore the issue to the Assessing Officer to examine this aspect and determine the arm's length price accordingly after due opportunity of being heard to the assessee.
Notional interest on overdue receivables from the AEs - HELD THAT:- As a matter of policy, the assessee does not charge any interest on overdue receivables either from the AEs or non-AEs. Further, the contention of the assessee that it is a debt free company has not been controverted by the Department. It is also a fact that the assessee raises invoices on the AEs at cost plus 9%. Thus, it can be said that in the mark-up charged, the assessee has factored in the interest element on the overdue receivables. In these circumstances, applying the ratio laid down in the decisions relied upon by the learned Sr. Counsel for the assessee, we are of the view that no adjustment on account of notional interest on overdue receivables from the AEs should be made. Accordingly, we delete the addition. Grounds raised are allowed.
Adjustment to the arm's length price on account of payment of royalty/fee for services - HELD THAT:- While examining the royalty payment in case of Hindustan Unilever Ltd. in assessment year 2013-14, the Transfer Pricing Officer has accepted royalty paid to the AE to be at arm's length. Similarly, in the order passed under section 92CA(3) of the Act in respect of AE, the Transfer Pricing Officer has accepted the royalty payment to be at arm's length. That being the case, the arm's length price of royalty payment at the hands of the assessee cannot be determined at nil. In any case of the matter, it is not disputed that the assessee is remunerated by the AE on cost plus mark-up basis. That being the case, royalty paid to the AE forms part of the cost base of the assessee on which it has charged mark-up @ 9%. In the aforesaid circumstances, if the payment of royalty to the AE is disallowed by determining the arm's length price at nil, then logically the income of the assessee also should be reduced. This is the view expressed in Mercer Consulting Pvt. Ltd. [2016 (8) TMI 62 - ITAT DELHI]. Thus adjustment made by determining the arm's length price of royalty payment at nil deserves to be deleted.
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2019 (7) TMI 1725 - ITAT MUMBAI
Addition u/s 68 - bogus share application money and share premium received as bogus accommodation entries provided by Shri Mukesh Choksi and Shri Shirish Shah - CIT-A deleted the addition - HELD THAT:- In the present assessment year assessee has submitted that it has submitted all the information and documents. Not specific defect in the same has been pointed out by the assessing officer. Assessing officer has solely gone on the investigation done in the case of third parties. As a matter of fact, no summons were issued by the assessing officer to the share applicants the present case. For assessment year 2006-07, even notice under section 133(6) were not issued.
As assessee has discharged its onus and no addition under section 68 is warranted. Accordingly we uphold the order of learned CIT-A. - Decided in favour of assessee.
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2019 (7) TMI 1722 - ITAT PUNE
Registration u/s 12AA denied - Proof of charitable activities u/s 2(15) - scope of inquiry by CIT(A) for the registration u/s 12A and 12AA - HELD THAT:- Sec.12AA(1) requires the Commissioner to whom an application is made for the registration of a Trust or Institution to satisfy himself about the genuineness of the activities of the Trust or the Institution as well as the objects of the Trust or Institution and for that purpose Commissioner is vested with power to call for documents or information and is also empowered to make such inquiries as he may deem necessary in that behalf. The Commissioner is thereupon empowered to pass an order in writing either registering an Institution or if he is not satisfied about the objects of the Trust or Institution and of the genuineness of its activities, to pass an order in writing refusing to register the Trust or Institution. Thus it can be seen that at the time of grant of registration, the Commissioner is not empowered to examine the application of income. The stage for consideration of the relevance of the object of the Trust and the application of its funds arises at the time of assessment.
There is no finding of CIT(E) on the objects of Trust as mandated by the provisions of the Act as noted above. Further it is also not in dispute that assessee had made an application for registration in 2014 which was not been acted upon and therefore assessee filed 2nd application in 2018.
Considering all, we restore the issue back to CIT(E), Pune to decide the issue of registration u/s 12AA of the Act in accordance with law and after granting reasonable opportunity of hearing to the assessee. We also direct the CIT(E) to dispose of the application within three months of the receipt of the present order. Appeal of the assessee are allowed for statistical purposes.
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2019 (7) TMI 1719 - ITAT DELHI
TDS u/s 195 - assessee failed to deduct tax at source on payments made to Non-resident parties on account of professional fee - AO rejected the contention of the assessee that services rendered by the 6 non-resident entities are not in the nature of independent personal services - CIT-A deleted the addition - HELD THAT:- DR could not controvert the finding of the Ld. CIT(A) that the article on “ independent personal services” is applicable on income derived by a person who is an individual or firm of individuals or by an individual, whether in his own capacity or any member of a partnership firm. Further in the DTAA with Netherland, the word resident has been used for the benefit of independent personal services, which is wider than individual and the firm, who has rendered services is entitled to benefit of said provision. No error in the order of the Ld. CIT(A) on this issue.
CIT(A) has also analysed in view of the various DTAAs that the services rendered by the those non-resident parties are not Fee for Technical Services.
DR could not establish that any technical knowledge was made available in the process of providing services by the non-resident parties to the assessee. In absence of not making available, the technical knowledge to the assessee, in view of the Article 13 of the respective DTAAs, the payment for services cannot be held as fee for technical services under the provisions of the respective DTAAs. We do not find any error in the order of the Ld. CIT(A) on this issue also.
CIT(A) has further observed that Article 13 of DTAAs provisions defining Fee for Technical Services being more favourable to the assessee as compared to the provisions of section 9(1)(vii) of the Act which has defined Fee for Technical Services, and thus the assessee was having option of choosing more favourable provisions of the DTAAs. In our opinion, the finding of the Ld. CIT(A) is in accordance with the established legal position on the issue.
CIT(A) in view of the decision in the case of Van Oord ACZ India (P) Ltd versus CIT [2010 (3) TMI 167 - DELHI HIGH COURT] has held that the sum payable to the nonresidents was not chargeable to income tax in their hands and thus the assessee was not liable for deduction of tax at source on such payment under the provisions of section 195 and no disallowance under section 40(a)(i) could be made. - Decided against revenue.
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2019 (7) TMI 1718 - ITAT CHENNAI
Bogus LTCG - Exemption u/s 10(38) disallowed by AO on the ground that the company in which the assessee invested is a penny stock company - Long term capital gains on the sale of shares denied - HELD THAT:- It is not brought on record how the assessee is involved in promoting the penny stock company and how the assessee involved in inflating the shares of the company. Moreover, the copy of the investigation report said to be received from the Directorate of Investigation at Kolkata was not furnished to the assessee. On identical circumstances, this Tribunal in the case of Kanhaiyalal & Sons (HUF) v. ITO [2019 (2) TMI 1640 - ITAT CHENNAI] has remitted back the matter to the file of the Assessing Officer for reconsideration.
Matter needs to be re-examined by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the issue raised by the assessee with regard to deduction under Section 10(38) of the Act is remitted back to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes.
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2019 (7) TMI 1714 - SC ORDER
Dis-allowance of bad debts written off u/s 36(1)(vii), Disallowance of expenditure incurred u/s 14A, Levy of interest u/s 234B, Dis-allowance of provision for leave encashment u/s 43B, Dis-allowance of bad debts of non-rural Banks written off u/s 36(1)(vii), Addition of amortisation of expenses incurred in connection with the issue of public subscription of shares u/s 35D, Disallowance of expenses relating to right issue - HELD THAT:- SLP dismissed.
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2019 (7) TMI 1708 - ITAT MUMBAI
Disallowance u/s 36(1)(iii) interest paid on loan - Interest on loans taken from director wholly and exclusively for the purpose of business activities - HELD THAT:- Dichotomy between the borrowing of the loan and actual application thereof in the purchase of a capital asset, seems to proceed on the basis that a mere transaction of borrowing does not, by itself, bring any new asset of an enduring nature into existence, and that it is the transaction of investment of the borrowed capital for the purchase of a new asset which brings that asset into existence; the transaction of borrowing is not the same as the transaction of investment and if this dichotomy is kept in mind, it becomes clear that the transaction of borrowing attracts the provisions of section 36(1)(iii).
Assessee filed before the AO the confirmation of loan from the directors in response to the written query dated 29.09.2014 issued by the AO u/s 142(1) - Assessee-company had effected purchase of land in the first year of operation i.e. from 07.05.2010 to 31.03.2011 for an amount which was financed out of unsecured loan obtained from the directors amounting outstanding as at 31.03.2011. Interest was paid on the above loan @ 10%. The borrowing had been effected for the purpose of business activities of the company. The assessee has rightly claimed u/s 36(1)(iii) interest paid on the above loan during the impugned assessment year - Decided in favour of assessee.
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2019 (7) TMI 1698 - ITAT CHENNAI
Expenditure claimed u/s.36(1)(iii) - difference between interest received and interest paid - HELD THAT:- Assessee has been considered as an investment company and making investments was part of its business.
In the case of CIT vs. Shriram Investments (Firm) [2013 (11) TMI 1656 - ITAT CHENNAI] held that deduction u/s.36(1) (iii) of the Act had to be allowed in respect of interest paid, if capital was borrowed for the purpose of business or profession.
As already mentioned there is no finding by any of the lower authorities that disparity between interest receipts and payments arose on account of charging of lower rate of interest on loans advanced when compared to interest paid on loans received. AO was not justified in making a disallowance for the difference between interest received and interest paid by the assessee. Disallowance stands deleted.- Decided in favour of assessee.
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2019 (7) TMI 1694 - CHHATTISGARH HIGH COURT
Validity of reopening of assessment - Reopening based on some information collected by way of survey under section 133A - learned single judge observed that, it was a matter which could be effectively challenged by approaching the statutory authority - HELD THAT:- Matter involves some fact finding exercise and the same can be effectively prosecuted before the competent authority under the statute, which cannot be a matter for discussion and finalization invoking the discretionary jurisdiction of this court under article 226 of the Constitution of India.
No irregularity, much less any illegality, with regard to the course ordered to be pursued by the learned single judge. The appeal fails and it is dismissed accordingly. We have not expressed anything with regard to the merit of the case. It is always open for the appellant to establish the merit of the case before the statutory authority, based on the facts and the relevant provisions of law.
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2019 (7) TMI 1693 - ITAT MUMBAI
Disallowance u/s 14A r/w rule 8D - AO noticed that during the year the assessee has earned exempt income by way of dividend on mutual fund and shares - HELD THAT:- Disallowance made by the Assessing Officer is far in excess of the total expenditure claimed by the assessee. Therefore, under no circumstances, the disallowance made by the AO could have been sustained. Therefore, following the decisions of the Tribunal and the Hon'ble Jurisdictional High Court [2014 (1) TMI 1183 - ITAT MUMBAI] in the preceding assessment years we hold that the disallowance under section 14A r/w rule 8D, should be restricted to the amount already disallowed by the assessee under section 14A. - Decided in favour of assessee.
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2019 (7) TMI 1689 - ITAT MUMBAI
Reopening of assessment u/s 147 - non supply of reasons and not qua the change of opinion - HELD THAT:- In this case the assessee has not filed any return of income despite the issue of notice under section 148 due to the fact that all the records of the assessee were seized by the various government agencies and assessee was not having any access to such records at the relevant point of time. This fact was brought to the notice of the AO.
Assessee requested by various letters during course of the assessment proceedings to supply the reasons but AO did not supply any reasons recorded for re-opening. Even after completion of the assessment, the assessee again requested vide letter dated 30.05.2018 and 01.05.2019 to supply copy of reasons but some were not supplied to the assessee. Once it has established that assessee has not been supplied copy of reasons recorded, then the reassessment proceedings as well as the assessment framed as a result thereof are invalid.
The case of the assessee is squarely covered by the decision of the Hon’ble Bombay High Court in the case of CIT vs. IDBI Ltd [2016 (7) TMI 1587 - ITAT BANGALORE]wherein it has been held that where the reasons recorded are not supplied to the assessee, the order of reassessment would be without jurisdiction. - Decided in favour of assessee.
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2019 (7) TMI 1682 - ITAT JAIPUR
Levy of penalty u/s 271(1)(c) - addition made during the course of assessment, which were confirmed by the appellate authority - non specification of charge - assessment was framed u/s 153A r.w.s. 143(3) of the Act wherein addition was made on account of undisclosed income as well as low household withdrawals - HELD THAT:- It is only when the authority invested with the requisite power is satisfied that either of the two events existed in a particular case that proceedings u/s. 271(1)(c) are initiated. This pre-requisite should invariably be evident from the notice issued u/s. 274 r.w.s. 271 which is the jurisdictional notice, for visiting an assessee with the penal provision.
The intent and purpose of this notice is to inform the assessee as to the specific charge for which he has been show caused so that he could furnish his reply without any confusion and to the point.
In the present case, neither the assessee nor anyone else could make out asto whether the notice u/s. 274 r.w.s. 271 (1)(c) of the Act was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet with the case of the Assessing Officer. There are a catena of judgments highlighting the necessity for identifying the charge for which the assessee is being visited and in all those decisions, Hon'ble Courts have repeatedly held that where the jurisdictional notice is vague, similar to the one in the present case, the consequent levy cannot be sustained.
No merit for the penalty so imposed, accordingly, AO is directed to delete the penalty so imposed u/s. 271(1)(c) of Act. - Decided in favour of assessee.
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2019 (7) TMI 1681 - ITAT CHENNAI
Contribution to Pension Fund Trust - HELD THAT:- As decided in own case [2014 (8) TMI 1199 - ITAT CHENNAI] bare reading of section 36(1)(iv) makes is amply clear that the sum should be contributed by the employer towards a recognized provident fund or approved superannuation funds subject to such limits as may be prescribed for recognizing provident fund or approving the superannuation fund. The section does not lay down any specific condition that the fund should be approved by the jurisdictional Commissioner or Chief Commissioner only.
In the present case, the assessee is contributing in the Pension Fund Scheme jointly floated by twelve State Transport Corporations operating in different districts of the state of Tamil Nadu. All the State Transport Corporations are signatories to the Trust Deed for setting up of joint State Transport Employees Pension Fund Scheme. It is not in dispute that the said fund has been recognized by the CIT-VII, Chennai. Once the assessee is contributing towards recognized fund, the assessee is entitled to get the benefit for the contributions made to the said fund.
Allowing the damages for remittance to Pension Fund Trust - HELD THAT:- As decided in own case [2018 (11) TMI 1798 - ITAT CHENNAI]issue is decided in favour of the assessee and against the Revenue.
Disallowance of Chairman’s Office Expenses - HELD THAT:- As submitted by ld. D.R that during the course of Appellate proceedings, the assessee has submitted their evidences before the ld.CIT(A) and the ld.CIT(A) has decided the matter without calling for the remand Report from the ld.Assessing Officer. The ld.AR has not denied the said factual position. We accordingly set aside the matter to the file of ld.CIT(A) to seek the Remand Report from the ld.Assessing Officer and decide the matter afresh as per law. This Ground relating to the expenses incurred for Chairman’s Office Expenses is allowed for statistical purposes.
Disallowance u/s.14A read with Rule 8D - HELD THAT:- By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. See JOINT INVESTMENTS PVT LTD VERSUS COMMISSIONER OF INCOME TAX [2015 (3) TMI 155 - DELHI HIGH COURT].
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2019 (7) TMI 1678 - ITAT INDORE
Levying late fees u/s 234E - Late filing of TDS returns / statement - statement processed u/s 200A - HELD THAT:- From going through the provisions of sections 234E and 200A of the Act we find that the provision for levying fee for default in furnishing statement was inserted w.e.f 01.07.2012. The power to process the statement of tax deducted at source are provided in section 200A of the Act. The date of CPC order is the yardstick to examine the applicability of the amendment brought by the Finance Act 2015 w.e.f 01.06.2015.
If the default is committed by a person in delivering the TDS statement within the time prescribed in sub-section (3) of section 200 of the Act or proviso to sub-section (3) of section 206C of the Act, from 01.07.2012 provision of section 234E of the Act comes into operation and if the default continues and the CPC order is passed on and after 01.06.2015 then even if the CPC order relates to quarters for F.Y. 2014-15 and earlier years, and the tax has been deposited before 01.06.2015 will have no relevance. This contentions of the Ld. counsel for the assessee has no merits.
There is a clear provision in the scheme giving powers to the CPC to process the TDS return any the manner as specified u/s 200A(1) of the Act which provides that the statement shall be processed with regard to the tax deducted, arithmetical error incorrect claim, interest as well as the fee u/s 234E and other adjustment as provided in sub-section (1) of section 200A of the Act. So in our considered view CPC have sufficient power to levy fee u/s 234E of the Act for late filing of TDS return.
As relying on SHRI UTTAM CHAND GANGWAL M/S ADINATH STONES VERSUS THE ACIT, CPC (TDS) , GHAZIABAD [2019 (1) TMI 1355 - ITAT JAIPUR] CIT(A) has rightly confirmed the levy of fee u/s 234E of the Act by the CPC, however we direct the revenue authorities to make necessary verification in each of the case so as to look into the fact that in case if any fee u/s 234E is levied for the delay in filing return for the period before 01.06.2015, the same is directed to be deleted and the remaining fee levied for the default committed from 01.06.2015 onwards needs to be confirmed. - Decided in favour of assessee partly.
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2019 (7) TMI 1675 - ITAT SURAT
Reopening of assessment u/s 147 - estimating the income of the assessee firm at 25% on the advance received by the assessee from its customer - HELD THAT:- The words 'reason to believe' cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. They only mean that he forms a belief from the examination he makes or from any information that he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he has reason to believe that such income had escaped assessment. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under section 147, may ultimately stand altered after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the Assessing Officer is not required to base his belief on any final adjudication of the matter.
Thus it is evident that the AO has initiated the reassessment proceedings u/s 147/148 as per the provisions of the Act and all the conditions laid down for reopening has been fulfilled. Hence, this ground of the appellant fails and the ground of appeal is dismissed.
Estimation of income - As in compliance of the agreement no registered sale deed was executed in the year under consideration and the amount of total area sold was also reduced from 34720 to 18954 sq.ft for the total consideration of ₹ 11,76,70,000/- instead of the original amount of ₹ 16,73,50,400/-. Therefore, the Assessing Officer has wrongly determined the profit @25% of ₹ 13,53,76,000/- without any basis or material in position merely on the basis of presumption which is not sustainable in the eye of law. Even otherwise, the sale deeds in dispute was executed in financial year 2015-16 for which the assessee has offered its income. Therefore, the ld.First Appellate Authority has rightly deleted the addition in dispute by passing the detailed order mention above. Therefore, no interference is called for in the well-reasoned order passed by the ld.First Appellate Authority in deleting the addition in dispute and we dismiss the Revenue appeal and uphold the impugned order.
After going through the findings given by the ld.First Appellate Authority, which we have reproduced above, we fully agree with the same and uphold the impugned order for initiating the proceedings u/s.147 of the Income Tax Act and dismissed the appeal filed by the assessee.
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2019 (7) TMI 1674 - ITAT CUTTACK
Rejection of books of accounts - NP estimation - HELD THAT:- As noticed that the assessee is engaged in various sectors of business wherein the rate of net profit may not be at a similar line. We also notice that the assessee could not produce complete bills and vouchers and sector-wise books of accounts before the AO.
Looking to the voluminous nature of the business carried on by the assessee and considering the arguments advanced by both the sides, we restrict the net profit to 6% on the gross turnover of the assessee of ₹ 40,10,71,312/- as against 6.5% applied by the CIT(A) on gross receipts. We further make it clear that from the net profit of 6%, no further any depreciation shall be allowed.
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