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Income Tax - Case Laws
Showing 81 to 100 of 10077 Records
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2019 (12) TMI 1484
Taxation of notional rental income on unsold stock-in-trade - Business income OR Income from house property - assessee is a builder and developer and during the course of assessment proceedings it was found that the assessee was having unsold flats/shops - AO computed notional rental on such stock-in-trade under the head `Income from house property"- HELD THAT:- Similar issue came up for consideration before the Pune Benches of the Tribunal in M/s. Cosmopolis Construction vs. ITO.[2018 (9) TMI 1621 - ITAT PUNE] has held that no rental income can be computed when flats are held as stock in trade. In reaching this conclusion, the Tribunal relied on certain other judgments and the orders. In the absence of any distinguishing fact having been brought to my notice by the ld. DR and respectfully following the precedent, overturn the impugned order on this score and direct to delete the addition.
As the Finance Act, 2017, w.e.f. 1.4.2018 has inserted sub-section (5) of section 23 providing that : `Where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to two years from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil.‟ This amendment has the effect of providing that from the A.Y. 2018-19, stock in trade of buildings etc. shall be liable to be considered for computation of annual value under the head `Income from house property‟ after two years from the end of the financial year in which the certificate of completion of construction of the property is obtained. As the assessment year under consideration is 2015-16, the amended section 23 will not apply - Decided in favour of assessee.
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2019 (12) TMI 1483
TP Adjustment - international transaction of AMP and adjustment on account of the same - HELD THAT:- In the instant case, there is not an iota of material on the file apart from relying upon the fact that by incurring huge AMP expenses to the tune of 6.93%, taxpayer has enhanced brand value and created intangibles in favour of its AE, no cogent material is there to treat the incurring of AMP expenses as international transactions. TPO has also not returned the finding that how the benefit of AMP expenditure incurred by the taxpayer have benefited AE, no calculation has come on record, so in these circumstances when we discarded the BLT the entire case of ld. TPO/DRP fell flat.
There is not an iota of material with ld. TPO to prove the existence of an international transactions involving AMP expenses by the taxpayer. TPO rather proceeded on the premise that the AMP expenditure incurred by the taxpayer were far excess of AMP expenses incurred by the comparables.PO has also applied the BLT which has been discarded by the Hon’ble High Court in a number of judgments. Even otherwise, in the absence of any agreement, arrangement or understanding between the taxpayer and its AE, expressed or implied, that AMP spent of the taxpayer would also be beneficial to the AE or it would enhance the brand value of the AE in any manner, no international transaction can be inferred.
Thus we are of the considered opinion that the ALP of an international transaction involving AMP expenses, the adjustment made by the TPO/DRP/AO is not sustainable in the eyes of law. At the same time, we cannot ignore the submission of the learned DR that the matter is pending before Hon'ble Apex Court and the decision of Hon'ble Apex Court would be binding upon all the authorities. In view of the above, we set aside the orders of authorities below and restore the matter to the file of the Assessing Officer. We hold that as per the facts of the case and the legal position as of now and discussed above in this order, the adjustment made by the TPO/DRP/AO in respect of AMP expenses is not sustainable. However, if the above decisions of Hon'ble Jurisdictional High Court which is under consideration before the Hon'ble Apex Court is modified or reversed by the Hon'ble Apex Court, then the Assessing Officer would pass the order afresh considering the decision of Hon'ble Apex Court. In those circumstances, he will also allow opportunity of being heard to the assessee.
Adjustment of depreciation on account of capital assets getting converted into stock-in-trade - HELD THAT:- As relying on own case [2015 (3) TMI 932 - ITAT DELHI] we are of the considered view that conversion of used asset into stock-in-trade and sold subsequently and surplus on the sale is brought to tax then there is no loss to the Revenue. Consequently, the addition made by the AO/DRP is ordered to be deleted.
Depreciation on printers, routers, UPS SMF battery etc. - @ 60%O OR 15% depreciation by AO/DRP by treating the same as plant and machinery. - HELD THAT:- Hon’ble Delhi High Court in case of CIT vs. BSES Yamuna Power Ltd.[2010 (8) TMI 58 - DELHI HIGH COURT] affirmed the findings returned by the Tribunal that computer accessories and peripherals, such as, printers, scanners and server etc. are integral part of the computer system, hence entitled for depreciation @ 60% instead of 15% allowed by the DRP/AO. Consequently, following the decision rendered by the Hon’ble Delhi High Court in case of CIT vs. BSES Yamuna Power Ltd. (supra), we are of the considered view that the taxpayer is entitled for depreciation @ 60% on computer accessories and peripherals.
Disallowance on account of bad debts and advances written off - addition challenged on the ground that the entire evidence was there before the ld. DRP by way of additional evidence which was also given to AO during remand proceedings - HELD THAT:- The issue is required to be remanded back to the ld. DRP to decide afresh after perusing the additional evidence brought on record by the taxpayer after providing opportunity of being heard to the taxpayer,
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2019 (12) TMI 1481
Deduction u/s 80P in respect of interest from members - HELD THAT:- CIT (A) is not justified in holding that the assessee is not eligible for deduction u/s 80P in respect of interest earned from associate members because as per Karnataka Co Operative Societies Act, associate members are also members and restriction on no. of associate members up to 15% of total members is by way of a subsequent amendment which is not applicable in the present year. Hence, on this issue, the order of CIT (A) is set aside and hold that for allowing deduction u/s 80P in respect of interest from members, regular members and associate members are to be considered at par in the present year which is before amendment in Karnataka Co Operative Societies Act, In respect of interest from regular members, learned CIT (A) has directed the AO to allow deduction u/s 80P. I modify this direction and direct the AO to allow deduction u/s 80P as per law in respect of interest income from regular members as well as associate members.
Deduction u/s 80P in respect of Bank Interest - We find that the claim of the assessee for deduction u/s 80P in respect of bank interest income was disallowed by AO and CIT (A) by following the judgment of Hon’ble Apex Court rendered in the case of Totgars Co – Operative Sale Society Limited vs. ITO [2010 (2) TMI 3 - SUPREME COURT]
There is one judgment of Hon’ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. [2015 (2) TMI 995 - KARNATAKA HIGH COURT] in which this judgment of Hon’ble apex court rendered in the case of Totgars Co – Operative Sale Society Limited vs. ITO (Supra) was considered but still, the issue was decided in favour of the assessee because in that case, money used to earn bank interest was out of own funds and not of out of liability. To examine the applicability of these two judgments, the facts are to be examined as to whether in the present case, the money advanced to earn interest income from various banks is out of liability or own funds of the assessee because if such advances are out of liability, then this judgment of Hon’ble apex court rendered in the case of Totgars Co – Operative Sale Society Limited vs. ITO (Supra) will be applicable and the assessee will not be entitled to deduction u/s 80P with regard to interest from banks but if such advances are not out of liability but are out of own funds of the assessee than the judgment of Hon’ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO [2015 (2) TMI 995 - KARNATAKA HIGH COURT] will be applicable.
Hence, set aside the order of CIT (A) on this issue and restore this aspect of the matter back to his file for fresh decision with the direction that he should examine the facts of the present case in the light of these two judgments of Hon’ble apex court rendered in the case of Totgars Co – Operative Sale Society Limited vs. ITO (Supra) and of Hon’ble Karnataka High Court rendered in the case of Tumkur Merchants Souhadra Credit Cooperative Ltd. Vs. ITO (Supra) to find out which judgment is applicable in the facts of the present case. Appeal of the assessee is allowed for statistical purposes.
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2019 (12) TMI 1476
Addition on account of Labour Charges, Repair and maintenance expenses, printing and stationery, office exp. vehicle fuel and maintenance exp. and vehicle repairing exp - AO has recorded a finding that on examination of bills and vouchers of expenses, it was noticed that the assessee did not maintain proper and complete vouchers of these expenses and some of the payments were made in cash - as noticed by the Assessing officer that some of the vouchers of these expenses are self made and without supporting bills and not verifiable fully, therefore, he has made a lumpsum disallowance - HELD THAT:- In the absence of any specific findings that the claim of the expenditure are either bogus or not been incurred wholly and exclusively for the purposes of business, there is no basis for making any adhoc disallowance of expenses and the same cannot be sustained in the eyes of law. We find that similar issue has been examined by the Coordinate Bench in case of M/s Kumar & Brothers vs. ITO.[2019 (9) TMI 1514 - ITAT JAIPUR]
If certain claim of expenditure is not found to be incurred wholly and exclusively for the business purpose of the assessee then the same is liable to be disallowed. However, if the expenditure incurred by the assessee is found for the business purpose of the assessee then due to certain irregularity in maintaining the supporting evidence an ad hoc disallowance is not called for. Without specifying the instance of the expenditure, which is either excessive or found not incurred for the business of the assessee, the action of the A.O. in making ad hoc disallowance and confirmed by the ld. CIT(A) is not justified. Hence, ad hoc disallowance is deleted - adhoc disallowance of expenses so made by the Assessing Officer is hereby directed to be deleted - Appeal filed by the assessee is allowed.
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2019 (12) TMI 1475
Delay of 144 days in filing the cross objection by the assessee - assessee has submitted that the Director of the assessee company, who was handling the tax matters was not fully aware of its right to file the cross objection and remained under the impression that the assessee has already succeeded in the first appeal and hence no further action was required - HELD THAT:- When the assessee was already proceeded against ex parte and the matter was fixed for ex parte arguments, the assessee could only participate in the proceedings for which the matter was fixed. Hence except the arguments on the appeal of the revenue, the assessee cannot be allowed to file any pleadings or cross objection without setting aside the order dated 4th November, 2019 whereby the assessee was proceeded ex parte. Despite sufficient time availed by the assessee and adjournment taken by the ld. A/R of the assessee, the assessee did not take any step for setting aside the ex parte order dated 4th November, 2019. Further, the assessee has decided to file the cross objection only after the assessee was proceeded ex parte. Therefore, in these facts and circumstances we are not convinced with the explanation for cause of delay in filing the cross objection as the assessee was otherwise not allowed to go behind the stage of proceedings fixed for the day. Hence in the facts and circumstances of the case, the cross objection filed by the assessee is dismissed being not maintainable as well as barred by limitation.
Estimating the income by applying the G.P. rate - Rejection of books of accounts - increase in the G.P. just on the basis of the discrepancies pointed out in the accounts - increase in the GP just on the basis of discrepancies pointed out in the accounts and not for any other reasons up by 0.08% - Declining of profit margin of assessee - HELD THAT:- There is no quarrel on the point that the rejection of books of account under section 145(3) would not ipso facto lead to an addition if the GP declared by the assessee is either better than the past history of the GP declared or in line with the past history. However, in the case in hand, the GP declared by the assessee is neither in line with the past history nor it can be considered as better or reasonable in comparison to the past history of GP declared by the assessee. It is pertinent to note that in the absence of specific exceptional circumstances or adverse economic condition having impact on the trading result of the assessee, a general contention cannot be accepted as a reasonable cause for such decline. However, except the speculative situations which may represent an exceptional year or cycles of ups and downs in various sectors of economy, the ld. CIT (A) has neither considered the relevant specific facts having influenced to the business/trading of the assessee as well as business results of the assessee. Therefore, all these reasons which are general speculation and possibilities cannot be considered as finding of fact.
Once the AO is bound to estimate the income, then the past history of the assessee is regarded as a proper and reasonable basis for estimation of income. Accordingly, in view of the above facts and circumstances as well as the binding precedents, we set aside the impugned order of the ld. CIT (A) qua this issue and restore the order of the AO. Appeal of the revenue is allowed and cross objection of the assessee is dismissed.
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2019 (12) TMI 1473
Seizure of cash carried out by the Flying Squad - cash seized in an exercise conducted under the guidelines of the Election Commission of India - Seeking release the seized cash which was deposited in the District Treasury at Muzaffarpur but has since been transfered to the Income Tax Department - HELD THAT:- Delay condoned. Special leave petition is dismissed.
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2019 (12) TMI 1470
Bogus LTCG - assessee invested is a penny stock company - deduction under Section 10(38) 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 Investigation Wing of the Department at Kolkata was not furnished to the assessee. On identical circumstances, this Tribunal in the case of Kanhaiyalal & Sons (HUF) [2019 (2) TMI 1640 - ITAT CHENNAI] has remitted back the matter to the file of the Assessing Officer for reconsideration.
This Tribunal is of the considered opinion that the 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. The Assessing Officer shall examine the matter as directed by this Tribunal in the case of Kanhaiyalal & Sons (HUF) (supra) and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee. Appeal assessee is allowed for statistical purposes.
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2019 (12) TMI 1469
Reopening of assessment u/s 147 - petitioner seeks interim relief - as submitted by assessee initially for the assessment year 2012-2013, the assessment order was passed by the Assessing Authority and on the same material again the Assessing Authority has proceeded to issue a show cause notice under Section 148 - respondent submits that certain materials were not earlier disclosed by the Assessing Authority while passing the first assessment order and the said material came in the light when the fresh notice has been issued by the Assessing Authority by invoking the provisions of Section 148 of the Income Tax Act on the basis of which the order in question has been passed - HELD THAT:- After hearing learned counsel for parties and going through the record, it transpires that the matter needs consideration by this Court, thus, as an interim measure, we provide that the assessment order passed by the Assessing Authority for the assessment year 2012-13 may go on but no final order should be passed till the next date of listing.
Learned counsel for the respondents prays for and is granted four weeks' time to file counter affidavit. Two weeks' time thereafter is granted to file rejoinder affidavit.
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2019 (12) TMI 1468
TP Adjustment - MAM selection - computation of the transfer pricing addition by taking all the direct and indirect costs incurred by the assessee - inclusion of two comparables - HELD THAT:- On a conjoint reading of the relevant parts of above sub-clauses, it is manifested that the RPM compares the transaction at gross profit level, which means considering all the direct costs forming part of the Trading account only. Not only the `gross profit margin’ of the comparables is taken for application to the sale price of the goods purchased from the AE, but also the expenses incurred by the assessee in connection with the purchase of goods are then sought to be reduced. The mandate is for reducing only the expenses incurred by the assessee in connection with the purchase of goods and no other expenses.
On a relative analysis, it emerges that it is only the items of the Trading account of the comparables as well as the assessee which go into determining the ALP of the international transaction of purchase of goods from the AEs under the RPM. If under sub-clause (iii), we proceed to reduce the indirect costs also, meaning thereby, the costs debited to the Profit and loss account of the assessee, the effect would be that we would be comparing the figure of comparables at gross level with the figure of the assessee at net level, distorting the comparability. Sub-clause (iv) talks of even ironing out the differences in the accounting practices of the assessee and comparables. Its rationale is that even after considering all the costs debited to the Trading account of both the assesses and comparables, if still there remains some difference due to following of different accounting practices, then the effect of such difference should also be given to in the determination of the ALP. It may cover a situation in which a comparable may have either debited an item of indirect cost to the Trading account or some direct cost to the Profit and loss account, effect of which is required to be given. There is no prescription what so ever for considering the indirect costs either of the assessee or the comparables in determining the ALP under the RPM.
TPO, in the calculation extracted above, has rightly considered the gross profit margin of the comparables, but stepped out of the method in considering the `Operating cost’ of the assessee and has, in fact, included all the direct and indirect costs of the assessee. The method adopted by the TPO has become a hybrid of the RPM and the TNMM, which has needlessly dragged down the ALP of the international transaction of purchase of goods. As against that, he ought to have considered only the direct costs of the assessee so as to bring parity with the gross margin of the comparables under the RPM. Thus the impugned order cannot be sustained to this extent. We, therefore, set-aside the impugned order pro tanto and hold that only the direct costs incurred by the assessee should be considered.
Inclusion of two companies in the final set of comparables, namely, Larsen and Toubro Ltd. and Siemens Ltd. - As gone through the segmental reporting of L&T Ltd. from which it can be seen that no separate figures for trading segment are available. As the assessee is admittedly only in the trading, the consideration of L&T Ltd.’s figures also including manufacturing and property development activities, do not serve as a good comparable. We, therefore, order to remove L&T Ltd. from the list of comparables.
TPO has computed at page 11 of his order the `Gross margin of trading activity only’ of Siemens Ltd. at 49.20%. We have gone through the Annual report of this company. It can be seen that the year ending of this company is 30-09-2012. As against that, the assessee is maintaining its accounts on financial year ending basis. In CIT Vs. PTC Software [2016 (9) TMI 1282 - BOMBAY HIGH COURT] has held that the companies with different financial year endings cannot be considered as comparable under Rule 10B. Without going into further analysis and following the precedent on this preliminary issue, we order to delete this company from the list of comparables.
Transfer pricing addition on the entity level figures of the assessee company rather than the international transactions - Hon'ble jurisdictional High Court in CIT vs. Thyssen Krupp Industries India Private Ltd. [2015 (12) TMI 1076 - BOMBAY HIGH COURT] has held that the transfer pricing addition can be made only with reference to the international transactions and not the transactions with the non-associated enterprises. Similar view has been espoused by the Hon’ble Delhi High Court in CIT VS. Keihin Panalfa Ltd. [2016 (5) TMI 203 - DELHI HIGH COURT]. Respectfully following the precedents, we hold that the transfer pricing addition should be restricted only to the international transactions.
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2019 (12) TMI 1467
Exclusion of service tax portion in computing income u/s 44BB - CIT(A) has allowed the claim of the assessee on the basis of his earlier decision for the A.Y. 2016-17 dated 25.01.2018 - HELD THAT:- No doubt, the law relied by the Ld. Representative of the revenue speaks that the service tax is the part and parcel of the profit, therefore, the same was subject to presumptive profit and gain u/s 44BB of the Act. The issue has been considered by Hon’ble Delhi High Court in the case of Mitchell Drilling International [2015 (10) TMI 259 - DELHI HIGH COURT].
Subsequently, by ITAT Mumbai Bench in the case of M/s. Weatherford Drilling [2018 (6) TMI 1526 - ITAT MUMBAI] in which it has been clearly held that the service tax is not liable to be include in gross receipt in terms of Section 44BB(1) r.w. Section 44BB(2) of the Act because the same is not part of the gross receipt for the purpose of depositing the presumptive tax. Taking into account all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we decide all the issues in favour of the assessee against the revenue.
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2019 (12) TMI 1457
Capital loss or allowable business deduction - difference between purchase price of Stock Appreciation Right ('SAR') and the sale price of such SAR at the time of exercise by the employees - HELD THAT:- As decided in own case [2017 (10) TMI 1531 - ITAT DELHI] above expenditure on account of employee stock option scheme is an ascertained liability for deduction and further also held that the expenses debited is cost of employee stock option plan in the profit and loss account is an allowable expenditure. The Ld. departmental representative also could not point out any other judicial precedent against the above judicial precedents cited by the Ld. authorized representative. - Decided in favour of assessee.
Disallowance of bad debt written off - AO was of the opinion that since the debt has not been routed through the profit and loss account and had not been considered as income, as mandated u/s 36(1)(vii) of the Act, the same was not allowable - HELD THAT:- Money receivable from a client by a share broker is to be treated as debt and even if a part of debt has been offered to income, the assessee will get the benefit of writing off of the entire amount of debt as is claimed as having becoming bad. Therefore, the only issue which needs to be looked into is as to whether a part of the debt written off was offered to income in this year or earlier years or not. Therefore, it will be in the fitness of things if this aspect is re-examined by the AO. Accordingly, we restore this issue to the file of the AO with a direction to verify and examine as to whether the assessee has offered to tax a part of the debt being claimed as bad and written off as income in earlier assessment years or in this year in form of brokerage or interest or not. If it has so been done, the AO shall allow the amount claimed as bad debt and written off as deduction. The assessee will be given due opportunity by the AO to present its case.
Disallowance made u/s 14A - assessee made suo moto disallowance - HELD THAT:- We agree with the proposition of the Ld. AR that disallowance u/s 14A cannot in any case exceed the exempt dividend income. We, therefore, set aside the issue and remit the issue back to the file of the AO to work out the disallowance by calculating the average investment under Rule 8D (2)(ii)/(iii) by taking those only investments which have actually yielded the divided income during the relevant year and if the same exceeds the dividend income then restrict the same to the extent of exempt income only. Here, since the assessee has suo moto disallowed an amount u/s 14A of the Act, the disallowance should not exceed this amount. AO shall give proper opportunity to the assessee before deciding the issue. Accordingly, ground allowed for statistical purposes.
Accrual of income - Addition being notional addition made on account of transfer of merchant banking licence by the assessee to another of its group company - HELD THAT:- Guided by the ratio laid down by BALBIR SINGH MAINI, CS ATWAL [2017 (10) TMI 323 - SUPREME COURT] we are unable to agree with the contention of the Revenue that the impugned amount would be said to have accrued to the assessee company - As decided in ADITYA BIRLA TELECOM LIMITED [2016 (10) TMI 1326 - ITAT MUMBAI] there can be no notional transaction with reference to fair market value in absence of any specific enabling provision in the Act and the full value of consideration has to be taken based on the price that has been contracted between the parties and further that there was no scope for imputing consideration on a notional basis. Therefore, it is our considered opinion that consideration cannot be imputed on a notional basis for the transfer of the merchant banking licence as the same has neither been received, realised and nor is capable of being received or realised. Accordingly, we set aside the order of the Ld. CIT (A) on the issue and direct the AO to delete the addition.
Disallowance of provision made for expenses in respect of legal and professional charges, recruitment charges expenses and software license expenses - Lower authorities have disallowed these provisions on the ground that the liability for payment of expenses has not crystallised during the year - HELD THAT:- Admittedly, the assessee is following mercantile system of accounting in which the income of expenditure has to be accounted for on accrual basis. There is no dispute about the method of accounting being followed. The only doubt, as been raised by the lower authorities, is whether the liability for payment of these expenses had crystallised during the year under consideration. A perusal of the invoices filed by the assessee in this regard also does not throw any light on the issue. To this extent, we are in agreement with the lower authorities that the assessee should establish that the services were rendered and utilised for the year under consideration. Therefore, we deem it fit to restore this issue to the file of the AO to verify as to whether the services for which these invoices have been raised and for which the assessee had made provision have been received and utilised during the year under consideration. If it is so found, then the AO shall allow the impugned provision as deduction in this year only.
Disallowance of depreciation on UPS - Assessee had claimed depreciation on UPS @ 60% by treating the same as part of computer and peripherals whereas the AO restricted the depreciation to 15% by holding that UPS was plant and machinery and not a part of computer and peripherals - HELD THAT:- This issue is no longer res judicata and there are a catena of judgments wherein it has been held that UPS is an essential part of computer system as a computer cannot function in isolation without the basic accessory. The leading case in this point is the judgment of the Hon’ble Delhi High Court in the case of CIT vs. BSES Yamuna Power Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT]. Therefore, respectfully following the same we direct the AO to allow depreciation on UPS @ 60%.
Disallowance of depreciation on fixed assets - disallowance has been made on the ground that the assessee could not submit complete bills for verification pertaining to purchase of fixed assets HELD THAT:- AR has submitted as due to computer related issues and pressure of last dates, complete invoices could not be filed but now 77.45 % of the invoices/payments were verifiable. Therefore, it is our considered opinion that it will be in fitness of things if this issue is restored to the file of the AO to re-examine the assessee’s claim and, thereafter, pass order in accordance with law after providing due opportunity to the assessee. It is so directed accordingly. Accordingly, ground stands allowed for statistical purposes.
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2019 (12) TMI 1453
Rectification of mistake u/s 254 - HELD THAT:- There is a mistake apparent from record in the above lines recorded in order dated 20.12.2019 which is now suo moto corrected vide this Corrigendum and it should read as under:
“…..The learned counsel for the assessee placed before the Bench , Balance Sheet of the said Lalitha Jewellery Mart Private Limited which has reserves and surplus to the tune of ₹ 289.29 crores as at 31.03.2015….”
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2019 (12) TMI 1452
Stay petition - as submitted that around 20% of the demand raised is already paid to Revenue and prayers are made to stay outstanding demand of tax and interest - HELD THAT:- As assessee placed before the Bench, the challans for payment of taxes to the tune of ₹ 9.26 crores post assessment framed by the AO , which challans are now placed in the stay petition file. The assessee has however not filed any financial statements / Balance sheet etc before the Bench to prove financial difficulties. The learned DR objected to grant of stay of outstanding demand of income-tax and interest thereon. After hearing both the parties and keeping in view entire factual matrix of the case and as per detailed discussions above, we are inclined to grant early hearing of the appeal which is now fixed for hearing before Regular Bench on 13th January 2020 and till then we direct Revenue not to take coercive action against the assessee for recovery of outstanding demand. Registry is directed to issue notice to both the parties fixing appeal .
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2019 (12) TMI 1446
Validity of assessment u/s 153A - Non taking the approval of the competent authority u/s 153D - HELD THAT:- The supervisory power mandated under s.153D of the Act in case of search assessment could not be bypassed. The co-ordinate bench in D. S. India Jewelmart P Ltd.[2019 (9) TMI 866 - ITAT AGRA] taken note of various judicial decisions and arrived at conclusion that lack of approval under s.153D of the Act could invalidate the assessment order. The non-compliance of Section 153D of the Act is a substantive defect and thus not curable. Such absence of approval has rendered the assessment order passed under s.153A of the Act as bad in law at the threshold.
Action of the CIT(A) is reversed and the main ground of the assessee is allowed.
Levy of interest under s.234A and 234B with reference to assessed income instead of returned income - HELD THAT:- As relying on M/s. Anand Vihar Construction Pvt. Ltd [2018 (11) TMI 1738 - ITAT RANCHI] Interest under s.234A & 234B of the Act is chargeable with reference to returned income only, we are inclined to adjudicate the legal objection raised by way of additional ground in favour of the assessee.
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2019 (12) TMI 1444
Condonation of Delay - delay in filing of appeal about 4378 days - Settlement Commission procedings pending - HELD THAT:- We find that the belief of the assessee for not filing the appeals before the Tribunal was that, they were expecting that their cases will be taken by the Settlement Commission in all assessment years. According to the assessee, they have harboured this belief on the advice of their Counsel, whose opinion is available on the paper book. Moreover, under the same set of facts the Co-ordinate Bench of ITAT has already taken a view and has condoned the delay under the identical circumstances for A.Y. 2003-04 & 2001-02.[2017 (7) TMI 360 - ITAT AHMEDABAD]
Since the Co-ordinate Bench has already taken a view by condoning the delay, therefore in order to maintain judicial consistency and judicial discipline, we also deem it appropriate to condone the delay in filing of appeals, accordingly, we proceed to decide the appeal on merits.
Since the ld.CIT(A) has not adjudicated the issues on merits rather, dismissed the appeals on account of non-maintainability. In the light of above decision of Co-ordinate Bench of ITAT, we deem it appropriate to set-aside orders of the ld.CIT(A) on these appeals and restore all these to the file of the ld.CIT(A) for re-adjudication. Appeal of assessee allowed for statistical purpose.
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2019 (12) TMI 1438
Validity of assessment - assessee had challenged the non service of notice u/s. 143(2) - addition u/s 68 - HELD THAT:- Once a notice has been sent on a proper address and said notice has not returned back, then it is deemed to have been affected in time to the assessee. The Hon'ble Jurisdictional High Court in the case of CIT vs. Madhsy Films Pvt. Ltd. [2008 (3) TMI 19 - HIGH COURT OF DELHI] in the context of notices issued u/s. 143(2) held that, where notice has been issued to the assessee u/s. 143(2) and has been sent by the speed post on the given address as per the return of income and if the same has not been received back, then it is presumed that it has reached the assessee. Similar view has been taken in the case of CIT vs. Yamu Industries Ltd. as [2007 (5) TMI 237 - DELHI HIGH COURT]. Accordingly, we hold that here in this case notice has not only been sent on the address mentioned in the return of income but also been duly served under the law within statutory time limit and accordingly the ground raised by the assessee is dismissed.
Addition u/s 68 - As assessee got the money as confirming party and not on behalf of someone else or as some kind of advance. It fairly evident from the records that assessee has received the amount from M/s. Samyak Projects Pvt. Ltd. which is nothing but income of the assessee, because M/s. Aravali Heights Infratech P. Ltd. had entered into an agreement with M/s. Yathartha Constructions vide MOU where M/s. Samyak Projects Ltd. acquire the right to develop the said land along with purchase of share resulting in 100% control in both the companies.
Onus in the confirming party had agreed to transfer the interest in land to M/s. Samyak Projects Ltd. to a total consideration of ₹ 81.88 crores. Thus, in the entire deal assessee gets an amount of ₹ 35,91,73,500 which definitely is an income of the assessee which has not been shown. Thus, the finding arrived by the Ld. CIT (A) cannot be tinkered and accordingly this issue is decided against the assessee and the grounds raised on this issue are dismissed.
Deposits in accounts of the assessee neither any evidence has been filed before the authorities below in support of any cash withdrawal which has been claimed to have been re-deposited nor any proper supporting documents or the explanation about the source of deposit has been filed. In absence of any rebuttal or explanation, the amount of deposits of ₹ 1,67,84,000/- has rightly been taxed as unexplained. Ld. CIT (A) has observed that the assessee has not been able to provide any evidence in support of his claims and merely giving a generalized statement that the cash deposits are from the cash withdrawal made earlier is not sufficient evidence. The assessee has not been able to correlate the cash withdrawn and subsequent deposits. In absence of any cogent reason and evidence, the authorities below are justified in holding cash deposits as unexplained. Accordingly, this ground is also dismissed.
CIT(A) has already directed the Assessing Officer to verify from the computation of income filed alongwith the return of income whether the same has been offered to tax or not. Accordingly, the appeal of the assessee is dismissed.
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2019 (12) TMI 1435
Power of the first appellate authority - Capital gain computation - Invoking section 50C - as pe CIT-A asset as depreciable and accordingly, the AO was right in invoking section 50C - HELD THAT:- CIT(A) has directed the AO to make a reference to the Valuation Officer in accordance with provisions of section 50C(2) of the Act. As mentioned earlier, the CIT(A), in an appeal against an order of assessment, may confirm, reduce, enhance or annul the assessment. He has no power to set aside/restore the order to the file of the AO.
In such a scenario, the order passed by the Ld. CIT(A) being not in conformity with section 251 of the Act is bad in law. Consequently, we annul the impugned order. Assessee appeal is allowed.
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2019 (12) TMI 1430
Non filling of appeal electronically within period of limitation - Appeal filed manually - Whether appeal cannot be treated as non-est in the eyes of law as appeal was not filed electronically as prescribed under Rule 45 of the Income Tax Rules, 1962? - HELD THAT:- As the assessee has filed its appeal manually on 25.04.2016 and has e-filed the same on 12.01.2019, the said e-filed appeal would in fact relate back to the date of filing of the appeal manually on 25.04.2016. This being so, we are of the view that the order of the Ld. CIT(Appeals) is unsustainable and consequently, set aside the same and the issues in this appeal are restored to the file of the Ld. CIT(Appeals) for adjudication on merits.
As relying on M/S. SOUTH INDIA BOTTLING CO. PVT. LTD. VERSUS THE DY. COMMISSIONER OF INCOME TAX, CHENNAI [2019 (8) TMI 1624 - ITAT CHENNAI] the orders of the learned CIT(A) are set aside and the issues raised in the appeal are restored to the file of the learned CIT(A) to adjudicate on merits.
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2019 (12) TMI 1429
Non filling of appeal electronically - Appeal filed manually - Whether appeal cannot be treated as non-est in the eyes of law as appeal was not filed electronically as prescribed under Rule 45 of the Income Tax Rules, 1962? - HELD THAT:- Appeal was filed manually within the period of limitation prescribed under the statute. No doubt Income Tax Rules prescribes that the appeal before the ld.CIT(A) should be filed electronically. It is matter of record that ld. CIT(A) had accepted the appeal, the defect was pointed out only in the year 2018. The right of appeal is an substantive right. The form of filing of appeal, procedure prescribed falls within the domain of law of procedure. The law of procedure has to be approached, understood and appreciated as a helpmate in the course of the process of administration of justice. Procedural provisions should be –so construed as to subserve the course of justice and not to hinder it.
It is now well-settled that a procedural provision, ordinarily, should not be construed as mandatory, if the defect in the act done in pursuance of it can be cured by permitting appropriate rectification to be carried out at a subsequent stage. Procedural laws are devised and enacted for the purpose of advancing justice. Reference can be made to the decision of Hon’ble Calcutta High Court in the case of CIT vs. Hardeodas Agarwalla Trust, [1991 (7) TMI 22 - CALCUTTA HIGH COURT].
In the present case, though the appeal was filed manually, ld. CIT(A) had taken cognizance of appeal memo. Therefore, we hold that ld. CIT(A) ought not have dismissed the appeal in limine without considering the merits of the assessments. We remit the matter back to the file of the ld. CIT(A) for denovo adjudication after affording due opportunity of hearing to the appellant in accordance with law. Hence, appeal filed by the assessee is partly allowed for statistical purposes.
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2019 (12) TMI 1426
Reopening of assessment u/s 147 - reasons to believe that some income of the assessee has escaped assessment - reassessment as barred by limitation - HELD THAT:- The phrase "reasons to believe" does not mean that the Assessing Officer should have ascertained the facts by legal evidence. All that is required is that, the AO should prima facie have some material on the basis of which there should be reason to believe of certain incomes chargeable to tax escaping assessment. There need not be any concrete evidence or proof available for coming to a final conclusion. It is only an initiation of proceedings of reassessment where the assessee gets a chance to put forth their defence, explanation and justification which would further be scrutinized by the Assessing Officer while reaching the final conclusion. One should not lose sight of the fact that the final assessment on the conclusion of proceedings under section 147 of the Act is also an appealable order wherein also the assessee has a right to agitate or challenge the order passed by the Assessing Officer on a proceeding under section 147 of the Act.
If we look into the proceedings under challenge, it would clearly reveal that there are sufficient reasons given by the Assessing Officer, which according to him is "reason to believe" of an income of more than ₹ 2.53 crores, which are chargeable to tax has escaped assessment and which has come to the notice of the Department at a later stage in the course of scrutiny.
This court has no hesitation to reach to the conclusion that the case in hand cannot be said to be one which is barred by limitation as the proceedings drawn by the Assessing Officer seems to be with sufficient material in record showing income, which otherwise is chargeable to tax having escaped assessment.
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