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Income Tax - Case Laws
Showing 1 to 20 of 713 Records
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2020 (2) TMI 1712
Ingenuine Loss in client code modification in F&O account - whether there is no indication in the lower authorities’ orders as to whether that the assessee’s demat account in any way involved such a client code modification or not? - HELD THAT:- As decided in Kundan Investment Ltd. [2003 (3) TMI 62 - CALCUTTA HIGH COURT] all the shares related to the reputed companies and were quoted shares in the stock exchanges and were purchased and sold at the prevalent quoted market rates, which was verified from the statement of the slack exchanges. On these basis, the Tribunal found that the CIT(A) had proceeded on the basis of suspicion that there might be some ingenuinity in the transactions.
On the basis of the materials produced, the Tribunal came to a finding of fact, which does not seem to be perverse. Whether the shares could be sold immediately on the date of purchase or not was a question of business expedience. Whether the decision was correct or wrong cannot the question, which can be a subject-matter of decision in such a case. In order to find out whether the transaction is genuine or in genuine it is neither the expedience nor correctness of the decision nor the business expertise of the person to be considered. It is to be considered on the basis of the materials that there was no such transaction and that these share transactions were paper transactions. The suffering of loss could not be a factor for such purpose. Having regard to the facts and circumstances of the case, the view taken by the Tribunal allowing share loss cannot be said to be erroneous or perverse.
Thus we direct the Assessing Officer to delete the addition in question - Decided in favour of assessee.
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2020 (2) TMI 1708
TP Adjustment towards Stand by Letter of credit - adjustments towards commission for utilization of non-fund based limits of the assessee by Associated Enterprises (AEs) and the Bank has issued SBLC and charged commission - AR contented that there is no requirement of ALP adjustment as the AE is permitted to utilize its non-fund based limits, which is in the nature of shareholders operations and on commercial expediency - HELD THAT:- As vehemently submitted that, there is no necessity of Transfer Pricing adjustment on SLBC because of commercial expediency, But could not controvert the observations and findings of the CIT(Appeals) with cogent evidence. Accordingly, we are not inclined to interfere with the order of CIT (A) on this disputed issue and confirm the same and dismiss the ground of appeal of the assessee.
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2020 (2) TMI 1704
Determination of payment of trademark royalty of Cadbury Schweppes Overseas Limited [CSOL] - TP adjustment on account of payment of trademark royalty to CSOL - HELD THAT:- It is clear from the above decision of the Tribunal [2018 (11) TMI 1762 - ITAT MUMBAI] that the royalty payment of trademark used held within arm’s length and does not call for any adjustment. There being no difference in the factual position in the impugned assessment year, therefore, respectfully following the order of the Tribunal on identical facts in assessee’s own case we hold that royalty payment on trademark to CSOL, 1% of net sale is at arm’s length, hence, no further adjustment is required. The ld DR has fairly conceded that the issue is covered by the decision of the Tribunal in assessee’s own case. Appeal of the assessee is allowed.
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2020 (2) TMI 1703
Disallowance u/s 14A - assessee has suo motu disallowed amount - HELD THAT:- As disallowance of expenditure in terms of Section 14A r.w. Rule 8D cannot exceed the exempt income itself. No additional disallowance is called for under sec. 14A of the Act in excess of exempt income. The disallowance is thus required to be restricted to the extent of exempt income. See CORRTECH ENERGY PVT. LTD. [2014 (3) TMI 856 - GUJARAT HIGH COURT], M/S CHETTINAD LOGISTICS PVT. LTD. [2018 (7) TMI 567 - SC ORDER]
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2020 (2) TMI 1699
Maintainability of appeal against ITAT - low tax effect - Addition u/s 2(22)(e) and 14A deleted - AO treated the loan received from Member(s)/Share-holder(s)/Director(s) holding more than 10% of shares therein, as deemed dividends and made additions under the head “income from other sources” and also disallowance u/s 14A - HELD THAT:- From the perusal of the order of the Tribunal, it is not forth coming that any notification, order, instruction or circular was dealt with/ relied upon by the Tribunal what to talk about the same being held illegal or ultra vires. Even otherwise, the Tribunal has no jurisdiction to declare a circular ultra vires. In our considered view, the case does not fall in the exception clause.
The appeal is dismissed. The substantial questions claimed are kept open.
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2020 (2) TMI 1696
Stay Application - recovery proceedings - disposing a stay application filed by the petitioner in respect of a disputed demand in respect of assessment year (AY) 2017-18 - HELD THAT:- A perusal of the order reveal that there has been no application of mind by the Assessing Officer in considering the trifolds aspects of (i) prima facie case (ii) financial stringency and (iii) balance of convenience, prior to disposal of the application. See MRS. KANNAMMAL VERSUS INCOME TAX OFFICER WARD 1 (1) TIRUPUR [2019 (3) TMI 1 - MADRAS HIGH COURT]
The impugned order is set aside. The petitioner will appear before the Assessing Officer on Tuesday, the 3rd of March at 10:30 a.m., without expecting any further notice in this regard. The stay application shall be disposed within two weeks thereafter i.e., on or before 17.03.2020. Status quo of recovery be maintained till 17.03.2020.
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2020 (2) TMI 1695
Disallowance u/s 14A r.w.r 8D(2)(i) and (2) - Calculation of levy of interest u/s 234A and 234B of the Act in respect of self assessment tax paid u/s 140A - HELD THAT:- We direct the Assessing Officer to comply with the directions of Tribunal in group cases of assessee [2019 (4) TMI 214 - ITAT PUNE] and decide the same. AO shall give reasonable opportunity of hearing to the assessee while deciding the issues. Thus, the grounds raised by the assessee are partly allowed as above.
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2020 (2) TMI 1694
Disallowance of claim u/s 35(1)(ii) - bogus donations for claiming deduction - assessee failed to furnish the certificate issued by the prescribed authority to School of Human Genetics and Population Health (SHG & PH) Kolkata granting approval for exemption of tax in respect of donations made to it - HELD THAT:- As relying on judgment of [2019 (7) TMI 1559 - ITAT AHMEDABAD] not specifically recorded statement of representatives of the donee. He has not brought on record a specific evidence wherein donee has deposed that donations received from the assessee was paid back in cash after deducting commission. On the basis of a general information collected from the donee, the donation made by the assessee cannot be doubted. Neither representatives of the donee have been put to cross-examination, nor any specific reply deposing that such donation was not received, or if received the same was repaid in cash, has been brought on record.
donation given by the assessee to the donee, on which the assessee no mechanism to check the veracity, can be doubted, more particularly, when certificate to obtain donation has been cancelled after two years of the payment of donation. It is fact which has been unearthed subsequent to the donations. Therefore, there cannot be any disallowance on this issue. Assessee’s appeal is allowed.
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2020 (2) TMI 1693
Penalty u/s 271(1)(c) - principles of natural justice - as argued assessee was not provided sufficient opportunity of hearing before the AO in the penalty proceedings - HELD THAT:- On perusal of the penalty order, we found that the assessee in lieu of the show cause notice issued has filed explanations on 17.01.2017 and mentioned that the addition in order u/s 143(3) by AO was accepted and paid the taxes. Further, we found that there is no other date of hearing is provided, the assessee has accepted the addition to buy peace with the Department. AO in complying the provisions of Section 271(1(c) has come to a conclusion that the assessee has deliberately furnished inaccurate information and details. AR emphasized that the assessee has prima facie vital explanations to submit before the AO in the penalty proceedings and prayed for one more opportunity.
We considering the factual aspects and principles of natural justice and further the reasons envisaged by the learned Authorized Representative, consider it appropriate to provide one more opportunity to the assessee to give clarifications and explanations in detail to the AO in the penalty proceedings. Assessee appeal is allowed for statistical purposes.
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2020 (2) TMI 1691
Validity of Reopening of assessment - mandatory requirement of giving a notice u/s 143(2) - Curable defect u/s 292BB or not - HELD THAT:- Impugned reassessment order passed by the AO u/s. 147/143(3) of the Act is invalid and void-ab-inito for want of valid notice u/s. 143(2) as per law as evident from fact that when return in response to notice u/s. 148 of the Act was admittedly filed on 05.10.2015, the notice u/s. 143(2) of the Act was issued on very same date i.e. on 05.10.2015 which shows non application of mind on the part of the AO in issuing notice u/s. 143(2) of the Act and thereafter assuming jurisdiction to frame assessment on this basis, the notice is not tenable in law and therefore impugned proceedings need to be quashed.
See Silver Line [2015 (11) TMI 809 - DELHI HIGH COURT] as held Section 292BB of the Act is a rule of evidence and it has nothing to with the mandatory requirement of giving a notice and especially a notice u/s 143(2) of the Act which is a notice giving jurisdiction to the AO to frame an assessment. Decided in favour of assessee.
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2020 (2) TMI 1690
Nature of expenses - club entrance fees - Revenue or capital expenditure - HELD THAT:- As decided in CIT vs. Samtel Colour Limited [2009 (1) TMI 26 - DELHI HIGH COURT] holds that such an admission fee expenditure incurred for corporate membership is very much allowable as revenue expenditure. Thus both the learned lower authorities have erred in law and on facts in disallowing the impugned payments as capital expenditure. The same stands deleted.
Deduction u/s 35D regarding share issue expenditure - whether amortization is allowable only for “pre-operative expenses”? - HELD THAT:- No merit in Revenue’s instant stand since section 35D(1)(ii) makes it clear that such an expenditure is allowable not only that pertaining to “before the commencement his business” but also “after the commencement of his business, in connection with extension of his undertaking or in connection with its setting up of a new unit”.
This tribunal’s recent decision in M/s MBL Infrastructure Ltd [2020 (1) TMI 457 - ITAT KOLKATA] has held similar share issue expenses as eligible for section 35D amortization - We adopt the above detailed reasoning mutatis mutandis and accept the assessee’s contention seeking impugned amortization.
CIT-DR said that the assessee did not identify the share issue expenses - He fails to dispute that the assessee’s impugned expense have already been recorded in the books of accounts forming part of records. We thus allow the assessee’s instant second substantive ground as well.
Disallowance u/s 40(a)(ia) - Assessee not filing the necessary details of its payees - effect of section 40(a)(ia) 2nd proviso inserted in the Act vide Finance Act 2012 w.e.f. 01.04.2013 - HELD THAT:- We wish to clarify here that hon’ble Kerala high court in Thomas George Muthoot [2015 (7) TMI 810 - KERALA HIGH COURT] had held the very proviso as having prospective operation only. We note in this backdrop that the assessee’s omission, if any, in not filing the necessary details of its payees is not fatal to its cause in view of the legal developments qua interpretation of the above-stated amended proviso involving divergent views from various high courts. We thus accept the assessee’s instant third substantive grievance for statistical purposes and leave it open for the Assessing Officer to carry out the necessary factual verification as per law. This substantive ground is taken as accepted for statistical purposes.
Disallowance u/s 14A - administrative expenses disallowance - HELD THAT:- Both the lower authorities have erred in law invoking the impugned disallowance in case of an assessee’s shares held as stock-in-trade. The assessee’s instant fourth substantive grievance is accepted.
Disallowance of interest claim u/s 36(1)(viii) after changing allocation of operative expenses from asset to turnover basis - HELD THAT:- We notice qua the instant issue as well that this tribunal’s coordinate bench’s decision in Allahabad Bank [2019 (6) TMI 993 - ITAT KOLKATA] as held assessee-Bank was required to manage both performing as well as nonperforming assets and the operating expenses incurred by it thus were attributable to non-performing assets also. This vital aspect was not appreciated by the authorities below in proper perspective and as rightly contended by assessee, the basis adopted by them for apportioning the operating expenses without proper appreciation of the vital position resulted in a distorted picture - basis adopted by the assessee for the apportionment of operating expenses was more fair and reasonable and the same followed consistently by the assessee in the earlier years was accepted by the revenue.
Thus we conclude that both the lower authorities have erred in changing assessee’s allocation from asset to turnover basis thereby including even the non-performing assets as well. The impugned section 36(1)(viii) disallowance is directed to be deleted therefore.
Provision for fraud and dacoity disallowed - assessee argued since the impugned provision has followed reasonable prudence after taking into account all fraud and dacoity cases and therefore allowable as per the hon’ble apex court’s landmark decision in Chainrup Sampatram [1953 (10) TMI 2 - SUPREME COURT]- HELD THAT:- the assessee’s income realized from the corresponding customers as well as insurance sums to this effect have also been declared in the year(s) of actual receipt. Learned CIT-DR is fair enough in submitting that all these aspects requires AO’s factual verification. We therefore restore the instant issue back to AO for carrying out necessary factual verification.
Assessee appeal partly allowed.
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2020 (2) TMI 1689
Limitation prescribed u/s 132 - limitation period of 60 days - communication herein is in terms of Section-37 of the Foreign Exchange Management Act, read with Section-132 of the Income Tax Act - HELD THAT:- It postulates a limitation period of 60 days with regard to such an impugned order. The same having been examined and following the judgments of the Hon’ble Supreme Court on this point, the impugned orders were quashed by the learned Single Judge. Under these circumstances, we find no good ground to entertain this appeal. Hence, the appeal is dismissed.
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2020 (2) TMI 1688
Assessment u/s 144C - APA between the assessee and the CBDT with reference to the TP issues - HELD THAT:- As pointed by assessee that the assessee has submitted two separate letters before the Registry of this Tribunal on 29.01.2020 in which, it is submitted by the Managing Director of the assessee company that the assessee wants to withdraw the grounds of appeal filed on 29.02.2016 for Assessment Year 2011-12 and filed on 22.12.2017 for AY 2013-14 because the assessee has entered into a Unilateral APA with the Central Board of Direct Taxes under section 92CC of the Income Tax Act, 1961 and the assessee has also enclosed a copy of the said agreement for both the years. Appeals of the assessee are dismissed as withdrawn.
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2020 (2) TMI 1686
Revision u/s 263 - Eligibility of deduction u/s 54EC - HELD THAT:- There is no dispute between the parties about the two dates each of receipt of sale consideration of painting(s) followed by reinvestment in REC bonds.
The assessee’s reinvestment falls within six months from the date of transfer. He is entitled for the impugned section 54EC deduction. We make it clear that the legislature has amended section 54EC by inserting 2nd proviso to sub-section(1) of the Act by the Finance Act 2014 w.e.f. 01.04.15 restricting the reinvestment amount to a lumpsum of Rs.50,00,000/-; even if it involves more than one financial year, w.e.f 01.04.15 only without having retrospective effect. We wish to reiterate here that we are dealing with assessment year 2014-15.
It emerges from the case records that the learned special bench had came across the concerned assessee’s date of receipt of sale consideration as 10.06.08 and reinvestment of the corresponding capital gains on 17.12.08 only.
We therefore adopt the reasoning Alkaben B. Patel [2014 (3) TMI 842 - ITAT AHMEDABAD] mutatis mutandis and hold that the assessee’s impugned reinvestment dated 28.04.14 after receiving final amount of consideration on 01.11.13 as very well beyond six months and therefore, he is entitled for the impugned section 54EC deduction.
PCIT’s impugned revision action in the above-narrated facts and circumstances is not sustainable since the Assessing Officer’s alleged failure in either or not examining the case or disallowing the above-stated deduction relief has not caused any prejudice to interest of the Revenue. His assumption of section 263 revision jurisdiction stands reversed therefore. AO’s regular assessment herein stands revived as a necessary corollary.
Coming to remaining eight assessees’ cases both the learned representatives are ad idem that the same also involve identical facts since they had received the sale consideration of painting(s) on more than one occasion containing different dates followed by reinvestment thereof in REC bonds on similar two dates only. More particularly qua the latter one being beyond a period of six months from the date of transfer of the relevant capital asset(s). PCIT’s revision direction in these eight cases are also stood reversed therefore.
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2020 (2) TMI 1684
Benefit/perquisite u/s.2(24(iv) - addition of notional interest - Calculation of benefit by taking the rate of interest @ 6% per annum - AO held that amount has been received by the assessee as a Director without any interest, and therefore, in terms of provision of Section 2(24)(iv), the interest free advance received by the Directors is to be treated as Benefit/perquisite received by him, because he is the person who has controlled the affairs of these two companies and also other companies - HELD THAT:- ITAT order in [2019 (1) TMI 2001 - ITAT DELHI] wherein the Tribunal has dealt and decided this issue by following the order of the Tribunal in Assessment Year 2009-10 [2018 (3) TMI 1575 - ITAT DELHI] wherein set aside ground of the appeal of the revenue to the file of the Ld. assessing officer with a direction to the assessee to show before him that how the about transaction of receiving loan from a firm to the assessee free of interest where a company where the assessee is director which is provided huge interest free funds to such firm is not chargeable to tax as income under section 2(24)(iv) - AO may examine the arguments of the assessee and decide the issue afresh in accordance with the law after granting assessee adequate opportunity of hearing. Accordingly, ground No. 3 of the appeal of the revenue is allowed with above direction.
Thus, respectfully following the aforesaid precedent in assessee’s own case, we restore all this issues raised before us to the file of the Assessing Officer for reconsideration as per the direction of the Tribunal. Appeals of the assessee are allowed for statistical purposes.
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2020 (2) TMI 1682
Reopening of assessment u/s 147 - whether the learned Tribunal was legally justified in upholding the action of the Assessing Officer reassessing the “interest income” of the appellant under sections 147 / 148? - HELD THAT:- This question has to be answered in the affirmative notwithstanding the fact that the AO, admittedly, on account of oversight / mistake failed to assess the interest income since there was no question of double addition which had arisen in this case.
A judgment of the Hon'ble Supreme Court which was referred to and relied upon by the learned advocate representing the appellant rendered in Commissioner of Income-Tax v. Corporation Bank Ltd. [1999 (2) TMI 16 - SUPREME COURT] has no manner of application at all in the facts of the instant case, since that judgment was rendered prior to the applicable law having undergone several amendments.
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2020 (2) TMI 1678
Taxability of Home Office Allocation receipts - FTS receipts - HELD THAT:- As decided in assessee own case [2017 (12) TMI 299 - ITAT KOLKATA] receipt in question is not FTS and cannot be charged to tax in the hands of the Assessee. Nevertheless, we are of the view that it would be just and appropriate to direct the AO to examine the claim of the Assessee in this regard and if the claim of the Assessee is found to be correct, then the receipt in question cannot be taxed as FTS. We hold and direct accordingly. Thus the relevant grounds of Cross objections by the Assessee are allowed.
Agreement between the appellant and TIL was purely advisory services and such advisory services rendered cannot be treated as fees for included services under Article 12(4)(b) since there is no make available of technology.
Home office receipts during the year under consideration are pursuant to the same agreement between the appellant and TIL which has already been considered by the Hon’ble ITAT while adjudicating the appeals for A.Ys 2002-03 to AY 2007-08. Thus we uphold the same and dismiss this ground of the revenue for all the Assessment Years.
Taxability of charge back of receipts - assessee had received an amount on account of charges from TIL/Timken Engineering and Research India Private Limited (TERI). These receipts were reimbursements of payments made by the assessee to third parties towards, provision of various services to TERI, TIMPL and TIL - HELD THAT:- As decided in assessee own case [2017 (12) TMI 299 - ITAT KOLKATA] the sums received by the appellant in question are pure reimbursements on actual with no mark up and the appellant is not the ultimate beneficiary of the sum in question. The appellant has not rendered any service to TIL and there is no basis on which the sum in question can be considered as FTS in the hands of the appellant. Further, even assuming it is FTS, the services rendered does not make available any technical skill, knowledge, etc. to the service recipient.
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2020 (2) TMI 1677
Income deemed to accrue or arise in India - Business connection /permanent establishment in India - Whether the appellant had a business connection in India in terms of the Act and a permanent establishment [PE] in India in terms of the India-Singapore Double Taxation Avoidance Agreement [DTAA] - HELD THAT:- The Tribunal in the aforementioned appeals for A.Y 1999-2000 to A.Y 2004-05 had upheld the orders of the lower authorities and had concluded that the assessee was having business connection and PE in India. We find that though the assessee had raised a ground of appeal assailing the observations of the DRP that the assessee had a PE in India in terms of Article 5(1) and 5(8) of the India-Singapore DTAA but during the course of the hearing of the appeal no contention was advanced by the ld. A.R to support his aforesaid claim. We thus following the orders passed by the coordinate benches of the Tribunal in the assesses own case uphold the order of the DRP that the assessee had a business connection/PE in India. The Ground of appeal No. 2 raised by the assessee before us is dismissed.
Amount of income that was attributable to the PE of the assessee in India - We herein conclude that 15% of the gross receipts pertaining to India bookings shall be the income attributable to the India operations of the assessee. Also, we follow the view taken by the Tribunal in the aforesaid preceding years viz. A.Y 1999-2000 to A.Y 2004-05 [2009 (7) TMI 1341 - ITAT DELHI] and A.Y 2005-06 to A.Y 2011-12 [2018 (2) TMI 1767 - ITAT MUMBAI] that as the commission paid by the assessee to its NMC viz. ADSIL at 25% of its gross receipts pertaining to India bookings was higher than its income attributable to India, therefore, no part of the aforesaid income would remain in the hands of the assessee which could be brought to tax in India. As such, in terms of our aforesaid observations we allow the Ground of appeal No. 3 raised by the assessee.
10% of the expenses reimbursed by ADSIL were to be held as the business income of the assessee - HELD THAT:- As relying on assessee own case A.Y 2005-06 to A.Y 2011-12 [2018 (2) TMI 1767 - ITAT MUMBAI] we herein direct that 10% of the aforesaid amoun be brought to tax as the business income of the assessee. At the same time, the assessee would be entitled for claiming ‘set off’ of the aforesaid amount against the commission payment made by it to its NMC viz. ADSIL. The Ground of appeal No. 4 raised by the assessee is partly allowed in terms of our aforesaid observations.
TP adjustment in respect of USD denominated interest free ECB loan that was advanced by the assessee to its wholly owned subsidiary company in India, viz. ADSIL - HELD THAT:- As following the view taken by the Tribunal in the aforesaid preceding years viz. A.Y 2005-06 to A.Y 2011-12 [2018 (2) TMI 1767 - ITAT MUMBAI] in the assesse’s own case, we herein conclude that the notional interest income on the loan (interest free) that was advanced by the assessee to its AE viz. ADSIL would be assessable as the income of the assessee which has a business connection/PE in India. At the same time, we are in agreement with the claim of the ld. A.R that the said notional interest income on the loans advanced by the assessee to its AE would be entitled to be adjusted against the expenditure incurred by the assessee by way of marketing service fees paid to its National Marketing Agency in India, i.e its NMC viz. ADSIL. Ground of appeal No. 5 raised by the assessee is disposed off in terms of our aforesaid observations.
Levy of interest u/s 234B and interest u/s 234C - HELD THAT:- As in N.G.C Network Asia CCC [2009 (1) TMI 174 - BOMBAY HIGH COURT] had concluded that the Tribunal had rightly deleted the interest levied on the assessee under Sec. 234B of the Act. We thus in terms of the aforesaid observations of the Hon’ble High Court direct the A.O to delete the interest levied on the assessee under Sec. 234B and Sec. 234C.
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2020 (2) TMI 1673
Estimation of income - Undisclosed sale - assessing income @60% of the profit rate - HELD THAT:- We notice that this assessee is a cloth merchant and proprietor of M/s Geeta Tex Fabrics. Case file suggests that the learned lower authorities have assessed her income derived from cloth trading @0.75% profit rate. That being the case, we are of the opinion that the CIT(A)’s impugned action assessing 60% profit rate is neither based on the assessee’s corresponding books of accounts nor that adopted in preceding and succeeding assessment years.
We therefore conclude that a lumpsum profit rate @7.5% of the rates in issue, already double than that accepted @0.75%, would be just and proper keeping in mind the peculiar facts and circumstances involved herein. Necessary computation to follow as per law. It is made clear that our instant estimation shall not be treated as a precedent in other assessment year(s). Assessee’s appeal is partly allowed.
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2020 (2) TMI 1671
Addition u/s 69 - unexplained deposits in his bank account - assessee as per its explanation before the tax authorities submitted that he is trading in Kiryana items and has income from sale of agricultural produce along with milk and Ghee and there are some cash receipts from his real brother - HELD THAT:- The assessee claims to be illiterate and the fact that he did not have the best of legal advice available, is glaring on the record as even proper and appropriate grounds could not be raised. The aim of the statute is to collect just and due taxes for the State and not encash the ignorance of the tax payers. The representation before the CIT(A) admittedly was not proper. Accordingly, in the interests of substantial justice, the issues are set aside to the file of CIT(A) with the direction to decide the same afresh in accordance with law by way of speaking order after giving the assessee a proper opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.
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