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Income Tax - Case Laws
Showing 141 to 160 of 745 Records
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2021 (10) TMI 1149 - ITAT BANGALORE
Deemed dividend assessed u/s 2(22)(e) - HELD THAT:- As noticed that the decision rendered by Ld CIT(A) in deleting the assessment of deemed dividend in the hands of Prakash Ladhani has been upheld by the Tribunal on the reasoning that the transactions of advancing money by CAPL to BBPL are business transactions. Accordingly, we confirm the decision of ld CIT(A) in holding that there is no case for assessment of deemed dividend on merits and hence the protective addition made in the hands of the assessee herein is liable to be deleted.
Unexplained investment as assessed protectively - DTVSV Scheme - Since the addition made on substantive basis in the hands of Shri Prakash Ladhani has been upheld by Ld CIT(A), the protective addition made in the hands of the assessee of the very same amount was deleted by Ld CIT(A).
As further submitted that Shri Prakash had filed appeal before ITAT challenging the decision rendered by Ld CIT(A) and further he has opted to settle the issue under DTVSV Scheme. The assessee has furnished a copy of Form No.1 filed under the above said scheme. Under the above said scheme, the above said company is required to pay tax shown in Form no.3 and final certificate in Form no.5 is required to be issued in proof of settlement of dispute. Since these matters are pending, we restore this issue to the file of AO with the direction to delete this protective addition upon furnishing of Form no.5 issued to Shri Prakash Ladhani in settlement of this dispute.
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2021 (10) TMI 1148 - ITAT MUMBAI
Validity of reopening of assessment u/s 147 - notice u/s 148 was not validly served - notice u/s 148 of the Act was issued on 12-03-2014 and it was served on the assessee by way of affixture only after six days, i.e. on 18-03-2014, as per the report of the serving officer -- mandation of serving officer has to show that all due and reasonable diligent efforts were made to serve the assessee/defendant with the notice - HELD THAT:- Without exhausting the regular / ordinary course of service of notice as provided under section 282 of the Act, the assessing officer has straight away proceeded to serve the notice by way of substituted service as provided under Rule 17 and 20 of Order V of CPC - there is nothing on record to suggest that before resorting to substituted service of notice issued under section 148 of the Act, the pre-conditions of Rules 17 and 20 of Order V CPC were satisfied.
Nowhere in the assessment order the assessing officer has mentioned even a single sentence to indicate that either the assessee or anyone authorized on his behalf has refused to sign the acknowledgement or the assessing officer even after reasonable attempt has failed to find the assessee at the given address or the assessee has consciously avoided service of notice issued under section 148 of the Act.
Thus, in our view, the notice issued under section 148 of the Act was not validly served on the assessee. Therefore, the fundamental requirement for initiation of proceedings under section 147 of the Act stands unsatisfied / unfulfilled. This being a jurisdictional error, the consequence which follows would result in invalidation of the assessment order. Therefore, we hold that the assessment order passed under section 143(3) r.w.s. 147 of the Act without valid service of notice under section 148 of the Act is void ab initio.
Eligibility of reasons to believe - As reading of the reasons recorded clearly reveals that being of the view that the assessee has not filed any return of income for the impugned assessment year resulting in escapement of income, the assessing officer has reopened the assessment under section 147 of the Act. However, the facts on record reveal that the assessee, in fact, had filed his return of income for the impugned assessment year on 18-05-2010 declaring total income of ₹ 2,05,448/. It is also evident, the return of income so filed by the assessee was processed under section 143(1) of the Act on 15-04-2011 granting refund of ₹ 7,190/-. Thus, it is very much clear, the reason to believe for reopening of assessment has no nexus with the material on record.
Thus due to erroneous assumption of facts while forming belief for reopening of assessment, the proceeding has been vitiated. Consequently, the assessment order passed under section 143(3) r.w.s. 147 of the Act has been rendered invalid. - Decided in favour of assessee.
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2021 (10) TMI 1147 - ITAT MUMBAI
Assessment u/s 153C - Whether no addition/disallowance can be made in absence of any incriminating material found as a result of search and seizure operation? - HELD THAT:- As on the date of search and seizure operation, assessments for the impugned assessment years have not abated. A perusal of the assessment orders would reveal that the various additions/disallowance made by assessing officer, such as, disallowance of depreciation, cash credits, 14A disallowance, etc. are not based on any incriminating material found as a result of search. At least, in the body of the assessment orders the assessing officer has not made any observation to demonstrate that the additions/disallowances made are with reference to incriminating material found as a result of search.
On a specific query from the bench, learned departmental representative while accepting that the assessing officer has not referred to any incriminating material for making additions also could not bring to our notice any incriminating material on record which can be even remotely connected to the additions made by the AO.
As per the ratio laid down in case of CIT vs Continental Warehousing Corporation and Another [2015 (5) TMI 656 - BOMBAY HIGH COURT] in a case where on the date of search and seizure proceedings the assessment has not abated, no addition can be made in absence of any incriminating material - No infirmity in the decision of Commissioner (Appeals) in deleting the additions made by the assessing officer - Decided in favour of assessee.
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2021 (10) TMI 1146 - ITAT RAIPUR
Revision u/ 263 by CIT - revisional order passed ex-parte has observed that deduction claimed by the assessee on sale of agricultural land u/s 54B of the Act has been wrongly allowed without adequate enquiry and the order of the AO passed u/s 143(3) of the Act is vitiated by non-application of mind - principal allegation of the PCIT is that the land sold and then purchased by the assessee is not an agricultural land - HELD THAT:- We find the observations of the PCIT neither here nor there. It is manifest that the PCIT has proceeded on a total misconception of law in the given set of facts. Where the agricultural sold land situated is outside the municipal limits, it will not be deemed as capital asset under Section 2(14)(iii) of the Act at the first place and consequently there would be no liability of capital gain on the assessee at the threshold. Hence, we do not understand the need for certificate of land record authorities in this regard. The assessee has not claimed at all that the agricultural land is situated outside the specified distance of municipality.
The assessee has, in fact, calculated the LTCG and claimed deduction thereon on the ground that the capital gain accrued on sale of land has been towards purchase of other land parcels which is also used for agricultural purposes. The PCIT has made out a totally different case which has no relation with application of Section 54-B of the Act. The use of agricultural land, after its transfer to a builder, is of no consequence for the purposes of Section 54-B of the Act. The PCIT himself has admitted that the land in sale to be agricultural land and also not disputed the purchase of agricultural land by utilization of capital gain for agricultural purposes. The PCIT has proceeded to disturb the assessment on totally irrelevant consideration and without showing any error in the claim.
On appreciation of facts available before us showing the use of land for agricultural purposes having regard to the agreement with farmers and other supporting papers, we are unable to discern even any remote error in the action of the AO in admitting the claim of deduction under Section 54-B of the Act. On the other hand, we find that the action of the PCIT suffers from vice of arbitrariness and total lack of application of mind. The palpably wrong revisional order is accordingly set aside and quashed.
Non-issuance of notice and on total lack of opportunity while concluding the proceedings under Section 263 - whether a failure to give a reasonable opportunity to the assessee of being heard was only a procedural irregularity ? - The finality of the assessment cannot be disturbed for the failure of the PCIT to obdurately adhere to the explicitly prescribed requirement of opportunity to assessee. Hence, in the absence of any opportunity to the assessee for which the fault is attributable squarely to the PCIT, is fatal and such defect being incurable, the revisionary order passed under Section 263 of the Act is also required to be quashed independently on this ground also. - Decided in favour of assessee.
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2021 (10) TMI 1145 - ITAT GUWAHATI
Validity of reopening of assessment - non-service of notice u/s. 143(2) - as per AO Assessee did not comply with the notice u/s. 148 of the Act by filing the return of income, therefore he issued notice u/s. 142(1) of the Act calling for certain details which was also not responded by the assessee - HELD THAT:- We agree that the AO had no other alternative but to proceed with framing assessment u/s. 144 of the Act since it is admitted that the assessee had not filed the return of income pursuant to the service of notice u/s. 148 of the Act. Therefore, the AO rightly did not issue notice u/s. 143(2) of the Act, because there was no statutory requirement of the AO to issue the same. Ergo this legal issue raised stands dismissed.
Non participation from the side of the assessee - Addition as long term capital gain - According to assessee this amount was sale consideration of his Shaiel Dhan Bhumi/Shaiel Raice Land/Rural Agricultural Land which is exempted u/s. 10(37)(1) read with Section 2(14) - HELD THAT:- First of all it is not in dispute that the assessment order has been passed after reopening u/s. 147 of the Act and thereafter by framing the assessment u/s. 144 of the Act because according to AO the assessee did not co-operate during the assessment proceedings. And it is the assessee's case that for reasons beyond his control being not well he was prevented from responding to the notice u/s. 142(1) and notice u/s. 144 of the Act. So, as held by the Hon'ble Supreme Court Tin Box Compan y[2001 (2) TMI 13 - SUPREME COURT] if sufficient opportunity is not given by the AO while framing of assessment, then the assessee should be given opportunity before the AO.
Since the assessee has to explain the amount deposited in his bank account supported by the documents and the AO had to examine the veracity of the same, we deem it fit to set aside the impugned order of Ld. CIT(A) for de novo assessment on the issue of addition made by the AO - Appeal of assessee is allowed for statistical purposes.
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2021 (10) TMI 1144 - ITAT SURAT
Revision u/s 263 by CIT - scope of revisionary jurisdiction of ld. PCIT - validity of declaration made under IDS - income declared by assessee under IDS was accepted without any variation or objection - AO issued notice u/s 153C requiring the assessee to file return of income - search and survey of SRK group and it related parties, of which the assessee is also part, has resulted in to impounding of documents/ books of accounts and evidence related with evidence of undisclosed receipt and expenses in respect of project “Amrut Sarovar Residenty” - HELD THAT:- We find the there is no dispute that the AO while passing the assessment order accepted the claims of the assessee in non- speaking order. It is not the case of ld PCIT that the AO is not authorised (empowered) to accepted the return of income in non-speaking order. We have seen that the AO while passing the assessment order recorded that “the Authorized representative of the assessee vide various order sheet entries have furnished the relevant details and information called for. After affording ample and adequate opportunities of being heard to the assessee, assessment proceedings have been completed on the basis of the submissions and details collected and in consequence upon the conclusion of proceeding and hearing of evidences, assessment is made by this order - A perusal of show cause notice under section 263 dated 08.03.2021, clearly demonstrate that the ld PCIT identified all the issues which were the subject matter of the notice under section 142(1) and the questionnaire attached thereto, were issued by the assessing officer, except the issue of initiation of penalty 271D. The ld PCIT in his show cause notice (SCN) under section 263 has accepted that the AO made detailed questionnaire dated 03.12.2018. And on perusal record and details /evidences available on record, the PCIT noted that AO has not made further inquiry.
PCIT has not made a case that there was “no enquiry” or “lack of inquiry” rather recorded that the AO called detailed inquiry. We find that the ld. PCIT has not specified that what kind of further inquiry was required, when the income disclosed in IDS was duly accepted by higher authority. And the acceptance of IDS was never questioned by Board or other superior authority then PCIT.
We find that in SCN the ld PCIT observed that the assessee made declaration on the basis of misrepresentation of fact. However, the ld PCIT failed to mentioned the nature of misrepresentation or the basis of his such observation. PCIT failed to give any specific finding on his observation while revision the assessment order. After going through the entire material, we find that the AO had taken a conscious decision on the basis or explanation furnished by assessee. Furthermore, the assessment order was duly approved by the ld JCIT. There in not finding of ld PCIT that the approval granted by the JCIT is not proper or non-application of proper procedure.
We find that in the case in hand the AO has made required inquiry and came to a plausible, reasonable and legally sustainable conclusion in allowing the claims to the assessee.
Non initiation of penalty under section 271D/ 271E - We find that in case of CIT Vs Suresh G. Shah [ [2006 (8) TMI 101 - HIGH COURT, GUJARAT] and CIT Vs Parmanand M. Patel [2005 (7) TMI 72 - GUJARAT HIGH COURT] it was held that CIT cannot exercise his jurisdiction under section 263 for the purpose of initiation of penalty proceedings. Otherwise also we find that the assessee has specifically in its reply to the SCN to the ld PCIT has stated that the cash was received only against the booking and no loan or such transaction was undertaken by them.
PCIT failed to specify the transaction on which initiation of penalty either under section 271D or 271E was warranted. And on the issues of validity of discloser in IDS, the ld PCIT has not specified that while making declaration the assessee made any misrepresentation of any facts. Once the IDS in all cases were accepted by ld. PCIT, the AO or the Range head no authority to relook or power to revoke or to examine its validity. We further find that the ld PCIT while directing the AO has not himself revoked the IDS nor directed to refund the payment of tax to the assessee.
In the IDS the assessee has paid more tax to the revenue then the rate of normal tax, so there is no loss of revenue. At the cost of repetition, we note that the AO while passing the assessment order in all years have made inquiry and took reasonable, plausible and legally sustainable view. The Hon’ble Delhi High Court in CIT Vs Kelvinator of India Ltd [2002 (4) TMI 37 - DELHI HIGH COURT] held that if the AO has adopted one of the course permissible in law, which resulted in loss of revenue or where two view is possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as erroneous order prejudicial to the interest of revenue unless view taken by the AO is not sustainable in law. At the cost of repetition, we may note that the ld PCIT neither in his show cause notice nor in ultimate / final order has held that the order passed by the AO is unsustainable in law.
We are of the considered view that the ld PCIT was not justified in subjecting the assessment order for all three years to revision proceedings by taking view that the AO has not made further inquiry, therefore we quash the revision order (s) in all three assessment years.- Decided in favour of assessee.
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2021 (10) TMI 1143 - ITAT PUNE
Validity of reopening of assessment u/s 147 - Period of limitation - notice issued beyond 4 years - taxability of goodwill as credited to the accounts of retiring partners - HELD THAT:- AO has power to reassess if he has reason to believe that any income chargeable to tax escaped assessment but however, the proviso limits that power that no action shall be taken after expiry of four years from the relevant assessment year, which means to say that if the AO has reason to believe that any income chargeable to tax as escaped assessment, the notice should be issued within four years from the end of said assessment year.
Therefore, in our opinion proviso to section 147 of the Act is meant to limit the scope of provision u/s. 147 of the Act, going by this, it is safe to say that the proviso to section 147 of the Act is a qualifying proviso and it only seeks to limit the main provision in section 147 of the Act with stipulation or condition. In the present case, we already discussed the same in the aforementioned paragraphs that the AO should have issued notice u/s. 148 of the Act on or before 31-03-2013 whereas the notice issued was on 23-04-2014. Further, we also discussed that all the relevant details regarding the admission of new partners and also retiring partners were fully disclosed in the audit report in Form No. 3CD, and payment of goodwill thereon Thereby, we find no infirmity in the order of CIT(A) and it is justified - Decided against revenue.
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2021 (10) TMI 1142 - ITAT MUMBAI
Non speaking order passed by CIT-A - Disallowance of set off claimed - HELD THAT:- AO has not given any cogent reason or referred to the necessary provision of law as to why the claim by the assessee is not allowable. CIT(A) again has copied the order of AO not spelling out as to why and what violation of section 72 of the Act, the claim is being dismissed.
Addition being the difference in business income arrived by the A.O - Again Ld. CIT(A) has passed a non speaking order. The Ld. CIT(A) mention that assessee could not file any documents and the reconciliation warranting, the AO to make the addition. But this is totally wrong appreciation as AO has mentioned that the reconciliation has been given by the assessee, but it is not acceptable.
CIT(A) has passed the order without application of mind. It is settled law that even administrative orders have to be construct with rule of natural justice. The order by Ld. CIT(A) is on the cusp of abandonment of statutory duty cast upon him as the first appellant authority. This is more palpable by a reading of ground No. 1 of the assessee as above. Accordingly, remit the issue to the file of Ld. CIT(A) to pass a proper speaking order after giving the assessee proper opportunity of being heard. Assessee appeal allowed for statistical purpose.
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2021 (10) TMI 1141 - ITAT BANGALORE
Addition invoking provisions of section 69 and 40A/40a(ia) - CIT- A deleted the addition - HELD THAT:- We agree with the Ld. Sr. DR that the orders of Ld. CIT(A) are cryptic and is passed without recording proper reasoning. The Ld. CIT(A) reproduced the submissions filed by assessee and decided the issue without giving reasons. In the interest of justice we remand this issue back to the Ld. AO to verify the claims in both the appeals based on evidences/submissions filed by assessee and in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law. Revenue appeals stands allowed for statistical purposes.
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2021 (10) TMI 1140 - ITAT DELHI
Claims of amount paid for employees taken on Secondment - Revenue attribution - As submitted assessee was rendering management consultancy services to the group entities of K.K. Modi Group by availing services of seconded employees for which it was setup - HELD THAT:- AR has pointed out that in A.Y. 2011-12, assessee had taken on seconded employees who were originally employee in the flagship group company i.e. Godfrey Philips India (P) Ltd. and then seconded to the assessee on cost to company basis, without any mark-up. It has been further pointed by the Learned AR that no disallowance of secondment cost to employees was disallowed by the AO in earlier years. The aforesaid contention of the Learned AR has not controverted by the Revenue. We find that AO on one hand had held the secondment agreement to be not a genuine agreement but on the other hand had disallowed only 50% of the expenditure which according to us appear to be contrary. We further find that CIT(A) for the reasons stated in the order has deleted the addition. Before us, Revenue has not pointed any fallacy in the findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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2021 (10) TMI 1139 - ITAT DELHI
Addition u/s 69A - Cash deposits during the demonetization period - Assessee submitted that the savings were out of accumulated savings in the form of pin money and minor cash gifts received by her from her parents and in-laws on the occasion of birthdays, anniversaries etc. - HELD THAT:- CIT(A) grant relief to ₹ 50,000/- and upheld the addition to the extent of ₹ 2,00,000/-. Before us, assessee has submitted that the deposits to be out of accumulated savings and out of the cash gifts received by her on the occasion of birthdays and anniversaries. It is also a fact that assessee's husband is an income tax payer working for an MNC.
in view of the CBDT Circular vide Instruction No. 03/2017 dated 21st February 2017 and relying on the decision of SMT. UMA AGRAWAL BABA KAPUR SUNARAN KA MOHALLA VERSUS I.T.O –1 (3) GWALIOR, M.P. [2021 (6) TMI 712 - ITAT AGRA], the explanation of the assessee about the source of cash deposits cannot be brushed aside without there being any evidence to the contrary.- Decided in favour of assessee.
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2021 (10) TMI 1138 - ITAT DELHI
TDS u/s 195 - payments abroad of export commission to non-resident the foreign agent for the procurement of export orders - FTS' under the India-France DTAA - disallowance u/s 40(a)(i) - HELD THAT:- As relying on STERIA INDIA LTD. (EARLIER KNOWN AS XANSA (INDIA) LTD.) [2018 (4) TMI 578 - DELHI HIGH COURT] for bringing the services under the net of Fee for Technical Services (FTS) under the India France DTAA, the 'make available' clause has to be satisfied. But in the services rendered by the non-resident of procuring export order for the assessee, no knowledge has been provided to the assessee which could be exploited further by the assessee. In such circumstances, the services rendered by the non-resident cannot be held as 'FTS' under the India-France DTAA. Accordingly, such services will not be chargeable in India in the hands of nonresident under DTAA and, therefore, no liability to deduct tax at source will arise. Consequently, payment to said non-resident is not liable to disallowance under section 40(a)(i) of the Act. - Decided in favour of assessee.
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2021 (10) TMI 1137 - ITAT DELHI
Assessment u/s 153A - Addition u/s 68 - action of CIT(A) in holding that no addition was warranted in the present case - HELD THAT:- CIT(A) while deciding the issue in favour of the assessee has given a finding that the original return of income filed by assessee was processed u/s. 143(1) of the Act and at the time of search action no assessment or reassessment proceedings were pending or abated. He has further given a finding that the addition made u/s. 68 of the Act was not based on any incriminating document/record or any other material found/seized during the course of search proceedings. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.
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2021 (10) TMI 1136 - ITAT SURAT
Revision u/s 263 by CIT - validity of declaration made under IDS - Before issuing the notice under section 153C of the Act, the assessee made disclosure under income disclosure scheme (IDS) - understatement of income of the project - HELD THAT:- The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law.
There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of su motu revision under such circumstances will amount to arbitrary exercise of power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objectives were available from the records called for and examined by such authority. The decision of the ITO could not be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. Moreover, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous, he simply asked the ITO to re-examine the matter, which was not permissible.
After affording ample and adequate opportunities of being heard to the assessee, assessment proceedings have been completed on the basis of the submissions and details collected and in consequence upon the conclusion of proceeding and hearing of evidences, assessment is made by this order”. A perusal of show cause notice under section 263 dated 08.03.2021, clearly demonstrate that the ld PCIT identified all the issues which were the subject matter of the notice under section 142(1) and the questionnaire attached thereto, except the issue of initiation of penalty 271D and validity of IDS. The ld PCIT in his show cause notice (SCN) under section 263 has accepted that the AO made detailed questionnaire (para -5) dated 03.12.2018. And on perusal record and details /evidences available on record, the PCIT noted that AO has not made further inquiry. Thus, the ld. PCIT has not made a case that there was “no enquiry” or “lack of inquiry” rather recorded that the AO called detailed inquiry. We find that the ld. PCIT has not specified that what kind of further inquiry was required, when the income disclosed in IDS was duly accepted by higher authority. And the acceptance of IDS was never questioned by Board or other superior authority then PCIT. It is the AO who has to take a conscious decision if any further inquiry is required or not. Furthermore, the assessment order was duly approved by the ld JCIT. There in not finding of ld PCIT that the approval granted by the JCIT is not proper or non-application of proper procedure. AO has made required inquiry and came to a possible conclusion in allowing the claims to the assessee.
Non initiation of penalty under section 271D/ 271E - We find that in case of CIT Vs Suresh G. Shah [ [2006 (8) TMI 101 - HIGH COURT, GUJARAT] and CIT Vs Parmanand M. Patel [2005 (7) TMI 72 - GUJARAT HIGH COURT] it was held that CIT cannot exercise his jurisdiction under section 263 for the purpose of initiation of penalty proceedings. Otherwise also we find that the assessee has specifically in its reply to the SCN to the ld PCIT has stated that the cash was received only against the booking and no loan or such transaction was undertaken by them.
PCIT failed to specify the transaction on which initiation of penalty either under section 271D or 271E was warranted. And on the issues of validity of discloser in IDS, the ld PCIT has not specified that while making declaration the assessee made any misrepresentation of any facts. Once the IDS in all cases were accepted by ld. PCIT, the AO or the Range head no authority to relook or power to revoke or to examine its validity. We further find that the ld PCIT while directing the AO has not himself revoked the IDS nor directed to refund the payment of tax to the assessee.
In the IDS the assessee has paid more tax to the revenue then the rate of normal tax, so there is no loss of revenue. At the cost of repetition, we note that the AO while passing the assessment order in all years have made inquiry and took reasonable, plausible and legally sustainable view. The Hon’ble Delhi High Court in CIT Vs Kelvinator of India Ltd [2002 (4) TMI 37 - DELHI HIGH COURT] held that if the AO has adopted one of the course permissible in law, which resulted in loss of revenue or where two view is possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as erroneous order prejudicial to the interest of revenue unless view taken by the AO is not sustainable in law. At the cost of repetition, we may note that the ld PCIT neither in his show cause notice nor in ultimate / final order has held that the order passed by the AO is unsustainable in law.
We are of the considered view that the ld PCIT was not justified in subjecting the assessment order for all three years to revision proceedings by taking view that the AO has not made further inquiry, therefore we quash the revision order (s) in all three assessment years.- Decided in favour of assessee.
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2021 (10) TMI 1135 - ITAT BANGALORE
TDS u/s 194B or 194BB - disallowance in respect of payment of stake money under section 40(a)(ia) - stake money and cups disbursed to horse owners without deducting TDS - HELD THAT:- As decided in own case [2020 (12) TMI 1280 - ITAT BANGALORE] CBDT Circulars are binding on the Department as it clarifies the understating of the provisions of the Act by the Revenue which cannot be disregarded by the income-tax authorities while construing the provisions of the Act. The ld. DR was not able to point out why the interpretation given in the CBDT Circular relied upon by the assessee should not prevail. We find that the Department has tried to indirectly tax what cannot be taxed by virtue of Circular issued by the CBDT, a situation which is impermissible in law. Thus, on this aspect also, we hold that 'stake money' is not liable to TDS u/s 194B of the Act. - we also hold that stake money paid by assessee to the horse owners are not liable to TDS under section 194B or section 194 BB of the Act. Consequentially no disallowance could be made under section 40 (a) (ia) of the act in the hands of assessee.
Nature of expenditure - Expenditure on modification of TV towers - claim un/s 37 - AR submitted that, during the year six TV towers were modified to fit the technology cameras which could be used during horse races and there is no enduring benefit in the hands of assessee and that, amount paid for purchase of technological camera are capitalised the books of account on which depreciation is claimed in accordance with section 32 - HELD THAT:- In present facts assessee incurred expenses on re-modification of TV towers which might, undergo further modification as and when the technologically upgraded camaras are brought in. It is submitted that the towers were remodified to fit in the new camaras purchased. Admittedly, the cameras purchased by assessee were capitalised on which depreciation is claimed. Thus in our view though expenditure do not have the character of enduring benefit, the advantage is not for indefinite future. Accordingly, respectfully applying the principles laid down in EMPIRE JUTE COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1980 (5) TMI 1 - SUPREME COURT] we hold the expenditure to be revenue in nature. We direct the Ld.AO to delete the disallowance made on expenses towards re-modification of TV towers.
Nature of expenditure - expenditure incurred on constructing temporary stables, repairs to existing stables and gun greeting of such stables - HELD THAT:- We agree with the argument advanced by the Ld.Sr,DR that the structures are permanently made for outstation horses that come to Bangalore for races and therefore to be catagorised as capital asset.
We also note that assessee incurred repair work towards existing stables. We direct the Ld.AO to allow the expenditure incurred is towards repair work as revenue expenditure.
Expenditure incurred on upgrading of UPS system u/s 37 - HELD THAT:- We note that the server installed in the racecourse premises was originally supported by UPS of 8 KVA. Assessee upgraded it to16 KVA in the year 2012. The upgradation of UPS has brought into effect a new asset for advantage of assessee and therefore has to be treated as capital asset. However, assessee is eligible for depreciation. We direct the Ld.AO to grant depreciation to assessee on the UPS.
Expenditure incurred towards maintenance of betting systems and other equipments and asphalting of roads - Revenue or capital expenditure - HELD THAT:- We note that both these expenditure are incurred by assessee for maintenance of existing asset. It cannot be ignored that, there would arise ware and tear of machines used and the road on which horse racing takes place. These needs to be maintained on regular basis for the purposes of business. We are therefore convinced with the view of Ld.CIT(A) that they are in the nature of revenue expenditure.
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2021 (10) TMI 1125 - ITAT BANGALORE
Undisclosed income - amounts have been advanced to Prakash Ladhani outside the books of account - assessee submitted that it has withdrawn money from United Bank of India and the same was deposited with Bank of India - As per AO the amount was given to Shri Prakash Ladhani and it would also fall under the category of deemed dividend within the meaning of section 2(22)(e) CIT-A deleted the addition - HELD THAT:- We notice that the transactions relating to imprest account, withdrawal from United Bank of India and deposit into Bank of India have been routed through the books of account. As submitted by assessee, the imprest account was fastened between cash withdrawal from United Bank of India and deposit into Bank of India in order to have control over these transactions. We notice that the imprest account is created as conduit between the bank transactions.
We notice that the Ld. CIT(A) has examined the books of account which has also been confronted before the A.O. CIT(A) has also recorded a finding that all the transactions are duly recorded in the books of account. When all the transactions have been routed through the books of accounts, the question of undisclosed income will not arise. Hence we are of the view that the AO has made the impugned addition on surmises and conjectures only and accordingly, in the facts and circumstances of the case, we do not find any infirmity in the decision rendered by Ld. CIT(A) in deleting this addition in both the years.- Decided in favour of assessee.
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2021 (10) TMI 1114 - BOMBAY HIGH COURT
TDS u/s 194H - discounts given to collection centres - Whether ITAT was justified in holding that the relationship between the assessee and collection centres is in the nature of Principal to Principal and not that of Principal to Agent? - HELD THAT:- In this case, admittedly, respondent has not been paying any money to the collection centres. Respondent was only receiving payment from the collection centres. As noted earlier, the collection centres collect money from the patient and pays a reduced amount to respondent and keeps the difference for itself as its margin.
As the section is applicable only to a person who is responsible for paying to deduct tax at the time of credit to the account of the payee or at the time of payment and as respondent does not perform any act of paying, there is no obligation on the company to deduct tax at source. We fail to understand appellant’s arguments as to how respondent was to deduct TDS when it was not making any payment. Mr. Suresh Kumar was unable to explain how respondent should have deducted TDS and paid with the treasury when respondent was not making any payment. Even the Assessing Officer, who the appellant wishes to support, does not say anything on this - AO’s order is contrary to sense.
In our view, ITAT (though has applied slightly different preposition while allowing the appeal) has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.
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2021 (10) TMI 1113 - MADRAS HIGH COURT
Offences u/s 276CC, 276C(1) and 276C(2) of the Income Tax Act, 1961 - search conducted in the partner's premises and that the transactions were admittedly recorded in the books of accounts of the firm, the Income Tax Appellate Tribunal's view that there was concealment of income for invoking Section 271(1)(C) - as urged by the learned Counsel that putting the petitioners through the ordeal of trial would be a futile exercise - HELD THAT:- Income Tax Department, very fairly affirmed that the Dvision Bench of this Court had set aside the order of the Income Tax Tribunal and stated that no further proceedings are pending against the parties and that order of the Division Bench had not been taken up further in appeal by the department/revenue.
Also affirmed by the learned Counsel that the complaint had been preferred only consequent to the order of the Appellate Tribunal. But, as it turned out, that particular order of the Tribunal had been set aside by the Divison Bench of this Court.
Find every reason to interfere with further progress of E.O.C.C now pending of the file the learned Additional Chief Metropolitan Magistrate/E.O - I, Egmore, insofar as the petitioners/A1 to A3 are concerned and direct the same to be quashed - present Criminal Original Petition is allowed and E.O.C.C.on the file of the Additional Chief Metropolitan Magistrate, Economic Offences Court - I, Egmore is quashed.
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2021 (10) TMI 1112 - GUJARAT HIGH COURT
Initiating the proceedings u/s 153C - grievance made on the part of the petitioner that the respondent has not disposed of the objections raised by the petitioner against the reopening - HELD THAT:- Noticing the requirement of the law, where the respondents have chosen not to dispose of objections raised to the satisfaction notes, without expressing any opinion on the correctness of initiation of the proceedings, the request is being granted to the assessee of availing opportunity of hearing. The objections raised by the assessee shall be considered by the respondent authority concerned which shall decide the same within the period of four weeks of the date of receipt of copy of this order. The order of disposing of the objection, if goes against the petitioner, the petitioner shall be availed the time of four weeks to avail the legal recourse in accordance with law.
Present petition stands disposed of. Notice is discharged. Ad-interim relief, granted earlier stands vacated.
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2021 (10) TMI 1111 - KERALA HIGH COURT
Deduction claimed u/s 80P(2)(d) - as argued reply filed by the petitioner was not even referred to, while passing the order of assessment - Petitioner contends that though an appeal is available u/s 246A of the Act, failure to consider the reply submitted by the petitioner amounts to violation of the principles of natural justice - HELD THAT:- As rightly argued by the respondent, this Court will not interfere normally under Article 226 of the Constitution of India on orders of assessment issued by the assessing authorities. It is equally settled that when there is a violation of the principles of natural justice, this Court can step in, even against assessment orders, to avoid the unnecessary travails of an assessee, in pursuing the statutory remedies.
In the instant case, Ext.P9 show cause notice was issued on 22.03.2021 directing the petitioner to show cause as to why the assessment should not be completed as per the draft assessment order. The response of the petitioner was also sought for in the said show-cause notice. Petitioner’s response to Ext.P9 is produced as Ext.P10, wherein it has raised an objection of some substance, however brief it may be. Certain documents were also produced along with Ext.P10. However, while issuing the order of assessment, it is seen that there is no reference at all to the response submitted by the petitioner nor is there any consideration of the document produced along with Ext.P10.
Whether the contentions raised by the petitioner in Ext.P10 or whether the document produced along with Ext.P10 may have a bearing upon the case is not a matter which this Court can go into at this stage. An order of assessment is the foundation on which the rights of the assessee depend upon. It is necessary that the assessing authority considers the objections filed by the petitioner especially when a show-cause notice in the form of Ext.P9 had been issued, eliciting the response of the petitioner. Failure to consider the said response offered by the petitioner in the facts of the case is a negation of the rights of natural justice. In the said view of the matter, I find that the order of assessment suffers from the infirmity of violation of the principles of natural justice and is liable to be set aside.
Accordingly, set aside Ext.P11 assessment order dated 19-04-2021 issued by the respondent and direct the respondent to consider and pass fresh orders for the assessment year 2018-19, relating to the petitioner, after affording an opportunity of hearing to the petitioner, as expeditiously as possible.
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