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Income Tax - Case Laws
Showing 121 to 140 of 641 Records
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2021 (3) TMI 1149 - ITAT KOLKATA
Addition of business promotion expenses u/s. 40(a)(ia) - Non-deduction of TDS - CIT(A) has not given relief in respect of expenditure the assessee seeks verification in respect of two items of expenditure i.e. in respect of M/s. Rakshit & Company and M/s. Choicest Enterprises Ltd. to whom the assessee had made payment - HELD THAT:- We find force in the said contention of the Ld. AR and we direct the AO to verify from these two concerns as to whether they (M/s. Rakshit & Company and M/s. Choicest Enterprises Ltd.) have shown these amounts/receipts in their trading receipts in this assessment year and have paid due taxes thereon. The assessee to give all the details to the AO regarding their identity. And, the AO to verify from these concerns the veracity of the payment made by assessee and if the AO finds that both the concerns have shown these two payments made by the assessee as their receipts and have paid taxes thereon in this assessment year, then no deduction u/s. 40(a)(ia) of the Act is warranted, if not, the same may be confirmed. In respect of other items confirmed by the Ld. CIT(A), the Ld. AR does not want to press taking into account the smallness of the amount and, therefore, those expenses to be disallowed u/s. 40(a)(ia) of the Act. So, this ground is partly allowed for statistical purposes.
Disallowance on account of interest on office loan - AO disallowed it since this office was not utilized/put to use - as demonstrated that assessee has its own fund to the tune of ₹ 8,28,88,111/- and the loan amount is only to the tune of ₹ 1.3 cr. and, therefore, according to the Ld. AR, the assessee possessed mixed fund which includes its own fund in sufficient quantity - HELD THAT:- CIT(A) has found that the assessee has got the office in question registered next year i.e. F.Y 2016-17 i.e. AY 2017-18, which fact corroborates the finding of AO and therefore, the proviso to section 36(1)(iii) of the Act is attracted. And in this case, the presumption as per the ratio of the decision rendered by Hon’ble Bombay High Court in Reliance Utilities [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC [2014 (8) TMI 119 - BOMBAY HIGH COURT] cannot be applied because in those cases, there was mixed funds in the hands of assessee i.e. both own and borrowed funds and allocation of borrowed funds could not be specifically determined. In the case in hand, the loan amount was allocated for its office/capital which is a factual finding, which could not be disproved by the assessee, so the presumption based on mixed fund cannot be applied. So, we confirm the action of Ld. CIT(A). Therefore, this ground of appeal of assessee is dismissed.
Addition on inflated purchases - According to the Ld. AR, promoter and directors of both the companies were same during that period and the entire business of both the companies were run by the same directors and since the indirect taxes has already been levied and paid by the sister concern and once this figure is deducted it is not more than the purchase price of the assessee i.e. ₹ 123 cr., therefore, according to him, there is no inflated purchase as alleged by the Ld. CIT(A) - HELD THAT:- CIT(A) has not enquired properly which fact is discernible from the show cause notice wherein the Ld. CIT(A) gave enhancement notice to assessee only alleging total inflated purchase to the tune of ₹ 4.99 cr. However, after receiving replies of assessee (supra), the Ld. CIT(A) has made an addition of ₹ 20,35,94,402/-. According to us, the action of the Ld. CIT(A) is bad for not conducting proper enquiry and for non-application of mind. Therefore, we set aside the order of the Ld. CIT(A) and remand this issue to the file of AO for verification of the details given (supra) and if the assessee has not inflated any purchase as contended by it, then no adverse view may be taken. With the aforesaid observation, we direct the AO to enquire into this limited issue raised by the Ld. CIT(A) and the assessee is directed to produce all documents pertaining to this issue to the AO and the AO to decide in accordance to law.
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2021 (3) TMI 1148 - ITAT INDORE
Addition u/s 68 - unexplained cash credit - assessee received cash from some parties to which advances were given in the preceding years. but A.O was not satisfied with the genuineness of the cash received - CIT- A deleted the addition - HELD THAT:- The alleged amount added is actually the refund of the advances given by the assessee to various parties for purchase of land in preceding years which were given through banking channel and duly disclosed in the audited financial statements placed before the revenue authorities in the preceding years and no addition/discrepancy have been noticed. We therefore find no reason to interfere in the finding of Ld. CIT(A) and the same stands confirmed. In the result Ground No.1 raised by the revenue is dismissed.
Addition u/s 41(1) on bogus creditors - addition deleted by Ld. CIT(A) - HELD THAT:- As the alleged amount of bogus creditors are not in the form of sundry creditors. These amounts are advances against booking of plots. When the plots are developed and the parties who have booked the plots give the remaining amount if any, then the advance given at the time of booking is transferred to sales account.
As regards the amount outstanding in the name of Maggy Publicity, no addition can be made u/s 41(1) of the Act since it has offered to tax in the return of income filed for Assessment Year 2014-15.
All the remaining 10 parties are not sundry creditors but are the advances for booking of developed plots of which some have already been transferred to the sales account when the registry was completed. These 10 parties cannot be termed as sundry creditors as there is no supply of goods or services by these parties. Ledger account shows that the assessee has received the sum through banking channel from these parties.
Such sum received can either be in the form of unsecured or advance for sale/booking of plots. In the instant case out of the 10 parties in two cases the registry have been done and the advances received during the preceding years have been transferred to sales account. This fact asserts that all the sum received from 10 parties is advances for booking of plots and not balance of sundry creditors.
As decided in NITIN S. GARG [2012 (5) TMI 30 - GUJARAT HIGH COURT] “Merely because the liabilities are outstanding for last many years, it cannot be inferred that the said liabilities have seized to exist. The Appellate Tribunal has rightly observed that the Assessing Officer shall have to prove that the assessee has obtained the benefits in respect of such trading liabilities by way of remission or cessation”.
We are of the considered view that out of the alleged sum outstanding in the name of Maggi Publicity has been offered to income for Assessment Year 2014-15 and all the remaining amount received from 10 parties are not sundry creditors as they have advances for booking of plot of lands of which few have been transferred to sales account as and when the registry of plot of land is completed. Provision of Section 41(1) are not applicable on this case as the assessee has not claimed the alleged amount of advances from customers as an allowance or deduction in any assessment year in respect of loss, expenditure or trading liability. We thus confirm the finding of Ld. CIT(A) - Decided against revenue.
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2021 (3) TMI 1147 - ITAT AHMEDABAD
Addition of undisclosed stock - HELD THAT:- AR has cited an order of ITAT Jaipur Bench in the matter of Stone Age (P.) Ltd.. [2019 (6) TMI 388 - ITAT JAIPUR] wherein it is held that where there was practically no difference in physical inventory taken by survey team viz-a-viz inventory as per books of account, impugned addition made on account of difference in value of stock was to be deleted and merely on the basis of statement recorded of the Director of the assessee-company with no corroborative material on record, had no legal force and thus same deserved to be deleted.
The affidavits of the parties were rejected by the lower authorities on the basis of treating those affidavits as self-serving documents but documents submitted by the persons who were doing business from the same premises were not thoroughly examined and their Income Tax Returns were not considered by the lower authorities, wherein all the details with regard to their income were mentioned and no material was provided, on that basis addition was made and assessee was not allowed to cross-examine whose statements were relied for making addition in the hands of the assessee. In our considered opinion, whatever material or statement had been basis of the addition that should have been made available to the assessee and ought to have given opportunity to cross-examine the person and inspect the document, but in this case, such exercise was not carried out by the Department to the assessee and same amounts to miscarriage of justice.
Since books of accounts were not rejected and no opportunity was provided to the assessee for cross-examination of persons who have given their statements against the assessee, so we have to give benefit of doubt to the assessee. In view of the foregoing discussion and respectfully following aforesaid judgments, we allow appeal of the assessee.
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2021 (3) TMI 1146 - ITAT MUMBAI
Exemption u/s 11 - cancellation of registration under section 12AA(3)/(4) - effective date of cancellation of registration - Authority to cancel the registration under section 12AA(3)/(4) - Principal Commissioner of Income-Tax-17 cancelling the registration of the Appellant - Whether power of cancellation of registration vests in the authority who has the jurisdiction to grant registration? - HELD THAT:- There is no dispute that certain investments made by this Trust donot qualify the benefit of exemption under section 11, and that precisely was the reason that the assessee had requested the Commissioner for cancellation of registration under section 12A.
The question of whether the assessee had the powers, under the trust deed, to seek cancellation or withdrawal of registration under section 12A or not is wholly irrelevant because once the assessee informs the Commissioner of the assessee becoming ineligible for exemption under section 11, it is power, as indeed duty, of the Commissioner to cancel the said registration and that power of the Commissioner is not dependent on the assessee having powers, under the trust deed, to seek cancellation of registration. On this aspect of the matter also, we are unable to find ourselves in agreement with the learned ASG.
It is difficult to understand on the first principles, much less approve, any legitimate justification for the income tax authorities to insist that the assessee must have continue with the registration under section 12A when the assessee does not want it. It is nobody’s case that there were certain specific obligations on the part of the assessee which the assessee must perform as a quid pro quo for the registration per se. Whatever obligations a charitable institution has towards the income tax authorities, these obligations are a quid pro quo for exemption and not a foundational requirement for the exemption.
All these things are, however, academic in the light of our findings that the Commissioner had the duty, much more than the power, to cancel the registration under section 12A upon the fact of admitted violation of section 13(1) coming to his notice, and that such cancellation had to effective from the date on which the disability for exemption under section 11 is attracted (which is not ascertained on the facts of this case), the date of this fact coming to the notice of the Commissioner (i.e.11th March 2015), from the date on which the first show-cause notice was issued (i.e. 13th March 2015), or,at the minimum, from the date on which hearing in this regard was concluded and the order thereon was reserved (i.e. 20th March 2015).
Conclusions:
The impugned order of cancellation of registration granted to the assessee under section 12A must be held to be effective from the date on which the hearing on first show-cause notice was concluded and the show cause notice issued by the Commissioner was formally acquiesced by the assessee in the said hearing, i.e., 20th March 2015, since, without disposing of the said matter, the Commissioner, or his successors, could not have started other parallel proceedings for cancellation of registration obtained under section 12A. The registration having been “obtained” under section 12A was in the nature of a benefit to the assessee, and it was, therefore, entirely at the option of the assessee. In our considered view, an assessee unwilling to avail the “benefit” of registration “obtained” under section 12A cannot be, directly or indirectly and by actions or by inactions, compelled by the revenue authorities, to continue with the said registration “obtained’ by the assessee, particularly when it pertained to the registration obtained in a period prior to the insertion of section 12AA. The present cancellation of registration under section 12A must, therefore, be held to be effective from 20th March 2015. To this limited extent, we uphold the plea of the assessee.
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2021 (3) TMI 1133 - MADRAS HIGH COURT
Computation of deduction u/s 10A - Interest expenditure incurred by the assessee are excluded form export turnover should also be excluded form total turnover - Whether Tribunal was right in holding that the assessee is eligible for deduction under section 10A as the assessee had not set up a new business buy only transferred its place of business of an existing business to a new place located in STPI area? - Tribunal held that the brought forward business loss and unabsorbed depreciation are to be set off only after grant of deduction under section 10A - HELD THAT:- Above questions of law are covered by the decision of this Court in M/S. SRA SYSTEMS LTD.[2021 (3) TMI 977 - MADRAS HIGH COURT] - Decided in favour of the assessee
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2021 (3) TMI 1130 - MADRAS HIGH COURT
Deduction u/s 80IA - Treatment to carbon credit receipt - revenue or capital receipts - income from generation of electricity and the carbon credit earned by the assessee are totally separate and the source of the income is also separate - HELD THAT:- As relying on S.P. SPINNING MILLS PVT .[2021 (1) TMI 1081 - MADRAS HIGH COURT] if the receipt from the sale of carbon credit is a capital receipt, then it will go out of the purview of the gross total income as defined under Section 80B(5) of the Act, which expression is found in Section 80IA of the Act. Thus, if the receipts by sale of carbon credit will not fall within the definition of total income, the same cannot be included under Section 80IA of the Act. Therefore, even if the assessee has made such a claim, that cannot be a reason for the Tribunal to non-suit the assessee.
Section 115BBG of the Act was introduced by Finance Act, 2017 with effect from 01.04.2018, prior to which, there was no such provision and Mr.V.S.Jayakumar, learned counsel for the assessee would submit that the assessees were under utter confusion as to under which provision of the Act, they should make a claim for deduction and having left with no other option, had been making the claim under Section 80IA of the Act and merely because the assessee due to uncertainty in the legal position, had made a claim under Section 80IA of the Act that cannot be a reason to deny a benefit granted in favour of the assessee. The submission, made by Mr.V.S.Jayakumar, learned counsel for the appellant, in this regard, is well found and accepted. - Decided in favour of assessee.
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2021 (3) TMI 1127 - MADRAS HIGH COURT
Contempt action against the IRS for not following the directions issued by the Court - Prosecution for offence punishable under Section 276C - undisclosed deposit in a foreign bank account - appellant filed a petition under Section 279(1) of the I.T.Act for compounding the offence - HELD THAT:- We have to necessarily hold that the directions issued by the learned Contempt Court after holding that there is no merit in the contempt petition is beyond the jurisdiction of the Court while considering the contempt petition. Therefore, we have no other option except to interfere and set aside such direction.
Effect and applicability of the circular issued by the CBDT dated 14.06.2019, which came into effect from 17.06.2019. Admittedly, this circular was not in vogue when the respondent filed his first application under Section 279(2) of the I.T.Act. The Writ Court while testing the correctness of the order dated 15.01.2014, was examining the correctness of the same qua the circular/guidelines which were in vogue when the order was passed, which is the circular dated 16.05.2008. In fact, the learned Contempt Court, in the impugned order, notes that neither the respondent, nor the Revenue had brought to the notice of of the Writ Court about the fresh circular dated 14.06.2019, when the writ petition was heard in August, 2019 (filed in 2014).
With regard to the effective date of such circular, which is stated to be 17.06.2019. We find that these issues neither directly nor indirectly arose for consideration in the contempt petition. There appears to be no pleadings to the said effect.
Consequently, the Revenue had no opportunity to put forth their stand. Thus, we are fully convinced that no such direction could have been issued by the learned Contempt Court after having held that there is no merit in the contempt petition.
We are to necessarily set aside the direction issued by the Court in paragraphs 37 to 40 of the impugned order and all the observations, which were made by the Court in paragraphs 32 to 36, which have led to issuance of the impugned directions. Having held so, we need to take note of the submissions of the learned Senior Counsel for the respondent that the respondent should not be left without a remedy because his contempt petition was dismissed as being devoid of merit and now we have come to a conclusion that the direction could not have been issued by the Contempt Court, which was beyond the scope of the contempt petition. Bearing this in mind, we are inclined to give liberty to the respondent to file a fresh petition for compounding in which, he may canvass all issues available to him on law as well as on facts and orders and directions which according to them are in their favour as well as the decisions which he chooses to rely upon.
This writ appeal is allowed and the directions issued in paragraphs 37 to 40 are set aside and the observations made in paragraphs 32 to 36 leading to the directions are vacated. Liberty is granted to the respondent to file a fresh petition under Section 279 of the I.T.Act before the first appellant within a period of 30 days from the date of receipt of a copy of this judgment and the same shall be considered in accordance with law within a reasonable time not later than 90 days from the date on which the petition is presented in full form.
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2021 (3) TMI 1125 - ITAT DELHI
Bogus purchases - CIT(A) deleted the disallowance - HELD THAT:- The finding on facts is not rebutted by the Revenue by placing cogent evidence. The Assessing Officer has not doubted the book results. Moreover, the Assessing Officer has not given any adverse finding regarding the issues for which the case was selected for scrutiny. Further, the Assessing Officer has not disturbed the sale. There is no whisper about out of book sales made by the assessee. We, therefore, do not see any reason to interfere in the finding of the Ld.CIT(A). The grounds raised by the Revenue are hence, rejected.
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2021 (3) TMI 1124 - ITAT DELHI
Assessment u/s 153A - Addition u/s 14A - CIT(A) has deleted the addition applying the ratio in the case of Kabul Chawal [2015 (9) TMI 80 - DELHI HIGH COURT] that no addition could be made under 153A proceedings under absence of any incriminating material, in case of completed assessments - HELD THAT:- As far as first condition is concerned, in the instant case addition under section 14A of the Act has been made and evidently there is no reference of any incriminating material in the assessment order, with regard to the addition under section 14A of the Act. Thus, there is no dispute that there was no incriminating material found during the course of the search relevant to the assessment year under consideration.
Regarding the second condition, according to the Assessing Officer notice under section 148 of the Act for commencing reassessment proceeding was issued on 23/10/2013 and notice under section 153A was issued on 10/03/2015 and therefore assessment was pending in instant assessment year. However, the Ld. CIT(A) held that no proceedings were pending as on the date of the search and, therefore, notice under section 148 issued after the date of the search was avoid ab initio.
As perused the Panchnama of search operation in the case of the locker in the joint name of the entity merged with the assessee and it is evident from said Panchanama that the search was conducted on 30/01/2013. Since the notice under section 148 was issued on 23/10/2013, which is after the date of the search, it is evident that as on the date of the search no assessment/ reassessment proceedings were pending in the instant assessment year. AO has wrongly considered the pendency of the assessment proceeding on the date of the issue of the notice under section 153A.
In absence of no incriminating material found during the course of the search and no assessment/reassessment proceedings pending as on the date of the search, the ratio in the case of decision of the Hon’ble Delhi High Court in the case of Kabul Chawal (supra) is squarely applicable on the facts of the case and accordingly, no addition could have been made in the instant assessment year. The addition made by the Assessing Officer has rightly been deleted by the Learned CIT(A), and we uphold the same.- Decided against revenue.
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2021 (3) TMI 1122 - ITAT MUMBAI
Penalty proceedings u/s 271(1)(c) - assessee has incurred loss on sale of shares which was held as stock-in-trade - assessee treated the same as part of business whereas AO treated the same as speculative loss by invoking explanation to section 73 - HELD THAT:- As decided in AURIC INVESTMENT AND SECURITIES LTD. [2007 (7) TMI 276 - DELHI HIGH COURT] it is well-settled that assessment proceedings and penalty proceedings are distinct and independent of each other. No doubt, the findings in the assessment proceedings would have significance in the penalty proceedings also but they are not decisive or determinative.With respect to the fact that the assessee had accepted the view taken by the Assessing Officer that V the loss due to trading in shares was in the nature of a speculative loss, the assessee contended that in the penalty proceedings, it can take up the plea that the claim made in the return was bona fide.
The assessee had a bonafide belief that the loss suffered by it is business loss. The change of nature of loss from business loss to speculative loss was not enough to impose penalty on the assessee. Therefore, we are inclined to delete the penalty imposed in this case. Accordingly, grounds raised by the assessee are allowed.
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2021 (3) TMI 1121 - ITAT MUMBAI
TDS u/s 195 - Assessee made payments to Celltick Israel towards license fees pursuant to the distribution agreement entered between them - assessee while making payment to Celltick Israel deducted withholding tax for the period April 2013 to August 2013. The assessee made further payments without deducting TDS for the reason that the income of the payee is not taxable in India as the transaction of the payee comes under article 7 of the Indo Israel Treaty - whether the amendments made in Section 40(a)(i) is applicable retrospective or not? - HELD THAT:- The payee has already furnished certificate from a chartered accountant, return of income and computation of income under section 139. Further we also noticed that the income of the payee is not chargeable to tax in India as per the decision of the coordinate bench. Even though as submitted by learned DR that the matter of payee is pending before High Court. In our view, as far as the current position available on record that the income of the payee is not chargeable to tax in India.
It is clear that the 2nd proviso to section 40(a)(ia) and section 40(a)(i) are evenly worded and Pari materia to each other. Both the provisions were introduced by the legislature in order to remove the anomaly and curative in nature. In the case of section 40(a)(ia) the Hon’ble Bombay High Court in the case of Perfect Circle India Pvt. Ltd. [2019 (1) TMI 1532 - BOMBAY HIGH COURT] and in the case of Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] have already held that these provisions are applicable retrospectively with effect from 01.04.2005. Since the amendment was carried out in order to remove the anomalies in the sections similar to section 40(a)(ia) and in our considered view, the amendment in section 40(a)(i) is also made in order to remove the anomaly and it is no doubt curative in nature.
Therefore, considering the findings of the Hon’ble High Courts, in our view the amendment to the section 40(a)(i) is also applicable retrospectively.
Considering our observation in the above paragraphs, in our considered view, the documents submitted before us clearly shows that the income of the payee is not taxable in India and assessee has already filed the relevant information u/s 201(1) of the Act which shows that the assessee cannot be regarded as ‘assessee in default’. Therefore, we set aside the order passed by the AO under section 143(3) of the Act. Considering the above discussion, the additional ground raised by the assessee is allowed.
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2021 (3) TMI 1118 - ITAT MUMBAI
Penalty u/s 271(1)(c) - estimation of income on bogus purchases made by the assessee - HELD THAT:- As per the law, the provisions of section271 (1) (c) of the Act would be applicable only where the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. However, the estimation of higher rate of profits by the AO cannot be termed as either concealment or furnishing of inaccurate particulars of income.
As decided in M/S. NORTON ELECTRONICS SYSTEMS PVT. LTD [2014 (2) TMI 606 - ALLAHABAD HIGH COURT] and M/S VISION RESEARCH AND MANAGEMENT PVT. LTD. [2014 (11) TMI 1228 - ITAT LUCKNOW] when addition is made on estimate basis, no penalty is sustainable.
There is no active concealment of income on the part of the assessee and additions made on estimation by the AO do not called for initiation of penalty. Thus, in our view, the penalty levied by AO and confirmed by Ld. CIT(A) is hereby deleted - Appeal filed by the assessee stands allowed.
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2021 (3) TMI 1113 - ITAT INDORE
Rectification of mistake - Assessment u/s 153A - whether no incriminating material was found as these assessments stood completed u/s. 143(3)/143(1) and were not pending on the date of search? - HELD THAT:- It is a settled proposition as laid down in the case of CIT V/s Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] that additions for the concluded and non abated assessment can be made only if there is a incriminating material found during the course of search for those years. Before us Ld. Counsel for the assessee has demonstrated through the documents placed in the paper book that Assessment Year 2003-04 to Assessment Year 2006-07 with respect to all the assessee(s) mentioned in the instant Miscellaneous Application are concluded and non abated assessments as they have either to be assessed u/s 143(3) of the Act or the time limit for issuance of notice u/s 143(2) of the Act had expired and there was no incriminating material found during the course of search with respect to Assessment Year 2003-04 to Assessment Year 2006-07 and therefore the additions made by the Ld. A.O for all these years in respect of the assessee(s) mentioned in the instant Miscellaneous Application deserves to be deleted.
Looking to the peculiarity of the facts and in the interest of justice, it will be fair for both the parties, if this issue is set aside to the file of Ld. A.O for limited purpose of examining the veracity of the submissions made by the Ld. Counsel for the assessee. We accordingly order so and direct the Ld. A.O that after giving necessary and reasonable opportunity of being heard to the assessee(s), should examine, firstly as to whether any incriminating material was found during the course of search for Assessment Year 2003-04 to Assessment Year 2006-07 having any nexus with the additions made and secondly whether the Assessment Year 2003-04 to Assessment Year 2006-07 were falling under the category of concluded and non abated assessments. In case the Ld. A.O finds that Assessment Year 2003-04 to Assessment Year 2006-07 were concluded and non abated assessments and there was no incriminating material found during the course of search pertaining to these Assessment Years, in view of settled judicial precedents should not make any addition for the assessee(s) mentioned herein above and in the alternate can take necessary action as per the provisions of law. In the result first common issue raised by above captioned assessee(s) present before us, as to whether “No addition ought to have been made in respect those years where no incriminating material was found as these assessments stood completed u/s 143(3)/143(1) and were not pending on the date of search” is hereby allowed for statistical purposes.
Absence of corroboration by way of independent evidence, no addition ought to have been made in respect of rough notings in the diary found in search - We find that as regards diary found relating to AY 2004-05 from the possession of the assessee Arun Sahlot, the assessee has been explaining since inception that jottings in the impugned dairy had nothing to do with actual financial transactions and it merely contained various business proposals , reminders, appointments, planning, business targets, projections etc. He filed an affidavit too before AO on oath solemnly stating that he has not made any such payments as presumed and alleged by the AO. Assessee also issued letters u/s. 131 of the Act to call the respective parties to verify the facts but the same was not done. In the statement recorded u/s. 132(4) of the Act also assessee nowhere accepted to have made any such payments alleged to have been recorded in the seized diary and he only averred that the diary contains merely work list.
Despite categorical denial of any such payments by the assessee, Arun Sahlot, he was neither examined as author of the diary nor was he cross-examined as deponent of the affidavit. We take note of this very significant and important fact oozing out from AO order that the AO claims to have identified so -called recipients of the alleged payments contained in the diary by collecting their addresses and even phone numbers as narrated in his assessment order at Page 55 and 61-65 but he has neither examined any of them nor even tried to take pain to corroborate, much less corroborated, the same by way of independent evidence.
Even one employee, Asim Ansari, was simultaneously searched and was simultaneously assessed by same AO and addition on account of three alleged payments to him were made in the hands of assessee - AO has also identified Asim Ansari to be the same person who was assessed by him simultaneously. But even in case of Asim Ansari also, neither he was examined by AO nor any corresponding income in the hands of the Asim Ansari, as alleged recipient, was ever made.
We are of the considered view that the issue raised in Ground No.5 in the case of Arun Sahlot for Assessment Year 2004-05 needs to be set aside to the file of Ld. A.O for afresh examination. On perusal it seems that the additions are based merely on rough jottings and rough diary but still in the interest of justice and fair play we are of the view that the issue needs to be examined afresh by Ld. A.O after providing reasonable opportunity of being heard to the assessee and the Ld. A.O is also directed that in view of the settled judicial precedents and discussions herein above the addition can be made on the basis of the seized diary only if proper nexus is established and same is corroborated with relevant material. If the Ld. A.O is not able to establish any such nexus between the notings in the seized diary and the actual transaction having taken place then no addition deserves to be made and if found otherwise Ld. A.O can make addition as permissible under the law.
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2021 (3) TMI 1112 - ITAT INDORE
Undisclosed income - as during the course of search cash sum was found and assessee failed to explain its source and accepted to offer it as additional income - HELD THAT:- As we find that the assessee had made retraction before the completion of assessment proceedings with documentary evidence and relevant explanation and therefore the onus to prove the burden shifted on to the revenue. The assessee during the assessment proceedings also submitted the details of cash in hand as on 31.3.2016 in the hands of the firm M/s Daya Properties & Finance, its partners and wife of the partner.
Income Tax Returns of the firm M/s Daya Properties & Finance and other individuals for Assessment Year 2016-17 were very much before the Ld. A.O. They have been scrutinized during the assessment proceedings and the assessment was completed u/s 143(3) of the Act and no addition have been made.
If the Ld. A.O was not satisfied with the cash in hand shown by the assessee and individuals as on 31.3.2016 he should have taken necessary action during Assessment Year 2016-17 but in absence there of it has to be presumed that the Ld. A.O has accepted the position of cash in hand as on 31.3.2016 shown by the assessee firm and its partners and wife of the partner which stood. So as on 1.4.2016 assessee had cash in hand in its business concern and other individuals referred above at ₹ 16,50,360/- which is sufficient enough to cover up the shortfall in surrender of income of ₹ 15,02,020/- found during the course of search as on 30.8.2016.
Since the assessee had explained the source of cash to the extent of ₹ 15,02,020/- as on the date of search, it had rightly reduced the surrender of income from ₹ 37,02,020/- to ₹ 22,00,000/-. We therefore are of the view that the Ld. A.O was not justified in making the addition of ₹ 15,02,020/-. We accordingly set aside the finding of Ld. CIT(A) and allow Ground No. 1 to 4 raised by the assessee.
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2021 (3) TMI 1109 - ITAT HYDERABAD
Undisclosed income - Discrepancies between the income reported by the assessee and as noticed by the AO in Form No.26-AS - HELD THAT:- CIT (A) has reproduced the submissions of the assessee as held that the assessee has not submitted any further information besides what has been submitted before the AO and that the appeal with regard to the claim of conversion charges were not submitted and no fresh evidence or information was submitted by the assessee inspite of several opportunities.
All the details have been given by the assessee. The invoices and also the ledger a/c of the parties are submitted before us and the certificate is also given that these documents have been filed before the AO and the CIT (A) except for the information from M/s. Alembic Pharmaceuticals Ltd and M/s. Ajanta Pharma Ltd before the CIT (A). We find that the CIT (A) has failed to consider the same nor has she called for a remand report from the AO for the evidence filed by the assessee. In view of the same, we deem it fit and proper to remand the Grounds 2 to 6 to the file of the AO for verification and reconsideration in accordance with law. Therefore, Grounds 2 to 6 are allowed for statistical purposes.
Assessee had submitted detailed submissions before the CIT (A) but without verifying the same, the CIT (A) has confirmed the order of the AO. The assessee has pleaded that the income from trading unit alone may be disallowed u/s 80IC but the CIT (A) has confirmed the assessment order on the ground that the assessee has not submitted any proof that the expenses are not excessive and also held that the assessee is in trading business and not manufacturing business. We find that in the paper book filed before the Tribunal in pages 49 to 55 are the account details of the H.O Traders. CIT (A) has not considered this evidence also nor called for a remand report also. Therefore, we deem it fit and proper to remand this issue also to the file of the AO for denovo consideration in accordance with law. Assessee’s appeal is treated as allowed for statistical purposes.
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2021 (3) TMI 1108 - ITAT VISHAKHAPATNAM
Condonation of delay of 606 days in filing of the appeal against revision u/s 263 - HELD THAT:- Assessee has claimed that on misconception and/or non-guidance of earlier counsel, the Assessee did not file appeal against the order passed by the Pr.CIT u/sec. 263 of the Act, however, on guidance of the present counsel, the Assessee immediately filed the instant appeal. The reasons stated by the Assessee do not inspire any confidence and seems to be an afterthought concocted story cultivated upon the observations of the ld. CIT(A) in the appellate order against the assessment framed u/sec. 143(3) r.w.s. 263 of the Act and therefore, in order to fill up the gap and/or to get adjudicate the issue which has been left by the ld. CIT(A), filed the instant appeal before us with a delay of 606 days.
In our considered opinion, act of the Assessee was not diligent in availing the remedy of appeal. The delay in filing the appeal is occurred due to Assessee’s in-activeness hence in our considered opinion, in any sense, the averments made, the reasons stated and demonstrated by the Assessee failed to qualify the test of sufficient cause and also do not show any acceptable cause much less sufficient cause to exercise Court’s discretion in its favour. Hence considering the peculiar facts and circumstances collectively, we are not inclined to admit the appeal by condoning the delay of 606 days in filing of the appeal, consequently the application for condonation of delay stands dismissed.
Revision u/s 263 - Disallowance of deduction claimed u/sec. 80P(2)(d) - HELD THAT:- No hesitation to follow the decision of Hon’ble Karnataka High Court rendered in the case of Pr.CIT Vs. Totagars Co-operative Sale Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] wherein clearly held that the issue whether a Co-operative Bank is considered to be a Co-operative Society is no longer res integra. The Co- operative Bank which is a species of the genus would necessarily be covered by the word "Co-operative Society". Even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-Operative Society bank as the meaning of Co- Operative Society. Therefore, a Co-operative Society Bank would be included in the words 'Co-operative Societies'. Admittedly, the interest which the Assessee respondent had earned was from a Co-operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I.T. Act, the said amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income.
Section 80P(2)(d) exempt the income by way of interest or dividend derived by the co-operative society from its investment with any other co-operative society which includes Co-operative bank which would be included in the words ‘Co-operative Societies’ as held by the Hon’ble Karnataka high Court in Totgars’s case [2017 (1) TMI 1100 - KARNATAKA HIGH COURT]. In the instant case, the Assessee has earned interest income from Krishna District Co-operative Central Bank (KDCCB) and it is not the case of the Revenue Department that KDCCB is not a co-operative society. Therefore on the aforesaid consideration and analyzations, the decision of the ld. CIT(A) qua issue in hand is set aside and the AO is directed to allow the deduction claimed u/sec. 80P(2)(d) of the Act by the Assessee .
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2021 (3) TMI 1107 - ITAT PUNE
Weighted deduction u/s.35(2AB) - capital and revenue expenditure incurred on in-house R & D facility - HELD THAT:- As M/S. MAHINDRA ELECTRIC MOBILITY LTD. VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 4 (1) (2) , BANGALORE. [2019 (1) TMI 20 - ITAT BANGALORE] no difficulty about the quantum of deduction u/s.35(2AB) of the Act, because the AO allowed 100% of the expenditure as deduction u/s.35(2AB)(1)(i) as expenditure on scientific research. Deduction u/s.35(1)(i) and Sec.35(2AB) are similar except that the deduction u/s.35(2AB) is allowed as weighted deduction at 200% of the expenditure while deduction u/s.35(1)(i) is allowed only at 100%. The conditions for allowing deduction u/s.35(1)(i) and under Sec.35(2AB) are identical with the only difference being that the Assessee claiming deduction u/s.35(2AB) should be engaged in manufacture of certain articles or things. It is not in dispute that the Assessee is engaged in business to which Sec.35(2AB) applied.
The other condition required to be fulfilled for claiming deduction u/s.35(2AB) is that the research and development facility should be approved by the prescribed authority. The prescribed authority is the Secretary, Department of Scientific Industrial Research, Govt. Of India (DSIR). It is not in dispute that the Assessee in the present case obtained approval in Form No.3CM as required by Rule 6 (5A) of the Rules. The deduction u/s.35(2AB) ought to have been allowed as weighted deduction at 200% of the expenditure as claimed by the Assessee and ought not to have been restricted to 100% of the expenditure incurred on scientific research. We hold and direct accordingly and allow the appeal of the Assessee.
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2021 (3) TMI 1106 - ITAT DELHI
Exemption u/s 11 - objects of the assessee seems to be charitable, but the activities carried out by the assessee are commercial in nature - Claim of deprecation on assets used by assessee trust - HELD THAT:-As in assessee's own case [2018 (7) TMI 1478 - ITAT DELHI] Assessing Officer (AO) had ruled that the assessee was disentitled to the exemptions. The CIT(A) and the ITAT, however, reversed the decision and relied upon the decision of this Court in India Trade Promotion Organization vs. DGIT [2015 (1) TMI 928 - DELHI HIGH COURT]. See assessee own case [2019 (2) TMI 1917 - DELHI HIGH COURT]
Double benefit claimed by the assessee i.e. towards depreciation reported in respect of the assets acquired out of previous exempt income - On this too the Tribunal relied upon a binding decision of the Supreme Court in CIT vs. Rajasthan & Gujarat Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] - Revenue appeal dismissed.
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2021 (3) TMI 1105 - ITAT ALLAHABAD
Rectification u/s 154 - Denial of the credit of TDS on the income declared and assessed in the hands of the assessee - HELD THAT:- There is no dispute that the assessee has offer the income to tax which was received as commission income from M/s Unitech Wireless (East) Pvt. Ltd. The contract income was subjected to TDS and is assessed in the hands of the assessee as a proprietrix of M/s Gupta Electric Works then the TDS on the said income even if deposited in the PAN of the deceased husband of the assessee due to inadvertence or mistake, it would not lead to denial of the claim of credit to the assessee, who has offered the said income to tax. Rule 37BA of Income Tax rules, 1962 also provides the credit of tax deducted at source and paid to the Central Government, if the income on which tax is deducted at source and paid to the Government is offered to tax by the assessee and the deposit is made in the name of other person.
There is no dispute that the assessee has offer the income to tax which was received as commission income from M/s Unitech Wireless (East) Pvt. Ltd. The contract income was subjected to TDS and is assessed in the hands of the assessee as a proprietrix of M/s Gupta Electric Works then the TDS on the said income even if deposited in the PAN of the deceased husband of the assessee due to inadvertence or mistake, it would not lead to denial of the claim of credit to the assessee, who has offered the said income to tax.
Rule 37BA of Income Tax rules, 1962 also provides the credit of tax deducted at source and paid to the Central Government, if the income on which tax is deducted at source and paid to the Government is offered to tax by the assessee and the deposit is made in the name of other person.
Denial of TDS credit to the assessee is not justified. The impugned orders of the Assessing Officer passed u/s 154 as well as Ld. CIT (A) are set aside and the claim of the assessee for TDS credit is allowed. Appeal of the assessee is allowed.
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2021 (3) TMI 1104 - ITAT DELHI
Penalty u/s 271(1)(c) - whether the penalty proceedings is initiated for furnishing of inaccurate particulars of income or concealment of income and therefore, the impugned penalty order passed deserves to be cancelled? - HELD THAT:- As penalty notice does not specify whether the penalty was proposed for concealment of particulars of income or for furnishing inaccurate particulars of such income in terms of provisions of Section 271(1)(c).
The Hon’ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law.
Hon’ble Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. [2019 (8) TMI 409 - DELHI HIGH COURT] reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT]
In the present case, too, in notice dated 05.12.2011 and on 08.12.2014 issued under section 274 read with section 271 of the Act, initiated penalty against the appellant for alleged ‘concealment of income or furnishing of inaccurate particulars of such income’, that is to say, the specific default was not specified by the assessing officer in the notice issued.
Since the notice u/s 274 has not been specified as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated. Appeals of the assessee are allowed.
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