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Income Tax - Case Laws
Showing 141 to 160 of 7776 Records
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2021 (12) TMI 1201
Addition being 40% of cash balance shown in the balance sheet as income of the assessee - HELD THAT:- Assessee is maintaining the books of accounts and the same were audited u/s. 44-AB - turnover of the assessee for the year under consideration as submitted by the assessee before the Ld. CIT(A) is at ₹ 2.5 crores and the major sales are cash sales only and obviously generates cash in hand. When the assessee has submitted the same before the A.O as well as Ld. CIT(A) they have not pointed out any defect in the books of accounts and only says that the cash in hand shown by the assessee is excessive.
A.O without any basis, simply says that the cash in hand is excessive and therefore, estimated 40% of the cash in hand as an income and subsequently, partial relief granted by the Ld. CIT(A) and when the assessee is explaining in detail without considering the same estimation made by the A.O without giving any reasons, in my opinion, it is not correct. Even, the Ld. CIT(A) has granted partial relief without giving any reasons why entire addition cannot be deleted. Further, the Ld. CIT(A) also failed to consider the explanation of the assessee. In view of the above, the addition made by the A.O cannot be survived. Accordingly, the addition made by the A.O is deleted. - Decided in favour of assessee.
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2021 (12) TMI 1200
Disallowance of deduction claimed u/s 10AA after claiming deduction / exemption u/s 10A - SEZ unit - HELD THAT:- The assessee company was incorporated in February 2000 in Tambaram, MEPZ, Chennai, which was later converted into SEZ and commenced the production in December, 2000. The company had claimed deduction of 100% for the assessment years 2001-02 to 2005- 06 (five years) u/s 10A of the Act as well as 50% from 2006-07 to 2010-11 (5 years). The Special Economic Zones Act, 2005 inserted section 10AA of the Act effective from 01.04.2006 and as per proviso to section 10AA of the Act, 50% deduction was claimed by the assessee from assessment year 2006-07 till 2010-11 (5 years) and 50% from assessment years 2011-2012 for five years.
Explanation to section 10A of the Act states that for the removal of doubts, it is hereby declared that an undertaking, being the unit, which had already availed, before the commencement of the Special Economic Zones Act, 2005, the deductions referred to in section 10A for ten consecutive years, such unit shall not be eligible for deduction from income under this section. In view of the above provisions it was the submissions of the assessee that the period of ten consecutive assessment years needs to be seen only as before commencement of the Special Economic Zone Act, 2005.
As on the commencement of assessment year 2006-07, which is the effective date of operation of section 10AA, the unit has just claimed deduction under section 10A only for five assessment years and therefore, the assessee has submitted that the assessee company is entitled for deduction under section 10AA.
Tribunal in assessee’s own case for the assessment year 2011-12 [2019 (12) TMI 536 - ITAT CHENNAI] may be followed for the assessment year under consideration as while deciding the appellate order for the assessment years 2012-13 and 2013-14 the ld. CIT(A) followed the Tribunal’s order for the assessment year 2011-12 and decided the appeals in favour of the assessee.
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2021 (12) TMI 1199
Delay in deposit of Employees contribution to PF and ESI - Payment deposited before the due date of filing IT Return U/s 139(1) - AR submitted that the assessee-company deposited employee’s contribution of PF/ESI though with a delay of few days from the due dates mentioned in the respective Acts, however the same was deposited well before the due date of filing of return of income - HELD THAT:- Admittedly and undisputedly, the employees’ contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) - it is noted that the ld CIT(A) has referred to the explanation to section 36(1)(va) and section 43B introduced by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance bill, 2021, however, he has simply failed to consider the express wordings in the said memorandum which says “these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years”. The impugned assessment year is assessment year 2019-20 and therefore, the said amendment cannot be applied in the instant case.
The addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees’s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee.
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2021 (12) TMI 1198
Delayed employees contribution of ESI and Provident Fund - payment remitted before due date of filing of return - HELD THAT:- In the present case, the assessee has remitted the employees contribution in respect of PF & ESI beyond due date for payment but within due date of filing of return of income. Thus, we respectfully following the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security & Intelligence India Pvt. Ltd.,[2014 (10) TMI 1049 - ITAT CHENNAI] we allow the appeal filed by the assessee.
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2021 (12) TMI 1197
Business loss claim - disallowance of loss as there was no sales and purchase - distinction between the commencement and setting up of the business - case of the assessee is that the assessee-company is ready for the commencement of the business and placed the order for raw material and advance also paid therefore, the loss claimed by the assessee has to be allowed - HELD THAT:- It is found that when the assessee has set up an industry by obtaining all necessary permissions and advance paid for the purpose of obtaining the raw material, the same is accepted by the A.O therefore, the raw material not reached the place of the assessee, it cannot be said that the assessee has not commenced the business. Once the assessee is setup entire business activity and waiting for the raw material, it has not reached because of various reasons therefore, it cannot be said that the assessee is not commenced his business.
Hon’ble Delhi High court in the case of CIT v. LG Electronic (India) Ltd. [2005 (5) TMI 30 - DELHI HIGH COURT] has observed that there is a distinction between the commencement and setting up of the business beyond two dates need not necessarily overlap and section 3 refers to date of setting up of the business and as such it is only thereafter, that previous years of newly set up business would commence and, therefore, expenses incurred prior thereto could be taken into account for the purpose of determining profits of a newly set up business. In the present case, the assessee has already set up the business and it commences only once raw material reaches.
The assessee has already paid advance for supply of raw materials and therefore, the loss claimed by the assessee during the year under consideration cannot be disallowed on the ground that the assessee is not commenced the business. Appeal filed by the assessee is allowed.
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2021 (12) TMI 1196
Penalty u/s. 271(1)(c) - unexplained loan creditors - HELD THAT:- As submitted by the assessee that the assessee has borrowed funds from the various creditors therefore, there is difference in confirmations given by the financiers and submitted that it is neither concealment nor filing of inaccurate particulars of income - A.O and CIT(A) has not accepted the explanation of the assessee and penalty is levied. We have considered the entire facts of the case, it is a fact that the assessee has borrowed money from various creditors nearly about 175 and there is a difference in confirmations when compared to books of accounts of the assessee - as explained by the assessee that said difference is due to reconciliation of year end entries between assessee and his creditors. In our opinion, this cannot be considered as neither concealment nor filing of inaccurate particulars of income. Levying of penalty on this count is not justified therefore, the same is deleted.
Disallowance of interest - The claiming of the interest expenditure is neither concealment nor filing of inaccurate particulars of income. We find that the assessee borrowed certain amounts from various creditors and as per the books of accounts of the assessee, he has to pay interest - AO has asked the assessee to produce confirmation letters, the assessee is not able to produce the same. At the best, the A.O can make an addition in respect of loan borrowed is not explained by the assessee and also interest claimed by the assessee. In our opinion, the disallowance of interest claimed by the assessee cannot be considered neither concealment nor by filing of inaccurate particulars of income simply because the assessee was not able to file confirmation letters. We find that the A.O is not justified in levying the penalty on this count confirmed by the Ld. CIT(A).
Amount was refunded to distributors debited to profit and loss account under the head ‘administrative expenses’ - We find that the assessee is in the business of film making and sometimes it is necessary to refund money to the distributors whenever there is a huge loss but it is depend upon the understanding between the parties and also agreement between parties. The assessee is not able to file any details however, taking into consideration of the nature of the business of the assessee, simply because the assessee is not able to file details of expenses debited to profit and loss account cannot be considered neither concealment of income nor filing of inaccurate particulars of income and therefore, we are of the opinion that the A.O and Ld. CIT(A) is not correct in levying the penalty on this count and the same is deleted.
Difference in opening balance - When the assessee himself has admitted before the A.O that there is a difference in opening balance and the same is offered for taxation. In our opinion, it cannot be neither concealment nor filing of inaccurate particulars of income and therefore, the difference in opening balance cannot be considered the penalty levied u/s. 271(1)(c) of the Act. We are of the opinion that the A.O as well as Ld. CIT(A) not justified in levying the penalty. - Decided in favour of assessee.
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2021 (12) TMI 1195
Rectification of application u/s 154 rejected - what the assessee has done is being aggrieved with the rejection of rectification petition by the AO he has filed another rectification petition before the Pr. CIT which is not permitted within the framework of the Income-tax Act - HELD THAT:- As totality of the facts and circumstances that against the rejection of the rectification application of the assessee by the AO, as correctly pointed out by the ld. D/R, the proper recourse available to the assessee is to file an appeal before the ld. CIT(A). That filing another rectification application before the Pr. CIT against the rejection of rectification application u/s 154 of the Act by the AO is not the proper procedure within the framework of the Act. This appeal preferred by the assessee before us is directed against the order passed by the Pr. CIT wherein the assessee has filed a rectification application before him against the order of the rectification passed by the AO. This action of the assessee is legally not maintainable within the purview of the Act and only remedy available to them is to file an appeal before the first appellate authority. In view thereof we do not find any infirmity with the findings of the Pr. CIT which is upheld. Appeal of the assessee is dismissed.
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2021 (12) TMI 1194
Assessment u/s 153A - Disallowance of interest expenditure u/s.37 - assessment of income from other sources u/s.68 r.w.s. 115BBE - HELD THAT:- There is no reference to any seized material / incriminating material in respect of assessment of income from other sources u/s.68 r.w.s 115BBE of the Act. It is well settled principles of law by the decisions of various Courts, including decision of the Hon'ble Supreme Court in the case of PCIT Vs. Meeta Gutgutia Prop. M/s. Ferns N Petals [2017 (5) TMI 1224 - DELHI HIGH COURT] that in absence of incriminating material found as a result of search u/s.132 or requisition u/s.153A of the Act, completed assessments cannot be disturbed in the assessment framed u/s.153A. Also see CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD., ALL CARGO GLOBAL LOGISTICS LTD. [2015 (5) TMI 656 - BOMBAY HIGH COURT] and KABUL CHAWLA [2015 (9) TMI 80 - DELHI HIGH COURT].
The sum and substance of ratios laid down by various High Courts is that unabated/completed assessments cannot be disturbed in absence of any incriminating material found as a result of search.
As assessments for assessment years 2011-12 to 2014-15 are unabated / completed. Further, no reference of any incriminating material found as result of search in respect of additions made by the Assessing Officer towards disallowance of interest u/s.37 of the Act and for assessment of income from other sources u/s.68 r.w.s 115BBE of the Income Tax Act, 1961 - we direct the Assessing Officer to delete additions made towards interest u/s.37 of the Act and assessment of income from other sources u/s.68 r.w.s. 115BBE of the Act for all assessment years. - Decided in favour of assessee.
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2021 (12) TMI 1193
Estimation of income - Bogus purchases u/s 69C - HELD THAT:- Since the issue is squarely covered by the order of Co-ordinate Bench of this Tribunal in the case of Pankaj K. Choudhary,[2021 (10) TMI 653 - ITAT SURAT]. Hence,respectfully following the above binding precedent we disallow 6% of the impugned purchases.
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2021 (12) TMI 1192
Disallowance u/s 40A(3) - payment in cash of more than ₹ 20,000/- in a day - HELD THAT:- Assessee has not disclosed the fact as to when the consignment reached at the destination and when the deliveries of goods were received by assessee. No such expediencies are disclosed by the assessee that either transporter insisted for cash payment or the assessee was unable to prepare the cheque against such delivery immediately - it is not the case of assessee that the assessee was maintaining the bank account in co-operative Bank and realisation of cheque from their banker take a longer time - assessee in Anupam Tele Services [2014 (2) TMI 30 - GUJARAT HIGH COURT] is not applicable on the facts of the present case - the principal company insisted that payment by cheque which was drawn a co-operative bank takes longer time in realization and they insisted for payment - the said case law relates to assessment year 2006-07. The Rule 6DD has been amended in the year 2008 by making significant changes with effect from assessment year 2009-10, which is subject assessment year in the present case.
We find one more reason as recorded by ld CIT(A) that during the first round of appeal before the Tribunal, of the assessee took his stand that assessee has not made payment exceeding of ₹ 20,000/- or aggregate of exceed of ₹ 20,000/- in order to attract the provision of section 40A(3) - The assessee instead of substantiating that submission raised a new plea by taking the excuse of alleged conditions No.6 and 17, allegedly printed on back side of bill of transporter. No such copy of bill is produced for our perusal. In aforesaid circumstances, we do not find any justification to interfere with the order of Ld. CIT(A). In the result, the ground of appeal raised by the assessee is dismissed.
Disallowance of deduction u/s 80P(2)(a)(iii) - No new facts are required to adjudicate the additional grounds of appeal. The assessee in facts seeking deduction under different clauses of section 80P(2)(a) only. In our view, the assessee has right to raise new claim in additional ground of appeal before the appellate authority as has been held by series of decisions of superior courts. Therefore, the additional grounds of appeal raised by the assessee are admitted.
However, considering the fact that the assessee has raised alternative plea for claiming the deduction under different subclause of clause-(a) and sub-section 80P, for the first time before the Tribunal. Therefore, we deem it appropriate to restore the issue back to the file of Ld. CIT(A) who shall examine the alternative plea of assessee and pass the order in accordance with law. CIT(A) would be at liberty to seek the remand report from the Assessing Officer on the alternative claim of assessee. The assessee is also directed to provide complete details and evidence before Ld. CIT(A) as and when called for and not to take any adjournment without any valid reason as the case relates to assessment year 2009-10. In the result the additional ground of appeal is allowed for statistical purpose.
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2021 (12) TMI 1185
Assessment u/s 153A - Non issue of the notice u/s 143(2) - HELD THAT:- There is no issuance of the 143(2) notice. Even, if we go through the assessment order, assessee filed his return of income on 7th December, 2011 in response to the notice u/s 142(1) dated 26/10/2010, whereas, notices u/s 143(2) & 142(1) were issued on 18th November, 2011, the date of which is before filing of the return of income, how is it possible to issue a notices before filing of return of income.
Even if we correlate the notice u/s 143(2) with the assessment order, the issue of notice is time barred. This is a search year, in which, assessment has been framed u/s 143(3) of the Act, but, the assessment has not been framed u/s 153A. Therefore, even if notice issued u/s 143(2) is time barred or not issued at all or notice u/s 143(2) is invalid in the eye of law, the assessment framed u/s 143(3) will not survive.
As in the present case, assessment has been framed u/s 143(3), therefore, as per the statute notice u/s 143(2) is mandatory to be issued by the jurisdictional AO, which is absent in this case. Therefore, non-issuance of a valid notice u/s 143(2) of the Act, the entire assessment framed by the AO is void-ab-initio. - Decided in favour of assessee.
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2021 (12) TMI 1183
Reopening of assessment u/s 147 - correct head of income - non-compete fees receipt - Notice after expiry of 4 years from the end of relevant assessment year on the ground of escapement of income chargeable to tax on the non-compete fees in question by contending that it was taxable as business income under Section 28 (V-A) of the Act instead of income under the head “capital gain” - HELD THAT:- In the facts and circumstances of the case assumption of jurisdiction under Section 147 by the respondent/AO and issuance of impugned notice under Section 148 of the said Act after the expiry of 4 years from the end of the relevant assessment year 2012-13 is bad and not tenable in the eye of law in view of non-fulfilment of criteria under the first proviso to Section 147 of the Act and in view of the fact that the respondent Assessing Officer could not establish from record that there was any omission or failure on the part of the assessee petitioner in disclosing fully and truly all relevant material facts necessary in course of scrutiny assessment under Section 143 (3) of the Income Tax Act, 1961.
In the facts and circumstances of the case invoking of provision of Section 147 read with Section 148 of the Act by the Assessing Officer for reopening the assessment of the assessee on the self-same material which were very much available to the Assessing Officer at the time of scrutiny assessment under Section 143 (3) of the Income Tax Act, 1961 is not justified by taking a view different from his predecessor who had already allowed to tax the nom-compete fees in question as Long Term Capital Gain in scrutiny assessment and by taking a view that the same should be treated as income from business under Section 28 (V-A) of the Income Tax Act, 1961 instead of Long Term Capital Gain.
In the facts and in the circumstances of the case the respondent assessing authority is legally not justified in reopening the assessment in question under Section 147 of the Income Tax Act, 1961 by ignoring the fact that non-compete fees in question had already been treated and taxed as capital gains by the Assessing Officer during the scrutiny assessment proceedings under Section 143 (3) of the Act by accepting the claim of the petitioner after examining, verifying and scrutinising all the facts, relevant documents, details and particulars which were requisitioned by the assessing officer in course of scrutiny assessment and which are matters of records.
In the facts and in the circumstances of the case reopening of assessment by invoking Section 147 and issuance of notice under Section 148 of the Income Tax Act, 1961, after expiry of 4 years from the end of relevant assessment year on the basis of information received from investigation wing which are nothing new and are the same material which were already available before the Assessing Officer and were considered at the time of scrutiny assessment under Section 143 (3) of the Act, and taking a different view on the self-same material is a mere change of opinion. - Decided in favour of assessee.
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2021 (12) TMI 1182
Validity of Reopening of assessment u/s 147 - income chargeable to tax of the Corporate Debtor has escaped assessment - notice under Section 148 to a Corporate Debtor, calling upon it to submit a return in the prescribed form for the assessment year falling prior to the date of approval of Resolution Plan under Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Once the public announcement is made under the IBC by the Resolution Professional calling upon all concerned, including the statutory bodies, to raise claim, it would be expected from all the stakeholders to diligently raise their claim. The Income Tax authorities in that sense, ought to have been diligent to verify the previous years’ assessment of the Corporate Debtor as permissible under the law and to raise the claim in the prescribed form within time before the Resolution Professional.
In the present case, the Income Tax Authorities failed to do so and therefore, the claim stood extinguished.
As stated earlier, there could be a contingency where statuary claim is raised after the approval of the Resolution Plan, owing to receipt of information of the Corporate Debtor having suppressed certain facts while filing returns of the previous years, which then could not be a part of the Resolution Plan. To counter such a situation, the statutory authorities will have to explore the possibility of raising such claims before the Resolution Professional or Adjudicating Authority, as the case may be, by requesting to make certain provisions for payment of statutory claims in the Resolution Plan. Whether to accept such claim is a matter that should be left to the COC, the Resolution Professional or the Adjudicating Authority. However, in absence of any such claim having been made and dealt with by the Resolution Professional and in absence of any provision to settle such claim in the Resolution Plan, such claim could not be raised subsequently. In that sense, the Petitioner is correct in contending that the impugned notice could not have been issued by the Assessing Officer.
We did not come across any such provision under the Income Tax Act, 1961 nor did the parties before us informed of its existence. We, accordingly, record our answer in the negative to the question framed.
Objection of maintainability of the petition - As decided in Ghanashyam Mishra’s case [2021 (4) TMI 613 - SUPREME COURT] the alternate remedy would not operate as a bar for invoking jurisdiction under Article 226 of the Constitution of India in at least three contingencies, namely,
(1) where the writ petition has been filed for the enforcement of any of the Fundamental Rights;
(2) where there has been a violation of the principle of natural justice; and
(3) where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.”
We find that the impugned notice falls under category – 3 above. Accordingly, the preliminary objection is rejected.Both the Petitions are allowed. The impugned notices dated 25.03.2021 and 24.03.2021 are hereby quashed and set aside. - Decided in favour of assessee.
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2021 (12) TMI 1181
TDS credit - AO did not allow the TDS credit on the ground that the corresponding income of this TDS has not been offered to tax by the assessee as it was not received during the impugned assessment year - assessee during the impugned assessment year has adopted cash method of accounting - HELD THAT:- We find an identical issue had come-up before the Coordinate Bench of the Tribunal in the case of Chander Shekhar Aggarwal [2016 (2) TMI 420 - ITAT DELHI] wherein the Tribunal after considering the identical set of facts has held that assessee would be entitled to credit of the entire TDS offered as income in the year of deduction. We hold that the Ld. CIT(A) is not justified in denying the credit of TDS. Accordingly, order of the Ld. CIT(A) is set aside and the AO is directed to allow the credit of TDS - Decided in favour of assessee.
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2021 (12) TMI 1180
Disallowance with respect to loan advanced by assessee written off and claimed as business loss - CIT(A), who confirmed the disallowance holding that same is neither allowable under section 37(1) or under section 36(1)(vii) or under section 36(2) - HELD THAT:- We find that for assessment year 2014-15, the assessee has earned no interest from private parties and the assessee only earned the interest from bank FDRs. Therefore, if the statement of the partner is looked into with respect to the activities of the assessee for assessment year 2014-15, the facts are stated correctly. However, the partner was fully aware about the loan given and the amount repaid by the borrower. This is demonstrated from answers to questions - such as ledger account of the borrower showing advances of ₹ 10 crores, proof of earning interest income, repayment of sum , outstanding remaining of ₹ 2 Crores, such sum being written off in the books of accounts, object of the partnership deed and past assessment records of the assessee, merely using the statement of the partner against the assessee for disallowance of the above loss is not justified. Merely because the borrower is a related party and in which the partners of the assessee firm are interest, cannot be the reason for disallowance of the above loss. As the assessee has satisfied all the conditions of section 36(1)(vii) read with section 36(2) of the Act, the claim of the assessee is allowable. In the result, we reverse the orders of the lower authorities and direct the assessing officer to delete the above disallowance.
Erroneous set off of business loss against the capital gains rather than against the business income of the year - As per the assessment order, the long term capital gain of the assessee is ₹ 5,48,65,125/-. However, as per the income-tax computation form, the learned assessing officer has taken long term capital gain of ₹ 4,56,01,325/- . Thus, the total income remains same at ₹ 6,56,01,325/- but the figure of the long term capital gain has been changed by the assessing officer in the income-tax computation form. Thus, we direct the learned assessing officer to correctly compute the income-tax computation by taking the long term capital gain at ₹ 5,48,65,125/- only. Accordingly, ground 2 of the appeal of the assessee is allowed.
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2021 (12) TMI 1179
Validity of assessment u/s 153A - Non issuance of notice U/s 143(2) - Protective assessment - HELD THAT:- AO has not issued a notice u/s 143(2) and even the ld. D.R. also could not bring on record any copy of the notice issued by the assessing officer or any proof of service of notice u/s 143(2) of the Income Tax Act, 1961 as mentioned above. The provisions of section 292BB also do not support the revenue because in the impugned case there is no documentary evidence to show that there was a notice issued U/s 143(2) - Even in the assessment order, the AO has mentioned the notice has been issued before filling of the return of income.
We observe from the assessment order the assessment has been made on a protective basis, but, it is not clear whether any assessment has been framed in substantive basis in case of other/s - when the assessments in other/s assessee’s cases are not framed on substantive basis, how the protective assessment can be framed in the case of the assessee on hand. Therefore, in our considered opinion, the assessment framed on protective basis in the case of the assessee does not stand in the eyes of law.
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2021 (12) TMI 1178
Assessment u/s 153A - Addition u/s 68 - Unsecured cash credits - Assessment against concluded assessments - HELD THAT:- As concluded assessments cannot be interfered with unless there is incriminating material discovered from the seized documents as a result of search and further, no additions can be made where the assessments are framed u/s.153A for unabated year i.e. where no assessment is pending. The seized documents must at least clearly point out that there is some undisclosed income, which here in this case is completely absent, as is discussed above, and thus, are not in the nature of incriminating material so as to warrant any addition.
Submissions made by ld. CIT-DR, regarding seized documents having bearing on total income becoming incriminating documents automatically, we are not impressed with the arguments of Ld CIT DR, as the same goes contrary to the judgments of jurisdictional high court as cited above. And further, with reference to the order of assessment or even going by the order of learned CIT (A), the learned CIT DR was not able to point out any single document which was not disclosed by assessee prior to search proceedings and neither the judgments so relied by counsel of assessee were rebutted or contradicted by learned CIT DR.
We have no hesitation to hold that firstly, none of the documents mentioned in the order of assessment more specifically the copy of flowchart, email and share certificates are incriminating in nature out of which any adverse inference can be drawn as to any undisclosed income, relating to assessee-company have been unearthed during the course of search and; since, the impugned assessment year from 2008-09 to 2011-12 were not pending, as the assessment stood completed prior to the date of search, therefore, we hold that without any incriminating material, concluded assessments cannot be tinkered with and no addition can be made without there being any incriminating material for the impugned assessment year. Accordingly, we hold that the additions made by the Assessing Officer are beyond the scope of Section 153A. - Decided in favour of assessee.
Addition u/s 68 - HELD THAT:- AO in the order of assessment has relied on report and observations of the Investigation wing, which otherwise does not implicate any of the assessees, whereas, no concrete enquiry or investigation had been carried out by the assessing officer in the order of assessment to dislodge the explanation or rebut the documentary evidence placed and recorded by AO - Thus, when no appropriate investigation has been carried out by the AO and as such the burden which lay upon the learned A.O. has not been discharged, the addition so made is unsustainable and deserves to be deleted.
We have also noticed that that the Revenue has failed to controvert the findings so recorded by learned CIT (A) which is based on documentary evidences as have been discussed above, wherein, substantial relief on merits was provided to assessee by CIT (A). Thus, documentary evidences on record have not been rebutted by the A.O. through any evidence or material on record. No independent enquiry has been made against these documentary evidences except issuing notices under section 133(6), which were also replied by the subscribing companies. Therefore, such documentary evidences clearly support the explanation of assessee that investments made in the assessee companies are genuine.
The assessee apart from submitting the various documents related to receipt of share capital and share premium as listed hereinabove, also furnished the workings for share valuations using discounted cash flow method and furnished explanation for issuing shares at a premium taking into account the future growth in the business of the assessee and also considering the future prospects of the assessee business coupled with the fact entire group had a turnover of over ₹ 2500 crores in financial year 2014-15. - Decided in favour of assessee.
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2021 (12) TMI 1177
Net profit estimation - assessee is agitating for the higher net profit rate applied by the ld. CIT(A) ignoring past net profit track of the assessee - HELD THAT:- Respectfully following the decision of this Tribunal in the case of M/s B.B.C. Project Services Pvt. Ltd [2018 (11) TMI 1884 - ITAT KOLKATA] consistent business of contract work carried out by the assessee and the net profit rate offered in the financial statements and being fair to both the parties are of the view that application of net profit rate of 0.6% on the turnover of contract business during the year i.e. ₹ 87.46 Cr. will meet the end to justice. We accordingly order so and direct the revenue to compute the net profit for the year @ 0.6%. We further make it clear that this net profit rate of 0.6% will take care of all the business expenses including interest and depreciation incurred for the purpose of running contract business and related to the turnover of ₹ 87.46 cr. Accordingly assessee will get part relief on this common issue and revenue fails to succeed. Ground No.1 of the assessee’s appeal for A.Y. 2012-13 is partly allowed.
Addition for sale of immovable property - HELD THAT:- We find merit in the contentions of the assessee that the alleged amount of sale consideration of ₹ 2,81,70,890/- is just one of the many transactions of sale of property executed by the assessee on behalf of the purchaser and the income earned by the assessee from such transactions of purchase/sale carried out in past as well as in the year under appeal have been routed through its books of account and the commission income earned from such transactions have been duly disclosed in the financial statements and offered to tax. We, therefore, set aside the finding of ld. CIT(A) and delete the addition made by the Ld. AO. Thus, ground no.2 raised by the assessee is allowed.
Unexplained cash deposit - HELD THAT:- As assessee has made general submissions that this cash deposited in the bank are out of the business receipts but no such evidence in the form of extract of the cash book of the relevant date has been filed so as to make possible for us examine this fact that whether the assessee had sufficient cash in hands in the books as on the date of deposit of the alleged amount with the HDFC Bank. In lack of necessary evidences, we find no merit in this ground raised by the assessee
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2021 (12) TMI 1176
Revision u/s 263 by CIT - Addition u/s 68 - scope of section 147 - unsecured creditors - ‘no enquiry’ or ‘inadequate enquiry’ - HELD THAT:- The opening part of section 147 categorically provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section. Thus, it is evident that section 147 duly empowers the AO to make addition on any other income chargeable to tax which escaped the assessment and comes to his notice during the reassessment proceedings, in addition to the point(s) on which the re-assessment was initiated.
Turning to the facts of the instant case, we find that though the AO initiated reassessment for denial of deduction u/s.80G, but he did initiate enquiry on receipt of unsecured loans for which the assessee also furnished certain details as discussed above. In that view of the matter, it cannot be said that the ld. PCIT travelled outside the assessment order passed u/s 147 of the Act, which vitiated the revisionary order.
The assessee, situated in Aurangabad, received loans running into crores from certain companies based in Kolkata or Mumbai, that were neither in the financing business nor had any past business dealings with the assessee. No question was asked by the AO as to how the assessee came into contact with them, the answer to which was neither given to the ld. PCIT nor has it come up before the Tribunal.
AO issued notice u/s 133(6) to such parties. Most of them did not respond and the AO chose to accept the genuineness of the loan creditors without proceeding further as per law, rather, by recording to the contrary in the assessment order.Most of the companies which replied and filed their Balance sheets etc. had shown to have received huge share premium on issue of share capital without any justifiable valuation. Such companies had declared nominal profit running into thousands or a few lakhs, but the share premium was in crores. These companies were prima facie shell or penny stock companies. AO kept the information received on record without blinking.
Four Kolkata based companies who allegedly advanced identical loans of ₹ 25.00 lac each had same address and the AO did not consider it expedient to inquire further.No interest was paid to some of the unsecured loans despite no prior business.
We are fully satisfied that there was utter failure on the part of the AO to conduct enquiry in respect of huge loans received by the assessee from various parties thereby rendering the assessment order erroneous and prejudicial to the interest of the Revenue justifying the exercise of revisionary power u/s 263 of the Act.
Once it is held that the AO failed to apply his mind to the issue of unsecured loans which ought to have been done in the facts and circumstances of the case thereby rendering the assessment order erroneous and prejudicial to the interest of the revenue, the sequitur is that the exercise of revisionary power gets justified. As can be seen, that the ld. PCIT did not enhance the assessment on any issue but simply restored the matter to the file of the AO: `with a direction that the assessment order should be reframed as per the provisions of law after considering proper facts and submissions of the assessee and also for necessary verification in the light of the observations made above, after affording proper opportunity to the assessee’. If the assessee has an explainable case on the issues taken note of by the ld. PCIT, it can put forth the same before him in the course of proceedings giving effect to the order passed u/s 263. - Decided against assessee.
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2021 (12) TMI 1175
Claim of deduction u/s. 35AD by stating that the appellant did not build the hotel building - HELD THAT:- Provisions of section 35AD of the Act does not specify that the assessee has to construct the entire building by itself or own the building and land. The provisions only specify that the specified business should be in the nature of building and operating a new hotel of 2 star or above category as classified by the Central Government - there is no doubt that the entire investment made by the assessee was for constructing a portion of the building and for operating a new hotel of the category specified under the Act - from the provisions of section 35AD it is obvious that these provisions are brought into the Act in order to promote certain specified business in the country.
These provisions grant deduction to the assessee in respect of the entire capital expenditure incurred wholly and exclusively for the purpose of the specified business which has commenced during the previous year. Even otherwise, by virtue of section 32 of the Act, the assessee is entitled for deduction towards such expenditures u/s.32 of the Act by way of depreciation over a period of time.
There is no loss to the revenue when the whole issue is viewed in its entirety, because when the assessee derives the benefit of Section 35AD of the Act it saves payment of tax in the initial years but in the subsequent years ends up paying higher tax as it is deprived of the benefit of depreciation u/s. 32 of the Act. Provisions of section 35AD of the Act, only helps the assessee to maintain higher cash liquidity during the initial years of its business.
Once deduction u/s.35AD of the Act is claimed then by virtue of section 35AD(4) of the Act, no other deduction in respect of these expenditure shall be allowed as deduction - the beneficial provisions of the Act and our observations mentioned herein above in the instant case before us the assessee is entitled for the benefit of deduction u/s. 35AD towards the expenditure incurred by it for establishing its hotel business of specified category as provided under the Act - we hereby direct the Ld. AO to grant deduction to the assessee under the provisions of section 35AD - Appeal of the assessee is allowed.
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