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Income Tax - Case Laws
Showing 301 to 320 of 7776 Records
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2021 (12) TMI 873
Unaccounted investment - Addition in the hands of the assessee on protective basis on account of expenses u/s. 69C - Assessee has been held to be an entry provider through which, the money has been routed for making investment in another companies and considering the facts of the whole transactions made addition in the hands of the real beneficiary on substantive basis and in the hands of the assessee, on protective basis - HELD THAT:- The addition in the hands of the beneficiary has been confirmed by the Commissioner of Income tax (Appeals) in their respective cases holding that the addition is required to be made in the hands of those companies, on substantive basis. The revenue have not shown us any evidence that the addition in the hands of those companies having survived for the reason that it should be taxed in the hands of this assessee.
AO has also made addition u/s. 69 C of the Act of expenses of obtaining the accommodation entry in the hands of the assessee, on protective basis. The expenditure of accommodation entries were also held to be the income of those assesses, who obtained accommodation entry and therefore, such expenditure is confirmed as unexplained expenditure of those beneficiaries. In view of this, the learned Commissioner of Income tax (Appeals), after carefully recording the order of the learned Commissioner of Income tax (Appeals) in the hands of the beneficiaries, have deleted the addition in the hands of the assessee. There is no evidence that income belongs to this assessee and further stand of the revenue is that this assessee is only a paper company. Further, if at any moment, in the case of the beneficiaries, if it is held that the income belongs to the assessee and not to those beneficiaries, the provisions of Section 153 of the income tax act will come to the rescue of the revenue.
We find no infirmity in the order of learned Commissioner of Income-tax (Appeals) in deleting the addition in the hands of this assessee, made on protective basis, when addition already made in the case of other assesses on substantive basis, have been confirmed. - Decided against revenue.
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2021 (12) TMI 872
Exemption u/s 11 and 12 - denial of exemption as the receipts of income in relation to hiring of auditorium and conference hall and running of Hostel/canteen activities are in the nature of business receipts and thus, would fall outside the ambit of expression charitable purpose contemplated u/s. 2(15) - HELD THAT:- The issue is squarely covered in favour of the assessee. On a broader reckoning, it was held by the coordinate bench that the aforesaid income of the trust is incidental to attainment of the main objects of the trust that is to establish, maintain and conduct one or more National or International Youth Centers in India for the benefit of foreign students and youth delegations as well as individuals visiting India which activity has been recognized as charitable activity and the registration has been granted to the assessee by the Income Tax Department.
The issue having been decided in favour of the assessee in identical facts situation in the earlier years, we do not see any reason to depart there from. We thus, see no merit in the appeal of the Revenue.
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2021 (12) TMI 871
Revision u/s 263 by CIT - source of cash deposited into the bank account of the assessee - agreement to sell was entered into by the assessee with Shri Sunil Khasa for sale of 20% share in the house, whereas as per the records submitted by the assessee, the house in question was transferred in the name of the assessee - assessee was not the owner of the above-said property at the time of execution of agreement to sell. He further observed that in the agreement to sell, the property was mentioned as a plot but actually it was a duplex house. He, therefore, observed that there was clearly lack of inquiries by the AO - HELD THAT:- CIT had proceeded on the wrong footing that the assessee had deposited the amount of ₹ 19 lacs in the account and further that the assessee had entered into an agreement to sell for 20% share in the house with Shri Sunil Khasa, whereas, the case of the assessee from the very beginning has been that the amount of ₹ 19 lacs was not deposited by her in the joint bank account, rather the amount in question was deposited by the other/second account holder i.e. her husband, namely Shri Surender Singh Taxak.
When the assessee had explained that the account was a joint account and the amount was deposited by the second account holder, then in our view, the AO should have dropped the proceeding against the assessee and issued notice to the second account holder, i.e. the husband of the assessee - AO continued with the proceedings, wherein the assessee duly explained the source of cash deposited even by the second account holder.
Whatever may be the shortcomings/discrepancies relating to the agreement to sell 20% portion of the house, that could have been taken into consideration in the assessment proceedings in the case of the second account holder i.e. the husband of the assessee. Once the assessee had explained that she has not deposited any amount in the joint account and further the second account holder had in clear term admitted that the amount was deposited by him, the assessee, in our view, was absolved of her liability to further explain about the transaction. However, the Ld. Pr. CIT proceeded on wrong footing that the aforesaid explanation relating to the agreement to sell 20% share in the house pertain to the assessee. Even it was explained that the father of the husband of the assessee was paralytic and was not in good health and, therefore, the agreement to sell was executed by the husband of the assessee i.e. the second account holder.
The compulsion for execution of agreement to sell was also explained as installment was due of ₹ 17.25 lacs towards the Noida Authority/Developer and that the husband of the assessee was in dire need of money for which he obtained ₹ 19 lacs from his friend Shri Sunil Khasa and in lieu of that, he executed agreement to sell of 20% share of the house. The father-in-law of the assessee expired after some time and thereafter the house in fact, was transferred in the name of the husband of the assessee on 01.04.2015.
The above facts show that the AO had duly made appropriate inquiries and even recorded the statement of Shri Sunil Khasa, who admitted that he had given ₹ 19 lacs to the husband of the assessee. In view of the above discussion, it is held that the Ld. Pr. CIT wrongly exercised his revision jurisdiction u/s. 263 of the Act. The impugned order passed by the Ld. Pr. CIT u/s. 263 of the Act being bad in law, is not sustainable and the same is accordingly, quashed - Decided in favour of assessee.
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2021 (12) TMI 870
Validity of reassessment proceedings - Proof of Change of opinion - initiation of reassessment proceedings on the ground that there is interest income and interest expenses which was shown Nil in the column of loan funds - HELD THAT:- The reopening in the present case has been done on the claim of interest expenses. The assessee in the original return of income has not mentioned the amount regarding loan funds.
As per Section 147, Explanation-3 for the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issues which are escaped assessment and such issue comes to the notice subsequently in the course of proceedings under this section, notwithstanding that the reason for said issue has not been included in the reasons recorded under sub Section-2 of Section 148. The contention of the assessee that there is change of opinion is not a valid contention as in the present case the assessee has not decided the issue related to notice whether issue within the period of four years from the end of relevant Assessment Year.
In the present case, the assessee admittedly stated that Tax Consultant committed error by not mentioning loan fund in the original return of income. The Assessing Officer in the original assessment dated 12.02.2016 has never doubted the claim of interest and there is no mention of actual disclosure of claim of interest at any stage of its Assessment Order. Thus, the Assessing Officer in assessment under Section 143(3) of the Act has not noticed that there is escapement of certain issues in the Assessment Order/assessment proceedings. Thus, explanation of section 147, to be specific Explanation-3, will come into picture and it will not amount to change of opinion. Thus, ground no. 1 of assessee's appeal is dismissed.
Merits of the case Assessee has explained before the Assessing Officer that the loan fund was mentioned in the return of income filed in response to notice under Section 148 of the Act and thus the assessee has made valid claim of interest expenses on borrowed fund. The same should have been allowed by the Assessing Officer. Hence, the appeal of the assessee is partly allowed.
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2021 (12) TMI 869
Reopening of assessment u/s 147 - addition of bogus expenditure - non-issuance of notice under section 143(2) - Information received from DGIT (Investigation), Mumbai that assessee is one of the beneficiaries of bogus purchases shown from various entities managed by Rajendra K Jain - HELD THAT:- We find that on the Jurisdictional High Court in PCIT vs. Marck Biosciences Ltd. [2014 (11) TMI 812 - GUJARAT HIGH COURT] held that where notice under section 143(2) was issued to assessee prior to filing of return of income, said notice being invalid, assessment order passed in pursuance of same deserved to be set aside.
CIT(A) in his order held that non-issuance of notice under section 143(2) of the Act is a curable defect, we find that Hon'ble Jurisdictional High Court in Marck Biosciences Ltd. [2019 (4) TMI 215 - GUJARAT HIGH COURT] also considered the provision of section 292BB and held from the language employed in section 292BB, which emerges that a notice would be deemed to be valid in three circumstances provided therein, namely where assessee has participated in the proceedings it would not be permissible him to raise objection that (i) notice was not served upon him; (ii) was not served upon him in time; & (iii) was served upon him in an improper manner and held that all the circumstances contemplated under section 292BB of the Act are in case where a notice has been issued, has either not been served upon the assessee or not served in time or has been served in an improper manner. The said provision clearly does not contemplate the case where no notice has been issued at all.
Issuance of notice under section 143(2) of the Act prior to filing of return of income was invalid and in absence of valid notice under section 143(2) of the Act, the assessment order is rendered invalid. - Decided against revenue.
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2021 (12) TMI 868
Addition made towards Bonus Payable, Salaries and Cash credits in capital account - HELD THAT:- As submitted that the bonus was paid during the months of April & May, 2013 i.e. on 30/04/2013, 10/05/2013 & 30/05/2013. The assessee had furnished Annexure – 1, in which the details of employees, amounts paid & signature without the date of payment. The reason has taken by the CIT(A) for confirming the addition that date of payments were not mentioned, is not sufficient to dismiss the ground. He ought to have made an enquiry with the employees who have got the payment of bonus whether the have received the payment of bonus, of so, on what dates. CIT(A) failed to do so. As per the details submitted before us on 23/11/2021 the bonus has been paid on 30/04/2013, 15/05/2013 and 30/05/2013, which is much before the filing of return of income u/s 139(1). Therefore, we set aside the order of the CIT(A) and direct the AO to allow the assessee’s claim of bonus.
Disallowance of expenditure on sales - AO disallowed 10% of the salary expenditure on the ground that the appellant did not provide identification documents of few employees as requested by him - HELD THAT:- Assessee failed to provide the complete identification documents of the employees and has submitted on 23/11/2021 only for 24 employees. Therefore, to meet the ends of justice, we restrict the disallowance to 8% of the salary expenditure of ₹ 1,16,16,589/- as against 10% disallowed by the revenue authorities. Accordingly, ground No. 4 is partly allowed.
Unexplained investment - CIT(A) confirmed the addition observing that in the course of appellate proceedings - HELD THAT:- Considering the facts noted by the lower authorities that the amounts were not entered in the cash book, we uphold the findings of the lower authorities with regard to the addition to capital account of the assessee. Thus, we uphold the order of CIT(A) and dismiss the ground No. 5 of the assessee
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2021 (12) TMI 867
Additions of commission income - Assessment u/s 153A r.w.s 144 - Whether additions are not based on incriminating evidence? - HELD THAT:- From the admission of assessee, Sachin Pareek and Surendra Jain in their statement and identification of actual beneficiary of import and delivery of diamonds by actual beneficiary and e-mail found to actual beneficiary, CIT(A) concluded that assessee and his group was providing accommodation entry.
CIT(A) further concluded that once the business as per books is proved fictitious and bogus, the action of AO in rejecting the books is obvious. On the ground/ grievance of the assessee on additions of commission and allowance of 25% expenses the CIT(A) concluded that the addition made by AO is on lower side comparative to the addition in case of Bhanwar Lal Jain, who was also providing similar accommodation entry with similar modus operandi.
Once books are rejected, the profit is to be estimated on the basis of commission rates and net profit is to be determined. On the grievance of assessee of exchange rate difference, CIT(A) held that when the actual business is importing for others and in the books credit in the name of exporters (other beneficiary), the exchange rate difference is not payable by the assessee and rejected the ground raised by the assessee.
Assessee basically made two fold submissions that no incriminating material/ evidence was recovered during the course of search and that the assessee retracted from his statement recorded by the search party and the assessee was doing real business and not engaged in providing accommodation entry. We find that during the search action more than sufficient incriminating evidence was found, which is also supported with the corroborative evidence found in the form of e-mails and other evidence in the form of books of account recovered from the pen drive, which itself is incriminating evidence against the assessee.
Assessee in his retraction statement has not explained the material evidence found in the form of e-mail, from his e-mail account, his background history as to how he entered in the this particular business of providing entry, which he himself disclosed during the search action that he learnt all this business module of providing accommodation entry from his ex-employer namely Ratanlal Jain. The said retraction is filed for the first time before AO after gap of 12 months period.
The reliance in case Manoj Begani[2017 (12) TMI 1408 - ITAT KOLKATA], passed by Kolkata Tribunal which is case of beneficiary of the alleged accommodation entry from Rajendra Jain, is not helpful to the assessee. Here in the present case, there is clear admissions of the assessee about the entire business affair carried out by him with his associate for providing bogus entry, mere obitor in case of beneficiary by the Coordinate bench, will not absolve the assessee from his own admission.
The finding of Tribunal in Manoj Begani vs. ACIT(supra) is based on the facts and evidences produced by that assessee. Therefore, in view of the abovesaid discussions, we are in full agreement with the finding of ld CIT(A) that once the books are rejected the profit is to be estimated on the basis of commission rates and net profit is to be determined. We also affirms the finding of ld CIT(A) that that when the actual business of assessee was importing goods for others and in the books credit in the name of exporters, thus exchange rate difference is not payable by the assessee and the assessee is not eligible for deduction of such exchange rate fluctuation. No evidence is filed by the assessee on record to prove the fact that the assessee entered into hedging contract with the Banker, the evidence found in the form of e-mail and other evidences show the facts otherwise. Therefore, the submissions made by the assessee do not inspire confidence.
None of the case laws relied by the ld AR for the assessee is helpful to the assessee as there was sufficient incriminating material seized during the search action on the assessee on the basis of which it is clearly proved that the assessee is in the business of entry provider.
Commissions has already included by the assessee in his sales transaction - Considering the facts that the lower authority have categorically held that the assessee was not doing any genuine business transactions and was engaged in providing accommodation entry, books of the assessee was rejected and only very meager rate of commission income was added to the total income of the assessee, which we have already affirmed. If for the sake of assuming it is considered that the assessee was doing genuine business, thus, keeping in view of volume of transactions in his bank account, the income of assessee would be estimated many fold comparative to the commission income added by the AO. Thus, the alternative ground of appeal is also rejected.
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2021 (12) TMI 866
Revision u/s 263 - Reopening of assessment u/s 147 - transaction of sale of land property - whether the impugned land was an ancestral land which was inherited by the assessee from his forefathers? - HELD THAT:- Tenancy right was converted into the ownership of the land by virtue of Gujarat Devasthan Inam Abolition Act 1969 and section 32 read with section 88E of Bombay Tenancy and Agricultural Act 1948 which was subsequently confirmed by the order of the Mamlatdar and Krishi Panch - as Shri Remnik bhai Patel who held the property for the 1st time as owner. Thus, it is transpired that there was a change in the character of right in the land as far as tenancy and ownership of the land.
From the above fact it is inferred that the land bearing survey Nos. 182, 183 and 185 was acquired by Shri Ramnikbhai N Patel in his individual capacity for his 1/4th interest and not as the family property. As such land was not devolved to him as per section 6 of the Hindu Succession Act 1956 as Mitakshra coparcenary as the same was not the property of his ancestor as they were only the tenant of land and not the owner. Therefore, in our considered view any income arising from the sale of such land is taxable in his individual capacity as he was the owner of the said land.
AO dropping the assessment proceeding under section 147 of the Act against the HUF is not prejudicial to the interest of the Revenue as the land in question is not the property of HUF. Hence, the HUF is not liable to capital gain on transfer of such land. Here, it is pertinent to note that in order to set aside the order of the AO u/s 263 it must proved that the order of the AO is erroneous as well as prejudicial to the interest of the Revenue. For sake of understanding if an order of the AO is erroneous but not prejudicial to the interest of the Revenue or vise-versa then power under section 263 of the Act cannot be invoked - we set aside the order of the learned Pr. CIT passed under section 263 of the Act. Hence ground of appeal of the assessee is allowed.
Reopening of assessment u/s 147 - amount of capital gain as shown represents the income from other sources - As none of them had any right in the property in their individual capacity as such the property belongs to HUF of Ramnikbhai. So, the income declared by this them under the capital gain is the income from other sources. There is no dispute to the fact that they have shown the income on the sale of the property of which they were not the owners. The revenue is also admitting this fact.
As also pertinent to note that we have already given a finding in the previous Paragraph of this order that such property was the personal property of Shri Ramnikbhai Patel and therefore any gain arising in consequence to sale of the property has to be taxed in the hands of Shri Ramnikbhai only. In the light of this fact, if any addition is made in the hands of the other parties either as capital gain or income from other sources, it would lead to the double addition. Under the provisions of law, there is no concept of making the addition to the total income of the assessee twice for the purpose of the tax until and unless such addition falls in the exception categories. Accordingly, we are of the view that all the assessee is not subject to tax on the income which they have offered to tax under the bona fides believe.
We are of the opinion that there should not be any addition in the hands of the other assessee, treating the capital gain income under the head other sources. Before parting, it is also important to note that all the assessee have already declared and offered the capital gain taking the sale consideration as ₹70 Lacs which have not been disputed by any of the assessee before us. In other words the learned AR for all the assessee before us agreed not to dispute the income already shown in the income tax return. Accordingly, the status quo with respect to the income by the assessee in the income tax return shall be maintained. Hence the ground of appeal of all the assessee are allowed.
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2021 (12) TMI 865
Reopening of assessment u/s 147 - Unexplained cash credits u/s 68 - HELD THAT:- From reasons recorded for reopening proceedings u/s 147 and there is no discrepancy in the reasons. Hence assessee’s appeal is dismissed. It is seen that the information received from investigation wing was part of the reopening, yet the reopening was based on the records and facts of the assessee’s case.
As observed in the reasons for reopening that certain cash withdrawals was seen in respect of assessee company’s records. The CIT(A) has correctly stated that the information on the basis of which AO had initiated proceedings under Section 147 was certain and it could be construed to be sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. Therefore, the reassessment proceedings initiated by the Assessing Officer under Section 147/148 is valid and rightly upheld by the CIT(A). There is no need to interfere with the findings of the CIT(A). Hence, Ground No. 1 to 4 in assessee’s appeal are dismissed.
Addition on account of unexplained cash credits u/s 68 - AO has given a categorical finding that evidences were not produced related to creditworthiness and genuineness of the sources of funds and the parties thereon. Though the CIT(A) has mentioned in general statement that evidences were put up, but from the records it is seen that these are general statements and the source of the funds upon which the creditworthiness is depended has not been established by the assessee through any document and the condition of creditworthiness was not satisfied. From the perusal of records it can be seen that the assessee has also not given plausible explanation in respect of genuineness of the transactions. As regards, the unsecured loan taken from Shri Sanjeev Dhingra, no bank statement was filed before the Revenue authorities. Hence, it deems appropriate to remand back both the issues to the file of the Assessing Officer for proper adjudication on verification of the evidences. Needless to say the assessee be given opportunity of hearing by following principles of natural justice
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2021 (12) TMI 864
Deduction u/s 80P - Assessee is a co-operative society and engaged in the activity of providing credit facilities to the members - HELD THAT:- The provisions of section 80P(2)(a)(i) of the Act provides the deduction to a co-operative society engaged in the business of banking or providing credit facilities to its members. The provisions of the section are without any ambiguity. In other words, the income from the activity of financing from the members is only eligible for deduction under section 80P(2)(a)(i) of the Act. If there is any income arising to the co-operative society from the non-members that will not be subject to deduction under section 80P(2)(a)(i).
It is only the interest derived from the credit provided to its members which is deductible under section 80P(2)(a)(i) of the Act and the interest derived by depositing surplus funds with the Banks other than cooperative bank is not being attributable to the business as envisaged under the provisions of the Act. Thus the same cannot be deducted under section 80P(2)(a)(i).
The profits and gains attributable to non-members arising as a result of advancement of loans was held to be not an allowable deduction under Section 80P(2)(a)(i) of the Act. In view of the above, we do not find any merits in the argument advanced by the learned counsel for the assessee.
How to determine the income which is not eligible for deduction under section 80P(2)(a)(i) - The income on the deposits from the bank has been treated as income from other sources but the gross income cannot be excluded from the deduction available to the assessee under the provisions of section 80P(2)(a)(i) - It is the net interest income on the deposits from the bank which needs to be excluded from the amount of deduction claimed under section 80P(2)(a)(i) of the Act and the same should be brought to tax under the head income from other sources as per the provisions of section 56 - To determine, the net income on the deposits from the bank, amount of expenses incurred in generating such interest income should be allowed as deduction from the gross income of interest in pursuance to the provisions of section 57(iii) .
In case of co-operative credit society, income to which benefit of section 80P(2)(a)(i) is not allowed, e.g., rental income, interest income from surplus funds kept in FDs' of banks, etc., basic exemption of ₹ 50,000 as provided for in section 80P(2)(c)(ii) must be granted.
Though the word 'activity' is not defined, yet the investment activity, activity of renting of immovable property, etc., and the consequent income attributable to such activities would be covered under section 80P(2)(c). Hence, we direct the AO to allow the deduction under section 80P(2)(c) of the Act. Thus, in view of above discussion the appeal of the assessee is partly allowed subject to the discussion made in previous paragraph. Appeal filed by the assessee is partly allowed for the statistical purposes.
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2021 (12) TMI 863
Penalty Levy u/s 271D - assessee has received unsecured loan in cash in contravention of the provisions contained u/s 269SS - HELD THAT:- Undisputedly AO has verified the claim of the assessee as to taking loan of ₹ 6,00,000/- in cash from his father out of the sale proceeds of the agricultural land sold by him to deposit the bank guarantee with Delhi Doordarshan Kendra which he has actually deposited by way of cheque on 20.03.2013 so as to enable him to get a 50% advance against making TV serials of 13 episodes on 31.03.2015, it was a genuine reason and contingency exercised by the assessee company as a purely business prudence.
When source of the cash receipt of ₹ 6,00,000/- is not in dispute and transaction between Shri Sanjay Malik and his father Shri Iqbal Singh Malik has also not been disputed by Revenue and it has not prejudiced the interest of the Revenue in any manner as no tax avoidance and tax evasion has been alleged or proved, we find that AO/ld.CIT(A) have erred in levying/confirming the penalty. Consequently, impugned order passed by the ld. CIT (A) is set aside and penalty levied by AO and confirmed by ld. CIT(A) is ordered to be deleted - Decided in favour of assessee.
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2021 (12) TMI 862
LTCG - date of Transfer of Immovable property as the date of registration of sale deed or date of agreement, date on which the possession is given - value of the property as per Section 50C - appellant contended that Section 50C came into operation from 01.10.2009 and the agreement of the instant property was entered into on 06.08.2006 and part payment was also received. Hence, Section 50C is not having any application - HELD THAT:- CIT(A) has considered the net consideration of ₹ 41,41,000/- (which is the value given by SRO) in respect of computation of capital gains and the value mentioned in the sale deed for the transaction of the property is ₹ 25,25,000/-, which has not been disputed by any of the authorities.
From the detailed written submissions of the assessee it is clear that the agreement was made for the sale of property on 06/08/2006 through cheque No. 754963 drawn on Andhra Bank for ₹ 5,50,000/- and paid cash of ₹ 50,000/- also and the subsequent payments received through cheques only. Therefore, the proviso of section 50C(1) will clearly apply here. Therefore, the assessee’s net sale consideration shall be considered as ₹ 25,25,000/- for the computation of capital gains as it is immaterial that whether reference of the agreement is included in the sale deed or not because it is evident from the payments received by the assessee by way of cheques, which proves that there was genuine agreement made for the sale/purchase of the property.
As decided in SHRI VUMMUDI AMARENDRAN [2020 (10) TMI 517 - MADRAS HIGH COURT] AO could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance - AO could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance - Decided in favour of assessee.
Exemption u/s 54F on the construction of new asset - AO has accepted construction value of ₹ 16,26,000/- for three individual houses, but, had denied for remaining houses the claim of exemption u/s 54F. This issue has been settled by various High Courts and the issue relates to prior to the amendment in the Act. Therefore, the assessee is eligible for claiming exemption u/s 54F for remaining two houses also - See VITTAL KRISHNA CONJEEVARAM, ANAND KRISHNA CONJEEVARAM, VINOD KRISHNA CONJEEVARAM [2013 (8) TMI 757 - ITAT HYDERABAD], SYED ALI ADIL [2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT], M/S. TILOKCHAND AND SONS [2019 (4) TMI 713 - MADRAS HIGH COURT] - Assessee appeal allowed.
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2021 (12) TMI 861
Disallowance of CSR expenses - Addition by invoking Explanation 2 to Section 37(1) - HELD THAT:- Representatives of both the sides have agreed that the same is squarely covered in favour of the assessee by the decision of this Tribunal in the case of Misrilall Mines Pvt. Ltd. [2018 (6) TMI 893 - ITAT KOLKATA]wherein it was held that deduction claimed by the assessee on account of CSR expenses actually incurred can be disallowed by invoking Explanation 2 to Section 37(1] of the Act, only from Assessment Year 2015-16 as the same was applicable prospectively w.e.f. 01/04/2015.
Provision made for CSR expenses - .As rightly pointed out by the Id. D/R, this claim of the Id. Counsel for the assessee requires verification by the Assessing Officer inasmuch as if the provision made by the assessee is found to be ascertained liability representing actual expenditure incurred by the assessee on CSR, the same is allowable as deduction as held by this Tribunal in the case of Misrilall Mines Pvt. Ltd. (supra). We, therefore, restore this issue to the file of the Assessing Officer for deciding the same afresh after necessary verification from the relevant record.
Appeal of the assessee is treated as allowed for statistical purposes
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2021 (12) TMI 860
Reopening of assessment u/s 147 - Addition of bogus purchases - addition on account of disallowance of 25% of purchases - HELD THAT:- AO has not disputed the sales of the assessee. No sale is possible without purchases. The statement of accounts of the assessee was not rejected by the assessing officer. CIT(A) confirmed the addition made by AO - even if the parties are failed to prove the genuineness of entire transaction of such tainted purchases, the revenue authorities are not entitled to bring the substantial or entire transaction to tax, rather to tax the income component in such tainted transactions to avoid the possibility of revenue leakage.
After considering the decision of Tribunal in assessee’s own case for earlier year and the GP and NP ratio declared by assessee for the year under consideration. We find that assessee has declared in AY 2009-10 the assessee has declared GP at 4.95 %, in AY 2010-11 at 17.55% and in AY 2011-12 at 5.38%. It is a settled law that principles of res judicata is not applicable in the income tax proceeding, similarly it is also settled legal view that consistency must be followed if there is no variation in the facts qua earlier or subsequent years. Therefore, in order to avoid the possibility of revenue leakage 6%, would meet the end of justice. Similar view was adopted by this combination, wherein the beneficiary of such purchases has shown very meagre GP. Therefore, we modify the order of ld. CIT(A) and restrict the addition of impugned/bogus purchases to the extent of 6%.Appeal of assessee for AY 2009-10 is partly allowed.
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2021 (12) TMI 830
TDS u/s 194H or 192 - Non deduction of TDS on provision for commission for the Chairman and the Managing Director (CMD) of the Company - disallowance under Section 40(a)(ia) - As per Section 192 of the said Act, TDS is deductible from salary payment only at the time of payment and not at the time of making provision and therefore no disallowance is called for in the given circumstances. CIT (A) accepted the contentions of Respondent and allowed this ground of appeal - Whether ITAT erred in holding that non-deduction of TDS under Section 194H by the Assessee company on commission payment to the directors is not liable for disallowance under Section 40(a)(ia) ? - HELD THAT:- We find that the commission paid to the CMD has been shown as part of salary in Form-16 for Assessment Year 2010-2011. Total salary paid for the Financial Year 2009-2010 as it appears from the impugned order is ₹ 1,72,15,959/- which includes commission for ₹ 1,08,00,000/- paid by assessee in the Assessment Year in question.
Section 192 of the said Act, unlike other TDS provisions require deduction of tax at source under the head “Salary only at the time of payment and not otherwise." We also find that the quantum of accrual of expenses is not disputed by Revenue and Shri Sharma also stated the same. Since Shri Sharma had in fairness stated that the quantum or accrual of expenses is not disputed, there cannot be any perversity in the order passed by CIT(A) or by ITAT in concurring with the findings of CIT (A).
Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly - No substantial question of law.
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2021 (12) TMI 829
Addition based on documents found in search - Onus to prove - Whether the Respondent had failed to discharge its onus to prove the genuineness of the sale transaction with regard to the shop in the Cross River Mal? - HELD THAT:- This Court finds that the name of the assessee nowhere appears in the computer generated loose sheets found from the residence of Mr.Lalit Modi, the alleged broker.
ITAT in its impugned order has concluded that there was no corroborative evidence or statement to prove that the payment had been received by the assessee other than cheque amount as entered in the sale agreement. The Tribunal had observed that on the bare perusal of the seized document it cannot be inferred or concluded that seized document belongs to or has any nexus with the assessee. Tribunal/ITAT has given cogent reasons for arriving at its decision.
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2021 (12) TMI 828
Refund of taxes paid/ deposited by the petitioner for the assessment years 1996-97 to 2016-17 along with applicable interest - Conclusions arrived at by the Tribunal as a result of which the Nil income returned by the Petitioner stood affirmed which in turn makes the petitioner entitled to refund of the entire taxes deposited/ paid, along with applicable interest - HELD THAT:- As by way of the present writ petition, the petitioner seeks refund of, as many as, twenty assessment years in one go - no cause of action has arisen in the recent past and therefore, the present writ petition is not maintainable.
This Court finds that the petitioner prior to the filing of the present writ petition had made a request to respondent no.1 vide application dated 5th August, 2021 requesting thereby to respondent no.1 to grant refund of income tax due for the assessment years 1996-97 to 2016-17. However, the said application has not been decided till date despite various reminders. Consequently, this Court is of the view that the petitioner has the cause of action to maintain the present writ petition.
This Court is also of the view that Section 240 of the Act embodies the salutary principle of right of the assessee to receive refund of tax which becomes due to the assessee as a result of any order passed in appeal.
The present writ petition is disposed of with the directions that respondent No.1 shall process the case of the petitioner for refund of taxes paid/deposited by the petitioner for the assessment years 1996-97 to 2016-17 and refund the same along with applicable interest in accordance with law within three months.
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2021 (12) TMI 827
Validity of reopening of assessment u/s 147 - Notice in the name of company ceased to exist - HELD THAT:- As per MARUTI SUZUKI INDIA LIMITED [2019 (7) TMI 1449 - SUPREME COURT] case respondent has invoked jurisdiction of issuance of notice under Section 148 of the Act to an entity that had ceased to exist. This is notwithstanding the fact that Respondent No.1 was aware that Nirvan Holdings Pvt. Ltd., had ceased to exist. For reasons mentioned above, we state that Respondent No.1 was aware that Nirvan Holdings Pvt. Ltd. has ceased to exist. The stand now taken in the affidavit in reply is nothing but an after thought - the stand of Respondent No.1 today taken as afterthought that it was an error which could be corrected under Section 292B of the Act is not acceptable to this court. - Decided in favour of assessee.
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2021 (12) TMI 826
Validity of reopening of assessment u/s 147 - Eligible reasons to believe - no sanction as contemplated under Section 151 - HELD THAT:- On bare perusal of the reasons it is quite evident that the reasons are based on totally erroneous and in correct facts and without non application of mind.
The fact is the return of income for A.Y. 2012-13 filed by petitioner on 24th September, 2012 has been assessed under Section 143(3) of the Act and the Assessment Order dated 31st March, 2015 has been passed - AO has proceeded on erroneous factual basis that the return of income was only processed under Section 143(1) - this displays total non application of mind. In fact, petitioner’s allegations that Respondent No.1 has sought to re-open the assessment on incorrect factual position that the return of income was only processed under Section 143(1) of the Act has not even been denied in the affidavit in reply which is filed by the same Assessing Officer. In paragraph no.2 of the affidavit in reply which is in response to paragraph no.1 and 2 of the petition, Respondent No.1 simply says that these are factual in nature and the notice under Section 148 dated 26th March, 2019 and the order disposing the objections and the notice dated 22nd October, 2019 are issued in pursuance of the objective of completing reassessment in accordance with the procedures laid down.
On this ground alone, the notice dated 26th March, 2019 has to be set aside.
One wonders whether the sanctioning authority under Section 151 also would have even applied his mind because the reasons recorded as noted above itself displays non application of mind by the Assessing Officer. Therefore, either no sanction as contemplated under Section 151 of the Act has been obtained or the same was granted mechanically without application of mind to the facts because if only the Assessing Officer had placed the entire file before the sanctioning authority he would have pointed out the error in the reasons for re-opening. - Decided in favour of assessee.
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2021 (12) TMI 825
Validity of assessment u/s 144B - final notice along with the draft assessment order has not been served upon the petitioner - HELD THAT:- It is admitted that only draft assessment order was served upon the Assessee on 23.09.2021 without fixing any date for furnishing the reply and the final show cause notice availing the opportunity of hearing to the petitioner has not been served upon the Assessee. The Assessment Order was finalized and submitted for approval of Range Head on 24.09.2021. Thus, it is clear that as per the provision of Income Tax Act, 1961 under Section 144B(1) (xvi) and 114B(1)(xx)(ii), the final notice along with the draft assessment order has not been served upon the petitioner.
As decided in GANDHI REALTY (INDIA) PRIVATE LIMITED VERSUS ASSISTANT/JOINT/DEPUTY/ASSITANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER [2021 (12) TMI 313 - GUJARAT HIGH COURT] if there is any variation prejudicial to the assessee, final notice with the draft assessment order needs to be served necessarily as per the mandate of the statute and otherwise the order passed is non-est as provided under the said provisions itself.
The present petition is allowed. The impugned order of assessment and consequent notice of demand is quashed and set aside. The respondent/revenue will be at liberty to proceed with the process of assessment under the provisions of Section 144B read with section 144C of the Income Tax Act, 1961 as permissible under the law obviously after issuance of the final notice-cum-draft assessment order and on availing an opportunity to the petitioner
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