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Income Tax - Case Laws
Showing 421 to 440 of 7776 Records
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2021 (12) TMI 654
Reopening of assessment u/s 147 - Notice after expiry of 4 years from the end of the relevant assessment year - transactions of two clients of petitioner Parth and Devki - retraction by Parth and Devki and before passing a block assessment order in the case of petitioner for the period 1st April 1991 to 23rd March 2001 on 26th September 2003 - HELD THAT:- In the case of assessment of Parth and Devki, the Assessing Officer has recorded their retraction and dismissed those retractions as after thought because the transactions were recorded by Parth and Devki in their own books of account but they did not book the same into account while computing the profit. Where on consideration of material on record, one view conclusively is taken by the Assessing Officer, it would not be open to re-open the assessment based on very same material with a view to take another view.
In our view, this is a case where the assessment is sought to be re-opened on account of change of opinion of the Assessing Officer. There is no new material to which reference is to be found and the entire basis for re-opening the assessment is the material which was available before the Assessing Officer in the course of assessment proceedings of petitioner, Parth and Devki and respondent no.1 is the common Assessing Officer. In this case, it cannot be postulated that the condition precedent to the re-opening of the assessment beyond a period of 4 years has been fulfilled.- Decided in favour of assessee.
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2021 (12) TMI 653
Penalty u/s 271(1)(c) - Issue of use of single-year data - whether multiple-year data can be used or only current-year data ? - ITAT in its impugned order has recorded that prior to 2007, there was a legal debate as to whether multiple-year data can be used or only current-year data is to be used under Rule 10B(4) of the Rules - ITAT further records that the other reason for making the adjustments in the relevant AY was the denial of the capacity utilization claimed by the respondent and difference in the level of capacity utilization is an accepted principle, though denied in the relevant AY to the respondent and same cannot tantamount to filing without good faith and due diligence - HELD THAT:- We do not find any infirmity in the above observation of the learned ITAT. As held by the Supreme Court in Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Pvt. Ltd., [2010 (3) TMI 80 - SUPREME COURT] for the purpose of invoking Section 271(1)(c) of the Act, there has to be a concealment of particulars in the income of the assessee and the assessee must have furnished inaccurate particulars of his income. Making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars under Section 271(1)(c) of the Act. Mere making of a claim which is not sustainable in law, by itself, will not tantamount to furnishing inaccurate particulars regarding income of the assessee. Merely because, the assessee had claimed an expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under Section 271(1)(c) of the Act.
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2021 (12) TMI 652
Nature of expenditure - Revenue expenditure or capital expenditure - expenditure incurred by the Appellant for raising floor height of Godown - as submitted submitted that as the expenditure was incurred only at the instance of the Customer to meet specific requirement of the Customer and the purpose and object of incurring this expenditure was to ensure continuity of business with the Customer and that to at enhanced rates - HELD THAT:- Appellant by spending the amount did not bring into existing any new asset. The expenditure was incurred wholly and solely to ensure that the existing business with the Customer, which was offering attractive returns to Appellant, was continued uninterrupted. The expenditure incurred by Appellant had direct relation to the business with the customer because Appellant also received corresponding increased compensation from the customer.
Appellant also incurred the expenditure, notwithstanding that the volume of the space available in the ware-house would get reduced, for the business with the Customer would survive. There was a benefit by way of continuing business with the Customer or increase in compensation from the Customer. Appellant achieved both these objectives by incurring the expenditure. We are satisfied with the explanation given by Appellant that it was for the purpose of conducting its business and increase in profit.
The expenditure so incurred is related to the carrying on or conducting of ware-house business of Appellant and hence, it should be regarded as an integral part of the profit earning process. The expenditure, therefore, cannot be treated as capital expenditure but should be treated as revenue expenditure. The substantial question of law is answered accordingly.
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2021 (12) TMI 651
Reopening of assessment u/s 147 - Reopening beyond period of four years - eligibility of reasons to believe - HELD THAT:- The criteria for reopening of assessment after a period of four years are no longer res Integra in view of the judgment of ANANTA LANDMARK PVT. LTD. [2021 (10) TMI 71 - BOMBAY HIGH COURT] held that where assessment was not sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but was a case wherein assessment was sought to be reopened on account of change of opinion of Assessing Officer, the reopening was not justified.
It is also held that where primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled to reopen the assessment on a change of opinion. It is held that while considering the material on a record, one view is conclusively taken by Assessing Officer, it would not be open for the Assessing Officer to reopen the assessment based on the very same material and take another view.
Perusal of the reasons recorded by Respondent No.1 indicates that Respondent No.1 has relied upon facts and figures available from the audited account and undisputed TAR filed along with the return of income in the original assessment. Since the impugned notice was issued four years from the end of the relevant Assessment year, there has to be tangible material to conclude that income had escaped assessment. From the reasons recorded by Respondent No.1 in the reassessment notice, it appears that there was no tangible material available on record to conclude that income had escaped assessment.
Assessing Officer has acted in excess of the limit of his jurisdiction to reopen the assessment in the exercise of powers under Section 147 read with Section 148 of the Act. Accordingly, Petitioner would be entitled to succeed in this proceeding - Decided in favour of assessee.
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2021 (12) TMI 650
Reopening of assessment u/s 147 - depreciation that was applied on cylinders and the second is a gift petitioner had received from one Fazle Rehaman - HELD THAT:- Depreciation on cylinders, petitioner had claimed @ 80% whereas according to the AO, who wanted to reopen, the correct rate of depreciation was only @60%. In the assessment order originally passed on 9th March 2015, it says “the case is selected under CASS on the issue of depreciation at higher rate” - assessee has claimed higher rate of depreciation @ 80% and it is verified and allowed. Therefore, even if the correct rate of depreciation was only @ 60%, still there was no failure on the part of the assessee to fully and truly disclose the rate of depreciation claimed. On this point, there cannot be re-opening.
Gift from Fazle Rehaman in the reasons of re-opening itself it is stated "as per material available on record". The assessee has received the gift amounting to ₹ 42,25,000/- but no details of gift deed is available on record. It is true that the original assessment order does not discuss this item of gift but the indisputable fact is in the balance sheet as on 31st March 2012 filed by petitioner, petitioner has disclosed in his capital account a sum of ₹ 42,25,000/- received from Fazle Rehaman. AO, who passed the earlier assessment order after selecting the case under Computer Aided Scrutiny Selection (CASS) would have certainly considered right on the face of the balance sheet this disclosure by petitioner.
In the circumstances, as the reasons do not disclose any material that has not been fully and truly disclose by petitioner, in our view, respondents could not have validly reopened petitioner's case for A.Y.-2012-2013.
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2021 (12) TMI 649
Carry forward of losses - ITR-V filed belated - CBDT Circulars issued relaxing the time of fifteen days for filing the ITR-V Form at CPC pursuant to filing of the E-return of income - HELD THAT:- The comprehensive reading of Section 80 and Section 139[3] of the Act read with Notification dated 27.07.2007 issued by the CBDT would make it clear that the e-Return i.e., electronically transmitted return furnished under the Scheme has to be supported by a duly verified Form ITR-V by the eligible person which is required to be furnished under Section 139 of the Act for the assessment year 2007-08 or any subsequent assessment years to a e-Return Intermediary who shall digitize the data of such return and transmit the same electronically to a server designated for this purpose by the e-Return Administrator on or before the due date.
It is true that this Circular No.13/2016 relates to the assessment years 2009-10 to 2014-15 and Circular No.3/2020 relates to the assessment years 2015-16 to 2019-20 wherein it refers to filing of tax returns electronically without digital signature and ITR- V Form to be send to the CPC, Bengaluru whereas for the assessment year under consideration i.e., 2008-09, duly verified ITR-V Form was required to be sent by the eligible person to the AO. No discrimination could be made between the asessee, if such ITR-V Form are required to be submitted by the Assessing Officer or before the CPC in relaxing the time prescribed in sub-paragraph[2] of the paragraph 3 of the Notification dated 27.07.2007.
The view of the Department is hyper-technical for the reason that the e-filed return data indeed was transmitted on the date of such return filed electronically to the server designated by the e-Return Administrator which necessarily contains the data of the claim made by the assessee for carry forward of losses. ITR-V is verification Form which would be construed as Annexure of statement to be made to the e-filed return of income. Time relaxation is permitted by the CBDT for verification of such returns either by sending a duly signed physical copy of ITR-V to CPC, Bengaluru through speed post. Merely for the reason that ITR-V Forms are required to be sent to Assessing Officer, the relaxation extended for the subsequent Assessment Years cannot be denied. In our considered view, the delay caused in submitting the ITR-V does not make the return submitted on 30.09.2008 [e-filed return] invalid for denying the carry forward of losses in future years.
The Hon’ble High Court of Bombay in the case of Crawford Bayley & Co [2011 (12) TMI 64 - BOMBAY HIGH COURT] while considering the issue of non-receipt of Form ITR-V by the Department, though the department has made the provision of electronic filing of returns, Form ITR-V containing the due verification was required to be remitted by an ordinary post, held that treating e-return filed by the assessee well within the period of limitation cannot be treated as a invalid return and the same has serious consequences. Reference has been made to sub- Section [9] of 139 wherein adequate provisions for the Assessing Officer has been made to furnish in the first instance a notice granting a period of fifteen days to rectify the defect in the return, a provision made for extension of the period within which the defects are to be rectified has also been considered.
Though the contention of the assessee in the said proceedings was that ITR-V was submitted by ordinary post well within the period prescribed under the Scheme, that would not make any major distinction if such ITR-V Form is submitted belatedly under the Scheme since the data available in the e-filed return of income is not disputed by the Department inasmuch as the claim of carry forward of losses claimed by the assessee for future years. The significance of filing an e- filed return cannot be effaced and the claim of the assessee cannot be denied on hyper-technicalities. Moreover, system of e-filing of tax returns was in the initial stages for the assessment year in question and if the delay in filing the ITR-V, if is relaxable for the subsequent assessment years, the same cannot be restricted in stricto sense for the initial years of the Scheme - Substantial question of law in favour of the assessee.
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2021 (12) TMI 648
Cessation of liability u/s 41(1) - Incomplete project - advances from various persons against the Tower D & E of Bhadralok Project - possession of concerned properties not given not even advances received - HELD THAT:- The section 41(1) applies where a trading liability was allowed as a deduction in an earlier year in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in a later year by way of remission or cessation of the liability.
The assessee has submitted that it has launched a scheme i.e. Towers “D” and “E” at Bhadralok Project. It has received advances from prospective buyers. However, when residential flats in Tower “D” & “E” were under construction and possession of the same were not handed over to the respective buyers, the assessee has shown these advances as liability, because there prevailed contingency as to finalization of sale.
Assessee has received trade advance for sale of certain flats to prospective buyers which were ultimately not construed by it and incomplete project was sold under the head “work-in-progress”. It has not returned money to these customers in the last fifteen years. It has not created an arrangement with buyer of the WIP that these customers would get flats at reduced price by the amount received by the assessee as advance. It has simply retained these amounts under the garb of liability without paying any taxes. The judgment Hon’ble Supreme Court in the case of Sundaram Iyengar & Son Ltd. [1996 (9) TMI 1 - SUPREME COURT] is fully applicable on the facts of the present case. Therefore, we allow appeal of the Revenue.
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2021 (12) TMI 647
Royalty income - appellant company appointed Dow Jones Consulting India Pvt Ltd [DJCIPL] on a principal to principal basis for distributing its products in the Indian market - AO was of the firm belief that the receipts from DJCIPL should be taxed in India as ‘Royalty Income” under the provisions of the Act as well as India-USA DTA - HELD THAT:- We have to state that basis the provisions of section 92 of the Act, the assessee is entitled to invoke the provisions of India - USA DTAA to the extent it is more beneficial. Our view is fortified by the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Azadi Bachao Andalon [2003 (10) TMI 5 - SUPREME COURT]. Accordingly, we will consider the beneficial provisions of the tax treaty to see whether the contention of the assessee that the alleged payment from DJCIPL is not royalty income.
The payments made for acquiring right to use product itself, without allowing any right to use the copy right in the product are not covered with the scope of ‘Royalty’ which may get covered under the term under Royalty as per the Act.
The facts of the case in hand show that there is no transfer of legal title in the copyrighted article as the same rests with the assessee. All rights, title and interest in the licensed software which is being claimed to be copyrighted article are the exclusive property of the assessee. DJCIPL has no authority to reproduce the date in any material form to make any translation in the date or to make adaptation in the data.
The end user cannot be said to have acquired a copy right or right to use the copy right in data. A perusal of the agreement with DJCIPL shows that DJCIPL does not acquire any right in relation to the products. In our considered view, in determining whether or not a payment is for use of copyright, it is important to distinguish between ‘a payment for right to use the copy right in a program’ and ‘right to use the program itself’.
The revenue derived by the assessee from granting limited access to its data base is akin to sale of book, wherein purchaser does not acquire any right to exploit the underlying copyright. In the case of a book, the publisher of the book grants the purchaser certain rights to use the content of the book, which is copyrighted. The purchaser of the book does not acquire the right to exploit the underlying copyright. When the purchaser reads the book, he only enjoys the contents. Similarly, the user of the database does not receive the right to exploit the copyright in the database he only enjoys the product in the normal course of his business.
Appellant is only granting access to its database to DJCIPL. In our considered opinion, the payments received cannot be said to be ‘Royalty’ in nature. The transaction under consideration is for provision of accessing database of the assessee. Hence the same cannot be considered as ‘Royalty’ under Article 12 of the India-US DTAA. We, therefore, set aside the findings of the Assessing Officer and direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee.
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2021 (12) TMI 646
Revision u/s 263 by CIT - Whether Assessment order passed under section 143(3) is without jurisdiction and deserves to be dismissed? - HELD THAT:- It is also a fact that the notice under section 143(2) was issued by the Dy. Commissioner of Income Tax, Range-VI, Lucknow. However, as available from Income Tax Return acknowledgement, bearing acknowledgement no.507789481300912 for the assessment year 2012-13 it is evident that the address provided by the assessee is of the State of Maharashtra. Moreover, the copy of notice issued by the AO u/s 143(2) dated 30.9.2013 reveals that the same was issued on the address of the assessee at Kalyan, Maharashtra. Therefore, it is evident from record that the jurisdiction of the assessee lay with an ITO of Kalyan, Maharashtra and not with the Dy. Commissioner of Income Tax, Range-VI, Lucknow.
It is the Income-tax authorities specified in section 124 of the Income Tax Act, who have jurisdiction in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situated within the area, or where his business or profession is carried on. It is an undisputed fact that the business of the assessee is in the State of Maharashtra and not in Uttar Pradesh. Therefore, the notice was issued by an Assessing Officer not holding jurisdiction over the assessee. That being so, the notice is null and void and it is held to be so.
In ‘ITO vs. M/s Arti Securities & Services Ltd. [2020 (11) TMI 310 - ITAT LUCKNOW] it was held by the Lucknow Bench of the Tribunal that where notice under section 143(2) of the I.T. Act had not been issued by an Officer having jurisdiction over the assessee, the assessment order as well as the order passed by the ld. CIT(A), were bad in law.
Finding the grievance of the assessee, calling in question the jurisdiction of the Assessing Officer, to be justified, we accept the same. Accordingly, Ground no.1 and the Additional Ground nos.10,11 and 12 are accepted. The notice issued under section 143(2) of the Act is, therefore, quashed as null and void - all the proceedings consequent thereupon, including the assessment order as well as the order under appeal, are quashed - Decided is favour of assessee.
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2021 (12) TMI 645
Validity of initiation of proceeding u/s 153C - Additions on account of unexplained investment in land, unexplained cash credits and unexplained investment on account of loans and advances - Admission of additional evidence - HELD THAT:- Once the assessee sought to file the additional evidence then the proper procedure is to first admit the additional evidences and then seek remand report from the AO on the correctness of the additional evidence. This exercise is necessary to verify the correctness of the additional evidence first time filed by the assessee at appellate stage as well as granting the opportunity to the AO to consider such evidences.
CIT(A) has proceeded on its own without giving the opportunity to the AO to verify and examine the additional evidence and further to respond and make comments on merits of the issue - when the additional evidence was not subjected to examination and verification by the AO and the order of the CIT(A) is also non-speaking order so far as deletion of additions are concerned, therefore, in the facts and circumstances of the case we set aside the impugned order and remand the issue to the record of CIT(A) to decide the appeal afresh by passing a speaking order after getting the additional evidences to be verified from the AO - assessee be given an opportunity of hearing before passing fresh order.
Though the assessee has supported the order of CIT(A) under Rule 27 of IT rules on the issue of validity of initiation of proceeding under section 153C of the Act which has been decided by CIT(A) against the assessee however, as we have remanded the matter to the record of the CIT(A) for fresh adjudication including the maintainability of the belated appeal therefore, this issue is kept open to be raised as per the outcome of the fresh order of CIT(A) - Appeals of the revenue are allowed for statistical purposes.
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2021 (12) TMI 644
Disallowing the claim of the assessee u/s 54F - As per assessee he owned only one residential house property and accordingly she is eligible for deduction u/s 54F - HELD THAT:- Admittedly, the details of the ownership of the Madiwala property was submitted to ld.CIT(A) along with the copies of Wealth-tax Returns for the first time. These details and the contentions of the assessee in this regard were not available before the AO. We noticed that the ld.CIT(A) has also not confronted these materials with the AO in order to elicit his opinion with regard to the claim of the assessee.
This issue requires to be remitted to the file of AO for examining it afresh by duly considering the claim of the assessee with regards to the ownership of the residential building located at Madiwala. We earlier noticed that the assessee had claimed deduction u/s 54 of the Act and it is the AO who has stated that the assessee is eligible for deduction u/s 54F of the Act and the said view of the AO has been accepted by the assessee. We also notice that the manner of computation of deduction u/s 54 and 54F are different. However, there was no occasion for the AO to compute the eligible amount of deduction, since he had held that the assessee is not eligible for deduction u/s 54F of the Act. Hence, the manner of computation of deduction also requires to be examined, if the AO is convinced on the claim of the assessee with regard to residential building located in Madivala.
We set the order passed by the ld.CIT(A) on this issue and restore the same to the file of the AO for examining it afresh by duly considering the claim of the assessee with regard to the ownership of residential building located at Madiwala. The assessee is also directed to furnish all the relevant materials to prove that the residential building located in Madiwala is not owned by her and she was only a name lender. After hearing the assessee, the AO may take appropriate decision on this issue in accordance with law.
Not adjudicating the ground relating to disallowance of interest expenditure - disallowance of interest expenditure claimed by the assessee against income from other sources - HELD THAT:- We noticed earlier that the CIT(A) did not adjudicate this issue even though contentions were raised by the assessee on this issue. Before us, the Revenue has raised a ground stating that the ld.CIT(A) has not adjudicated this issue. In fact, the Revenue cannot be said to be aggrieved by the action of the CIT(A) in not adjudicating this issue. It is the assessee who is aggrieved in this matter, but the assessee is not in appeal before us - revenue has only pointed out in its ground that Ld CIT(A) has not adjudicated this issue. Accordingly, we are of the opinion that this ground of the revenue does not require adjudication.
Appeal filed by the Revenue is treated as allowed for statistical purposes.
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2021 (12) TMI 643
Disallowance on account of bad debt written off - addition made by AO as assessee has not made sufficient efforts to recover the outstanding due - CIT-A deleted the addition - HELD THAT:- The aforesaid reasoning of the AO is unsustainable - assessee was a sub-contractor under M/s Naftogaz India Pvt. Ltd., who was awarded a contract by ONGC. The assessee was assigned the specific work of physical survey, positioning support for diving etc. Subsequently, ONGC cancelled the contract with M/s Naftogaz India Pvt. Ltd.
As a result of which the amount due to be received by the assessee from M/s Naftogaz India Pvt. Ltd. could not be recovered - Rreasoning of the AO that the assessee has not made sufficient effort to recover the outstanding due is contrary to the materials on record, considering the fact that the assessee has issued legal notice for recovery of the dues. In any case of the matter, after the amendment to section 36(1)(vii) w.e.f. 01.04.1989, it is not necessary for the assessee to prove that the amount has become irrecoverable despite best efforts. The only requirement is, the amount must have been written off having become irrecoverable. This is the view expressed by the Hon'ble Supreme Court in case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] - Decided against revenue.
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2021 (12) TMI 642
Rectification of mistake u/s 154 - Addition u/s 36(1)(iii) towards interest on loans to subsidiary - HELD THAT:- We note that there were transfer of funds from both sides i.e. from the assessee to the subsidiary and from the subsidiary to the assessee however at the financial year end, net payable to the assessee was ₹ 1,36,23,329/-.We have also examined the overall calculation of interest and find that if the cross transactions are taken into consideration for the whole year, then instead of interest receivable, there comes out to be interest payable by the assessee. So certainly the rectification application moved by the assessee was maintainable which was summarily rejected by the AO and so by the ld CIT(A). Therefore considering the facts of the case we are unable to agree to the conclusion drawn by the ld CIT(A) on this issue. Accordingly we set aside the order of ld CIT(A) direct the AO to delete the disallowance of Interest - The appeal of the assessee is allowed.
Rectification application qua allowing the credit of TDS - Assessee has returned the income received from M/S M/S Tamilnadu Petroproducts Ltd on which TDS of ₹ 10,04,793/- was deducted and similarly income received from Karvy Stock Broking Ltd as also returned on which TDS of ₹ 55,150/- was deducted by Karvy Stock Broking Ltd. However the deductors deposited the TDS in the nest year and thus it was appearing in the form 26AS of AY 2012-13. In our opinion the assessee should be allowed the benefit of TDS in the current year in which income is offered to tax irrespective of the year in which it was deposited by the deductor. Even this treatment is in accordance with the provisions of section 199 of the Act. Accordingly the we direct the AO to allow the credit of TDS of ₹ 10,59,943/- in the current year.
Appeal of assessee allowed.
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2021 (12) TMI 641
Disallowance of interest paid on loan u/s 36(1) (iii) - Diversion of interest bearing funds during the period under consideration - assessee advanced loan to Shri Babu Lal Natani on interest @ 15% and derived income there form as interest and declared in the “income from other sources”, the rate of interest charged 15% is more than interest on borrowed funds - whether the directorship in the Companies is profession or not? - HELD THAT:- The assessee is director in Natani Rolling Mills (Pvt,) Ltd and Neelkanth Industries (Pvt.) Ltd since long back and purchased shares of Neelkanth Industries (Pvt.) Ltd. prior to the assessment year 2009-10 of ₹ 47,65,000/- and there was no any further investment in the shares and the share in another Company Natani Rolling Mills (Pvt.) Ltd. were also purchased before the assessment year 2009-10 of ₹ 7,32,000/-, thus, the total share were purchased of ₹ 54,97,000/-, thus, we are view of that the assessee has the same shares only and there in no any direct nexus of investment out of the loan during the period under consideration because no any shares were purchased during the period under consideration..
Assessee took loan for business purposes from the financial institutions namely Bajaj Finance and thereafter from the HDFC Bank Ltd. The assessee has been doing business as working partner in the partnership firms as well as profession/vocation as Director in three Companies.
From perusal of Section 2(36) “Profession” includes Vocation definition of the profession the assessee is entitled for deductions of interest on loans took for business/profession.
Thus, it is crystal clear that the interest was paid in the business and commercial expediency apart from that there was no any direct nexus between the investment in shares and loans taken thereafter - as the assessee borrowed the funds from the bank as well as other, the borrowing was for the business purposes only and interest thereon was paid to the Bank as well as to others also.See SA BUILDERS LTD. VERSUS COMMISSIONER OF INCOME-TAX [2006 (12) TMI 82 - SUPREME COURT]
We found merit in the contentions raised by the assessee and the ld. DR has not brought on record any new material to rebut or controvert the submissions and documents placed before us, therefore, we direct to delete the disallowances confirmed by the ld. CIT(A) - Decided in favour of assessee.
Disallowance with regard to excess interest paid on borrowings to the Bank who given the loan, because the assessee could not utilize the whole amount in his own business - As per the deed of partnership, it is crystal clear that the assessee could not took interest on advances as working capital to it’s partnership firm i.e. Oliya Import Export exceeding 12% which was advanced as working capital. It is important to mention here that in the course of business, it is not necessary to have profit only and there should not be any loss therein. As far as advances to Giriraj Buildcon is concerned, we noticed that the Giriraj Buildcon is a sister concern of the assessee as proprietor of the Giriraj Buildcon was also a director in the Natani Rolling Mills Pvt. Ltd. and had dealing in purchasing from the company during the period under consideration and in subsequent year also. Hence, looking to the commercial expediency given some advance for his business. Considering the totality of facts and circumstances of the case, material placed on record as well as the relevant provisions of the Act, we found merit in the contentions raised by the assessee and the ld. DR has not brought on record any new material to rebut or controvert the submissions and documents placed before us, therefore, we direct to delete the disallowance. - Decided in favour of assessee.
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2021 (12) TMI 640
Net profit estimation - Rejection of books of accounts - HELD THAT:- Only Reasons for rejection of books of accounts being fact that no reply was received from certain creditors in response to notice u/s 133(6) of the Act could not have resulted into the rejection of books of accounts. Assessee has produced confirmations of those parties and no additions were made on account of creditors. Even otherwise, if a sundry creditor does not provide a confirmation u/s 133(6) of the Act, we do not find any reason to uphold the rejection of the books of accounts on that basis.
The assessee has also produced the comparative chart of the gross profit for a block of 5 years starting from assessment year 2012-13 onwards. The assessee has produced assessment orders of other parties and shown a chart wherein the net profit has been accepted in the case of the other assessee in same line of business @ 0.43%.
We find that the rejection of the books of accounts by the ld. AO is not proper without finding any latent, patent and glaring defects in the books of accounts of the assessee. Accordingly, we direct the ld. AO to delete the addition made of 8% of the net profit and to accept the book results shown by the assessee. Accordingly, grounds Nos. 1 – 3 of the appeal of the assessee are allowed.
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2021 (12) TMI 639
Denial of exemption u/s 10(25)(ii) - filling of return in the abbreviated name - Addition of interest income solely on the ground of not filing return in the complete name of the assessee i.e. Indo Euro Chemical Services Limited Employees Provident Fund covered under FPS rather filed the return in the abbreviated name as “IECS Ltd. Employees P.F. Covered under FPS” - HELD THAT:- Adjustment made by the Revenue Department by denying the exemption claimed by the assessee u/s 10(25)(ii) of the Act cannot be and shall not be subject matter of section 143(1) of the Act. This can only be done u/s 143(3) of the Act. Because u/s 143(1) returned filed by the assessee should be accepted. So, we are of the considered view that when undisputedly assessee has been accorded registration under Rule 3(1) – Part A of the Fourth Schedule of the Act vide order dated 03.03.1979 (supra), there is no scope for the Revenue to deny the exemption claimed u/s 10(25)(ii) of the Act on hyper technical grounds.
As decided in EASTER INDUSTRIES LTD VERSUS UNION OF INDIA [2012 (5) TMI 397 - DELHI HIGH COURT] proof in support of the claim is not furnished by the assessee, then, for the lack of proof, no disallowance or an adjustment can be made. The only option which is open to the Income-tax Officer in such a case is that he can require the assessee to furnish proof in which case he will presumably have to issue notice u/s 143(2)
In the instant case, it is also undisputed fact that no notice u/s 143(2) of the Act was ever issued to the assessee rather arbitrarily declined to accept the exempt income of ₹ 60,88,057/- which was claimed as exempt u/s 10(25)(ii) of the Act by the assessee and the same has been adjusted against the income of the assessee and assessment has been framed at ₹ 60,88,057/- as against nil income claimed by the assessee in its return.
We are of the considered view that ld. CIT (A) has erred in dismissing the rectification application filed by the assessee u/s 154 of the Act by denying a relief otherwise available to the assessee u/s 10(25)(ii) - we direct the AO to allow relief to the assessee by allowing exemption u/s 10(25)(ii) of the Act after due verification qua the abbreviated name mentioned by the assessee in its return in the light of the order for according exemption to the assessee. - Decided in favour of assessee.
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2021 (12) TMI 638
Penalty u/s 271(1)(c) - Argument on defective notice - non strike off any of the twin limbs of the penalty - HELD THAT:- As penalty notice obviously the ld AO has not cancelled any of twin limbs on which penalty u/s 271(1)(c) of the Act can be levied. The above issue is squarely covered by the decision of Sahara India Life Insurance Corporation [2019 (8) TMI 409 - DELHI HIGH COURT] wherein, held that in notice issued by the ld AO would be bad in law if it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of income or for furnishing of inaccurate particulars of income.
As the above decision covers the issue in favour of the assessee, we reverse the orders of the lower authorities and hold that penalty order issued by the ld AO based on such invalid notice is not sustainable in law - Decided in favour of assessee.
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2021 (12) TMI 637
Reopening of assessment u/s 147 - genuinety of claim of the assessee that income can not be taxed twice as has been done in the present case - Profit of the project offered to tax in the earlier year on the basis percentage completion method followed by the assessee - HELD THAT:- As the order of Ld. CIT(A) suffers from serious infirmities as he has not considered the issue of double taxation and also the fact that return filed in response to notice under section 148 of the Act has been acknowledged by the AO in the assessment order and only the reassessment proceeding has to be done on the basis of return filed in response to notice under section 148 of the act. In our opinion, the department should not be allowed to take the advantage of any mistake committed by the assessee which may result prejudice to the assessee in double taxation of the same income.
In the present case, ₹ 1,74,76,000/- has been assessed from A.Y. 2009-10 to A.Y. 2012-13 and therefore to tax the income again on the plea that assessee has wrongly returned the income on the original return of income and not giving effect to the rectification filed by the assessee is totally wrong and against the principle of natural justice. In our opinion, this income needs to be reduced from the return of income of the assessee as there is no provision in the income tax law to assess the same income twice. Even otherwise, the stand of the AO is not acceptable as in the reopened proceedings the issue which was subject matter of reopening i.e. non deduction of tax on certain expenses amounting to ₹ 38,00,500/- has not been added in the reassessment order and once the item proposed in the reasons recorded under section 148(2) did not find place in the assessment order, no other addition can be made and income returned as per return in response to notice under section 148 of ₹ 3,22,254/- has to be accepted. The case of the assessee finds support from the decision of the jurisdictional High Court in the case of CIT vs. Jet Airways (India) Ltd.2014 (5) TMI 1215 - BOMBAY HIGH COURT] - direct the AO to reduce ₹ 1,74,76,000/- from the income of the assessee. Accordingly, the appeal of the assessee is allowed.
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2021 (12) TMI 636
Addition made on account of employees’ contribution to PF & ESI - delay in deposits - HELD THAT:- Employees’ contributions qua ESI & PF involved in the present appeal is squarely covered by the decision of coordinate bench of the Tribunal delivered in the case of Vinko Auto Industries Limited, . [2021 (12) TMI 574 - ITAT AMRITSAR] wherein the Tribunal has deleted the disallowances made by the AO on account of delay in depositing the employees’ contribution towards ESI & PF as the same were deposited later than the prescribed time in the relevant acts but prior to the filling of the Return u/s.139(1) - respectfully following the aforesaid order of the Coordinate Bench of the Tribunal, the disallowance qua employees’ contribution towards PF and ESI, sustained by the Ld. CIT(A) stands deleted. Thus, grounds No.1 to 3 are allowed.
Disallowance of claim u/s.80C - HELD THAT:- Assessee has filed relevant documents in support of its claim u/s.80C of the Act in CPC, however, the same remained un-considered by the AO as well as by the CIT(A), therefore, without going into controversy, in the interest of justice and for the just decision of the case, this issue is remanded back to the file of AO to decide afresh the claim of the assessee while considering the documents already filed by the assessee. Needless to say, sufficient opportunity of hearing shall be provided to the assessee. Thus, ground No.4 raised by the assessee stands allowed for statistical purposes.
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2021 (12) TMI 635
Revision u/s 263 by CIT - Reopening of assessment u/s 147 initiated - Deduction of interest income claimed u/s 80P(2)(d) - HELD THAT:- Here being the assessment u/s 147/148 PT.CIT could not be said to be justified in holding that the assessment order was passed without examining the issue of deduction u/s 80P(2)(d).
PT.CIT has no where concluded that as to how any prejudice in fact has been caused to the revenue and in case, if no loss to the revenue is caused then in that eventuality the provision of Section 263 of the Act could not have been invoked. It was incumbent upon the ld. PT.CIT to have shown as to how the order of assessment was prejudicial to the interest of revenue.
Pr. CIT did not prove or bring any material or circumstantial evidence on record that the claims of the assessee on these issues are not genuine, bogus, not verifiable and not correct. Pr. CIT has not decided the merits of the case as to whether any addition or disallowance was called for or not despite all the details, facts position of law available before him. He was only of the view that the AO has not examined the issue of deduction u/s 80P(2)(d).
When he has issued the notice u/s 263 on 25.03.2021 and sought the reply on the very next day i.e on dt.26.03.2021, despite being very short span of time assessee filed the detailed reply and after receiving reply the ld. Pr. CIT has passed the order on 31.03.2021 straight way without confronting the issue or asking any query, question explanation on the issue.
PT.CIT failed to do so and summarily reach to the conclusion that the order was prejudicial to the interest of revenue. Such a view taken by the PT.CIT is not well founded in the law or by various Hon'ble courts.
Pr.CIT can assume jurisdiction if there has been lack of enquiry. In the instant case, the enquiry has been made admittedly on the issue of reopening, though the enquiry may not be sufficient in the opinion of the ld Pr. CIT.
A.O. has made enquiry on the issue of reopening and not supposed to examination of the issue which is not the subject matter of reasons recorded, however sufficiency of enquiry can be depending upon from person to person. The AO cannot remain passive in the face of a return which is apparently in order but calls for further enquiry. It is the duty of the AO to ascertain the truth of the facts stated in the return, when the circumstances of the case are such as to provoke an enquiry. The word 'erroneous' includes the failure to make enquiry.
Considering all the documents' replies and submissions made by the assessee before the Id. Pr.CIT and also before us, we are of the view that the assessee has duly satisfied all the queries raised by the ld. Pr. CIT in his order passed U/s 263 of the Act, therefore, in such circumstances and keeping in view our above observations that the A'O' had made all the detailed enquiries and Verifications, therefore, no action U/s 263 of the Act was warranted' Accordingly' we quash the proceedings U/s 263 of the Act and allow the grounds raised by the assessee.
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