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Income Tax - Case Laws
Showing 161 to 180 of 782 Records
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2022 (11) TMI 1207 - ITAT AHMEDABAD
AO jurisdiction for conducting assessment proceedings as well as passing assessment order - change in the Assessing Officer of the similar rank - HELD THAT:- It can be seen that the assessee has filed return of income on 15.08.2015 with AO, Ward 7(1)(5), Ahmedabad, PAN No. of the assessee is AGKPT6559M and the notice which was issued by the respective ITO was also that of Ward 7(1)(5). Merely change in the Assessing Officer of the similar rank cannot be stated as not having jurisdiction for conducting assessment proceedings as well as passing assessment order. Therefore, all the contentions taken by the assessee which were incorporated in the original grounds of appeal as well in the revised grounds of appeal as well as the submissions before us does not stand at all in the eyes of law. Hence, all the contentions of the Ld. AR are rejected.
Unexplained cash deposit and gift received from assessee’s wife as well as failed to prove genuineness of the other cash gifts - Documents produced during the assessment proceedings are not reflecting the source of cash deposits whether the gifts are genuine or not. At the time of hearing, the ld. AR has also not produced any additional evidence to that extent and also not demonstrated from whom the gifts were received and whether the gifts are genuine or not. Therefore, on merits the assessee’s case does not stand and, therefore, ground no.nil to the extent of merits in Column Nos.7, 8 & 9 stand dismissed
Other grounds mentioned in original Form No.36 and in the revised grounds both are alleging the authorities in personal capacity which is uncalled act of the professional who is guiding his respective client i.e. assessee. Despite giving several opportunities to the Ld. AR, the Ld. AR was adamant to concise the grounds of appeal on the jurisdiction point as well as on merit point. The observation made hereinabove related to the jurisdiction point and merits should be taken into account as entirely deciding the appeal on merit as well as law. Appeal of the assessee is dismissed.
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2022 (11) TMI 1206 - ITAT KOLKATA
Assessment order passed u/s. 143(3) - Merging of order - Disallowance made in the assessment completed u/s. 143(3) of the Act and is pending for disposal - Assessee is in appeal before the Ld. CIT(A) against the disallowance made in the assessment completed u/s. 143(3) of the Act and is pending for disposal - HELD THAT:- From the perusal of the assessment order passed u/s. 143(3) of the Act, we note that Ld. AO has proceeded to compute the assessed income by making an addition to the returned income of the assessee and not the income processed u/s. 143(1) - As noted that in the said order u/s. 143(3) of the Act, there is no addition made in respect of dividend income received from investment in units of mutual funds u/s. 115BBDA of the Act.
We note that since the assessment order u/s. 143(3) of the Act has already been passed in the present case before us, the intimation u/s. 143(1) of the Act against which the assessee is in appeal before us got merged with the aforesaid assessment order.
Once the present intimation u/s. 143(1) of the Act having got merged in the assessment order passed u/s. 143(3) of the Act, the cause of action for the present appeal itself has vanquished, rendering the instant appeal as infructuous. We have not expressed any views in respect of the matter raised in the assessment order passed u/s. 143(3) of the Act for which appeal by the assessee before the Ld. CIT(A) is pending for adjudication. That is a separate proceeding and the outcome of the same may be take n up in separate appellate proceedings under the relevant provisions of the Act at the discretion of the concerning parties. Considering the above observation and finding, we dismiss the appeal of the assessee as infructuous. Appeal of the assessee is dismissed.
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2022 (11) TMI 1205 - ITAT DELHI
Addition u/s 14A r.w. Rule 8D - assessee had earned substantial dividend income - AO has made the addition by observing that where investment has been made in shares which did not yield any dividend income in the year under consideration, the expenditure incurred for earning income was deductible notwithstanding the fact that no such income has been earned - DR submitted that the assessee has capitalized substantial amount of interest paid by him on the amount invested, therefore, the amount of disallowance has to be calculated accordingly - HELD THAT:- Hon’ble ITAT, Delhi has taken a similar view in the cases of Mitsubishi Corporation India Pvt. Ltd. vs. DCIT [2015 (1) TMI 48 - ITAT DELHI] and LG- Chemical India Pvt. Ltd. [2014 (12) TMI 294 - ITAT DELHI] whereby the ITAT has deleted the additions made u/s 14A on the ground that no exempt income has been earned by the appellant.
When the entire amount of dividend income of Rs.1,22,16,840/- has been offered for taxation by the assessee in its return of income and no exempt income has been claimed for AY 2015-16, then, the disallowance u/s 14A of the Act r.w.r. 8D of the Rules cannot be held as sustainable in view of the judgement of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] and in view of the judgement of CIT vs. Chettinad Logistics Pvt. Ltd. [2018 (7) TMI 567 - SC ORDER]
Contention of DR that the assessee has capitalized huge amount of interest paid by him is concerned, this also show that the assessee has incurred expenditure of interest paid towards amounts used for investments in shares, but, has not claimed interest amount as revenue expenditure and has capitalized the same - instead of claiming expenditure on interest payment, the assessee has capitalized the same by enhancing the value of investment, therefore, no addition is called for u/s 14A of the Act r.w.r. 8D of the Rules in this regard. In view of the above, we are unable to see any ambiguity, perversity or any other valid reasons to interfere with the findings of the ld.CIT(A). The ground raised by the Revenue is dismissed.
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2022 (11) TMI 1204 - ITAT DELHI
Addition u/s 40A - addition on account of payment of management fee paid to M/s ATS Infrastructure Ltd - HELD THAT:- CBDT in its Circular No.6P dated 06.07.1968 clarified on the issue stating that the provisions of Section 40A(2) are meant to check evasion of tax through excessive or unreasonable payments to relatives and associate concerns and should not be applied in a manner which will cause hardship in bonafide cases.
The assessee company had filed all the requisite documents before A.O. as called for, but, however, the A.O. without considering the fact that there is no loss to the revenue since assessee company as well as ATS are not claiming any exemption, disallowed the impugned expenditure and added back the same to the returned loss of assessee company in an arbitrary manner without considering the judicial precedence on this issue as well as the Circular of CBDT No.6P Dated 06.07.1968.
A.O. flouted the CBDT Circular as well as judicial precedence on the matter in issue. We may note that in the instant case the A.O. judged the merits or otherwise of a commercial transaction by sitting in the chair of assessee which is not sustainable under law as per Judgment of Hon’ble Delhi High Court in the case of Pr. CIT vs., M/s. Second Leasing Pvt. Ltd. [2017 (11) TMI 269 - DELHI HIGH COURT] We find that the A.O. failed to bring any cogent material on record to suggest that the entire expense is excessive without bringing any comparable that the expenditure claimed by the assessee company is much higher than that of prevailing market rate. We, therefore, find no force in the arguments of Ld. D.R. on this issue.
D.R. also did not brought anything on record to sustain the addition made by the A.O. In this view of the matter and the settled position of law on this issue by the Hon’ble Supreme Court in the case of S.A. Builders Limited [2006 (12) TMI 82 - SUPREME COURT] and the Judgment of Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. [1954 (10) TMI 12 - SUPREME COURT] relied upon by the CIT(A), we find no reason to interfere with the order of the Ld. CIT(A) in deleting the disallowance made by the A.O.- Thus, we dismiss the ground of Revenue.
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2022 (11) TMI 1203 - ITAT DELHI
House property income - assessee has already claimed deduction u/s 24 on the rental income earned by it and it had voluntarily made disallowance of expenses debited on account of earning of such rental income - AO has made disallowance of 10% of operating expenses, employee benefit expenses and administrative & general expenses, keeping in view that the total rental income is approximately 10% of total revenue/income including rental and hotel business - CIT-A deleted the addition - HELD THAT:- The principle of res judicata does not apply to the income-tax proceedings, but, rule of consistency is always respected by the tax authorities In the present case, the assessee had shown and included in the other income an amount received as maintenance charges, but, the expenditure towards maintenance of rental area has been incurred from the common pool of expenses which provoked the AO to make the impugned disallowance.
We observe that the AO has not made any allegation regarding proportionate lease rent and municipal taxes related to rental portion, but, the disallowance of 10% of total expenses incurred by the assessee on other operating expenses, employee benefit expenses and administrative & general expenses has been made. Therefore, the argument of double disallowance has no legs to stand and, thus, we dismiss the same.
Obviously, when the assessee is claiming deduction u/s 24 of the Act on the rental income earned by it, then, it is not entitled for claiming any depreciation on the commercial block from which rental income has been earned. From the assessment order, we also observe that it is not the case of the AO that the assessee has claimed depreciation on the rental commercial block and, therefore, he is making disallowance of proportionate expenditure. Therefore, this contention of the ld. Counsel of the assessee is also not acceptable.
CIT(A) was not correct and justified in deleting the disallowance by observing that the AO, without identifying any expenses attributable to rental income, assumption of the AO without identifying any expenses attributable to rental income and such disallowance without identifying any expenses cannot be sustained.
As the ld. CIT(A) has ignored some factual position as noted above from the audited accounts of the assessee and has completely ignored the audited financial statements and accounts of the assessee especially table 21, 22 and 25 wherein some expenses are clearly identifiable and attributable to hotel business as well as rental activity and which has been incurred from the common pool and the assessee has not made any sustainable and acceptable apportionment to establish that the actual maintenance charges received by it are equal or less than the actual expenses incurred from common pool on the rental operation towards other expenses, employee benefit expenses and other administrative & general expenses. Therefore, the issue is restored to the file of the AO with a direction to identify the expenses pertaining to hotel and rental activity from common pool as per table 21, 22 and 25 of accounts and to make proportionate and appropriate disallowance on rental area/portion maintenance. Appeal filed by the Revenue is allowed for statistical purposes only.
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2022 (11) TMI 1202 - ITAT MUMBAI
Levy of income tax - Applying the concessional rate of tax @ 22% u/s 115BAA - assessee did not file Form 10–IC before the due date of filing the return of income, i.e. 15/02/2021, in the present case, which is mandatory condition for claiming the option available under section 115BAA - HELD THAT:- The coordinate bench of the Tribunal in Suminter India Organics Private Ltd [2022 (7) TMI 1219 - ITAT MUMBAI] held that the time permitted for filing Form 10-IC by virtue of section 3(1)(b) of Taxation and Other Laws (Relaxations and Amendment of Certain Provisions) Act, 2020, must be treated as 31/03/2021, even as the time permitted for filing the income tax return under aforesaid section, in light of the 3rd proviso to section 3(1) of said Act and read with subsequent notification, was only up to 15/02/2021.
AR, during the hearing, fairly submitted that in the present case Form 10-IC has not been filed by the assessee till date. Thus, in view of the above, we find no infirmity in the impugned order passed by the learned CIT(A) on this issue. We may, however, clarify that our findings on this issue shall not affect any other alternative remedy available/pursued by the assessee. Accordingly, ground No.1 raised in the assessee’s appeal is dismissed.
Applying the rate of tax @25% since the total turnover of the company in financial year 2018–19 is less than Rs. 400 crore - AR by referring to the profit and loss account for the year ending 31/03/2017 submitted that the gross revenue from operations of the assessee was Rs. 10.82 crore and thus in view of the aforesaid provision the rate of tax applicable in case of assessee should be 25% - HELD THAT:- We deem it appropriate to remand this issue to the file of AO for necessary verification. We further direct that the tax liability of the assessee be computed by applying the rate of tax as per the applicable provisions of law. Needless to mention that no order shall be passed without affording reasonable opportunity of being heard to the assessee. Accordingly, ground No. 2 raised in the assessee’s appeal is allowed for statistical purposes.
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2022 (11) TMI 1201 - ITAT PUNE
Interest income received u/s 28 of the Land Acquisition Act, 1894 - Taxabilty u/s 56(2)(viii) r.w.s. 57(iv) - HELD THAT:- We thus adopt the foregoing discussion in Basweshwar Mallikarjun Bidwe [2020 (10) TMI 356 - ITAT PUNE] mutatis mutandis to affirm the CIT(A)’s action upholding the impugned assessment findings regarding taxability of both sec.28 and sec.34 interests. The assessee’s sole substantive grievance raised in the instant appeal fails.
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2022 (11) TMI 1200 - ITAT AHMEDABAD
Disallowances u/s 14A - Expenditure on exempt income - HELD THAT:- No infirmity in the finding of learned CIT(A) as limiting the disallowances u/s 14A of the Act to the extent of exempted income.
MAT - Exempted income - adjustment to book profit u/s 115JB - provision of clause (f) of the explanation 1 to section 115JB - HELD THAT:- We note that the Special Bench in the case of ACIT vs. Vireet Investment Pvt. Ltd. . [2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of addition while determining the net profit u/s 115JB.
We hold that the disallowances made under the provisions of Sec. 14A r.w.r. 8D of the IT Rules, cannot be applied to the provision of Sec. 115JB of the Act as per the direction in the case of CIT Vs. Jayshree Tea Industries Ltd. [2014 (11) TMI 1169 - CALCUTTA HIGH COURT].
How to determine the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently - There is no mechanism/ manner given under the clause (f) to Explanation-1 of Sec. 115JB of the Act to workout/ determine the expenses with respect to the exempted income. Therefore in the given facts & circumstances, we feel that adhoc disallowance will serve the justice to the Revenue and assessee to avoid the multiplicity of the proceedings and unnecessary litigation. Thus we direct the AO to make the disallowance of 1% of the exempted income as discussed above under clause (f) to Explanation-1 of Sec. 115JB of the Act. We also feel to bring this fact on record that we have restored other cases involving identical issues to the file of AO for making the disallowance as per the clause (f) to Explanation-1 of Sec. 115JB of the Act independently. But now we note that there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently. Therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus in view of the above the ground of appeal of the Revenue is partly allowed.
Bogus purchases - whether the purchase shown by the assessee is bogus in nature? - HELD THAT:- We note that the assesse has shown export sales which was duly supported based on form H, bill of lading, shipping bill etc. Likewise, there was received money against such export sales. Thus, all these cumulative informations suggest that the assessee without making the purchase, cannot export the goods. There were various documents filed by the assessee in his form of confirmation, sales bills of the parties. Besides, the authorized representative appeared on behalf of M/s Uma Cotton Industries, all these documents cannot be neglected merely on the reasoning that there was some mismatch in the transport bills as discussed above. Thus, in view of the above, and after considering the facts in totality we do not find any reason to interfere in the order of the Ld. CIT(A), hence the ground of appeal of the revenue is hereby dismissed.
Addition of commission expenses - HELD THAT:- All documentary evidences are not sufficient enough until and unless it is clear based on the evidences that the commission agents have rendered services to the assessee. It is the onus upon the assessee to bring such services based on the cogent materials but we note that there was no evidence brought on record about the services rendered by the commission agent, therefore, we are not inclined to uphold the order of the Ld. CIT(A), on the reasoning that the commission expenses have not been incurred by the assessee wholly and exclusively for the purpose of business. On perusal of the agreement, we note that there were executed on 01/04/2011 and the same were not notarized. Furthermore, most of the payment for the commission was made at the fag end of the Assessment Year though the assessee was carrying out business throughout the year. All these facts strongly suggest that the assessee has manipulated it profit by claiming commission expenses. Hence the ground of Revenue is allowed.
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2022 (11) TMI 1199 - ITAT AHMEDABAD
Additions of unexplained cash credit u/s 68 - Adjustment of Bad debts under the provision of section 36(1)(vii) - Addition made by the authorities below to the extent under the provisions of section 68 - HELD THAT:- The amount of unexplained cash credit was adjusted by the assessee against the debtors meaning thereby the debtors in the books of accounts of the assessee were written off on account of such adjustment. The authorities below treated the sum as unexplained cash credit u/s 68.
Thus, there remains no ambiguity to the fact that assessee has made its debtors at NIL value and accordingly the assessee is entitled to claim the deduction by way of writing off bad debts of these sundry debtors within the meaning of the provision of section 36(1)(vii) - Thus, we set aside the order of the CIT(A) and direct the AO to allow the deduction for the bad debts only. Thus, ground of appeal of the assessee is partly allowed.
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2022 (11) TMI 1198 - ITAT SURAT
Capital gain computation - Commissioner has considered valuation given by DVO - Whether Commissioner has not referred the valuation method provided by the approved valuer? - HELD THAT:- The Registered Valuer had not based his Valuation Report on any scientific or logical basis but had made general observations to work out the FMV. The Registered Valuer is required to follow the provisions of the Urban Land Ceiling Land Act, Town and Country Planning Act, Chapter XXC of the I.T. Act, Capital Gains under the Income Tax Act and Guidelines referred by the Institute of Valuers and Guidelines from the sub-Registrar’s Office (Col. No.38) wherein the Valuer has to report whether any comparable instances/cases of the sales relied upon to arrive at the value of the land. As per the Central Public Works Department’s Manual, comparable sale instances, are only method for valuation. It is settled law that orange and apple cannot be compared which has been done by the Registered Valuers to arrive at an imaginary rate @ 235 per. Sq. mtr. The DVO has taken the rate @ Rs.50 per sq. mtr., which is based on some scientific analysis and as per the guidelines as the comparable sales instances has been taken.
As correct computation of capital gains on the basis of the valuation report of the DVO has been made by the Assessing Officer. The AO is being directed to taken the estimated value as per DVO Report instead of the value of the Stamp Authorities to work out the correct computation of capital gains. Hence, the action of the AO is upheld.
We find that there is no infirmity in the order passed by the ld. CIT(A) above. The ld. CIT(A) has considered all the facts and legal position applicable to the facts and delivered a reasoned order, therefore we decline to interfere in the order passed by the ld. CIT(A). Hence, the appeal of the assessee is hereby dismissed.
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2022 (11) TMI 1197 - ITAT SURAT
Addition u/s 68/41 - opening balance of advances for booking and another sundry creditor - old sundry creditors appearing in the balance sheet - assessee has not filed any confirmation of creditors, copy of ITRs of so-called advances given, were furnished - taxability of sundry creditor u/s 41(1) - HELD THAT:- As held that advances for booking and sundry creditor added are carried forward from earlier year and cannot be added under section 68. For creditor assessee furnished copy of sale deed, wherein the details of cheque given to the seller and bank statements established that seller has not deposited cheques or encashed the said amount. CIT(A) recorded that assessing officer had given categorical findings that the above amounts of both the additions are opening balance.
On such observation, CIT(A) was of the view that there is no dispute that amounts added are actually opening balance, which was carried forward from assessment year 2014-15. On the observation of AO for taxing the sundry creditor u/s 41(1) being ceased trading liability to assessee who is a builder, we find that the AO was given liberty to examine such facts in relevant assessment year. Once the AO is given liberty, the Ld. CIT(A) found no reason to wait for her remand report as no prejudice is caused to either party on adjudication the matter. We are conscious of the fact that there is no ground of appeal raised by the revenue for making/ sustaining addition under section 41(1), yet we may observe that the assessing officer has not brought any evidence to show that it was a cessation or remission of trading liability.
Asin PCIT Vs Matruprasad C Pandey [2015 (4) TMI 830 - GUJARAT HIGH COURT] held that amount of old sundry creditors appearing in the balance sheet cannot be added under section 41(1) unless and until it is found that there is remissions/ cessation of liability and that too during the relevant assessment year. Thus, on the basis of the aforesaid factual and legal position, we do not find any infirmity in the order of ld CIT(A) in deleting the addition of advance bookings and sundry creditors, which we affirms with these additional observation.
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2022 (11) TMI 1196 - ITAT CHANDIGARH
Revision u/s 263 - undisclosed income of the firm - PCIT went on to hold that neither the assessee firm was covered under the provisions of section 44AD and nor was the calculation made by the AO @ 8% justified as the AO was required to treat the entire gross receipts as undisclosed income of the firm - PCIT concluded that the assessment order was passed without making inquires or verification and, therefore, the order of the AO was erroneous - HELD THAT:- AO had made necessary inquiries regarding assessee's claim of having earned income from sub-contract work and, thereafter, after considering the reply submitted by the assessee, the AO has rejected such claim of the assessee regarding its working as a subcontractor. AO proceeded to hold that the assessee's work was in the nature of providing accommodation entries and based on this conclusion, the AO held that a rate of 8% should be applied being percentage of commission earned on providing the accommodation entries.
Thus, in view of the questionnaires issued by the AO and the replies submitted by the assessee, the conclusion reached by the AO of rejecting the assessee's claim apparently proves that the AO had made proper inquiries and had also duly applied his mind to the facts of the case. Contention of the Ld. PCIT that no enquiry was made by the AO is factually incorrect. Having said that, in the present case, PCIT has not specifically pointed out as to what further inquires or verification should have been carried out by the AO in this regard. Merely because the Ld. PCIT felt that further inquiry should have been made does not make the order of the AO erroneous and prejudicial to the interest of the Revenue.
It is not a case where the AO has upheld the applicability of section 44AD as alleged by the Ld. PCIT. Rather, the AO has rejected the assessee's claim of business income under section 44AD of the Act and has determined the true nature of assessee's activities as that of an accommodation entry provider rather than provider of sub-contractor services as so claimed by the assessee.
Having arrived at the true nature of assessee's activities of that of an accommodation entry provider, the AO has applied commission rate of 8% on total receipts/transaction value of entries - PCIT has not pointed out how rate of 8% being the commission income so determined by the AO is unsustainable in the eyes of law and whether there are other benchmark of estimating commission income which the AO should have applied and which he has failed to apply.
There is thus no incorrect application of law by the AO in the present case and further, the AO, after making inquiries and examining the records, has taken a view which is one of the possible views, and since this view is not unsustainable in law, it cannot be said that the order passed by the AO was erroneous in so far as being prejudicial to the interest of Revenue.
Thus following the decision of the Coordinate Benches in case of Shiv Shakti Constructions [2022 (10) TMI 972 - ITAT CHANDIGARH] the order so passed by the Ld. PCIT u/s. 263 is set-aside and the order of the AO is sustained. Assessee appeals stands allowed.
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2022 (11) TMI 1195 - ITAT MUMBAI
Revenue recognition - Profit offered during the survey proceeding - profit determined on the project undertaken by the assessee - Method of accounting - assessee was following percentage completion method of accounting - assessee has not honored the income of Rs. 5 crore, which the assessee declared during the course of survey action - HELD THAT:- A.O. ignored the percentage completion method of revenue recognition consistently followed by the assessee in assessment years prior to the assessment year under consideration i.e. A.Y. 2009-10 and opined that project of the assessee was completed therefore entire profit should have been declared in the year under consideration. In our opinion, the Ld. FAA after considering the submission of the assessee and analyzing facts of the case, correctly upheld the percentage completion method of Revenue recognition following the judicial precedents, and therefore we do not find any error in the order of the Ld.FAA on the issue in dispute, accordingly we uphold the same. - Decided against revenue.
Addition on account of income from house property - ALV of the flats held by the assessee as stock in trade - Addition determined by the Ld. A.O. on the closing stock of the flats held by the assessee - whether, from the flats held by an assessee as a stock in trade, the deemed rental income under the head income from house property should be assessed or not? - HELD THAT:- The coordinate bench of the Tribunal in the case of Bangal Shapoorji housing development Private Limited [2021 (5) TMI 636 - ITAT MUMBAI] after considering various decisions directed the Ld. Assessing Officer to delete the addition made towards the ALV of the flats held by the assessee as stock in trade of its business as that of a builder and developer. In our opinion, there is no error in the order of the Ld. FAA on the issue in dispute, which has been passed after following binding precedent on the issue in dispute. We accordingly uphold the same. The ground No.3 of the appeal of the Revenue is accordingly dismissed.
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2022 (11) TMI 1189 - ITAT DELHI
Assessment u/s 153C - Whether separate satisfaction has been recorded by the A.O. of the searched person by complying the provisions of Section 153C? - HELD THAT:- As per Apex Court in the case of Super Malls Pvt. Ltd. [2020 (3) TMI 361 - SUPREME COURT] and the satisfaction recorded by the ACIT, Central Circle- 21 who is the common AO of the searched person and the other person, the ground raised by the assessee are liable to be dismissed.
Search and seizure operation - Satisfaction though recorded was not based on the material relevant to the year in question and also the additions made were not based on the incriminating material found and seized during the course of search u/s 132.
Disallowance of purchases u/s 40A(3) - addition on account of purchases of milk made by the AO - HELD THAT:- CIT(A) has cogently brought on record about the fact of genuineness of the payment and applicability of Rule 6DD along with the relevant case laws. Under the above mentioned facts and circumstances, the CIT(A) held that action of AO u/s 40A(3) is not upheld. Since, no addition has been made by the AO under this section holding that the addition has been made on account of unexplained purchases, any adjudication by the Tribunal would be only academic in nature.
Addition on account of unexplained purchases - CIT(A) has recorded the detailed statement of all the purchase parties on oath and came to a conclusion that the identity, genuineness and creditworthiness of the parties has been proved beyond doubt. Hence, the identity, genuineness and creditworthiness of all the parties from whom purchases were made were proved beyond doubt. Hence, no addition is called for on this account.
Ad-hoc estimation of GP @ 0.20% on sales by the CIT(A) - We find that the ld. CIT(A) himself held that there is no reason for doubting the purchases made and payment made in cash being the parties are identified and accepted that they have made sale to the appellant in cash and there is no doubt as regard to genuineness of corresponding sales effected by the appellant and rightly deleted the addition on account of unexplained purchases. CIT(A) has verified the purchases by recording statement of suppliers of milk during the appellate proceedings in presence of AO and it is not the case of any inflation in price of the milk purchased by appellant as nothing incriminating was brought on record. Therefore, the action of the CIT(A) to resort to ad-hoc estimation of GP @ 0.20% of total sales is arbitrarily and mechanical. Hence, the action of the ld. CIT(A) cannot be supported and is liable to be deleted.
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2022 (11) TMI 1180 - SUPREME COURT
Capital gain - transfer - revaluation of assets - partnership firm - retirement of one partner and reconstitution of firm with new partners - applicability of Section 45(4) of the Income Tax Act as introduced by the Finance Act, 1987 - HELD THAT:- The assets of the partnership firm were revalued to increase the value by an amount of Rs. 17.34 crores on 01.01.1993 (relevant to A.Y. 1993-1994) and the revalued amount was credited to the accounts of the partners in their profit-sharing ratio and the credit of the assets’ revaluation amount to the capital accounts of the partners can be said to be in effect distribution of the assets valued at Rs. 17.34 crores to the partners and that during the years, some new partners came to be inducted by introduction of small amounts of capital ranging between Rs. 2.5 to 4.5 lakhs and the said newly inducted partners had huge credits to their capital accounts immediately after joining the partnership, which amount was available to the partners for withdrawal and in fact some of the partners withdrew the amount credited in their capital accounts.
Therefore, the assets so revalued and the credit into the capital accounts of the respective partners can be said to be “transfer” and which fall in the category of “OTHERWISE” and therefore, the provision of Section 45(4) inserted by Finance Act, 1987 w.e.f. 01.04.1988 shall be applicable.
For the purpose of interpretation of newly inserted Section 45(4), the decision of this Court in the case of Hind Construction Ltd.[1971 (9) TMI 16 - SUPREME COURT] shall not be applicable and/or the same shall not be of any assistance to the assessee. As such, we are in complete agreement with the view taken by the Bombay High Court in the case of A.N. Naik Associates and Ors.[2003 (7) TMI 46 - BOMBAY HIGH COURT] - We affirm the view taken by the Bombay High Court in the above decision.
The impugned judgment and order passed by the High Court and that of the ITAT are unsustainable and the same deserves to be quashed and set aside and are accordingly quashed and set aside. The order passed by the AO is hereby restored.
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2022 (11) TMI 1179 - SC ORDER
Chargeability of TDS on non-convertible debentures and FDR below - HELD THAT:- As gone through the judgment and orders passed by the Tribunal as well as the High Court, we are of the opinion that no error has been committed by the Tribunal and/or the High Court on the chargeability of TDS amount on non-convertible debentures and fixed deposit of the value less than Rs.5,000/-.
Both, the Tribunal as well as the High Court have concurrently found that on non-convertible debentures and fixed deposit of the value less than Rs.5,000/-, there shall not be any TDS leviable.
We are in complete agreement with the view taken by the Tribunal as well as the High Court. Once, there is no liability to deduct TDS on non-convertible debentures and fixed deposit of the value less than Rs. 5,000/-, there is no question of charging any interest. At the same time the issue whether the levy of the interest was time barred considering Section 201(1) / 201(1)(a) has not been dealt with and considered in High Court, we keep the question of law on the aforesaid open.
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2022 (11) TMI 1178 - CALCUTTA HIGH COURT
Validity of order of ITAT deciding the issue raised first time without proper notice to assessee - Deduction u/s 80IA - deduction was not claimed in the original return but was claimed in the revised return - whether the assessee was required to electronically upload the audit report in Form 10CCB before the due date prescribed under the Act? - HELD THAT:- As pointed out earlier the Tribunal has rightly taken note of the settled legal position and held that if the defect be procedural it can be cured at a subsequent stage namely at the stage of filing the revised return or even during the course of assessment proceedings. If that was the finding of the learned Tribunal the natural consequence that has to flow is to allow the appeal of the assessee. However, assessee’s appeal has been dismissed on the ground that the audit report has not been filed within the time prescribed under the statute. Tribunal though noted that such prescription of time limit was pursuant to an amendment it failed to take note of the fact as to whether such a amendment would apply to the assessment year under consideration namely A.Y. 2014-15. The amendment to the Act was brought about by the Finance Act 2020 (No. 12 of 2020) dated 27.3.2020.
In Section 35 of the Finance Act the amendment brought out to Section 80IA of the Act in sub Section (7) has been mentioned. It has to be noted that Finance Act, 2020 came into force on 1.4.2020. If that be so, Tribunal without examining as to whether such an amendment could apply to the assessee’s case had directed to the assessing officer to verify such a matter.
Advocate appearing for the appellant submitted that such an issue was never raised by the revenue at any earlier point of time. As could be seen from the materials available on record the assessing officer has not taken such a view, obviously he could not have done so because the assessment order was passed on 29th December, 2016, much earlier to the amendment. The CIT(A) also could not have taken note of the amendment because the order passed by the CIT(A) is dated 28th February, 2019.
Therefore, if an issue is to be raised by the learned Tribunal suo-motu for the first time then the assessee is entitled to notice of such an issue being raised and should have afforded an opportunity to the assessee to put forth their submission. We find that such procedure was not adopted by the Tribunal. In any event, the learned Tribunal in paragraph 18 of its order having rightly noted the legal position ought to have granted relief to the assessee. Failure to do so, would result in order passed by the learned Tribunal liable to be set aside.
Tribunal though noted the correct legal position has taken note of the subsequent amendment in the Act requiring the audit report to be filed in prescribed manner within the prescribed time. As mentioned by us above, this issue was never an issue pointed out to the assessee at any earlier point of time and it appears that the issue had been taken up for consideration when the case was heard and orders were reserved by the learned Tribunal. In any event, such point could not have been put against the assessee when the same was never the case of the revenue before the Tribunal.
The appeal filed by the assessee is to be allowed. The order passed by the learned Tribunal as well as order passed by the CIT(A) are set aside and also the order passed by the assessing officer dated 29.12.2016 in so far as it disallows the deduction claimed under Section 80IA of the Act are set aside and there will be a direction to the assessing officer to allow the said deduction claimed by the assessee under Section 80IA of the Act. Decided in favour of the assessee.
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2022 (11) TMI 1177 - CALCUTTA HIGH COURT
Revision u/s 263 - PCIT may have information from the assessment file or through other sources - correctness of the exercise of power under section 263 - contention advanced before us by the revenue is that the assessee could not establish the genuineness of the transactions to prove that it had not indulged in any dubious share transactions meant to account for undisclosed income under the garb of long term capital against (LTCG) to claim exemption under Section 10 (38) - HELD THAT:- In the cases on hand there is nothing on record to show that such an exercise was done by the PCIT. Tribunal after noting several decisions on the subject rendered by the Coordinate Benches of the Tribunal had allowed the assessee’s appeal and set aside the order passed by the PCIT under Section 263 - Tribunal has proceeded to examine the merits of the matter and granted relief.
It is the submission that so far as the merit of the cases are concerned similar issue was tested by this Court in the case of Principal Commissioner of Income Tax Vs. Swati Bajaj [2022 (6) TMI 670 - CALCUTTA HIGH COURT] Though such may be the issue, as pointed out earlier the learned Tribunal had granted relief to the assessee on two grounds the first of which being that the exercise of power under Section 263 of the Act was not in accordance with law.
As could be seen from the substantial questions of law suggested by the revenue, the revenue has not raised any question on the said finding of the Tribunal which goes to show that the revenue had reconciled with the reasoning given by the learned Tribunal in that record. Therefore, a piecemeal challenge to the order passed by the learned Tribunal on one of the grounds on which relief was granted to the assessee is not maintainable.
In more or less identical circumstances in the case of Principal Commissioner of Income Tax, Durgapur Vs. M/s. Sinforte Pvt. Ltd. [2022 (1) TMI 1297 - CALCUTTA HIGH COURT] the court had dismissed the appeal filed by the revenue on the ground that the PCIT in order to exercise jurisdiction under section 263 of the Act exercised jurisdiction at the instance of the assessing officer which is against the provisions of the law. This decision supports the case of the respondent assessee. Hence, for the above reasons, we are of the view that the order passed by the learned tribunal on the first ground, namely with regard to the correctness of the exercise of power under section 263 of the Act has to be affirmed and, accordingly, the appeal filed by the revenue is dismissed.
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2022 (11) TMI 1176 - DELHI HIGH COURT
Reopening of assessment against company as struck off by the ROC from its register of companies - Later the name was restored - Section 248 of the Companies Act, 2013 - Respondent has filed its counter affidavit for restoration of the name of the Company in the register of companies, maintained by the ROC Delhi - HELD THAT:- The petitioner herein is the promoter and director of the Company and he has filed the present petition in his individual capacity -The Petitioner admits the Company stands restored by the order dated 25th September, 2019, passed by the NCLT. The defaulting Company has neither challenged the impugned Notice dated 28th March, 2019, nor the order dated 25th September, 2019, passed by the NCLT, which has therefore, attained finality in law. In our view, in these facts alone, the Petitioner herein has no locus standi to maintain the proceedings and even in alternative the present petition has become infructuous.
Impugned notice was issued at a point in time, when the Company was struck off from the ROC, the subsequent order passed by the NCLT restoring the Company, will not have the effect of curing the defect issuance of notice to the non-existent entity - Section 252(3) of the Companies Act, 2013 expressly states that the Tribunal’s order directing restoration of a company will have the effect of placing the company in the same position as if the name of the company has not been struck off from the register of companies. In other words, with the restoration order passed by the NCLT, even on the date of the issuance of the impugned notice, the Company is deemed to be in existence.
Section 250 of Companies Act of 2013 is a new provision and it declares that even where a Company is dissolved in consequence to it being struck off under Section 248, it shall be deemed to continue to be in existence for the purpose of discharging its liabilities. The said section recognizes the continuing liability of a struck off company, which is in addition to Section 248(7) of the Companies Act, 2013,
In the present proceedings, the Company has admittedly been restored and as it has been observed above that statutorily upon restoration, the Company under Section 252(3) of the Companies Act, 2013, is deemed to not have been struck off from the register of companies at all. Accordingly, the impugned notice dated 28th March, 2019, is valid and not non-est on the grounds urged in the present petition.
Decision as distinguishable in Shrikishen Dhoot & Others [1964 (11) TMI 38 - HIGH COURT OF ANDHRA PRADESH] has held that a suit is not maintainable against a company which was struck off from the register of companies. However, the Court in the said case has clarified that the existing liability of any director or member prior to the dissolution of the company will continue in spite of the dissolution. Also Sharvan Kumar Swarup [1994 (9) TMI 2 - SUPREME COURT] and Mrs. Suseela Sadanandan [1964 (10) TMI 6 - SUPREME COURT]
Company was initially struck off by the Ministry of Corporate Affairs due to its default in filing its statutory return with the ROC and the Company was, therefore, struck off due to its own defaults. The NCLT upon realizing that the detriment caused to the interest of the Income Tax department due to the striking off, restored the Company to enable the Department to recover its dues. However, the conduct of the Petitioner in persisting with the present petition even after the Company has been restored and also his action in opposing the appeal before the NCLT for restoration evidences that the petitioner is abusing the process of law to obstruct the assessment proceedings. The resort to present petition by the Petitioner herein is therefore, not bona fide and is being done to avoid legal processes. We, accordingly, dismiss the present petition with costs.
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2022 (11) TMI 1175 - DELHI HIGH COURT
Validity of Faceless assessment - maintainability of the that writ petition on the ground of territorial jurisdiction since the PAN AO, was located outside Delhi - Penalty proceedings u/s 271AAC (1) - HELD THAT:- View expressed by a co-ordinate bench of this Court in RKKR foundation [2021 (5) TMI 496 - DELHI HIGH COURT] has not taken into account the entire conspectus of the legal position in assignment proceedings with reference to the hierarchy of appellate authorities under the Act, 1961 and that the matter requires a deeper consideration.
We are also of the view that applying the doctrine of forum non-conveniens as laid down by a Full bench of this Court in Sterling Agro [2012 (6) TMI 76 - DELHI HIGH COURT - LB] this Court can refuse to entertain the writ petitions where the jurisdictional assessing officer i.e. JAO is based outside the NCT of Delhi. It would be appropriate to refer this matter to a larger bench for a conclusive view as this issue will arise repeatedly in many cases.
Keeping in view the complexity of the legal issues involved and since we have doubted the correctness of the view expressed by a coordinate bench of this Court in RKKR Foundation [2021 (5) TMI 770 - DELHI HIGH COURT] wherein this Court had decided to exercise its jurisdiction in a similar matter where the jurisdictional assessing officer was located outside the NCT of Delhi, we are of the considered view that the aforesaid questions of law requires to be settled and decided by way of an authoritative pronouncement by a larger bench of this Court.
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