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Income Tax - Case Laws
Showing 401 to 420 of 8298 Records
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2023 (12) TMI 406
TP Adjustment - comparable selection - Application for admission of additional evidences - assessee submitted that in the present AY, being first year, the assessee had erroneously considered the comparable companies engaged in ‘financial and leasing services’ (hire purchase and leasing services, investment services, other financial services, other consultancy services) to benchmark the subject international transaction instead of considering comparable companies engaged in providing ‘business support services’.
HELD THAT:- Section 92CA(3) rests obligation on TPO to determine the arm’s length price in relation to the international transaction in accordance with sub-section (3) of section 92C. This exercise at one end is to accept or discredit the TPSR of the assessee on the other hand obliges the TPO to make an independent enquiry of his own on the question of determination of ALP.
The point is that in present AY the TPO accepted the comparables of segment taken by assessee without questioning if the assessee was right in taking up comparable of segment financial services/ selling of financial products however in same set and scope of business activity and model when accepted in AY 2008-09 onwards the assessee’s changed stand with comparables of different segment of ‘business support services’.
Thus the comparables of segment AY 2008-09 onwards are binding on the TPO and if those are accepted the whole TPSR becomes defective and that causes prejudice to both the parties. In any case, if additional evidence of fresh TPSR on new set of comparables is allowed, the TPO will still have a right to not consider the same and allege that in present AY the comparables of right segment were taken.
Admissibility of additional evidence we are of the considered view that Rule 29, bars the right of parties to the appeal to produce additional evidence either oral or documentary. However, if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders, the additional evidence can be called for. Further the Rule 29 provides that for ‘any other substantial cause’ also the Tribunal can allow the additional evidences.
in the case in hand the facts and circumstances establish that either both TPO and the assessee or the TPO only hand failed to take comparables of correct segment. Thus, there is force in the contention of assessee that both the assessee and TPO were mistaken on facts of the functional profile of the assessee to consider comparables engaged in ‘financial and leasing services’ instead of ‘business support services’. Hence at the end, before us, neither the assessee nor the Revenue can completely justify the comparables accepted by them.
Assessee has sought indulgence of the Bench to allow the additional evidences of new set of comparables, but, the same require verification as the whole exercise has to be done again by the TPO who has right to rebut the same. Thus, the question of admissibility of these evidences as to the assessee had opportunity to lead this evidence at the first instance or that the assessee has created this evidence subsequently is not of much consequences. The evidence is from the contemporary data of relevant AY only so there is no question of assessee taking advantage of subsequent facts or something created by assessee ex post facto. The nature of fresh set of comparables require a fresh look into all the issues, substantially and incidentally involved due to erroneously taking comparables of wrong segment by both the assessee and the TPO.
Thus, we are inclined to allow the application of the assessee. Impugned final assessment order is set aside and the TPO is directed to accept the fresh evidence and report of the assessee for the purpose of Section 92C of the Act r.w. Rule 10B of the Income-tax Rules, 1962 and, after giving further opportunity of hearing to the assessee pass a fresh order. The assessee will be at liberty to raise further incidental issues afresh before the TPO/AO. In the result, the appeal of the assessee be considered allowed for statistical purposes.
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2023 (12) TMI 405
Addition u/s 56(2)(vii) - real owners - partners v/s firm - property purchased by assessee-partner less than guideline value of the property - addition made to the extent of assessee’s share therein i.e., one-fourth - Assessee argued that entire amount to purchase the property was spent by the firm and the property actually belonged to the firm - as per AO the sale deed does not mention that the property was purchased in the capacity of the partners of the firm and the property was being acquired by the firm and loan was sanctioned in the name of the partners only and property was purchased in individual names only - HELD THAT:- As the impugned property has been purchased in joint ownership of 4 persons all of whom happens to be partner in a firm - From the financial statements as placed on record, it emerges that the said property has been introduced by the partners in the firm and the said property is in business use of the firm.
The same is also evidenced by the fact that the depreciation has also been allowed to the firm. The firm is repaying the loan installment and for all practical purposes, it is the firm only which is exclusively using the property for its business use. We also find that the provisions of Section 14 of Indian Partnership Act provide that unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm are deemed to have been acquired for the firm.
Therefore, applying purposive construction to the facts of the present case, the property is deemed to have been acquired by the firm only and not by individual partners. Provisions of Sec.56(2)(vii)(b)(ii) could not be pressed into service since these provisions do not apply to partnership firm at the relevant point of time. Therefore, addition is not sustainable. Assessee appeal allowed.
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2023 (12) TMI 404
Additions u/s 68 - bogus STCG - assessee has sold share within 12 days and earned short term capital gain. Financial result of transaction indicate that rise in price was a result of rigging - HELD THAT:- In the present case, the assessee has shown sufficient evidence about the purchase and sale of scrip of M/s Splash Media & Infra Ltd.. No adverse material against such evidence was brought on record. No investigation was carried out by the Assessing officer.
Assessee by furnishing complete details of their share transaction, has discharged primary onus upon them. As decided in Ranchhod Jivabhai Nakhava [2012 (5) TMI 186 - GUJARAT HIGH COURT] that once the assessee has discharged its primary onus, the onus shift upon the revenue to carry out further investigation to disprove the evidence of assessee.
We find that in the present case, the Assessing Officer failed to carry out any investigation or brought any adverse material against the assessee. There is no dispute that the assessee made purchases of impugned shares through well-known stock broker Reliance Securities Limited. The transaction was carried out through Bombay Stock Exchange, therefore, find no justification to tax such short term capital gain as unexplained cash credit without bringing any adverse evidence on record. Accordingly, direct to delete the addition made by the Assessing Officer and confirmed by the ld. CIT(A). Decided in favour of assessee.
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2023 (12) TMI 403
Penalty u/s 271D - assessee has accepted cash as part of sale consideration on sale of immovable property - contravention of the provisions of section 269SS - HELD THAT:- We find that the AO has enquired about the cash deposits made by the assessee and he convinced and accepted the explanation given by the assessee. Further, it is pertinent to mention that the Ld.AO has not recorded the satisfaction regarding the initiation of penalty proceedings while passing the assessment order u/s. 143(3) of the Act which is a prerequisite for initiation of penalty u/s. 271D of the Act. We are of the considered opinion that issuing a notice u/s. 274 r.w.s 271D of the Act is nothing but an afterthought of the Ld. AO.
As case of CIT Vs Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] we are of the considered view that the penalty order passed u/s. 271D deserves to be quashed. Appeal of the assessee is allowed.
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2023 (12) TMI 402
Disallowance on account of exchange rate fluctuation - speculative loss or not - HELD THAT:- As decided in own case [2023 (5) TMI 577 - ITAT DELHI] Appellant is an NBFC and inter-alia is in the business of acquiring loan for onward lending. Appellant has incurred loss on foreign exchange fluctuation on account of ECB liability only. Therefore, the conclusion of the AO derived on the basis of CBOT Instruction No. 3 of 2010 in the above circumstances is not fit to be supported with respect to loss incurred on account of re-instatement of ECB liability.
AO has not given concrete findings on the explanation of assessee that Instruction No. 3 of 2010 issued by CBDT is applicable only where there is trading in forex derivatives, which situation does not exist in the instant case, as the AO herself has mentioned the nature of appellant's business as that of Information Technology line, i.e., IT related purchase/sales or services. Therefore, the conclusion of the AO derived on the basis of CBDT Instruction No. 3 of 2010 in the above circumstances is not fit to be supported that the foreign exchange fluctuation loss is a speculative loss
The issue has been decided in favour of the assessee by the decision (supra) of the Tribunal in its own case. Respectfully following the Tribunal’s decision (supra) and agreeing with the submissions of the assessee, we delete the impugned disallowance.
Disallowance u/s 36 (i) (viii) - whether taking cognizance of timeline prescribed under section 80IA to make the impugned disallowance u/s 36(1)(viii) is in accordance with law or not? - assessee submitted that it satisfies all the conditions prescribed under section 36(1)(viii) to claim deduction for the amount transferred to special reserve and taking cognisance of timelines prescribed under section 80IA for making any disallowance is not called for - The contention of the assessee is that section 36(1)(viii) is a complete code in itself and reference to section 80IA beyond what has been stated in the section itself is not warranted - HELD THAT:- Section 36(1)(viii) of 1961 Act corresponds to section 10(2)(xiva) of 1922 Act meaning thereby that the provision of special deduction to an specified entity existed in Income Tax Act 1922 and was retained in 1961 Act whereas the provision of section 80IA came into being w.e.f. 1.4.1991 and the provision for benefit of deduction has been amended many a times and at present section 80IA shall not apply to any enterprise which starts the development or operation and maintenance of infrastructure facility on or after 01.04.2017. There is nothing like that in section 36(1)(viii) of the Act. We, therefore hold that the Ld. AO erred in taking cognizance of timeline prescribed under section 80IA in making the impugned disallowance. The contention of the Ld. AR that the Revenue has allowed the claim of the assessee in AY 2017-18 and 2018-19 has not been refuted by the Ld. CIT-DR. We therefore do not find any justification in making the impugned disallowance which we hereby delete in both the assessment years.
Disallowance of advertisement expenses - AO made the impugned disallowance for want of supporting documents - HELD THAT:- CIT(A) restored the matter to the Ld. AO with a direction to him to decide it afresh on production of ledger account containing the details of expenses with bills/vouchers by the assessee. The only grievance of the assessee has been lack of adequate opportunity given to it. Since opportunity to present its case again before the Ld. AO has been allowed by the Ld. CIT(A) we decline to interfere.
Disallowance u/s 14A and Rule 8D - AO did not accept the explanation of the assessee and relying on several decisions held that investment decisions are very strategic decisions in which top management is involved and therefore proportionate management expenses are required to be deducted while computing the exempt income from dividend - HELD THAT:- It is observed that before the Ld. CIT(A) it was vehemently argued by the assessee duly supported by judicial pronouncements that disallowance cannot exceed the amount of exempt income earned during the year. The Ld. CIT(A) has accepted this argument of the assessee. We find no reason to interfere with the order of the Ld. CIT(A) and accordingly reject this ground of the assessee.
Disallowance of depreciation - assessee has made investment in windmill to earn income from investments and such investment activity cannot be equated with activities in the nature of trade or business or adventure - CIT(A) deleted the impugned disallowances holding that the assessee can claim depreciation as it owns the assets and the same is put to use for business - HELD THAT:- The parties agree that this issue is covered against the Revenue by the decision of Hon’ble Delhi Court [2023 (1) TMI 70 - DELHI HIGH COURT] - The appeal of the Revenue pertaining to AY 2012-13 against the deletion of similar disallowance by the Ld. CIT(A) has been dismissed by the Tribunal [2023 (5) TMI 577 - ITAT DELHI] Following the precedent as above, we find no merit in the appeals of the Revenue which we hereby reject. These grounds are dismissed.
TDS u/s 194C or 194J - short deduction/non deduction of TDS - AO payments made by the assessee to Suzlon Energy Ltd. was in the nature of technical and professional services - CIT(A) relying on the decision of Hon’ble Calcutta High Court in CIT vs. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] deleted the impugned disallowance - HELD THAT:- As decided in Future First Info Services (P) Ltd. [2022 (7) TMI 748 - DELHI HIGH COURT] that in cases of short deduction of TDS disallowance under section 40(a)(ia) could not be made. The correct course of action would be to invoke section 201 of the Act. We therefore uphold the order of the Ld. CIT(A) and reject the appeal of the Revenue in both the AYs involved.
Disallowance u/s 14A r.w.r. 8D - assessee itself computed disallowance on a prudent and reasonable basis - CIT(A) restricted the disallowance to the extent of exempt income and deleted the additional disallowance - HELD THAT:- As relying on assessee own case for earlier AYs ITA No. 349/2022 [2023 (1) TMI 70 - DELHI HIGH COURT], 1268/Del/2015 [2023 (5) TMI 507 - ITAT DELHI] and 4985/Del/2017 [2023 (5) TMI 577 - ITAT DELHI] we confirm the order of the Ld. CIT(A) in both the AY(s) and consequently reject the appeals of the Revenue on the issue.
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2023 (12) TMI 401
Validity of reopening of assessment u/s 147 - prior sanction of approval u/s 151 of the Act from the competent authority not taken - Exemption u/s 10(26BBB) denied - HELD THAT:- We find that prior sanction of approval u/s 151 of the Act from the competent authority is mandatory before the reopening of assessment. As it has been duly confirmed that no approval U/s 151 of the Act is on record for the years under consideration, the assumption of jurisdiction U/s 147 of the Act becomes void ab initio. Accordingly, the entire reassessment proceedings are hereby quashed. Assessee appeal allowed.
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2023 (12) TMI 400
Levy of penalty u/s 271(1)(c) - defective notice - as alleged non specification of clear charge - Correct head of income - Assessee had offered the rental income as “business income” as compared to “Income from house property” as done by AO - HELD THAT:- AO initiated penalty u/s 271(1)(c) of the Act for furnishing inaccurate particulars of Income leading to concealment of income and thereafter issued the notice u/s 274 read with 271(1)(c) of the Act without specifying any particular limb of the penalty and finally imposed the penalty for furnishing inaccurate particulars of income. The Assessee challenged the Imposition of penalty mainly on the basis of notice itself, therefore we deem it appropriate to decide the legal issue involved in the instant case, instead of going into other issue/merits of the case.
The Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] observed that the levy of penalty has to be clear as to the limb under which it is being levied. As per Hon'ble High Court, where the Assessing Officer proposed to invoke first limb being concealment, then the notice has to be appropriately marked. The Hon'ble High Court also held that the standard proforma of notice under section 274 of the Act without striking off the irrelevant clause would lead to an inference of non-application of mind by the Assessing Officer and levy of penalty would suffers from non-application of mind.
The penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income.
In the present case AO has issued the notice u/s 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceedings have been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which is bad in law, hence can not be considered a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act and therefore we are of the considered view that under these circumstances, the penalty is not leviable - Decided in favour of assessee.
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2023 (12) TMI 399
Disallowing loss in F&O due to change in client code modification done by broker - AO disallowed proportionate BSE/NSE charges by allocating the same in proportion of turnover of delivery and non-delivery based transaction - AO received information from the office of the Director of the Income-tax, Mumbai that assessee was one of the beneficiary of tax evasion by way of client code modification on stock exchange and taking excess loss - HELD THAT:- AO has nowhere provided details of the transactions where client code modification was carried out nor he given reasons as why the said client code modification was not for genuine purposes and for the purpose of the evasion of the tax. In absence of providing any such material to the assessee, the addition by the Assessing Officer is against the principle of natural justice.
AO has neither called for the broker and made any inquiry and made addition simply on the basis of the report of the Director of the Investigation. Thus the addition made being on presumption that the client code modification carried out was for non-genuine purposes. Accordingly, the addition made by the AO and upheld by the Ld. CIT(A) being based on the presumption and being without supporting any documentary evidence that assessee has evaded the tax on those transactions and shown fictitious loss, is deleted and the order of Ld CIT(A) is set aside. The grounds of appeal of the assessee are accordingly allowed.
Penalty u/s 271(1)(c) - Defective notice u/s 274 - Assessee argued that relevant limb for levy of the penalty i.e. concealment of the particulars of income or furnishing of inaccurate particulars of the income, has not been stricken off in the notice u/s 274 r.w.s. 271(1)(c) - HELD THAT:- We find that the AO has not stricken off the relevant limb for levy of the penalty and not specified whether the penalty has been initiated for concealment of particulars of income or furnishing inaccurate particulars of income. The Hon’ble Bombay High Court in the case of Mohd Farhan A Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT] held that where penalty notice has not specified for charges for levy of the penalty, whether it is for concealment of the particulars of the income or furnishing inaccurate particulars of income, in such circumstances, levy of the penalty is bad in law and accordingly cancelled.
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2023 (12) TMI 398
TP adjustment - specified domestic transaction covered u/s 40A(2)(b) - AO had noted that the assessee had entered into both International & Specific domestic transactions with Associated Enterprises (AE’s) and therefore made a reference u/s 92CA(1) to the TPO for determination of the Arm’s Length Price (ALP) - As argued presumption ought to be that expenditure covered u/s 40A(2)(b) was never a specified domestic transaction and therefore by virtue of this amendment, the impugned transfer pricing adjustment made u/s 92BA of the Act be deleted on this score alone - also AR submitted that the TPO had erred in holding that the director’s commission paid by the company was excessive and thereby making transfer pricing adjustment by applying TNMM Method - whether the director’s remuneration was required to be benchmarked on aggregate basis or the salary & commission was to be benchmarked separately and independent of each other?
HELD THAT:- AR has rightly pointed out that the remuneration policies of companies in same industry may differ i.e. fixed & variable pay may vary depending on each case but the overall remuneration policy shall be in accordance with the provisions of Companies Act, 2013. It is noted that Section 197 of the Companies Act 2013 sets the limits for payment of overall director’s remuneration, by whatever name i.e. salary, fee or commission. Hence, we note that there is no distinction between salary or sitting fees or commission carved out in the Companies Act, 2013. This is indeed relevant in the present context as the said provision sets out the parameters for payment of overall remuneration to Directors in unison.
We also note that Section 17(1) of the Act which defines ‘salary’, includes any ‘commission’ paid in addition to salary and therefore the commission is noted to form part of the salary income of the employee / director. For the aforesaid reasons, we find merit in the plea of the appellant that the salary & commission paid to the directors are closely related and forms part of the overall remuneration package and therefore it has to be aggregated and benchmarked as a single transaction.
It is noted that applying the aggregate approach, the ratio of aggregate salary & commission i.e. director’s remuneration to the profit before tax of the appellant works out to 4.36% which is well within the permitted range of the six (6) comparables. Hence, the transfer pricing adjustment made by the TPO in relation to director’s commission is held to be unjustified and the TPO is directed to delete the same.
Since we have deleted the impugned transfer pricing adjustment on its merits, the alternative legal plea raised by the assessee has become academic and is therefore not being adjudicated upon. Accordingly Ground No. 1 stands allowed.
Characterisation of receipt - industrial Promotion Subsidy (IPS) received - Capital or revenue receipt - HELD THAT:- Having regard to the principle as laid down Ponni Sugar & Chemicals Ltd [2008 (9) TMI 14 - SUPREME COURT] it is noted that this Tribunal in assessee’s own case for AYs 2010-11 & 2012-13 [2022 (1) TMI 412 - ITAT MUMBAI] had held the IPS subsidy received by the assessee from the Government of Maharashtra was towards setting up of the new unit at Jalgaon and therefore capital in nature.
Similarly, it is noted that Industrial Policy of Assam in terms of which the assessee received IPS subsidy in relation to its Assam Unit, was examined by the coordinate bench of this Tribunal at Guwahati in the case of DCIT Vs Century Plyboards (I) Ltd in [2020 (12) TMI 55 - ITAT KOLKATA] and the subsidies received under this Industrial Scheme for setting up unit in Assam was held to be capital in nature - Thus we hold that the lower authorities had erred in holding the IPS subsidy received by the assessee under the State Industrial Schemes of Maharashtra, Madhya Pradesh & Assam was revenue in nature.
Thus the assessee recognizes subsidy on mercantile basis of accounting basis the terms of the initial sanction received from the State Government. The final approval or disbursement comes at a later date and there are instances of excess/ shortfall, which is appropriately accounted for by the assessee. It is noted that that the subsidy was short recognized by the assessee in earlier years and therefore the excess amount i.e. difference between amount recognized and amount finally disbursed was credited in P&L A/c during the year. As rightly pointed out by the Ld. AR, the nature of the subsidy which was short recognized in earlier year/s remains the same i.e. capital in nature. Assessee appeal allowed.
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2023 (12) TMI 397
Unexplained cash credit u/s. 68 r.w.s. 115BBE - Addition being 50 percent of agricultural income in the absence of books of accounts - assessee claimed that he is not interested in showing higher income though the basic exemption limit is not fully exhausted by the assessee - HELD THAT:- Agricultural income held by the assessee are cannot be doubted. However the Assessing Officer not satisfied with the evidences filed by the assessee treated 50% of the agricultural income are unexplained and invoked Section 68 r.w.s. 115BBE of the act which in our considered opinion, is not correct in law. The assessee has shown gross total income of Rs. 340 only for the Assessment Year and agricultural income of Rs. 28,65,563/-.
Co-ordinate Benches of the Tribunal have held that any sum found credited in bank passbook could not be treated as an unexplained cash credit under section 68 of the Act, since the bank account of the assessee is not considered as part and parcel of the books of accounts. Thus the addition made by the Assessing Officer was deleted.
The Bombay High Court in the case of CIT v Bhaichand N. Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT] has held that the pass book supplied by the bank to the assessee cannot be regarded as a book maintained by the assessee or under his instructions. Accordingly, the Tribunal is justified in holding that a cash credit for the previous year shown in the assessee's bank pass book issued to him by the bank but not shown in the cash book maintained by him for that year, does not fall within the ambit of section 68 of the Act.
No hesitation in holding that the Lower Authorities are not legally correct in invoking section 68 of the Act, as against the agricultural income shown by the assessee. Therefore the additions made on this count is liable to be deleted.
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2023 (12) TMI 396
Bogus LTCG - assessee makes sale of shares of a company having no financial standing/base i.e. a penny stock company - HELD THAT:- AO has not doubted the purchase of shares were through banking channels. The assessee has placed on record copies of contract memos in connection with purchase and sale of shares. Besides the above shares, the assessee has also held shares of 84 other companies as well. In the present case, no material has been brought on record to suggest that assessee was involved in any price rigging and not has the case of assessee mentioned in the list of beneficiaries, by the persons whose statements were recorded.
In the statements recorded, the name of the assessee as a beneficiary was not specifically mentioned this fact was also specifically taken noted by Hon’ble Supreme Court in the case of Renu Aggarwal [2023 (7) TMI 288 - SC ORDER]
AO has not brought any material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money. In the present case, despite the assessee’s specific request, no opportunity of cross examination was provided to the assessee on the basis of whose statements reliance has been placed to hold that the sale of shares was sham / bogus.
ITAT Kolkata and ITAT Mumbai with respect to the very same stock i.e. M/s Global Infratech and Finance Ltd. in three separate judgments (Mukesh Sharma [2019 (5) TMI 1845 - ITAT MUMBAI], Kaushalya Agarwal [2019 (6) TMI 297 - ITAT KOLKATA] and Mangilal Jain [2019 (5) TMI 1694 - ITAT KOLKATA]) have decided the issue in favour of the assessee by holding that the assessee was not engaged in bogus purchase and sale of shares.
Accordingly, looking at decisions were rendered with respect to the same stock i.e. Global Infratech and Finance Ltd. which the assessee had sold during the impugned assessment year, and the recent decision of Hon’ble Supreme Court in the case of Renu Aggarwal [2023 (7) TMI 288 - SC ORDER] we are of the considered view the Ld. CIT(Appeals) has not erred in facts and in law in allowing the appeal of the assessee.
Unexplained expenses - CIT(Appeals) directed the AO to compute the addition on account of unexplained expenses and unexplained receipt pertaining to the year under consideration on pro rata basis - HELD THAT:- we observe that Ld. CIT(Appeals) has given a detailed basis of partially allowing the appeal of the assessee, and, the Ld. DR has not pointed out to any specific infirmity/factual inaccuracy in the observations made by Ld. CIT(Appeals) in the appellate order. Accordingly, looking into the facts of the instant case, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in partly allowing the appeal of the assessee, after taking into consideration the facts of the case. Decided against revenue.
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2023 (12) TMI 395
Revision u/s 263 - assessment of trust - PCIT concluded that the assessee’s case squarely falls within the ambit of proviso to section 2(15) of the Act and that since the aforesaid aspects were not properly examined by the ld. AO while framing the assessment - HELD THAT:- We find that this tribunal for Asst Year 2010-11 [2019 (1) TMI 880 - ITAT DELHI] had passed an order in assessee’s own case in favour of the assessee where the revision order u/s 263 of the Act passed by the PCIT on identical grounds were quashed.
Moreover, the Hon’ble Jurisdictional High Court in assessee’s own case had decided the issue in favour of the assessee in [2018 (3) TMI 1702 - DELHI HIGH COURT] holding the activities of the assessee to be charitable in nature. Hence on merits, the issue is already decided in favour of the assessee by the order of this tribunal in earlier years after duly considering the proviso to section 2(15) of the Act. There is absolutely no reason for the ld. AO to take a divergent stand when the matters on merits are already settled by this tribunal in assessee’s own case.
Infact the ld. AO had followed judicial discipline, which has been completely and conveniently ignored by the ld. PCIT in the instant case. Apart from this, we also find that the ld. AO had indeed made specific enquiries on the very same issues that were raised by the ld. PCIT in his revision order.
Sufficient enquiries were indeed made by the various assessing officers in the course of assessment proceedings under faceless regime. It is not in dispute that the assessee had indeed filed complete details regarding the queries raised by the various assessing officers. Infact most of the queries raised were even repetitive in nature and details were filed by the assessee repeatedly. Moreover, we find that the AO under the faceless regime had even asked for the scrutiny assessment orders for the Asst Years 2016-17 and 2017-18 which were also filed by the assessee before him.
Merely for substitution of a view by the ld. PCIT on matters already on record, revision proceedings u/s 263 of the Act cannot be initiated by the ld. PCIT. Further revision proceedings u/s 263 of the Act cannot be initiated for inadequate enquiry and the same could be done only for lack of enquiry.
We hold that the issues raised by the ld. PCIT is already decided in favour of the assessee on merits and further since adequate enquiries were already carried out by the ld. AO in the course of assessment proceedings, the order of the ld. AO cannot be termed as erroneous - Assessee appeal allowed.
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2023 (12) TMI 394
Revision u/s 263 - whether assessment order was just erroneous and not prejudicial to the interest of the Revenue ? - As per CIT AO has failed to carry out any enquiry or examination regarding the issue of interest paid on TDS and the applicability of deemed rent on the unsold flats - HELD THAT:- AO has not conducted any enquiry or verification regarding the disallowance of interest paid on TDS and the applicability of deemed rent on unsold flats. The argument of the AR cannot be accepted because the very fact that there was no enquiry conducted by the AO as per explanation 2(a) to sec. 263, such an assessment order is deemed to be erroneous so as to be prejudicial to the interest of the Revenue.
Once that is so, the question does not arise whether the order of assessment was just erroneous and not prejudicial to the interest of the Revenue or just prejudicial to the interest of the Revenue but not erroneous.This interplay application of the provision becomes irrelevant when the said deeming provision is applied.
Also if the AO had conducted enquiry regarding the disputed issues, then the argument of the ld.AR would have carried some weight as to whether the assessment order was just erroneous and not prejudicial to the interest of the Revenue. In such scenario also, the issue of satisfaction by the PCIT would have been relevant, but in the instant case when in the threshold itself, the AO has failed to do his duty in conducting and verifying the issues involved, then in such situation, explanation 2(a) to sec. 263 as clearly stated as a deeming provision that such an assessment order passed shall be deemed to be erroneous insofar as it is prejudicial to the interest of the Revenue shall apply. Decided against assessee.
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2023 (12) TMI 393
Method of accounting for real estate project - Income recognition - Addition made applying Percentage of Completion Method [POCM] - Accrual of income for real estate - Rule of Consistency - AO referred to the Accounting Standard for real estate project issued by Institute of Chartered Accountant of India which provided that w.e.f. 01.04.2012 income has to be accrued in respect of all real estate on POCM - CIT(A) deleted addition - HELD THAT:- As prior to the impugned A.Y 2014-15, in the case of all previous A.Ys, assessment has been framed after thorough scrutiny and method of accounting has been accepted by the Assessing Officer. On such facts Rule of Consistency squarely applies. See Excel Industries Ltd [2013 (10) TMI 324 - SUPREME COURT]
In so far as applicability of Accounting Standard Guidance Note is concerned, it is pertinent to mention that the same has not been notified by the Central Government for the purpose of section 145(2) of the Act. Therefore, no adverse inference can be drawn. See Para Buildtech India (P) Ltd [2015 (11) TMI 1217 - DELHI HIGH COURT]
Also in the case of Bilhari Investment Pvt Ltd [2008 (2) TMI 23 - SUPREME COURT] to decide on choice of method of accounting every assessee is entitled to arrange its affairs and follow the method of accounting, which the Department has earlier accepted. It is only in those cases where the Department records a finding that the method adopted by the assessee results in distortion of profits, the Department can insist on substitution of the existing method. Decided against revenue.
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2023 (12) TMI 392
Unexplained advances from customers towards booking of plots - Addition u/s 68 - HELD THAT:- As assessee has received advance towards booking of plot and received further sums in subsequent financial year as well. That apart, the whole money was refunded through banking channel via bank a/c of director of assessee-company.
The evidences placed by assessee in terms of Rule 29 to demonstrate these factual aspects are taken as authentic evidences and relying upon the same and having considered the explanations made by Ld. AR, we are inclined to accept that the advance received by assessee is proved appropriately and, therefore, addition made by AO deserves to be deleted. Decided in favour of assessee.
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2023 (12) TMI 391
Addition u/s 69 - unexplained investments - Computation of peak unaccounted cash - CIT(A) held that the fact of unaccounted receipts and payments cannot be denied, since all the unaccounted transactions are in cash, the possibility of cash being rotated cannot be ruled out, hence, the benefit of peak is required to be given in the case of the assessee -
Primary reason for treating the account code named "AP" in the Hazir Johri software seized during the course of search action on Jindal Bullion Ltd., is that the banking transactions between Priyanka Jewellers/ Sh. Anoop Soni and JBL group are reflected in the Hazir Johri data as well as in the Tally data. This according to the Assessing Officer alone is sufficient evidence to establish that the accounts maintained under the names "AP" in Hazir Johri software pertained to the assessee - HELD THAT:- The entire addition by treating the account AP as belonging to Anoop Soni has been made on the basis of presumption drawn and the statement of Shri Parul Ahluwalia. However, statement of the assessee has not been recorded on this issue either at the time of search, post search inquiries or even during the assessment proceedings. A careful examination of the account AP as reproduced in the assessment order would reveal that in the remarks column various acronyms have been used against different transactions such as JD, KCX, RBG Overseas, KMTY, Oven AJ, JBL Coins, Oppo Mobile, Satia, Ishaan, Anshul, Vinod 8676, Guddu etc. These abbreviations show that the transaction recorded is ne ither through bank nor cash because since specific acronyms have been used, these transactions cannot be inferred to be pertaining to the assessee even if it is presumed with account AP be longs to the assessee.
Hence, keeping in view, the entire factual matrix of the case, we hold that no addition is warranted in the case of the assessee. In the result, the peak credit theory set out by the ld. CIT(A) would also be come infructuous. The appeals of the assessee on this ground are allowed.
Addition on sale of gold - assessee argued that notwithstanding anything, if the gold is considered to be sold, the same ought to have been purchased by the assessee. Hence, only the profit needs to be taxed - HELD THAT:- The argument of the ld. AR is in tune with the regular business practice. Hence, the AO is directed to compute 2% on the said sale of gold.
Addition u/s 69 - HELD THAT:- CIT(A) determined amount of unaccounted receipts also and accorded benefit of unaccounted receipts - Hence, we decline to interfere with the order of the ld. CIT(A).
Addition of Trail Balance Profit - transactions are recorded in code names - CIT(A) confirmed the addition holding that the examination of the seized document would reveal that it is a single page of the printout, it is a part of the trial balance as on 03.01.2017 of multiple accounts which are named in the first column - HELD THAT:- Having gone through the entire factum, we hold that the credit balance on a single page without bringing any primary or corroborative evidence of conducting the business of “dabba” trading such as broker, terminal, computer back up, running account or any other evidence cannot be treated as profit earned by the assessee. Since, the document proves payment of cash, the addition is sustained to the tune of Rs. 1,16,365/-.
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2023 (12) TMI 353
Payment of interest on the amount of refund as due against the respondents - settlement of disputes under Vivad Se Vishwas Act - As argued provisions of Section 244A have no application, on the other hand Explanation to Section 7 of the VSV Act, 2020 specifically prohibits grant of any interest and application of provisions of Section 244A of the Income Tax Act and, therefore, the petition deserves dismissal - HELD THAT:- A perusal of Form No. 5 (Annex.9) clearly reveals that the order has been passed by the designated authority under the VSV Act, 2020 and Rules determining the amount of Rs.3,47,03,505/- refundable to the petitioner in accordance with the provisions of the Act. Once the order in Form No. 5 has been issued on 8/3/2021, the petitioner became entitled for the amount of refund. Admittedly, the said amount was refunded to the petitioner/adjustment towards the demands on 22/10/2021, 10/1/2022, 20/1/2022 and 30/5/2022. No reason worth the name has been indicated in response for the delay in refunding the amount to which the petitioner became entitled on passing of order in Form No.5 way back on 8/3/2021.
The Delhi High Court in the case of Ms. Anjul [2022 (8) TMI 1438 - DELHI HIGH COURT] while relying on one judgment of Hon’ble Supreme Court in Union of India v. Tata Chemicals Limited [2014 (3) TMI 610 - SUPREME COURT] held that the State having received the money without right and having retained and used it, is bound to make the party good, just as an individual would do under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest.
Bombay High Court in the case of UPS Freight Services [2023 (9) TMI 34 - BOMBAY HIGH COURT] while following the order in the case of Ms. Anjul (supra) also ordered for payment of interest as per the rate prescribed under Section 244A of the Income Tax Act in similar circumstances.
So far as the plea raised by learned counsel for the respondents with reference to provisions of Explanation to Section 7 of VSV Act, 2020 is concerned, the same has been noticed for rejection only.
A bare perusal of the Explanation would reveal that the Explanation pertains to payment of any amount under the Income Tax Act for the period before filing the declaration under subsection (1) of Section 4 of the VSV Act, 2020 and nothing to do with the entitlement to interest for the period after issuance of Form No.5 indicating entitlement of the petitioner to the amount of refund.
Thus for the delayed payment, the petitioner is entitled to interest on the refund amount for the delay beyond the period of 90 days from the date of refund i.e. 8/3/2021.
WP allowed - It is directed that the respondents-revenue shall make payment of interest @ 6% p.a. on the delayed refund amount w.e.f. 8/6/2021 i.e. beyond the period of 90 days from the date of determination of refund amount on 8/3/2021 till the date of actual/last payment. As the payment/adjustment has been made on various dates, interest would be calculated on the balance amount till each respective date.
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2023 (12) TMI 352
Assessment u/s 153A - Unaccounted capital gain from sale of immovable property - addition was made on the basis of valuation report prepared by Shri Pankaj Mistry, Valuer which was accepted and never objected to by the assessee - Whether Tribunal has erred holding that there was no incriminating material without appreciating that the addition was based on the Valuation Report which in itself is an incriminating material and deleted addition? - HELD THAT:- We are of the opinion that there is no infirmity in the impugned order passed by the appellate authority as the appellant has failed to obtain any corroborative material put to the valuation report to come to the conclusion that any amount is received by the assessee on sale of the property in question and what is declared in the books of account. There is no allegation that the consideration declared by the assessee was above the value taken for the purpose of stamp duty by the valuation authorities as per provisions under Section 50C of the Act. No substantial question of law.
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2023 (12) TMI 351
Recovery proceedings of tax dues - Attachment orders - priority of rights over property as secured creditor - charge over the property already mortgaged with the bank - as argued charge over the property was created much prior than the notice issued by Income Tax Department - whether 1st charge over the bank’s debt under SARFAESI Act? - primary contention of the bank is that the property was already mortgaged with the bank and hence u/s 26-E the bank had priority as a secured creditor - properties in the name of the deceased Arun were attached under section 281B of Income Tax Act provisionally following the approval of Income Tax Department - petitioner claims that the Tax Recovery Officer has to invoke section 179 to take action against Director of a company or invoke section 226 of Income Tax Act, but the respondents submitted that the owner of the property Mr.A.M.Arun is an assessee and a Tax Recovery Certificate under section 222 was drawn for a demand of Rs.565.34 crores plus interest for assessment years 2009-2010 to 2016-2017.
HELD THAT:- For assessment year 2009-2010 the assessment was reopened in the year 2015, which means as on the date of mortgage there was no pending assessment proceedings for the assessment year 2009-2010. For the assessment year 2012-2013, the respondents had issued notice dated 16.08.2013 under section 143(2) for scrutiny assessment. According to the revenue the issuance of notice under section 143(2) would create an automatic charge over the property and any subsequent alienation would be liable to be set aside under section 281. But as per the Hon’ble Supreme Court judgment in Gangadhar Vishwanath Ranade’s case [1998 (9) TMI 1 - SUPREME COURT] under Rule 11 of Second Schedule the Tax Recovery Officer had no power to declare a transfer void. When the Revenue has no power under Rule 11(6) to declare as void, likewise the Revenue has no authority to claim section 281 as automatic. Following the aforesaid judgment, this Court is of the considered opinion that when the Tax Recovery Officer has no power to declare as void, likewise the Revenue has no authority to claim the charge or attachment over the property as automatic.
The above position would further be substantiated by section 281B, wherein the authority has to obtain prior permission from the Principal Commissioner for passing temporary attachment that too for six months and may be extended for another period of six months with prior approval of the Principal Commissioner of Income Tax. When the temporary attachment is restricted with time limit, then the power is not absolute.
In the present case the Revenue had passed an order of provisional attachment on 03.11.2015 after approval of Principal Commissioner of Income Tax. Moreover, there was a search under section 132 of the Income tax Act in the case of M/s.Vasan Health Care Private Limited group of cases on 01.12.2015. And all other subsequent proceedings are on later dates, especially the approval of Principal CIT, Central-2, Chennai, was granted on 22.07.2016, for a list of 46 properties including the subject property and fresh approval was granted on 18.01.2017 for provisional attachment under section 281B and the same was extended for another 6 months vide proceedings dated 13.07.2017. Then Tax Recovery Certificate was issued on 14.09.2017 and the subject property was attached on 04.01.2018. The Revenue had created charge in this case on 04.01.2018. The respondents had reopened the assessment proceedings in the year 2015 for the assessment year 2009-2010 and the respondents had not stated the exact date of reopen in their counter. From the above narration of events, it is evident that the mortgage is on 17.04.2014 and the same is registered on 10.12.2014 which is prior to the reopen of assessment in the year 2015 and prior to attachment dated 04.01.2018, hence this Court is of the considered opinion that no assessment proceedings were pending when the petitioner bank has executed registered mortgage deed dated 10.12.2014, hence the petitioner bank’s debt has priority over the respondent’s crown debt.
After considering section 281 and rule 48, the Court in ICICI Bank Limited Vs. Tax Recovery Officer [2019 (3) TMI 701 - TELANGANA AND ANDHRA PRADESH HIGH COURT] has elaborately dealt with the issue and has held that there is no provision in the Income Tax Act by which a first charge is created automatically on the properties of the assesses. And also held it is now well settled that wherever the statute does not create a first charge over the property, the crown's debt does not take precedents over the claim of the secured creditor.
Section 281 of Income Tax Act and section 26E of SARFAESI Act and 31B of the Recovery of Debts and Bankruptcy Act cannot operate simultaneously and there arises conflict and hence the attachment ought to be lifted whenever the challenge is made and whenever the mortgage by bank is prior to the attachment under Income Tax Act.
Income Tax Act has not provided any 1st charge of its debts. But there is 1st charge over the bank’s debt under SARFAESI Act. Moreover, the amendment of Section 26E is applicable to pending lis. Therefore, this Court is of the considered opinion that even though it is a statutory duty to attach property by the Income Tax Department, as and when the bank claims and exercise its 1st charge over the property, the Income Tax Department is liable to issue no objection certificate and also lift the attachment. In the present case this Court has already held that the mortgage by bank is prior to the attachment of the Revenue - Thus the impugned orders are liable to be quashed.
1st respondent is directed to lift the attachment. The 2nd respondent is directed to strike the name of the 1st respondent from the Encumbrance Certificate with respect to the property measuring about 33.43 cents vacant land at Chinthamani Village Salai limit T.S.No.21-part, New Ward B, Block 19, Trichy-2.
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2023 (12) TMI 350
Validity of Reopening of assessment - as argued no oral hearing was granted to the petitioner before passing the impugned order u/s 148A(d) - HELD THAT:- The affidavit filed by the respondents/revenue clearly states that no oral hearing was granted to the petitioner before passing the impugned order dated 30.03.2023 u/s 148A(d) - Having regard to the averments made in the aforementioned affidavit filed by the respondents/revenue, according to us, the best way forward would be to set aside the impugned order dated 30.03.2023 passed u/s 148A(d) and the consequent notice of even date i.e., 30.03.2023 issued u/s 148 of the Act, albeit with liberty to the AO to pass a fresh order after hearing the petitioner/assessee.
Accordingly, the impugned order and the consequent notice of even date issued u/s 148 of the Act are set aside.
Liberty is, however, given to the AO to pass a fresh order.
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