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Income Tax - Case Laws
Showing 101 to 120 of 175810 Records
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2025 (7) TMI 44
Penalty u/s. 271(1)(c) - furnishing inaccurate particulars of income with respect to the deduction claimed u/s 54F - CIT(A) deleted addition - onus to prove - diversified view - matter referred to third member - HELD THAT:- Admittedly, it is established that whenever there is a difference between the returned income and assessed income, there is an inference of concealment and Explanation 1 to Section 271(1)(c) of the Act raises a presumption which is always rebuttal. There is no quarrel about the cases of B.A. Balasubramaniam & Bros. Co. [1998 (1) TMI 7 - SC ORDER], B.A. Balasubramaniam & Bros. [1984 (2) TMI 39 - MADRAS HIGH COURT]; Mussadilal Ram Bharose [1987 (1) TMI 1 - SUPREME COURT]; K.R. Sadayappan [1990 (7) TMI 1 - SUPREME COURT]; Jeevan Lal Sah [1993 (9) TMI 11 - SUPREME COURT] and K.P. Madhusudanan [2001 (8) TMI 8 - SUPREME COURT]. In these case laws, admittedly the onus is on the assesse to rebut the inference of concealment and absence of plausible explanation itself would attract penalty u/s. 271(1)(c) of the Act for concealment of income or furnishing of inaccurate particulars of income as the case may be.
But in the present case, the assesse offered the explanation corroborating with the evidences justifying the claim of deduction u/s 54F of the Act. But there is no reason that the assesse is not at all entitled to claim of deduction and ultimately the same was surrendered by the assesse during the assessment proceedings. The reasons was that ultimately construction of building could not take place due to inability of the builder and/or default on the part of the builder.
In regard to the decision of the Hon’ble Supreme Court in the case of MAK Data P. Ltd. [2013 (11) TMI 14 - SUPREME COURT] as per Explanation 1 to Section 271(1)(c) of the Act, admittedly the disclosure of concealed income does not absolve assesse of rigours of section 271(1)(c) of the Act if the assesse fails to offer any explanation which is bonafide. Similar is the situation with the decision of K.P.Madhusudanan [2001 (8) TMI 8 - SUPREME COURT]
In the present case before us, the assesse has explanation which is supported by the documentary evidences as the assesse has furnished all the relevant details alongwith return of income or during the course of scrutiny assessment proceedings and this disclosure of information in regard to claim of deduction u/s. 54F of the Act in respect of the long term capital gain earned during the year is sufficient for not confirming the levy of penalty u/s. 271(1)(c) of the Act.
The facts of the present case clearly indicates that the issue in dispute is squarely covered by the decision of the Hon’ble Supreme Court in the case of Reliance Petroproducts P. Ltd. [2010 (3) TMI 80 - SUPREME COURT] which has been relied by the Ld. Judicial Member in his order.
Questions referred by the Ld. Judicial Member - whether the Tribunal can travel beyond the facts recorded in the assessment order or the order of penalty u/s. 271(1)(c) of the Act or the order of CIT(A) for adjudicating the appeal? - Whether the Tribunal can bring new facts on record gathered from external sources / public domain, whereas such facts do not form part of the orders passed by lower authorities for imposition of penalty u/s. 271(1)(c) of the Act? - This issue is settled by the Hon’ble Supreme Court of India in the case of Kishan Chand Chella Ram [1980 (9) TMI 3 - SUPREME COURT] wherein, it has been held that cross examination is must where AO relies upon only on the statement of Third Party unconnected with the assessee. Hon’ble Supreme Court held that the letters dated 18.2.1955 and 09.03.1959 did not constitute any material evidence which the Tribunal could legitimately taken into account for the purpose of arriving at the finding that the amount of Rs. 1,07,350/- was remitted by the assessee from its Madras Office.
Accordingly, Hon’ble Supreme Court eliminated these two letters from consideration and held that there was no material evidence at all before the Tribunal which could support its finding. It was further held that what the Manager wrote in his letters could not possibly be based on his personal knowledge but was based on hearsay. Even otherwise, if revenue authorities ought to have called upon the Manager to produce the documents and papers of which he made a statement and confronted the assessee with these documents and papers.
In the present case, we are of the view that information gathered from the Google Search Engine cannot be the basis for arriving at a decision. If at all information from the public domain is to be collected then that has to be confronted to the assessee, which the Tribunal failed to do in this case. Hence Tribunal cannot travel beyond the facts recorded in the orders of the authorities below or on the record of the AO.
Tribunal cannot bring new facts on record specially gathered from external sources/ public domain which do not form part of the orders passed by the lower authorities without confronting the same to the assessee.
THIRD MEMBER CONCLUSION:-
Whether on the facts and circumstances of the case and in law the CIT(A) was justified in deleting the penalty u/s. 271(1)(c) of the Income Tax Act? - Ans framed by the Ld. Accountant Member - Yes. In view of the aforesaid facts and circumstances of the case and in the background of the aforesaid discussions, the Ld. CIT(A) was justified in deleting the penalty in dispute.
Whether the Tribunal can travel beyond the facts recorded in the assessment order or the order of penalty u/s. 271(1)(c) of the Act or the order of CIT(A) for adjudicating the appeal? - Ans. framed by the Ld. Judicial Member - No. In view of the aforesaid facts and circumstances of the case and in the background of the aforesaid discussions, the Tribunal cannot travel beyond the facts recorded in the orders of the authorities below.
Tribunal cannot bring new facts on record gathered from external sources / public domain, without confronting to the assessee.
Penalty in dispute cannot be sustained.
Wrong claim of deduction u/s. 54F cannot be included in ‘furnishing inaccurate particulars of such income’.
Third member agree with the order of Ld. Judicial Member. And do not agree with the order of Ld. Accountant Member on the given facts and circumstances of the case.
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2025 (7) TMI 43
Unaccounted Receipts / On-Money - incriminating documents were seized, inter alia, from the back office of Ananta Group and other premises - CIT(A) in restricting the additions - HELD THAT:- CIT(A) relied on various judicial precedents where profit margin ranging from 8% to 16% was adopted. During the course of appellate proceedings, when queried as to why the assessee accepted a higher profit margin of 20%—despite judicial precedents suggesting acceptance of profit margins in the range of 8% to 16% in comparable cases, the learned AR submitted that the assessee chose to accept such estimation in order to buy peace of mind and bring finality to the long-drawn controversy. It was submitted that the assessee, while maintaining that only the embedded profit on verifiable on-money receipts could be brought to tax, did not press for further reduction in the profit percentage so as to avoid protracted litigation. This submission, in our considered view, further reinforces the bona fides of the assessee’s stand and lends credence to the reasonableness of the estimation adopted by the CIT(A).
Revenue has challenged the finding of the CIT(A) to the effect that additions in search assessments u/s 153C must be based on incriminating material relatable to the assessment year in question - Though the word “incriminating” does not explicitly appear in the language of section 153A or section 153C, the judicial interpretation rendered by various High Courts, including the jurisdictional Hon’ble Gujarat High Court, has consistently held that where an assessment has already been completed and is not abated as on the date of search, then additions in such reassessment can be made only on the basis of incriminating material seized during the course of search or requisition. This position has been affirmed in various authoritative pronouncements including PCIT v. Saumya Construction Pvt. Ltd. [2016 (7) TMI 911 - GUJARAT HIGH COURT] and CIT v. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]
In the present case, the CIT(A), having noted that the assessments for A.Ys. 2016–17 to 2018–19 were not abated on the date of search, has rightly concluded that additions could not have been made in those years in the absence of any year-specific incriminating document. The only material seized, namely Annexures BS-7 and BS-10, pertained to transactions verifiably relatable to A.Y. 2015–16, and there was no other document linking any unaccounted receipt to the later years. Thus, the AO’s action in extrapolating the findings of A.Y. 2015–16 to later years falls foul of the jurisdictional requirement under section 153C, as interpreted by binding judicial precedents.
We find no infirmity in the approach adopted by the CIT(A) in restricting the additions for A.Y. 2015–16, being 20% of the verifiable unaccounted cash receipts and in deleting the extrapolated additions made for A.Ys. 2016–17, 2017–18 and 2018–19 in the absence of year-specific seized material.
CIT(A) has rightly applied the settled principle that only the embedded profit in unaccounted receipts can be brought to tax. We, therefore, uphold the findings and conclusion of the CIT(A) on this issue, and dismiss the Revenue’s grounds relating to unaccounted cash receipts.
Unaccounted Land Investment - Addition u/s 69 - CIT(A) deleted addition - HELD THAT:- The presumption of unexplained investment u/s 69 cannot be invoked when the source is clearly traceable to income already taxed in the hands of the assessee. We find no rebuttal by the Revenue to the assessee’s specific claim that these land payments were made out of unaccounted receipts already taxed. There is no material brought on record to show that the cash payments emanated from any independent or unexplained source. Nor has the AO shown that the timing or quantum of the payments was inconsistent with the flow of receipts assessed in the same year.
CIT(A), in our considered view, has rightly appreciated the factual matrix and allowed the assessee's claim by observing that taxing the land payments separately under section 69 would result in double taxation of the same income, once as unaccounted receipts and again as unexplained investment. CIT(A) has further noted that the explanation of the assessee was not only plausible but supported by the very evidence relied upon by the AO i.e., seized Annexure BS-9 and BS-7, the cash flow pattern, and the admitted fact that the land transactions were executed for the same real estate projects for which on-money receipts were assessed.
Accordingly, we find no infirmity in the decision of the CIT(A) in deleting the addition made u/s 69 of the Act. The conclusion reached is not only consistent with the facts and evidence on record but also in conformity with well-established legal principles governing telescoping and avoidance of double taxation. We accordingly uphold the order of the CIT(A) on this issue and dismiss the Revenue’s ground.
Addition on Account of Alleged Unaccounted Cash Expenditure for Bungalows in Ananta Savera Project - addition u/s 69C - said addition was based on the notings found in cash vouchers and loose sheets seized during the search and seizure action conducted under section 132 of the Act at the residential premises of Shri Nilay Chotai, one of the group functionaries - CIT(A) deleted addition - HELD THAT:- We find no infirmity in the decision of the CIT(A). The documents forming the basis of the addition were found from a third party’s residence and lacked any express or implied connection to the assessee’s business.
AO has not examined the person from whose premises the vouchers were recovered, nor made any enquiry with the listed payees to establish whether the payments were made by or for the assessee firm. There is no corroboration by way of entries in the assessee’s books or statements of its partners. In such a situation, the presumption that the impugned expenditure was incurred by the assessee is not legally sustainable. In the absence of nexus between seized documents and the assessee’s income or business, mere possession or recovery of such documents does not ipso facto justify an addition under section 69C.
We are in agreement with the view taken by the CIT(A). The AO has failed to establish that the cash expenses reflected in the seized vouchers were incurred by the assessee firm. Accordingly, the addition made u/s 69C cannot be sustained. The ground raised by the Revenue is dismissed.
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2025 (7) TMI 42
Ex-parte order passed by the CIT(Appeals)/NFAC due to non-compliance by the assessee - undisclosed cash payments - order u/s 148A(d) - application of principle of fraud - HELD THAT:- This bench has provided one final opportunity to the assessee considering that the benefit of doubt may be existing in favour of the tax payer assessee and for that due to reasons beyond control of the assessee, the said assessee may not have been able to represent and comply with the hearing notices before the Ld. CIT(Appeals)/NFAC.
Therefore, in this regard, as per the order of the ITAT, "Division Bench", Raipur in the cases of Brajesh Singh Bhadoria [2025 (3) TMI 1480 - ITAT RAIPUR] wherein the Tribunal had dealt with similar issue on the same parameters of ex-parte order passed by the Ld. CIT(Appeals)/NFAC and remanded the matter back to the file of the Ld. CIT(Appeals)/NFAC, accordingly, we set-aside the order of the Ld. CIT(Appeals)/NFAC and remand the matter back to its file for denovo adjudication on similar terms as recorded by us in the aforesaid decision.
The facts in this case further suggests that the assessee was involved in huge unaccounted investment and rotation of unaccounted money involving M/s.Hotel Babylon International Pvt. Ltd. and its group of companies/concerns. Therefore, it is mandatory on the part of the Ld. CIT(Appeals)/NFAC to determine and examine the facts in detailed manner whether any sham transactions have been facilitated to defraud the revenue by the assessee and thereby getting illegitimate gains. That if fraud is detected that shall be within purview of tax evasion and in such scenario, fraud vitiates everything including natural justice. The person approaching the court has to come with clean hands and if hands of the assessee itself are tainted the principles of natural justice will not come to his/her rescue.
The application of principle of fraud was even considered by the Hon'ble Supreme Court in the case of Badami (deceased) by her LRs v. Bhali [2012 (5) TMI 648 - SUPREME COURT] It had been held that the courts of law are meant for imparting justice between the parties and one who comes to the court, must come with clean hands. A person whose case is based on falsehood has no right to approach the Court.
Therefore, in our considered view, in the present matter it is the responsibility of the revenue authorities to investigate the matter in detailed manner as per law whether there is tax planning or tax evasion as per the transactions entered into by the assessee. If tax evasion is determined by the revenue in such circumstances additions are to be sustained in the hands of the assessee. Appeal of the assessee is allowed for statistical purposes.
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2025 (7) TMI 41
Unexplained cash deposit during the demonetization period - assessee is aged about 78 years and filed return of income for A.Y. 2017-18 declaring income which mainly comprises rental income and bank interest and assessee has also claimed exempt agricultural income - information available with the department, case of the assessee selected for scrutiny and inspite of assessee’s claim that the said sum is out of the withdrawals made in the preceding years, the addition for the total cash deposit was made
HELD THAT:- Assessee is not into any business activity and mainly earns income from rent, bank interest and agriculture. No regular books of account are maintained still the paper book showing the cash book starting from the opening cash in hand at Rs. 5,89,314.99 as on 01.04.2010.
Bank statement has also been filed. CIT(A) has stated that assessee has not furnished these details before the lower authorities. Even in the bank statement, the entries reflected are from 18.06.2013.
Withdrawals of cash from the bank account partially supports the contention of assessee coupled with the fact that assessee is a senior citizen and she must be having accumulated cash in hand from past savings including agriculture income.
Considering all these facts and being fair to both the parties, we find that assessee has been able to explain the source of cash deposit to the extent of Rs. 11.50 lakh which includes cash withdrawals referred above and also accumulated past savings. We accordingly grant part relief to the assessee.
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2025 (7) TMI 40
Unexplained cash deposit in the bank account - CIT(A) erred in confirming the action of AO invoking section 115BBE and deleted 50% of the total addition - whether assessee has explained the nature and source of the alleged cash deposit? - HELD THAT:- Cash in hand as on 01.04.2016 is Rs. 35,965/- and cash balance as on 24.10.2016 is Rs. 43,49,428/-. The said balance appearing in the cash book is part of regular books of account which have not been rejected by the Assessing Officer as he has accepted the book results. The said cash balance has been utilised for depositing in the bank account during the demonetization period.
Assessee has claimed that cash withdrawn on 16.09.2016 was for the purpose of purchase of immovable property but the same could not be materialised and the available cash in hand was deposited in the bank account. Even for the sake of argument, it is found that assessee has not withdrawn cash for purchase of immovable property even then the withdrawal of cash is from the regular bank account and cash in hand available in the books is sufficient enough to explain the source of alleged cash deposit.
CIT(A) has given the relief without discussing the facts in detail. The facts placed before us clearly demonstrate the source of cash deposit made by the assessee through bank account.
We are of the considered view that since the assessee has successfully explained the source of alleged cash deposit, no addition is called for. Impugned addition stands deleted. Effective grounds of appeal raised on merit are allowed.
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2025 (7) TMI 39
Income earned from the activity carried out by the assessee for its Members on the Principle of Mutuality - apart from the interest income, assessee receives the amount from Members towards Annual Maintenance Charges, Parking fees etc. and the expenditures are incurred for the Members towards Electricity, Security services, Garden maintenance, Lift maintenance, Gymnasium and Club House Expenses
HELD THAT:- It is not in dispute that assessee has raised this ground for the first time. It is also observed that in the Income and Expenditure Account assessee has made a provision of income-tax which shows that the present claim before us regarding the Principle of Mutuality was never in the mind of the assessee.
Even in the return of income, deduction has been claimed u/s. 80P but then ld. AO has curtailed it to deduction u/s. 80P(2)(c) and further ld.CIT(A) gave benefit of deduction u/s. 80P(2)(d).
Since this is a legal ground raised for the first time and goes to the root cause of the issue and facts already available on record, we admit the legal ground but since CIT(A) had no occasion to deal with this legal issue, the same needs to be examined by ld.CIT(A) in the light of the facts of the case with regard to the receipt from the Members and the expenditure incurred against the same.
We therefore restore this legal issue to the file of ld.CIT(A) for necessary adjudication - Ground No.1 raised by the assessee is allowed for statistical purposes.
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2025 (7) TMI 38
Addition of gift received from assessee’s daughter - creditworthiness of her daughter who gifted the amount to the assessee - Explanation for 'source of source' - HELD THAT:- We noted from the documents submitted by the assessee and from the bank statements of daughter that there is a transfer of money received on two occasions and the same amount has been given as gift to the assessee. During the proceedings before the lower authorities, assessee has proved the source of source i.e., husband of the assessee.
On going through the financial statements, we noted that husband of the assessee has sufficient fund to give gift to his daughter and the daughter has given the same amount as gift to her mother (assessee). Accordingly, creditworthiness is proved to the extent of the amount received as gift. Accordingly, the addition made by the AO is not warranted. Appeal filed by the assessee is allowed.
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2025 (7) TMI 37
Revision u/s 263 - consequential order u/s.143(3) r.w.s. 263 of the IT Act passed by AO when the order u/s.263 of IT Act passed by PCIT had been set aside by ITAT - HELD THAT:- A copy of the order of the Co-ordinate Bench of this Tribunal in [2024 (8) TMI 39 - ITAT AHMEDABAD] has been brought on record. It is found that the Tribunal had held that the original assessment order passed u/s 143(3) of the Act on 18.12.2017 was not erroneous and prejudicial to the interest of the revenue.
Therefore, the exercise of jurisdiction by the Ld. PCIT under Section 263 of the Act was not held as valid and accordingly the order under Section 263 of the Act dated 26.08.2021 was set aside by the Tribunal. When the order under Section 263 stands set aside, the assessment order passed in consequence to the said order cannot survive. Further, when the order of the AO was held as void, there was no necessity to adjudicate the various additions as made by the AO in the assessment order on merits.
Therefore, the Ld. CIT(A) had rightly cancelled the assessment order passed under Section 144 read with Section 263 of the Act. We do not find anything wrong with the decision of the Ld. CIT(A). Merely because the Department had challenged the order of ITAT before the Hon’ble High Court, it does not change the legal perspective. Appeal of the Revenue is dismissed.
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2025 (7) TMI 36
Penalty order u/s 271B - period of limitation - Scope of Section 275(1) - HELD THAT:- We observe that the penalty notice was issued on 25.12.2019 and, in accordance with Section 275(1)(c) of the Act and the penalty order should have been passed on or before 30.06.2020. However, in this case, the penalty order was passed on 30.07.2021, which is beyond the time limit prescribed under the Act.
Therefore, we hold that the penalty order passed by the AO is barred by limitation and void ab initio and having been passed without jurisdiction and beyond the time limit prescribed under the provisions of the I. T. Act.
We find that the procedural requirements and statutory condition to the imposition of penalty was not duly complied with by the AO. Consequently, the penalty order suffers from legal infirmity and cannot be sustained in the eyes of law. In view of the foregoing, the impugned penalty order is hereby set aside and appeal filed by the assessee stands allowed. Appeal of the assessee is allowed.
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2025 (7) TMI 35
Assessment u/s 153C - period of limitation - relevant date in the case of a non-searched person - statutory provisions of the Act - assumption of jurisdiction - law with regard to block assessment years - reckoning of the six AYs' - HELD THAT:- Law with regard to block assessment years for which assessments can be completed in the case of ‘other person’ stands settled that it is from the date of handing over of incriminating material and recording of the satisfaction the block assessments periods have to be determined.
On the admitted facts, it comes up that notices u/s 153C were issued on 26.09.2019 and, if recording of the satisfaction note and receiving of record from the assessing officer of the searched person is considered as 26.09.2019, the search year in the case of the present assessee as ‘other person’ would be 2020-21. In that case, assessments for AYs 2014-15 to 2019-20 would fall in the search years and the present assessment years fall beyond the block assessment periods.
Though the ld. DR has submitted that this amendment is prospective, however, the issue has been well considered in the case of Ojjus Medicare Pvt. Ltd. [2024 (4) TMI 268 - DELHI HIGH COURT] as held that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A - Decided in favour of revenue.
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2025 (7) TMI 34
Addition on account of increase in share capital u/s. 68 - in the absence of information regarding the share capital increase, the entire share capital is added as the income of the assessee - HELD THAT:- From the reply filed by the assessee, party-wise ledger account of share capital and shareholders bank account statements furnished by the assessee.
AO made the entire share capital as unexplained addition which is not sustainable in law. Similarly party-wise ledger account for long term borrowings as specified by the AO in his notice u/s. 143(2) was furnished by the assessee.
Without considering the same, the AO made addition which is not sustainable in law. Similarly the other additions made by the Assessing Officer are without verifying the replies and documents submitted by the assessee during the Faceless Assessment proceedings. Therefore in the Principle of Natural Justice, we deem it fit to set aside the matter back to the file of Jurisdictional Assessing Officer to consider the same on merits by giving proper opportunity of hearing to the assessee and pass order on merits.
Appeal filed by the Assessee allowed for statistical purpose.
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2025 (7) TMI 33
Denial of Foreign Tax Credit - late filing of Form No. 67 - HELD THAT:- It is settled principle of law that FTC cannot be denied to an assessee having filed the same belatedly. Since the Lower Authorities not considered the belated filing of Form No. 67 by the assessee, we deem it fit to set-aside the matter back to the file of Jurisdictional Assessing Officer to consider the Form No. 67 claiming Foreign Tax Credit by giving proper opportunity of hearing to the assessee and redo the assessment in accordance with law. Appeal filed by the Assessee allowed for statistical purpose.
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2025 (7) TMI 32
Rejection of application for registration u/s 80G - as per AO no substantial charitable activity being carried out by assessee - HELD THAT:- There is no dispute that the assessee was already granted registration u/s 12AB of the Act and thereby the objects of the assessee trust have been considered as charitable in nature as well as the activities of the assessee was also considered as genuine for achieving the objects of the assessee trust.
While passing the impugned order, CIT (E) has stated that no substantial charitable activities are being carried out by the assessee trust. These reasons given by the CIT (E) are cryptic and non-speaking as nothing has been discussed about the record filed by the assessee showing the activities carried out as well as the record filed by the assessee at the time of seeking registration u/s 12AB of the Act.
Once the assessee has reponded to the notices issued by the learned CIT (E) which is also not disputed in the impugned order, then a factual finding ought to have been given by considering the relevant facts and record available before the learned CIT (E).
Thus, we have came across identical orders passed by the learned CIT (E) in other cases while deciding the application for registration u/s 12AB as well as approval u/s 80G of the I.T. Act, 1961 in a stereotype manner giving the reasons in verbatum leading to the inference that there is no application of mind on the part of the learned CIT (E) while passing the impugned order.
Accordingly, CIT (E) is set aside and the matter is remanded to the record of the learned CIT (E) for reconsideration of the application of the assessee for approval u/s 80G(5) - Appeal filed by the assessee is allowed for statistical purposes.
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2025 (7) TMI 31
Rejection of registration of the assessee u/s 12A - violation of section 13(1)(c) - powers by PCIT for cancellation of registration - as during the course of search carried in the case of third parties, incriminating documents/evidences were gathered and it was found by the AO that the Assessee society is indulged in non -genuine activities and that there was diversion of funds of the society - HELD THAT:- We observed that on the similar facts available on record, the coordinate Bench has decided the exactly similar issue in the case of Lakhmi Chand Charitable Society [2024 (8) TMI 1297 - ITAT DELHI] as held jurisdiction to withdrew exemption vests with the “prescribed authority”. The PCIT has no jurisdiction to withdraw or cancel the exemption. In this regard the Notification No. 52/2014 and 53/2014 both dated 22.10.2014 vesting powers to the Ld. CIT(Exemption) Delhi in the territorial area specified in Column No. 4 of the said notification who are claiming exemption inter/alia under Section 12A of the Act has been relied upon. It is the case made out by the appellant that by and under the said notification the Ld. CIT(E) has been constituted separately for the purposes mentioned therein. Thus, it is the CIT(E) to exercise the power not the PCIT as has been wrongly done in the case in hand.
Also in view of the provision of Section 12AA(5) of the Act as the provision of Section 12AA cannot be applied on order after 01.04.2021 the show cause notices issued by the PCIT to the appellant dated 05.07.2023 and 16.08.2023 are, thus, found to be erroneous and therefore liable to be quashed. Once the show cause is found to be non est in the eyes of law, the entire proceeding is naturally found to be on a wrong foundation of law and thus, liable to be set aside
We quash the impugned order passed by the ld. PCIT cancelling 12A registration granted to the assessee - Appeal filed by the assessee is allowed.
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2025 (7) TMI 30
Levy of penalty u/s. 271(1)(c) - Defective notice - as alleged notice issued by the AO was a vague notice, in as much as the AO has not specified the charge against the assessee - HELD THAT:- We observe that similar issue has been decided by the co-ordinate bench in the case of Riyas Nelliyote [2025 (4) TMI 661 - ITAT COCHIN] as held that undisputed fact that the assessment order and the notice issued u/s. 274 is vague and is not clear under which limb the penalty has been initiated. Notice issued u/s. 274 is bad in law and consequentially the order imposing penalty u/s. 271(1)(c) of the Act arising therefrom is unsustainable - Assessee appeal allowed.
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2025 (7) TMI 29
Revision u/s 263 - treating order erroneous and prejudicial to the interest of the revenue as AO has not inquired on the interest claimed by the assessee - case of the Revenue that the assessee has claimed the payment of interest of loan as business expenses and observations of the PCIT were that loan taken by the assessee has not been utilized for the purpose of business and hence the assessee is not entitled for the deduction of interest paid.
HELD THAT:- PCIT has partly set aside the order of the AO in order to verify the applicability of provisions of sec.14A as well as the utilization of loan borrowed by the assessee. Therefore, we are of the view that no prejudice should be caused to the assessee, in case the assessee substantiate its claim in the remand proceedings then no addition is warranted. Therefore, we do not find any infirmity in the order of the PCIT, it is accordingly upheld. Appeal filed by the assessee is dismissed.
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2025 (7) TMI 28
Penalty u/s. 271(1)(c) - disclosure of additional income in response to notice u/s. 153C - search and seizure conducted in the case of a third party/Malabar Group of Companies - HELD THAT:- On a mere reading of the orders of the authorities below, it would be clear that the lower authorities had failed to discuss the evidences found as a result of search and seizure in the case of Malabar Group of companies, which led to the unearthing of the undisclosed income in the hands of the appellant.
AO also not discussed as to how the seized material led to unearthing of the undisclosed income and how the seized material in the case of Malabar Group of companies has relation to the appellant herein. Merely because the appellant has disclosed additional income in response to notice u/s. 153C it cannot lead to the conclusion that the appellant is guilty of concealing the particular of income or guilty of concealment of income.
It is the case of assessment made u/s. 153C of the Act, pursuant to the initiation of search and seizure in the case of a third person. In the above circumstances, we remit the matter back to the file of the CIT (A) for de novo disposal of the appeal in accordance with law after affording a reasonable opportunity of being heard to the assessee. Appeals filed by the assessee are allowed for statistical purposes.
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2025 (7) TMI 27
Levy of penalty u/s. 271B - assessee failed to submit the audit report within the time prescribed by the CBDT - What were reasonable cause for the delay in filing the audit report? - HELD THAT:- This is a case where audit report has been submitted before the completion of assessment and hence in our view the penalty cannot be levied in such cases. The second aspect of the matter is that the assessee was not able to file the audit report as he was busy with the illness of his son, which constituted a reasonable cause and hence no penalty is leviable on this count also.
It is pertinent to refer here to the decision of this bench on the same set of facts in the case of Attinkara Electronics [2019 (3) TMI 1682 - ITAT COCHIN] wherein it has been held that ill health of a partner was a reasonable cause within the meaning of sec.273B of the Act. Therefore, we delete the penalty and allow the appeal of the assessee.
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2025 (7) TMI 26
Denial of deduction u/s 80P - assessee who did not file return of income in time - HELD THAT:- The issue involved in this appeal is squarely covered by the judgment of the Hon’ble jurisdictional High Court in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [2023 (3) TMI 1055 - KERALA HIGH COURT] wherein it has been that no deduction u/s 80(P) is available to such assessee who did not file return of income in time. Therefore, we hereby dismiss this appeal of the assessee.
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2025 (7) TMI 25
Validity of Revision u/s 263 - assessee has contested the order of the PCIT on the ground the PCIT has violated the principle of natural justice - HELD THAT:- The only recourse is to restore the matter to the file of the PCIT for examining the issue as held in the case of CIT(E) v. Love in Action Society [2021 (12) TMI 512 - KERALA HIGH COURT] Respectfully following the verdict of cited supra, we restore this matter to the file of the PCIT and give liberty to the assessee for raising all its legal contentions before the PCIT. Appeal filed by the assessee is allowed for statistical purposes.
Addition of VAT on closing stock without increasing the value of purchases, sales and opening stock of goods as provided in clause 11 of section 145 - assessee has relied on the provisions of section 145A and the provisions of AS-2 as issued by ICAI - HELD THAT:- We are of the view that is the settled position of law that corresponding adjustments to be made to the purchase, sales and opening stock, in terms of the provisions of section 145A. Therefore the AO is directed to provide the same.
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