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Income Tax - Case Laws
Showing 121 to 140 of 175810 Records
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2025 (7) TMI 24
Addition u/s 68 - bogus LTCG on shares - onus to prove - denial of exemption u/s 10(38) - period of holding of shares - HELD THAT:-Admittedly, the Assessee held such shares for a period of more than 27 months and in order to substantiate its claim u/s. 10(38) of the Act, filed relevant documents such as:
(i) Contract note-cum-purchase bills,
(ii) Confirmation of SEBI registered stock broker M/s. IIFL Securities,
(iii) Bank Statements showing making of payment purchase of shares,
(iv) D-mat statement,
(v) Balance sheet of earlier years and other relevant documents etc.
and therefore, in our considered view, the Assessee has duly discharged the onus cast on him u/s. 68 of the Act.
Even otherwise, neither any allegations were leveled against the Assessee or its stock broker nor any preventive or penal action has been taken by the SEBI or other agency.
Both the authorities below have not attributed any specific role to the Assessee qua rigging of the share prices, but in fact on the basis of investigation carried out by the Directorate of Investigation of Bombay and Kolkata and general allegation, made the additions u/s. 68 on account of sale proceeds of the shares and on account of commission paid on arranged capital gain, without being corroborated by any evidence.
Admittedly, the transactions of purchase and sale of shares involved in the instant case, have been carried out through online platform i.e. Bombay Stock Exchange and banking channels.
Assessee has duly discharged the onus cast u/s. 68 of the Act, the additions be deleted. Assessee appeal allowed.
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2025 (7) TMI 23
Reopening of assessment u/s 147 - addition made u/s 69A treating the same as unexplained cash credit - AO also initiated penalty proceedings u/s 271(1)(c) - HELD THAT:- We note that the conclusion of the AO regarding the bogus capital gains which is not supported by any cogent evidence and the addition appears to be made without any basis and even the CIT(A) was erred in confirming the order of the AO without examining the merits of the case and documents submitted by the assessee before him.
We examined the bank statements of the assessee for the assessment year under consideration as furnished before us for the period from 01.04.2011 to 31.03.2012 which reflected that there was no such transaction done as alleged by the AO while passing the assessment order.
Also gone through the submission of the assessee which clearly stated that no capital gain loss arose during the assessment year 2012-13. However, the AO did not look into the facts and even the ld. CIT(A) also did not consider while passing the impugned order. We, therefore, set aside the order of the CIT(A) and direct the AO to delete the addition made by him. Appeal of the assessee is allowed.
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2025 (7) TMI 22
Unexplained donations - AO's favourable remand report confirming that the donations were received from specific donors with instructions to form part of the society's corpus - HELD THAT:- CIT(A)’s lower appellate discussion makes it clear that he has gone by the Assessing Officer’s favourable remand report only that these donation(s) had come from the concerned corresponding donors with specific instructions that it shall form part of the societies corpus only. These Assessing Officer’s remand report has been duly extracted in the lower appellate discussion.
This being the clinching case, we hereby quote CIT Vs. D.M. Prunesh [2020 (9) TMI 731 - KARNATAKA HIGH COURT] and Smt. B. Jayalakshmi [2018 (8) TMI 208 - MADRAS HIGH COURT] that the Revenue could hardly be treated even an aggrieved party in the Assessing Officer’s above favourable remand report. This instant appeal fails therefore.
Revenue’s appeal is dismissed.
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2025 (7) TMI 21
Revision u/s 263 - eligibility of exemption u/s 11 - CIT directing the AO to make inquiries with reference to the interest charged and interest paid, verify the nature of activities, vis-à-vis, the object of the assessee-trust and whether the assessee is entitled to exemption u/s.11 - principle of res judicata and principle of consistency
HELD THAT:- Cochin Bench of the Tribunal, in assessee’s own case for assessment year 2011-2012 had categorically held that the micro financing activities carried on by the assessee-trust is a charitable activity under the first limb of sec.11 of the Act.
Also confirmed by HC [2016 (12) TMI 1920 - KERALA HIGH COURT] which says that relief to the poor is incorporated as first limb of the Section to qualify as a charitable activity. Insofar as this case is concerned, reading of the order impugned itself shows that the activity of the assessee is advancing loans to poor women from the villages. Such an activity, to our mind, qualifies to be relief to the poor is to be included in the first limb of the Section.
Though the principle of res judicata is not applicable to the Income-tax proceedings and that each assessment year has to be viewed and examined separately, with regard to the activities carried on by the assessee, the principle of consistency has to be followed in situations where on the same set of facts are permeating through different years.
In the instant cases, we find that the activity carried on by the assessee was providing micro financing in rural areas as it was done by assessee for A.Y. 2011-2012. The said activity has been categorically held to be coming within the first limb of sec.2(15) of the Act and not that of objects of general public utility - Assessee appeal allowed.
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2025 (7) TMI 20
Penalty proceedings u/s. 270A against the dead person/deceased assessee - HELD THAT:- The information of the death of the assessee was brought to the knowledge of the AO by the legal heir of the assessee on 28.05.2021. Despite this information available to the assessing officer, he passed the impugned order on 26.08.2021 for levy penalty u/s 270A
Once the fact of the death of the assessee was brought to the knowledge of the AO, he was required to bring the legal heir of the assessee on record and thereafter pass order on him. Whereas, the assessing officer has passed the order of the dead person.
It is settle law that no order can be passed on dead person and therefore, the present order passed by the AO is quashed ab-initio and cannot be sustained. The direction of the Ld. CIT(A) is accordingly set aside and the order of the Ld.AO is cancelled. Appeal of the assessee is allowed.
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2025 (7) TMI 19
Addition u/s 68 - cash deposited as unexplained credit - AO also denied the deduction claimed u/s 80C of the Act for want of evidences - HELD THAT:- Admittedly, the Assessee failed to prove the source of cash deposit and also failed to file the proof with regard to the deduction claimed u/s 80C of the Act and therefore is not entitled for any relief as claimed, however, considering the peculiar facts and circumstances in totality, as the issues involved in the instant appeal remained to be adjudicated in its right perspective and proper manner in the absence of relevant documents/submissions which the Assessee failed to file, hence for the proper and just decision of the case and substantial justice, we are inclined to remand the instant case to the file of the Ld. Commissioner for decision afresh, suffice to say by affording reasonable opportunity of being heard to the Assessee.
We also direct the Assessee to file the relevant documents in order to substantiate his claim. We clarify that in case of subsequent default, the Assessee shall not be entitled for any leniency. Thus, the case is remanded to the file of the Ld. Commissioner accordingly. Appeal filed by the Assessee is allowed for statistical purposes.
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2025 (7) TMI 18
Determination of Short term capital gain - question of deducting the fair market value from the sale consideration - "transfer" for capital gains purposes - CIT(A) / NFAC directed the AO to determine the capital gain in the case of the assessee by deducting the fair market value of the land from the sale consideration - HELD THAT:-We find merit in the arguments of DR that when the cost of the asset is available there is no question of deducting the fair market value from the sale consideration so as to determine the capital gain either long term or short term.
However, on a pointed query by the Bench as to what has happened in the case of the other co-owners, DR submitted that he is not having any details.
Since the order of the AO is ex-parte order and since the fate of the other co-owners is not available before us therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee.
While doing so, he shall take into account the fate of the other co-partners and decide the issue as per fact and law. The assessee if he so desires, shall substantiate his case by filing the requisite details. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.
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2025 (7) TMI 17
Rejecting the application for grant of registration u/s 12A and cancelling the provisional registration granted earlier u/s 12AB - non-compliance to the notice issued by the Ld. CIT(E) asking for certain details - It is the submission of assessee that due to mistake on the part of the employee of the trust, the details could not be furnished and that given an opportunity the assessee is in a position to substantiate its case by filing all the relevant details before the Ld. CIT(E)
HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details to his satisfaction and decide the issue as per fact and law. Assessee is also hereby directed to submit the details as called for by the CIT(E) on the appointed date without seeking any adjournment under any pretext - The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2025 (7) TMI 16
Rejection of application for registration u/s 12AB - discrepancies were noticed including that the application is not under appropriate clause - HELD THAT:- Admittedly, the assessee trust was required to obtain permission from Charity Commissioner regarding loans but the same was not obtained timely. However, we also find that the assessee has already applied before Charity Commissioner for post facto approval of such loans.
Considering the totality of the facts of the case & in the interest of justice and without going into merits of the case, we deem it proper to setaside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction to decide the application afresh Thus, the grounds of appeal filed by the assessee are partly allowed.
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2025 (7) TMI 15
Reopening of assessment u/s 147 - denial of principle of natural justice - AO deprived the assessee with a reasonable time to file its responses - transactions concerning purchase of immovable property - HELD THAT:- AO proceeded to conclude the assessment - The non-compliance of the assessee is evident however, it is also seen that the AO deprived the assessee with a reasonable time to file its responses.
Principles of natural justice postulate that reasonable opportunity of being heard is sina qua non for any judicial proceedings. The same has been violated. We are of the view that the assessee has not been afforded adequate opportunities of being heard. We are of the view that ends of justice would be met if the assessee is given one last opportunity to present its case and file supporting evidences before the AO.
Accordingly, the order of lower authorities is set aside and the Ld. AO is directed to re-adjudicate the matter de novo after giving due opportunity of being heard and by passing a speaking order. The decision to remit it back to the AO is taken in view of the fact that an AO is the fulcrum of assessment proceedings.
He possess the first right and responsibilities to examine facts of a case before arriving at his decision qua determination of taxable income in a particular case.
We have noted with respectful deference the decision of TIN box [2001 (2) TMI 13 - SUPREME COURT] on the subject matter. AO shall give opportunities of being heard to the assessee and it shall be bounden upon the assessee to comply with the notices issued by the Ld. AO. Any non-compliance on the part of the assessee can be adversely viewed.
The assessee is at liberty to produce all or any other evidences deemed relevant in support of its claims before the Ld. AO during the re-adjudication proceedings. Accordingly, all the grounds of appeal raised by the assessee are therefore allowed for statistical purposes.
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2025 (7) TMI 14
Denial of deduction u/s 80P - non filing of return of income -absence of filing a valid return of income within the prescribed time u/s 139(1) - assessee is a primary agricultural credit society registered under the Kerala Co-operative Societies Act - HELD THAT:- In the present case, it cannot be disputed that the assessee neither filed its return of income u/s 139(1) of the Act nor filed the same in response to the notice issued u/s 142(1) of the Act.
We find that the issue of whether the assessee is entitled to claim deduction under section 80P of the Act in the absence of a return of income is no longer res integra and has been decided in favour of the Revenue in Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [2023 (3) TMI 1055 - KERALA HIGH COURT] as held that after 1-4-2018, even if the assessee makes his claim for deduction under section 80P in a return filed within time under sections 139(4), 142(1) or section 148, he will not be allowed the deduction, unless the return in question was filed within the due date prescribed under section 139(1). Thus, it is clear that the statutory scheme permits the allowance of a deduction under section 80P of the IT Act only if it is made in a return recognised as such under the IT Act, and after 1-4-2018, only if that return is one filed within the time prescribed under section 139(1) of the Act. Appeal by the assessee is dismissed.
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2025 (7) TMI 13
Denial of registration u/s 80G(5) - charitable activities carried out by the assessee approved - mistake committed by the assessee is that it should have applied under sub-clause (i) of the first proviso to Section 80G(5) - registration denied on the ground that assessee was earlier granted provisional registration which should not have been granted to it because it has commenced its activities in Financial Year 2016-17
HELD THAT:- Assessee instead of filing under sub-clause (i) has filed under sub-clause (iii) which is meant for new institutions which came into existence after 01.04.2021 and due to this anomaly, ld. Commissioner did not grant approval to the assessee under Section 80G(5) (vi) of the Income Tax Act.
We find that assessee Trust is already registered and only error committed by the assessee is the filing of the application under a wrong Section. Otherwise, it fulfills all the ingredients for grant of approval. Though under sub-clause (i) of the first proviso, the time limit was provided as three months from 1st day of April, 2021 but this time limit has been extended by the CBDT time to time and lastly it was available upto the end of June, 2024 vide Circular No. 7 of 2024. The assessee has filed application on 07.05.2024.
Thus, its application was within time but only error committed by the assessee was mentioning of the wrong Section. Therefore, we set aside the order of the CIT(Exemptions) and direct the CIT to grant approval to the assessee as if it is an old Institution which came into existence prior to 01.04.2021 and entitled for registration. Such registration be granted to the assessee by treating the application under sub-clause (i) for grant of regular registration and not as a provisional registration. The necessary certificate be issued accordingly.
Appeal of the assessee is allowed.
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2025 (6) TMI 2045
Addition u/s 69 - cash deposits in the bank account during the demonetization period - unexplained income - onus to prove - assessee submitted that the deposits were made from cash previously withdrawn from his bank account. It was explained that the withdrawals were intended to meet expenses related to his son’s marriage and other personal needs. However, the unutilized amount was subsequently re-deposited into the same bank account during the demonetization period.
HELD THAT:- In support of the cash deposit made, the assessee had furnished a comprehensive cash flow statement, a summary of cash inflows and outflows, bank statement and extracts from the cash book both before the AO as well as the ld.CIT(A). These documents collectively demonstrate that the cash deposits of Rs. 15,10,500/- made into the assessee’s bank account during the demonetization period were sourced from earlier cash withdrawals from the same bank account.
We note that it is evident that the assessee has duly discharged the initial burden of proof by establishing the source of the cash deposits as unutilized cash withdrawals.
It is a settled position in law that while an assessee is required to prove a positive fact, he cannot be expected to prove a negative. In such circumstances, the onus shifts to the AO to rebut the explanation by bringing on record any material evidence to show that the withdrawn cash was utilized or diverted for some other purpose.
In the present case, the AO has not brought on record any such material to suggest that the cash withdrawn earlier was spent, invested, or otherwise deployed elsewhere.
Only basis for the AO’s rejection of the assessee’s explanation is the time gap between the withdrawal and the subsequent re-deposit of cash - As noted that there is no statutory or judicially prescribed time limit within which cash must be re-deposited to be considered explained. The mere existence of a time gap, without any corroborative evidence of alternate use of funds, cannot be a valid ground to disbelieve the assessee’s explanation
There is no legal bar on an assessee retaining cash in hand for a reasonable period, particularly when the source of such cash is accounted for and traceable through bank withdrawals. The AO’s inference that no prudent person would hold cash and forego interest is speculative and not based on any evidence specific to the assessee's financial conduct or circumstances.
Assessee’s sole source of income is interest, as accepted by the AO. There is no allegation or finding on record to suggest that the assessee has any other source of income. Therefore, in the absence of any contrary evidence or material brought on record by the AO, the cash deposits made in the bank account cannot be presumed to represent income from an undisclosed source. The AO’s primary concern appears to be that a prudent person would not keep substantial cash in hand, thereby foregoing interest income, and has presumed that the cash withdrawn must have been utilized for some other purpose. However, such a presumption is merely based on conjecture and not supported by any material evidence on record. It is not for the AO to decide that the assessee should have acted in a financially prudent manner, which expectation is unreasonable and cannot form a valid basis for drawing an adverse inference.
AO has neither demonstrated nor established that the cash withdrawals were in fact utilized or diverted elsewhere. Mere assumptions regarding the utilization of cash without concrete evidence cannot justify an addition u/s. 69 of the Act. It is a well-settled principle that additions cannot be made based on suspicion or surmise. Therefore, in our considered view, in the absence of any positive finding or evidence to contradict the assessee’s explanation, the presumption that the cash deposits are unexplained is not sustainable. Assessee appeal allowed.
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2025 (6) TMI 2044
Validity of reopening of assessment against NRI assessee - as argued notice u/s 148 of the Act has been issued by the same AO, Ward-34(3)(5), Mumbai and not by the International Taxation, AO - Addition u/s 69 on unexplained investment - section 292BB applicability - HELD THAT:- As in the order u/s 148A clause (d) of the Act dated 20.04.2022 in para No.4, the AO has acknowledged the response to the notice by the Assessee that he was NRI for the relevant year. Therefore, it is not the case of the Revenue that the AO who has issued the impugned notice u/s 148 of the Act was not aware that the Assessee was NRI for the relevant year.
Thus, we are of the considered opinion that in the arguments of the Ld. D.R. wherein he has tried to invoke section 292BB of the Act, because of the above discussion and the judicial precedent relied by the Ld. A.R., there is no merit found in the arguments from applicability of section 292BB of the Act in the case of the Assessee.
Also in view of the findings of case of Nimir Kishore Mehta [2024 (4) TMI 202 - BOMBAY HIGH COURT] AO who had issued the notice u/s 148 of the Act was not having jurisdiction on the case of the Assessee. Therefore, the issuance of show cause notice u/s 148A(b) of the Act, passing of the order u/s 148A(d) of the Act and subsequent issuance of notice u/s 148 of the Act by the AO in this case are held to be carried out without having jurisdiction over the issue and the said proceedings are bad in law and accordingly liable to be quashed. Accordingly, ground Nos.1 &2 are decided in favour of the Assessee.
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2025 (6) TMI 2043
Assessment u/s 153C - Assessment of income of any other person - period of limitation - satisfaction note - jurisdiction of the AO in initiating proceedings u/s.153C for the A.Y. 2008-09, in light of second proviso to section 153A(1) of the Act, and proviso to section 153C(1) - non-application of mind while according sanction u/s.153D - absence of incriminating material to support the assessment u/s.153C of the Act, lack of jurisdiction to pass the assessment order under the said provision, and failure to properly record satisfaction as mandated u/s.153C - HELD THAT:- In light of the foregoing discussion and with due respect to the binding precedent laid down by the Hon’ble Supreme Court in CIT v. Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] we are of the considered opinion that the AO has committed an error in issuing notice u/s 153C of the Act to the assessee for the Assessment Year 2008-09. This conclusion is drawn on the basis that the satisfaction note by the AO was recorded on 23.09.2014, which clearly falls outside the statutorily permissible period of six assessment years. Accordingly, the notice issued u/s.153C and the consequential assessment order passed u/s.143(3) r.w.s.153C of the Act are barred by limitation and are therefore liable to be quashed. Consequently, we hereby quash the assessment order dated 31.03.2015 passed by the AO u/s.143(3) r.w.s. 153C of the Act for AY 2008-09.
Lack of proper recording of satisfaction - On perusal of the Section 153C of the Act provides for assessment of ‘income of a person other than the person searched’ where certain seized or requisitioned material belonging to or relating to such other person is found during the course of a search u/s.132 or a requisition u/s.132A of the Act. However, the invocation of Section 153C is not automatic. It is a jurisdictional provision and its valid invocation is subject to strict conditions precedent, which have been repeatedly emphasized by the Hon’ble Supreme Court and various High Courts.
This provision requires the AO of the searched person to be "satisfied" that the seized material belongs to or pertains to or relates to the other person and further, that such material is incriminating in nature leading to the conclusion of undisclosed income.
We note that the reading of the ‘satisfaction note’ reveals that it does not constitute a satisfaction note in the manner contemplated u/s.153C of the Act. Instead, it merely records a procedural observation regarding the substitution of the legal representative of the deceased assessee and cannot be construed as a valid or reasoned satisfaction for the purpose of initiating proceedings u/s.153C of the Act.
On perusal of the satisfaction recorded in the present case, for the assessment years AY 2009-10 to AY 2012-13, there is a complete absence of proper and independent satisfaction as required u/s.153C of the Act, for the following reasons:
a. There is no contemporaneous recording of satisfaction by the AO of the person searched linking the seized material to the assessee.
b. There is no recording of satisfaction by the AO of the assessee (the “other person”), independently examining and determining that the seized material belongs to or pertains to the assessee.
c. The assessment orders are silent on the nature of seized documents or materials and do not demonstrate any live nexus between the seized material and the alleged undisclosed income of the assessee.
d. The same satisfaction note appears to have been used in a mechanical and templated manner for multiple years, which is contrary to the principles laid down by the Supreme Court.
Hence, in our view, the jurisdictional power for initiating assessment u/s.153C is wholly absent in the present case for all the A.Ys. 2009-10 to 2012-13.
In the present case on hand the satisfaction note is completely silent on whether the diary contains any incriminating entries.There is no mention of how the contents of the diary lead to the discovery of undisclosed income in the hands of Late Shri Dharmi Chand or his legal heir. The satisfaction note is based solely on post-search correspondence and statements, not on independent analysis of the seized material. There is no evidence that the AO examined the diary to verify that it belonged to and incriminated the other person. This fails the standard of “objective satisfaction based on material” required under Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT]
The satisfaction note is not provided any evidence as an incriminating material relating to the assessee and also does not contain any whisper of the undisclosed income to be assessed on the assessee.
Therefore, we are of the view that the jurisdiction u/s.153C cannot be invoked in the absence of incriminating material.
Further, the law requires a high threshold of satisfaction for the following reasons to issue notice u/s.153C of the Act to any other person:
• To protect third parties from arbitrary assessments based on mere suspicion;
• To ensure that seized material has clear nexus with alleged undisclosed income of such person;
• To prevent roving and fishing inquiries in the guise of proceedings u/s.153C.
Further, in our considered view that it is a settled proposition of law that if the jurisdictional foundation is lacking, the entire assessment collapses.
As held in Calcutta Knitwears [supra] and reaffirmed in Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] the absence of valid satisfaction strikes at the root of the jurisdiction u/s.153C of the Act. Consequently, any order passed in such a scenario is non-est, void ab initio, and liable to be quashed. Assessee appeal allowed.
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2025 (6) TMI 2042
Reopening of assessment u/s 147 - denying the deduction claimed u/s. 80P of the Act by stating that the assessee is a scheduled bank in assessing - AR submitted that the assessee / cross objector is governed by the provisions of The Regional Rural Bank Act, 1976 and hence, the attempt to treat the assessee /cross objector as a co-operative bank for the purpose of denying deduction u/s. 80P of the Act was wrong - only contention of the Revenue is based on the circular issued by CBDT to treat the co-operative societies as co-operative bank
HELD THAT:- AO while re-opening the assessment had failed to appreciate that for the very same issue relating to claim of deduction u/s. 80P of the Act, the assessee was subjected and succeeded before the Tribunal for earlier assessment years which orders of the Tribunal was very much available at the time of initiating the present re-assessment proceedings thereby negating the presumption of escapement of income in the hands of the assessee for the purpose of assuming jurisdiction u/s. 147 of the Act.
Therefore, re-opening the case of the assessee for the very same issue which is decided in favour of the assessee is wrong and does not stand the test of law and therefore deserves to be quashed in the interest of justice.
Deduction u/s. 80P - We note that the Assessee is a Regional Rural Bank governed by the Regional Rural Bank Act, 1976.
As per Section 22 of the RRB Act explicitly states that an RRB shall be deemed to be a co-operative society for the purposes of the Income-tax Act, 1961. Further, Section 32 of the RRB Act contains a non-obstante clause, making the RRB Act prevail over any inconsistent provisions of other laws. Therefore, the argument of the Revenue based on CBDT circulars is thus contrary to the overriding effect of the RRB Act.
We also find that in PCIT v. Bhilwara Zila Dugdh Utpadak Sahakari Sangh Ltd. [2019 (8) TMI 1131 - RAJASTHAN HIGH COURT] has affirmed that RRBs continue to be treated as co-operative societies under the Income-tax Act by virtue of Section 22 of the RRB Act.
In the latest decision of the Tribunal for the assessment year 2014-15 has allowed the deduction u/s. 80P(2)(a)(i) - Thus, we do not find any infirmity in the order of the ld.CIT(A) in allowing the assessee’s claim under Section 80P(2)(a)(i) of the Act. Thus, the related grounds raised by the Revenue are dismissed.
Interest arises out of refund of tax whether form part of the business income of the assessee - This issue is squarely covered by the decision of Punjab State Co-op Bank Ltd.[2010 (2) TMI 185 - PUNJAB & HARYANA HIGH COURT] which has been held that such interest is compensatory in nature and partakes the character of the principal.
Thus, interest on income tax refund is to be treated as income from business and hence eligible for deduction under Section 80P(2)(a)(i) of the Act. Thus, the ground of cross-objection raised by the assessee is allowed.
Recompute the interest u/s. 244A taking the date of remittance of TDS as the starting point till the date of credit of refund. Hence, this issue is remanded back to the AO for limited verification and correct computation as per law.
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2025 (6) TMI 2041
TCS u/s 206C - compounding fees received from illegal miners/transporters of minerals - Scope of Mines and Minerals (Development and Regulation) Act, 1957/ ‘the MMDR Act’ - offenders who do illegal mining or transportation/storage without having lease or license or have not entered into the contract for transfer of right in Mines or Quarry and from whom Compounding Fine is collected as per provisions under Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015 - HELD THAT:- Tax at the rate of 2% has to be collected by the assessee from the lease holder or license holder or with whom the assessee has entered into contract or otherwise transferred any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, on the amount of payment made by them to the appellant herein.
The person must be lease holder or license holder or with whom the assessee has entered into contract or otherwise transferred any right or interest in the mines or fields, meaning thereby the person from whom the TCS is collectable must be the person to whom the lease or license or otherwise any express contract, right or interest has been transferred by the assessee to any mine or quarry and royalty is payable by them to the State Government through the District Mining Officer. In the instant case, mining lease must be granted in terms of Section 9 of the MMDR Act.
By virtue of Section 9(1) of the MMDR Act, the holder of a mining lease is obliged to pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee from the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral and the Central Government is empowered to amend the Second Schedule so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification.
Section 206C(1C) of the IT Act only obliges the assessee to collect tax at source from the person to whom such right has been conferred and by whom royalty is payable to the State Government through the District Mining Officer and obligation to collect tax u/s 206C(1C) cannot be extended to the person involved in illegal mining or transporting illegal minerals.
Section 206C(1C) of the IT Act specifically obliges to collect tax by the assessee from the lease holder or license holder or with whom the assessee has entered into contract or otherwise transferred any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry. Similarly, there is no legislative mandate to collect tax at source from the person who is involved in illegal mining or illegal transportation of minerals and similarly, compounding fees/fine is collectable in terms of Section 23A of the MMDR Act read with Rule 71(5) of the Rules of 2015 and the effect of compounding would be that on being compounded under Section 23A(1), no proceeding or further proceeding shall be taken and the offender, if in custody, shall be released forthwith.
Similar provision has been laid down in Section 320 of the Code of Criminal Procedure, 1973, which deals with compounding of offences and sub-section (8) of Section 320 clearly mandates that the compounding of an offence under Section 320 shall have the effect of an acquittal of the accused with whom the offence has been compounded.
As such, compounding fee/fine cannot be subjected to proceeding under Section 206C(1C) of the IT Act, as there is no legislative mandate to collect tax at source (TCS) on compounding fee/fine collected under Section 23A of the MMDR Act read with Rule 71(5) of the Rules of 2015.
As such, by virtue of the provisions contained in Section 206C(1C) of the IT Act, there is legislative command to collect TCS from the amount of royalty and simultaneously, there is no legislative command to recover TCS from the amount of compounding fee/fine under Section 23A of the MMDR Act read with Rule 71(5) of the Rules of 2015, as the royalty does not include the compounding fee/fine and the terms “royalty” and “compounding fee”, both, are mutually exclusive.
Therefore, the ITAT is completely unjustified in holding that compounding fee/fine (TCS) would be chargeable under Section 206C(1C) of the IT Act by relying upon the definition contained in Section 2(47) of the IT Act. Accordingly, we are unable to uphold the judgment & order passed by the ITAT relying on Section 2(47) of the IT Act.
Impugned judgment & order passed by the ITAT making demand and levying interest & penalty for non-compliance of Section 206C(1C) of the IT Act cannot be sustained and accordingly, it is set aside. The substantial question of law is answered in favour of the assessee and against the Revenue.
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2025 (6) TMI 2040
Time granted to file response for notice issued u/s 148A - less than 7 days provided - HELD THAT:- We observe that the AO is not granted 7 days’ time to the assessee for responding in response to notice u/s 148A(b) of the Act. In our opinion, the issue is squarely covered by the judgement of Thulaseedas Srinath [2024 (6) TMI 1477 - KARNATAKA HIGH COURT] wherein held time granted short of the minimum period of 7 days prescribed in the said provision, thus impugned notice and consequential proceedings including the impugned assessment order notices etc., deserves to be quashed. Assessee appeal allowed.
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2025 (6) TMI 2039
Rejection of registration u/s 12A(1)(ac) (iii) and u/s 80G - registration denied as assessee has failed to file the confirmation from the donors exceeding Rs. 50,000/- to Rs. 1,00,000/-, details of contractors engaged in construction of low, cost house project and drinking water project etc. was not filed - as per DR head office of the trust has been shown at Delhi, while the mostly donation were given by the resident of the Kerala state without mentioning the address of the donors - HELD THAT:- The assessee has submitted the all details before the CIT(E) during the proceedings which were required for the registration of the Trust. The assessee also provided the addresseses of the donors.
CIT(E) did not make any comments on the genuineness of the object of the trust. The registration u/s 12A as well as 80G of the Act was denied for the reason that certain details were not furnished by the assessee. The assessee has furnished the voluminous evidence to prove that the assessee is a charitable trust and activities carried by the assessee are genuine.
The queries raised and details required by the Ld. CIT(E) were all subject of verification by the AO while completing the assessment. The Ld. CIT(E) should not have rejected the registration u/s 12A as well as 80G of the Act on the ground that certain details were not furnished by the assessee, while all the details were furnished by the assessee. Thus, we direct the Ld. CIT(E) to restore the provisional registration granted to the assessee u/s 12A of the Act and also direct to grant registration u/s 12A as well as of the Act to the assessee trust. Appeals of the assessee are allowed.
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2025 (6) TMI 2020
Validity of assessment order passed u/s 144 r/w Section 144B - fixing a short time limit by Department for filing responses - violation of natural justice - as argued no sufficient opportunity of hearing was not provided to the assessee before passing the assessment order and the same has been passed in violation of principle of natural justice and without following the Standard Operating Procedure provided u/s 143 (3) r/w Section 144B
HELD THAT:- Undisputedly, in the case in hand, before the assessment order was passed on 24.03.2025, the second notice was issued by the Department on 13.03.2025 wherein response was sought from the petitioner by 17:00 hours of 15.03.2025 i.e. two days which is a very short time for filing the response. It is also undisputed at the bar that the date of 14.03.2025 was declared as Holiday on the occasion of Holi Festival.
In the similar nature of facts, in the matter of Gemini Film Circuit [2023 (10) TMI 1040 - MADRAS HIGH COURT] when five days time was stipulated by the Department for filing reply, the High Court of Madaras observing that the petitioner was deprived from the opportunity of personal hearing, set-aside the impugned order of assessment and directed to pass fresh order after providing sufficient opportunity of filing reply/objection.
This Court has also taken the similar view while considering the case of Rashmi Lakhotia [2022 (11) TMI 780 - CHHATTISGARH HIGH COURT] wherein it was observed that when the Act itself provides a procedure for effective hearing and from the facts and circumstances of the case, if it appears that principle of natural justice is violated and no reasonable opportunity is afforded, order passed by the Assessment Authority is not justifiable.
Thus, no reasonable opportunity has been given to the assessee particularly by providing the dates between Holi festival. Hence, this Court is of the view that the assessment order has been passed in violation of principle of natural justice.
The respondent/Authority is directed to restore the matter and to take suitable steps for rehearing of the case by providing reasonable opportunity of hearing to the assessee.
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