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Showing 221 to 240 of 175810 Records

2025 (6) TMI 1909

Validity of reassessment proceedings - Reasons to believe - determining the ALV of the house properties is not backed on plausible reasoning - HELD THAT:- We observed that the issue is squarely covered in favour of the assessee by decision of ITAT in assessee’s husband case [2022 (1) TMI 421 - ITAT DELHI] as held non-recording of the reasons prior to issue of notice u/s 148 flouts the provisions of law and clearly depicts non-application of mind on the part of the ld. Assessing Officer.

It is a settled position that even where an assessment has been only processed under Section 143(1) of the Act, the reopening notice must satisfy the test of having reason to believe that the income chargeable to tax has escaped assessment. The reason to believe has to be arrived at after applying one's mind to the material available and to reach a prima facie view that income chargeable to tax has escaped assessment. Mere receipt of information from any source would not by itself tantamount to reason to believe that income chargeable to tax has escaped assessment. AR has submitted that the property from which the deemed rental income the Revenue proposes to 11 add does not belong to the assessee. When the property does not belong to the assessee, the question of taxing the deemed rental income does not arise. Revenue has not placed any material on record to demonstrate that the submission of the assessee of it not being the owner of the aforesaid properties is false/ incorrect. In the present case the AO prima facie has not done the bare necessary enquiry into the material received before he concluded that income chargeable to tax has escaped assessment.

Assessee appeal allowed.
2025 (6) TMI 1908

Ex parte order passed by CIT(A) - Assessee submitted that since the assessee did not have access to the Income Tax Portal, therefore, he had no knowledge about any of these notices being issued by CIT(A) - HELD THAT:- It is evident that the CIT(A), while passing the impugned order, has not considered any of the submissions as filed by the assessee before migration of the appeal to the National Faceless Appeal Centre.

It is further evident from the perusal of the impugned order that there is no reference to the notices issued during the physical hearing and the submissions filed by the assessee.

CIT(A) in limine dismissed the appeal filed by the assessee, placing reliance upon the decision of B.N.Bhattacharjee [1979 (5) TMI 4 - SUPREME COURT] merely on the basis of non-compliance with notices by the assessee without adjudicating the grounds raised by the assessee on merits, as required u/s 250(6) of the Act.

From the perusal of the record, it is further evident that the assessment was also concluded on a best judgment basis u/s 144 of the Act in the absence of a response/details being filed by the assessee.

Assessee should be granted one more opportunity to represent its case on merits before the AO. Consequently, we deem it fit and proper to set aside the impugned order and restore the matter to the file of the AO for de novo adjudication with a direction to the assessee to furnish all the details/submissions in support of its claim. Appeal by the assessee is allowed for statistical purposes
2025 (6) TMI 1907

Penalty u/s. 271(1)(c) - defective notice u/s 274 - Allegation of no specific charge, i.e. either for concealment of income or for furnishing of inaccurate particulars of income - disallowance of expenditure on account of “Magazine and Journal” - estimation of income - HELD THAT:- Upon careful consideration, we find considerable cogency in the contention of the ld. AR that penalty u/s. 271(1)(c) of the Act is not leviable, since there is no specific charge, either for concealment of income or for furnishing inaccurate particulars of income have been made while passing the assessment order passed u/s. 143(3) of the Act dated 28.3.2013, hence, on the anvil of settled law on this issue, as referred above, the penalty in dispute does not survive and hence, the same is deleted on this point of view.

Further, it could be seen from the assessment order that the Assessing Officer has made addition on ad hoc basis by disallowing 10% of the total expenses in the head Magazine and Journals treating the same unjustified and excessive and unreasonable. Ultimately the said addition was made on adhoc/estimate basis, however, the AO has tried to justify the same by comparing the similarly placed concern, but the facts of that case has not been discussed at all.

We noted that this issue is now covered by the decision of Technip Italy Spa [2015 (3) TMI 975 - ITAT DELHI] wherein held penalty cannot be levied on an estimated income. Merely because books of the assessee were rejected and income was assessed on estimate basis, it could not be held that the assessee was guilty of fraud or gross or wilful neglect for the purpose of levy of penalty u/s 271(1)(c).

Also in Sangrur Vanaspati Mills Ltd. [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] wherein, it has been held that when addition has been made on the basis of estimate and not on account of any concrete evidence of concealment, then penalty u/s 271(1) (c) cannot be levied

Decided in favour of assessee.
2025 (6) TMI 1906

TP Adjustment - recharacterization of the services rendered by the assessee as knowledge process outsource or KPO services - HELD THAT:- Appellant is providing engineering design services to its AEs on the basis of concept provided by the AE as per requirement of the customers. The services include in-depth understanding of the clients business process, existing systems etc. However, on careful examination of various design services provided by the assessee which includes 3D modelling and 2D Drawings from 3D modelling, clean room technical specification, 3D visualization (for Architecture), 3D Modelling and 2D Drawings from 3D Modelling of process plant equipment (pipes, ducts, cable tray, pipe racks etc.,) Staad analysis, connections design for (civil/structural) etc. For rendering the above services, the appellant company has employed various categories of technical staff including Diploma Holders, Engineering Graduates, PG Graduates and from the above, it is undisputedly clear that the services rendered by the appellant to its AEs in EDS segment is not a simple design services in the category of BPO services but it is a highly technical work in the category of Knowledge Process Outsourcing (KPO) and therefore, there is no error in the reasons given by the TPO to recharacterize the services of the appellant company as KPO services and thus, we reject the ground taken by the assessee.

Comparable selection - exclusion of Mahindra Consulting Engineers Ltd. -Services rendered by the assessee to the AE are comparable to services rendered by Mahindra Consulting Engineers Ltd. Further, although the appellant contended that it fails the RPT filter, but in our considered view, the method of computation of related party transaction by the assessee is contrary, because related party transactions should be computed to revenue or expenses separately but there is no question of aggregating both the transactions and computing the percentage. Since related party transaction of the appellant company with related party is less than 25% in respect of income and expenditure separately, in our considered view, it passes the RPT filter applied by the TPO. Standing in the business of number of years does not matter for the margin earned by the company, but all depends upon the nature of services rendered by the company. Therefore, the argument of the learned Counsel for the assessee that Mahindra Consulting Engineers Ltd is in the business of almost 37 years and cannot be compared with the appellant company being in the first year operation does not hold water. Thus, we reject the argument of the assessee and upholds the inclusion of Mahindra Consulting Engineers Ltd.

M/s Genesys International Corporation Ltd is predominantly into the services of geographical information system services comprising of photogrammetry, remote sensing, car topography, data conversion, state of the art terrestrial and 3D geo-content including location and other computer related services, whereas the assessee is into simple activities of engineering design services of EPC contractors and cannot be compared to each other. TPO/DRP without considering the relevant facts simply included the above company in the list of final set of comparables. Thus, we direct the TPO/Assessing Officer to exclude it.

L&T Technologies Services Ltd is not a comparable company to the appellant company which is providing engineering design services to its AEs for EPC Contractor.

Inclusion of exceptional item being consultancy charges paid as part of operating cost - Since the assessee itself has taken over the agreement in a slump sale and further the entire amount of consultancy charges has been paid by the assessee, in our considered view, unless the assessee derived benefit from the agreement, it may not have taken over agreement and agreed to make payment to Cyient Ltd. Therefore, from the above, it is undisputedly clear that the benefits of agreement from Cyient Ltd is furthering the business of the assessee in subsequent years and for this purpose, the assessee agreed to make payment. Therefore, once the expenditure is related to the business operations of the assessee, then it should be definitely part of the business expenditure do the assessee and partakes the nature of operating cost. The TPO/DRP has rightly considered exceptional item, being service charges paid to Cyient Ltd as operating in nature. Thus, we are inclined to uphold the findings of the TPO/DRP and reject the ground taken by the assessee.

Considering Amortization of Good Will as part of operating cost - The excess of liabilities over assets has been treated as goodwill. Since it is one time extra ordinary expenses arise on account of acquisition of global design services division from another company and a difference between the asset and liabilities of the transferor company, in our considered view, said asset being goodwill cannot be included as asset employed in the business of the assessee to be considered as operating in nature. Further, the learned DRP has itself given a finding that goodwill acquired on account of amalgamation or business transfer agreement is not eligible for depreciation. Once the assessee is not eligible for depreciation on goodwill, then the same cannot be considered as operating in nature for the purpose of computing margin. Therefore, we are of the considered view that the TPO is erred in including amortization of goodwill as part of operating cost. Thus, we direct the TPO to exclude amortization of goodwill from operating cost.

Considering management fee and value fee as part of operating cost - The assessee has considered the very same expenditure in Ground No.10 and seeks to exclude the amount as part of operating cost. Since we have already held that consultancy/management fees paid to Cyient Ltd is part of operating cost, in our considered view, Ground No.10 taken by the assessee challenging the exclusion of management fee and value fee is devoid of any merit and thus, we reject the ground No.10 taken by the assessee.

Rejecting capacity utilization adjustment sought by the assessee - There is no basis for adopting the total available hours and further, the assessee has not submitted any details for the number of hours utilized for the under utilization and therefore, on this ground itself, capacity utilization computed by the assessee should be rejected. However, the case of the assessee is that it has utilized 86.87% whereas the comparables which utilized 100% of their capacity.

In our considered view, once again the assessee is making a claim without there being any evidence. We do not know whether the comparables are operating with full capacity to say that they are operating with 100% capacity. In absence of any evidence, it cannot be said that the comparables are operating at 100% capacity. Since the appellant has failed to file any evidences to support its claim, in our considered view, there is no reason to deviate from the reasons given by the DRP to reject allow adjustment towards capacity utilization. Thus, we reject ground No.11 taken by the assessee.

Inclusion of Code Ploy Engg. Ltd and E2G Engineering & Design Services (P) Ltd in the list of comparables - There is no dispute with regard to the fact that the assessee has not taken any ground before the TPO raising inclusion of above 2 companies in the list of final set of comparables. Further, the assessee has also not taken any ground before the DRP on this issue. Therefore, the argument that the TPO/DRP not allowing the assessee to take an additional ground for inclusion of the above two companies is devoid of any merit and cannot be accepted. Further, the assessee has not placed relevant material before the TPO to examine the FAR analysis of the 2 companies to consider for inclusion or exclusion for the purpose of computing the ALP.

Appeal filed by the assessee is partly allowed.
2025 (6) TMI 1905

Disallowance u/s.80P - appellant did not file the return of income placing reliance on the provisions of section 80A(5) - HELD THAT:- No doubt, the appellant co-operative society is incorporated with the object of accepting deposits from its members and lending money to its members, and the appellant is classified as a primary agricultural credit society.

No return of income was filed either under the provisions of sec.139(1) of the Act nor in response to the notice issued u/s.142(1) of the Act.

In terms of the provisions of sec.80A(5) of the Act, in order to claim deduction u/s.80P of the Act, it is mandated that the appellant should make the claim in the return of income for deduction u/s.80P of the Act. Since the appellant had not filed the return of income, the provisions of sec.80A(5) is squarely applicable in view of the ratio laid down in the case of Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham [2023 (3) TMI 1055 - KERALA HIGH COURT] to hold that the appellant-cooperative society is not entitled for deduction u/s.80P - Decided against assessee.
2025 (6) TMI 1904

Intimation issued u/s.143(1) - entire contract receipts as per Form 26AS was treated as income of the assessee and a huge demand - Rejection of declaration of income on presumptive taxation u/s.44AD - as held by the JCIT(A) total turnover / gross receipts of the assessee during the relevant assessment year exceeded Rs. 2 crore, hence, the presumptive provision u/s.44AD of the Act does not have application and JCIT(A) held that no details of the expenditure incurred by the assessee in undertaking the contract work has been furnished.

HELD THAT:- We find, there is no justification to assess the gross receipts of the assessee as income under the head profits and gains from business or profession. If the provisions of sec.44AD of the Act is not applicable, the Revenue cannot bring to tax the entire gross receipts, but only the net income. In the interests of justice and equity, we restore the case to the files of the AO.

The assessee shall produce necessary material to prove that he had incurred the expenses for which he has earned the total receipts of Rs. 2,97,85,593.

In the event, the assessee has not been able to provide necessary evidences to that effect, the AO shall estimate the income of the assessee by taking into account comparable cases. AO shall afford a reasonable opportunity of being heard to the assessee before a decision is taken on the matter. Appeal filed by the assessee is allowed for statistical purposes.
2025 (6) TMI 1903

Nature and character of subsidy/incentive received under The New Sugar Promotion Policy, 2004 of the Government of Uttar Pradesh - whether capital or revenue receipt? - assessee is a resident corporate entity engaged in manufacturing and sale of sugar - HELD THAT:- On perusal of the facts and materials on record, it is noticed that it is a legacy issue recuring from A.Y. 2007-08 onwards. While deciding the issue for the first time in A.Y. 2007-08, the Tribunal [2023 (1) TMI 1482 - ITAT MUMBAI] has decided the issue in favour of the assessee, holding that the subsidy/incentives received under New Sugar Promotion Policy issued by Government of Uttar Pradesh is ‘capital in nature’.

Thus, we hold that the subsidy/incentive received under The New Sugar Promotion Policy, 2004 of the Government of Uttar Pradesh, being in the nature of capital receipt, is not taxable. Hence, this ground is decided in favour of the assessee.

Addition of an amount on account of non-reconciliation of ITS details - HELD THAT:- Once, the assessee denies its involvement in the transactions, duty is cast upon the AO to make thorough enquiry and ascertain the veracity of assessee’s claim. Departmental authorities, in our view, have failed to do so. Insofar as the alleged transaction with Rauzagaon Chini Mills (A unit of Balrampur Chini Mills Ltd.), Faizabad is concerned, the assessee has submitted before us that the concerned party has uploaded revised Form 26AS, wherein the particular transaction does not appear in the name of the assessee.

A.O. is directed to factually verify this fact and delete the addition. Insofar as the rest of the transactions alleged to have been entered into with Standard Chartered Bank, Fort, Mumbai and American Express Bank Ltd., it is the duty of the A.O. to make proper enquiry to ascertain whether the transactions actually relate to the assessee or not. In case the transactions do not relate to the assessee, the additions made have to be deleted. This ground is allowed for statistical purpose.

Incentives received under the New Sugar Industry Promotion Policy ought to be reduced while computing the book profit u/s 115JB - As adjudicated the ground no. 2 of the assessee holding that incentive received under the New Sugar Industry Promotion Policy, 2004 of Uttar Pradesh Government are of the nature of capital receipt, therefore we direct the assessing officer to reduce the same while computing the book profit u/s 115JB of the Act.

Disallowance u/s.14A read with Rule 8D(2) - suo motu, the assessee has disallowed an amount based on proportionate salary cost of employees engaged in investment activity, rent, office administration, electricity, etc. - HELD THAT:- Factual matrix reveals that the suo motu disallowance of expenses u/s. 14A of the Act was made by the assessee adopting a consistently followed method. While computing the disallowance, the assessee has taken into account proportionate salary cost of persons engaged in investment activity, office administration, electricity, office equipment and depreciation and miscellaneous expenses. A reading of the assessment order clearly reveals that before rejecting assessee’s computation of suo motu disallowance and applying Rule 8D, the A.O. has not recorded any positive satisfaction to establish that the suo motu disallowance made by the assessee is incorrect, having regard to its accounts. Further, the fact that the assessee has surplus interest free fund, could not be controverted by the Revenue.

As in assessee’s case in A.Y. 2008-09 [2024 (5) TMI 1586 - ITAT MUMBAI] wherein, under identical facts and circumstances, disallowance made u/s. 14A read with Rule 8D, was deleted by the Tribunal. In view of the aforesaid, we uphold the decision of learned first appellate authority by dismissing the grounds.

Addition on account of gain on foreign exchange fluctuation, in respect of foreign currency convertible bonds (FCCB) - Before us, the parties have agreed that while deciding identical issue in assessee’s case in A.Ys. 2007-08, 2008-09 and 2009-10, the co-ordinate bench has restored the issue to the A.O. for fresh adjudication, after verifying the materials on record.

Addition towards alleged gain on sale of shares of closed business subsidiary in Brazil - As rightly observed by learned first appellate authority, the value of shares held in Brazil in foreign currency represented capital asset of the assessee. Therefore, when the shares were sold, the amount realized through transfer of such capital asset, has to be treated as ‘capital receipt’, as the transaction is on capital account. That being the factual position emerging on record, the receipts have to be treated as ‘capital in receipt’ and not ‘income from other sources’, as held by A.O. Learned first appellate authority having decided the issue in accordance with settled legal principles, we uphold the same. Grounds are dismissed.
2025 (6) TMI 1902

Addition u/s 68 - share capital and share premium - accommodation entry receipts - addition made by the AO holding that the assessee has paid the commission @ 1.8% for arranging accommodation entries in the garb of alleged amount of share capital - HELD THAT:- Source of funds arising to the group companies to establish the bonafides of receipts by the assessee has not been examined. The issue is factual in nature. Proper finding of facts from the lower authorities would be necessary to apply the correct position of law.

CIT(A) has concluded that subscriber is a conduit company. The source of receipt of money by M/s. Udhyam Mercandise Pvt.Ltd. has not been looked into. In the absence of any affirmative finding on the source of funds originating in one company and getting transferred to other company in rotation as claimed, we are incapacitated to return any finding either way.

Hence, without expressing any opinion on merits and in order to prevent miscarriage of justice and to set right the alleged impropriety in the action of the Revenue, if any, we consider it expedient to set aside the first appellate order and restore the appeal before the CIT(A) for fresh adjudication - Appeal of the assessee is allowed for statistical purposes.
2025 (6) TMI 1865

Denial of benefit u/s 12A - delay of 353 days in submitting the audit report in Form-10B prescribed under Rule 17B of the IT Rules - HELD THAT:- Taking cognizance of well-established principle that when technical consideration and cause of substantial justice are pitted against each other, it is the substantial justice which is to prevail, this Court holds that mere technicality should not have been ground for claim of exemption u/s 12A - CIT has failed to consider the application for condonation of delay in its right earnest under the provisions of Section 119(2)(b) of the Income Tax Act, 1961 read with power conferred by virtue of Circular No.10/2019, dated 22.05.2019.

Ergo, finding that there was “genuine hardship” faced by the petitioner during the relevant period and refusal to condone the delay invoking power u/s 119(2) of the IT Act being arbitrary exercise of discretion having regard to the fact-situation, Order dated 12.02.2025 passed by the CIT (Exemption), Hyderabad-opposite party No.2 are hereby set aside. The matter is remitted to the said authority concerned to consider audit report in Form 10B furnished under Rule 17B of the Income Tax Rules to claim exemption u/s 12A of the Income Tax Act and in consequence thereof, the Commissioner of Income Tax (Exemptions)-opposite party No.2 is directed to grant all consequential relief to the petitioner by taking into account the Audit Report in Form 10B pertaining to the Assessment Year 2017-18 submitted on 19.03.2021, as if the same is filed within period specified invoking Section 119(2)(b) of the Income Tax Act, 1961.
2025 (6) TMI 1864

Validity of reopening of assessment - assumption of jurisdiction on the basis of approval from an authority which was not competent to grant approval u/s 151 - more than three years have lapsed - HELD THAT:-Approval is contrary to the provisions of section 151 of the Act as amended/substituted by the Finance Act, 2021 because, as per section 151 of the Act, if more than three years have lapsed from the end of the relevant assessment year, approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. In the present assessment years, notices u/s 148 have been issued on 28.07.2022 after expiry of three years from the end of relevant assessment years. Accordingly, sanction/approval of Principal Chief Commissioner of Income-tax or Principal Director General or Chief Commissioner or Director General was required to be obtained. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in Union of India vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] and various decisions. Thus, the approval is not sustainable under law. Assessee appeal allowed.
2025 (6) TMI 1863

Penalty u/s 271(1)(c) - Debatable issues - whether assessee acted in good faith ? - TP adjustment made in respect of the manufacturing and trading segments - TPO’s decision to use PBIT/Sales as the Profit Level Indicator (PLI) instead of PBDIT/Sales as adopted by the Assessee, changes in the filters and comparables used for benchmarking, and adjustments made to the operating profit computation by excluding items such as liabilities written back, bad debts written off, and provisions for doubtful debts - penalty was levied only on the ground that the adjustments made by the TPO were upheld by the CIT(A) and partly confirmed by the ITAT

HELD THAT:- We note that the assessee had furnished relevant details in the return of income, the transfer pricing study report, and during the course of assessment and penalty proceedings, none of which were found to be inaccurate or false. The TNMM was accepted by the TPO as the most appropriate method, and the adjustments arose on account of differences in interpretation, such as the use of PBIT versus PBDIT as the PLI, and in the treatment of certain operating items-issues which in our view are debatable.

We note that several judicial precedents, including CIT vs. Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT], Mastek Ltd vs. DCIT [2012 (11) TMI 17 - ITAT, AHMEDABAD], and PCIT vs. Global Vantedge (P) Ltd [2018 (3) TMI 2057 - DELHI HIGH COURT] have held that mere differences in opinion or debatable issues should not attract penalty.

In the instant case penalty was levied for furnishing inaccurate particulars of income, despite there being no specific finding by the Tax Authorities that the ALP was not computed in good faith or without due diligence. Moreover, Explanation 7 to section 271(1)(c), which specifically governs penalty in transfer pricing cases, was neither invoked during the initiation nor discussed while levying the penalty.

In the instant case, the assessee had used a prescribed method (TNMM) u/s 92C of the Act and disclosed the selection of filters, comparables, and operating margin computation in the transfer pricing study report. Neither the TPO nor CIT(A) ever held that the ALP was computed outside the statutory provisions, or that the study report lacked diligence or was not prepared in good faith. In view of these facts and the settled legal position, in our view the necessary conditions under Explanation 7 for imposing penalty are not satisfied. Accordingly, we hold that the penalty levied by the AO is unsustainable in law and is hereby deleted. Since, we have given our findings on merits of the case, the other technical grounds raised by the assessee on jurisdiction are not being separately adjudicated.

Appeal of the assessee is allowed.
2025 (6) TMI 1862

Deferment of revenue - Difference between receipts as per Form 26AS and the Profit & Loss Account - uncertainty of ultimate revenue collection and has failure to demonstrate, with supporting evidences that the conditions mentioned in AS-9 are fulfilled - as per assessee deferment of revenue recognition was on account of a genuine dispute between the assessee and the parties concerned and this amount was received by the assessee in a later year

HELD THAT:- On going through the contents of the agreements furnished by the assessee for deferment of revenue, the year-wise income recognition table and the reconciliation statement of Form 26AS with audited Profit & Loss Account, we are of the considered view that assessee has not given a clear finding on what basis the amount was deferred by the assesee.

Assessee has also not submitted the precise breakup of bills raised by the assessee, the copies of bills for which revenue were deferred and has also not submitted the evidences to ascertain the reasons for deferring the revenue.

Accordingly, in view of the lack of submission of complete details by the assessee, in the interest of justice, the matter is hereby restored to the file of AO for de-novo consideration with a direction to the assessee to file all necessary details as called for by the AO during the course of assessment proceedings. Appeal of the assessee is allowed for statistical purposes.
2025 (6) TMI 1861

Assessee-in-default u/s 201(1) for non-deduction of TDS - Non-deduction of TDS u/s. 194J - determine the nature of transaction - HELD THAT:- Other than the default reported in the Tax Audit Report, there is no material in the possession of the AO and on record as to how the said default has been determined. The tax audit report is also silent as to how the provisions of Section 194J have been held applicable and the basis of arriving at the said opinion by the tax auditor.

If we refer to the provisions of Section 194J of the Act, it provides that any person other than an individual or an HUF, who is responsible for paying to a resident any sum by way of fee for professional services or fee for technical services or royalty etc., shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, shall deduct at appropriate rate as specified.

Therefore, it is critical to determine the nature of transaction as to whether the same will constitute as fee for technical services, professional services or in the nature of a royalty and thereafter, basis such determination, the TDS liability can be quantified.

However, we find that in the instant case, there is no such finding recorded by the AO apparently for the reason that the assessee has not complied to the show cause notice issued by the AO. Even there is nothing on record as to how the tax auditor has determined the TDS liability u/s. 194J of the Act. Even before the Ld.CIT(A), we find that even though the assessee has stated that it has availed charter hire services from Velocity Charter Private Limited, there is no supporting documentation in terms of any charter hire agreement or copy of the invoice which seems to be submitted for the first time before us.

Further, there are separate provisions in terms of 194C in terms of transportation services and there is no finding recorded by either of the authorities in this regard as to how the said provisions are not applicable.

In the instant case, we find that other than the tax audit report, there is nothing on record and no substantive explanation furnished by the assessee. Therefore, we deem it appropriate to remit the matter back to the file of the AO to determine the exact nature of a transaction, after providing reasonable opportunity to the assessee. Appeal filed by the assessee is allowed for statistical purposes.
2025 (6) TMI 1860

Rectification order u/s. 154 - mistake apparent from record that assessee has deposited cash during the demonetisation period is not added - assessee did not respond to 4 notices issued by the CIT(A), hence it was held that assessee is not interested in prosecuting the appeal - HELD THAT:- CIT(A) is empowered to dispose of the appeal only on its merits. He is not empowered to dismiss the appeal of assessee for non-prosecution. Further, the notices sent by him are not at the email address stated by the assessee in Form 35, except on 1st occasion.

All subsequent notices have been issued to a different email id, which we do not know, wherefrom he got information about. Therefore, assessee did not receive at least 3 notices. In absence of receipt of notices, naturally assessee could not respond.

But despite that, the ld. CIT(A) should have decided the appeal on the merits and not for non-prosecution as one of the grounds of appeal raised before the CIT(A) was against rectification order in accordance with law in absence of any mistake apparent from the record. CIT(A) even did not adjudicate the same.

Therefore, in absence of any decision on merits of the case, when adequate information is available before him, the ld. CIT(A) is not correct in disposing of the appeal on the allegation of non-prosecution. Therefore the order of the ld. CIT(A) is not sustainable, hence quashed.

Appeal of the assessee is allowed by quashing the rectification order passed by the ld. AO and also quashing the order of the ld. CIT(A) though not based on the merits of the case wherein the appeal of the assessee is disposed of for non-prosecution which is in violation of the provisions of section 251 of the Act. Appeal of the assessee is allowed.
2025 (6) TMI 1859

Disallowance of miscellaneous expenses and business expenses of the assessee - Disallowance on the ground that the assessee has not produced any cogent evidence in support of the expenses to prove the same were fully and exclusively incurred for the purpose of business of the assessee firm - Even during the first appellate proceedings, the assessee except filing written submissions not produced any documents to substantiate its claim

HELD THAT:- Considering the fact that the assessee has failed to substantiate its claim either before the lower authorities or before this Tribunal, finding no merits in the grounds of appeal, we dismiss the grounds of appeal of the assessee.
2025 (6) TMI 1858

Disallowance of deduction u/s 35(2AB) - expenditure incurred on in-house Research and Development facility - non-availability of Form No.3CL issued by the DSIR - HELD THAT:- It is an admitted fact that Form No.3CL was issued by the DSIR on 16.12.2022 only after the assessee filed a Writ Petition before the Hon’ble Delhi High Court.

Since the above certificate was not available either during the course of assessment proceedings or during appellate proceedings and since it has a bearing on the matter, therefore, we deem it proper to restore the issue to the file of the AO with a direction to adjudicate the issue afresh. Appeal filed by the assessee is allowed for statistical purposes.
2025 (6) TMI 1857

Addition u/s 69A - undisclosed income of the assessee - unexplained cash deposits in bank - HELD THAT:- Upon examination, we find that out of the total cash deposit the assessee had already offered Rs. 30,00,000/- to tax in the return of income. Further, the cash book clearly evidences that the assessee had adequate cash balance to support the bank deposits.

While the Ld. DR advanced arguments, no specific objection was raised against the factual submissions made by the assessee. We find merit in the contentions of the assessee. Accordingly, the addition sustained by the Ld. CIT(A) is hereby deleted.

It is further noted that the revenue has not preferred any appeal against the portion of the addition deleted by the CIT(A). Assessee appeal allowed.
2025 (6) TMI 1856

Addition u/s 69 r.w.s. 115BBE and disallowance u/s 14A r.w. Rule 8D - CIT(A) failure to issue any statutory show-cause notice u/s 251(2) - HELD THAT:- We find that in the present case, while passing the impugned order, the ld. CIT(A) confirmed the addition u/s 69 r.w.s. 115BBE of the Act without fully examining the supporting documents and explanations offered by the assessee before him and similarly, while making the disallowance u/s 14A r.w. Rule 8D CIT(A) simply upheld the addition despite admitting the fact that the assessee has not earned any exempt income during the relevant assessment year, which is contrary to the settled proposition of law.

We additionally note that the enhancement of income as unexplained expenditure u/s 69C by the ld. CIT(A), is not justified as the CIT(A) failed to issue any statutory show-cause notice u/s 251(2) while making the adjustment, which is clearly a violation of principles of nature justice.

We also note that the assessee was deprived of proper opportunity to explain or rebut the proposed enhancement of income rendering the action unsustainable in the eyes of law.

In view of the above and in the interests of justice and fair play, we feel it necessary to remand the whole issue to the file of the AO. Therefore, we set aside the impugned order of the CIT(A) and restore the entire matter to the file of the AO with a direction to re-examine the case of the assessee on merits after affording reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
2025 (6) TMI 1839

Validity of reopening of assessment - notice issued beyond the period of four years - review v/s reopening - reasons to believe - tangible material to initiate reassessment proceedings - HELD THAT:- A reassessment made within four years or beyond four years has to be based on tangible material de hors that is available on record that has come to the notice of the AO.

Recourse to proceedings for reassessment is available only if the Department comes into possession of materials, apart from that already available as part of its records or if primary particulars reveal discrepancies that are not explained or resolved by the accompanying documentation. This is subject, therefore, to the assessee having placed on record all materials necessary for the appreciation of issues arising for assessment including financials and annexures along with its return of income at the first instance.

As in Orient Craft Ltd. [2013 (1) TMI 177 - DELHI HIGH COURT] has held that reopening of assessment made u/s 143(1) of the Act is without jurisdiction, in the absence of any tangible material available with the Assessing Officer to form the requisite belief regarding escapement of income. The Court held that in the absence of any tangible material, there will be a review in the guise of reopening.

In the present case, the reasons disclose that the AO reached the belief that there was escapement of income, on going through the return of income filed by assessee after it was accepted u/s 143(1) without scrutiny and nothing more. Therefore, this is nothing but a review of the earlier proceedings. There is no whisper in the reasons recorded, of any tangible material which came to the possession of AO subsequent to the issue of the intimation. It reflects arbitrary exercise of the power conferred u/s 147 of the Act. Decided in favour of assessee.
2025 (6) TMI 1838

Validity of reopening of assessment - period of limitation - effect of TOLA on the limitation period for issuing notices u/s 148 and 148A(b) for A.Y. 2015-16 - HELD THAT:- It is not in dispute that the respondent-Assessing Officer has issued the notice u/s 148A(b) of the Act after the period of six years were over on 31.03.2022.

As observed in case of Deepak Steel and Power Ltd [2025 (4) TMI 1367 - SC ORDER] and in view of the concession made by the Revenue before the Apex Court for the Assessment Year 2015-16, all the notices issued on or after 01.04.2021 will have to be dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and therefore, nothing further is required to be adjudicated in the matters as the notice so far as the present petitions are concerned, though dated 31.03.2021, admittedly have been issued after 01.04.2021.

t is also not in dispute that the notices u/s 148A(b) have been issued pursuant to the decision in Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] dated 04.05.2022 admittedly after 31.03.2022. Therefore, on both counts, the notices issued under section 148 of the Act dated 27/28/29.07.2022 would be time barred.