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Showing 381 to 400 of 175845 Records

2025 (6) TMI 1631

Jurisdiction of DCIT, Circle 3(1)(2) over the case of the assessee - HELD THAT:- The income declared by the assessee in the current year was above Rs. 30 lacs and thus the jurisdiction over the case was with the ACIT/DCIT in accordance with the CBDT Instruction. Merely because the assessment of past year was made by the ITO, it cannot be presumed that the jurisdiction for the current year will remain with the ITO.

The jurisdiction was dynamic considering the CBDT Instruction and the income declared by the assessee in different years. Even if the initial notice u/s 143(2) was issued by the ITO, the jurisdiction was required to be transferred to the ACIT/DCIT considering the fact that the returned income of the assessee in the current year was in excess of Rs. 30,00,000/-.

Therefore, the contention of the assessee that the AO had no jurisdiction over the case can’t be accepted. The jurisdiction over the case for the current year was with the ACIT/DCIT and not with the ITO. The jurisdiction was also rightly assumed by the ACIT/DCIT by issue of notice u/s 143(2) of the Act dated 26.07.2016. Therefore, the assessment order as passed by the DCIT, Circle – 3(1)(2), Ahmedabad in this case cannot be held as without jurisdiction. Accordingly, the ground raised by the assessee in respect of jurisdiction over the case is dismissed.

Conversion of limited scrutiny into complete scrutiny by the AO and making ad hoc addition without identifying the nature of addition - Addition was finally restricted only to the issues of limited scrutiny. In fact, the assessee itself was to be blamed for this addition as no compliance, at all, was made before the AO. The assessee has acknowledged receipt of the notices issued by the AO. When the compliance was made before the ITO, the assessee could have simply filed a copy of those submissions before the AO as well. In the absence of any explanation in respect of the discrepancies on the two of the issues of limited scrutiny, the AO had no option but to make the addition.

The objection taken by the assessee on the addition beyond the limited scrutiny issues is no longer res integra as the same stands rectified by the AO. The entire addition can’t be held as beyond jurisdiction and the assessment order can’t be quashed for this reason. Moreover, the assessment has already been set aside by the CIT(A) for denovo assessment on the issues after giving another opportunity to the assessee to present his case and after verification of the facts of the case. Hence, the assessee, under the circumstances at this stage, is not left with any grievance relating to the impugned additions made by the AO. Therefore, the ground by the assessee in this regard are dismissed.

Assessee is against setting aside the matter to the file of the AO for making fresh assessment - As explained by the assessee itself in the rejoinder to the remand report, these differences could have been reconciled only after obtaining specific information/bill-wise details in respect of the data as uploaded on ITD. In the absence of such details, it was not feasible for the CIT(A) to decide the issue on merit. Therefore, he had rightly set aside the matter to the file of the AO with a direction to allow another opportunity of being heard to the assessee and decide the matter afresh after verification of the facts of the case.

Since the CIT(A) could not have decided the matter on merits in the absence of necessary details, there was nothing wrong in his setting aside the matter to the file of the AO for deciding the matter afresh after conducing further enquiries and verifications as deemed necessary. Therefore, the ground as taken by the assessee is dismissed.

Appeal of the assessee is dismissed.
2025 (6) TMI 1630

Receipts earned by the foreign assessee from Indian customers for provision of software-based information security solutions -Income deemed to accrue or arise in India - income attributable to the alleged PE in India - assertion of Revenue - HELD THAT:- The burden to prove, that assessee has a PE in India lies initially on the Revenue as held in E-Funds IT Solution Inc. [2017 (10) TMI 1011 - SUPREME COURT] As discussed above there was no discussion of ld.Tax authorites on basis of any material available in the form of two agreements, we have discussed to show that any element of agency was there in the respective rights and obligations of two parties.

Evidence such as email record, travel itinerary etc. would not have mattered much. Reliance placed on the judgment of Daikin Industries Ltd [2018 (6) TMI 210 - ITAT DELHI] is differentiated by ld.Sr. Counel submitting in the said case, the Indian entity involved was finalizing products sold by it in the capacity of a distributor as well by the non-resident entity therein, which is not the case herein.

In any case, the above principles have been distinguished by this Tribunal in in the case of Siemens Mobile Communications SPA vs. DCIT, [2019 (10) TMI 512 - ITAT DELHI] Secondly, the reliance placed on the judgment of Rolls Royce Singapore (P.) Ltd. vs. ADIT, [2011 (8) TMI 769 - DELHI HIGH COURT] is also misplaced inasmuch as, in that case the Tribunal had given a factual finding that there existed DAPE and the Hon’ble High Court after concluding that the Tribunal had arrived on wrong conclusion, remanded the matter back to reconsider the issue. In the present case, it has been sufficiently demonstrated above that Zscaler India does not constitute DAPE of the Appellant and is only providing marketing support services to the Appellant.
2025 (6) TMI 1629

Deduction u/s 80P(2)(d) - interest income earned from investments made with cooperative banks - HELD THAT:- Exemption provisions have to be strictly interpreted, the submissions of the Ld. DR and as has been elaborately discussed and brought out in the orders of the Hon'ble Karnataka High Court in the case of Bangalore Club as well as Totagars [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] in which reliance has been placed upon the judgment of Hon'ble Supreme Court, the interest received from Cooperative Banks, even though they are Cooperative Societies, is not allowable in view of the express provision of sub-section (4) of section 80P of the Act as the Cooperative Banks have been treated at par with the Scheduled Banks and the deduction u/s 80P of the Act is allowable only for the interest received from the Cooperative Society per se and not from the Cooperative Bank.

DR has amply demonstrated how the reliance on the decisions by the Ld. AR is not applicable to the facts of the case being distinguishable. Hence, the appeal of the Revenue is allowed, the order of the Ld. CIT(A) is set aside and the order of the Ld. AO is confirmed on this issue. Appeals filed by the Revenue are allowed.
2025 (6) TMI 1628

Reopening of assessment u/s 147 - reasons to believe - Additions u/s 56 - addition of the gift received from 20 donors in respect of equity shares - principles of doctrine of relating bank

HELD THAT:- Coordinate Bench in the case of Charanjiv Lal Aggarwal [2017 (4) TMI 390 - ITAT AMRITSAR] we are of the view that the reassessment order is liable to be quashed as it is noticed that the reasons recorded are undated which itself proves that the AO has not applied his mind. Secondly the same are founded on incorrect facts and reflects a manifest non-application of mind.

AO had not made any positive enquiries as the reasons cited rely solely on ‘uncorroborated and unconfronted information’, without any independent verification or inquiry. Furthermore, the assumption that the entire amount of ₹100 per share (comprising ₹10 face value and ₹90 share premium paid by the donors) constitutes taxable income in the hands of the appellant is in gross contravention of Section 56(2)(vii)(c) of the Income Tax Act and such an interpretation is legally untenable.

Whether additions could have been made during the year under consideration or not? - We noticed that the shares were gifted and transferred by the donors to the assessee on 09.04.2009 as per the respective letters of the donors and also as per gift deed dated 30.04.2009, wherein the donor had ‘gifted and transferred’ all the rights of the shares in favour of assessee along with other supporting documents.

Company who had issued the shares to the respective donors had requested for gift deeds to be on stamp papers, therefore on 18.09.2010 the gift deeds on stamp papers were supplied. Thus by applying the principles of doctrine of relating bank, the same could be effective from 09.04.2009 and 30.04.2009 itself.

In this way, the entire transaction of gift stood completed between the donor and the done on 09.04.2009 itself. Even delivery of share certificates to the Donee was not necessary in view of section 122 of the transfer of property act, as has been held in the case of Vasudev Ramchandra Shelat Vs Pranlal Jayanand Thakkar [1974 (7) TMI 78 - SUPREME COURT]

AO had merely raised doubts and has not conducted and independent enquiry worth a name to refute the submissions of the assessee and has not even doubted the veracity and genuineness of the gift deeds. Even the provisions of section 56(2)(vii)(c) of the I.T. Act was introduced with effect from 01.10.2009 i.e F.Y 2009-10 (A.Y. 2010-11) and the shares were already gifted in the name of the assessee by the donors prior to that. Thus, the provisions of section 56(2)(vii)(c) of the Act is not applicable to the assessee so far, the above gifts are concern. It is only that the gift deed was stamped on 18.09.2009 at the request of the Company, the AO initiated the reassessment for AY 2011–12, whereas AO himself admitted that gift deed was executed on 30.04.2009 itself. Thus, in this background, no additions were called for in the hands of the assessee for the year under consideration i.e A.Y 2011-12.

Thus, AO erred in initiating the re-assessment and making additions in the hands of the assessee u/s. 56(2)(vii)(c) for the year under consideration. Assessee appeal allowed.
2025 (6) TMI 1627

Validity of notice issued u/s. 148 on account of being barred by limitation - Time limit for notice - purpose of first proviso to section 149 under the new regime - procedural requirements under section 148A, introduced by the Finance Act, 2021 - HELD THAT:- The first proviso to Section 149 of the Act provides that no notice under Section 148 shall be issued at any point of time in a case for a relevant assessment year beginning on or before the 1" day of April 2021, if a notice under Section 148 could not have been issued at that time on account of being beyond the time limit specified under the provision of clause (b) of sub-section (1) of this Section, as it stood immediately before the commencement of the Finance Act, 2021. The purpose of the first proviso to Section 149 of the Act is consistent with the stated object of the government to make prospective amendments in the Act.

Accordingly, the proviso provides that up to Assessment Year 2021- 2022 (period before the amendment), the period of limitation as prescribed in the erstwhile provisions of Section 149(1)(b) of the Act would be applicable and only from Assessment Year 2022-2023, the period of ten years as provided in Section 149(1)(b) of the Act, would be applicable.

It is pertinent to take note of the observations and findings of the Hon'ble Supreme Court in the case of Union of India and others vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] wherein the first proviso to section 149(1)(b) has been deliberated in detail.

In the present case, notice issued u/s. 148 is dated 19.04.2022 which was issued pursuant to order passed u/s. 148A(d) which is also of the even date, wherein it was held by the AO that it is a fit case to issue notice u/s. 148.

The moot case of the controversy arisen in this case is on account of show cause notice issued u/s. 148A(b) which is dated 24.03.2022 and is prior to the date of 31.03.2022 when the limitation under the old regime expires. However, the notice u/s. 148 is issued subsequent to this date, i.e., on 19.04.2022. Thus, the process of initiation of considering whether reopening is to be done or not was initiated within the limitation period available as per the old regime but it got concluded beyond the period of limitation. In this background from the perusal of provisions contained in section 149(1), we note that it states that no notice u/s. 148 shall be issued for the relevant Assessment Year prescribing the conditions and time limit.

It does not refer to show cause notice/s.148A(b). The first proviso to section 149(1)(b) also carves out an exception to the limitation in respect of notice u/s. 148 and not under section 148A(b). In the case of Hexaware Technologies Ltd.[2025 (6) TMI 1494 - BOMBAY HIGH COURT] has categorically held that if a notice u/s. 148 is not with the time prescribed under the first proviso to section 149(1)(b) then, such period cannot be extended by fifth proviso and sixth proviso to the said section.

Admittedly, the undisputed fact in the present case is that impugned notice issued u/s. 148 is dated 19.04.2022 which is after the limitation expired on 31.03.2022 within the meaning of first proviso to section 149(1)(b). In view of the above stated deliberations, on the factual matrix of the present case and the applicable law including the jurisprudence discussed above, we hold that notice for Assessment Year 2015-16 issued on 19.04.2022 u/s. 148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in impugned re-assessment proceedings as well as the impugned assessment order bad in law. Accordingly, ground nos. 1 and 2 raised by the assessee are allowed.
2025 (6) TMI 1626

Denial of exemption claimed u/s. 11 - delay in filing the audit report u/s 10B- procedural provision - mandatory v/s directory requirement - HELD THAT:- We find that the assessee had not been granted the exemption under section 11 as there was delay in filing the audit report u/s.10B of the Act but the same was available at the time of processing of the return.

As decided in Indian Sugar Mills Association [2024 (1) TMI 1445 - CALCUTTA HIGH COURT] filing of the auditor’s report along with the return of income has to be treated as a procedural requirement and, therefore, directory in nature and not mandatory. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the ld. CIT(A) as well as the intimation order passed by the CPC and remit the matter back to the file of the Assessing Officer for considering the claim of the assessee afresh as the audit report was available at the time of processing of the return, therefore, the claim u/s. 11 of the Act could not be denied. The Ld. AO is directed to allow the claim u/s 11 of the Act as per law and after considering the audit report filed on Form No. 10B - Appeal of the assessee is treated as allowed for statistical purposes.
2025 (6) TMI 1625

Denial of exemption u/s 11 - audit report in Form No. 10B had not been filed within the specified date - procedural v/s mandatory provision - HELD THAT:- We have considered the rival submissions. It is noted that Form No.10B had not been uploaded within the due date, which is claimed to be unintentional on the part of the assessee. However, it is noted that the same was available before the Ld. Assessing Officer at the time of processing of the return of income and was uploaded by the Chartered Accountant in time.

The filing of Form No.10B has been held to be a procedural requirement and directive in nature and not mandatory. As decided in M/s Indian Sugar Mills Association [2024 (1) TMI 1445 - CALCUTTA HIGH COURT] that the filing of the auditor’s report along with the return of income has to be treated as a procedural provision and therefore, directory in nature.

We deem it appropriate to set aside the order of the Ld. CIT(A) as well as the intimation of the Ld. AO and remit the matter back to the Ld. AO for considering the claim of the assessee afresh as the audit report was available at the time of processing the return of income and therefore, the claim of exemption u/s 11 of the Act had to be allowed - Appeal filed by the assessee is allowed for statistical purposes.
2025 (6) TMI 1624

Disallowing the interest expenses incurred u/s 36(1)(iii) - deployment of the funds in mutual funds and fixed deposits - As contended on behalf of the Assessee that the funds were borrowed for the purpose of business, the requirement of Section 36(1)(iii) of the Act stood fulfilled, and therefore, the deduction was correctly claimed under Section 36(1)(iii) - HELD THAT:- We note that the AO did not dispute the fact that funds were borrowed for the purpose of business. The reason for disallowance made by the AO was that the funds were utilized for the purpose other than business (i.e. for making investment in shares and securities).

On perusal of records following facts emerges that the Assessee had raised debt capital by way of issuance of debentures for the stated purpose of purchasing plot of land on 21/04/2014 and the payment for the acquisition of the said plot of land of was to be made on 28/04/2014. Thus, the Assessee had an interim period of 7 days for which the funds were idle.

Assessee was aware that the investment made by utilizing the aforesaid funds, would be liquidated on or before 28/04/2014 and funds received would be utilized for the purchase of plot of land.

In our view, the Assessee had carried out the aforesaid activity in a systematic manner and the same would qualify as adventure in the nature of ‘business’ as defined in Section 2(13) of the Act. The Assessee was not seeking to earn gains on appreciation of the value of the investment. To the contrary, the intention of the Assessee was to earn income by way of purchase/sale of mutual funds and interest income from fixed deposits to offset the corresponding interest cost incurred in the aforesaid period of 7 days. Thus, the action of the Assessee to utilized funds for making investments/deposits was necessitated on account of commercial expediency. Therefore, we are of the considered view that the Assessee was correct in claiming deduction u/s 36(1)(iii) of the Act.

Benefit of lower rate of tax in respect of the Short Term Capital Gains - Assessee had claimed income as exempt dividend income - Computation of Income furnished by the Assessee supports the aforesaid submissions advanced on behalf of the Assessee. Therefore, even if the income from purchase/sale of investments was characterized as business income, there would have been no change in the final outcome. Instead of inter-head set off of business loss with Capital Gains u/s 71(2) of the Act, the income from purchase/sale of investment would offset the interest expenses debited to Profit & Loss Account. Accordingly, we accept Assessee’s claim for deduction of interest expenses u/s 36(1)(iii) of the Act. However, we note that the Assessee had claimed income as exempt dividend income. Section 14A of the Act provides for disallowance of expenses incurred for earning exemption income. Accordingly, interest expenses pertaining to funds deployed in investments yielding exempt dividend income during the interim period of 7 days would be hit by the provisions of Section 14A of the Act. We note that the CIT(A) had also referred to the provisions contained in Section 14A of the impugned order. Accordingly, the Assessing Officer is directed to make disallowance of party of interest expense of INR.1,56,06,164/-,if any, attributable to investments yielding exempt income of INR.4,54,581/- under Section 14A of the Act. For the aforesaid, we direct the Assessee to furnish to the Assessing Officer the details of investments made during the interim period of 7 days in investments yielding exempt income, along with the date of purchase and sale of such investments and the source of such investments. It is clarified that the Assessee would be granted a reasonable opportunity of being heard.

Accordingly, the Assessing Officer is directed to allow deduction claimed by the Assessee for interest expenses of INR.1,56,06,164/- under Section 36(1)(iii)after making disallowance under Section 14A of the Act, if any, as per the aforesaid directions. In view of the aforesaid, the deduction granted by the Assessing Officer while computing Income from Other Sources shall stand reversed/disallowed.

Alternative contention raised on behalf of the Assessee - As contented on behalf of the Assessee that interest cost debited to the Profit and Loss Account should be treated as ‘cost of acquisition’ of investments and the same should be taken into account while computing the capital gains earned during the relevant previous year - contention of the Assessee that the fund were, admittedly, borrowed for the purchase of plot of land for the Project - HELD THAT:- As we have already concluded that the Assessee had entered into an adventure in the nature of trade by utilization of funds raised which were idle for an interim period of 7 days. It was on account of utilization of funds that the cost was attributed to the business activity carried out by the Assessee. Therefore, the alternative submissions made on behalf of the Assessee cannot be accepted.
2025 (6) TMI 1623

TP Adjustment - benchmarking the international transactions of providing of Software Development Services - Comparable selection - whether or not the TPO/DRP are justified in benchmarking the international transactions of providing of Software Development Services (in short “SDS”) by the assessee company by not applying the turnover filter and including the comparables with exceptionally high turnovers in the final list of comparables ? - HELD THAT:- We are of the firm conviction that the TPO/DRP had grossly erred in including the aforesaid five comparables in the final list viz., (i). Infosys Ltd; (ii). Wipro; (iii). Larsen & Turbo Infotech Ltd; (iv). Mindtree Ltd; and (v). Tata Elxsi Ltd. We thus, in terms of our aforesaid deliberations direct the TPO/ DRP to exclude the aforesaid five comparables from the final list of comparables. With this view of the matter, we direct the TPO/AO to take the range of turnover filter at ten times on both the ends and conduct afresh search to arrive at a plausible view. We thus, in terms of our aforesaid deliberations restore the matter to the file of the TPO for carrying out a fresh benchmarking of the international transaction of SDS provided by the assessee company during the subject year.

Benchmarking of the international transaction of the interest paid by the assessee company to its AE on the Indian Rupee denominated External Commercial Borrowings (ECB) - TPO rejected the benchmarking approach adopted by the assessee company of the interest paid on the Indian Rupee denominated ECBs by the assessee company to its AE by applying the SBI-PLR, and substituting the same by adopting the interest rate paid on Masala Bonds rates gathered from the public database, as the Most Appropriate Method under CUP - HELD THAT:- When the borrower’s liability is in Indian rupees, then, the appropriate benchmark should generally be an Indian Rupee denominated lending rate available in the Indian domestic market. We thus, are of the firm conviction that the risk profile of the borrower in Indian rupee denominated ECB is similar to a domestic Indian rupee loan and cannot be equated with a foreign currency loan.

We find that in the case of Adama India Pvt Ltd [2019 (7) TMI 1316 - ITAT HYDERABAD] had observed, that as in the case of an Indian rupee denominated loan the currency risk is not borne by the assessee as the loan is denominated in Indian rupees, therefore, the interest rate on such loan should be benchmarked with the Indian domestic rates. We are of the view that the aforesaid order of the Tribunal supports the claim of the assessee company that for an Indian Rupee – denominated ECB, where the borrower’s liability is in Indian Rupees, the appropriate benchmark is the domestic Indian rupee lending rate.

As relying on Invesco (India) Private Limited [2025 (4) TMI 83 - ITAT HYDERABAD] a loan whose liability for a borrower is in Indian rupee should be benchmarked against domestic Indian rupee lending rates, and not against external Masala Bond rates which carry a different risk for the lender. We, thus, are of the firm conviction that as the assessee company had benchmarked its interest payment on INR denominated ECB of 10.45% against SBI-PLR of 13.75%, therefore, the same based on our aforesaid observations read along with the judicial pronouncements can safely be held to be within Arm’s Length. Accordingly, we direct the AO/ TPO to vacate the TP adjustment qua the interest paid by the assessee company on the INR denominated ECB to its AE.

Apropos the claim of the assessee company that the AO while computing the tax demand had erred in not granting the advance tax credit, despite the fact that the same was disclosed in its 26AS, we are of the view that as the said issue will require necessary verification, therefore, the AO is directed to look into the matter. If the claim of the assessee company is found to be in order, then credit of the amount of the advance tax deposited by the assessee company be allowed as per the extant law.

Appeal filed by the assessee company is allowed.
2025 (6) TMI 1622

Exemption u/s 10(10B) - compensation under scheme approved by Central Government under Retirement Scheme 2019 (Voluntary Retirement Scheme)

HELD THAT:- In this case, the Assessee received first installment of compensation/exgratia on VRS during the financial year 2019-20 upon which the claim exemption u/s 10(10B) of the Act to the Assessee has been allowed by the CIT(A)in the appellate order in relation to the assessment year 2020-21.

In respect of the 2nd installment of compensation/exemption on VRS the claim of the assessee has been disallowed, which in my view is not justified. When the claim of the Assessee relating to the first installment has been accepted by the Ld. CIT(A). There was no question to reject the claim of the Assessee in relation to second installment of compensation received by the Assessee.

Assessee had duly demonstrated that the Assessee had not been paid salary for the last so many months and there was no option to the assessee than to accept the VRS scheme which, in fact, was retrenchment scheme in the garb of the VRS scheme. The amount received by the Assessee was, in fact, the compensation on account of retrenchment.

As relying on Sh. Sarabjit Singh vs Income Tax Officer [2019 (4) TMI 2180 - ITAT CHANDIGARH] the impugned disallowance made by the lower authorities is ordered to be deleted. Assessee appeal allowed.
2025 (6) TMI 1621

Survey action - Addition on account of certain ledgers recorded in the two diaries found in the survey action - Addition in the hands of Shri Jatin Shah on substantive basis - HELD THAT:- When the substantive addition arising out of separate ledgers made in the hands of Shri Vinay Shah and Shri Ketan Shah have been included in the peak calculation of income in the hands of the Shri Jatin Shah, then the reverse protective addition of such amount in the hands of the assessee has no legs to stand because ledger account which have both debit and credit entries but appeared to bear the names of family members viz., 'VRS', 'KRS', 'Kunal', etc. now cannot be substantially taxed in the hands of Shri Vinay Shah or Shri Ketan Shah. Because, when on entire entries, peak has been worked out and taxed in the hands of Jatin Shah then everything gets subsumed in the peak calculated in the case of Shri Jatin Shah. It is a matter of fact that peak balance of income has already been taxed by the ld. AO in the hands of Shri Jatin Shah on substantive basis.

Quantum of peak credit which is liable to be taxed in the hands of Jatin Shah, we will discuss this issue while dealing in the appeal of Shri Jatin Shah. Accordingly, we uphold the order of the ld. CIT (A) holding that the entire entries made in the diary both with regard to debit and credit even which bear the names of family members of Shri Vinay Shah, cannot be taxed in the hand of the assessee as they have been substantively taxed in the hands of Shri Jatin Shah. Accordingly, the order of the CIT (A) is upheld and this issue raised by the department, i.e., ground No.1 in A.Y.2015-16 and ground No. 1 & 2 in A.Y.2019-20 are dismissed.

Disallowance of loss in derivative option alleged to be non-genuine - AO has heavily relied upon the ad interim order of the SEBI and rejected the various explanation of the assessee holding that the loss incurred on trading in options are not genuine and disallowed the same - CIT(A) deleted addition - HELD THAT:- CIT (A) from the basis of facts and material on record and after considering the reasoning given by the ld. AO has noted that assessee has been a regular trader in option / currency derivatives and has worked through various brokers in the past as well as during the year and assessee had shown profits from transaction with some brokers while losses in other transactions. The consolidated income / loss declared in the return of income have not been doubted nor AO has carried out any enquiry to dislodge the authenticity of the trades done through any broker. In such facts, it cannot be stated that only one isolated transaction was pre-meditated only to incur loss.

One very important fact which has been noted by the CIT (A) are that there are 17 counter parties to the assessee's transaction which has been reproduced by the ld. AO in his order however, in the ad-interim of SEBI, none of these parties have even been mentioned or there is any whisper that they were indulged in synchronized trading. As regards to the statement of the assessee, during the survey wherein assessee has offered to withdraw the loss in light of the statement of the property of Goodluck Securities and ad-interim SEBI order, the same was given on the presumption that Ad-interim SEBI order was in force and the statement of Goodluck Securities was correct. However, nowhere assessee had finally offered any such loss or offered to disallow such loss.

For SEBI ad-interim order, the same was passed exparte and it is also a matter of fact vide subsequent order dated 22/08/2016, SEBI has provided interim relief to the assessee giving permission to buy and sale commodities for taking position, liquidity shares, mutual funds etc. Later, even Ad-interim was vacated by the subsequent order of SEBI vide order dated 05/04/2018. Thus, the very basis on which ld. AO has disallowed the loss i.e. Ad-interim order of the SEBI itself stands vacated. Thus, his entire premise of the AO falters.

Thus addition made by the AO cannot be sustained and accordingly, the finding of the ld. CI T(A) is upheld and the grounds raised by the Revenue are dismissed.

Disallowance made u/s 14A - contention of assessee is that the assessee has not incurred any expenditure for earning of any exempt income and ld. AO has failed to establish as to how assessee has incurred expenditure in respect of the exempt income - HELD THAT:- We find that assessee has earned exempt income on investments made and once there is exempt income, then the first onus is on the assessee to show whether assessee has incurred any expenditure for earning of the exempt income then it needs to be quantified; or if no such expenditure is attributable out of expenditure debited to the profit and loss account, then having regard to the nature of expenses debited and accounts assessee has to show that no expenditure can be attributed. Onus then shifts to the Ld. AO to record his satisfaction having regard to the nature of of account once the claim of the assessee has been made and after recording his satisfaction he can proceed to disallow u/s. 14A r.w.r. 8D. Accordingly, we do not agree with the contention of the ld. Counsel that no disallowance can be made, because no where assessee has given any working as to why no expenditure can be attributed. However, we agree with the alternate contention of the assessee that disallowance u/s.14A should be confined only after considering those investments which have yielded exempt income during the year under consideration.

Accordingly, AO is directed to verify the working and the disallowance u/s.14A should be restricted only after considering those investments which have yielded exempt income during the year as per the working given above in the above mentioned assessment years. Accordingly, the grounds raised by the assessee are partly allowed.

Addition u/s.69A and 69C - Addition of peal credit - Contention of the assessee has been that it has earned commission/brokerage income to arrange such transactions - same has been rejected by ld. AO on the ground that assessee has not provided the identity of the parties and has himself offered income on peak credit basis - HELD THAT:- Addition on account of peak credit is justified on the facts of the case, because, ostensibly there are clear cut entries and cash transaction of loan which assessee could not explain the nature and source of party wise entries. Thus, the admission of the assessee before the Investigation Wing and before the ld. AO that addition should be confined to peak credit cannot be rescinded. Accordingly, in principle, we uphold the addition made on account of peak credit. The total peak credit in various years was worked out to Rs. 39,07,73,526/-, which working is not in dispute by both the parties as same has been meticulously worked out by the CIT(A) and no defect has been pointed out in such working of peak credit. We also agree with the Ld. CIT (A) that thereafter, net addition made u/s.69C has to be telescoped against the peak addition. The reason being that income as well as expenditure have been noted in the same books and as part of the same activity carried out by the assessee and therefore, benefit of telescoping while determining the quantum of unaccounted expenditure should be allowed and only the net income after reducing the corresponding expenditure shall be taxed in the respective years.

CIT (A) has tabulated unexplained income and expenditure and thereafter, the net addition u/s.69A and 69C has been telescoped against the peak addition. Accordingly, the net peak is confirmed.

Seperate addition u/s.69A and aggregate addition u/s.69C the same is also confirmed, because we agree with the reasoning given by the ld. CIT(A) that these are the separate ledgers on which income and expenditure has been accounted for and after benefit of telescoping the net income as well as expenditure has arrived in various years needs to be confirmed. Accordingly, the order of the ld. CIT (A) is upheld.

Disallowance u/s. 14A - assessee is a regular trader and investors in shares and Securities and has earned exempt income from investments held - AO himself has made disallowance u/s.14A r.w.s. 8D on the ground that no disallowance has been offered by the assessee or any expenditure has been earmarked for the purpose of earning exempt income. The assessee has earned disallowance. However, the case of the assessee is that disallowance should be computed only on those investments which has yielded exempt income and as per the working given, the disallowance comes to Rs. 3,20,215/-, accordingly, we direct the ld. AO to verify the working and restrict the disallowance u/s.14A to the extent of those investment which has yielded exempt income. In the result, this issue is partly allowed.
2025 (6) TMI 1620

Non- deduction of TDS foreign payment u/s 40(a)(i) - Unexplained expenditure disallowed u/s 69C - CIT(A) considering details and explanations along with documentary evidence, held in favour of the assessee by deleting the addition made by AO on account of unexplained expenditure u/s 69C and disallowance u/s 40(a)(i) - HELD THAT:- The factual position remains uncontroverted as nothing is brought on record by the ld. Sr. DR to dislodge the claim of the assessee. Furthermore, reference is made to Form 26AS of Wunderman Pte Ltd for the year under consideration which reflects the TDS done by the assessee on the amount of Rs. 5,29,04,162/-. Considering the facts and detailed discussion backed by relevant documentary evidences, we do not find any reason to interfere with the finding arrived by the CIT(A) deleting the addition made by the ld. Assessing Officer. Accordingly, ground nos. 1 and 2 by the revenue are dismissed.

Unexplained nature of the software expenses - CIT(A) treated as capital expenditure - Contention of the assessee is that these expenses are incurred towards IT support services including software license fee and are not for acquiring any right in the software - HELD THAT:- CIT(A) after deliberating in detail on the submissions made by the assessee and going through the records held in favour of the assessee to delete the addition made by taking the view that IT support charges paid are not for acquiring any right in the software and but paid as licence fee for use of the software, which is renewable on a yearly basis.

Before us, factual position along with aforesaid submissions were reiterated. The same are considered along with material placed on record and observations of the authorities below. No reason to interfere with the finding arrived at by theCIT(A) whereby the addition made by AO is deleted. Accordingly, ground no. 3 by the revenue is dismissed.
2025 (6) TMI 1619

Validity of Approval u/s 153D - single composite order covering multiple assessment years - HELD THAT:- As relying on JSS Buildcon Private Limited [2025 (6) TMI 479 - ITAT DELHI] proceedings initiated u/s 153 A/143(3) of the Act in the absence of a valid approval granted by the Addl, Commissioner of Income Tax Central Range Lucknow. Appeal of the assessee is allowed.
2025 (6) TMI 1618

CIT(A) passed ex parte order - appellate authority has passed the impugned order without hearing the assessee which is in violation of subsection (6) of section 250 - HELD THAT:- As noted that the CIT(A) has given (3) notices to the assessee and finding no response from the assessee has passed ex parte order. The reasons for the assessee for not responding to the notices of the Ld.CIT(A) was because the notices issued by the Ld.CIT(A) went unnoticed, because it went into ‘SPAM’ e-mail account of the assessee instead of going into in the ‘Inbox’ which may be due to technical glitches.

Be that as it may, since the assessee was dark about the appellate proceedings going on, the assessee was not able to respond to the notices issued by the Ld.CIT(A).

Therefore, in the interest of justice and fair play, we set aside the impugned order of the CIT(A) and restore the appeal back to his file with a direction to adjudicate the grounds of appeal raised by the assessee and the assessee is at liberty to raise all the issues including legal issues before him and file written submissions/relevant documents to substantiate the same and the Ld.CIT(A) to pass orders in accordance with sub-section (6) of section 250 of the Act after hearing the assessee.
2025 (6) TMI 1617

Penalty levied u/s. 272A(1)(d) - appeals filed by the assessee to be non-maintainable only on the ground that appeals were belatedly filed and that too by five & eight days - HELD HAT:- It should be borne in mind that “justice should not only be done, but it must be seem to be done”. In the instant case, even if the Ld.CIT(A) felt that there was delay in filing of the appeal, then he was not precluded from asking the assessee to file the reason for the delay which he has not done in this case.

Therefore, there is per-se violation of natural justice and hence, the impugned action need to be interfered with and we do so, by setting aside the impugned orders of the CIT(A) i.e. both the cases; and also we condone the delay of five (5) days & eight (8) days in filing of appeals against the assessment order as well as penalty order; and direct the Ld.CIT(A) to decide the grounds of appeal raised by the assessee on merits as mandated by sub-section (6) of section 250 of the Act after hearing the assessee.
2025 (6) TMI 1616

CIT(A) has passed an ex parte order qua assessee - CIT(A) was of the view that since eight (8) notices of his went unanswered by the assessee, he dismissed the appeal of the assessee and confirmed the action of the AO - HELD THAT:- We find that there is per se violation of natural justice and therefore, we set aside the impugned order of the CIT(A) and restore the appeal back to the file of the Ld.CIT(A) with a direction to decide the appeal in accordance to law as per sub-section (6) of section 250 and the AR has undertaken to diligently participate in the appellate proceedings and seek video conferencing facility which may be extended to the Ld.AR of the assessee. CIT(A) to decide the appeal on merits after hearing the assessee.

Appeal filed by the assessee is allowed for statistical purposes.
2025 (6) TMI 1615

Validity of order passed by PCIT cancelling 12A registration granted to the assessee - charitable activity u/s 2(15) - as per revenue during the course of search, various 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 and also violation of section 13(1)(c)

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 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. Similarly, invoking the provision of Section 12AB(4) of the Act by the PCIT to cancel registration for specified violation is also not permissible at the same has not seen the light of day prior to 01.04.2022; the same is therefore, not applicable to Assessment Years 2015-16 to 2021-22 as wrongly has been applied in the case in hand.

Thus, issuance of show cause notices proposing cancellation of registration alleging specified violation occurred prior to 01.04.2022 i.e. for Assessment Year 2015-16 to 2021-22 and the final order passed by the Ld. PCIT cancelling registration of the appellant society for Assessment Year 2015-16 to 2021-22 by wrongly invoking the provision of Section 12A r.w.s 12AA and 12AB(4) of the Act is found to be erroneous, bad in law, whimsical, in non application of mind and thus, unsustainable.

Further direction given by the Ld. PCIT to this effect that even if the appellant society is found that specified violation is not in existence then also the consequential cancellation order would continue to operate independently by and under the impugned order dated 31.03.2024 is nothing but colourable exercise of power, not only arbitrary or erroneous but establishes the biasness on the part of the authorities below; by hook or crook the authority was bent upon to cancel the registration of the appellant trust which is evident from such observation and/or decision made by the Ld. PCIT. In fact, on that score alone the order passed by the PCIT is also found to be bad in law and liable to be quashed - Assessee appeal allowed.
2025 (6) TMI 1614

Validity of approval granted u/s 153D by Add CIT - HELD THAT:- The word/phrase "written approval" is not mentioned in the section 153D of the Income tax Act, 1961. The only phrase used is "the prior approval". Therefore, the contents of the written order of the JCIT/AddI. CIT are legally not required to be examined or considered, for meeting the legal or factual requirements of the approval under section 153D.

The order by the Addl. CIT/JCIT under section 153D is an Administrative Order, by the higher authority i.e. JCIT/AddI. CIT to the lower authority, i.e. AO. Such an order is not a quasi-judicial or judicial order. Therefore, the legal requirements and benchmarks regarding the principles of "the application of mind" and "the speaking order" are not as strict or high, as they are in the case of quasi-judicial or judicial order.

As relying on Anuj Bansal’s case [2023 (7) TMI 1214 - DELHI HIGH COURT] approval u/s 153D dated 13.05.2016 is declared as illegal. Consequently, the impugned assessment orders of Ld. AO and Ld. CIT(A) are unsustainable and are set aside. Assessee appeal allowed.
2025 (6) TMI 1613

Addition u/s 68 - addition on account of share application money - Onus to prove - unexplained credits - as per AO primary onus on the assessee company to prove the creditworthiness of the share applicant not proved - As per AO unreasonably huge amount of share premium was taken on the shares issued, despite the fact that the assessee's financials were weak and did not support such a huge premium.

HELD THAT:- The assessee having discharged primary onus by filing all necessary documents, the onus thereafter shifted to the Department, who needed to carry out further inquiry before arriving at any conclusion or finding with regard to the explanation furnished by the assessee being unsatisfactory, and having failed to do so, therefore, the CIT(A), we hold, has rightly held that the explanation of the assessee cannot be said to be unsatisfactory for the purpose of invoking section 68 of the Act.

The case of the Revenue of the credit worthiness of the share applicant not being established is we find, incorrect. The assessee having demonstrated the fact of the share applicant having made investment through banking channels and having even provided details of the source from where the share applicant made the advance by giving details of all credits appearing in his bank account, the creditworthiness of the share applicant was we hold sufficiently demonstrated.

The case of the Revenue, if any, we find, merely rests on the financials of the assessee-company not supporting the huge premium collected by it, but that, we agree with the ld. CIT(A), cannot be the ground for doubting the explanation of the assessee, particularly, when all documentary evidences to prove the genuineness of the transactions have been filed by the assessee, and there is no infirmity found by the Department in the same.

As decided in Chain House International P.Ltd. [2019 (2) TMI 1213 - SC ORDER] in this regard, is apt, wherein the Hon'ble Apex court has categorically held that once the genuineness, credit-worthiness and identity of the investors are established, no addition can be made of cash credit on the ground that shares were issued at excess premium.

Assessee appeal allowed.

Validity of reopening of assessment - reasons to believe - new information in the possession of the AO for reopening the case of the assessee or not? - HELD THAT:- DR was unable to controvert the factual findings of the CIT(A) that the information or basis, on which the reopening was resorted to by the AO was also in the possession of the AO during the original assessment proceedings, who had duly examined it, questioned the assessee regarding it, and to which the assessee had furnished explanation duly substantiated with evidences.

The findings of the CIT(A) therefore that there was no new information in the possession of the AO for reopening the case of the assessee, and that reopening was resorted to only on a change of opinion is therefore factually correct. DR had no quarrel with the proposition of law applied by the CIT(A) for holding the reassessment proceedings to be invalid since it was based on mere change of opinion of the AO and there was no new information in the possession of the AO. Decided against revenue.
2025 (6) TMI 1612

Petition for adjournment filed by the assessee - HELD THAT:- As held by the hon’ble High Court, there is no vested right for the appellant / assessee / petitioner to take the adjournment and as per the decision of Hon'ble High Court in the case of R.B.Seth Jessaram Hospital [2024 (11) TMI 1429 - DELHI HIGH COURT] the adjournment petition filed is required to be dismissed, if it is motivated, cryptic and without assigning any valid reasons. In view of the above, petition for adjournment filed by the assessee is dismissed.

Validity of assessment proceedings initiated u/s 153C OR 143(3) - search as conducted in the case of another entity - addition towards undisclosed receipts and towards unexplained advances from customers - HELD THAT:- From the conjoint reading of sections 142 and 143 of the Act, it is amply clear that the AO is required to pass order in writing, making the admission of total income or loss of the assessee and thereby determines the amount total payable by the assessee, however, at the time of passing of the order, the evidences as produced by the assessee or such other evidence, as the AO may require or specified, or such other material, which he has gathered or came to his possession were required to be considered.

Undoubtedly, in the present case, the documents showing the payment of Rs. 18 crores were found at the time of search in the premises of M/s. MBS Jewellers Private Limited, and the very said document was used by the AO of the assessee for making the addition in the hands of the assessee.

As mentioned by the AO / CIT-DR that the assessment for the year under consideration is the search year and therefore, the rigors of Section 153C of the Act are not attracted. In our view, the additions are required to be made by the AO within four corners of Section 143(3) of the Act.

We noticed that AO in the present case has passed the order under Section 143(3) of the Act, being the search year, and not under Section 153C of the Act, there is a difference between the powers of the AO when the AO is passing the order under Section 143(3) and the order passed by the AO under Section 153C, read with Section 143(3) of the Act. For the purposes of Section 153C, there has to be some satisfaction recorded by the AO before using the information in respect of the orders.

In the present case, CIT(A) without applying his mind and without considering the fact that the assessment year under consideration is the search year, has deleted the addition on the wrong understanding that the requirement u/s 153C of the Act are required to be fulfilled and for that purposes, CIT(A) has wrongly relied upon the order passed by the Tribunal for the assessment years which are covered by the search. We cannot countenance the same being contrary to Act. Therefore, in our view, the finding of ld.CIT(A) is without any basis and accordingly, we set aside the order of ld.CIT(A).

As we have annulled and set aside the order passed by the ld.CIT(A), we noticed that the ld.CIT(A) has not adjudicated the grounds raised by the assessee on merit and therefore, for the purposes of deciding the issues on merit, we deem it appropriate to remand back the matter to the file of LD.CIT(A) to decide the issue afresh on merit. Accordingly, the appeal of Revenue is allowed for statistical purposes.