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Income Tax - Case Laws
Showing 441 to 460 of 175845 Records
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2025 (6) TMI 1496
Seeking to quash Panchanamas of Seizure of gold jewellery claimed as Stock-in-Trade weighing 4698.81 consisting of various gold ornaments approximately valued at Rs.3.17 crores
HELD THAT:- We find that after the gold was seized by the Railway Police Force, the same was requisitioned by the Deputy Director of Income Tax u/s 132A of the IT Act. Under the provision of Section 132B, and more particularly the first proviso thereto, the party aggrieved by such requisitioning or seizure, can make an Application for release of the assets seized and / or requisitioned, as the case may be. That Application has to be made within a period of 30 days from the end of the month, in which the assets were seized. The first proviso also stipulates that this Application had to be made to the AO.
Such an Application was made by Petitioner No. 1 on 2nd January 2025. However, it appears that this Application has been addressed to Dy. Director of Income-Tax (Inv.) [DDIT(Inv.)] and not to the Assessing Officer. Considering these peculiar facts, we are of the opinion that interest of justice would be served if the aforesaid Application is decided by the Assessing Officer as required under the first proviso to Section 132B of the IT Act. We are informed that the Assessing Officer is one Mr. Arun Udharao Bende, DCIT, Central Circle-I.
We according dispose of the above Writ Petition by directing the said AO to decide the Application filed by Petitioner No. 1 before the DDIT (Inv.), as expeditiously as possible and in any event, within a period of six weeks from today.
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2025 (6) TMI 1495
Denial of benefit u/s 12A - delay of eight days in submitting the audit report in Form-10B prescribed under Rule 17B of the IT Rules - HELD THAT:- Applying the legal position discussed in similar fact-situation as obtained in Action Research for Health and Socio-economic Development [2025 (5) TMI 1500 - ORISSA HIGH COURT] this Court is of the opinion that the Commissioner of Income Tax (Exemption), Hyderabad has not applied his conscientious mind in proper perspective.
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 of the IT Act.
Thus, 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.16/2024, dated 18.11.2024.
Ergo, finding that there was “genuine hardship” faced by the petitioner during the relevant period and refusal to condone the delay invoking power under Section 119(2) of the IT Act being arbitrary exercise of discretion having regard to the fact-situation, Order passed by the Commissioner of Income Tax (Exemption), Hyderabad-opposite party No.1 (Annexure-1 & 1A) 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 under Section 12A.
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2025 (6) TMI 1494
Validity of reassessment - as argued notice u/s 148 has been issued by the Jurisdictional Assessing Officer in place of the Faceless Assessing Officer, in violation of the provisions of Section 151A - HELD THAT:- We find that this issue is squarely covered by the decision of this Court in case of Hexaware Technologies Ltd. [2024 (5) TMI 302 - BOMBAY HIGH COURT] Further, in similar circumstances, this Court in case of Mahindra and Mahindra Ltd [2024 (11) TMI 1105 - BOMBAY HIGH COURT] and Dennischarles John Das [2024 (11) TMI 1267 - BOMBAY HIGH COURT] has stayed the assessment order till the proceeding before the Appellate Authority or Revisionary Authority are decided. Thus, this Court has granted a complete stay on the demand, in light of the fact that the issue on merits is covered by the judgment of this Court.
The demand arising out of the reassessment proceeding vide order under Section 147 r/w Section 144B ought to be stayed, till the disposal of appeal by the Commissioner (Appeals). Thus, the adjustment of refund for the AY 2024-25 against the outstanding demand for the AY 2017-18 is bad in law.
Respondent No. 1 and Respondent No. 3 are therefore, directed to reverse the adjustment of refund for the AY 2021-22 against the outstanding demand for AY 2017-18 and refund the same along with interest, in accordance with law, on or before 30th July 2025.
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2025 (6) TMI 1493
Bogus loss on client code modification - assessee failed to prove the genuineness of the transactions relating to bogus loss - Validity of reopening of assessments u/s 143, 147, and 148 - ITAT deleted addition - HELD THAT:- As per the data there are total 219 brokers who have made 54565 client code modification and the volume of sale and purchase transaction is Rs.6311 crore.
AO specifically recorded that the brokers and the client in whose favour client modification are made are spread all over India and the assessee is also one of the clients whose name if included in the list of modified clients in the details provided by NSEL.
The other relevant details with regard to the privity of contract existed between the clients and their respective brokers were also brought on record. Thus, AO would state that a comprehensive investigation/enquiry and verification of data processed by the Department and after due application of mind the AO has reasons to believe that the assessee is a beneficiary by way of client code modification during the financial year 2011-12 relevant to the assessment year 2012-13.
Hence, on the basis of the information collated and the analysis done by the Assessing Officer, he was of the view that the assessee company has not disclosed the true and full income. Thus, the Assessing Officer proceeded to issue notice under Section 148 of the Act for which approval was obtained from the Principal CIT-2, Kolkata. Therefore, the Tribunal committed an error in holding that the Assessing Officer did not record any satisfaction nor conduct any enquiry or investigation before issuing notice u/s 148 of the Act.
Therefore, this contention raised by the Tribunal and accepted by the Tribunal is incorrect and, therefore, the revenue should succeed on the said point. Onus was on the assessee to establish that they were not the beneficiary on account of the modification of the client code, despite opportunity being granted to the assessee did not produce any evidence either during the course of assessment proceedings nor at the first appellate stage to show that he is not the beneficiary of the client code modification.
Thus, we are of the view that the Tribunal committed an error in allowing the assessee’s appeal. Decided against assessee.
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2025 (6) TMI 1492
Scope of supurdgimana u/s 457 of the CrPC - denial of handing over possession of seized articles to the applicant - Rejection of application only on the ground that an objection has come from the Income Tax Department saying that against the seized articles since they have already issued a warrant of authorization u/s 132A(1) and, therefore, possession of those articles cannot be handed over to the applicant - HELD THAT:- In a criminal case, if any stolen property is seized by the police from the accused, then the Income Tax Department cannot claim possession over the said seized property by issuing notice u/s 132A of the Act, 1961 for the reason that the same is a separate proceeding and can be initiated only after decision of the Court.
In the present case, after making a complaint by the applicant in respect of an event of theft committed in his house, the police made investigation and seized the stolen articles from the accused and thereafter, the applicant moved an application for handing over the possession of said seized articles in his favour annexing therewith documents of his ownership over those articles, but the trial Court, on an objection raised by the Income Tax Department, has rejected the application.
Trial Court on a mere objection raised by the Income Tax Department cannot reject the application preferred by the applicant for the reason that it is the duty of the Court to see whether the person claiming possession over the seized articles, satisfies the Court by producing cogent evidence of his/her ownership or not.
From the record of the trial Court, it reveals that while claiming title over the seized articles, the applicant has not only filed a certificate issued by the Tahsildar but also filed other relevant documents of his title over the same and as such, after considering the same, an order in this regard ought to have been passed, but the Court has failed to do so. Under such circumstances, the impugned order dated 08.04.2022 (Annexure-P/6) passed by the trial Court is not sustainable in the eyes of law and as such, it is hereby set aside.
The trial Court is directed to allow the application filed by the applicant subject to satisfaction of relevant documents showing his ownership over the seized articles filed along with the application.
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2025 (6) TMI 1491
Validity of reassessment proceedings - notices issued u/s 148A and 148 challenged - as argued notices issued u/s 148A and the subsequent initiation of proceedings u/s 148 by the jurisdictional Assessing Officer which ought to have also been issued and proceeded in a faceless manner
HELD THAT:- This issue of proceedings being in violation of the Finance Act, 2021 i.e., the impugned notices u/s 148A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICER [2023 (9) TMI 951 - TELANGANA HIGH COURT] whereby a batch of writ petitions were allowed and the proceedings initiated u/s 148A as also u/s 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read with Notification 18/2022 dated 29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms.
To a query being put to the learned counsel for the Revenue, they have categorically accepted the fact that there is no interim order granted by the Hon’ble Supreme Court in any of these matters pending before it. Meanwhile, fresh writ petitions of identical nature are being piled up before this Bench on daily basis and the pendency is getting increased on matter which otherwise has already been dealt and decided by this very High Court itself.
On the one hand, even though the order of this Court that was passed as early as on 14.09.2023 and more 16 months have lapsed, till date, we do not find any remedial steps having been taken by the Income Tax Department to take appropriate steps to either hold back issuance of notice u/s 148A and u/s 148 of the Act by the jurisdictional Assessing Officer, rather the authorities concerned in the teeth of series of decisions by all the major High Courts in India are continuously still initiating proceedings under Section 148A of the Act and also initiating proceedings u/s 148 of the Act in contravention to the amendments brought into the Income Tax Act pursuant to the Finance Act, 2020 as also the Finance Act 2021.
This Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter.
We would only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy [2023 (9) TMI 951 - TELANGANA HIGH COURT] is subjected to challenge before the Hon’ble Supreme Court in [2024 (12) TMI 1586 - SC ORDER] preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 supra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon’ble Supreme Court in the pending SLP on the very same issue.
Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concerned. As a consequence, the impugned notice under challenge under Sections 148-A and 148 stands set aside/quashed.
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2025 (6) TMI 1490
Subsidy received from Reserve Bank of India under the Export Credit (Interest Subsidy) Scheme, 1968 - whether forms part of assessable interest under section 2 (7) of the Interest Tax Act, 1974? - as contended that it is deferred or indirect interest income and the Court must look at the real nature of transaction nor merely its form or label and that Section 2 (7) of the Act uses the expression ‘means’ and ‘includes’ and therefore the expression ‘includes’ suggests an inclusive and expansive scope, which permits inclusion of indirect interest receipts, which arise in relation to loan and advances.
HELD THAT:- In the instant case, no loan or advance was given by the assessee to the RBI. Therefore, any amount received by the assessee from the RBI in the form of a subsidy or compensation for loss on interest by whatever name it may be called, would not convert the amount received by the assessee from the RBI to interest, as defined u/s 2 (7) of the Act.
The amount of subsidy received by the Assessee is not relatable in loan or advance given by the assessee to the RBI and therefore, the amount of subsidy can neither be treated as commitment charges nor discount on promissory notes on bill of exchange drawn or made in India.
Therefore, the amount of subsidy received by the assessee from the RBI u/s 42(1B) of the RBI Act, 1934 cannot be treated as interest chargeable under Section 4 of the Act.
As pertinent to note that similar view was taken in Punjab National Bank [2008 (1) TMI 537 - DELHI HIGH COURT]. Against the aforesaid decision of Delhi High Court, the Revenue preferred an SLP before the Supreme Court which has been dismissed. Assessee appeal allowed.
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2025 (6) TMI 1489
Reopening of assessment - reasons to believe - Change of opinion - HELD THAT:-Reopening for the Assessment Year 2016-17 is being presently sought was the very same ground for scrutiny for the year 2016-2017 which culminated in the Assessment Order dated 24.12.2018.
In such circumstances, the Respondent No.1 could not have assumed jurisdiction to assess/reassess the income for the Assessment Year 2016-17, inasmuch as, the Respondent No.1 could not be said to possess any “reason to believe” that any income chargeable to tax for the AY 2016-17 has escaped assessment within the meaning of Section 147 of the Act.
Thus, in our view the decisions of Rajesh Jhaveri Stock Brokers [2007 (5) TMI 197 - SUPREME COURT] and Raymond Woolen Mills [1997 (12) TMI 12 - SUPREME COURT] have no application whatsoever to the facts of the present case.
On the contrary, the decision in the case of CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] applies squarely to the facts of the present case as we are of the opinion that all the necessary information and details in respect of the property in question which form the subject matter of the present controversy in the reassessment proceedings were very much present before the AO who had framed the original Assessment Order dated 24.12.2018 after a thorough scrutiny.
Hence, the present proceedings have arisen wholly and solely on account of a mere change of opinion which has been deprecated in the case of Kelvinator (Supra). Accordingly, the present petition succeeds and the impugned notice u/s 148 of the Act is hereby quashed and set aside. Decided in favour of assessee.
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2025 (6) TMI 1488
Profit on sale of investments - Assessee carrying on a general insurance business - HELD THAT:- Question answered in favour of the assessee in light of the judgement of United India Insurance Co [2020 (5) TMI 755 - SC ORDER (LB)] affirming the decision of this Court in United India Insurance Co [2019 (7) TMI 387 - MADRAS HIGH COURT] as held with the Assessee carrying on a general insurance business, it was bound by the provisions of the IA as well as the IRDA Regulations referred to hereinbefore. Even the CBDT, in its Circular No.5/2010 dated 3rd June, 2010, acknowledged that, after the introduction of the IRDA Regulations in 2002, non-life insurance companies are required to credit income from the sale of investments directly to the P&L Account. This requirement, which would make the income so earned amenable to tax, was made applicable only from AY 2011-12. Prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments.
In terms of the above decision, prior to 1st April, 2011, there was no provision which required the Revenue to disallow the deduction of loss on sale of investments.
MAT/115 JB on Insurance Companies, the said issue is answered in favour of the assessee in light of the decision of Royal Sundaram Alliance Insurance Co. Ltd. [2019 (2) TMI 923 - MADRAS HIGH COURT] as ITAT held Insurance Companies prepare profit and loss account as per the guidelines issued by the Insurance Regulatory and Development Authority of India and not as per Part II and III of Schedule VI of Companies Act.
Furthermore, the applicability of Schedule VI of the Companies Act was specifically excluded in respect of Insurance Companies. The revenue has not been able to dislodge this finding before us in these appeals. We find that the conclusion arrived at by the Tribunal in this regard is proper and valid.
Commission paid for receipt of re-insurance are also answered in favour of the assessee in light of the decision of Royal Sundaram Alliance Insurance Co. Ltd [2019 (2) TMI 923 - MADRAS HIGH COURT] as noted that as a matter of industrial practice it was termed as "commission on reinsurance premium received", however, in substance it is discount on re-insurance premium received by an Insurance Company from another Insurance Company. We find that the Tribunal rightly decided the issue in favour of the assessee.
TDS on the payments made to surveyors outside the Country - Whether they are not taxable in India? - HELD THAT:- Issue answered in favour of the assessee in light of the decision in Royal Sundaram Alliance Insurance Co. Ltd. [2019 (2) TMI 923 - MADRAS HIGH COURT] as held disallowance u/s 40(a)(i) can be made only if taxes are not withheld on income chargeable to tax in India. On facts, it held that the payment was made to Royal and Sun Alliance, U.K. to settle the amounts of various surveyors on cost to cost basis and the surveyor does not make available any technical knowledge which can independently be applied by the assessee and consequently, held that the payment by the assessee would not be taxable as fees for technical services in the hands of the recipient. As noted that in the absence of permanent establishment, the income in the hands of the recipient is also not taxable in India.
Depreciation on UPS answered in favour of the assessee in light of the decision of the Madras High Court in T.V.Sundaram Iyengar & Sons Ltd [2021 (11) TMI 1220 - MADRAS HIGH COURT]as held assessee was entitled to depreciation at 60%.
Disallowance u/s 14A - Clause (b) states that gain or loss on realisation of investments, if not credited or debited to profit and loss account, shall be added back, and similarly, provision for diminution in the value of investments debited to profit and loss account are to be added back. Clause (c) states that any amounts carried over to a reserve for unexpired risks as may be prescribed are to be allowed as a deduction.
Barring the aforesaid adjustments, there can be no other adjustments contemplated to the scheme of computation of profits and gains of other insurance businesses. Reference to Section 14A thus does not arise in the context of such computation. In the scheme as we have set out above, the legislative intent is clear, to put in place a distinct and different scheme for computation of profits from other insurance business. The substantial question of law in relation to this issue is thus answered in favour of the assessee and against the revenue.
Disallowing the re-insurance premium under Section 40(a)(i) -We find from the records that the Department had contested the issue of liability under Section 40(a)(i) upto A.Y.2014-15 upto the level of the High Court, under Section 260A of the Act, for A.Ys.2015-16 and 2018-19 before the Income Tax Appellate Tribunal and has not contested the issue from A.Y.2020-21 onwards, accepting the stand of the assessee in full, at the stage of assessment. Hence, the ratio of the judgements in C.K.Gangadharan [2008 (7) TMI 10 - SUPREME COURT] and J.K.Charitable Trust [2008 (11) TMI 8 - SUPREME COURT] are distinguishable.
As far as the decision in CIT V. Oswal Agro Mills Ltd [2008 (2) TMI 398 - SC ORDER] is concerned, the issue that arose for consideration there, is related to eligibility of deduction of expenses incurred as ‘management expenses’. The Tribunal and the High Court had acceded to the stand of the assessee on the basis of Rule of consistency. Those orders were reversed, the Supreme Court expressing the view that that ought not to have been the sole basis for answering the substantial questions of law.
We have, in the present order, also looked into the substantive issue of liability under Section 40(a)(i) and invocation of the Rule of consistency is additional, intended only to buttress on conclusion.
Hence, and in light of the discussion as aforesaid, we see no necessity to admit the substantial questions of law now raised under the Miscellaneous Petitions.
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2025 (6) TMI 1487
Exemption u/s 11 - delay of 14 days in filing the audit report in Form 10B - assessee submitted that the assessee had duly e-filed Audit Report in Form 10B much prior to intimation order passed u/s 143(1) - HELD THAT:- Grant of exemption u/s 11 of the Act cannot be denied to the assessee only on account of a minor delay in filing of Form 10B, especially keeping into light the fact that the said form was available with the Income Tax Department prior to issue of notice u/s 143(1) of the Act
None of the facts which have been stated before us by the Counsel for the assessee have been verified by the Income Tax Department at any stage of proceedings regarding the precise date of filing of Audit Report etc. owing to non-compliance by the assessee before the Tax Authorities.
Accordingly, in the interest of justice, the matter is hereby set-aside to the file of Ld. CIT(A), for necessary verification and if it is found that the assessee had filed Form 10B before issuance of notice under Section 143(1) of the Act, then appropriate relief may be granted to the assessee.
Ground No. 1 of the assessee’s appeal is allowed for statistical purposes.
Denial of exemption u/s 11 - details of registration u/s 12A of the Act provided in the return of income “were not matching” with the information as per Form 10AC - As assessee submitted that admittedly there was an error in part of the tax consultant of the assessee/applicant trust, but it was submitted before us that mere mismatch in the details as per ITR and Form 10AC should not lead to withdrawal of grant of exemption under Section 11 of the Act, especially when Form 10AC is accessible to the AO and he can verify that the trust is registered u/s 12A of the Act and hence eligible for claiming exemption u/s 11 of the Act.
On going through the instant facts, in the interest of justice, the matter is set-aside to the file of Ld. CIT(A), for carrying out necessary verification and thereafter, pass appropriate orders in accordance with law.
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2025 (6) TMI 1486
Estimation of income - AO adopting the net profit rate @ 10% - assessee has submitted that the assessee is a Fruit Vendor which is a perishable commodity and therefore, the profit in this line of business is very low - assessee does not maintain any books of account
HELD THAT:- We find that the assessee has not filed any return of income nor maintained any books of account. Thus, except estimating the income of the assessee by taking some reasonable and proper net profit rate, the AO was not having any other course of computation of income. The assessee has even not furnished any details about the business transactions or any expenditure incurred by the assessee. Therefore, the turnover of the assessee was taken as per the amount deposited in the bank account of the assessee which is also not disputed by the assessee as the turnover of the assessee.
Estimation of income by adopting 10% as net profit is not sustainable in law when the AO himself has proposed in the show cause notice to estimate the income by adopting the net profit at 8%.
The assessee has relied upon the decision of Shri Y. Jaya Prakash Tripathi [2013 (5) TMI 1076 - ITAT HYDERABAD] wherein the Tribunal has estimated the net profit at 4% as reasonable and justified.
Accordingly, we direct the AO to apply the net profit at 5% which is, in our view, is proper and reasonable for estimation of the income of the assessee when the assessee is not maintaining any books of account or any other record in respect of his business transactions. Appeal filed by the assessee is partly allowed.
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2025 (6) TMI 1485
Unexplained cash credit - Nature of transaction - cash consideration for purchase of property Or loan secured by mortgage - two distinct transactions - cash payment mentioned is a typographical error - Incriminating material found in search and seizure operation - Addition made under sections 68 and 69 r.w.s.115 BBE - cash payment mentioned in the exchange agreement of sale to mortgage the alternative property and released the original document of first mortgaged property - HELD THAT:- From the discussion, it is undisputedly clear that, the amount mentioned in the document as sale consideration paid in cash, is the same loan given in the year 2013 by cheque and, therefore, this is not a co-incidence, as the previous document executed on the same date mentioned about a further right of 30,130 square feet super built-up area in “Shriram Sameeksha”. It is important to note that, 35 apartments/units with cumulative area of 30,130 square feet were already attached by the Income tax Department vide order under section 281B of the Act dated 13.04.2015 and when the property itself is attached by the Department, any further transaction would become ab initio void and no one would pay any consideration for the attached property as this would go as a void transaction under section 281B of the Act. Therefore, the reasons given by the Assessing Officer that, the subsequent exchange agreement of sale dated 07.03.2016 is altogether a different transaction is devoid of merit and cannot be accepted.
Further, the document executed on the same day, gives a different narration of events and the assessee was only trying to secure capital by executing such a document in return of original papers and thus, creating a charge in anticipation that, demand raised by the Department would not be equal to the charge of the value of the property. The veracity of the document cannot be doubted going by the contents of the document, where it is very clear that, appellant-firm has created a pressure on the borrower by putting a condition of the refund of the loan amount within 03 months, so that, the borrower resolves it's disputes as soon as possible with the Department who had made the attachment, otherwise, the charge of the appellant-firm turns into “Title” though to an extent disputed one in view of attachment by the Department.
From the sequence of the events, it is undisputedly clear that, amount referred to in exchange of agreement of sale dated 07.03.2016 that, it has paid sale consideration of Rs. 6 crore is nothing, but, same amount of loan given in cheque in the year 2013 and further, it is only a typographical error while entering into agreement and, therefore, in our considered view, the Assessing Officer is erred in making addition towards consideration of Rs. 6 crore under section 68 and 69 of the Act.
The learned CIT(A) after considering the relevant facts has rightly deleted the addition made by the Assessing Officer. Thus, we are inclined to uphold the order of the learned CIT(A) and dismiss the appeal filed by the Revenue.
In the result appeal of the Revenue is dismissed.
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2025 (6) TMI 1484
Validity of reopening of assessment - period of limitation - Scope of TOLA - Period of limitation under new tax regime - Notice issued old law - HELD THAT:- We note that in the instant case, surviving period i.e. number of days between date of issuance of original notice u/s 148 under old law and 30.06.2021, is only 7 days.
Upon considering the period of exclusion prescribed by the Hon'ble Apex Court in the case of UOI vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] i.e. the period between date of issuance of original notice w/s 148 under the old law and the due date of filing response to communication issued by the Ld. JAO furnishing material being relied upon i.e. period between 23.06.2021 and 17.06.2022, the surviving period would be 7 days after 17.06.2022, i.e., 24.06.2022. Accordingly, the period of limitation for issuance of notice u/s 148 of the new law as envisaged in aforesaid judgement of Hon'ble Apex Court was 24.06.2022.
AO issued the notice in accordance with new law on 29.07.2022 which is more than a month after expiry of period of limitation. Consequently, the notice dated 29.07.2022, issued under section 148 of the Act, is time-barred.
Accordingly, by virtue of period of limitation prescribed by the Hon'ble Apex Court in the case of UOI vs. Rajeev Bansal (Supra) and correlated facts of the case of the assessee, it is abundantly clear that the statutory notice issued u/s 148 of the new law is barred by limitation and therefore, the same deserve to be quashed. Consequently, the assessment order dated 29.05.2023 also bad in law.
Impugned reassessment proceedings initiated under Section 148 of the Act vide notice dated 29.07.2022 is barred by limitation and deserve to be quashed and consequently, the reassessment order passed u/s 147 r.w.s Section 144B of the Act dated 29.05.2023 also deserve to be quashed. Decided in favour of the assessee.
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2025 (6) TMI 1483
Ex-parte order being passed due to non-compliance by the assessee before the CIT(Appeals) - HELD THAT:- We refer to the order of Brajesh Singh Bhadoria [2025 (3) TMI 1480 - ITAT RAIPUR] wherein the Tribunal had dealt with similar issue on the same parameters of ex-parte order passed by the CIT(Appeals) and remanded the matter back to the file of the CIT(Appeals).
Respectfully following the aforesaid order on the ex-parte issue, we are providing one final opportunity to the assessee to represent his case before the first appellate authority. Accordingly, we set-aside the order of the CIT(Appeals) and remand the matter back to his file for denovo adjudication as per law while complying with the principles of natural justice.
This is not simply an ex-parte matter as has been examined afore-stated wherein incriminating materials pertaining to the assessee have been found during the course of search and seizure proceedings in third party’s premises, it is now therefore onus on the part of the Ld. CIT(Appeals) to verify and examine in detailed manner whether any fraud has been committed by the assessee towards the department.
That though on the ground of natural justice, one final opportunity has been given to the assessee but the genesis of the entire facts and circumstances needs proper verification by the department so to find out whether any lawful taxes remain unpaid to the department due to any sham transactions falling within purview of tax evasion amounting to fraud to the revenue and in such case, fraud vitiates everything including natural justice.
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2025 (6) TMI 1482
Rectification u/s 154 - compensation receipt from NHAI on account of acquisition of land - assessee filed a rectification application wherein it has been stated that the said compensation received under RCTLAAR Act, 2013 is exempted from income as per Section 96 of the RCTLAAR Act, 2013 as well as in view of Circular No.36/2016, dated 25.10.2016 issued by CBDT - HELD THAT:- On perusal of the order of the Ld. CIT(Appeals)/NFAC, it is noted that the Ld. CIT(Appeals) while rejecting the rectification application filed by the assessee u/s. 154 of the Act had relied on the order of Heritage Buildcon (P) Ltd. [2023 (8) TMI 1018 - ITAT RAIPUR] wherein it has been held that Section 105(1) makes all provisions of the Act inapplicable to the land acquisitions made under the enactments specified in the Fourth Schedule of the Act, while Section 105(3) only makes the First Schedule, Second Schedule and Third Schedule applicable to the land acquisitions made under the enactments specified in the Fourth Schedule to the Act.
CIT(Appeals)/NFAC observed that the ITAT, Raipur in the aforesaid case (supra) had relied on OM dated 06.06.2019 issued by the CBDT wherein it is held that the provisions of Section 96 of the RCTLAAR Act, 2013 are not applicable to the land acquisitions made under the enactments specified in the Fourth Schedule of the RCTLAAR Act, 2013.
Accordingly, since the issue involved in the present appeal is squarely covered by the decision supra in favour of the revenue, on which, the Ld. CIT(Appeals)/NFAC had relied upon, therefore, we find no infirmity in the view taken by the Ld. CIT(Appeals)/NFAC, which is hereby upheld. Appeal raised by the assessee are dismissed.
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2025 (6) TMI 1481
Disallowance u/s 14A r/w rule 8D - as per DR assessee has though made suomoto disallowance which as per the assessee is directly related to earning such income however, has failed to compute to disallowance in terms of rule 8D(2)(ii) of the I.T. Rules, 1962 - HELD THAT:- The language of section 14A is not at all ambiguous and in fact very clear and by virtue of the same, only expenditure actually incurred in relation to income not includible in total income shall be disallowed. Therefore, disallowance u/s 14A can be made only when assessee has actually earned exempt income. As observed above, in the instant case, the assessee has exempt income in the shape of Dividend and further admitted that the expenditure to the extent of Rs. 45.87 lacs were incurred to earn the exempt income which does not form part of total taxable income. Therefore, in view of these facts, the provisions of section 14A are applicable to the facts of the present case of the assessee.
Sub-section 2 of section 14A provides the mode and manner of computing the disallowance according to which the mechanism is to be followed as provided in Rule 8D of the Rules.
Rule 8D sub rule (1), the AO should record his dissatisfaction about the correctness of the claim of expenditure made by the assessee in relation to income which does not form part of total income and then he has to proceed to compute the amount of disallowance as provided in sub rule (2) of rule 8D.
As observed above, in the instant case, the AO has duly recorded his dissatisfaction with regard to the suo-moto disallowance made by the assessee by issue of the show cause notice. As per the AO, the provisions of rule 8D has been changed w.e.f. 02.06.2016 and thereafter as per the AO, the provision of section rule 8D(2) are applicable.
We find that it is an admitted position that out of total investment of Rs. 26400.88 crores, only investments of Rs. 2437.37 crores earned exempt income of Rs. 210.4 crores as dividend. Once it is established that the AO is not satisfied with the claim of the assessee that the expenses shown under suo-moto disallowance are sufficient and correct with respect to the income earned not forming part of the total taxable income, the provisions of sub rule (2) of rule 8D come into play according to which the cumulative figure of expenses directly relating to income which does not form part of total income and 1% of average of monthly value of investments should be the amount of disallowance.
Computing the amount of disallowance in terms of rule 8D(2)(ii) -Delhi Special Bench of ITAT in the case of Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI] and Crago Motors Pvt. Ltd. [2022 (10) TMI 571 - DELHI HIGH COURT] that the investments which have yielded exempt income should only be considered for the purpose of computing the amount of disallowance in terms of rule 8D(2)(ii) of the Income Tax Rules, 1962. Thus by respectfully following the judgement’s supra, we accept the alternative prayer of the assessee and direct the AO to recompute the amount of disallowance u/s 14A by considering those only investments which yielded exempt income.
Appeal of the assessee is partly allowed.
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2025 (6) TMI 1480
Additions on account of cash generated from clients of the assessee - HELD THAT:- Now the claim of the assessee before us is that the sums aggregating to Rs. 20,00,000/- were for furniture, fixtures, fittings, etc. for the said properties by prospective buyers; Shri Vishal Sethi and Sh. Kartik Luthra. However, the said claim does not get corroborated by any documentary evidence including affidavits in this regard either by the assessee or by Shri Vishal Sethi and Sh. Kartik Luthra.
Assessee has also failed to bring any material on the record to establish that he has incurred expenditure on account of furniture, fixtures, fittings, etc. for the said properties on behalf of the prospective buyers; Shri Vishal Sethi and Sh. Kartik Luthra.
Since no material has been brought on the record to contradict the finding of the Authorities below with respect to the taxability of Rs. 20,00,000/-; therefore, we decline to interfere with the finding of the Authorities below in this regard. Consequentially, we upheld the addition of Rs. 20,00,000/-. However, keeping in view the fact that the assessee, a regular taxpayer, can have saving of Rs. 2,50,000/-; we hereby delete the addition of Rs. 2,50,000/-.
Expenditure incurred for the constructions sourced from partners and prospective buyers - As no material has been brought on the record to contradict the finding of the Authorities below; therefore, we decline to interfere with the finding of the Authorities below in this regard.
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2025 (6) TMI 1479
Disallowance on account of "pre-operating cost" - Assessee argued these are revenue expenditure incurred in relation to expansion of business - HELD THAT:- Mere nomenclature of the expense in the books cannot be the sole determinative factor of allowability of expense. It is trite law that mere nomenclature of entry in the books of accounts is not determinative of the true nature of transaction.
Reliance can be placed on decision in India Discount Co. Ltd. [1969 (8) TMI 2 - SUPREME COURT], Provincial Farmers (P) Ltd. [1976 (2) TMI 18 - CALCUTTA HIGH COURT] and KCP Ltd. [2000 (8) TMI 3 - SUPREME COURT] which have been considered in the case of Arvind Kumar Jain [2011 (9) TMI 363 - DELHI HIGH COURT] - In the present case after going through the relevant evidence of so called pre-operating expenses it has been established that the payment made were on account of expansion of exiting business to new geographical area before is commercial exploitation. Thus corresponding grounds in both the years involve deserve to be sustained.
Assessee argued if Assessee does not opt to amortize any revenue expense, benefit of which is extending to future years, the tax department cannot make any contrary tax treatment - By allowing 50% of the expenditure, CIT(A) has itself appreciated that subject customer acquisition expenditure is revenue in nature. Further, Hon’ble Supreme court in the case of CIT v Excel Industries Ltd [2013 (10) TMI 324 - SUPREME COURT] has held that where the tax rate in a given AY and its subsequent AY is same, then the department should not continue with the litigation as it may not add anything to the public coffers. Hence, in the present case also the expenditure incurred in relation to customer acquisition cost should be allowed to the Assessee in current AY and should not be deferred i.e. 50% of expense allowed by learned CIT(A). The corresponding ground deserves to be sustained.
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2025 (6) TMI 1478
Unexplained money u/s. 69A - cash deposits during the demonetization period - as argued deposits are out of cash withdrawals made by the assessee during the impugned assessment year - HELD THAT:- Department has not pointed out to any specific circumstance / any specific expenditure which was incurred by the assessee to show that the cash so withdrawn by the assessee was not available with the assessee for redeposit during the demonetization period.
In the case of Sudhirbhai Pravinkant Thake [2016 (3) TMI 171 - ITAT AHMEDABAD] held that when assessee had demonstrated that he had withdrawn cash from bank and there was no finding by authorities below that this cash available with assessee was invested or utilized for any other purpose, it was not open to Authority to make addition on basis that assessee failed to explain source of deposits in favour of assessee.
Again in the case of ACIT vs. Baldev Raj Charla [2008 (12) TMI 241 - ITAT DELHI-C] held that where there were sufficient cash withdrawals to cover cash deposits in question, merely because there was time gap between withdrawal of cash and cash deposits, explanation of assessee could not be rejected and addition on account of cash deposit could not be made.
We are of the considered view that the assessee has been able to explain the source of cash deposits made by the assessee in the aforesaid bank account during the demonetization period.
Appeal of the assessee is allowed.
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2025 (6) TMI 1477
Penalty levied u/s 271(1)(c) - assessee suomoto rejected the expenses u/s 40(a) of the Act and disallowed the same - HELD THAT:- We note, however, that the plea regarding the absence of tax advantage owing to continuous losses was neither raised before the Ld. CIT(A) nor before the AO. Nevertheless, the assessee is entitled to submit additional evidence before the Tribunal, and the same has been duly admitted with the consent of the DR.
The additional evidence pertains to factual aspects relevant to the present case. Accordingly, we deem it appropriate to remand the matter to the file of the Ld. AO with a limited direction to verify the claim of losses incurred by the assessee during the relevant assessment year and in preceding years, in light of the judgment of the Hon’ble Jurisdictional High Court. AO shall thereafter adjudicate the issue of levy of penalty in accordance with law, considering the above observations.
Needless to state, the assessee shall be afforded a reasonable opportunity of being heard in the set-aside proceedings.
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