|
Advanced Search Options
Income Tax - Case Laws
Showing 481 to 500 of 173396 Records
-
2025 (4) TMI 978
Validity of reopening of assessment - reason to believe -allegation of borrowed satisfaction - no enquiry/investigation on receipt of information from the Investigation Wing - GDR receipts - HELD THAT:- Firstly, the AO must have reason to believe that income chargeable to tax has escaped assessment; and secondly, he must also have a reason to believe that such escapement of income has occurred by reason of failure on the part of the assessee either to make a return of income under section 139 or in response to notice issued under sub-section (1) of section 142 or section 148; or to disclose fully and truly all material facts necessary for his assessment for that purpose.
In the instant case, it is a not a case where the assessee has not filed a return of income, therefore, the first limb of the proviso is not relevant. What needs to be examined is the satisfaction of the second limb of the proviso as to whether there is a failure on part of the assessee to disclose fully and truly all material facts necessary for its assessment. The aforementioned requirements of law are held to be conditions precedent for invoking the jurisdiction of the AO to reopen the assessment under section 147 of the Act and both the conditions are cumulative and must co-exist and in event of any of the conditions not been satisfied, the very initiation of proceedings under section 147 of the Act shall be wholly without jurisdiction.
Second part of the reasons so recorded, the Assessing officer has talked about the information collected/received by him and basis which, he has recorded the reasons of income having escaped assessment.
General modus operandi involved whereby the proprietary concerns receive payments from the beneficiary companies through various modes like RTGS /CHEQUES /BANK TRASNFERS/ and the amount is immediately withdrawn as cash and returned to the beneficiaries after charging certain commission from the beneficiaries. The so called modus operandi where so found and adopted by the assessee has not been specified –mode and manner of payments by the assessee, the particulars of the bank account where the payment is remitted/transferred by the assessee, the quantum of payment and the factum of withdrawal and hand over of cash to the assessee has not been specified as so found by the DDIT Investigation.
It is not that the whole of the investigation report has to be reproduced in the reasons so recorded, at the same time, relevant portion thereof and how the information so found and reported in the said report and linkage thereof with the assessee should be specified in order to hold the said information as a tangible piece of information in possession of the Assessing officer. However, nothing has been specified in the reasons so recorded. We find that these are general descriptions and how the same are relevant and tangible in the case of the assessee is not borne out from the reasons so recorded.
CIT(A) has held that the Assessing officer was in possession of tangible material in form of a report from the Investigation Wing and has thus tried to support the reasons so recorded by way of supplementing the same. It is a settled position that the reasons are required to be read as they were recorded by the Assessing officer and no substitution or that matter, supplementation is possible. It may be that the Assessing officer was in receipt of the report of the Investigation Wing, however, just having the report in his possession is not sufficient unless he brings out the relevant facts and bearing thereof in the hands of the assessee in the reasons so recorded which has evidently not happened in the instant case.
Third part of the reasons so recorded, the Assessing officer has claimed to have carried out the analysis of the information so collected/received by him and all that he has stated was that the assessee had received many bogus entries from Rohit Trading and has made payment.
There is nothing in the reasons so recorded that he has carried out any such enquiry/investigation on receipt of information from the Investigation Wing and the answer to all these questions is therefore not in affirmative. Thereafter, in part five of the reasons so recorded where he says that the assessment records, 360 degree report and financial statements are the basis for arriving at the belief that income has escaped assessment is merely a generic statement without any substance and corroboration. We therefore find that there is nothing on record that the Assessing officer has actually carried out any analysis/verification of the information so received and it is case of mechanical recording of reasons to believe that income has escaped assessment without due application of mind. We therefore find merit in the contention advanced by the ld AR that the reasons have been recorded merely basis receipt of information (even the same is not discernable from the reasons so recorded) from the Investigation Wing without any independent examination and application of mind by the Assessing officer and the same clearly lacks the jurisdictional requirements as so provided in the statute which requires the satisfaction of the Assessing officer and the reasons to believe that income has escaped assessment in the hands of the assessee.
Sixth and seventh/concluding part of the reasons so recorded, the Assessing officer has recorded his findings on the applicability of requirement of true and full disclosure of material facts in terms of proviso to section 147 of the Act as fours years have elapsed from the end of the relevant assessment year. It has been stated by the Assessing officer that he has carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment/reassessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for his assessment for the year under consideration. It has been further stated by the Assessing officer that it is true that the assessee has filed a copy of annual report and audited P&L A/c and balance sheet along with return of income where various information/ material were disclosed, however, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above.
Thus, in the instant case, AO has simply relied upon the report of Investigation Wing without carrying out any preliminary enquiry and investigation and establishing the necessary nexus between material and formation of belief that income has escaped assessment.
There is clearly no tangible material in possession of the Assessing officer and no independent application of mind by the Assessing officer. There is no specific failure in terms of material facts not truly and fully disclosed as can be discernable from the reasons so recorded. The whole exercise thus shows a mechanical approach on part of the Assessing officer to issue notice u/s 148 of the Act merely on receipt of information from the Investigation Wing on 26/03/2018 and issue of notice on last date of the limitation period i.e, 31/03/2018 without carrying out any further examination/verification.
AO doesn’t have the legal basis to acquire jurisdiction for reassessment u/s 147 and thus, the notice so issued under section 148 is hereby quashed and consequent reassessment proceedings are thus liable to be set-aside. Decided in favour of assessee.
-
2025 (4) TMI 977
Stay on recovery of the outstanding demand - HELD THAT:- Despite earlier directions given by ITAT while granting conditional part stay of outstanding demand of income-tax and interest to recover and adjustment of Rs. 39 crores from the refund due to the assessee against outstanding demand of income-tax and interest due thereon, the said recovery and adjustment of Rs. 39 crores has not been done by the Revenue. The AO shall take immediate steps to recover and adjust Rs. 39 crores from the refund due to the assessee, otherwise the assessee is directed to deposit the said amount of Rs. 39 crores if no refund is due and payable to the assessee. The AO shall adjust the same against the outstanding demand of income-tax and interest thereon. The assessee on its part shall also co-operate with the AO to submit relevant information w.r.t. adjustment of refunds claimed to be due to the assessee to the tune of Rs. 39 crores, or otherwise the assessee shall make payment/deposit of Rs. 39 crores with Revenue/Government if no refund is found to be due and payable to the assessee
We stay recovery of remaining outstanding demand towards income-tax and interest thereon of Rs. 230.97 crores vide this order in stay application, for a period of 180 days or till the disposal of the appeal which ever is earlier, with the condition that Rs. 39 crores be adjusted/deposited towards the outstanding demand. The stay on recovery of aforesaid outstanding demand will become effectively operational on recovery and adjustment of Rs. 39 crores, either by adjustment of refund or deposit by assessee, as directed by us as above.
AO will take immediate steps towards the same. The appeal was adjourned sine-die as the issue involved in this appeal concerns issue of DIN, and the same shall continue to be so, till application for fixation of hearing is moved.
-
2025 (4) TMI 976
Rejection of books of accounts - Estimating of net profit - CIT(A) directed to estimate profit before depreciation @ 10.32% subject to depreciation, except depreciation on fixed assets claimed to be added during the year under consideration - Disallowance made u/s 40a(ia) by appellant as the TDS amount was deposited delayed and based on the provisions of law, the same would have to be disallowed while making the computation of income and would be claimed only in the year of payment - HELD THAT:- Since the said amount stands already included in the income while making the computation of income there is hardly any need to make any comment on the same and to draw any adverse inference on the basis of the same.
If the books of accounts are rejected, and net profit is estimated by application of net profit rate, there cannot be again addition on account of any disallowance based on the same set of books of accounts. Here we note that the books of accounts were rejected, and net profit rate was applied. Thus, having accepted the fact of rejection of book results making separate addition from the same set of books is incorrect. The issue raised in this year also prevailed in the earlier year wherein no separate addition were made in relation to payments for default of section 40a(ia) while estimating the income, even by the AO himself. Thus, taking a different stand in the current year is not only bad in law but is also unjustified on the facts.
As is available from the above, finding that while allowing the grounds of appeal of the assessee, ld. CIT(A) has considered the decision of the ITAT in the case of the assessee's case and has accordingly allowed the grounds of appeal. The ld. DR did not demonstrate any contrary decision having binding precedent and therefore, we do not find any merit in the grounds of appeal raised by the revenue and therefore, ground no. 2 & 3 raised by revenue has no merit and therefore, dismissed.
Excluding amount from turnover of the assessee for determining GP 29.29% whereas the above amount was shown by assessee itself in its ITR under the had "other income" in P&L account so it is part of business receipts along with amount from revenue from operations shown by assessee and holding that this amount as un- accrued income when the assessee itself has shown the same as part of income in its ITR - When the book results were rejected while estimating the profit only the real income be taxed and not the notional income. While deciding this issue the ld. CIT(A) has considered the issue that there is no finality about the income and the estimated income is accrued at once subject to correction when the amount is agreed upon. If the amount is litigated, however, even though liability is admitted it has been held that income does not accrue until the litigation is finally terminated. But if liability is not admitted income does not arise from mere accrual of a cause of action. The income may not be accrued until a settlement is made or if the claim is litigated until all possible appeals have been taken or the liability has become final by the expiration of time to appeal from a judgement for the taxpayer and that too when book results are rejected and at that point of time only the real income be taxed and not the litigated income be considered while estimating the income. In the light of this observation we do not find any infirmity in the finding of the ld. CIT(A) and therefore ground no. 4 raised by the revenue stands dismissed.
CIT(A) in excluding amount from turnover of the assessee for determining GP @ 29.29% when the assessee failed in the appellate proceedings to explain the difference in amount shown in form 26AS and amount credited in books of accounts - As is evident from the finding of the CIT(A) has favored the assessee on two reasons one the similar issue was raised in the A.Y. 2016-17 and the ld. AO accepted the explanation of the assessee, and the matter has reached to finality as the appeal before the High Court was not considered. Secondly CIT(A) has considered the explanation of the assessee and hold that difference stands explained, and no adverse inference drawn. Before us the ld. DR did not demonstrate any perversity in the explanation of the assessee and finding of the ld. CIT(A) and therefore, we do not find any merits in the ground raised by the revenue and the same stands dismissed.
Estimating net profit @0.11% - AO has categorically held that 70% of expenses not subject to TDS are not genuine and this disallowance (70%) was included in the estimated addition by applying N.P. rate of 10.32% - As is evident from the above order of the ld. CIT(A) that he has followed the order of the co-ordinated bench which ultimately reached finality when challenged before our Jurisdictional High Court and therefore, when the ld. DR did not demonstrate before us as to how we can deviate from the binding precedent, when the ld. CIT(A) has compared the finding of the earlier year with that of the current year comes to loss and in that year of A. Y. 2016-17 being loss and based on the order of the co-ordinate bench applied the profit rate @ 0.11%. Thus, as discussed in the order of the ld. CIT(A) and no contrary material before us to take a difference view of the matter we do not find any infirmity in the finding of the ld CIT(A). Based on these observation ground no. 1 raised by the revenue stands dismissed.
-
2025 (4) TMI 975
Disallowance of Assessee's claim of deduction u/s 54F - CIT(A) who has confirmed the addition made by the AO on the ground that the sale consideration should have been deposited before the due date of filing of the return u/s. 139(1) of the Act in specified Capital Gains Account Scheme (CGAS) bank account with authorized banks and utilized in the manner prescribed under the Act - HELD THAT:- It is clear from the bank statement filed by the assessee, the assessee received sale consideration on 10-05-2016 and the entire sale consideration was reinvested in a residential flat on 17-05-2016 by transferring it to the Builder. However the assessee has not declared the sale transaction in the original Return of Income but claimed for the first time the claim of exemption u/s. 54F of the Act in the reassessment proceedings. Since the assessee has made reinvestment of the entire sale consideration within seven days from the date of sale of the original Asset, the question of depositing the sale consideration/Capital Gain amount is specified CGAS account does not arise.
As perused the statutory provision contemplated u/s 54F and are of the considered view that the same does not cast any statutory obligation on the part of assessee to file his return of income within the stipulated time period as contemplated u/s 139 or 148 of the 'Act', as a precondition for entitling him to claim exemption under the said statutory provision.
Therefore, we are of the considered view that the reference to the term 'due date' for furnishing of return of income u/s, 139 as contemplated in section 54F(4) is in context of the time limit within which the amount which had not been appropriated by the assessee towards making of investment in the purchase and/or construction of the new residential house is permitted to be deposited in the 'Capital Gains Account Scheme, 1988. Which thereafter is to be withdrawn and utilized as per the terms contemplated in the said statutory provision.
Section 54F, neither provides as a pre-condition the requirement of filing of the 'return of income' by the assessee within the stipulated time period, nor places any embargo as regards the claim of such exemption in a case the 'return of income' filed by the assessee involves some delay.
Since the A.O. has no occasion to have deliberated upon the satisfaction of the requisite conditions as contemplated u/s 54F of the Act as claimed by the assessee. Therefore, in all fairness we restore the matter to the file of J.A.O for making the necessary verifications and allow the claim in accordance with law. Appeal filed by the Assessee is allowed for statistical purpose.
-
2025 (4) TMI 974
Validity of Reassessment proceedings - Assessee argued the proceedings were completed without jurisdiction i.e without issue of notice u/s.143(2) of the Act as prescribed under law - HELD THAT:-Admittedly, in this case, no notice u/s.143(2) of the Act was issued through e-filing portal. As per CBDT Instruction No.1 dated 12th February, 2018, it has become mandatory that except for search related assessments, proceedings in other pending scrutiny assessment cases shall be conducted only through the “E-Proceedings” functionality in ITBA/Efiling.
CBDT has mandated that after the issue of this instruction, all the notices should be sent through ‘E-Proceedings’ functionality in ITBA/E-filing. However, in the instant case, the Assessing Officer has not sent notice u/s.143(2) in E-Proceedings functionality/ITBA/E-filing but sent the same through physical mode via Speed Post. Therefore, there was no valid issuance of notice u/s.143(2) of the Act. Once the notice u/s.143(2) is not validly issued, consequent proceedings cannot be held as valid.
As decided in the case of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] wherein as held that the issue of notice u/s. 143(2) of the I.T. Act is mandatory and not procedural and if the notice is not served within the prescribed period, the assessment order is invalid. Thus reassessment order quashed. Decided in favour of assessee.
-
2025 (4) TMI 943
Territorial jurisdiction of the Bombay High Court to entertain this petition - HELD THAT:- In this case, even if we proceed on the basis that the minuscule part of the cause of action may have arisen in Mumbai, that will not be a determinative or compelling factor to exercise the discretion under Article 226 for entertaining this petition.
In Wills India Insurance Brokers (P.) Ltd. [2011 (3) TMI 1807 - BOMBAY HIGH COURT] the court found that a part of the cause of action had significantly arisen in Bombay, and based on that finding, the petition was considered. Kusum Ingots [2004 (4) TMI 342 - SUPREME COURT] has been clarified by the Full Bench of the Delhi High Court. Kusum Ingots (supra) itself discusses the principles of forum conveniens, which is applicable in the present case.
In the context of appeals under Section 260A of the Income-tax Act, the Hon'ble Supreme Court, in the case of ABC Papers ltd. [2022 (8) TMI 863 - SUPREME COURT] has held that the appellate jurisdiction of the High Court is exercisable by the High Court within whose territorial jurisdiction the assessing officer is located. Thus, even the location of ITAT is held not to be determinative. The location of the assessing officer is crucial. However, this was the decision in the context of an appeal u/s 260A and not a Writ petition under Articles 226 and 227 of the Constitution. Still, for all the above reasons, we are satisfied that the interest of justice will be met if the petitioner is relegated to avail of the remedies at Kolkata.
Accordingly, we decline to entertain this petition but leave the petitioner free to avail of the remedies at Kolkata. All parties' contentions on merits are left open.
-
2025 (4) TMI 942
Validity of proceedings u/s 154 as barred by limitation - proceedings issued after a lapse of four months from the date on which the reassessment order was passed along with the notice of demand - HELD THAT:- Any amendment to Form ITNS-150 would clearly fall within the scope of an amendment as contemplated under Section 154 (1)(a) of the Act. Thus, in terms of sub-section (7) of Section 154 of the Act, no amendment of such an order can be made after expiry of four years from the date of the said order.
The record also does not support the contention that the impugned order has not been passed under Section 154 of the Act. This is so because the impugned order was passed pursuant to a show cause notice issued in respect of proceedings under Section 154 of the Act and the impugned order expressly indicates that it has been passed under Section 154 of the Act read with Section 143 (3) /147 of the Act.
We are also not persuaded to accept that the figure of interest under Section 234A of the Act, which is sought to be corrected, was a clerical error. As noted above, the reassessment order dated 11.12.2018 expressly stated that the “interest under Section 234A, 234B, 234C and 234D, if any, has been charged”.
AO had signed the assessment order. Thus, confirming that the interest chargeable under any of the aforesaid Sections, had been charged. The Form ITNS-150 was also signed by the AO and the same indicated that the interest amounting Rs. 6,92,90,301/- was determined as payable u/s 234B of the Act; an amount of Rs. 5,682/- was determined as payable under Section 234C of the Act; and the interest under Section 234A of the Act was determined as “0”. It follows that the AO was of the view that no interest under Section 234A of the Act was chargeable. This is not a case where the AO had directed the levy of interest under Section 234A of the Act and by an inadvertent error, the same was not mentioned in the computation of tax payable (in Form ITNS-150). The assessment order itself clearly specified that the interest if any had been charged. It must follow that the AO was aware of the interest that was determined as payable in the income tax computation form (Form ITNS-150).
It is also material to note that the Assessee disputes that any interest under Section 234A of the Act is payable. It is the Assessee’s contention that the return filed pursuant to the notice under Section 148 of the Act, was a mere reiteration of return that was originally filed. Therefore, it could not be faulted for the delay in filing its return of income. It is not necessary to examine the merits of the said contention in this proceeding, however, it is clear that the issue involved is a contentious one and the Assessee’s claim in this regard cannot be considered as unsubstantial which merits no consideration.
It is clear that the impugned order and the impugned demand notice had been issued beyond the prescribed period and are thus set aside. WP allowed.
-
2025 (4) TMI 941
Undisclosed investments - addition was premised on the estimated value of certain works of arts which were found at the Assessee’s residential premises during the search proceedings and which the Assessee claimed were gifted to him - HELD THAT:- Quantum of addition made by the AO and as upheld by the learned CIT(A) in respect of works of art found during the search proceedings, is not based on any valuation or cogent evidence as to their market value. Neither the AO nor any other authority had made any reference to the Valuation Officer or obtained the value of the said artworks from any independent valuer. On this ground alone, the additions made by the AO and as upheld by other authorities is unsustainable. It is well settled that additions cannot be made on unfounded surmises.
Whether the Assessee had established the genuineness of the transaction? - Assessee had stated that he knew the artists in question for several years and some of them are also his friends/ acquaintances of his mother. There is no material to controvert this assertion as well.
In the given circumstances, where the donors have confirmed that they have gifted the works of art to the Assessee and that they are the friends and acquaintances of the Assessee; there is also no reason to doubt the genuineness of the transactions.
Any addition to the income of the Assessee is required to be based on cogent material and not on mere surmises and conjectures. It is also material to record that Assessee is a constituent partner of a firm that is engaged in running an art gallery. This also clearly establishes that the Assessee would be acquainted with the artists in question. There is no reason to suspect that they have not given their personal works of art as gifts to the Assessee. We find that the finding of the AO, learned CIT(A) and ITAT are based on surmises and completely unjustified and thus are liable to be set aside - Decided in favour of assessee.
-
2025 (4) TMI 940
Apparent mistake regarding the PAN number of the assessee - HELD THAT:- We find that there is indeed an apparent mistake in the Tribunal’s order in respect of PAN of the assessee and HUF. Accordingly, the error is rectified and the correct PAN of the HUF is replaced in place of incorrect PAN.
-
2025 (4) TMI 939
Reopening of assessment u/s 147 - reasons to believe- non-compliance of strict conditions of jurisdictional provision of sec 147 r.w.s. 151 - HELD THAT:- There is no reference or particulars about the date on which the information was received by the AO. There is also no reference of any objective particulars which led the AO to believe towards escapement of chargeable income. AO has merely quoted the entries routed through banking channels from various parties which were alleged to be accommodation entries. No basis has been referred to show his application of mind on the material if any, to implicate the assessee with such vicious allegation.
A plain reading of reasons would clearly show that re-opening proceedings have been initiated based on some generalized and uncorroborated information. There does not appear any application of mind on the so-called information (contents not available) collected by the AO. The circumstances narrated in the reasons recorded would show that the AO has proceeded on dotted lines as dictated in the information received.
The reasons recorded apparently vouches for the fact that no immediate nexus or live link is reflected between any tangible material and the corresponding ‘belief’ thereon towards escapement.
In the instant case, there is not even a line of reason which may justify the formation of belief. The AO in the instant case observes that the name of the assessee figures in the list of beneficiaries on share capital premium/loan.
AO is not privy to even the nature of transaction whether the assessee is a beneficiary towards share capital premium or towards loan. Besides, in the absence of any specific information of reliable character referred in the reasons, the reasons are required to be construed as vague, indefinite, far-fetched and remote. The AO has also not bothered to take cognizance of basic facts such as income reported, date of return filed or any assessment carried out earlier. The reasons recorded are apparently stereo-typed without any emphasis on the relevant facts.
We thus find potency in the plea of the assessee that the reasons recorded and approval granted thereon u/s 151 do not meet the requirement of law at all and thus the issuance of notice u/s 148 based on cryptic and non-descript reasons combined with a mechanical approval thereon under s. 151 do not pass the test of judicial scrutiny.
CIT(A), in our view, has committed blatant error in endorsing the reasons recorded which are clearly plagued by the vice of being vague, indefinite, non-descript and distant and that too without providing an iota of sound reasoning. A solitary observation that the re-opening has been carried in the light of Investigation Report can be no basis to fasten the jurisdiction for re-assessment of completed assessment. Such findings of the CIT(A) against the assessee on the jurisdictional aspect cannot be countenanced in law.
Consequently, the notice under s. 148 to re-open the assessment is held to be void ab-initio and thus consequential re-assessment order is bad in law and therefore stands quashed.
We notice that material collected from the Investigation Wing if any, was never confronted to the assessee at any stage of the assessment. The assessment in the instant case was earlier carried out under s. 143(3) of the Act. As per the reasons recorded, the AO has alleged that tangible material showing ‘escapement of income’ seeks to dislodge the position taken by the assessee as per the return of income. However, having not disclosed the information collected, the onus continued to remain on the Revenue and was never discharged and therefore, never shifted on the assessee.
The process of reasoning adopted by the CIT(A) while affirming the stance of the assessee and reversing the additions appear to be on sound principles. We do not see any infirmity in the process of reasoning so adopted. Decided in favour of assessee.
-
2025 (4) TMI 938
Deduction u/s 80P - denial of claim as assessee is carrying on the activity in violation of provisions of cooperative society and thereby the concept of mutuality is missing - CIT(A) disallowed the deduction of interest income earned from surplus funds invested in banks and government securities - HELD THAT:- We find that this statutory requirement imposes a legal obligation on the assessee society to maintain such deposits, thereby restricting its ability to freely use or withdraw these funds for its business operations without prior approval from the Registrar of Co- operative Societies.
Given this statutory compulsion, we find that the interest income arising from these deposits cannot be equated with interest income derived from surplus funds voluntarily parked in banks for earning a return. Therefore, we hold that the interest income earned from such statutory deposits should be considered as operational income derived in the course of the assessee’s business and consequently qualifies for deduction u/s 80P(2)(a)(i).
We in the interest of justice and fair play, are inclined to set aside the issue to the file of the AO with direction to compute the required quantum of amount needs to be deposited as per statutory requirement and allow the claim of the deduction under section 80P(2)(a)(i) of corresponding interest income.
We are also inclined to consider the alternative plea raised by the assessee. In the event that the AO found that the any amount of investment over and above the required statutory limit and classify the interest income from such deposits as "Income from Other Sources," then it is imperative that the corresponding cost incurred in earning such income must be deducted while computing taxable income. It is a well-established principle of taxation that only net income should be brought to tax, and any expenditure directly attributable to the earning of such income should be allowed as a deduction. Therefore, we direct the AO to grant a proportionate deduction of the corresponding cost, if any, while assessing the interest income under the head "Income from Other Sources."
We hold that the assessee is entitled to deduction u/s 80P(2)(a)(i) on the interest income earned from deposits made in compliance with statutory requirements. AO is directed to re-examine the taxability of such interest income in accordance with this finding, as per law and grant appropriate relief to the assessee. Appeal of the assessee is allowed for statistical purposes.
-
2025 (4) TMI 937
Nature of expenditure/payment - “Commercial rights acquired under an agreement” for providing commercialisation services across the globe for underlying Intellectual Property Rights (IPR) for technologies identified - asset eligible for depreciation u/s. 32 or as revenue expenditure eligible for deduction u/s. 37(1) - HELD THAT:- Assessee has capitalized the consideration under this agreement payable to EADS as an ’Intangible asset’ claiming depreciation on the same which the AO as disallowed. Recognition of “business or commercial rights of similar nature” as its peculiar nuances. In the present case, facts of undertaking business transaction by the assessee with EADS in terms of aforesaid agreement is not in dispute.
As already analysed the contents of the agreement entered by the assessee with EADS for rendering commercialisation services cooperation in technology licensing initiative for specified time period upto 31.12.2021, commencing from 28.07.2011. Assessee has demonstrated generation of revenue under this agreement over the period from 01.04.2010 to 31.03.2017, tabulated above. In terms of section 37(1), assessee has incurred the expenditure which is laid out wholly and exclusively for the purposes of the business. Keeping the above terms and conditions in the agreement in perspective with the alternate claim made by the assessee of treating the amount payable under the aforesaid agreement as a “revenue expenditure” allowable u/s. 37(1) of the Act, we find it proper to allow the said alternate claim. Ld. Assessing Officer is directed to recompute the total income while giving effect to the aforesaid finding of considering the claim allowable u/s 37(1). Accordingly, ground no. 3(e) raised by the assessee is allowed.
Alternative claim towards foreign exchange loss actually paid as revenue expenditure which it has considered as part of cost of intangible - This ground is covered by our above stated observations and finding since it stems from the same transaction of impugned agreement under which assessee had recognized it as an intangible asset, having consequential effect. Accordingly, in terms of our aforesaid finding, ground no. 4(c) is allowed. AO is directed to give appropriate effect in computing the total income.
Appeal of the assessee is allowed.
-
2025 (4) TMI 926
Reopening of assessment u/s 147 - TCS collected by various entities under Section 206CA, Deposits during the demonetization period and time deposit - HELD THAT:- In regard to the TCS, the Assessee explained that same was related to the transaction of purchase of liquor, which was duly accounted for in its books of account. In regard to the cash deposit, the Assessee had explained that the cash deposited during the demonetization period was the sale proceeds of goods. It is material to note that the Assessee disclosed that it had deposited Rs. 18,74,14,600/- during FY 2016-17 which was much larger than a sum of Rs. 7,03,20,600/- information of which was available with the AO. Thus, the allegations of bulk cash deposit by the Assessee during the demonetization period was contested. The said allegation was premised on the basis that the total cash deposit during the period was Rs. 7,03,20,600/-, however, the Assessee had clarified that said figure was much higher.
There is also no cavil as to the explanation regarding the time deposit of Rs. 10,00,000/-.
AO had considered said responses and accepted the Assessee’s explanation regarding the reconciliation of TCS with proceeds of sales reflected in the books of account and the time deposit made under PM-GKY. The AO had held that no adverse inference is to be drawn on account of such information.
With regard to the deposit of cash in the bank account, concededly, there was no allegation in the notice issued under Section 148A (b) of the Act that the cash deposited by the Assessee in its bank account during the demonetization period was disproportionately higher in comparison with the cash deposited during the corresponding period in the previous financial year. Thus, the Assessee had no opportunity to provide any explanation in respect of such allegation.
We find merit in the contention that the impugned order passed u/s 148A (d) of the Act had travelled beyond the information furnished to the Assessee, which, according to the AO, was suggestive of its income escaping the assessment. Thus, the impugned order passed u/s 148A (d) of the Act cannot be sustained and is set aside.
The impugned notice is set aside.
-
2025 (4) TMI 925
Petitioner should avail the alternate remedies available - Petitioner has adequately pleaded the non-availability or inefficacy of alternate remedies as required for entertaining such a petition - HELD THAT:- The limitation issue presents a mixed question of law and fact, which this Court, exercising its extraordinary jurisdiction, would prefer not to adjudicate. The additions are based on incriminating material, and this Court cannot examine such material to settle the disputes regarding the extent of the additions. These are routine grounds addressed by the appellate authorities, and no extraordinary circumstances exist to deviate from the standard practice of exhaustion of statutory alternate remedies.
Almost all the grounds that were tried to be urged before us concern the merits or demerits of the assessment order. It is not as if these grounds cannot be urged before the appellate authority. This is an instance where the party has tried to take chances with the court procedures and consumed disproportionate Court time.
In the case of Oberoi Constructions Limited Vs Union of India & Ors [2024 (11) TMI 588 - BOMBAY HIGH COURT] this Court has considered several precedents on the issue of exhaustion of alternate remedies. By adopting the reasoning in the said decision, we decline to entertain this Petition. The Petitioner is free to Appeal the impugned assessment order if the Petitioner so desires.
The observations made in this order are not intended to prejudice the Petitioner’s Appeal when instituted. The observations are only prima facie for deciding whether any case is made out to bypass the salutary practice of exhaustion of alternate remedies. Therefore, if an Appeal is instituted, the appellate authority need not be influenced by any observations.
-
2025 (4) TMI 924
Validity of order passed by CIT(A) - addition was made towards unexplained sundry creditors which was outstanding as on March 31, 2014 - CIT(A) directing the AO to delete the additions subject to certain conditions - HELD THAT:- This Court is, therefore, of the considered view that the order of the CIT(A) directing the Assessing Officer to delete the addition of amount on account of unexplained sundry creditors was not set aside by the Hon’ble Division Bench. The portion of the order of CIT(A) directing the AO to delete the addition, stands. The resultant effect is that the order of the AO stood set aside.
Upon a conjoint reading of subsection (1), (2), (3) and (4) of Section 154, this Court holds that the authority has the power to make an amendment u/s 154 (1) of its own motion but if such amendment has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, the authority concerned is under a statutory obligation to issue a notice upon the assessee and give a reasonable opportunity of hearing before passing an order of amendment for rectification of any mistake apparent from the record.
In the case on hand, the assessing officer made the amendment of its own motion. It is not in dispute that notice in terms of Section 154 (3) of the Income Tax Act was not served upon the petitioner. No opportunity of hearing was afforded to the petitioner before passing the order dated February 7, 2025. This Court holds that there has been a violation of the provision laid down u/s 154 (3) of the 1961 Act and for such reason the order dated February 7, 2025 calls for interference.
AO while passing the order dated February 7, 2025 held that the impugned Assessment Order of the AO passed under Section 143 (3) of the Income Tax Act dated August 31, 2016 remains uninterfered and still remains in force. This Court has already observed that the effect of the order of the Hon’ble Division Bench is that the order of the appellate authority directing the Assessing Officer to delete the additions, stands.
This Court holds that the observation made in the order dated February 7, 2025 to the effect that the order of the AO dated August 31, 2016, is still in force, calls for interference.
The order is set aside and quashed. Consequently the order stands revived. The authorities are directed to take all consequential steps in terms of the order dated January 3, 2024 within a period of four weeks from the date of receipt of a server copy of this order.
-
2025 (4) TMI 923
Reopening of assessment u/s 147 - period of limitation - notice issued under the old regime - scope of new regime u/s 148A - normal period of limitation of 4 years u/s 149 - HELD THAT:- As per decision of the Hon’ble Supreme Court in Rajeev Bansal’s case [2024 (10) TMI 264 - SUPREME COURT (LB)] the period from the date of issuance of deemed notice dated 31.03.2021 till the supply of relevant material / information by the Assessing Officer to assess the income in terms of the directions of the Hon’ble Supreme Court in Ashish Agarwal’s case [2022 (5) TMI 240 - SUPREME COURT] has to be excluded for the purpose of computation of period of limitation.
Only requirement to be followed is u/s 153(2) of the Income Tax Act, 1961 as in force with effect from 01.04.2021. Thus, an Assessment Order has been passed within a period of 9 months from the end of the Financial Year in which the Notice was under Section 148 of the Income Tax Act, 1961 as in force with effect from 01.04.2021.
The Impugned Notice dated 31.03.2021 for the Assessment Year 2015-2016 under Section 148 of the Income Tax Act, 1961 as it stood till 31.03.2021 was issued within the extended period of limitation, as 5 years had already expired from the end of the said Assessment Year. If the said notice is pigeonholed as a notice under Section 149(1)(a) of the Income Tax Act, 1961 as in force with effect from 01.04.2021, for the purpose of computation of period of limitation, the entire proceedings initiated under Section 148 as it stood till 31.03.2021 for the purpose of Section 148 as in force with effect from 01.04.2021 will be a still-born i.e., at the time of its issuance. This is not what was intended by either of the decision of the Hon’ble Supreme Court.
Therefore, it has to be held that a Notice under Section 148 of the Income Tax Act, 1961 as in force with effect from 01.04.2021 was issued within the extended period of limitation prescribed u/s 149(1)(b) after the said Notice dated 31.03.2021 issued u/s 148 as it stood till 31.03.2021 transformed itself into a Notice u/s 148-A(b) of the Income Tax Act, 1961 under the new regime as in force with effect from 01.04.2021 in the light of the decision of the Hon’ble Supreme Court in Ashish Agarwal’s Case [2022 (5) TMI 240 - SUPREME COURT]
Therefore, computation of limitation for issuance of a Notice under Section 148 of the Income Tax Act, 1961 under the new regime with effect from 01.04.2021, the period of limitation up to 02.06.2022 being the date of issuance of the Show Cause Notice and Reply dated 11.06.2022 of the petitioner, assessment has to be excluded even if it has to be construed that the case falls under Clause (a) to Section 149(1) of the Income Tax Act, 1961. However, the present case falls under Clause (b) to Section 149(1) of the Income Tax Act, 1961 as in force with effect from 01.04.2021.
If the aforesaid period is excluded as per the decision of the Hon'ble Supreme Court, conclusion in Paragraph 114(g) in Rajeev Bansal's case (cited supra), read with 1stProviso and 3rdProviso to Section 149(1) of the Income Tax Act, 1961 as amended, it has to be necessarily concluded that the Impugned Notice issued on 30.07.2022 is in time.
Only if the Impugned Notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 as it stood till the said date was already time barred under the old regime as it stood till 31.03.2021, it can be said that the Notice was time barred. Since there were ingredients for invoking the extended period of limitation under the Proviso to Section 147 of the Income Tax Act, 1961 as it stood till 31.03.2021, it cannot be said that the Impugned Notice dated 30.07.2022 is time barred.
Therefore, there is no merits in the challenge to the Impugned Notice issued to the petitioner on 31.03.2021 under the old regime or the Impugned Order passed by the respondent under Section 148-A(d) of the Income Tax Act, 1961 on 30.07.2022 or the Impugned Notice issued under Section 148 of the Income Tax Act, 1961 on 30.07.2022 under the new regime.
-
2025 (4) TMI 922
Entitlement to Exemption to cooperative societies engaged in banking activities from the purview of Section 194N - petitioner emphasizes that deducting 2% TDS on loans would severely impact the society's financial sustainability, jeopardizing its purpose of serving marginalized agrarian members - petitioner's claim for exemption under Section 80P(2) - HELD THAT:- Section 194N of the Income Tax Act, 1961 applies to the petitioner's transactions, including loans and subsidies, irrespective of the cooperative society's nature. This Court is of the view that the legal provisions and amendments are clear and no exemption applies in this case as claimed by the learned Senior Counsel for the petitioner. The respondents have followed the procedures properly and passed the impugned orders in accordance with law.
This Court distinguishes the precedents cited by the learned Senior Counsel for the petitioner, noting that the factual circumstances of those cases differ from the present case. Therefore, this Court upholds the actions of the respondents, including the deduction of TDS as lawful and procedurally correct. WP dismissed.
-
2025 (4) TMI 921
Validity of show cause notice issued u/s 144 (8) by the first respondent - petitioner submitted that prior to the issuance of the impugned show cause notice by the first respondent/JAO, the second respondent/faceless Assessing Officer has already issued a show cause notice and when the faceless proceedings were going on, the second respondent abruptly and arbitrarily transferred the case to the first respondent/jurisdictional officer, without any intimation or communication to the petitioner stating the reason for transfer, therefore, the petitioner was in a perplexed state as to which show cause notice, he is required to file reply
HELD THAT:- It is no doubt true that initially, a show cause notice dated 28.02.2025 was issued by the second respondent, however, since the said show cause notice was issued by a faceless AO, the case was transferred to the file of the jurisdictional AO, viz., the first respondent, who issued the impugned show cause notice dated 12.03.2025, and called for reply/objections from the petitioner. In the said show cause notice itself, a reference was made to the show cause notice issued by the Faceless Assessment Officer dated 28.02.2025, stating that the case of the petitioner has been transferred to the jurisdictional/AO, first respondent, therefore, the contention of the petitioner that the petitioner got perplexed as to which show cause notice, they have to file reply/objection is baseless, as rightly pointed out by the learned Standing Counsel for the respondent.
Though this Court is not inclined to entertain the Writ Petition, however, grants liberty to the petitioner to file reply to the show cause notice issued by the first respondent, Jurisdictional Assessing Office which is impugned herein within a period of two weeks from the date of receipt of a copy of this order. Thereafter, the first respondent is directed to consider the reply and shall issue a clear 14 days notice affording an opportunity of personal hearing to the petitioner and shall decide the matter in accordance with law.
-
2025 (4) TMI 920
Exemption u/s 11 - whether the assessee having incurred more expenditure than income and even then, the benefit u/s. 11(1)(a) be claimed by the assessee and that claim be rejected? - HELD THAT:- Since the issue is related to the provision of section 11(1)(a) it would be appropriate to reads the said provision -Income from property held for charitable or religious purposes.
(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income -
(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property.
That provision, being very clear as vanilla the claim of the assessee is very much within the law. Not only that the issue which the revenue raised has already been settled in the case of Krishi Upaj Mandi Samiti [2016 (7) TMI 707 - RAJASTHAN HIGH COURT] held that where assessee, a charitable trust, incurred expenditure in excess of income in previous year relevant to assessment year for charitable purposes, out of accumulated charity fund, it could not be denied benefit of exemption under section 11(1)(a) in respect of income of previous year relevant to assessment year, which had been admittedly applied for charitable purposes.
We direct the ld. AO to allow the claim as claimed in the return of income. Appeal of the assessee is allowed.
-
2025 (4) TMI 919
Orders passed u/s 201(1)/201(1A) - short or non deduction of TDS on interest payment - HELD THAT:- Assessee submitted that assessee being the branch of the bank, has to file the relevant evidence as to availing of Form no. 15G/H or 27BA so prove that the payee has paid the tax. From the order it is also revealed that in some case PAN number was not mentioned but in fact branch may have the same and the assessee might have submitted those details along with the form 15G/H in the alleged default of the short deduction or non-deduction cases as listed in the order under challenged.
Based on that set of facts assessee prayed to grant an opportunity to the assessee to present those facts on merits of the disputes as the assessee has sufficient reason to establish the non-deduction of tax by filing 27BA also that the tax to that interest paid by the branch has already subjected to tax by the payee.
Considering the specific prayer of the assessee the bench is of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing an opportunity of being heard to the assessee.
Therefore, based on those facts we deem it fit to remand the matter to the file of the ld. AO who will consider the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee after affording due opportunity to the assessee and dealing with the evidence placed on record. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO. Appeal filed by the assessee is allowed for statistical purposes.
............
|
9911796707
