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Income Tax - Case Laws
Showing 501 to 520 of 175845 Records
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2025 (6) TMI 1408
Reopening of assessment - disallowance u/s 14A of the Act read with Rule 8D - eligibility of reasons to believe - HELD THAT:- It is not in dispute that at the time of original assessment proceedings the details were sought by the AO regarding the exempt income earned by the petitioner along with the investment from which the exempt income to be generated. The petitioner-Company by reply dated 30.11.2019 has provided such details and has also stated that the petitioner has earned share from the partnership firm which is disclosed in the return of income as well as in the Note No.22 of the Notes forming part of the financial statements namely “Other Income”.
Thus, the information which is sought to be relied upon by the respondent for assumption of jurisdiction to re-open the assessment proceedings was duly processed during the regular assessment proceedings and no dis-allowance was made u/s 14A of the Act.
Hence, the impugned notice issued on the basis of the verification of the profit and loss account and the balance-sheet of the petitioner-Company for the year under consideration, in absence of any fresh new tangible material available with the respondent, cannot be sustained as the reasons recorded by the AO to assume the jurisdiction to re-open the assessment clearly depict that the re-opening is sought to be done only on the basis of mere change of opinion.
Even the respondent while rejecting the objections raised by the petitioner has not dealt with the submissions on the ground that the petitioner filed the reply beyond the period of sixty days.
In view of the above settled legal position, the respondent-Assessing Officer could not have assumed the jurisdiction to re-open the assessment on mere change of opinion as it would amount to review the Assessment Order passed u/s 143(3) of the Act on the same set of facts which is not permissible. Decided in favour of assessee.
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2025 (6) TMI 1407
Warrant of authorization rejecting the handing over of stock in trade jewellery and follow up action including search and seizure (requisition), assessment order against the petitioner - HELD THAT:- Based on the warrant of authorization, respondent No.2 took the custody of gold jewellery worth Rs. 1,07,70,042/- from the Court of Magistrate. The petitioners did not challenge the said order by filing a revision. By way of a petition under Section 482 of Cr.P.C., the petitioners sought quashment of the entire proceedings of Crime and seizure memo dated 12.7.2017. However, the petitioners claimed the release of seized gold jewellery, but a letter dated 11.9.2017 has been written by Special Railway Magistrate to GRP, Ratlam for handing over the jewellery to the Principal Director of Investigation. Vide order dated 19.3.2024 the Single Bench of this Court has only quashed the proceedings of Crime No.3/2017 and declined to pass any order regarding release of gold ornaments.
The aforesaid order has attained finality. Despite the aforesaid order, the petitioners again filed an application before the Magistrate for the release of gold ornaments, which came to be dismissed vide order dated 28.5.2024. Again the petitioners filed a Criminal Revision before this Court, which has been dismissed vide order dated 9.8.2024.
After the seizure, the petitioners were served with the notice under Section 142(1) of the Income Tax Act dated 9.9.2019, thereafter notice under Section 143(2) was issued and thereafter final assessment order was passed on 24.12.2019. Petitioners challenged the said assessment order by way of appeal and the appeal has been dismissed. Therefore, the Income Tax Authority has rightly dismissed the application for release of the gold ornaments because of the pending demand of Rs. 1.08 Crores. Therefore, the only remedy available to the petitioners to challenge the order passed by the PCIT (Central), Mumbai is before the Income Tax Appellate Tribunal in view of Section 132-B of the Income Tax Act.
Therefore, in view of the above, the petition cannot be entertained at this stage to challenge the warrant of authorization, especially after passing the order of assessment and misconceived and dismissed. dismissal of appeal. The petition is misconceived and dismissed.
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2025 (6) TMI 1406
Tribunal disposing the appeal ex-parte - adjournment application filed on behalf of the appellant rejected - HELD THAT:- As per the proviso to Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963, when the appeal has been disposed of ex-parte and when the appellant appears afterwards and satisfies the Tribunal that there was sufficient cause for his non appearance and the appeal was called for hearing, the Tribunal is bound to make an order setting aside the ex-parte order by restoring the appeal.
On perusal of the Misc. Application filed by the appellant for recall of the ex-parte order of the Tribunal, the Tribunal without considering the reason given by the appellant that the authorized representative of the appellant was unable to brief the senior advocate to appear in the matter, the Tribunal insisted for the documentary evidence and there cannot be any documentary evidence for the facts stated in the rectification application filed by the petitioner. Therefore, even the order passed by the Tribunal in Misc. Application is contrary to the Rule 24 of the Income Tax (Appellant Tribunal) Rules, 1963.
In order to render the justice to the appellant, more particularly when the appellant has produced the evidence by way of submissions and the documents before the CIT (Appeals), the same ought to have been considered by the Tribunal and the appellant is again required to be provided an opportunity of hearing and to place the said material before the Tribunal to arrive at an appropriate finding after considering the same and providing an opportunity of hearing to the appellant.
As the appellant was negligent right from the assessment stage and also did not appear before the Tribunal for more than thirteen times, the appellant is saddled with the cost of Rs. 10,000/- to be deposited before the Gujarat State Legal Services Authority, Ahmedabad within a period of four weeks from today. On deposit of such amount, the appeal filed by the appellant shall stand restored and the Tribunal shall endeavour to dispose of the appeal within a period of twelve weeks from the date of deposit made by the appellant as directed above. The appellant is also directed to co-operate and remain present as and when the matter is listed before the Tribunal.
Appeal is disposed of. The question of law is answered in favour of the appellant assessee and against the revenue.
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2025 (6) TMI 1405
Rectification of mistake u/s 154 - Nature of receipt - MEIS subsidy[Merchandise Exports from India Scheme] - whether subsidy is a revenue receipt and should be treated as income under the Income Tax Act, 1961?
HELD THAT:- We find that in Volkart Brothers [1971 (8) TMI 3 - SUPREME COURT] held that for initiating proceedings under section 154 of the Act, the mistake apparent from record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions.
The very fact that in the present case, the proceedings under section 154 of the Act were initiated on the issue of MEIS subsidy being a capital or revenue receipt requires examination of the objective of the scheme, the nature of reward received under the scheme, as well as the purpose for which it was granted.
Therefore, we do not find any infirmity in the findings of the learned CIT(A) that the determination of the nature of MEIS subsidy involves significant interpretational issues, making it unsuitable for rectification under section 154 of the Act.
The very controversy of capital receipt vs. revenue receipt brings this issue outside the ambit of the expression “mistake apparent from the record” under section 154 of the Act, as this issue is the most contentious in the history of tax litigation.
Accordingly, we do not find any infirmity in the order of the learned CIT(A) that the AO erred in invoking the provisions of section 154 of the Act on a debatable issue. Decided against revenue.
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2025 (6) TMI 1404
Revision u/s 263 - as per CIT assessment order passed by the AO appears to have been passed without proper inquiry - assessee has withdrawn amount from the capital account and could not explained the withdrawals and its application - HELD THAT:- We noted that the assessee out of the total withdrawal assessee explained that ₹4,80,400/- was withdrawn for household expenses and a sum of ₹7.50 lakhs was utilised in M/s Dwelling Private Limited, where assessee is one of the Directors. The assessee explained for the balance that these were withdrawals and not the income. He stated that this amount was withdrawn out of capital account and amount withdrawn was utilised for expenses.
Once there is a withdrawal from the capital account, it cannot be treated as income and there is no error in the order of the AO which caused prejudice to the revenue. Once the amount is not taxable which is withdrawn out of capital account, it cannot be treated as income and hence there is no prejudice caused to the revenue. Therefore, we find that the Ld. PCIT’s finding on this very issue is without any basis and bad in law, thus, we reverse the same on this count.
Receivables declared by the assessee as against meager sundry creditors - The assessee before the AO filed the complete books of accounts which were duly examined by the AO. We noted that the assessee before the AO filed the complete books of accounts which were duly examined by the AO and even now before us assessee filed the complete details of sundry creditors vis-a-vis sale effected during the year and sundry receivables. We find no reason that what was the ambiguity having sundry receivables and how the PCIT reached the conclusion that the AO’s order is erroneous and prejudicial to the interest of the revenue. In the absence of any adequate finding by the PCIT on this revision carried out, is bad in law, and thus, we reverse the same on this count.
Contradicted reply filed by the assessee wherein, it is admitted that a sum was provided by the M/s Garg Agencies, the proprietory concern of assessee’s father late Umakant Garg to M/s A.R. Fruits - As before us assessee filed a complete details and we noted that the assessee has received a sum of ₹2,00,30,000/- during the year assessment year 2011-12 relevant to financial year 2010-11 from M/s Garg Agencies. We noted that M/s Garg Agencies is a proprietory concern of assessee‘s father and from the facts, it is noted that a sum of ₹51,41,000/- was credited to M/s Garg Agencies against the goods supplied and a sum of Rs. 1,48,90,000/- was credited to assessee Shri Umesh Garg. We noted that these facts were duly examined during the scrutiny assessment proceedings as the details were available before the AO. Even otherwise, the PCIT in his revision order has not given a finding that how this amount is taxable and which type of enquiry the AO has not carried out. It is not the case of the assessee that the assessee is withdrawing the money from his capital account for the purpose of investment into M/s AR Dwelling P Ltd., hence, we find no reasonableness in the finding of the PCIT on this count, thus, we reverse the finding of the Ld. PCIT on this issue.
Verification of debit entry as bank charges and interest - We noted from the copy of account filed by the assessee that these bank charges and interest is clearly chargeable by the bank and claimed by the assessee. These details were available before the AO during the course of assessment proceedings in the form of books of accounts, which were duly examined by the AO during the course of assessment proceedings. Hence, we find no reasonableness in the finding of the Ld. PCIT on this count, thus, we reverse the finding of the Ld. PCIT on this issue.
Thus, order passed u/s. 263 by the Ld. PCIT deserve to be quashed - Assessee appeal allowed.
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2025 (6) TMI 1403
Reopening of assessment - issuance notice under Section 148A reason to believe - Period of limitation - particularly in light of the monetary threshold prescribed u/s 149 - contention of the Ld. DR was that as per information available with the AO, the income likely to escape assessment was likely to exceed Rs. 50,00,000/-
HELD THAT:- The words “likely to amount to fifty lakh rupees or more” cannot be read in a manner that the AO would be at liberty to initiate re-assessment proceedings, by way of issuance notice under Section 148A of the Act, without analyzing the information on the basis of which the re-assessment proceedings have been initiated. In this case, we observe that evidently, on a basic perusal of the bank statement of the assessee held with M/s. Renuka Mata Multi State Urban Cooperative Credit Society Ltd. a sum was on account of amount credited in the bank account of the assessee on account of maturity of fixed deposits.
Therefore, had the AO undertaken a basic analysis of the transactions done by the assessee with M/s. Renuka Mata Multi State Urban Cooperative Credit Society Ltd., there was no question of coming to the conclusion that this amount had escaped assessment in the hands of the assessee. Even, during the course of re-assessment proceedings, the AO accepted this fact and the aforesaid amount was not added in the hands of the assessee. Accordingly, in our considered view, the Assessing Officer is expected to analyze the information available with him, before forming the belief, whether the income which is likely to escape assessment is in excess of Rs. 50,00,000/-.
In this case, we are of the considered view that there was an evident non-application of mind by the Assessing Officer on the information available on record and the Assessing Officer did not carry out the necessary analysis of the information available with him so as to ascertain whether the income which is likely to escape assessment, is in excess of Rs. 50,00,000/-.
Accordingly, notice issued by the AO u/s 148A is barred by limitation, since firstly, a preliminary analysis of information by the Assessing Officer before issuance of notice would have led to a clear conclusion that income of the assessee was not likely to exceed Rs. 50,00,000/- and secondly, even the additions which were made by the Assessing Officer were not in excess of Rs. 50,00,000/-.
In the case of Rohit Kumar [2025 (1) TMI 827 - DELHI HIGH COURT] held that since the escaped income of Rs. 46.17 lakhs was below the 50 lakhs threshold set by Section 149(1)(b) in the amended provisions, accordingly, the re-assessment was unsustainable due to non-fulfilment of the monetary threshold.
In the case of Sri Adiparashakti Boards [2025 (1) TMI 827 - DELHI HIGH COURT] held that since the actual income escaping assessment was below Rs. 50,00,000/-, AO lacked proper jurisdiction to reopen the assessment. Appeal of the assessee is allowed.
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2025 (6) TMI 1402
Deduction u/s 80P(2)(a)(i) - interest income earned by the assessee from investments with Cooperative Banks - Lower authorities have denied the deduction as Lokmangal Cooperative Bank is not a Cooperative Society.
HELD THAT:- This issue is no longer res integra by virtue of catena of decisions taking consistent view that interest income earned from deposits with Cooperative Banks is eligible for deduction u/s. 80P(2)(d) of the Act. Recently, this Bench in the case of Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal [2025 (6) TMI 963 - ITAT PUNE] wherein allowed the deduction claimed by the assessee u/s. 80P(2)(d).
Deduction claimed by the assessee on the interest income earned from deposits/Investments with Lokmangal Cooperative Bank u/s. 80P(2)(d) deserves to be allowed. Assessee appeal allowed.
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2025 (6) TMI 1401
Additions made u/s 68 and 69C - Share transactions from company listed on a recognized stock exchange - HELD THAT:- Coordinate Bench of ITAT in the case of sister of the assessee has dealt with the same script regarding same assessment year and had deleted the addition by recording well reasoned order. Apart from this, Ld. AR has also relied upon number of other cases, wherein also same script was dealt with by the Coordinate Bench of ITAT. See Damyanti Mundhra [2019 (8) TMI 1121 - ITAT DELHI], AMIT H. PATEL (HUF) [2021 (8) TMI 324 - ITAT MUMBAI], GOPAL CHAND MUNDHRA [2019 (8) TMI 1121 - ITAT DELHI] and RAMPRASAD AGARWAL [2018 (12) TMI 561 - ITAT MUMBAI].
Thus taking into consideration the decision of the Coordinate Bench in the same script more particularly in the case of sister of the assessee, wherein the same script and the same assessment year is involved and hence adhering to the principles of judicial consistency and judicial discipline, we direct the Ld. AO to delete the additions made under section 68 & 69C of the Act. Assessee appeal allowed.
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2025 (6) TMI 1400
Nature of receipt - right to receive profit in a partnership firm and relinquishment of the right to receive profit - asset of the partnership firm was revalued by the partners and the difference on account of revaluation of asset was credited to the partners’ account - whether the admission of new partners and the consequent reduction in the share of existing partners constituted a taxable event u/s 2(47)? - HELD THAT:- The revaluation of partnership firm’s asset was anterior to the introduction of new partners. Thus, in view of our above discussions as well as judicial precedents, we are of the considered opinion that the revaluation of assets by CRCL does not attract capital gains. The revaluation of assets of CRCL and the credit of revalued amount to the capital account of partners in their respective share ratio does not entail any transfer as defined under section 2(47) of the Act.
When any new partner is introduced into an existing partnership firm, the profit sharing ratios undergo a change, which does not amount to transfer as defined u/s 2(47) of the Act, as there is no change in the ownership of assets by the partnership firm. As during the subsistence of the partnership firm, the partners have no defined share in the assets of the partnership firm and thus on realignment of profit-sharing ratio, on introduction of new partners, there is no relinquishment of any non-existent share in the partnership firm’s assets as the asset remained with the firm.
Such an arrangement is not covered by the provisions of section 45(4) of the Act, which covers the case of dissolution of partnership firm. Accordingly, no capital gains arise on such relinquishment of share ratio in the partnership firm.
However, we find that in order to bring the profit or gains from receipt of money or capital asset or both by the specified person from a specified entity on reconstitution of the specified entity shall be chargeable to income-tax as income of such specified entity under the head “Capital Gains”, the legislation amended the provisions of section 45(4)] vide Finance Act, 2021, shall come into force on the 1st day of April, 2021, which is prospective in nature.
Similarly, the provisions of section 9B of the Income Tax Act has been inserted w.e.f. A.Y. 2021-22 vide Finance Act, 2021 to bring under the tax net the income on receipt of a capital asset or stock in trade by a specified person from the specified entity in connection with the dissolution or reconstitution of such specified entity, shall come into force on the 1st day of April, 2021, which is prospective in nature. In fact, transfer of capital asset is common in both section 9B and section 45(4) of the Act. In the present case, the assessment year under consideration is 2017-18 and accordingly, the amendments vide Finance Act, 2021 have no application in the present case.
Under the above facts and circumstances of the case as well as judicial precedents, the addition made by the AO towards levy of short term capital gains tax and confirmed by the CIT(A) stands deleted. Thus, the grounds raised by the assessee are allowed.
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2025 (6) TMI 1399
Denial of deduction u/s 80IB(10) - as per revenue assessee failed to file supporting evidences/ assessee failed to file the completion certificate - AR has stated that this being the 6th year of claiming this deduction, the same would be allowable to the assessee
HELD THAT:- We find that the assessment was framed on best judgment basis and even in the remand report, Ld. AO did not render any such finding on merits and merely opposed admission of additional evidences. The arguments as advanced before us are new arguments and the submissions made before us has not been dealt with by any of the lower authorities.
The plea involves factual verification and re-examination of impugned claim of the assessee. The Explanation mandate issue of certificate by local authority whereas Ld. AR has stated that the said certificate is to be issued by an Architect which would be sufficient compliance under the relevant law.
We remit the impugned issue back to the file of Ld. AO for fresh adjudication with a direction to the assessee to plead and prove its case. No other ground has been urged in the appeal. The appeal stand partly allowed for statistical purposes.
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2025 (6) TMI 1398
Foreign Tax Credit - denial of claim due to delay in filing Form-67 - HELD THAT:- Filing of Form No. 67 is directory and not mandatory and therefore, the relief of foreign tax credit is allowable as Form No. 67 was available at the time of processing of the return. See Swapan Bhttacharya [2025 (5) TMI 438 - ITAT KOLKATA] which has referred to the decision of Duraiswamy Kumaraswamy [2023 (11) TMI 1000 - MADRAS HIGH COURT] and Rahul Anand [2024 (12) TMI 638 - ITAT KOLKATA] AO is directed to allow the credit for foreign taxes in accordance with law.
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2025 (6) TMI 1397
Addition u/s 69A - difference of valuation of the stamp duty versus actual consideration - money found credited in the assessee’s bank account unexplained - HELD THAT:- The assessee has demonstrated by bank statement that the entire amount came from the properties sold to the purchaser. Moreover, valuation of the stamp duty versus actual consideration, the difference arose solely because of the purchaser chosen to register a deed at the circle rate and stamp duty value was determined by the said authority for which the seller cannot compel the purchaser to reflect negotiated price.
Since the assessee was transparent in receipts, therefore, the Assessing Officer has not disputed that the monies were reached through normal banking channel and once the assessee has proved the identity of the buyer, genuineness of the transaction and source of fund, the initial burden stands discharged.
The revenue has not brought any record showing the consideration exceeded Rs. 34,00,000/- for that have been originated from a unaccounted sources. Addition made by the AO and sustained by the DRP u/s 69A of the Act is unsustainable and the AO is directed to delete the addition. Appeal of the assessee is allowed.
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2025 (6) TMI 1396
Addition u/s 69 - excess stock found during the survey - Addition being GP on suppressed sales found during the course of survey - HELD THAT:- Since the addition on account of suppressed GP was made by extrapolating the sales figure and the excess stock found during the survey, therefore, we find merit in the submission of the Ld. Counsel for the assessee that the benefit of telescoping should be given
As we find the Coordinate Benches of the Tribunal are taking the consistent view that the excess stock found during the course of survey should be taxed as business income at normal rate. Th
As in the case of Yash Construction Co. [2024 (7) TMI 1649 - ITAT PUNE] has taken the view holding that the excess stock found during the course of survey should be treated as business income to be taxed at normal rate. We, therefore, set aside the order of the CIT(A) on this issue and direct the Assessing Officer to tax the amount at normal rate instead of u/s 69 r.w.s. 115BBE of the Act. The ground Nos.1 and 2 are accordingly partly allowed.
Addition u/s 68 - unsecured loan received - In absence of production of the persons or their confirmation letters or bank statements of the above persons, the AO held that the assessee could not prove the creditworthiness of the said persons - HELD THAT:- It is the submission of the Ld. Counsel for the assessee that the loan creditors have declared such loan amounts in their respective Balance Sheets which were filed along with the returns of income prior to the completion of the assessment. It is also his submission that given an opportunity, the assessee is in a position to substantiate his case with evidence to the satisfaction of the AO regarding the identity and creditworthiness of the loan creditors and genuineness of the transactions.
Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to give one final opportunity to the assessee for proving the identity and creditworthiness of the loan creditors and genuineness of the transactions and decide the issue as per fact and law.
Addition u/s 68 of the Act on account of increase in capital - due to non submission of any details before the AO regarding the details of increase in the capital AO made addition - HELD THAT:- Introduction of capital by the assessee is out of the funds given by close relations for betterment of the business, the details of which are already available in the cash book of the assessee. Further, an amount is the opening capital. It is also his submission that given an opportunity, the assessee is in a position to furnish the full details before the Assessing Officer. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate his case by furnishing all the details and decide the issue as per fact and law.
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2025 (6) TMI 1395
Income taxable in India - Amount received as ‘fees for technical services’ falling within the ambit of Section 9(1)(vii) - India-UAE DTAA - PE in India or not? - HELD THAT:- We are of the view that in absence of PE in India and also for the admitted fact there is absence of provision in DTAA to tax the FTS, the amount received by the assessee company would be taxed as per the provisions of Article 7 of the DTAA. Accordingly, the said amount received by the assessee is not chargeable to tax in India and we delete the addition made by the AO in the final assessment order. Appeal filed by the assessee is allowed.
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2025 (6) TMI 1394
Validity of reopening of assessment - period if limitation - Time limit for notices u/s 148 and 148A - reasons to believe - HELD THAT:- We observe that assessing officer has not followed the procedure mentioned in section 148A of the Act, properly. While following the procedure, we find that there are lot of launches which is not curable. It was submitted that the allegation in the entire Annexure (Reason) is that of unaccounted receipts by assessee from booking / sale of units in the project "Silver Heights".
However, while justifying the reopening of case under the prescribed time-limit u/s 149 of the Act, it was alleged that income chargeable to tax in assessee’s case is not represented in the form of assets / expenditure, that is, nowhere, it is mentioned that income chargeable to tax, which has escaped assessment amounts to Rs. 50,00,000/- or more. Therefore, there is clear contradiction between the allegation raised on the basis of so-called documents/data seized from the premises of third party and averment made in justification of compliance with the provision of Section 149(1)(b) of the Act.
In the show cause notice dated 13.03.2023, it is mentioned that the reopening proceedings are made as per clause (iv) of Explanation 2 to Section 148 of the Act, this, is in stark contradiction to the reasons mentioned in the very notice issued u/s. 148 of the Act, dated 23.02.2023. In the said notice issued u/s 148 of the Act, on 23.02.2023, it is mentioned that assessment is reopened “on account of search initiated u/s 132 of the Act, in your case or in the case of the person in respect of which you are assessable under the Act”.
This means that while reopening the proceedings, assessing officer had formed an opinion and a belief that, either search has been carried out in assessee’s case or that assessee’s representative of any other search person (In this case of R K Group). Thus, the very initiation of the reassessment proceedings is on a completely incorrect factual premises or belief and it was strongly objected by the assessee during the assessment proceedings. Therefore, on this ground also, initiation of proceeding u/s. 147 of the Act is incurably and defective.
We find that in para-3 of SCN it is stated that the provision of Section 149(1)(b) has been followed by taking approval from the specified authority. However, as stated above, there is no mention of asset or expenditure represented by the alleged-escaped income and hence, the notice issued u/s.148 of the Act is barred by the limitation period of time prescribed u/s.149 of the Act. Proceedings initiated u/s147 of the Act are wholly and ipso facto invalid and hence, reassessment proceedings are hereby quashed. Assessee appeal allowed.
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2025 (6) TMI 1393
Delay of 61 days in filing the appeal before the Tribunal - sufficient reasons for delay - HELD THAT:- As noted that u/s 253(5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exist a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on the part of the assessee in not filing this appeal within the prescribed time. On going through the reason for delay as stated in the affidavit it cannot be said that the assessee is very callous in its approach in filing the appeal before us.
While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors [1987 (2) TMI 61 - SUPREME COURT] laid down six principles.
As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.
Whether delay was excessive or inordinate? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. [1984 (4) TMI 24 - MADRAS HIGH COURT]considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 61 days cannot be considered to be inordinate or excessive.
In view of the above we are condoning the short delay of 61 days in filing the appeal before us and accordingly admit the appeal for adjudication.
Rejection of approval u/s 80G - As rightly contended by the ld. A.R. of the assessee, the order of rejection passed by the ld. CIT(E) is in the name of "Bangalore Medical College" and not in the name of the Assessee trust "Bangalore Medical College Alumni Association". Further, ld. A.R. of the assessee drawn our attention that in the course of 80G proceedings before ld. CIT(E), the notices were also erroneously issued in the name of Bangalore Medical College instead of Bangalore Medical College Alumni Association, thereby leading to confusion and procedural irregularity.
This being so, in the interest of justice and fair play and as requested by the ld. A.R. of the assessee, we deem it fit & proper to remit the entire issues in dispute to the file of ld. CIT(E) to decide afresh. Appeal filed by the assessee is partly allowed for statistical purposes.
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2025 (6) TMI 1392
Unexplained Share Application Money u/s 68 - as per revenue assessee discharged the onus of proving the identity, creditworthiness, and genuineness of the investors and transactions - HELD THAT:- Since the entire share application money has been received in cash and the date of transaction was not even filed before the AO nor before the Ld. CIT(A) nor even now in the additional evidence filed before us, therefore, the documents are self-serving documents and on failure of the Director to appear before the AO when the examination was to be carried out and to subject himself to examination as there was non-compliance after partial recording of statement, the entire share application money being received in cash, no credence can be given to the evidence filed as the entire scheme is a make-believe transaction and the transactions of receipt of share application money are not genuine, more so when proceedings against the company for irregularities were being conducted.
As regards the SIT yet to give its final verdict, the facts have been elaborately brought out in the order of Hon'ble High Court and have been reproduced in the order of the Ld. CIT(A); therefore, we are of the view that considering the preponderance of probability which governs the proceedings under the Income Tax Act, 1961, even though the assessee may get relief in a criminal procedure which requires a proof beyond reasonable doubt and the standard of proof is on a much higher scale while in the case of the assessment proceedings the surrounding circumstances, the test of human probabilities and the preponderance of probabilities have to be considered for making the assessment of income, we find no justification for any interference in the order of the Ld. CIT(A) whose order is hereby confirmed and the Ground raised by the assessee are dismissed.
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2025 (6) TMI 1391
Addition on account of cash payment made towards purchase of plot u/s 40A(3) - expense so disallowed relates purchase of land, the assessee being a Private Limited Company engaged in the business of construction of buildings for residential purpose - HELD THAT:- The first and primary rule of interpretation is that words in a statute should be given their ordinary grammatical or natural meaning unless there is an intention to the contrary. The plain language of a statute must override any supposed intendment of the legislature and cannot be amended or stretched by court.
The Hon’ble apex court in the case of Padmasundara Rao (DECD) And Others vs State of Tamil Nadu and Others [2002 (3) TMI 44 - SUPREME COURT] laid down that the first and primary rule of construction is that the intention of the legislature must be found in the words used by legislature itself. That courts cannot read anything into a statutory provision which is plain and unambiguous. Statute is the edict of legislature. The language employed in a statute is the determinative factor of legislative intent.
Even otherwise the intent of the section cannot be to exclude genuine transactions since Section 40(A)(3) of the Act operates on the premise that the transaction otherwise is genuine. And this is for the reason that if the expense were not genuine it would attract disallowance u/s 37 of the Act or any other provision of law. Section 40A(3) is triggered only when an otherwise genuine transaction /expense is incurred in cash beyond limit specified in the section.
Reliance placed by assessee on the decision of Achal Alloy (P) Ltd. [1995 (11) TMI 65 - MADHYA PRADESH HIGH COURT] is completely misplaced. The Hon’ble Court in the said case noted not only genuineness of the transaction but also existence of business exigency for making the payment in cash when it found that the insistence on making the cash payment was founded on the fulcrum that the payees did not have any bank account and that, being illiterates required payment in cash. Therefore, the said decision is of no assistance to the assessee.
Therefore, the argument of assessee that the transactions being genuine would not attract Section 40A(3) of the Act is, we hold, without any substance and is dismissed.
Argument of the Ld. Counsel of no expenditure having been incurred rests on the fact that the land purchased in cash remained in the closing stock of the assessee and therefore in effect no expenditure in relation to the same could be said to be incurred by the assessee. There is, we hold, absolutely no merit in the argument of the Ld. Counsel for the assessee. The fact remains that the assessee purchased the impugned lands during the year and debited the purchases to its Profit and Loss account. This is sufficient for the said transaction to qualify as expenditure. The fact that it was treated as closing stock does not take away the fact that expenditure by way of purchases was incurred in relation to the said transaction of land.
Disallowance of expenses u/s 40A(3) upheld - Decided in favour of revenue.
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2025 (6) TMI 1390
Addition u/s 68 - CIT(A) dismissing the appeal in limine for want of prosecution and for failure to support the grounds raised - HELD THAT:- The assessee, despite being given multiple opportunities, failed to place on record any corroborative evidence to support the claim that the cash deposits were explained or that the addition u/s 68 was unjustified.
No error in the approach of the CIT(A) in invoking the ratio laid down by the judicial precedents, wherein it was held that preferring an appeal without prosecution is equivalent to non-preferring it, and the appellate authority is not required to adjudicate grounds in vacuum without substantiation.
It is trite law that legal arguments must be supported by facts, and in the absence of any documentary or evidentiary support, the appellate authority cannot be faulted for dismissing the appeal. Accordingly, the grievance that the CIT(A) failed to consider the written submissions is devoid of merit, as those submissions were not accompanied by any new facts or explanations and merely reiterated earlier general legal contentions.
No infirmity in the action of CIT(A) in dismissing the appeal in limine for want of prosecution and for failure to support the grounds raised. The principles of natural justice do not extend to granting endless indulgence, particularly where procedural notices remain unanswered. Accordingly, Ground Nos. 1 and 2 raised by the assessee are dismissed.
Jurisdictional validity of reassessment proceedings initiated u/s 147 - grievance of the assessee is that the AO reopened the case for a specific reason, namely the alleged advancement of an unsecured loan to one party which was not reflected in the assessee’s books of account - HELD THAT:- This is not a case where the AO has made addition on an entirely unrelated ground. Rather, the AO traced the funding of the loan to unaccounted cash deposits, and treated the latter as unexplained for want of books and records.
Loan transaction served as the triggering event for the reopening, and the inquiry led to a connected addition on the same line of inquiry. It is now settled law that if the AO makes an addition on a matter which was examined as a result of or connected with the reason recorded, the reassessment cannot be invalidated merely because the form of the addition differs from the reason recorded.
In the present case, the loan transaction and cash deposits are part of a single factual chain and cannot be viewed in isolation. Where the AO finds that the purported loan is fictitious and is backed by unaccounted cash, the addition of cash deposits falls within the ambit of the original reason, even if the section applied is different. It is also pertinent to note that the reassessment has been completed within the scope and spirit of section 147. The existence of tangible material, coupled with the enquiry into the source of loan and the linked cash deposits, supports the jurisdiction assumed by the AO. The procedural compliance with issue of notice under section 148 and the recording of reasons is not in dispute. We therefore do not find merit in the assessee’s challenge to the validity of the reassessment. Accordingly, Ground No. 3 is dismissed.
Addition u/s 68 - unexplained cash credits, being deposits in four ICICI Bank accounts held by the assessee - We find the plea to be prima facie acceptable for consideration. The facts and pattern of transactions in the present year are substantially similar to those in A.Y. 2012–13, as evidenced by the presence of multiple ICICI Bank accounts, large-value cash deposits, and rotation of funds. However, the critical difference is that in the present year, the assessee failed to furnish any factual explanation or documentation before the AO or CIT(A). The record before us also does not contain any independently verifiable material to assess whether the transactions were of a pass-through nature, or whether the assessee retained the entire sums for his own benefit.
While the alternative plea for estimation merits examination, we are not inclined to accept the same straightaway at the Tribunal stage without factual verification. However, in the interest of justice, and in keeping with the principle of consistency, we are of the considered view that the matter deserves to be restored to the file of the Assessing Officer with a specific direction to verify the nature and pattern of the cash deposits in light of the facts accepted in A.Y. 2012– 13 and to decide whether estimation of commission income is warranted in the present year. Accordingly, we set aside the limited issue of quantum addition and restore the matter to the Assessing Officer with the following directions:
a. The AO shall verify the assessee’s bank statements, flow of funds, and any available evidence to ascertain the nature of cash deposits including repayment of such loan, if any, in part or full.
b. The AO shall specifically examine whether the assessee had engaged in providing accommodation entries or rotation of third-party funds, as accepted in A.Y. 2012–13.
c. If the factual matrix is found to be similar, the AO shall estimate the income component, such as commission, on a reasonable basis and in accordance with law.
Assessee shall be afforded a reasonable opportunity of being heard and to furnish supporting evidence, if any.
Appeal of the assessee is partly allowed for statistical purposes.
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2025 (6) TMI 1389
Additions made based on the basis of loose papers found and seized during the course of search - AO by alleging that assessee is having 1/4th share in such expenses and thus made the addition (being 25% of total alleged undisclosed expenditure) as unexplained expenditure in the hands of the assessee on protective basis - HELD THAT:- CIT(A) by observing that those expenses were duly recorded in the books of accounts for four entities namely M/s SRC Buildtech Private Limited, M/s SRC Realtech Private Limited, M/s Pyramid Buildtech Private Limited and M/s SRC International Pvt. Ltd. deleted this additions.
CIT(A) made this finding on the basis of remand report submitted by the AO wherein it is observed by the AO that the necessary verification was made at the stage of ITSC and no negative interference was drawn with respect to the transactions noted in these papers which were duly recorded and unexplained by the abovesaid companies. As further seen that in the case of three companies Co-ordinate Bench of the ITAT has dismissed the appeals of the Revenue by observing that this expenditure were duly recorded by in the books of those companies and, therefore, separate additions is not required to be made. The Revenue has failed to controvert these findings of the Ld. CIT(A) and the Co-ordinate Bench of Tribunal, thus, we find no infirmity in the order of the CIT(A) in deleting the additions made, therefore, the order of Ld. CIT(A) is hereby upheld on this count. Ground of the Revenue are dismissed.
Assessment u/s 153A - Addition towards the cash deposited into bank account maintained in the regular course by the assessee - HELD THAT:- In this regard, the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] has settled this issue by holding that where no incriminating material were found as a result of search with respect non abated years, no addition could be made. Decided in favour of assessee.
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