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Income Tax - Case Laws
Showing 61 to 80 of 173171 Records
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2025 (4) TMI 1481
Levy of penalty u/s 271(1)(b) - non-compliance of notice issued u/s 142(1) - HELD THAT:- Hon’ble Supreme Court, in the case of Hindustan steel Ltd.[1969 (8) TMI 31 - SUPREME COURT] has held that an order-imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation.
We have taken note of the fact that the assessee has ensured regular compliance of the statutory notices after August, 2018.
Thus, it appears that the provisions of Section 271(1)(b) have been used by the AO as a deterrent to ensure timely compliance.
We are satisfied with the reasons of non-compliance of the notice issued u/s 142(1) as there is no deliberate defiance of law or is guilty of conduct contumacious or dishonest or act in conscious disregard of the legal obligation. We therefore, hereby set aside the impugned order and delete the penalty. Appeal of the assessee is allowed.
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2025 (4) TMI 1480
LTCG - Indexed cost of construction - Evidence (Proof) of expenditure incurred on construction - CIT(A) deleted the additions against cost of construction - HELD THAT:- Perusal of the order of the Ld. CIT(A) reveals that the remand report was called out by the appellate authority but the AO was failed to submit the report.
CIT(A) has examined the issue that the assessee has furnished the valuation report issued by a government approved valuer who estimated the cost of construction. The assessee also filed the additional evidence before the appellate authority on which remand report was called out from the AO.
CIT(A) has examined the issues in the correct prospective and rightly allowed the appeal of the assessee. The reasoning and findings of the CIT(A), while granting relief is on proper appreciation of law expounded by the judicial dicta. No reason to interfere with the findings of the CIT(A). Appeal of the revenue is liable to be dismissed.
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2025 (4) TMI 1479
Addition u/s 69A - suo-moto taking the bank deposits as turnover and estimating the profit @ 8% - assessee has not furnished complete details of bank deposits, the same is added to the total income of the assessee as unexplained money u/s 69A - HELD THAT:- Legal heir of late assessee has furnished evidence to show that, prior to his death, assessee was running a Kirana business which had a turnover that had been verified by the VAT authorities in the course of an assessment.
Non-compliance before the AO is explained by the illness and subsequent demise of the assessee during the period of assessment.
Therefore, the lack of explanation furnished before the AO in the given circumstances of the case, should not be viewed as an attempt to evade notices but has to be seen in the light of the circumstances that befell the assessee and his family.
Since, the total amount of cash deposit and even the total amount of credits in the said bank account are well below the turnover of the late assessee’s business, and since the AO has verified this in the course of remand proceedings and not recorded any adverse comments, when given the opportunity to do so, we are of the opinion that the CIT(A) is justified in accepting the request of the assessee’s legal heir to assess the income from the said business @ 8% of gross receipts in view of the provisions of section 44AD. Appeal of the Revenue is dismissed.
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2025 (4) TMI 1478
Surcharge applicable on income as clubbed with highest rate of income tax against the provisions given in chapter ii, 1st Schedule part 1 of Finance Act, 2022 - CIT(A) NFAC erred in law to invoke the provision section 164 r.w.s 2(29C)
HELD THAT:- As surcharge @ 10% only should have been applied as the income was below Rs. 1 Crore. For A.Y. as the total income was only Rs. 24,78,407, therefore, no surcharge was leviable. Hence, the appeals are allowed for both the assessment years and the AO is directed to apply the surcharge @10% for A.Y. 2022-23 as the income did not exceed Rs. 1.0 Crore and apply NIL surcharge for A.Y. 2023-24 as the income did not exceed Rs. 50,000/-. Hence Ground Nos. 1, 2 and 3 are allowed.
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2025 (4) TMI 1477
Denying the benefit of exemption claimed u/s 10(23C) (iiiad) - funds collected by the assessee trust towards building and repair development expenditure - HELD THAT:- We find that the issue as to whether the funds collected by the assessee trust towards building and repair development expenditure has already been decided in the case of Vidya Bharati Society for Education & Scientific Advancement[2020 (1) TMI 559 - ITAT KOLKATA]
Thus, we set aside the order passed by CIT(A) and direct the AO to recomputed the income of the assessee after excluding the building and repair development expenditure from the gross receipts and allow exemption u/s.10(23C)(iiiad) of the Act. Thus, appeal of the assessee is allowed.
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2025 (4) TMI 1476
Unexplained expenditure on election - Post Search Assessment u/s 153A - expenditure recorded in a diary seized during search in the name of a third party and the assessee denied ownership or connection with the diary - HELD THAT:- The diary found with the assessee was in the name of Third party/Mr. Alok Tiwari, that it contained details of expenses incurred during election and the source of these expenses remained unverified by the Department, the only conclusion which can be drawn is that the diary belonged to Third party/Mr. Alok Tiwari and the said expenses were incurred by him.
We do not agree with the CIT (A) that applying the provisions of section 132( 4A) and section 292C of the Act, the diary is to be attributed to as belonging to the assessee and addition to be confirmed in the hands of the assessee. The addition made in the hands of the assessee is therefore directed to be deleted.
Addition made on account of cash found deposited in the bank account of the assessee - source of the same remained unexplained - AO made addition of the peak of the bank deposits while the CIT (A) rejected the addition made of the peak balance and on the basis of data available with him, extracted from the Balance Sheet of the assessee, reworked the availability of cash with the assessee and accordingly noted that an partly deposited in the bank account of the assessee remained unexplained - HELD THAT:- We have gone through the contents of the Balance Sheet, which was placed before us in a paper book at page number 21-24. The said Balance Sheet, we have noted, records the opening and closing balances of both the bank accounts in which the Revenue authorities have noted cash to be deposited by the assessee.
Considering the fact that both the bank accounts are recorded in the balance sheet of the assessee, there can be no case with the Revenue of the cash found deposited therein being from unexplained sources .As long as the cash and bank balances are recorded in the Balance Sheet of the assessee, it is simple accounting, that all the transactions recorded therein are duly accounted for in the books of the assessee and therefore are from accounted sources. The addition therefore made by the Revenue authorities, we hold, is without any basis and is therefore directed to be deleted.
Unsecured loans from different persons found to be not genuine - Not allowing credit for redeposit of surplus business funds in bank account and the addition sustained - HELD THAT:- The only reason for holding the loans ingenuine was the fact that the said persons could neither be produced by the assessee for examination nor did they respond to notices issued by the AO with regard to the same.
This is not sufficient for treating the impugned loans as not genuine. Undoubtedly the assessee had furnished the names and details of all persons from whom the loans had been taken and had also given their affidavits. In this regard no infirmity has been pointed out as such in the affidavits furnished by the assessee of these persons. Merely because the said persons did not respond to notices issued by the AO cannot be read adversely against the assessee and neither does it establish that the loans were not genuine.
As we find that the assessee had duly discharged its onus of establishing the genuineness of the loan by furnishing all details of the lenders and also their affidavits. Addition deleted.
Addition of entries of expenses and investments found recorded in seized document BK 2 treating them to be unexplained - HELD THAT:- The findings of the CIT (A) noted, is a detailed finding who has considered all the contentions of the assessee and after dealing with all of them has given part relief to the assessee.The original edition made by the AO was to the tune of Rs.20,23,567 /-which the Ld. CIT(A), after considering each and every argument and contention made before him and corraborating it with the documents on record, has confirmed to the extent of ₹12,75,317/- which he noted to have remained unexplained. In the absence of any assistance on behalf of the assessee on this factual issue we are left with no option but to confirm the order of the Ld. CIT(A) upholding the addition.
Unexplained expenditure incurred through the employee Rajan Dubey for the purchase of fertilizer for agriculture - HELD THAT:-CIT(A), we have noted,has confirmed the addition since the assessees explanation of having made the payment out of his available cash balance was not substantiated through any cash book and the assessee, as per its Balance Sheet,was found to have only nominal cash balance of 3000 odd rupees. We find no merit in the ground raised by the assessee seeking deletion of the impugned addition in the absence of any assistance from the assessee controverting the findings of the AO and Ld.CIT(A).
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2025 (4) TMI 1475
Validity of reopening of assessment - notices issued u/s 148 challenged on the basis that same are beyond the limitation period prescribed u/s 149 - HELD THAT:- Similar issue pertaining to the challenge against notices issued u/s 148 for the assessment year 2015-16 on the basis that same are beyond the limitation period prescribed u/s 149 of the Act has been decided in favour of the taxpayers after noting the submission of the Revenue before the Hon’ble Supreme Court in Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)], wherein it was conceded by the Revenue that for the assessment year 2015-16, all notices issued on or after 1st April, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (“the TOLA”).
We find that in Pratishtha Garg [2024 (12) TMI 1540 - DELHI HIGH COURT] allowed the writ petition filed by the taxpayer and set aside the notice issued u/s 148.
Thus, the re-assessment notice issued u/s 148 of the Act for the assessment year 2015-16 is barred by limitation. Decided in favour of assessee.
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2025 (4) TMI 1474
Delay of 445 days in filing the appeal by the assessee against the order passed u/s 263 - as submitted appellant was not aware of the order passed by the PCIT - HELD THAT:- AO has passed order u/sec.143(3) r.w.s 263 on 30.03.2022 and served on the appellant. In fact, the appellant has claimed in it’s petition that, after receipt of the order from the Assessing Officer dated 30.03.2022, the appellant-company has filed RTI application on 07.04.2022 before the learned PCIT to obtain necessary information. From the above facts, it is undisputedly clear that, the appellant was aware of the proceedings before the learned PCIT u/sec.263 of the Act and also participated in the proceedings by filing relevant evidences. Therefore, reasons given by the appellant in the petition for condonation of 445 days delay that, the appellant was not aware of the order passed by the learned PCIT u/sec.263 dated 29.03.2021 till the AO passed his consequential assessment order u/sec.143(3) r.w.s 263 on 30.03.2022 is devoid of merit and contrary to the facts available on record. Therefore, we are of the considered view, that the reasons given by the appellant for delay in filing appeal does not come under “sufficient and reasonable cause”
Appellant claims that the Managing Director of the company was suffering from cancer and he was admitted to M.S. Ramaiah hospital at Bangalore - Although, the claim of the appellant that it’s Managing Director was suffering from cancer and was admitted in hospital, but, the fact remains that when the Director of the company was in hospital, the appellant company has filed appeal against the order passed by the learned PCIT u/sec.263 the Act on 16.08.2022 which is evident from the date of admission into the hospital and date of death of the Managing Director. Further, in a company there are more than one Directors and in case one Director or Managing Director is not able to attend any proceedings because of illhealth or for some other reasons, but, the other Director can very well attend the proceedings. Therefore, in our considered view, the reasons given by the appellant in the petition that due to ill-health of the Managing Director of the company, the appeal could not be filed on or before the due date is devoid of merits and does not come under “reasonable and sufficient cause” going by the facts available on record. Therefore, on this reason, the delay of 445 days cannot be condoned.
Arguments of the appellant in light of Covid-2019 pandemic period if we exclude the delay covered in the order of Hon’ble Supreme Court, then, the actual delay is 79 days and, therefore, considering the short delay of 79 days, the appeal may be admitted in the interest of justice - Once there is a delay, it is the duty of the appellant to explain the total delay including the delay covered under Covid period and delay not covered under Covid period. Therefore, even if we exclude delay covered by the Covid period, still there is a delay 79 days, which could not be explained by the appellant with “sufficient reasons”. Therefore, we are of the considered view that, the reasons given by the appellant on this account also cannot be accepted.
As the reasons given by the appellant in the petition for condonation of delay, does not come under “sufficient and reasonable cause” for condonation of huge delay a 445 days in filing the appeal before the Tribunal.
Deduction u/sec. 80IA(4) applicability to the constituent of the JV Consortium - assessee had not directly entered into agreement with Central/State Governments or any Local Authority or Statutory Body, but, entered into agreement through JV/Consortium and, therefore, the Assessing Officer disallowed the claim of deduction u/sec.80IA(4) of the Act to the assessee - HELD THAT:- We note that contracts awarded to JVs and whether the assessee can claim the same as a constituent of the above JVs, the coordinate bench of ITAT, Visakhapatnam in the case of Transstory (India) Ltd [2011 (7) TMI 810 - ITAT VISAKHAPATNAM] held that the constituents of JVs are eligible to claim deduction u/s 80IA. Decided in favour of assessee.
Deduction u/s 80IA - AO after examining the submissions of the assessee, allowed the 80IA deduction only to the extent of assessee-company’s proportionate share with respect to the works executed through JV/Consortium and disallowed excess claim - HELD THAT:-The assessee-company had executed 100% project-work in respect of the above 02 projects. Since the back-to-back agreement entered into by the assessee company with JV/Consortium with respect to their proportionate share of project works in the above 02 projects are not verified either by the AO or by the CIT(A), we deem it appropriate to remit the issue back to the file of AO to the limited extent of examining the issue of back-to- back agreements with the JV/Consortium for execution of proportionate share of JV/Consortium project works by the assessee-company in respect of 02 projects and if the assessee-company furnishes relevant agreements with respect to completion of the project works to be done by the JV/Consortium by the assessee-company, then, the Assessing Officer is directed to allow the deduction claimed by the assessee-company u/sec.80IA of the Act. Needless to say, the Assessing Officer should provide adequate opportunity of being heard to the assessee. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
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2025 (4) TMI 1473
TDS u/s 194H - Addition u/sec.40(a)(ia) - disallowance of commission and cash incentives paid to the retailers on non deduction of TDS - HELD THAT:- In the present case, there is no dispute with regard to the fact that, the appellant-company has paid sales incentives to the retailers on behalf of the Principal’s and the same has been reimbursed by the Principal to the appellant-company. Since there is no Principal and Agent relationship between the appellant-company and the retailer traders, the provisions of sec.194H cannot be applied. Therefore, in our considered view, the AO is erred in invoking the provisions of sec.194H and consequently, disallowed the expenditure u/sec.40(a)(ia) of the Act for non-deduction of tax on such payments.
Disallowance of expenditure on the ground that the appellant-company failed to prove genuineness of the expenditure by filing relevant evidences - HELD THAT:- AO has completely erred in coming to the conclusion that, the expenditure incurred by the appellant-company is non-genuine only on the basis of enquiry conducted during the course of assessment proceedings, because, the AO conducted enquiries in the year 2010, whereas, the appellant-company carried-out business in the year 2007-2008 and there is almost more than 03 years gap between the business conducted by the appellant-company and the enquires conducted by the AO. Since the assessee has filed relevant evidences and argued that the license period is only for a period of 1-2 years and as and when the license period is over, the retailers will discontinue business and not available in the given address, in our considered view, going by the nature of business of the assessee and the trade practice, the Assessing Officer cannot disbelieve the arguments of the assessee only on the ground that notices issued u/sec.133(6) of the Act are returned un-served by the postal authorities.
We are of the considered view that, when the assessee has filed various evidences including confirmation from the parties to prove the genuineness of expenditure, in our considered view, merely for the reason of non-service of notice, adverse inference cannot be drawn against the genuine expenditure incurred by the appellant-company.
Therefore, we are of the considered view that the Assessing Officer is erred in coming to the conclusion that the assessee has designed tax avoidance method for payment of tax which is nothing but a colourable device.
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2025 (4) TMI 1472
Loss of PE against the FTS income earned by the assessee - whether the two steam of income to be treated as one income for the taxation purpose? - as submitted that PE also belongs to the same entity, therefore, the assessee should be allowed to claim the set of inter head adjustment - HELD THAT:- We observed that the assessee has PE in India and during the current year, the ‘PE’ has no offshore supply and it has attributed expenses for running the same in India, therefore, it has declared loss attributing to its PE in India.
Assessee is a foreign company taxable in India to extent of the income earned or sourced by it in India. We noticed that the assessee has two sources or stream of income, one is from the services to its clients through its PE and another is by providing services to its clients directly. We noticed that the first stream falls under the Art.7 and the other under Art.12 of the DTAA. However, both stream of income falls under the head business as far as the assessee is concerned. It is only classification and inter play between the two articles of the DTAA. There is no dispute as far as the classification of income is concerned. The AO has accepted that the loss claimed by the assessee is attributable to the PE and the FTS earned by the assessee is from the other services provided directly.
In the given case, no doubt the assessee has declared loss in the PE and at the same time, the income earned by it falls under FTS, as far as assessee is concerned it has earned the above income or loss sourced thru India. Therefore, the provisions of section 71 are applicable. Just because the income is chargeable to tax under special provisions and also TDS is collected, it does not change the determination of income under the Act. The Provisions of section 44DA and 115A are applicable or not and how it will impact the income declared by the assessee has to be analysed.
As per the provisions of section 44DA, the income of Royalty or FTS earned by the assessee through its PE is concerned, the same is chargeable to tax under this provisions and it is chargeable to tax on gross basis. In the given case, the assessee has earned the FTS directly without the assistance of its PE. Therefore, the above section has no application. Coming to the provisions of section 115A, the provisions starts with the words, ‘Where the total income of’ connotes the meaning that first we have to determine the total income and if the above total income includes the FTS as per the provisions of section 115A(1)(b) then the relevant FTS has to be excluded from the above income and then chargeable to tax at the specified rate (as per section 115A(1)(b)(B) of the Act). We observe that as per the provisions of section 115A(3) of the Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under the sections 28 to 44C and 57 of the Act in computing the income referred in section 115A(1) of the Act.
If there is any loss in the PE, the same can be set off against the Gross income of FTS.
Provisions of section 115A(3) does not allow any expenditure or allowance, the set off of loss is to be allowed or not? - It is clear that the legislature specifies the restrictions specifically in the statute. Therefore, the provisions of sec.115A is silent, hence, the assessee is eligible to set off of the loss of its PE against the income earned through other sources in India under the provisions of section 71 of the Act.
As noticed a reported decision of the coordinate bench in the case of Foramer S.A [1994 (11) TMI 177 - ITAT DELHI-B] has considered the issue of allowability of depreciation, when the rate of depreciation and allowability of the same are not prescribed under the Treaty, the assessee may choose to apply the relevant provisions contained in the provisions of the Act applicable in the contracting state and also it was held that the a foreign national governed by avoidance of double taxation treaty is entitled to ask for application of provision of the Income Tax Act, to the extent they are more beneficial to that assessee. Similarly in this case, the issue involved is the issue of allowability of Set off of intra head of income, the similar provisions are not present in the relevant treaty, in case of absence of relevant provisions of set off, the assessee has liberty to follow the provisions of Income Tax Act, which is beneficial to it. In the absence of any provision of set off in the treaty, the relevant findings of the coordinate bench applicable to the present case mutatis mutandis. Decided in favour of assessee.
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2025 (4) TMI 1471
Denial of deduction u/s 80-IB(10) - profits from a housing project - A.Y. 2008-09 - HELD THAT:- In assessee’s own case for the assessment year 2007-08, it is evident that the claim of deduction u/s 80-IB(10) was allowed to the assessee only in respect of Wing-A to Wing-F of the housing project “Aakash Nidhi”, while in respect of Wing-G of the aforementioned housing project the claim of the assessee u/s 80-IB(10) was denied.
Therefore, in the absence of any distinguishing facts pertaining to the claim of deduction u/s 80IB(10) in respect of housing project “Aakash Nidhi” in the present case, respectfully following the settled position in the assessee’s own case AO is directed to grant the deduction u/s 80-IB(10) to the assessee proportionate to the profits earned from Wing-A to Wing-F of the housing project “Aakash Nidhi”. Accordingly, Ground No. 1 raised in assessee’s appeal is partly allowed.
Deduction claimed u/s 80-IB(10) was denied as so many flats were sold to the spouses of the existing flat owners - A.Y. 2010-11 - We are of the considered view that whether the flats were allotted to the spouse of the existing flat owners or the same were allotted to the major children of the flat owners requires verification. Therefore, we deem it appropriate to restore this aspect of the issue to the file of the jurisdictional AO for necessary examination of the details placed reliance upon by the assessee.
Exemption u/s 80IB(10) on proportionate basis - housing project “Aakash Nidhi” comprising of seven buildings, namely Wing-A to Wing-G - HELD THAT:- Insofar as the claim of the assessee in respect of Wing-A to Wing-F deduction under section 80-IB(10) of the Act is allowed respectfully following the settled position in assessee’s own case for the assessment year 2007-08. Further, insofar as the claim of the assessee in respect of Wing-G of the housing project “Aakash Nidhi”, we deem it appropriate to restore the issue to the file of the jurisdictional AO for de novo adjudication in light of the decision of the Hon’ble Jurisdictional High Court in Vandana Properties [2012 (4) TMI 54 - BOMBAY HIGH COURT]
Same flat has been sold twice by the AO - Having considered the submissions of both sides, we deem it appropriate to restore this aspect of the issue also to the file of the jurisdictional AO for necessary verification to examine whether the same flat was re-sold or reallotted by the assessee. It is further directed that if, upon examination, it is found that the assessee merely re-allotted the same flat due to non-fulfilment of allotment conditions by the earlier allottee, then the AO is directed to grant deduction under section 80-IB(10) of the Act to the assessee in respect of the balance deduction claimed by the assessee in the year under consideration.
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2025 (4) TMI 1470
Addition u/s 68 - unexplained cash - CIT(A) deleted addition instead making estimation of net profit of 4% of turnover - as per revenue assessee failed to discharge the onus to prove the identity, creditworthiness and genuineness of the parties to whom cash sales were made during the year - HELD THAT:- Since the assessee failed to prove the identity, creditworthiness and genuineness of the impugned bank deposits, the AO was justified in invoking the provisions of section 68 of the Act.
Quantification of the addition - GP estimation - CIT(A) held that once the book results have been rejected by the AO, only the profit element there in could be added. Accordingly, he applied a flat rate of 4% of the total turnover - As decided in M/s ISMT Limited [2021 (12) TMI 549 - ITAT PUNE] wherein it was observed that once the books of accounts of an assessee are rejected by the A.O under Sec. 145(3) of the Act, then he cannot rely upon on the same books of account for the purpose of making any addition, and the only course of action available with him is to determine the income by application of a flat rate of profit by taking into consideration the business conditions of the assessee as in comparison to profits disclosed by other assessee’s in the similar line of business.
CIT(A) has taken a very pragmatic view of the entire matter. His conclusion as stated above is based on correct appreciation of facts of the case which are in consonance with judicial findings as well. We therefore, hold that he has correctly appreciated the facts and his conclusion and application of the net profit on the total turnover being the addition, does not need any interference.
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2025 (4) TMI 1469
Incorrect computation of Transfer Pricing Adjustment - HELD THAT:- We note that as per the final Assessment Order, ALP was determined at INR.438,44,64,758/- as against the actual sales of INR.426,48,22,811/-. As the difference between the aforesaid two amounts, which comes to INR.11,96,41,940/-, should have been added as APL Adjustment Whereas transfer pricing addition has been made. Therefore, we find merit in the contention of the Assessee that the actual transfer pricing adjustment challenged by way of Ground.
TPO had selected final list of comparables consisting of four comparables - MPS Limited as functionally dissimilarities and in absence of segmental data, MPS cannot be taken as a comparable. Therefore, respectfully following the decision of the Tribunal in the case of the Appellant for the AY 2017-2018, we direct the AO/TPO to exclude MPS Limited from the list of comparables.
Inclusion/exclusion of R. Systems International Limited - We direct the Assessing Officer/TPO to include R. Systems in the list of comparable after examining the functional comparability keeping in view that TNMM has been adopted as the most appropriate method.
Short grant of credit for Dividend Distribution Tax (DDT) - On perusal of the said application we find that the Appellant has filed before the AO copy of challans for deposit of DDT. Accordingly, the AO is directed to grant credit of DDT after verification of the aforesaid challans as per law and re-compute consequential interest under Section 115P of Act, if any, and thus, dispose off the aforesaid rectification application.
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2025 (4) TMI 1462
Revision u/s 263 - addition on account of sale of fly ash and cenosphere - Assessee claimed that it had not earned any income as it had deposited the entire sale proceeds of fly ash, which was received from NTPC in a fly ash utilization fund and had also furnished the same - HELD THAT:- There is no question of the Assessee having earned any income. The fly ash did not belong to the Assessee, but to its holding company – NTPC. The Assessee had only sold the fly ash and utilized part of the funds as mandated and made over the balance funds to NTPC.
No infirmity with the decision of the ITAT that the Assessee had not earned any income on account of sale of fly ash, which was provided by NTPC.
In New Horizon Sugar Mills Pvt. Ltd [1998 (4) TMI 41 - MADRAS HIGH COURT] Madras High Court had upheld the decision of the learned ITAT holding that the amount set apart towards Molasses Storage Reserve Fund is required to be excluded from the total income of the assessee. The said decision was rendered bearing in mind the Molasses Control (Amendment) Order dated 06.02.1972, which required that the amount for construction of molasses storage tank was to be kept separately. The assessee had no power to spend the said amount, the same was required to be spent only in accordance with the directions issued by the Government. The appeal preferred against the said order was also dismissed by the Supreme Court, in view of the orders passed in similar matter permitting the Revenue to withdraw the appeals.
As Assessee was not free to utilize the sale proceeds of fly ash as the same was required to be used for specified purposes, which as stated above, did not result in the Assessee acquiring any asset. No substantial questions of law.
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2025 (4) TMI 1461
Reopening of assessment u/s 147 - Reopening on a "protective basis" - as alleged that the Petitioner assessee has received cash for assessment year 2010-11 based on the findings recorded in the assessment order for assessment year 2011-12 - HELD THAT:- The issue of addition on the basis of the allegation of cash received was not the subject matter of inquiry during the course of the assessment proceedings u/s 143 (3). The case is reopened based on the findings for assessment year 2011-12, wherein the officer has worked out the addition on account of cash received for various years, but has added the full amount in assessment year 2011-12, even though certain agreements for sale pertained to assessment year 2010-11.
Since the amount was already added in assessment year 2011-12 on a substantive basis and certain transactions pertain to assessment year 2010-11, the AO on a protective basis has reopened the case for assessment year 2010-11.
The jurisdiction to reopen the case has to be examined based on the facts prevailing on the date of recording the reasons, and on the date of recording the reasons the order of the CIT(A) for assessment year 2011-12 was not in existence and therefore the argument made by Petitioner, that since the CIT (Appeal)’s order for the assessment year 2011-12 was available on the date of rejecting the objection, the AO ought to have consider it is to be rejected. In any case the CIT(Appeal)’s order was not final and was subject matter of appeal before the Tribunal, and therefore even on this ground the submission made by the Petitioner has to be rejected.
No infirmity in the proposed reopening of the case, since the issue of the alleged cash received was not the subject matter of investigation during the course of the original assessment proceedings, and the reopening is made within a period of four years from the end of the relevant assessment year and that constitutes sufficient material based on the findings and reasons given in assessment year 2011-12 and further the proposed proceedings are taken only on protective basis.
Hon’ble Supreme Court in the case of NDTV Ltd. [2020 (4) TMI 133 - SUPREME COURT] has held that reassessment proceedings can be initiated based on findings in subsequent assessment years order. In our view, the ratio of this decision is squarely applicable to the facts of the present.
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2025 (4) TMI 1460
Delays in disposal of the appeals by the National Faceless Appeal Centre [NFAC] - HELD THAT:- This court by an order dated 24.02.2025 had observed that it was cognizant of the large number of statutory appeals which are pending disposal before NFAC and had also expressed concern regarding the delay in disposal of the same. The court further observed that NFAC would endeavour to implement remedial measures in all earnest.
Undoubtedly, there are large number of appeals which are pending adjudication before NFAC. It is necessary for the NFAC to take remedial steps for early disposal of the appeals. Nonetheless, we do not consider it apposite to issue any further directions in this regard.
The petition is disposed of.
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2025 (4) TMI 1459
Fees for technical services as defined u/s 9(1)(vii) or Fees for Included Services as covered under Article 12 (4) (a) of the DTAA - payments received by the Assessee on account of providing certain centralised services including marketing services and reservation services - HELD THAT:- Admittedly, the said issue is covered in favour of the Assessee and against the Revenue by several decisions of this court including Sheraton International Inc. [2009 (1) TMI 27 - DELHI HIGH COURT] Sheraton International LLC. [2023 (5) TMI 1435 - DELHI HIGH COURT] Westin Hotel Management LP [2024 (4) TMI 1250 - DELHI HIGH COURT] and Shangri-La International Hotel Management Pte Ltd. [2023 (9) TMI 1683 - DELHI HIGH COURT]
In the case of Radisson Hotel International Incorporated [2022 (11) TMI 641 - DELHI HIGH COURT] this court had referred to the earlier decisions and dismissed the case holding that no substantial questions of law arise for consideration by this court. The present appeal must bear the same fate.
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2025 (4) TMI 1458
Addition u/s 68 - bogus purchases - Whether ITAT erred in upholding addition of entire amount of the alleged bogus purchases to the income of the Appellant, instead of only gross profit margin embedded in the purchases? - HELD THAT:- Assessee’s appeal was rejected by the CIT(A) on the basis that the additions were made by the AO u/s 68. Assessment order does not mention that the additions have been made under the said Section.
Respondent also earnestly contended that the AO had not made additions under Section 68 of the Act. It is material to note that this was one of the contentions advanced by the Assessee before the learned ITAT but the same was not considered. Further as noted above, it was Assessee’s case that since its sales as recorded in the books of accounts was accepted, some allowance was necessary to be made on account of purchases even if the AO was of the view that the suppliers in question had not supplied goods. Plainly, this contention was neither examined by the learned CIT(A) nor learned ITAT.
We set aside the impugned order and remand the matter to ITAT to consider afresh. ITAT will examine whether the additions were made under Section 68 of the Act as held by the CIT(A) and if so whether the same are sustainable. ITAT shall also consider the question whether any allowance is required to be made for purchases in the event it is held that the sundry creditors as reflected by the Assessee in the books, had not supplied the goods on credit.
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2025 (4) TMI 1457
Denial of principles of natural justice by passing the final assessment order without granting or rejecting the petitioner's request for adjournment and opportunity to respond to the show cause notice - HELD THAT:- As relevant extract from the affidavit of Shri Sanjeev Jain, Principal CIT(OSD)(EXEMPTION) shows as relevant point of time when the Petitioner had made application dated 02.03,2021 for adjournment, the entries of adjournment in the hearing module were not synchronized in Case History Noting/ order sheet, on account of gap in software development due to which the said adjournment request made by the petitioner did not reflect in the Case History Noting / order sheet.
As humbly say and submit that such shortcoming in software came to be noticed subsequently and accordingly in the year 2023, the software was updated so that adjournment entries in the hearing module get synchronized in Case History Noting /order sheet module.
Department had taken us through the files, which inter alia, contained questionnaires to the concerned officers and their written responses to their respective Superiors.
From the same, it is apparent that the failure of the administration rested on the twin factors: issues with the portal and human error.
This Court deems it appropriate not to venture in the area of errors and the degrees of negligence in the performance of duties by the concerned officers. It is up to the Department to deal with the same on the administrative side.
As far as issues with the portal are concerned, we find that these portals have become silent stakeholders in the Justice Delivery System. On the last hearing, we were pleased to note that there is an acknowledgment on behalf of the Department, coupled with a sincere effort to rectify the issues.
Given such a situation, the Department, whose avowed objective being to participate in the economic growth of the country through the Tax collection system as mandated and circumscribed by Parliament in Article 265 of the Constitution of India, has to ensure that at all times, every wing of the Department including the “portal” is attuned and fine tuned to the imminent needs of the functioning of the Department. Likewise, it is bounden duty of this Court to strike a balance between the competing rights of the Assessee and the duty of the Department to collect tax to ensure that the Constitutional mandate is carried out in the best possible manner.
Department intends to position the CIT(J) as a Nodal Officer to be connected with each jurisdictional High Court. The further functions elaborated under the Head “Work Domain” under paragraph No.4 of the aforesaid instruction No.1/2024, if implemented, should go a long way in mitigating lapses of the kind, forming the subject matter of the present proceedings.
This Court, therefore, passes the following directions :-
(1) In all future Income Tax petitions (Special Civil Applications and Tax Appeals), apart from the usual respondents, the CIT (Judicial) is to be mandatory made a party respondent by the Assessee petitioners and a co-petitioner by the Income Tax Department, where the Tax Appeals are filed by the Department. The postal address and E-mail address for CIT (Judicial) given
(2) Once the CIT (Judicial) stands impleaded in the petition, the sole responsibility for implementation of the Orders of this Court and to follow Instruction No. 1/2024 to the hilt, shall be upon the CIT (Judicial), as a representative of the Income Tax Department. The buck shall stop there.
The present proceedings were being continued beyond the immediate reliefs claimed in personam by the Petitioner herein because in the course of the hearings, this Court had become aware of the systemic deficiencies in the administration of the Income Tax Department which has resulted in egregious violation of the rule of law.With the aforesaid steps taken by the Department in consultation with the Chairman, CBDT and the directions passed by us in the foregoing paragraphs, we are buoyant and optimistic that the deficiencies recorded in the Orders of this Court, of which the Department is now alive to and both pro-active and re-active, the administration of the provisions of the Income Tax Act will be optimized to ensure that a powerful engine of our economy can maximize its potential and at the same time remain just and humane to the Assessee. It is the need of the hour.
Lastly, it brings us to the individual case of the “little man” who had knocked the doors of this Court for his own statutory and Constitutional rights.
Denial of Exemption u/s 11 and 12 - allegedly violated the conditions prescribed under Section 12A of the Act by not filing the return of income and Form No.10B within the prescribed time limit - Penalty imposed ignoring stay orders - In view of the fact that the penalty and demand orders, both dated 21.12.2021, were passed in the teeth of the order dated 06.04.2021 by which Assessment Order dated 04.03.2021 came to be stayed, the penalty order under Section 270-A dated 21.12.2021 and the Demand Notice u/s 156 of the Act dated 21.12.2021 are hereby quashed and set aside.
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2025 (4) TMI 1456
Reopening of assessment u/s 147 - notice in the name of a non-existent entity - HELD THAT:- From the perusal of the records, it will be seen that in response to the notice cum draft Assessment Order u/s 147 r.w.s. 144B addressed to the Assessee in question the Petitioner had responded on 29.03.2022 (uploaded on the same day), stating the factum of amalgamation and specifically uploading the certified copy of the Scheme of Amalgamation Order passed by the NCLT and other annexures.
Additionally, on 29.03.2022, further detailed submissions on facts and law including a detailed reply on merits was uploaded along with copies of several decisions of the Hon’ble Supreme Court, etc. The Petitioner also sought a video conference reserving its right to make further submissions. Therefore, in such circumstances the Respondent could not have assumed the jurisdiction to issue a notice in the name of a non-existent entity.
Following the ratio laid down in the case of PCIT Vs. Maruti Suzuki India Ltd[2019 (7) TMI 1449 - SUPREME COURT] the Assessment Order and the consequent notice of demand u/s 156 deserves to be and are hereby quashed and set aside.
Assessee appeal allowed.
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