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Income Tax - Case Laws
Showing 81 to 100 of 175799 Records
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2025 (7) TMI 106
Unexplained money u/s. 69A - SBN deposited in bank accounts -cash deposit treated as unexplained in Bank Account during demonetization period - burden of proof - non rejection of books of accounts - HELD THAT:- Assessee claims that the cash deposit is on account of demonetization and in fact cash sales was essentially generated on retail sales to various customers which is duly reflected in the cash book maintained by the assessee. A copy of the computerized cash book was submitted before the Assessing Officer, during the course of assessment proceedings, which are duly audited with Tax Audit Report.
AO has not found any defect or discrepancy in the audited books of accounts. The assessee has proved with reference to corroborative material evidence in the cash deposits with retail sales bill, purchase bill with name of the customers. Thus the initial burden is fully discharged by the assessee.
Whereas the Ld. A.O. without rejection of books of accounts and without making enquiry with the seller of gold namely M/s. D.S. Jewellers or with the purchaser of smaller denominations made the additions which is not sustainable in law.
Further the sales are found recorded in the sales register, stock register, cash book, etc. The impugned sum also formed part of the overall sales credited in the Profit & Loss account and offered for taxation under the head “Business Income”. Perusal of the stock register along with sales register shows that the movement of the stock fully reconciles with the reported sale proceeds on the day of demonetization. The Ld. D.R. was also unable to controvert the fact that the A.O. had accepted the sales and the stocks in as much as he did not invoke provisions of Section 145(3) of the Act and rejected the books of accounts.
We therefore agree with assessee that, once the book results and inter alia the sale proceeds has been accepted by the A.O. as assessee’s business income, it is not justified on AO’s part again to assess the same by way of unexplained cash credit u/s. 69A of the Act, only on the issue of sales made to different customers on the night of demonetization day as it would amount double taxation of the same sum. Assessee appeal allowed.
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2025 (7) TMI 105
Addition u/s. 56(2)(x) - difference in fair market value of the land as determined by the stamp valuation authorities and decalred by assessee - As submitted that assessee has produced Registered Valuer’s report who had valued property at much lower than the actual sale consideration, because of location and condition and use of the land, the fair market value was much far below the stamp duty value - earlier the person from whom assessee had purchased the property in this case, the matter was referred to the departmental Valuation Officer who had submitted his report on 29/06/2017 who has valued the same property as on 30/12/2013 at Rs. 22,88,790/- for the A.Y. 2013-14 - HELD THAT:- When the department itself has got the same property valued and it has been found by the AVO that it was far below the ready reckoner value and the property was valued at Rs. 33,30,250/- five years before the purchase was made by the assessee. If one takes the index value for 5 years then it comes to Rs. 42,30,500/-, which is still far below the consideration of Rs. 75,00,000/-. Then how can it be held that the fair market value of the property is Rs. 6,91,82,500/-.
The third proviso to Clause (x) of sub-section (2) of Section 56 clearly provides that if the stamp duty of value of immovable property is disputed by the assessee on the grounds mentioned in Section 50C(2), then ld. AO has to refer the matter to the Valuation Officer.
Once the assessee has challenged the valuation specifically and has brought all these facts of earlier valuation, then either AO should have accepted the valuation done by the department earlier and taken the index cost or should have referred the matter to the DVO / AO.
Since, in the remand report called for by the ld. DRP in the case of the assessee for present assessment year, AO himself has considered all these aspects by taking into consideration the earlier departmental valuation officer’s report and the index value as per the ready reckoner is Rs. 42,38,500/-, then the sale consideration of Rs. 75,00,000/- is held to be far reasonable and fair market value of the property. Accordingly, the difference of Rs. 6,16,82,500/- added by the ld. AO is deleted. Assessee appeal allowed.
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2025 (7) TMI 104
Denial of exemption u/s 11 - default in ensuring timely mandatory compliance of filing Form 10B tax audit report on or before the due date of filing section 139(1) return.
HELD THAT:- A perusal of the case file indicates that the assessee had filed its return on 03.11.2017 claiming section 11 exemption and thereafter; its form 10B tax audit report was belatedly uploaded on 23rd November, 2018 i.e. much before the CPC’s processing in its case on 31st March, 2019.
The assessee had very well filed the tax audit report in Form 10B before the CPC’s processing. That being the case, we hereby quote CIT vs. Xavier Kelavani Mandal (P.) Ltd. [2012 (9) TMI 1049 - GUJARAT HIGH COURT] to conclude that once their lordships have already settled the issue in assessee’s favour and against the department, thereby holding the above compliance as directory provision, the learned lower authorities’ action rejecting section 11 exemption is hereby reversed in very terms.
AO is directed to frame its consequential computation in assessee’s case after verifying all the relevant facts as per law. Assessee appeal allowed.
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2025 (7) TMI 103
Interest received on enhanced compensation awarded for acquisition of agricultural land - Addition made within the meaning of provisions of section 145B r/w section 45(5) and amended provisions of sections 56(2)(viii), 57(iv) - HELD THAT:- As decided in Inderjit Singh Sodhi [2024 (4) TMI 408 - DELHI HIGH COURT] discussion, we affirm the concurrent findings of the AO and CIT(A) and find that the view taken by the ITAT is unsustainable, as the same is based on an incorrect appreciation of law. The 2010 amendment was a conscious departure by the Legislature from the earlier position and the said departure holds good law, as on date. There is no question with respect to the vires of the amendment before us or regarding any ambiguity in the language of the amendment. The only concern is regarding the enunciation of the applicable law and we hold the same to unequivocally mean that interest, whether on compensation or on enhanced compensation, shall be considered as income from other sources and shall be exigible to income tax.
We, accordingly, answer the substantial question of law which has arisen in the instant appeal in affirmative and in favour of the Revenue. We, thus, hold that the ITAT has erred in relying upon the decision of Ghanshyam [2009 (7) TMI 12 - SUPREME COURT] ignoring the changes brought about by Finance (No.2) Act, 2009, which came into effect in the year 2010. Revenue’s appeal is allowed.
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2025 (7) TMI 102
Addition u/s 69A - Bogus LTCG - Penny stock purchases - long-term capital gains arising from sale of shares unexplained - CIT(A)/NFAC deleted addition - HELD THAT:- NFAC observed that the facts of the assessee's case are exactly identical with the facts in the case of Reeshu Goel [2019 (10) TMI 1387 - ITAT DELHI] which was decided by the Tribunal referred supra wherein the same scrip from which the assessee had obtained long-term capital gain has been held to be genuine and held not to be a penny stock. Accordingly, the addition made under Section 69A as unexplained money stood deleted by the Learned NFAC correctly. The said decision of this tribunal has been approved by the Hon’ble Jurisdictional High Court [2021 (12) TMI 716 - DELHI HIGH COURT]
Decided in favour of assessee.
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2025 (7) TMI 101
Addition on account of creditors appearing under loans & advances - AO has doubted the genuineness of the advances shown in the books of account of the assessee solely on the ground that the assessee was not having stock of land to be sold to these parties and therefore, the question of making the advances by the parties is highly suspicious and unbelievable - As argued it was not possible for the assessee to submit the confirmation from these parties as they were not traceable due to some criminal cases registered against them
HELD THAT:- The assessee has shown the helplessness to produce confirmation from these parties due to the reason that these persons were absconding due to criminal cases pending against them and this fact is not disputed by the Department and rather confirmed by the Department by producing this news material on a criminal case registered against the Managing Director of Heera Gold Exim (P) Ltd. In any case, when there was no material produced or brought on record to show that there was actual sale of land to these parties and the assessee has suppressed the sale consideration to avoid the tax, then the advances received through proper banking channel cannot be treated as unaccounted sale.
At the most, if the AO was satisfied that these advances are not a genuine transaction, then the addition could have been made u/s 68 to the extent received during the year. AO has not doubted the transfer of money by these parties in favour of the assessee but the reporting of the transactions in the books of account by the assessee under advances from these parties was doubted by the AO on the premise that the assessee is receiving the consideration over and above the consideration reported and declared in the books of account and sale deeds.
It is pertinent to note that in the case of suppression of consideration, the excess amount is received as own money, not through banking channel. Once the AO fails to co-relate these amounts with specific sale indent between the assessee and these parties, then this cannot be treated as unaccounted sale consideration.
Thus, the addition was confirmed by the learned CIT(A) for want of the documentary evidence to substantiate the loan and advances and to establish the identity, creditworthiness and genuineness of the transaction. These conditions as referred by the CIT(A) are required to be satisfied in case of cash credit u/s 68 whereas the AO has not doubted the transaction of transfer of the amounts by these persons but doubted the nature of payment. Thus, in the absence of any sale incident, title deed or any other material, the advances shown by the assessee cannot be treated as sales. Therefore, in the absence of allegation of any own money received, these advances cannot be treated as unaccounted sale. Hence the addition made by the AO on this account is deleted.
Advances received from the customers - Addition u/s 68 - addition made for want of the confirmation from these parties - assessee produced ledger account, bank account statement and confirmation of these parties to show that the amounts were received from these parties as an advance through banking channels and also furnished the PAN of some of these parties - HELD THAT:- It is pertinent to note that the assessee produced the sale deeds to show the actual sale of the land to these parties in subsequent years and the sale consideration was adjusted against the advances received by the assessee. Once the sale deed is registered, then the identity and creditworthiness of the parties cannot be disputed as the amounts were received by the assessee against the sale of land. Only in respect of some of the persons belonging to the Heera Group, the assessee could not submit confirmation due to the reason that criminal cases were registered against those persons and therefore, the assessee was unable to file the confirmation from those persons. Once the identity of these persons are not in dispute and the amounts were received through banking channels, then not filing confirmation in some isolated cases due to a Bonafide reason explained by the assessee would not lead to the conclusion that the transaction of advances are not genuine when the other records prima facie establish the genuineness of the transaction. Accordingly, when the assessee has produced the supporting evidence including the confirmation in majority of the cases, then non-production of the confirmation in 2 or 3 cases cannot change the nature of the transaction. Hence, in the totality of the facts and circumstances, the additions sustained by the learned CIT(A) merely on the ground of non-furnishing of the confirmation of some of the parties due to unavoidable circumstances for the assessee, the addition is not justified - Decided in favour of assessee.
Unaccounted sale consideration of plots - Non-admission of sales revenue - CIT(A) has deleted the addition by considering the fact that some of the sales are not related to the A.Y under consideration, but pertains to the A.Y 2018-19 and for remaining sales, the assessee has filed the revised computation wherein only the profit or loss element was considered as income of the assessee as against the entire sale consideration - HELD THAT:- It is clear that the assessee has duly admitted in the statement recorded u/s 132(4) of the Act that there was a mistake in reporting the sale and consequently disclosed sales of Rs. 1,83,84,000/-.
AO has simply rejected the said factual details filed by the assessee and revised the computation solely on the ground that the assessee has admitted additional income in this regard in the statement and affidavit filed by the assessee. It is pertinent to note that if a statement recorded u/s 132(4) or u/s 131 as well as statement made in the affidavit is contrary to the actual facts, then the facts which are duly supported by the undisputed evidence in the shape of registered sale deed are required to be considered and not the statement which is found to be incorrect and contrary to the actual facts.
Further, it is not in dispute that this amount is shown as advances by the assessee and duly reflected in the balance sheet and since the assessee has not reported this amount as sale, the same was shown as part of the closing stock of the assessee. Therefore, only the profit element could be assessed as income of the assessee from these transactions because the cost of the land was already part of the closing stock. Accordingly, when the facts brought on record as well as undisputed documentary evidence are considered by the learned CIT(A) while deciding this issue, then we do not find any reason to interfere with the findings given by the CIT(A) based on correct facts.
Disallowance u/s 40(a)(ia) - Non-remittance of TDS on purchase of land in the Govt. Account - CIT(A) deleted addition - HELD THAT:- Revenue has not disputed this fact that the seller of the land M/s. Neelanchal Roadways (P) Ltd has considered the sale consideration as part of its income for the A.Y 2016-17 and paid the tax on the same. The assessee furnished the certificate/information regarding the return of income filed by the seller and therefore, once the recipient of the amount has offered the said amount to tax, then in view of the 2nd proviso to section 40(a)(ia) r.w.s. 1st proviso to section 201(1) of the I.T. Act, 1961, no disallowance is called for u/s 40(a)(ia) of the Act. Even otherwise, when the assessee has not paid the TDS amount in the govt. account, then the recipient of the amount cannot avail the TDS credit being not reflected in 26AS. Accordingly, we do not find any error or illegality in the impugned order of the learned CIT(A) and the same is upheld.
Addition towards the advances shown from the customers - as per AO these advances are not shown against any sale agreement for any identified plots of land - assessee could not produce any sale/purchase document/agreement to substantiate the claim that this amount was received as advance against the same - HELD THAT:- It is pertinent to note that this addition was made by the AO based on the transaction recorded in the books of account and not on the basis of any incriminating material. PAN of Shri Mohammad Shaik Hussain was submitted by the assessee during the course of assessement proceedings and thereafter, the assessee has taken confirmation letter from Shri Mohd.Shaik Hussain and Aadhar No. of Smt. Gausia Begum which were annexed to the application made under Rule 46A of the I.T. Rules, 1962 which were forwarded to the Assessing Officer for remand report, then this statement of the learned CIT (A) while confirming the addition is found to be contrary to the record. Decided in favour of assessee.
Addition of sum surrendered in the statement made u/s 132(4) of the Act - voluntary disclosure made by the Managing Partner and also confirmed by subsequent affidavit - CIT(A) has deleted the addition while considering the fact that there was no incriminating material to show any undisclosed income in the hand of the assessee resulting the disclosure as income as well as relying upon the various judgments and CBDT Circular dated 10/03/2003 - HELD THAT:- When the Department has failed to refer any incriminating material to corroborate the amount surrendered by the Partner of the assessee firm, then the addition made solely on the basis of the statement of the partner without any description of the nature of the undisclosed income or any transaction resulting any undisclosed income is not sustainable in law. Accordingly, we do not find any error or illegality in the impugned order of the learned CIT(A). Thus, ground of the Revenue’s appeal is dismissed.
Unaccounted sale - Addition deleted by the learned CIT(A) - HELD THAT:- As it is apparent from the details of the transaction itself that the Assessing Officer has made the addition of this amount without excluding the opening balance of the advances. We have considered an identical issue for the A.Y 2016-17. Therefore, in view of our findings on this issue for the A.Y 2016-17, we do not find any error or illegality in the impugned order of the learned CIT(A).
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2025 (7) TMI 100
Addition u/s 68 - Protective additions - Substantive addition made in the hands of the assessee company - commission earned by providing accommodation entries - AO submitted that the Assessee has acted as conduit concern for providing accommodation entries to the beneficiaries - HELD THAT:- By respectfully following case of Holeon Traders Pvt. Ltd. [2023 (7) TMI 1558 - ITAT DELHI] the deletion of the protective addition made in the hands of Assessee is hereby upheld, accordingly, the Ground No. 3 of the Revenue is dismissed.
Addition made on account of unaccounted commission -As contention of the Ld. Assessee's Representative that the Co-ordinate Bench of the Tribunal [2023 (7) TMI 1558 - ITAT DELHI] upheld the addition on account of commission income which was deleted by the Ld. CIT(A). However, after passing the order [2023 (7) TMI 1558 - ITAT DELHI] a corrigendum has been issued by the Tribunal on 31/07/2023, wherein the Co-ordinate Bench of the Tribunal held that the Ld. CIT(A) was right in deleting the addition on account of commission income.
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2025 (7) TMI 99
Addition u/s 69A -unexplained advances given by the assessee - CIT(A) deleted the addition - HELD THAT:- The assessee provided sufficient evidences to the Ld. AO whereon no adverse inference was drawn the deletion of addition made by the Ld. CIT(A) is deemed to be just and proper so as not to warrant any interference and is therefore upheld.
CIT(A) correctly held that appellant had discharged its onus by providing plethora of documents/evidence on record, to Ld.JAO. No adverse inference has been drawn on the documents available in assessment proceedings and even in the remand report proceedings. As the onus has not been discharged and remained on JAO, therefore, it is held that addition made to income u/s 69A is to be deleted - Decided against revenue.
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2025 (7) TMI 98
Cash deposit made during the demonetization period - addition u/s 69A - whether no valid and sufficient explanation for the cash deposits given? - HELD THAT:- Assessee is a salaried employee earns the income from teaching services. As per the facts available on record, assessee habitually withdraws all the cash out of salary credited in his bank account. He maintained withdrawals with himself due to his religious belief.
As observed that CIT(A) has considered the facts available on record and he has given relief only to the extent of cash withdrawals of last three assessment years.
Also observed that there is no other source of income unearthed by the tax authorities. Therefore, whatever the cash withdrawals by the assessee is only out of salary income and it is also observed that assessee has only withdrawn from the bank out of the salary income and made the deposit only during demonetization period due to declaration of demonetization during current assessment year. That being the case the cash deposit made by the assessee only from his declared source of income i.e. salary income.
Since there is no other source of income brought on record, therefore, there is no other source for the assessee to earn to deposit the said cash.
Therefore, to allow the claim of the assessee considering the religious belief and also there is no other source of income or ability to make additional income brought on record by the tax authorities. Accordingly, grounds raised by the assessee are allowed and addition made by the AO is also deleted.
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2025 (7) TMI 97
Disallowance on inconsistency in amount of interest paid in respect of borrowed capital u/s 36(1)(iii) in the 143(1) order and subsequently in the assessment order passed u/s 143(3) - appellant has submitted that this amount was already disallowed by appellant itself which can be seen from the Return of Income and the “Computation of Income” enclosed to the Return of Income - HELD THAT:- A copy of “Computation of Income” filed by the appellant before the Department alongwith copy of Return of Income filed was submitted to the Bench to demonstrate its case. After going through the same, the Bench is satisfied and hence decided that when the appellant has already disallowed the said amount, adding to the “Taxable Income” amounts to double disallowance. Hence, the addition made by the Ld. AO towards this disallowance is deleted.
Company itself disallowed the amount which can be evidenced from the “Computation of Income”- Since, the amount was disallowed by the appellant company, there is no need of making same addition and hence addition is deleted.
Disallowance of amortization of premium paid for leasehold land - Since, this amount was disallowed by appellant company, the Ld. AO cannot make same addition and hence the same is deleted.
MAT computation of book profit u/s 115JB - Prima facie, all the disallowances/additions made by the CPC/Ld. AO were already done by the appellant in the Return of Income itself. But, the Ld. AO is directed to go through the copy of Return of Income and “Computation of Income” and if the appellant itself had disallowed them, then all the additions made by Department should be deleted. This direction is given to Ld. AO, as the same were not verified by Revenue and due to this limited extent, the issues are remitted to the file of the AO.
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2025 (7) TMI 96
Validity of Approval accorded u/s 153D - mechanical and arbitrary manner - approval in a symbolic exercise of powers vested u/s 153D - HELD THAT:- Hon’ble Orissa High Court in the case of ACIT vs Serajuddin& Co. [2023 (3) TMI 785 - ORISSA HIGH COURT] had an occasion to examine substantial question of law on the propriety of approval granted u/s 153D of the Act. The Orissa High Court made wide ranging observations towards the manner and legality of approval u/s 153D of the Act.
The Hon’ble High Court inter-alia observed that the approval under s. 153D of the Act being mandatory, while elaborate reasons need not be given, there has to be some indication that approving authority has examined draft orders and finds that it meets the requirement of law.
The approving authority is expected to indicate his thought process while granting approval, held that it is not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the Court finds that the approval is granted mechanically, it would vitiate the assessment order itself. The approval letter simply grants approval.
As explained, the mere repeating of words of the Statue or mere rubber stamping of the communication seeking sanction by using similar words like ‘approval’ will not, by itself, meet the requirement of law. The Hon’ble Court made reference to manual issued by the CBDT in the context of erstwhile section 158BG of the Act and observed that such manual serves as a guideline to the AOs. Since it was issued by CBDT, the powers of issuing such guidelines can be traced to section 119 of the Act. The Hon’ble High Court also held that non-compliance of requirement of section 153D of the Act is not a mere procedural irregularity and lapse committed by Revenue may vitiate the assessment order.
As noted above, in the instant case, a single approval u/s 153D has been accorded in respect of two Assessment Years pertaining to the Assessee, there is no mentioning of seized material in the other material to show involvement of the superior authority in the approval granted by the ACIT. Assessee appeal allowed.
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2025 (7) TMI 95
Assessment u/s 153A - Unexplained cash credit u/s 68 - incriminating seized material found during the course of search or not? - HELD THAT:- It is a settled law that in the absence of any incriminating seized material found during the course of search, no addition can be made in the assessment u/s 153A of the Act.
On the plain reading of the Assessment Order, at no point of time, the Ld. A.O. referred any seized material which has been made basis for the impugned addition.
AO has only mentioned the date of search, however, not referred any incriminating material found during the course of search which could be basis for the addition made ultimately. The only addition made by the A.O. is on account of unsecured loan u/s 68 of the Act.
A.O. regarding ‘the balance sheet’ of the Assessee which has been made basis for making the impugned addition. Though the Ld. Departmental Representative filed copy which are seized materials, however, those annexures are neither referred in the Assessment Order and not made reliance to make the impugned addition.
When the Ld. AO himself has not referred the incriminating seized material in the assessment order in order to make the addition, the Department cannot improve the case of the A.O. before the Tribunal by reading something which is not written in the assessment order.
Judgment of Hon'ble Supreme Court relied by the Ld. Departmental Representative in the case of K. Krishna Murthy [2025 (2) TMI 583 - SUPREME COURT] the subject matter of the said case was penalty u/s 271AAA of the Act, wherein the addition has been made on account of undisclosed income arising out of search and the said addition has been made based upon own admission of the Assessee during the course of the search and since a quantum was confirmed, the penalty u/s 271AAA was upheld. Therefore, the said Judgment is not applicable to the case in hand.
As in the case of Abhisar Buildwell Pvt. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] relied by the Ld. Department's Representative, it is seen that in para (iii) and (iv) of the said Judgment, it is held that, in the absence of incriminating material found during the search, no addition can be made in the unabated assessment. In the present case which can be seen from the assessment order, that there is no reference to any incriminating material found during the search which resulted in the addition.
In the present case, there is no such seized material available with the A.O. which was made basis for making the addition in the Assessment Order.
The Hon’ble Apex Court in the case of Abhisar Build well [2023 (4) TMI 1056 - SUPREME COURT] upheld the view of the Jurisdictional High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] that in the absence of any incriminatory seized material found during the course of search, no addition can be made in an assessment made u/s 153A of the Act where, on the date of search, no assessment is pending for the relevant Assessment Year.
In the present case, the A.O. has not referred any incriminating material found during the course of search, which could be the basis for the impugned addition and the addition has been made only on the account of unsecured loan u/s 68 of the Act de-hors any incriminating material found during the search - Assessee appeal allowed.
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2025 (7) TMI 94
Reopening of assessment - reasons to believe - reliance on data of AIR which indicating alleged cash deposits - HELD THAT:- It can be seen from the reasons recorded except relying on the data available with the ITD system, A.O. has not made independent anaylization of the entries before forming belief that income has escaped assessment.
The identical issue came up in the case of Mahavir Prasad [2017 (10) TMI 1377 - ITAT DELHI] reasons recorded are highly vague, farfetched and cannot by any stretch of imagination lead to conclusion of escapement of income and these are merely presumption in nature; that it is a case of mechanical action on the part of the AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such deposits represented income. Decided in favour of assessee.
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2025 (7) TMI 51
Validity of reopening of assessment - period of limitation - Scope of TOLA - Period of limitation under new tax regime - Notice issued old law - scope of reassessment notices issued under the old and new regime of the Income Tax Act - HELD THAT:- Revenue could not controvert the facts that as per the decision of the Hon’ble Apex Court in case of Union of India v. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] the notice dated 15.7.2022 would be a time barred notice and in turn the notice dated 30.6.2021 would be an invalid notice, as per aforesaid observations made by the Apex Court.
Considering the above facts, there is a notice dated 30.6.2021, only one day time was left for the issuance of the notice under Section 148 after granting 14 days time to the assessee from the decision of Union of India v. Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] the date of issuance of the notice under Section 148 would be 12.6.2022, whereas in the facts of the case the notice u/s 148 is issued on 15.7.2022 and as such the notice dated 30.6.2021 would be an invalid notice.
In the result, the petition succeeds only on this ground.
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2025 (7) TMI 50
Estimation of income - Bogus purchases - Tribunal partly allowed the appeal of the assessee and restricted the addition made by the Assessment Officer of 100% to 6% - HELD THAT:- As decided in Pankaj K. Choudhary [2023 (3) TMI 1402 - GUJARAT HIGH COURT] partly allowed the appeal of the Revenue wherein it was held that in respect of bogus purchases, the addition at the rate of 6% of bogus purchases is fair and reasonable.
Thus, the substantial questions of law proposed by the appellant in this appeal stands already answered and therefore, no question of law much less any substantial question of law can be said to have arisen.
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2025 (7) TMI 49
Rejection of approval u/s 12AA - assessment proceeding pending in appeal - Effective date of grant of registration and subsequent grant of registration - whether the assessment proceeding as stated in first proviso to Section 12A(2) can be taken as pending appeal?
ITAT by the impugned order rejected the appeal holding that first proviso to Section 12A(2) of the IT Act has wrongly been construed, as the assessment proceeding was not pending before the Assessing Officer on the date of registration i.e. 14-7-2023 and accordingly proceeded to dismiss the appeal which is sought to be challenged by filing this appeal under 260A
HELD THAT:- First proviso to Section 12A(2) of the IT Act has been inserted with effect from 1-10-2014. Section 12A(2) of the IT Act was brought into the statute book by the Legislature to prevent genuine hardship that could be caused on the assessee due to non-registration under Section 12AA of the IT Act and accordingly, the provisos to Section 12A(2) is to be construed as retrospective in nature.
It would also be appropriate to notice the CBDT Circular No. 01/2015 dated 21-5-2015 which has been made applicable with effect from 1-10-2014 in order to remove hardships to charitable organisations due to non-application for registration for the period prior to the year of registration to show that it mandates that registration will have the effect for the period prior to the year of registration or in respect of which the assessment proceedings are pending and the provisions of Section 12A of the IT Act entailed unintended consequences of non-application of registration for the period prior to the year of registration and, thereby, non-grant of exemption under Sections 11 and 12 up to grant of registration.
This position was also recognised by the Central Board of Direct Taxes while issuing the Explanatory Notes to the provisions of the Finance (No. 2) Act, 2014, vide Central Board of Direct Taxes Circular No.1 of 2015, dated January 21, 2015. It is, thus, a curative proviso, which is but merely declaratory of the previous law. It has, by removal of the hardship, rendered the procedure more relief oriented.
It adequately complies with the natural justice principle of fairness to all.
Hence, it has to be presumed and construed as retrospective in nature, in order to give the section a purposive interpretation. {See Shree Shyam Mandir Committee’s case [2017 (10) TMI 1450 - RAJASTHAN HIGH COURT]
It is held that appeal pending before the ITAT against the order of the CIT (Appeals) affirming the order of the AO is the continuation of the original proceedings of the AO and thus, the assessment proceeding in appeal pending before the appellate Court i.e. ITAT is deemed to be the assessment proceeding before the AO within the meaning of first proviso to Section 12A(2) of the IT Act and we accordingly hold that appeal proceedings pending before the ITAT are deemed to be the assessment proceeding before the Assessing Officer within the meaning of Section 12A of the IT Act.
The impugned order so passed after the effective date of grant of registration and subsequent grant of registration on 14-7-2023 operates retrospectively for all relevant years in the present case, assessment year 2016-17, though registration was granted with effect from 1-4-2019, as we find that the object of the appellant Society is charitable in nature within the meaning of Section 12A(2) of the IT Act and on which there is absolutely no dispute. Accordingly, we are unable to sustain the impugned order and set aside the same. The appellant Society is entitled for exemption under Sections 11 & 12 of the IT Act. The Assessing Officer is directed to pas consequential order as stated above for the assessment year 2016-17, expeditiously.
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2025 (7) TMI 48
Revision u/s 263 - validity of Rectification u/s 154 order by deleting additions made u/s 68 - HELD THAT:- We are of the considered view in this factual backdrop that such a course of substantive adjudication in an instance of section 154 rectification by the Assessing Officer could not be held sustainable in law as per T. S. Balaram, ITO v Volkart Bros. [1971 (8) TMI 3 - SUPREME COURT] This is what has formed the precise reason for the learned PCIT to invoke section 263 revision jurisdiction in light of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] We thus see no reason to interfere with the learned PCIT’s impugned action holding the Assessing Officer’s above section 154 rectification as an erroneous one causing prejudice to the interest of the Revenue. Rejected accordingly.
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2025 (7) TMI 47
Addition made u/s 68 r.w.s. 115BBE - proceeds from cash sales of metal scrap - as submitted Amount of sales generated from metal scarp already offered under "sales figures", in the audited books of account - HELD THAT:- When the amount is already included under the sales figure the same cannot be taxed again. Books of account duly audited and the same has not been rejected. It is a trite law that when the amount is included in the sales and the Assessing Officer thinks otherwise, then he is required to reject the books of accounts.
Once the turnover declared by the assessee is accepted by the Revenue, there can be no further additions. In this case admittedly, the books of accounts are not rejected
Addition can be made, only when the books of account of the assessee are rejected. We note that in the case of ACIT v/s. Hirapanna Jewellers 2021 (5) TMI 447 - ITAT VISAKHAPATNAM] held that the assessee was maintaining complete stock tally, the sales were recorded in the regular books of accounts and the amount was deposited in the bank account out of the sale proceeds, therefore, the addition made by the AO and sustained by the Ld. CIT(A) was no justified. It is noted that the relevant documents to substantiate the cash sales has been provided by the assessee and no discrepancy or defects has been pointed out in the same.
The assessee has already provided various documents to substantiate the cash sales recorded by it which is not disputed. It is a trite law that unless some defects are pointed by the AO in the documents submitted, the same needs to be accepted. In this case, from the perusal of the reassessment order/ CIT(A) order it shall be clear that the same does not contain even a whisper that the document submitted by the Appellant was not genuine/ were defective.
Even during the course of the remand proceedings in the remand report, the Ld. AO has not pointed out any discrepancy in the various documents submitted by the assessee to substantiate its cash sales. The figures accepted under VAT/GST assessment.
The same very figure of sales has been duly depicted in the VAT returns, which is duly accepted and assessment in this regard has already been made by the sales tax authorities. Hence, there cannot be two different treatments in regard to the same amount. The addition has been made and thereafter sustained only on surmises and conjectures.
No adverse material/no independent enquiry made - The addition has been made only on the basis of surmises and conjectures. In this case, there is no adverse report/ material/document etc. to suggest that the appellant has taken some kind of accommodation entry or has routed its own money. No independent inquiry has been made by the lower authorities. It is a trite law that, in case the explanation cited by the assessee is not considered as tenable then the AO should specifically bring some material to refute the same. In this case, there is none. Thus, addition in dispute deserve to be deleted.
Assessment u/s. 115BBE in view of SMILE Microfinance Ltd. [2024 (11) TMI 1444 - MADRAS HIGH COURT] has already settled the issue against the department that the law applies to the transaction on or after 01.04.2017 only.
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2025 (7) TMI 46
Disallowance on account of loss on Amritsar project written off - year of crystallisation - main thrust of the lower authorities was that the said loss has not crystallized in the year under consideration and that the said loss is capital in nature and hence the said loss was disallowed - assessee company is in the business of real estate promotion and development in residential and commercial segment and undertook one real estate project in Amritsar - HELD THAT:- We find that the lower authorities were of the opinion that the entire dispute stood resolved between Shri K N Shukla group and Shri Anil Jain group in Assessment Year 2010-11 itself, which is factually incorrect. It could be seen that even after the arbitration award dated 26-4-2007, the disputes between the parties remained and these were finally resolved vide compromise deed dated 20-7-2012 executed between the parties i.e Shri K N Shukla and his group companies and Shri Anil Jain and his group companies.
Hence the effective date when the matter was put to rest is the date of compromise deed dated 20-7- 2012 and not 14-7-2009 as stated by the lower authorities. The documents relating to the continuation of disputes between the parties post 14-7-2009 were placed in the Supplementary Paper Book filed before this Tribunal in the original round of proceedings before this Tribunal.
Hence on perusal of the documentary evidences enclosed in Supplementary Paper Book, we are convinced of the fact that the disputes had continued between the parties upto 20-7-2012 and the same were put to rest only pursuant to compromise deed dated 20-7- 2012. Hence it could be safely concluded that the loss on Amritsar Project got crystallized on 20-7-2012 only. The assessee had given convincing explanation already as to why the loss on Amritsar Project that stood finally settled on 20-7-2012 had been claimed as deduction in Assessment Year 2012-13 instead of Assessment Year 2013-14. Moreover, it is pertinent to note that the tax rates remained the same from Assessment Years 2010-11 onwards. Hence there would be no loss to the exchequer with regard to the tax portion if the deduction is allowed in either of the years.
Hon’ble Apex Court in the case of CIT vs Excel Industries Ltd [2013 (10) TMI 324 - SUPREME COURT] wherein it was held that the revenue should not have any grievance when the rate of tax remained the same in the year under consideration, in the earlier year and in the subsequent year and thereby making the entire dispute raised by the revenue academic.
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2025 (7) TMI 45
Manipulative losses - Booking of contrived loss of commodity trading done in synchronized manner to evade tax - AO noted that information had been received from the Investigation Directorate, Kolkata regarding systematic evasion of tax by various clients/members of National Multi Commodity Exchange (‘NMCE’) along with a report detailing modus operandi adopted for misusing NMCE platform for booking contrived losses through pre-mediated synchronized trade for the purpose of setting off genuine commodity profits - AR stated that the case is not covered under the exceptional clauses as it is not an organized tax evasion of capital gains but is a business transaction - HELD THAT:- As going by the preponderance of probability, Ground nos. 1 and 2 are allowed in favour of the revenue as the transactions are colourable in nature and have been apparently carried out to incur losses through contrived/manipulative transactions.
CIT appeal has failed to appreciate the substance of the transactions and has granted relief merely on the form of them without realising that the transactions carried out on the NMCE platform do not per se become genuine merely because they have been carried out on that platform. Thus, the order of the Ld. CIT(A) is set aside and the order of the Ld. AO is hereby confirmed. Appeal filed by the Revenue is allowed.
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