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2025 (5) TMI 634
Initiation of proceedings u/s 130 of the GST Act against a dealer when excess stock is found during a survey or inspection u/s 67 of the GST Act - stock was assessed on the basis of eye measurement - HELD THAT:- It is not in dispute that survey was conducted at the business premises of the petitioner on 15.10.2019. It is also not in dispute that excess stock was found, which triggered the initiation of the present proceedings against the petitioner. On various occasions, this Court has held that if excess stock is found, then proceedings under sections 73/74 of the GST Act should be pressed in service and not proceedings under section 130 of the GST Act, read with rule 120 of the Rules framed under the Act. The law is clear on the subject that the proceedings under section 130 of the GST Act cannot be put to service if excess stock is found at the time of survey.
This Court in M/s Vijay Trading Company [2024 (8) TMI 1039 - ALLAHABAD HIGH COURT] has categorically held that the proceedings under section 130 of the GST Act cannot be put to service in case excess stock is found at the time of survey.
Further, section 35 of the GST Act prescribes about the maintenance of account and other records. Sub-section (6) thereof contemplates that if the registered dealer fails to account for the goods in accordance with the provision of sub-section (1), the Proper Officer shall determine the amount of tax payable on such goods that are not accounted for by such person and the provision of sections 73/74 of the GST Act, as the case may be, shall mutatis mutandis apply for determination of such tax. The GST Act is a complete Code in itself - Once the Act specifically contemplates that action to be taken, then the provision of section 130 of the GST Act cannot be pressed into service.
Conclusion - If excess stock is found at the time of survey, then proceedings under sections 73/74 of the GST Act should be pressed in service and not proceedings under section 130 of the GST Act, read with rule 120 of the Rules framed under the Act.
Petition allowed.
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2025 (5) TMI 633
Challenge to order and summary of order - challenge to N/N. 09/2023 dated 31.03.2023 as contained in Annexure-P8 and the N/N. 56 of 2023 dated 28.12.2003 - extension of time limit specified under sub-section (10) of Section 73 of the CGST Act for issuance of order under sub-section (9) of Section 73 of the GST Act for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized upto 31st March, 2024 for the Financial Year 2018-19 - main contention of petitioner is that the impugned order has been passed without consideration of the provisions of the Act, the rules made thereunder and also notification fixing the liability only in respect of the development agreement on or after 01.04.2019 - violation of principles of natural justice - mistake of fact apparent on the record or not.
HELD THAT:- The petitioner does not get any right on the said property until the completion of the project. After the project is completed and completion certificate is issued, the petitioner gets a right to sell the area of the property which is called “Developers Area”. There are no substantial material to establish that with execution of the development agreement, the petitioner got ownership in the land. It is held that the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of sale of land subject to clause (b) of Paragraph 5 of Schedule II, sale of building (as per Entry 5 of Schedule-III of the GST Act).
The petitioner has not controverted the submission of the State that vide notification no.11/2017 dated 28.06.2017, construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. In this case, it has been specifically pleaded by the State-respondent that the consideration had been received by the petitioner in the form of transfer of development rights, which happened long before the issuance of completion certificate or first occupancy. This Court agrees that in this case, the petitioner cannot claim that it had received the consideration after the issuance of completion certificate or first occupancy.
The State-respondents are correct in contending that the construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. There would be no ambiguity in the above-mentioned notifications.
Conclusion - There is no ambiguity with regard to liability of the petitioner on account of ‘GST’ on ‘RCM’ basis on the constructions services rendered by him in lieu of the developments rights under the Development Agreement dated 27.11.2014.
There are no reason to entertain the present writ application - application dismissed.
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2025 (5) TMI 632
Availment o fake ITC - SCN issued u/s 74 of the CGST Act, 2017 was not considered - HELD THAT:- It is noticed that the Petitioner has already deposited Rs. 2.5 crores with the Department on 16th September, 2020, which forms a substantial part of the 10% pre-deposit which has to be furnished mandatorily in order to file an appeal under Section 107 of the Central Goods and Service Tax Act, 2017.
Accordingly, let the Petitioner approach the appellate authority under Section 107 of the CGST Act along with the remaining pre-deposit amount within 30 days. If the Petitioner approaches the appellate authority with the pre-deposit as directed, the appellate authority shall consider the interim reply filed by the Petitioner of 15th April, 2024, as also any other documents which the Petitioner may wish to submit in support of his case. After such consideration, the appellate authority shall adjudicate the appeal on merits.
Petition disposed off.
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2025 (5) TMI 631
Rejection of Input Tax Credit - return was filed beyond the time provided - HELD THAT:- A Division Bench of this Court, had considered the same issue, in its judgment M/S. PADMAVATHI ENTERPRISES VERSUS SUPERINTENDENT OF CENTRAL TAX AND OTHERS [2025 (5) TMI 372 - ANDHRA PRADESH HIGH COURT]. The Division Bench after considering the effect of sub section (5) of Section 16 of the GST Act, in a similar situation, had held that the petitioner, by virtue of the non-obstante clause, available in the provision, would be entitled to avail the credit which was rejected by the Assessing Officers, in the case before the Division Bench.
A perusal of the facts in the present case would show that the facts in this case are similar to the facts in the case before the Division Bench.
This Writ petition is allowed setting aside the order of Assessment, dated 30.04.2024, and the matter is remanded back to the 3rd respondent to pass a fresh assessment order keeping in view the insertion of Section 16 (5) of the CGST Act - Petition allowed by way of remand.
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2025 (5) TMI 630
Deduction u/s 80IC - Review petition - claiming the exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - units established in certain special category States - units situated in the State of Sikkim, Himachal Pradesh and Uttaranchal and North-Eastern States - As decided by SC [2018 (8) TMI 1209 - SUPREME COURT] after availing deduction for a period of 5 years @ 100% of such profits and gains from the ‘units’, the assessees would be entitled to deduction for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company), as the case may be, and not @ 100%. The question of law is, thus, answered in favour of the Revenue
HELD THAT:- There is an inordinate delay of 412 days in filing the review petition for which no satisfactory explanation has been furnished and having carefully gone through the petition for review and the papers connected therewith, we do not find any ground warranting review of order dated 20-08-2018.
The review petition is, therefore, dismissed on the ground of delay as well as on merits.
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2025 (5) TMI 629
Payment constituted a 'royalty' under the Treaty's domestic law - consideration paid for transponder services - Whether assessable as "royalty" u/s 9 (1) (vi) of the Act and/or Article 12 of the India-USA DTAA? - Whether the payment made was not for 'secret process' - HELD THAT:- Appellant relying upon the Tribunal's order in the Appellant-Assessee's own case for AY 2015-2016 submitted that since the Tribunal for that year has concluded that Intelsat Corporation was not liable to pay tax, there is no question of the Appellant-Assessee being fastened with withholding tax liability. Mr. Agrawal fairly stated that this was not the reasoning given by the Tribunal in the present appeals. He attempted to tender the orders passed in the case of Intelsat Corporation for the years under consideration after the Respondent-Revenue had started their arguments. This Court refused to take the same on record since it would not be proper for this Court to verify this factual position, whether in the years before this Court, there is a final determination in the case of Intelsat Corporation that they are not liable to pay tax. This would require verification before the lower authorities.
However, in the interest of justice if the orders passed in the case of Intelsat Corporation holds that they are not liable for tax in India for the years which are subject matter of the present appeals and the payments made by the Appellant-Assessee has been considered before giving such a finding, then there cannot be any withholding tax liability on the Appellant-Assessee. However, such an order in the case of Intelsat Corporation should have attained finality. Therefore, we remand the matter back to the CIT (A) file for verifying this aspect.
Nature of services specified in the agreement and its applicability to the definition of ‘royalty’ under the Act and Article 12 (3) of the Treaty - The present appeal is under Section 260A of the Act on substantial questions of law. It was incumbent upon the three authorities, i.e. the original authority and the appellate authorities, to have examined and analysed the nature of services as agreed upon by the parties in the agreement. It was also incumbent upon these authorities to thereafter give a finding of fact on this issue and then apply the definition of 'royalty' under the Act or under Article 12 (3) of the Treaty. How these services are covered by the Act or the Article 12 (3) is not discussed. There is an absence of foundational facts in the orders of all the three authorities on this issue. The orders are non-speaking orders.
The authorities should have independently analysed and examined how the services rendered under the agreement would fall within the phrase ‘process’ or ‘secret process’ as per the Act or Article 12 (3). The authorities have not analysed what is 'process' or 'secret process' and how it applies to the services rendered under the agreement.
The questions raised by the Appellant-Assessee and admitted by this Court cannot be answered without there being the findings of the lower authorities on the nature of the services rendered under the agreement by Intelsat Corporation to the Appellant-Assessee and the analysis of the phrase 'secret process/process' used in the Act and the Treaty.
The Co-ordinate Bench of this Court in Reliance Industries Limited [2024 (8) TMI 432 - BOMBAY HIGH COURT] has held that retrospective amendment cannot fasten withholding tax liability if payments were made prior to the amendment. Therefore, for those assessment years where the payments have been made prior to the insertion of Explanation 6 to Section 9 (1) (vi) of the Act same would not be exigible to withholding tax liability. This aspect should be examined by the CIT(A) and an appropriate relief be given after verifying the facts for those assessment years prior to the enactment of Finance Act. 2012.
The above direction is given as per Section 90 (2) of the Act, which states that between the Act and the DTAA, what is beneficial is to be made applicable to the Assessee.
For the payments made post the Finance Act 2012, the CIT(A) is directed to examine the agreements and give a factual finding on the nature of services rendered under the agreements and how the phrase 'secret process' is to be interpreted to ascertain whether the payments constitute 'royalty' under Treaty. This exercise has not been done in the instant case by the authorities. Therefore, we direct them to do the same in the remand proceedings.
CIT(A) is requested to dispose of the appeals as expeditiously as possible and in any case on or before 31 December 2025.
We remand the appeals back to the file of the CIT(A) with the following directions:-
(i) If the Appellant-Assessee is able to show that there is a final determination of no taxability in the hands of Intelsat Corporation on payments made by the Appellant-Assessee, then there would be no withholding tax liability ;
(ii) If the payments are made prior to the Finance Act, 2012 then, then following decision of this Court in the case of Reliance Industries Limited [2024 (8) TMI 432 - BOMBAY HIGH COURT] no withholding tax liability can be imposed based on retrospective amendment ;
(iii) For payments made after the enactment of Finance Act, 2012, the CIT(A) to examine the nature of agreements for each assessment year and determine whether same constitutes 'royalty' under the domestic law or the Treaty and if same does not constitute 'royalty' then there would be no withholding tax liability after considering provisions of Section 90 (2) of the Act.
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2025 (5) TMI 628
Addition u/s 68 - bogus share capital & premium - AO’s remand report had categorically stated that the share applicant companies had no credit worthiness to invest in the assesse company - Tribunal upholding the action of the CIT (A) in deleting the addition - whether three factors which are required to be established by the department at the first instance have been established namely identity of the investors, their creditworthiness and the genuineness of the transaction?
HELD THAT:- The assessee had inventories of Rs. 8.38 crores as on 31.03.2011 and 9.36 crores as on 31.03.2012. The audited result of the assessee has shown its profits grown by over three times between assessment years 2011-2012 and the assessment year 2012- 2013. Further during the same period, the earning per share of the assessee company had grown from two and half times to 16% per share of Rs. 10 and therefore the CIT (A) on facts held that the assessee company was showing good returns and were showing good profits for its investors and it is a growing company.
Therefore, the submission of the revenue that the allegation that unduly high premium was charged was not examined by the CIT (A) is incorrect. In fact, this aspect was also examined by the assessing officer to certain extent as pointed out by the CIT (A). When the matter travelled on appeal to the learned tribunal at the instance of the revenue, the factual aspects were re-examined.
Tribunal notes that the paper book containing 1029 pages were filed and all documents were placed before the learned tribunal and after noting the facts the learned tribunal came to the conclusion that the CIT (A) was well justified in deleting the addition made under Section 68 of the Act. No substantial question of law arising for consideration in this appeal.
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2025 (5) TMI 627
Monetary limits for filing Income Tax Appeals by the department before the High Court - HELD THAT:- In view aforesaid submission of learned counsel for the appellant where monetary limit (tax liability) in the present case is less than Rs.2 Crores therefore, in light of aforesaid circular dated 17/09/2024, the instant Tax Case stands disposed of.
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2025 (5) TMI 626
Validity of demand notice issued u/s 156 - addition made by the AO u/s 69 and 69A - HELD THAT:- As huge amount of demand has been made against the Petitioner by reflecting wrong figures. Cursory glance at computation sheet transpires without any ambiguity in mind that the figures have been reflected with erroneous perception. In such view of the matter, the notice of demand under Section 156 of the Income Tax Act (Annexure-4) needs modification by undertaking fresh computation of tax liability.
Petitioner furnished copy of appellate order passed under Section 250 by the National Faceless Appeal Centre (NFAC) wherein as allowed in favour of the Petitioner by taking cognizance of the fact that it has been granted exemption under Section 10(26AAB) of the Income Tax Act. In the said appellate order, it has been observed that the source of deposit in the bank is the market fee received from the Odisha State Civil Supplies Corporation Limited. Observing thus, the Appellate Authority found no merit in the addition made by the AO under Sections 69 and 69A of the IT Act and, accordingly, deleted the additions.
Regard being had to such Appellate Order for the subsequent period 2018-19 granting exemption u/s 10(26AAB) and being conscious of the fact that there occurred error in computation of tax liability, it is, therefore, felt expedient to show indulgence in the order of the Assessing Authority.
This Court has no other option but to set aside the demand raised along with Computation Sheet under Annexures-2 & 3 and also the notice of demand.
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2025 (5) TMI 625
Notice u/s 201(1) issued when no failure on the part of the petitioner to deduct or deposit TDS - HELD THAT:- It is important to note that the averment that the petitioner had deducted tax at a lower rate in regard to payments made to Sir Ganga Ram Hospital pursuant to a certificate dated 08.05.2015 is not controverted. Thus, admittedly, there is no material on record to suspect that the petitioner had failed to deduct TDS or deposit the same with the Income Tax Authorities. The allegation on the basis of which the impugned notice is stated to have been issued, stands sufficiently addressed by the petitioner in its rejoinder affidavit.
We do not consider it necessary to examine the larger question whether any notice for the purpose of verifying the details regarding deduction of payment of TDS can be initiated.
It is clear in the present case that no proceedings u/s 201 of the Act are warranted in the case of the petitioner.It is clear in the present case that no proceedings under Section 201 of the Act are warranted in the case of the petitioner.
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2025 (5) TMI 624
Validity of Reopening of assessment u/s 147 - period of limitation - notice issued in accordance with the statutory regime as existed prior to 31.03.2021 - HELD THAT:- The notice issued under Section 148 of the Act stands quashed and set aside. Concededly, the controversy is covered in favour of the Assessee by the decision of this court in Makemytrip India Pvt. Ltd.[2025 (4) TMI 46 - DELHI HIGH COURT] wherein the impugned notice was issued on 27.07.2022, which was admittedly beyond the period of limitation as prescribed under Section 149 (1). Since TOLA was not applicable in respect of the said notices u/s 148 of the Act for AY 2015-16 as conceded by the Revenue in the case of Union of India v. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)], thus the impugned notice is liable to be set aside.
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2025 (5) TMI 623
Rejection of Application u/s 119 (2)(b) - condonation of delay in filing Income Tax returns - impugned order has been passed without affording the petitioner an opportunity of hearing - HELD THAT:- Power u/s 119(2)(b) of the Act, has been consistently held to be quasi judicial in nature. Importantly, grant of personal hearing is found necessary for valid exercise of power u/s 119(2)(b) of the Income Tax Act. In this regard it may be relevant to refer to judgment of this Court in the case of Envission Communication (P) Ltd. [2023 (11) TMI 129 - MADRAS HIGH COURT] held that the power under Section 119(2)(b) of the Act being quasi-judicial in nature and which could result in adverse civil consequence, it must be exercised in compliance with principles of natural justice. However, this Court finds that the impugned order is made in violation thereof, in view of the fact that the impugned order does not assign reason but only contains the conclusion, in other words non-speaking and thus unsustainable”.
Thus set aside the impugned order. The respondents are directed to pass fresh order after affording the petitioner a reasonable opportunity of hearing.
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2025 (5) TMI 622
Limitation for passing a Final Assessment Order u/s 144C - HELD THAT:- Advisory makes it clear that the FAO would be able to view the DRP order in the 360 degree screen, since the assessment was pending with that officer. This feature has evidently been provided to ensure that an officer can access/receive the directions of the DRP as soon as it is uploaded by the Secretariat of the DRP and the pending proceedings would be completed within the statutory limitation provided.
Hence, there is no protection available to the Department by the DRP user having selected the second manual option, as, an assessing officer, in order to ensure that the assessment proceedings are strictly in accordance with statutory limitation, has been given full and complete access to all inputs required for completion of the assessment including the directions of the DRP immediately on their uploading into the ITBA portal by the DRP.
Clearly, limitation cannot be dependent on varying user functionalities which are nothing but internal processes. If this argument were to be accepted, the commencement of limitation would vary depending on the option exercised by the user which would defeat the purpose of statutory limitation apart from being an acceptable proposition.
The starting point of limitation has thus to be reckoned from the earliest instance when the directions of the DRP would be visible to the officer and cannot be taken to fluctuate from one methodology to another depending on the option exercised by the user.
Our understanding of the 360 degree view page is that on entering the details of the assessee including the PAN number and the assessment year, the form would auto populate in regard to all details relating to that assessee including present status of proceedings and all orders, letters and notices.
We are supported by the concluding portion of the advisory that states that the DRP order would be visible in the 360 degree screen to the FAO for his ready access. Thus, all that is required to gain complete and up-to- date access to all relevant data in regard to an assessee's assessment would available on the 360 degree screen.
Learned Standing Counsel draws attention to letter dated 12.12.2024 from the Secretariat of the DRP, specifically the portion where the DRP states that ‘no separate mail had been sent to AO or FAO’. The Assessing Officer thus appears to have been awaiting personal intimation of the order to his e-mail ID.
The fact that the FAO has merely chosen to await intimation when the order had admittedly been uploaded on the ITBA by the DRP user, and his consequent belated response, cannot thus lead to a situation of disadvantage to the assessee, particularly when the Advisory provides a methodology by which the FAO can access the document uploaded by the DRP simultaneously, and real-time.
Lastly, Section 144C is a Code by itself that provides for very strict timelines for completion of an assessment. Hence the stipulation in regard to limitation cannot be reckoned in a manner so as to give rise to more than one interpretation, where either party can take benefit of a later date.
This issue has also attracted the attention in Vodafone Idea Limited [2023 (11) TMI 449 - BOMBAY HIGH COURT] and Louis Dreyfus Company India Private Limited [2024 (3) TMI 62 - DELHI HIGH COURT] In both the cases, the very submissions as made before us, were advanced and have been rejected by those Courts. Decided in favour of the assessee.
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2025 (5) TMI 621
Rejection of application u/s 12A(1)(ac)(vi)(B) and u/s 80G(5)(iv)(B) - as per revenue Assessee having business income and doing business in garb of charity and doing activity beyond the objects and is Siphoning off the funds of the institution - HELD THAT:- As submitted that from the records it can be seen the genuineness of the activities of the trust and also its objects and there is no room for siphoning off the funds and all the funds has been utilized for the object of the trust.
Bench adopts the lenient view and feels that the assessee should be given one more opportunity to advance the documents before the ld. CIT(E) as to registration of the trust u/s 12AB and u/s 80G(5)(iv)(B)
Matter is restored to the file of CIT(E) for afresh adjudication by providing adequate opportunity of being heard and the assessee is also required to submit the documents as demanded by CIT(E) with regard to registration of the Trust u/s 12AB of the Act. Thus this appeal of the assessee is allowed for statistical purposes.
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2025 (5) TMI 620
Validity of reopening of assessment u/s 147 - reasons to believe - unexplained cash deposit in the bank account - HELD THAT:- The only requirement is that he must have a prima facie belief about concealment of income which was available in this case as the AO was having information about cash deposit in the bank account and coupled with the fact that appellant did not file her ITR for the year under consideration and both these facts were sufficient to raise a doubt about concealment of income and hence the AO was justified in issuing a notice u/s 148 on the facts of the case.
In this regard we refer to the case of ACIT v/s Rajesh Jhaveri Stock Brokers P Ltd. [2007 (5) TMI 197 - SUPREME COURT] wherein held that at the stage of initiating action u/s 147, the final outcome of the proceeding is not relevant and at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. Hence we dismiss first ground of appeal.
Addition on account of cash deposits in bank accounts which was restricted by CIT (A) at 50% - There is no infirmity pointed out by the D/R also on such cash flow statement. We find that in this cash flow statement the appellant has adopted an opening cash balance of Rs. 3,77,000/- and thereafter by incorporating all transactions of cash deposit and withdrawals in various bank accounts, at no stage any negative balance has been worked out.
Neither the CIT(A) nor the ld. D/R raised any doubt about the opening balance of Rs. 3,77,000/- in the cash flow statement and the entries appearing therein. Therefore, there is no doubt about contents of the cash flow statement wherein no negative balance was noticed at any stage, we are inclined to allow the appeal of the assessee and hence we delete the addition as sustained by ld. CIT (A) on account of cash deposit in the bank account of the assessee. This ground of appeal is allowed.
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2025 (5) TMI 619
Assessment u/s 144 - addition of receipt towards commission who has deducted TDS - as argued AO was not justified in bringing to tax the entire amount as income of the assessee without allowing any expenditure out of that nor estimating the income - As relying on various decisions, it was argued that in such type of cases, the profit is usually estimated from 4% to 8% - HELD THAT:- As due to non-compliance to the statutory notices issued by the AO he completed the assessment u/s 144 of the Act determining the total income of the assessee which is the gross commission received by the assessee. We find the CIT(A) / NFAC upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of assessee that bringing to tax the entire gross receipts without granting any proportionate expenditure will cause grave injustice to the assessee.
A perusal of the order of the CIT(A) / NFAC would show that the CIT(A) / NFAC has basically dismissed the appeal of the assessee on the ground that the assessee did not file any fresh documentary evidence in respect of expenditure incurred nor filed any details for the activities of the assessee in the previous and subsequent years.
We deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The grounds raised by the assessee are accordingly allowed for statistical purposes.
Levy of penalty u/s 270A on account of under-reporting of income - Since the quantum appeal has been restored to the file of the AO for fresh adjudication, therefore, the issue relating to levy of penalty u/s 270A is also restored to his file for fresh adjudication. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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2025 (5) TMI 618
Penalty u/s 271A - holdings the assessee guilty of concealment of income - assessee had not maintained books of account u/s 44AA - HELD THAT:- The return of income in response to notice u/s 148 of the Act was filed by the assessee declaring total income. In the return of income, the assessee has also claimed deduction u/s 80P of the Act which was duly granted by the ld AO in the assessment. While this is so, without mentioning any reason, AO simply initiated penalty proceedings u/s 271A on the ground the assessee had not maintained books of account u/s 44AA of the Act. This notice culminated in the levy of penalty u/s 271A which was also upheld by the ld NFAC.
We are unable to comprehend ourselves to accept to the aforesaid levy of penalty u/s 271A of the Act for the simple reason that when books of account are not maintained by the assessee according to the lower authorities, then how the deduction claimed by the assessee u/s 80P of the Act was granted? This itself becomes a clinching evidence that books of account were indeed maintained by the assessee and hence, there is no question of violation of provisions of Section 44AA of the Act. Consequentially there could be no levy of penalty u/s 271A of the Act.
Demand raised u/s 147 r.w.s 144 holdings the assessee guilty of concealment of income -denial of deduction claimed by the assessee u/s 80P(2)(a)(i) - The assessee has claimed deduction u/s 80P(2)(a)(i). No deduction or exemption whatsoever was claimed by the assessee in respect of interest earned by it on fixed deposits from banks. The deduction claimed u/s 80P(2)(a)(i) of the Act is with regard to the business of providing loans to its members out of deposit accepted from the members. The surplus derived from this activity would be eligible for deduction u/s 80P of the Act as well as exemption from tax on the principles of mutuality as the transactions are only with the members. Hence, there is absolutely no question of denying the deduction claimed by the assessee u/s 80P(2)(a)(i) in the instant case.
Appeals of the assessee are allowed.
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2025 (5) TMI 617
Reopening of assessment u/s 147 beyond period of limitation - information flagged as per Risk Management Strategy formulated by the CBDT through ITBA - HELD THAT:- As held in the case of Suman Jeet Agarwal [2022 (9) TMI 1384 - DELHI HIGH COURT] held that the date on which digitally signed has to be considered. In the given case, the notice was digitally signed only on 02.04.2022. Therefore, the relevant provisions as per amended with effect from 01.04.2022 are applicable. Therefore, the relevant provisions as applicable are, as per section 149(1)(b), no notice u/s 148 shall be issued, if three years have elapsed from the end of relevant AY unless the AO has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of as asset, expenditure or an entries which has escaped assessment amounts to or likely to amount fifty lakh rupee or more.
As the escaped assessment amount is only Rs. 17.80 lakhs. Therefore, the notice issued u/s 148 is without jurisdiction. Further it is brought to our notice that as per the declared income in the return of income filed for the year under consideration is Rs. 77.36 lakhs and as per the CBDT instruction no 1/2011 dated 31.03.2011, the jurisdiction lies only with the ACIT whereas the notice and assessment was completed by the ITO. Even on this count, the notice issued is beyond the jurisdiction of the present assessing officer. Therefore, we are inclined to allow the additional ground raised by the assessee.
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2025 (5) TMI 616
Levy of penalty u/s. 271AA - assessee failed to report transaction of issue of shares to its associated enterprises in Form 3CEB - assessee has failed to comply with the mandatory provisions of reporting of international transactions - HELD THAT:- As undisputed fact that the assessee during the period relevant to assessment year under appeal had allotted shares to its parent company i.e. Sarens NV, Belgium. As per the provisions of section 92D of the Act every person who enters into an international transaction is required to maintain and document information in respect of any transactions as specified under Rule 10D of the Income Tax Rules 1962.
The assessee has placed on record Form 3CEB. A perusal of the same reveals that the assessee has given a complete list of Associates Enterprises with whom the assessee entered into international transaction during the period relevant to AY 2015-16. The assessee has also given detailed descriptions of transactions entered into with its AE’s during the relevant period except for issuance of share capital against outstanding trade payables of the parent company.
The assessee is a wholly owned subsidiary of Sarens NV, Belgium the shares have been issued by the assessee to its parent company at par. No addition/adjustment was made by the AO on account of any international transaction and the return of income was accepted by the AO. Hence, in our considered view it is not a fit case for levy of penalty u/s. 271AA therefore, penalty levied u/s. 271AA of the Act is deleted. Appeal of the assessee is allowed.
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2025 (5) TMI 615
Disallowing royalty and interest payments alleging the same to be prior period expenditure - as argued liability in respect of aforesaid expense crystallized during the relevant assessment year under consideration, the same could not be regarded as prior period expense - assessee pleaded that it has been carrying on sale of DVD players every year and which has been consistently allowed as revenue expenditure in the earlier years - HELD THAT:- We find that the contentions of the assessee to be correct as in view of the letter dated 23.04.2015 relevant to AY 2016- 17 wherein, additional royalty and interest had been crystallized in the hands of the assessee and settlement agreed with Philips. The said settlement happened during the year, the expenditure had to be construed as having crystallized during the year. We find that the said expenditure is duly subjected to deduction to tax at source. The evidence for settlement arrived with Philips by the assessee vide letter dated 24.03.2015 is enclosed in pages 78 to 81 of the Factual Paper Book. AR before us sought to meet each and every observation by the ld AO and ld CIT(A) which are enclosed in his written submissions.
These additional evidences, in our considered opinion, goes to the root of the matter and are very much crucial for adjudication of the issue in dispute before us. Hence, we deem it fit and appropriate to admit those additional evidences and restore the entire issue in dispute to the file of the ld AO for de novo adjudication in accordance with law in the light of the aforesaid observations, in the light of additional evidence submitted and after due verification of all the agreements on record. Accordingly, Ground Nos. 1 to 1.4 raised by the assessee are allowed for statistical purposes.
Non granting full MAT credit u/s 115JAA - This matter requires factual verification with ld AO and hence the ld AO is hereby directed to grant MAT credit in accordance with law after due verification of the computation thereon. Accordingly, Ground No. 2 raised by the assessee is allowed for statistical purposes.
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