|
Advanced Search Options
Case Laws
Showing 481 to 500 of 1445 Records
-
2024 (3) TMI 965
Violation of principles of natural justice - impugned order passed without taking into consideration the reply Submitted by the petitioner and is a cryptic order - ex-parte demand - HELD THAT:- The observation in the impugned order is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply, however the impugned order records that “neither filed any reply nor appeared in person”. Proper Officer had to at least consider the reply submitted by the Petitioner on merits and then form an opinion. He merely held that the no reply has been filed which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
The order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 29.11.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication.
Petition disposed of by way of remand.
-
2024 (3) TMI 964
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - demand alongwith penalty - HELD THAT:- Perusal of the Show Cause Notice shows that the Department has given separate headings under declaration of output tax, excess claim Input Tax Credit, ITC to be reversed on non-business transactions & exempt supplies and under declaration of ineligible ITC. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads - The observation in the impugned order dated 23.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was unsatisfactory, incomplete and not duly supported by adequate documents. He merely held that the reply is not clear and unsatisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
Further, if the Proper Officer was of the view that the reply is unsatisfactory and if any further details were required, the same could have been specifically sought from the petitioner. However, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details.
The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 23.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication - Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act.
Petition disposed off.
-
2024 (3) TMI 963
Retrospective cancellation of GST registration of petitioner - SCN does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria.
It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer’s registration with retrospective effect is that the taxpayer’s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent’s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted.
In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 07.07.2023 is modified to the limited extent that registration shall now be treated as cancelled with effect from 26.07.2022 i.e., the date when the Petitioner closed down his business activities. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017.
Petition disposed off.
-
2024 (3) TMI 962
Retrospective cancellation of GST registration of petitioner - petitioner could not respond to the SCN as the petitioner could not access the GST portal - HELD THAT:- The impugned order dated 11.12.2023 has been passed merely on the ground that no reply has been received from the taxpayer - It is not in dispute that once the registration is cancelled retrospectively, the taxpayer is not in a position to access the portal; become aware of any notice or respond thereto.
In the instant case, since the GST portal shows that the registration of the petitioner has been cancelled retrospectively with effect from 01.07.2017, petitioner would not have been able to receive the show cause notice or access the portal to become aware of any show cause notice or respond thereto.
Since both the petitioner as well as respondent want the registration to be cancelled, though for different reasons, the interest of justice requires that the registration of the petitioner be deemed to be cancelled with effect from 01.01.2018 i.e., the date of the application filed by the Petitioner seeking cancellation of the GST registration - the impugned order dated 11.12.2023 is not sustainable - petition disposed off.
-
2024 (3) TMI 961
Validity of assessment order - alleged discrepancies in returns filed by the petitioner - difference between the amounts indicated in the notice in Form ASMT-10 and the amounts specified in the show cause notice - HELD THAT:- On examining the notice in Form ASMT-10, the said notice pertains to financial year 2017-2018. The abstract of demand proposed therein is for an aggregate sum of Rs. 1,37,33,386.62 comprising a demand of Rs. 71,59,663.28 towards IGST, a sum of Rs. 32,86,861.67 towards SGST and a sum of Rs. 32,86,861.67 towards CGST. Upon receipt of the petitioner's reply dated 22.09.2023, by order in Form ASMT-12 dated 27.09.2023, the respondents concluded that the reply was satisfactory and no further action is required.
In these circumstances, it is necessary to examine the impugned assessment order to verify whether the same demand was resurrected. On examining the impugned assessment order, it is found that the confirmation of demand relates to the same assessment period and the same amounts towards SGST, CGST and IGST. The only difference is that interest and penalty has been imposed thereon to arrive at the aggregate sum indicated therein. Upon issuance of an order in Form ASMT-12 recording that no further action is required, the continuation of proceedings culminating in the impugned assessment order is undoubtedly unsustainable.
The impugned assessment order is quashed - Petition closed.
-
2024 (3) TMI 960
Denial of Input Tax Credit - Disallowance on the ground that the details submitted in the petitioner's return did not tally with that in the GSTR-2A return - HELD THAT:- The documents on record, such as invoice dated 20.09.2017 and the GSTR return of Kirthi Enterprises, prima facie indicate that the GSTIN of Premier Corporation was wrongly mentioned by Kirthi Enterprises in the return. If that is indeed the case, the petitioner would be unjustly deprived of ITC. In order to provide the petitioner with an opportunity to redress this grievance, interference with the impugned order is called for.
The impugned order dated 25.08.2023 is quashed and the matter is remanded to the assessing officer. The assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months thereafter. It is also open to the petitioner to file an appropriate petition, if necessary, to set right the error complained of by the petitioner.
Petition disposed off.
-
2024 (3) TMI 959
Validity of Revision u/s 263 - Revision of orders prejudicial to revenue - loan transactions advanced to the assessee by entry operators - disallowance u/s 14A of the Act read with Rule 8D(2)(iii) - PCIT, while exercising the revisional powers, recorded that M/s. Sarvottam Securities Ltd. and M/s. Upaj Leasing & Finance Pvt. Ltd. are the shell companies of Mr. Himanshu Verma, an entry operator and the assessee was the beneficiary of the unsecured loans received through the entry operator and AO ought to have done further inquiry to ascertain the genuineness and creditworthiness of the loan transactions - HELD THAT:- As in light of the findings which are unravelled from the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & Finance Pvt. Ltd. that the entities M/s. Sarvottam Securities Ltd. and M/s. Upaj Leasing & Finance Pvt. Ltd. are the shell companies of an entry operator, the relevance of ascertaining the genuineness and creditworthiness of the transactions cannot be undermined. Additionally, the genuineness and creditworthiness of the transactions may not be satisfactorily determined solely on the basis of the ledger accounts or the ITR of the entities, especially when the identities of such entities are not bona fide.
As observed in N.R. Portfolio [2013 (11) TMI 1381 - DELHI HIGH COURT] the task of unveiling the mischief of the human minds working behind the corporate veil in such cases requires a deeper scrutiny, which goes beyond the periphery of documents ordinarily submitted for the purpose of assessment. An inquiry for ascertaining the creditworthiness and genuineness of financial transactions necessarily requires unknotting of the transactions, by going beyond what is conspicuously available.
Unfortunately, the assessment order nowhere reflects any element of inquiry or verification. The discussion about the loan transactions in question is altogether missing. Furthermore, the assessment record would also reflect that the AO has not taken any concrete steps to ascertain the genuineness and creditworthiness of the transactions, which merits consideration in the light of the findings that emerged from the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & Finance Pvt. Ltd. It emerges that the present is a case where the AO failed not only to spell out any finding about the DDIT investigation report and assessment proceedings of M/s. Upaj Leasing & Finance Pvt. Ltd. but also to scrutinize the highlighted aspects in the said report qua the genuineness and creditworthiness of aforenoted loan transactions. Therefore, this is the minimum inquiry which atleast was expected to have been made by the AO.
It is apposite to point out that clause (a) of Explanation 2 of Section 263 of the Act introduces a deeming fiction to the effect that the order passed by the AO shall be considered erroneous and prejudicial to the interests of the Revenue, if the order is passed without making inquiries or verification, which should have been made. Henceforth, since neither there is any facet of discussion about the aforenoted aspects in the assessment order nor the assessment record duly reflects that the AO has done inquiry in the light of the findings of the investigation report. We find that the present is a fit case to invoke the revisional powers under Section 263 of the Act.
So far as question (a) is concerned, we hold that the ITAT was incorrect in holding that the AO had duly made the inquiry in the instant case and considered the material produced before it. Furthermore, the ITAT also erred in holding that the PCIT has wrongly assumed the jurisdiction under Section 263 of the Act as the assessment order is not only prejudicial to the interests of the Revenue but also erroneous in nature.
So far as question (b) is concerned, it is crystal clear that Explanation 2 to Section 263 of the Act will be applicable in the instant case as the said explanation was inserted vide Finance Act, 2015 with effect from 01 June 2015 and the case of the assessee belongs to AY 2016-17.
Thus, questions of law need to be answered in favour of the Revenue and against the assessee.
-
2024 (3) TMI 958
Validity of reopening of assessment - An order u/s 245D(4) already been passed by the Income Tax Settlement Commission (ITSC) - Scope of harmonious construction - whether the order of the ITSC is final in all respects for the concerned AY? - HELD THAT:- As seen that the order of the ITSC is deemed to be conclusive for all the matters pertaining the concerned AY for which the settlement application has been accepted and processed by the ITSC. In case, the Income Tax Department is not satisfied with the computation of income by the ITSC for the relevant AY, the same could only be assailed in accordance with the provisions contemplated under Section 245D(6) read with Section 245D(7) of the Act. The legislative scheme envisaged for ITSC is self-contained in nature and the intent appears to be to facilitate a mutually satisfactory arrangement which could not be reopened, unless explicitly covered under the textual exceptions of fraud or misrepresentation.
In the instant case, the application of the petitioner was accepted and the proceedings were initiated therein by the ITSC after the second search and seizure operation was conducted by the respondent on 05.03.2013. Thus, undoubtedly, since the ITSC was already held up with the concerned AY, including the aspects raised by the respondent in the present petition, the AO cannot be allowed to exercise jurisdiction to reopen the proceedings under the guise of Section 147/148 of the Act for the relevant AY in consideration.
As already settled allowing the AO to proceed with the impugned notices and order for reopening assessment for the concerned AY would create a situation of downright chaos and vagueness. Put otherwise, it would tantamount to simultaneous existence of two concomitant and materially different assessment orders for the same AY, which is completely impermissible as per the provisions of the Act.
The issue regarding the impermissibility of two assessment orders for a particular AY was also highlighted in the case of Abhisar Buildwell Pvt. [2023 (4) TMI 1056 - SUPREME COURT]
Therefore, if the respondent was apprehensive of the fact that the petitioner had suppressed its income before the ITSC, it ought to have resorted to the remedy contained in Chapter XIX-A of the Act itself on the grounds of fraud or misrepresentation. The concept of fraud has been jurisprudentially recognized as a concept of wide import, and thus, availability of a challenge on the ground of fraud could have provided an effective remedy to the respondent, if so justified. Evidently, the respondent has failed to seek recourse to such a remedy and rather, preferred an appeal before this Court on altogether different aspects as compared to the ones raised in the present petition. In any case, the same was also dismissed vide order dated 05.09.2017 [2017 (9) TMI 1721 - DELHI HIGH COURT]
So far as the decision relied upon by the respondent in the case of Abhisar Buildwell P. Ltd. [2023 (5) TMI 587 - SUPREME COURT] is concerned, in the given facts and circumstances, the same cannot be construed to be an authority to override the mandate of Section 245-I of the Act. Sections 150 and 245-I of the Act are provisions of equal standing and a conflict between the two must be resolved by resorting to the principle of harmonious construction. One of the foremost considerations of harmonious construction is to preserve the essence and meaning of both the provisions, and to not let either provision fall at the expense of the other. If the settlement arrived at by ITSC is allowed to be reopened on grounds, other than those expressly provided for, it would effectively render the entire mandate of the ITSC as vulnerable and the commitment of the finality of a settlement would stand compromised. It is this legislative sanctity of ITSC that provides it a special status under the Act.
Since the decision of the ITSC qua the issues in the present petition has already attained finality, therefore, taking a cue from the decision of the Constitution Bench of the Hon’ble Supreme Court in the case of Brij Lal [2010 (10) TMI 8 - SUPREME COURT] the reliance placed by the respondent on Abhisar Buildwell P. Ltd. [2023 (5) TMI 587 - SUPREME COURT] to proceed with the reassessment proceedings, is completely unjustifiable and unsustainable, in the given factual matrix of the petition.
In view of the aforesaid, we quash the impugned notice alongwith corrigendum and the impugned order of even date.
-
2024 (3) TMI 957
Application u/s 119(2)(b) for condoning delay, if any, in filing Form 10-ID to avail the beneficial rate of tax of 15% u/s 115BAB - Validity of order of CBDT rejecting the application u/s 119(2)(b) - FDI investment approval from China - as submitted Petitioner had not entered into any transaction for FY 2019-20 as need to take approvals and the COVID-19 pandemic which lasted in China for a longer period - For AY 2020-21 and 2021-22, Petitioner had not exercised the option to be governed by Section 115BAB of the Act, which Petitioner thought of exercising for AY 2022-23. - As argued order has not been passed or signed by the Member who gave a personal hearing and secondly, in the order reliance has been placed on the report of the Field Authorities, which Petitioner on instructions, states, has not been provided - principles of natural justice denied - HELD THAT:- As Petitioner stated that such a report was received by CBDT and considered itself came to light only when Petitioner received the impugned order. He also states that Petitioner’s officers were called by the ‘Field Authorities’. Their explanations were sought after which nothing was received by the Assessee from the Field Authorities.
In our view, principles of natural justice would require that Respondent No. 1 should have made a copy of the report received by them from the Field Authorities to Petitioner and given an opportunity to Petitioner to explain or show cause. We understand that even during the personal hearing, it was not informed to Petitioner that there was such a report.
Moreover, the order says, “This issues with the approval of Member (IT&R), Central Board of Direct Taxes” and is signed by one Virender Singh, Additional Commissioner of Income Tax (ITA Cell), CBDT, New Delhi. If a personal hearing has been granted by the Member (IT&R), the order should have been passed by him. Mr. Sharma states there could be file notings. If that is so, that has not been made available to Petitioner.
In the circumstances, on these two grounds alone, we quash and set aside the impugned order dated 5th December 2023 and remand the matter to CBDT. The Member/Members shall within three weeks from the date this order is uploaded make available to Petitioner all Field Reports/documents/instructions received by the CBDT from the Field Authorities and within two weeks of receiving the same, Petitioner shall file, if advised, further submissions in support of their application for condonation of delay.
Thereafter, an order shall be written, passed and that order shall be authored and signed by the Member of CBDT, who has given a personal hearing and when we say this, it is not the Member holding the same designation.
-
2024 (3) TMI 956
Reopening of assessment u/s 147 - reasons to believe - cash deposits in bank account as alleged unexplained - nformation received from the Investigation Officer, Kolhapur that Petitioner made some cash deposit by assessee-trust - HELD THAT:- The reasons recorded clearly indicate that notice has been issued and the reopening has been initiated on a mere change of opinion. In the earlier scrutiny assessment, Respondent No. 1 had the opportunity to specifically scrutinize the cash deposits made by Petitioner. A specific query was also raised by the IO, Kolhapur regarding the cash deposits under Section 133(6) of the Act, to which Petitioner had replied stating that the said issue was being examined in the scrutiny assessment. The reason recorded and the impugned order are based on issues which have already been examined and verified during the original scrutiny assessment and the same cannot, in law, be a valid ground to reopen Petitioner’s assessment for AY 2016-17 as the same would amount to a ‘review’.
The same facts and materials on record cannot be re-examined for change of opinion under the garb or reassessment proceedings. It has been held in a catena of judgments that reassessment proceedings cannot be initiated by the AO when he has accepted the matter in an original assessment and the same would amount to a mere change of opinion and would not give rise to ‘reasons to believe’.
Also further noticed from the documents on record that there was no reason nor any justification given in the notice to even arrive at prima facie finding that the cash deposits led to escapement of income. There was no response to Petitioner’s requests for information regarding alleged undisclosed income pertaining to cash deposits over and above the deposits in the bank account. The impugned order does not even controvert the objection raised by Petitioner that the cash collected was not only deposited in its bank account but was also duly offered to tax.
It is settled law that a reason to suspect is not the same as reason to believe. There has to be a rational connection and the live link between the material coming to the notice of the AO and the formation of belief regarding escapement of income. See Sheo Nath Sing case [1971 (8) TMI 6 - SUPREME COURT]
The reasons to believe in the present matter merely adverts to information from the Investigation Officer, Kolhapur that Petitioner made some cash deposits. But it is an admitted fact that Petitioner, a charitable trust registered under Section 12A of the Act, eligible to avail exemption under Section 11 of the Act has deposited the donations received in cash in its bank account and thereby disclosed ‘Nil’ total income for the relevant assessment year. Moreover, the accounts of Petitioner are recorded, accounted and audited and hence, undoubtedly, there is no undisclosed cash over and above the deposits in its regular bank accounts which were offered for taxation. Thus, there is no material or fact which has been stated in the reasons for reopening assessment in the present case on which any belief can be founded of the nature contemplated by law. Decided in favour of assessee.
-
2024 (3) TMI 955
Validity of assessment u/s 153C - Period of limitation - Assessment of income of any other person - recording of satisfaction about seven years after search - HELD THAT:- The question as to whether these proceedings are barred by limitation should be addressed with reference to the judgment in Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] Effectively, the Supreme Court held that the person, other than the searched person, would be gravely prejudiced if the papers were to be handed over to the jurisdictional assessing officer of such person after about four years.
In the case at hand, the search in the premises of Mr. Thirumalaivasan was carried out on 11.10.2012, whereas the satisfaction note was recorded only on 27.03.2019. It is also significant to notice that the assessing officer of the searched person and the petitioner were the same and the recording of satisfaction about seven years after search is unjustified. If the limitation period of six years is reckoned from the date on which satisfaction was recorded, which falls within financial year 2018-2019 or assessment year 2019-2020, the respondent could only have reached back up to assessment year 2013-2014. Therefore, the proceedings in respect of both these assessment years are undoubtedly barred by limitation. It should also be noticed that the periods specified in Section 153B for completion of assessment had also lapsed.
The impugned assessment orders are quashed as being barred by limitation. Decided in favour of assessee.
-
2024 (3) TMI 954
Reopening of assessment u/s 147 - Reason to believe - information received from the Investigation Officer, Kolhapur that Petitioner made some cash deposit by assessee-trust - HELD THAT:- It is an admitted fact that Petitioner, a charitable trust registered under Section 12A of the Act, eligible to avail exemption u/s 11 of the Act has deposited the donations received in cash in its bank account and thereby disclosed ‘Nil’ total income for the relevant AY. Moreover, the accounts of Petitioner are recorded, accounted and audited and hence, undoubtedly, there is no undisclosed cash over and above the deposits in its regular bank accounts which were offered for taxation. Thus, there is no material or fact which has been stated in the reasons for reopening assessment in the present case on which any belief can be founded of the nature contemplated by law.
Thus upon perusal of the letter providing the reasons to believe escapement of assessment as well as the order rejecting Petitioner’s objections impugned herein, we have no hesitation in holding that there is no live link, which is a sine qua non between the material before the AO in the present case and the belief which he has to form regarding escapement of income. The sanction under Section 151 of the Act granted by the prescribed authority as well as the notice is issued by the Department without any application of mind. Decided in favour of assessee.
-
2024 (3) TMI 953
Reopening of assessment u/s 147 - notice issued u/s 148A(b) as alleged that petitioner was one of the persons who claimed fictitious short-term capital loss - HELD THAT:- There is nothing in the notice to indicate on what basis it is alleged that the short-term capital loss claimed was fictitious. Petitioner had, based on public announcement, invested in the mutual fund. The fact that petitioner received tax free dividend fund cannot be held against petitioner. The fact that petitioner had suffered a loss also cannot be held against petitioner. Even assuming that the transaction was pre-planned, there is nothing to impeach the genuineness of the transaction. Petitioner was free to carry on his business which he did within the four corners of law. Mere tax planning without any motive to evade taxes through colourable devices is not frowned upon even by the judgment of the Apex Court in McDowell & Co. Ltd [1985 (4) TMI 64 - SUPREME COURT]
It is settled law that the reasons for the formation of the belief that there has been escapement of income must have a rational connection with or relevant bearing on the information. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and his view that there has been escapement of income of the assessee from assessment in the particular year.
It is settled law that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched which would suggest escapement of the income of the assessee from assessment. The powers of the Income Tax Officer to reopen assessment, though wide, are not plenary. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The live link or close nexus should be there between the information before the Income Tax Officer and the belief which he has to prima facie form an opinion regarding the escapement of the income of the assessee.
In the notice issued under Section 148A(b) of the Act, the Assessing Officer alleges that JM Financial had manipulated accounting methodology so as to artificially inflate the distributable surplus and the investors, in order to reduce their tax liability, entered into these sham transactions and received dividend and short-term capital loss. These are allegations against JM Financial and do not implicate petitioner in any manner. There is nothing to indicate that petitioner had participated knowingly in a sham transaction to reduce his tax liability or to earn dividend or book short-term capital loss.
Therefore, the Assessing Officer is also not clear whether the assessee had booked loss or claimed dividend in the JM Balanced Fund Annual Dividend Option Regular scheme or JM Equity Hybrid Fund Quarterly Dividend. This also indicates non application of mind by the Assessing Officer. Assessee appeal allowed.
-
2024 (3) TMI 952
Disallowance of deduction u/s 80-IA(8) - computation of the market value or electricity - Scope of expression “market value” in relation to any goods - ITAT justification in holding that the price at which State Electricity Board sells electricity to industrial consumer in representative of the price that electricity would ordinarily fetch in the open market in terms of section 80-IA(8) - HELD THAT:- We note that the issue would stand concluded in light of the judgment rendered [2024 (1) TMI 1252 - DELHI HIGH COURT] wherein as accepted the alternative plea of the assessee and remanded the matter with a direction to the Ld. AO to deduct the sale proceeds of those items from the cost of raw materials used in the manufacturing process and then accordingly determine the profit of the undertaking to allow the deduction under section 80 IB as per the revised profits so computed.
TP Adjustment - Excessive remuneration to a related party - HELD THAT:- No disallowance in this regard have been made in the earlier years as held comparison done by the AO between the remuneration paid by the assessee company on account of managerial remuneration to Ms. Shallu Jindal with the remuneration paid by Essar Steel Ltd to Sh. Ashutosh Agarwala is not proper as well considering the facts that the assessee company is a profit making venture whereas Essar Steel Ltd. is incurring losses. It should also be noted that the assessee company has also complied with all the provisions of the Companies Act, 1956, relating to the payment of managerial remuneration to its managerial personnel appointed and the said payment of managerial remuneration has also been approved by the Board of Directors. The reference made to Circular No. 6P dated 08.07.1968 issued by the CBDT is apt in the present case. Thus, the Assessing Officer was not correct in making addition on account of managerial remuneration.
Allocation of common expenses u/s 80-IA to eligible and non-eligible unit on the basis of ratio between eligible and non-eligible units - HELD THAT:- As decided in [2024 (1) TMI 1252 - DELHI HIGH COURT] from perusal of the Assessment Order/Order of the TPO/Directions of the DRP, in the present case none of the authorities have doubted that there was no expenses. In facts, the Assessing Officer/TPO/DRP re-allocated the expenditure in the ratio of turnover between eligible and non-eligible units without bringing into the light the flaw or inaccuracy or any suitable explanation involved in relation to the method of allocation adopted by the assessee company.
Non deduction of TDS on bank guarantee commission u/s 40(a)(ia) - As decided by ITAT DRP has directed to delete the bank guarantee commission and without appreciating the same, the Assessing Officer made an addition which is unsustainable. Therefore, we direct the Assessing Officer to comply with the directions of the DRP and grant the relief to the Assessee.
We find no justification to entertain the instant appeal on this solitary question.
-
2024 (3) TMI 951
Validity of order of ITAT allowing Applications filed u/s 254(2) - Rectification versus Review of order - TP Adjustment - Comparability analysis done by ITAT - HELD THAT:- ITAT had clearly rendered incompatible and inconsistent findings. In fact we are constrained to observe that paras 12 and 21 were clearly contradictory. It was thus not only imperative but also expedient in the interest of justice for the ITAT to recall its order of 29 September 2020 and correct a manifest error apparent on the record. If that route had not been adopted, it would have left the Transfer Pricing Officer [“TPO”] as well as the Assessing Officer with an unresolvable quandary.
We further note from a reading of the order dated 18 October 2022 that the ITAT has presently kept the issue of comparability vis-a-vis PSL open for its own consideration, and insofar as Sasken is concerned the matter has been remitted to the file of the TPO. In that view of the matter no prejudice as such stands caused to the appellant.
-
2024 (3) TMI 950
Refund of the amount as deposited by the assesse towards part payment of demand raised - Justification for retention of the amounts of which refund is sought - Time limit for completion of assessment, reassessment and recomputation - petitioner asserts AO has failed to frame a final order of assessment on or before 31 March 2017, there exists no justification for the respondents to retain the amounts which had been deposited by the petitioner pending finalization of the assessment proceedings
HELD THAT:- As would be evident from a reading of Section 153(5) of the Act, the same deals with contingencies where the matter may have been remitted by the ITAT to other authorities, including the TPO wholly or in part, for the purposes of making a fresh assessment. Dealing with such a contingency, sub-section (5) of Section 153 of the Act provides that effect to such an order of the ITAT would have to be given within a period of three months from the end of the month in which that order is received. However, and insofar as the present case is concerned, it would clearly be governed by sub-section (7) of Section 153 of the Act since the matter itself relates to an order passed by the authority prior to 1 June 2016.
Since the remit ordered by the ITAT, admittedly, was rendered prior to 1 June 2016, it was incumbent upon the AO to have framed a final order of assessment on or before 31 March 2017. Having failed to do so, there would exist no justification for the respondent to retain the amounts which had been deposited by the petitioner.
We further take note of the submission of respondent, who draws our attention to the pendency of appeals preferred by the petitioner against the orders of the ITAT. In our considerate opinion, the mere pendency of those appeals would clearly not detract from the right of the writ petitioner to claim refunds since those appeals have in any case been rendered infructuous consequent to the period of limitation of framing an order of assessment itself having come to an end.
We according allow the instant writ petition and direct the respondents to refund the amounts along with the interest as may be statutorily payable.
-
2024 (3) TMI 949
TP Adjustment - Comparable selection - ITAT excluding Modicare Limited [“Modicare”] as a comparable under the Resale Price Method [“RPM”] - ITAT after considering various factors such as the non-availability of data of Modicare for various product segments and marketing strategies, difference between the entities in the treatment of discounts given to consultants/agents and the substantial difference between the entities in the advertising, marketing and promotion expenses incurred by them - ITAT also held that the Transactional Net Margin Method [“TNMM”] ought to be adopted as the most appropriate method for benchmarking the respondent’s case.
HELD THAT:- During the course of hearing today, it was brought to our attention that the matter has been resolved inter partes in terms of the assessment which came to be finalised for AY 2014-15 and that Modicare Limited has been excluded from the list of comparables to determine the ALP and the upward adjustments of income as proposed by the Department has not been undertaken as well. We are informed that the view taken therein has been duly accepted and followed in the subsequent years.
Thus bearing in mind the principle of consistency, we find no justification to entertain the instant appeals.
-
2024 (3) TMI 948
Penalty u/s 271D - violation of the provisions under section 269SS - Assessee sold the property for a consideration received in cash - meaning of the term “specified sum”- assessee pleaded that the cash of Rs. 9.38 lakhs was received from the purchaser on the day of registration and before the Jt. Sub Registrar only, since the purchaser did not have sufficient bank balance and hence had to pay such sum in cash, which was accepted by the assessee to avoid inconvenience to the purchase - HELD THAT:- The meaning of the “specified sum” has dealt in the case of ITO vs. Shri. R. Dhinagharan (HUF), [2024 (1) TMI 61 - ITAT CHENNAI] wherein as took the view that the ‘ sum specified’ as per Explanation to Section 269SS of the Act, only applicable for advance receivable, namely, ‘as advance or otherwise’ means advance can be in any manner, and therefore, this provision will not apply to the transaction that happens when the final payment at the time of registration of sale deed and payment takes place before sub-registrar for registration of property.
In the present case before us, it is an admitted fact that the assessee received the amount of cash not as advance, but as the final payment in front of the Sub-Registrar at the time of registration for sale of property - we hold that there is no violation of provisions of section 269SS of the Act in the present case in the given facts and circumstances and hence, penalty under section 271D of the Act is not leviable. Grounds raised by the assessee allowed,
-
2024 (3) TMI 947
Capital gain computation - allowability of transfer expenses [brokerage, air tickets, hotel accommodation receipts, postal charges receipts, conveyance charges, lawyer fees, photocopying expenses] - as per DR expenditure was merely incidental to the sale transaction and cannot be allowed to be deduction since such an expenditure was not wholly and exclusively for the transfer of property - HELD THAT:- As decided in SHAKUNTALA KANTILAL [1991 (3) TMI 123 - BOMBAY HIGH COURT] what constitute the expenditure incurred wholly and exclusively in connection with transfer as contemplated under section 48(i) of the Act and reached a conclusion that the expression ‘in connection with such transfer’ is certainly wider than the expression ‘for transfer’ and held that any amount of payment of which is absolutely necessary to effect transfer will be an expenditure covered by section 48(i) of the Act.
In the case on hand, the assessee is a non-resident individual and for the purpose of effecting transfer of the property, he had to travel to India and incurred the expenditure for obtaining special power of attorney from Indian Consulate in USA, air tickets, hotel accommodation receipts, postal charges receipts, conveyance charges, lawyer fees, photocopying expenses, without which the transfer could not have taken place. We, therefore, are of the opinion that in terms of the ratio in the case of Shakuntala Kantilal [supra], said expenditure is covered under section 48(i) of the Act is allowable.
We, accordingly hold that the expenditure incurred by the assessee towards special power of attorney from Indian Consulate in USA, air tickets, hotel accommodation receipts, postal charges receipts, conveyance charges, lawyer fees, photocopying expenses are also allowable expenditure and the AO will consider the same and delete the addition so made. Assessee appeal allowed.
-
2024 (3) TMI 946
Rejection of the books of account of the assessee company u/s. 145(3) - addition of Cash deposits in bank accounts in demonetized currency - adverse inferences drawn by the A.O regarding the authenticity of the sale transactions of the assessee company i.e. by dubbing the same as sales carried out against SBNs during the demonetization period - HELD THAT:- AO conclusion is not supported by any evidence, but is based on a general presumption, i.e reference to certain media clippings and the modusoperandi that was adopted by some jewellers who during the demonetization period had indulged in laundering the ill-gotten money of their customers, therefore, we are unable to persuade ourselves to concur with the same.
As the rejection of the books of account of the assessee u/s. 145(3) of the Act pre-supposes satisfaction of either of the two conditions contemplated under the said statutory provision, viz. (i) dissatisfaction of the A.O as regards the correctness and completeness of the accounts of the assessee; or (ii) failure on the part of the assessee in computing its income as per system of accounting regularly employed by him, existence of neither of which, had been proved in the case of the assessee company before us, therefore, rejection of its books results by the A.O cannot be approved.
Estimation of income - AO estimated profit element (Net Profit) of 25% on the subject sales - We find substance in the claim of the Ld. AR that no material had been placed on record by the department, which would reveal that the subject sales were not carried out by the assessee company during the pre-demonetization period, i.e, as disclosed in its books of accounts, but were made during the demonetization period. Also, as stated by the Ld. A.R., and rightly so, there is even otherwise no basis for the A.O. to have inferred that the assessee company had carried out the subject sales at an abnormally high profit of 25%.
We are unable to comprehend that as to on what basis, the A.O. had presumed a profit element (Net Profit) of 25% on the subject sales. In our view, both the assumptions of the A.O, viz. (i) that the sales in question were antedated, i.e., though disclosed by the assessee as having been carried out during the pre-demonetization period, but were carried out by the assessee company in lieu of SBN's during the demonetization period; and (ii) earning of the super profit by the assessee company on the subject disclosed sales of Rs. 2.37 crores (approx.) in SBN's, are merely based on mere suspicion, assumptions, presumptions, surmises, and conjecture without any material proving the same.
Although the A.O had drawn support from certain media clippings and status reports of the Income Tax Department on “Operation Clean Money”, and also the fact that certain jewellers had opted for IDS and PMGKY scheme and had offered 25% to 40% of their total cash deposits as undisclosed income, but the said observation, on a standalone basis, in our view, cannot justify the drawing of adverse inferences and the consequential impugned addition in the hands of the assessee company.
Thus we are unable to fathom the very basis, on which, the duly disclosed sales of the assessee company had been related by the A.O to the demonetization period, i.e. 09.11.2016 to 31.12.2016; and also, the presumption drawn by him regarding earning of super profit of 25% on the subject sales, thus, are unable to persuade ourselves to subscribe to the view taken by the lower authorities. Accordingly, we set aside the order of the CIT(Appeals), and vacate the addition made by the A.O. Assessee appeal allowed.
............
|
9911796707
