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Showing 401 to 420 of 1642 Records
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2024 (7) TMI 1242
Time Limitation - no findings or reasons for imposing the demand - non-appllication of mind - HELD THAT:- It is considered apposite to set aside the impugned order and remand the matter before the Adjudicating Authority for a decision afresh. The Adjudicating Authority shall examine the reply filed by the petitioner to the impugned SCN and take an informed decision within a period of eight weeks from today.
Petition disposed off by way of remand.
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2024 (7) TMI 1241
Service of notice - whether there was a valid service of the notice and the impugned order as contemplated under the GST Act and the Rules? - denial of discretionary relief under Article 226 of the Constitution on the premise that the appellant has filed the writ petition challenging the order dated 09.01.2019 only on 24.05.2024 i.e., almost 5 years after the impugned order came to be passed.
HELD THAT:- It is trite law that service of notice or order is essentially a question of fact - It is equally true that valid service of notice or order goes to the root of jurisdiction.
This writ appeal stands disposed of granting liberty to the appellant to file an appeal within a period of 4 weeks from the date of receipt of a copy of this judgment.
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2024 (7) TMI 1240
Challenge to assessment order - challenge to Circular No.9 dated 24.05.2019 - authority to delegate the power of adjudication by way of a circular contrary to Section 167 of the Act which contemplates a notification being issued - assessing authority was the inspecting authority and permitting the very same authority to adjudicate would fall foul of the maxim ''No man can be a judge of his own cause'' or not.
Whether the 4th respondent has no authority to delegate the power of adjudication by way of a circular contrary to Section 167 of the Act which contemplates a notification being issued? - HELD THAT:- With regard to the 1st ground that the authorisation ought to have been made only by way of a Notification as contemplated under Section 167 of the CGST Act, 2017, the same is misplaced inasmuch as the Circular is apparently traceable to Section 2(91) of the Act and not Section 167 of the Act, thus, issuance of a notification may not be necessary for authorising/ assigning proper officers with power of adjudication. In this regard, it may be relevant to refer to the judgment of the Gujarat High Court in the case of Yasho Industries Ltd. vs. Union of India [2021 (6) TMI 918 - GUJARAT HIGH COURT] wherein identical contention stood rejected - the challenge to Circular No.9 of 2019 on the ground that the authorisation of power of adjudication by way of Circular is impermissible is liable to be rejected.
Whether the assessing authority was the inspecting authority and permitting the very same authority to adjudicate would fall foul of the maxim “No man can be a judge of his own cause.”? - HELD THAT:- It is trite law that adjudication of disputed questions of fact falls outside the purview of Article 226 of the Constitution of India - There can be no doubt that even though the High Court can entertain a Writ Petition against any order or direction passed / action taken by the State and / or its authorities under Article 226 of the Constitution of India, it ought not to do so as a matter of course when the aggrieved person could have availed of an effective alternative remedy in the manner prescribed by law.
The writ petition challenging Circular No.9 of 2019 and the assessment orders for the period 2017-18 to 2020-21 are liable to be rejected - Petition disposed off.
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2024 (7) TMI 1239
Applicability of GST - Facility of car extended to the employees of the Applicant-Company in the course of employment - HELD THAT:- In the instant case, the Appellant-Company reportedly pays the lease premium directly to car leasing company, and the overall salary cost of the related employees will get reduced to the extent of cost incurred by company in relation car facility provided to employees for office purpose. In order to ascertain whether the instant transaction constitutes a ‘Supply’ or not, the basic fact as to whether the facility extended qualifies as a ‘Perquisite’ or not, is required to be determined in the instant case. The applicant claims the same to be a ‘perquisite’ for the employees and in terms of the CBIC Circular dated 06.07.2022, recovery from employees in relation to car lease premium will not be exigible to GST.
In the instant case, having paid the lease premium directly to car leasing company, the appellant admittedly deducts the exact amount from the salary of the employees concerned, i.e., to the extent of cost incurred towards the leasing of cars by the Company. Extending a mere facility does not qualify as a perquisite; that a value in monetary terms is required to be extended to the employees; and that the value of perquisite for consideration is restricted to the value of actual monetary gain extended as in Form 12BA. Therefore, the contention of the appellant that extending the facility of car lease is nothing but a benefit extended to the concerned employee, is not sustainable and does not support their stand.
The ownership of car by the company and resultant provisioning of services by the company on their own account amounts to ‘supply’ of services by them, and this aspect has a direct bearing in determining the taxability in the instant case.
It is thus opined that within the facts and circumstances of the case, only the actual value in monetary terms extended to the employee concerned in the course of or in relation to employment, qualifies as a ‘perquisite’, and it squarely falls within the ambit of entry No. 1 of Schedule III of the CGST/TNGST Acts, 2017. Whereas, the car lease amount recovered in actual terms by the appellant-company while extending the facility of car to its employees, cannot be considered as a ‘perquisite’ and accordingly taxes under GST are applicable on the same, as it does not get covered under the entry No. 1 of Schedule III of the CGST/TNGST Acts, 2017.
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2024 (7) TMI 1238
Input Tax Credit - tax paid on input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishments Act, 1947 - can entire ITC be availed by the applicant for providing the transport facility in all shifts considering the safety of women as mandated under the Tamil Nadu Shops and Establishment Act, 1947? - can ITC be availed for services received from the date of introduction of proviso to Section 17 (5) (b) (iii) of CGST Act, 2017 for the periods up to March 2022?.
In the facts and circumstances of the case, whether tax paid on input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishments Act, 1947 is eligible to be availed as input tax credit (ITC)? - HELD THAT:- Input tax credit on services of leasing, renting or hiring of motor vehicles shall not be available as the same falls under the category of blocked credit. However, the proviso to the said sub-section provides that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force - Further it is seen that CBIC vide circular No. 172/04/2022 dated 06.07.2022, issued by the Ministry of Finance wherein it was clarified that the proviso after sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the CGST Act is applicable to the whole of clause (b) of sub-section (5) of section 17 of the CGST Act.
In view of the foregoing provisions of the CGST Act, 2017, CBIC Circular dated 22.07.2022 and Notification of the Government of Tamil Nadu dated 02.06.2022, it is found that the applicant is eligible to avail input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishments Act, 1947 subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017.
If eligible, can entire ITC be availed by the applicant for providing the transport facility in all shifts considering the safety of women as mandated under the Tamil Nadu Shops and Establishment Act, 1947? - HELD THAT:- The Input tax credit on services of leasing, renting or hiring of motor vehicles shall not be available as the same falls under the category of blocked credit and the same becomes eligible for availment as per the proviso to the said sub-section which provides that the input tax credit in respect of such goods or services or both shall be available, where' it is obligatory for an employer to provide the same to its employees under any law for the time being in force. Hence, in the instant case the Input tax credit shall be available to the applicant, only on the tax paid on services of leasing, renting or hiring of motor vehicles for providing transport facilities to women employees alone who are arriving or leaving workplace between 8.00 P.M to 6.00 A.M. as the same has been made obligatory vide the Notification of Government of Tamil Nadu.
If eligible, can ITC be availed for services received from the date of introduction of proviso to Section 17 (5) (b) (iii) of CGST Act, 2017 for the periods up to March 2022? - HELD THAT:- The input tax credit on leasing, renting or hiring of motor vehicles shall be available to the applicant from 28.05.2019 onwards, i.e the date of notification issued by the Government of Tamil Nadu vide which it was made obligatory on the part of the employers to provide transportation facilities to women employees working in shifts even though the provisions of Section 17 (5) (b) was substituted vide notification no 02/2019 dated 29.01.2019 and the same came to effect from 01.02.2019. It is also reiterated that the said availment of input tax credit shall be subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017.
A circular is only clarificatory in nature and not a legislation. Whereas a notification is issued to notify the changes made in law or to give effect to provisions of law, a circular is issued to provide a clarification on an already existing provision of law. Hence, the applicants' submission that in the instant case until the issuance of Circular more clarity was awaited on the eligibility of ITC and the ambiguity has been removed altogether only after issuance of the said circular and hence the benefit of ITC cannot be denied on procedural grounds without any fault on the part of the Applicant is not in consonance with the provisions of the GST law.
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2024 (7) TMI 1237
Applicability of N/N. 04/2019 - Integrated Tax, issued dated 30th September 2019 - services supplied by the applicant, i.e., research and development services provided in relation to agro-chemical sector - services are rendered in the taxable territory or not - Place of supply - HELD THAT:- The Applicant undertakes testing for the products of their clients (hereinafter referred to as ‘sponsors’), and the Applicant provides the test results in the form of a report. Applicant has a standard practice to execute an agreement/document with the sponsor(s). The sponsor makes available a certain quantity of material (hereinafter referred to as the “test item”) based on the agreement pursuant to which the research, development, testing and analysis will be carried out and methodologies adopted for the research, development and testing are well documented as per the global guidelines and standards - The applicant has been supplying the services to its sponsors outside India under tax invoice with 18% GST as the applicant’s understanding was that the place oi supply for such services falls in India under Section 13 (3) of the IGST Act, 2017.
The Applicant is of the view that with respect to Research, Development and Testing process, the activities carried out by both the industries are inter linked with each other and in few cases, the Research, development, testing and analysis are the same and considering the similarities between pharmaceutical and agro-chemical sectors, the research and development services provided by the applicant squarely falls under the various types of services provided in the notification.
Whether N/N. 04/2019-Integrated Tax, issued dated 3O’h September 2019 shall be applicable on the services supplied by the Applicant, i.e., research and development services provided in relation to agrochemical sector? - HELD THAT:- Any discussion about the supply of such services rendered within the Taxable Territory is not relevant to the issue in question. However, it is important to delve into the Agreements executed by the IIBAT /Applicant with the sponsors located outside India, in order to ascertain the applicability of the Notification 4/2019, on the facts of the applicant’s case.
Agreements Entered into with Foreign Service Recipients by the Applicant - HELD THAT:- The Applicant has to analyse the test sample, i.e., in this case, the Mosquito net, received from the service recipient and determine the weight in grams of the alpha-cypermethrin active ingredient content in one kilogram of the Mosquito net (test sample) and weight in milligram of the same in cm square meter of the Mosquito net (test sample) and similarly, has to determine the weight in grams of the BPO active ingredient content of pooled samples present in one kilogram of the test sample as well as weight in milligram of the same in one square-meter of the test sample - The most important condition is that service provider shall follow international best practice guidelines to ensure reliability of results and the personnel involved in the activities should be trained in concerned diagnostic chemical science.
On careful reading of the list of services enumerated, it is seen that every line entry of the Table 2 of the Notification No.4/2019, involves research and development services in pharmaceutical Sector in connection with study of drugs or disease. But, on perusal of the services rendered by the Applicant from the copies of the agreement filed in paper book, as discussed in para 18.0 to 18.8, we have no doubt that the said services are not circumscribed under the services enumerated as supply of research and development services related to pharmaceutical sector as specified in the Table B of the notification, but found to be relating to the quality studies in respect of long lasting insecticide infused Bed Nets, which are used to give better protection from mosquitoes, bedbugs, cockroaches, houseflies by keeping them away or by killing them. But, the services enumerated under the Notification No. 04/2019 -Integrated Tax, pertaining to research and development in the field of pharmaceutical sector are with the aim of producing new and potential drugs into the market, ensuring the safety and validity of medical drugs and in the evaluation of safe drugs, which enable quicker patient recovery from diseases.
The place of supply in the instant case continues to be covered under Section 13 (3) of the IGST Act, 2017 and are accordingly taxable. Further the provisions of Notification No. 04/2019 - Integrated Tax, dated 30th September 2019 are applicable to research and development services related to ‘Pharmaceutical sector’ only and shall not be applicable on the services supplied by the applicant, in terms of the agreements entered into with the foreign Service recipients, as there are no provisions to include or consider ‘Agro-chemical sector’ within the ambit of the impugned notification.
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2024 (7) TMI 1236
Supply or not - grant from the Food and Agriculture Organisation of UN - whether the receipt of the said grant is eligible to classify under the Export of Service as "Zero rated supply" under Section 16 of the Integrated Goods and Services Tax Act, 2017 or not? - liability to pay GST under IGST or under CGST and TNGST for the receipt of grant from the FAO of UN and what rate - eligibility to claim a refund of GST paid on grant provided to applicant in India under Section 55 of the CGST Act, 2017.
Whether the grant from the Food and Agriculture Organisation of UN is a supply or not in accordance with the provisions of the GST Act? - HELD THAT:- In the instant case, the applicant has submitted that in the transaction between the applicant and the FAO of UN, nothing will be supplied to the FAO of UN for the grant given by them. It is purely a gratuitous grant from the overseas UN linked autonomous and Non-Profit Organisation for the use of the applicant to overcome the obstacles suffered in difficult situation and mainly concentrates on the indirect welfare of the people who depends on the applicant Company - That the grant sanctioned by the FAO of UN is a gratuitous grant under the projects of the said UN organization and it has to be utilised according to the budget lines specified in the agreement within the time lines specified. The said budget lines were determined based on the proposal submitted by the applicant Company to the FAO of UN.
From the perusal of the provisions of the CGST Act, 2017 regarding Scope of Supply and the submissions made by the applicant regarding the activities to be undertaken by the applicant as mandated by the grant providing organization we find that there is no supply of Goods or services to the grant providing organization, and hence the we are of the opinion that the activities undertaken by the applicant in lieu of receipt of the Grant from FAO is not covered under the meaning of 'scope of supply'.
On perusal of the description of the investment as mentioned in the Grant Agreement it is found that the purpose of the investment is to help the applicant company overcome the losses due to lack of capital, slowing down and stopping of cash flows and collapsing of the distribution network due to the pandemic lockdown and the activities to be undertaken by the applicant are towards strengthening the local green enterprise for sustained livelihood of vulnerable communities, and contribute to positive environmental outcomes, using an inclusive approach that focuses on enhancing the capacities of women in forest-based enterprises as envisioned by FAO - neither the grant received by the applicant can be construed to be consideration under the provisions of the GST law nor the activities to be undertaken by the applicant, as per the work plan developed and agreed upon jointly by the FAO and the applicant qualify to be supply under the provisions of GST law.
Since the answer to above question raised by the applicant is answered in the affirmative, the other questions, need not be answered as they cease to exist.
Eligibility for refund of GST paid on the grant by FAO of UN under Section 55 of CGST Act - HELD THAT:- On perusal of the provisions of Section 95 (a) and Section 103 (a) of the CGST Act, 2017, it is opined that this question is also out of purview of Section 97 of the CGST Act, 2017.
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2024 (7) TMI 1235
Royalty income - payments which were made by Assessee for obtaining computer software - whether such payments were liable to be taxed in India as royalty under the provisions of Section 9 (1) (6)? - HELD THAT:- Oder passed by this Court in Commissioner of Income Tax-(LTU) Vs. Reliance Industries Ltd. [2024 (6) TMI 1069 - BOMBAY HIGH COURT] which according to the learned counsel for the parties would govern the present proceedings as there is a DTAA entered with the countries in question, with whose residents the transactions were entered into by the assessee.
The amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income-tax Act were not liable to deduct any TDS under section 195 - Assessee appeal allowed.
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2024 (7) TMI 1234
Deduction u/s. 80IB (10) - deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March by a local authority - scope of definition of 'built-up area' - non considering the DVO’s report available on record wherein violation relating to two row houses having area more than 1500 sq.ft. was shown - HELD THAT:- Similar question of law as raised would stand covered by the decision of Sarkar Builders [2015 (5) TMI 555 - SUPREME COURT] wherein while examining the scheme of Section 80-IB of the Act, held that insofar the position prior to 1 April, 2005 was concerned, on the basis of the plans as approved by the Planning Authority, it was legitimate and permissible for the assessee to claim deduction u/s 801B (10), as for such period (prior to 1 April, 2005), the concept of built-up area as inserted by clause (a) in Section 80IB (14), which included inner measurement of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls, but excluding the common areas, shared with other residential units, cannot be the consideration.
It was held that in the absence of applying such parameters to the constructions approved prior to 1 April, 2005, it would be to absurd results, as it could not have been expected from an assessee to comply with such conditions, that was not part of the statute when housing project was approved.
Admittedly insofar as the facts of the present appeals are concerned, the project “Roseland Residence” was sanctioned prior to 1 April, 2005.
As decided in Tinnwala Industries [2014 (7) TMI 90 - BOMBAY HIGH COURT] the expression ‘built up area’ introduced with effect from 1 April, 2005 could not be applied retrospectively and the Tribunal was justified in holding upto 1 April, 2005, the expression ‘built up area’ would exclude the balcony area.
Decided in favour of the assessee.
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2024 (7) TMI 1233
Addition on account of reduction of long term liabilities, short term borrowing, trade payables and other current liabilities u/s 41(1) - CIT(A) deleted the addition as no cessation of liabilities during the year as assumed by the ld. CIT(A) but it was discharged the liabilities against the trade receivables - HELD THAT:- Assessee could not file any confirmation before the AO with regard to the sundry creditor whether they are still outstanding or not. There were no details about the intention of the assessee to pay the outstanding liabilities nor any reminders from the creditors seeking payment of the amounts due.
The details of the litigation or any Court case have not been brought before us.
As per CIT(A) that the liabilities brought forward from earlier years, hence, the provisions of Section 68 are not applicable is not emanating from the record. To that extent, the ld. CIT(A) erred in adjudicating on the Section which is not a subject matter of AO - Hence, matter should go back to the AO for due verification as to the existence of the parties, writing of these liabilities as bad debts in their books or not and to afford an opportunity to the assessee to file the confirmations and the relevant details before the Assessing Officer. The appeal of the Revenue on this ground is allowed for statistical purpose
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2024 (7) TMI 1232
Addition of interest income - AO has made the impugned addition on the basis of information available in the ‘insight portal’ - HELD THAT:- AO has not supplied the said information to the assessee. We find merit in the submissions of Ld A.R. that the assessee could have offered explanations with regard to the information available in the ‘insight portal’, if the relevant information were supplied to the assessee. We find merit in the above said submissions of Ld A.R.
Principles of natural justice would require the AO to confront the materials relied upon by him for making the addition. In the instant case, we are of the view that there is violation of the above said principle. Accordingly, we are of the view that this issue needs a fresh examination at the end of the Assessing Officer
Disallowance made u/s 14A - assessee has not earned any exempt income - HELD THAT:- In the instant case, the admitted fact is that the assessee did not earn any exempt income. Hence, the disallowance under Section 14A of the Act is not called for as per the decision rendered in the case of IL & FS Energy Development company Ltd[2017 (8) TMI 732 - DELHI HIGH COURT] Hence the AO was not justified in making disallowance u/s 14A of the Act when the assessee has not earned any exempt income. Accordingly, we set aside the order passed by the Ld.CIT(A) and direct the Assessing Officer to delete the disallowance made u/s 14A - Decided in favour of assessee.
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2024 (7) TMI 1231
Addition under the head ‘Other sources’ - Valuation of unquoted equity shares-- As per AO valuation report for valuation of unquoted shares for the purpose of section 56(2)(viib) by an independent Chartered Accountant is not accurate and is not acceptable- HELD THAT:- After taking into consideration the order of the CIT(A), it comes up that in spite of the assessee taking a specific plea of being exempted as a start up from the application of clause (viib) of sub-clause (2) of section 56 of the Act, no findings was given to reject this claim.
CIT(A) has only endorsed the reasoning of the AO for not accepting the valuation report. Thus, we consider it an appropriate case to allow the ground of the assessee for statistical purposes and restore the issue with regard to the claim of the assessee to be exempt from applicability of section 56(2)(viib) of the Act, as a start up to the files of the AO. The AO shall take into consideration the aforesaid findings and evidences filed and further give opportunity of hearing on this issue, to the assessee. Accordingly, the appeal is allowed for statistical purposes.
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2024 (7) TMI 1230
Disallowance being interest at 12% of interest free advances - Advances was given to 5 persons without charging any interest - HELD THAT:- As submitted that the advances were subsequently received back by the appellant. It was also submitted that for the last three years, khandsary business is closed. In view of the above facts, we are of the considered view that loans and advances were given for business purposes. It is the assessee who decides as to how the business should be done and when expansions or modernization should be undertaken. Such a business decision cannot be questioned by any authority.
Once it is held that the advances were for business purposes, non-installation of the machinery or renovation in the subsequent period due to non-viability cannot obliterate the purpose of business. The assessee decided not to go-forward with its plan of new machinery and renovation due to bad market condition. Such business decision cannot be a ground to disallow consequential expenditure. Hence, appellant is liable to succeed on the subject issue.
Assessee had its own interest free capital which was more than the interest free advances - The Hon’ble jurisdictional High Court in case of Gujarat Narmada Valley Fertilizers Co.Ltd. [2012 (8) TMI 1161 - GUJARAT HIGH COURT] held that where there was sufficient fund available with the assessee-company on which no interest was paid and out of which loans and advances to associate companies could be made, AO was not justified to disallow the claim of interest on borrowed funds.
In the present case, we find that the assessee had its own share capital of Rs. 1,63,55,749/ - whereas the loans and advances given were only Rs. 95,70,601/-. Hence, the assessee had adequate interest free funds with it to make such advances. Therefore, the disallowance is not permissible in view of the decisions of Gujarat Narmada Valley Fertilizers Co. Ltd. [2012 (8) TMI 1161 - GUJARAT HIGH COURT] and R L Kalthia Enggineering & Auomobilies (P.) Ltd. [2013 (2) TMI 754 - GUJARAT HIGH COURT] Accordingly, the ground raised by assessee is allowed.
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2024 (7) TMI 1229
Revision u/s 263 - Addition u/s 68 - HELD THAT:- Regarding the review by the PCIT, it is a settled law that for exercising revisionary powers u/s 263 of the Act, the order must be both erroneous and prejudicial to the interests of the revenue. This twin condition is highlighted in the decision of Malabar Industrial Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT] - The Court held that for an order to be revised under Section 263, it must be shown that the order is erroneous and such error has caused prejudice to the revenue. An incorrect application of law or a failure to make necessary inquiries would render an order erroneous.
We noted the contention of the assessee that the AO’s inquiry was neither inadequate nor insufficient. AO verified the identity, creditworthiness, and genuineness of the transactions in terms of Section 68 - AO’s decision to accept the assessee's submissions after thorough verification cannot be deemed erroneous. We have also reviewed the judicial pronouncements relied upon by the assessee. These judicial precedents establish that revisionary action u/s 263 of the Act is not justified on grounds of inadequate inquiry if the AO has conducted sufficient inquiries and taken a permissible view.
PCIT has not demonstrated that the AO's insufficient investigation has led to an erroneous assessment. In our opinion, inadequate inquiry alone does not justify revision unless it results in a prejudicial outcome for the revenue. Thus, if the AO has conducted an inquiry, however minimal, the PCIT must provide concrete evidence of the resultant error and prejudice to the revenue to justify invoking Section 263 of the Act.
We hold that the order passed by the AO u/s 143(3) of the Act was neither erroneous nor prejudicial to the interests of the revenue. Therefore, the revisionary action taken by the PCIT u/s 263 of the Act is not justified. Thus, the appeal filed by the assessee is allowed, and the order passed by the Principal Commissioner of Income Tax under Section 263 of the Act is hereby quashed. Appeal of the Assessee is allowed.
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2024 (7) TMI 1228
Reopening of assessment u/s 147 - Reason to believe - period of limitation - HELD THAT:- Reasons taken by the department for re- opening of the case itself were unverified and vague. Moreover, the assessee fully participated in the proceedings before the CIT (A) and all the relevant information pertaining to the credits in her bank account were duly furnished. Based on above observation and time limit discussed, it is found that re-opening was time barred hence liable to be quashed. On merits also the assessee was able to discharge her onus beyond doubt. In the result, grounds taken by the assessee is allowed. Appeal of the assessee is fully allowed.
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2024 (7) TMI 1227
Bogus long term capital gain - Assessee has failed to produce any of other parties before AO and also did not represent before CIT (A) - HELD THAT:- AO should have made inquiry [1] from the bankers about whose funds were routed in the bank account of the assessee, [2] from the brokers on stock exchange how did they make transaction on behalf of this person and to whom did they provided exit , [3] from Demat agencies in whose demat accounts such shares were credited and debited, [4] why bankers, Demat agency and brokers did not report such a huge suspicious transaction to RBI and Stock exchanges, [5] How synchronized trade of purchases by the assessee took place and to whom exit was provided , [6] where the shares appearing in Demat account were diverted to, who operated Demat account of this assessee,] should have summoned to Mr. Kamlesh Sanghavi who deposited cross account payee cheques in the bank account of the assessee as alleged by assessee himself.
AO should have definitely made a larger inquiry because such a kind of scam cannot happen without connivance of the bankers, demat agencies, brokers [who sold shares on behalf of assessee] on stock exchange platform.
After making all these inquires AO should also take necessary action in case of all other persons in accordance with law. Assessee is also duty bound to support his affidavit and produce those persons.
AO should also make independent efforts to bring all other person by using the necessary powers bestowed upon him in the act. It is a trite law that real income should be taxed in the hands of right assessee. As the AO has not made any inquiry but made the addition in the hands of the assessee, instead of restoring the matter back to the file of the CIT (A), in the interest of justice and give a fair opportunity to the assessee, we restore it back to the file of AO to decide the issue afresh in the light of above direction. Appeal of assessee allowed.
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2024 (7) TMI 1226
Penalty u/s 271G - non-maintenance of documents for specified domestic transaction of purchase and sale to associated enterprises - CIT(A) deleted addition - HELD THAT:- The adjustment of transfer pricing was made with respect to the specified domestic transactions covered u/s 92BA(1) of the Act.
The co-ordinate Bench in Texport Overseas (P.) Ltd [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] has held that transfer pricing provisions do not apply to the case of the assessee for the impugned assessment year in view of the omission of the above clause by the Finance Act, 2017, with effect from 1st April, 2017, having the resultant effect that such provisions never existed. As there is no requirement of or applicability of transfer pricing provisions to the specified domestic transactions of the assessee covered u/s 92BA (i) of the act , consequently there cannot be any requirement of maintenance of the document. Therefore, the assessee cannot be penalized under Section 271G of the Act. Accordingly, the learned CIT (A) has correctly deleted the penalty levied under Section 271G of the Act.
Mere deletion of adjustment of transfer pricing cannot automatically result into deletion of penalty for non-maintenance of documents, but in this case, there is no requirement of maintenance of such documents. Therefore, assessee cannot be penalized, for maintaining documents, which is not required by law - Decided in favour of assessee.
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2024 (7) TMI 1225
Estimation of income - Bogus purchases - addition taking 25% of the alleged bogus purchases - HELD THAT:- ITAT, Mumbai in assessee’s own case for AY 2009-10 [2021 (9) TMI 1555 - ITAT MUMBAI] wherein profit rate of 4% has been directed to be applied on the alleged bogus purchases. Also, in the decision of Co-ordinate Bench in assessee’s own case for Assessment Year 2010-11 [2024 (7) TMI 1164 - ITAT MUMBAI] dated 18.07.2024 similar direction is given to adopt profit rate of 4%.
As in the case of Mohammed Haji Adam & Co. [2019 (2) TMI 1632 - BOMBAY HIGH COURT] had held to restrict the addition to the extent of bringing the gross profit rate on purchases at the same rate of other genuine purchases. Accordingly, we direct the AO to apply the rate of 4% on the alleged bogus purchases. Accordingly, appeal of the assessee is partly allowed.
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2024 (7) TMI 1224
Validity of impugned proceedings u/s 147 - Time limit for notice u/s 149 - proceedings have been initiate beyond the time limit prescribed under provision of Section 149 - HELD THAT:- In the memorandum explaining the provisions in the Finance Bill, 2021, it has been interalia explained that another restriction has been provided that the notice under section 148 of the Act cannot be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under the provisions of clause (b), as they stood immediately before the proposed amendment.
In our understanding of the law, for the relevant provisions of Section 149 of the Act read with the memorandum explaining the provisions, what could not be done earlier, cannot be done even after the amendment. Meaning thereby that if in the erstwhile provisions, the notice is barred by limitation then, in the amended provision also, the said notice is barred by limitation.
Thus, we hold that the impugned notice and the proceedings have been initiated beyond the time limit prescribed under the provisions of Section 149 of the Act making the impugned proceedings vitiated and liable to be quashed - Decided in favour of assessee.
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2024 (7) TMI 1223
Rectification u/s 154 - Disallowance of claim of brought forward unabsorbed depreciation - HELD THAT:- AO has transgressed his jurisdiction while giving effect to the order of the ld. CIT (A) as he cannot go beyond the directions given by the ld. CIT (A) in the garb of rectification u/s 154.
The aforesaid observation and the finding of the ld. CIT (A) clearly shows that the ld. A.O. has exceeded his jurisdiction by disallowing the claim of brought forward unabsorbed depreciation by rectifying the order giving effect, because the issue of claim of brought forward unabsorbed depreciation had already attained finality and there was no such direction by the CIT (A) to disallow. Thus, post order of Ld CIT (A) and after giving effect to the order, AO cannot rectify such order u/s 154 as there was no mistake apparent from record. We do not find any infirmity in the order of the ld. CIT (A) and the same is confirmed. Appeal filed by the Revenue is dismissed.
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