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Income Tax - Case Laws

Showing 1 to 20 of 175766 Records

• 2025 (7) TMI 190
  

  Procedure of service of notice under the Faceless Assessment provisions u/s 144B - Centralized Communication to Improve compliance of notice u/s 142(1) - Standard Operating Procedure (SOP) - HELD THAT:- On bare perusal of the SOP, it can be interpreted that if the assessee is not responsive to any notice u/s 142(1) of the Act then the department is mandatorily required to send physical letter at the latest address known through speed-post.

  This procedure is apparently not followed by the respondent authorities.

  The only defence raised is that in the earlier round, the petitioner had responded to such notice only after remand order by this Court, the petitioner was non-responsive and, therefore, there was no need for any further physical communication -Unfortunately, we are unable to accept such contention raised by Mr. Sanghani. The SOP specifies a mandatory requirement to send physical communication at the latest known address if the assessee is not responsive to the notice u/s 142(1). The stage at which this happens is insignificant. Once authorities have failed to follow the mandatory requirement of SOP, the impugned order dated 11.10.2022 would not stand at all.

  Resultantly, the impugned order is hereby quashed and set-aside and the matter is remanded back to the Faceless Assessment Authority to comply with the SOP as envisaged by SOP dated 3.8.2022 and pass a fresh order.

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• 2025 (7) TMI 189
  

  Reopening of assessment u/s 147 - reasons to believe - review v/s reopening - HELD THAT:- It is well settled that the power under Section 147 of the Income Tax Act cannot be invoked for a review of the assessment. Mere change of opinion cannot be a reason for the assessing officer to invoke Section 147.

  In this case, as noted above, it cannot be said that the reasons shown in Ext.P5 are proper for the reason that those aspects were actually considered, as evident from Exts.P13 and P14, by the assessing officer at the time of scrutiny under Section 143. That being the position the re-opening in the case at hand can be considered only as a review of the original assessment. The same is impermissible. Assessee appeal allowed.

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• 2025 (7) TMI 188
  

  NP rate determination - method of accounting - assessee in the course of proceedings before the ITSC, Kolkata had on suo motu basis rejected his books of accounts and admitted 10% net profit to the total gross receipts - scope of res judicata - HELD THAT:- The existence of infirmities and discrepancies in the accounts maintained by the assessee is sine qua non for invoking the provisions of Section 145(3) of the IT Act. Unless and until the infirmities and discrepancies are expressly noticed by the AO in the accounts maintained by the assessee, Section 145(3) of the IT Act cannot be invoked. Similarly, the principle of res judicata does not apply to the assessment proceeding.

  It is well settled principle of law that in taxation matters, the strict rule of res judicata as envisaged by Section 11 of the Code of Civil Procedure, 1908 has no application. As a general rule, each year’s assessment is final only for that year and does not govern later years, because it determines the tax for a particular period.

  It is, therefore, open to the Revenue/Taxing Authority to consider the position of the assessee every year for the purpose of determining and computing the liability to pay tax or octroi on that basis in subsequent years. A decision taken by the authorities in the previous year would not estop or operate as res judicata for subsequent year. See VIDYUT METALLICS LTD. AND ANOTHER [2007 (9) TMI 399 - SUPREME COURT]

  The Supreme Court in the matter of M.M. Ipoh and others v. Commissioner of Income Tax, Madras [1967 (7) TMI 8 - SUPREME COURT] has clearly held that the doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year.

  As in Dhakeswari Cotton Mills Limited [1954 (10) TMI 12 - SUPREME COURT (LB)] as clearly held that in making the assessment, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all.

  In the present case, both the authorities have clearly held that the adoption of net profit @ 10% of the total gross receipts by the AO has been made on pure guess work only and record of the assessee has not been found deficient and no infirmity or defect was noticed by the AO, therefore, Section 145(3) of the IT Act could not be invoked and assessment could not have been done holding 10% net profit of the total gross receipts making best judgment assessment under Section 144 of the IT Act.

  In that view of the matter, the concurrent finding of the two Courts below – CIT (Appeals) and the ITAT partly interfering with the order of the AO is in accordance with law and the substantial question of law is answered in favour of the assessee and against the Revenue.

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• 2025 (7) TMI 187
  

  Delay in filing the income tax return - application filed for condonation of delay in filing the Return of Income rejected - denial of refund of excess Tax Deducted at Source on non filling of ROI - procedural aspect of the income tax law - petitioner being a non-resident was under the impression that no Return of Income was required to be filed as per the provisions of the Act as there was no tax liability - when legitimate refund was not received by the petitioner, he thought it fit to file return claiming return at the time of his visit to India.

  HELD THAT:- When the petitioner was not aware of the procedural aspect of the income tax law as well as the fact that he was medically unfit during the pendency of the application under Section 119(2)(b) of the Act, the respondent authority could not have rejected the application as filing of return for claiming benefit under the provisions of the Act is procedural and the benefit accrued to the assessee cannot be taken away on account of technicalities when there is a genuine hardship. This can be drawn from the case of Sitaldas K. Motwani [2009 (12) TMI 36 - BOMBAY HIGH COURT] as well as the case of Bombay Mercantile Co-op. Bank Ltd. [2010 (9) TMI 23 - BOMBAY HIGH COURT]

  Considering the facts of the case as well as the settled legal position, the petition succeeds and is accordingly allowed. The impugned order is hereby quashed and set aside and the matter is remanded to the respondent to pass a fresh order to condone the delay in filing the income tax return so as to enable the petitioner to get the refund as per the provisions of the Act.

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• 2025 (7) TMI 186
  

  Reopening of assessment u/s 147 - denial of deduction u/s 54 -disallowing the capital gains only on the ground that the amount was deposited after the sad demise of original assessee in the name of the petitioners as legal heirs - allowability of investments made by the legal heirs in their own names, after the death of the original assessee,

  HELD THAT:- The reasons recorded by the AO which are reflected in the impugned assessment order only refers to the disallowance as it was on the ground that the same was not disclosed in the return of income and the entire amount of sale consideration would be liable to be taxed under the head of capital gain.

  Thereafter, it appears that the respondent-AO without there being any tangible information, that income had escaped assessment and without considering the fact that the petitioners have filed the return of income after the sad demise of the late Kamalbhai Ramniklal Shah, wherein the petitioners have disclosed the fact of sale of the immovable property and deposit of such sale consideration to claim the deduction under Sec. 54 amounting to Rs. 3 crores as against the amount liable for capital gains and as such no capital tax was payable by the petitioners in view of the investments made as required under Sec. 54 of the Act, has passed the impugned Assessment Order by disallowing the capital gains only on the ground that the amount of Rs. 90 lakhs was deposited after the sad demise of Kamalbhai Ramniklal Shah in the name of the petitioners as legal heirs and therefore the same could not have been considered as an amount invested as required under Sec. 54 of the Act. Such an hyper-technical approach adopted by the respondent-AO can never be said to provide ground for assumption of jurisdiction to reopen the assessment.

  This petition succeeds and accordingly, the impugned notice issued u/s 148 as well as the Assessment Order passed u/s 147 read with Sec. 144B.

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• 2025 (7) TMI 185
  

  Reopening of assessment - Bogus LTCG - eligibility of reasons to believe - denial of exemption income u/s 10(38) - additions u/s 68 - mandation to apply independent application of mind - AO alleged transactions in "penny stocks" through 77 transactions, linked to Consortium Capital Private Limited as connected with assessee - HELD THAT:- Merely placing reliance on any other authority without recording own satisfaction or bringing any cogent substance on record shows that, without applying his mind, the AO has issued the notice, which is invalid. Since the AO has formed his reason to believe just on the basis of the information received from the Director of Income Tax (Inv.), Kolkata, that income has escaped assessment and not a reason to believe which is necessary for reopening of the assessment proceedings.

  In our view, the AO cannot reopen the assessment merely on the basis of information received without applying his independent mind to the information and forming an opinion.

  It is well established that the reason recorded by the Ld. A.O. shall be concrete, specific and shall be recorded after making all necessary and independent enquiries and the AO should clearly ‘form his belief’ that the assessee has escaped income and only then can he reopen the assessment u/s 147 of the Act. The reopening for the purpose of fishing inquiries or to verify the details is not permitted u/s 147 of the Act - Decided in favour of assessee.

  Bogus LTCG - Addition on the basis of the SEBI report - We are of the considered view that just the modus operandi, generalization, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected.

  SEBI order, while identifying price manipulation by specific entities in the JMD Telefilms scrip, does not name or implicate the assessee in its findings. particularly for her transaction in Patch 6. Therefore, sale at a lower price Rs. 54-55 during a period of price decline, after holding the shares for over three years, contradicts the modus operandi of manipulative trades. The absence of any SEBI enquiry involving the assessee and the legitimate nature of her stock exchange transaction further affirm the genuineness of her LTCG claim under Section 10(38).

  We noticed that the CIT(A) overlooked the crucial fact that the Assessee did not purchase shares in the scrip of Consortium Capital Ltd, a private company, nor was beneficiary in any manner. However, the AO relied on the specific report of Securities and Exchange Board of India on JMD Telefilm Ltd.

  Now, in the present case, we found that the SEBI has not issued any notice to the assessee or broker of the assessee in relation to these trades. The assessee submits again that it has never received any notice for violating the SEBI Rules or regulations.

  Therefore, the AO has made a baseless allegation and put reliance of the Investigation report, without any substance and corroborative evidences. The SEBI Report reproduced by the AO in the assessment order has nothing to do with the assessee. If some person manipulates the trades in JMD Shares does not mean that the assessee was also involved. There is no evidence from AO or in the report reproduced by the AO in assessment order.

  Therefore, the addition made by placing reliance on the SEBI stands deleted, and the above-ground stands allowed.

  Penny stock transactions - With regard to the so-called Penny Stock Capital Gain, as recently decided in the case of Ms. Farrah Marker [2016 (6) TMI 786 - ITAT MUMBAI] wherein it was held that the Long-term capital gains on sale of "penny" stocks cannot be treated as bogus & unexplained cash credit if the documentation is in order & there is no allegation of manipulation by SEBI or the BSE. Denial of right of cross-examination is a fatal flaw which renders the assessment order a nullity.

  Assessee appeal allowed.

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• 2025 (7) TMI 184
  

  Addition u/s 68 - unexplained income with regard to cash deposits made out of normal course of business - levying tax u/s 115BBE - additions made in the present case on account of the fact that there was an abnormal increase in cash deposits during the demonetization period as compared to the pre-demonetization period

  HELD THAT:- AO had accepted the assessee’s entire sale and purchase offered in the books of account as genuine. Therefore, the addition made by the AO on account of cash deposited during the demonetisation period on the pretext that the assessee had created an artificial scenario in its books of account where unaccounted income was shown by them as cash sales and then deposited into bank accounts.

  There is no evidence/proof of the said observation made by the AO. Since there is no evidence with the explanation put forth by the assessee is justified with reference to various documents, such as Cash book [day wise] - Showing names of persons whom sales is made, Party wise purchases with Name/ Address /PAN, Party wise sales with Name/ Address /PAN, Purchase Register - month wise/Party wise also, Sales Register - Date wise / Item Wise and Bank Statement of all bank. And further, such cash deposit has been shown as sales in the P&L account and has also been offered for taxation.

  Therefore, in our view, no addition should have been made in the case of the assessee.

  Reliance is being placed upon the decision of Vishva and Devji Diamond Pvt. Ltd. [2025 (2) TMI 1025 - ITAT CHENNAI] wherein it has been held that where assessee, engaged in trading business of gold and diamond jewellery, claimed that cash deposited in bank account during demonetization period pertained to sale proceeds of gold and diamond jewellery collected from its customers, since assessee's claim was backed up by relevant evidences, impugned addition made under section 69A, read with section 115BBE treating cash sales as bogus was to be deleted.

  Also in Charu Agarwal [2022 (4) TMI 537 - ITAT CHANDIGARH] wherein as held that held that where cash deposited by assessee was out of cash sales which had been accepted by Sales Tax/VAT Department and not doubted by AO and there was sufficient stock available with assessee to make cash sales, sales made by assessee out of existing stock were sufficient to explain deposit of cash (obtained from realization of sales) in bank account and, thus, cash deposits could not have been treated as undisclosed income of assessee.

  Appeal filed by the assessee is allowed.

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• 2025 (7) TMI 183
  

  Rejection of books of accounts - estimation of income - suppressed purchases, suppressed sales and unaccounted payments - HELD THAT:- The Bench was of the view that net profit rate of 5% would be justified on the total turnover worked out by the Ld. AO after including the sales mentioned in the impounded documents SP-68 and SP-73 and SP-42 etc., which were not disclosed in the books of account to the sales recorded in the books of account as after rejection of books of account the profit is to be estimated. Both the Ld. DR and the Ld. AR were fair enough not to argue against the decision before us. The Ld. AO is, therefore, directed to apply the net profit rate of 5% to the aggregate of the sales shown in the books of account and the unrecorded sales found in the impounded documents and reduce the net profit shown by the assessee and add the difference to the total income returned by the assessee.

  No separate addition on account of any other head of expenditure relating to the trading and profit and loss account would be called for nor on account of low house hold expenses and undisclosed investments in the name of the daughters etc., which would be covered by the enhanced income estimated. The Ld. AO is directed to apply the net profit rate of 5% to the sales as worked out on the basis of these directions and allow consequential relief to the assessee. Decided in favour of assessee partly.

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• 2025 (7) TMI 182
  

  Addition u/s. 69C - availing accommodation entries of bogus purchases from three hawala parties, identified by the Sales Tax Department of Maharashtra - CIT(A) restricting the addition @ 4.40% as against the 20% addition made by AO u/s. 69C - AO recorded that assessee has not furnished delivery challans and corresponding sales to third party, copy of octroi receipt and transportation receipt were not furnished.

  HELD THAT:- CIT(A) has recorded that the AO has not disputed the sales. Such finding is contrary to the finding of assessing officer on page 3 of assessment order wherein the assessing officer clearly recorded “b.

  The assessee has failed to link the material purchased with sale made by it with the stock register or movement of goods with supporting documents”. Thus, CIT(A) has not appreciated the fact in proper perspective. Still, disallowance made by AO was on higher side, therefore, disallowance to the extent of 10% of the impugned/bogus purchases from three parties would be fair, reasonable and sufficient to avoid the revenue leakage. Thus, the AO is directed to restrict the addition @ 10% of purchases. Appeal of the revenue is partly allowed.

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• 2025 (7) TMI 181
  

  Rejection of Foreign Tax Credit (“FTC”) claim - Belated filing of relevant Form 67 - CIT(A) rejected the claim of the assessee on the ground that the assessee has failed to file return of income and Form 67 on or before the due date of furnishing the return of income as prescribed u/s 139(1) which is mandatory according to Rule 128(9) - HELD THAT:- Since the assessee has filed relevant Form 67 although belatedly, before the AO passed order u/s 143(3) of the Act, in our considered view, the AO ought to have allowed credit for FTC on the basis of relevant Form 67 by the assessee. This view is supported by the decision of Sri Sridharan Venkatanarayanan [2025 (6) TMI 1376 - ITAT HYDERABAD] held that Foreign Tax Credit cannot be denied merely because there is a delay in filing Form-67. Assessee appeal allowed.

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• 2025 (7) TMI 180
  

  Jewellery found during the course of search - Scope of CBDT Circular No.1916/1994, dated 11/05/1994 as per which jewellery held by an individual to certain extent cannot be seized -addition being the value of 690gms of jewellery on the ground that, the assessee could not explain source.

  CIT (A) allowed relief to the assessee to the extent of 1700gms of jewellery and held that, in view of the CBDT Circular No.1916/1994 dated 11/05/1994, the family members can possess jewellery to the extent of specified quantity and to that extent, there is no need to explain the source

  HELD THAT:- There is no merit in the argument of assessee for the simple reason that, the CBDT issued Circular No.1916/1994 dated 11/05/1994 considering various aspects including customary practices in India to give jewellery to the ladies on various occasions and directed the Field Officers to not to seize the jewellery to the extent of 500gms in case of married women, 250gms in case of unmarried women and 100gms in case of men.

  Therefore, jewellery has been received on the occasion of marriage as Sthridhan and other occasions covered within the limit allowed by the CBDT Circular No.1916/1994.

  Therefore, we are of the considered view that, CIT (A) after considering the relevant explanation of the assessee and also taken note of the circular of the CBDT has allowed relief to the extent of 1700gms of jewellery.

  The remaining 110gms of jewellery was still unexplained and the assessee could not file any evidence, even before us, to explain the source for the said jewellery.

  Therefore, there is no error in the order of the learned CIT (A) to sustain the addition to the extent of 110gms of jewellery. Thus, we are inclined to uphold the order of the learned CIT (A) and dismiss the appeal filed by the assessee. Appeal filed by the assessee is dismissed.

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• 2025 (7) TMI 179
  

  Reopening of assessment u/s 147 - return of income was not e-verified, the same was treated as invalid and non-est by AO - as observed AO had not issued notice u/s 143(2) to the assessee and also had not furnished the reasons recorded for reopening of assessment - whether curable defect u/s 292BB?

  HELD THAT:- Since the return was treated as non-est, the stand of the revenue is that there was no requirement for AO to either issue notice u/s 143(2) of the Act or furnish the reasons recorded for reopening the assessment.

  But we find from the final page of the assessment order, AO had started the computation of income from the returned income for computing the assessed income of the assessee. This goes to prove that return filed by the assessee either the original return or the return filed in response to notice u/s 148 of the Act has been taken due cognizance by the AO.

  Having done so, it is mandatory for AO to issue notice under section 143(2) of the Act first in the reassessment proceedings and also furnish the reasons recorded for reopening of the assessment.

  Further we find that the AO had intimated on 14-2-2022 to the assessee that the return of income was not e-verified. The assessee immediately on 15-2-2022 (i.e. the very next day) rectifies the same and duly e-verifies the return of income filed in response to notice u/s 148 of the Act.

  This excruciating fact has been ignored by the AO while framing the re-assessment. Admittedly, notice u/s 143(2) of the Act was not issued to the assessee in the reassessment proceedings and reasons recorded for reopening the assessment were also not furnished to the assessee by AO.

  These become jurisdictional defect and hence not curable even in terms of section 292BB of the Act.

  Reliance in this regard is placed on the decision of Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT] wherein it was held that when no notice under section 143(2) of the Act has been issued, the entire assumption of jurisdiction fails and the assessment proceedings are required to be quashed.

  Also in the case of CIT vs Trend Electronics [2015 (9) TMI 1119 - BOMBAY HIGH COURT] had categorically held that where no reasons recorded for reopening of assessment were furnished to the assessee, it becomes fatal to the entire reassessment proceedings per se and accordingly, the reassessment proceedings are required to be quashed. Appeal of the revenue is dismissed.

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• 2025 (7) TMI 178
  

  Allowability of the section 80P - Interest and dividend received by the Appellant Society from other co-operative societies - HELD THAT:- We find that in Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. [2023 (5) TMI 372 - SC ORDER] held that a co-operative credit society is entitled to exemption under section 80P(2) of the Act.

  Decision of Totagar Co-operative Sales Society [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] placed reliance upon by the learned DR, was duly considered in assessee’s own case for the assessment year 2020-21 [2025 (2) TMI 1206 - ITAT MUMBAI] - Therefore, respectfully following the aforesaid decisions, we uphold the plea of the assessee of claiming deduction under section 80P(2)(d) of the Act in respect of interest and dividend income earned by it from Co-operative Banks. Accordingly, Ground No.2 raised in assessee’s appeal is allowed.

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• 2025 (7) TMI 177
  

  GP Estimation - Rejection of books of accounts - assessee is dealing with live stock and purchases the animals from farmers, sell the same to slaughter house - HELD THAT:- We observed that assessee is dealing in the live stock. He purchases the live stock from the farmers and sell the same to slaughter house. Since assessee purchases the live stock from the farmers it is not possible to maintain bills or vouchers and it is fact on record that these kind of transactions are historically done through cash.

  We observed that similar issue was came up before the coordinate Bench in the case of Salauddin Saifi [2024 (10) TMI 1674 - ITAT DELHI] and the coordinate Bench has, after considering the facts available on record, sustained the addition of 0.5% as reasonable profit in this line of business.

  We further observed that CIT (A) also enhanced the GP ratio based on the comparable study of the same assessee’s i.e. Salauddin Saifi and Shamim Ahmad and cases reached finality. Therefore, we are inclined to follow the same and direct the AO to restrict the GP @ 0.5%. In the given case, assessee has already declared 0.6%, therefore, we direct the AO to retain the same in the current assessment year. Accordingly, grounds raised by the assessee are allowed.

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• 2025 (7) TMI 176
  

  TP Adjustment - payment of management fees - assessee has benchmarked the said transaction in entity level TNMM on the ground that the margin earned by the assessee at entity level was in accordance with the provision of section 92C(2) and further claimed that the same was determined at ALP - HELD THAT:- The Jurisdictional Tribunal in [2023 (9) TMI 1694 - ITAT MUMBAI] it was observed while following the judgment in the case of Merk Limited [2016 (8) TMI 561 - BOMBAY HIGH COURT] and Nielsen (India) Pvt. Ltd [2016 (6) TMI 172 - ITAT MUMBAI] that the TPO is not correct in rejecting the TP study of the assessee on the ground that the assessee has not availed all the services agreed with the AE. It is further held that the TPO can only examine the ALP of the services availed by the assessee and non-availing of services can not be the reason for rejecting the claim. It is also held that reducing the ALP on the ground that the assessee has availed only few services out of bundle of services in the umbrella agreement is not sustainable.

  We find force in the argument of Ld. AR that the issue of payment of management fee does not require separate benchmarking and the comparable under TNMM method based on the overall profit margin of the entity level has been accepted and no adjustment was required on that count, therefore, the question of CUP method over TNMM by TPO pales into insignificance.

  As per section 92C(i) of the Act, the arm’s length price in relation to international transaction shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction. The Six methods included CUP method as well as TNMM method. In the present case, the assessee in order to arrive at arm’s length price in relation to international transaction relating to the payment of management fee to the AE for the services rendered has considered the TNMM as most appropriate method.

  In the similar situation, the Jurisdictional Tribunal in for AY 2017-18 [2023 (9) TMI 1694 - ITAT MUMBAI] has approved the TNMM to arrive at ALP and the CUP method adopted by the TPO was not considered to be the most appropriate method. Assessee appeal allowed.

  Thus, we are of considered opinion that Ld. AO /Ld. TPO / Ld. DRP has committed illegality in making TP adjustment paid by the assessee to its AE on account of management fee. Assessee appeal allowed.

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• 2025 (7) TMI 175
  

  TP adjustment - Non-consideration of the exponential increase in Demurrage & Detention charges as extra-ordinary cost - AR submitted that the TPO has not considered exponential increase in demurrage and detention charges of Rs. 2.57 crores as extra-ordinary cost and hence non-operating in nature - HELD THAT:- The demurrage charges paid in earlier years for a turnover of Rs. 19 to 36 crores was Rs. 1.5 lakhs to Rs. 4.05 lakhs only. During the year under consideration the demurrage charges paid were to the tune of Rs. 2.57 Crores. Considering the demurrage charges OP/OC would be 1.35% which would be within the tolerance limit of ALP of 1.78%. These facts are not in dispute.

  As relying of Transwitch India (P.) Ltd [2012 (5) TMI 314 - ITAT DELHI] we hold that the demurrage charges being an extra ordinary cost shall be treated as non-operating in nature. Appeal of the assessee on this ground is allowed.

  Interest on outstanding receivables - TPO held that the assessee has made sale to AE and has shown outstanding receivable in its financial statements but the same has not been reported in Form 3CEB. The TPO held that the assessee has also not submitted the details of outstanding receivables viz. invoice date, credit period, due date, date of receipt and interest rate etc. even after repeated reminders - HELD THAT:- On going through the entire facts specific to the instant case, we find that the transactions have been entered with the local parties for and on behalf of the AE, and also keeping in view the facts that the local parties have not been paid till date, there has been a net receivable of Rs. 10.91 Crores, and the assessee being a debt-free company, placing reliance on the judgement of M/s Inductis India Pvt. Ltd. [2023 (12) TMI 140 - DELHI HIGH COURT] we hold that no interest can be charged on notional basis.

  Appeal of the assessee on this ground is allowed.

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• 2025 (7) TMI 174
  

  TP adjustment - Corporate Guarantees provided - HELD THAT:- Considering the order for AY 2014-15, we hold that the Corporate Guarantee has to be assessed @ 0.5% and not 1.82%. Consequently, the assessee succeeds on this ground of appeal.

  Downward adjustment of purchase of goods - no deduction u/s 80IE of the Act has been claimed by the assessee - HELD THAT:- As seen that, prima facie, no claim u/s 80IE of the Act has been tendered by the assessee and hence there should be no downward adjustment regarding the same. We find no fault with the directions given by the Ld. DRP. We merely reiterate the same for the AO to follow. Accordingly, AO will verify the facts from the record and in case no claim u/s 80IE of the Act has been tendered, there will be no downward adjustment. With these directions this ground is allowed for statistical purposes.

  Disallowance of Employees Contributions u/s 36(1)(va) r.w.s. 2(24)(x) -HELD THAT:- We find that this issue has to be decided against the assessee following the judgment in the case of Checkmate Services Pvt. Ltd. [2022 (10) TMI 617 - SUPREME COURT (LB)]. Accordingly, this ground is dismissed.

  Disallowance of Club Expense u/s 37 - as argued membership of clubs is beneficial to the business of any person and hence the same deserves to be allowed - HELD THAT:- We find no fault in principle with these directions and consequently direct the Ld. AO to verify the expenses and allow all expenses which are billed to the assessee company. The assessee would do well to present the requisite details before the Ld. AO in this regard. Accordingly, this ground is allowed for statistical purposes.

  Disallowance of excess remuneration paid to Managing Director - HELD THAT:- We find that the DRP’s directions have been mis-construed by the Ld. AO as he was to simply confine himself to the language of the said directions. Thus, we direct that the Ld. AO would confine himself to the claim of the assessee with respect to the treatment meted out to the impugned amount in the computation of income and the audited accounts. In case, the claim of the assessee is verified from these then there can be no addition on this account. In result, this ground of the assessee is allowed for statistical purposes.

  Double taxation of excess remuneration paid to Managing Director in the AY 2015-16 - HELD THAT:- As DRP’s order there is a clear direction that the fact of recovery as reflected in Notes 43(e)(i) to the audited accounts should be verified and in case the recovery is reflected in the said audited accounts then there can be no addition. Here also we find that the Ld. AO has travelled beyond the mandate given to him as per para 7.4 at page 13 of the Ld. DRP’s order. However, to make issues clear, we direct that in case the said recovery is reflected in the audited accounts then the assessee would get relief with respect to the impugned amount as per the ground of appeal. The Ld. AO is directed accordingly. In result, this ground is allowed for statistical purposes.

  Disallowance u/s 14A - HELD THAT:- Provisions of section 14A read with Rule 8D would apply in principle to the facts in this case. However, we are conscious of the fact that the exempt income is only to the tune of Rs. 33,59,625/- and in that respect any disallowance u/s 14A of the Act cannot be more than the actual exempt income earned. Thus, following the case of TV Today Network Ltd. [2022 (8) TMI 361 - DELHI HIGH COURT] hold that the disallowance u/s 14A, read with Rule 8D, cannot be more than Rs. 33,59,625/-. Also, this disallowance would take into consideration, the amount that has already been disallowed by the assessee amounting to Rs. 20,28,109/-. We direct the Ld. AO to compute the disallowance accordingly. In light of this discussion, these grounds of the assessee are partly allowed.

  MAT computation on disallowance u/s 14A - HELD THAT:- Considering the finding given in the case of Birla Corporation Ltd [2024 (12) TMI 1591 - ITAT KOLKATA] we hold that this issue needs to be decided in favour of the assessee and against the revenue.

  Disallowance of allowing credit of TDS and TCS - HELD THAT:- We allow credit of taxes collected or deducted at source which should be available in Form 26AS etc.

  Not granting relief u/s 90/90A - HELD THAT:- Benefit of relief u/s 90 of the Act is allowable to the assessee and should be granted by the Ld. AO, as claimed by the assessee, at the time of giving effect to this appellate order. In result, this ground of appeal of the assessee is allowed.

  Computation of proportionate profit/loss on purchase of green leaves -We direct the AO to compute the loss/profit accurately and adopt the figures arising after appeal effect is given to this adjudication order. In result, this ground of the assessee is allowed for statistical purposes.

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• 2025 (7) TMI 173
  

  Validity of assessment u/s 153A - mechanical approval given by Addl CIT u/s 153D - consolidated approval covering multiple assessees - DR stated that merely because the approvals were granted by one letter does not mean that it was not granted for each assessment year - HELD THAT:- We find that if a consolidated approval given by the Learned Addl. CIT for various assessee’s” for various assessment years is to be considered as an approval given for “each assessment year”, then it would render the requirement of passing an order for “each assessment year” with prior approval under section 153D of the Act, nugatory. Therefore, the obligation on the approving authority is to verify the draft assessment order of each assessment year together with the related seized document to ascertain whether it complies with law as well as the procedure laid down. Hence it is established that the action of the Learned Additional CIT in granting common approval for all the assessment years for various assessee’s” in a mechanical manner without application of mind is writ large.

  No hesitation in holding that the approval under section 153D of the Act has not been granted for each of the assessment year which is in violation of provisions of Section 153D of the Act itself thereby making the approval being granted in a mechanical manner without due application of mind. Assessee appeal allowed.

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• 2025 (7) TMI 172
  

  Unaccounted income received from a contractor - whether corroborative evidence found and/or seized from the possession of the appellant during search operation on the same day? - HELD THAT:-The facts of the case of the assessee are similar to the case of Rajeshwar Singh Yadav [2023 (9) TMI 201 - ITAT DELHI] who was also allegedly receiving money from Ajay Kumar, contractor as he was also employed as Executive Engineer of the Irrigation and Water Department of the Government of UP like the present assessee.

  Thus, there being no substantial difference in the facts and not entering into the discussion on appreciation on first principles, as there is nothing substantial material to differentiate with the case of the assessee, therefore, the additions made on that account deserves to be deleted in both the years and corresponding grounds are sustained.

  Unexplained jewelry - as submitted that daughter of the assessee was engaged on 10.06.2017 and some gold ornaments were offered by her in laws that are also included while search was conducted on 16.06.2017 - her prospective groom was working in Paris since 2014 and belonged to a well to do family. Thus, at the time of engagement of his daughter, the assessee had received contribution and ceremonial gifts from friends and relatives - HELD THAT:- Statement made by Smt. Pushpa Sharma, wife of assessee, showing ignorance with regard to the jewellery of Shweta Sharma was out of stress as Smt. Pushpa Sharma was at home at the time of search and the assessee was not at home and may be it slipped the attention. The ld.CIT(A), however, declined to take into account the statement recorded on 01.08.2017 i.e., 45 days after the date of search. We are of the considered view that there was no justification with the Revenue to make an addition on account of 76.064 gms of Rs. 2,76,101/- when out of total 1651.046 gms remaining jewellery is found to be duly explained and justified from the sources of the assessee who is a public servant. It is unreasonable to expect an explanation to the precision with so many family members being given the benefit of their respective holdings as per the CBDT Instruction No.1916 of 1994. A mathematical approach for making an addition of 76.064 is not prudent so as to be sustained. Thus, we are inclined to sustain the explanation given by the assessee.

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• 2025 (7) TMI 171
  

  Assessment u/s 153A - Deficiency in approval by non-application of mind while granting approval u/s 153D - HELD THAT:-Admittedly, the draft assessment order was forwarded to the competent authority by letter dated 30.12.2019 mentioning that it is part of the Nagpal group of cases. Similarly, by another letter dated 30.12.2019 in case of 28 assessee’s covered under search on Nagpal group for various assessment years, the approval u/s 153D of the Act was sought.

  Of them, in cases of Anu Nagpal [2025 (5) TMI 1782 - ITAT DELHI], Prateek Nagpal [2025 (1) TMI 651 - ITAT DELHI], M/s Shiv Vani Buildcon Pvt. Ltd. [2025 (7) TMI 114 - ITAT DELHI] and Shri Hari Kishan Rathi [2025 (4) TMI 1657 - ITAT DELHI] the coordinate Benches have taken into consideration the same set of approval and held that on such consolidated approval for various assessment years in regard to various assessee’s, without reflecting in the approval that assessment records were examined in regard to the each assessee, the approvals were granted and the approval were not found to be in accordance with the law and the assessments have been quashed. Assessee appeal allowed.

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