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Income Tax - Case Laws
Showing 1 to 20 of 163634 Records
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2024 (5) TMI 57
Validity of reopening of assessment against the ex-promoters - notice u/s 148 against petitioner company after the approval of the resolution plan for a period prior to closing - liability of previous management - HELD THAT:- As we find all these petitions will be covered by the judgment of this Court in Alok Industries Limited [2024 (3) TMI 1083 - BOMBAY HIGH COURT] wherein held that Section 148 read with Section 147 of the Act only deals with a situation where any income chargeable to tax has escaped assessment for any assessment year. We are unable to fathom as to how the provisions of Section 148 of the Act can be applied for collection of evidences of third party, ex-promoters etc., and we say this because there are separate provisions under Section 133(6) of the Act in which, such evidences can be collected. We are also unable to understand how the provisions of Section 148 of the Act can be used when the proceedings are not for recovery of tax. Both Petitioner and respondent agreed.
Petitioner at the same time states that Revenue’s doors should not be closed and they must be permitted to take such steps as advised against the ex-promoters because the purpose of passing the orders or issuance of notices under Sections 148A/143C/143(3)/148 of the Income Tax Act, 1961 were only to take action against the ex-promoters of Respondent-company.At the same time we make it clear that if Revenue wants to take any steps as they proposed to, it may do so in accordance with law. We express no opinion.
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2024 (5) TMI 56
Eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) - assessee is registered as a Primary Agricultural Credit Society (PACS) - HELD THAT:- The assessee/s, satisfying the primary condition of s. 2(19) of the Act defining a society, is, thus, a cooperative society, a pre-requisite for deduction u/s. 80P(1). The resolution of the dispute as to whether the assessee is therefore eligible for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) and, where so, its extent, thus rests solely on the assessee being, or not being, a co-operative bank, a term again defined under BRA, which stands adopted for the purpose of s. 80P, determining the issue.
The copy of the bye-laws, only a certified translated copy of which, in full, can be taken cognizance of and regarded as a part of the record, is not on record. As also noted by the Tribunal in it’s orders afore-referred, what value the restriction on the area for it’s members, if the assessee-society is otherwise eligible to accept deposits from non-members as well - Under the circumstances, we, for the reasons aforenoted, as also the cases referred to, set aside the orders by the Revenue authorities, and restore the matter back to the file of the AO to determine the assessee’s eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) on the basis of it being or, as the case may be, not being, a co-operative bank, i.e., on the basis of it’s bye-laws read with the Kerala Act and the BRA, as well as the quantum of the deduction there-under, which we clarify would be in full where the assessee is a cooperative bank, with it’s entire income arising from the business of banking. Assessee’s appeal is allowed for statistical purposes.
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2024 (5) TMI 55
Deduction u/s. 80P(2)(a)(i) - denial of deduction as assessee being, in substance, not a PACS inasmuch as the bulk of it’s lending is not for agriculture and allied purposes - as submitted assessee, that it is, registered as a Primary Agricultural Credit Society (PACS) under the Kerala Cooperative Societies Act, 1969 (Kerala Act), is admittedly in the business of banking - HELD THAT:- As explained therein, where and to the extent the assessee-society accepts deposits from non-members; rather, is entitled to, being permitted by it’s bye-laws, it is in the business of banking notwithstanding the area restrictions for it’s operations inasmuch as the same are applicable only qua it’s members. Rather, in such a case, being in the business of banking, even income on provision of credit to non-members would stand to be deductible u/s. 80P(2)(a)(i). The bye-laws of the assessee-society are not on record, neither stand referred to in their orders by the Revenue authorities. It is only with reference thereto would it stand to be determined as to if:
(a) the assessee is a co-operative bank; and
(b) the assessee is in the business of banking.
The matter, accordingly, is restored to the file of AO for, on a perusal of it’s bye-laws, and after affording due opportunity of hearing to the assessee, issue specific finding/s on the two aspects afore-stated, and decide accordingly, allowing or, as the case may be, disallowing – wholly or partly, the assessee’s claim for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) of the Act. We make it clear that the assessee shall be allowed deduction u/s. 80P only if it is not a cooperative bank, i.e., as per the definition provided in Explanation below s. 80P(4). Two, where it’s bye-laws permit it to accept deposit from non-members, it is by definition in the business of banking and, accordingly, entitled to deduction on it’s profit in full, as opposed to that attributable to the provision of credit to it’s members. Assessee appeal allowed.
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2024 (5) TMI 54
Deduction u/s. 80P - assessee, a cooperative society in existence since 1961, and registered under the Kerala Cooperative Societies Act, 1969 (Kerala Act) as a primary agricultural credit society (PACS) - denial of deduction even as the assessee is registered as a PACS, it is actually undertaking banking business, providing the services, with in fact only a small fraction (close to 10%) of it’s lending being to the agricultural sector, so that it is not a PACS - HELD THAT:- The assessee’s lending being admittedly not primarily for agricultural purposes, it is not a PACS by definition and, two, is a cooperative bank, i.e., a cooperative society in the business of banking, even as clarified by the Hon'ble Courts time and again, as in Mavilayi SCB Ltd. [2021 (1) TMI 488 - SUPREME COURT], THE CITIZEN CO-OPERATIVE SOCIETY LIMITED [2017 (8) TMI 536 - SUPREME COURT] AND MUHAMMED USMAN [2002 (11) TMI 686 - HIGH COURT OF KERALA]
Why, the provision itself recognizes ‘banking’ as an eligible activity for a cooperative society, entitling it to deduction of the profits derived therefrom (s. 80P(2)(a)(i)). It being not a PACS would thus not carry the Revenue’s case far. Firstly, for the reason that exemption u/s. 80P(1) r/w s. 80P(2)(a)(i) is, as afore-noted, equally applicable to income derived from the business of banking, even as that from credit to members is not confined to that for agricultural purposes only. Two, inasmuch as the tax statutes are to be strictly construed, the term ‘cooperative bank’ is it be, for the purpose of s. 80P(4), excluding cooperative banks from the benefit of s. 80P, strictly construed, i.e., as defined therein.
The assessee, per it’s Ground 4 before the first appellate authority, has made a specific claim as to it’s bye-laws permitting admission of other cooperative societies as members and, therefore, of not being a primary cooperative bank in terms of s. 56 r/w s. 5(ccv) of BRA. There is no finding by the ld. CIT(A) thereon, which clearly has a direct bearing on the assessee being, or not being, a primary cooperative bank and, thus, a cooperative bank for the purposes of s. 80P of the Act. Copy of the byelaws is not on record. Even the two pages (in English) thereof, forming part of the paper-book, to which Shri Narayanan would refer during hearing, are not by an authorized translator for us to place reliance thereon; the original, as explained, being in vernacular. The matter, accordingly, is restored to the file of the AO to examine if the assessee falls under the definition of a ‘cooperative bank’ under BRA, construed strictly, which definition stands adopted for the purpose of s. 80P(4) of the Act, i.e., whether as a primary cooperative bank or district/state cooperative bank.
As afore-noted, it being in the business of banking or not a PACS is not detrimental to it’s claim u/s. 80P(1) r/w s. 80P(2)(i)(a). The AO shall, upon hearing the assessee and examining such material as it may adduce in substantiation of it’s claim/s, and causing such verification as he may deem fit, issue a definite finding as to if it is, or is not, a cooperative bank as defined under BRA, determining it’s entitlement to exemption u/s. 80P(1) r/w s.80P(2)(a)(i) accordingly. We make it further clear that despite being not a PACS under the Act, it is yet a cooperative society under the Kerala Act, satisfying thus the requirement of s. 2(19) of the Act, which only is relevant for claiming deduction u/s. 80P(1) - Assessee’s appeals allowed for statistical purposes.
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2024 (5) TMI 53
Estimation of income - bogus purchases - HELD THAT:- As held in case of Mohmd. Haji Adam & company (s2019 (2) TMI 1632 - BOMBAY HIGH COURT] where sales are not disputed, no discrepancy between purchases shown by the assessee and the sales declared; only the addition should be restricted to the extent of bringing the gross profit on purchases at the same rate of other genuine purchases.
On this mandate, it was found that assessee has given the quantitative sales corresponding to the quantitative purchase, which is from alleged bogus suppliers. The resultant gross profit from alleged bogus purchase and sales is 5.096%. The gross profit ratio without alleged bogus purchase and corresponding sales is 5.407%, which will result into addition of 0.3% of alleged bogus purchases of ₹1,15,86,557/-which would be minuscule. Looking at the minuscule amount of addition to be retained, we find it a reasonable and just to delete the addition and allow appeal of the assessee.
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2024 (5) TMI 35
Delay in filling appeal before SC - Claim of long-term capital gains on shares in terms of Section 10(38) - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings but turned around and make such claim of wanting to cross-examine persons - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers
HELD THAT:- There is gross delay of 309 days in filing the special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any.
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2024 (5) TMI 34
Stay of demand - disposal of the first appeal subject to the condition that the petitioner pays 20% of the disputed tax demand - whether grant of stay is in exercise of discretionary jurisdiction? - HELD THAT:- Appellate authority did not examine whether the petitioner has made out a prima facie case. The petitioner asserted in the request letter that it has limited resources and would not be able to provide services to the public if directed to make the pre deposit. Although this does not qualify as evidence of financial stringency, this aspect warranted consideration. It should also be noticed that office memorandum dated 31.07.2016 (Instruction No.1914) does not make it mandatory that the assessee should remit 20% of the disputed tax demand.
Solely for the purpose of enabling a reconsideration of the stay application by applying the classical principles of prima facie case, balance of convenience and irreparable hardship, including financial stringency, the impugned order calls for interference.
The impugned order is set aside and the stay application is remanded for reconsideration by the appellate authority / first respondent in accordance with the observations set out herein. First respondent may exercise its discretion in accordance with law. In relation to the consideration of the stay application, it is open to the petitioner to file an additional affidavit and supporting documents.
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2024 (5) TMI 33
Revision u/s 263 - scrutiny assessment was completed on the return of income filed - petitioner had an alternate remedy before the appellate Tribunal u/s 253(1)(c) of the Income Tax Act - HELD THAT:- A survey was conducted under Section 133A of the Income Tax Act, 1961 on 14.03.2017. The petitioner had declared sum under Pradhan Mantri Garib Kalyan Yojana Scheme [PMGKYS] 2016.
It is thereafter, the petitioner filed return on 03.11.2017 declaring a total loss which culminated in the scrutiny assessment order dated 30.12.2019 under Section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2017-2018. It is, in this background, the show cause notice was issued under Section 263 of the Income Tax Act, 1961.
The scrutiny assessment order passed under Section 143(3) of the Income Tax Act, 1961, cannot be confused with the impugned order pursuant to invocation of power under Section 263 of the Income Tax Act, 1961. Therefore, there is no merit in this Writ Petition.
Further, the issue involves disputed question of facts, liberty is given to the petitioner to file a statutory appeal before the Appellate Tribunal u/s 253(1)(c) of the Income Tax Act, 1961, within a period of 45 days from the date of receipt of a copy of this order. The petitioner is also at liberty to move suitable appeal under the same proviso against the assessment order passed u/s 144 r/w section 263 and144B of the Income Tax Act, 1961, within such time. The petitioner is also at liberty to move suitable application for staying the operation of the impugned order as also the assessment order passed on 24.03.2023 under Section 144 read with Section 263 read with Section 144B of the Income Tax Act, 1961, along with the proposed appeal.
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2024 (5) TMI 32
Addition u/s 69A r.w.s. 115BBE - assessee failed to establish that the cash deposited during demonetisation period - non rejection of books of accounts - assessee explained that assessee was engaged in one of the businesses of running of a petrol pump which was the main source of cash sales that were deposited in the bank from time to time throughout the year - HELD THAT:- It is a matter of fact that the all figures were taken from the table on the basis of statement of profit and loss by the assessee. The statements were duly verified by independent auditors report.
Hon’ble Supreme Court in the case of Lalchand Bhagat Ambica Ram [1959 (5) TMI 12 - SUPREME COURT] has held that when entries in books of account in regard to cash balances were held to be genuine, there was no escape from conclusion that assessee had offered reasonable explanation as to source of all high denomination notes which it encashed on 19th January 1946 and it was not open to ITAT to accept genuineness of those books and accept assessee’s explanation in part and reject same in regard to balance sum. It was observed that the ITAT in arriving its conclusion indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of facts which could not reasonably be entertained or finding was perverse which could not be sustained and Supreme Court was entitled to interfere with such findings and therefore the addition was deleted.
Thus from perusal of above material fact especially treating the cash deposit as unexplained cash on basis of books of account without rejecting the same is legally not permissible as per ratio of judgment in Lalchand Bhagat Ambica Ram’s case (supra) - Appeal of assessee allowed.
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2024 (5) TMI 31
Levy of penalty u/s 271C - period of limitation - proper meaning for the expression ‘expiry of 6 months' - Failure to deduct TDS - Whether 6 months expiry should be reckoned from the date of which reference was made by AO who passed the quantum assessment order to ld. JCIT (TDS) or the date on which JCIT (TDS) issued notice to the assessee for the first time - whether the penalty order passed u/s 271C by the ld. JCIT would be barred by limitation as per section 275(1)(c)? - HELD THAT:- We find that this dispute has been directly addressed in JKD CAPITAL & FINLEASE LTD. [2015 (10) TMI 1281 - DELHI HIGH COURT] wherein held Additional CIT ought to have been conscious of the limitation u/s 275 (1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c).
Thus it could be safely concluded that the penalty order framed by the ld. JCIT(TDS) on 25.02.2016 is squarely barred by limitation and hence penalty is required to be deleted. Appeal of the assessee is allowed.
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2024 (5) TMI 30
Validity of reopening of assessment u/s 147 - no notice u/s 143(2) of the Act was issued by the AO for taking case under scrutiny - HELD THAT:- We find that the Hon’ble Delhi High Court in the case of Pr. CIT v. M/s Paramount Biotech Industries Ltd. [2017 (11) TMI 127 - DELHI HIGH COURT] held that even in the reassessment proceedings issue of notice u/s 143(2) of the Act is mandatory.
The proposal to reopen an assessment under Section 147 of the Act is to be based on reasons to be recorded by the AO. Such reasons have to be communicated to the Assessee. However, merely because the Assessee participates in the proceedings pursuant to such notice under Section 148 of the Act, it does not obviate the mandatory requirement of the AO having to issue to the Assessee a notice under Section 143(2) of the Act before finalising the order of the reassessment. Hon’ble High Court has also considered the decision of Hotel Bluemoon [2010 (2) TMI 1 - SUPREME COURT] - thus there being a jurisdictional defect in completing, the reassessment proceedings hence same are held to be invalid. The reassessment proceedings u/s 147 hereby quashed. Decided in favour of assessee.
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2024 (5) TMI 29
Foreign Tax Credit u/s. 90 - denial of taxes paid by the assessee outside India merely on the ground that the assessee did not file Form 67 at the time of filing of her return of income - directory/procedural or mandatory default - HELD THAT:- Revenue would hardly dispute the clinching fact that the assessee had indeed submitted the Form 67 before the CPC’s processing dated 09.01.2023 i.e. on 05.02.2021. This being the clinching fact herein, it is of the considered opinion that both the learned lower authorities could not have rejected the assessee’s impugned Foreign Tax Credit claim for the above stated sole ground.
Case law Duraiswamy Kumaraswamy [2023 (11) TMI 1000 - MADRAS HIGH COURT] had already settled the issue that Rule 128 of the Income Tax Rules prescribing Form 67 hereinabove, is directory and not mandatory in nature. Faced with this situation, hereby accept the assessee’s instant sole substantive grievance in principle and direct the CPC, Bangalore to finalize assessee’s afresh computation in above terms as per law. Assessee appeal allowed.
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2024 (5) TMI 28
Exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - interest income earned by a cooperative society from the scheduled banks - appellant is a cooperative society engaged in the business of providing credit facilities as it does not enjoy any license to carry on the business of banking from Reserve Bank of India - HELD THAT:- Referring to various contradictory judgments as following the case of Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit [2018 (12) TMI 1926 - ITAT PUNE] taken view in favour of the assessee following the judgment of Tumkur Merchants Souharda Credit Cooperative Ltd [2015 (2) TMI 995 - KARNATAKA HIGH COURT].the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) and section 80P(2)(d) of the Act. Decided in favour of assessee.
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2024 (5) TMI 27
Addition u/s 69A - cash deposited from alleged unexplained sources - Whether cash deposited is duly explained from the cash withdrawals made by assessee and her husband? - assessee did not explain the reasons for withdrawal of cash from his bank account, cannot be the basis to hold that the source of deposit of cash was not explained by the assessee - HELD THAT:- Appellant has shown cash deposited was out of cash in hand available which was withdrawn by the assessee and her late husband during the year 2019-20 to 2021-22 - reference is made to date wise withdrawal of money by the assessee and her husband. The date wise cash withdrawals from the bank by assessee and her husband was held to be not justifiable by holding that cash withdrawals must have been used for incurring personal expenses. The deposit of cash on multiple occasions and no evidence was furnished that the same cash was deposited in assessment year 2021-22. The assessee had not given any plausible explanation in respect of transactions.
As evident that cash withdrawals by the assessee and her husband from assessment years 2018-19 to 2021-22 are not disputed by the AO and CIT(A). Once the cash withdrawals are in excess of the cash deposits, then it is amply clear that the cash deposits in the bank account were out of the available sources of the assessee. The burden lies on the revenue to bring material on record to suggest that the money withdrawn by the assessee was utilized elsewhere for personal purposes or the money so withdrawn was not available with the assessee as per the mandate of CIT vs. Kulwant Rai [2007 (2) TMI 185 - DELHI HIGH COURT] well settled principle of law the passing of impugned orders is not just fair and reasonable and deserved to be set aside. Appeal of assessee allowed.
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2024 (5) TMI 26
Revision u/s 263 - source of cash found in the course of search remains unexplained and additions u/s 69A r.w. Section 115BBE - CIT proceeded on the premise that AO has also failed to make cogent inquiries with reference to investments in jewellery found in the course of search in terms of Sections 69 / 69A r.w. Section 115BBE - HELD THAT:- Source of cash available, we take note of the contentions raised on behalf of the assessee that an opportunity of barely three working days in aggregate has been given to assessee to defend the allegations. Despite such extremely short time made available, assessee has attempted to comply with the show cause notice in the best possible manner and has pointed out that search team itself was prima facie satisfied with the source of cash available in the course of search and did not choose to seize the cash.
The source of cash was shown to be arising from the earlier balances as well as some accumulation thereafter to the satisfaction of the AO. A specific inquiry was directed by the AO and the source was found to be satisfactory. While seeking to dislodge the action of AO, no inquiries were made by the CIT in the course of revisional proceedings.
CIT without giving any effective opportunity, has decided the issue against the assessee with a degree of finality disregarding the vital facts such as opening balances available in the F.Y. 2016-17 to the tune which was admitted and accepted as closing balance of cash in the preceding A.Y. 2016-17 and also has attained finality. CIT has adjudicated the issue against the assessee without giving any allowance for any cash in hand which, a common person would ordinarily possess having regard to the construct of the Indian society.
An amount of Rs. 10 lakh cannot be stated to be highly implausible having regard to the postulations which define Indian socio-eco structure. Business model of the assessee and need of cash for running business was also disregarded by the CIT.
We find substantial merits in the ardent defense raised on behalf of the assessee on both counts. Assessee has demonstrated the existence of cash in hand. The relevant facts were placed before the AO which suggests the view taken by the AO in its quasi judicial capacity to be plausible while framing the assessment.
Assessee has not declared any cash in hand in its return of income filed prior to search since it was not compulsory for the assessee to do so owing to presumptive taxation scheme availed by the assessee. The cash in hand was however declared for different assessment years in the return filed u/s 153A.
Pursuant to search, the opening cash in hand for F.Y. 2016-17 declared has been accepted by the Revenue and has attained finality in the absence of any pending proceedings. This itself gives rise to a somewhat plausible explanation towards cash found - revisional action has been taken at a ferocious speed and in unprecedented hurry apparently to meet the limitation period denying any opportunity to the assessee to objectively explain the factual position to the CIT. CIT has merely rejected the plea of the assessee with preconceived notions and without countering the assessee in any manner.
When the facts are collated, the view taken by the AO cannot be branded as without any enquiry. The direction of the CIT to make additions on account of cash found in the course of search with aid on the contour of Section 69A r.w.s. 115BBE without effective opportunity, thus cannot be countenanced in law. Such directions are thus required to be set aside and the action of the AO is required to be restored.
Directions of the Pr.CIT setting aside the assessment order to make inquiry on source of jewellery is clearly marred by total lack of opportunity and is in contravention of the statutory enactment codified u/s 263 of the Act. A revisional directions given without any opportunity to assessee is a complete non starter.
The impugned revisional order passed u/s 263 is thus set aside and quashed. Assessee appeal allowed.
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2024 (5) TMI 25
Addition u/s 69A r.w.s. 115BBE - assessee deposited cash during demonetization period - AO rejected the claim of the assessee and held that there were no cash sales since the assessee failed to disclose the identity of the persons to whom cash sales were made on 08.11.2016 - assessee submitted that due to announcement of demonetization by GOI, there was huge demand for investment in gold and due to rush, the assessee failed to collect the identity of the person to whom sales were made - HELD THAT:- When the sale has been reflected in the books of accounts and offered to tax, adding the same again would amount to double taxation which is impermissible in law. The cash sales proceeds have been credited in the books of accounts and the same form part of assessee’s cash book. On these facts, it could very well be said that the assessee’s claim was backed up by sufficient documentary evidences.
The allegation of AO is that such abnormal sales could not be achieved by the assessee immediately upon announcement of demonetization by the Government. However, such allegations are bereft of any concrete evidence on record. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises.
In the present case, the assessee has duly discharged the burden of establishing the source of cash deposit and the onus was on Ld. AO to disprove the same. However, except for mere allegation and few statistics, there is nothing on record to support the conclusions drawn by Ld. AO that the cash deposited by the assessee was her unaccounted money. There is no finding by Ld. AO that any particular sales affected by the assessee exceeded threshold limit which cast an additional obligation on the assessee to obtain requisite particulars from the customers. Since cash generated out of sales has been credited in the books of accounts, the provisions of Sec.69A could not be invoked in the present case. Therefore, on the given facts, the impugned additions are not sustainable.
Interest disallowance - assessee has advanced loan to her son only at the fag-end of this year. In fact, initially the assessee has obtained interest free funds from her son. Subsequently, she has repaid the loan in excess leaving closing balance of Rs. 70.15 Lacs. Further, the fact that the assessee has sufficient capital balance has also not been disputed by lower authorities. No nexus of borrowed funds vis-à-vis loans granted by the assessee has been established by Ld. AO. Therefore, considering all these facts, the interest disallowance is not justified. We delete the same.
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2024 (5) TMI 24
Estimation of income - Bogus purchases under the head ‘fuel/diesel’ purchased from three parties - CIT(A) sustained the disallowance to the extent of 10% of total purchase from three parties - HELD THAT:- There is no rational behind restricting disallowance to 10% when the complete list of bills and delivery location along with vehicle numbers used for supplying goods/materials were provided to the AO during the assessment proceedings. In our opinion, the CIT(A) is not justified in sustaining 10% diesel/fuel expenses as bogus merely for the reason that 10% disallowance has been made in respect of bogus purchases by the Assessing officer.
In the case of PCIT Mumbai v. JK Surface Coatings Pvt. Ltd. [2021 (10) TMI 1323 - BOMBAY HIGH COURT] relied upon by the ld CIT(A), the bogus purchases were undisputedly confirmed and only issue was of the percentage of disallowance. In said case delivery of material was not established whereas in the instant case the AO has neither doubted delivery nor doubted consumption of the diesel and therefore, sustaining ad-hoc disallowance, merely on the basis of the presumption, cannot be upheld and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and delete the addition sustained by him. Decided in favour of assessee.
Disallowance on account of alleged bogus tyre purchase bills - disallowance of 10% of expenses out of expenses on purchase of tyres shown from M/s Om Shree Siddhivinayak tyres during year under consideration - HELD THAT:- In view of the observations during the course of the survey, the director of the assessee company Shri Satish Mandhania admitted fact of the bogus purchase. The cashier of the assessee company also stated of receipt of cash back from M/s Om Shree Siddhivinayak tyres. In view of those statements coupled with failure on the part of the assessee in providing complete details of delivery challans of the bills in respect of M/s Om Shree Siddhivinayak tyres, the Assessing Officer held 10% of the purchases as bogus and accordingly disallowed. The assessee also failed to produce details of delivery challans in respect of purchase bills where tyre numbers and size were not mentioned in the invoices before the ld CIT(A).
Before us, also no such details to support that goods were actually delivered in respect of bills where tyre numbers and sizes were not mentioned. In absence of any such supporting documents, the statements get corroborated that part of the purchases from M/s Om Shree Siddhivinayak tyres are in the nature of bogus. In absence of complete details provided, the AO is justified in making estimated disallowance @ 10% of total expenses on tyre purchase. Accordingly, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground No. 2 of the appeal of the assessee.
Disallowance for unsubstantiated expenses - HELD THAT:- We find that the sufficient documentary evidences have been produced by the assessee in respect of rent paid for RMC plant and labour supply at Pune before the lower authorities. In our opinion, once the CIT(A) is satisfied with the documentary evidences maintained in respect of those expenses, particularly when he himself mentioned that no lacuna or defect has been found in documents filed during assessment proceedings, then he is not justified in sustaining disallowance to the extent of 10% of the expenses for the reason that those parties did not respond to the notice u/s 133(6) of the Act.
It is not the case that those parties have not been found that their address because, the notice issued u/s 133(6) of the Act has not been claimed to be returned unserved. Once, notice were served it was the duty of the AO to enforce their attendance or carry out inquiry by sending Inspector at their site. In absence of any such evidence of non-existence of those parties, the action of the Ld. CIT(A) in sustaining addition @ 10% of the total expenses purely on ad-hoc basis is not justified. The finding of the Ld. CIT(A) on the issue in dispute is accordingly set aside.
Addition for the share application money u/s 68 - HELD THAT:- Assessee has submitted during the appellate proceedings that said company has been stricken off by the Registrar of Companies (ROC) ,therefore, no reply was received. CIT(A) is justified in accepting this explanation of the assessee and therefore, no adverse view could be taken on this account. Secondly, CIT(A) has further rejected the argument of the Assessing Officer in the original assessment order that director of the assessee was a non-filer.
In our opinion the status of the director of company as non-filer is not relevant while deciding the identity, creditworthiness and genuineness of the transaction of a company. Thirdly, the AO in assessment order mentioned that cash deposits were made in bank account of said party, however, the ld CIT(A) has pointed out that not a single instance has been brought on record by the AO. Before us also no such instance has been brought by the ld Departmental Representative. In our opinion, once the AO in the remand report has accepted the identity and creditworthiness of the share subscriber and genuineness of the transaction, then, filing of further appeal before the Tribunal on the said issue, is not justified. Ground of appeal of the Revenue dismissed.
Addition of share application money received from one party - CIT(A) deleted addition - AO has doubted the creditworthiness of M/s Kasturi only for the reason source of money in the hands of said party was share application money from other 13 companies, whose credential were not verified - HELD THAT:- The assessee has already filed a copy of ITR and other document in respect of said party. The identity of M/s Kasturi has not been doubted by the AO. Regarding creditworthiness, the ld CIT(A) observed that the Assessing officer has not mentioned as what happened in the assessment in the case of Kasturi and those 13 parties, which had been termed as shell companies by the investigation wing of Kolkatta. The ld CIT(A) opined that if source of money is not explained in their hand, then addition warrants in their case and not in the case of assessee. We are of opinion that if addition has been already made in the case of Kasturi, then no further addition is required in the case of the assessee. In view of above, in principle we do not find any error in the order of the Ld. CIT(A) on the issue in dispute but for verification of the fact addition in respect of source of money has been already done in assessment of Kasturi, we restore the matter back to the AO - Revenue ground allowed for statistical purpose.
Disallowance of depreciation on unaccounted sales of old vehicles - As per AO assessee company had unaccounted sales of vehicles - CIT(A) deleted addition - HELD THAT:- We find that only evidence of unaccounted sale of old vehicles has been found in respect of assessment year 2018-19 and no documentary evidences have been found for the year under consideration. The Assessing Officer has merely extrapolated such unaccounted sale on the basis of presumption that assessee would have earned unaccounted cash on the sale of old vehicle during the year under consideration. The Ld. CIT(A) has rejected this contention of the Assessing Officer and deleted the addition made merely on the basis of the extrapolation of the figures of the subsequent year. In our opinion, finding of the Ld. CIT(A) on the issue in dispute is well reasoned and no interference is required on our part. Decided against revenue.
Bogus loan u/s 68 - deposit received from two parties unexplained - CIT(A) deleted addition - HELD THAT:- We find that the sums of money received from those parties against the sales have not been doubted by the AO and therefore, we do not find any reason for specifying the sum received from those two parties against the deposits for the distribution agreement as unexplained cash credit. Both the parties have filed all the documents to support the identity, creditworthiness and genuineness of the transaction. Further, in respect of statement by the director of the respective parties the Ld. CIT(A) has recommended for taking action of reassessment in their hand. In our opinion there is no infirmity in the finding of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same - Decided against revenue.
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2024 (5) TMI 23
New scheme for Tax on income of individuals and Hindu undivided family u/s 115BAC - Assessee had not filed Form 10-IE for opting the new tax regime within the stipulated time - denial of benefit of new scheme as assessee has not filed the return of income within the time period allowed for filling the return of income - whether the other deduction as per the old scheme is allowable to the assessee or not? - standard deduction not allowed which is available under the old tax regime.
HELD THAT:- As per provision of section 115BAC so as to understand the allowability of deduction on the return of income filed after the due date prescribed, in this case since, the assessee has not filed the return of income as per the due date prescribed, then as per the proviso given in the above section the assessee is not eligible to get the benefit of the new scheme. Thus, as per the proviso of the aforesaid section the option the option shall become invalid in respect of the assessment year relevant to that previous year under consideration and other provisions of this Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year.
Since the assessee in this case though filed the return after the due date which was not processed under the new tax regime but the said return is required to be proceeds as per the old provision of the Act and after considering the provision of section 80AC - Since, the standard deduction, deduction u/s 80C and 80TTA is required to be tested as per the evidence that the assessee is supposed to produced. Since the assessee was not provided an opportunity of being heard before processing the return of income, we feel it in the interest of the natural justice that the assessee shall provide the details connected to the claim before the ld. AO on merits a fresh in the interest of equity and natural justice. Thus we hold to remand the matter back the matter to the file of the AO who will decide the issue based on evidence and submission of the assessee. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (4) TMI 1122
Reopening of assessment - validity of order passed u/s 148A(d) - Second round of litigation - non independent application of AO's mind to the information furnished by the DDIT - As decided by HC [2023 (2) TMI 1119 - CALCUTTA HIGH COURT] only conclusion that can be arrived at is to hold that the reopening of the assessment was bad as it was based on certain alleged “potential” cash borrowings and certain alleged “possible” financial transactions - AO did not independently apply its mind to the information furnished by the DDIT which he is required to do while exercising the power to reopen an assessment - entire reopening proceedings commencing from issuance of the notice u/s 148A(b) and culminating in the order u/s 148A(d) is a clear abuse of the process of law.
HELD THAT:- There is a gross delay of 399 days in filing this special leave petition. The explanation given for condonation of the delay is not satisfactory or sufficient in law to condone the same.
Hence, the application seeking condonation of delay is dismissed. Special leave petition also stands dismissed.
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2024 (4) TMI 1121
Legality of revision of order of Tribunal u/s 254 on ground of retrospective overruling - Penalty imposed u/s 271(1) if returned income is a loss - Revenue contended that order of Tribunal had been based entirely on the decision of the Supreme Court decision and the latter decision had been subsequently overruled by a larger Bench of the Supreme Court, thus there was a mistake apparent on the face of the record -
As decided by HC [2012 (6) TMI 39 - DELHI HIGH COURT] decision larger Bench of the Supreme Court has to be regarded as the law as it existed when the order was passed by Tribunal, there is a clear mistake apparent from the record. Only limitation for correcting the mistake is that imposed by the provisions of Section 254(2) itself and that is only with respect to time.
HELD THAT:- In continuation of the order M/S. LAKSHMI SUGAR MILLS CO. LTD. & ANR. VERSUS COMMR. OF I.T. CIRCLE 4 (1) & ANR. [2024 (4) TMI 1083 - SC ORDER] it is fairly stated by petitioners that the order DCIT, CIRCLE 4 (1) , NEW DELHI VERSUS M/S. LAKSHMI SUGAR MILLS CO. LTD. [2009 (4) TMI 1064 - ITAT DELHI] passed by Tribunal has not been challenged by the petitioners as it was not in their knowledge as the same was an ex-parte order, the petitioners will join the proceedings, and that they may be permitted to raise all the contentions before the Prescribed Authority. Special Leave Petition is disposed of with liberty to the petitioners to raise all the legal and factual contentions before the Prescribed Authority to whom the matter has been remitted by the Tribunal.
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