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Income Tax - Case Laws
Showing 81 to 100 of 175845 Records
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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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2025 (7) TMI 170
Assessment u/s 153A - Addition u/s 68 - deposits/credits made in the bank account of the assessee unexplained - Incriminating material found during the search/requisition or not? - HELD THAT:- AO made the addition in respect of the total credits of the amounts in the bank account of the assessee and no addition was made in the hand of the assessee based on any incriminating material found or seized during the course of requisition u/s 132A. The addition made by the AO while framing the assessment u/s 153A for the unabated A.Ys in the absence of any incriminating material are not sustainable in law as held in the case of Pr. CIT vs. Abhisar Buildwell (P) Ltd [2023 (4) TMI 1056 - SUPREME COURT]
Thus, as per the 2nd proviso to section 153A of the Act, only pending assessments or re-assessments shall stand abated and the Assessing Officer would assume the jurisdiction in respect of such abated assessment to assess the income based on the material available with the AO.
In case no incriminating material is found during the course of search u/s 132 or requisition u/s 132A of the Act, no addition can be made by the Assessing Officer in respect of the completed assessments/unabated assessments. Accordingly, in view of the judgment of the Abhisar Buildwell (P) Ltd [2023 (4) TMI 1056 - SUPREME COURT], the addition made by the Assessing Officer for the A.Ys 2017-18 and 2018-19 in the absence of any incriminating material are not sustainable in law and liable to be deleted.
Addition u/s 68 - HELD THAT:- It is pertinent to note that this Tribunal while remanding the matter [2023 (3) TMI 1580 - ITAT HYDERABAD] has taken note of the fact that due to the assessee being in Jail/Judicial Custody, he could not receive the notices issued by the learned CIT (A) and therefore, the assessee was given further opportunity to appear before the learned CIT (A) and substantiate his case.
AR has pointed out that the assessee is still in the judicial custody and therefore, he could not avail the opportunity granted by this Tribunal to produce relevant evidence before the CIT (A). Thus, it is clear that the assessee could not produce any explanation or the source of the deposits as well as credits in the bank account of the assessee due to the reason that he was in the judicial custody.
The assessee has also taken a plea that there are substantial withdrawals from the bank account which can be considered as source of subsequent cash deposits in the bank account. All these facts are required to be verified and reexamined on the basis of the relevant record to be produced by the assessee.
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2025 (7) TMI 169
Disallowance of claim pf bad debt which ultimately form part of profits eligible for deduction u/s 80P(2)(a)(i) - HELD THAT:- AO as well as the CIT were not correct in appreciating the fact that the assessee is entitled for deduction u/s. 80P (2)(a)(i) of the Act, and hence, whatever disallowance has been made by them would ultimately increase the profit eligible for deduction u/s. 80P(2)(a)(i) of the Act, a reference can be made to the decision of Bangady Cooperative Society [2024 (7) TMI 1654 - ITAT BANGALORE] wherein deduction u/s 80P(2)(a)(i) of the Act on the income derived by the assessee from providing credit facilities to its members has been enhanced by including the sum disallowed u/s 40(a)(ia) of the Act. Appeal filed by the assessee is allowed.
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2025 (7) TMI 168
Addition u/s 69A r/w section 115BBE - cash deposits made during the demonetization period - assessee stated that the AO arbitrarily added the deposits without appreciating that the source of the fund was already in record and no contrary evidence was given on the available cash-in-hand
HELD THAT:- We find that in the present case, the assessee has sufficient cash balance of Rs. 11,30,655/- at the very beginning of the financial year 2016-17, therefore, the alleged addition of Rs. 5,00,000/- made by the Assessing Officer u/s 69 is without any basis and reasoning. We accordingly delete the addition as the assessee has duly disclosed the cash balance to make the alleged deposit during the demonetization period. Assessee appeal allowed.
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2025 (7) TMI 167
Disallowances on account of Provision for Post Closure expenses and Provision for Pit Covering expenses - CIT(A) deleted addition as they were merely provisions and the same were neither accrued nor paid during the year - HELD THAT:- Provision for Pit covering expenses is allowable as deduction. Since the Ld CIT(A) has followed the decision rendered by the Tribunal in the assessee’s own case. [2024 (6) TMI 1478 - ITAT MUMBAI] we do not find any infirmity in the order passed by him on this issue. Appeal filed by the revenue stand dismissed.
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2025 (7) TMI 140
Non admission of appeal by CIT(A) - appellant has not filed the return of income as well as not paid the said amount of advance tax - Tax on “regular assessment” - return filed by assessee was treated as invalid by CPC due to receipt of the ITR-V after due date - as per revenue provisions of section 249(4)(b) says where no return has been filed by the assessee, the assessee has to pay an amount equal to the amount of advance tax, which was payable by him; otherwise, appeal shall not be admitted.
HELD THAT:- If tax is being paid for same financial year based on estimated income, it would be advance tax. If tax is being paid after end of financial year, it would be self-assessment tax. When Department finds that there has been under-assessment of income and resultant tax is due, it computes the actual amount that ought to have been paid.
This demand raised on the person is called tax on “regular assessment”.
Tax on “regular assessment” is the tax which the taxpayer is required to pay against of notice of demand from the Income-tax Department, normally u/s 156 of the Act.
CIT(A) did not admit the appeal because the assessee had not paid an amount equal to the advance tax, which was payable by it. The ld.AR has contended that the assessee did not pay any advance tax as the income was below taxable income.
When total income is below taxable income during the year, question of payment of advance tax does not arise and provisions of Section 249(4)(b) of the Act are not applicable.
As decided in the case of Ranajitbhai B. Patel vs. ITO [2023 (11) TMI 1382 - ITAT SURAT] where following the decision of Hotel Sai Siddi (P.) Ltd [2011 (7) TMI 540 - ITAT PUNE] it was held that when the assessee had incurred loss while filing ROI and was not liable to pay tax an amount equal to amount of advance tax as required u/s 249(4)(b), the assessee’s appeal was liable to be admitted.
As assessee was claiming that it had no taxable income, the Tribunal restored the case back to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit.
Thus, we hold that the CIT(A) should have decided the issue on merits of the case. Hence, the matter is restored to the file of CIT(A) with a direction to admit the appeal of the assessee and pass an order on merit. Appeal of the assessee is allowed for statistical purposes.
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2025 (7) TMI 130
Disallowance of fictitious loss, Unexplained expenses on account of debit note, Addition u/s 68 - inordinate delay of 392 days in filing the Special Leave Petition.
HELD THAT:- Though, a letter has been submitted seeking adjournment, learned Additional Solicitor General very fairly submits that similar matter has already been dismissed by this Court in M/S N.K. INDUSTRIES LTD. [2025 (5) TMI 2061 - SC ORDER]
As there is an inordinate delay of 392 days in filing the Special Leave Petition.
That being the position, we dismiss the special Leave Petition both on the ground of limitation as well as on merits.
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2025 (7) TMI 129
Capital gains on sale of shares of its Indian subsidiary - assessee's claim to tax long-term capital gains on sale of shares at 10% u/s 112(1)(c)(iii) of the Act - assessee originally offering such gains at 20% u/s 112(1)(c)(ii) in the return of income, without the assessee filing a revised return as mandated u/s 139(5) and section 119 of the Act - retrospective amendment to section 112(1)(c)(iii) - AO however, rejected the contention of the assessee on the ground that there was uncertainty as to whether the unlisted securities as mentioned in section 112(1)(c)(iii) of the Act would include shares of a private limited company or not and accordingly, out of abundant caution, the assessee paid taxes at the rate of 21.63% on the sale of unlisted shares of private limited company
CIT(A) also rejected the claim of the assessee on the ground that such change of claim could have been possible only by filing the revised return of income and such effect cannot be granted to the assessee in absence of CBDT issuing any instruction u/s 119 of the Act - ITAT allowing the claim of assessee u/s.112(1)(c)(iii) with regard to taxing the Long term capital gain on sale of shares @10% though in Return of Income it was offered for tax @ 20% u/s.112(1)(c)(ii)
HELD THAT:- Respondent assessee was eligible to pay tax at the rate of 10% in view of the retrospective amendment as per the Finance Act, 2017 which was made by the assessee before the AO.
This Court in case of Mitesh Implex [2014 (4) TMI 484 - GUJARAT HIGH COURT] relying upon various decisions of Hon’ble Apex Court and more particularly, in case of National Thermal Power Co. Ltd. [1996 (12) TMI 7 - SUPREME COURT (LB)] wherein held that when the question of law was raised for the first time before the Tribunal though the facts were already on record, it was observed that there is no reason why the assessee should be prevented from raising such a question before the Tribunal for the first time so long as the relevant facts are on record in respect of the item concerned and there is no reason to restrict the power of the Tribunal in such appeal.
Even in case of Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] the Hon’ble Apex Court after distinguishing the judgment in case of National Thermal Power Co. Ltd. [1996 (12) TMI 7 - SUPREME COURT (LB)] in facts of the said case, while deciding the powers of the Assessing Officer has made it clear that the issue in the case was limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961.
We are therefore of the opinion that in view of above dictum of law, no interference is called for.
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2025 (7) TMI 128
Validity of final assessment order passed by the AO beyond the time limit prescribed u/s 144C(13) - Case of the appellant was referred to the Transfer Pricing Officer u/s 92CA - HELD THAT:- AO shall complete the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received.
In the instant case, the AO received the direction from the DRP passed under Sub-Section (5) of Section 144C of the IT Act on 29.12.2015 and the AO was required to pass assessment order within one month from the end of December 2015 i.e., the AO ought to have passed assessment order on or before 31.01.2016.
AO passed assessment order only on 18.02.2016, beyond the prescribed time under Sub-Section (13) of Section 144C of the IT Act. Under Sub-Section (13) of Section 144C of the IT Act, the Assessing Officer is mandated to pass order within the time prescribed thereunder and no discretion is vested with the AO.
Under Sub-Section (13) of Section 144C of the IT Act, the Assessing Officer on receipt of direction under Sub-Section (5) from DRP, mandated to complete the assessment within one month from the end of the month in which such direction is received. Immediately on receipt of direction from the DRP under Sub-Section (5), the AO shall complete the assessment within the timeline. The timeline prescribed under Sub-Section 144C are to be construed as mandatory. Assessee appeal allowed.
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2025 (7) TMI 127
Correct head of income - income arising from the sale of land held as fixed asset and not stock-in-trade - business income or long-term capital gains offered to tax @ 20% - AO has observed that the activity of the assessee is spreading over more than one year and a sole object of acquiring land was to sale it at a higher price to earn profit and he determined the profit earned from the sale of 29597 sq. ft. of land during FY 2014-15 and made an addition on account of business income from the sale of land.
HELD THAT:- Looking at the audited balance sheet as filed by the assessee, we find that the assessee had purchased and acquired the said land in FY 2012-13 measuring 115203 sq. ft. and showed it under the head fixed asset in its audited balance sheet. It is further pertinent to mention here that immediately preceding year (AY 2014-15), the assessee had sold a portion of land and offered the same for tax under head capital gains @ 20% and that can be verified from the computation of income for AY 2014-15 submitted by the assessee along with ITR, audited books of account.
We find substance in the argument of the assessee that the department ought to follow the rule of consistency as in the present case department has accepted the sale of a portion of such land as sale of fixed asset and accepted the gains to be offered @20% taxability under the head capital gains.
Accordingly, the appeal of the assessee is hereby allowed and the addition made by the AO confirmed by the Ld. CIT(A) are hereby directed to be deleted. Appeal filed by the assessee is allowed.
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2025 (7) TMI 126
Disallowance of Foreign Tax Credit - filing of Form 67 beyond the due date specified u/s 139(1) - Scope of amended rule - HELD THAT:- In the present case, the dispute is also for the A.Y 2022-23. As per the amended rule, the assessee can file Form 67 before the end of the A.Y relevant to the previous year.
In the present case, the assessment year involved is A.Y 2022-23 and end of the A.Y is 31/03/2023. The assessee has filed Form 67 on 15/12/2022, which is well before the due date for furnishing the relevant form.
Although, these facts have been brought to the notice of the learned CIT (A), but the CIT (A) rejected the claim of the assessee by considering the pre-amended rules.
Therefore, CIT (A) is erred in upholding the reasons given by the AO to deny credit for Foreign Tax Credit. Thus, we set aside the order of the learned CIT (A) and direct the AO to allow credit for Foreign Tax Credit as claimed by the assessee in the return of income by considering the relevant form 67 filed on 15/12/2022 indicating the details of income and taxes paid outside India and delete the demand raised - Assessee appeal allowed.
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2025 (7) TMI 125
Excess stock found during the survey - addition in respect of alleged shortage of stock - AR submits that the stock was quantified and valued by the Departmental Officials during survey wherein various scrap items available were also included in the total quantity and value of the stock and no credit is allowed despite the details provided by the assessee - CIT(A) based on the working of the assessee reduced the additions and further deleted the profit estimated by AO on such excess stock - HELD THAT:- Before us, the assessee has failed to bring on record any evidences with respect to the claim that scrap/damaged goods which were included in the total quantity of stock as quantified by the survey authorities. However, possibility of damaged/ defective stock merged into regular stock cannot be ruled out.
Under these circumstances, in our considered opinion, further credit of 20% should be given on account of the possibility of damaged/defective stock merged into total stock quantified by the survey authorities. Accordingly, the addition of Rs. 11,04,629/- is further reduced by the sum of Rs. 2,20,925/- and the confirm and balance addition. According, Ground of appeal no.1 of the assessee is partly allowed.
Addition being the profit @ 12% on such shortage of stock confirmed.
Disallowance of salary - AO has based on the statements of the Ms. Shilpa Behal, employee and relative of Director available at the time of survey - HELD THAT:- From the perusal of the statements of Ms. Shilpa Behal and also considering the fact that assessee premises is having of four floors where goods were lying which fact is verified by the department during survey. We find force in the arguments of Ld. AR that services of labour were obtained on daily basis to arrange the stock lying in the shop at all the floor.
Further services of employees are required to manage each floor. With regard to accounting charges, total annual payment of Rs. 60,000/- was claimed as aid to accountant which is quite reasonable looking to the volume of business. We find that the claim of payment salary at Rs. 6,00,000/- on the total turnover Rs. 2.20 crores of retails sales of petty electronic items is reasonable and thus, is allowed.
Appeal of the Assessee is partly allowed.
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2025 (7) TMI 124
Penalty u/s 270A - disallowing the claim of leave encashment - HELD THAT:- As per section 270A(6)(a) of the Act, the under reported income shall not include the amount of income in respect of which the assessee offers bona fide explanation and disclosed all the material facts to substantiate the explanation offered.
AR emphatically argued that the CIT(A) erroneously concluded that the assessee had suppressed the facts and so the case of the assessee falls u/s 270A(9) of the Act, which is quite contrary to facts available on record.
Both lower authorities nowhere specifically denied that the assessee has offered a bona fide explanation for under reported or misreported income in it's reply. Despite adequate disclosure in the annual accounts regarding the leave encashments, the Learned CIT(A) declined to accept without any strong reasons by quoted it incorrect and fallacious.
AR contended that the CIT(A) however, inferred that there was no reasonable cause for making the claim but there is no any single whisper in the impugned order that claim in question was not bona fide - On the basis of foregoing fact situation, we finds material substance in the submissions advanced on behalf of the assessee that the claim in question was on provisional basis having debatable issue with it’s bona fides and so imposition of penalty was not called for. Hence, appeal of the assessee deserves to be allowed as imposition of penalty in question is unsustainable. Assessee appeal allowed.
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2025 (7) TMI 123
Back Money - assessee had not declared the foreign assets in the column provided in the return of income - as alleged assesse violated the provisions of section 43 of Act in respect of the investment in Barclays Bank PLC, Branch Isle of Man - HELD THAT:- The foreign bank accounts were duly disclosed by her husband in his respective returns of income along with the interest income, which has been duly offered to tax. The assessee also filed her updated return for A.Y. 2022-23, wherein the said foreign assets were disclosed under the FA Schedule, thereby evidencing bona fide compliance with the disclosure requirements.
The explanation tendered by the assessee during the penalty proceedings, including the full disclosure of the relevant bank statements, source of funds, ITRs of the husband, and other supporting documents, clearly establishes the assessee's bona fide belief and absence of any willful concealment or intention to evade tax.
The co-ordinate benches of the ITAT, in the cases of Aditi Avinash Athavankar [2023 (7) TMI 1561 - ITAT MUMBAI], Palanirajan Rajarajan [2025 (3) TMI 643 - ITAT CHENNAI], and Sanjay Bhupatrai Shah [2025 (3) TMI 797 - ITAT MUMBAI] have consistently held that mere technical or venial breaches arising out of bona fide belief, especially where the primary holder has already disclosed the foreign assets and income therefrom, do not warrant penal consequences under section 43 of the BMA Act. It has also been judicially affirmed that the imposition of penalty u/s 43 is discretionary and must be exercised judiciously, taking into account the surrounding facts, conduct of the assessee, and legislative intent.
In the present case, the assessee has sufficiently demonstrated that the lapse, if any, was inadvertent and non-malicious, and all the necessary disclosures were duly made by the primary account holder. Moreover, the revenue has not brought any material to rebut the explanation or to prove that the assessee was the actual beneficial owner of the said assets or the income therefrom.
Thus, we are of the considered view that the penalty levied under section 43 of the Act in this case is unjustified and unsustainable. Assessee appeal allowed.
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2025 (7) TMI 122
New claim in proceedings u/s 153A as not claimed in his regular return of income - Denial being interest paid on borrowed capital for house property - AO disallowed the same on the ground that the assessee did not furnish the details such as proof of payment of interest for housing loan taken for purchase of self occupied house property, copy of loan account statement and the certificate from the bank regarding the payment of interest and principal - HELD THAT:- CIT(A) although held that the assessee can make a new claim in proceedings u/s 153A which was not claimed in his regular return of income since the assessee filed original return of income u/s 139 of the Act and while the assessment was pending the assessee again in response to notice u/s 153A filed another return making a new claim, however, rejected the same in absence of documentary evidence filed before him.
We find the Revenue is not in appeal against the finding of the Ld. CIT(A) that the assessee can make a new claim in the abated assessment in light of the decision of the Hon’ble Bombay High Court in the case of PCIT vs. JSW Steel Ltd. [2020 (2) TMI 307 - BOMBAY HIGH COURT]
Assessee that given an opportunity, the assessee is in a position to substantiate his case by filing the requisite details before the Assessing Officer. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his claim of interest expenditure of Rs. 2 lakh on account of borrowed capital for self occupied house property and decide the issue as per fact and law. We hold and direct accordingly. The first issue raised by the assessee is accordingly allowed for statistical purposes.
Disallowance of interest - HELD THAT:- As relying on Shri Girishbhai Vadilal Shah [2024 (3) TMI 771 - ITAT AHMEDABAD] and Darashaw & Co. Pvt. Ltd. [2014 (5) TMI 940 - BOMBAY HIGH COURT] AO was not justified in disallowing the claim of interest expenditure and Ld. CIT(A) was not justified in confirming the same. We, therefore, set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the disallowance. The second issue raised by the assessee in the grounds of appeal is accordingly allowed.
Treating agricultural income as taxable income - as per AO assessee did not furnish the supporting documents to prove that the agricultural activity was being carried out by him for earning the agricultural income - HELD THAT:- It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate his claim by filing the requisite details before the AO since the case was not handled properly before the AOas well as the Ld. CIT(A). Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to grant one final opportunity to the assessee to substantiate his claim by filing the requisite details and decide the issue as per fact and law. We hold and direct accordingly. Ground No.3 raised by the assessee is accordingly allowed for statistical purposes.
Disallowance of deduction under Chapter VI-A - HELD THAT:- CIT(A) confirmed the action of the AO on the ground that the assessee failed to furnish the details of medical insurance premium, LIC policy and repayment of principal amount of housing loan. It is the submission of the assessee that given an opportunity, the assessee is in a position to substantiate his claim by filing the requisite details before the AO.
We deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his claim by filing the requisite details and decide the issue as per fact and law.
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2025 (7) TMI 121
Disallowance on interest - Nature of interest paid on refund of amount towards cancellation of Booking or property - Interest being penal in nature or not - AO concluded that interest paid on refund to the allottees is penal in nature and not allowable as deduction u/s 37(1) - HELD THAT:- In our considered opinion, the same is merely a contractual obligation pursuant to which the assessee had made payment of interest. The modus operandi adopted by the assessee together with the nature of transactions thereon have been duly explained hereinabove. There is absolutely no infringement of law made by the assessee. The payment of interest had arose on account of contractual obligations with the parties, whether oral or written and is inextricably linked with the business of the assessee and hence the same is merely compensatory in nature which has been duly deleted by the ld CIT(A), on which we do not find any infirmity. Accordingly, the ground 1 raised by the revenue is dismissed.
Addition on IBMS and sinking fund - AO observed that once an amount has been charged form the customers, it is an income of the assessee and same cannot be transferred to liabilities in the balance sheet, thus brought to tax the sum as income of the assessee - CIT(A) considered the receipt of these charges from the customers to be in the nature of security deposit which are transferable to the account of the new purchaser of the shop - HELD THAT:- It is not in dispute that the charges on account of IBMS and sinking fund have been collected by the assessee from its customers to whom shops of the mall have been sold. No doubt, the assessee has to maintain the entire mall in which it would be entitled to collect the charges from the customers/ shop owners. However, no details were filed by the assessee with regard to these security deposits received which were either refunded back to the shop owners on any point of time or getting adjusted towards future contingencies as stated by the ld AR.
All said and done as stated, these are the receipts in the normal course of business by the assessee from its customers. If the shop owner paid the security deposit to the assessee, the same shall have to be refunded back by the assessee to the concerned shop owner in the event of the said shop getting transferred to a new customer. In that scenario, it would be justified on the part of the assessee to reflect the receipts as a liability in the balance sheet. But in absence of any details from the side of the assessee as and when these security deposit either got refunded/ adjusted, it partakes the character of income in the year of receipt. Hence, we uphold the action of the ld AO in this regard and allow ground No. 2 raised by the revenue before us.
Addition on account of suppressed sale at Meerut Mall project - AO noted that during the year, the assessee had sold the shops at Meerut Mall to different customers at different rates - AO calculated the cost of each shop on dividing the total cost incurred in construction of Meerut Project by the total area of the Mall and arrived at the cost of Rs 2772.54 per sq ft. - CIT(A) observed that the assessee has constructed the total area of 211239 sq ft of shopping mall of which 23954 sq ft is sold during the year under consideration and balance 187284 sq ft area is shown as closing stock - HELD THAT:- None of the factual findings given by the ld CIT(A) could be controverted by the revenue with cogent evidence before us. Either way it is only an estimated addition made by the ld AO which have no legs to stand in the facts and circumstances of the instant case. Hence, we do not find any infirmity in the order of the ld CIT(A). Accordingly, ground No. 3 raised by the revenue is dismissed.
Addition on account of unaccounted sales - HELD THAT:- This issue is no longer res integra in view of the decision of this Tribunal in assessee’s own case [2023 (6) TMI 803 - ITAT DELHI] wherein as held addition has been made totally based on conjecture and surmises.
Addition on account of transaction recorded outside books as per seized documents - AO made a value of all the notings in the slip pad in the sum as income on substantive basis in the hands of the assessee and on protective basis in the hands of Mr. Rajat Gupta - HELD THAT:- We hold that the burden u/s 132(4A) read with Section 292C of the Act had been duly shifted by the assessee to the income tax department right from the time of search, which fact also stood corroborated by an affidavit. CIT(A) had noted in his findings that the some of the names mentioned in the slip pad like Mohitji, Shri Ram Hari Ram are the persons who were assessed by the same ld AO and that no corresponding action has been taken in their case by the very same ld AO based on the said seized documents Annexure A-2 and no addition has been made in their hands.
Thus, we do not find any infirmity in the order of the CIT(A) qua this issue. We hold that there cannot be any case of making any addition either substantive or protective either in the hands of the assessee company or in the hands of Rajat Gupta qua this seized document. Hence, ground raised by the revenue is dismissed.
Late payment of employees contribution towards PF & ESI contribution - HELD THAT:- This issue is settled against the assessee by the recent decision of Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd [2022 (10) TMI 617 - SUPREME COURT (LB)] Respectfully following the same, the ground No. 2 raised by the assessee is dismissed.
Addition on the basis of seized documents vide Annexure A-2 - undisclosed investment - a diary was seized vide Annexure A-2 wherein in pages 1 to 8 of the diary, certain transactions were recorded which was commercial in nature and the amounts written were in coded form - HELD THAT:- AR placed on record copy of the Tribunal in assessee’s own case for AYs 2005- 06, 2006-07 and 2007-08 [2023 (6) TMI 803 - ITAT DELHI] respectively wherein, the same issue has been considered and Tribunal had deleted the addition made on account of undisclosed investment. Respectfully following the same, the Ground No. 1 raised by the assessee is hereby allowed.
Disallowance u/s 14A read with Rule 8D of the Income Tax Rules - HELD THAT:- CIT(A) in principle upheld the application of the computation mechanism provided in Rule 8D(2) of the Rules, but directed the ld AO to consider only those investments which had actually yielded exempt income to the assessee. Accordingly, he arrived at the disallowance figure of Rs. 1,41,139/- but stated that assessee had already disallowed the same in the return of income and hence, there is no need for further disallowance.
No contrary findings or factual errors were brought by the revenue before us with cogent evidences. Either way, the law is very well settled that only those investments which had actually yielded exempt income to the assessee should be reckoned for the purpose of computing the disallowance of expenses u/s 14A of the Act read with Rule 8D(2) of the Rules. Hence, we do not find any infirmity in the order of the ld CIT(A) and accordingly, Ground no. 7 raised by the revenue is dismissed.
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2025 (7) TMI 120
Disallowance u/s. 69C - expenses claimed as deduction and debited to the Profit & Loss Account of the Assessee in respect of ‘Downside on Sale of Flats’ - scope of terms ‘purchase’, ‘sale’, ‘purchaser’ and ‘new purchaser’ - Addition made as assessee failed to produce entire details of final purchaser for verification of genuineness of loss claimed - CIT(A) deleted addition - HELD THAT:- As per the ‘Risk and Rewards’ clause all risk and reward attached to the flats were transferred to the Assessee from the date of execution of MOU.
Assessee (being the ‘purchaser’) had allowed BDMC (being the ‘Developer’) to make ‘further sale’ of the 23 flats to the ‘new purchaser’. As per the modalities agreed upon by the Assessee and BDMC, the consideration at which these flats were sold to end customers/new purchasers by BDMC was approved by the Assessee. In case of 20 flats the consideration paid/payable by the end customer/new purchaser was less than what the Assessee had to pay to BDMC and as a result there was a loss of INR.17.60 Crores.
We find that the arrangement between the Assessee and BDMC was in the nature of an underwriting agreement whereby the Assessee had agreed to purchase specified number of flats from BDMC. What is apparent is that while the MoUs use the term ‘purchase’, ‘sale’, ‘purchaser’ and ‘new purchaser’, there was no sale of immovable property affected by way of the said MoUs. Therefore, we accept the contention of the Assessee that the judgment of Suraj Lamp & Industries Pvt. Ltd [2011 (10) TMI 8 - SUPREME COURT] would not apply to the facts of the present case.
Assessee has followed a consistent approach in recognizing income/losses arising on account of variation in the amount of consideration the Assessee was contractually bound to pay to BDMC and the final selling price at which the flat was sold to new purchasers/end customers.
We find that the CIT(A) had accepted the transactions undertaking by the Assessee with BDMC as genuine transactions. Taking note of the terms of the MOU between the Assessee and BDMC, the CIT(A) had noted that the Assessee was the owner of risks/rewards attached to the flats. In the preceding assessment years, the same arrangement had resulted in income which was offered to tax by the Assessee and the same was accepted by the AO. Therefore, the CIT(A) was of the view that the loss arising from the same arrangement should also be allowed as deduction to the Assessee. We find that the findings returned by the CIT(A) are based upon material on record.
Assessee had filed all the MoUs referred to in the table reproduced in Table in paragraph 4.16 above before the Assessing Officer either in original assessment proceedings or in the remand proceedings. Further, the Assessee as well as BDMC had filed bank statements to show that the payments were made through banking channel and to establish the genuineness of the transaction. The entries in the bank statement were corroborated by the ledger accounts and the financial statements.
We reject the contention of the Revenue that the Assessee had failed to support the claim for deduction in respect of amount debited to Profit & loss Account for the relevant previous year on account of ‘Downside on Sale of Flats’. Decided against revenue.
Addition u/s 68 - unsecured loan reflected in the Balance Sheet of the Assessee-Company as on 31/03/2018 - identity and creditworthiness of the lender and the genuineness of the transaction - AO rejected documentary evidence furnished by the Assessee for the sole reason that notices issued u/s 133(6) of the Act to IDBI Bank Ltd. to confirm the genuineness of Bank Statement submitted by the Assessee were not responded to by the said bank - HELD THAT:- AO had failed to point out any infirmity in the documents furnished by the Assessee in the remand proceedings to establish the nature and source of the loan transactions recorded in the books of accounts of the Assessee. Even during the appellate proceedings before the Tribunal, the Revenue has failed to point out any discrepancy or perversity in the order passed by the CIT(A).
Further, on examination of the documents placed on record, we find that the same corroborate stand taken by the Assessee and establish the manner in which loan was received by the Assessee from DHFL. We also note that the Assessee had also placed before the CIT(A) signed/stamped copy of Bank Statement issued by the IDBI Bank Ltd. along with Rejoinder to Remand Report filed by the Assessee on 02/04/2024 to counter the objection raised by the Assessing Officer regarding non-verification of bank statements. Decided against revenue.
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2025 (7) TMI 119
Delay in filing the appeal before CIT(A) - sufficient cause for delay - eligible reasons for delay of 175 days - HELD THAT:- Hon’ble Supreme Court in Sambhaji and Ors V Gangabai and Ors, [2008 (11) TMI 393 - SUPREME COURT] has held that the object of prescribing procedure is to advance the cause of justice. In an adversial justice system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation.
Unless compelled by express and specific language of the statute, the procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extra ordinary situations in the ends of justice.
Justice is the goal of jurisprudence. Procedural law is always subservient to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be followed. Processual law is not to be tyrant but a servant, not an obstruction but an aid to justice.
A procedural prescription is the handmaid and not the mistress, lubricant, not a resistance in the administration of justice. In view of this and in the interest of justice, we find sufficient cause to condone the delay caused in filing the first appeal before the ld. CIT(Appeals).
In the result, the appeal is allowed for statistical purposes. The impugned order dated 28.02.2023 is set aside. The delay in filing the first appeal before first appellate authority i.e CIT(A) stands condoned.
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