|
Advanced Search Options
Case Laws
Showing 121 to 140 of 628 Records
-
2011 (12) TMI 676
Issues involved:
The judgment involves the deletion of penalty u/s 271(1)(c) imposed on the assessee for additions made u/s 68 of the IT Act.
Deletion of Penalty u/s 271(1)(c):
The Revenue appealed against the deletion of penalty of Rs. 8,64,100/- imposed on the assessee u/s 271(1)(c) for additions made u/s 68 of the IT Act. The AO added Rs. 25,49,000/- on account of unexplained cash credit u/s 68 and Rs. 50,295/- on account of unexplained investment in property u/s 69. The ld. CIT(A) confirmed these additions. The AO levied a penalty of Rs. 8,64,100/- @ 100% of tax sought to be evaded on the concealed income of Rs. 25,92,300/- as the assessee did not respond to the show cause notice. The assessee submitted various evidences to prove the genuineness of the loans, including names, addresses, PANs, confirmations, and financial details of the depositors. Some depositors were produced before the AO, while others could not be due to time constraints.
Assessee's Submissions and CIT(A) Decision:
The assessee submitted evidence to support the genuineness of the loans, citing previous court decisions. The ld. CIT(A) deleted the penalty based on the Tribunal's decision in a similar case and a decision of the Gujarat High Court. The Revenue contended that the loans were not genuine, but the Tribunal found that the explanation provided by the assessee was not disproved. The Tribunal emphasized that the penalty was based on additions made u/s 68 and 69, not on concealment of income. The Tribunal referred to legal principles regarding the imposition of penalties u/s 271(1)(c) and held that the AO's decision to levy the penalty was not justified in this case.
Conclusion:
The Tribunal upheld the ld. CIT(A)'s decision to delete the penalty u/s 271(1)(c) imposed on the assessee. The Tribunal found that the explanation provided by the assessee, supported by evidence, was not disproved, and the additions made by the AO did not automatically justify the penalty. The Tribunal emphasized the importance of proving conscious concealment or furnishing of inaccurate particulars for the imposition of penalties u/s 271(1)(c). The appeal filed by the Revenue was dismissed, and the penalty deletion was upheld.
-
2011 (12) TMI 675
Issues Involved:
1. Sustaining the action of survey under section 133A and search under section 132(1) of the IT Act.
2. Addition on account of unexplained investment in Gold Jewellery.
3. Addition on account of unexplained investment in excess stock found during the course of search.
4. Application of GP rate for trading additions.
5. Disallowance of unverifiable purchases.
6. Interest accrued on KVP and FDR.
7. Disallowance of certain expenses.
8. Cost of construction determined by the departmental valuer.
Issue-Wise Detailed Analysis:
1. Sustaining the action of survey under section 133A and search under section 132(1) of the IT Act:
The assessee did not press this ground; hence, it was dismissed as not pressed.
2. Addition on account of unexplained investment in Gold Jewellery:
The AO added Rs. 9,59,960 as unexplained investment in gold jewellery. The CIT(A) found that the assessee was eligible for relief of Rs. 6,83,760 and sustained an addition of Rs. 2,76,200. Both the assessee and the department appealed. The Tribunal found no infirmity in the findings of the CIT(A), confirming the order and dismissing the grounds of both parties.
3. Addition on account of unexplained investment in excess stock found during the course of search:
The AO valued the stock found during the search at Rs. 18,64,44,294 and after giving credit of 11% GP, added Rs. 7,38,42,467 as unexplained investment. The CIT(A) modified the addition by applying a GP rate of 30%, resulting in an addition of Rs. 3,50,12,643. The Tribunal noted discrepancies in the valuation by the departmental valuer and found that the items and weights recorded in the books were almost the same as those found during the search. Therefore, the Tribunal deleted the entire addition on the basis of excess valuation, accepting the assessee's valuation.
4. Application of GP rate for trading additions:
The AO applied a GP rate of 30% based on past assessments, resulting in various trading additions. The CIT(A) upheld the application of section 145(3) and sustained the trading additions. The Tribunal directed the AO to apply a GP rate of 18% instead of 30%, considering the facts and past history of the case.
5. Disallowance of unverifiable purchases:
The AO disallowed certain cash purchases and purchases from unverifiable registered dealers. The CIT(A) upheld the disallowance in part. The Tribunal, following its consistent approach, held that the addition should be based on past history and not on a fixed percentage of unverifiable purchases. The Tribunal allowed the assessee's appeal on this ground.
6. Interest accrued on KVP and FDR:
The AO added interest accrued on KVP and FDR taken in the name of the assessee's mother. The CIT(A) upheld the addition. The Tribunal set aside the issue to the AO for fresh examination, directing to verify if the interest was already shown in the respective hands.
7. Disallowance of certain expenses:
The AO disallowed 20% of certain expenses, which the CIT(A) reduced to 10%. The Tribunal upheld the CIT(A)'s order, finding the disallowance reasonable.
8. Cost of construction determined by the departmental valuer:
The AO made an addition based on the DVO's report, which determined the cost of construction higher than what was declared by the assessee. The CIT(A) allowed partial relief by reducing the addition. The Tribunal found that the purchase price and expenses were recorded in the books of account and deleted the entire addition, holding that the AO and CIT(A) were not justified in making and sustaining the addition.
Conclusion:
The Tribunal provided a detailed analysis of each issue, addressing the discrepancies in valuation, application of GP rates, and disallowance of unverifiable purchases. The Tribunal's findings were based on the consistency of the assessee's records and past history, ultimately providing relief to the assessee on most grounds while upholding the CIT(A)'s findings on certain expenses and the application of section 145(3).
-
2011 (12) TMI 674
Issues involved: Disallowance claim under section 80-IB of the Income Tax Act, 1961 for assessment year 2002-03.
The appellant, an assessee, filed an appeal against the order of CIT(A), Jammu, dated 27.06.2011, concerning the disallowance claim of Rs. 2,29,319/- under section 80-IB of the Income Tax Act, 1961. The appellant claimed deduction u/s 80IB for the assessment year 2002-03, stating that the business activity was video software generation. However, it was found that the appellant's role was limited to editing and supplying sound to films already shot by customers, rather than manufacturing a new article or thing as required by section 80IB. The AO disallowed the claim following a previous order of ITAT, Amritsar Bench (SMC), in the appellant's own case for the assessment year 2001-02.
On appeal, the Ld. CIT(A) upheld the disallowance claim based on the ITAT, Amritsar Bench (SMC) order from 17.10.2005 in the appellant's own case.
During the hearing, it was noted that a similar issue had been decided against the appellant in the assessment year 2011-02 by ITAT, Amritsar Bench (SMC). The Tribunal observed that the appellant failed to explain the exact scope of activities undertaken and could not provide evidence to support the claim of being engaged in video software generation. The Tribunal emphasized that the appellant needed to establish with evidence that the activities amounted to 'manufacture' or 'production', which was not achieved merely by asserting engagement in such business. The Tribunal agreed with the previous decision and upheld the order of the CIT(A), dismissing the appeal of the appellant.
In conclusion, the appeal filed by the appellant was dismissed, and the order was pronounced in the open court on 14th December 2011.
-
2011 (12) TMI 673
The Bombay High Court admitted the case based on a substantial question of law regarding the correct interpretation of a judgment from the Delhi High Court. The appellant's counsel referenced judgments from the Apex Court to argue against the ITAT's distinctions. The respondent's counsel waived notice.
-
2011 (12) TMI 672
The High Court of Bombay at Goa admitted an appeal regarding the deletion of addition made by the Income Tax Appellate Tribunal on charter hire charges of Barges under Section 40 A(ii)(a) of the Income Tax Act. All contentions of the respondent are kept open.
-
2011 (12) TMI 671
The High Court of Bombay dismissed the appeal as no sufficient cause was shown for condoning the 1358-day delay in filing the appeal before the CITA. The ITAT confirmed the CITA's order.
-
2011 (12) TMI 670
Issues involved: Admissibility of CENVAT credit in respect of welding electrodes.
Admissibility of CENVAT credit in manufacturing process: The judgment acknowledges that welding electrodes used in the manufacturing process, such as welding cut tin sheets to manufacture cans and drums, are eligible for CENVAT credit without dispute.
Admissibility of CENVAT credit in repair and maintenance: The dispute arises when welding electrodes are used in the repair and maintenance of machinery. Referring to a previous case, the judgment notes that the Hon'ble Supreme Court upheld the denial of credit for such use. The Tribunal, in another case, analyzed the Supreme Court's decision and concluded that lower courts are bound by such orders, emphasizing the principle of judicial discipline. Consequently, the appellants in this case are deemed ineligible for CENVAT credit on welding electrodes used in machinery repair and maintenance. The impugned Order-in-Appeal is upheld, and the appeal is dismissed.
-
2011 (12) TMI 669
Issues Involved:
1. Jurisdiction to reopen a concluded issue.
2. Levy of Additional Duties of Customs under Section 3(1) of the Customs Tariff Act, 1975.
3. Levy of cess under Section 12 of the Rubber Act, 1947 on imported rubber.
4. Applicability of the doctrine of unjust enrichment.
5. Validity of the show cause-cum-demand notice dated 23.09.2011.
Issue-wise Detailed Analysis:
1. Jurisdiction to Reopen a Concluded Issue:
The petitioner argued that the respondent had no authority to reopen an issue already concluded in favor of the assessee. The court noted that the previous orders, including those of the Tribunal and the Apex Court, had settled the issue of cess levied under the Rubber Act on imported rubber. However, the current proceedings were for levying additional duty under Section 3 of the Customs Tariff Act, 1975, which was a separate matter. The court upheld the jurisdiction of the respondents to issue the show cause notice under Section 3(1) of the Customs Tariff Act, 1975.
2. Levy of Additional Duties of Customs under Section 3(1) of the Customs Tariff Act, 1975:
The court examined Section 3(1) of the Customs Tariff Act, which mandates additional duty on imported articles equivalent to the excise duty on like articles produced in India. The court referred to the Apex Court's decision in Hyderabad Industries Ltd. v. Union of India, which clarified that additional duty under Section 3 is independent of customs duty under Section 12 of the Customs Act, 1962. The court concluded that the levy of additional duty on imported rubber was valid as it aimed to counterbalance the excise duty on similar indigenously produced goods.
3. Levy of Cess under Section 12 of the Rubber Act, 1947 on Imported Rubber:
The petitioner contended that cess under Section 12 of the Rubber Act could not be levied on imported rubber. The court noted that previous Tribunal decisions, supported by the Apex Court, had ruled that cess under the Rubber Act was applicable only to rubber produced in India, not imported rubber. However, the court clarified that the current proceedings were for additional duty under Section 3 of the Customs Tariff Act, not cess under the Rubber Act.
4. Applicability of the Doctrine of Unjust Enrichment:
The court noted that the issue of unjust enrichment had been remanded by the Apex Court to the Tribunal for consideration. The Tribunal had directed the authorities to verify the aspect of unjust enrichment before granting a refund. The court did not delve deeply into this issue, as it was not directly relevant to the current proceedings for additional duty under Section 3 of the Customs Tariff Act.
5. Validity of the Show Cause-Cum-Demand Notice Dated 23.09.2011:
The petitioner challenged the validity of the show cause-cum-demand notice on the grounds that it was an attempt to reimpose cess in the guise of additional duty. The court examined the nature of the levy and concluded that the notice was for additional duty under Section 3 of the Customs Tariff Act, which was distinct from cess under the Rubber Act. The court upheld the validity of the show cause notice and dismissed the writ petition.
Conclusion:
The court dismissed the writ petitions, upholding the respondents' jurisdiction to levy additional duty under Section 3 of the Customs Tariff Act, 1975, on imported rubber. The court directed the respondents to provide the petitioner with an opportunity for a hearing before passing adjudication orders. The connected miscellaneous petitions were also closed.
-
2011 (12) TMI 668
Issues involved:
The judgment involves issues related to disallowance of balance written off, deduction under section 36(1)(vii), disallowance under section 43B, computation of deduction under section 80HHF, disallowance under section 40A(3), and penalty imposed under section 271(1)(c).
Assessment Year 1998-99:
The only issue raised in the assessee's appeal is against the confirmation of disallowance of a specific amount out of balance written off including advances given for development of music albums abandoned. The Assessing Officer did not consider such debts as bad debts eligible for deduction under sections 36(1)(vii) due to no amount being treated as income in earlier years. The Tribunal, considering relevant judgments, allowed the deduction as revenue loss instead of capital loss, overturning the Assessing Officer's decision.
Assessment Year 2003-2004:
The first ground of the assessee's appeal is against the confirmation of disallowance under section 43B on account of delayed payment of ESIC. The Tribunal, following a precedent, ordered for the deletion of this disallowance. Another issue was the computation of deduction under section 80HHF, where interest income earned by the assessee was to be considered under the head "Profits and gains of business or profession," leading to a reduction of 90% of such interest income.
Assessment Year 2004-2005:
Ground no.1 of the assessee's appeal is against the confirmation of disallowance under section 40A(3) for urgent medical treatment expenses. The Tribunal dismissed this ground as the payment was not covered under Rule 6DD. Ground no.2, similar to a previous year, was allowed in favor of the assessee. Other grounds related to deduction under section 80HHF and disallowance of miscellaneous income were also decided in favor of the assessee.
ITA No.2236/Mum/2010:
This appeal by the Revenue against the deletion of penalty imposed under section 271(1)(c) for assessment year 2004-2005 was dismissed. The penalty was deleted as there was no willful concealment, and the addition made by the Assessing Officer was also deleted in quantum proceedings, leading to the dismissal of the appeal.
-
2011 (12) TMI 667
Issues involved: Appeal against addition of provision for bonus to book profits u/s 115JB for assessment year 2007-08.
Summary:
The appeal was directed against the order of the Ld. Commissioner of Income-tax (Appeals)-VI, Baroda for the assessment year 2007-08. The assessee contested the addition of Rs. 1,218,627 as provision for bonus to the book profits u/s 115JB. The Assessing Officer deemed this amount as an unexplained liability and made the addition while computing the book profit. The assessee argued that the provision was made in accordance with the Payment of Bonus Act and applicable accounting standards, with no uncertainty. The matter was brought before the ITAT for further appeal.
The ITAT noted that the assessee failed to provide evidence to establish the provision for bonus as a certain liability. The assessee was required to demonstrate the allocable surplus as per the Payment of Bonus Act to prove that the provision was for an ascertained liability. Despite the equal amount being paid in the subsequent year, it was deemed insufficient to establish certainty at the time of making the provision. However, considering the lack of proper representation before the authorities below and the absence of relevant queries from the Assessing Officer, the ITAT granted the assessee another opportunity to substantiate the provision as a certain liability. The burden was placed on the assessee to provide necessary evidence, and the matter was remanded back to the Assessing Officer for a fresh decision.
In conclusion, the appeal of the assessee was allowed for statistical purposes, and the order was pronounced in Open Court on 09/12/2011.
-
2011 (12) TMI 666
Issues involved: Application for waiver of pre-deposit of duty, interest, and penalty based on denial of credit for Service Tax paid on commission agent providing business auxiliary service.
Summary:
The Applicant filed an application seeking waiver of pre-deposit of duty amounting to Rs. 30,87,942/- along with interest and penalty of equal amount. The demand arose due to the denial of credit for Service Tax paid on a commission agent providing business auxiliary service. However, a clarification issued by the C.B.E. & C. through Circular No. 943/4/2011-CX dated 29-4-2011 stated that credit for Business Auxiliary Service (B.A.S.) on account of sales commission is admissible. The circular highlighted that the definition of input services allows credit on services used for clearance of final products up to the place of removal, including the sale of dutiable goods on commission basis. Consequently, the impugned order denying the credit was set aside, and the requirement of pre-deposit of duty, interest, and penalty was waived, leading to the allowance of the appeal.
-
2011 (12) TMI 665
Issues involved: Appeal against order of ld.CIT(A) cancelling rectification order u/s 154/143(3) for assessment year 2006-07.
Revenue's case: AO completed assessment u/s 143(3) with NIL income, later noticed unclaimed depreciation. AO relied on Jaipuria Chinaclay Mines case for current year's depreciation set off. Appellant argued depreciation not claimed, citing Mahendra Mills Ltd. case. AO allowed depreciation, leading to appeal.
Appellant's case: Appellant argued depreciation not claimed, as per Mahendra Mills Ltd. case. AO did not consider submissions, leading to cancellation request. Tribunal found AO's decision not justified, as depreciation not claimed and retrospective application not applicable.
Tribunal's decision: Tribunal noted disputable nature of issue, citing Sree Senhavalli Textile Mills and Kerala Electric Lamp Works Ltd. cases. Explanation 5 of Section 32(1) not retrospective, Mahendra Mills Ltd. case applicable. Tribunal upheld ld.CIT(A)'s decision to cancel order u/s 154. Revenue's appeal dismissed.
-
2011 (12) TMI 664
Issues involved: Liability of interest on supplementary invoices issued during the financial year 2005-2006 without alleging suppression/misstatement.
Summary:
The appeal was filed against Order-in-Appeal No. SKSS/133/Vapi/2010, dated 11-8-2010. The issue revolved around the demand of interest on duty paid by the appellant for supplementary invoices issued during the financial year 2005-2006. The show cause notices did not allege any suppression or misstatement by the assessee. Previously, in a similar case involving the same assessee, the Tribunal had ruled that demand for interest beyond the period of one year as prescribed under Section 11A of the Central Excise Act, 1944, could not be upheld. The current Bench found no reason to deviate from this precedent and set aside the impugned order, allowing the appeal with consequential relief.
-
2011 (12) TMI 663
Issues Involved:1. Classification of the sale of property as long-term capital loss or short-term capital gain. 2. Determination of the acquisition date of the capital asset. Summary:Issue 1: Classification of the Sale of PropertyThe Revenue's appeal contested the CIT(A)'s decision to treat the sale of property as a long-term capital loss instead of a short-term capital gain as determined by the AO. The Assessee, a company engaged in various businesses including developing resorts, declared a long-term capital loss of Rs. 5,23,66,272/- for AY 05-06. The AO argued that the ownership of the capital asset was not created in 1994 and thus classified the gain as short-term capital gain, adding Rs. 48,97,473/- to the total income. The CIT(A) disagreed, recognizing the right in the property as a capital asset acquired in 1994, and directed the AO to treat the gain as long-term capital gain. Issue 2: Determination of the Acquisition Date of the Capital AssetThe Assessee claimed that the right to the property was acquired in 1994 when GCDA accepted the bid and issued an allotment letter. The AO contended that the right was acquired only in 2004 when the final payment was made. The CIT(A) and the Tribunal upheld that the right was acquired in 1994, citing judicial precedents such as CIT V/s. Tata Services Limited (122 ITR 594) and Ponds (India) Ltd. V/s. DCIT (64 ITD 33), which established that rights under an agreement are capital assets. The Tribunal concluded that the Assessee's right to purchase leasehold rights in the property was acquired on 4.11.1994, making the loss a long-term capital loss. Conclusion:The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal and confirming that the loss should be treated as a long-term capital loss. The appeal by the Revenue was dismissed, and the order was pronounced in the open court on the 21st day of Dec. 2011.
-
2011 (12) TMI 662
Issues involved: Disallowance u/s. 14A of the Act.
Summary:
The Appellate Tribunal ITAT Mumbai heard an appeal for assessment year 2007-08 against the order of Ld. CIT(A) regarding the disallowance of &8377; 81,03,631 u/s. 14A of the Act. The AO had made the disallowance following a decision of the Special Bench in the case of Daga Capital Management Pvt. Ltd. The Ld. CIT(A) confirmed the AO's action in the first appeal.
However, the decision of the Special Bench was reversed by the Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs DCIT, holding that Rule 8D of I.T. Rule is prospective and applicable from assessment year 2008-09. Consequently, the Tribunal set aside the orders of the authorities below and directed the AO to re-decide the disallowance, if any, in respect of exempted income after giving the assessee a hearing and considering the evidence. The appeal by the assessee was allowed for statistical purposes.
The order was pronounced on the 2nd day of December 2011.
-
2011 (12) TMI 661
Issues involved: Challenge to order directing surrender of passport based on complaints filed for alleged offences under Section 500 and 506 of IPC, interpretation of provisions of Passport Act regarding surrender of passport.
Comprehensive details of the judgment:
Issue 1: Challenge to order directing surrender of passport
The writ petition challenged the order directing the petitioners to surrender the passport based on complaints filed against them for alleged offences under Section 500 and 506 of IPC. The petitioners contended that the power to issue an order to surrender a document should be anchored to the provisions of the Passport Act, specifically Section 10(9) of the Act. The Section states that on revocation of a passport, the authority can direct surrender. The language of Section 10 distinguishes between variation, impounding, and revocation of passports. Revocation can be done on the application of the holder or under specific circumstances mentioned in Section 10(3). The circumstances for impounding or revoking a passport exist if criminal proceedings are pending, as mentioned in Section 10(3)(e). The procedure for varying or cancelling a passport under Section 10(5) requires the passport authority to record reasons for the order and furnish a copy to the holder. The Court held that the power to direct surrender of a document does not exist under the passport scheme without following principles of natural justice. The impugned action was quashed, and the writ petition was allowed.
Issue 2: Interpretation of provisions of Passport Act regarding surrender of passport
The Court emphasized that the Passport Act's provisions must be interpreted in a manner that upholds natural justice. When a travel document is sought to be impounded, the procedure under Section 10(5) should ensure that the affected party is given notice and an opportunity to show cause against revocation or impounding. Without adhering to principles of natural justice, the power to direct surrender of a document does not align with the passport scheme. The Court highlighted the importance of following fundamental precepts of natural justice in matters related to passport surrender.
-
2011 (12) TMI 660
Issues:
1. Seizure and detention of goods under Panchanama orders dated 27-10-2010.
2. Legality of business activities and search conducted by authorities.
3. Show cause notice issued by Directorate General Central Excise Intelligence.
4. Request for release of seized goods and payment of excise duty and penalty.
5. Provision of legible copies of relied upon documents in the show cause notice.
6. Pending adjudication proceedings and final order by the adjudicating authority.
Analysis:
1. The petitioner, a proprietor of two firms engaged in manufacturing and trading copper items, challenged the seizure and detention of goods under Panchanama orders dated 27-10-2010. The petitioner contended that the search and detention were illegal as there was no wrongdoing in the business activities.
2. A show cause notice was issued by the Directorate General Central Excise Intelligence, calling upon the petitioner to explain why the seized copper items should not be confiscated and why certain duties and penalties should not be imposed. The Additional Commissioner informed that the seized goods could be released provisionally after fulfilling certain formalities.
3. The petitioner expressed willingness to deposit the excise duty and penalty for the seized goods to secure their release. However, a dispute arose regarding the provision of legible copies of relied upon documents in the show cause notice, impacting the petitioner's ability to respond effectively.
4. The court noted that the adjudication proceedings were pending since 25-1-2011 and directed the petitioner to submit a reply/explanation within one month. The final order was to be passed by the authorized officer within a month thereafter, emphasizing the need for due process and timely resolution.
5. Regarding the release of seized goods, the court clarified that the statutory provisions allowed for confiscation of goods with the option for redemption upon payment of a specified amount. Releasing goods based on a deposit of excise duty and penalty before completion of adjudication would undermine the legal framework governing confiscation and redemption.
6. The judgment disposed of the writ petition with observations on the proceedings concerning other firms involved, emphasizing compliance with the law and due process in handling the matter.
-
2011 (12) TMI 659
Issues involved: Appeal against the order of ld.CIT for assessment year 2006-07 regarding allowance of additional depreciation u/s 32(1)(ii)(a) on windmill.
Summary:
Issue 1: Allowance of additional depreciation u/s 32(1)(ii)(a) on windmill
The ld.CIT found the AO's order erroneous for allowing additional depreciation along with depreciation on windmill u/s 32(1)(i). The Tribunal noted that depreciation u/s 32(1)(i) is based on actual cost, while u/s 32(1)(ii) is on written down value. Rule 5(1A) allows undertaking covered u/s 32(1)(i) to claim depreciation on written down value. The Madras High Court held in CIT vs Hi Tech Arai Ltd. that additional depreciation is allowable on windmills. The Tribunal concluded that the AO's decision was a possible view and not prejudicial to Revenue, citing Malabar Industrial Co. Ltd. vs CIT. Therefore, the ld.CIT's order was cancelled, and the appeal of the assessee was allowed.
This judgment clarifies the eligibility for additional depreciation on windmills and the difference between depreciation u/s 32(1)(i) and 32(1)(ii). It emphasizes the importance of following relevant rules and legal precedents in determining the allowability of additional depreciation, ensuring fair treatment for taxpayers.
-
2011 (12) TMI 658
Whether claim of the loss disallowed by virtue of provisions of section 94(7) attracts penalty under section 271(1)(c) - Held NO - This is a bonafide mistake happened at the level of compiling the data. The application of provisions of section 94(7) were not examined nor invoked. Since the assessee has declared large amount of profits in transactions on purchase and sale of shares, this aspect could have genuinely missed the attention of persons concerned. Since no malafide intention can be attributed to assessee in claiming loss in these transactions, we are of the view that penalty under section 271(1)(C) is not warranted. Various case law relied upon by the assessee also supports the contentions made. However, without getting into the legal parameters, on facts of the case we are of the view that there occurred a bonafide mistake in not examining the provisions of section 94(7) on these transactions. Moreover, though there are disallowances in the course of the assessment proceedings, mere disallowance does not attract penalty proceedings under section 271(1)(C).
-
2011 (12) TMI 657
Issues Involved:
1. Deletion of addition made on account of deemed dividend under Section 2(22)(e) of the Income Tax Act for the assessment years 2006-07 and 2007-08.
2. Deletion of addition made under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act for the assessment year 2007-08.
Issue-wise Detailed Analysis:
1. Deletion of Addition Made on Account of Deemed Dividend under Section 2(22)(e) of the Income Tax Act for the Assessment Years 2006-07 and 2007-08:
The Revenue challenged the orders of the CIT(A) for the assessment years 2006-07 and 2007-08, which deleted the additions made by the Assessing Officer (AO) on account of deemed dividend under Section 2(22)(e) of the Income Tax Act. The AO had treated a sum of Rs. 55.00 lacs received by the assessee from M/s. Sun Polytex (P) Ltd. as deemed dividend, arguing that the assessee held 23.67% shares in M/s. Sun Polytex (P) Ltd. and the loan received should be taxed as deemed dividend under Section 2(22)(e). The AO cited the Hon'ble Bombay High Court's decision in Seksaria Biswan Sugar Factory Ltd. vs CIT and the Hon'ble Kerala High Court's decision in CIT vs P.V. John to support his stance.
The assessee contended that the loan was taken in the ordinary course of business and that M/s. Sun Polytex (P) Ltd. was engaged in the business of financing as per its Memorandum of Association, which empowers the company to lend money. The CIT(A) accepted the assessee's argument, observing that M/s. Sun Polytex (P) Ltd. was engaged in money lending to associated concerns on interest out of unsecured loans and not from accumulated profits. The CIT(A) concluded that the provisions of Section 2(22)(e) were not applicable to the inter-corporate deposits given by M/s. Sun Polytex (P) Ltd. to the assessee.
Upon appeal, the Tribunal analyzed the balance sheet and profit and loss account of M/s. Sun Polytex (P) Ltd. and found that the interest income was not a substantial part of the company's income. The Tribunal held that the AO was justified in treating the loan of Rs. 55.00 lacs as deemed dividend in the hands of the assessee for the assessment year 2006-07. For the assessment year 2007-08, the Tribunal restored the issue to the AO to ascertain whether the advance during the year exceeded the closing balance of the previous year. If it did, the amount should be treated as deemed dividend; otherwise, no addition should be made.
2. Deletion of Addition Made under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act for the Assessment Year 2007-08:
The Revenue also contested the deletion of an addition of Rs. 5,710/- made by the AO under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act. The CIT(A) had deleted this addition, and the Tribunal upheld the CIT(A)'s decision, citing the decisions in CIT vs AIMIL Ltd. & Others and CIT vs Vinay Cement Ltd., which held that employees' contributions paid before the due date of filing the return are allowable under Section 43B of the Act.
Conclusion:
The Tribunal allowed the Revenue's appeal for the assessment year 2006-07, treating the loan of Rs. 55.00 lacs as deemed dividend. For the assessment year 2007-08, the Tribunal partly allowed the Revenue's appeal, restoring the issue of deemed dividend to the AO for further verification. The Tribunal upheld the CIT(A)'s deletion of the addition of Rs. 5,710/- under Section 36(1)(va) read with Section 2(24)(x) for the assessment year 2007-08.
............
|
9911796707
