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2025 (4) TMI 1464
Principles of natural justice - challenge to ex-parte order - contention of the petitioner's counsel was that order is time barred - HELD THAT:- Though by virtue of the Central Board of Direct taxes and Customs Notification dated 03.02.2018 the date for filing annual return for the financial year 2017-18 which would normally be 31.12.2018 stood extended till 05.02.2020 and based on the said notification the period of three years mentioned in Sub-section 10 of Section 73 would end on 05.02.2023, meaning thereby, an order under Sub-Section 9 of Section 73 could have been passed by 05.02.2023 for the financial year 2017-18, however, in view of the Notification dated 21.07.2022 which came into effect from 01.03.2020 the said time limit specified under Sub-section 10 of Section 73 for issuance of order under Sub-section 9 of Section 73 of the U.P. GST Act, 2017, for recovery of taxes not paid or short paid or of input tax credit wrongly availed or utilized, in respect of a tax period for the financial year 2017-18, stood excluded up to the 30th day of September, 2023 and by the subsequent notification of the State Government dated 24.04.2023 which has been given effect from 31.03.2023 the said time limit stood extended till 31.12.2023 for the financial year 2017-18.
In the case at hand, the impugned order has been passed on 13.12.2023, therefore, it has been passed within the time limit as extended by the Notifications referred hereinabove. The said notifications are not under challenge.
Conclusion - The impugned order of assessment dated 13.12.2023 is not barred by time, therefore, the writ petition is not maintainable as remedy of appeal is prescribed against such an order.
Petition dismissed.
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2025 (4) TMI 1463
Challenge to SCN - jurisdiction of appellate authority to entertain the appeal - prayer for provisional release of the goods and conveyance - HELD THAT:- On perusal of the impugned show-cause notice passed in GST MOV-10 and order passed in FORM GST MOV-11 prima facie, it appears that the supplier of the petitioner-M/s. Sunrise Enterprise is a non-existent entity. However, neither the supplier of the goods to the petitioner nor the transporter, who is owner of the truck in question have made an attempt for release of the goods or conveyance.
On perusal of the impugned order passed in FORM GST MOV-11, it appears that the petitioner has purchased the goods from some other person and obtained the bill in name of M/s. Sunrise Enterprise who is a non-existent entity. On perusal of the details provided in FORM GST MOV-11, it also appears that the said M/s. Sunrise Enterprise was found to be a non-existent on physical verification carried out by respondent No. 4 at Surat and therefore, the goods purchased by the petitioners are liable to be confiscated under the provision of section 130 of the GST Act.
No interference is made in the impugned order to challenge the impugned show-cause notice dated 11.11.2024 in FORM GST MOV-10 as well as order in FORM GST MOV-11 passed by respondent No. 4 - Petition dismissed.
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2025 (4) TMI 1462
Revision u/s 263 - addition on account of sale of fly ash and cenosphere - Assessee claimed that it had not earned any income as it had deposited the entire sale proceeds of fly ash, which was received from NTPC in a fly ash utilization fund and had also furnished the same - HELD THAT:- There is no question of the Assessee having earned any income. The fly ash did not belong to the Assessee, but to its holding company – NTPC. The Assessee had only sold the fly ash and utilized part of the funds as mandated and made over the balance funds to NTPC.
No infirmity with the decision of the ITAT that the Assessee had not earned any income on account of sale of fly ash, which was provided by NTPC.
In New Horizon Sugar Mills Pvt. Ltd [1998 (4) TMI 41 - MADRAS HIGH COURT] Madras High Court had upheld the decision of the learned ITAT holding that the amount set apart towards Molasses Storage Reserve Fund is required to be excluded from the total income of the assessee. The said decision was rendered bearing in mind the Molasses Control (Amendment) Order dated 06.02.1972, which required that the amount for construction of molasses storage tank was to be kept separately. The assessee had no power to spend the said amount, the same was required to be spent only in accordance with the directions issued by the Government. The appeal preferred against the said order was also dismissed by the Supreme Court, in view of the orders passed in similar matter permitting the Revenue to withdraw the appeals.
As Assessee was not free to utilize the sale proceeds of fly ash as the same was required to be used for specified purposes, which as stated above, did not result in the Assessee acquiring any asset. No substantial questions of law.
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2025 (4) TMI 1461
Reopening of assessment u/s 147 - Reopening on a "protective basis" - as alleged that the Petitioner assessee has received cash for assessment year 2010-11 based on the findings recorded in the assessment order for assessment year 2011-12 - HELD THAT:- The issue of addition on the basis of the allegation of cash received was not the subject matter of inquiry during the course of the assessment proceedings u/s 143 (3). The case is reopened based on the findings for assessment year 2011-12, wherein the officer has worked out the addition on account of cash received for various years, but has added the full amount in assessment year 2011-12, even though certain agreements for sale pertained to assessment year 2010-11.
Since the amount was already added in assessment year 2011-12 on a substantive basis and certain transactions pertain to assessment year 2010-11, the AO on a protective basis has reopened the case for assessment year 2010-11.
The jurisdiction to reopen the case has to be examined based on the facts prevailing on the date of recording the reasons, and on the date of recording the reasons the order of the CIT(A) for assessment year 2011-12 was not in existence and therefore the argument made by Petitioner, that since the CIT (Appeal)’s order for the assessment year 2011-12 was available on the date of rejecting the objection, the AO ought to have consider it is to be rejected. In any case the CIT(Appeal)’s order was not final and was subject matter of appeal before the Tribunal, and therefore even on this ground the submission made by the Petitioner has to be rejected.
No infirmity in the proposed reopening of the case, since the issue of the alleged cash received was not the subject matter of investigation during the course of the original assessment proceedings, and the reopening is made within a period of four years from the end of the relevant assessment year and that constitutes sufficient material based on the findings and reasons given in assessment year 2011-12 and further the proposed proceedings are taken only on protective basis.
Hon’ble Supreme Court in the case of NDTV Ltd. [2020 (4) TMI 133 - SUPREME COURT] has held that reassessment proceedings can be initiated based on findings in subsequent assessment years order. In our view, the ratio of this decision is squarely applicable to the facts of the present.
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2025 (4) TMI 1460
Delays in disposal of the appeals by the National Faceless Appeal Centre [NFAC] - HELD THAT:- This court by an order dated 24.02.2025 had observed that it was cognizant of the large number of statutory appeals which are pending disposal before NFAC and had also expressed concern regarding the delay in disposal of the same. The court further observed that NFAC would endeavour to implement remedial measures in all earnest.
Undoubtedly, there are large number of appeals which are pending adjudication before NFAC. It is necessary for the NFAC to take remedial steps for early disposal of the appeals. Nonetheless, we do not consider it apposite to issue any further directions in this regard.
The petition is disposed of.
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2025 (4) TMI 1459
Fees for technical services as defined u/s 9(1)(vii) or Fees for Included Services as covered under Article 12 (4) (a) of the DTAA - payments received by the Assessee on account of providing certain centralised services including marketing services and reservation services - HELD THAT:- Admittedly, the said issue is covered in favour of the Assessee and against the Revenue by several decisions of this court including Sheraton International Inc. [2009 (1) TMI 27 - DELHI HIGH COURT] Sheraton International LLC. [2023 (5) TMI 1435 - DELHI HIGH COURT] Westin Hotel Management LP [2024 (4) TMI 1250 - DELHI HIGH COURT] and Shangri-La International Hotel Management Pte Ltd. [2023 (9) TMI 1683 - DELHI HIGH COURT]
In the case of Radisson Hotel International Incorporated [2022 (11) TMI 641 - DELHI HIGH COURT] this court had referred to the earlier decisions and dismissed the case holding that no substantial questions of law arise for consideration by this court. The present appeal must bear the same fate.
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2025 (4) TMI 1458
Addition u/s 68 - bogus purchases - Whether ITAT erred in upholding addition of entire amount of the alleged bogus purchases to the income of the Appellant, instead of only gross profit margin embedded in the purchases? - HELD THAT:- Assessee’s appeal was rejected by the CIT(A) on the basis that the additions were made by the AO u/s 68. Assessment order does not mention that the additions have been made under the said Section.
Respondent also earnestly contended that the AO had not made additions under Section 68 of the Act. It is material to note that this was one of the contentions advanced by the Assessee before the learned ITAT but the same was not considered. Further as noted above, it was Assessee’s case that since its sales as recorded in the books of accounts was accepted, some allowance was necessary to be made on account of purchases even if the AO was of the view that the suppliers in question had not supplied goods. Plainly, this contention was neither examined by the learned CIT(A) nor learned ITAT.
We set aside the impugned order and remand the matter to ITAT to consider afresh. ITAT will examine whether the additions were made under Section 68 of the Act as held by the CIT(A) and if so whether the same are sustainable. ITAT shall also consider the question whether any allowance is required to be made for purchases in the event it is held that the sundry creditors as reflected by the Assessee in the books, had not supplied the goods on credit.
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2025 (4) TMI 1457
Denial of principles of natural justice by passing the final assessment order without granting or rejecting the petitioner's request for adjournment and opportunity to respond to the show cause notice - HELD THAT:- As relevant extract from the affidavit of Shri Sanjeev Jain, Principal CIT(OSD)(EXEMPTION) shows as relevant point of time when the Petitioner had made application dated 02.03,2021 for adjournment, the entries of adjournment in the hearing module were not synchronized in Case History Noting/ order sheet, on account of gap in software development due to which the said adjournment request made by the petitioner did not reflect in the Case History Noting / order sheet.
As humbly say and submit that such shortcoming in software came to be noticed subsequently and accordingly in the year 2023, the software was updated so that adjournment entries in the hearing module get synchronized in Case History Noting /order sheet module.
Department had taken us through the files, which inter alia, contained questionnaires to the concerned officers and their written responses to their respective Superiors.
From the same, it is apparent that the failure of the administration rested on the twin factors: issues with the portal and human error.
This Court deems it appropriate not to venture in the area of errors and the degrees of negligence in the performance of duties by the concerned officers. It is up to the Department to deal with the same on the administrative side.
As far as issues with the portal are concerned, we find that these portals have become silent stakeholders in the Justice Delivery System. On the last hearing, we were pleased to note that there is an acknowledgment on behalf of the Department, coupled with a sincere effort to rectify the issues.
Given such a situation, the Department, whose avowed objective being to participate in the economic growth of the country through the Tax collection system as mandated and circumscribed by Parliament in Article 265 of the Constitution of India, has to ensure that at all times, every wing of the Department including the “portal” is attuned and fine tuned to the imminent needs of the functioning of the Department. Likewise, it is bounden duty of this Court to strike a balance between the competing rights of the Assessee and the duty of the Department to collect tax to ensure that the Constitutional mandate is carried out in the best possible manner.
Department intends to position the CIT(J) as a Nodal Officer to be connected with each jurisdictional High Court. The further functions elaborated under the Head “Work Domain” under paragraph No.4 of the aforesaid instruction No.1/2024, if implemented, should go a long way in mitigating lapses of the kind, forming the subject matter of the present proceedings.
This Court, therefore, passes the following directions :-
(1) In all future Income Tax petitions (Special Civil Applications and Tax Appeals), apart from the usual respondents, the CIT (Judicial) is to be mandatory made a party respondent by the Assessee petitioners and a co-petitioner by the Income Tax Department, where the Tax Appeals are filed by the Department. The postal address and E-mail address for CIT (Judicial) given
(2) Once the CIT (Judicial) stands impleaded in the petition, the sole responsibility for implementation of the Orders of this Court and to follow Instruction No. 1/2024 to the hilt, shall be upon the CIT (Judicial), as a representative of the Income Tax Department. The buck shall stop there.
The present proceedings were being continued beyond the immediate reliefs claimed in personam by the Petitioner herein because in the course of the hearings, this Court had become aware of the systemic deficiencies in the administration of the Income Tax Department which has resulted in egregious violation of the rule of law.With the aforesaid steps taken by the Department in consultation with the Chairman, CBDT and the directions passed by us in the foregoing paragraphs, we are buoyant and optimistic that the deficiencies recorded in the Orders of this Court, of which the Department is now alive to and both pro-active and re-active, the administration of the provisions of the Income Tax Act will be optimized to ensure that a powerful engine of our economy can maximize its potential and at the same time remain just and humane to the Assessee. It is the need of the hour.
Lastly, it brings us to the individual case of the “little man” who had knocked the doors of this Court for his own statutory and Constitutional rights.
Denial of Exemption u/s 11 and 12 - allegedly violated the conditions prescribed under Section 12A of the Act by not filing the return of income and Form No.10B within the prescribed time limit - Penalty imposed ignoring stay orders - In view of the fact that the penalty and demand orders, both dated 21.12.2021, were passed in the teeth of the order dated 06.04.2021 by which Assessment Order dated 04.03.2021 came to be stayed, the penalty order under Section 270-A dated 21.12.2021 and the Demand Notice u/s 156 of the Act dated 21.12.2021 are hereby quashed and set aside.
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2025 (4) TMI 1456
Reopening of assessment u/s 147 - notice in the name of a non-existent entity - HELD THAT:- From the perusal of the records, it will be seen that in response to the notice cum draft Assessment Order u/s 147 r.w.s. 144B addressed to the Assessee in question the Petitioner had responded on 29.03.2022 (uploaded on the same day), stating the factum of amalgamation and specifically uploading the certified copy of the Scheme of Amalgamation Order passed by the NCLT and other annexures.
Additionally, on 29.03.2022, further detailed submissions on facts and law including a detailed reply on merits was uploaded along with copies of several decisions of the Hon’ble Supreme Court, etc. The Petitioner also sought a video conference reserving its right to make further submissions. Therefore, in such circumstances the Respondent could not have assumed the jurisdiction to issue a notice in the name of a non-existent entity.
Following the ratio laid down in the case of PCIT Vs. Maruti Suzuki India Ltd[2019 (7) TMI 1449 - SUPREME COURT] the Assessment Order and the consequent notice of demand u/s 156 deserves to be and are hereby quashed and set aside.
Assessee appeal allowed.
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2025 (4) TMI 1455
Validity of notice issued u/s 153C as barred by limitation - Reckoning of limitation period of 6 years - HELD THAT:- In the cases on hand, the search was conducted on 10.11.2020. Thereafter, on 30.06.2022, the documents/materials were collected from the petitioner, who is the other person. In terms of 1st proviso to Section 153C(1), the limitation would start from the date on which the materials were collected from the other person, viz., petitioner.
In this case, the search was conducted on 10.11.2020. Thereafter, the documents or assets were seized or requisitioned by the Assessing Officer on 30.06.2022 and the show cause notice dated 30.12.2024 was issued.
The claim of the petitioner is that the date of issuance of show cause notice should be considered as the date of initiation of proceedings as far as other person is concerned, and hence, the limitation period of 6 year has to be calculated from the said date, in which case, the present proceedings are barred by limitation.
In this case, on 10.11.2020, the search was not conducted in the petitioner's premises. The petitioner is the other person, from whom the documents or assets were seized or requisitioned on 30.06.2022 and thus, the said date, i.e., 30.06.2022, only has to be considered for calculating the limitation period of 6 years. With regard to all other aspects, i.e., for initiation or completion of proceedings, it is left open for the petitioner to give suitable reply to the show cause notice dated 30.12.2024 and contest the same in accordance with law, if so advised.
As far as the settlement arrived at IBS is concerned, even though the case was settled before the IBS, the liberty is granted to the Department to proceed further, in future, if any new material is found. When such being the case, this Court finds no substance in the submissions made by the petitioner on this aspect.
This Court does not find any merits in the submissions made by the petitioner on the aspect of limitation and thus, this Court is not inclined to interfere with either the impugned notices. Writ petitions are liable to be dismissed.
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2025 (4) TMI 1454
Claim of weighted deduction u/s. 35(2AA) - donations made to a scientific research institution - CIT(A) allowed deduction - HELD THAT:- The arguments of the CIT-DR is devoid of merits for the simple reason that, when donation was given for specific purpose i.e., for construction of state-of- the-art Auditorium which is also eligible for deduction u/sec.35(1)(ii) of the Act as per the letter issued by the IISc, Bangalore, in our considered view, the AO cannot deny deduction for the said donation only on the ground that it is capital in nature and used for construction of state-of-the-art Auditorium in the name of father of the Director of appellant-company.
Moreover, even if the amount is spent for construction of state-of-the-art Auditorium,, in our considered view, the Auditorium may be used for the purpose of scientific research of conducting seminars, workshops and other activities which means the said purpose is for the prosecution or the provision of facilities for the prosecution of scientific research and, therefore, the appellant-company is entitled for deduction u/sec.35(1)(ii).
CIT(A) after considering the relevant facts has rightly allowed the donation given by the appellant-company to the IISc, Bangalore u/sec.35(1)(ii) of the Act. Thus, we are inclined to uphold the order of the learned CIT(A) and dismiss the appeal filed by the Revenue.
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2025 (4) TMI 1453
Disallowance of interest expenses u/s 36(1)(iii) - CIT(A) observed that it is not the business of assessee company to give share application money to sister concern from borrowed funds and further, the assessee-company do not have any surplus to invest in shares of sister concern and entire investment has been funded through interest bearing borrowings - HELD THAT:- From the details filed by the assessee, it is undisputedly proved that, the impugned sum considered by the AO as loan for the purpose of sec.36(1)(iii) of the Act is in fact, an investment in another group company, but, not a loan.
Therefore, AO is erred in invoking the provisions of sec.36(1)(iii) of the Act for the amount invested in M/s. Kamineni Health Care Pvt. Ltd.
Assuming for a moment it is a loan and advance for the purpose of sec.36(1)(iii) but, the fact remains that the assessee has given said loan and advance out of it’s own interest free funds available in the form of fresh investment received from two of it’s Directors.
No interest bearing funds have been used for the purpose of giving amount to M/s. Kamineni Health Care Pvt. Ltd. and, therefore, on this count also, the addition made by the AO towards disallowance of interest u/sec.36(1)(iii) cannot be sustained. We, therefore, delete the addition made by the AO towards interest on amount given to M/s. Kamineni Health Care Pvt. Ltd.
Coming back to loan and advances given. There is no dispute with regard to the fact that the appellant-company had given loan to above company on 31.03.2016. AO has computed interest for the whole year. Although, CIT(A) has restricted the disallowance of interest for the actual period of loan i.e., for one day, but, uphold the reasons given by the AO to treat the said transaction as loans and advances for the purpose of sec.36(1)(iii) of the Act.
Before us Assessee claims that it is not a loan or advance, but, a current account between the two group companies in the ordinary course of business. We find that, although, Assessee brings in the theory of business exigency or commercial exigency, but, failed to prove the theory of commercial exigency by bringing on record any evidence to prove that there is a business connection between the two companies.
Although, the appellant-company claims that it is a holding company of appellant-company, but, in our considered view, except making a oral statement, no evidence has been placed on record to prove the claim that the transaction is between the holding company and subsidiary company in the ordinary course of business and such transactions are carried-out under commercial expediency.
Since the appellant-company fails to prove commercial/business exigency in advances given to the other company, in our considered view, there is no error in the reasons given by the learned CIT(A) to treat the said advances as loans and advances within the meaning of sec.36(1)(iii). We, therefore, direct the AO to levy interest for the actual period of loan. Thus, we uphold the reasons given by the learned CIT(A) on this issue.
We direct the AO to delete addition made towards disallowance of interest on investment with M/s. Kamineni Health Care Pvt. Ltd. and sustain the addition made toward interest on loan given to M/s. United Steel Allied Ind Private Limited, but, restrict the interest disallowance as per the directions of the learned CIT(A). Appeal of the Assessee is partly allowed.
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2025 (4) TMI 1452
Deduction u/s 80IB(10) - due to a typographical error, the claim of deduction was not mentioned in the I.T. Return - HELD THAT:- A perusal of the Audit Report in Form No.10CCB shows the date of approval by the local authority as 30.03.2007 and the date of completion of the housing project as 31.03.2012. The deduction u/s 80IB(10) of the Act is also determined at Rs. 6,12,05,192/-.
Although the assessee can claim a deduction which was not claimed in the original return filed or through a revised return and the Ld. CIT(A) can entertain such a new claim, in view of the various judicial precedents relied on by CIT(A), however, he has to adjudicate the issue as to whether the assessee is entitled to the claim of certain deductions / exemptions without claiming the same in the return of income as per the provisions of section 80A(5). However, he has not done the same.
We deem it proper to restore the issue to the file of the Ld. CIT(A) with a direction to adjudicate the issue of allowability of the claim in absence of claiming the same in the return of income as per provisions of section 80A(5) of the Act and pass a speaking order on this issue. The grounds raised by the Revenue are accordingly allowed for statistical purposes.
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2025 (4) TMI 1451
Penalty levied u/s 270A - disallowance of the deduction Claimed towards Health and Education Cess - HELD THAT:- The claim for deduction was made based on existing legal interpretation available at the time of filing return. Judicial pronouncements clearly supported such a view. There is no allegation of concealment, falsification, or suppression of facts.
Assessee voluntarily surrendered the claim immediately upon being made aware of the retrospective amendment. The facts were fully disclosed by the assessee during the course of assessment proceedings.
It is relevant to note that both the Assessing Officer and the CIT(A) accepted that the case does not involve “misreporting” under section 270A(9) of the Act. Accordingly, penalty was restricted to 50% of tax on underreported income. However, once it is found that the claim was bona fide and all facts were disclosed, even such penalty under section 270A(1) read with section 270A(2)(a) of the Act becomes unsustainable in law.
Mere making of a claim based on a bona fide interpretation of law, subsequently found unsustainable by retrospective amendment, does not attract penalty under the Act.
This position is fortified by case of Yahoo India (P.) Ltd. [2013 (3) TMI 704 - BOMBAY HIGH COURT] wherein it was reiterated that where a claim is made transparently and based on legal interpretation, even if not accepted, it does not amount to furnishing inaccurate particulars or under-reporting. Thus, relying on the principles laid down therein, we hold that the assessee’s claim towards deduction of cess, made prior to the retrospective amendment and disclosed in full, cannot trigger penalty under section 270A of the Act. Appeal of the assessee is allowed.
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2025 (4) TMI 1450
Addition u/s 40(a)(ia) - form 26A was not filed by the assessee in respect of amount of interest paid on which no TDS was deduction at source - HELD THAT:- We observe this fact from the appellate order passed in the first round passed by the ld CIT(A) that the payee of the interest has offered the sum to tax by incorporating the same in his return of income and therefore, case is clearly covered by the decision of Hindustan Coc Cola Beverages (P) Ltd. [2007 (8) TMI 12 - SUPREME COURT] wherein it is held that no disallowance has to be made u/s 40(a)(ia) of the Act if the receiver/ payee of income has offered same to tax in the return of income.
Therefore, there cannot be any disallowance on this account. Moreover, the finding of the CIT (A) that assessee has not filed the form no.26A read with 31ACB a certificate from Chartered Accountant, certifying the payee had fulfilled all the conditions mentioned in the First Proviso to Sub Section 1 to Section 201 but after perusing the said section along with Rule 31ACB of the Income Tax Rules, 1962, we note that the form 26A was not applicable during the impugned assessment year as the same was brought by IT(11th Amendment) Rules, 2012 with effect from 12.09.2012, which provides that under Rule 31ACB, the assessee is required to obtain a certificate from Accountant under First Proviso to Section 201 (1) and that certificate should be in form no.26A. Accordingly, we set aside the order of ld. CIT (A) and direct the AO to delete the addition.
Deduction u/s 80IB - AO noted that the assessee has not made his claim in the return filed u/s 139(1) - AO observed that the assessee has also not made its claim by filing a revised return of income and therefore, the same is not allowable to the assessee - HELD THAT:- We note that the assessee has filed the return of income within time on 26.09.2008, originally declaring total income without claiming the deduction u/s 80IA of the Act in respect of rail and infrastructure system. In our opinion, if the assessee is not made any claim in the return filed u/s 139(1) of the Act, then the same could be made before the appellate authority for the first time.
CIT (A) in the first round has rightly given the finding while allowing the appeal of the assessee by admitting the additional ground which has been extracted above, whereas in the impugned appellate order, the CIT (A) has given a perverse finding by misconstruing the facts. In our opinion, the assessee is entitled to claim u/s 80IA. Accordingly, we set aside the order of ld. CIT (A) and direct the AO to allow the deduction u/s 80IA. The ground raised by the assessee is allowed.
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2025 (4) TMI 1449
Rejection of application for registration u/s 12A - even there is a clause in the Trust deed for paying Honorarium or salary to the trustee against his/her services or involvement in any of the project or programs run by the trust, which is in violation of section 13(3) of the Act regardless of the fact that whether any payment in honorarium or salary is made to specified persons, the applicant is ineligible for registration u/s 12A
HELD THAT:- If the functionary is a salaried employee under an employment contract and therefore, is being paid salary which is a contractual obligation on the part of the Trust then such remuneration is permissible. There has to be a reason or cause of action to infer and conclude that any benefit was provided to the functionary.
A benefit implies payment of anything which is not legally due to a person, therefore, the salaries paid cannot be treated as a benefit. It may also be noted that payment of salary per se is not a benefit. To establish that some benefit was passed u/s 13(1)(c) of the Act, it will be incumbent on the AO to have reasons to believe that the remuneration were legally not due to the employees/functionaries. Once the legal eligibility of the trustees/board members to receive salary as full time employee is not disputed, then the only option available is to see the reasonableness of the salaries under section 13(2)(c) of the Act.
Therefore, we agree with the contention of assessee that the provision of section 13(3) of the Act cannot be pressed into play to decide the eligibility of registration of the Trust. In view of the above discussion, we set aside the order of the rejection passed by the ld. CIT(E), Kochi and direct to grant the registration to the assessee as sought vide application in form 10AB dated 30/09/2023.
Appeal filed by the assessee is allowed.
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2025 (4) TMI 1448
Income tax demand against company dissolved - HELD THAT:- In the case of Rishi Ganga Power Corporation Ltd. [2023 (11) TMI 201 - DELHI HIGH COURT] held that where National Company Law Tribunal admitted insolvency petition against assessee but revenue in terms of Insolvency and Bankruptcy Code, 2016 had not lodged its claim with RP, revenue could not enforce assessment order and demand notice.
In the instant facts, we observe that the assessment was completed and demand was raised on the assessee on 01.12.2017, whereas the order of NCLT u/s 30(6) r.w.s. 31 of IBC was passed on 06.12.2023. In the Resolution Plan, the Department had not filed any claim for recovery of tax demand with respect to outstanding demand against the assessee. Therefore, assessee’s case and the judicial precedents cited above, the Department cannot now claim and recover from the assessee an amount of arrears that accrued prior to approval of Resolution Plan u/s 31 of IBC.
Appeal of the Department is dismissed and the appeal of the assessee is allowed.
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2025 (4) TMI 1447
Penalty u/s. 271(1)(c) - Addition u/s 68 - HELD THAT:- As evident that the addition has been made on a debatable issue. The decisions relied upon by the assessee heavily support its contention that where the High Court has admitted substantial question of law on issue of quantum proceedings, on the basis of which penalty was levied, it shows that the concealment is not final and the issue is debatable.
Therefore, there is no case for levy of penalty. We hold that the penalty levied in the present case being on a debatable issue, is not sustainable and we direct the deletion of the same. Appeal of assessee allowed.
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2025 (4) TMI 1446
Reopening of assessment u/s 147 - validity of consolidation approval by JCIT for various years and cases - Addition u/s 68 - HELD THAT:- It is evident that the approval is in respect of 111 cases of reassessment. It is a general order of approval for all the cases. The ACIT in its approval has failed to mention the assessment year wise income returned and assessed by the AO. It is established from the record that the approval was granted mechanical manner without applying the mind and verifying the record.
The requirement of approval cannot be treated as mere formality and the mandate of the Act that the Approving authority has to act in a judicious manner by due application of mind in a manner of a quasi- judicial authority.
Thus we hold that the approval granted by the Joint Commissioner of Income Central Range 61 New Delhi is not valid. Accordingly, we quashed the assessment order. Assessee appeal allowed.
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2025 (4) TMI 1445
Addition on account of cash deposit in to bank u/s 69A - HELD THAT:- Assessee has source for cash deposits made during the pre-demonetization and also subsequently. AO proceeded to make the addition merely on the basis of sales recorded by the assessee comparatively less during previous assessment year and he has completely overlooked the fact that assessee has sales of cash of selling the fabric during festival season mainly in October and November.
They do not deny the fact that the assessee has recorded huge cash sales and credit sales during the festival season and the sales recorded during the current assessment year cannot be compared with previous assessment year due to increase of business recorded only during the current assessment year. The details of two incomparable years cannot be compared.
Therefore, assessee has a source of cash deposits. Hence, the addition made by the AO is not justified and for the sake of overall justice, we are inclined to direct the assessee to submit a quantity-wise details of opening purchases and sales recorded of credit as well as cash sales during the year matching with the closing stock declared in the financial statement.
AO is directed to verify the same and if the quantity details are properly recorded in the financials statement, the additions proposed by him should be deleted. We are inclined to delete the addition after due verification of the quantity details by the AO. Assessee appeal allowed. Appeal of the assessee is allowed.
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