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2025 (3) TMI 1284
Validity of reassessment proceedings as barred by limitation u/s 153(2) - whether the proviso to Section 153 (2) is applicable or whether the time for completing the assessment is a period of 12 months by virtue of Section 153 (2) of the Act, as contended on behalf of the Revenue? - HELD THAT:- In terms of the proviso to Explanation I to Section 153 of the Act, the time-period available for completion of the assessment is less than sixty days after excluding the periods as referred to under Explanation I, a period of sixty days would be available to complete the assessment.
AO would have sixty days to complete the proceedings. In the present case, the interim order, which interdicted the AO from proceeding with the reassessment proceedings in respect of AY 2013-14 was passed on 20.12.2019.
The said proceedings were otherwise required to be concluded on 31.12.2019. Thus, the time-period available to the AO was less than sixty days. Accordingly, the proviso to Explanation 1 to Section 153 of the Act is applicable. Thus, in terms of the said proviso, the AO is required to complete the proceedings within sixty days of the interim order being vacated. The same was vacated on 13.12.2023. Therefore, the said period of sixty days expired on 11.02.2024.
Notwithstanding that the time for passing an assessment order had expired, the faceless assessment unit continued to issue notices u/s 142 (1) of the Act. The petitioner objected to the said notices on the ground that further proceedings were barred by limitation but the same was rejected by a communication dated 21.06.2024.
We find merit in the contention that the time-period for concluding the assessment pursuant to the notice dated 20.03.2019 issued under Section 148 in respect of AY 2013-14 has since expired. Accordingly, the reassessment proceedings are required to be terminated.
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2025 (3) TMI 1283
Reopening of assessment u/s 147 - ACL and its related parties had entered into the non-genuine transactions and misused the funds/accounts of the company - According to the AO, the said communication indicated that ACL had resorted to misrepresentation of accounts and had failed to present a true and fair view of the state of affairs of the said company - HELD THAT:- The transaction of immovable properties, as explained by the assessee had resulted in a profit of Rs. 60,00,000/- during the previous year relevant to the AY 2016-17. Thus, the transaction of sale of 1600 square feet space to ACL cannot be stated to have resulted in any income of the assessee escaping assessment.
In any view the impugned order does not indicate as to how any income of the assessee had escaped assessment on account of the said transaction. The observation that no TDS was deducted on the said transaction, may not be material to reopen the assessment of the assessee. Apart from the fact that the petitioner disputes that any TDS was required to be deducted, the obligation to deduct the TDS was on the purchaser and, therefore, assessee cannot be faulted for non-deduction of TDS assuming that any such obligation existed.
Petitioner also purchased 1200 square feet of space in another tower of the same project at the same rate at which it sold the space to ACL. The petitioner had discharged its obligation of deducting TDS at source and also made the part payment by the banking channel. The AO has also not controverted that the balance amount of Rs. 60,00,000/- was paid in subsequent financial year (on 15.07.2017) along with interest at the rate of 9.5 per cent per annum).
We are unable to ascertain as to how these transactions have resulted in assessee’s income escaping assessment. There is no explanation in the impugned order as to how such transactions would lead to this conclusion. Even assuming that the transactions were found to be non-genuine or non- existent, the same would not result in petitioner’s income escape assessment as the petitioner has in fact declared a profit of Rs. 60,00,000/- on sale of 1600 square feet to ACL and surrendered the same to tax.
Thus, even these transactions are held to be paper transactions, as is contended by the learned counsel for the Revenue, the same would not result in petitioner’s income escaping assessment. Revenue was also unable to explain as to how the facts as narrated in the notice under Section 148A (b) could lead to the conclusion that the petitioner’s income for AY 2016-17 had escaped assessment.
Availing of loan from HVPL is concerned, the impugned order does not indicate as to why such loan transaction is required to be considered as bogus considering that the petitioner has disclosed that HVPL was a NBFC having a paid up capital and reserves of Rs. 20.74 Crores and the turnover of Rs. 10.20 Crores.
The impugned order passed under Section 148A (d) of the Act cannot be sustained. Accordingly, the impugned notice and impugned order are set aside. Decided in favour of assessee.
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2025 (3) TMI 1282
Nature of land sold - LTCG or agricultural land - Capital Asset u/s 2(14) - HELD THAT:- Section 2[14] defines 'what is capital asset'. Any agricultural land, which is not located with 8Km from the local limits of any Municipality or Cantonment Board is exempted from being considered as capital asset.
From the reading of Section 2[14] of the Act, it is seen that the term ''Municipality'' should be understood in the context to mean a Local Body whether known as Municipality, Municipal Corporation, Notified Area Committee, Town Area Committee, Town Committee or by any other name. Therefore, the conclusion of the Commissioner of Income Tax is contrary to the plain language of Section 2[14] of the Act. In the present case, the fact that the land is situated beyond 8Kms from the Municipality is not in dispute. Therefore, the order of the Appellate Tribunal holding that the lands in Egathur and Navalur Villages are agricultural lands, cannot be faulted.
Investment in NABARD bonds to claim deduction u/s 54EC - It is admitted that another property was sold only on 13.02.2006 for a consideration. Therefore, consideration received on 13.02.2006 was not available with the assessee to make the investment in NABARD bonds on 26.11.2005. Therefore, the order of Commissioner of Income Tax is perfectly valid. Assessee is entitled to claim deduction u/s 54EC only for a sum by way of long term capital gain of sale of shares and a further sum by way of sale of property. As rightly held by the Commissioner, out of a sum of Rs. 10 Crores, the assessee can claim exemption or deduction u/s 54EC only to an extent of Rs. 8,55,54,167/-. The claim for deduction under Section 54EC cannot be permitted to the extent of Rs. 1,44,45,833/-.
Therefore, the order of the Tribunal impugned in this appeal cannot be sustained as regards the exemption claimed by the assessee to the tune of Rs. 10 Crores under Section 54EC of the Act.
As a result, this Tax Case Appeal is partly allowed. While confirming the order of the Tribunal as regards the finding that the sale of land in Egathur and Navalur Villages are agricultural lands to permit deduction under Section 10[37] r.w.s. 2[14] of the Act, the order of Tribunal is modified by reversing the finding in relation to the deduction under Section 54EC of the Act.
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2025 (3) TMI 1281
Adjustment of refund payable to the petitioner against the outstanding demands - Petitioner claims that the amounts adjusted be refunded along with interest as applicable - HELD THAT:- We are inclined to accept that adjustment of refund against outstanding demand may in some cases amount to a coercive measure as held in Kulbhushan Goyal v. Union of India and Ors [2018 (2) TMI 1271 - PUNJAB AND HARYANA HIGH COURT] However, as held by this court, it is open for the appellate authority to further specify that the stay order is limited to interdicting other coercive measures for recovery and would not extend to adjustment of refunds. Clearly, in case of ambiguity in this regard, the apposite course for the parties would be to apply to the appellate authority for a clarification. In the present case, none of the parties have chosen to take the said action.
It is also material to note that the application filed by the petitioner before the learned ITAT seeking stay of recovery in respect of AY 2016-17 is pending and has not been decided as yet. This also lends this Court to understand that the interim orders passed by the learned ITAT are, essentially, to interdict the Revenue from taking any steps in the meanwhile.
Apart from the above, there is yet another reason why the Revenue’s action for adjustment of refund against the outstanding demand for AY 2016-17 is unsustainable. Concededly, the Revenue has not issued any prior notice or intimation u/s 245 for making any such adjustment. Thus, the mandatory provisions for effecting an adjustment u/s 245 of the Act have not been followed.
In Vijay Singh Kadan [2016 (6) TMI 217 - DELHI HIGH COURT] this Court had not accepted that the Revenue could issue an ex post facto notice to cure the said defect.
In Kshipra Jatana [2022 (5) TMI 1162 - DELHI HIGH COURT] this Court had, inter alia, considered the non-issue of notice under Section 245 of the Act and had directed the Revenue to refund the amount adjusted against outstanding demands to another assessment year.
We allow the present petition and set aside the action of the Revenue and adjust the refunds due to the petitioner for assessment year 2020-21 against the outstanding demands for the AYs 2016-17, 2017-18 and 2018-19 and direct that the amount of refund determined, be paid to the petitioner along with the applicable interest as expeditiously as possible, and preferably within a period of eight weeks from date.
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2025 (3) TMI 1280
Denial of benefits of provisions of Section 115BAB - no filing Form 10-ID before the due date - procedural lapse in filing the form - petitioner’s application u/s 119 (2) (b) came to be dismissed - HELD THAT:- Once a benefit is claimed in the return of income, the filing of a separate Form pursuant to the claim of the said benefit is merely procedural in nature and should not be denied particularly if the Assessee has been able to show sufficient cause for the lapse.
In the present case, the very fact that a series of Circulars namely Circular Nos. 6/2022, 19/2023 and recently 17/2024 have been issued by the CBDT goes to show that there has been a problem in large number of cases which the Assessee has faced in respect of filing Form 10-IC and 10-ID in time.
Given the acknowledgment of the problem by the Department, it must be said that the Assessee has shown sufficient cause. Further, had the application of the Assessee u/s 119 (2) (b) not been dismissed and per chance, had remained pending as on 18.11.2024, the case of the Assessee for condonation of delay u/s 119 (2) (b) would have been squarely covered by Circular No. 17 of 2024 and the Respondent-authorities, following the said Circular would have automatically condoned the delay in the Petitioner’s case.
This Court deems it appropriate to exercise its jurisdiction under Article 226 of the Constitution of India to quash and set aside the impugned order dated 26.06.2024 passed by the Respondent No. 1 u/s 119 (2) (b) and further direct the Respondent-authorities to accept Form 10-ID filed u/s 115BAB read with Rule 21AF of the Rules, filed on 12.09.2022 to be legal and valid. The petition therefore succeeds.
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2025 (3) TMI 1279
Condonation of delay in filing the return of income u/s 119 (2) (b) - Petitioner submitted genuine hardship for not filing the return of income for reason, firstly, on account of non-deposit of TDS deposited by the purchaser of the property till 11.06.2022 and inability of the petitioner to travel to India due to Covid-19 pandemic situation at the relevant point of time - HELD THAT:- As in view of the fact that the petitioner is a non-resident staying at USA was genuinely prevented from filing the return in view of Covid-19 pandemic situation, the respondent ought to have condoned the delay in filing the return for Assessment Year 2020-2021. It is also not in dispute that the petitioner has furnished computation of income along with computation of long-term capital gain along with reply dated 17.01.2023 filed in response to the notice dated 10.01.2021 issued by the respondent which is placed on record.
On perusal of the Form 26AS for AY 2020-2021, it is also found that the purchaser of the property namely M/s. Ashutosh Builders deposited the amount of TDS which was deducted at the time of purchase in the year 2019 only on 11.06.2022. Therefore, the petitioner was not able to file the return for Assessment Year 2020-2021 claiming the refund in view of late deposit of TDS by the purchaser of the property.
The impugned order passed u/s 119 (2) (b) is not tenable and is accordingly quashed and set aside and delay in filing the return of income for A.Y. 2020-21 is required to be condoned to permit the petitioner to file return of income for belatedly claiming the refund as per the computation of income placed on record.
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2025 (3) TMI 1278
Best Judgment Assessment u/s 144 - AO has failed to consider the reply and passed the impugned order - HELD THAT:- In view of undisputed fact that the petitioner has filed voluminous reply on 24.02.2024 to the show cause notice for proposed addition which was duly considered by the AO but found unsatisfactory without assigning any reason for coming to such a conclusion and therefore, the Best Judgment Assessment order passed u/s 144 of the Act is not tenable in the eye of law.
As relying on M/S SHUKLA & BROTHERS [2010 (4) TMI 139 - SUPREME COURT] the assessment order cannot be sustained and is accordingly quashed and set aside and the matter is remanded back to the AO to pass a fresh de novo order after providing a fresh opportunity of hearing to the petitioner, if prayed for and after considering the reply of the petitioner, pass assessment order giving reasons qua the submissions of the petitioner within a period of 12 weeks from the date of receipt of a copy of this order.
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2025 (3) TMI 1277
Validity of assessment order passed u/s 143(3) r.w.s. 144B - violation of principles of natural justice due to non-consideration of the petitioner's application u/s 144A - HELD THAT:- The procedure u/s 144B of the Income Tax Act, 1961 makes it clear that there are adequate safeguards during assessment. Clause (iii) Sub- Section (1) Section 144B of the Income Tax Act, 1961 mandates that the assessment will be completed in accordance with the procedure laid down under section 144B of the Income Tax Act, 1961.
Clause (iv) to Sub-Section 144B of the Income Tax Act, 1961 also makes it clear that the National Faceless Assessment Centre shall assign the case selected for the purpose of Faceless Assessment to a Specific Assessment Unit (SAU) in any one of the Regional Assessment Centre (RAC) through an automated allocation system. The Assessing Unit under Section 144B consist of Senior Officials of the Income Tax Act, 1961.
The case of the petitioner that the impugned Assessment Order dated 28.9.2021 has been passed without awaiting for order under Section 144A of the Income Tax Act, 1961 of the Joint Commissioner in response to be application dated 13.09.2021 filed by the petitioner under the aforesaid provision cannot be countenanced.
That apart, the Joint Commissioner of Income tax is a functionary of the Assessment unit. Therefore, the jurisdictional Joint Commissioner cannot issue any directions to the Assessment Unit contemplated for completing the assessment u/s 144B of the Income Tax Act, 1961.
With the incorporation of Section 144B of the Income Tax Act, 1961, the role of the Jurisdictional Joint Commissioner of Income Tax under Section 144A of the Income Tax Act, 1961 has become redundant to the extent where the assessment under section 144B of the Income Tax Act, 1961 is contemplated.
Section 144A of the Income Tax Act, 1961 will apply under limited circumstances, where the assessment continues with the Jurisdictional Assessing Officer.
The National Faceless Assessment Centre has to assign case, to a specific Assessment Unit (SAU) in any Regional Faceless Assessment Centre (RFAC) through an Automated Allocation System. The specific Assessment Unit can request the National Faceless Assessment Centre for obtaining such information, documents or evidence from the assessee or any other person or for conducting an enquiry or Verification Unit or seek technical assistance from the Technical Units.
After receipt of concurrence from the Review Unit on the draft assessment order, the National Faceless Centre has to once again follow the procedure in clause 16 sub-Clause A or B or Clause 16 of Section 144B(1). It is therefore, the National Faceless Assessment Centre assigned the case to an Assessment Unit or other than an Assessment Unit which has made a draft assessment order through an Automated Allocation System.
Assessment Unit too, thereafter considers the variation suggested by the Review Unit, final draft assessment order from the National Faceless Assessment Centre. Where again the procedure under Clause (A) or (B) of Clause XVI to Section 144B of the Income Tax Act, 1961 has to be followed. Thus there is no scope for interplay between Section 144A of the Income Tax Act, 1961 and where assessment is made under Section 144B of the Income Tax Act, 1961.
Accordingly, this Writ Petition is dismissed. However, liberty is given to the petitioner to file a Statutory Appeal before the Appellate Commissioner, within a period of 30 days from the date of receipt of a copy of this order.
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2025 (3) TMI 1276
Addition being deposits in bank account by appellant an NRI treating the same as Unexplained credit - assessee is a NRI and a citizen of UK having no independent source of income in India - HELD THAT:- It is an undisputed fact that the cash was withdrawn by the assessee and merely if there is a time gap between withdrawal of cash and re-deposit of the same by the assessee in his bank account, the same cannot be the subject matter of the addition and cannot be treated as undisclosed income of the assessee, unless the Department gives some conclisive evidence that the cash which was earlier withdrawn by the assessee was not available for re-deposit by such assessee (and that the amount had been spent / utilized by the assessee for some other purpose).
We observe that once it has not been disputed by the Department that assessee had withdrawn a sum from his NRO bank account, and there is no allegation or specific finding with regards to how this sum was spent / utilized by the assessee and why the same was not available with the assessee for re-depositing, in our considered view, it has to be presumed that the subsequent re-deposit made by the assessee was sourced out of earlier withdrawals by the assessee from his NRE bank account. Appeal of the assessee is allowed.
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2025 (3) TMI 1275
Validity of Reopening of assessment u/s 147 - barred by the limitation as notice u/s 148 was not issued within the prescribed time - HELD THAT:- Though the notice was issued u/s 148 of the Act on 31.03.2021 but the same was dispatched on 01.04.2021 as is apparent from print out of the Email received by the assessee from the department. A perusal of the said email showed that the DCIT, Kolkata sent the said notice on 1st April, 2021 at 3.28 AM, which should have been issued on or before 31st March, 2021. Therefore, the notice is barred by limitation. The case of the assessee find support from the decision of Marudhar Vintrade Private Limited [2022 (7) TMI 64 - CALCUTTA HIGH COURT] wherein held that notice issued u/s 148 of the Act which signed on 31.3.2021 but communicated on 1.4.2021 at 3.00 a.m.is and all subsequent proceedings are not sustainable and are quashed. However, there was no bar in issuing fresh notice in accordance with law.
Scope of extended period as per TOLA - So far as the second peal is concerned for A.Y. 2015-16, is barred by limitation, in our opinion the extended period for issuing notice u/s 148 of the Act is not available and therefore, the proceedings are barred by limitation even on this count the proceedings as well as consequential assessment has to be quashed. The case of the assessee find force from the decision of the Hon'ble Apex Court in the case of Union of India & Ors. Vs. Rajeev Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] wherein it has been held that the reopening for A.Y. 2015-16 is not permissible in the extended period as per TOLA on and form 01.04.2021 and therefore the assessment order for A.Y. 2015-16 is barred by limitation.
Notice issued beyond period of four years - Thirdly, in this case the assessment has been made u/s 143(3) of the Act vide order dated 26.12.2017 and apparently, the case was reopened after a period of four years from the end of the relevant assessment year which can only be made subject to the satisfaction of the conditions as provided in proviso to Section 147 of the Act, which shows that the reopening of assessment, where the assessment is framed u/s 143(3) of the Act, can only be made if the escapement of income is attributed to the failure of the assessee to truly and materially disclose any information during the assessment proceedings. However, in this case, there is no such failure is reported by AO in the reasons recorded and accordingly, the reopening has been made in violation of first proviso to Section 147 of the Act. The case of the assessee find support from the decision of CEAT Ltd. [2023 (1) TMI 73 - SC ORDER] wherein held that the reopening u/s 147 of the Act beyond four years from end of the relevant assessment year could be made subject to the satisfaction of the conditions as provided in first proviso to Section 147 of the Act and not otherwise. Therefore, we are inclined to quash the reopening of assessment. Hence, the appeal of the assessee is allowed.
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2025 (3) TMI 1274
Unexplained cash credit u/s 68 - onus to prove - HELD THAT:- As examined all the evidences as placed before us and observe that the assessee has discharged the burden by furnishing all the documents before the authorities below and therefore provisions of section 68 can not be invoked. The case of the assessee is squarely covered by the decisions of Orient News Prints Ltd[2018 (11) TMI 396 - SC ORDER], M/S ADAMINE CONSTRUCTION PVT. LTD. [2018 (9) TMI 1861 - SC ORDER] and M/S. HIMACHAL FIBERS LTD. [2018 (8) TMI 873 - SC ORDER]
Thus where the assessee has discharged the onus by furnishing all the evidences and AO has not conducted any enquiry, then no addition can be made u/s 68 - Decided in favour of assessee.
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2025 (3) TMI 1273
Revision u/s 263 - lack of enquiry or inadequate enquiry - as per CIT AO allowed the long term capital loss claimed on sale of Zero Coupon Bonds to be carried forward for set-off in subsequent years, even though such loss was computed after indexing the cost of acquisition, which was not allowable as per the provisions of Section 48 - HELD THAT:- Long-term capital loss has already been mentioned in the computation of total income submitted by the assessee before the AO income under the head capital gain.
As found that the long-term capital loss on sale of ZCB issued by NABARD has also been disclosed in the computation of income. In the statement showing profit of loss on sale of investment. The assessee has also filed notice being the confirming part of the taxable income.
We further find that in the present case the assessment proceedings was initiated vide notice u/s 142(1) and in response to the said notice a detailed reply has been filed by the assessee before the DIT.
Computation chart has clearly revealed that the short term capital gain includes short term capital loss on sale of utilization income fund. A detailed submission has already filed by the assessee before the AO and AO accepted the contention and did not make adjustment.
We have gone through the citation made by the assessee and find that in a case of D. G Housing Projects Ltd. [2012 (3) TMI 227 - DELHI HIGH COURT] wherein has held that one has to keep in mind the distinction between lack of enquiry and inadequate enquiry and even if there is any enquiry by the AO, even if inadequate enquiry the PCIT cannot invoke the provision of Section 263 of the Act to give direction to the AO to undertake further enquiries.
We are in this view that the impugned order of PCIT is not sustainable under the law. We do not find that assessment order was erroneous and prejudicial to the interest of justice to the revenue. Accordingly, we quashed the impugned order. Appeal filed by the assessee is allowed.
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2025 (3) TMI 1272
Revision u/s 263 - deduction/exemption u/s 54F - verification of the claim of indexation as per the provisions of Section 2(47) - date of transfer of the original asset, i.e., 13/03/2020, the assessee did not own any residential property, as the earlier residential unit had been gifted to her daughter-in-law on 27/02/2020 - HELD THAT:- The entire matter was duly examined by the AO in a speaking order, and every aspect was thoroughly scrutinized during the assessment proceedings. The decision in PCIT vs. Cartier Leaflin (P.) Ltd. [2023 (5) TMI 1013 - SC ORDER] is also relevant, wherein the Hon’ble Supreme Court held that if the AO has adopted a plausible view, there is no justification for invoking Section 263 to revise the assessment order. This ruling applies even if it is alleged that the AO did not examine certain aspects, such as the books of accounts or the share trading transactions conducted by the assessee through demat accounts, during the assessment proceedings.
Given these facts, it is evident that the order passed by the Ld. AO is neither erroneous nor prejudicial to the interests of the revenue. Since one of the two mandatory conditions for invoking Section 263 is not satisfied, the revisionary jurisdiction u/s 263 cannot be exercised. Assessee’s grounds of appeal succeed.
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2025 (3) TMI 1271
Unexplained cash credit u/s 68 - HELD THAT:- Facts on record reveal that no fresh loan was taken during the year under consideration. In fact, neither at the time of assessment proceeding nor during the remand proceeding, the AO has been able to identify any entry in the books of accounts reflecting any fresh loan availed by the assessee during the year under consideration.
Even, the AO is absolutely silent on the aspect whether any amount either in cash or through cheque/draft has been received by the assessee from any person towards unsecured loan in the year under consideration.
AO has not brought on record any material to controvert the claim of the assessee that the increase in unsecured loan is on account of book entries made both on the asset and the liability side of the balance sheet on account of purchase of immovable properties. Since, the department has failed to bring any material on record to controvert the aforesaid factual position, we do not find any infirmity in the decision of first appellate authority in deleting the addition. Hence, these grounds are dismissed.
Addition made u/s. 69 - unexplained investment in properties - AO has failed to bring on record any evidence to demonstrate that in addition to the initial payment made by the assessee in the assessment year 2014-15, any further payment was made towards the purchase of the properties. The payments to be made is based on various stages of the construction and the construction itself did not proceeded and ultimately the builder/developers closed down its business. There is no reason why the assessee would have made the payment.
Thus, there being no material on record to establish that the assessee had made the payment we do not find any reason to interfere with the decision of first appellate authority. However, as observed by the first appellate authority, the assessee did pay the stamp duty and registration charges while entering into the agreement to sale with HDIL.
In fact, while deciding the issue, the first appellate authority has sustained addition to the extent of payment made by the assessee towards stamp duty and registration charges. However, while doing so, he has omitted to add an amount of Rs. 30,000/- paid by the assessee towards registration charges of Flat No. B-307. Thus, the addition sustained by the first appellate authority has to be enhanced by an amount of Rs. 30,000/-. Appeal is partly allowed.
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2025 (3) TMI 1270
Addition made u/s. 69A - Addition was made by the AO primarily relying upon certain information received as a result of search and seizure operation conducted in case of third parties - FAA deleted addition - HELD THAT:- There is nothing on record to suggest that any independent enquiry was taken up with M/s. MEC Tech or its proprietor, to ascertain whether in reality it has paid the amount to the assessee.
From the stage of assessment proceeding itself, the assessee has consistently taken the stand that it has received the amount from M/s. UVI Films Productions Pvt. Ltd. and the stand taken by the assessee was backed by corroborative evidence. The A.O. has not brought any cogent material/evidence to dislodge assessee’s claim or to discredit the evidences brought on record by the assessee. Merely on suspicion, conjuncture and surmises the A.O. has made the addition. On going through the observations of the first appellate authority, we are convinced that he has deleted the addition after carefully analyzing and appreciating the facts and evidences available on record. That being the case, we do not find any infirmity in the decision of first appellate authority. Decided in favour of assessee.
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2025 (3) TMI 1269
TP Adjustment - selection of MAM - assessee has adopted RPM method, however TPO has noticed that it has adopted other method - HELD THAT:- TPO has misunderstood the clear directions of the DRP on the aspect of FAR profile of the assessee and applicability of RPM in the case of the assessee which was accepted by the Revenue in the earlier assessment years. There is no clear finding on the aspect of non-applicability of RPM and TPO merely and grossly rejected the RPM with the observation that assessee is not a pure distributor and it also does manufacturing activity.
In our considered view, the TPO has grossly misunderstood the business of the assessee and proceeded to complete the ALP on the basis of TNMM method. In our considered view, the TPO has to redo the ALP adjustment on the basis of various details available on record which shows that assessee has two segments – (a) manufacturing and (b) trading activities – and the ALP of the trading activities was accepted by the Revenue in the earlier assessment years on the basis of RPM. Therefore, we are inclined to remit this issue back to the file of AO/TPO to redo the ALP adjustment on the basis of RPM.
Disallowance of expenditure claimed in ITR - assessee was not able to verify the genuineness of the expenses, thus proceeded to disallow 10% of the total expenditure u/s 37 - HELD THAT:- We are inclined to remit this issue to the file of Assessing Officer to verify the additional evidences submitted by the assessee. Accordingly, we direct the Assessing Officer to verify the additional evidences and allow the claim of the assessee as per law, after giving proper opportunity of being heard to the assessee. Accordingly, ground no.8 raised by the assessee is allowed for statistical purposes.
Addition u/s 69C - Addition made merely relying on the information available from CBEC export and import data - HELD THAT:- From the assessment order, we observed that even Assessing Officer does not have details of customs duty paid by the assessee. For the sake of justice, we are inclined to remit back this issue to the file of Assessing Officer to collect the information from assessee. Assessing Officer cannot make the addition merely on the basis of CBEC export import data and Assessing Officer has to collect the total imports made by the assessee during the year and reconcile the same with customs duty paid by the assessee. Needless to say that assessee may be given an opportunity of being heard and we direct the assessee also to submit the relevant information before the Assessing Officer. Accordingly, ground no.9 raised by the assessee is allowed for statistical purposes.
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2025 (3) TMI 1268
Validity of assessments subsequent to IBC proceedings - Income tax proceedings against company dissolved/insolvent - HELD THAT:- It is now settled that as per Section 31(1) of the IBC, once the resolution plan is approved by the Adjudicating Authority, it shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan.
When the relevant clauses of resolution plan as reproduced above are taken into consideration there is no dispute left that the resolution plan provided NIL value to the income tax dues and same stands approved by NCLT. Thus the same shall be binding on the Income Tax Department. Consequently, after going through the above process, the Management of the Company is expected to begin with a ‘clean slate’ which essentially means that the business of the Corporate Debtor, is revived again and is expected to start afresh by the new management.
Thus we are of considered view that as there was no claim of department adjudicated during resolution proceedings and infact the dues or demands of the department were quantified at NIL, the NFAC should have quashed the impugned assessments instead of dismissing the appeals as non-maintainable, and then giving ld.AO liberty to just follow the NCLT order.
We accordingly sustain the grounds and allow the appeals.
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2025 (3) TMI 1267
Validity of Reopening of assessment u/s 147 - as argued notice was issued on the borrowed satisfaction and assessment was completed without satisfying the requirement of section 147 - HELD THAT:- AO has proceeded to complete the assessment without resorting to the new provisions. It is fact on record that the notice u/s 148 was issued only on 01.04.2021 and he cannot proceed to apply the old provisions to complete the assessment.
From the record, we observed that the AO has proceeded to complete the assessment in hurry without even waiting for information from the assessee considering the limitation period based on the old provisions. The fact brought on record shows that the AO merely satisfied the information received from the investigation wing on receipt of STR without proper investigation on his part and after collecting partial information from the assessee and proceeded to complete the assessment with the incomplete information and without giving any opportunity, also not shared the information to the assessee and also not considered the information filed by the assessee.
AO should have followed the amended and new provisions with effect from 01.04.2021 based on the fact that the notice was actually issued only on 01.04.2021 and even AO was aware of the fact that the notice was only issued on 01.04.2021 and also, he was aware of the fact that new provisions are applicable with effect from 01.04.2021. Therefore, the assessment passed u/s 147 is without adhering to the new procedure applicable from 01.04.2021 and it is beyond jurisdiction and bad in law. Hence, we are inclined to set aside the order passed u/s 147 of the Act. In the result, ground no.2 raised by the assessee is allowed.
Non-issue of notice u/s 143(2) - On careful consideration, it is fact on record that the AO has failed to issue any notice u/s 143(2) for both the assessment years under consideration i.e., AY 2016-17 and AY 2017-18. Therefore, the completion of assessment without issuing notice u/s 143(2) is bad in law and also invalid in the eyes of settled position of law.
Even the provisions of section 292BB of the Act will not come to rescue for non-issue of notice u/s 143(2) of the Act, the provision u/s 292BB is only to cure infirmities in the manner of service of notice and it is not intended to cure the complete absence of the notice itself, as held in the case of Laxman Das Khandelwal [2017 (12) TMI 517 - ITAT AGRA] Hence, we are inclined to treat the assessment completed without issue of statutory notice u/s 143(2) is bad in law and deserves to be quashed as void ab initio.
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2025 (3) TMI 1266
Computation of presumptive income u/s 44BB - Goods and Services Tax (GST) inclusion in the computation of presumptive income u/s 44BB - HELD THAT:- As relying on Orient Overseas Container Line Limited [2024 (11) TMI 954 - ITAT MUMBAI] the Coordinate Bench in Seadrill International Ltd [2025 (1) TMI 1531 - ITAT MUMBAI] has held that the GST which is collected as a separate line item in the invoices as a statutory levy cannot be included as part of gross receipts for the purposes of section 44BB of the Act.
Thus, GST would not form part of gross receipts for the purposes of computing income under Section 44BB of the Act and the AO is hereby directed to exclude the amount towards GST while computing gross receipts in hands of the assessee. In the result, ground no. 2 of the assessee’s appeal is allowed.
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2025 (3) TMI 1265
Assessment u/s 153A - AO made the addition treating the long term capital gain as undisclosed income merely on the basis of information received from Investigation Wing, Kolkata - HELD THAT:- The impugned order passed by the ld. CIT (A) is bad in law as no addition can be made in the absence of incriminating material so far as the assessment under section 153A in respect of the assessment years already completed before the date of search and not abated by virtue of search. We, therefore, set aside the order of ld. CIT (A). The ground no. 1 is allowed.
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