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Showing 201 to 220 of 1642 Records
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2024 (7) TMI 1442
Correction of inadvertent human error while filing a return - denial of ITC - time limitation - digital platform on which returns, applications of refund etc., are filed, by reason of sheer passage of time, having foreclosed the remedy to rectify the error occasioned - HELD THAT:- Admittedly, the denial of input tax claim was only due to the wrong mentioning of GSTIN number; which has been established to be a bonafide mistake arising out of human error. The IDA who was the awarder and who deducted the tax and paid it to the department is also made a party, though subsequently, as the 8th respondent - There would be no loss caused to the State and if the refund is not effected there is every chance of the petitioner’s company closing down, considering the huge refund which would not be granted to the petitioner, putting the very business in doldrums. This is a peculiar and special circumstance in which, even if there can be no facilitation of an online rectification, it should be done physically and the amounts eligible for refund disbursed.
The quantum of input tax credit not specified, nor does it go by the admission of the 8th respondent that deductions as pointed out by the petitioner were made from the proceeds of the contract and paid up to the State Government. The assessing officer would be entitled to look into the specific deductions claimed and verify it with the returns filed by the 8th respondent; specifically the tax deductions made at the source and enable the claim of refund which is possible under law.
The petitioner is directed to make a representation to the respondent authorities upon which, as directed by the High Court of Jharkhand at Ranchi, the respondent authority shall facilitate opening of the portal for a limited period, with due intimation given to the petitioner and if that is not possible allow the petitioner to make rectification on manual mode.
Petition allowed.
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2024 (7) TMI 1441
Reopening of reassessment u/s 147 - reference to the reasons as recorded in the Section 148 (2) notice - submission of the petitioner that a perusal and comparative reading of the Section 148A (b) notice and Section 148A(d) order would establish that the respondents have clearly changed their stance and now seek to base the proposed reassessment on reasoning which was neither constructed nor alluded to in the original notice.
HELD THAT:- The validity of the proceedings initiated upon a notice under Section 148 of the Act would have to be adjudged from the stand point of the reasons which formed the basis for the formation of opinion with respect to escapement of income. That opinion cannot be one of changing hues or sought to be shored upon fresh reasoning or a felt need to make further enquiries or undertake an exercise of verification. Ultimately, the Court would be primarily concerned with whether the reasons which formed the bedrock for formation of the requisite opinion are tenable and sufficient to warrant invocation of Section 148 of the Act.
Import of Explanation 3 as well as the language in which Section 147 of the Act stands couched, we find no justification to differ from the legal position which had been enunciated in Ranbaxy Laboratories Ltd. [2011 (6) TMI 4 - DELHI HIGH COURT] We also bear in consideration the said decision having been affirmed and approved subsequently in Commissioner of Income-tax (Exemption) vs. Monarch Educational Society [2016 (2) TMI 971 - DELHI HIGH COURT] and Commissioner of Income-tax vs. Software Consultants [2012 (2) TMI 18 - DELHI HIGH COURT]
We thus, come to the conclusion that the enunciation with respect to the indelible connection between Section 148A (b) and Section 148 A(d) of the Act are clearly not impacted by Explanation 3. As we read Sections 147 and 148 of the Act, we come to the firm conclusion that the subject of validity of initiation of reassessment would have to be independently evaluated and cannot be confused with the power that could ultimately be available in the hands of the AO and which could be invoked once an assessment has been validly reopened.
Explanation 3, or for that matter, the Explanation which presently forms part of Section 147, would come into play only once it is found that the power to reassess had been validly invoked and the formation of opinion entitled to be upheld in light of principles which are well settled. The Explanations would be applicable to issues which may come to the notice of the AO in the course of proceedings of reassessment subject to the supervening requirement of the reassessment action itself having been validly initiated.
Explanation 3, cannot consequently be read as enabling the AO to attempt to either deviate from the reasons originally recorded for initiating action under Section 147/148 of the Act nor can those Explanations be read as empowering the AO to improve upon, supplement or supplant the reasons which formed the bedrock for initiation of action under the aforenoted provisions.
The writ petitions are accordingly allowed and the impugned notices and orders in each of the above-captioned writ petitions are quashed. The impugned orders under Section 148A(d) as well as the notices under Section 148 - Decided in favour of assessee.
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2024 (7) TMI 1440
Maintainability of appeals u/s 377 of Cr.P.C. against the sentence on the ground of its inadequacy - judgment of conviction and order on sentence has been passed by the Special Court for Economic Offences, Bengaluru, Special Court established under Section 280-A of the Income Tax Act, 1961 - HELD THAT:- As per the first schedule of Cr.P.C. classification of offence against other laws if offence is punishable for imprisonment for less than 3 years or with fine only, it is classified as non-cognizable, bailable and triable by any Magistrate. As the offences stated in Section 279-A of the I.T. Act, 1961 are non-cognizable within the meaning of Cr.P.C., they are triable by a Magistrate.
Offences registered by or against elected representatives are now tried by Special Courts established and it is presided over by a Sessions Judge. That Special Court which is presided over by a Sessions Judge can be said to come under clause (b) - ‘any other Court’. The Special Court for economic offences, Bangalore, is presided over by an officer of the rank of Magistrate and does not come under clause (b) - ‘any other Court’.
The appeal against convictions for offence under Chapter XXII of I.T. Act, 1961 lie to the Sessions Judge u/s 374 of Cr.P.C. Learned counsel for respondent submitted that the respondent – accused has challenged the judgment of conviction passed by the Special Court and the said criminal appeal is pending before the Sessions Court.
If the appeal has been tried against the judgment of conviction by the Sessions Court and if the appeal is dealt by the High Court against inadequacy of sentence it may lead to passing of conflicting judgments. In case in an appeal against conviction if the Sessions Court reverses the judgment of conviction and acquits the accused and the High Court allows the appeal filed against inadequacy of sentence then the said judgments are conflicting judgments against the same judgment of conviction passed by the Special Court. In order to avoid such conflicting judgments the appeal against conviction and appeal against inadequacy of the sentence are to be dealt with by the same Court.
As in the case of Ammannamma and others Vs. State of Karnataka [2005 (1) TMI 755 - KARNATAKA HIGH COURT] has held that in cases where appeal against conviction is filed and appeal against enhancement is also filed, the Bench considering the same is required to dispose of the same simultaneously and together and not separately i.e. not in any other manner.
Appeal filed against the sentence on the ground of inadequacy u/s 377 of Cr.P.C. the accused may plead for his acquittal or for reduction of sentence as provided under sub-section (3) of Section 377 of Cr.P.C - The right of appeal is provided to the accused to challenge the judgment of conviction and order on sentence under sub-section (3) of Section 374 of Cr.P.C. So also sub-section (3) of Section 377 of Cr.P.C. provides for the accused to plead for his acquittal or for reduction of sentence. The accused who has been convicted need not wait till the State files an appeal under Section 377 of Cr.P.C. to plead for his acquittal or for reduction of sentence. The accused has a statutory right under sub-section (3) of Section 374 of Cr.P.C. to challenge the judgment of conviction and order on sentence passed by the Special Court. If the accused has not challenged the judgment of conviction and order on sentence by filing an appeal under sub-section (3) of Section 374 of Cr.P.C., then in the appeal filed under Section 377 of Cr.P.C. he can plead for his acquittal or reduction of sentence under sub-section (3) of Section 377 of Cr.P.C.
The appeals preferred by the Income Tax Department under Section 377 of Cr.P.C. are not maintainable and accordingly all the appeals are dismissed.
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2024 (7) TMI 1439
Reopening of assessment u/s 147 - order u/s 148 (A) (d) of the Act was passed by respondent no. 3, without obtaining prior approval of the specified authority, i.e. Principal Chief Commissioner of Income Tax, and ex post facto approval was obtained after passing the order under clause (d) of Section 148(A) - HELD THAT:-From perusal of record, it is revealed that Principal Chief Commissioner of Income Tax had granted approval on 19.04.2024 and the order under clause (d) of Section 148(A) was passed by respondent no. 3, the same day. Thus, the Statutory requirement of prior approval is also met, and the order passed by respondent no. 3 cannot be faulted on this count.
Since this Court does not find any illegality or infirmity in the notice issued to the petitioner u/s 148 (A) (b) and the order passed u/s 148 (A) (d), therefore, any interference in the matter would be unwarranted. WP Dismissed.
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2024 (7) TMI 1438
Royalty payable - rate of royalty - ITAT justification in adjudicating that royalty was payable by Dabur International Ltd. UAE at a reduced rate of 0.75 percent on FOB Value to the respondent as against the royalty chargeable at the rate of 4 percent on FOB sale value as worked out by the TPO/AO? - HELD THAT:- Although the assessment on the regular basis was proposed on a total income of approximately INR 52,00,00,000/- the book profits were ultimately worked out in terms of Section 115JB and the income subjected to tax was quantified at INR 211,42,99,386/-. - Thus, we find that there would be no justification to entertain these appeals on the aforesaid proposed questions of law.
Valuation of shares - ITAT directing for the valuation of shares AO be required to adopt the figure of projected growth as taken by the respondent i.e. average of growth figure at 19% instead of 25% as previously directed by the CIT(A) & 89% adopted by the AO - As correctly held by ITAT in the present case, the ld. CIT(A) although directed the AO to adopt average of growth figure available for three years which came to 25% but ignored the growth rate based on actual figures for the future years. In the instant case, it is not pointed out as to how and in what manner the average growth figure taken by the assessee at 19% for succeeding years, on the basis of valuation report of an independent valuer was wrong. Therefore, we are of the view that the Ld. CIT(A) was not justified in adopting the figure of average growth at 25% instead of 19% adopted by the assessee. Accordingly, we modify the order of the ld. CIT(A) to this extent that the AO for the valuation of shares of M/s Dabur Overseas Ltd., shall adopt the figure of projected growth by taking average of growth figure at 19% instead of 25% directed by the ld. CIT(A). Accordingly, this issue is decided in favour of the assessee and against the department.
Deduction u/s 80-IB and 80-IC - receipts of sale of scrap - whether the said claim was legally justified and correct? - Revenue could not question or doubt the legal position as enunciated in CIT v. Sadhu Forging Ltd. [2011 (6) TMI 9 - DELHI HIGH COURT] in view the activities of the assessee in giving heat treatment for which it had earned labour charges and job works charges, it can thus be said that the appellant had done a process on the raw material which was nothing but a part and parcel of the manufacturing process of the industrial undertaking. These receipts cannot be said to be independent income of the manufacturing activities of the undertakings of the assessee and thus could not be excluded from the profits and gains derived from the industrial undertaking for the purpose of computing deduction under section 80-IB. These were gains derived from industrial undertakings and so entitled for the purpose of computing deduction under section 80-IB. There cannot be any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction u/s 80-IB.
here is no infirmity in the order of the ITAT. No substantial question of law arises
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2024 (7) TMI 1437
Disallowance of Provision of Liquidated Damages - said amount was on account of unascertained liability for which there did not exist a probability of outflow of resources - ITAT deleted addition - HELD THAT:- There is a concurrent finding which has come to be recorded by both CIT(A) as well as the ITAT that the liquidated damages upon being waived were written off after the same had been waived in the subsequent year.
As correctly held by ITAT provision is arising out of a contractual obligation and the basis of providing the provision is based on past experience and such a reasonable basis of estimation has been regularly followed by the assessee in the past, then ostensibly it cannot be held that the basis of estimation of working of the provision is not correct. - once it is brought on record that assssee on the year of reversal has paid taxes on excess provision and similar feature appeared in the earlier years and assesee had payments for liquidated damages on delay of deliverables, then no adverse view can be taken, because it is not the charge of the AO that assessee has made some kind of excessive provision in this year in relation to past. Decided against revenue.
Provisioning for warranty - To give an example of product warranties, a company dealing in computers gives warranty for a period of 36 months from the date of supply. The said company considers following options: (a) account for warranty expense in the year in which it is incurred; (b) it makes a provision for warranty only when the customer makes a claim; and (c) it provides for warranty at 2 per cent of turnover of the company based on past experience (historical trend). The first option is unsustainable since it would tantamount to accounting for warranty expenses on cash basis, which is prohibited both under the Companies Act as well as by the Accounting Standards which require accrual concept to be followed. In the present case, the Department is insisting on the first option which, as stated above, is erroneous as it rules out the accrual concept. The second option is also inappropriate since it does not reflect the expected warranty costs in respect of revenue already recognized (accrued).
It is not based on matching concept. Under the matching concept, if revenue is recognized the cost incurred to earn that revenue including warranty costs has to be fully provided for. When value actuators are sold and the warranty costs are an integral part of that sale price then the appellant has to provide for such warranty costs in its account for the relevant year, otherwise the matching concept fails. In such a case the second option is also inappropriate - Thus third option is most appropriate because it fulfils accrual concepts as well as the matching concept.
Validity of rectification order by TPO - TP Adjustment - ITAT concluded services provided by the AE were not stewardship services - HELD THAT:- ITAT has essentially taken into consideration, the undisputed fact that there was a failure on the part of the Transfer Pricing Officer [“TPO”] to provide an opportunity to the assessee of being heard before enhancing income.
As per Section 154(3) of the Act amendment/rectification which has the effect of enhancement of an assessment or reducing a refund or otherwise increasing the liability of the assessee shall not be made unless the authority concerned gives notice to the assessee of its intention to do so. Therefore, it is obligatory under the statute to issue notice by the tax authority to give a reasonable opportunity of being heard to the Assessee. This is clearly set out u/s 154 of the Income Tax Act and it has to be followed by the tax authorities at the initial stages. If this procedure of issuing the notice and giving reasonable opportunity of being heard is not followed, any further exercise will be non est. Therefore, the order itself becomes void ab initio. In the circumstances, we have no other option to set aside the impugned rectification order as being void ab initio. No justification to take a view contrary to what was expressed by the ITAT.
Question nos. 2.5 and 2.6 are concerned, Appellant has sought time to address submissions in that respect. Consequently, re-notify on 07.03.2024.
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2024 (7) TMI 1436
Validity of order of assessment made in the name of company not in existence - order of assessment in the name of the amalgamating company- HELD THAT:- The case on hand stands covered by the decision of Maruti Suzuki [2019 (7) TMI 1449 - SUPREME COURT] and thus the impugned order of assessment in the name of the amalgamating company i.e. , Pharmazell Vizag Pvt. Ltd. which was not in existence on the date of passing the impugned order canot be sustained and thus the impugned order is quashed. The respondents are however at liberty to proceed in accordance with law.
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2024 (7) TMI 1435
Validity of reopening of assessment - Non providing the reasons to assessee though requested - respondents, submits that the petitioner did not request for reasons through the ITBA portal, therefore, the request for reasons did not come to the notice of the AO - HELD THAT:- As prior to the amended regime being put it place with regard to re-assessment proceedings, by virtue of the order of the Hon'ble Supreme Court in GKN Driveshafts [2002 (11) TMI 7 - SUPREME COURT] the Income-tax Department was under an obligation to provide reasons if requested for by the assessee concerned after filing the return of income pursuant to receiving notice under Section 148.
In the case at hand, admittedly, the petitioner filed the return of income and, thereafter, requested for reasons for reopening the assessment by e-mail of 21.04.2021. On examining the impugned assessment order, it is evident that the e-mail address from which the petitioner requested for reasons for reopening the assessment is the same as the registered e-mail ID of the assessee. In these circumstances, the failure to provide reasons for reopening the assessment is fatal.
Therefore, WP is allowed and the impugned assessment order is quashed by leaving it open to the respondents to initiate de novo proceedings in accordance with law.
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2024 (7) TMI 1434
Reopening of assessment u/s 147 - Addition u/s 14A r.w.r. 8D - HELD THAT:- The expression “reason to believe” in Section 147 of the Act would mean some cause or justification of the competent authority. If the competent authority has a ground or some justification that the income had escaped assessment or that there was a mistake in making assessment, the competent authority would be empowered to re-open the assessment after four years with prior approval of the jurisdictional Commissioner, as provided under Section 151.
Rule 8D of the Income Tax Rules, 1962, prescribing the methodology for determining the amount of the expenditure in addition to income not includible in total income, was inserted with effect from 24.3.2008 to implement sub-Sections (2) and (3) of Section 14A. It is a clear indicator that a new method for computing the expenditure was brought in by the Rules, which was to be utilised for computing the expenditure for the assessment years 2007-08 and onwards, as held in CIT v. Essar Teleholdings Ltd. [2018 (2) TMI 115 - SUPREME COURT]
An assessee has the obligation to provide full material disclosures at the time of filing of the return. The nexus between expenditure disallowed and earning of exempt income is required to be established.
In the present cases, the petitioner had obtained loans and invested in his new Company and earned income and claimed the interest paid by him on the said loans obtained as expenditure. Such expenditure is not exempt under the provisions of Section 14A read with Rule 8D.
If the assessments concluded are not in accordance with the law, it is not change of opinion, but it is a valid reason for reopening the assessments. The assessing officer has ignored the mandatory provision of Section 14A and Circular No.5/14 while completing the assessments, which got re-opened.
We, do not find that the assessing officer has committed any error of law or jurisdiction, which requires this Court to interfere with the present writ petitions. Therefore, these writ petitions are hereby dismissed. If the re-assessment proceedings are already complete and if the petitioner has any grievance, he may resort to the statutory remedy of appeal, if so advised. If the petitioner files appeal, the time expended in prosecuting these writ petitions before this Court would be condoned and the appellate authority should proceed with the appeal on merits.
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2024 (7) TMI 1433
Revision u/s 263 - cash deposited during demonetization period - HELD THAT:- AO has conducted due enquiries by calling for various details from the assessee to substantiate the source of cash deposits in Specified Bank Notes during the demonetization period and therefore, it cannot be said that the AO has not applied his mind and has accepted the submissions made by the assessee. Therefore, it can be safely concluded that the present case is not a case of no enquiry or lack of enquiry.
AO in the instant case has made due enquiries which is expected of him and after receiving the replies from the assessee from time to time, has accepted the source of such cash deposits in the bank account during the demonetization period.
The order passed by the AO in the instant case may be prejudicial to the interest of the Revenue but cannot be termed as erroneous in view of the various notices issued by him calling for various details from the assessee to substantiate the source of such huge cash deposits during the demonetization period.
CIT in the instant case, despite having all the material, has not examined the details himself and came to a definite conclusion but has merely set-aside the matter to the file of the AO for afresh assessment. The various decisions relied on by the ld. Counsel for the assessee in the case law compilation support his case to the proposition that where the AO had conducted enquiries regarding the source of cash deposits made during the demonetization period and has taken a possible view, the Pr.CIT was not justified in invoking the revision powers u/s. 263 of the Act by merely directing the AO to carry out enquiries afresh without himself conducting further enquiries.
Since the AO in the instant case has made detailed enquiries regarding the source of cash deposits made during the demonetization period and after being satisfied has taken a possible view, therefore, we are of the considered opinion that the ld. Pr.CIT is not justified in invoking the provisions of section 263. We, therefore, set aside the same. The grounds raised by the assessee are accordingly allowed.
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2024 (7) TMI 1432
Exemption of dividend income u/s 10(35) - claim was rejected by the CPC while processing the return of income u/s 143(1)(a) - HELD THAT:- Assessee has fairly admitted that it did not challenge the above disallowance made by the CPC before Ld CIT(A), meaning thereby, the disallowance so made by CPC has attained finality. In the impugned assessment order passed u/s 143(3) of the Act, the AO has only repeated the disallowance already made while processing the return of income u/s 143(1)(a) of the Act.
Hence, the cause of action in respect of denial of exemption u/s 10(35) of the Act would lie only in challenging the intimation issued u/s 143(1)(a) of the Act. Admittedly, the assessee has failed to challenge the same. Hence the Ld CIT(A) could not have granted relief in the appeal filed against the assessment order passed u/s 143(3) of the Act, when the addition made u/s 143(1)(a) remained unchallenged. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the addition made by the AO on this issue.
Exemption u/s 10(23FB) claiming itself to be a Venture Capital Undertaking - As the said claim has been rejected by the AO and Ld CIT(A). We notice that the assessee has not challenged the rejection of exemption u/s 10(23FB) of the Act confirmed by Ld CIT(A). Hence, this issue has attained finality for this year.
Alternative/fresh claim made by the assessee without filing return of income - Exemption u/s 10(38) - Long term capital gains earned by the assessee on sale of shares of venture capital - HELD THAT:- We notice that the assessee has put forth the alternative claim before the assessing officer itself - assessee had already claimed exemption u/s 10(23FB) in the return of income and since the AO expressed the view that the assessee is not entitled to claim said exemption, the assessee has made alternative claim before him. Hence, in our view, it is only a case of change of section under which the exemption has been claimed by the assessee and it may not fall under the category of “Fresh claim”. Accordingly, we reject the grounds no.1 to 4 raised by the revenue.
Exemption u/s 10(38) been allowed by the Ld CIT(A) without considering the fact that the assessee has acquired shares from the off market without paying Securities Transaction Tax (STT) - Conditions prescribed in clause (a) and (b) of sec. 10(38) of the Act are fulfilled in the instant case. The contentions urged by the revenue is related to the third proviso, which is highlighted above and which prescribes one more condition that the “transaction of acquisition of shares” should have also suffered the Securities Transaction Tax.
The third proviso to sec. 10(38) of the Act empowers the Central Government to issue notification and the acquisition of shares falling under the said notification need not have suffered STT for the purpose of availing exemption u/s 10(38) of the Act. Hence sale of such kinds of shares are eligible for exemption u/s 10(38) of the Act.
The clauses (a) and (b) of the Notification deal with “existing listed equity shares”. Clause (c) deals with the case of acquisition of shares of a company which has been delisted from a recognized stock exchange.
Hence all the three clauses, viz., clause (a), Clause (b) and Clause (c) are not applicable to the facts of the present case, since the assessee herein has purchased unlisted shares. Accordingly, the Ld A.R was right in mentioning that the main part of the Notification will only be applicable to the facts of the present case. Hence the shares acquired by the assessee would be covered by the main part of the notification and hence, even if the STT was not paid at the time of acquisition, the assessee would be entitled to claim exemption of LTCG u/s 10(38) of the Act. Accordingly, we confirm the final decision taken by Ld CIT(A) on the above said reasoning.
Assessee, being a Venture Capital Fund, is a pass through entity and hence the exemption u/s 10(38) could be claimed only by the investors as per sec. 115U of the Act and not by the assessee - A.R submitted that a Venture Capital Fund will acquire the character of “Pass through entity”, only if it is granted exemption in terms of sec. 10(23FB) - HELD THAT:- As per the provisions of sec. 10(23FB) of the Act, the income earned by VCF on the investments made in the Venture Capital Undertaking is exempt and if the said exemption is given, then the income is liable to be assessed in the hands of investors in terms of sec. 115U of the Act. However, in the instant case, the assessee’s claim for exemption u/s 10(23FB) has been rejected by the tax authorities, meaning thereby, the status of the assessee as a “pass through entity” has not been accepted by the tax authorities in this year. Hence the question of applying the provisions of sec. 115U will not arise in this year.
As noticed earlier, the assessee, being a trust is legal entity and would fall under the definition of “person” under the Income tax Act. Hence it is assessable under the Act for the income earned by it and consequently, it is entitled to avail all types of eligible exemption provided under the Act. Accordingly, the assessee would be entitled to claim exemption of long term capital gain u/s 10(38) of the Act. In the preceding paragraphs, we have upheld the decision of Ld CIT(A) in holding that the assessee is eligible for exemption u/s 10(38) of the Act.
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2024 (7) TMI 1431
Unexplained credits in the books of account - AO and the CIT(A) have frivolously alleged that the amount received by the assessee does not pertain to be sale consideration - HELD THAT:- In the present case, although it was not the responsibility of the assessee to prove the sources of such funds even then the assessee has filed the bank statement of the buyer starting from 01.04.2015 to 31.03.2016, and the said bank statement clearly reflects that the buyer was a man of means and having regularly deposits in crores were being received by the said buyer in the earlier years also, and therefore it cannot be alleged that the buyer has no funds. Meaning thereby that the assessee has duly furnished evidence to prove the identity and creditworthiness of the buyer and the genuineness of the transaction, and even then, if the Ld. AO or department has any apprehension in respect of the same, then they are free to open the case of the buyer.
Thus, we hold that the requirement of law is not to prove the source of source of cash credit. Accordingly, we hold that the alleged credit stands explained and as such, the addition is deleted. Assessee appeal allowed.
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2024 (7) TMI 1430
Penalty u/s 271D - violation of the provisions of section 269SS penalty was levied for accepting interest free loan - as contended that the assessee obtained cash as gift from his father-in-law - CIT(A) did not accept the submissions of the assessee as the cash obtained in order to purchase of property from his father-in-law as gift, warranting no violation of provisions of section 269SS - HELD THAT:- We find that similar identical issue came up in the case of Mani Sundaram [2024 (2) TMI 534 - ITAT CHENNAI] wherein, the Tribunal, while deciding the issue by placing reliance in the case of Ms. Nanda Kumari [2019 (1) TMI 413 - MADRAS HIGH COURT] held that no penalty u/s 271D of the Act is attracted if the cash obtained from family members as gift.
The order of the ld. CIT(A) in confirming the penalty levied under section 271D of the Act is not maintainable. Accordingly, we direct the Assessing Officer to delete the penalty levied under section 271D - Decided in favour of assessee.
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2024 (7) TMI 1429
Validity of Revision u/s 263 - distinction between “lack of inquiry and inadequate inquiry” - nature and character of the one time regulatory fee paid by it as well as the bank and stamp duty charges - assessee has gone through the rigours of the proceedings u/s 143(3),147/ 148 by playing two innings as there are two separate independent assessment orders one u/s143 (3) and another u/s 147/148 r.w.s 144 r.w.s. 144B - HELD THAT:- Assessment order dt. 12/06/2020 basis which revisionary proceedings were initiated u/s 263 culminating into the impugned order has accepted the return of income.
The said acceptance of returned income is arrived after a proper inquiry and verification because prior to thereto notices u/s 143(2) and 142(1) were duly served to the assessee firm and that they were suitably replied with all material information so that computation of income is done in just and proper way for purpose of levy of tax on it.
We have minutely perused the notices and replies which are more than two to three and it contains and answers all query of AO. We also hold that notice u/s 142(1) is appropriately answered with relevant enclosure by the assessee firm.
As seen both the notice and reply from pape book volume II. Further we notice that vide notice u/s. 142(1) dt. 17/02/2020 the Ld. AO raised few more query and that the same were replied by the assessee. We have perused the further query and reply from paper book Volume II.
Vide notice u/s 142(1) AO raised few more query and that the same were replied by the assessee. We have perused such further more query and reply from paper book Vol. III.
AO has applied his mind and have enquired and verified the state of affairs of the assessee firm and has passed the assessment order dt. 12/06/2020 in a manner know to law.
Raising query after query periodically while the assessment proceedings are going on shows proper application of mind coupled with due inquiry and verification. The Ld. AO has examined all the papers and proceedings of the case and has accepted the return u/s 143(3) after due diligence. The assessee thus has gone through rigor’s of law; during the scrutiny proceedings.
We hold that it is only after the proper inquiry and verification that the AO has accepted the returned income. The documents on record speaks for it as query’s were raised and answered according to law.
We also hold that under Income Tax Act besides being practice that whenever any addition / disallowances are made an opportunity is given to the assessee to show cause why addition / disallowance should not be made. In so far as income and its components are concerned which are untainted are normally accepted as it is. See Hari Iron Trading Company [2003 (5) TMI 48 - PUNJAB AND HARYANA HIGH COURT] as held Commissioner can exercise powers under subsection (1) of section 263 of the Act only after examining "the record of any proceedings under the Act". The expression "record" has also been defined in clause (b) of the Explanation so as to include all records relating to any proceedings available at the time of examination by the Commissioner. Thus, it is not only the assessment order but the entire record which has to be examined before arriving at a conclusion as to whether the Assessing Officer had examined any issue or not. The assessee has no control over the way an assessment order is drafted. The assessee on its part had produced enough material on record to show that the matter had been discussed in detail by the AO.
We further hold that by virtue of Government of India, Ministry of Finance, Department of Revenue (CBDT) Instructin NO. 8/2017 dt. 23/09/2017 at para 5.1 - Enquiry before assessment in electronic mode a particular methodology is prescribed which has been followed. The assessee has rightly relied upon it to demonstrate that due enquiry before assessment was done.
AO has made enquiries on all the matters from notices issued under section 142(1) and that the assessee has filed submission on the questions in the notices issued by AO from time to time. The assessee therefore has rightly submitted that the enquiries has been made as per provision of Section 142(iii) of the Income Tax Act, 1961 and that AO framed the assessment after considering the replies submitted by assessee during the course of assessment proceedings. We further hold that AO has applied his mind irrespective of the fact that issues were not discussed in the assessment order.
We also hold that by virtue of Section 263 it is incumbent upon the Ld. PCIT while exercising supervisory / Revisionary jurisdiction to at least carry out a bare minimum inquiry himself before terming the order of AO as erroneous and prejudicial to the interest of Revenue. In the instant case that has not happened. See Delhi Airport Metro Express Pvt. Ltd. [2017 (9) TMI 529 - DELHI HIGH COURT]
Impugned order of PCIT is not proper just and fair and in accordance with law as Ld. PCIT has not made any minimal inquiry before holding that Ld. AO has not made any inquiry and therefore order is erroneous and prejudicial to the interest of the Revenue. We hold that the Ld. PCIT ought not to have passed the impugned order.
We also hold enough inquiries as the AO deemed fit and proper had been made on more than one occasion supra. It is not a case of no inquiry the impugned order is therefore without jurisdiction and / or in excess of jurisdiction and / or in irregular exercise of jurisdiction and is null and void. It is illegal and not proper. It is in irregular exercise of supervisory / revisionary jurisdiction u/s 263 of the Act and therefore bad in law. Decided in favour of assessee.
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2024 (7) TMI 1428
Addition on account of LTCG on sale of shares u/s 112 - assessee is registered in Mauritius and is holding tax residency certificate of Mauritius - assessee had claimed long term capital gains arising from sale of shares as exempt from tax in light of Article 13(4) of India-Mauritius DTAA - LEI Singapore Holdings Pte. Ltd. deducted tax at source on the payments made to the assessee. Now, the assessee is seeking refund of withholding tax deducted on the aforesaid transaction.
HELD THAT:- We find that similar transaction of transfer of shares of Pearl Retail Solutions Pvt. Ltd. was undertaken by the assessee in AY 2018-19. The assessee claimed refund of TDS deducted on sale of shares. The matter travelled to the Tribunal, the Coordinate Bench after considering the facts of the case, provisions of Article 13(4) of the India-Mauritius DTAA and placing reliance on the decision rendered in the case of Bid Services Division (Mauritius) Ltd. vs. Authority of Advance Ruling (Income Tax) [2023 (3) TMI 563 - BOMBAY HIGH COURT] and the decision of Vodafone International Holding BV vs. UOI [2012 (1) TMI 52 - SUPREME COURT] held that long term capital gain on sale of shares in the case of assessee is not liable to be taxed in India. Decided in favour of assessee.
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2024 (7) TMI 1427
Interest u/s. 244A - refund of advance tax paid - contention of the assessee is that the CIT(A) has allowed interest on refund of advance tax paid by the assessee for AY 2004-05, per contra stand of the department is that the CIT(A) has erred in allowing interest on MAT credit allowed by the AO in proceedings u/s. 154 - HELD THAT:-CIT(A) following the decisions rendered in the case of CIT vs. Tulsyan NEC [2010 (12) TMI 23 - SUPREME COURT] the decision of Hon’ble Bombay High Court in the case of CIT vs. Apar Industries [2010 (4) TMI 151 - BOMBAY HIGH COURT] and Bharat Aluminum [2011 (5) TMI 565 - DELHI HIGH COURT] has directed AO to allow interest u/s. 244A of the Act on the refund arising from advanced tax paid by the assessee.
However, in the last line of the order it appears that the CIT(A) inadvertently mentioned “refund arising on account of MAT credit”. It is settled position that the department is liable to pay interest u/s. 244A of the Act on the refund arising from advance payment of tax by the assessee.
Since, in the instant case there is some ambiguity in the findings of the CIT(A) in allowing interest. We deem it appropriate to restore this issue back to the file of AO for the limited purpose of verification. If refund has accrued to the assessee from advance payment of tax, the AO shall allow interest to the assessee on such refund u/s. 244A - However, if it is a case of refund on account of MAT credit no interest shall be allowable. Appeal of the department is partly allowed for statistical purpose.
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2024 (7) TMI 1426
Addition u/s 69A - unexplained source of cash in hand - non rejection of books of accounts - HELD THAT:- As we observe that the AO has not adversely commented on the details of sales, purchases and stocks both in terms of quantity and amount and the party-wise sales/purchase etc.
AO has also accepted the sales declared by the assessee. As a sequel to such undisputed facts, we are compelled to think that cash in hand declared in the books is backed by documentary evidences.
The assessee being in Kiryana business where large cash transactions are generally involved, the source of cash in hand draws considerable strength. The purchases made are stated to be through banking channel which further strengthens the audited financial accounts. Besides, we see no semblance in the view taken by the AO that only average balance of cash in hand needs to be given credit. For doing so the cash book necessarily has to be discarded.
The books of account are admittedly not rejected. The sales, purchases and stocks have been accepted. Thus, the prerequisites of Section 69A do not appear to have been fulfilled.
Several judgments have been quoted on behalf of the assessee to contend that rejection of books is necessary to indulge in such addition. The action of the AO in our view, as rightly contended on behalf of the assessee has resulted in double additions which is not permissible in law. We thus see no rationale in confirming the additions towards unexplained cash under Section 69A in the facts of the case by granting credit only towards average cash balance rather than actual cash in hand at the relevant point of time.
We note that as against the sale of Rs. 7,46,90,131/-, the assessee has declared a net profit ratio of 0.9% as against the immediately previous F.Y. 2017-18 where against the turnover of Rs. 2,02,83,095/-, the net profit ratio stands at 3.43%. Thus, there is a drastic fall in the net profit ratio vis-à-vis earlier year. Hence, in the balance of things, additional business income @2.53% being difference in net profit ratio of turnover of 7.46 crore which stands at Rs. 18,89,660/- calls for addition attributable to cash sales in question. Thus, the additions to the extent of Rs. 18,89,660/- is retained and the remaining amount of Rs. 1,13,77,807/- is deleted.
Appeal of the assessee is partly allowed.
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2024 (7) TMI 1425
CIT(Appeals) disposed off the appeal for non-prosecution - assessee despite having been afforded four opportunities had failed to participate in the proceedings before him, therefore, he was constrained to dismiss the appeal for want of prosecution - HELD THAT:- No infirmity in the view taken by the CIT(Appeals) in dismissing the appeal of the assessee who had adopted an evasive and lackadaisical approach in the course of the proceedings before him, but at the same time, unable to persuade to subscribe to the manner in which he had disposed off the appeal without dealing with the issue which was specifically raised before him.
CIT(Appeals) had disposed off the appeal for non-prosecution and had failed to apply his mind to the issue which did arise from the impugned order and was assailed by the assessee before him. We are unable to persuade myself to accept the manner in which the appeal of the assessee has been disposed off by the CIT(Appeals).
Once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him.
As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of Premkumar Arjundas Luthra (HUF) [2016 (5) TMI 290 - BOMBAY HIGH COURT]
Thus, not being able to persuade to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits. CIT(Appeals) shall in the course of the de-novo appellate proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at liberty to substantiate his claim on the basis of documentary evidence, if any. Appeal filed by the assessee is allowed for statistical purposes.
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2024 (7) TMI 1424
Rejection of application for registration u/s 80G(5) - section code is wrongly mentioned - assessee accepted its mistake of wrongly selecting section code “13-Clause (ii) of first proviso to sub-section (5) of section 80G” instead of selecting section code “14-Clause (iii) of first proviso to sub-section (5) of section 80G” in letter dated 11.03.2023 and offered to resubmit the application - HELD THAT:- As submitted that though the objects of the trust may be religious but the same is not bar for applying for 80G registration as section 80G(5B) itself provides allowance of 5% for religious expenditure. It was also explained that expenditure of temple etc. were not carried out by the trust but by the trustees in their individual capacity.
Thus, the same did not appear in the financial statement of the trust. The position regarding vegan food center was also clarified. Likewise, explanation for non-audit of financial statements, work done by the trust for animal welfare, donation received by the assessee was furnished.
Necessary evidence in support including the copy of the decision in Santshreshtha Gajajan Maharaj Sevabhavi Sanstha [2022 (12) TMI 338 - ITAT PUNE] accompanied the said reply. But nothing was considered by the Ld. CIT(E) in his impugned order.
The matter deserves to be set aside and restored back to the file of the Ld. CIT(E) for decision afresh on merits taking into account all the material available in the records and after allowing adequate opportunity of being heard to the assessee to present its case. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (7) TMI 1423
Levy of penalty u/s 271(1)(c) - Defective notice u/s 274 - non striking off irrelevant clause - HELD THAT:- Even though, the AO had clearly mentioned in the assessment order that the assessee had furnished inaccurate particulars of income but at the time of issuing he did not strike off the irrelevant clause. As such, the notice issued by the Ld. AO was vague. There are various decisions on this issue on the decision of Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] mere defect in the notice by not striking off the irrelevant matter vitiate the penalty proceedings. A penalty proceeding is a corollary, nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness.
Thus we direct the deletion of the penalty levied in this case. Decided in favour of assessee.
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