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Showing 261 to 280 of 1464 Records
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2021 (10) TMI 1205
Exemption u/s 11 - Whether CIT(A) is not justified in accepting the contentions of the assessee and not accepting the findings of the AO in violation of Rule 46A of the IT Rules? - HELD THAT:- CIT(A) had called remand report from the Assessing Officer but the AO has not objected to the written submission filed by the assessee trust. Therefore, the ld. CIT(A) is fully justified in directing the AO allow exemption u/s. 11 of the Act.
As regards the acceptance of submission of the assessee in violation of Rule 46A as claimed by the department, we find that after receiving the various written submissions and documents, the CIT(A) had called for the remand report and after getting the remand report, the explanation of the assessee was called for and the rejoinder was filed by the assessee. Therefore, it cannot be established that the CIT(A) has accepted the new evidence in violation of Rule 46A of the IT Rules. Therefore, we reject the grounds of appeal of the revenue.
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2021 (10) TMI 1204
Accrual of income - Addition account of accrued interest on seed money loans - classification of sticky advances - whether there was no basis for accounting said accrued interest income on cash basis as section 145(1)? - HELD THAT:- Admittedly, the respondent-assessee is following the mercantile system of accounting. It is the policy of the respondent-assessee company to account for the interest on such loans under seed money assistance scheme on receipt basis following the uncertainty of the recovery, realization of the interest. This policy is clearly stated in Clause (5) of Note No.23 read with 36 of Notes to Accounts forming part of Audited Financial Statements. Thus, material on record clearly indicates that there is uncertainty as to the recovery of the principal amount and interest on such advances. Therefore, the issue that comes up for our consideration is that whether can it be said that the interest had accrued on such advances when the assessee is following mercantile system of accounting.
As decided in own case WESTERN MAHARASHTRA DEVELOPMENT CORPORATION LIMITED [2021 (6) TMI 1068 - ITAT PUNE] we do not find any merit in the grounds of appeal raised by the Revenue. Accordingly, the appeal filed by the Revenue stands dismissed.
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2021 (10) TMI 1203
Rejection of books of accounts - best judgment assessment - gross profit estimation - CIT(A) was of the view that 1% to 2% on profits may be estimated depending upon the market situation in such cases - CIT(A) noted that all transactions in assessee`s case are with the associated concerns and no physical transfer of goods took place thus profit cannot be estimated at a normal market rate. In fact, it calls for appropriate rate
HELD THAT:- It is well settled that in a best judgment assessment there is always a certain degree of guesswork. No doubt the authorities concerned should try to make an honest and fair estimate of the income even in a best judgment assessment and should not act totally arbitrarily. Department must act judiciously, while passing the order u/s 144 of the Act and must be guided by judicial consideration and by rule of justice, equity and good conscience. And also that there must be honest and fair estimate of the proper figure of assessment, for which consideration of local knowledge and repute, besides the previous returns an assessment of the assessee concerned, and all other matters must be taken into account for fair and proper estimate which of course, would fall in the category of guesswork, but a honest guesswork.
In the assessee`s case under consideration, we note that assessee did not submit books of accounts. On examination of the profit and loss account of the assessee, the ld CIT(A) noted that total expenditure other than purchases mentioned in the profit and loss account, is a negligible amount of ₹ 2,71,150/- for business turnover of ₹ 2,39,05,01,881/-. Therefore, books of accounts of the assessee cannot be believed. The breakup of these expenses also shows that no expenses were recorded towards transportation. With negligible amount of transportation cost, how the assessee has achieved turnover of ₹ 2,39,05,01,881/-? Therefore, it simply implies that the transactions of purchase and sales are made through book entry. Needless to say, that no physical transfer of goods has taken place in view of the fact that there was no transportation expenses recorded. Hence, we are of the view that Gross Profit rate at 1% sustained by ld CIT(A) is quite reasonable.
There is gross failure on the part of the assessee, as the assessee has deliberately refrained from producing the books of account till the very last stage of the assessment proceedings. The reason being that the books of account were not good enough to pass the test of verification of the Assessing Officer. It needs to be appreciated that verification of the books of account is a primary and fundamental tool for finalizing the assessment under section 143(3) - in the light of the judgment of the Hon`ble Apex Court in the case of CIT Vs. Simon Carves Ltd [1976 (8) TMI 4 - SUPREME COURT], and taking into account the assessee`s facts, as narrated above, we are of the view that estimation made by ld CIT(A) is based on sound reasoning. That being so, we decline to interfere with the order of Id. CIT(A) in sustaining the additions at the rate of 1% of gross profit. His order on these additions are, therefore, upheld and the grounds of appeal of the assessees, as well as Revenue are dismissed.
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2021 (10) TMI 1202
Sundry debtors written off - assessee has not demonstrated how the debts have become bad or what efforts have been taken for recovery - HELD THAT:- CIT(A) has given finding that it is clear that the ledger accounts and sales invoices along with a detailed chart has been furnished by the assessee which demonstrates that the amount involved in the debts have been offered as income in the earlier years. CIT(A) has rightly rejected the AO’s plea that the assessee has not demonstrated how the debts have become bad or what efforts have been taken for recovery. As the said issue is duly covered by the decision in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] wherein it was held that after amendment in the Act write off in the account is sufficient for the claim of debts written off. Hence, in our considered opinion there is no infirmity in the order of learned CIT(A). Moreover, this ITAT in assessee’s own case for A.Y. 2011-12 & 2012-13 in [2021 (6) TMI 615 - ITAT MUMBAI] on the issue of bad debts similarly raised, has allowed the same in favour of the assessee.
Finished goods written off - HELD THAT:- In order to bring out the effect of the change in the method of accounting the assessee had reduced the effect which is ₹ 37.41 cores from the consumption which would decrease valuation of opening stock and increase the profit. Further in order to negate this effect the assessee had debited the same amount to the profit and loss account as exceptional items written off. Thus there is no effect on the profit and loss account and the assessee has not tinkered with the opening stock. To recapitulate, the assessee has reduced the value of opening stock by a sum of ₹ 37.41 crores which is a credit effect increasing the income and has simultaneously debited the profit and loss account by the same amount as exceptional items written off to nutralize the effect. Thus actually there is no effect and this has also been detailed in Note No. 4 given by the auditors in the notes to accounts. In this view of the matter in our considered opinion, we do not find any infirmity in the order of learned CIT(A).
We note that in the present case before us aforesaid amount added by the AO is erroneous as assessee’s adjustment has not affected to the profit and loss account. In this view of the matter we do not find any infirmity in the order of learned CIT(A). Hence, we uphold the same.
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2021 (10) TMI 1201
Addition u/s 68 - Unexplained cash credit - primary discharge of onus - HELD THAT:- Where the document furnished explained a credit - cash available to the required extent in the instant case, there is a prima facie discharge of the onus on the assessee, and it is for the AO to, where not satisfied, seek further explanation, so that his non-seeking the same, as stated by Sh. Modh during hearing, cannot disturb the said prima facie discharge of the onus by the assessee.
In the instant case, however, the argument of a prima facie discharge of onus by the assessee is not available to him as, as found, he had been specifically required by the AO to furnish the source of the cash available with the creditors, also drawing their cash flow statements, and which had not been complied with. As afore-stated, the reference of cash availability to the opening cash-in-hand (i.e., as on 31/3/2011), only implies that the source of the cash is to be found in an anterior period - nothing more and nothing less.
The matter, on balance, warrants being remitted back to the file of the AO for fresh adjudication, which is hereby directed. It shall be open for him to question the assessee, or even, where so considered, the concerned creditor/s, and/or seek further evidence in validation of the document/s (balance-sheet, income statement, etc.) submitted, which, where belonging to the creditors, would need to be signed by them. He shall make an objective and fair assessment of the different variables impinging on the cash availability, and decide in accordance with law per a speaking order after affording a reasonable opportunity to the assessee to present his case before him.
Another aspect of the matter that needs to be before parting clarified is that the Revenue has not disallowed the interest allowed by the assessee on the impugned credits, stated to be loans thereto, and which in fact follows in consequence of the same being, or ought to be the case where it is, deemed as the assessee's income. Though inconsistent, that would not by itself render the assessee's case as proved, which will have to be adjudged on its merits. Why, regarding so would make the Revenue's case a non-starter, and allowing the assessee the benefit of what is essentially a fallacy on the part of the Revenue, which ought to have been addressed by the first appellate authority inasmuch as it is, as afore-said, inconsistent with the impugned credits being regarded by it as the assessee's income. Why, for that matter, even the said interest having been returned by them, may have been assessed as the creditor's income for the relevant year. That, again, though would not by itself absolve the assessee from discharging the burden of proof on it
Addition toward low house-hold withdrawals - AO effected the same finding the disclosed withdrawal as inadequate to satisfactorily explain the personal and house-hold expenditure, i.e., for self and family. The position before the first appellate authority, and in fact even at the second appellate stage, remains the same; the assessee being unable to show as to how the estimated expenditure was excessive, as alleged per his ground of appeal. The same is found reasonable considering the obtaining price levels, with, as afore-said, the assessee not improving his case before me in any manner. We decide accordingly.
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2021 (10) TMI 1200
Disallowance u/s 14A r.w.r. 8D - mandation of recording satisfaction - Addition being 0.5% of the average of opening and closing investment in mutual funds pertaining to financial year 2012-13 - whether AO failed record his dissatisfaction with the working given by the assessee that they have not incurred any expenditure to earn the dividend income? - HELD THAT:- When assessee has come up with a categoric defence that no expenditure has been incurred to earn the dividend income during the years under assessment and that all the investment during the years under assessment are “dividend reinvested” (Debt Oriented Funds) and that no direct investment has been made rather dividend has been reinvested by the company during the years under assessment and has brought on record complete fund statement issued by the ICICI Prudential Fund wherein the entire investment shown in the year under consideration is “dividend reinvested” (Debt Oriented Funds), AO was required to record his categoric dissatisfaction as to working of the assessee that such and such expenses have been incurred to earn dividend income, but not shown.
When ld. CIT (A) himself recorded that, “it may not be possible to find out the actual expenditure incurred in relation to the earning of exempt income”, it is difficult to reject the working brought on record by the assessee too that no expenditure has been incurred to earn dividend income by the assessee. Moreover, the entire investment made by the assessee during the years under assessment is “dividend reinvested” and in these circumstances, the provisions contained u/s 14A read with Rule 8D cannot be invoked mechanically.
In AY 2014-15 also, AO has mechanically applied section 14A read with Rule 8D without recording any dissatisfaction as to the working given by the assessee as to not incurring any expenses to earn the dividend income rather based his findings on the basis of generic observations that such a huge investment cannot be made without incurring expenditure. For AY 2014-15 also, assessee has brought on record fund statement also showing entire investment for the year under assessment as “dividend reinvested” which ratifies the working given by assessee.
By following the law laid down in Godrej & Boyce Manufacturing Company Ltd. [2017 (5) TMI 403 - SUPREME COURT] and Maxopp Investment Ltd. [2011 (11) TMI 267 - DELHI HIGH COURT] we are of the considered view that disallowance for Assessment Years 2013-14 & 2014-15 respectively by mechanically applying the provisions contained u/s 14A read with Rule 8D(2) are not sustainable in the eyes of law because sub-section (2) & (3) of section 14A with Rule 8D of the Rules has only prescribed a formula for determination of an expenditure to earn the income which does not form part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee.
It is a matter of fact that the entire investment during the year under consideration is on account of dividend reinvested (Debt Oriented Funds) not creating any occasion for the assessee company to put in their administrative and managerial manpower for making investment. So, AO is directed to delete the disallowance for Assessment Years 2013-14 & 2014-15 respectively after due verification that apart from “dividend reinvested” no other investment has been made by the assessee company. - Decided in favour of assessee.
Education Cess (EC) and Secondary & Higher Education Cess (SHEC) on income-tax being an allowable expenditure for computing the total income - HELD THAT:- As it is settled principle of law that Education Cess and Secondary & Higher Education Cess paid on income-tax is an allowable deduction for computing the total income being not hit by the provisions contained u/s 40A(ii) of the Act, as has been held by Hon’ble Bombay High Court in case of Sesa Goa Ltd. [2020 (3) TMI 347 - BOMBAY HIGH COURT].
Hon’ble High Court in Sesa Goa Ltd. case (supra) held that education cess or any other cess is not included in clause (ii) of section 40(a) of the Act so there is no prohibition in claiming deduction of such amounts while computing the income of the assessee under the head ‘profits & gains of business or profession’.
Coordinate Bench of the Tribunal in case of Sicpa India Private Ltd. [2020 (4) TMI 425 - ITAT DELHI] also decided the identical issue by holding that education cess on income-tax, dividend distribution tax and fringe benefit tax is not a disallowable expenditure under section 40(a)(ii) of the Act having been expressly excluded from section 40(a)(ii) - education cess and secondary & higher education cess is an allowable deduction being not hit by the provisions of section 40(a)(ii) of the Act. - Decided in favour of assessee.
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2021 (10) TMI 1199
Disallowance of supervisory charges paid - ingenuine expenditure - assessee had made a claim for deduction u/s. 40(a)(i) of the 'supervisory charges' paid to the parent company - as per DR CIT(A) has erred in deleting supervisory fees paid by the assessee to its parent company based on fresh evidences submitted for the first time during appellate proceedings without giving any opportunity to the Assessing Officer in violation of Rule 46A of Income Tax Rules, 1962 - HELD THAT:- The assessee has furnished necessary evidences, including agreement between the parties, invoices raised by parent company, travel documents of expatriates, who visited India for rendering services, their visa, passport and air tickets. The assessee had also furnished e-mail correspondence between its parent company for exchange of information regarding technological support required for manufacturing and installation of industrial furnaces. The said payment has been made after withholding necessary TDS applicable as per law - supervisory fees paid by the assessee to its parent company M/s. Dong Woo HST Co. Ltd. in pursuant to an agreement dated 25.12.2007 is genuine expenditure incurred wholly and exclusively for the purpose of business of the assessee and which is supported by necessary evidences.
AO has disbelieved genuine expenditure incurred by the assessee for the purpose of business only for the reason that said transaction was entered into between the assessee and its parent company. AO had also questioned necessity of making such payments. Therefore, he opined that payment made to its parent company for rendering supervisory fees is nothing but shifting of profit from one tax territory to another tax territory without any actual business expediency and as against which no particular service is received.
As gone through reasons given by the AO in light of various evidences filed by the assessee including agreement between parties and we do not ourselves subscribe to reasons given by the Assessing Officer for the simple reason that it is well settled principle of law that the Assessing Officer cannot sit in the armchair of businessman and decide whether particular expenditure is required to be incurred or not. It is also an admitted legal position that the Assessing Officer cannot question rational and necessity of incurring any particular expenditure. What is required to be seen is whether particular expenditure is incurred wholly and exclusively for the purpose of business of the assessee and further such expenditure is supported by necessary evidences. In this case, the assessee has filed all possible evidences including agreement between parties to prove genuineness of expenditure incurred for supervisory services.
There is no doubt of whatsoever with regard to genuineness of payment made by the assessee to its parent company, because such payment was made in pursuant to agreement between parties and further, the assessee has deducted applicable TDS as per law. The assessee had also furnished other supporting evidences to prove receipt of services from its parent company - expenditure incurred by the assessee towards payment made to its parent company for rendering supervisory services is genuine expenditure, which was incurred wholly and exclusively for purpose of business of the assessee.
AO without appreciating facts has simply disallowed supervisory fees paid to the assessee's parent company. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer. Hence, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the Revenue.
Non-deduction tax deducted at source and consequent disallowance of expenditure by the assessee in certain years and claiming deduction for said expenditure in the year of payment is not disputed by the Assessing Officer, because the Assessing Officer has primarily held that expenditure incurred by the assessee under the head supervisory fees is held to be not deductible under section 37 of the Income Tax Act, 1961. But, the ld. CIT(A) has examined suo motu disallowance made by the assessee in earlier years for non-deduction of tax deducted at source and subsequent deduction claimed in the year of payment and held that the assessee has rightly claimed deduction towards expenditure incurred in earlier years in the impugned assessment years, because, it was disallowed in earlier years for non deduction of TDS and further, the same has been claimed as and when TDs has been deducted and remitted to Govt. account. - Decided in favour of assessee.
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2021 (10) TMI 1198
Assessment u/s 153A - HELD THAT:- The impugned addition made in Section 143(3) r.w.s. 153A assessment is not liable to be sustained since not based on any incriminating material and the same had already been made in Section 143(3) assessment. We therefore accept the assessee's grievance herein.
Addition u/s 14A r.w.r 8D - HELD THAT:- As decided in own case [2021 (9) TMI 124 - ITAT HYDERABAD] the very disallowance stood accepted on the ground that it had not derived any exempt income. We therefore adopt the very precise reason herein as well to delete the impugned disallowance in light of case law Chettinad Logistics Pvt. Ltd. [2017 (4) TMI 298 - MADRAS HIGH COURT], Corrtech Energy Pvt. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] and Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] - Decided in favour of assessee.
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2021 (10) TMI 1197
Income from other sources - valuing shares and the procedure to be followed - AO rejected the DCF method followed by assessee and recomputed under NAV method and made addition as "income from other sources" u/s 56(2)(viib) - HELD THAT:- An identical issue was considered in case of M/s. Town Essential Pvt. Ltd. [2021 (7) TMI 17 - ITAT BANGALORE] Primary onus to prove the correctness of the valuation Report is on the assessee as he has special knowledge and he is privy to the facts of the company and only he has opted for this method. Hence, he has to satisfy about the correctness of the projections, Discounting factor and Terminal value etc. with the help of Empirical data or industry norm if any and/or Scientific Data, Scientific Method, scientific study and applicable Guidelines regarding DCF Method of Valuation. The order of ld.CIT(A) is accordingly set aside and this issue is remanded to the AO for decision afresh, after due opportunity of hearing to the Assessee.
Thus we remand this issue back to the Ld. AO. The Ld. AO is directed to carry necessary verification as directed hereinabove. Assessee is directed to file all relevant documents as called for support the claim. Ld. AO is then to consider the claim in accordance with law. Needless to say that proper opportunity of being heard to be granted to assessee. Assessee's appeal is allowed for statistical purposes.
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2021 (10) TMI 1196
Addition u/s 36(1)(va) - employees' contribution to ESI before the due date for filing of return u/s. 139(1) - HELD THAT:- Admittedly, the assessee has remitted the employees' contribution to ESI before the due date for filing of return u/s. 139(1) of the I.T. Act. The Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. [2014 (3) TMI 386 - KARNATAKA HIGH COURT] has categorically held that the assessee would be entitled to deduction of employees' contribution to ESI provided the payment was made prior to the due date of filing of return of income u/s. 139(1).
Whether the amendment to section 36(1)(va) and 43B of the I.T. Act by Finance Act, 2021 is clarificatory and declaratory in nature? - Supreme Court in the recent judgment in the case of M.M. Aqua Technologies Limited v. CIT [2021 (8) TMI 520 - SUPREME COURT] had held that retrospective provision in a taxing Act which is "for the removal of doubts" cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood - amendment brought about by the Finance Act, 2021 to section 36(1)(va) and 43B of the I.T. Act, alters the position of law adversely to the assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 01.04.2021 and will apply for and from assessment year 2021-2022 onwards. The amendment to section 36(1)(va) and 43B of the I.T. Act by Finance Act, 2021 is only prospective in nature and not retrospective.
The amendment by Finance Act, 2021 to Sec. 36(1)(va) and 43B of the I.T. Act will not have application to relevant assessment year, namely A.Y. 2019-2020. Accordingly, we direct the A.O. to grant deduction in respect of employees' contribution to ESI since the assessee has made payment before the due date of filing of the return of income u/s. 139(1) - Decided in favour of assessee.
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2021 (10) TMI 1195
Revenue recognition - method of accounting - sale of residential/commercial units - revenue from booking of units by the customers - Addition invoking percentage of completion method -"completed contract method" v/s percentage of completion method - Addition deleted by CIT(A) - HELD THAT:- Accounting standard AS-7 relied upon by the Assessing Officer is applicable strictly in the case of construction contracts only.
CIT(A) has followed binding precedent of the jurisdictional High Court in the case of Paras buildtech India private limited [2015 (11) TMI 1217 - DELHI HIGH COURT]; Sabh infrastructure Ltd. [2015 (11) TMI 1283 - DELHI HIGH COURT] and Manish Buildwell P. Ltd. [2011 (11) TMI 35 - DELHI HIGH COURT] Further, the assessee is following consistently this method of revenue recognition in prior years as well as in subsequent years and which has been accepted by the revenue and thus rule of consistency also demand that in the year under consideration the assessing officer is not justified in deviating the consistent approach of the Department. No error in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The grounds of the appeal of the revenue are accordingly dismissed.
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2021 (10) TMI 1194
Revision u/s 263 by CIT - As per CIT sale of land parcels as taxed under the head "Capital Gains" - AO found that the actual sale consideration of land parcels shown as business assets/stock-in-trade in the books of accounts is lesser than the corresponding value assessable for the purposes as stamp duty - HELD THAT:- If the course suggested by the PCIT is adopted and on profits arising on sale of land parcels are taxed under the head "Capital Gains", the assessed income could be lower than the income assessed by the AO. The tabular statement demonstrating the aforesaid fact is self-speaking in this regard and does not require much delineation. Consequently, where the course suggested by the PCIT results in greater prejudice to the Revenue and the course adopted by the AO has resulted in lesser prejudice, the action of the PCIT under Section 263 falls flat on the ground.
In order to usurp jurisdiction u/s 263, both the conditions, i.e. order being erroneous as well as prejudicial to the interest of the revenue, must simultaneously coexist. In absence of any prejudice caused to the Revenue by the action of the Assessing Officer, the order cannot be revised even if it is momentarily considered to be erroneous. Hence, the revisionary action of the PCIT requires to be set aside on this ground alone without going into other aspect of arguments.
We also take into account the other line of arguments propounded on behalf of the assessee that the nature and character of an income depends on host of factors which are required to be cumulatively weighed and thus is inherently a very highly subjective exercise. There is no straight jacket formula to determine whether an asset held by the assessee should be treated as capital asset or business asset. Such issues are inherently highly debatable and arguable in nature. One cannot definitely say with precision and more so under the revisional jurisdiction that the action of the AO in adopting one course of view is erroneous per se. There is invariably a scope of argument on determination of character of income. Indulgence on such aspect under the revisional jurisdiction is not appropriate in the absence of cogent facts adverse to the assessee. We do not see any such material which can make the conclusion of the PCIT indefeasible. This being so, the action of the PCIT cannot be endorsed on this ground also. Hence, looking from any angle, the revisional action of the PCIT under Section 263 is not sustainable in law. Consequently, the revisional order under Section 263 of the Act is quashed and set aside. - Decided in favour of assessee.
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2021 (10) TMI 1193
Unexplained deposits in bank - Withdrawal of cash from bank and re-deposit of the same into the bank account - contention of the assessee i.e. withdrawn the money for the purpose of giving advance to the landlords and since the land deal could not materialize, the amount had been re-deposited back into his bank accounts - HELD THAT:- Withdrawal of cash has been accepted by the AO. In such scenario, unless the AO is able to show that the assessee has been able to utilize this withdrawn cash for some investment/undisclosed expenses of the same/like amount, we infer that the assessee has been able to show that money re-deposited in the bank account of the withdrawn/like amount, so the assessee's contention need to be accepted without any rebutted material to suggest otherwise.
DR could not rebut/controvert the cash flow statement vis-à-vis the bank statements filed - The assessee had enough money in his bank as disclosed, therefore, no addition u/s. 68 of the Act was warranted in this case and therefore, the assessee succeeds and since the assessee has been able to explain the nature and source of the deposits in the bank account which has been found adversely by the Department. Therefore, we direct the AO to delete the addition - Decided in favour of assessee.
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2021 (10) TMI 1192
Levy of penalty u/s 271B - violation of section 44AB - assessee has failed to maintain the books of accounts - assessee is a Civil Contractor - Proof of reasonable cause within the scope of section 273B - A.O has completed the assessment u/s. 143(3) by disallowing 5% of the expenses on the ground that non submissions of bills and vouchers - HELD THAT:- In this case, the assessee has not maintained any books of accounts and the assessee has offered an income on estimate basis and the same is accepted by the A.O. Keeping in view of the case of CIT v. Bisuali Tractors [2007 (5) TMI 181 - ALLAHABAD HIGH COURT] penalty u/s. 271B imposed by the A.O in this case cannot be sustained. Therefore, the penalty imposed by the A.O and confirmed by the Ld. CIT(A) is cancelled. Thus, the appeal filed by the assessee is allowed.
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2021 (10) TMI 1191
Validity of Proceedings u/s 153C - whether no proper satisfaction note of the Ld. Assessing Officer has been prepared having jurisdiction over the searched person as well as the assessee for initiating the proceeding u/s 153C - HELD THAT:- As in the case of M/s Super Malls Pvt. Ltd [2020 (3) TMI 361 - SUPREME COURT] and on examining the satisfaction note reproduced above we are of the considered view that a proper satisfaction note of the Ld. Assessing Officer has been prepared having jurisdiction over the searched person as well as the assessee for initiating the proceeding u/s 153C of the Act and therefore we find no merit in the additional legal ground raised by the assessee. We accordingly dismiss the same.
Long term Gain on sale of land - claim of section 54 - From perusal of records we find that registered sale deed was executed on 12.12.2006 but on perusal of paper book we find that the possession of the said flat was given to the assessee on 10.02.2007. The transfer of residential flat in favour of the assessee is completed only when the possession is given i.e. 10.02.2007. On adopting the date of purchase of flat on 10.02.2007 the assessee’s claim for section 54F of the Act would be valid as it is within one year.
The revenue authorities have adopted the date of sale of land on the basis of registered sale deed dated 28.12.2007 but have not considered the date of possession given by the assessee of the said land on 06.12.2007 but for the purchase of flat revenue authorities have adopted the date of purchase as the registered deed i.e. 12.12.2006 but not considered the date of possession of flat received by the assessee on 10.20.2007. If for sake of academic discussion the basis of possession of the immovable property is taken then also the assessee succeeds as the date of sale of land would be 06.12.2007 and purchase of flat would be 10.02.2007.
Assessee has rightly claimed the deduction u/s 54F of the Act for purchase of residential flat on 10.02.2007 which is within one year from the date of sale of the land on 28.12.2007( when the total payment for sale of land was received) and since we have held the claim of section 54 F of the Act for deduction against Long Term Capital Gain as valid, the impugned addition of not utilizing the deposit in Capital Gain Account Scheme will not stand for and therefore, the addition made by the Ld. Assessing Officer stands deleted - Decided in favour of assessee.
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2021 (10) TMI 1190
Penalty u/s 271AAA(2) - Proof of admission of undisclosed income u/s 132(4) - primary onus - onus is on the Revenue to raise appropriate questions towards manner of deriving undisclosed income and substantiation thereof - HELD THAT:- As the factual position discernable from the record, it is manifest that the assessee has not failed to specify the manner of deriving undisclosed income perse in the absence of any question directed towards the assessee/deponent of the statement in this regard. The substantiation of the manner of deriving undisclosed income naturally has not been called into question by the Revenue.
Assessee has replied to the queries raised while recording the statement as called for. The Revenue does not appear to have quizzed the assessee for satisfying the manner in which the purported undisclosed income has been derived. The income considered as undisclosed income under s. 132(4) of the Act was duly incorporated in the return filed pursuant to search. Therefore, the Revenue, in our view, now cannot plead deficiency on the part of the assessee to specify the manner which has not been called into quest ion at the time of search or even at the stage of the assessment.
AO or CIT(A) has not pointed out any query which remained unreplied or evaded in the course of search or post search investigation. Therefore, looking from any angle, it is difficult to endorse the action of the Revenue - Decided in favour of assessee.
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2021 (10) TMI 1189
Revision u/s 263 by CIT - AO has not examined the large commission expenses and low net profit and there is a mismatch of interest paid to the related persons u/s 40A(2)(b) - HELD THAT:- We find that the claim was allowed by the Hon’ble Tribunal in the earlier assessment year and the miscellaneous application filed by the revenue is dismissed. Whereas in respect of twin conditions of (i) Erroneous and (ii) Prejudicial to the interest of the revenue. We find the revenue is disputing of the Assessment order. Whereas, the assessee has discharged the burden by submitting the information and requisite details as called for by issue of statutory notice u/s 142(1) of the Act along with the questioner which cannot be overlooked. Since the information was available with the A.O in the course of the assessment, the A.O. has considered the facts, submissions and evidences filed and took a possible view.
In the assessment proceedings the assessee has responded to the clarifications/ queries raised by the A.O. and after verification and satisfaction of claims, A.O has passed the order U/sec 143(3) - AO order passed u/sec 143(3) of the Act does not satisfy the twin conditions of erroneous and prejudicial to the interest of revenue and Accordingly, the revision order passed by the Ld.Pr.CIT is quashed and allow the grounds of appeal in favour of the assessee.
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2021 (10) TMI 1188
Addition on account of 10% of GP rate on the total turnover - CIT-A deleted the addition - HELD THAT:- The agreement with the parties, the affidavits, confirmation and appellant letter filed before the AO the appellant’s letter for personal presence of the parties lifted goods are part of the records lying before us. AO observed that these documents were not produced before us though the same was in fact produced during the original assessment. CIT(A) found no basis to make this addition. Since the assessee has discharged its onus by producing the entire set of documents/evidence as mentioned hereinabove and in the absence of any adverse evidence relied upon by the AO. CIT(A) finally deleted the addition which according to us is of no ambiguity so as to warrant interference and hence, this ground of appeal preferred by the Revenue is found to be devoid of any merit and thus, dismissed.
Unexplained investment - HELD THAT:- As total income of the assessee. However, there was an arithmetic mistake in calculating ₹ 1800000/- which should have been 1702500/- (2102500 – 400000). CIT(A) during the appellate proceeding went through the cash flow statement prepared on the basis of the copies of seized material taking into account the opening cash balance, bank withdrawals which is also made available before us being part of the Paper Book. Apart from that in the remand report dated 27.10.2010 available at page 10 to 15 of the PB so filed before us. The Ld. AO admitted such facts and the documentary evidences filed in its explanation of the sources of funds by the assessee and hence, the Ld. CIT(A) deleted both the additions. According to us, there is no ambiguity in making such decision made by the Ld. CIT(A). Hence, the said is hereby confirmed. This ground of appeal preferred by Revenue fails.
Cash sale of agricultural equipment - HELD THAT:- CIT(A) while allowing the appeal alongwith this ground of appeal relied on the basis of the documents, facts and the remand report and further observed that the cash flow cannot be suspected in the absence of any adverse evidence relied upon by the Ld. AO which according to us is without any ambiguity so as to warrant interference. This ground of appeal is allowed.
Lifting the goods from the Custom Authorities - HELD THAT:- AO has not mentioned anything except that this purchase was not accounted for without any evidence at all. In spite of having all seized material and the documents of Customs Authorities the AO has not verified the same. Neither has given any adverse comment on the audited profit and loss account. CIT(A) has categorically mentioned that all above grounds are being discussed for the source of funds for lifting the goods from Customs and the appellant has already shown purchase in profit and loss account at ₹ 20260309/- In that view of the matter, the conclusion made by the AO that the said sales had not been reflected in the books of accounts of the assessee is without any basis and application of GP rate on the presumed sales outside the books of account leading to addition has been rightly found to be unsustainable in the eye of law by the Ld. CIT(A).
Addition on account of specularity profit earned from sale of shares - HELD THAT:- Case of the assessee is this that these were forwarded transactions, profit and loss is determined when the transaction gets finality otherwise carried forward with notional profit/loss and charges are debited by broker as badlaThe bills and the conciliation with Sh. Pradeep Bhalla & Company has also been perused by us - CIT(A) in his order has deleted the addition on the basis of remand report and the facts that these were speculative transactions and this year these were carried forward and got finality in subsequent year i.e. AY 1993-94, he has referred the Ld. CIT(A) order for AY 1993-94. We do not find any ambiguity in such observation and decision made by the Ld. CIT(A) and hence, the same is hereby confirmed. This ground of Revenue is thus, dismissed.
Unexplained cash deposits in bank - HELD THAT:- As perused the cash flow statement available at page 36 of the Paper Book filed before us which reflects that there were sufficient cash available as on 30.04.1991 and also the sufficient explanation was made by the appellant. Hence, the Ld. CIT(A) deleted such addition. Hence, according to us the Ld. CIT(A) has rightly deleted the same. In that view of the matter, ground preferred by the Revenue is found to be devoid of any merit and hence dismissed.
Addition on account of closing stock - HELD THAT:- CIT(A) deleted the addition on the basis of facts, documents and remand report from the AO on the ground that the appellant has included this quantity while calculating the value of closing stock which is proper and thus, confirmed. This ground of appeal preferred by the Revenue fails.
Addition on account of GP rate at 20% - HELD THAT:- CIT(A) deleted the addition on the basis that the sales as per audited profit and loss account is much more than the sales as per Sales Tax Department because the exempted sales are not included in sales tax returns. Therefore, the estimation is not correct. Regarding GP of 20%, the Ld. CIT(A) mentioned that despite logical explanation the estimation of turnover at 4.50 crore and 20% GP without bringing on record any sound reasoning for doing the same. There was no reason to reject the actual sale of ₹ 44011886/- and GP of 11.15% as of against the Ld. CIT(A) which according to us is without any ambiguity so us to warrant interference and hence, this ground of appeal preferred by the Revenue is found to be devoid of any merit and thus, dismissed.
Addition of notional interest on loan outstanding - HELD THAT:- CIT(A) while deleted notional addition took into consideration this particular aspect of the matter that the Ld. AO has not given any weightage to the circumstances detailed by the assessee that the interest had to be weived to secure the principle. No document was further found during the search to suggest that the assessee had received the interest amount outside the books of account as of the observation made by the Ld. CIT(A) while deleting such addition is according to us just and proper and we hereby confirm the same. The ground of appeal filed by the Revenue fails.
Addition on estimate basis - Addition on the basis of the voucher containing payment of Visa charges by Vandana Goyal from whose residence the same has been seized - HELD THAT:- As the voucher which was seized from the residence of Ms. Vandana Goyal was at ₹ 20858/- being the Visa charges of our travelling and thus, the same was rightly deleted by the Ld. CIT(A). The same is thus, hereby confirmed. This ground of appeal preferred by the Revenue, therefore, fails.
Addition on account of creditors - HELD THAT:- Ld. CIT(A) deleted the addition while doing so. He has relied upon the judgment passed in the matter of Sugauli Sugar Works Ltd.,[1999 (2) TMI 5 - SUPREME COURT]. According to us, there is no ambiguity in such order passed by the Ld. CIT(A). Hence, we confirm the same. - Revenue appeal dismissed.
Unexplained deposit to the bank account - addition was made rejecting the cash flow based upon the documents including sales of agricultural euqipments - HELD THAT:- CIT(A) while deleting the addition mentioned that the appellant has shown total sales of ₹ 11935611/- of agricultural equipment during the year 1992 and the AO cannot reject the cash flow on the basis of cash sale of agricultural equipments at ₹ 813000/- in the month of February, 1992. The reasons so recorded while deleting the addition by the Ld. CIT(A) seems to be adequate and hence, the same is confirmed. This ground of appeal preferred by Revenue is found to be devoid of any merit and thus, dismissed.
Addition on account of interest at 18% of loans and advances - HELD THAT:- The perusal or explanation given by the assessee shows that amounts outstanding as advance represents the transaction of sale by the assessee to the said concern and the amount outstanding is actually on account of the realization to be made of the sales amount. The confirmation filed by the assessee confirming the detailed transaction of purchases, part payment made as been recorded. The above said amount therefore, cannot be treated as advance free of interest.
Addition based on difference of balances - HELD THAT:- It appears that the Ld. CIT(A) deleted the addition on the basis of the reconciliation filed by the assessee before the AO and before him as well without any ambiguity so as to warrant interference. Hence, the appeal preferred by the Revenue is found to be devoid of any merit and thus, dismissed.
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2021 (10) TMI 1187
Imposition of Redemption Fine and Penalty - import of Copper Sulphate Pentahydrate Industrial grade (powder) - insecticide goods or not - requirement of importing the goods from designated ports as per the Ministry of Agriculture and Farmers Welfare Notification dt. 22/12/2017, which is violated in this case - HELD THAT:- The Revenue has nowhere doubted the bona fides of the appellant.
There is a Bill of Entry wherein the goods is described, there are other documents like contract with foreign supplier, Bill of Lading, etc. which when examined/considered, could throw light in deciding what was imported, but nothing is placed on record - The revenue therefore could not have proceeded without carrying out this exercise since it is the direction of Hon’ble High court. Strangely and without placing anything on record, the Order-in-Original has proceeded to confiscate and offer redemption fine only for the reasons that the appellant had violated the port restriction. Port restrictions would apply if the cargo imported is per se insecticide.
Levy of penalty u/s 112(a) of Customs Act - HELD THAT:- Penalty under Section 112(a) could be fastened only if the facts point out to the possible commission or omission as described therein, but when there is miserable failure in considering/examining as what was actually imported, to jump the gun alleging port restrictions is clearly arbitrary and unjustified.
Appeal allowed - decided in favor of appellant.
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2021 (10) TMI 1186
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - import of used rubber tyres without a cut in bead wire - restricted goods - misdeclaration of goods - HELD THAT:- The appellant (Customs Broker) had visited the Delhi address of the importer. Merely because he did not visit the factory at Jaipur, Rajasthan, it is held by the Commissioner that there is violation of Regulation 10(n) of CBLR, 2018. In fact, the address declared in the bills of entry and bill of lading is that of the Delhi address and the said address is a proper one and not fake one. On verification, the department has come to understand that there is no factory at Rajasthan address as declared in the IEC, Aadhar and GSTIN. When these are documents issued by the Governmental authorities, the Customs Broker cannot be burdened with responsibility of verifying the correctness of such address.
There is no violation which is so grave for imposing such a harsh punishment of revocation of license. Taking note of the fact that the appellant has visited the Delhi address of the importer and such address being not fake, we are of the considered opinion that the imposition of penalty is not justified.
The department has failed to establish that appellant has violated Regulation 10(n) of CBLR, 2018 - Appeal allowed.
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