|
Advanced Search Options
Case Laws
Showing 281 to 300 of 1635 Records
-
2022 (3) TMI 1355
Exemption u/s 11 - application of the respondent seeking registration under section 12AA rejected on the ground that there was no satisfactory materials produced by the respondent - As per revenue respondent/assessee failed to produce the requisite documents for consideration of its application seeking registration under section 12AA - HELD THAT:- It is not in dispute that the respondent trust applied for registration under section 12AA of the Act, for the purpose of claiming exemption from the payment of tax. After thorough analysis of the legal position and the materials placed, by order dated 10.12.2010, the said application was rejected by the CIT, Madurai, based on the circular no.762 dated 18.02.1998 issued by the CBDT, New Delhi, on the ground that the respondent trust did not furnish the requisite satisfactory materials to grant such registration.
Without properly examining the activities carrying on by the respondent trust and utilisation of the surplus funds received by them, in the light of the documents furnished, the ITAT, Chennai, merely referring to the objects of the respondent trust, opined that the purpose of the respondent trust was nothing but education; construction of infrastructure for pursuing educational activity is also by its very nature a necessary expenditure for effectively pursuing the educational objects; and the Act itself contemplates exemption to income of institution imparting education. Ultimately, it was concluded by the Tribunal that the respondent trust was eligible for registration under section 12AA.
This court is of the view that such reasoning of the Tribunal without proper verification of the requisite materials, cannot be countenanced and on that score alone, the order impugned herein deserves to be set aside.
We set aside the order of the Tribunal and remand the matter to it for fresh consideration. The respondent trust is at liberty to submit all the requisite documentary evidence available to them to substantiate its claim for registration under Section 12AA of the Act, to the Tribunal, within a period of two weeks from the date of receipt of a copy of this judgment.
-
2022 (3) TMI 1354
Assessment u/s 158BC - period of limitation - time limit prescribed in the statute for completion of block assessment in respect of persons other than the person on whom search was made - HELD THAT:- Admittedly, based on the search and seizure operation conducted in the premises of one R.Ganesan, on 12.12.2002, the respondent issued the notice under section 158BD to the respondent / assessee only on 17.02.2005, requiring them to file return of income in respect of the sand quarrying business carrying by them in the capacity as AOP. As such, the notice issued after three years from the date of search as well as after completion of the assessment under section 158BC, is certainly beyond the time limit of two years as provided under section 158BE. Taking note of the same, the Tribunal rightly allowed the appeal filed by the respondent / assessee on the ground that the notice issued under section 158BD is barred by limitation.
Though the learned counsel for the appellant /Revenue contended that there is no time limit prescribed in the statute for completion of block assessment in respect of persons other than the person on whom search was made and therefore, the notice issued under section 158BD of the Act by the Assessing Officer is valid, this court is not inclined to accept the same, as it is settled law that where limitation is not prescribed, action must be taken within reasonable period.
This court is of the opinion that there is no question of law, much less substantial question of law, arising for consideration in this appeal. Hence, the tax case appeal filed by the Revenue stands dismissed.
-
2022 (3) TMI 1353
Reopening of assessment u/s 147 - Notice after four years - Deduction u/s 80IB - HELD THAT:- Admittedly, for the assessment years 2006-2007, 2004-2005 and 2004-2005 respectively, the respondents herein have filed their returns of income and the assessments were also concluded. After expiry of four years, notices under Section 148 of the Act were issued to the respondents herein on 01.03.2011, 16.03.2011 and 25.03.2011 respectively. On receipt of such notices, the respondents have submitted their objections by stating that they have not suppressed any material particulars at the time of original assessment and therefore, the re-assessment proceedings is not warranted - such objections were rejected by the respective appellant on 25.11.2011. Therefore, challenging the show cause notices issued under Section 148 of the Act as well as the orders of rejection dated 25.11.2011, the writ petitions were filed. The writ petitions were allowed by the learned Judge on the ground that there is no proof to show that there was escapement of income warranting initiation of re-assessment proceedings.
In the decision of the Division Bench of the Gujarat High Court in the case of Ganesh Housing Corporation Limited vs. Deputy Commissioner of Income Tax, Circle 4 & 1 [2016 (9) TMI 764 - GUJARAT HIGH COURT] it was held that re-assessment proceedings are not warranted if the assessee did not suppress any material particulars at the time of assessment or the assessing officer had not collected any new materials to show that there was escapement of assessment.
The contention of the learned Senior Standing Counsel for the appellants that the re-assessment is not solely based on the amendments brought to the statute, but due to the fact that the respondents herein undertook and constructed the building as a contractor and not as a developer, also cannot be sustained in the light of the decision of the Division Bench of the Gujarat High Court mentioned supra. The learned Judge also categorically held that the Assessing Officer is not in possession of tangible material evidence to initiate re-assessment proceedings against the respondents herein. Such a finding rendered by the learned Judge, in our opinion, is proper and therefore, we are not inclined to interfere with the orders, which are impugned in these writ appeals.
-
2022 (3) TMI 1352
Assessment u/s 144B - Faceless Assessment - request for personal hearing or to make oral submissions, on approval of the request, the personal hearing shall be conducted exclusively through Video Conferencing was not honoured - HELD THAT:- It is clear from the procedure prescribed u/s 144B(7)(vii & viii) that in the event of any variation proposed in the draft assessment order or final draft assessment order, the assessee is to be granted an opportunity by serving a notice to show cause and that if the assessee requests for personal hearing, the same is to be considered by the Chief Commissioner or Director General In-charge and the Regional Faceless Assessment Centre.
Circular providing Standard Operating Procedure for personal hearing through Video Conferencing under the Faceless Assessment Scheme, 2019 vide Circular bearing F.No.PR.CCIT/NeAC/SOP/2020-21 dated 23.11.2020 clarifies this position. Accordingly, when the petitioner makes such request for personal hearing, the same must be provided to the petitioner.
As observed by Delhi High Court, the use of the word 'may' u/s 144B is to be construed as 'shall', if otherwise the requirements under the said Circular are complied with.
Accordingly, on this ground itself, the Assessment order at Annexure-A dated 09.09.2021 and the Computation Sheet at Annexure-B dated 09.09.2021 and the Demand Notice at Annexure-C dated 09.09.2021 are hereby set aside
-
2022 (3) TMI 1351
Reopening of assessment u/s 147 - Scope of Section 148A as newly inserted - Comparison between old and new provisions for reassessment - Individual identity of Section 148 as prevailing prior to amendment - applicability of the newly inserted provisions of Section 148A and the amendments brought inter alia w.e.f. 1.4.2021 - identity of Section 148 as prevailing prior to amendment and insertion of section 148A - Whether after introduction of new provisions for reassessment of income by virtue of the Finance Act, 2021 with effect from 01.04.2021, substituting the then existing provisions, would the substituted provisions survive and could be used for issuing notices for reassessment for the past period? - HELD THAT:- As relying on SUDESH TANEJA WIFE OF SHRI CP TANEJA [2022 (1) TMI 1212 - RAJASTHAN HIGH COURT] no indication of surviving the past provisions after the substitution and in fact an active indication to the contrary, inescapable conclusion that we must arrive at is that for any action of issuance of notice under Section 148 after 01.04.2021 the newly introduced provisions under the Finance Act, 2021 would apply. Mere extension of time limits for issuing notice under section 148 would not change this position that obtains in law.
Under no circumstances the extended period available in clause (b) of sub-section (1) of Section 149 which we may recall now stands at 10 years instead of 6 years previously available with the revenue, can be pressed in service for reopening assessments for the past period. This flows from the plain meaning of the first proviso to sub-section (1) of Section 149. In plain terms a notice which had become time barred prior to 01.04.2021 as per the then prevailing provisions, would not be revived by virtue of the application of Section 149(1)(b) effective from 01.04.2021. All the notices issued in the present cases are after 01.04.2021 and have been issued without following the procedure contained in Section 148A of the Act and are therefore invalid.
If the plain meaning of the statutory provision and its interpretation is clear, by adopting a position different in an explanation and describing it to be clarificatory, the subordinate legislature cannot be permitted to amend the provisions of the parent Act. Accordingly, these explanations are unconstitutional and declared as invalid.
We are unable to persuade ourselves to accept this analysis of the situation. In our understanding by virtue of notifications dated 31.03.2021 and 01.04.2021 issued by CBDT substitution of reassessment provisions framed under the Finance Act, 2021 were not deferred nor could they have been deferred. The date of such amendments coming into effect remained 01.04.2021.
In the result we find that the notices impugned in the respective petitions are invalid and bad in law. The same are quashed and set aside. The learned Single Judge committed no error in quashing these notices. All the writ petitions are allowed. Appeals of the revenue are dismissed.
-
2022 (3) TMI 1350
Disallowance u/s 80P(2)(d) - AO held that a Co-op Bank does not fall under the purview of coop society referred to in section 80P(2)(d) - AO denied the claim of exemption u/s 80P in respect of interest derived from Saraswat Cooperative Bank Ltd. - HELD THAT:- What is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank not from cooperative society has no legs to stand as a cooperative bank is also a cooperative society as held by the Karnataka High Court in the case of CIT vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha Bagalkot [2015 (1) TMI 821 - KARNATAKA HIGH COURT]
As regards to the eligibility of exemption u/s 80P(2)(d), this issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] wherein referring to the case of Totgars Co-operative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon’ble Supreme Court in the aforesaid case (supra) held not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act.
Thus the reasoning adopted by the lower authorities cannot be accepted. However, there can be no dispute on facts that the appellant society had received the interest from another cooperative society and, therefore, the income so derived is exempt under the provisions of section 80P(2)(d) of the Act. Thus, the grounds raised by the assessee are allowed.
-
2022 (3) TMI 1349
Computation of capital gain - non-granting of deduction which the assessee claimed to have paid to other co-owners in connection with the property transferred - HELD THAT:- Since the full value of consideration, subject matter of the capital gain under consideration, did not have any relation with Gut No.222/13 in respect of which the assessee along with Sh. Vilas Keshavrao Autade paid a total sum of ₹ 50.00 lakh to the other four co-owners, this transaction of payment in my opinion has rightly been disassociated from the computation of capital gain from transfer to Gut Nos. 222/1 to 222/6.
It can be gathered from the impugned order qua the Gut No.222/13 that Sh. Vilas Keshavrao Autade entered into agreement for jointly developing and selling the land which covered Gut No.222/13. Other four co-owners had some right and interest in the said land at Gut No.222/13. To purchase their right, a total sum of ₹ 50.00 lakh was paid by the assessee and Sh. Vilas Keshavrao Autade. On 17-08-2013, Sh. Vilas Keshavrao Autade entered into sale deed for transfer of his land admeasuring 80R out of Gut No.222/13 in favour of two sons of the assessee and no payment was made by the assessee or his sons towards acquiring the share in Gut No.222/13 along with Vilas Keshavrao Autade. This shows that sum of ₹ 25.00 lakh paid by the assessee along with Sh. Vilas Keshavrao Autade to the other co-owners was a consideration for transfer of Gut No. 222/13, inter alia, in the name of two sons of the assessee. Notwithstanding this factual aspect, since the payment of ₹ 25.00 lakh made by the assessee to other co-owners has no relation whatsoever with the property transferred that became subject matter of computation of long term capital gain under consideration, there can be no question of allowing any deduction in respect of this sum. The impugned order is countenanced on this score.
Non-granting of exemption u/s.54F - Claim was jettisoned by the AO on the ground that the assessee did not purchase a new residential flat but only an “office premises” and hence, section 54F could not apply - It is apparent from bare reading of section 54F that the exemption becomes available towards capital gain arising from the transfer of any long term capital asset on purchasing or constructing one residential house in India. Thus, it is patent that in order to qualify for exemption u/s.54F, it is necessary that the new asset must be a ‘residential house’. Turning to the facts of the instant case, it is seen that the new asset purchased by the assessee is an ‘office premises’ and not a ‘residential premises’. In that view of the matter, the inescapable conclusion is that the authorities below were justified in repelling the assessee’s contention on this issue.
-
2022 (3) TMI 1348
Denial of exemption u/s.54 - purchasing a new house in the name of the assessee’s son - whether exemption u/s.54 can be allowed when the new property purchased by the assessee in the name of someone else other than self? - Diversified decisions - HELD THAT:- When discordant views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that the other view of the non-jurisdictional High Court may sound more appealing on individual level vis-a-vis the view of the jurisdictional High Court.
The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion – for or against - on that point. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not deactivated by the Hon’ble Supreme Court - we bound to follow the view taken by the Hon’ble jurisdictional High Court. The ld. AR failed to draw my attention towards any other subsequent decision rendered by the Hon’ble Bombay High Court in favour of the assessee on this issue. Therefore, hold that the authorities below were justified in denying the benefit of exemption u/s 54. - Decided against assessee.
-
2022 (3) TMI 1347
Additions in respect of employees contribution towards ESI/PF - Deposits before the due date of filing of return of income u/s 139(1) - HELD THAT:- As admittedly and undisputedly, the employees’ contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) - D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says “these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years”. In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case.
Addition by way of adjustment while processing the return of income u/s 143(1) made by the CPC towards the deposit of the employees’s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted.- Decided in favour of assessee.
-
2022 (3) TMI 1346
Exemption u/s 11 - Denial of grant of registration and approval u/s. 12AA/80G - HELD THAT:- From perusal of the written submissions made by the assessee before the Ld. CIT(E), we note that they are dated 04.10.2018, 14.09.2018, but bears acknowledged stamp/seal of the office of the CIT(E), Patna which is dated 11.10.2018. It is noted that impugned order of the Ld. CIT(E) is dated 03.10.2018 whereas the submissions made and received by the O/o the CIT(E) are dated 11.10.2018. On a specific query by the Bench to assessee on these dates, it was submitted by him that the impugned order of rejection of application was passed by the Ld. CIT(E) without considering the submissions made by the assessee for which the assessee should not be made to suffer.
In the present set of facts and circumstances and considering the material and the relevant documents on record, we find it fit and proper to set aside the matter to the file of the Ld. CIT(E) and to reconsider the application made by the assessee for grant of registration and approval u/s. 12AA/80G of the Act by taking into account the material which is already on record and to pass a fresh order in accordance with law. Needless to say that the assessee be given reasonable opportunity of being heard with liberty to file any further details/documents before the Ld. CIT(E) in support of its application for grant of registration or approval.
We set aside the impugned order and restore the matter back to the file of Ld. CIT(E) to re-consider the application made for registration u/s 12AA afresh by providing reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purpose.
-
2022 (3) TMI 1345
Reopening of assessment u/s 147 - Eligibility of reasons to believe - AO has proposed to assess the income being notional rent in respect of the closing stock in the commercial complex, namely, “Kreishna Square” - HELD THAT:- There is no allegation by the AO in the reasons recorded that the income proposed to be assessed in the reassessment proceedings has escaped assessment due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Even otherwise, we find that all the relevant material in respect of the issue of assessment of rental income of the unsold stock was already available with the Assessing Officer at the time of scrutiny assessment. Hence, when the original assessment was framed under section 143(3) and the reopening is after the expiry of four years from the end of the relevant assessment year then the Assessing Officer is not permitted to reopen the assessment until and unless the conditions prescribed in the proviso to section 147 are satisfied.
Assessing Officer himself has not alleged that the income proposed to assess has escaped assessment for want of disclosure of all material facts necessary for assessment.
Thus in view of the above facts and circumstances as well as the binding precedents on the issue being decision of GKN Driveshafts (India) Ltd,[2002 (11) TMI 7 - SUPREME COURT] and CIT Udaipur vs. Hindustan Zinc Ltd. [2016 (6) TMI 1045 - RAJASTHAN HIGH COURT], we are of the considered view that the assessee deserves to succeed and the impugned order of the ld. CIT (A) for A.Y. 2010-11 is set aside.
Addition of the respective amounts by determining the ALV in respect of unsold stock of the assessee at “Krishna Square” the commercial complex - Notional ALV of the units held as stock in trade cannot be chargeable as income in the case of builder since the property is not constructed for letting out but the same is held for sale and actually was sold out on subsequent dates. Further, the builders take booking advance from several parties against the units and is under obligation to deliver possession of unsold stock to the concerned parties and such units cannot be let out by the builder. Therefore in absence of any specific provision in law ALV of stock in trade cannot be taxed. The sub-section (5) of section 23 was inserted by Finance Act 2017 with effect from 01.04.2018. The amended provision of sub section (5) of section 23 allows relaxation from taxability of ALV on unsold stock for the period upto 2 (two) years from the end of the financial year in which the certificate of completion of construction of the property is obtained. In the case of the assessee, construction of the property was completed on 31.08.2009.
Even if we consider the relaxation period upto two years as envisaged in section 23(5), the ALV on unsold stock cannot be taxed for assessment year 2010-11 and 2011-12. Accordingly,e decide this issue against the revenue and in favour of the assessee and consequently the additions made by the AO and sustained by the ld. CIT (A) for A.Y. 2010-11 and 2011-12 are deleted and the order of the ld. CIT (A) is set aside.
-
2022 (3) TMI 1344
Delayed employee’s contribution to ESI & PF - assessee filed complete details of the entire payments i.e. employee’s PF & ESI contribution paid before the due date of filing of return of income - Scope of amendment - HELD THAT:- There are series of decisions of various Hon’ble High Courts M/S. INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD [2015 (7) TMI 1063 - MADRAS HIGH COURT] on this issue and held that the payment of employees contribution in regard to PF & ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B of the Act. See M/S MOHANLAL KHATRI VERSUS A.C.I.T., CIRCLE-2 AJMER [2021 (11) TMI 1035 - ITAT JAIPUR]
We are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee’s appeal is allowed.
-
2022 (3) TMI 1343
Revision u/s 263 by CIT - Bogus purchases - HELD THAT:- When the assessment order which was subject matter of section 263 of the Act was passed after discreet enquiry and applying its mind the same cannot be revised under section 263 of the Act. Since order passed by the Ld. PCIT does not fulfill the condition laid down under section 263 of the Act the same is not sustainable in the eyes of law, so far as issue as to the bogus sub-contract expenses claimed by the assessee are concerned.
We are unable to agree with this reasoning given by the Ld. PCIT as well as by Ld. D.R. for the Revenue because power to reopen the assessment under section 147 of the Act is vested with the AO and not with the Ld. PCIT. For that matters limitation cannot be stretched beyond two years as laid down under section 263(2) of the Act. So assuming jurisdiction qua income from arbitration award under section 263 of the Act is hopelessly time barred and as such the impugned order in this regard is not sustainable.
We are of the considered view that the said order was passed on the basis of settled principle of law but we are to decide this issue on the basis of particular facts of this case. In the instant case, we are of the considered view that when after due enquiry, the AO has taken plausible view on the issue in question by calling necessary information from the assessee, such assessment order cannot be held to be prejudicial to the interest of the revenue. So we are of the considered view that very initiation of proceedings by invoking the provisions contained under section 263 of the Act by the Ld. PCIT lacks jurisdictional error and as such not sustainable in the eyes of law.
We are of the considered view that very initiation of the proceedings under section 263 of the Act are not sustainable in the eyes of law for lack of jurisdiction as required under section 263(2) to Explanation 1 of the Act, hence ordered to be quashed. Since the assessee has got the relief on legal issue, we find no need to go into the merits of this case. Resultantly, appeal filed by the assessee is allowed.
-
2022 (3) TMI 1342
Validity of Survey proceedings u/s 133A conducted in absence of assessee - Manner of conducting survey u/s 133A - excess stock containing the ornaments given by the customer for repairs/re-modelling available at the stock at the time of the survey - additional income in the hands of the assessee who happens to be the proprietor of the business - HELD THAT:- It is also not in dispute that the summons, u/s 131 of the Act were issued to the assessee on 7.11.2012 itself requiring her presence on 8.11.2012 before the Income Tax Authorities. Assessee did not present herself as required in the summons but on the other hand, the husband of the assessee was present on 8.11.2012 before the authorities and he submitted before the authorities that in part performance of his promise, he paid a sum of ₹ 5.00 lakhs for the A.Y 2013-14 towards advance tax and produced the copy of challan.
Subsequently on 18.12.2014, though the assessee challenged the authority of her husband to give any statement binding her, did not dispute the fact of survey or the findings of any excess stock during that survey worth - Even at that time also, the assessee did not plead about the errors, if any, in the valuation of jewellery or that part of excess stock contains the gold ornaments received from or being given by certain customers for repairs/re-modelling available in the shop. Even during the appeal before us also, no details of such customers or the gold ornaments attributable to them are produced.
There was a time gap of more than 3 ½ years between the survey operation and the assessee giving her statement before the Income Tax Authorities. If the plea taken by the assessee is correct, the assessee should have brought it to the notice of the authorities her grievance in respect of the manner of conducting the survey or manner of valuing the excess stock or the details about the gold ornaments that were given for repairs/re-modelling by the customers.
It could be seen from the record that even during the stage of first appellate proceedings, the assessee did not mince many words nor had she took any such plea on those aspects. The assessee is taking several pleas at several stages and they did not fit in the conduct of an ordinary prudent person. We are therefore, not inclined to accept the plea taken by the assessee before us and the learned CIT (A) considered these aspects in a proper way while granting relief and declining to delete the addition to the extent - We, therefore, do not propose to interfere with the findings of the learned CIT (A). The appeal of the assessee is accordingly found to be devoid of merits and dismissed. Appeal of the assessee is dismissed.
-
2022 (3) TMI 1341
Assessment u/s 153A - Addition u/s 68 - HELD THAT:- Admittedly, in the instant case no assessment was pending as on the date of search and the addition under consideration is not emanating from any incriminating material seized during the course of search and seizure operation as it clearly reflects from the assessment order, hence, the addition under challenge in any sense is un-sustainable and cannot stand in the eyes of lawon legal aspect as well as per judgment of the Jurisdictional High Court in the case of CIT Vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] wherein it was held that “that if on the date of search, the assessment proceedings already stood completed and no incriminating material unearthed during the search, then no addition can be made to the income already assessed.‟
The said dictum of the Hon'ble High Court was confirmed by the Hon'ble Apex Court in the case of Pr. Joint CIT vs. Meeta Gutgutia [2018 (7) TMI 569 - SC ORDER] - Decided in favour of assessee.
-
2022 (3) TMI 1340
Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - HELD THAT:- The penalty provisions of section 271(1)(c) of the Act are attracted, where the Assessee has concealed the particulars of income or furnished inaccurate particulars of such income. It is also a well-accepted proposition that the aforesaid two limbs of section 271(1)(c) of the Act carry different meanings. Therefore, it is imperative for the Assessing Officer to specify the relevant limb so as to make the Assessee aware as to what is the charge made against him so that he can respond accordingly.
Having regard to the manner in which the Assessing Officer has issued notice dated 29.12.2016 under section 274 r.w.s. 271(1)(c) of the Act without specifying the limb under which the penalty proceedings have been initiated and proceeded with, apparently goes to prove that notice in this case has been issued in a stereotyped manner without applying mind which is bad in law, hence cannot be considered a valid notice sufficient to impose penalty u/s 271(1)(c) of the Act and therefore we are of the considered view that under these circumstances, the penalty is not leviable as held by the various Court including Apex Court and hence, we have no hesitation to delete the penalty levied by the AO and affirmed by the Ld. Commissioner - Appeal of assessee allowed.
-
2022 (3) TMI 1339
Exemption u/s 11 and 12 - AO denied the benefit of deduction under section 11 to the assessee by holding that the assessee cannot be regarded as existing for charitable purposes under section 2(15) - HELD THAT:- We find that the AO on noticing that the assessee was in receipt of voluntary contributions came to the conclusion that the voluntary contributions were received only from students and were admitted in the assessee’s educational institutions. According to the AO, the contributions were not given out of free will and was a quid-pro-quo for admission of students in the assessee’s educational institutions. There is no material whatsoever for this conclusion drawn by the AO. On the other hand, the AO has proceeded purely on the basis that there was a suggestion and unwritten direction from the assessee for contributions to be made mandatorily for the purpose of securing admission in the assessee’s educational institutions.
AO, thereafter, concluded that voluntary contributions are nothing but a capitation fee. It is seen that the assessee enjoys registration under section 12A and except for the compliant of the AO that the assessee received voluntary contribution, there has been no other charge in so far as allowing exemption under section 11 is concerned. The receipt of so called capitation fees has been interpreted by the AO as an act which will go against the definition of charitable purpose under section 2(15) - CIT(A) has rightly observed that the conclusions of the AO are without any material and that the receipt of capitation fees has not been established nor were there any proceedings against the assessee under the Karnataka Educational Institutions (Prohibition of Capitation Fees) Act, 1984. In the given circumstances of the case, we are of the view that the conclusions drawn by the CIT(A) that the assessee cannot be denied the benefit under section 11 of the Act cannot be said to be erroneous and we concur with the said findings.
Hon’ble Karnataka High Court in the case of Children’s Educational Society [2013 (7) TMI 519 - KARNATAKA HIGH COURT] has held that application of surplus for educational purpose is sufficient to conclude that an educational institution is just solely for educational purpose. In the given facts and circumstances of the case, we find no merits in these appeals by the Revenue and consequently these appeals deserve to be dismissed and are hereby dismissed.
-
2022 (3) TMI 1338
Reopening of assessment u/s 147 - validity of notice of reopening, which was also issued on the basis of information of investigation wing that they have searched a person who is engaged in providing accommodation entries - estimation of income for bogus purchases - HELD THAT:- AO validly assumed the jurisdiction for making re-opening under section 147 on the basis of information of investigation wing Mumbai. So far as other submissions of the ld AR for the assessee that there is no live link of the reasons recorded, we find that the Hon’ble Jurisdictional High Court in Peass Industrial Engineers (P) Ltd [2016 (8) TMI 276 - GUJARAT HIGH COURT] clearly held that when assessing officer received information from the investigation wing that two well-known entry operators of the country provided bogus entries to various beneficiaries, and assessee was one of such beneficiary, assessing officer was justified. Hence, the ground No. 1 in assessee’s appeal is dismissed.
Bogus purchase - No comment was made by Assessing Officer on the documentary evidence furnished by assessee. The sales of assessee was not disputed. No sale is possible in absence of purchases. The Assessing Officer estimated addition on account of purchases without rejecting books of accounts of assessee. CIT(A) restricted to addition to the extent of 12.5% of the total purchase shown by taking view that the assessee shown G.P of less than 1.15% .In our view the disallowance restricted by Ld. CIT(A) is on higher side.
The profit margin in the industry is 5% to 7%. It is settled law in case of disputed purchases shown from such hawala dealers on the profit element embedded to avoid the possibility of revenue leakage is to be disallowed. No doubt made the assessee has shown extremely low G.P i.e. 1.15% only, yet the disallowance at rate of 12.5% is on higher side. This combination is similar cases, wherein the purchases are shown from Bhawarlal Jain for providing accommodation entry, have restricted or enhanced the addition to the extent of 6% of impugned or disputed purchases. Therefore, taking the consistent the disallowance of purchases in the present case is also restricted to 6% of the disputed purchases. In the result, the grounds of appeal raised by assessee is partly allowed.
-
2022 (3) TMI 1337
Disallowance u/s 54F - assessee has sold the immovable property within the definition of capital asset in India - reason for denying benefit of 54F by the AO as well as the Ld.CIT(A) was solely on the ground that the assessee has reinvested the amount in USA in the residential house property - HELD THAT:- In our considered opinion, once, the assessee invested the long term capital gain in buying the residential house either in India or outside India prior to 01.04.2015, the assessee is entitled for exemption.
The literal meaning of construction of ‘a residential house’ used in section 54 cannot be restricted to only purchasing or constructing or acquiring “a residential house within India”. In our considered opinion, the golden rule of interpretation as envisaged in law is required to be applied. In our view, when the statue is clear and unambiguous, then the Tribunal or court should refrain from adding any meaning or word which has not been provided by the statute, to the provision , while interpreting the section . Undoubtedly, the word used in section 54 is “a residential house” and not “a residential house in India”, therefore, it will be violation of literal interpretation of statute, if we read a residential house as residential house in India. The Tribunal is bound to interpret the law within four corners of statute and refrain from inserting any word in the statute and it would amount to legislating the Act. - Appeal of assessee allowed.
-
2022 (3) TMI 1336
Disallowance of interest u/s.14A r.w.Rule 8D - disallowance to the extent of exempt income earned for the year - HELD THAT:- Although, the assessee claims to have used fresh capital raised during the financial year to make investments in share application money in subsidiary company, but on perusal of financial statements filed by the assessee, we find that the assessee has availed huge borrowings from banks and paid interest. Further, the assessee failed to prove its claim that it has not utilized borrowed funds for investment purpose with necessary evidence. Therefore, we are of the considered view that there is no error in the reasons given by the Assessing Officer as well as learned CIT(A) to sustain additions towards disallowance of interest u/s.14A r.w.Rule 8D.
Fact remains that the assessee has earned dividend income of ₹ 15,71,210/- whereas, the Assessing Officer has disallowed expenses relatable to exempt income at ₹ 69,29,042/- which is in excess of dividend income earned for the year. It is well settled principle of law by the decision of various courts, including decision of M/s. Redington India Ltd. [2017 (1) TMI 318 - MADRAS HIGH COURT] where it has been clearly held that disallowance contemplated u/s.14A r.w. Rule 8D cannot exceed exempt income. CIT(A), after considering relevant facts has rightly directed the Assessing Officer to recompute disallowance u/s.14A but restrict disallowance to the extent of exempt income earned for the year. Hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the revenue as well as the assessee.
Additions towards deferred income on account of change in method - AO made addition on the ground that the assessee has failed to explain reasons for change in method of accounting and further, when income has already accrued or deemed to be accrued for the relevant assessment year, question of deferral of income to subsequent year does not arise - CIT-A deleted the addition - HELD THAT:- As from the impugned assessment year, the assessee has changed its method of accounting and thus, deferred AMC charges pertains to subsequent financial year, because the assessee has not rendered services to the customers and thus, question of accrual of any income to the period pertaining to subsequent assessment year does not arise. Therefore, we are of the considered view that when the assessee has explained reasons for change in method of accounting and further, disclosed effects in profit or loss for the relevant financial year in a statement of financial accounts prepared for the year, then the Assessing Officer should not have made additions towards deferred income only on the ground that the assessee does not explain reasons for change in method of accounting.
AO has observed that when the assessee has deferred income to subsequent financial year, it ought to have deferred expenses pertains to deferred income. We find that the assessee does not incur expenditure relatable to income deferred to subsequent financial year. Therefore, when there is no expenditure incurred and debited into profit & loss account, then question of deferral expenses to subsequent year does not arise. Therefore, we are of the considered view that reasons given by the Assessing Officer to make additions towards deferred income on account of AMC charges cannot be sustained. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer. - Decided against revenue.
............
|
9911796707
