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Showing 281 to 300 of 1740 Records
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2024 (9) TMI 1462
Violation of principles of natural justice - petitioner did not notice the show cause notice or other communications in view of his limited computer knowledge - petitioner contends that the mechanism of reconciliation of GSTR 3B returns and the auto populated GSTR 2A was not in force during the relevant period - HELD THAT:- On examining the impugned order, it appears that the tax proposal was confirmed on the ground that the petitioner did not reply to the show cause notice. By taking into account the assertion that such non participation was on account of not being aware of proceedings, the interest of justice warrants re-consideration subject to putting the petitioner on terms.
The impugned order dated 20.12.2023 is set aside on condition that the petitioner remits 10% of the disputed tax demand as agreed to with in a period of fifteen days from the date of receipt of a copy of this order. The petitioner is permitted to submit a reply to the show cause notice within the aforesaid period - petition disposed off.
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2024 (9) TMI 1461
Limitation period for initiating proceedings under Section 73(10) of CGST Act, 2017 - filing of annual returns under the Central Goods and Services Tax Act, 2017 - HELD THAT:- In the present case, the Assessment Year is 2018-19 and the end of the financial year comes on 31.12.2019, within which time as per Rule 80, an annual return has to be filed. The petitioner filed the annual return before 31.12.2019 and the present proceeding is initiated on 19.04.2024, as per Annexure P-3. The three year period as provided under Section 73(10) ends on 31.12.2022. The ground of limitation is raised on this count.
The extension as provided in the second proviso to Section 44(2) is only with respect to the filing of a return even after the expiry of the further period of three years, from the due date of furnishing the annual return. Sub-section (2) as we notice speaks of any annual return to be filed within three years from the due date of furnishing the said annual return. Section 73(10) specifies three years from the due date of filing of annual return and not three years from the extended date of filing an annual return under Section 44(2). Further, it has to be noticed that the proviso under Sub-section (2) empowers the Government to issue a notification and the notification produced before us dated 28.10.2020 has been issued by the Commissioner who does not have such power. The notification is also issued under the proviso to Section 44(1) which empowers the Commissioner to exempt any class of registered persons from filing annual returns under the provision and not for extension of due date for filing of annual returns or extension of the period provided under Sub-section (2), for filing of annual returns.
Interim stay of the Annexure P-3 order granted - Post on 11.09.2024.
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2024 (9) TMI 1460
Violation of principles of natural justice - lack of jurisdiction - non application of mind - Reverse Charge Mechanism (RCM) liability issue - HELD THAT:- The petitioner replied on the RCM liability issue by stating that the amounts declared and paid under RCM are greater than the amount mentioned in the notice. The observation of the proper officer on this issue reflects complete non application of mind. Likewise, as regards trade payables, the petitioner replied stating that all trade payables are below 180 days. Once again, without applying his mind to the reply, an identical finding is recorded. Since the impugned order is vitiated by complete non application of mind and non consideration of the petitioner's reply, such order is liable to be set aside.
The impugned order dated 30.04.2024 is set aside and the matter is remanded for reconsideration - Petition disposed off by way of remand.
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2024 (9) TMI 1459
Refund order - rejection on the ground that the petitioner as an SEZ Unit was not allowed to claim refund under the GST law and the refund claim for the tax period on supplies made to SEZ Unit / Developers can be claimed only by the supplier of goods or services - HELD THAT:- Admittedly, no stay has been granted by the Hon’ble Apex Court in the S.L.P. preferred by the Revenue against the aforesaid decision in the case of Britannia Industries Limited [2020 (9) TMI 294 - GUJARAT HIGH COURT]. The ratio laid down by the Division Bench of this Court in the case of Britannia Industries Limited still holds the field and thereby, the same ought to have been followed by the Appellate Authority while deciding the appeal of the Revenue. The Appellate Authority could not have ignored the dictum of law merely on the ground that the said decision is pending adjudication before the higher forum more particularly without any stay. The facts of the present case as well as the facts in the case of Britannia Industries Limited are more or less identical in nature and thereby, a different view than that of already taken by the Coordinate Bench of this Court in the case of Britannia Industries Limited cannot be takien.
The present petition is allowed by quashing and setting aside the impugned order dated 30th November 2023 passed by the respondent No. 2 - Appellate Authority. The present petition is, accordingly, disposed of.
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2024 (9) TMI 1458
Interpretation of Section 43A - losses arising out of fluctuation of exchange rates in servicing a foreign currency loan that is utilized partly for acquiring assets from outside India and partly for acquisition of assets within India - ITAT allowed the foreign exchange losses to be broken up in proportion to the value of import of assets and value of assets acquired locally, and allowed the latter component to be treated as revenue expenditure - whether losses should be entirely capitalised with the value of the assets acquired? -
Accounting Standard (AS) 11 and its amendment - HELD THAT:- In the case at hand, the Respondent-Assessee opted for capitalizing and adding the expense arising out of exchange rate fluctuation on its foreign currency loan to the cost of the capital asset. Such election was under AS-11 and therefore, obviously, regardless of whether the assets financed thereby had been imported from outside India or acquired locally in India. It is trite law that accounting treatment in the commercial books is no conclusive indication of treatment in the tax returns, and one must have regard to the legislative stipulation in the tax legislation to ascertain if the expense is allowable as revenue expenditure or is to be capitalised as a capital expenditure. It is in this context that we are of the view that Section 37 (1) must necessarily be dealt with.
Positive Mandate of 43A vs. Negative Caveat in 37 (1) - It is apparent that to attract the mandatory obligation to capitalise the expense relating to exchange rate fluctuation under Section 43A, the ingredients of Section 43A have to be attracted. The essential jurisdictional fact for the mandatory capitalisation of such an expense under Section 43A is that the capital asset financed by the foreign currency loan in question, must have been brought into India from a country outside India. To the extent the loan was utilised for such an import, even the Respondent-Assessee has without demur, capitalised the loss on exchange rate fluctuation in servicing the loan, to add to the cost of the asset.
Looking at the ingredients of Section 37 (1) of the Act, we believe it would be necessary to look at the substance of the expenditure and come to a view that it is not in the nature of capital expenditure, for it to qualify as revenue expenditure for purposes of Section 37 (1). The gap in the Impugned Order is that the analysis on whether the expenditure in question cannot be regarded as capital expenditure, is missing.
Effect of judgement in Wipro Finance Ltd. [2022 (4) TMI 694 - SUPREME COURT] - Section 43A contains a positive enjoinment that losses due to exchange rate changes on a foreign currency loan taken for import of a capital asset must not be treated as revenue expenditure. This is why Section 43A is a non-obstante provision, that positively imposes such obligation notwithstanding anything contained in the Act. However, that positive obligation would not necessarily mean the converse – that any loss on exchange rate fluctuation on a foreign currency loan taken for acquiring capital assets would necessarily not be a capital expenditure, only because the assets were not imported into India from abroad.
It is made clear that the relevance of whether the fluctuation results in erosion of an asset’s value or in enhancement of a liability’s size, can also be fully articulated by the parties before the ITAT – this was a facet hotly contested before us.
To be clear, the question to be answered by the ITAT on remand is as follows:-
Whether the expenditure in the sum of Rs. Rs.4,78,38,245/- that has been disallowed by the AO and the CIT-A, and allowed by the ITAT, would on its own showing (de hors Section 43A that contains a positive enjoinment of treating such exchange rate losses relating to foreign currency loan deployed to import assets as capital expenditure), qualify as not being capital expenditure, so that it can be considered towards allowance as revenue expenditure under Section 37 (1).
We are deeply conscious that this Appeal pertains to the Assessment Year 2009-10. By the time this litigation came to be filed in the High Court, after traveling through two rounds of appeal, it was October 2017. Final hearing of this appeal took place in 2024. The scope of remand being limited, as articulated above, we trust the ITAT would deal with the remanded proceedings at its earliest possible convenience, bearing in mind the vintage of the proceedings. Both the Revenue and the Assessee are also requested to extend full cooperation to the ITAT by participating in the hearings expeditiously, without seeking unnecessary adjournments, so as to enable the ITAT to deal with the issue at the earliest.
We also make it clear that nothing contained in this judgement and order is to be regarded as an expression of our opinion on the merits of the issue being remanded to the ITAT.
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2024 (9) TMI 1457
Rejection order of the 2nd respondent - seeking return of seized documents - return of the original documents seized during the search conducted in the petitioner's house - HELD THAT:- Totally, 5 documents were seized from the premises of the petitioner. The petitioner seeks return of the documents which were not only seized from the premises of the petitioner, but also from the third party houses. Hence, he has no right to seek those documents which were seized from the third party. He is entitled to only 5 documents. However, he can only seek those documents upon completion of the assessment proceedings. Now, they are entitled to get only a copy of those documents.
These are all the documents which ultimately were seized about the involvement of the petitioner's son in the tax evasion. The respondents have come to the conclusion that there are incriminating documents in connection with the offence alleged against the petitioner's son. Until completion of the assessment proceedings, the petitioner is not entitled for the original documents. The respondents have rightly rejected the contention of the petitioner. No reason to interfere with the same. Accordingly, this Writ Petition is dismissed.
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2024 (9) TMI 1456
Benefit of Direct Tax Vivad Se Vishwas - HELD THAT:- No doubt, there is an embargo and certain categories of persons from availing the benefit of the amnesty under the Act. As far as the petitioner is concerned, sting if any would stand attracted in terms of Section 9(c) of the Act which reads as under:-
“9(c) to any person in respect of whom prosecution for any offence punishable under the provisions of the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the prevention of Corruption Act, 1988, the Prevention of Money Laundering Act, 2002, the Prohibition of Benami Property Transactions Act, 1988 has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts;”
A reading of the above provisions indicates that either a criminal case should be pending or it should have resulted in a conviction. There is no embargo for settling the dispute in respect of a person who has be acquitted before filing of the declaration. Therefore, there is no merits in the stand of the respondents.
Thus, inclined to allow this Writ Petition with liberty to the respondents to recall the order in case conviction is sustained by the Delhi High Court against the petitioner.
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2024 (9) TMI 1455
Addition as unexplained income from purported sale of casurina trees u/s 69 - Assessment u/s 144(A) - assessment of agricultural income reported as unexplained income based on the enquiry report of the Income Tax Inspector - HELD THAT:- In this case, the Department has disbelieved the letter of the person who had given a statement in favour of the appellant without subjecting the said person to any cross examination.
Therefore, the substantial question of law to be answered in this appeal is whether a statement of a person who had given a statement in favour of the appellant can be disbelieved and discredited long after it was given without cross examination of the said person by a mere reliance on an enquiry Report of the Income Tax Officer based on information gathered by the Income Tax Officer from the Village Headman.
The evidence which department has gathered is long after the felling of trees and sale by the appellant by placing reliance on the statement of the Village Headman. The statement of the Village Headman can at best only corroborate the stand which department based on evidence, if there were other compelling evidence.
As incumbent on the part of the Income Tax Department to have summoned the said Mr.Thangasamy of Alangudi Taluk, Pudukottai District and verified and confirmed whether the said person had indeed given the statement which was produced by the Appellant and if so whether the statement given by the said person was true or not.
Although the department is governed by preponderance of probability and not by strict rules of evidence, yet it was incumbent to have secured the presence of the said person. They should have cross examined him before disbelieving the statement. Therefore, an issuance of summon to Mr.Thangasamy who had given statement by the Income Tax department is not sufficient.
Income Tax department should have secured the presence of Mr.Thangasamy to answer to the summons and should have confronted him and contradicted the content of the statement of Mr.Thangasamy produced by the appellant by way of cross examination.
Therefore, without cross examination, the statement of Mr.Thangasamy can neither be disbelieved nor disregarded. The statement of Mr.Thangasamy cannot be therefore discredited. If Mr.Thangasamy had refused to co-operate, the Income Tax Department was not without remedy under the provisions of the Income Tax Act, 1961 to secure his presence.
Since this exercise was not done, the demand confirmed u/s 144(A) which view was affirmed by the AO passed u/s 143(3) and by the Commissioner of Income Tax (Appeals) and by the Income Tax Appellate Tribunal vide order are liable to be interfered as unsustainable.
We are therefore of the view, the succeeding orders passed against the appellant in so far as the addition under Section 69A of the Income Tax Act, 1961 as unexplained credit/unexplained money of the appellant are incorrect and are liable to the set aside. Decided in favour of assessee.
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2024 (9) TMI 1454
Validity of reassessment proceedings - Challenge to the assessment order rejected by giving liberty to the appellant to work out the remedy before the appellate authority - availability of depreciation which the appellant had availed on the vehicles - HELD THAT:- Single Judge in both the writ petitions was that after the assessment was completed on 24.10.2014 for the assessment year 2007-08 u/s 148(3) of the Income Tax Act, 1961 and invocation of power u/s 148, ibid., for the purpose of Section 147, ibid., on 01.03.2013 was bad and therefore, overruling of the objection of the appellant was bad. Consequently, the impugned assessment order dated 24.10.2014 was also without jurisdiction.
As a matter of fact, the issue on the availability of depreciation which the appellant had availed, appears to have been answered by the Hon'ble Supreme Court in Industrial Credit and Development Syndicate Limited. [2013 (1) TMI 344 - SUPREME COURT] held if the lessee was in fact the owner, he would have claimed depreciation on the vehicles, which, as specifically recorded in the order of the Appellate Tribunal, was not done. It would be a strange situation to have no claim of depreciation in case of a particular depreciable asset due to a vacuum of ownership. The entire lease rent received by the assessee is assessed as business income in its hands and the entire lease rent paid by the lessee has been treated as deductible revenue expenditure in the hands of the lessee. This reaffirms the position that the assessee is in fact the owner of the vehicle, insofar as Section 32 of the Act is concerned
We are, therefore, of the view that no useful purpose will be served by remitting the matter to the learned Single Judge to pass orders on merits, as it would result in wastage of judicial time.
To balance the interest of the appellant and the Income Tax Department, we deem it fit to quash the impugned assessment order dated 24.10.2019 and remit the case to the Assessing Officer to pass fresh orders on merits, in the light of the decision of Industrial Credit and Development Syndicate Limited - AO shall examine the issue afresh and pass orders on merits. Needless to state, the appellant shall be heard before passing orders.
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2024 (9) TMI 1453
Faceless assessment scheme - Jurisdiction of the Jurisdictional Assessing Officer (JAO) to issue notice u/s 148 - HELD THAT:- As decided by JASJIT SINGH, [2024 (8) TMI 228 - PUNJAB AND HARYANA HIGH COURT] Notices issued by the JAO under Section 148 of the Act, 1961 and the proceedings initiated thereafter without conducting the faceless assessment as envisaged under Section 144B have been found to be contrary to the provisions of the Act, 1961 and accordingly notices issued are set aside for want of jurisdiction.
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2024 (9) TMI 1452
Unexplained share capital and share premium u/s 68 - assessee has directly or indirectly received share capital and premium from entities/persons not having creditworthiness to provide such huge amount of unsecured loans - ITAT deleted addition - HELD THAT:- We note that an identical question arose for consideration in Principal Commissioner of Income Tax-Central-I v. Surya Agrotech Infrastructure Limited [2023 (9) TMI 391 - DELHI HIGH COURT] wherein held irresistible conclusion is that since the undisclosed income which is subject matter of the present dispute had already been taxed in the hands of the flagship company, it cannot be again subjected to tax in the hands of the respondents/assessee companies in the form of application of the said income as their share capital. No substantial question of law.
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2024 (9) TMI 1451
Faceless assessment of income escaping assessment - validity of notice issued by the JAO as not in accordance w/sec 151A - not permissible for the Jurisdictional Assessing Officer to issue a notice u/s 148, as the same would amount to breach of the provisions of section 151A - HELD THAT:- As decided in recenet case recent decision of this Court in Nainraj Enterprises Pvt. Ltd. [2024 (7) TMI 511 - BOMBAY HIGH COURT] relying on Hexaware Technology Ltd. [2024 (5) TMI 302 - BOMBAY HIGH COURT] provisions of Section 151A had clearly brought a regime of faceless assessment. The Court held that it was not permissible for the Jurisdictional Assessing Officer to issue a notice u/s 148, as the same would amount to breach of the provisions of section 151A of the IT Act.
There is no question of concurrent jurisdiction of the JAO and the FAO for issuance of notice u/s 148 of the Act or even for passing assessment or reassessment order. When specific jurisdiction has been assigned to either the JAO or the FAO in the Scheme dated 29th March, 2022, then it is to the exclusion of the other. To take any other view in the matter, would not only result in chaos but also render the whole faceless proceedings redundant. If the argument of Revenue is to be accepted, then even when notices are issued by the FAO, it would be open to an assessee to make submission before the JAO and vice versa, which is clearly not contemplated in the Act. Therefore, there is no question of concurrent jurisdiction of both FAO or the JAO with respect to the issuance of notice u/s 148.
An act which is done by an authority contrary to the provisions of the statue, itself causes prejudice to assessee. All assessees are entitled to be assessed as per law and by following the procedure prescribed by law. Therefore, when the Income Tax Authority proposes to take action against an assessee without following the due process of law, the said action itself results in a prejudice to assessee. Decided in favour of assessee.
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2024 (9) TMI 1450
Addition u/s 68 - addition of share capital and share premium as bogus - identity of shareholders, creditworthiness of the shareholder and genuineness of the transaction not proved - HELD THAT:- Except for filing paper documents, which are in the nature of self-serving recitals but could not justify the genuineness of the transactions for investing in a newly formed company with no past history nor having any plausible business model, that too at a huge premium of Rs. 499/- for shares of the face value of Rs. 1, the assessee could not establish the genuineness of the transactions and the creditworthiness of the share applicants. The factors which militate against the assessee and question the genuineness of the entirely dubious and unjustified transactions for receipt of share capital along with huge share premium from corporate entities.
Since neither the identity, nor the creditworthiness, nor the genuineness of the transition could be established and the whole arrangement was dubious and a smokescreen to camouflage the real transactions, as is rightly held by the Ld. AO and the Ld. CIT(A), therefore, the Ld. AO was justified in adding the amount to the income of the assessee as unexplained cash credits, which additions has been rightly confirmed by the Ld. CIT(A). Appeal of the assessee is dismissed.
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2024 (9) TMI 1449
Addition u/s 68 - Admissibility of additional evidence under Rule 46A - CIT(A) deleted addition admitting additional evidences - as argued AO making the addition of the whole of the sum deposited into the bank account stating that on the one hand AO ask the assessee to reconcile the sale with mandi tax and pin point the difference in sale and on the other hand make the addition of the whole cash deposited into the bank account as unexplained - assessee he is aged 64 years and is assessed to tax for last more than 40 years. Since inception he is engaged in the business of Aadatia (आडतिया) of agriculture products - CIT(A) deleted addition
As argued CIT(A) has admitted and considered the additional evidence without giving adequate opportunity to the AO in the remand proceeding - HELD THAT:- While concluding assessment proceedings, AO eventually considered all the documentary evidence furnished and made addition by invoking the provisions of section 68 as against 69A as was originally proposed. In support of the above submission, copies of acknowledgements of submission made before ld. AO, whereby cash books of all the three proprietary concerns were submitted is placed on record.
AO though the ld. DR did not controvert this aspect of the matter and therefore, based on the material placed on record it is very much clear that no additional evidence was furnished by assessee during appellate proceedings before ld. CIT(A). Based on these observations ground no. 1 & 2 raised by the revenue has no leg to stand and thereby the same are dismissed.
Addition u/s 68 on account of Cash deposited by assessee in bank account - CIT(A) has deleted that addition by observating that the assessee submitted cash books of all the three proprietorship concerns, all the bank statements, Ledger account of all the expenses claimed in all the three proprietorship concerns, Ledger account of farmers with supporting evidences - The assessee is one of the license holder of the mandi samiti (owned and controlled by the State Government) as per which he became entitled to get one shop area in the above stated type of mandi premises from where he carried out his Adat activity as per the rules and regulations formed by the State Government and implemented through the Government Officers in the relevant Mandi Samiti by observing the prescribed practice that as and when a vehicle carrying the agriculture produce enters into the premises of the mandi samiti, the same measured in terms of weight and nature of goods and thereafter prescribed gate pass is issued by the mandi samiti which contains the details of the produce brought into along with the details of the sender / person who brings the produce and the details of Adatia to whom such produce is being assigned for sale by auction. With this, the produce is brought to the shop of such adatia where such produce is unloaded from the vehicle and after making entry of such goods into the register authenticated by the Mandi Samiti, the same is sold through open auction process, where the prospective bidders bid for the produce are gathered and the successful bidder after making the payment as per the conditions between the broker (Adatia like the assessee) and the customer, take delivery of the goods (produce).
AO has alleged that assessee might have engaged in the trading business which as not disclosed and the cash deposit in the bank account of his commission agency firm belonged to such undisclosed trading activity and accordingly treated the said cash deposit as unexplained cash credit and made the addition of entire cash deposited into bank u/s 68 of the Income Tax Act. While alleging so the ld. AO has failed to appreciate the fact that the bank accounts under which the said cash was deposited belonged to and pertaining the transactions carried out by the proprietorship firms of the assessee namely M/s Kanhaiya Lal Nenu Mal and M/s Prashant Kumar Lakhmi Chand where the consignment sale of more than 17.00 crores were carried out and part of the same was received in cash and duly recorded in the books of accounts maintained. The entire cash was deposited in the bank accounts regularly maintained by the assessee therefore under no circumstances such deposit could be held unexplained.
Even otherwise the addition of cash deposits of Rs. 8,60,03,806/- made u/s 68 by treating the same as unexplained cannot be made as the assessee has submitted the cash book all the three concerns and the cash so deposited into the bank account is duly reflected in the books of account. The assessee has explained the source of this cash deposit. We also note that the ld. AO of the assessment order has reproduced the details of amount received by the assessee in cash and through recovery of credits (as furnished by assessee)
AO pointed out “Bilty” issued by transporter for consignment of agriculture produce, which was in the name of assessee (though there was no invoice issued in the name of assessee) and a details submission on the same has already been made. Firstly, “Bilty” is always issued in the name of recipient and assessee, being registered Adatiya in Mandi Samiti was authorized to receive goods for sale. Ld.AO could have verified this fact from the record of Mandi Samiti, which has not been done It is thus submitted that addition made by ld.AO amounts to double addition which is against the principle of taxation. It is further submitted that ld. AO grossly erred in not appreciating the fact that only “Real Income” can be taxed and moreover in the case of assessee, ld. AO miserably failed to understand the facts that in the business of Adatia only commission income can be taxed.
AO has neither rebutted the submission of the assessee that cash deposits represent sale consideration received by assessee on behalf of farmers nor brought any material on record by making any independent enquiry that assessee has indulged into the trading activity which was not disclosed and the cash deposited in the bank account is over and above the cash receipts from his regular ADAT business. Thus, once accepting commission income, receipt of money their behalf is incidental. In fact, ld.AO is vested with power to make direct enquiries and if he had any doubts, notices could have been issued Mandi Samiti to cross verify the Sales or to bankers to confirm that payments were made to farmers and subsequent deposits were on account of their sale consideration.
Based on these discussion so recorded and ongoing through the detailed order of the ld. CIT(A) we see no infirmity in the finding of the ld. CIT(A) while deleting the addition in the hands of the assessee.
Disallowance made by ld.AO being 25% of expenses on ad hoc basis - CIT(A) deleted addition - We note that during the course of assessment proceedings, ld. AO had issued notices u/s 133(6) to the persons to whom salary has been paid but they remained un-complied and only one of them has reverted that he was in employment somewhere else however, has not submitted anything else like Salary Certificate etc. and has further informed that he was in employment with the assessee prior to this year and after this year also which rather proves that he was under employment with the assessee in the year under consideration. Also, the persons to whom salary is being paid are not techno friendly and is not having legal counsels to look after their respective income tax login along with their mails and rather they are simple accountant, salesmen, loaders etc. which are earning their livelihood from the employment.
Further the fact that they have provided services was neither doubted nor can be denied looking to the volume of business carried out by the assessee where the total consignment sale of more than 17.00 crores was taken place in the entire year which could not be possible without the help of manpower. Further except the salary expenses, no doubts were raised on the other expenses claimed by the assessee thus disallowance has been made without pointing out any specific defect in the records which were completely placed on record by the assessee vide letter dated 22.02.2022
In view of the above, we note that ld. CIT(A) has decided the appeal after considering all the documentary evidence furnished by the assessee and evidence adduced which are not disputed.
Assessee has placed on record all the details which are necessary to prove the claim of salary expenses - This factual detail has not been controverted. Therefore, we see no infirmity on the facts of the case while ordering to delete the lumpsum addition of 25% out of the expenses so claimed by the ld. CIT(A).
Appeal of the revenue stands dismissed.
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2024 (9) TMI 1448
Application of provision of sec. 69A - cash deposit in the bank during the demonetization period - additions are out of regular books as maintained - HELD THAT:- The provisions of section 69A provides to make the addition if the assessee is found to be the owner of any money, bullion jewellery and other valuable articles and such money bullion jewellery or valuable is not recorded in the books of the account of the assessee. When the sale has been duly recorded and supported by the books of account produced by the assessee the addition cannot be made u/s. 69A.
But since the books of account of the assessee has already been rejected and the profit is estimated @ 10 % on the money so deposited into the bank account where we note that since this addition being trading addition made by the AO he has not given the credit of the profit already reflected in the books of account and therefore, while doing so the ld. AO has not reduced that profit which we considered is required to be given credit to the assessee while making the addition therefore, we direct the ld. AO to reduce the profit already declared by the assessee @ 5.74 % and balance amount 4.26 % can be considered as trading addition in the hands of the assessee.
Application of provision of sec. 145(3) without rejecting method of accounting and stock valuation - HELD THAT:- We note that the assessee is not challenging the rejection of the books based on the detailed observation made by the ld. AO but contend that the method of accounting as well as the stock valuation was not rejected. We note that once the books of account is rejected based on detailed 6 reasons by the ld. AO, it may not be a particular part of the record but once the same is rejected on various reasons we do not find any infirmity in the finding recorded by the ld. CIT(A) and that of the ld. AO. Therefore, ground no 1 raised by the assessee stands dismissed.
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2024 (9) TMI 1447
Addition u/s 68 - bogus LTCG - share capital received by the assessee treated to be not genuine - HELD THAT:- We are of the considered view that the assessee has proved the share application money are received from the share applicants companies by necessary documents justifying the identity, genuineness and creditworthyness of the said parties and accordingly are of the considered view that the Assessing Officer grossly erred in making the additions to share application money under section 68 of the Act and which was rightly deleted by the learned CIT(A). Consequently, we decline to interfere with the order passed by the learned CIT(A) and dismiss the grounds of appeal raised by the Revenue.
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2024 (9) TMI 1446
Validity of final assessment order passed u/s. 147 r.w.s. 144C(13) in pursuance of the Hon’ble Dispute Resolution Panel direction - Addition u/s 69A - unexplained investment/credit - failure on the part of the assessee to furnish the same before the lower authorities - whether the draft assessment order passed by the ld. A.O. on irrelevant facts could be sustained pursuant to the rejection of the same by the Hon’ble DRP and also for the allegation made by the assessee that the same was passed mechanically and without application of mind?
HELD THAT:- Hon’ble High Court of Calcutta in the case of Excel Commodity Derivative (P) Ltd. [2022 (9) TMI 310 - CALCUTTA HIGH COURT] wherein it was held that the term ‘information’ stated in Explanation 1 of section 148 cannot be taken at ease for the purpose of reopening an assessment and the Revenue cannot be given an unbridled power to reopen the assessment based on such information. Further, it held that the ld. A.O. has lightly used the said information and had issued notice and further proceeded to make addition on a fresh ground after duly considering the assessee’s submission.
As evident that the assessee’s case would squarely be covered by the said decision where the Hon'ble High Court has held that in such situation there is no necessity to remand the matter back to the ld. AO by holding that the said order is illegal and wholly unsustainable.
AR has also placed reliance on the decision of Akshar Builders & Developers [2019 (1) TMI 1277 - BOMBAY HIGH COURT] wherein it was held that the ld. A.O. cannot reopen the assessment mechanically based on erroneous information received by him. Further, it was held that there was complete non application of mind on the part of the ld. A.O. This proposition was further supported by the decision of the Hon'ble Jurisdictional High Court in the case of Paranjape Schemes (Construction) Ltd. [2024 (3) TMI 736 - BOMBAY HIGH COURT]
As evident that the action of the ld. A.O. in reassessing a case on erroneous facts and on non application of mind has been reprimanded by various decisions of the Hon’ble High Courts and Hon'ble Apex Court. This fallacy which occurred while reopening the assessment in the present case cannot be rectified by the subsequent action of the Hon’ble DRP in rejecting the draft assessment order and in proposing a fresh addition.We hold that the impugned draft assessment order and the consequential final assessment order are held to be invalid and are hereby quashed. Appeal filed by the assessee is allowed.
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2024 (9) TMI 1445
Validity of reassessment proceedings - reason to believe - unexplained loan receipts - A.Y. 2011-12 - HELD THAT:- We find that theLd.AO has already adjudicated the issue by issuing notice under section 142(1) during the impugned assessment year by the order passed U/s 143(3) of the Act. The same issue was reopened by the report of the Investigation department. During the assessment, we find that the Ld.AO had not made any separate investigation against the unsecured loan which was treated as accommodation entry. Mere change of opinion cannot be the reason for reopening.
We respectfully relied on the order of Seimens Financial Services P. Ltd [2023 (9) TMI 552 - BOMBAY HIGH COURT] and Aditi Constructions vs DCIT [2023 (5) TMI 281 - BOMBAY HIGH COURT] and Engineers & Allied Elastomers (2024 (9) TMI 1371 - ITAT MUMBAI] which have the common legal issue. Accordingly, the notice issued under section 148 is bad in law. The ld. AO acted beyond jurisdiction to reopen the assessment. We set aside the impugned appeal order and direct the ld. AO to delete the addition amount. Decided in favour of assessee.
Addition of loan and interest thereon - AY 2013-14 - We find that the entire addition was made on the basis of the report of the investigation department. The Ld.AO has not made any separate verification about the loan creditors and the interest payment. The assessee has shifted its onus to the revenue by submitting all relevant documents in relation to the loan-creditors. In case of interest, the assessee deducted TDS and paid the amount through banking channel.
AO was not able to bring any contrary fact and not even nullified the documents submitted by the assessee. The ld. AO & ld. CIT(A) only relied on the report of the investigating authority. CIT(A) only followed the order of the Ld.AO and confirmed the addition. We find that the entire addition was made without proper verification. The assessee had shifted its onus by submitting the evidence before the revenue authority. No further investigation was done. The ld. AO was unjustified for addition the same. Decided in favour of assessee.
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2024 (9) TMI 1444
Net Profit (NP) estimation on unaccounted turnover/cash sales - AO estimated the profit % 8% based on seized material - HELD THAT:- We find that the AO on the aggregate quantum of sale, 8% profit has been calculated on estimate basis. However, CIT(A) reduced it by 5%. It is well-settled that in case of estimate of profit u/s 145, Revenue has to make an honest and fair estimate of the income by applying the profit rate declared in the preceding years. Considering that the assessee is engaged in the business of trading in Kirana items, we are of the opinion that the profit @ 4% which amounts to ₹ 35,70,673, shall meet justice.
Since a sum of ₹ 75 lakh has been offered for taxation as income from business, the additional profit needs to be telescoped with the offer for addition income. No separate addition is required at all in the peculiarity of the circumstances.
Unexplained expenditure - Assessee argued once the AO has rejected books of accounts and estimated profits on turnover, the same shall take care of the expenses incurred for earning such profits and any addition made with respect to such expenses would tantamount to double addition - HELD THAT:- The expenditure on account of unrecorded cash coupons works out as detailed at table above is treated as unexplained expenditure and assessed u/s 69C of the Act and the same is taxed at maximum marginal rate of 60% u/s 115BBE - There is no scope for estimation of unexplained expenditure because the same is a deeming provision and actual incurring of expenditure is must. The addition itself is fragile and is based on pure surmise and conjunctures. The basic invocation of section 69C is uncalled for merely on estimates. The learned CIT(A) has appropriately decided which needs no interference at our end. Thus, though on a different line of logical line of thinking, we uphold the order passed by the CIT(A) by dismissing the ground no.4.
Addition based on 4% net profit estimated on the turnover - We have heard the rival arguments, perused the material available on record and gone through the orders of the authorities below. We find that the CIT(A) has recorded that the appellant has offered ₹ 75 lakh, as additional income, which duly covers the profit @ 4% on the total turnover. Thus, we find that the CIT(A) has correctly considered the additional income and our interference is not called for.
Addition on account of profit estimated @ 8% on the difference in the stock physically found vis-à-vis as appearing in books of accounts - It is admitted that the Assessing Officer has rejected books of account and estimated turnover and profit on sales from the business.
CIT(A) deleted the addition stating the reason that once the books of accounts are rejected and the profit percentage has been estimated, no separate addition is called for the shortage found in stock. The same can also be telescoped with the additional income offered for ₹ 75 lakh. Therefore, CIT(A) has correctly decided to delete the addition. As such, we decline to interfere in his rock solid findings. Accordingly, we uphold the order passed by the learned CIT(A) by dismissing the ground no.5, raised by the Revenue. Additions proposed by the Assessing Officer as modified by the learned CIT(A) is quashed. The returned income is sacrosanct and no addition may be made thereafter in view of the additional income offered for ₹ 75 lakh which has already suffered tax.
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2024 (9) TMI 1443
Addition u/s 36(1)(viia) - provision for bad and doubtful debts disallowed - whether the presence of both rural advances and non-rural advances by a bank, is a must in order to be eligible to claim deduction towards provision for bad and doubtful debts u/s 36(1) (viia) ? - HELD THAT:- On identical facts, the Co-ordinate Bench of ITAT Bangalore, in the case of ING Vysya Bank Ltd. [2014 (9) TMI 44 - ITAT BANGALORE] held that in order to allow assessee's claim under section 36(1)(viia) of the Act, what has to be seen by Assessing Officer, is as to whether provision for bad and doubtful debts (PBDD) is created, irrespective of whether it is in respect of rural or non-rural advances by debiting profit and loss account and, to extent of provision for bad and doubtful debts (PBDD) is so created, assessee is entitled to deduction subject to upper limit of deduction laid down in said section.
Our view is fortified by the order of Bhagini Nivedita Sahakari Bank Ltd. [2018 (12) TMI 322 - ITAT PUNE] wherein it was held that a co-operative bank is entitled to claim deduction of bad debts provided in first part of section 36(1)(viia)(a) being 7.5 per cent of total income even in absence of rural branches.
Actual provision made in the books by the Assessee on account of provision for bad and doubtful debts (PBDD) (irrespective of whether it is rural or non-rural) has to be seen. To the extent PBDD is so created, then subject to the permissible upper limits referred in section 36(1)(viia) (a), the deduction has to be allowed to the Assessee. For availing the benefit of 7.5% (present limit 8.5%) of total income, there is no condition that it should be in respect of any rural branches.
All types of banks described under sub-clause (a) of clause (viia) are entitled to seek deduction of an amount not exceeding 7.5% (present limit 8.5%) of total income and only condition is that there should be provision for bad and doubtful debts in the books of account. Based on these facts and circumstances, we delete the addition made by the assessing officer and allow the appeal of the assessee.
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