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2024 (8) TMI 1244
Non payment of Gratuity payable to director or managing director - Controlling Authority-cum-Labour Court passed orders rejecting the applications filed by the Petitioners, inter-alia, holding that they were in control over the affairs of the Company and therefore did not fit in definition of the term ‘employee’
HELD THAT:- Since the amount claimed by Petitioners is in excess of Rs. 10,00,000/-, they have contended that there is a contract with Respondent No. 1, under which Petitioners are entitled to receive gratuity. Thus, right to receive gratuity is essentially premised on existence of agreement under Section 4 (5) of the Payment of Gratuity Act. Therefore, the key to the issue at hand is existence or otherwise of an agreement to pay gratuity within the meaning of Section 4 (5). No doubt, section 4 (5) is also applicable to an ‘employee’ and unless person seeking enforcement of agreement is an ‘employee’, jurisdiction of Controlling Authority under the Payment of Wages Act would be unavailable and a plain claim of a person (not being an employee) to enforce specific performance of agreement for payment of amount described as gratuity may not lie before the Controlling Authority.
The first inquiry should have been about the issue as to whether Petitioners were ‘employees’ of the first Respondent-Company. However, since substantially high amount of Rs. 1,21,96,154/- is claimed by both Petitioners as gratuity as compared to cap of Rs. 10,00,000/- each under Section 4 (3), a slightly different approach is being adopted where I first embark upon the path to enquire about existence of agreement under Section 4 (5) of the Act between the parties.
What is contemplated under sub-section (5) of Section 4 of the Payment of Gratuity Act is ‘any award or agreement or contract with the employer’. Admittedly the claim is not premised on existence of any Award and therefore what needs to be proved is existence of an agreement or contract. No express written agreement or contract is however produced on record, under which the first Respondent-company agreed to pay any gratuity to Petitioners. In absence of such express written contract, Petitioners contend that the entries made in the Balance Sheet for the year ending 31 March 2012 are required to be construed as an ‘agreement’ for payment of gratuity.
Whether Balance Sheet prepared for taxation purposes would constitute an ‘agreement’ for payment of gratuity under section 4 (5) ? - Mere reflection of an entry in the liability column of balance sheet would amount to creation of a right which never existed. Such right will have to be independently established either through a transaction or a document in the form of a contract.
In the present case, there is no underlying document in the form of a contract between Petitioners and the First Respondent-Company under which it agreed to pay gratuity to Petitioners. For the purpose of application of sub-section (5) of Section 4 of the Payment of Gratuity Act, it is necessary that existence of specific agreement or contract must be proved. In the present case, beyond reflection of entry in the balance sheet, there appears to be no underlying document under which the First Respondent-Company agreed to pay any gratuity to Petitioners.
Thus in absence of any underlying agreement or contract, it cannot be stated that mere entry in balance sheet would give rise to creation of liability for the First Respondent-Company to pay gratuity under the provisions of subsection (5) of Section 4 of the Payment of Gratuity Act.
An entry made by Petitioner themselves in the balance sheet of the company on 15 September 2012 (five days before execution of SPA) is made basis for claiming gratuity of Rs. 1.21 crores. The claim puts an additional burden on purchasers over and above the purchase price of Rs. 23 crores. There is no underlying agreement for payment of gratuity to directors to support the stray entry in the balance sheet. There is nothing of record to indicate that the previous directors (Mr. and Mrs. Deo) who owned 50% stake in the company during financial year 2010-11, were paid any gratuity.
Petitioners’ names do not figure in the list of employees for whom gratuity is insured by purchasing insurance policy from LIC under Section 4A of the Act. Even then, if a specific agreement was to be produced for payment of better terms of gratuity under Section 4 (5) of the Act, the claim of Petitioners could have been awarded.
Mere entry in the balance sheet created for the first time by Petitioners, who were in complete control of the company on that date, that too 5 days before sale of their stake in the company, cannot amount to agreement under provisions of section 4 (5) of the Payment of Gratuity Act. Petitioners’ claim for gratuity is thus totally untenable and has rightly been rejected by the Controlling and Appellate Authorities.
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2024 (8) TMI 1243
Delay of 704 days in filing the appeal before the ld. CIT (A) - there was a delay of 614 days due to Covid pandemic period and there is only delay of 90 days - HELD THAT:- After going through the ratio laid down in its order reported [2021 (11) TMI 387 - SC ORDER] we condone the delay of 614 days and with regard to 90 days delay, we observe that there is reasonable ground to condone the delay in the form of affidavit filed.
Further, we find that as the ld. CIT (A) has not decided the issues on merit for AY 2018-19 and the issues involved are same in both the assessment years i.e. 2018-19 & 2019-20 and also assessee prayed that the matter may be remitted back to the AO for considering the documentary evidences as the CIT (A) did not decide the appeal on merits.
The disallowance made by the AO needs verification of the documentary evidence filed by the assessee. Therefore, in the interest of justice, we direct AO to consider the documentary evidences and also give an opportunity of being heard to the assessee
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2024 (8) TMI 1242
Disallowance of expenditure as assessee has not carried any business activities during the current assessment year - HELD THAT:- Assessee is having a huge plant for the purposes of generating, transmitting, distribution and supply of electricity since 1995 with an agreement for supply of electricity with HPCL, at present HPPC for 15 year power purchase agreement, however, the same was suspended by HPCC w.e.f. 10th May, 2005 in compliance with the order of HERC.
We observed that the assessee has not received any payment of fixed tariff from HPPC and has filed a suit in Supreme Court which is pending as on date. It is a fact on record that assessee has not declared any income due to non realisation of fixed tariff and AO has objected to the same and opined that the assessee should have declared deemed income in order to claim of the expenditure.
We are in agreement with the findings of the CIT(A) until the relevant fixed tariff are realisable the same cannot be declared as income in the hands of the assessee and further the assessee has to keep up the plant in running condition it has to incur certain expenditures.
As and when withdrawal of the suspension of power purchase agreement the assessee may continue to generate power, therefore, the temporarily suspension of the business is with a proper reason declared on record, therefore, in our view assessee is eligible to claim the Revenue expenditure as well as the relevant depreciation of the fixed assets during the current year, therefore, we are inclined to agree with the findings of the CIT(A) and, accordingly, appeal filed by the Revenue is dismissed.
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2024 (8) TMI 1241
Condonation of delay filling appeal before CIT on non-receipt of the assessment order - assessee filed appeal against assessment order of AO after gap of over seven years - only reason given by the assessee for the inordinate delay in filing of appeal was that due to change in address of the assessee, the assessment order was not received by the assessee
Whether the AO had followed the due process laid down for service of notice by affixture in the instant facts? - Scope of Procedure for service of notice - HELD THAT:- It is evident that the assessee has been deliberately avoiding receipt of notices issued by the Income Tax Department and had also deliberately not participated in assessment proceedings.
The assessee had changed his address and such change in address was also intimated to the Income Tax Department and neither was the PAN data base was updated by the assessee to keep the Income Tax Department informed about the whereabouts of the assessee. It was only when the bank account of the assessee was attached by the Tax Recovery Officer that the assessee decided to file appeal before the CIT(A) and that also after a gap of over seven years.
As per the provisions of Section 282 of Income Tax Act,1961, the service of notice of summon or requisition or order under the I.T. Act may be made by delivering a copy thereof, by post or by such courier services as may be approved by the Central Board of Direct Taxes. Sub-Rule (1) of the Rule 127 of the Income Tax Rules, 1962 provides that for the purposes of sub-Section (1) of Section 282, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the may be delivered or transmitted shall be as per sub-Rule (2).
AO can also serve the assessment order by affixture. Service by affixture is resorted to in two circumstances: First, when the assessee or his agent refuses to sign the acknowledgement for service or when the serving official, after using all due and reasonable diligence, cannot find the assessee in his residential or business premises within a reasonable time and second, when there is nobody else authorized to receive the notice. In the above circumstances, the Income Tax Inspector can effect the service by affixture on his own initiative without waiting for an order from the AO. A report is to be drawn up by the Income Tax Inspector, on the facts and circumstances of the service by affixture, specifying the date and time of service and the name of the identifier if any.
From the facts placed on record before us, it is not clear where the complete process of affixture as laid down u/s 282 r.w.r. 127 of the Income Tax Rules, 1961 has been followed by the Income Tax Department.
Accordingly, in the interest of justice, the matter is restored to the file of Ld. CIT(A) to call for the relevant assessment records for the purpose of verifying whether the due process of service of assessment order by way of affixture has been followed in the instant case.
Assessee has not pressed for vacating / setting-aside of the assessment order, as being bad in law, but the only request of the Counsel for the assessee before us is that in case it is found that the due process for service of notice has not been followed by the Income Tax Department, then the Ld. CIT(A) may condone the delay in filing of the appeal before him and thereafter, decide the issue on merits after giving due opportunity of hearing to the assessee. Accordingly, the matter is set-aside to the file of Ld. CIT(A) for carrying out the verification as directed - Appeals of the assessee are allowed for statistical purposes.
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2024 (8) TMI 1240
Reopening of assessment u/s 147 - cash deposits in bank account - HELD THAT:- Cash deposits in Bank Account maintained with YOUTH DEVELOPMENT CO-OP. BANK LTD., KOLHAPUR. It is also observed that no addition has been made on account of impugned cash deposits. Thus, no addition has been made on account of reason for reopening.
As decided in Jet Airways (I) Ltd [2010 (4) TMI 431 - BOMBAY HIGH COURT] if no addition has been made on account of the income alleged to have been escaped assessment in the reasons recorded, then it is not open for AO to independently assess some other income. In this case, AO had independently tried to assess which was outside the initial reasons. Therefore, it is held that AO had no jurisdiction to add independently. Accordingly, we direct the AO to delete the addition.
Addition u/s 56 - As observed that assessee’s father had issued a cheque in the name of assessee. The source of this is well explained as maturity amount received from maturity of Fixed Deposits. Therefore, source stands explained. Hence, assessee has fulfilled his primary onus of proving identity, genuineness and creditworthiness. Assessing Officer has not brought on record any document to negate the Assessee’s submission. Any sum of money received from a Relative(defined in the section) as gift is not taxable as per section 56(2)(vii).
Assessee has received sum by cheque as gift from his father. We are of the opinion that addition is not sustainable - Decided in favour of assessee.
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2024 (8) TMI 1239
Estimation of income - bogus purchases - HELD THAT:- When the revenue has made the addition to the extent of only 3% on bogus purchases for same parties in different years, there is no reason to make 100% addition on the alleged bogus purchases in the year under consideration. We, accordingly, direct the AO to reduce the addition to 3% of the total impugned purchases - Appeals of the assessee and revenue are partly allowed.
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2024 (8) TMI 1238
Unexplained creditor - CIT(A) deleted addition admitting additional evidences - HELD THAT:- CIT(A) has considered the additional evidence filed before it by the assessee which was not available before the ld. AO. No doubt, according to the provisions of Rule 46A, the ld. CIT(A) is empowered to admit the additional evidence, provided it falls into conditions as mentioned in clause (a) to (d).
For admitting such evidence a specific order under Rule 46A also to be passed under the appellate order. Accordingly, to sub-rule (iii), he has to give an opportunity to the AO to verify the same. In the appellate order, we do not find any (1) reference to any application made by the Assessee for admission of additional evidence, (2) Correspondence with the AO for comments on admission of such evidence, (3) any order admitting such additional evidence. Thus, there is no reference of any power exercised by him u/r 46A of The IT Rules, 1962.
Therefore, it is apparent that ld. CIT(A) has admitted the additional evidence without any application made by the assessee, without making any order and without providing any opportunity to the AO. Thus, there is clear violation of rule 46A of the IT Rules.
We restore the whole issue back to the file of the ld. CIT(A) to comply with the provisions of Rule 46A and decide the issue afresh. The solitary ground raised by the ld. AO is allowed.
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2024 (8) TMI 1237
Revision u/s 263 - difference between ‘no enquiry’ and ‘lack of enquiry’ - HELD THAT:- All issues are share application money/share premium, transactions with related parties specified u/s 40A(2) of the Act, expenditure on account of freight and octroy/clearing and sawing, security premium reserve and verification of sundry creditors/sundry debtors were examined by Ld. AO and decided in favour of assessee in original assessment proceedings.
PCIT had no where found any flaw in the documents. PCIT had not undertaken any enquiry or given reasons for coming to conclusion that assessment order was erroneous and prejudicial to interest of revenue.
Explanation 2 to section 263 of the act does not give unfettered power to Ld. PCIT to revise each and every order to re-examine the issues already examined by the AO during assessment proceedings. Therefore, the impugned order is beyond jurisdiction, bad in law and void ab initio. Consequently, the impugned order deserves to be set aside.Assessee’s appeal is allowed.
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2024 (8) TMI 1236
Quantification of short payment of TDS and interest exparte of the assessee - HELD THAT:- Considering the facts and circumstances of the cases for AY 2009-10 & 2012-13 and in view of the decision of the Hon’ble High Court of Delhi in the case of CIT v. Ansal Land Mark Township (P.) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] along with other appeals for AYs 2013-14 & 2014-15, we deem it proper the remand the matter to the file of the Assessing Officer for his consideration in terms of the fresh evidence filed before us by way of paper book containing the details of various parties in Form 26A and pass order in accordance with law. Thus, the order of the ld. CIT(A) is set aside for all the assessment years under appeal and the grounds raised by the assessee are allowed for statistical purposes.
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2024 (8) TMI 1235
Penalties levied u/s 271D & 271E - assessee having been found to be violated the provisions of Section 269SS and 269T - HELD THAT:- There is no concrete finding of the assessee having accepted loans in violation of the provisions of Section 269SS of the Act or repaid the same in violation of the provisions of Section 269T of the Act.
The only finding of the Revenue is to the effect that 11 cheques pertaining to the assessee were found at Sudama Resorts whose Director had contended that the cheques were obtained from financiers for arranging loans in cash to them. Except for the statement of the Director of the Sudama Resorts, there is no other evidence with the Revenue.
Assessee in fact had sought cross-examination of the Director of the Sudama Resorts and the same was not given by the AO. Therefore, this statement of Director of Sudama Resorts has no evidentiary value in the eyes of law as laid down in the case of Andaman Timber Industries[2015 (10) TMI 442 - SUPREME COURT] - Moreover it is a fact on record that the director of Sudama Resorts had surrendered income on account of cheques found during search at its premises.
There is agree with assessee, no concrete finding of the Revenue ,based on authentic evidence, of the assessee having accepted and repaid loan in violation of the provisions of section 269SS/T of the Act. The finding of the Revenue to this effect is merely based on surmises and conjectures.
With no clear finding based on authentic evidence of the assessee having violated the provisions of Section 269SS and 269T of the Act, we agree with assessee that there was no case for levy of penalty u/s 269D and 269E of the Act respectively.
As in the case of Sneh Builders [2011 (5) TMI 1156 - ITAT PUNE] squarely applies to the case of the assessee wherein identical penalty levied u/s 271D of the Act on the presumption that the assessee must have taken loan in violation of provisions of Section 269SS was deleted noting no concrete evidence brought on record to establish the fact of the assessee having violated the relevant provisions - Appeals of the assessee are allowed.
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2024 (8) TMI 1234
Addition u/s 69A - Cash deposits during demonetization period - HELD THAT:- AO has made addition u/s. 69A which will be applicable only when the assessee is found to be the owner of any money, bullion, jewellery or other valuable articles and such money etc. is not recorded in the books of accounts maintained by him from any source of income and any explanation offered by the assessee is not in the opinion of the AO is satisfactory then, the same can be added as the unexplained money in the hands of the assessee.
In the present case, the assessee has recorded the above cash deposits in his books of accounts and source of cash deposits during demonetization period were also been maintained by the assessee.
Therefore in our considered view, the A.O. is not correct invoking provisions of Section 69A of the Act and charging tax u/s. 115BBE of the Act. Thus the addition made by the Assessing Officer is liable to be deleted. Decided in favour of assessee.
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2024 (8) TMI 1233
Penalty levied u/s 270A - the assessee did not file original return of income AO initiated penalty proceedings for underreporting of income - AR before us submitted that all the due tax on the income earned by the assessee under the head ‘salary’ were already deducted by the employer and, therefore, there was bona-fide belief on the part of the assessee that he has not underreported
HELD THAT:- Undisputedly the income of the assessee was subject to the tax liabilities on which tax at source was duly deducted by the employer and deposited with the government exchequer on behalf of the assessee which was also reflecting in the record of the department.
Accordingly, there was no loss to the revenue as far as the tax liability is concerned. The provisions of clause (a) of sub-section 6 of section 270A provides that there will not be any under reporting of income if the assessee furnish explanation with respect to the income and discloses all the material facts regarding such income and the AO is satisfied that the explanation offered is bona fide.
In the present case, the income of the assessee was subject to TDS and almost entire tax liability was already paid by way of TDS and the same was duly reflecting in the record of the department.
Hence there was no reason for the assessee to underreport his income by not furnishing return of income. The assessee has been filing return of income for the last many years. Therefore, we find that the explanation furnished by the assessee for failing to file return of income was bona fides as the assessee never intended to underreport the income.
Likewise, as far as the addition is concerned, we reiterate that the assessee under the bona fides belief has claimed a higher amount of deduction u/s 24 of the Act. Therefore, no penalty under the provision of section 270A of the Act shall be levied.
We can safely hold that the assessee due to bona fide belief failed to file the return of income. Therefore, no penalty shall be levied under section 270A of the Act on account of underreporting of income - Appeal of the assessee is allowed.
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2024 (8) TMI 1232
Addition under the provisions of Explanation 1 to sec. 37(1) - As argued expenses in dispute have not been prohibited under the provisions of law - interest and the fee were levied on account of non-compliance of the different provisions under the different Act, which is compensatory in nature and, therefore, the same should be allowed as a deduction.
HELD THAT:- As regards the first category of expenses representing the interest and late fee on account of delay in filing GST return, we find that it was levied for non-compliance of the provisions of GST Act.
Assessee is required to comply the provisions of GST Act by filing the return within the stipulated time. Since the returns have not been filed within the stipulated time, the interest and fee were charged under the GST Act. As such the interest in dispute was not charged by the revenue for committing any offence which was prohibited under the provisions of GST Act. Thus, interest and late fees paid by the assessee in the given facts and circumstances is compensatory in nature which is allowable as deduction under the provisions of section 37(1)
As decided in the case of ITO vs. Virtue Financial Services (P) Ltd [2012 (9) TMI 762 - ITAT DELHI] regarding the payment made on account of delay in submitting statutory requirement/returns held that the same are compensatory in nature and allowable as business expenditure u/s 37
Interest on delayed payment of Professional tax, PT, and licence fee for which the assessee was under the statutory obligation to deposit/pay within the stipulated time but there was a delay and therefore the interest was charged under the relevant Act which is nothing but compensatory in nature and therefore the same cannot be hit by the explanation 1 to section 37(1) of the Act.
Accordingly, we hold that such interest on account of delayed payments is eligible for deduction as business expenses under section 37(1) - grounds of appeal of the assessee are allowed.
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2024 (8) TMI 1231
Taxability u/s 115BAA - assessee being a representative assessee, claimed to be taxed at same rate applicable to its beneficiary claim as dismissed as the assessee was not treated as a representative assessee.
CIT(A) accepted the status of the assessee as a representative assessee and held that since the assessee is a determinate trust with RIIHL as its sole and 100% beneficiary and settler and as RIIHL has opted to be taxed under the new tax regime @22% being a representative assessee u/s 161 of the Act, the assessee is also liable to be taxed at the same rate i.e., @22% + applicable surcharge and CESS.
HELD THAT:- Sub-Section (1) is the relevant sub-Section. It can be seen that the tax shall be levied upon and recovered from a representative assessee in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him which means that the trust will be subject to same rate of tax as applicable to the person represented by it i.e., RIIHL which was taxed u/s 115BAA.
As in the case of Mrs. Amy F. Cama [1998 (6) TMI 60 - BOMBAY HIGH COURT] assessee claimed purchase price of the flat should be deducted from the capital gain arising out of the sale of the said immovable property, under section 54. ITO negatived the assessees claim on the ground that the trust who was the owner was not residing in the said flat and the beneficiaries who resided therein were not the owners and, therefore, the assessee did not fulfil the conditions laid down in section 54.
On appeal, the AAC also negatives the claim of the assessee. On second appeal, the Tribunal, dismissed of assessee’s claim on the ground that the excess amount realised by the trustee would be income in her hands and the said income could not be said to be income receivable on behalf of the beneficiary.
Tribunal came to the conclusion that the question of applicability of section 161 did not arise in the instant case. Decided in favour of assessee.
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2024 (8) TMI 1230
Revision u/s 263 - disallowance u/s. 14A - HELD THAT:- PCIT has simpliciter carried out unnecessary exercise without analyzing that the assessee has received the exempt income - PCIT has not noted any error in the assessment order or any prejudice caused to the Revenue by the assessment order.
Further for revising the assessment, the PCIT has to give a clear cut finding that the order passed by the AO u/s. 143(3) of the Act suffers from the twin conditions i.e., erroneous insofar as prejudicial to the interest of Revenue, which is sine qua non to invoke the powers u/s. 263
Loss of sale of assets - Claim being capital in nature was disallowed by the assessee company while computing taxable income for the relevant assessment year and moreover, the disallowance of this loss on sale of assets was duly disclosed in the return of income filed for the relevant assessment year and appropriate disclosure was made in TAR filed by the assessee for the relevant assessment year.
PCIT has nowhere recorded finding of fact that the assessment order is erroneous insofar as prejudicial to the interest of Revenue and once this twin conditions is not mentioned or not probed, the PCIT has no power to exercise powers u/s. 263 of the Act for revising the assessment.
Satisfaction as noted by CIT - For invoking the revisionary powers u/s. 263 of the Act, it is necessary for the PCIT to state in what manner he consider the assessment order as erroneous and prejudicial to the interest of Revenue and what the basis and material for such conclusion. Though the provisions of section 263 of the Act vests power in PCIT in subjective terms, but even when an enactment vests discretion in any authority saying, “if it appears”, “if he satisfied”, “if he considers necessary”, that does not mean that it is a matter only of subjective satisfaction and such authority has not to judge the circumstances in an objective manner.
PCIT must give his own reasons for being satisfied that the order passed by the AO is erroneous and prejudicial to the interests of Revenue and this provision postulates a scrutiny by PCIT of all the relevant facts for holding that the order is erroneous and is also prejudicial to the interest of Revenue. In the present case none is the finding qua that and PCIT has not given any reasoning for setting aside the assessment order and directing the AO verification without any basis. Assessee appeal allowed.
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2024 (8) TMI 1229
Disallowance u/s 37(1) - business expediency on account of expenditure incurred towards various heads; testing & commissioning, security services, repairing, loading & unloading, labour charges, installation charges, freight expenses, etc. when the Income earned from corresponding activities remain undisputed - assessee had failed to submit documentary evidences to confirm the genuineness of expenditure booked - as submitted assessee duly deducted tax at source and provided all details as were available with him to show that the payments have been made only and exclusively for the purposes of his business.
HELD THAT:- Income under the head ‘business and profession’ would be earned by making certain relevant expenditure. While demonstrably unjustified expenditure could be disallowed, but it is also clear that there are limits to the kind of documentation and evidences that a normal business would be expected to maintain. In this case, the assessee has adequately demonstrated that he has meticulously maintained documents and even deducted tax at source on the payments made to vendors who were associating with him in executing turnkey projects.
Even the CIT(A) has failed to appreciate that there are limits to the kind of evidences that any normal business entity would have with it to justify the expenditure incurred for earning business income.
In this case it is felt that the assessee could not have done any better than what he has already done in terms of filing detailed documents to justify the expenditure incurred.
As relying on ASHOK SURANA [2016 (6) TMI 696 - CALCUTTA HIGH COURT] and M/S. PAHARPUR COOLING TOWERS LTD. [2022 (9) TMI 1608 - CALCUTTA HIGH COURT] to show that the burden of proof on the assessee regarding proving expenditure u/s 37(1) has limits and cannot be mainly disallowed on the grounds adopted by the AO. Disallowance u/s 37(1) deleted - Decided in favour of assessee.
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2024 (8) TMI 1228
Addition u/s 69A r.w.s 115BBE - During the search operation, statement u/s 132(4) was recorded in which the assessee surrendered lumpsum for alleged long term capital gains earned from sale of shares as additional income - AO completed assessment by recharacterizing the income surrendered as income u/s 69A and made addition
HELD THAT:- Assessee admitted that he has earned long term capital gain along with his wife which has been claimed as exempt income and offered the same for taxation.
However, the assessee realized that actual gain earned by him was Rs. 20,57,590/- and no such gain was earned by his wife. Immediately the return was revised.
Since the assessee himself has declared income as income from other sources, we do not find any merit in recharacterising the same as income u/s 69A of the Act. Further, on verification of the return of the wife of the assessee, we find that she has not earned any long term capital gain and the entire addition has been made only on the basis of surrender made by the assessee at the time of search.
As decided in [2023 (11) TMI 333 - ITAT DELHI] assessee has not offered the income under Section 69A of the Act. Even, the Assessing Officer has not made any separate addition under Section 69A of the Act. He has merely re-characterized the nature of income offered by the assessee. Thus, in our considered opinion, the provisions of sections 115BBE would not be applicable to the facts of the present appeal. Decided in favour of assessee.
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2024 (8) TMI 1227
Validity of Adjustments made in intimation u/s 143(1) - mismatch between the income tax return and tax audit report filed by the assessee -Whether adjustment can be made by CPC u/s. 143(1)(a) of the Act while processing the return filed by the assessee without complying with the condition stipulated in first proviso to clause (a) of sub-section (1) of section 143? - HELD THAT:- We do find force in the submissions made by assessee in respect of any adjustment which is proposed to be made, a prior intimation is required to be served on the assessee, either in writing or electronically, as contained in 1st proviso to section 143(1)(a) - Counsel has evidently demonstrated before us, the failure on the part of CPC to issue such prior intimation to the assessee before making an adjustment. Thus, the only aspect which emerges in the appeal is whether the adjustment has been made in compliance to 1st proviso to sec. 143(1)(a) of the Act.
Considering the facts on record and the perusal of the provisions contained in sec. 143(1)(a) of the Act, we find that on this aspect, the revenue fails. This position has not been controverted by Ld. Sr. DR also.
In case, where there is no response received from the assessee then, within thirty days of the issue of such intimation, department is free to make such adjustment or disallowance. The documentary evidence placed on record and the e-proceedings downloaded from the Income Tax portal, no where suggests that such a process has been followed. Thus, we find that the impugned intimation issued u/s. 143(1)(a) is not in compliance with the provisos to section 143(1)(a) of the Act and thus, the impugned intimation is invalid under the Act. Assessee appeal allowed.
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2024 (8) TMI 1226
Disallowance of the depreciation - assets which were held by the assessee were not put to use as per authorities below - as per revenue some of the invoices were in the name of associate company of USA and some invoices were bearing the date of next Financial Year - HELD THAT:- Ownership of assets invoiced to Arcserve USA was transferred to the assessee via inter- office memos.
Incorrect invoice, the same was rectified after the fiscal year end but the assets were in use and payments were made during the current assessment year. Assessee stated that there was a business transfer agreement for purchase of running business of ‘CA India Technologies Pvt. Ltd.’ which was to take place from 26.02.2015 but due to some technical reason the record date of acquisition was extended to 31.05.2015.
No employee cost is there, assessee’s submission in this regard is that operations commenced with directors and assistance from Arcserve USA and CA Technologies employees, negating additional manpower costs. Furthermore, the most important feature is that assessee had arrangement with its AE for billing cost plus 15%. This has been duly billed during the year and entire depreciation cost plus 15% has been billed to the AE. When the Revenue is accepting the revenue earned which is totally based upon depreciation plus 15% markup, there is no reason to deny the cost.
Thus, authorities below have erred in disallowing the depreciation - Decided in favour of assessee.
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2024 (8) TMI 1225
Addition u/s 69 - unexplained investment in agricultural land at Ratlam - addition based on presumption v/s evidence - HELD THAT:- The sale-deed is executed and registered by stamps authority and cannot be brushed aside. Secondly, we find that the bank statement of Stare Bank of India clearly mentions the details of debit entries of those six cheques cleared on various dates as narrated earlier. The bank statement is also a document issued by bank and cannot be brushed aside. Thus, from these documents, it is clearly established that the entire consideration was paid only through cheques.
Undoubtedly this clearly shows that there is no passing of cash between the parties. So far as clearance of cheques after about two years is concerned, Ld. AR has made a submission that this was due to a mutual understanding of parties. Ld. AR has further made a clear submission standing at the bar that both parties belong to Dowdy Bohra Community of Muslims where interest is not charged following customary practice. These factors pointed by Ld. AR certainly make a sense and dislodge the apprehensions made by authorities.
Lower authorities have no basis or proof to establish that the assessee or his brother had made any cash payment to the sellers and subsequently recovered the same on clearance of cheques. Such a conclusion taken by authorities is merely based on apprehension, presumption or suspicion. It is an established judicial wisdom that presumption howsoever strong can never become an evidence.
When we have two sets of evidence, one documentary evidence in the form of registered-deed and bank statement showing the factum of payment through post-dates cheques and other a mere presumption that cash mush have exchanged the hands, we must necessary give credence to the documentary evidences and should not be guided by mere presumption. Assessee appeal allowed.
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