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2025 (2) TMI 1142
Revision u/s 263 - whether the respondent-assessee could have claimed benefits flowing from Section 80IA? - HELD THAT:- We, with due respect, note that principles which guide us in evaluating whether a writ petition would be maintainable under Article 226 of the Constitution cannot be extrapolated to answer whether a transaction would fall within the scope of Section 80IA. The language in which Section 80IA stands couched is unambiguous. The scope and extent of its coverage would clearly be governed and regulated by sub-section (4) and which in unequivocal terms explains the nature of activities and contracts which could lead to a claim being laid for benefits being derived therefrom.
Sub-section (4) is prefaced by the Legislature stipulating that Section 80IA would apply to an enterprise carrying on business of developing, operating and maintaining any infrastructure facility.
While it was sought to be contended by the appellants that a Cargo Terminal does not find specific mention in the Explanation, we proceed on the premise that since “infrastructure facility” is defined to include an airport, a facility integral or supportive and concomitant to an airport would also be covered.
Whether the concession which was granted by DIAL in favour of the respondent-assessee would qualify the principal part of sub-section (4)? - This would necessarily entail it being found and established that the respondent-assessee was an enterprise carrying on either a business or operating and maintaining an infrastructure facility in terms of and pursuant to an agreement entered into with either the Central or State Governments, a local authority or any other statutory body.
It is here that the claim of the respondent falters and falls. We, firstly find ourselves unable to countenance or acknowledge DIAL to be either the Central or State Government, a local authority or for that matter a statutory body. DIAL came into existence pursuant to a bidding process which was initiated by AAI in avowed fulfilment of objectives underlying Section 12A of the AAI Act. The OMDA represents a grant which was made, a concession granted by that authority to a consortium of private entities. That cannot possibly lead to DIAL being elevated to the status of a statutory body. Merely because AAI granted a concession to DIAL and enabled it to discharge some of its functions in terms of the scheme of the AAI Act, the same would clearly not result in DIAL itself being viewed as a statutory body.
Whether the respondent-assessee could be viewed to be an enterprise which had entered into an agreement with either the Central or State Governments, a local authority or a statutory body? - The construct of the concession clearly fails to meet the aforesaid primordial requirement as laid in place by Section 80IA(4). Once it is held that DIAL does not fall within the ambit of the principal qualifying provision, the concession which it granted to the respondent would also not qualify for benefits under Section 80IA. We are thus of the considered opinion that the PCIT was justified in doubting whether the benefits flowing from Section 80IA could have been claimed by the respondent-assessee.
Tribunal has clearly erred in holding otherwise and interfering with the order which had been framed by the PCIT in valid exercise of powers flowing from Section 263 of the Act. Decided against assessee.
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2025 (2) TMI 1141
Reopening of assessment u/s 147 - Videocon Industries Ltd. [Videocon] had utilised financing and credit facilities granted to it to provide interest free loans to various entities, including Top Most Investment, YK Securities and Glider Investment - HELD THAT:- On a more fundamental plane, it appears to have been asserted that even if it were assumed that the allegation of Videocon having diverted credit facilities received by it to provide interest free loans were accepted to be correct, there could be no plausible or justifiable reason to hold that income assessable in the hands of Top Most Investment, YK Securities or Glider Investment could be said to have escaped assessment.
The various objections which were made were ultimately negated in terms of the final order u/s 148A(d) which came to be passed by the respondents.
This since the solitary allegation which is levelled is a diversion of funds by Videocon to YK Securities, Top Most Investment and Glider Investment. Even if it were assumed to be correct that the Videocon had diverted funds and credit facilities provided by banks and financial institutions to third party entities, it would have at best and perhaps led to the deletion of any claims towards interest paid that may have been made by that entity.
We fail to comprehend how such a diversion of funds could have led to the formation of opinion that income taxable in the hands of Top Most Investment, YK Securities and Glider Investment could have escaped assessment. The notice u/s 148A (b) dated 31 March 2023 and the order u/s 148A (d) dated 20 April 2023 fails to provide any clue as to how such an opinion could have been formed even on a prima facie basis.
We find ourselves unable to sustain the impugned order of reassessment.
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2025 (2) TMI 1140
Rejection of application seeking for registration u/s 12A as well as approval u/s 80G - submission of assessee that the various details were furnished before the CIT(Exemption), however, the same were not as per his requirement and if given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the CIT(E) to his satisfaction - HELD THAT:- Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(Exemption) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details.
Denial of approval u/s 80G - Since we have already restored the issue of registration u/s 12A to the file of the Ld. CIT(E) for adjudication afresh, therefore, we deem it proper to restore the issue of approval u/s 80G also to his file for fresh adjudication.
Appeals filed by the assessee are allowed for statistical purposes.
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2025 (2) TMI 1139
Addition u/s 40A(3) - payments made to suppliers of material in the assessee's contract business - as submitted payments have been made by bearer cheques to various individuals for supply of material and the necessary certificates from the Mukhias of the relevant Gram Panchayat had also been produced before the AO in the course of the original proceedings itself wherein it has been categorically admitted that there is no branch of any bank in the village where the suppliers were operating - HELD THAT:- It is clear that even, in the course of the original proceedings, the certificate issued by the Mukhia of the relevant villages were available. Obviously, the Mukhias are the Gram Pradhan who were elected representatives and who know the facts and the ground reality. They represented to the Government also in their respective villages. Such Mukhias have specifically confirmed that there are no banks or any branch of banks operating in the respective villages. Thus, obviously, the provisions of Rule 6DDJ would come into play and no disallowance can be made in respect of the payment made by bearer cheques to the various suppliers of material.
Addition invoking the provisions of section 40(a)(ia) - non-deduction of TDS on payments made to Mangla Planners for map design - HELD THAT:- As submitted by the ld. AR that in view of the principles laid down in the case of Hindusthan Coca Cola Beverage (P) Ltd. [2007 (8) TMI 12 - SUPREME COURT] the issue could be restored to the file of the Assessing Officer for verification as to whether the recipients of the amount of Rs. 2,95,000/- being Rs. 1,00,000/- paid to Mangalam Planners and the amount of Rs. 1,95,000/- paid to the different persons for the design and planning of the water towers have been offered by the recipients to tax as their income. AO will also consider the fact as to whether the recipients are liable to tax or whether their incomes are below the taxable limit.
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2025 (2) TMI 1138
Revision u/s 263 - assessment order passed u/s 147 r.w.s. 144B challenged distinction between "lack of inquiry" and "inadequate inquiry" - claim of 100% deduction u/s 80IC - re-verify and re-examine the matters in reference being the question of the proportion of deduction (viz. 25% versus 100%) u/s 80IC for the reason that prior to the initiation of the revision proceedings, enquiries/examinations in the manners in which these ought to have been carried out were not so carried out by the Assessing officer rendering such previous impugned order of assessment erroneous and prejudicial to the interest of Revenue.
HELD THAT:- No discussion or findings by the ld Pr.CIT in respect of the nature of enquiry or verification so carried out by the AO vis-à-vis its reasonableness in the facts and circumstances of the case in the proceedings so completed u/s 147 r/w 144B of the Act. The Explanation 2(a) to Section 263 doesn’t give such unfettered powers to the ld PCIT and it is the responsibility of the ld PCIT to show that the enquiry or verification conducted by the AO was not in accordance with the enquires or verification that would have been carried out by a prudent officer in the facts and circumstances of the present case.
Merely the fact that the order so passed is cryptic doesn’t give the jurisdiction to ld PCIT to exercise the jurisdiction u/s 263 as what needs to be seen is the assessment records at the time of examination by the ld PCIT and which speak about the issue of notices, the submissions and documentation so submitted by the assessee which reflect due application of mind by the AO. The assessment order is reflection of conclusion of assessment proceedings and it is an accepted practice that only where an adverse view is taken against the assessee, the basis of arriving at such a adverse view find mention in the assessment/reassessment order which in turn allows the assessee to challenge and avail remedial action as so advised.
AO after calling for required information/documentation and after duly considering the explanations and documentation submitted before him, reached a rightful conclusion that the assessee is eligible for claim of 100% deduction u/s 80IC of the Act for the impugned assessment year 2017-18.
In our view, such a view is clearly a plausible view which a reasonable and prudent officer could have taken and in absence of any further enquiry conducted by the ld PCIT and merely for the purposes of re-verification and re-examination of claim so allowed, the view so taken and order so passed by the Assessing officer cannot be held to be erroneous in so far as prejudicial to the interest of the Revenue and the exercise of revisional jurisdiction by the Ld. PCIT u/s 263 cannot be sustained in the eyes of law. Assessee appeal allowed.
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2025 (2) TMI 1137
Applicability of section 41(1) and 68 - Addition of lease advance as well as addition toward booking advance as liability ceased as income of the assessee - HELD THAT:- Lease deposit amount were interest free deposit means interest free amount to be deposited by the Licensee with Lessor as per terms and conditions of lease agreement. The interest free deposit taken by the licensor is to secure or to act as a guarantee as per the terms of agreement against damages to the properties.
The amount of ₹ 3 crore received by the assessee were lease deposit and the said deposit is temporary in nature for lease period of 21 years as per lease agreement. The said agreement of lease is binding on both the parties. The amount was duly acknowledged and confirmation was also filed by Poonam Resorts Ltd., which is placed on record.
We find that the assessee company received advance against booking of property from various parties, which were routine practice in this line of business. During the assessment year 2019-20, the assessee was having opening balance of ₹ 1.20 crore which was received as booking advance against property. Subsequently, the assessee has further received ₹ 1 crore through proper banking channel towards booking advance during the previous year relevant to the assessment year 2019-20 and not as booking advance during the previous year relevant to the assessment year 2020-21. The said advance were booking advance against property which cannot be treated as cessation of liability. These amounts are specifically received as advances against booking of property and which does not fall within the provision of 41(1) of the Act, therefore, provision of section 41(1) are not applicable in assessee’s case. No amount has been received during the previous year relevant to the assessment year 2020-21.
Basic condition of invoking the provision of section 41(1) of the Act has not been pointed out the Assessing Officer in the assessment order. The Assessing Officer has only doubted the genuineness of the lease deposit transaction and booking advances transactions which could have been the basis for addition under section 68 of the Act, but again the transactions are very old and not taken place during previous relevant year relevant to the assessment year 2020-21.
Therefore, the applicability of section 68 is also not attracted in assessee’s case. Even if the transactions are assumed to be trading liability, the condition mentioned in the Explanation to section 41(1) of the Act is bad–in–law, arbitrary and unjustified.
Addition made for lease advance as well as addition toward booking advance as liability ceased as income of the assessee were rightly deleted by learned CIT(A). Decided in favour of assessee.
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2025 (2) TMI 1136
Addition u/s 68 - Unexplained cash credit - HELD THAT:- We find that the assessee submitted confirmations, bank statements, and ITRs of all share applicants, thereby discharging its initial burden of proof.
As held in the case of CIT vs. Vrindavan Farms (P) Ltd. [2015 (11) TMI 279 - DELHI HIGH COURT] once the assessee submits basic documentary evidence, the onus shifts to the AO to make further inquiries and bring contrary material on record. In the present case, the AO merely rejected the documents without conducting further verification, which is contrary to this principle.
As decided in case of Arjun Trading Co. Pvt. Ltd. [2018 (6) TMI 1860 - ITAT AGRA] where a company is newly incorporated and has not commenced business, cash credits cannot be treated as unaccounted income.
AO rejected creditworthiness solely on the ground of low-income levels of investors, which is legally untenable - AO failed to conduct any further inquiry or cross-examine the investors, despite having their details. This is contrary to the principle laid down in the case of Clavecon India P. Ltd. [2023 (12) TMI 625 - ITAT DELHI] where it was held that if the AO doubts the creditworthiness, he must conduct independent inquiries before making an adverse inference.
The rejection of share applicants' creditworthiness solely on the basis of their low-income levels is not legally sustainable. Since no business activity had commenced during the relevant year, the application of Section 68 in this case is wholly unwarranted. Accordingly, the addition under Section 68 deserves to be deleted in its entirety.
Alternative addition u/s 56(2)(viib) - AO’s action of ignoring the DCF method without any proper basis and replacing it with the NAV method is arbitrary, contrary to legal precedents, and unsustainable in law. Accordingly, the alternative addition under Section 56(2)(viib) of the Act is unjustified and deserves to be deleted.
Disallowance of expenses - As per AO since no business operations were carried out, the expenses could not be allowed as business expenditure - AO noted that the financial cost was related to borrowings used for investment in the share capital of an associate company, which is not allowable u/s 57(iii). Similarly, ROC expenses were held to be capital in nature. Other expenses such as traveling, legal, and professional fees were also disallowed due to lack of any direct connection with the interest income. The CIT(A) upheld the disallowance, concurring with the AO’s finding that the expenditure was not incurred for the purpose of earning interest income and thus could not be allowed u/s 57(iii) of the Act. The only expenses allowed were statutory audit fees, postal expenses, and telephone charges which were deducted from the income.
We find no reason to interfere with the decision of the lower authorities. The assessee did not demonstrate any direct nexus between the claimed expenditure and the income earned, which is a necessary condition u/s 57(iii) - AO and CIT(A) have correctly applied the provisions of law, and accordingly, the disallowance is justified.
Appeal of the assessee is partly allowed.
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2025 (2) TMI 1135
Unexplained cash credit u/s 68 - Bogus share application / share premium, received during the year - HELD THAT:- Assessee has filed the various documents / evidences of the 8 share subscribers which comprised of share application, ITRs, audited financial statements, PAN Cards, allotments receipts, bank statements of source of funds, assessment orders u/s 147/143(3) of the Act. We find that in all most all the cases the assessments were framed u/s 143(3) r.w.s 144 of the Act.
We also find that the source of source were explained in some cases even though the same was not required. Needless to say that all these details / documents were before the ld. CIT (A) who has not taken a cogent view to the same. We also note that the ld. AO has also issued summons u/s 131 of the Act to the director of the assessee company, which were not complied with. Now, coming to the evidences filed before us, we have examined the evidences filed by the assessee in the form of share applications, ITRs, audited financial statements, PAN Cards, allotments receipts, bank statements of source of funds, assessment orders and find that the identity and creditworthiness of the shares and the genuineness of the transactions are adequately proved. However, the authorities below have failed to conduct any enquiry or pointed any defects the said documents.
As decided in Shreen Hire Purchase P. Limited [2024 (12) TMI 1536 - CALCUTTA HIGH COURT] both the nature & source of the share capital received with premium were fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed before the ld AO. Accordingly, all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction were placed before the AO and the onus shifted to the ld AO to disprove the materials placed before him. Without doing so, the addition made by AO is based on conjectures and surmises cannot be justified.
Assessee appeal allowed.
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2025 (2) TMI 1134
Unexplained cash credit u/s 68 - AO observed that the assessee had deposited cash in three different bank accounts during the year -
Cash Deposit in Andhra Bank - HELD THAT:- It is a well-recognized fact that real estate transactions in India often take place based on oral agreements, particularly in cases where mutual trust exists between parties. The sale-purchase deed furnished by the assessee before the ld. CIT(A) and in remand proceedings before the AO clearly establishes the flow of funds. This documentary evidence directly supports the assessee’s explanation that the cash received was used towards the cost of acquiring the property for Mr. Chandra Kaladhara Reddy. Despite this crucial fact being on record, both the CIT(A) and the AO have failed to consider it, which constitutes a significant lapse in the assessment proceedings.
Additionally, the Revenue failed to conduct any independent inquiry with Shri Chandra Kaladhara Reddy, despite all relevant details being available on record. In view of the above, we hold that the assessee has duly discharged the primary onus under Section 68 of the Act concerning the cash deposit of ₹ 1.57 crore in Andhra Bank. Since the Revenue has not controverted this explanation through independent inquiry or contrary evidence, we hereby set aside the findings of the lower authorities and direct the AO to delete the addition of ₹ 1.57 crore.
Cash Deposits in Chartered Sahakari Co-operative Bank and Karnataka State Apex Co-operative Bank - We observe that the assessee has made cash withdrawals from these banks throughout the year.
Similarly, we also note that there was balance cash receipt of Rs. 50 lacs (200 lacs less 150 lacs) against the sale of the property discussed above. The aggerate of all these cash is sufficient to justify the deposit of cash discussed above. At the same time, the revenue has not brought anything on record suggesting that the amount of cash available in his hands discussed above has been utilised for any other purposes i.e. personal expenses or investments other than the deposit in the impugned bank accounts. Given these facts and circumstances, we are inclined to set aside order of the learned CIT-A with the direction to the AO to delete the addition made by him on account of cash deposits in the bank.
Credit in the assessee’s bank account from M/s KR Shelter and on account of interest, neither of which were offered to tax - Out of the sum of ₹ 29 lakh credited from M/s KR Shelter Pvt. Ltd., only ₹ 19 lakh is accounted for in the books as commission income and advance. However, the accounting treatment for the remaining ₹ 10 lakh is not substantiated in the profit and loss account or balance sheet. Based on the facts emerging from the above discussion, we conclude that the assessee has failed to establish that the amount of ₹ 10 lakh credited to his bank account was duly accounted for and offered to tax. Accordingly, we confirm the same.
Similarly, we note that assessee’s Andhra Bank account was credited with ₹ 2.45 lakh, with the transaction description reading "Inst03551 Clg Axis Bank Ltd," which was treated by the authorities below to be an interest credit. Upon reviewing the same, we note that Inst03551 represents the “instrument” and not the interest as alleged by the revenue. Accordingly, we are of the view that such amount of Rs. 2.45 lacs do not represent the undisclosed interest income of the assessee as alleged by the authorities below. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him for Rs. 2.45 lakhs on account of interest income. Hence, the ground of appeal raised by the assessee is hereby partly allowed.
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2025 (2) TMI 1133
Unexplained sources u/s 69A - cash deposits in Bank account - HELD THAT:- It is a well settled law that if the assessee is able to show that it had made cash withdrawals from which the deposits were made, then it would be reasonable to infer that the source of cash deposits was from the cash withdrawals made by the assessee, unless, the Revenue is able to establish that there was a specific expenditure incurred by the assessee as a consequence to which the assessee was not in a position to/did not have adequate cash in hand to make the cash deposits in his bank account.
In the case of C. Vamsi Mohan [2015 (3) TMI 1236 - ITAT HYDERABAD] held that said withdrawal having been made by the assessee just before a week, the same can reasonably be treated as available with the assessee for cash deposit especially when there is nothing to show that the said amount was utilized by the assessee for some other purpose.
In the case of ITO v. Deepali Sehga [2014 (9) TMI 1073 - ITAT DELHI] it was held that merely because there was a time gap between withdrawal of cash and its further deposit to the bank account, the amount cannot be treated as income from undisclosed sources under Section 69 of the Act in the hands of the assessee.
In view of the facts of assessee’s case as highlighted above and the judicial precedents on the subject, we are of the view that the assessee has been able to explain the source of cash deposits in his bank account as coming from earlier withdrawals made by the assessee from the same bank account.
Department has not brought any material to show that the earlier withdrawals from the same bank account was utilized by the assessee for any other purpose. Appeal of the assessee is allowed.
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2025 (2) TMI 1132
Validity of Assessment u/s 153A - Addition u/s 68 - non-current liabilities in the balance sheet of the appellant company - HELD THAT:- Additions have been made by the AO in assessment orders passed u/s 153A of the IT Act. We have already noted earlier that the relevant facts are not in dispute. It is not in dispute that no incriminating materials were found in the course of search u/s 132 of the IT Act in respect of the various additions made by the AO.
Further it is also not in dispute that no assessment proceedings were pending in the cases of the assessee at the time of search conducted on 08/07/2016 in the case of the assessee, u/s 132 of the IT Act. Furthermore, as no assessment proceedings were pending in the case of the assessee at the time when (on 08/07/2016) search u/s 132 was conducted, the case of the assessee in the present appeals before us, falls in the category of completed/unabated assessments within the meaning of orders passed in the case of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] and Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] which was approved by Hon'ble Supreme Court in [2023 (4) TMI 1056 - SUPREME COURT] Abhisar Buildwell (supra).
We are of the view that the issue in dispute is squarely covered in favour of the assessee by the orders of Abhisar Buildwell (supra) and U.K. Paints (Overseas) Ltd. [2023 (5) TMI 373 - SC ORDER] and by the aforesaid instruction No. 1 of 2023 of CBDT, which is binding on Revenue authorities. We direct the AO to delete the additions.
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2025 (2) TMI 1131
Rejecting approval u/s 80G - Application filled under the wrong clause - trust was already incorporated on 24.02.2006 and had claimed exemption, it was not correct in filing Form 10AB under clause(iv)(B) which was meant for those trust which did not claim exemption in Previous years - HELD THAT:- The assessee trust was required to file application under 10AB which was lodged on 25-May-2024 but the section for registration which was selected was 14A-Sub-clause (B) of clause (iv) of first proviso to sub-section (5) of section 80G, instead of clause (iii) of the said section due to inadvertent error in the application.
It is not disputed that the assessee trust already had an 80G approval under the erstwhile provisions.
Under the new provisions pertaining to 80G, the new provisional registration was received and the said provisional registration was from 24-09-2021 to AY 2024-2025. In such a situation, the only mistake committed by the assessee was mentioning the relevant clause(iii) in place of clause(iv). Evidently, it is a typographical, inadvertent but a bonafide mistake only which is subject to correction.
As gone through the cited decision of Torna Rajgad Parisar Samajonnati Nyas [2025 (1) TMI 1473 - ITAT PUNE] where also such a technical mistake was involved in the case of a trust. The hon’ble Bench set aside and restored the matter back to the CIT (Exemption).
The authorities below failed to appreciate that if the failure to consider the claim of option to discharge tax under Section 115BAA on the ground of failure on the fact of the petitioner to file Form 10-IC within the period stipulated under Section 115BAA would cause genuine hardship to the assessee.
CIT(E) was not justified in dismissing assessee’s application for registration merely on a technical ground.
Impugned order is set aside with a direction to him to treat the application already filed by the assessee decide the same as per fact and law after providing reasonable opportunity of hearing to the assessee - Appeal of the assessee is allowed for statistical purposes.
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2025 (2) TMI 1130
Validity of reopening of assessment - HELD THAT:- AO reopened the assessee’s assessment after due application of mind and obtained proper approval and therefore no interference is called for in the finding of ld.CIT(A) - Decided against asssessee.
Addition u/s. 69 - information received from the DDIT (Investigation) about huge cash deposits in certain bank accounts and thereafter immediate transfer through RTGS to the other interlinked accounts and from one of such account assessee was found to have received Rs. 8.00 lakh from Destiny Goods Private limited - HELD THAT:- Assessee was holding Equity Shares prior to the alleged transaction. The assessee sold some of the Equity Shares held by it to M/s. Destiny Goods Private Limited for a consideration of Rs. 8.00 lakh. In support of said transaction, the assessee has furnished the copy of sale bill, ledger copy, bank statements.
So far as the proof that the alleged sum was not an accommodation entry, but was sale consideration received from sale of Equity Shares, CIT(A) has also mentioned these facts but nowhere during the course of proceedings before the lower authorities, the genuineness of these documents have been doubted. Rather no enquiry has been conducted by the AO to verify the correctness of these details and in absence of any such enquiry, it has to be presumed that the assessee received sale consideration against the genuine transaction of sale of Equity Shares.
DR failed to controvert these facts. Therefore, CIT(A) has erred in confirming the addition made by the AO u/s. 69 of the Act. Decided in favour of asssessee.
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2025 (2) TMI 1129
Addition u/s 68 - undisclosed income in the hands of the assessee - CIT(A) deleted the addition on the ground that the income was already assessed in the hands of M/s. Ice Worth Reality LLP, and taxing the same in the hands of the partner would lead to double taxation, which is contrary to the provisions of the Act.
HELD THAT:- It is an undisputed fact that the AO has already made an addition in the hands of M/s. Ice Worth Reality LLP on account of bogus LTCG from penny stock transactions. CIT(A), Ahmedabad, in the case of M/s. Ice Worth Reality LLP, has already deleted the said addition, holding that the LTCG transactions were not taxable. Since the same income has already been taxed at the LLP level and subsequently deleted in appeal, taxing it again in the partner’s hands would lead to double taxation, which is impermissible under the Act.
Section 68 of the Act applies when an assessee fails to explain the source of a credit in his books of accounts. In this case, the assessee’s share of profit from M/s. Ice Worth Reality LLP is fully explained and recorded in the LLP’s books, which were assessed separately. Since the income was already disclosed at the LLP level, there was no unexplained credit in the partner’s books, and invoking Section 68 in the partner’s case was unjustified.
AR has pointed out that the tax effect in the present appeal is below the revised monetary threshold of Rs. 60 Lacs for filing appeals before the Tribunal As per the CBDT’s policy, the Department is instructed not to file appeals before the Tribunal where the tax effect is below the prescribed limit unless the case falls within specific exceptions. The Revenue has not demonstrated that this case falls within any such exception. Thus, the appeal is liable to be dismissed on this ground alone.
Decided against revenue.
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2025 (2) TMI 1128
TP Adjustment - Arm's length price of guarantee fee in respect of international transactions of corporate guarantee given by the assessee to AEs - HELD THAT:- We note that the Assessee had supported the ALP Guarantee Commission Rate of 0.41% per annum determined by the Assessee with the Facility Sanction Letter, dated 18/11/2016, issued from Kotak Mahindra Bank to the Assessee expressing its willingness to give guarantee on behalf of the AEs concerned in consideration of guarantee commission of 0.30% per annum, whereas the Assessee had determined ALP Guarantee Commission Rate at 0.41% per annum.
We note that the TPO had not brought on record any material to support Guarantee Commission Rate at 1.25% per annum and has merely placed reliance upon the order passed by the DRP for the Assessment Year 2015-2016 (which has since been overturned by the Tribunal).
While the Revenue has pleaded that determination of ALP is a factual exercise which needs to be carried out on yearly basis, we find that the TPO has failed to follow this approach and had rejected the ALP determined by the Assessee for the AY 2016-2017 by following the DRP order for the AY 2015-2016.
We decline to interfere with the order passed by the CIT(A) deleting the transfer pricing addition.
Disallowance u/s 14A r.w.r. 8D - Assessee has earned exempt dividend income during the relevant previous year by investing its surplus funds in units of Liquid Mutual Funds - CIT(A) was justified in restricting the disallowance to the suomoto disallowance made by the assessee - HELD THAT:- It is admitted position that there is no change in the facts and circumstances of the present case. We note that the AO has proceeded to invoke provisions contained in Rule 8D of the IT Rules without recording his dissatisfaction regarding the computation/methodology adopted by the Assessee to arrive at the suo moto disallowance u/s 14A of the Act.
CIT(A) had granted relief to the Assessee by following the decisions of the Tribunal in the case of the Assessee for earlier Assessment Years [2021 (10) TMI 822 - ITAT MUMBAI], [2023 (10) TMI 1180 - ITAT MUMBAI],[2022 (12) TMI 1464 - ITAT MUMBAI], [2023 (3) TMI 653 - ITAT MUMBAI], [2021 (10) TMI 453 - ITAT MUMBAI], [2021 (4) TMI 254 - ITAT MUMBAI] which was binding upon the CIT(A) since there was neither any change in facts or in law. No infirmity in the order passed by the CIT(A).
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2025 (2) TMI 1127
Benefit of new tax regime u/s 115BAC - Assessee entitlement to the benefits of the new tax regime un/s 115BAC despite filing a return under the old tax regime on the reason that portal system of Income Tax Department did not allow for choosing the new tax regime after the extended due date - HELD THAT:- Unless the option exercised for the new tax regime by filling Form-10IE has been rendered invalid due to violation of the conditions contained in the relevant provisions thereto, the benefits of new tax regime would be available or applicable in the subsequent assessment years but subject to fulfilling of prescribed conditions for the regime and the Assessee cannot be treated as in-eligible for the benefits of new tax regime, which is certainly a benevolent provision for the benefit and welfare of the Assessees.
Further requirement of filing form 10-IE is directory in nature and not mandatory and it is sufficient compliance if the said Form is filed/available before the AO at the time of assessment. Further if the assessee has opted for taxation u/s 115BAA of the Act and filed Form No. 10IC or 10IE electronically on or before 31.01.2024 or 3 months from the end of the month in which the CBDT Circular ( no 19/2023 dated 23.10.2023) is issued and whichever is later, then the delay in filing of Form No. 10-IC as per Rule 21AE of the Rules for previous year relevant to A.Y. 2021-22 is liable to be condoned.
Undoubtedly the benevolent provisions cannot be read or interpreted in the restrictive manner or in isolation to the propose or object of introducing the provisions and the Courts are supposed to interpret the benevolent provisions of the law in such a way that real effects of the same would come.
Coming to the instant case, we observe that till the date of processing the return filed by the Assessee for the A.Y. 2022-23, Form No.10IE for exercising the option for availing the benefits of new tax regime filed on 10-01-2022 for the AY 2021-22 was neither withdrawn nor rejected or made invalid but the same was still available or effective before the AO during the assessment proceedings or passing the Assessment order and therefore in our considered view, the return filed by the Assessee should have been considered, under the new tax regime/provisions. Thus, the Assessee is entitled for the benefit of new tax regime and consequently the addition is deleted.
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2025 (2) TMI 1126
Validity of reopening of assessment - Assessment of trust - anonymous donations received by the assessee by way of Hundi collections/Charity box collections taxability u/s 115BBC - HELD THAT:- AO has entertained the belief on the basis of view taken by him in AY.2015-16 and the same has been held by the Hon’ble Bombay High Court [2024 (12) TMI 1276 - BOMBAY HIGH COURT] as the opinion of the AO on legal provisions, i.e., the same cannot be considered as a tangible material warranting reopening of assessment of earlier years. We noticed that the revenue has recognized the assessee trust as both charitable and religious in nature in terms of registration/approval granted to the assessee under various provisions of the Act. Hence, the assessee would be covered by the exceptions prescribed in sec.115BBC(2) of the Act and hence, the anonymous donations received by the assessee are not liable to be taxed u/s 115BBC of the Act. Hence, it cannot be held that the AO has formed a legally valid belief and accordingly, we hold that the reopening of assessment of the year under consideration is not valid.
Applicability of provisions of section 115BBC - CIT(A) has followed the decision rendered in the assessee’s own case in the [2023 (11) TMI 497 - ITAT MUMBAI] respectively in holding that the provisions of sec.115BBC are not applicable to the assessee.
Granting of deduction u/s.11(1)(a) on the “net receipts” instead of allowing the same on “gross receipts” as claimed by the assessee - We notice that the claim of the assessee is supported by the decision of CIT vs. Programme for Community Organisation [2000 (11) TMI 4 - SUPREME COURT] wherein held that the accumulation allowed u/s.11(1)(a) of the Act is on the income derived from trust and accordingly allowed deduction on the gross receipts.
Rejection of enhanced claim of deduction u/s 11(2) - We notice that the assessing officer has found certain deficiencies in Form No.10 and also in the Board resolution for rejecting the enhanced claim made u/s 11(2) - it is pertinent to note that the AO, relying on the very same documents, has allowed the deduction u/s 11(2) of the Act. Hence, we do not find any reason to reject the enhanced claim made by the assessee during the course of assessment proceedings.
The question whether the deficiencies, if any, in Form No.10 will disqualify the assessee from claiming deduction u/s 11(2) of the Act has been examined in the case of CIT (E) vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [2018 (10) TMI 995 - GUJARAT HIGH COURT] and it has been held that any inaccuracy or lack of full declaration in the prescribed format by itself would not be fatal to the claimant.
AO, even after pointing out the deficiencies in Form No.10, has allowed the initial claim for deduction u/s 11(2) of the Act made by the assessee. Hence those deficiencies should not in the way to allow the enhanced deduction claimed by the assessee as per the AO‟s own action and also as per the decision rendered by Hon’ble Gujarat High Court in the above said case. We further notice that the assessee has mentioned specific purposes in the resolution and also earmarked specific amounts for each of the purposes.
Thus we are of the view that the AO was not justified in rejecting the enhanced claim made u/s 11(2) of the Act.
Assessee appeal allowed.
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2025 (2) TMI 1125
Rectification u/s 254 - sale of non-agriculture land and the valuation for capital gains tax purposes - nature of land was converted from agriculture to non-agriculture - revenue argued that the Tribunal had erred in not considering that the land sold by the assessee was a capital asset and should have attracted capital gains tax - CIT(A) while confirming the action of AO confined his finding only on the distance of location of land by referring CBDT Circular No. 03/2014 dated 21.01.2014 and held that shortest possible route has to be taken as crow flies.
HELD THAT:- We find that case of assessee is that assessee is an agriculturist and sold her land situated Ubhrat, Dist – Navsari. The assessee set up his case that the land is situated eight kilometres beyond city limit and is not a capital asset, thus consideration receipt on sale thereof is not chargeable to tax.
This Tribunal after considering the contention of both parties, restore the matter back to the file of AO to examine the distance of land from municipal limit on the basis of subsequent CBDT Circular No.17/2015.
So far as specific contention of revenue in its MA that the nature of land was converted from agriculture to non-agriculture is concern, it is settled position of law that in State of Gujarat, the agriculturist is debarred from selling of his land to non-agriculturist, or for other than agriculture purpose, and if in case the purchaser is not agriculturist, or the land is being transferred for other than agriculture purpose, the permissions of revenue authorities are required, but it will not change the character of land in the hand of seller (agriculturist).
Even, the Hon’ble jurisdictional High Court including a leading decision in the case of CIT vs. Siddharth J. Desai [1981 (9) TMI 48 - GUJARAT HIGH COURT] held that when the assessee sold agricultural land and permission was granted under section 63 of the Bombay Tenancy & Agricultural Lands,1960 for using it for residential purpose, the land continued to be agricultural land till the date of sale. The permission was obtained prior to sale as it was necessary only because land was agricultural land and it was governed by provisions of Bombay Tenancy & Agricultural Lands Act. It was held that mere such permission was obtained does not mean that land cease to be agricultural land used. Thus, the sole controversy in the order impugned before Tribunal was with regard to distance of location of land and the manner of measuring it, either by road distance or by aerial view.
The revenue is now seeking review of the order which is beyond the scope of provisions of section 254(2) as has been held in case of Vrundavan Ginning and Oil Mills [2021 (3) TMI 905 - GUJARAT HIGH COURT]. Thus, we do not find any merit of in this Miscellaneous Application and the same is dismissed.
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2025 (2) TMI 1124
Jurisdiction - power of DRI to issue SCN - Proper officer or not - HELD THAT:- The Supreme Court in COMMISSIONER OF CUSTOMS VERSUS M/S CANON INDIA PVT. LTD. [2024 (11) TMI 391 - SUPREME COURT (LB)] has disposed of the review petition by observing that the decision passed in the Canon India Private Limited did not consider the notification and provisions of law since same was not brought to their notice. The Supreme Court in review petition held that the DRI officer is the “proper officer” for issuing the show cause notice. The Supreme Court also upheld the Validation Act by which amendment, the DRI officers were empowered to issue show cause notices. Now that the review petition filed by the Revenue has been allowed, the Petition is taken up for disposal.
The Petitioner is granted twelve weeks time [from the date of uploading of this order on the High Court website] to file an appeal challenging the Order-in-Original dated 30th March, 2023 before the CESTAT.
Conclusion - The DRI officers, Commissionerates of Customs, and other relevant officers are proper officers for issuing show cause notices under Section 28.
Petition disposed off.
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2025 (2) TMI 1123
Seizure order - condition precedent of "reason to believe" under Section 110(1) of the Customs Act, 1962 - extension of the time limit for issuing a show cause notice under Section 124 of the Customs Act, 1962, without granting an opportunity to be heard - violation of principles of natural justice - HELD THAT:- On a bare reading of sub-section (1) of Section 110, it is crystal clear that the proper officer must form reason to believe that the goods which he is looking to cease are liable to be confiscated. Chapter XIV of the Act of 1962 contains the provisions for confiscation of improperly imported goods, goods attempted to be improperly exported etc., confiscation of conveyance, confiscation of goods used for concealing smuggled goods, adjudication of confiscations and penalties and adjudication procedure.
The learned co-ordinate Bench In case of Assam Supari Traders [2024 (9) TMI 1617 - PATNA HIGH COURT] held that what has been assigned as reason for seizure is that there are violation of the aforementioned statutory provisions. In what manner is not forthcoming in the seizure memo. The Court observed “Prima-facie, none of the cited provisions are attracted in the present case, having regard to the factual aspect of the matter read with documents relating to purchase of goods and its transportation and traders are registered and they are fulfilling all the criteria for purchase of dried Areca nuts transportation and sale etc.” It has been held that what would constitute the reason to believe are to be recorded and for invoking the powers under Section 110 of the Act of 1962, the Seizing Officer has to record his reason to believe in writing.
In Santosh Kumar Murarka [2024 (8) TMI 1161 - PATNA HIGH COURT], the learned co-ordinate Bench held that there was disputed issue as to whether driver of the vehicle had produced relevant document at 21:00 Hours on 19.06.2021 or not. It was found that the RUD-05 E-way Bill was generated on 19.06.2021 at 09:26 PM and seizure was at 09:30 PM. Finding some discrepancies, the learned co-ordinate Bench was of the view that under Article 226 Court cannot examine disputed issues among the parties.
A conjoint reading of sub-section (2) of Section 110 and Clause (a) of Section 124 of the Act of 1962 would make it clear that where no notice in respect of the seized goods under sub-section (1) of Section 110, is given under Clause (a) of Section 124 within six months of the seizure of the goods or within the extended period under the first proviso to sub-section (2) of Section 110, the goods shall be returned to the person from whose possession they were seized. The effect of not giving notice under Clause (a) of Section 124 within six months of the seizure of the goods is stipulated under sub-section (2) of Section 110 and according to this, the consequence would be that the goods shall be returned to the person from whose possession they were seized - In this case, admittedly the goods have been provisionally released on 16.06.2020 i.e. after a period of six months, twice this period has been extended by three months each.
It is apparent from a bare reading of the order of the Hon’ble Supreme Court in UNION OF INDIA & ORS. VERSUS M/S. OM SAI TRADING COMPANY & ANR. ETC. [2022 (9) TMI 1656 - SC ORDER] that it was passed after granting leave against the Division Bench judgments of this Court and the effect of the order of the Hon’ble Supreme Court may be clearly seen. The principle of ‘merger’ will apply. Despite quashing of the seizure memo, it cannot be said that the appellants cannot investigate and proceed in accordance with law under the provisions of the Act of 1962.
Conclusion - Seizure memos must contain specific reasons to believe for confiscation, mere citation of statutory provisions is insufficient.
The seizure memo is quashed; however, the show cause notice was upheld - application allowed.
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