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Showing 481 to 500 of 1466 Records
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2024 (6) TMI 986
Unexplained investment u/s 69 OR 56(2)(x)/6(2)(vii) - difference between assessee’s actual purchase price and stamp value - HELD THAT:- There is not even an iota of evidence indicating the assessee to have actually paid the impugned sum to the vendor(s) concerned before or at the time or after the registration of sale deed. Section 69 of the Act stipulating such an addition of unexplained investment is applicable only when an investment is actually made than which is considered for the purpose of stamp collection only.
We accordingly conclude that the learned lower authorities have erred in facts in law in making the impugned addition of Rs. 51.20 lacs; which is also not taxable in case of a partnership firm u/s. 56(2)(x) for the assessment year 2016-17 since inserted w.e.f. 01.04.2017 carrying prospective effect. Faced with this situation, we accept the assessee’s sole substantive ground in very terms. Assessee’s appeal is allowed.
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2024 (6) TMI 985
Validity of penalty proceedings u/s 270A - due to failure to specify relevant clauses - show cause notice nowhere specified the corresponding limbs in clauses (a) to (f) to sub-section 9 read with sub- section (8) thereof - HELD THAT:- In the instant appeal that the impugned penalty proceedings stand vitiated on account of the AO’s failure to pinpoint the relevant clauses (a) to (f) to sub-section (9); while initiating the proceedings herein u/s. 270A(8) of the Act, thereby alleging under reporting of income as a sequence of misreporting. Faced with this situation, we find no merit in Revenue’s arguments placing reliance on M/s. Veena Estate Pvt. Ltd. (supra) [2024 (1) TMI 701 - BOMBAY HIGH COURT] once the issue before their lordships was that of the concerned appellant seeking to frame an additional substantial question of law in section 260A proceedings whereas the law regarding the tribunal’s jurisdiction to entertain such a pure question of law, not requiring any further detailed investigation on facts, is already settled in NTPC Ltd. Vs. [1996 (12) TMI 7 - SUPREME COURT].
That being the case, we are of the considered view that going by the foregoing judicial precedent, this tribunal is very much entitled to entertain and decide such a pure legal plea for the first time in section 254(1) proceedings. We accordingly reject the Revenue’s instant technical arguments to conclude in light of section 270A (8) & (9) r.w. clauses (a to f) that the AO’s failure to pinpoint the corresponding default of assessee’s part indeed vitiates the entire proceedings as per Schneider Electric South Asia Ltd. [2022 (3) TMI 1295 - DELHI HIGH COURT] and Md. Farhan [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)] in section 271(1)(c) old penal provision. The impugned penalty stands deleted in very terms.
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2024 (6) TMI 984
Bogus Long Term Capital Gain claimed u/s. 10(38) - bogus transaction of shares through penny stock - AO has held that the sale of shares of SRK Industries Ltd. as bogus transaction based on Investigation Wing report received by the department - HELD THAT:- Only reason for denying the benefit is based on the investigation report of the Department that M/s. SRK Industries Ltd. is identified as one of the penny stock company. A.O. has not brought any material to support his finding that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money in the sale transaction. Further despite the assessee’s specific request, no opportunity of cross examination was provided to the assessee, on the basis of whose statements reliance has been placed to hold that the sale of shares was sham/bogus.
Jurisdictional High Court in the case of Himani M. Vakil [2012 (9) TMI 1099 - GUJARAT HIGH COURT] held that where assessee duly proved genuineness of share transactions by bringing on record contract notes for sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, Assessing Officer was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit. Thus we do not find any infirmity in the order passed by the Ld. CIT(A) in allowing the asessee’s appeal and granting the benefit of Section 10(38) of the Act to the assessee. Thus the grounds raised by the Revenue is devoid of merits.
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2024 (6) TMI 983
Disallowance u/s 14A r.w.r. 8D in the absence of exempt income for the relevant A.Y - Retrospective/Prospective application of the explanation to Section 14A inserted by Finance Act, 2022 - CIT(A) has based his finding while upholding the disallowance made by the Ld. AO on the ground that the Finance Act, 2020 has amended Section 14A by adding explanation to section 14A of “the Act” to clarify that notwithstanding anything to contrary contained in this Act, the provisions of this Section shall apply and shall be deemed to have always applied in a case where the exempt income has not accrued or arisen or has not been received during the previous year relevant to an A.Y. and the expenditure has been incurred during the said previous year in relation to such exempt income - Whether disallowance can be made under Rule 8D without satisfaction of the Ld. AO u/s. 14A or whether the explanation to section 14A inserted by Finance Act, 2022 can be made applicable retrospectively?
HELD THAT:- Hon’ble Supreme Court in the case of Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] was pleased to hold that the Hon’ble High Court had noted the finding of the Tribunal that the interest free funds available to the assessee were sufficient to makes its investment. Hence, it could be presumed that the investments were made from the interest free funds available with the assessee.
Hon’ble Supreme Court in GVK Project and Technical Services Ltd. [2019 (5) TMI 725 - SUPREME COURT] was pleased to hold that in the absence of any exempt income, disallowances were impermissible because for the relevant A.Y. 2013-14, concededly, the assessee did not report any exempt income.
AO has proceeded for disallowance made in this case on the basis of presumptions that the investment was made from the borrowed funds bearing interest expenditure which may earn dividend income in future and further that such disallowances and additions are permissible u/s. 14A r.w.r. 8D of the I. T. Rules, 1962.
In view of the discussions made and the relevant law laid down by the Hon’ble Supreme Court as well as Hon’ble High Court, the said finding and observation of the Ld. AO are neither tenable nor legally sustainable in the eyes of law. While upholding the finding of the Ld. AO and permitting the disallowances made therein in the Assessment Order, the Ld. CIT(A) has committed illegality and perversity by relying the explanation to Section 14A brought into existence by the Finance Amendment Act, 2022 while giving retrospective effect to the said amendment which as has been held by the Hon’ble High Court of Delhi in M/s. Era Infrastructure (India) Ltd. [2022 (7) TMI 1093 - DELHI HIGH COURT] to be not permissible.
The amendment in Section 14A is not applicable retrospectively to the previous A.Y. 2016-17. For the above reasons, the finding recorded by the Ld. CIT(A) while upholding the assessment order of Ld. AO are found to be perverse, not legally sustainable in the eyes of law and accordingly set aside.
Since the satisfaction of the Ld. AO for making disallowance u/s. 14A r.w.r. 8D was based on presumptions of earning dividend income in future, therefore, cannot be said to be based on the legally sustainable satisfaction. We therefore conclude that both the question no. 1 and 2 enumerated for consideration before this Tribunal are decided against the revenue and in favour of the assessee/appellant.
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2024 (6) TMI 982
Validity of assessment u/s 153A - absence of any incriminating material seized during the course of search - No assessment pending which got abate - HELD THAT:- In addition to the income that has already been assessed, the assessment u/s 153A of the Act will be made on the basis of incriminating material, which in the context of relevant provisions means (i) books of accounts, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search.
The argument of the Counsel is that in this assessment year, notice to issue u/s 143(2) was already lapsed as on the date of search, no assessment could be made without basis of incriminating material found during the course of search. We find force in the argument of assessee in this AY 2013-14 & AY 2014-15, the addition made by AO is not based on any seized material and the AO made additions in a routine manner which were disclosed to the department by way of regular return of income filed by the assessee and no incriminating material was found during the course of search and to come to conclusion that the expenses or allowances claimed by the assessee could be disregarded or income disclosed by the assessee could be considered as taxable. Further in the case of IBC Knowledge Park Pvt. Ltd. [2016 (5) TMI 372 - KARNATAKA HIGH COURT] had held that “unless material seized during the course of search which suggest undisclosed income and are incriminating in nature, jurisdiction u/s 153C of the Act cannot be assumed.
Same view has been taken by Hon’ble Supreme Court in the case of Abhisar Buildwell (P) Ltd. [2023 (4) TMI 1056 - SUPREME COURT] - Decided in favour of assessee.
Validity of assessments u/s 153A consequent to search action u/s 132 - AY 2015-16 - HELD THAT:- The assessment in this case was to be completed u/s 153A of the Act and the AO was under a statutory obligation to consider entire material irrespective of the place from where it was found whether assessee’s own place or some other place. There cannot be two assessments in case of searched party, one u/s 153A of the Act and another u/s 153C of the Act.
Further in the present case, return of income filed by assessee that was processed u/s 143(1) of the Act and the time limit for issue of notice u/s 143(2) of the Act not expired which is available up to 30.9.2016 and the intimation is not akin to assessment and time limit for notice u/s 143(2) of the Act is not expired, even though return has been processed, it will be a case where return has not been attained finality Consequently, ld. AO would have authority/jurisdiction to assess the entire income similar to jurisdiction in regular assessment u/s 143(3) of the Act as held by All Cargo Logistics Ltd. [2012 (7) TMI 222 - ITAT MUMBAI(SB)]. As such, the quashing of assessment by ld. CIT(A) is not possible.
Hence, the assessment was pending as on the date of assessment since the search took place on 24.6.2016 return was filed for this assessment year u/s 139(1) of the Act on 29.9.2015. The same was processed u/s 143(1) of the Act on 5.5.2016 there was a time limit to issue notice u/s 143(2) of the Act up to 30.9.2016. Hence, on the date of search i.e. 24.6.2016 there is a time limit to issue notice u/s 143(2) so as to complete the assessment u/s 143(3) of the Act. Hence, this assessment cannot be said that assessment has not been pending on this date and the assessment is not abated.
Being the assessment year 2015-16 falls under the above clause the assessment cannot be cancelled by applying the judgement in the case of Abhisara Buildwell Pvt. Ltd. [2023 (4) TMI 1056 - SUPREME COURT] To that extent ld. CIT(A) not justified. Since there is a time limit to issue notice u/s 143(2) of the Act though return was processed it will be the case where the return has not attained finality. As such assessment is pending and it is not a concluded assessment, the ld. AO validly assumed jurisdiction u/s 153A of the Act consequent to search action u/s 132 of the Act so as to frame the assessment u/s 153A of the Act.
Addition made towards unaccounted sales - Addition based on notings on the loose sheets - It is settled position of law that onus lies upon the Department to collect cogent evidence to corroborate the notings on the loose sheets. The additions cannot be made merely on the basis of notings on the loose sheet papers which are in the nature of “dumb documents” having no evidentiary value. The onus lies on the Department to collect the evidence to corroborate the notings on the loose sheets. In the present case, it is undisputed position that as a result of search and seizure action in the case of respondent- assessee and its group companies, no material whatsoever was seized and found indicating payment of on-money consideration at the time of purchase of the lands.
We find that the conclusions reached by the Assessing Officer are merely based on presumptions and assumptions without bringing corroborative material on record. It is settled position of law that no addition in the assessment can be made merely based on assumptions, suspicion, guess work and conjuncture or on irrelevant inadmissible material.
Thus a sworn statement cannot be relied upon for making any addition and must be corroborated by independent evidence for the purposes of making assessments.
In view of the above discussion, we are of the opinion that addition cannot be made on the basis of statement recorded u/s 132(4) of the Act supported by the unsubstantiated loose slips. Accordingly, the addition is deleted though we are not agreed with the order of the ld. CIT(A) on deletion of addition.
Taxation of Undisclosed Stock and Unaccounted Sales u/s 115BBE - AO treated entire total value of this jewellery as income from other sources and taxed at 60% by applying provisions of section 115BBE - Assessee has declared additional income towards excess stock found during the course of search action - HELD THAT:- We note that assessee is in jewellery business. The assessee had admitted excess stock found in the business premises of the assessee as well as residence of the assessee as business income and offered the same for taxation by bringing the same to P&L account of the assessee. The ld. AO accepted the returned income and taxed the whole excess stock of jewellery. The assessee has been explaining before the lower authorities that excess stock found during the course of search action had emanated from the stock of earlier years and it is nothing but the flow back of the business income earned by assessee from year to year. Unless the department is having any material to show that the assessee has earned the same from any other unknown sources of income, it is to be treated as business income only. In our opinion, when the assessee has explained that the source was from the business and except stock difference no other investment with any other asset was found and particularly, this unexplained excess stock is surrendered as business income has to be assessed as business income and not under the head unexplained investment under the head investment u/s 69B
Assessee has declared additional income towards excess stock found during the course of search action both at the business premises of the assessee as well as partner of the assessee (Mr. Ravish) and there was no material to suggest that the assessee has not earned this income other than from the jewellery business carried on by the assessee from assessment year to assessment year and it has to be treated as income earned from the assessee only in the assessment year under consideration or earlier years from business and the same has been surrendered as income of the assessee to be treated as accordingly, especially, the ld. AO has not done anything to dispute the claim of assessee that the source was not from the business. The lower authority cannot apply the provisions of section 69B r.w.s. 115BBE of the Act and the income declared by the assessee to be considered as income from normal business of the assessee.
Revenue authorities were not able to submit any evidence to show that such income is not connected with the business income of the assessee or accumulated from non-recognising sources. Hence, all the incomes earned by the assessee are only from the business income of the assessee, there do not arise any question as to application of provisions of section 69 or 69A or 69B or 69C of the Act. Hence, taxing such income at special rate u/s 115BBE of the Act is improper. It is settled principle of law that when there is no separate source of income identified during the course of search action or survey or during the course of assessment proceedings or appellate proceedings, any income arising to the assessee shall be treated to be out of the normal business of the assessee only. For this purpose, we place reliance on the judgement of Deepak Setia [2023 (9) TMI 942 - ITAT AMRITSAR]
Hence, the addition sustained by CIT(A) u/s 69B r.w.s. 115BBE has to be treated as income from business.
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2024 (6) TMI 981
TDS u/s 195 - sub contract charges paid to Deep Drilling 8 Pte Ltd. Singapore being bareboat charges - Disallowance u/s. 40(a)(ia) towards non-deduction of TDS - assessee is a Non-Resident company incorporated in Singapore and engaged in the business of drilling of oil wells in off shore territories and provision and facilities relating to exploration and exploitation of mineral oils and natural resources - assessee argued as relying on its own case [2023 (7) TMI 1420 - ITAT CHENNAI] assessee is covered under the provisions of Section 44BB of the Act and therefore, the assessee is not liable to deduct TDS u/s. 195
HELD THAT:- We are of the view that first of all, the assessee is covered and assessed u/s. 44BB of the Act and moreover, the party M/s. Deep Drilling 8 Pte Ltd., Singapore, does not have PE in India in term of DTEE between India and Singapore and hence, the same are not taxable in India. Accordingly, the assessee is not liable for deduction of TDS u/s. 195 of the Act. Therefore, the provisions of Section 40(a)(i) cannot be pressed for making disallowance of sub contract charges paid by the assessee to M/s. Deep Drilling 8 Pte Ltd., Singapore.
In view of the above discussions made in the preceding para, the addition made by the Assessing Officer in the Assessment Order u/s. 143(3) read with section 144C(13) of the Act dated 05.01.2023 u/s 40(a)(i), relying upon the directions of the DRP is hereby deleted. Appeal of the assessee is allowed.
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2024 (6) TMI 980
Dismissal of appeal by CIT(A) on Ex-parte basis - Denial of natural justice - Additions u/s 43CA on higher interest paid to relatives - HELD THAT:- We find that the CIT(A), NFAC, Delhi has dismissed the appeal without providing proper opportunity to the assessee. We also find that the ld. CIT(A), without considering the adjournment application dated 18.12.2023 moved on behalf of the assesse, passed the order on 19.12.2023 in undue haste. The order so passed by the ld. CIT(A), NFAC is patently non-speaking and has not adjudicated on merits of the additions made by Assessing Officer. Moreover, he has not decided the appeal after discussing in detail, his reasons for agreeing with the assessment order.
If the order of the Commissioner (Appeals) on merits is a summary order, it amounts to non-application of mind. This non-application of mind is a contravention of statutory role of the Commissioner (Appeals) under section 251(2) of I.T. Act. Also, section 251(1)(a) provides that while disposing of an appeal against assessment order, Commissioner (Appeals) shall have the power to confirm, reduce, enhance or annul the assessment. Similarly, the section 251(1)(b) provides that in disposing of an appeal against an order imposing a penalty, the Commissioner (Appeals) may confirm or cancel such orders or vary it so as to either to enhance or to reduce the penalty. On cumulative consideration of the provisions of section 250(6) read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) and Explanation of section 251(2), it is concluded that the Commissioner (Appeals) is not empowered to dismiss the appeal for non-prosecution of appeal and is obliged to dispose of the appeal on merits. In this view of the matter, another opportunity of hearing requires to be given to the assessee to represent its case fully before the ld. CIT(A).
The matter is remitted to the file of the ld. CIT(A), to be decided afresh on merit, in accordance with law, on affording due and adequate opportunity of hearing to the assessee, preferably within two months from the date of receipt of this order. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (6) TMI 979
Denial of depreciation to assessee trust - HEKD THAT:- This issue is covered in favour of the assessee and against the Revenue by the order [2022 (12) TMI 397 - ITAT DELHI] wherein the assessee’s claim of depreciation was negatived by the Ld. AO but on appeal filed by the assessee before the Ld. CIT(A), the assessee’s claim of depreciation was allowed against which the Revenue filed appeal before the Tribunal - We therefore set aside the order of the Ld. CIT(A) on the issue and direct the Ld. AO to allow the assessee’s claim of depreciation.
Exemption u/s 11 to 13 - assessee STPI is established for charitable purposes or not? - assessee is a society registered under the Societies Registration Act, 1860. It is also registered u/s 12A as a charitable society offering services to the nation as the arm of the Govt. of India under Software Technology Park of India (STPI) scheme - HELD THAT:- We observe that in the AY 2012-13 [2022 (12) TMI 397 - ITAT DELHI] the Revenue had come up in appeal before the Tribunal against acceptance of the assessee’s claim of being a charitable society and direction of the Ld. CIT(A) to the Ld. AO to compute the income of the assessee in accordance with the provisions of section 11 to 13 which would include accumulation as per section 11(1)(a) and section 11(2) of the Act as established in the reply of the assessee that the prime objective of the society is to encourage Information Technology in the country and the charges received for certification of the entities carrying on activities related to information technology are not directly in the nature of business. Further, the assessee has established that the income generated from this activity is not applied for any individual benefit or transfer to the benefit of any particular person, entity or group of persons but the application is for the benefit of public at large. This amply proves that the Ld. AO accepted the claim of the assessee that the assessee is a charitable society. It was in the backdrop of such a finding of the Ld. AO that the Ld. CIT(A) arrived at the conclusion that the income of the assessee has to be computed in accordance with the provisions of section 11 to 13 which would include accumulations as per section 11(1)(a) and section 11(2).
Following the decision (supra) of the Tribunal in assessee’s own case for AY 2012-13 we do not find any substance in the grounds taken by the Revenue before the Tribunal which we hereby reject.
Appeal of the assessee is allowed and the appeal of the Revenue is dismissed.
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2024 (6) TMI 978
Short grant of advance tax credit - only prayer is to restore the matter back to the ld. AO for necessary verification - HELD THAT:- Accordingly, the claim of the assessee that the ld. AO has not granted tax credit for Tega Industries (SEZ) Limited is restored to the file of the ld. AO for necessary verification. Accordingly, Ground is allowed for statistical purposes.
TP adjustment on account of corporate guarantee - international transactions or not? - HELD THAT:- As in view of the provisions of Section 92B of the Act, the alleged transactions of corporate guarantee with the AE falls in the category of international transactions. Our view is further supported by the judgment of M/s. Redington (India) Limited [2020 (12) TMI 516 - MADRAS HIGH COURT] Accordingly, ground raised by the assessee that the alleged transactions is not an international transactions, is hereby dismissed.
Calculation of corporate guarantee fee - As we find that this issue has come up before various judicial forums and corporate guarantee fee range of 0.2% to 0.5% has been found to be justified. We find support from the judgment of CIT v. Everest Kento Cylinders [2015 (5) TMI 395 - BOMBAY HIGH COURT] and are inclined to give part relief to the assessee directing the TPO to compute corporate guarantee fee @ 0.5% and delete excess amount added in the hands of the assessee. Accordingly, Ground Nos. 2 & 3 raised by the assessee are partly allowed.
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2024 (6) TMI 977
Validity of final assessment order passed beyond limit prescribed u/s.144C(13) - HELD THAT:- AO shall pass final assessment order within one month from the end of the month, in which, such directions issued by the DRP, is received by the AO. In the present case, the directions issued by the DRP for AY 2017- 18, was received by the AO on 03.06.2022 and consequently, the AO should have passed final assessment order on or before 31.07.2022.
But, the AO has passed final assessment order for AY 2017-18 u/s.143(3) r.w.s.144C(13) on 02.01.2023 and thus, in our considered view, the final assessment order passed by the AO on 02.01.2023 is barred by limitation, since, the same is passed beyond the time limit prescribed u/s.144C(13) of the Act.
Similarly, the directions issued by the DRP for AY 2018-19 dated 20.06.2022 was received by the AO on 30.06.2022 and consequently, the AO shall pass final assessment order u/s.143(3) r.w.s.144C(13) of the Act on or before 31.07.2022. Since, the AO has passed final assessment order for AY 2018-19 on 30.12.2022, in our considered view, the order passed by the AO is barred by limitation and is liable to be quashed and thus, we quashed final assessment orders passed by the AO for AY 2017-18 dated 02.01.2023 and for AY 2018-19 dated 30.12.2022 since both are barred by limitation in terms of sec.144C(13) of the Act. Appeal of assessee allowed.
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2024 (6) TMI 976
Rejection of final approval u/s 80G(5)(iii) - delay in filling final approval post provisional application/approval - time limit prescribed for making an application for final approval u/s 80G was at least six months prior to the expiry of the period of the provisional approval or within six months of the commencement of its activities, whichever is earlier - HELD THAT:- The issue is squarely covered by the decision in the case of “Tomorrow’s Foundation [2024 (3) TMI 941 - ITAT KOLKATA] assessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The issue is otherwise squarely covered by the decision of Vivekananda Mission Asram [2023 (12) TMI 1298 - ITAT KOLKATA] and in the case of “West Bengal Welfare Society [2023 (9) TMI 1422 - ITAT KOLKATA] and further by the decision in the case of “Sri Aurobindo Bhawan Trust, Krishnagar [2024 (3) TMI 839 - ITAT KOLKATA]. Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible.
The appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. Appeal of the assessee is treated as allowed for statistical purposes.
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2024 (6) TMI 975
Rejection of approval u/s 80G(5) - delay in filing of application by 178 days - assessee vehemently argued that assessee-trust was allowed provisional registration, which is followed up to assessment year 2024-25 and that the assessee-trust was under bona fide belief that they have applied for regular approval well within time limit from the commencement of their activities, which is started from 27.09.2022 - alternative plea, the assessee prayed for condoning the delay on the basis of decision of Vishwa Jagriti Mission [2013 (1) TMI 157 - DELHI HIGH COURT] - HELD THAT:- Considering the alternative plea of assessee and following the decisions of this combination in the case of GHB Green Foundation and in SDA Aarogya Trust [2024 (1) TMI 946 - ITAT SURAT] and decision of Vishwa Jagriti Mission [2013 (1) TMI 157 - DELHI HIGH COURT] the delay in filing of application under section 80G(5) of 178 days is condoned and appeal of the assessee is restored beck the file of Ld.CIT(E) to reconsider the application of assessee and examine the remaining requirements of approval and to pass order afresh in accordance with law and allow relief to assessee, if assessee fulfilled all requisites conditions for availing approval under section 80G(5) of the Act. In the result, the grounds of appeal raised by the assessee is allowed for statistical purpose.
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2024 (6) TMI 974
Denial of registration u/s 12AB - assessee is a Public Charitable Trust running a Primary School for physically disabled kids - charitable activity u/s 2(15) - HELD THAT:- The materials available on record including the submissions and details filed by the assessee namely detailed note on the nature of activities, previous registration u/s. 12AA and 80G(5), Copy of the Trust Deed, no business undertaking under provisions of section 11(4) or 11(4A) - assessee filed before us Copies of Income Tax Returns and Audit Report for the preceding three Asst. Years and requested to grant one more opportunity, so that the assessee can clarify and produce any further documents to prove the genuineness of the activities carried out by the Trust.
For Registration of a Trust u/s. 12AB, different Forms to be filed with necessary documents as enumerated in Rule 17A of the I.T. Rules. Even Ld. CIT(E) is bound to dispose of the Application either for granting Registration or refusing Registration, before the expiry of six months from the end of the month in which the Application was received, u/s. 12AA(2) of the Act, after giving proper opportunity of hearing to the assessee. In this case, three hearing opportunities were given by the Ld. CIT(E), however the assessee Trust failed to file the Income Tax Returns and Audit Report for the previous three preceding Financial Years. Now the assessee undertook the file the same, as well as other details before Ld. CIT(E). The assessee who wish to claim exemption u/s. 12AB should always make their application with relevant details as enumerated under Rule 17A of the Rules, so that the Statutory Authorities can consider the Application for Registration within the provisions of law.
Therefore in order to prevent miscarriage of justice, we find it fit and proper to provide one more opportunity of being heard to the assessee in support of its case for registration of the trust u/s. 12AB of the Act. Therefore we dispose of this appeal by restoring this issue to the file of the Ld. CIT(E) with a direction upon him to provide further opportunity of being heard to the assessee and consider the documents, evidences which the assessee would file as per the notice issued by the Ld. CIT(E). Appeal filed by the Assessee is hereby allowed for statistical purposes.
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2024 (6) TMI 973
Levy of penalty u/s 271B - non-production of books of accounts and not getting the books of accounts audited u/s 44AB - HELD THAT:- The assessee did not maintain books of account. As he did not maintain books of account, no question for producing the books of account before the Tax Authority will arise. The assessee violated section 44AA of the Act and for this action, penalty is levied u/s. 271A of the Act. However, the Tax authorities levied penalty u/s 271B of the Act due to non-submission of books of account. As no books of accounts were maintained by the assessee he could not produce books of account before the Tax authority and therefore, no question will arise for production of books of account.
Thus penalty imposed by Ld. A.O u/s 271B of the Act is erroneous. Accordingly, we direct ld. AO to delete the impugned penalty. Assessee appeal allowed.
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2024 (6) TMI 972
Revision u/s 263 - assessee sold and claimed capital loss on sale of car by indexing the purchase price of car and adjusting the loss against long-term capital gain - PCIT initiated 263 proceedings by observing that according to Section 2(14) a car is a “personal asset/effect” and capital loss by the assessee on sale of car was required to be added by the assessing officer, at the time of finalizing the assessment - Whether a motorcar, which has been used by the assessee for his personal use, would qualify as a capital asset and the assessee would be eligible to claim benefit of set off of loss on sale of motor car against other capital gains made by the assessee
HELD THAT:- Whether a motor car is a capital asset or not, or would qualify as a “personal effect” and hence falling outside, the purview of a capital asset would depend upon the use to which the motor car has been put by the assessee. In case, as held in the aforesaid decision NARENDRA I. BHUVA [2003 (5) TMI 519 - ITAT MUMBAI] the motor car is not at all used for personal purposes, but has been held as an asset i.e. possession of pride as a collector’s item, then the sale thereof would attract capital gains. Similarly, if it is found that the motor car is for business purposes, then the assessee would be eligible to claim depreciation on such asset and sale would be exigible to capital gains tax provisions.
If it is seen that the motor car has been used by the assessee for purely personal purposes/usage on regular basis, then, in our considered view, the same would not come within the purview of the capital asset and would fall within the exclusion of “personal effect”. In the instant facts, the PCIT has correctly observed that the assessee has not been able to demonstrate that the car was used by the assessee for its business purposes so asked to be eligible for capital gains/losses on sale thereof.
The asset was not held as an antique item or “possession of pride” and again would not qualify as a “capital asset” for this reason as well. In this case, the PCIT has correctly observed that the assessee was using the car for his daily/personal purposes and hence qualified as personal effects i.e. movable property held for personal use by the assessee.
Therefore, in the instant facts, PCIT has correctly observed that from the facts apparent on the face of record, the motor car qualified as a personal effect of the assessee, and was falling outside, the purview of capital asset and was coming under the definition of exclusions to Section 2(14) of the Act.
It is well settled law that even if the issue has been examined by the assessing officer, but a view has been taken, which is apparently an incorrect position of law as evident from the facts of the case, then as held in the case of Shri Babula Solanki [2019 (4) TMI 694 - ITAT AHMEDABAD] such cases will come within the review of Section 263 of the Act. Appeal of the assessee is dismissed.
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2024 (6) TMI 971
Non grant the benefit of permanent Registration u/s 12AB - CIT (Exemption) rejected the application of the assessee treating it as non- maintainable on the ground that the assessee has already been granted provisional registration which is valid till AY 2026-27, therefore, held that application of the assessee is premature - HELD THAT:- We observe that the assessee is a charitable Trust registered u/s 12AA of the Act vide order u/s 12AA(1)(b)(i) of the Act effective from 01.05.2018 (AY 2018-19). Subsequent to the amendments brought in the Act by Finance Bill, 2020, there was a requirement of provisional registration as well as final registration for new as well as existing Institutions/Trusts. The assessee has been granted provisional registration up to AY 2026-27 and before the expiry of the period, the assessee has applied for final registration. However, ld. CIT (Exemption) has treated the said application as non-maintainable only on the ground for being premature and that the assessee has already been granted provisional registration valid till AY 2026-27.
We therefore, hold that there is no bar in moving the application for final registration at the earliest possible. We accordingly, set aside the impugned order and restore the matter back to the file of ld. CIT (Exemption) to consider the application of the assessee for final registration and grant the same for if the same is admissible to the assessee as per the provisions of the Act. Accordingly, all the grounds of appeal raised by the assessee are allowed for statistical purposes.
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2024 (6) TMI 970
Ex parte order passed by CIT(A) - non considering the ground of the assessee - addition of Unexplained income as per provision of section 69 and 69A - levying of tax u/s 115BBE - AR vehemently argued and placed that the number of dates is allotted by the ld. CIT(A) for hearing, the adjournment petition was filed but only for the dates 14.07.2022, 05.01.2023 and 08.08.2023 the ld. CIT(A) mentioned that none appeared - HELD THAT:- The appeal was passed ex parte though the ld. CIT(A) had allowed number of dates to the assessee but the assessee specifically claimed that some of the dates the notice was not received and some of the dates the adjournment petition was filed. AR further claimed that the ld. CIT(A) passed the ex parte order without considering the ground of the assessee. Both the merit and the legal grounds are not considered during passing of appeal order. The ld. AR prayed for set aside the matter to the file of the ld. CIT(A) for further adjudication de novo,considering the grounds filed by the assessee. DR had not made any objection against the submission of the ld. AR.
We are, therefore, of the opinion that interest of justice would be sub served if the impugned order is set aside and the matters are remitted back to the ld. CIT(A) for consideration thereof afresh. We are not expressing any views on the merits of the case so as to limit the appellate procedure before the Ld. CIT(A). Needless to say, the assessee should get a reasonable opportunity of hearing for setting aside proceedings. Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 969
Quantification of profit element qua the unsubstantiated purchases - Disallowance of bogus purchases - HELD THAT:- The matter is restored to the file of the A.O with a direction to confine the addition with respect to the unsubstantiated purchases to the extent of the difference/variance between the rate of profit element on the genuine purchases vis-à-vis unsubstantiated purchases. Thus, the Ground of appeal raised by the assessee is allowed for statistical purposes.
Disallowance of interest on loan - HELD THAT:- As there are certain justifiable reasons, due to which, the assessee before the lower authorities could not substantiate his claim that the personal loans raised by him were exclusively used for the purpose of business, therefore, the additional evidence a/w. the “chart” filed by him is in all fairness admitted. At the same time, I am of the view that as the aforesaid “chart” filed by the assessee to substantiate his claim that the personal loans raised by him were utilized wholly and exclusively for the purpose of business had been filed for the first time in the course of the proceedings before me, therefore, the matter in all fairness requires to be restored to the file of the A.O who is directed to re-adjudicate the issue after considering the aforesaid claim of the assessee in the backdrop of the additional documentary evidence filed by him. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.
Addition u/s.68 - AO while framing the assessment observed that the assessee had raised fresh unsecured loans from three parties - HELD THAT:- As assessee had in his application seeking admission of certain fresh documents as “additional evidence” placed on record confirmations of the lenders, copy of the returns of income, computation of income, bank statements, balance sheets of the respective lenders - As observed by me hereinabove, as there are certain justifiable reasons for the assessee in not filing the aforementioned documents in the course of the proceedings before the lower authorities, therefore, the same in all fairness and in the interest of justice are admitted.
As the aforementioned fresh documents were not available before the lower authorities and had been filed by the assessee before us for the first time, therefore, the matter in all fairness requires to be restored to the file of the A.O who is directed to re-adjudicate the issue after considering the aforesaid claim of the assessee in the backdrop of the aforesaid fresh documents filed by him. Ground raised by the assessee is allowed for statistical purposes.
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2024 (6) TMI 968
Delay in filing of the appeal - delay in filing the present appeal of 233 days - Delay occured due to CA for gross negligence in his professional duties - HELD THAT:- Application for Condonation of Delay and such submissions have not been controverted on behalf of the Department that the Manager and staff of the assessee Society are from the nearby villages. They are not aware of the provisions and technicalities of the Income Tax Act. They also have no knowledge as to how to operate Income Tax Portals. The Society changed its Chartered Accountant and engaged anther C.A. for taxation purposes. He was provided user name and password of Income Tax Site. He was asked to keep a check on the portal and to e-mal any notice or order and to do the needful. He assured that the needful was being done. Manager of the assessee Society was transferred in March,2022. He, however, did not provide any password of the Income Tax Site or e-mail which was registered with the Income Tax Department, nor did he inform the assessee Society about any messages regarding any notice or order.
C.A. informed the Manager of the assessee Society that the CIT(A) had rejected the first appeal filed in January, 2020 and appeal had to be filed before the ITAT. He asked the Manager of the assessee Society to send him Rs.10,000/-, to be deposited on account of Appeal Fee in the Tribunal. The said amount was immediately paid to him. He deposited the Challan for the Appeal Fee before the ITAT on 05.01.2023 and a copy of the Challan Deposit Receipt was given to the Society.
The assessee had no access to the e-mail registered with the Income Tax Department. As such, it was not aware of the order passed by the ld. CIT(A), till the time their C. A. informed them about the same, in December,2022. In April,2023, when all the bank accounts of the assessee Society, as running in the Ambala Central Co-operative Bank, Ambala were attached by the Income Tax Department, did it come to the notice of the assessee Society, that a huge demand was outstanding against the Society due to some orders passed in assessment years 2015-16 and 2017- 18.
Immediately on receipt of notice in this regard, issued u/ s 226(3) of the Income Tax Act that the assessee Society immediately contacted CA to do the needful. It was only after a lot of persuasion that he filed an appeal before the Tribunal against the CIT(A)’s order for assessment year 2017- 18 on 04.05.2023. It was at that time only, that he informed the assessee Society that assessments for assessment year 2015-16 and 2016-17 had also been made in March, 2022 and that some penalty orders had also been passed in September,2022 . The assessee Society was shocked to find that no appeals had been filed by him against these orders also, within the prescribed time. He was again requested to do the needful. However, again he kept the Society in the dark, stating that the needful had been done. It was in these circumstances, that the assessee contacted another C.A., Mr. Mukesh Jain in Ambala, to know the status of the cases. It came to knowledge that no appeals against the assessment orders and penalty orders for assessment year 2015-16 and 2016-17 had been filed and also that the appeal before the ITAT had not been attended on the date of hearing by Shri Vagish Sharma, C.A
In the above undisputed facts and circumstances, the assessee is found to have suffered for no fault of their own. After considering all the facts and circumstances, we are of the considered opinion that in the interest of justice, the assessee should be given an opportunity of being heard and the assessee should not suffer for the mistake and negligence of the counsel. Appeal of the assessee is allowed for statistical purposes.
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2024 (6) TMI 967
Condonation of delay in filing appeal - time limitation - appeal dismissed on the sole ground that the appeal was filed on 9th February 2023, i.e., instead on or before 6th February 2023 - HELD THAT:- The delay of three days in filing the appeal before Respondent No. 1 is condoned.
Delay condoned subject to condition that, petitioner will pay a sum of Rs. 25,000/- (Rupees Twenty Five Thousand only) as donation to K.E.M. Hospital to be used in the neurosurgery DSA department.
The impugned order dated 28th February 2024 is hereby quashed and set aside. Respondent No. 1 is directed to hear the appeal on merits and pass the order in accordance with law on or before 31st August 2024 - petition disposed off.
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