TMI Tax Updates - e-Newsletter
May 2, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax

TMI Short Notes

1. Optional Concessional Taxation for domestic Companies : Clause 200 of the Income Tax Bill, 2025 Vs. Section 115BAA of the Income-tax Act, 1961

  Bills:

2. Concessional Taxation for Manufacturing Domestic Companies : Clause 199 of Income Tax Bill, 2025 Vs. Section 115BA of Income-tax Act, 1961

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3. Taxation of Special Incomes in India "Profits and gains from Life Insurance Business" : Clause 194 of the Income Tax Bill, 2025 Vs. Section 115B of the Income-tax Act, 1961

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4. Evolving the Taxation of Foreign Portfolio Investment : Clause 210 of the Income Tax Bill, 2025 Vs. Section 115AD of the Income Tax Act, 1961

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5. Taxation of income from Global Depository Receipts (GDRs) earned by resident employees of Indian companies or their subsidiaries engaged in specified knowledge-based industries or services : Clause 193 of the Income Tax Bill, 2025 vs. Section 115ACA of the Income Tax Act, 1961

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6. Legislative framework governing the taxation of income derived by non-residents from bonds and Global Depository Receipt : Clause 209 of Income Tax Bill, 2025 Vs. Section 115AC of the Income-tax Act, 1961

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Articles

1. FILING OF APPEAL BEFORE GOODS AND SERVICES TAX APPELLATE TRIBUNAL – PART II

   By: DR.MARIAPPAN GOVINDARAJAN

2. How to Correct Mistakes in Your LLP Annual Return Filing?

   By: Ishita Ramani

3. ​​​​​​​How to protect your Intellectual Property Rights and what legal recourses are available in case of any infringement of your IPRs?

   By: YAGAY andSUN

4. Registration of Trademarks in India

   By: YAGAY andSUN

5. Registration of Geographical Indication (GI) under the Geographical Indications of Goods (Registration and Protection) Act, 1999, and the GI Rules, 2002

   By: YAGAY andSUN

6. Registration of Patents under the Patents Act, 1970 and Patents Rules, 2003 (Laws of India).

   By: YAGAY andSUN

7. Re-Export in Customs Laws

   By: YAGAY andSUN

8. Refund of Customs Duty and Interest

   By: YAGAY andSUN

9. Warehousing Period under Customs Laws

   By: YAGAY andSUN

10. "Notified Goods" and "Specified Goods" Under Customs and Foreign Trade Policy (FTP) laws in India.

   By: YAGAY andSUN

News

1. Reporting of HSN codes in Table 12 and list of documents in table 13 of GSTR-1/1A

2. GST revenue hits record high of Rs 2.37 lakh crore in April, up 12.6 pc

3. Gross and Net GST revenue collections for the month of Apr, 2025

4. GST mop-up rises 12.6 pc to highest-ever at Rs 2.37 lakh crore in April

5. Domestic efficiencies, competitiveness must for economic resilience: Sitharaman

6. Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman Inaugurates 'Corporate Bhavan' in Kolkata; New Multi-Office Facility brings MCA Departments Under One Roof

7. PMLA action picked momentum after 2014; conviction rate over 93 pc: ED director

8. ATM usage cost up by Rs 2 to Rs 23/withdrawal after free monthly usage limit

9. Shri Arvind Shrivastava took charge as Secretary, Department of Revenue, Ministry of Finance, today

10. US, Ukraine sign deal giving US access to country's valuable mineral wealth

11. Shri Gyaneshwar Kumar Singh Takes Charge as Director General & CEO of Indian Institute of Corporate Affairs(IICA), bringing Over 30 Years of Expertise in Finance, Law, and Governance

12. Senate votes down resolution to block Trump's global tariffs amid economic turmoil

13. US, Ukraine sign economic deal after Trump presses Kyiv to pay back US for help in repelling Russia

14. Senate Democrats are voting on whether to block Trump's global tariffs amid economic turmoil

15. Russia's foreign minister visits the Dominican Republic to strengthen economic, commercial ties

16. Caste census alone won't suffice, conduct socio-economic survey as well: Siddaramaiah tells Centre

Notifications

Customs

1. 08/2025 - dated 30-4-2025 - ADD

Seeks to amend various Customs Notifications so as to align them with changes made vide Finance Act, 2025

2. 28/2025 - dated 30-4-2025 - Cus

Seeks to amend Notification no. 27/2011-customs dated 1 st March, 2011 and Notification No. 22/2024-Customs, dated 2 nd April, 2024 to align them with the changes made in the Second Schedule to the Customs Tariff Act.

3. 27/2025 - dated 30-4-2025 - Cus

Seeks to amend Second Schedule to the Customs Tariff Act, to align it with changes made in the First Schedule to the Customs Tariff Act vide Finance Act, 2025.

4. 26/2025 - dated 30-4-2025 - Cus

Seeks to rescind Notification No. 04/2025-Customs dated the 1st February, 2025 - Withdrawal of exemption from the import duty on goods since the BCD (Tariff) itself has been rationalized w.e.f. 1.5.2025

5. 25/2025 - dated 30-4-2025 - Cus

Seeks to amend various Customs Notifications to align them with changes made vide Finance Act, 2025

6. 33/2025 - dated 30-4-2025 - Cus (NT)

Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver

7. 02/2025 - dated 30-4-2025 - CVD

Seeks to amend Notification No. 05/2024-Customs (CVD) dated the 11th September, 2024 so as to align with changes made vide Finance Act, 2025

FEMA

8. F. No. FEMA 10 (R)(6)/2025-RB - dated 29-4-2025 - FEMA

Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Sixth Amendment) Regulations, 2025

GST - States

9. 7/11/2025-LA-63 - dated 29-4-2025 - Goa SGST

Goa Goods and Services Tax (Second Amendment) Act, 2025

10. G.O. Ms. No. 3 - dated 16-4-2025 - Puducherry SGST

Puducherry Goods and Services Tax (Second Amendment) Rules, 2025

SEBI

11. SEBI/LAD-NRO/GN/2025/245 - dated 30-4-2025 - SEBI

Securities and Exchange Board of India (Depositories and Participants) (Second Amendment) Regulations, 2025

Highlights / Catch Notes

GST

• GST Notifications on COVID-19 Deadline Extensions Challenged, Provisional Relief Pathways Recommended for Six Case Categories

  Case-Laws - HC : HC found multiple GST notifications challenging deadline extensions during COVID-19 potentially procedurally defective. While the core validity issue is pending before SC, the court provisionally recommended case-specific relief approaches. The HC suggested allowing petitioners opportunities to present arguments, pursue appellate remedies, and challenge ex-parte orders across six identified case categories. Parties were directed to provide further instructions, with potential interim relief mechanisms to be finalized, recognizing potential procedural irregularities in the original notifications without definitively ruling on their ultimate legal standing.
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• Tax Order Quashed: Procedural Flaws Invalidate Original Decision, Mandates Fresh Review Under Section 75(6)

  Case-Laws - HC : HC allowed the petition challenging an impugned tax order, finding procedural irregularities in the original decision. The court determined that the order dated 27.04.2024 failed to meet statutory requirements under Section 75(6), specifically lacking substantive factual basis and reasoning. The HC quashed the previous orders and remanded the matter back to the Deputy Commissioner, directing a fresh review process. The Deputy Commissioner must provide the petitioner an opportunity to respond to the show cause notice within four weeks and subsequently issue a legally compliant order after affording proper hearing.
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• GST Recovery Order Invalidated Due to Violation of Natural Justice Principles Under Section 75(4)

  Case-Laws - HC : HC allows writ petition challenging GST recovery order due to violation of natural justice principles. The court found that mandatory personal hearing under Section 75(4) was not conducted, rendering the impugned order invalid. While the limitation period argument was rejected, the procedural defect of non-compliance with hearing requirements became the decisive factor. The recovery order was consequently set aside, emphasizing the critical importance of providing opportunity of hearing in administrative proceedings involving tax recovery.
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• Creditors Cannot Raise New Claims After NCLT Resolution Plan Approval, Tax Demands Quashed to Preserve Insolvency Process Integrity

  Case-Laws - HC : HC ruled on the legality of creating additional dues by GST Department after NCLT's Resolution Plan approval. The court held that once a Resolution Plan is approved under IBC, subsequent claims by creditors are impermissible as they would disrupt the resolution process. The court specifically noted that the tax department was aware of IBC proceedings and had previously filed claims through the Resolution Professional. Consequently, the court quashed the assessment order and demand notice issued under Section 74 of CGST Act, 2017, which were raised post-Resolution Plan approval, thereby protecting the sanctity of the resolution mechanism and preventing potential disruption to the insolvency resolution process.
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• Tax Fraud Case: Anticipatory Bail Denied Due to Systematic Invoice Manipulation and Potential Investigative Obstruction

  Case-Laws - HC : HC denied anticipatory bail in a tax fraud case involving fraudulent input tax credit and invoice manipulation. The court carefully examined the accused's role, referencing SC precedents on parity principles. Despite arguments about punishment quantum, the court prioritized broader societal interests and potential investigation impediment. The HC determined that granting anticipatory bail would potentially compromise the investigative process, considering the prima facie evidence of systematic fraudulent activities. The court emphasized that anticipatory bail is not a shield against serious accusations that adversely affect societal integrity. Accordingly, the anticipatory bail application was dismissed, preserving the investigative agency's ability to conduct a comprehensive inquiry into the alleged financial misconduct.
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Income Tax

• New Income Tax Rules 2025 Simplify Return Filing for Individuals and HUFs with Updated ITR-1 and ITR-4 Forms

  Notifications : The GoI's MoF through CBDT issued Income-tax (twelfth Amendment) Rules, 2025, effective 1st April 2025, amending Income-tax Rules, 1962. Key modifications include updating Rule 12 and Rule 11B, specifically revising income tax return forms ITR-1 and ITR-4. The amendments introduce new provisions for filing returns, particularly for individuals and Hindu undivided families, with specific conditions for reporting capital gains under section 112A and business income computed under sections 44AD, 44ADA, and 44AE. The changes aim to streamline tax return filing processes and provide clarity on reporting requirements for specific income categories. The notification ensures no adverse impact on taxpayers and facilitates more precise income tax documentation.
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• Property Dispute Resolution: Income Tax Act Sections 269-UN and 293 Do Not Restrict Civil Court's Power to Hear Claim

  Case-Laws - HC : HC held that Sections 269-UN and 293 of Income Tax Act, 1961 do not bar civil court jurisdiction in the present suit. The court found no impediment to plaintiffs seeking declaration of property re-vestment, as the suit does not challenge or modify any income tax order. The single judge's earlier order was set aside, with the suit restored for expedited hearing. The court ruled against revenue authorities, determining that the statutory provisions do not prevent judicial review of the specific legal claim. No costs were awarded, and the original proceedings shall continue until final disposal.
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• Reassessment Notice Invalidated: Statutory Time Limit Breach Renders Tax Proceedings Null and Void Under Section 149(1)

  Case-Laws - HC : HC held that the notice u/s 148 was time-barred under Section 149(1), rendering it invalid. The Assessing Officer (AO) exceeded statutory limitations by issuing a notice beyond the prescribed time period. The court emphasized that procedural timelines are mandatory and cannot be circumvented. The impugned notice was liable to be set aside solely on the ground of limitation, irrespective of other substantive challenges. The decision underscores the critical importance of adhering to statutory time constraints in tax reassessment proceedings, affirming that procedural compliance is essential for maintaining the integrity of tax assessment processes.
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• Procedural Errors Invalidate Tax Assessment Reopening: Insufficient Evidence and Inadequate Examination of Shipping Bill Documentation

  Case-Laws - HC : HC held that the assessment reopening under SS147 was procedurally flawed. The AO failed to substantiate allegations of income escape by thoroughly examining disputed shipping bill evidence. The Assessee's contention of manual bill correction and non-involvement in alleged exports was not adequately addressed. Consequently, the SS148A(d) order was set aside, effectively nullifying the assessment reopening and upholding the Assessee's appeal without prejudice to potential future reassessment if concrete evidence emerges.
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• Property Title Clearance Costs Deemed Integral to Asset Transfer Under Section 48 for Capital Gains Calculation

  Case-Laws - HC : HC held that the expenditure incurred by the appellant to clear title of a disputed property constitutes a cost directly connected with the asset transfer under Section 48. The payment was deemed 'wholly and exclusively' incurred in connection with the property transfer, as the title was initially clouded and litigation existed between original vendors and their sisters. The court found that without such payment, the property transfer could not have been executed, effectively treating the amount as integral to the sale consideration. The expenditure was therefore allowable as part of the cost of acquisition for long-term capital gains computation, ultimately deciding in favor of the assessee.
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• Tax Penalty Overturned: Section 270A Invalidated Due to Lack of Substantial Under-Reported Income Evidence

  Case-Laws - AT : ITAT adjudicated a tax penalty case involving under-reported income. The tribunal upheld the lower appellate authority's order deleting penalty u/s 270A. Since the primary quantum addition related to section 80P deduction was eliminated, no substantial under-reported income was established. Consequently, the penalty could not be sustained. The revenue's appeal was dismissed, confirming that the prerequisite conditions for imposing penalty under section 270A were not satisfied based on the factual matrix presented.
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• Income Tax Appeal Partially Succeeds: Estimated Income Addition Reduced from 10% to 1.52% with Partial Set-Off Allowed

  Case-Laws - AT : ITAT partially allowed the appeal, reducing the estimated income addition from 10% to 1.52% of declared turnover. Despite concerns about unaudited accounts and non-filing of returns, the tribunal recognized the assessee's self-declared figures and permitted a set-off of Rs. 1,49,165/-. The decision mandates the assessee to reconcile financial discrepancies while moderating the income addition imposed by the Assessing Officer, thereby striking a balance between procedural compliance and equitable tax assessment.
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• Cash Deposits During Demonetization: Systematic Accounting Records Shield Taxpayer from Unwarranted Tax Levy Under Section 69A/115BBE

  Case-Laws - AT : ITAT adjudicated a tax dispute regarding cash deposits during demonetization. The tribunal examined whether cash deposited in bank accounts during the specified period could be subject to additional taxation under Section 69A/115BBE. The assessee demonstrated that the cash deposits were comprehensively recorded in official books of account with a fully explained source. Applying established legal principles, the tribunal ruled that entries systematically documented in accounting records cannot be unilaterally taxed under the referenced statutory provisions. Consequently, the tribunal rendered a decisional outcome favoring the assessee, effectively negating the proposed tax addition and upholding the principle of transparent financial documentation.
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• Cash Donation to Charitable Organization Validated Under Section 80G, Proving Financial Support Qualifies for Tax Deduction

  Case-Laws - AT : ITAT resolved a dispute regarding donation deduction under section 80G. The tribunal determined that the assessee's donation was in cash, not in kind, based on evidence of direct equipment order, installation at donee premises, and financial support. The assessee's role was purely financial, without direct involvement in purchase or installation. Following precedent from a coordinate bench and rejecting revenue's contention, the tribunal allowed the assessee's appeal, finding the donation eligible for deduction. Consequently, the penalty levy became academic and was disposed of, effectively vindicating the assessee's claim for tax deduction.
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• Valuation Method Upheld: DCF Approach Valid, Share Premium Addition Rejected Under Rule 11UA(1)(c)

  Case-Laws - AT : ITAT allowed the appeal, finding the lower authorities' approach legally incorrect. The Tribunal held that the assessee company's chosen Discounted Cash Flow (DCF) method for share valuation was valid under Rule 11UA(1)(c), and the Assessing Officer (AO) could not arbitrarily disregard this method. The Tribunal noted inconsistent treatment between resident and non-resident investors' share premium and rejected the addition under Section 56(2)(viib). Furthermore, the Tribunal ruled that the amendment to Section 115BBE should not be applied retroactively, as it was not intended to cover the assessee's case. The decision effectively deleted the additions made by the AO and confirmed by the CIT(A), providing relief to the assessee company.
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• Comprehensive Assessment Stands: Revision Petition Dismissed When Original Inquiry Thoroughly Addresses Key Tax Compliance Issues

  Case-Laws - AT : ITAT ruled in favor of the assessee, dismissing PCIT's revision petition under Section 263. The tribunal found that the assessing officer had conducted a comprehensive inquiry during original assessment proceedings, covering 25 detailed points including loan justifications. The key issues of unsecured interest-free loans and potential rental income were thoroughly examined. The tribunal emphasized that when the assessing officer adopts a legally permissible view, and two interpretations are possible, the order cannot be interfered with merely because another perspective exists. The court referenced precedents establishing that 263 proceedings are invalid when the initial assessment included proper enquiries and a plausible legal interpretation. Consequently, the PCIT's order was quashed and the assessee's appeal was allowed.
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• Securitisation Trust Wins Tax Dispute: Excess Interest Spread Payment Exempt from TDS Under Section 194LBC

  Case-Laws - AT : ITAT determined that a Securitisation Trust was not required to deduct TDS under section 194LBC on Excess Interest Spread (EIS) payment to the originator. The tribunal found that the EIS payment was not an investment return but a surplus distribution per waterfall mechanism. The payment did not meet the conditions of section 194LBC, specifically regarding investment characterization. Consequently, the tribunal deleted the tax liability and interest levied under sections 201(1) and 201(1A), allowing the assessee's appeal and ruling that no TDS was mandatory in this securitization transaction.
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• Wind Turbine Generator Compensation Deemed Capital Receipt, Not Taxable Under Performance Shortfall Settlement

  Case-Laws - AT : ITAT adjudicated compensation received for wind turbine generator (WTG) under-performance as capital receipt, not taxable. Relying on precedents in PCIT vs Xpro India Ltd. and Ramkrishna Forgings Limited, the tribunal determined the compensation from equipment supplier for technical performance shortfall constitutes a capital receipt. The Revenue's prior acceptance of similar claims in subsequent assessment year further substantiated the ruling. Tribunal directed assessment officer to exclude compensation amount from assessable income, effectively allowing the assessee's appeal and confirming the non-taxable nature of the compensation.
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• Tribunal Orders Detailed Verification of Loan and Deposit Investments, Directs Fair Procedural Review of Section 68 Additions

  Case-Laws - AT : ITAT directs Assessing Officer (AO) to verify facts regarding loan/deposit investments after providing reasonable opportunity to assessee. Tribunal found no merit in additions under Section 68 for advances to Rainbow Tech, Arun Muchhala Engineering College, Arun Muchhala Research & Education Centre, and loans from Sai Shiva Developers, Mucchala Magic Land P. Ltd., and Arun Muchhala Co-owners. The tribunal noted that most disputed amounts were opening balances or partially repaid, and transactions were conducted through banking channels. Consequently, the tribunal deleted additions made under Section 68 and upheld the assessee's claim, remanding the matter back to AO for further verification with proper procedural fairness.
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• ITAT Denies Revenue's Rectification Plea Under Section 254(2), Reaffirms Strict Limits on Order Modification

  Case-Laws - AT : ITAT rejected Revenue's application for rectification under Section 254(2). The Tribunal determined that the application was essentially a disguised attempt to review the original order, which is impermissible. The Tribunal emphasized that its power under Section 254(2) is limited to correcting apparent mistakes on the record, not re-examining the merits of the case. Relying on precedent, the Tribunal held that revisiting the original order's substantive findings falls outside the scope of Section 254(2). Consequently, the Miscellaneous Application was dismissed, with the Tribunal maintaining its original order and finding no mistake apparent on the record warranting rectification.
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• Charitable Trust Loan Validated: ITAT Finds Legitimate Purpose Beyond Interest Income, Remands for Detailed Review

  Case-Laws - AT : ITAT held that the trust's loan from a related party was for legitimate charitable purposes, not for earning interest income. The tribunal admitted additional evidence demonstrating the loan's application towards trust's charitable objectives. The case was remanded to the CIT(E) to re-examine: (1) loan utilization for charitable expenses, and (2) verify the percentage of Parsi community beneficiaries. The assessee's appeal was allowed for statistical purposes, with directions to conduct a fresh assessment considering the submitted financial documentation and charitable intent.
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• ITAT Strikes Down Tax Reassessment Order Under Section 263 Due to Procedural Violations and Jurisdictional Overreach

  Case-Laws - AT : ITAT set aside Pr.CIT's order under section 263, finding procedural irregularities in reassessment proceedings. The tribunal determined that Pr.CIT exceeded jurisdictional limits by: (1) considering documents not available during original examination, (2) introducing issues beyond the original reassessment scope under section 147, and (3) improperly evaluating additional tax-related matters not part of initial proceedings. The tribunal emphasized that revisional powers must be exercised strictly based on records existing at the time of original assessment. Consequently, the entire proceedings were deemed ultra vires, with the appellate order partially allowing the assessee's appeal and nullifying the CIT's interventions.
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• Tax Penalty Quashed: Undisclosed Income Estimation Doesn't Automatically Trigger Penalty Under Section 270A Without Specific Grounds

  Case-Laws - AT : ITAT adjudicated a tax penalty case concerning undisclosed turnover for AY 2019-20. The tribunal held that penalty u/s 270A cannot be levied when income is estimated and accepted by the Assessing Officer (AO). The tribunal emphasized that for penalty imposition, specific conditions must be strictly followed, and mere declaration of additional income does not automatically constitute misreporting. The AO failed to communicate specific grounds for penalty, violating principles of natural justice. The penalty is discretionary, and the primary onus lies on revenue to prove default. Given the assessee's bona fide disclosure and absence of adverse findings, the tribunal decided against revenue, effectively quashing the proposed penalty.
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• Software Maintenance Charges Not Royalty: Tribunal Validates Tax Treatment and Directs Comprehensive Reassessment of Original Assessment

  Case-Laws - AT : ITAT adjudicated a multi-issue tax dispute, primarily addressing software maintenance charges and tax deduction complexities. The tribunal ruled that SUN Maintenance Software usage charges do not constitute royalty, referencing precedential judgments from Reliance Industries and Supreme Court. The tribunal directed the Assessing Officer (AO) to delete additions related to Business Support Services (BSS), allow appropriate TDS credits by examining Form 16A, and recalculate section 234A interest based on accurate timeline evidence. The decision fundamentally upholds the assessee's contentions regarding software charges and tax treatment, mandating a comprehensive re-examination of the original assessment.
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• Taxpayer Wins Deduction for Abandoned Project Expenses Under Commercially Justified Circumstances, Challenging Tax Authority's Scrutiny

  Case-Laws - AT : ITAT allowed the taxpayer's claim for deduction of expenditure incurred in an abandoned project, recognizing that the project abandonment was due to reasons beyond the assessee's control. The tribunal held that the written-off expenses under 'work in progress' were commercially justified and not subject to tax authority scrutiny. The tribunal directed the Assessing Officer to delete the disallowance in both the section 143(1) intimation and section 143(3) assessment order, effectively permitting the expenditure deduction based on the commercial reasonableness of the assessee's decision.
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• Tribunal Validates Revisionary Proceedings and Dismisses Unexplained Cash Credit Challenge After Thorough Verification of Share Applicants' Credentials

  Case-Laws - AT : ITAT held that the revisionary proceedings u/s 263 were valid and the assessee cannot challenge the order since it had attained finality. In the substantive matter concerning unexplained cash credit u/s 68 for share capital and share premium from 18 private limited applicants, the tribunal found that the assessee successfully established the identity, genuineness, and creditworthiness of share applicants through their tax assessments, financial statements, and ROC scrutiny. Consequently, the tribunal deleted the addition u/s 68, set aside the CIT(A)'s order, and allowed the assessee's grounds 1-5, concluding no addition was warranted based on the comprehensive documentation and verification of investment sources.
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Customs

• New CBIC Transhipment Air Global Bond Allows Nationwide Registration for Air Cargo Carriers Across Multiple Customs Ports

  Circulars : The public notice introduces a new "TA" (Transhipment Air Global) bond type implemented by CBIC in ICES for air transhipment of imported goods between air customs sites and ICDs. Carriers/airlines can now register the national "TA" bond at any air customs port, usable across all air customs EDI ports. The existing "TP" bond system will continue for carriers preferring local bond submissions. Additionally, CBIC has enabled ATP message filing on ICEGATE through email or web upload, complementing the existing service center filing mechanism. The notice aims to provide comprehensive guidance for stakeholders involved in air transhipment processes, offering flexibility in bond registration and message filing procedures.
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• Government Revokes Import Duty Exemptions Under Section 25(1) of Customs Act, Effective May 1st, 2025

  Notifications : The GoI, exercising powers under Section 25(1) of the Customs Act, 1962, rescinds Notification No. 04/2025-Customs dated 1st February, 2025, relating to import duty exemptions. The rescission is effective 1st May, 2025, and applies prospectively, preserving legal actions taken prior to this date. The notification withdrawal stems from rationalization of Basic Customs Duty (BCD) tariff, indicating an administrative restructuring of import duty regulations to align with current economic considerations.
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• Customs Notifications Updated: Finance Act 2025 Revises Tariff Codes for Chemical and Industrial Substances

  Notifications : The notification amends various Customs Notifications to align with changes in the Finance Act, 2025, primarily focusing on modifying tariff code entries across multiple notifications. The amendments involve updating specific Harmonized System (HS) codes for various chemical and industrial substances across multiple serial numbers in different notifications. The modifications aim to refine and update customs classification and potentially adjust applicable duty rates. The notification will come into effect on 1st May, 2025, ensuring precise alignment with the latest fiscal regulations and tariff classifications.
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• Multimedia Speakers with USB and FM Features Classified Under CTH 8518 22 00 Based on Technical Functionality and Precedent

  Case-Laws - AT : CESTAT adjudicated a customs classification dispute regarding multimedia speakers, determining that imported computer speakers with USB playback and FM radio features are classifiable under CTH 8518 22 00 as multiple loudspeakers mounted in the same enclosure. The tribunal consistently referenced prior judicial precedents, including Logic India Trading Company and ONKYO SIGHT & SOUND INDIA PVT.LTD. cases, which uniformly supported classification under CTH 8518 rather than alternative headings. The appellate tribunal's comprehensive analysis rejected the customs department's proposed classification, ultimately allowing the appeal and affirming the CTH 8518 22 00 categorization for the multimedia speakers.
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SEBI

• SEBI Revamps Cybersecurity Framework with New Classification Criteria for Financial Service Providers

  Circulars : SEBI issued clarifications to the Cybersecurity and Cyber Resilience Framework (CSCRF) for Regulated Entities (REs), revising categorization thresholds across multiple financial service sectors. The circular introduces detailed classification criteria for stock brokers, depository participants, investment advisers, research analysts, portfolio managers, alternative investment funds, and merchant bankers into four categories: Qualified, Mid-size, Small-size, and Self-certification REs. Key modifications include exemptions for entities with smaller client bases, modified reporting authorities, and flexible implementation timelines, with mandatory compliance set for June 30, 2025, aimed at enhancing cybersecurity standards across the securities market ecosystem.
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Case Laws:

• GST

• 2025 (5) TMI 43
  Validity of Notification Extending the deadlines for issuing show cause notices and passing adjudication orders - challenges the vires of multiple notifications - COVID-19 pandemic - Proper procedure not followed prior to the issuance - prior recommendation of the GST Council is essential for extending deadlines - notification No. 09 of 2023 (Central Tax), notification No. 56 of 2023 (Central Tax), notification No. 09 of 2023 (State Tax), notification No. 56 of 2023 (State Tax). HELD THAT:- A perusal of the above would show that various High Courts have taken a view and the matter is squarely now pending before the Supreme Court. The challenge to the notifications itself, various counsels submit that even if the same are upheld, they would still pray for relief for the parties as the Petitioners have been unable to file replies due to several reasons and were unable to avail of personal hearings in most cases. In effect therefore in most cases the adjudication orders are passed ex-parte. Huge demands have been raised and even penalties have been imposed. Broadly, there are six categories of cases which are pending before this Court. While the issue concerning the validity of the impugned notifications is presently under consideration before the Supreme Court, this Court is of the prima facie view that, depending upon the categories of petitions, orders can be passed affording an opportunity to the Petitioners to place their stand before the adjudicating authority. In some cases, proceedings including appellate remedies may be permitted to be pursued by the Petitioners, without delving into the question of the validity of the said notifications at this stage. The said categories and proposed reliefs have been broadly put to the parties today. They may seek instructions and revert by tomorrow i.e., 23rd April, 2025.

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• 2025 (5) TMI 42
  Challenge to impugned order - demand raised exceeds the amount specified in the SCN - HELD THAT:- In the case of M/s Hari Shanker Transport Vs. Commissioner of Commercial Tax U.P. Lucknow and another [ 2025 (4) TMI 619 - ALLAHABAD HIGH COURT] , this Court, after hearing the parties, held that The manner of passing of order dated 27.04.2024 falls foul of the requirements of Section 75(6) of the Act, which requires that the proper officer, in his order shall set out the relevant facts and the basis of his decision , the statutory requirements for passing an order by setting out relevant facts and basis for the decision are totally missing from the order dated 27.04.2024. Even if no response was filed to the notices issued under Sections 61 and 73 of the Act, it was incumbent on respondent no.2 to pass an order in compliance of the provisions of Section 75(6) of the Act, as a final order should be self contained and merely making reference to the previous notices while passing the said order does not suffice for making it a self contained order. The orders dated 08.08.2024 and 30.05.2024 (Annexure- 1 2 to the writ petition) are quashed and set aside. The matter is remanded back to respondent no.2/Deputy Commissioner, Commercial Tax Department, Sector-1, Auraiya to provide an opportunity of filing response to the show cause notice issued under Section 73 of the Act to the petitioner, which response shall be filed within a period of four weeks from today and thereafter, after providing opportunity of hearing, a fresh order in accordance with law be passed. Petition allowed.

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• 2025 (5) TMI 41
  Challenge to order dated 29.12.2023 passed under Section 73(9) of the U.P. GST Act, 2017 - time limitation - no personal hearing was given as envisaged under Section 75(4) of the Act, 2017 - violation of principles of natural justice. Time Limitation - HELD THAT:- Reliance placed in M/s Manoj Glass vs. State of U.P. [ 2025 (4) TMI 1464 - ALLAHABAD HIGH COURT] wherein it is noticed that the notification dated 21.07.2022 by which the date for passing of order was extended upto 30th September, 2025 was not brought to the notice of the Court at the time of decision in the aforesaid Writ Tax No.264/2024 - as the first judgment was apparently erroneous and it is noticed that the State proposes to file an application seeking review of judgment dated 12.11.2024, the first ground is not tenable. Violation of principles of natural justice - HELD THAT:- It is fairly submitted that opportunity of hearing envisaged under section 75(4) of the Act, 2017 has not been given, therefore, only on this second ground, this writ petition is allowed and the impugned order is set aside. Conclusion - i) The limitation period for issuance of recovery orders under Section 73(9) is three years from the due date of annual return filing, but this period can be validly extended by government notifications, including exclusion of certain periods from limitation computation. ii) The procedural safeguard of personal hearing under Section 75(4) is mandatory and non-compliance renders the order liable to be set aside, irrespective of limitation compliance. Petition allowed in part.

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• 2025 (5) TMI 40
  Legality of creating further dues by way of passing orders by the G.S.T. Department, once the Resolution Plan has been approved by the NCLT - HELD THAT:- This Court in M/S NS Papers Limited And Another Vs. Union of India Through Secretary and Others [ 2024 (12) TMI 989 - ALLAHABAD HIGH COURT] , after dealing with a catena of judgments rendered by the Supreme Court and also other High Courts held as Upon considering the facts and circumstances of the case, we are of the view that the arguments raised by the learned counsel appearing on behalf of the respondents is without any merit on two counts. Firstly, it is clear by the letter dated March 8, 2021 that the petitioner had informed the Income Tax Authorities with regard to approval of resolution plan. Secondly, the department itself had filed a claim before the Resolution Professional, and accordingly, the argument that the department was not aware of the IBC proceedings holds no water. In view of the above law laid down by the Supreme Court, the principle is crystal clear that once Resolution Plan has been approved by the NCLT, all other creditors are barred from raising their claims subsequently, as the same would disrupt the entire resolution process. Conclusion - The impugned assessment order and demand notice under Section 74 of the CGST Act, 2017, issued after approval of the Resolution Plan, are quashed and set aside. Petition allowed.

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• 2025 (5) TMI 39
  Seeking grant of anticipatory bail - indulging in fake /bogus / non existent firms and indulged in fraudulently availing input tax credit and passed on inadmissible input tax credit on the strength of issuance of invoices without underlined supply of goods or service or both - HELD THAT:- At the time of deciding the bail application, the Court should refrain from appreciating the evidence. However, considering the submissions made by the learned advocates for the respective parties and the fact and specific stand taken by the applicant to extend the benefit of parity as the co-accused is released on regular bail. Hence, this Court has considered the material collect during the course of investigation with a view to examine the applicability of parity. The reference is required to be made in a cases of Tarun Kumar Vs. Asst. Director, Directorate of Enforcement, [ 2023 (11) TMI 904 - SUPREME COURT] and Ramesh Bhavan Rathod vs. Vishanbhai Hirabhai Makwana, [ 2021 (4) TMI 1276 - SUPREME COURT] , wherein, the Hon ble Apex Court held that when deciding a bail application and extending the benefit of parity, the Court has to examine the exact role attributed to the accused. If the accused played a similar role, then the Court should extend the benefit of parity. Merely some words or any observation made in the order are not enough, such approach is erroneous and inappropriate for considering the benefit of parity. As co-accused is released on regular bail, the applicant is not entitled to claim parity in anticipatory bail. The object of anticipatory bail is that person should not be harassed or humiliated in order to satisfy the grudge or personal vendetta of the complainant. In present case, no any such sort of allegation or bias is found out it is needless to say that order under Section 482 of the BNSS is not a passport to the commission of trial nor a shield against any serious accusation, which adversely affects the society. Here duped and defrauded offence is not under the GST Act, but offence of forgery under IPC/BNS is committed. Hence, argument of learned counsel for the applicant that offence punishable under Section 132 is 5 years is not acceptable while larger societal interest is adversely affected and that extent of quantum of punishment is not a ground to allow the anticipatory bail. Conclusion - This Court has absolutely no doubt that if applicant is equipped with such an order before he is interrogated by the Police, it would greatly harm the investigation and would impede the prospects of unearthing all the ramifications involved in the conspiracy. Having considered nature and seriousness of the charge, prima facie involvement of accused and possibility of tempering with evidences, it does not appear to be just and proper to exercise the discretion in favour of the applicant. The application for anticipatory bail is dismissed.

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• Income Tax

• 2025 (5) TMI 38
  Validity of reopening of assessment - non considering assessee s objection against reopening - HELD THAT:- In this case, AO has been extremely casual in dealing with the assessee s objections. As noted earlier, the objections have not been dealt with at all. This amounts to frustrating the salutary process established in the case GKN Driveshafts India Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] After all this, to self-certify that objections have been adequately and appropriately dealt with is most improper. Besides, in this case, the Petitioner-Assessee has filed only one set of objections, and without dealing with those objections, to say that objections followed by cross objections are an endless process, which should end at a certain point in time, was not justified. We think that such casualness in the matter of disposal of the assessee s objections to reopening the assessment must end. In several cases, the AO s do not seriously deal with the assessee s objections, forcing us to set aside such orders and remand the matters to the AO. The other alternative is for the Writ Court to evaluate the reasons and decide upon them. This puts undue pressure on the Court s docket. AO, in the first instance, deals with the objections one way or the other so that judicial review can be limited to the reasoning of the AO disposing of the assessee s objections to the reopening of the assessment. By shirking their duty of deciding on the assessee s objections, the AO s cannot frustrate the scheme provided in GKN Driveshafts India Ltd. (supra). The impugned order is an instance where the AO has virtually declined to exercise the jurisdiction vested in him and to discharge the duty expected of him. We set aside the impugned order and direct the AO to consider the Petitioner s objections filed and dispose of such objections within four weeks of uploading this order.

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• 2025 (5) TMI 37
  Bar of suits in civil courts - Dismissal of suit as barred under the provisions of Section 269-UN and/or Section 293 - Whether the jurisdiction of the Hon ble Court to try, entertain and dispose of the present suit is barred under section 269UN of the Income Tax Act, 1961 as pleaded in paragraph 1 of the Written Statement and/or section 293 of the Income Tax Act, 1961? - HELD THAT:- Section 269-UN provides that save as otherwise provided in Chapter XX-C, any order made under Section 269-UD (1) or under Section 269-UF (2) shall be final and conclusive and shall not be called in question in any proceeding, either under the IT Act, 1961, or under any other law for the time being in force. The other Section and which is relevant for our purposes is Section 293 of the IT Act, 1961. What this Section stipulates is that no suit shall be brought in any Civil Court to set aside or modify any proceeding taken, or order made, under the IT Act, 1961, and no prosecution, suit or other proceeding shall lie against the Government or any Officer of the Government for anything done in good faith or intended to be done in good faith under the IT Act, 1961. In the facts of the present case, we fail to see how these two provisions would oust the jurisdiction of the Civil Court. As mentioned earlier, all that the Plaintiff seeks in the present suit is a declaration that on and from 31st October 2002, the 3rd Compulsory Purchase Order stands abrogated and the suit property re-vests in the Mulanis and Defendant No. 19 (Omprakash Navani). This declaration, in no way, calls into question the said order as referred to in Section 269-UN and neither does it seek to modify or set aside the said order as contemplated under Section 293. In these circumstances, even when Section 269-UN and Section 293 are read harmoniously, and together, they would not oust the jurisdiction of this Court. The abrogation referred to in Section 269-UH takes place by operation of law provided the consideration is not paid within the time-frame as stipulated in Section 269-UG. What is pertinent to note is that there is no machinery under the IT Act, 1961, when the authorities under the IT Act, 1961 refuse to recognize the abrogation which comes into effect by the operation of law. We, therefore, fail to understand as to how any inquiry with regard to whether the abrogation taken place or otherwise would be a proceeding under the IT Act, 1961. A proceeding under the IT Act, 1961 would necessarily mean a proceeding initiated under the relevant provisions of said Act, and not otherwise. We find that the learned Single Judge erred in heavily relying upon the decision in the case of Parmeshwari Devi [ 1998 (3) TMI 3 - SUPREME COURT ] to hold that the present suit was barred by virtue of Section 269-UN and/or Section 293 of the IT Act, 1961. We hereby set aside the impugned order and answer issue No. 1 in the negative i.e. against the Revenue (Defendant Nos. 1 and 2) and in favour of the Plaintiff. As far as the other two issues are concerned, since they have not been answered by the learned Single Judge, we are not giving any findings on the same, including whether they can be tried as preliminary issues or whether they should be tried with all other issues. The above appeal succeeds in the aforesaid terms. However, there shall be no order as to costs. Since the above suit is of the year 2006, the hearing of the suit is expedited. Now that the suit is restored, the order passed by the learned Single Judge [ 2007 (10) TMI 725 - BOMBAY HIGH COURT] shall stand revived and continue till the disposal of the suit.

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• 2025 (5) TMI 36
  Reopening of assessment u/s 147 beyond period of limitation as stipulated u/s 149(1) - HELD THAT:- In the present case, notice u/s 148 which was subject matter of challenge in the writ petition [ 2023 (1) TMI 417 - DELHI HIGH COURT ] was barred by limitation on the date, it was issued by virtue of Section 149 (1) of the Act. Thus, any order passed in a challenge to the said notice would not have the effect of obliterating the time limits for passing such an order. We find no merit in the contention advanced on behalf of the Revenue. It is necessary to note that the said writ petition was filed by the petitioner, inter alia, challenging the order issued under Section 148A (d) of the Act and the notice u/s 148 of the Act. There is no dispute that the impugned notice was barred by limitation and thus, was liable to be set aside on the said ground alone. However, the petitioner had challenged the impugned notice and the order under Section 148A (d) of the Act, inter alia, on the ground that the same had been passed without considering the reply furnished by the petitioner to the notice issued u/s 148A (b) of the Act. AO was required to pass an order in accordance with law. And, as noted above, the time period for passing such order had already elapsed on the date the impugned notice was issued. The import of the order is not to obliterate the timelines stipulated for issuing the notice u/s 148 of the Act. On the contrary, it was incumbent on the AO to examine whether it was a fit case for issuance of a notice under Section 148 of the Act, which would not be the case if issuance of such a notice was barred by limitation.

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• 2025 (5) TMI 35
  Reopening of assessment u/s 147 - assessment was reopened on the basis of information that the Assessee had made exports under Shipping Bills linked to a PAN different from that used by the Assessee for filing returns - HELD THAT:- It is apparent that if the matter is to proceed further on the suspicion entertained by the AO, the AO must examine the shipping bill in respect of which the income has allegedly escaped assessment. This is considering that the Assessee disputes that any such exports had been made by him. It is the Assessee s contention that the shipping bill in question had been manually corrected and thus he had made no exports under a code linked to PAN AABPS3614F. The AO must necessarily have some material to proceed further with his assumption that income pertaining to the shipping bill in question has escaped assessment. However, we do not find that the AO has addressed this issue in the order passed u/s 148A (d) of the Act. The impugned order passed u/s 148A (d) of the Act is set aside. Assessee appeal allowed.

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• 2025 (5) TMI 34
  Reopening of assessment u/s 147 - reason was recorded on the information received from investigation wing wherein it was held that assessee was one of the beneficiary to claim bogus LTCG through fabricated contract notes shares sale purchase - HELD THAT:- AO in order to justify the invocation of Section 148 was undoubtedly obliged to allude to the material facts that may have formed part of the report of the Investigation Wing and which would have given at least a broad indication of the involvement of the petitioner in the alleged manipulation of the 19 penny scrips and thus rendering support to the allegation of a wrongful claim of Long Term Capital Gains. Since the reasons which were recorded by the AO in this respect were gloriously silent and failed to make even a rudimentary disclosure on the basis of which we could have examined whether the formation of opinion even on a prima facie basis would sustain, we find ourselves unable to uphold the action of reassessment. Assessee appeal allowed.

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• 2025 (5) TMI 33
  LTCG - allowability or otherwise of the amount as cost of acquisition in the computation of capital gains u/s 48 - whether the amount in question would constitute expenditure wholly and exclusively incurred in connection with the transfer of the asset? - HELD THAT:- The purchase of the subject property by the appellant was on 22.01.1980. The vendors of the property were engaged in litigation with their sisters in regard to the title to various properties including the subject property. Their claim was negatived by the Civil court which held that the subject property would vest in the sisters of the vendors. Hence, the title of the appellant to the subject property under deed dated 22.01.1980 was under a cloud. The Civil suit instituted qua the vendors and their sisters and other family members was in 1981, subsequent to the deed of purchase executed on 22.01.1980. By virtue of order of this Court in second appeal the sisters have been held to be the owners of the schedule property. The vendors of the Appellant thus held no title whatsoever to the property and it is only upon payment of a sum that the appellant has cleared his title and can be said to have acquired the property. We are thus of the view that payment has been wholly and exclusively incurred in connection with the transfer of the subject asset. As decided in Bradford Trading Co. (P) Ltd. [ 2002 (9) TMI 33 - MADRAS HIGH COURT] as concerned with the allowability of an amount paid to get over difficulties in the sale of the property. The Bench holds that unless such amount was paid, the transfer of property could not have taken place and hence such payment has an intimate connection to the transfer of the asset. Payment of the amount to end the litigation in respect of the property concerned was purely in the interests of the assessee. The position of the present appellant is far better, as the title to the subject property vested only in the sisters and hence the amount is, in a way, part of the sale consideration itself. The amount has been paid not merely to get over difficulties in the transfer, but to enable the transfer itself. This is amply clear from a reading of Agreement of Sale dated 07.10.2005. Decided in favour of the assessee.

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• 2025 (5) TMI 32
  Validity of order of CIT(A) ADDL/JCIT-12 u/s 250 - Deduction towards club entrance fees - Whether a claim made for the first time during assessment proceedings without a revised return can be entertained by the Assessing Officer or appellate authority. HELD THAT:- We find that during the course of assessment proceedings, the assessee claimed deduction towards club entrance fees by filing an application however, the AO neither considered nor discussed the same which is against the principles of natural justice. Similarly, CIT(A) also did not record any findings on the issue but simply dismissed the appeal of the assessee. We also note that the said club entrance fees were incurred for the promotion of the business interest and hence the same is an allowable expenditure. Hon ble Supreme Court in the case of Mahalaxmi Sugar Mills Ltd. [ 1986 (7) TMI 83 - SUPREME COURT] has clearly held that the income tax authorities must grant relief to the assessee if the facts and materials available on record justify such relief, even if the assessee has not made a specific claim before the Assessing Officer. In the present case, the facts relating to club entrance fees was very much available on record. The assessee had submitted its claim before the AO along with supporting documents and the expenditure was duly reflected in books of accounts. We further note that the duty of the AO is to assess correct income and the legitimate tax must be assessed and collected. We find it just and proper to allow the claim of the assessee and we direct the AO to allow the claim of club entrance fees as debited by the assessee in books of accounts and recompute the total income of the assessee. Appeal of the assessee is allowed.

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• 2025 (5) TMI 31
  Penalty u/s. 270A - Penalty @ of 200% of tax payable on under-reported income in consequence of misreporting (in relation to the disallowance of deduction u/s 80P(2)(d) and at the rate of 50% of tax payable on under-reported income (in relation to the other additions) - HELD THAT:- Since the major quantum addition on account of claim u/s 80P has been deleted, therefore, on the facts brought out by the CIT(A) in the appeal order, there is neither any under-reported income nor any under-reported income in consequence of any misreporting as the facts do not establish so and therefore, penalty u/s 270A of the Act is not liable to be imposed and accordingly the order of the Ld. CIT(A) deleting the penalty is hereby upheld and the appeal of the Revenue is dismissed.

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• 2025 (5) TMI 30
  Revision u/s 263 - unexplained investment - landed property was not shown by the assessee in its books of account either in the fixed assets or investments schedule as per the accounts filed with the return of income for the assessment year under consideration, but AO did not consider the said facts and issue in question and had completed the assessment without taking into account the assessee s undisclosed investment in the said landed property - HELD THAT:- It is not a fit case where action u/s 263 as required as the appellant has categorically stated during the original assessment order and the proceedings u/s 263 that the said land was purchased on behalf of the company and all the transactions have been duly reflected in the books of account of the company. We, therefore, hold that the impugned order of the PCIT was uncalled for and unnecessary as the assessee has, time and again, reiterated that these transactions were duly reflected in the books of account of the company. Thus, the findings of the PCIT is not correct that the said original assessment order was erroneous in so far as prejudicial to the interests of revenue on the ground that necessary enquires were not made by the AO. Assessee has already submitted both before the AO and PCIT that the said land was purchased on behalf of the company and transactions were duly reflected in the books of account of the company. Hence, the said impugned order passed by the ld. PCIT u/s 263 is quashed. Decided in favour of assessee.

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• 2025 (5) TMI 29
  Addition applying the provisions of section 145(3) - income was estimated after rejection of expenses claimed in the profit loss account @ 10% - HELD THAT:- Here, it is pertinent to mention that the accounts of this year were not duly audited. Hence credibility is a concern and despite the fact that the assessee is a company and under obligation to file the return whatever may be the figure of turnover, still it opted not to file the return. Considering these facts, certainly the addition @ 10% made by the AO is not justified, but, at the same time, the assessee is also under obligation to reconcile the gap in the results declared for the current year and need to explain the failure to get the accounts audited. We deem it fit to restrict the addition to 1.52% of the turnover declared and accept last year s declared by the assessee itself, i.e. Rs. 12,10,949/-and set off of the self-declared figure of Rs. 1,49,165/- is to be given. In view of this, grounds raised on merits are partly allowed. Appeal of the assessee is partly allowed.

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• 2025 (5) TMI 28
  Addition on account of capital introduced in the business - assessee explained that fresh capital was sourced from sale of residential house in village and gifts received from relatives - HELD THAT:- In the absence of any documentary evidence to substantiate gifts the CIT(A) rejected submissions of the assessee and confirmed the remaining amount. The assessee has furnished a list of fifteen relatives before the AO who have allegedly given cash gifts to the assessee. AO has rejected the same as the said list neither contained the addresses of the donors nor confirmations were filed by the assessee from the persons making gifts. Before the Tribunal the situation is no different. The cash gifts from relatives is unsubstantiated. It is understandable that confirmations cannot be obtained from all relatives; however, the assessee could have easily obtained confirmations from parents and siblings. The said addition cannot be deleted merely on bald unsubstantiated assertions. Hence, find no reasons to interfere with findings of the CIT(A) on this issue. Thus, ground no. 1 of appeal is dismissed. Rejection of books of accounts and estimation of business income at 8% of the total turnover - We find merit in the submissions of the assessee that the books cannot be rejected merely for the reason that the purchases are more than sales. The AO and CIT(A) while deciding the issue have lost sight of the fact that if purchases are more than sales than their must be some closing stock of either finished product or the raw material as the assessee is engaged in manufacturing activity. Neither the AO nor the CIT(A) have commented on availability of closing stock or has called for stock register. The assessee has declared GP of 8.7% and NP of 2.57% for the impugned assessment year, which is higher than the GP 6.9% and NP 0.76% in the preceding assessment years. The business profits declared by the assessee are accepted. Thus, the assessee succeeds on ground no. 2 of appeal.

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• 2025 (5) TMI 27
  Assessment against dead assessee - Addition u/s 68 - cash deposit in the bank of the deceased assessee during the relevant yea r - unexplained credit transaction reflected in bank account in the old currency - HELD THAT:- It is pertinent to note that the AO was very well aware about the death Shri Panchanbhai Muljibhai Chavda which is clearly mentioned in assessment order and therefore subsequent notice should have been issued to the legal heir of the deceased assessee. Besides this, the Assessing Officer has passed the assessment order in the name of dead person and therefore the same cannot sustain. Therefore, the assessment order itself is invalid and the CIT(A) has rightly allowed the appeal of the legal heir of the deceased assessee. Hence, the appeal filed by the Revenue is dismissed.

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• 2025 (5) TMI 26
  Unexplained cash credits u/s 68 - though the assessee had maintained books of accounts but explanation offered by the assessee for sources of cash deposits during the demonetization period was not found to be satisfactory - CIT(A) deleted addition - HELD THAT:- We find that the appellant has proved that the cash deposits in the bank account maintained by it with HDFC Bank were out of the cash in hand at the relevant time. The cash in hand was due to cash withdrawals by the assessee from its bank accounts on earlier occasions. There were no cash sales and all sales by the appellant were by way of credit sales. Therefore, the source of cash deposit in the bank accounts was clearly not out of cash sales. The appellant has submitted books of account including cash book and bank book from which it is clear that the appellant had sufficient cash in hand to make the cash deposits in the bank on various occasions including the period of demonetization. It is also found that there is no variation between the VAT returns and the audited accounts filed before the Department. AO has not pointed out any defect in the books of account maintained by the assessee which were produced before the Department. What is germane to the issue at hand is as to whether assessee had sufficient cash in hand at the time of cash deposit in its bank account and not why it kept such large cash in hand. It was a decision by the appellant which is beyond realm of AO s discretion. Hence, the AO was not correct in making addition of the entire cash deposit because the source was duly explained by the assessee. Decided against revenue. Disallowance of interest expenditure - There was no restriction on cash withdrawal from bank during contingency or urgent requirement. AR has not seriously argued on this issue. Therefore, explanation of the assessee that it would have deposited the cash in hand in various intervals if the demonetization had not happened is not totally correct. Hence, it is held that the entire interest expenditure was not for the purpose of business within the scope and ambit of section 37 of the Act. It was not laid out or expended wholly and exclusively for the purpose of business. Hence, it would be reasonable if 25% of the interest expenditure is disallowed for not being laid out wholly and exclusively for business purpose. AO is, therefore, directed to add Rs. 4,81,558/- on this issue. This ground is partly allowed.

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• 2025 (5) TMI 25
  Addition u/s 69A/115BBE - cash deposited in bank account during the demonetization period - as argued the said amount was duly recorded in the books of account and source of such amount was fully explained, hence, addition is against the specific provision of the Act - HELD THAT:- Chennai Bench of the Tribunal in the case of PCIT Vs. M.C. Hospital [ 2022 (8) TMI 1483 - ITAT CHENNAI ] held that it is a settled principle of law that entries recorded in the books of account cannot be brought to tax u/s 69A. Since the assessee has recorded the transactions of cash deposits, sales, purchases, stock, etc. in the books of account the addition cannot be made u/s 69A of the Act. Decided in favour of assessee.

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• 2025 (5) TMI 24
  LTCG - claim of deduction u/s 54 - sale of an inherited property, particularly considering the cost of acquisition and cost of improvement claimed by the assessee - CIT(A) disallowing the indexed cost of improvement claimed by the assessee - HELD THAT:- The circumstantial evidence; such as the Wealth Tax Return of the assessee s mother for the AY 1992-93 and municipal tax, etc. support the assessee s claim. Unless the old property was not demolished or remodified/reconstructed/refurbished, the new property would have not come. Therefore, the entire facts and circumstances of the case have to be taken into account. We are of the considered view that the part of demolition/recodification/reconstruction/ refurbishing cost would have been met out of the sale of old building material also. Whether netting of the same has been claimed by the assessee as cost of improvement. The indexed cost of land and building as disclosed by the assessee has to be allowed while computing the LTCG. Ordered accordingly. After giving a thoughtful consideration on merit of the case, facts and circumstances of the case, we are of the considered view that the 5% of cost of improvements would have been met out of sale of old building material. Therefore, the claim of 5% of cost of improvements (other than the cost of acquisition as on 01.04.1981) required to be disallowed while computing the LTCG. Deduction of the mortgage charge - Here in the present case, the business concern which kept the above referred property on mortgage is different person that the assessee. This issue of claim of deduction of mortgage charges as deduction while computing the LTCG is held squarely covered by the decision of Roshan babu Mohammed Hussein Merchant [ 2005 (1) TMI 53 - BOMBAY HIGH COURT] Thus, CIT(A) is justified in upholding the disallowance of claim of deduction of the mortgage charge. Appeal of the assessee is partly allowed

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• 2025 (5) TMI 23
  Disallowing deduction claimed u/s 80G - assessee has not given the donation of money but is evidently clear that the same is given that of of kind and same is not eligible for claim - DR also raised the issue that the deduction is allowable u/s. 80G to the extent of the 50 % of the income but when controverted by AR with that of the provision of the Act these hospital were considered for 100 % of the donation and therefore, based on that argument DR supported the order of the lower authority. HELD THAT:- As is evident from the direction of the ITAT in first round wherein the bench already held that in case of another scenario wherein there is a necessity of the certain equipment by the donee institution place the order directly on the supplier, thereafter supplier of the equipment supplied the equipment directly and install the same at the premises of the done institution wherein the limited role of the done is to fund such acquisition which is met with in the case and therefore, when the order, installation and delivery is directly at the done premises and the role of the assessee is to finance that equipment cannot be considered merely donation in kind. Here in this case order was direct, installation and delivery of the equipment was not with the premises of the assessee and the assessee has not recorded the purchase and merely recorded the donation in their books of account cannot be termed as donation in kind and it is purely a donation of cash. Even this issue has already been decided by the co-ordinate bench of this tribunal in past for other year we do not see no reason to hold that the donation was in kind. Since the evidence advanced before us clearly shows that the donation of was money and therefore the decision cited of having paid the donation in kind are not applicable and therefore, the appeal of the assessee is allowed. Respectfully following the earlier decision of the co-ordinate bench in the case of the assessee, order of the High Court [ 2017 (5) TMI 1630 - RAJASTHAN HIGH COURT] ] dismissing the appeal which has been decided against the revenue and considering the evidence advanced before us the appeal clearly show it was case of donation in cash and not of kind. Thus, appeal of the assessee allowed. Levy penalty ranging from 100% to 300% - Since the quantum appeal of the assessee is decided herein above in favour of the assessee issue of levy of penalty on the addition become academic at this stage and the same is disposed off.

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• 2025 (5) TMI 22
  Un-explained credit U/s 56(2)(viib)/68 - lack of creditworthiness of the investors from whom the Share capital and share premium amount - No business activities were carried out by the company until 31.03.2015, thus the issuance of shares at a high premium was questioned as it did not align with the financial results of the company - excess premium received from resident investors was added as income from other sources AO, during the course of assessment proceedings, disregarded the Valuation Report for valuation of its CCPS, as obtained from a firm of Chartered Accountants, submitted before him and the AO determined the Fair Market Value ( FMV ) of the shares by applying Net Asset Value ( NAV ) method and disregarded the DCF method as originally adopted by the assessee company as per law and allowable. HELD THAT:- As decided in the case of Ginni Global (P.) Ltd. [ 2019 (7) TMI 920 - ITAT JAIPUR] the valuation of the Preference Shares, the valuation should be determined as per Rule 11UA(1)(c) which required the assessee to obtain a report from a Merchant Banker or a Chartered Accountant to determine the price which preference shares would fetch if sold in the open market on the valuation date. NAV method under Rule 11UA(2) is applicable for determination of FMV of unquoted equity shares and not preference shares. In the absence of a specific mandate, FMV of the preference shares can be determined on the basis of DCF method. Assessee company as per Rule 11UA(1)(c)(c) had the option of determining the fair market value of the shares on the basis of either NAV method or the DCF method. However, out of the two methods the assessee company chose to value its shares based on the DCF method. That It is a trite law that the method once chosen by the assessee company, for the purpose of valuation of its shares could not be disregarded by the Income Tax authorities, without any basis. Accordingly, both the lower authorities were completely incorrect in law in disregarding the method of valuation adopted by the assessee company and the re-after applying the NAV method and making addition of the differential amount u/s 56(2)(viib). When the lower authorities nowhere stated the law does not permit this method. It is pertinent to mention that even as per CBDT, additions u/s 56(2)(viib), in case of genuine issue of shares by Tech Based companies, is not in accordance with the correct interpretation of the law. It is contradictory approach of the lower authorities that in the case of NRI same share premium price accepted and in the case of resident the same has not accepted. Hence in case of resident investors also the same should be accepted. In view of the above, additions made by the AO and confirmed by the ld. CIT(A) u/s 56(2)(viib) deserves to be deleted into to-to. Invocation of Section 115BBE - At the time of receipt of share capital by the assessee company, the amended provisions wre not in place. The amendment to Section 115BBE, being onerous on the assessee company, should not be given a retroactive effect. Intention of the amendment to Section 115BBE was to cover cases of concealment of income, pursuant to demonetization, which was not the case of the assessee company. There is merit in the submissions of the assessee and the Bench does not concur with the findings of the lower authorities. In this situation, the appeal of the assessee is allowed.

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• 2025 (5) TMI 21
  LTCG - disallowing deduction claimed u/s 54F - investment by way of Agreement of Sale with Possession from the seller for purchase of a residential property - seller party which was not responded, therefore, deduction claimed u/s 54F was not allowed - HELD THAT:- The property has not been registered. The Ld. AR submitted that the entire sale consideration of Rs. 2,65,30,000/- have been paid to the seller through banking channel by the appellant on various dates from 29.06.2017 to 27.06.2018. The appellant has also deducted TDS of Rs. 2,65,300/- on the above payment. As per the agreement, the seller has conveyed to the appellant the vacant and direct possession of the entire property together with all rights and has stated that the appellant has become the sole and absolute owner of the property. The appellant shall have ownership and rights over the property to the same extent as the seller had. We find that in case of Kishorbhai Harjibhai Patel [ 2019 (7) TMI 991 - GUJARAT HIGH COURT] has held that where assessee had executed an agreement to sell in respect of a house property and purchased a new residential property within one year from date of agreement to sell, even though sale deed could not be executed within time, section 54F relief was to be granted to assessee in respect of purchase of new residential property. Hon ble High Court has followed the decision of Sanjeev Lal [ 2014 (7) TMI 99 - SUPREME COURT] and stated that the Income-tax Act gives precise definition to the term transfer . It observed that in case of Sanjeev Lal (supra), it is very clear that an agreement to sell would extinguish the rights and the same would amount to transfer within the meaning of Section 2(47) of the Act. This definition of transfer given in the Act is only for the purpose of Income-tax. Accordingly, the issue was decided in favour of the assessee.

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• 2025 (5) TMI 20
  Revision u/s 263 - no inquiry or sufficient inquiry was not conducted by the assessing officer, during the assessment proceedings - whether the assessee s case be considered in the category of No Inquiry ? PCIT has mainly raised two issues of unsecured loans given to family members and other depositors without charging interest and notional rent income under the head House Property u/s. 22 r.w.s.23 which has resulted into under assessment - HELD THAT:- We find that in the course of assessment proceedings, the assessing officer, vide notice u/s 142(1) has called for voluminous details covering 25 points which include the justification of borrowed money and payment of interest etc. The assessee has categorically explained the details of opening balance and subsequent transactions in partners cases and the receipts/payments of all other loan and advances etc. The copy of reply dated 04.01.2021, is attached as Annexure-2, in the paper book of the assessee. Thus, the issue now raised in the notice u/s 263 of the Act, had been verified by the assessing officer in detail and as such the present proceedings are not within the provisions of section 263 of the Act. It may be observed from the balance sheet that the assessee is having Interest free booking deposits Similarly the ledger of unsecured loans reflect unsecured loans interest free loans from Mohanlal C. Patel. As seen from the ledger of current liabilities that at the beginning of the accounting year booking deposits was at Rs. 3,38,92,434/- and at the end of the year at Rs. 2,47,01,636/-. Thus, average interest free fund of Rs. 2,93,00,000/- was available [3.39+2.47Cr/2). As against the same partner s average negative balance comes to Rs. 4.13 [6.40+1.87Cr./2]against which interest free average customer deposits are Rs. 2.93Cr. [3.39+2.47/2], as such there is negative balance in partner s account comes to Rs. 1.20 Cr. [4.3-2.93], however, at the same time the assessee has average interest free unsecured loans at Rs. 2.05 Cr. [1.80+2.3/2] which covers deficit of Rs. 1.20 Cr. Thus, there is no case of any under assessment on account of payment of interest on unsecured loans, as alleged. Not adding presumptive letting value of rent on vacant closing stock - In the present case, the completion certificates were issued on 30.01.2017 and 28.06.2017 and as such the cooling period is not over during the assessment year under consideration and hence the assessee is not required to offer any property income from this stock in trade. We note that in the case of Canara Bank Securities Ltd [ 2019 (10) TMI 1512 - SC ORDER] dismissed the Revenue s SLP holding that 263 proceedings are invalid when assessing officer had made enquiries and taken a plausible view in law. As in the case of CIT vs. Green world Corporation [ 2009 (5) TMI 14 - SUPREME COURT] that an order of assessment passed by ITO cannot be interfered with only because another view is possible. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the AO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law . In the conclusion we are of the view that none of the reasons set out by the PCIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the PCIT has to be quashed - Assessee appeal allowed.

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• 2025 (5) TMI 19
  TDS u/s 194LBC - amount of Excess Interest Spread ( EIS ) paid by the assessee - assessee was created to secure the pool of loan receivables from the originator, i.e., Sundaram Finance Ltd. As a Securitisation Trust, the main function of the assessee was to raise money to acquire the loan portfolio of the originator. HELD THAT:- We find that while deciding a similar issue in the case of a Securitisation Trust acting and controlling under the trusteeship of M/s. IDBI Trusteeship Services Ltd in Venus Trust March 2015 [ 2024 (9) TMI 1731 - ITAT MUMBAI] held that for the applicability of provisions of section 194LBC of the Act, two conditions are required to be fulfilled, i.e., the originator should be an investor as per the provisions of section 194LBC r.w. section 115TCA of the Act, and secondly, the income in the hands of the originator should be in respect of the investment in the Securitisation Trust. The Co-ordinate Bench held that even if the originator is considered to be an investor, the payment of EIS to the originator cannot be said to be pursuant to an investment in the Securitisation Trust or return of investment so made, as the said payment was merely surplus which was shared with the originator as a reward for its effort for creating an assignable pool of loan receivable. Accordingly, the Co-ordinate Bench held that the liability to deduct TDS u/s 194LBC of the Act is not applicable on payment of EIS to the originator. In the present case, we find that the payment of EIS by the assessee was not in respect of investment by the originator towards meeting the MRR, and the same was merely a distribution of surplus as per the waterfall mechanism. We are of the considered view that the assessee, being a Securitisation Trust, was not required to deduct TDS under section 194LBC on the payment of EIS to the originator. As a result, the tax liability and interest levied under section 201(1) and 201(1A) of the Act by AO-TDS are deleted. Assessee s appeal are allowed.

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• 2025 (5) TMI 18
  Deduction u/s 80P - Interest and dividend earned by the assessee from the co-operative bank - HELD THAT:- The same issue was dealt in the case of Jaimuni Sahkari Patpedhi Maryadit [ 2025 (3) TMI 1474 - ITAT MUMBAI] as held disallowance of deduction u/ 80P(2)(d) is unjustified and the assessee is eligible for deduction u/s 80P(2)(d) of the Act related to interest and dividend earned from co-operative bank. Assessee appeal allowed.

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• 2025 (5) TMI 17
  Nature of receipt - compensation received for under-performance of the WTGs installed by SEL - revenue or capital receipt not liable to tax - HELD THAT:- As perused the decision of case of PCIT vs Xpro India Ltd. [ 2022 (6) TMI 961 - CALCUTTA HIGH COURT] and find it to be squarely applicable to the facts of the present case. In that case, the assessee had acquired a machinery from UK, which failed to perform at the desired levels and therefore the assessee had claimed compensation from the supplier. The compensation so received for non-compliance with the performance parameter was treated to be capital receipt by the assessee. Though the AO agreed that the compensation receipt was capital in nature, but adjusted the same against the cost of the machinery in terms of Explanation (10) to Section 43(1) of the Act. On appeal, this Tribunal held that, the compensation received from the UK supplier on account of under performance of the machinery was in the nature of capital receipt outside the purview of taxation. We also note that identical issue was also involved in the case of Ramkrishna Forgings Limited [ 2020 (3) TMI 1486 - ITAT KOLKATA] wherein the compensation given by the suppliers for technical loss caused due to under-performance of the machines installed was held by the coordinate bench to be on capital account. Having to fact that the Revenue itself has acceded to the assessee s identical claim in the subsequent AY 2009-10, we hold that the compensation received from SEL for failure to meet the performance parameters is in capital field outside the purview of taxation. The AO is accordingly directed to exclude the same while computing the assessable income. Appeal of the assessee is allowed.

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• 2025 (5) TMI 16
  Denial of the benefit of exemption u/s 11 - AO was of the opinion that the investment made by the assessee by way of loan/deposit to another trust does not fulfill the requirements of the forms and modes of investment permitted by Section 11(5) - Addition u/s 68 made by AO - HELD THAT:- Considering the past history of the assessee and decision of the Co-ordinate Bench for AY AY 2006-07 [ 2022 (8) TMI 1572 - ITAT MUMBAI] we direct the AO to verify the facts for the advance given for the year under consideration only after affording reasonable and adequate opportunity of being heard to the assessee. Advance relates to Rainbow Tech - We find from the copy of accounts that Rs. 18,00,000/- was given in the earlier year. Therefore, the same cannot be questioned during the year under consideration, out of which the assessee has received Rs. 5,00,000/- back and the closing balance stands at Rs. 30,00,000/- which cannot be added during the year under consideration. Moreover, in subsequent financial year, the entire advance has been received as per the copy of account exhibited. Advance is in respect of Arun Muchhala Engineering College - A perusal of the copy of account shows that there was a pending balance of Rs. 6,65,09,376/-. Moreover, this engineering college is part of the Trust as can be seen from the financial statements and audit report of the Trust exhibited at pages 37 38 of the paper book. Therefore, we do not find any merit in considering this advance as violative of the provisions of Section 11(5) r.w.s. 13(1)(d) of the Act. Advance relates to Arun Muchhala Research Education Centre - A perusal of the copy of account shows that there was an opening balance of Rs. 29.25 lakhs. Therefore, there is no question of making any addition of the balance outstanding amount of Rs. 25,000/-. Addition u/s 68 - As the first disputed loan is in respect of Sai Shiva Developers which has an opening balance of Rs. 67.50 Lakhs and the closing balance of Rs. 32,50,000/- is out of the pending balance. Therefore, the same cannot be added u/s 68 of the Act for the year under consideration. Loan is from Mucchala Magic Land P. Ltd.. The copy of accounts shows that there is a credit balance of Rs. 17,75,000/- which cannot be added during the year under consideration. Other amounts received during the year have been duly confirmed by the creditor. Since the opening balance has been accepted in the earlier year, there is no question of treating the party as non-genuine and all the transactions have been done through banking channels. Therefore, we do not find any merit in the impugned additions u/s 68 of the Act. Loan from Arun Muchhala Co-owners is again the opening balance, therefore, cannot be added u/s 68 of the Act for the year under consideration. Accordingly, the additions made u/s 68 of the Act are directed to be deleted.

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• 2025 (5) TMI 15
  Revision u/s 263 - PCIT jurisdiction u/s 263 to revise the AO order giving effect to the Tribunal s earlier directions - HELD THAT:- CIT has no jurisdiction to revision the order giving effect dated 23.03.2022. It is the Tribunal or Higher forums has jurisdiction to see the order giving effect pursuant to the direction of the Tribunal. CIT who is lower in hierarchy than the Tribunal cannot sit in appeal on the order giving effect ( OGE in short) dated 23.03.2022 under revisionary powers u/s 263 by saying that the OGE is erroneous and prejudicial to the interest of the revenue. In the order giving effect (OGE) pursuant to direction of the higher authorities, the AO (JAO) has limited scope. In fact, he has to follow the direction of the higher forum in letter and spirit. In fact, the AO has followed the law what was there at that point of time. CIT under revisionary powers u/s 263 of the Act cannot extend the scope of AO beyond the direction of the Tribunal. Hence, revisionary jurisdiction/power invoked by the CIT in this case is patently wrong and void ab-initio. Therefore, order of the CIT u/s 263 is quashed on this ground.

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• 2025 (5) TMI 14
  Assessment u/s 153A - Addition u/s 68 - as contented addition not based on any incriminating material found/seized during the course of search conducted in the case of assessee - HELD THAT:-The undisputed fact is that, there is no incriminating material found and seized from the premises of the assessee to trigger the proceedings u/s 153A in respect of unabated years covered in the block period. Assessment for AY 2012-13 was completed on 30/09/2014, for AY 2013-14 on 31/03/2016, AY 2014-15 on 22/11/2016 and AY 2015-16, the time limit to issue notice u/s 143(2) of the Act expired on 30/09/2016 and no assessment proceedings were initiated u/s 143(3) of the Act. Thus, it is clear that the assessment years are unabated and, therefore, the ratio laid down in the case of Abhisar Buildwell Pvt. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] squarely applies, wherein held in case no incriminating material is unearthed during the search, the Assessing Officer cannot assess or reassess taking into consideration the other material in respect of completed assessments or unabated assessments, meaning thereby, in respect of completed or unabated assessments, no addition can be made by the Assessing Officer in the absence of any incriminating material having been found during the course of search under section 132 or requisition under section 132A of the Act. The statement recorded during the course of search of other person, stand of the revenue that the same has to be considered as incriminating material, is also not tenable in the light of decision of Pavitra Realcon (P) Ltd [ 2024 (5) TMI 1408 - DELHI HIGH COURT] No merit in the captioned appeals by the revenue.

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• 2025 (5) TMI 13
  Rectification of mistake u/s 254 - Unexplained cash credit u/s 68 - AO had rejected the appellant s claim of receipt of cash - Revenue by way of the present Miscellaneous Application contended that the Tribunal s order [ 2022 (8) TMI 1336 - ITAT PUNE ] is not acceptable as certain factual aspects of the case remained to be brought to the notice of the Tribunal and hence not considered, which according to the Revenue is mistake apparent on record - HELD THAT:- In exercise of powers u/s 254(2) Tribunal may amend any order passed by it only to rectify any mistake apparent from the record. The Tribunal cannot revisit its earlier order and go into details on merit, which is beyond the scope and ambit of the power conferred u/s 254(2) of the Act. On perusal of the contents of the Miscellaneous Application filed by the Revenue as well as the findings of the Tribunal [ 2022 (8) TMI 1336 - ITAT PUNE ] we find it difficult to agree with the contentions of the Revenue. Tribunal in its order had adjudicated the legal issue raised by way of an additional ground challenging the assessment itself after considering the specific facts brought to its notice at the time of hearing as well as the material available on records of the Tribunal. The Tribunal allowed the appeal(s) of the assessee holding the assessment as non-est in the eyes of law by giving reasoning in detail after considering all the facts and circumstances of the case and the settled legal position in respect thereto. We agree with the contention of the AR that what the Revenue is actually seeking by way of this Miscellaneous Application is the review of the Tribunal s order in the garb of rectification which is not permissible under the law. In its recent judgment in Reliance Telecom Ltd. [ 2021 (12) TMI 211 - SUPREME COURT ] their Lordships while considering application u/s 254(2) Tribunal is not required to revisit its original order and go in details on merits and completely recall its order as powers u/s 254(2) are only to rectify/correct any mistake apparent from record. We hold that there is no mistake apparent on record in the Tribunal s order calling for rectification of the same.

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• 2025 (5) TMI 12
  Rectification u/s 254 - Addition u/s 68 - HELD THAT:- As in respect of 26 member-depositors details were furnished by the Assessee and notices were sent by the AO and therefore, the addition made by the AO and confirmed by the CIT(A) in respect the aforesaid 26 member-depositors could not have been sustained in view of the judgment of Pragati Credit Corporative Society Limited [ 2005 (6) TMI 26 - GUJARAT HIGH COURT] Tribunal had directed the Assessee to substantiate the identity of member-depositors, and had clarified that the Assessing Officer may decide the issue of afresh in respect of 14 member depositors on whom notices could not be served. It is clear that the direction given by the Tribunal to the Assessee to substantiate identity of member-depositors was not restricted to any number of members. Thus, it is clear that the right of Revenue to carry out inquiry/investigation in respect of member-depositors (except for the 26 member-depositors specified hereinabove) was not precluded. At the same time, the Assessee would also be free to raise all the rights and contention before the Assessing Officer. Accordingly, we do not find any mistake apparent on record in the order passed by the Tribunal. Present Miscellaneous Application it appears that the Revenue has sought some clarification on the issues stated therein. The Order passed by the Tribunal stands clarified to the extent of our observations hereinabove. Since we have concluded there is no mistake apparent on record, the law as laid down in Reliance Telecom Limited [ 2021 (12) TMI 211 - SUPREME COURT] would become applicable. Relief as claimed by the Revenue cannot be granted in the present miscellaneous application preferred u/s 254(2) of the Act.

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• 2025 (5) TMI 11
  Revision u/s 263 - PCIT noticed from the capital account of the assessee that the assessee had credited an amount under the head 24CT Gold Bar and CIT was of the view that since there was no explanation on record to suggest that were capital receipts, and in absence of any details/explanation with supporting evidences, the said receipt was required to be treated as unexplained revenue receipts in the hands of the assessee HELD THAT:- We are of the considered view that this is not a fit case for initiating proceedings under section 263 of the Act. This for the reason that so far as receipt of gold bars is concerned, the mother of the assessee was the promoter and owner of Palitana Sugar Mills Private Limited and in Financial Year 2006-07, she had sold shares and the capital gains on sale of shares was duly offered by her return of income for that year. From the amount so received, the mother of the assessee had made investments from time to time and created wealth and required assets/property. These facts were also duly noted by Principal CIT. Therefore, it is evident that the mother of the assessee was having substantial wealth with her, she was also filing her Wealth tax returns and the only reason why principal CIT was of the view that the assessment order was prejudicial to the interests of the revenue was on the ground that since as per the Will executed by the mother, assessee was entitled to 33.33% share, therefore the amount of Rs.41.80 lakhs towards 24CT gold bar exceeded the limit as prescribed in the Will. Further, assessee has been able to give a detailed explanation for rest amount duly supported by ledger accounts maintained by the assessee with respect to transactions between the assessee and his mother, and accordingly, looking into the instant facts in our considered view, there is no prejudice caused to the interest of the Revenue. This is also in light of the fact that all the transactions had taken place through banking channels and no specific infirmity was pointed out by Principal CIT in the explanation provided by the assessee. Appeal of the assessee is allowed.

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• 2025 (5) TMI 10
  Denial of Exemption u/s 80G - deployment of the excess fund by the related party with intention to earn interest income, therefore, the transaction was in violation of provision of section 13(2)(a) - contention of the assessee that there was a deficit in the financial of the assessee since 2018-19 and therefore, such loan were taken to comply the the order of the District Collector for making rent payment within stipulated period - HELD THAT:- There was no option with the assessee otherwise then to take a loan and since it was a loan from a company under the provisions of the section 186(7) of the Companies Act, 2013, it could not have been given interest free to the trust therefore, interest was charged at the market rate. The funds were obtained for the charitable need of the trust and there was no intention of taking loans for the purpose of benefiting to its related party. The assessee provided a detailed financial position of the deficit since assessment year 2018-19. Benefit to a particular community , the assessee filed a detailed chart of the percentage of the Parsi Community benefited since year 2019-2020 onward. Assessee submitted that ratio of the medical relief provided to the Parsi Community is negligible. Before us, assessee filed a bank statement reflecting the receipt of the loan and their application for the object of the Trust. A summary of the loan transaction with their application and copy of the general ledger showing the application of the loan on expenses incurred object of the trust has been filed first time before us as additional evidence. In the case, CIT(E) has pointed out that liability of the payment of the rent arose in the year under consideration whereas loans have been taken from AY 2018-19 onwards but the assessee has contended that loan had been availed for meeting charitable expenses of the trust in view of deficit in revenue. Since, the above documents filed are crucial and important for examining this issue of the application of the loans for incurring expenses on charitable purposes. Therefore, we admit the documents as additional evidence and restore the matter back to the file of the Ld. CIT(E) for deciding the matter afresh. CIT(E) may also verify the percentage of the persons of Parsi Community benefited from the charitable activity of the assessee and decide the issue in accordance with law. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (5) TMI 9
  Addition u/s 57 - disallowance of interest expenses as assessee failed to prove the nexus between the funds borrowed and funds lent, for the purpose of allowability of claim of deduction u/s 57 - Assessee submitted that interest was paid after due deduction of tax at source u/s 194 of the Act, wherever applicable and the complete details of parties including their names, addresses, PAN, amount borrowed and interest paid were duly submitted before the Tax Authorities HELD THAT:- We observe that while passing the order, the Ld. Assessing Officer and CIT(A) have not made any observations with regard to the alternate claim of the assessee that interest was allowable u/s 36(1)(iii) of the Act. The only basis / reason for rejecting the claim of interest under Section 57 of the Act is that the assessee was not able to prove the nexus between the interest paid on amounts taken and the interest earned by the assessee. It is a well settled law that in case the assessee has made any error in filing the return of income, it would be open for him to revise the same or filed revised computation before Appellate Authorities. A legitimate claim of deduction cannot be denied to the assessee, only on the ground that the same was not claimed in the return of income. In our considered view, in all fairness, in the interest of justice, the matter may be restored to the file of AO to verify the genuineness of the claim of the assessee whether the interest was taken for the purpose of business and whether such claim is allowable under Section 36(1)(iii) of the Act. The assessee has claimed that it has given complete details of parties to whom interest was paid and such loans were taken for the purpose of it s construction business (in the name and style of M/s. Yashvi Construction). The Assessing Officer is accordingly, directed to verify the assessee s claim of deduction under Sectio 36(1)(iii) of the Act with respect to interest expenditure. Appeal of the assessee is allowed for statistical purposes.

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• 2025 (5) TMI 8
  Revision u/s 263 based on the invalid reassessment order - as per CIT unsecured loan received from shell company by the assessee which was not examined by the AO during the course of reassessment proceedings u/s 147 - assessee filed return of income in response to notice u/s 148 which is beyond the period of time allowed as per notice issued by the AO u/s 148 as well as 142(1) - HELD THAT:- The section 142 is enquiry before assessment, 143 deals the assessment, 147 is income escaping assessment and 148 is issue of notice where income has escaped assessment as per the Act. In case of income escaping assessment the notice u/s 143(2) can be issued by AO only if there is valid return filed by the assessee u/s 139 in pursuance of the notice issued u/s 148 of the Act . In the case on hand the asseseee has not filed valid return within the time allowed. Hence, the arguments submitted by assessee in regard to issue of notice u/s 143(2) are rejected. Pr.CIT has to exercise his power on the basis record available before him at the time of exercising powers u/s 263 of the Act . However, the documents as relied on by the ld. Pr. CIT were not available at the time of issue of notice, and it was called from the DDIT Kolkata. The show cause notice was issued to the assessee on 26.03.2022 whereas the CIT wrote letter to the DDIT, Unit- 3, Kolkata on 11.03.2024 almost after two years. Therefore, the documents relied on by the ld. Pr.CIT were not available. The power under section 263 could have been invoked on the basis of the record as it stood at the time of examination. Accordingly, the entire proceedings exercised by the ld. Pr.CIT is beyond the purview of law as mandated in the law . See Shri Manjunatheshwar Campho [ 1997 (12) TMI 4 - SUPREME COURT ] Thus, we set aside the Order passed by ld. Pr.CIT. Issues which were not part of the proceedings under section 147 of the Act has also been considered by the Pr.CIT - Pr. CIT has exceeded his jurisdiction. since the very initiation of exercising power u/s 263 is on the basis of Order passed u/s 147 of the Act on the reassessment proceedings. On going through the reassessment Order passed u/s 147 there is only one issue raised on the basis of the reasons recorded is regarding accommodation entries received by the assessee from shelle company and the ld. Pr.CIT has also directed the AO to examine the sale tax penalty and employees contribution to PF and ESI is not correct because all these 2 issues were not part of the reassessment proceedings. Our this view is supported by the judgement of Hotel Babylon Continental (P.) Ltd. [ 2024 (7) TMI 402 - ITAT RAIPUR ] Appeal filed by the assessee is partly allowed.

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• 2025 (5) TMI 7
  Penalty u/s 270A - additional income on account of undisclosed turnover is quantified during the course of search proceeding for the AY 2019-20 and admitted at the rate of 3% of undisclosed turnover - HELD THAT:- For the applicability of section 270A of the Act, the conditions stated therein must be strictly followed. A mere declaration of additional income which was estimated as being around 30% of regular turnover and even offered for taxation before the completion of assessment by itself will not amount to under reporting resulting in misreporting of income. Penalty u/s 270A cannot be levied when the income was arrived at based on estimation. Further the return income was duly accepted by the AO as no other disallowance or additions were made to the returned income. Therefore we completely disagree with the argument of DR that AO has not resorted to any estimation since the additional income offered by the assessee which is solely based on estimation is utterly accepted by the AO. Eventually, the Income assessed u/s 143(3) of the Act r.w.s. 153C of the Act is nothing but acceptance of Income based on complete estimation. Who had estimated the income is irrelevant especially when such income is accepted by both the parties. CIT(A)-2, Panaji has rightly observed that no adverse findings / additions have been recorded by the AO with regard to income offered during the course of assessment proceedings. We also agree with the view of the CIT(A)-2, Panaji that the AO dejectedly failed to identify or determine and then communicate either through assessment order or through notice of the specific circumstance or incidence i.e. specific clause (a) to clause (g) of s/s (2) of section 270A within which the case of the appellant falls so as to hold income as under-reported to trigger the said penal provisions. The failure continued further in identifying or determining the show casing the specific action of the assessee in terms of clause (a) to clause (f) of s/s (9) of section 270A within which the such action of assessee falls so as to jacket or categorize such under-reported income is in consequence of misreporting. Unless the person has been communicated the specific incidence vis- -vis action triggering the imposition of penalty, it would drastically obstruct an assessee from enforcing his right to dismantle the charge alleged against him thus resulting into a gross violation of the principles of natural justice. Therefore, the ladder has to be followed strictly for levying the penalty u/s 270A of the Act. Penalty by hereditary nature is always discretionary. The legislature has used the word may in section 270A(1) of the Act which clearly says that it is discretionary on the part of the AO to levy penalty or not. Penalty is not at par with the tax and interest and therefore, penalty should not be levied in a light hearted manner or in routine manner and not very additions/ disallowances are liable for penalty. The primary onus is on the revenue to prove that assessee falls under particular limb of default. AO have to bring the case in the four corners of the sections in order to levy penalty which in our opinion, the AO failed to do so. Therefore, we are of the opinion that the explanation offered by the assessee is bonafide and the assessee has disclosed all material facts to substantiate the explanation during the course of assessment proceeding and accordingly no addition was made in the assessment proceedings. Decided against revenue.

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• 2025 (5) TMI 6
  Income taxable in India or not - treatment of BSS as FTS in the hands of the assessee - HELD THAT:- Since the BSS rendered by the assessee is arising out of the same CCA as in the case of SIMPL, we are of the view that the decision of the Hon ble High Court [ 2024 (3) TMI 216 - BOMBAY HIGH COURT] has a binding precedence in assessee s case also. Further the facts for the year under consideration are identical to AY 2009-10 [ 2024 (9) TMI 1712 - ITAT MUMBAI] and therefore in our considered view the above decision of the Co-ordinate Bench on the impugned issue is applicable for the year under consideration also. Accordingly, we direct the AO to delete the addition made towards BSS in the hands of the assessee. Ground No.2 of the assessee raised in this regard are allowed. Amount received by the assessee on account of SUN Maintenance Software usage charges - Royalty Receipts under the DTAA between India and UK - AR argued that it is a settled position that the amount received towards use of computer software is not a payment of royalty since the charges paid are towards use of copyrighted item and not for the use of copyright itself - HELD THAT:-We in this regard notice that a similar issue has been considered in Reliance Industries P. Ltd. [ 2024 (6) TMI 1069 - BOMBAY HIGH COURT] by placing reliance on the decision of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] the amount received towards SUN Maintenance Software cannot be treated as royalty and the addition made in this regard is not sustainable. Short grant of TDS - We direct the AO to examine the Form 16A issued by the payer along with the corresponding income offered to tax by the assessee and allow the credit towards TDS in accordance with law. Excess interest charged u/s 234A - as submitted that the assessee has filed the return of income on 28.11.2012 whereas the due date for filing the return of income was 30.08.2011 and AO has erroneously calculated the interest u/s 234A for 14 months instead of 12 months (from December 2011 to November 2012) - HELD THAT:- We direct the AO to examine the contention of the assessee based on evidences to be submitted in this regard and recalculate the interest under section 234A in accordance with law.

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• 2025 (5) TMI 5
  Claim deduction of expenditure incurred in an abandoned project - intimation passed u/s 143(1) and 143(3) - HELD THAT:- The fact would remain that the assessee was constrained to abandon an expansion of the project already carried on by it for the reasons beyond its control and hence, it was constrained to write off the expenses booked under work in progress in the books of account, as those expenses will not result in creation of any new asset, which could be put to use. We notice that the assessee has cited various reasons which compelled them to abandon the projects. It cannot be disputed that they were commercial decisions taken by the assessee and it is well settled that the wisdom of commercial decisions cannot be questioned by the tax authorities. Hence, in the facts of the present case, we hold that the amount so written off will be allowable as deduction. Accordingly, direct the AO to delete the disallowance made in the intimation passed u/s 143(1) of the Act and also in the assessment order passed u/s 143(3) of the Act.

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• 2025 (5) TMI 4
  Reopening of assessment u/s 147 - reasons to believe - addition on account of unexplained cash credit u/s 68 - HELD THAT:- As in the present case, as the return of income filed by the assessee was processed under section 143(1) of the Act and thus no scrutiny assessment was carried out, therefore, the impugned reassessment proceedings cannot be questioned on the ground of change of opinion by the AO. However, non-selection of the case for scrutiny does not in any manner belittle/reduce the significance and meaning of the term reason to believe , which is of paramount importance for initiating proceedings under section 147 of the Act. Further, as has been held in various decisions, the reason to believe that income has escaped assessment should be based on some new or tangible material. Such a requirement also rules out the possibility of initiation of reassessment proceedings only on the basis of suspicion without any material being available with the Assessing Officer. Reassessment proceedings initiated by the AO under section 147 of the Act are bad in law, as there was no new or tangible material which came to the possession of the AO subsequent to the issuance of the intimation under section 143(1) of the Act and therefore, the jurisdictional condition, i.e. existence of reason to believe, is not satisfied in the present case. Thus, the reassessment proceeding is quashed. Consequently, the assessment order passed under section 143(3) read with section 147 of the Act is also quashed. Assessee appeal allowed.

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• 2025 (5) TMI 3
  Revision u/s 263 - unexplained cash credit u/s 68 - bogus share capital and share premium - on direction to the revisionary order passed u/s. 263 AO carried out the second round of assessment proceedings so as to examine the genuineness and source of share capital, conducting independent enquiry, examine the directors and examine the source of realisation from the liquidation of assets - assessee is challenging the jurisdiction of the revisionary proceedings stating that in the first round of reassessment proceedings the issue has already been examined and, therefore, CIT erred in giving direction for further enquiries on the same issue - HELD THAT:- In view of the finding of this Tribunal in the case of Astha Vincom Pvt. Ltd.[ 2022 (8) TMI 1571 - ITAT KOLKATA] which is squarely applicable on the legal issue raised before us, we are of the considered view that at this stage assessee cannot challenge the validity of the revisionary order u/s. 263 and the directions given therein since the same has attained finality in view of the order of this Tribunal which has subsequently not been challenged by the assessee before the higher forum. Whether CIT(A) was justified in confirming the action of the AO of making the addition on unexplained cash credit u/s. 68 for the share capital and share premium received from 18 private limited share applicants? - Since the assessee has successfully explained the nature and source of the alleged investments in share capital and share premium by proving the identity, genuineness and creditworthiness of all the 18 share applicants, which are regularly assessed to Income Tax, financial statements and duly audited, passed through the scrutiny proceeding of I. T Department and R.O.C and have sufficient net worth to explain the source of investment in the alleged share capital and share premium, in our considered view no addition u/s. 68 was called and the same is hereby deleted. Therefore, the order of the Ld. CIT(A) is set aside and the ground nos. 1 to 5 raised by the assessee are allowed.

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• Customs

• 2025 (5) TMI 2
  Classification of imported Multimedia Speakers/Computer Speakers - to be classified under CTH 851822/851829 or under CTH 8519/8527? - HELD THAT:- The subject issue is no more res integra. There are a catena of decisions holding the classification of the impugned goods under heading under CTH 8518. In the case of Logic India Trading Company vs Commissioner of Customs, Cochin [ 2016 (3) TMI 5 - CESTAT BANGALORE] , as maintained by the Hon ble Apex Court in [ 2017 (1) TMI 477 - SC ORDER] , while dealing with similar set of facts, the courts have held the classification of the said goods under CTH 8518. The detailed analysis of the classification of all such Audio-Visual Receivers was also undertaken independently by this Tribunal in the case of ONKYO SIGHT SOUND INDIA PVT.LTD. vs Commissioner of Customs, Chennai [ 2019 (4) TMI 37 - CESTAT CHENNAI] , wherein too the Southern Regional Bench of the Tribunal did not agree with the department s stance for classification of the said products under CTH 8527 and had retained the CTH 8518 claiming the goods as Audio Frequency Amplifier along with Home Theatre Systems as multiple loudspeakers mounted in the same enclosure. Conclusion - The imported multimedia speakers with USB playback and FM radio features are classifiable under CTH 8518 22 00 as multiple loudspeakers mounted in the same enclosure. Appeal allowed.

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• Insolvency & Bankruptcy

• 2025 (5) TMI 44
  Maintainability of application u/s 9 of IBC - initiation of CIRP - operational debt under Section 5(21) of the Insolvency and Bankruptcy Code, 2016 or not - existence of pre-existing dispute between the Operational Creditor and the Corporate Debtor prior to the issuance of the demand notice under Section 8 of the Code - HELD THAT:- A mere reading of Section 5(21) of the Code expressly states the pre-requisite circumstances on the basis of which any debt can be made eligible to be operational debt . However, in accordance with the information provided to the Adjudicating Authority concerning the instant application, the debt that has been termed as default under Section 9 of the Code hereof, cannot be considered as operational debt due to the basis of the said debt not falling under the aforementioned pre-requisite conditions. In the judgment passed by Ld. National Company Law Tribunal, Indore Bench in the matter of Permali Wallace Pvt. Ltd. vs Narbada Forest Industries Pvt. Ltd. [ 2022 (11) TMI 1551 - NATIONAL COMPANY LAW TRIBUNAL, INDORE ] which is of the opinion that any amount outstanding arising out a settlement agreement can be said to be operational debt in accordance with Section 5(21) of the Code. This Adjudicating Authority is of the considered view that there are disputes existing between the parties involved, as admitted by the Applicant herein. As a result, this Adjudicating Authority is of the considered opinion to reject the instant application on the basis of the said ground - this Adjudicating Authority is of the considered view that due to the prior existence of the dispute between the parties concerning the quality of the products, the instant application cannot be admitted under Section 9 of the Code. Conclusion - i) The debt claimed does not qualify as operational debt under the Code and hence the Section 9 application is not maintainable on this ground. ii) There existed a pre-existing dispute between the parties prior to the demand notice, which bars admission of the Section 9 application. iii) The application filed under Section 9 of the Code is rejected for non-compliance with the statutory requirements and due to the existence of disputes and the nature of the debt. Petition rejected.

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• Service Tax

• 2025 (5) TMI 1
  Short payment of service tax - limitation period for the demand of service tax - HELD THAT:- A perusal of the letter dated 18.12.2010 reveal that the payment particulars mentioned therein have been arrived at by the Department by scrutiny of documents like, Balance Sheet, P L account and ST-3 Returns up to the end of the Financial Year 2010-11. This evident from para (i) of the letter which is reproduced. Thus, the demand, if any, pertaining to the period cannot be raised again by invoking extended period of limitation as held by the Hon ble Apex Court in the case of Nizam Sugar Factory v Collector of Central Excise [ 2006 (4) TMI 127 - SUPREME COURT] . Thus, the demand raised in the notice for the period up to 2011-12 by invoking extended period of limitation is not sustainable. The demand has been raised on the basis of the documents like Balance Sheets and profit and loss accounts, which are public documents. Thus, when the SCN is issued on the basis of the figures contained in the ST-3 Returns and Balance Sheet, there cannot be any suppression on the part of the appellant. Therefore, extended period of limitation is not invocable. Regarding the demand confirmed for the normal period of limitation, the appellant worked out the demand as Rs. 18,57,196/- They submitted that out of this amount, they have already paid an amount of Rs. 4,08,929/-, which is reflected in Annexure A to the SCN. Thus, they are liable to pay the balance amount of Rs. 14,48,267/-along with interest. The appellant agrees to pay this balance amount along with interest. However, to verify the correctness of the claim of the appellant w.r.t. the demand of service tax payable for the normal period of limitation, the matter needs to be remanded back to the adjudicating authority. Penalty imposed on the appellant under section 78 of the Finance Act - HELD THAT:- The demand confirmed by invoking the extended period of limitation has been set aside, as there is no suppression of fact with intention to evade the tax is established in this case. Since the appellant is liable to pay service tax only for the normal period of limitation, there is no penalty imposable under section 78 of the Finance Act. As the appellant has been registered with the department and filing returns regularly, the penalty imposed under section 77(1)(c)(ii) of Finance Act,1994 is not sustainable and hence the same is set aside. Conclusion - i) The demand confirmed in the impugned order by invoking the extended period of limitation is set aside. ii) The demand confirmed for the normal period of limitation is upheld. However, to verify the correctness of the claim made the appellant w.r.t. the demand of service tax payable for the normal period of limitation, the matter is remanded back to the adjudicating authority. iii) The penalty imposed under section 77(1)(c)(ii) and 78 of the Finance Act. 1994 are set aside. No penalty imposable on the demand of service tax along with interest, which is liable to be paid by the appellant for the normal period of limitation. Appeal disposed off.

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