ITAT Annual Digest [Part 68]

This analyzes all the ITAT stories published in 2023 at taxscan. in The Indore bench of the Income Tax Appellate Tribunal (ITAT) held that the claim of credit of Tax Collected at Source (TCS) by individual license holders can’t be allowed when it has already been allowed to the partnership firm. The Two-member bench comprising of Vijay Pal Rao (Judicial member) and B.

M. Biyani (Accountant member) held that the credit of the tax deducted at source/tax collected at source be given to the de-facto prayer/recipient of the amount which is subjected to the collection/deduction of tax as in whose hands the corresponding income is going to be assessed. The relevant facts regarding the purchase and sales of liquor by the assessee and consequential income offered to tax by the assessee as well as the undertaking/indemnity from the individual license holders are required to be produced and verified/examined.

Therefore, the matter was set aside to the record of the Assessing Officer for the limited purpose of examining the factual aspect of carrying out the transactions of purchase and sales and corresponding income offered to tax by the assessee as well as production of the undertaking/indemnity on behalf of the individual license holders for not claiming the credit of the said amount of TCS. The Assessing Officer shall allow the claim of credit of TCS subject to verification of the above record and facts. Thus, the appeal of the assessee was allowed.

The Income Tax Appellate Tribunal (ITAT), Kolkata bench, held that an addition should not be made under Section 44AD of the Income Tax Act without rejecting the books of accounts produced during the assessment proceedings. After reviewing the facts and records, the two-member bench of Dr. Manish Borad (Accountant Member) and Sonjoy Sarma (Judicial Member) deleted the addition made by the assessing officer under Section 44AD of the Income Tax Act without rejecting the book of accounts.

Therefore, the bench allowed the appeal The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that the capital gain deduction under Section 54F of the Income Tax Act, 1961 cannot be allowed without holding flats for a minimum period of 3 years. The Two-member bench comprising of R. K.

Panda (Vice-President) and Laliet Kumar (Judicial member) held that the assessee has not held the flats for a minimum period of 3 years, the provisions of Section 54F of the Income Tax Act are not fulfilled and therefore, by allowing the claim of deduction under Section 54F of the Income Tax Act, the order of the Assessing Officer has become erroneous as well as prejudicial to the interest of the Revenue. Therefore, the bench does not find any infirmity in the order of the PCIT invoking the jurisdiction under Section 263 of the Income Tax Act. Accordingly, the order of the PCIT was upheld and the appeal of the assessee was dismissed.

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition under Section 69 of the Income Tax Act holding that the books of account could not be rejected based on non-maintenance of stock register in desired format. The two-member Bench of Waseem Ahmed, (Accountant Member) and T. R.

Senthil Kumar, (Judicial Member) observed that as per the provisions of section 145(3) of the Income Tax Act, the AO was empowered to reject the books of accounts of the assessee and make best judgement assessment in the manner as specified under section 144 of the Income Tax Act if he was not inter-alia satisfied with the completeness or correctness of the books of accounts of the assessee. The Bench allowed the appeal filed by the assessee holding that, “In this documentary evidence no defect was pointed out by the AO except non maintenance of stock register in the desired format. Therefore, without bringing any corroborative material on record suggesting specific defect in the books of account the book result cannot be rejected merely for not providing certain detail which the AO requires to verify.

” The Raipur bench of the Income Tax Appellate Tribunal (ITAT) held that the income earned by way of interest and claimed under income from other sources shall be allowable expenditure under Section 57(iii) of the Income Tax Act, 1961. The Two-member bench comprising of Ravish Sood (Judicial member) and Arun Khodpia (Accountant member) held that expenditure incurred by the assessee, the genuineness of which was not disputed by the Assessing Officer are allowable expenditure in terms of provisions of Section 57(iii) of the Income Tax Act. Therefore, the additions made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeal) [CIT(A)] are not sustainable.

Thus, the appeal of the assessee was allowed. The Income Tax Appellate Tribunal (ITAT), Delhi bench, while granting relief to Havells India, deleted the disallowance of sales incentives payable to dealers and distributors under the Shahenshah Scheme. After reviewing the facts and records, the two-member bench of Dr.

B. R. R.

Kumar (Accountant member) and Saktijit Dey (Vice-President) granted relief to Havells India and deleted the disallowance of sales incentives payable to dealers and distributors under the Shahenshah Scheme. Therefore, the bench allowed the appeal of the assessee. The Income Tax Appellate Tribunal (ITAT), Delhi bench held that the identity and creditworthiness of transactions of purchase and sale of shares at par value, without earning any capital gain, were duly explained.

Therefore, the bench deleted the addition made under Section 68 of the Income Tax Act, 1961. After reviewing the facts and records, the two-member bench of Dr. B.

R. R. Kumar (Accountant Member) and Chandra Mohan Garg (Judicial Member) held that the identity and creditworthiness of transactions of purchase and sale of shares at par value without earning any capital gain were duly explained.

Therefore, the bench deleted the addition made by the AO under Section 68 of the Income Tax Act. The Income Tax Appellate Tribunal (ITAT), Pune bench held that the assessment order passed under Section 144, read with Section 147 of the Income Tax Act, without a Document Identification Number (DIN), should be treated as invalid. After reviewing the facts and records, the two-member bench of Dr.

Dipak P. Ripote (Accountant member) and S. S.

Godara (Judicial member) relied upon the decision of Bombay High Court in the case of Ashok Commercial Enterprises Vs. ACIT, observed that assessment orders without DIN shall be treated as invalid and deemed never to have been issued. Therefore, the bench allowed the above ground raised by the assessee.

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench held that contractual or compulsive transfer of donation funds did not fall under voluntary donation, which could not be treated as an application of funds towards the object of the trust. Therefore, after observing the above, the bench directed readjudication in respect of granting registration for the assessee trust. It was observed by the tribunal that the application could not have been rejected by CIT(E) on the grounds that 30% of the total donation that the assessee Trust would receive would be transferred to the Red Cross Society’s State/Union Territory Branch and National Headquarters.

This is because the transfer of donation funds is contractual or compulsive, does not fall under the category of voluntary donation, and cannot be regarded as an application of funds towards the assessee Trust’s objectives. Therefore, the CIT(E) rejected the registration application without confronting the issue and affording a proper opportunity of hearing to the assessee Trust. After reviewing the facts and records, the two-member bench of Annapurna Gupta (Accountant member) and T.

R. Senthil Kumar (Judicial member) directs readjudication for granting registration under Section 12AB of the Income Tax Act. The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) held that additions under Section 68 of Income Tax Act,1961 would be made for the cash credits received by an assessee in its accounts during the year relevant to Assessment Year (AY).

The bench comprising of Rajpal Yadav, Vice-President and Rajesh Kumar, Accountant Member observed that a perusal of Section 68 of the Income Tax Act would indicate that additions would be made for the cash credits received by an assessee in its accounts during the year relevant to A. Y. 2012-13.

No amount was received by erstwhile M/s. Kasa Contrade Pvt. Limited and, therefore, being a successor company, it cannot be assessed in the hands of the assessee in A.

Y. 2012-13. The Tribunal held that since no assessment was reopened in A.

Y. 2011-12, therefore, addition is not sustainable. Thus allowed the appeal of the assessee and deleted the addition.

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) confirmed the addition under Section 60 of the Income Tax Act, 1961 due to the failure of the assessee to prove the creditworthiness of the creditor and genuineness of the transaction. The Two-member bench comprising of Shamim Yahya (Accountant member) and Yogesh Kumar U. S.

(Judicial member) held that the assessee has not produced any document before the CIT(A) or before the bench to prove the identity to the creditworthiness of the creditor and the genuineness of the transaction. The CIT(A) has also observed that ‘the assessee has failed to explain cash credit of Rs. 50,00,000/- within the meaning of Section 68 of the Income Tax Act.

Therefore, the lower authorities have committed no error and the bench finds no infirmity in the order of the CIT(A). Thus, the appeal of the assessee was dismissed. The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the disallowances/additions of loss cannot be raised when it has not been claimed in the computation of income.

The Single-member bench comprising of Rajesh Kumar (Accountant member) held that the assessee has not claimed this loss and therefore, there is no question of disallowance of loss or addition of loss when the same is not claimed in the computation of income. The Assessing Officer has wrongly appreciated the facts of the case which is also in appellate proceedings by CIT(A). In view of the above facts, the bench set aside the order of CIT(A) and directed the Assessing Officer to delete the addition.

Thus, the appeal of the assessee was allowed. The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the provision of Section 269SS and 269T of the Income Tax Act, 1961 imposed statutory liability and cannot be stated as a mere technical violation. The Two-member bench comprising of M.

Balaganesh (Accountant member) and Anubhav Sharma (Judicial member) held that the violation was of Section 269SS of the Income Tax Act which deals with the modes of accepting certain loan deposits and specified sums and Section 269T of the Income Tax Act which deals with the modes of repayment of certain loans for deposits are violation which are not to be examined from the perspective the person who has given the loan or to whom the loan was returned but from the perspective of the recipient of the loan. Thus, the innocence pleaded on account of ignorance of the law of Directors who are claimed to be non-residents is insignificant. There is no question of any benefit to the assessee company on the basis of the claim of bona fides of the Directors.

The provisions of Section 269SS and 269T of the Income Tax Act imposed statutory liability and cannot be said to be held to be mere technical violations in the case of companies. Therefore, the appeal of the assessee was dismissed. The Income Tax Appellate Tribunal (ITAT) Hyderabad bench OF R.

K. Panda, (Vice President) and Laliet Kumar, (Judicial Member) held that insurance activities carried out by cooperative society did not fall with banking business. Therefore, the bench upheld the disallowance of deduction claimed by the assessee under Section 80P of the Income Tax Act, 1961 The bench determined that activities of the insurance do not form a part and parcel of carrying on the business of banking and providing credit facilities to its members The Income Tax Appellate Tribunal (ITAT) Mumbai bench of f Amarjit Singh (Accountant Member ) and Aby T.

Varkey, (Judicial Member) deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 on estimated quantum addition based upon information from the sales Tax Department. The basis of estimated addition in the quantum assessment was based upon information from the Sales Tax Department that the assessee was a beneficiary of accommodation bills to the tune of Rs. 2,35,64,090/- The quantum addition was purely on estimated basis .

In a major relief to M/s. Tata Chemicals Ltd, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), ruled that on failure of comparable as chosen by the Dispute Resolution Panel (DRP), then same loses comparability for determining the arms length price (ALP). A Two-Member Bench comprising Padmavathy S, Accountant Member and Amit Shukla, Judicial Member observed that ,once only comparable as chosen by the ld.

DRP fails, then same loses the comparability for determining the ALP. In view of aforesaid discussion, we hold that the price on which eligible unit is selling the power, i. e.

, at Rs. 6. 90 per unit which is the price available in the open market and also the same manufacturing unit is purchasing it from GEB at the same price, then it can be said to be the market value of the price.

Accordingly, addition / disallowance of deduction made by the CIT(A) is deleted. ” The Income Tax Appellate Tribunal (ITAT), Mumbai bench of B. R.

Baskaran (Accountant member) and Rahul Chaudhary (Judicial Member) held that an addition under Section 68 of the Income Tax Act, 1961, should not be made when share application money received from companies engaged in the business of share trading is proven with documents. The bench observed that addition under Section 68 of the Income Tax Act could not be made once the assessee had produced the documents to prove the cash credits. The Income Tax Appellate Tribunal (ITAT), Delhi bench, upheld the addition made under Section 56(2)(vii)(b) of the Income Tax Act, 1961, towards the difference between the circle rate and the actual amount paid for the purchase of land.

The bench of M. Balaganesh (Accountant member) and Chandra Mohan Garg (Judicial Member) observed that the land was purchased by the assessee and his brother on 10. 12.

2013 during F. Y. 2013-14, and even after the lapse of 3 years up to A.

Y. 2015-16, except signing the MOU, no other action had been taken by the assessee and his brother, showing their intention to develop the land as a business venture. The Income Tax Appellate Tribunal (ITAT), Pune bench, directed a reexamination in respect of activities conducted by the assessee trust to obtain registration under Section 12AA of the Income Tax Act, 1961.

The purpose of the provisions for the registration of trusts under Section 12AA and the granting of exemptions under Section 80G is derived from the Directive Principles of State Policy enshrined in the Constitution of India. These provisions enhance socio-economic welfare in society. The two-member bench of M.

Balaganesh (Accountant Member) and Chandra Mohan Garg (Judicial Member) directed that one final opportunity should be provided to the assessee to file the relevant details before the CIT(E). The Delhi two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) Income Tax Appellate Tribunal (ITAT) has directed re-adjudication as non-issuance of show cause notice as to dissatisfaction on insufficient evidence was a sufficient cause preventing from filing additional evidence. The bench observed that the Assessing Officer, taking on record said evidence but without any examination or verification thereof, directly proceeded to hold that the assessee had not been able to prove identity & creditworthiness of subscriber and genuineness of transaction.

Thus In case the Assessing Officer was not satisfied with the documentary evidence submitted by the assessee then it was his duty to caution the assessee by way of show cause notice or note sheet entry showing his intention and dissatisfaction about insufficient of evidence and absence of details and plausible explanation, but the Assessing Officer directly proceeded make addition under Section 68 of the Income Tax Act without any efforts. The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has confirmed the addition as the commission charged by Assessing Officer (AO) was considering the market trend in providing accommodation entries and not on an ad-hoc basis. The two-member Bench of C.

M. Garg, (Judicial Member) B. R.

R. Kumar, (Accountant Member) held that the commission charged by the Assessing Officer was not on an ad-hoc basis but taking into consideration the prevailing market trend in providing such accommodation entries. The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition as the assessment order was framed under Section 153A of the Income Tax Act 1961 based upon the documents recovered by the search from the 3rd party without following the procedures as per Section 153C of the Income Tax Act.

The two-member Bench of Shamim Yahya, (Accountant Member) and Yogesh Kumar Us, (Judicial Member) observed that having not followed the mandate of section 153C of the Act, Revenue had committed fatal error and, on this account, assessment was liable to be quashed The Income Tax Appellate Tribunal (ITAT), Chennai bench, directed the Assessing Officer to reduce the addition due to the failure to prove the source of the cash deposit made in Canara Bank by the assessee and the income tax department. The two-member bench of Manjunatha. G (Accountant Member) and V.

Durga Rao (Judicial Member) observed that the CIT(A) did not provide any persuasive justification for rejecting the assessee’s submitted evidence. Additionally, the assessee was unable to provide other proof to support the alleged gift deed, such as her husband’s source. The Income Tax Appellate Tribunal (ITAT), Chandigarh bench, held that no addition could be made under Section 153A of the Income Tax Act, 1961, in the absence of incriminating material found during the course of a search conducted under Section 132 of the Income Tax Act.

The two-member bench of Vikram Singh Yadav (Accountant member) and Aakash Deep Jain (Vice President) observed that no addition can be made in respect of completed assessments in the absence of any incriminating material. The Income Tax Appellate Tribunal (ITAT), Chennai bench, directed the deposit cost of rupees 5,000/- to the State Legal Aid Authority due to non-appearance before the lower authorities for appeal proceedings. Tribunal observed that when the litigants do not pursue or prosecute their appeals with utmost honesty, the appellate authority is left with no option but to decide the appeals on their merits.

The appeals of the assessee have been dismissed on technical grounds, without any proper petition from the assessee. The Income Tax Appellate Tribunal (ITAT), Delhi bench, quashed reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, on the basis of a vague report from the investigation wing without applying their mind to the report. The two-member bench of Pradip Kumar Kedia (Accountant member) and Chandra Mohan Garg (Judicial Member) observed that the Assessing Officer proceeded to initiate reassessment proceedings only on the basis of a vague report from the Investigation Wing without applying their mind to the report and other alleged documentary evidence The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that assessing officers could not pass a final assessment order without complying with the mandatory requirements under Section 144C of the Income Tax Act, 1961.

Therefore, the Bench allowed the appeal filed by the assessee. The two-member bench of N. K.

Billaiya (Accountant Member) and Astha Chandra (Judicial Member) observed that While framing the said draft assessment order, the Assessing Officer not only issued and served a demand notice but also initiated the penalty proceedings. Thus, without hesitation, the tribunal declared that the proceedings came to an end on June 28, 2022, when the assessee received a demand notice and a penalty notice under Section 274 of the Act. As a result, any further proceedings and orders are no longer valid.

The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that registration under Section 12B of Income Tax Act 1961 could not be denied on no-clarification of discrepancies due to non-receipt of notice The two-member Bench of Partha Sarathi Choudhury, (Judicial Member) and G. D. Padmahshali,(Accountant Member) observed that the purpose of the provisions for registration of trust under Section 12A/12AB of the Income Tax Act and granting of recognition under Section 80G of the Income Tax Act, derives their spirit from Directive Principles of State Policy enshrined in the Constitution of India.

The Income Tax Appellate Tribunal (ITAT), Chennai bench, while dismissing the petition for condonation for delay, held that the appeal filed by the assessee against late fees under Section 2344E of the Income Tax Act, 1961, for the late filing of Tax Deduction at Source return, was delayed by more than 6 years. The two-member bench of Manoj Kumar Aggarwal (Accountant member) and Mahavir Singh (Vice president) dismissed the petition to condone the delay for filing an appeal against the levy of fees under Section 2344E of the Income Tax Act for the late filing of Tax Deduction at Source. Thus, the delay had occurred for more than 6 years, indicating gross negligence on the part of the assessee.

The Income Tax Appellate Tribunal (ITAT), Surat bench, held that an addition shall not be made under section 68 of the Income Tax Act, 1961 when the creditworthiness of the loan provider through the banking channel is satisfactorily explained. The two-member bench of Dr. A.

L. Saini (Accountant Member) and Pawan Singh (Judicial Member)observed that the assessee had produced confirmation before the AO, signed by the son of the assessee, and the bank statement evidencing the debit in the account of the giver of the loan, Mr. Ishwarbhai D.

Patel. Therefore, the creditworthiness of the loan giver, Late Ishwarbhai D. Patel, was established by the assessee.

The Income Tax Appellate Tribunal (ITAT), Surat bench, quashed the revision order passed under section 263 of the Income Tax Act, 1961, without following the natural justice principle in respect of the addition of Fixed assets. The two-member bench of Dr. A.

L. Saini (Accountant Member) and Pawan Singh (Judicial Member) relied upon the decision of the Supreme Court in the case of Malabar Industries Ltd. vs.

CIT and observed that every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. © 2020 Taxscan © 2020 Taxscan.