This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during the previous week from September 4 to September 10, 2022
The Income Tax Appellate Tribunal (ITAT), Jaipur bench has held that an intimation under section 143(1) of the Income Tax Act, 1961 does not amount to grant of refund and therefore, the assessee is eligible to receive simple interest till the date of actual refund. After considering arguments from both sides, the bench comprising Shri Sandeep Gosain, JM & Shri Rathod Kamlesh Jayantbhai, AM held that “Simply calculating the interest till the month on which intimation under section 143(1) is issued do not amount to grant of refund. Refund is granted when the amount is actually paid to the assessee. In the case of the assessee, the refund was actually paid to the assessee on 11.06.2020. Therefore, the assessee is eligible for interest under section 244A from April, 2018 to June, 2020 i.e. for 27 months and not from April, 2018 to November, 2019 i.e. 20 months.”
In a significant case, the Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that cash payments made to agriculturists are allowable and addition under section 40 A(3) of the Income Tax Act, 1961 not sustained. Shri N V Vasudevan, Vice President observed that CIT(A) treated the payment in question to R.G.Bhat, who was alleged to be an intermediary is not sustainable as the two agriculturists have affirmed in an affidavit that they received the payment through R. G. Bhat and when the cheques in question, though bearer cheques, were cheques issued in their names respectively.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has held that a bonafide action on the part of the co-operative bank not filing annual information report (AIR) will not attract a penalty under section 271FA of the Income Tax Act, 1961. A two-Member bench of the Tribunal comprising Shri R.K. Panda (Accountant Member)and Shri Laliet Kumar (Judicial Member) observed that the reading of 114E Income Tax Rules 1962, as applicable to the relevant Assessment Year, makes it abundantly clear that assessee Bank (banks, including the Co-operative Bank) is having an obligation to furnish the Annual Information Return (AIR) in the manner provided by Rule 114E.
The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) has held that the revisional jurisdiction of the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act, 1961 cannot be invoked to initiate penalty without finding that the assessment order passed by the AO as erroneous and prejudicial to the interest of revenue. Quashing the penalty orders, the Tribunal held that “The mandate under section 263 of the Act do not give any power to CIT to impose his satisfaction over the satisfaction of AO as to whether the penalty proceedings are toinitiated or not and if initiated under which section/clause. In our view, on examination of assessment record, the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Thus, the PCIT’s revisionary decision relating to non-initiation/incorrect initiation of penalty which without holding that assessment order passed by the AO as erroneous and prejudicial to the interest of revenueis vague and bad in law.”
The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the withholding of TDS of the assessee who has already suffered tax is not the right way to collect tax as the Income Tax Act, 1961 already provides for a sufficient mechanism for the same. Shri ParthaSarathi Chaudhury (JM) And Dr. Dipak P. Ripote(AM)relied on Omprakash Gattani Vs. ACITand observed that “Examining the provisions of section 205, the Hon’ble High Court has held that once it is established that tax has been deducted at source, the bar in section 205 of the Act comes into operation and it is immaterial as to whether tax deducted at source has been paid to Central Government or not because provisions are made under the Act for recovery of tax deducted at source from the person who has deducted such tax.”
Legal necessity of passing transfer order under Section 127 cannot be foregone even if transfer made at request of assessee, so was held by the Income Tax Appellate Tribunal (ITAT), Jaipur. The Tribunal observed that “In this case, assessee himself has requested for transfer of his case from Delhi to Jaipur, which can be deemed to be no-objection from the side of assessee. However, the necessity of passing order u/s 127 cannot be dispensed with. It is undisputed fact that the AO at New Delhi had transferred the file to the AO at Jaipur and, therefore, even if they are both under the jurisdiction of the same Director-General or the Pr. CIT, the notice u/s 127(1) was to be given to the assessee and order u/s 127(3) was to be passed by Director-General or Pr. CIT who can transfer the case u/s 127 of the Act.
The Income Tax Appellate Tribunal(ITAT), Ahmedabad bench held that when actual write-off of diminution in value of the asset from the corresponding amount of trade receivables and shown in the balance sheet, then the addition made relying upon the explanation of section 115 JB of the Income Tax Act, 1961 is not sustainable. In light of the case of Vodafone Essar Gujarat Ltd, Shri P M Jagtap, vice-president and Ms Madhumita Roy, judicial member had deleted both the additions made by the Assessing Officer and confirmed by the CIT(A) to the book profit of the assessee-company under Section 115JB of the Act on account of provision for doubtful debts and provision for diminution in the value of the investment and partly allowed the appeal of the assessee.
The Income Tax Appellate Tribunal (ITAT), of Kolkata bench has held that the claim of Performance Related Pay (PRP) is not sustainable when no documentary evidence was produced to substantiate the claim and restored the matter to CIT(A). The Tribunal observed that the assessee has not filed any details of computation of income, or calculation of the PRP and the tribunal can’t rely on any specific documents which could show that the alleged amount was part of a crystallised liability which the assessee company ascertained during the year that could make the assessee eligible to claim it as an expenditure.
The Income Tax Appellate Tribunal (ITAT), Hyderabad bench has held that the income tax appeal is not maintainable during the pendency of Insolvency and Bankruptcy Code (IBC) proceedings. It was observed that the appeal cannot be proceeded with during the continuance of the proceedings under the Code.
The Income Tax Appellate Tribunal (ITAT) of Ahmedabad bench has held that there is no provision for prior period expenses under section 115 JB(2) of the Income Tax Act,1961 and held addition as not permissible. In light of the precedents, Shri P M Jagtap, vice-president and Shri Siddhartha Nautiyal, judicial member observed that uphold the impugned order of the learned CIT(A) deleting the addition of Rs.31,26,316/ made by the Assessing Officer on account of prior period expenses while computing the book profit of the assessee-company under Section 115JB of the Act.
The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the cash loan between agriculturalists will not attract the provisions of section 269SS of the Income Tax Act, 1961 and therefore, penalty cannot be imposed. Holding that the assessee’s case would be covered under the exceptions provided in the second proviso to section 269SS, the Tribunal held that “Hence, the provision of section 269SS would not be applicable. In view of the aforesaid, we hold that the penalty imposed under section 271D of the Act is unsustainable. Accordingly, we delete it.”
The Income Tax Appellate Tribunal (ITAT), Varanasi bench consisting of Vijay Pal Rao, Judicial Member, and Ramit Kochar, Accountant Member held that charitable entity under Section 2(15) of Income Tax Act eligible for exemption under Section of the Income Tax. The AO observed that the assessee is neither in the field of education nor in the field of medical relief of the poor and at the most, the assessee’s objects and activities could be said to be falling within the scope of ‘general public utilities’ u/s 2(15) of the 1961 Act. The assessee being aggrieved by the assessment framed by AO filed the first appeal before CIT(A), who was pleased to allow the appeal of the assessee in the first round of litigation. The Revenue being aggrieved filed the second appeal with the tribunal in the first round of litigation, wherein Tribunal, restored the matter to the file of CIT(A) for fresh adjudication and later decided against the assessee. Aggrieved by the order of CIT, the assessee, is in appeal before the Tribunal.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad set aside proceedings under Section 147 on the ground that Re assessment framed for escapement of income by a share trading business that does not belong to the assessee. The Bench consisting of held that “As on the date of recording reasons for escapement of income i.e. on 4.10.2006, the assessment order passed, which was reopened under section 148 of the Act dated 30.3.2004 had categorically held that the assessee had not carried on the share trading business. Therefore, this very order passed under section 143(3) of the Act, wherein the assessee was held to have not carried out any share trading transactions, could not possibly have been reopened under section 147 of the Act on account of escapement of income relating to this very share trading business only. Assumption of jurisdiction to frame reassessment under section 147 is clearly invalid. Re-assessment framed, therefore, under section 147 of the Act is set aside.”
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