Income Tax Annual Digest 2024: ITAT Cases [Part 9]

A Round-Up of all the ITAT Rulings in 2024
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This annual round-up analytically summarizes all the Income Tax related Orders of the Income Tax Appellate Tribunal (ITAT) Benches of India reported at Taxscan.in during 2024.

AO fails to issue notice u/s 148 of Income Tax Act against all Legal Heirs, Issues only against Deceased: ITAT deletes Addition Maddikunta Sanjeeva Reddy vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 665

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition on grounds that the Assessing Officer ( AO ) failed to issue a notice under Section 148 of the Income Tax Act, 1961 to all legal heirs, issuing it only against the deceased.

The single member bench of the tribunal comprising Laliet Kumar (Judicial member) found that there was jurisdictional error in issuing the notice under Section 148 of the Income Tax Act against the deceased person. Hence, ITAT does not find any reason to uphold the addition made by the Assessing Officer, as everything was flowing from the notice under Section 148 of the Income Tax Act.

Section 115BBDA of Income Tax Act Does not Apply to Domestic Company: ITAT deletes Addition Meenakshi Ventures vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 666

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 3.07 lakhs, stating that Section 115BBDA of the Income Tax Act, 1961 does not apply to a domestic company.

A single member bench of the tribunal comprising Laliet Kumar (Judicial member) found that the assessee to be a domestic company, therefore, the provision was not applicable. It was only applicable and in fact, the limit was only applicable if the total income of an assessee, being an individual, Hindu Undivided Family or a firm resident of India, exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies.

Profit Embedded amount Purchase would be Subjected to Tax: ITAT directs AO to restrict Addition of Rs. 16.8 crores Sangam Wires vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 667

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer to limit the addition of Rs. 16.8 crores, indicating that the profit-embedded amount from the purchase would be subjected to tax.

The two member bench of the tribunal comprising K.Narasimha Chary ( Judicial member) and R.K Panda ( Vice president)  found that the CIT (A) NFAC deleted the addition made by the Assessing Officer but directed the Assessing Officer to apply the rate of profit on other genuine purchases, the reasoning of which have already been reproduced in the preceding paragraph. It found any infirmity in the order of the CIT (A) NFAC on this issue. Further found that the assessee in the instant case has filed the details of stock, copies of purchases invoices, E-waybills, computerized receipts from weigh bridges etc. The payments were also made through banking channels and the sales have not been doubted by the Assessing Officer.

Source of Funds Adequately Explained: ITAT Deletes Addition under Section 68 of Income Tax Act Sunil Khaitan vs DCIT CITATION: 2024 TAXSCAN (ITAT) 668

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted an addition under Section 68 of the Income Tax Act, 1961 concluding that the source of funds was prima facie sufficiently explained.

Further the two member bench of the tribunal comprising Girish Agrawal (Accountant member) and Sonjoy Sarma (Judicial member) concluded that the assessee has satisfactorily explained the source of funds out of which deposit of cash was made in the bank account. ITAT therefore, delete the addition made in this regard. Accordingly, the appeal of the assessee was allowed.

Section 41(1) of Income Tax Act Cannot Be Invoked for Cessation of Trading Liability Due to Absence of Liability in Books: ITAT Syama Prasad Mookerjee Port vs Deputy Commissioner of Income tax CITATION: 2024 TAXSCAN (ITAT) 669

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that absence of liability in books of account, provision of Section 41(1) of Income Tax Act, 1961 cannot be invoked as cessation of trading liability.

The two member bench of the tribunal comprising Sanjay Garg (Judicial member) and Dr. Manish Board (Accountant member) inclined to restore the issue to the file of the jurisdictional Assessing Officer for a fresh adjudication in light of the submissions of the assessee as well as the additional evidence adduced by the assessee. Needless to mention that the assessee shall produce all necessary documents/evidence, in support of its claim before the Assessing Officer and shall cooperate till the disposal of its appeal. Accordingly, this ground relating to addition under Section 41(1) of the Income Tax Act raised by the assessee was allowed for statistical purposes.

TPO fails to Apply Industry Filter while Determining ALP of Interest: ITAT Deletes addition, Dismisses Revenue’s appeal DCIT vs DLF Urban Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 670

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the Transfer Pricing Officer (TPO) failed to apply the industry filter while determining the Arm’s Length Price ( ALP ) of interest, leading to the deletion of the addition and the dismissal of the revenue’s appeal.

The two member bench of the tribunal comprising Shamim Yahya ( Accountant member ) and Anubhav Sharma ( Judicial member) concluded that the  CIT(A) has thoughtfully taken into consideration the facts in wholesome manner and has adopted a judicious approach by considering median @16% based on 49 comparables i.e. 47 comparables selected by assessee company as well as 2 by TPO. Even if the 2 comparables were not of the same industry but as the assessee does not object to their inclusion, the order of CIT (A) cannot be faulted. There is no apparent infirmity requiring our indulgence. Accordingly, the grounds so raised have no substance.  Accordingly, appeal of the revenue was dismissed.

TDS has been Duly Deducted on Entire Salary Payments to Expats and Deposited into Govt account: ITAT deletes Addition of Rs. 1.83 crore Ayesa Ingenieria Y Arquitectura vs ACIT CITATION: 2024 TAXSCAN (ITAT) 671

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that Tax Deducted at Source ( TDS ) has been duly deducted on the entire salary payments to expats and deposited into the government, resulting in the deletion of the Rs. 1.83 crore addition.

Further the two member bench of the tribunal comprising G.S.Pannu (Vice President) and Astha Chandra (Judicial member) noted that the disallowance of salary cost reimbursement by Branch Office to the assessee by the AO under Section 40(a)(i) was  not justified as TDS has been duly deducted on entire salary payments to the expats and deposited into the Government account within the prescribed time limit. Consequently addition of Rs. 1,83,71,951/- and Rs. 2,53,00,714/- for AY 2020-21 and 2021-22 respectively to the returned income of the assessee is hereby deleted. This ground raised by assessee was allowed .

Relief to Karur Vysya Bank: ITAT allows deduction u/s 36(1) (viii) as Reserve is Created out of Profit for Year 2013-2014, Deletes Additio M/s. Karur Vysya Bank Ltd vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 672

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) granted relief to Karur Vysya Bank by allowing deduction under section 36(1)(viii) of the Income Tax Act, 1961 as the reserve was created out of profit for the year 2013-2014, resulting in the deletion of the addition.

The bench found that the assessee had earned a profit of Rs. 429.59 Cr during the previous year 2013-14. It had transferred an amount of Rs. 157 Cr to Revenue & Other Reserves. During the Financial Year 2014-15, from out of the Revenue Reserve, the appellant transferred an amount of Rs. 30 Cr to Special Reserve. From these facts it can be seen that the assessee has transferred Rs. 30 Cr to Special Reserve from the profits of the previous year 2013-14 and therefore was eligible to claim the deduction under Section 36(1)(viii) of the Income Tax Act.

No addition shall made  on basis of document found from third party’s premises during survey proceedings: ITAT Smt. Lilaben Rameshbhai vs The Dy.CIT Central Circle CITATION: 2024 TAXSCAN (ITAT) 673

The two member bench of Ahmedabad Income Tax Appellate Tribunal ( ITAT )  ruled that no addition should be made on the basis of documents found from third party’s premises during the survey proceedings .

It is observed that the assessee was having 60% share in the land.Therefore, considering that the undisclosed amount of Rs.3,17,46,320/- has escaped assessment as per the observation of the Assessing Officer and, therefore, the case was reopened. Accordingly, notice under Section 148 of the Income Tax Act was issued and served upon the assessee.Accordingly the assessee informed that he was fielding a return of income .

No TDS on Minimum Guarantees Paid to Hotels: ITAT grants Relief to OYO Rooms M/s Oravel Stays Pvt Ltd vs The A.C.I.T CITATION: 2024 TAXSCAN (ITAT) 674

The Delhi Bench Income Tax Appellate Tribunal ( ITAT ), while granting relief to the Oravel Stays Private Limited, the company which runs OYO Rooms, has ruled that the company is not obligated to pay Tax Deduction at Source ( TDS ) on Minimum Guarantees Paid to Hotels. The ITAT ruled against the disallowance of Rs. 1,08,59,584 under Section 40(a)(ia) of the Income-tax Act, 1961, related to minimum guarantee expense.

The two-member bench of Khul Bharat (Judicial Member) and N. K. Billaiya (Technical member) observed that “The contention of the ld. DR that in furtherance of its business objectives/model, the assessee is providing service, cannot be accepted as neither the Assessing Officer nor the ld. CIT(A) have invoked the relevant provisions of the Act applicable for provisions of service. On the facts of the case, we hold that section 194C of the Act is not applicable.”

No addition is Permitted u/s 68 of Income Tax Act as Unsecured Loan when Cash Deposits in Bank A/c of Lender Firm is Accepted: ITAT Devki Nandan Maheshwari vs ACIT CITATION: 2024 TAXSCAN (ITAT) 675

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition made under Section 68 of the Income Tax Act, 1961 on unsecured loan obtained from a firm by the Assessee on the ground that the identity, creditworthiness, and genuineness of the transaction stands proved. It was found that the Cash deposits In Bank account of the lender firm is accepted.

The two member bench of comprising Amit Shukla ( Judicial Member ) and M. Balaganesh ( Accountant Member ) observed that “once the cash deposits made in the bank account of the lender firm had been accepted as coming from explained sources by the revenue under scrutiny assessment of the lender, the revenue cannot take a divergent stand in the case of the Assessee that those cash deposits had emanated out of undisclosed sources of the Assessee which had been deposited in the lender’s bank account and monies received by Assessee in the form of unsecured loan”.

Assessment Order made after Expiry of One Month of Receiving Directions from dispute Resolution Panel is Time Barred: ITAT M/s.Conferencecall vs The Dy. Commissioner CITATION: 2024 TAXSCAN (ITAT) 676

The Chennai  bench of the Income Tax Appellate Tribunal ( ITAT ) recently held that the final assessment order passed after expiry of one month from the end of the month in which the DRP directions were received by the Revenue is barred by limitation. It was found that the order was passed wholly without jurisdiction and therefore, null in the eyes of law.

The two member Bench comprising Aby T. Varkey (Judicial Member) and Jagadish (Accountant Member) observed that “as per Section 144C(13), Revenue had to complete the final assessment without providing any further opportunity of being heard to the Assessee within one month from the end of the month in which such directions are received and hence, the last date to pass final assessment order, in the present case, is Oct 31, 2017”.

Issuance of Notice in Name of Dead Person is not Valid: ITAT directs AO to quash Assessment Order u/s 143 (3) of Income Tax Act Late Sh. Birdi Chand vs ITO CITATION: 2024 TAXSCAN (ITAT) 677

The Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer ( AO ) to quash the assessment order issued under Section 143(3) of the Income Tax Act, 1961 stating that the issuance of a notice in the name of a deceased person was not valid.

Thus, The two member bench of the tribunal comprising Rathod Kamlesh Jayant Bhai ( Accountant member) and Dr. S Seethalakshmi ( Judicial member) respectfully, following the ratio of judicial precedent cited by the  AR of the assessee that once the AO  came to his knowledge that the assessee was  no more the subsequent issuance of the notice in the name of dead person was  not valid and consequently framing the assessment without there being bringing the legal heirs on record and when these information was shared by the legal heirs time and again with the AO framing the assessment and raising the demand on the dead person was not legal and thus directed to be quashed. Accordingly, the appeal of the assessee was allowed.

Taxpayer Follows Mercantile System of Accounting Consistently: ITAT allows Deduction of Rs. 34.2 lakhs u/s 57 of Income Tax Act Bal Krishan Das Mundhra vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 678

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) allowed a deduction of Rs. 34.2 lakhs under Section 57 of the Income Tax Act, noting that the taxpayer consistently followed the mercantile system of accounting.

The two member bench of the tribunal comprising Irish Agarwal ( Accountant member ) and Rajpal Yadav ( Vice President ) found that there was no dispute with regard to the fact that the assessee has been consistently following a mercantile system of accounting. It has accounted its interest income on the mercantile system and not on receipt basis. This stand of the assessee was not disputed by the Assessing Officer.

ITAT dismisses Appeal u/s 68 of Income Tax Act Due to Absence of Explanation for Transactions Ideal Vyapaar Pvt vs Income tax Officer CITATION: 2024 TAXSCAN (ITAT) 679

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal under Section 68 of the Income Tax Act,1961 due to the absence of an explanation for the transactions.

The two member bench of the tribunal comprising Girish Agarwal (Accountant member) and Rajapal Yadav (Vice President) observed that the assessee has been contesting that it had made all the submissions in support of the transaction in which additions have been made which have not been considered.

No Incriminating Material found during Search: ITAT quashes Assessment u/s 153A of Income Tax Act The Assistant Commissioner of Income Tax vs M/s. Uthangarai Sri Vidya Mandir Educational Trust CITATION: 2024 TAXSCAN (ITAT) 680

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment under Section 153A of the Income Tax Act, 1961 as no incriminating material was found during the course of the search proceedings.

The two member bench of the tribunal comprising G. Manjunatha ( Accountant member) and Mahavir Singh (Vice president) noted that there was no incriminating material or seized material pertaining to assessment years 2011-12 to 2013-14 and the estimated additions made by the AO on account of disallowances of unexplained investment under Section 69, unproved expenditure, annual day and food expenses, other expenses, disallowance of excess claim of depreciation and disallowance of claim of deduction under Section 10 & 11 of the Income Tax Act on the basis of amounts extrapolated on the basis of incriminating material found relating to assessment year 2014-15 and onwards.

Debt Written Off in Books of Account is to be Allowed as Bad Debts: ITAT directs AO to delete Addition of Rs. 6.69 crore Shri. Moolchand Kiran Kumar vs Deputy Commissioner of Income-tax CITATION: 2024 TAXSCAN (ITAT) 681

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer (AO) to delete the addition of Rs. 6.69 crore after ruling that debt written off in the books of accounts should be allowed as bad debts.

The two member bench of the tribunal comprising V.Durga Rao (Judicial member) and Manjunatha G (Accountant member) found merit in this claim of the assessee. The debt written off by the assessee in the books of account is to be allowed as bad debts and accordingly, the ITAT allowed the grounds taken by the assessee. However, as already held that it is to be allowed as bad debt.

Failure to prove Identity, Creditworthiness and Genuineness of receipt of Gift: ITAT upholds Addition made u/s 68 of IT Act Sh. Sujeet Kumar vs ITO,Haryana CITATION: 2024 TAXSCAN (ITAT) 682

The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) comprising Saktijit Dey, (Vice-President) and  M. Balaganesh, (Accountant Member) while upholding the addition made under Section 68 of the Income Tax Act, 1961  observed that the assessee failed to prove identity,creditworthiness and genuineness of receipt of Gift received from father in law.

The tribunal observed that the assessee has not furnished any cogent evidence to prove the alleged receipt of gift from father-in-law thus the addition made by the lower authorities was confirmed by the tribunal.

ITAT directs to tax Cash Deposit coming out of store business at 8% Smt. Kopparum Laxminarayan Kumuda vs ITO CITATION:   2024 TAXSCAN (ITAT) 683

The Income Tax Appellate Tribunal ( ITAT ), Bangalore bench recently directed the Assessing officer to tax at 8% towards the cash deposit as coming out of the store business.

The tribunal observed that cash deposit of Rs.12,17,200/- into the assessee’s bank account during the demonetization period is out of the business conducted in her name.However assessee was not aware of the business conducted by her assessment in her name .

Jewellery collection of married life of 25 to 30 years not treated as abnormal for levying tax: ITAT deletes addition Kirti Singh vs Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 684

The two member bench of Delhi Income Tax Appellate Tribunal ( ITAT ) comprising Yogesh Kumar Us (Judicial Member) and Pradip Kumar Kedia. (Accountant Member) while deleting the addition made by the assessing officer held that jewelry collection of married life of 25 to 30 years not treated as abnormal for levying tax.

The tribunal observed that assessee and her family members are high net worth individuals and having regard to their high status, holding such jewelry found in the custody of members of their families cannot be seen to be abnormal and consequently unexplained.

Recoveries of farmer’s advances duly reflected in Cash Book, not Unexplained Cash credit u/s 68 of Income Tax Act: ITAT DCIT vs M/s. Sri Arumuga Sugars Ltd CITATION: 2024 TAXSCAN (ITAT) 685

The Chennai Bench, Income Tax Appellate Tribunal ( ITAT ) held that when recoveries of farmers advances were duly reflected in cash book of assessee it would not be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961

After analyzing the submission of both parties, the bench of V. Durga Rao (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) observed that during the impugned years, the assessee has received back these advances which have been reflected in the cash book of the assessee. The cash balance has been used to make the deposits in the bank account which has ultimately been used in settling the bank loan as availed by the assessee. Therefore, the claim of the assessee was based on books of accounts and financial statements which could not be negated by AO.

No Assessment Order shall be passed in name of Non Existing Company: ITAT upholds CIT(A) decision Income Tax Officer vs M/s Silverline Trading Company Ltd CITATION: 2024 TAXSCAN (ITAT) 686

The  Delhi bench of  Income Tax Appellate Tribunal ( ITAT ) comprising Rahul Chaudhary (Judicial Member)  and Prashant Maharishi. ( Accountant Member ) directed to recompute the Arm Length Price (ALP) by including  excluded comparable chosen for transfer pricing .

After observing the submissions of both parties the tribunal determined that “any director of the company could have filed an appeal challenging the assessment order on the ground that the liability arising out of the impugned assessment order, under the circumstances pointed out in Section 179 of the Income Tax Act, could be fastened upon him”

Rejection of application of exemption claimed u/s 80G of Income Tax Act on account of failure to produce documentary evidence: ITAT directs Readjudication Sanj Sawali Care Foundation vs CIT (Exemptions) CITATION: 2024 TAXSCAN (ITAT) 687

The Income Tax Appellate Tribunal ( ITAT ) of Bangalore bench while observing the rejection of the application of exemption claimed under Section 80G of the Income Tax Act, 1961 on account of failure to produce the documentary evidence directed readjudication.

The tribunal observed the purpose of the provisions for registration of trust u/sec. 12AA and for granting exemption u/sec. 80G, all these sections derive their spirit from the Directive Principles of State Policy enshrined in the Constitution of India.

Company’s book, Including Manual Cash book, deemed Non-Incriminating u/s 153A of Income Tax Act: ITAT deletes S.69 Addition Bijender Singh Lohia vs JCIT (OSD) CITATION: 2024 TAXSCAN (ITAT) 688

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the Section 69 addition, ruling that the company’s books, including the manual cash book, were deemed non-incriminating under Section 153A of the Income Tax Act, 1961.

The two-member bench of the tribunal, consisting of M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member), reviewed the case and concluded that the CIT(A) had correctly upheld the AO‘s findings. They determined that no substantive addition was necessary for the Company based on the manual cash book. The cash transactions were verified to be from known sources and matched the existing books, which were deemed final in the Company’s assessment. Therefore, the same set of books, including the manual cash book found at the Company’s premises, cannot be considered incriminating material under Section 153A of the Income Tax Act for making an addition in the hands of the assessee as a searched person for the two assessment years in question.

Taxpayer entitles to Deduction for CENVAT Credit Written Off out of Assets acquired from GAPAIL through Slump Sale: ITAT G-Tekt India Pvt. Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 689

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the taxpayer was entitled to a deduction for the Central Value Added Tax ( CENVAT ) credit written off from assets acquired through a slump sale from Global Auto Parts Alliance India Private Limited ( GAPAIL )

The two member bench of the tribunal comprising Yogesh Kumar US (Judicial member) and M. Balaganesh (Accountant member) held that the assessee would be entitled for deduction of CENVAT Credit written off in the sum of Rs 89, 55,542/- during the year under consideration. Accordingly, the grounds raised by the assessee were allowed.

Income Tax Authorities fails to discuss difference in Sundry Creditors before Confirming Addition u/s 41(1): ITAT remands Matter to AO Jonna Iron Mart vs Asstt. C. I. T. CITATION: 2024 TAXSCAN (ITAT) 690

The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the Assessing Officer ( AO ) after noting that the Income Tax Authorities failed to discuss the difference in sundry creditors before confirming the addition under Section 41(1) Income Tax Act, 1961.

The single member bench of the tribunal comprising Manjunatha G (Accountant member) set aside the order of the CIT (A) and restore the issue back to the file of the Assessing Officer and direct the Assessing Officer to verify the claim of the assessee with reference to the evidences that may be filed to explain the difference in certain parties account

Section 249(4)(b) does not Apply when there is No question of Advance Tax in Income Tax Reassessment Proceedings: ITAT Nine Globe Industries Pvt. Ltd vs Asst. Commissioner of Income CITATION: 2024 TAXSCAN (ITAT) 691

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that Section 249(4)(b) of Income Tax Act, 1961 does not apply when there is no question of advance tax payment in the income tax reassessment proceedings.

The bench found that the case was initially selected for scrutiny, which was completed on 29.03.2015, and there was no change in the returned income of Rs.51,80,800/- in the absence of any additions being made. It is a matter of record that originally the return was filed for the relevant year under consideration on 29.09.2012. It was not disputed during the course of hearing that the advance tax has per the assessed income of Rs.51, 80,800/- has been paid.

Investment Source once accepted by AO cannot be Rectified using S.154: ITAT sets aside Income Tax Assessment Order SMT. KANTA vs INCOME TAX OFFICER, CITATION: 2024 TAXSCAN (ITAT) 692

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the Income Tax Assessment Order, emphasizing that an Investment Source, once accepted by the Assessing Officer ( AO ), cannot be rectified under Section 154 of the Income Tax Act, 1961.

The bench found that AO wants to change his view in the garb of rectification of mistakes under Section 154 of the Income Tax Act, which was not permissible under the law. Further find that the impugned order of the AO was passed under Section 154 of the Income Tax Act and Section 154 of the IT Act mandates rectification of mistakes apparent from record. The Apex Court in the case of ITO vs. Volkart Brothers and others have held that “a mistake apparent on record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning, on points on which there may be conceivably two opinions. A decision on a debatable point of law was not a mistake apparent from the record.

ITAT directs Re adjudication after considering Documentary Evidence related to Genuine Activities of Assessee Trust CITATION: 2024 TAXSCAN (ITAT) 693 Counsel for Appellant: Shri H. V. Doshi

The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) directed re adjudication after considering the documentary evidence related to the genuine activities of assessee trust.

After reviewing the facts the ITAT bench of Siddhartha Nautiyal ( Judicial Member ) and Annapurna Gupta ( Accountant Member ) directed readjudication after considering the documentary evidence related to the genuine activities of assessee trust.

Delay in filing of Form No. 10-IC  has condoned as per CBDT Circular No. 19/2023: ITAT allows Appeal Sunpack Barrier Films Pvt. Ltd vs ADIT CITATION: 2024 TAXSCAN (ITAT) 694

The  Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) while allowing the appeal filed by the assessee  observed that the assessee condoned the delay in filing of Form No.10IC as per the CBDT circular No.19/2023.

The tribunal observed that assessee has fulfilled all the conditions as mentioned in the aforesaid Circular and the assessee has also filed Form No. 10-IC within the stipulated timelines as specified in the aforesaid Circular, and accordingly is eligible for claim of being taxed under Section 115 BAA of the Act.

Non filing of ITR: ITAT upholds Reassessment Proceedings M/s.Shivam Developers vs The Dy.CIT CITATION: 2024 TAXSCAN (ITAT) 695

The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) upheld the reassessment proceedings after finding that the assessee did not file the income tax return.

After reviewing the facts the ITAT bench of Siddhartha Nautiyal (Judicial Member) and Makarand V. Mahadeokar (Accountant Member) upheld the reassessment proceedings after finding that the assessee did not file the income tax return.

Reopening of Assessment is not permissible in respect of Protective Addition when reasons are only of Assumption: ITAT deletes Addition Sanjaybhai Ranchhodbhai Patel vs The Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 696

The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) after deleting the addition made by the assessing officer held that reopening of assessment is not permissible in respect of protective addition when reasons are only of assumption.

It was observed that As regards reopening not permissible in respect of protective addition, since the substantive addition has already been made in case of the firm, the assessing officer cannot make protective addition in the present assessee’s case which tantamount to double taxation.

Failure to produce documents with respect to LTCG arising out of Purchase and Sale of Shares: ITAT upholds Addition Smt. R. Shobha Lodha vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 697

The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) held that the assessee failed to produce the documents with respect to Long Term Capital Gain ( LTCG ) arising out of the purchase and sale of shares hence the bench upheld the addition made by the assessing officer.

After reviewing the facts the ITAT bench of  Mahavir Singh, (Vice President) and S.R. Raghunatha, (Accountant Member) held that the assessee failed to produce the documents with respect to Long TermCapital Gain ( LTCG ) arising out of the purchase and sale of shares.

Working Capital Adjustment on Outstanding Trade Receivable has to be Verified While Making ALP Adjustment on Notional Interest: ITAT Intas Pharmaceuticals Limited vs The Assistant Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 698

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) while remitting the issue of transfer pricing adjustment regarding interest on overdue trade receivables held that working capital adjustment on outstanding trade receivables has to be verified while making Arm’s Length Price ( ALP ) adjustment on notional interest.

The two-member Bench comprising Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) observed that working capital adjustment given by the assessee company while fixing the sale price has an impact on outstanding trade receivable on profitability while having sale proceeds realization which is incidental to the transaction of sale of finished goods were not verified by the AO/TPO.

Mere Difference of Opinion with AO not a Base to Exercise Revision Jurisdiction under Income Tax Act: ITAT The Mullanpur Garibdas Co-operative Multipurpose Society vs The PCIT-II CITATION: 2024 TAXSCAN (ITAT) 699

The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT ) has held that a mere difference in opinion with the Assessing Officer ( AO ) is not a valid base to exercise Revisionary Jurisdiction under the Income Tax Act, 1961. The Tribunal quashed the revision order under Section 263 of the act.

The Bench observed that the assessment order has recorded the details called for during the assessment proceedings and the order also states that “the books of account were examined and no adverse inference was drawn and the exemption claimed under Section 80P was allowed”.

Payment made Overseas for Providing Information on Tariff Change is not FTS: ITAT sets aside TDS Demand u/s 195 of Income Tax Act ACIT vs Lx Pantos India Private Limited CITATION: 2024 TAXSCAN (ITAT) 701

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) held that payment made overseas for providing information on Tariff Change is not FTS and set aside the demand of Tax Deducted at Source ( TDS ) under section 195 of the Income Tax Act, 1961.

The Two-member Bench comprising Kul Bharat (Judicial Member) and M. Balaganesh (Accountant Member) observed that it is not the case that overseas parties have their Permanent Establishment (“PE”) in India and derive income from the business set up and controlled in India. Hence, such an amount is not chargeable to tax in India and no tax needs to be deducted at source.

Claim as Residential House having no Basic Amenities for Habitation is invalid: ITAT upholds Disallowance u/s 54 of Income Tax Act DCIT vs Sandeep Hooda CITATION: 2024 TAXSCAN (ITAT) 702

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) found that the claim of a residential house having no basic amenities for habitation is invalid and upheld the disallowance under section 54 of the Income Tax Act, 1961.

The two-member Bench comprising Saktijit Dey (Vice President) and M. Balaganesh (Accountant Member) observed that the assessee had not constructed the residential house within the prescribed time and in fact had not constructed a residential house at all on or before 25.09.2017 which could be construed as a residential house, habitable for its dwelling. Accordingly, deduction under section 54 had been rightly denied by the AO.

Failure to prove genuinity of Income from Agriculture Activities: ITAT upholds Addition Shri D. Ramagopal vs ACIT CITATION: 2024 TAXSCAN (ITAT) 703

The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) recently upheld the addition made by the assessing officer due to failing to provide the genuine income from the agriculture activities.

After reviewing the facts the ITAT bench of Mahavir Singh, ( Vice President ) and Manoj Kumar Aggarwal (Accountant Member) observed that the assessee has made unsubstantiated claims of agriculture income. Whatever documents have been filed by the assessee to support this income, has been found to be bogus and non-genuine. Therefore, the claim made by the assessee has rightly been denied.

ITD can’t cure defect in Notice issued u/s 148 of Income Tax Act against Dead person by issuing Manual Notice in name of Legal Heir: ITAT quashes Reassessment Proceedings Late Lodaya Navalbai Raichand vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 704

The Bangalore  bench of Income Tax Appellate Tribunal ( ITAT ) while quashing the reassessment proceedings  held that the Income Tax Department could not cure defect in notice issued under section 148 of the Income Tax Act, 1961 against the dead person by issuing manual notice in the name of legal heir.

After reviewing the facts the ITAT bench of Chandra Poojari, (Judicial Member)and Beena Pillai (Accountant Member) quashed the reassessment proceedings held that the Income Tax Department could not cure defect in notice issued under section 148 of the Income Tax Act, 1961 against the dead person by issuing manual notice in the name of legal heir.

Invalid Notice issued prior to Filing of ITR: ITAT quashes Assessment order M/s. Mideast Integrated Steels Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 705

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order after finding that the notice issued by the Income Tax Department was invalid and which was filed prior to filing the Income Tax Return

The tribunal observed that the assessee had filed its return of income on 26.12.2016. Whereas, as per the observations of the Assessing Officer in the body of the assessment order, notice under section 143(2) of the Act was issued to the assessee on 23.09.2015. Thus, it is established on record that notice under section 143(2) of the Income Tax Act was issued and served on the assessee prior to the filing of the return of income by the assessee.

Amount transferred from Current Account to Deposit Account to maintaining shortfall of Accounts cannot be consider Income of Assessee: ITAT deletes Addition ITO vs M/s. Aaditra Foundations CITATION: 2024 TAXSCAN (ITAT) 706

The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) after deleting the addition made by the assessing officer held that the amount transferred from the current account to maintain the shortfall of the account could not be considered the income of the assessee .

It was observed that the assessee is holding a current account. In case of surplus funds beyond a certain threshold limit, the excess funds would be transferred to a deposit account and whenever there is a shortfall in the current account, the amount is transferred back to the current account. Therefore, it is a cyclical transaction and deposits could not be considered to be the income of the assessee.

Payment received by Non Resident assessee from Indian Company for IUC cannot be taxed as Royalty in India u/s 9(1)(vi) of Act on absence of DTAA: ITAT M/s. Globe Teleservices Ltd vs The Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 707

The Bangalore bench of Income Tax Appellate Tribunal (ITAT) held that payment received by the non resident assessee from an Indian Company for IUC could not be taxed as royalty in India under Section 9(1)(vii) of the Income Tax Act, 1961 in the absence of Double Taxation Avoidance Agreement (DTAA).

After reviewing the facts the ITAT bench of Beena Pillai, (Judicial Member )and Laxmi Prasad Sahu(Accountant Member) relied upon the decision of Karnataka High Court in case of Vodafone Idea Ltd. hold that the payments received by the assessee cannot be held to be royalty under section 9(1)(vi) of the Income Tax Act.

ITAT directs to verify Peak Credits in Undisclosed Bank Account of ICICI Bank Gulshan Grover vs ITO CITATION: 2024 TAXSCAN (ITAT) 708

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) directed to verify the peak credits in an undisclosed bank account of ICICI Bank.

After reviewing the facts the ITAT bench of Amit Shukla, (Judicial Member) and M. Balaganesh, (Accountant Member) observed that “the peak credit working requires factual verification by the  AO. Hence, it is appropriate to restore this issue to the file of the AO for verification of the peak credit workings and bring to tax only the peak credit as undisclosed income of the assessee”.

Assessee failed to Prove Entries of Credit against Addition section/s 68 of Income tax Act: ITAT allows Revenue Dept’s Appeal Income Tax Officer vs M/s. Mangalvani Commercial Pvt. Ltd. CITATION: 2024 TAXSCAN (ITAT) 709

In a recent ruling, the Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) confirmed the addition made under Section 68 of the Income Tax Act, 1961 while allowing the revenue department’s appeal. The Tribunal observed that addition is valid as the assessee failed to prove entries of credit against the same.

The two member Bench of the ITAT comprising of Anikesh Banerjee ( Judicial Member ) and Dr. Manish Borad ( Accountant Member ) observed that once it is not specifically provided that sum should be received only through banking channels and the mention is only about the credit entry, then it entails into all the credit entries and the AO is well within his jurisdiction to examine the same.

Rejection of Registration of Trust due to Mismatch of Trust name in Legal Documents and PAN database: ITAT directs Re adjudication Parul University Alumni Association vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 710

The  Ahmedabad  bench of Income Tax Appellate Tribunal ( ITAT ) directed readjudication after finding that the CIT(Exemption) rejected the registration of trust due to mismatch of trust name in legal documents and PAN database .

It was observed by the tribunal that the assessee/applicant trust has been able to reasonably explain the mismatch between the name as appearing in the legal documents submitted by the assessee/applicant trust before CIT (Exemptions) and the name as appearing in the PAN database.

No Addition u/s 68 of Income Tax Act on Share Premium allowable when Identity & Creditworthiness of Share Subscribers Proved: ITAT Dream Valley Barter vs ITO CITATION: 2024 TAXSCAN (ITAT) 711

In a recent ruling, the Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) held that once the assessee has proved the identity and creditworthiness of the share subscribers,the burden shifts upon the Assessing Officer ( AO ) to examine the evidence and made independent inquiries.The Tribunal found that the addition under Section 68 of Income Tax Act is not valid as the AO failed to point out the discrepancies.

The two member Bench of the ITAT comprising of Sanjay Garg (Judicial Member) and Dr. Manish Borad (Accountant Member) observed that the assessee discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction and the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries.

Payments on ‘Transactional Charges’ not covered u/s 194J(1)(ba) of Income Tax Act: ITAT deletes Penalty Ambience Private Limited vs ITO CITATION: 2024 TAXSCAN (ITAT) 712

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty order passed by the Commissioner of Income Tax  ( Appeal ) ( CIT(A) ) under section 271C. of the Income Tax Act, 1961 and observed that the payments on account of ‘transactional charges’ to be not covered by section 194J(1)(ba) of the act.

The two-member Bench comprising Anubhav Sharma (Judicial Member) and Dr. B.R.R. Kumar (Accountant Member) observed that the tax authority considered the ‘Transaction charges as ‘Professional charges’ paid to directors falling in limb (ba) of sub-section (1) of section 194J of the Act, it comes up that the PCIT has accepted the plea of the assessee that payments made to directors on account of sitting fee is allowable.

Ratification Order under Income Tax Act Passed on Non Existing Entity is Invalid: ITAT DCIT Cirlce-3(4) vs IDBI Bank Ltd CITATION: 2024 TAXSCAN (ITAT) 713

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that a rectification order passed in the name of a non-existent entity, despite informing Revenue regarding its merger is invalid.

The two member Bench comprising Prashant Maharishi (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that the Assessing Officer was aware about the merger still, the Assessing Officer chose to pass the rectification order in the name of a non-existent entity.

Payment to Pollution Control Board for Environmental Norms Violation does not amount to Penalty, No Disallowance under Income Tax Act: ITAT Ma jhaulia Sugar Industries Pvt. Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 714

The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) has held that payment made by the assessee to the Pollution Control Board for violation of environmental norms would not be penal and held that no disallowance can be made under the Income Tax Act,1961 against this.

The two-member Bench of the ITAT comprising Rajpal Yadav (Vice-President) and Rajesh Kumar (Accountant Member) observed that the adjustment under Section 143(1)(a) was made based on an incorrect claim which is apparent from information in the return as provided by the assessee.

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