This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the addition as the assessee has failed to explain the cash found during the search procedure.
The Division Bench of V. Durga Rao, (Judicial Member) and G. Manjunatha, (Accountant Member) upheld the addition and dismissed the appeal observing that the assessee could not file any evidence to justify source for cash found and seized during the course of search.
The Delhi Income Tax Appellate Tribunal (ITAT) has recently held that the defect of issue of section 143(2) notice prior to conclusion of reassessment proceedings is not curable for invoking section 292BB of Income Tax Act 1961.
After considering the contentions of the both the parties the division bench of the ITAT comprising Anil Chaturvedi, (Accountant Member) and narender Kumar Choudhry, (Judicial Member) allowed the appeal filed by the assessee and observed that, “Failure of the assessing officer, in reassessment proceedings, to issue notice under section 143(2) of the Income Tax Act 1961 prior to the finalizing the reassessment order could not be condoned by referring to the Section 292BB of the Income Tax Act 1961”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the order against educational institutions holding that the remuneration to guest faculties would not come under salary.
The Division Bench of ChallaNagendra Prasad, (Judicial Member) And Pradip Kumar Kedia, (Accountant Member) allowed the appeal observing that assessee could not be treated as assessee in default in terms of Section 201(1)/201(1A) where the right in the master exists to supervise and control the work done by the Guest Faculties month after month.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that the monthly rent paid by the company could not be allowed as expenditure, finding that the flats were never used for business purposes.
The Division Bench of Inturi Rama Rao, (Accountant Member) And ParthaSarathiChaudhury, and (Judicial Member) dismissed the appeal observing that the flats were never used for business purpose. “It has been clearly brought out that this flat was never used for any business purposes of the assessee-company and whatever evidences have been produced in the form of leave and license agreement, minutes of Board meeting, etc. fall in the category of self-serving documents. Even before us also, the ld. A.R for the assessee could not substantiate through evidence as to how the flat was used for the business purpose,” the Bench observed.
The case of the assessee was reopened u/s 148 on the basis of the AIR information that the assessee had deposited cash to the tune of Rs. 10, 46,000/- in his ICICI Bank Account. The assessment was completed under section 147 r.w.s 144 of the Act, with an addition of Rs. 7, 37,948/- by taking into consideration peak amount date 24.12.2017 on account of cash deposited in ICICI bank.
It was observed by the Income Tax Appellate Tribunal (ITAT) bench of Judicial Member Anikesh Banerjee and Accountant Member Dr. M L Meena that “Mere possession of pass books cannot be treated as books of accounts.” It was thus also held that the application of Section 68 is uncalled for the assessee and that the cash deposited by assessee is income from agriculture which does not come under purview of the taxable income.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has refused to condone the huge delay of 3047 days based on vague reasons and on the ground of absence of reasonable cause for filing delay in filing appeal.
The Division Bench of RamaKanta Panda, (Accountant Member) and Laliet Kumar, (Judicial Member) dismissed the appeal observing that, the medical treatment of the director of assessee society, was only related to eye, cough, cardiovascular. For such diseases, it could not be said that the assessee society was prevented from filing the statutory appeal before the CIT (A). No evidence had been filled out showing that the director of the assessee was hospitalized for more than 6-7 years.
The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Appeals)[CIT(A)] and deleted the addition made by the Assessing Officer (AO) of solid waste expenses of ₹7,73,73,600/-.
The bench of SidharthaNautiyal (Judicial Member) and Annapurna Gupta (Accountant Member) noted the observations of the CIT(A) that the provision created by the assessee to be allowable as an accrued liability taking note of the fact that income in relation to the solid waste disposal under taken by the assessee was already accounted for in the impugned year, and since the assessee could not carry out the disposal of solid waste on account of non-availability of proper site and had kept the waste at temporary site, it had booked the expenses for the disposal of the waste at the permanent site, commensurate to income accounted for by it ,on the basis of the actual estimation of expenditure which were required to be incurred.
The Mumbai Income Tax Appellate Tribunal ITAT has recently held that lease rental income earned from associated enterprises has no royalty as per Indo-US Direct Tax Avoidance Agreement (DTAA).
After considering the contentions of the both parties the division bench of the ITAT comprising B.R. Baskaran (Accountant Member) and Kavitha Rajagopal (Judicial Member) allowed the appeal filed by the assessee and further the bench observe that, “lease rental income earned by the assessee cannot be treated as royalty income, both under provisions of DTAA and Income Tax Act 1961”.
The Bangalore Income Tax Appellate Tribunal (ITAT) has recently held that income from sale of residential flats obtained under the joint development agreement is taxable as capital gain hence it was not business income.
After considering the contention of the both parties the division bench of the ITAT comprising N.V. Vasudevan, (Vice President) and Chandra Poojari, (Accountant Member) denied the assessee’s claim. And further observed that,”This assessment has been settled by the assessee under VSVS Scheme, 2020 when it is pending before CIT
(A) indicating full and final settlement of tax arrears under section 5(2) read with section 6 of Direct Tax Vivad Se Vishwas Act, 2020 in Form 5 has been passed by the Principal Commissioner of Income Tax (Central), Bengaluru confirming the payment of Rs.1, 64, 73,385/- under VSVS scheme, 2020”.
The Amritsar Bench of Income Tax Appellate Tribunal (ITAT) has held a mere mistake in declaring fund transfer between proprietorship business and proprietor would not warrant addition.
The Division bench of M. L. Meena, (Accountant Member) and S.H Anikesh Banerjee, (Judicial Member) allowed the appeal holding that it was a mere mistake not a concealment. “Both the Revenue Authorities were not able to prove that undisclosed cash was introduced to establish the capital Rs. 11 lacs which was omitted by the accountant of the assessee. The proper inflow of cash account is undoubtedly matched with cash withdrawals from the personal bank account of the assessee,” the Bench further observed.
The Bangalore Income Tax Appellate Tribunal (ITAT) has recently held that assessee could not claim capital gain exemption under section 54F of Income Tax Act 1961 if there was no proof for completion of construction within three years.
After considering the contention of the both parties the division bench of the ITAT comprising N.V. Vasudevan, (Vice President) and Chandra Poojari, (Accountant Member) denied assessee’s claim as per section 54Fof Income Tax Act 1961. The bench determined that assessee has not produced any license/permission for construction of building in the scheduled property from any authorities said to be constructed and there was no evidence in support of the fact that there was actually any construction within the stipulated time as per section 54F of the Income Tax Act 1961.
The Amritsar Bench of Income Tax Appellate Tribunal (ITAT) has upheld the penalty under Section 271A of the Income Tax Act 1961 as the assessee had failed to submit books of account before assessing authority.
The Division Bench of M. L. Meena, (Accountant Member) and S.H. Anikesh Banerjee, (Judicial Member) upheld the penalty and dismissed the appeal observing that, “The penalty for non-submission of books of account before the assessing authority was levied amount to Rs.25, 000/- u/s. 271A. The assessee was not able to depict any proper and reasonable cause for non-submission of the books of account before the revenue authorities,” the Bench further observed.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) invalidated the Income Tax proceedings against the deceased person. The death of assessee has not been communicated to the assessing officer. The Assessing Officer has issued notice under section 148 of the Income Act 1961 in the name of the assessee.
The Coram comprising the account member B.R. Baskaran and the judicial member Pavan Kumar Gadale observed that the section 148 has been issued and also the orders of the tax authorities have been passed in the name of the assessee, who has died in 2013 itself. It is a settled proposition of law that proceedings initiated and orders passed in the name of the dead person are not valid.
The Bangalore bench of Income Tax Appellate Tribunal (ITAT) ruled that if there are conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court is binding in the jurisdictional area of the respective High Court.
Considering the decision, the bench of Laxmi Prasad Sahu (Accountant Member) and N V Vasudevan (Judicial Member) ruled that the present appeals of the Assessee relate to TDS returns filed prior to 1.6.2015 the levy of interest under section 234E of the Income Tax Act would not be valid.
There is a discrepancy in the present case between the rulings of the Gujarat High Court and the Karnataka High Court. Nonetheless, the Karnataka HC is the court with jurisdiction. The Karnataka HC’s decision so takes precedence under the ITAT’s ruling.
The Mumbai Income Tax Appellate Tribunal (ITAT)has recently while deleting additions made under section 153C of Income Tax Act 1961 observed that Information relied upon by the assessing officer did not have any bearing to search conducted.
The Mumbai Income Tax Appellate Tribunal (ITAT)has recently while deleting additions made under section 153C of Income Tax Act 1961 observed that Information relied upon by the assessing officer did not have any bearing to search conducted.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has held that the disallowance of Employment Provident Fund (EPF) shall be added while taxing 40% of income from tea plantation business as business income.
The Single Bench of Rajesh Kumar (Accountant Member) allowed the appeal and set aside the impugned order and observed that, “We have also examined the above computation of income and find that the income of Rs. 6, 92,424/- is be treated as business income being 40% of income of manufacturing of tea as per Rule 8 of Rules, 1962 instead of Rs. 23, 43,506/- assessed as per intimation u/s 143(1) of the Act. We have perused the Rule 8(1) of Rules, 1962 vis-a-vis decision of the Calcutta High Court and also the decisions of Tribunal and find that the case of the assessee is squarely covered by these decisions.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that estimation of cash based on surmises and conjectures cannot be made in rectification order u/s 154.
Hearing the opposing contentions of either sides as presented by Shri Divyansh Jain, Advocate, and the AR on behalf of the assessee and by Ms. PrincySingla, the Senior DR, on the Revenue’s behalf and thereby perusing the materials available on record, the Delhi ITAT observed: “We have heard both the parties and perused the records. The only grievance raised by the assessee before us is that addition of Rs.10, 00,626/- sustained u/s 69A of the Act by the authorities below is not correct in law. At the outset, we note that AO has already passed an order u/s 143(3) of the Act wherein no such addition was made. Subsequently, order u/s 154 was passed wherein the impugned addition was made. Relevant portions of original assessment order as well as rectification order u/s 154 have already been reproduced herein above.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that there can be no deemed rent on flats sold by builders declared as stock-in-trade.
Allowing the assessee’s appeal, the Pune ITAT held: “In the light of the above, we hold that the order of CIT (A) is not justified in confirming the view of AO in levying deemed rent u/s. 23(4) of the Act on account of income from house property. Thus, the grounds raised by the assessee are allowed. In the result, the appeal of the assessee is allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that no addition could be made under Section 153C of the Income Tax Act 1961 as the dumb documents found from the third party were not containing the assessee’s name.
“In the present case, material found at the premises of Rajiv Gupta has been taken as if they are material found during a search at the assessee, Atul Kumar Gupta, which is not at all correct. The assessee’s plea that the assessee’s name is nowhere directly mentioned in these documents found at Rajiv Gupta place whereas it is mentioned as Dildar (Atul sir) which ipso facto cannot mean the assessee.”
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) recently held that the valid satisfaction is required to initiate reopening of assessment under section148 of Income Tax Act.
The Coram comprising the judicial member V. Durga Rao and the account member G. Manjunatha observed that on the basis of reasons submitted by the assessing officer, ‘the said satisfaction’ constitutes a valid satisfaction as required under law. Therefore we reject the argument of the assessee.
The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the trust was not eligible for section 12AB registration under pre amended deed.
The Coram comprising Kavitha Rajagopal(Judicial member) ,B.R. Basakaran (Accountant Member) provided one more opportunity to furnish the details of registration of the amendment carried out by the assessee to the trust deed with the charity commissioner and set aside the impugned order passed by commissioner of Income Tax (CIT(E)).The appeal filed by assessee got allowed.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that late fee u/s 234E, is not leviable for belated filing of TDS statements, filed prior to 01.06.2015
Thus, allowing the assessee’s appeals, the Delhi ITAT held: “Since the demand under charging Section 234E for late filing of TDS return arising from belated TDS statements filed prior to 01.06.2015, the impugned late fee imposed requires to be deleted. In the result, all the three captioned appeals of the assessee are allowed.”
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the application of General Anti-Avoidance Rule (GAAR) provisions could not take away the tax benefit under Double Taxation Avoidance Agreement (DTAA).
The Division Bench of N. K. Billaiya, (Accountant Member) And S.H. Anubhav Sharma, (Judicial Member) directed the AO to delete the impugned disallowance and allow the treaty benefit to the assessee as per the relevant provisions of the treaty. “The AO has also invoked the doctrine “substance over form” to deny the benefit of Article 13 (4A)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that State cannot clutch the undue benefit of mistake committed by the taxpayer
“The fact that the exempt income received by the assessee of Rs. 2,093 (Rupees Two thousand and ninety-three only) has not been in dispute. The disallowance, in any case, cannot be more than the exempt income earned. The state cannot clutch the undue benefit of the mistake committed by the taxpayer. Hence, we decline to interfere with the order of the CIT (A). As a result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 14/02/2023.”
The Income Tax Appellate Tribunal ( ITAT ), Jaipur Bench, has recently, in an appeal filed before it, held that penalty u/s 271B of Income Tax Act cannot be imposed for not getting books of accounts audited for violation of S. 44AB.
Allowing the assessee’s appeal, the Jaipur ITAT held: “Therefore, while summing up the entire discussion and while relying upon the different decisions as mentioned supra, I am also of the view that in the instant case since assessee was not found to have maintained the books of account, therefore, no penalty can be imposed for not getting the books of accounts audited as prescribed under section 271B of the Act for violation of section 44AB of the Act. Thus, keeping in view, the binding precedent and principles laid down by the High Courts, I set aside.”
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has recently, in an appeal filed before it, held that penalty u/s 271F cannot be levied, if there is “reasonable cause”
“The Bench has deeply considered the submissions of the ld. AR of the assessee and found that it does not suffer from any infirmity as no building approval is required for construction area of 870 Sq Ft and property tax was not leviable on the residential house property. The assessee has shown the investment of source like (i) Rs.1,80,000/- (given by the wife of the assessee out of her Istri Dhan (ii) Rs.90,000/- (given by the father of the assessee in installments) (iii) Rs.78,000/- (out of the funds available with the assessee) for which the assessee has filed an affidavit (PB 30-31). The assessee has also filed an affidavit of Contractor Shri Om Prakash Kumawat (PB 32-33). The Bench has also given its verdict in the assessee’s case in ITA No.95/JP//2022 dated 15-09-2022 for the assessment year 2011-12 on the issue of penalty u/s 271F of the Act.”, the ITAT Panel consisting of Sandeep Gosain, the Judicial Member, further observed.
The Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, has recently, in an appeal filed before it, deleted the penalty proceedings, on finding that the notice issued u/s 271(1)(c) of Income Tax Act is omnibus.
“From the above, it is evident that non-specification of the limb of the notice would render the penalty proceedings invalid. Accordingly, respectfully following the precedent, we set-aside the orders of the authorities below holding that notice u/s 271(1) (c) is omnibus notice, thus defective which goes to the root of the matter. Accordingly, the appeal of the assessee stands allowed.”
The Mumbai Income Tax Appellate Tribunal (ITAT) while providing relief to Linklaters LLP ruled that remuneration received by a law firm for providing legal services is not taxable as Fee for Technical Service (FTS) as per the Indo-UK treaty.
After considering the contentions of both the parties the division bench of the ITAT comprising B. R. Baskaran, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) allowed the appeal filed by the assessee and observed that revenue has failed to prove that the same would fall under the category of ‘fee for technical services’ as envisaged in Article 13 of the India-UK DTAA and thereby holding that the same cannot be brought to tax as ‘FTS’ as per section 90(2) of the Income Tax Act,1961.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the revision order observing that the Assessing Officer (AO) had failed to conduct investigation regarding cash deposits during the demonetization period.
The Division Bench of Mahavir Singh, (Vice President) and Manoj Kumar Aggarwal, (Accountant Member) noted that the cash deposited by assessee in specified bank notes were received during demonetization period and nothing was examined by the AO while framing assessment. The appeal filed by the assessee was dismissed accordingly.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under Section 54F was allowable to the purchase of undivided share of land.
The division Bench of Mahavir Singh, (Vice President) and Manoj Kumar Aggarwal, (Accountant Member) upheld the decision of Commissioner of Income Tax Appeal (CIT (A)) and dismissed the appeal filed by the revenue holding that “The CIT (A) has allowed exemption u/s.54F by noting that the exemption is not hit because the assessee has actually purchased undivided share of land on 22.12.2011.”
The Mumbai Income Tax Appellate Tribunal (ITAT) recently held that market to market loss in forex business has no notional loss which was allowable as expenditure.
After considering the contentions of both the parties the division bench of the ITAT comprising Prashant Maharishi, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) allowed the appeal filed by the assessee and observed that “marked to market loss is not a notional loss and is, therefore, allowable expenditure”
The Mumbai Income Tax Appellate Tribunal (ITAT) has recently held that the assessment order passed without complying with the procedure of section 144B of Income Tax Act 1961 is invalid.
After considering the contentions of the both sides the division bench of the ITAT comprising Prashant Maharishi, (Accountant Member) and Kavitha Rajagopal, (Judicial Member) allowed the appeal filed by the assessee and the bench observed that, “The mandatory procedure prescribed under section 144B of the Income Tax Act 1961 if not followed the same would make the assessment order and the draft assessment order as non-est.”.
The Delhi Income Tax Appellate Tribunal has recently held that sale of software is not royalty under article 12(3) of Indo –US treaty.
After considering the contentions of the both sides the division bench of the ITAT comprising G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) allowed the appeal filed by the assessee and the bench observed that, amount received by the assessee from sale of software is not in the nature of royalty under Article 12(3) of India USA DTAA.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that no Tax Deducted at Source (TDS) shall be deducted on fee paid by Hindustan Aeronautics to CGTM France for availing flight test services.
The Division Bench of Chandra Poojari, (Accountant Member) and George George K., (Judicial Member) allowed the appeal observing that, “The Tribunal has already held that there was no question of deduction of TDS on the payment made to CGTM, France for the service rendered by them to the assessee and the payment made to them does not fall under the “fees for technical service.” Hence, it does not attract the provisions of section 195 of the Act so as to deduct TDS.”
The Income Tax Appellate Tribunal (ITAT), New Delhi Bench quashed disallowance on lottery expenses as the Assessing Officer (AO) traveled beyond jurisdiction.
The Tribunal of Anil Chaturvedi, Accountant Member and Challa Nagendra Prasad, Judicial Member observed that “We hold that the Assessing Officer traveled beyond his jurisdiction and made disallowances under Section 37(1)/40A (3) of the Income Tax Act which were not the items for consideration in the limited scrutiny and, therefore, the assessment order passed under Section 143(3) of the Act is liable to be quashed.”
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed re-assessment proceedings and noted that “Mere putting of seal as approving statement is not sufficient”.
The Tribunal further said that “I am unable to agree with the contention of the Senior DR that the putting seal as statement of approval is sufficient as the any exercise in the part of the PCIT for application of mind towards the said material which was gathered by the AO and the reasons recorded by him for the purpose of initiation of reassessment proceedings and issuance of notice under Section 148 of the Income Tax Act.”
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that assessment and rectification order does not contain DIN and that order number is invalid.
Thus, allowing the assessee’s appeals, the Pune ITAT held: “We reiterate that the foregoing sole seized document is totally “dumb” as there are no clear-cut entries which could suggest any payments or receipts, as the case may be, involving this assessee. Faced with the situation, we accept the assessee’s pleadings as well as the main appeal ITA No.47/PUN/2021 and dismiss the Revenue’s cross appeal ITA No.59/PUN/2021 as the necessary corollary.”
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, held that CAM charges are subject to TDS u/s 194C of the Income Tax Act.
Thus, allowing the assessee’s appeals the Delhi ITAT held: “Hence, we hold that the provisions for rent are governed by Section 194I and CAM charges by Section 194C of the Act. The AO is directed to re-compute the CAM charges, taking into consideration the two sections mentioned above.”
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