This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that the assessee’s delinquency and lethargy in pursuing the matter before the tax authorities would attract cost.
The Tribunal observed, “Since the assessee has not appeared before any of the tax authorities below, in the interest of justice, we are of the view that the assessee may be provided with an opportunity to present his case properly before the CIT(A)”. Finally, the coram of Narender Kumar Choudhry, the Judicial Member and B.R Baskaran, the Accountant Member thus held: “Since the assessee was delinquent and lethargic in pursuing his matter before the tax authorities, we impose a cost of Rs. 2000/- upon the assessee, which shall be paid to the credit of the Income Tax Department as ‘Other fees’ within two months from the date of receipt of this order.”
The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently invalidated the Income Tax Notice under Section 148 and the reassessment proceedings due to non-compliance with Section 151 of the Income Tax Act, 1961. Additionally, it was found that the approval of the reassessment order by the Joint Commissioner of Income Tax (JCIT) was not recorded.”
The bench consisting of two members, the Judicial Member C. M. GARG and the Accountant Member B. R. R. Kumar observed that the CIT (A) noted that the additional CIT (A) had mentioned a word “approved” on the proposal of the Assessing Officer for issuance notice under Section 151 of the Income Tax Act. He has not recorded his satisfaction towards reasons recorded by the Assessing Officer. The power vested to the Commissioner/ Additional CIT as in the case of the present assessee to grant or not to grant approval is coupled with a duty. Such duty cannot be exercised casually and in a routine manner and he is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. The CIT (A) had issued an order stating that the notice issued under Section 148 of the Income Tax Act, as well as the reassessment proceedings and resulting reassessment order, are invalid and should be cancelled. The reason for this is that they were deemed legally invalid and were not carried out in accordance with the mandatory provision of section 151 of the Income Tax Act. As a result, the appeal filed by the revenue was dismissed.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that Section 115BBE of the Income Tax Act 1961 would not be applicable as the undisclosed assets deposited in the bank accounts in the post demonetisation and assets were found in the premises prior to the demonetisation period.
The two-member Bench of Pawan Singh, (Judicial Member) and A L Saini, (Accountant Member) held that the amendment in section 115BBE of the Income Tax Act came into force only on 15.12.2016 whereas the search was conducted on 16.08.2016 and the assessee had paid tax at 30%. Since the search in the case of the assessee was carried out before the amendment the addition ought to have been made in terms of the prevailing provision, the addition made by the assessing officer invoking Section 115BBE of the Income Tax Act, provision of which came into force only on 01.04.2017, would not be sustainable, the Tribunal ruled.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that addition would not sustain once the genuineness of transaction is proven.
The two-member Bench of Pawan Singh (Judicial Member) and A L Saini (Accountant Member) allowed the appeal holding that the addition made by the Assessing Officer in reassessment proceedings was not sustainable in law. The Bench further held that there was no finding that any details, documents and evidence supplied by the assessee to the AO in respect of payment/repayment in the same year were found to be incorrect or erroneous or false. The bench added that, such addition cannot be made where the assessee has paid the due amount in the assessment year itself.
The Surat Bench of Income Tax Appellate tribunal (ITAT) has refused to condone the delay in filing the appeal holding that the legal illiteracy of common man could not be treated as an excuse.
A Single Bench of Pawan Singh, (Judicial Member) considering the submission of the revenue and persuading the record carefully held that in the application for condonation of delay, the assessee had casually contended that he was a common man and was not aware,could not be sufficient and reasonable ground for condoning the delay in filing appeal before the Tribunal. Accordingly the appeal was dismissed by the tribunal.
The Income Tax Appellate Tribunal (ITAT) of Jaipur bench has recently held that, no penalty shall be levied under Section 271(1)(c) of Income Tax Act 1961 on payment received on sale of penny stock shares.
It was observed by the tribunal that the assessee has already shown the income in response to the notice issued under Section 148 of the Income Tax Act. Further, as regards the addition of Rs 21,300/- amount of income received from sale of penny stock has been made on account of the meageramount and on account of difference of opinion only. Therefore, the two-member bench of Sandeep Gosain, (Judicial Member) andRathodKamleshJayantbhai, (Acountant Member) allowed the appeal filed by the assessee.
The Income Tax Appellate Tribunal (ITAT) has recently quashed an ex parte order passed due to mistake of services of notice to email of assessee’s counsel.
The assessee in his prayer for condonation of delay prayed that the impugned order of the CIT(A) was received directly into the SPAM folder of the counsel of the assessee and was not noticed.
After considering the materials and facts furnished by the both parties, the tribunal confirmed that the delay was caused due to the mistake of service of notice to email of assesse’s counsel. Therefore, the two-member bench of Sandeep Gosain, (Judicial Member) &RathodKamleshJayantbhai, (Accountant Member) restored the matter back to the file of the CIT(A).
The assessee Seth Paannalalji is a Trust created on 15.08.2001. It is registered under the M.P. Public Trust Act. It was also registered by the Income tax Department under Section 12A as well as section 80G of Income Tax Act, 1961, with the effect from 10.01.2003. However, in terms of the amendments made in Income Tax Act, 1961, the Assessee is required to obtain re-registration under Section 12A as well as 80G. Therefore, to comply with such requirements, the assessee filed two separate applications for registration under Section 12A as well as 80G of the Income Tax Act.
The two member bench consisting Judicial Member Vijay Pal Rao and and Accountant Member B M Biyani observed that the assessee has clearly mentioned “To Expenditure on the object of the Trust” in Income & Expenditure A/cs and the auditors have audited those statements after due verification. The Tribunal further held that the assessee has given donations out of current year income consisting of dividend, interest and mutual funds and not out of income which was accumulated or set apart brought the bench to conclude that the twin-reasons assigned by CIT(E) for rejection of assessee’s application were not valid. In result, Appeal filed by the assessee was allowed.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has quashed the disproportionate addition towards co-owners of land as the booking advances were treated as unexplained cash credits.
The two-member Bench of Pawan Singh, (Judicial Member) and A. L. Saini, (Accountant Member) allowed the appeal holding that the addition in the hands of the co-owners, therefore the assessee under consideration should not be treated differently. The Bench further observed that the Assessing Officer had failed to conduct the enquiry and issue the notice under Section 131 of the Income Tax Act to the persons from whom the assessee
had received booking advances and assessee’s mother was one of the co-owners of the land and whose assessment was framed under section 143(3) of the Income Tax Act, wherein the Assessing Officer had not made any addition in her hand.
The Income Tax Appellate Tribunal (ITAT) of Delhi bench has held that the cost of new property has to be assessed as per collaboration agreement for exemption under section 54 of the Income Tax Act, 1961.
A two-member bench comprising ShamimYahya, Accountant and S Anubhav Sharma, Judicial observed that the cost of the new property is not the cost of a share in the plot alone but all the other constructed and covered area received by the assessee. It was held that for Section 54 of the Act, the mere value of 32.5% ownership rights on the proportionate basis of share consideration of Rs. 5,50,00,000/- is not correct and the cost of new property has to be assumed to be Rs. Rs. 3,57,50,000/- being the value of interests and share of the assessee in the new construction, as per the collaboration agreement and the sale deed terms.
The Income Tax Appellate Tribunal (ITAT) of Delhi bench has held that loss incurred on chit fund is allowable as a business loss if money is utilized for business purposes.
The two bench members, Shri. N.K. Billaiya,( accountant) and Shri. Anubhav Sharma, (judicial) observed that subject to the satisfaction that the Chit Fund money is utilized for business, it can be allowed as an expenditure. The ITAT restored the matter to the files of AO to inquire into the question of the use of the Chit Fund money for business and to allow the same as business expenditure.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, in an appeal filed before it, held that interest income from co-operative bank credited to reserves in the balance sheet is eligible for deduction under section 80P(2)(d) of the Income Tax Act.
The ITAT coram of S. Rifaur Rahman, the Accountant Member, and Sandeep Singh Karhail, the Judicial Member, thus held: “Therefore, in view of the above, we are of the considered opinion that the assessee is entitled to deduction under section 80P(2)(d) of the Act on the entire amount of interest income of Rs.1,99,90,770 received from the Co-operative Bank. As a result, grounds raised by the assessee are allowed.”
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made on account of income received from sale of scrap/Waste.
The two-member bench of Anil Chaturvedi, Accountant Member and Anubhav Sharma, Judicial Member while considering the contentions of the both parties, observed that, AO made addition on the basis on the basis of research undertaken on the internet. Thus he had not brought on record any concrete material to demonstrate that the sale of Scrap recorded by the assessee is understated. Therefore, the bench allowed the appeal filed by the assessee and deleted the addition made by the AO.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in appeals filed before it, held that fee under Section 234E of the Income Tax Act is leviable, only for defaults committed after June 1st, 2015.
Finally, the ITAT coram of R.S Syal, the Vice- President, and S.S Viswanethra Ravi, the Judicial Member, thus concluded and held: “Similar view has been taken in Jiji Varghese VS. ITO (TDS) &Ors., holding that no interest under Section 234E can be imposed for the periods of the respective A.Ys. prior to June 1, 2015. Thus, the order of NFAC, Delhi is not justified in confirming the levy of fee under Section 234E of the Act and it is set aside.”
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that interest income arising from the investment made out of reserve fund is exempted under Section 80P(2)(a)(i) of the Income Tax Act, 1961.
A Single member Bench of SuchitraKamble, (Judicial Member) allowed the appeal holding that the assessee being cooperative society, any income recorded in sub-section 2 of the Section 80P of the Income Tax Act, there should be in accordance with and subsection to the provisions of Section 80P, of the Income Tax Act, the same was specified in sub-section 2 in computing the total income of the assessee. The Bench held that therefore, interest income arising from the investments made out of reserve funds is exempt under Section 80P(2)(a)(i) of the Income Tax Act.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed deduction to bad debts written off since the unpaid portion of sale amount and bad debts written off claims were the same.
The two member Bench of C.M. Garg, (Judicial Member) and M. Balaganesh, (Accountant Member) allowed the appeal holding that the assessee had claimed bad debts written off in respect of sales made during the year, that the assessee had indeed offered the sales amount initially to tax which would be in compliance to the provisions of Section 36(2) of the Income Tax Act. Since part of the said sales amount was not received, the Bench held that the assessee had claimed the same as bad debts written off and would be allowable.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that disallowance under Section 14A of the Income Tax Act, 1961 could not exceed the exempted limit.
The two-member Bench of ShamimYahya, (Accountant Member) And Anubhav Sharma, (Judicial Member) allowed the appeal filed by the assessee observing that the AO had mechanically applied the formula given in Rule 8D, hence he found that AO had computed the disallowance which was far in excess of the exempt income disclosed by the assessee which was not logically or prudently possible. Referring to the decision in Joint Investment (P) Ltd. vs. CIT, aa the Bench held that disallowance under Section 14A of the Income Tax Act could not exceed the exempt income.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that assessment order passed under Section 147 of the Income Tax Act, 1961 against non-existing entities is void ab initio.
AO had fallen in error in not taking cognizance of the fact of merger of the assessee company and that it had lost legal existence for the purpose of the Act, still the assessment order was passed against non-existing entity.Two member bench of ShamimYahya, (Accountant Member) and Anubhav Sharma, (Judicial Member) allowed the appeal filed by the assessee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed for denovo adjudication on finding that chronic disease of the assessee had resulted in ex parte assessment and ex parte appellate order.
A Single Bench of C.M. Garg,(Judicial Member), allowed the appeal and restored it back and directed for denovo adjudication observing that, “I am of the view that while deciding the condonation petition of assessee it has already observed that the assessee was suffering with chronic diseases and therefore, he could not file appeal within prescribed time limit and this cause was continuous and thus was continuously persisting in the life of the assessee which resulted into ex parte assessment as well as ex parte first appellate order.”
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently while quashing the assessment order passed by the AO held that the technical approval granted under Section 153D of Income Tax Act, 1961 is not valid.
It was observed by the tribunal that, in the instant matter of record by the own admission of JCIT that the approval granted is merely technical and without appraisal of evidence or enquiries. Finally, after considering the facts and circumstances of the case the two member bench Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) observed that the observations made by the JCIT, approval granted under Section 153D Income Tax Act apparently did not meet the requirement of law and hence assessment orders passed in consequence of such non-est approval is a nullity in law.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Income Tax additions cannot be made merely based on retracted statements.
The two member Bench of B. R. R. Kumar, (Accountant Member) and Yogesh Kumar US, (Judicial Member) allowed the appeal filed by the assessee holding that, “it is clear that the source of investment made against the share capital/ premium/ warrants, stands explained, as appellant and investor companies, have substantiated the same by furnishing evidences and proved the Identity, genuineness of transactions and creditworthiness of investor companies.”
The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that the penalty cannot be imposed under Section 271AAA(2) when the assessee disclosed undisclosed income in a statement under Section 132(4) of the Income Tax Act.
The two Bench consisting of an Account Member Dr. B. R. R. Kumar and a Judicial Member SaktijitDey observed that there was no undisclosed income relating to the previous year which could have enabled the Assessing Officer to invoke the provisions of section 271AAA of the Income Tax Act. Therefore, there was no valid reason to interfere with the decision of the Commissioner (Appeals). Grounds raised by the Revenue was dismissed. On the basis of the facts, it is clearly established that whatever undisclosed income earned by Assessee was offered to tax in the manner specified in sub-Section (2) to Section 271AAA of the Income Tax Act. That being the case, assessee’s case falls within the exception provided under section 271AAA (2). Hence, no penalty can be imposed under Section 271AAA of the Income Tax Act. In result, both appeals filed by revenue were dismissed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently held that payments made to the non-resident services providers on account of ad film production line services are not Fee for Technical Service (FTS) hence not taxable.
After considering the submissions of both parties the two-member bench of the tribunal G S Pannu, (President) and Astha Chandra, (Judicial Member) dismissed the appeal filed by the revenue and held that “payments made to the non-resident service providers by the assessee are not chargeable to tax in India and thus no disallowance under Section 40(a)(ia) of the Income Tax Act is called for on account of non-deduction of tax at source.”
The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently allowed the exemption under Section 272(1) due to compliance with the statutory notice under Section 142 (1) of Income Tax Act 1961.
The two-member Bench of Accountant Member M. Balangesh and a Judicial Member C.M. Garg observed that “We find that the counsel for the assessee had placed on record the evidence of having sought an adjournment in income tax portal from the Assessing Officer by stating the reason that its authorized representative Shri K C Garg is busy with filing of tax audit returns and information called for require some time for compilation. The evidence in this regard is placed on record by the counsel .Moreover, the assessee had also furnished the complete details called for before the Assessing Officer. Hence we hold that the assessee had indeed complied with the statutory notice under Section 142(1) of the Income Tax Act by seeking adjournment and later furnishing the requisite details. Hence there cannot be any levy of penalty under Section 272A(1)(d) of the Income tax Act for non-compliance with statutory notice. Accordingly, the ground raised by the assessee is allowed.”
The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently quashed the penalty order under Section 271(1)(c) of the Income Tax Act for lack of clarity in particular.
The bench consisting of two members, the Judicial Member Chandra Mohan Garg and the Accountant Member Pradip Kumar Kedia observed that based on this satisfaction, the notice under Section 274 read with Section 271(1)(c) of the Income Tax Act was issued. However, the penalty has been imposed on the grounds of furnishing inaccurate particulars of income. Thus, the basis for drawing satisfaction under Section 271(1B) of the Income Tax Act and the actual basis for imposition of penalty are quite different. The impugned action of the Assessing Officer for imposition of penalty on a different ground than the ground on which the satisfaction was drawn, is wholly untenable in law, the Bench observed. Consequently, the impugned penalty orders passed by the Assessing Officer were set aside as per the decision in the case HatisPrabhu Das Chaudhary vs. ITO and the penalty imposed under Section 271(1)(c) of the Income Tax Act was canceled. In the result, the appeal of the assessee was allowed.
The Income Tax Appellate Tribunal (ITAT) of Delhi bench has held that Cane Development Council is a local authority under section 10(20) of the Income Tax Act, 1961.
The two bench members, Shri C.M Garg(judicial), and Shri M.Balaganesh (accountant) concluded that the provisions of Section 2(24) of the Act would not cover such grant in aid to be included as an income for reasons that it cannot be naturally imputed that the activity of the construction of roads was any part of the business of Cane Cooperative Society and it did not relate to the normal business activities of the assessee cane committee. The ITAT held that “the assessee to be a ‘local authority’ and its receipts are not chargeable to tax in the facts and circumstances of the instant case.” The appeal of the assessee is allowed.
The Surat Bench of Income Tax Appellate Tribunal (ITAT) has held that the fair market value determined by the registered valuers for the purpose of computation of taxable value should not be ignored.
The two member Bench of Pawan Singh, (Judicial Member) and A. L. SAINI, (Accountant Member) held that the registered valuer of the assessee had taken into account all these facts and circumstances of the land to determine the fair value, therefore fair market value determined by the registered valuers should not be ignored. The Bench partly allowed the appeal by determining the fair value of both the properties at the rate of Rs.80/- per square metre for the purposes of computation of indexed cost of acquisition to determine the taxable long term capital gain holding that would meet the end of justice.
The Delhi bench of Income tax appellate tribunal (ITAT) quashed the assessment order and penalty which was passed by Deputy Commissioner of Income Tax (DCIT) and held that No addition could be made on unaccounted income since the assesse already included sale of jewellery as Long term capital gain in return of Investment.
The two-member bench comprising (N.K.Billaiya) accountant member (Anubhav Sharma) judicial member stated that the assessee is a former Central Government Employee who retired from the office of Accountant General, it can be assumed that she must have been holding some jewellery. The respondent, without trying to make any further inquiries from the assessee to ascertain the truthfulness of her holding of the jewellery, proceeded to out rightly discard the explanation. The assessee was required to give explanation of the reasons for receiving the credit entry in her bank which she has given on the basis of the invoice issued by the JBL. To discredit the same and to connect the assessee with the pseudonymous entries of cash, some evidence or circumstance based on preponderance of probability was required to be shown by the respondent-revenue. While allowing the appeal, the Court quashed the impugned assessment order and penalty order.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the addition cannot be made under Section 153C of the Income Tax Act 1961 without finding any incriminating material during the search and seizure operations.
The two-member Bench of SaktijitDey, (Judicial Member) and B.R.R Kumar, (Accountant Member) dismissed the appeal filed by the revenue referring to a recent judgement delivered in the case of PCIT vs. AbhisarBuildwell P. Ltd held that no addition could be made in an assessment under Section 153C of the Income Tax Act in absence of any incriminating material found as a result of search and seizure operation.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) recently held that the relief under Section 90 of the Income Tax Act, 1961 should not be denied solely on the ground of a delay in filing Form 67.
The bench, consisting of two members, Vice President RajpalYadav and Accountant Member Manish Borad, observed that the decision in the case of Sonakshi Sinha (supra) was squarely applicable to the facts of the present case. Therefore, the Income Tax Appellate Tribunal held that the Assessing Officer should not have denied the relief under Section 90 of the Income Tax Act merely based on the delay in filing Form 67. In result, appeal of the assessee was allowed.
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