This yearly digest analyzes all the ITAT stories published in the year 2023 at taxscan.in
The Raipur bench of Income Tax Appellate Tribunal (ITAT) has recently upheld the decision of the lower authority held that unsecured loans are unexplained cash credits under Section 68 of Income Tax Act 1961, if failed to prove authenticity of loan transactions.
While considering the contentions, the tribunal observed that the assessee had failed to discharge the primary onus that was cast upon him as regards proving the identity and creditworthiness of the aforementioned lenders, as well as genuineness of the transactions under consideration. Hence the single bench of Ravish Sood, (Judicial Member) upheld the decision of the lower authority and dismissed the appeal filed by the assessee.
The Pune bench of The Income Tax Appellate Tribunal (ITAT) has recently upheld the addition made on mismatch in sales turnover reported in audit report and Income Tax Return (ITR).
The tribunal observed that, the assessee’s case was mainly selected on ground of ‘mismatch’ between the figures shown by the assessee in income tax return vis-a-vis others. The AO has made the addition to the turnover of the assessee based on this mismatch only. Further the tribunal noted that “the total receipts of the assessee for financial year 2014-15 are Rs. 1,95,44,540/-. Since the assessee follows a cash system of accounting, the total actual receipts of Rs.1,95,44,540/- will be the actual turnover of the assessee for financial year 2014-15. However, the assessee in the profit and loss account has shown the turnover of Rs.1,75,69,979/-only. Therefore, the AO has added the difference.” Therefore, the two-member bench of the S.S. Godara, (Judicial Member) and Dr. Dipak P. Ripote, (Accountant Member) dismissed the appeal filed by the assessee.
The Lucknow Bench of Income Tax Appellate Tribunal (ITAT) has held that the capital gain exemption under Section 54 of the Income Tax could not be denied on inadvertent and bonafide typographical error.
The two-member Bench of Sudhanshu Srivasatava (Judicial Member) and Anadee Nath Missra (Accountant Member) observed that, neither assessment order nor the Commissioner of Income tax (CIT(A)), in their respective orders, had taken the view that on merits the assessee was not eligible for benefit under Section 54 of the Income Tax Act, the bench observed. The Tribunal Bench allowed the appeal holding that the assessee had already made this claim in the return of income, although, in an inadvertent and bonafide typographical mistake, the section under which the benefit was claimed, was erroneously mentioned as Section 54F instead of Section 54 of the Income Tax Act which was the correct section.
The Hyderabed Bench of Income Tax Appellate Tribunal (ITAT) has held that a meritorious case could not be thrown at threshold when proper documents are produced.
The two member Bench of Ramakanta Panda (Accountant Member) and K. Narasimha Chary (Judicial Member) observed that there was no material to contradict the fact that there were insolvency proceedings against DHFL and ultimately PHFL took over the DHFL Company and also that Bank of Baroda entered the shoes of DHFL in respect of this particular loan. The Bench held that, if the assessee’s documents were considered in the assessee would have got a fair chance of winning the matter. The Bench allowed the appeal holding that “A meritorious case cannot be thrown out at the threshold, without giving an opportunity to the assessee that too when the assessee produced the documents from proper custody.”
The Bench of the Income Tax Appellate Tribunal (ITAT) recently held that the claim for depreciation under Section 32 of the Income Tax Act requires the fixed asset to be used for business purposes.
The single Bench Accountant Member Laxmi Prasad Sahu observed that the CIT (Appeals) had rightly disallowed the depreciation on the assets by observing that the assessee was unable to prove that the assets were used for business purpose with cogent evidence. The ground raised by assessee was dismissed. The disallowance made by the assessing officer regarding the treatment of certain income as business income has not been examined in the context of section 10A of the Income Tax Act. In light of the documents submitted by the assessee, it is necessary to remit this issue back to the assessing officer for a thorough examination considering the provisions of section 10A and making a decision in accordance with the law. The assessee is advised to cooperate and not seek unnecessary adjournments to ensure the timely resolution of the case. The ground was allowed. In result, the appeal filed by assessee was partly allowed for statistical purposes.
The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the AO was justified in rectification of apparent error instead of substituting the same.
The two-member Bench of Rama Kanta Panda, (Accountant Member) and K.Narasimha Chary, (Judicial Member) dismissed the appeal filed by the assessee holding that,”when there was an apparent mistake in the order of the AO in accepting the returned income instead of substituting the same with the assessed income there was an apparent error and the AO was fully justified in rectifying the same.”
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) recently directed a readjudication due to an addition under Section 50C of the Income Tax Act, 1961. This addition was based on the overvaluation of capital gain sale consideration by the stamp valuation authority.
The bench, consisting of two members, Judicial Member Sanjay Garg and Accountant Member Manish Borad, observed that the assessee filed his Income Tax Return using Form No. 3. They disclosed a long-term capital gain in the computation of capital gains section. The long-term capital gain was calculated to be Rs. 2,27,852/-based on a sale consideration of Rs. 15 lakh and index cost of acquisition and improvement of Rs. 12,72,148/-. The value of the property as per the Stamp Valuation Authority was Rs. 51,81,810/-, but for the purpose of capital gains, the assessee mentioned only Rs. 15 lakh as the full value of consideration as per Section 50C of the Income Tax Act.
However, when the case was processed under section 143(1)(a) of the Income Tax Act, the computer system automatically took the value of the property as per the Stamp Valuation Authority and computed the long-term capital gain accordingly. The addition made by the Centralized Processing Center (CPC) under Section 143(1) of the Income Tax Act was out of the scope and ambit of provisions of Section 143(1) of the Income Tax Act, the Bench could not find any merit in the said ground since the CPC is equipped with computer software system and it picks up the data available in the income tax return. Since in the respective column appearing in the head ‘capital gain’ the assessee has mentioned the value of consideration adopted as per Section 50C of the Income Tax Act for the purpose of capital gain as stated by the assessee in ITR Form No. 3 i.e. value of property as per Stamp Valuation Authority and processed the return accordingly. Since the assessee had all rights to challenge such intimation under Section 143(1)(a) of the Income Tax Act, the ground raised by the assessee was dismissed. In result, the appeal filed by the assessee was partly allowed for statistical purposes.
The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271B of the Income Tax Act 1961 as the non-compliance of notice was not deliberate.
The two-member Bench of Rajpal Yadav, (Vice-President) and Manish Borad, (Accountant Member) allowed the appeal observing that, the first appellate authority had not considered the fact that the first notice was not served upon the assessee and the second notice was complied with by the assessee. The Bench deleted the penalty and held that the assessee had not knowingly violated the notices issued by the Assessing Officer. There was a reasonable cause for its non-appearance on the first notice, as it was not served upon the assessee. Similarly, the assessee had submitted a reply to the second notice, therefore, it could not be construed that the assessee had failed to comply with the notices.
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition and penalty under section 211(c) of the Income Tax Act 1961, on estimated income.
The bench, consisting of two members, a Judicial Member Yogesh Kumar and an Accountant Member Anil Chaturvedi, observed that the additions were made/sustained by the CIT(A) on the basis of estimation and the penalty cannot be levied on the basis of estimated additions and therefore, the Assessee cannot be subjected to levying penalty. In result, the appeal filed by the assessee was allowed.
The Income Tax Appellate Tribunal (ITAT) of Mumbai bench recently held that no addition can be made on the amount debited to Employees Share Option Scheme” for the benefit of employees of the company.
The two member tribuna of Amit Shukla (Judicial Member) and Padmavathy S. (Accountant Member) while considering the contentions of the both parties delete the addition made by the AO and allow the appeal filed by the assessee.
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently ordered for re adjudication as vat liability and EPF amount deposited on time under Section 263 of the Income Tax Act 1961.
The bench, consisting of two members, Judicial Member Kul Bharat and Accountant Member Pradip Kumar Kedia, observed that the payment of VAT before the due date and the self-disallowance of EPF were not refuted by the Deputy Commissioner. The Bench was concluded that it was not appropriate to exercise powers under Section 263 of the Income Tax Act. The Principal Commissioner did not verify the facts correctly before issuing the notice and initiating the proceedings. As both conditions for revising the assessment were not satisfied, the impugned order was set aside, and the original assessment order passed by the Assessing Officer was restored. Consequently, the grounds raised in the appeal were allowed.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) recently invalidated the reassessment proceedings as notice under Section 143(2) not issued within prescribed time limit.
The bench, consisting of two members, Judicial Member Sonjoy Sarma and Accountant Member Girish Agarwal, observed that in the case at hand, no notice under Section 143(2) of the Income Tax Act was issued during the proceedings pending under Section 148 of the Income Tax Act within the prescribed time from the date of filing the return. It squarely applies to the case, Hotel Blue Moon (supra), held as the reassessment framed without issuing notice under Section 143(2) of the Income Tax Act within the prescribed time limit from the date of filing of return is without jurisdiction. Section 143(2) incorporates the rule of audi alterem partem i.e., no man should be condemned unheard. The words “shall serve on the assessee notice” occurring in section 143(2) imply a duty to be performed and the word “shall” connotes that the provisions are mandatory and non-compliance of the same goes to vitiate the order of assessment itself. In result, the appeal filed by the assessee was allowed.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently upheld the revision order due to non-compliance with the arm’s length price (ALP) determination requirement.
The bench, consisting of two members, Judicial Member Kavitha Rajagopal and Accountant Member,B.R. Baskaran, observed that “the Assessing Officer, in the instant case, did not refer the matter of determination of ALP to the TPO as per the mandatory requirement of Instruction No.3/2016. As per clause (c) of Explanation 2 to Section 263, the order passed without complying with the instruction etc., issued by CBDT under Section 119 of the Income Tax Act would render the order erroneous and prejudicial to the interests of revenue. They further added that there was no infirmity or illegality in the impugned revision order passed by CIT (IT). In result the appeal filed by assessee was dismissed.
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 Shamim Yahya, 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) of Jaipur bench has held that the penalty for inaccurate particular is not imposable when the assessee paid tax before the issue of reassessment notice under the Income Tax Act, 1961.
A two-member bench comprising Shri Sandeep Gosain, JM & Shri Rathod Kamlesh Jayantbhai, AM observed that the assessee participated in the assessment proceeding, paid the tax, and filed the computation of income before the issue of notice under section 148 of the Income Tax Act. The ITAT held that levy of penalty is not sustainable and the same was quashed. The appeal of the assessee was allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has upheld the additional holding that the Assessing officer (AO) was not bound to make enquiry unless the assessee had discharged the initial onus under Section 68 of the Income Tax Act, 1961.
The two-member Bench of N. K. Billaiya, (Accountant Member) and Astha Chandra, (Judicial Member) observed that the first appellate authority had grossly erred in deleting the addition solely on the ground that identities of the share applicant companies had been established by the assessee. The Bench allowed the appeal filed by the revenue holding that the initial onus would be upon the assessee under Section 68 of the Income Tax Act and unless this initial onus had been discharged the AO would not be bound to make any enquiry. It would be only when the assessee had discharged the initial burden; the AO had to bring cogent material on record to demolish the submissions of the assessee.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that Section 56(2)(vii) of the Income Tax Act, 1961 could not be invoked if the property was purchased more than the circle rate.
The appeal filed by the assessee was granted by the two-member Bench of Shamim Yahaya, (accountant member) and Anubhav Sharma,(accountant member) holding that “We find ourselves in agreement with the proposition that the sanguine provision of the concerned section duly mandates that the value of property purchased has to be less than the circle rate for the difference to be added.”
The Amrtsar Bench of Income Tax Appellate Tribunal (ITAT) has held that the corpus donations received by an unregistered trust would not be taxable unless it is verified.
The two-member Bench of M. L. Meena, (Accountant Member) and S.H Anikesh Banerjee, (Judicial Member) allowed the appeal filed by the assessee and directed verification of the corpus donation holding that the grievance of the revenue was related to unverified corpus donation. The entire corpus donation was taken in the total income and was taxed accordingly. Further there was no point that the assessee could not take the corpus donation without availing the registration under Section 12AA of the Income Tax Act, 1961. As the unverified corpus donation was the moot point of the grievance of the revenue the Bench directed for reverification.
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition of Government grants which cannot be treated as corpus or income.
The bench, consisting of two members, Judicial Member Sanjay Garg and Accountant Member Manish borad observed that the grants were given to the assessee for implementation of various infrastructure schemes. It was further observed that the grants received by the assessee/state agency did not belong to the assessee.
In view of this, the grants received by the assessee for specific infrastructure projects which has also been utilized for those specific purposes only and since the assessee was not authorized to use the said grants for any other purpose and further that the unused funds have been returned to the Government, therefore, the aforesaid grants, in our view, do not constitute the income of the assessee. The appeal filed by the assessee was allowed in result.
The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the violation of procedural norm would not extinguish the substantive right of claiming the Foreign Tax Credit (FTC).
The two-member Bench of George George K, (Judicial Member) and Laxmi Prasad Sahu, (Accountant Member) allowed the appeal filed by the assessee referring to the decision in Brinda Ramakrishna v. ITO held that filing of Form 67 was a procedural / directory requirement and not a mandatory requirement. It was held that violation of the procedural norm would not extinguish the substantive right of claiming the credit of FTC.
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the disallowance under Section 143 (1)(a) of the Income Tax Act because of the late deposit of the employee’s share of PF/ESI contribution to the relevant fund.
The two-member Bench of A.D. Jain, (Vice President) and Vikram Singh Yadav, (Accountant Member) dismissed the appeal filed by the assessee referring to the decision in ‘Emson Tools Mfg. Corp. Ltd. vs. DCIT, Ludhiana. The bench further held that the Commissioner of Income Tax Appeals was justified in sustaining the adjustment under Section 143(1)(a) of the Income Tax Act by means of disallowance made for late deposit of employees’ share of PF/ESI contribution to the relevant funds beyond the date prescribed under the respective Acts.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted addition under Section 69 on amount that had been validly explained as professional income.
The tribunal Bench consisting of a Judicial Member Amit Shukla and an Accountant Member Padmavathy observed that the assessee had recorded the impugned amount in the books of account and had also offered the same to tax by including it as professional fees. Therefore the amount cannot be treated as unexplained and therefore the addition under Section 69A of the Income Tax Act was deleted. In result, the appeal filed by assessee was allowed.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that deduction under Section 80P(2)(d) of the Income Tax Act, is available to the income derived by co-operative society.
The ITAT coram comprising of Suchitra Kamble, the Judicial Member thus held: “The Hon’ble Gujarat High Court in case of Surat VankarSahkari Sangh Limited categorically mentioned provision of Section 80P(2)(d) of the Act does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a Co-operative Society. The Ahmedabad District Co-operative Bank is also a registered Co-operative Society and, therefore, the assessee is eligible for claiming deduction under Section 80P(2)(d) of the Act.”
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, on finding the additional income disclosed and returned in ITR filed under Section 153A, to be established to have originated out of seized material, upheld the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961.
Finally, the coram of S.S Godara, the Judicial Member, and G.D Padmahshali, the Accountant Member, by relying upon the decision of the Bombay High Court in Dr. Nitin Laxmikant Lad Vs ACIT, thus held: “Therefore, in the light of settled legal position the action of tax authorities in invoking the penal provisions for levy of penalty under Section 271(1)(c) on such account is well within the law and cannot be faulted with in view of decision of Hon’ble Jurisdictional Bombay High Court.”
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that consideration from sale of jointly owned property cannot be treated as long term capital gain of a co- owner alone.
Finally, the Coram of Suchitra Kamble, thus concluded: “As the Assessing Officer also passed ex-parte order, it will be appropriate to remand back the issues contested by the assessee in the appeal filed before the CIT(A) to the file of the CIT(A) for adjudicating the same on merit. The assessee be given opportunity of hearing by following the principles of natural justice and the CIT(A) should take all the cognisance of the evidences filed by the assessee.”
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no penalty should be levied under Section 271(1)(b) of the Income Tax Act, 1961 for failure to sign a consent letter which was not authorized by the government.
During the proceedings tribunal observed that assessee involving the deposits in the foreign bank account of HSBC bank also similar issue of levy of penalty under Section 271(1)(b) Income Tax Act for not signing the concerned form has been deleted by the Coordinate Bench of Tribunal in the case of Shyam Sunder Jindal. It was further observed that penalty could not be levied if there is a reasonable cause. The two member bench of C. M. Garg, (Judicial Member) and Dr. B. R. R. Kumar, (Accountant Member) after verifying the facts, deleted the penalty imposed by the lower authorities.
The Income Tax Appellate Tribunal (ITAT), Pune Bench, has recently, in an appeal filed before it, held that educational institution is eligible for exemption under Section 10(23C)(iiiab) of the Income Tax Act, 1961.
Finally, the Coram of S.S Godara, the Judicial Member, and Dr Dipak P. Ripote, the Accountant Member, thus held: “Since the assessee is substantially financed and it is an educational institution, the assessee is eligible for exemption under Section 10(23C) (iiiab). Therefore, we allow the appeal of the assessee.
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