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 deleted the penalty imposed under Section 273B of the Income Tax Act holding that the cash payment of defaulted EMI instalment to financier after cheque bounce was a reasonable cause.
The two-member Bench of Mahavir Singh, (Vice President) and And Manoj Kumar Aggarwal, (Accountant Member) allowed the appeal filed by the assessee and held that once the assessee defaulted in EMI payment, the financier would insist on cash payment only and would refuse to accept the cheques from the assessee was a reasonable cause under Section 273B of the Income Tax Act. In view of the above, the tribunal bench deleted the penalty imposed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that income arising from land could not be treated as capital asset once the nature of the land sold had established as agricultural land.
The two-member Bench of SaktijitDey, (Judicial Member) and M. Balaganesh, (Accountant Member) dismissed the appeal filed by the revenue holding that “Once, nature and character of land sold is established as agricultural land not to be treated as capital asset u/s. 2(14)(iii) of the Act, any income arising out of sale of such land – whether by way of declared sale consideration or on account of on-money, would partake the character of exempt income, as the source of both the declared sale consideration and the on-money received is the same, viz., sale of agricultural land.” The Bench deleted the addition holding that the income derived from sale of agricultural land, which was not a capital asset, could not be made taxable.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that deduction under Section 35(2AB) of the Income Tax Act could not be denied by ignoring Form 3CL.
The Bench deleted the disallowance and allowed the appeal filed by the assessee holding that when the competent authority had issued Form 3CL entitling the assessee to claim deduction in respect of both capital and revenue expenditure, which was a mandate under section 35(2AB) of the Income Tax Act, the departmental authorities could not disentitle the assessee from availing the deduction by ignoring Form 3CL.
The Income Tax Appellate Tribunal (ITAT) of Kolkata bench has held that grants from West Bengal State Government to cooperative societies are not income from other sources and directed to allow deduction under section 80P of the Income Tax Act, 1961.
A two-member bench comprising Shri Rajpal Yadav, (Vice-President) & Dr Manish Borad (Accountant Member) observed that since the alleged sum of Rs.9,92,664/- is the income earned by the Society for its objects, the same is eligible for deduction under section 80P of the Income Tax Act. The tribunal allowed the appeal in result.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the delayed deposit of employee’s contribution to Provident Fund (PF) and Employees’ State Insurance (ESI) could not be claimed even if it was deposited within the due date of filing return.
The two-member Bench of G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) dismissed the appeal filed by the assessee holding that the assessee had not deposited the employees contribution to PF and ESI within the due date prescribed under the statutes governing such payments. The submission of the assessee that “payments were made within the due date of filing of return of income under section 139(1) of the Income Tax Act, Hence, deduction claimed was allowable” were held to be not acceptable by the Bench, referring to the Supreme Court decision in case of Checkmate Services Pvt. Ltd. Vs CIT.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Reliance Infrastructure by allowing the Tax Deducted at Source (TDS) credit of Rs 40.43 crore deducted by Tata Power on payment to Adani Electricity, on transfer business.
The Bench observed that, “It is not even disputed by the department that the assessee is entitled for credit for TDS. Either some mechanism should be devised by the department to address such grievances in such circumstances or authorised the Assessing Officer to examine it and allow; or the strict conditions provided in Rule 37BA should be read in the provisions of Section 199(1) to make it workable in genuine cases where department is sure no double credit is allowed or claimed. Because Rules should not frustrate the main provisions of the Act.”
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the late filing fee under Section 234E of the Income Tax Act for TDS return due to human error and absence of malafide intention. The Bench consisting of a Judicial Member Suchitra Kamble, and an Accountant Member Annapurna Gupta observed that the assessee being senior citizen had deposited TDS amount immediately after sale consideration was received and there was no lapse on the part of the assessee while depositing the TDS amount to the Treasury of Government of India. It was further noted that, “Due to the circumstances, the assessee could not file form 27Q within the time frame, but the assessee’s intention is clear as the assessee filed the same in January 2021. Thus, merely on the ground that the assessee had not filed Form 27Q and thus late filing cannot be the criteria for levying fees under Section 234E of the Income Tax Act.” In result, the appeal of the assessee was allowed.
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has directed the Assessing Officer to re-adjudicate the case regarding the addition of a loan amount as an outstanding balance.
The tribunal Bench of Judicial Member Astha Chandra and Accountant Member Anil Chadurvedi observed that before the CIT(A), the assessee did not submit any explanation and the stand taken by the Assessing Officer remained uncontroverted. In the absence of any supporting evidence and documents filed by the assessee in support of the impugned outstanding balance of Rs. 14,47,140/-, the CIT(A) confirmed the impugned addition. The two-member Bench further added that the assessee must have an opportunity to present his case before the Assessing Officer. The explanation of the assessee could not come on record. Additionally, it was noted that the assessee had filed certain fresh documents before the Tribunal which the CIT (A)/Assessing Officer had not perused. Therefore, deem it fit to remit this issue also to the file of the Assessing Officer to decide it afresh after allowing reasonable opportunity to the assessee to present his case on the point. In result, the appeal of the assessee was allowed for statistical purposes.
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has recently remanded the file for a fresh decision to the file of the Assessing Officer to decide in accordance with the outcome of the criminal case pending against the partners in the matter where the Income Tax Return (ITR) of the assessee was filed without his consent by a Chartered Accountant in connivance with the partners of the Assessee.
The single-member bench of Judicial Member K Narasimha Chary also noted that “The finding by the Board of Discipline of ICAI is to the effect that the said Chartered Accountant, with the connivance of the partners of the assessee, prepared fake documents to support the ITR which was uploaded without the knowledge of the assessee. It prima facie creates any doubt as to whether there is any income in the hands of the assessee for this year or not?” It was also observed that “ICAI is a professional body competent to deal with the complaints against the Chartered Accountants, and the proceedings of the Disciplinary Board thereof carry their own credibility and cannot be simply brushed aside. Due regard has to be given to the findings of such a professional Body. The said findings lend any amount of support to the contention of the assessee.” In the pendency of the criminal proceedings closely related to the matter of the assessee, the tribunal bench allowed the appeal of the assessee for statistical purposes.
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has recently disallowed deduction under Section 80P due to late submission of return.
The Single Bench of Judicial Member Suchitra Kamble observed that the assessee should have filed the return within the extended period of due date but the assessee failed to do so. The Assessing Officer thereby issued intimation under Section 143(1) of the Income Tax Act and has categorically disallowed the deduction under Section 80P of the Income Tax Act on the ground of belated returns. It was noted that, “The assessee filed return belatedly and Section 80AC(ii) of the Act is inapplicable in present case. The CIT (A) was right in denying the claim of assessee that of deduction under Section 80P of the Income Tax Act.” In result, the appeal filed by the assessee was dismissed.
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that a penalty under Section 271D of the Income Tax Act, 1961 cannot be levied if a reasonable cause is shown by the assessee.
The two-member Bench consisting of Judicial Member T.R. Senthil Kumar, and Accountant Member Annapurna Gupta observed that ‘’a careful reading of Section 273B encompasses that certain penalties “shall” not be imposed in cases where “reasonable cause” is successfully pleaded. The bench further added that the Jurisdictional High Court in the case of Maa Khodiyar Construction (cited supra) held that no penalty is leviable under Section 271D for cash loans exceeding Rs. 20,000/- from agriculturists living in remote areas when transactions were not doubted.” As a result, the Bench cancelled the penalty and the appeal filed by the Assessee was allowed.
The Income Tax Appellate Tribunal (ITAT), Raipur Bench, has recently, in an appeal filed before it, on finding that unexplained money under section 69A was received back through banking channel as sale consideration of shares, upheld the addition made under Section 115BBE of the Income Tax Act.
ITAT Coram of Ravish Sood, the Judicial Member thus held: “In terms of my observations, I concur with the view taken by the lower authorities and uphold the addition of Rs.5.40 lac made by the A.O, on the ground that the same was the undisclosed fund of the assessee that was routed back in the garb of the aforesaid transaction of purchase/sale of shares. Thus, the Grounds of appeal raised by the assessee being devoid and bereft of any merit, are dismissed in terms of my aforesaid observations.”
The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that price paid by sugar cooperatives for the purchase of sugar cane higher than the fair and remunerative price (FRP) would be allowable as per the recent amendment in clause (19) of Section 155 of the Income Tax Act.
The two-member Bench of Satbeer Singh Godara, (Judicial Member) and Dipak P. Ripote, (Accountant Member) allowed the appeal filed by the assessee directing the AO to refer to the legislative developments as per law.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that penalty under Section 271(1)(c) of the Income Tax Act is not leviable when no inaccurate particulars of income were furnished by the assessee.
ITAT coram of Suchitra Kamble, the Judicial Member, thus held: “The decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts, is apt in the present case as the assessee is under bonafide belief that interest income earned on bank deposits is also coming under the purview of claim for deduction under Section 80P of the Act. Thus, the penalty under Section 271(1)(c) of the Act fails on the count of furnishing inaccurate particulars of income. Therefore, the penalty does not survive.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently in an appeal filed before it, held that interest income from FD is eligible for deduction under Section 10AA of the Income Tax Act, 1961.
Mumbai ITAT Coram of Amit Shukla, the Judicial Member and Padmavathy S, the Accountant Member thus held: “In the assessee’s case, we notice that the assessee has placed the surplus funds in FDs and has earned interest from the same. The facts of the assessee’s case being identical to the case of Hewlett Packard Global Soft Ltd, respectfully following the above full bench decision of the Hon’ble Karnataka High Court, we hold that the interest income earned by the assessee is eligible for deduction under section 10AA. Accordingly, we delete the disallowance made by the Assessing Officer in this regard.”
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that no penalty under section 271 (1) can be imposed when income surrendered by the assessee during the survey is shown in the regular income tax return filed within the prescribed time.
ITAT coram of Annapurna Gupta, the Accountant Member and Shri T.R. Senthil Kumar, the Judicial Member, thus held: “The Hon’ble Delhi High Court in the case of CIT vs. SAS had held that where income surrendered by the assessee during survey had been shown by it in its regular income tax return filed within the prescribed time, the penalty could be imposed. Thus, the CIT(A) has followed the above decisions and deleted the penalty on the declared income of Rs. 1,80,00,000/-. However, the CIT(A) had confirmed the levy of penalty on the balance disputed income of Rs. 4,08,097/-. Thus, we do not find any infirmity in the order passed by the CIT(A), which partly deleted the penalty levied under Section. 271(1)(c) of the Act. Thus, the grounds raised by the Revenue is devoid of merits and the same is dismissed.”
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed the re-computation of capital gain as the stamp duty was valued as full value of the consideration by invoking the provisions under Section 50C(1) of the Income Tax Act, 1961.
The Bench observed that, sale consideration for transfer of the capital assets, being the suit property, could have been decided by the parties to the dispute. The two-member Bench of Maharishi, (Accountant Member) and Rahul Chaudhary, (Judicial Member) allowed the appeal filed by the assessee directing re-computation of the capital gain after making reference to the valuation officer and considering the report of valuation officer as per law.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the reassessment order as the notice was issued within the limitation period specified under Section 149(1)(c) of the Income Tax Act.
The Bench dismissed the appeal filed by the assessee holding that the Assessing Officer was entitled to reopen an assessment for the Assessment Year 2006-07 as the jurisdictional requirements specified under Section 147 of the Income Tax Act were satisfied and the notice, dated 12/03/2014 – pursuant to which Assessment Order dated 25/03/2015 was passed, has been issued under Section 148 of the Income Tax Act within the limitation period specified under Section 149(1) of the Income Tax Act.
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the addition under Section 69C of the Income Tax Act, 1961 as explanation as to source of credit card payment was not furnished by the assessee. The Bench observed that the assessee had taken a plea before the Commissioner of Income Tax Appeals (CIT(A)) that he had received a sum of Rs. 2.5 lakhs by way of cash gifts from his father, from out of the pension savings but the assessee failed to substantiate the same with reference to the ITR, bank statement etc., of his father. The assessee had also failed to appear and to dispute the correctness of the additions made by the AO and confirmed by the learned CIT(A) before the tribunal. Thus, the Single Bench of K. Narasimha Chary, (Judicial Member) dismissed the appeal filed by the assessee
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) recently remanded the matter to CIT(A) due to non-consideration of valuation and Jantri value for determining the nature of sold land.
The Single Bench of Judicial Member Suchitra Kamble observed that the Jantri value determined by the Government of Gujarat was Rs. 300 per sq. yard for agricultural land. However, the valuer and CIT(A) mistakenly applied the Jantri value meant for non-agricultural land. The valuation report and the Jantri rate were not properly verified, the Tribunal observed. Thus, it was held that the case should be sent back to CIT(A) to consider these factors and provide the assessee an opportunity to be heard. In result, the appeal of the assessee is partly allowed for statistical purpose.
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed the assessment order and addition of income due to the invalid notice issued by assessing officer.
A single member bench comprising of Sri. Kul Bharat (Judicial) held that the based on various decisions of High courts and Supreme Courts, the issuance of notice under Section 148 of the Income Tax Act was bad in law and without jurisdiction, and that the impugned assessment has been framed in violation of natural justice. The tribunal bench also deleted the addition of unexplained income passed by assessing officer due to non-justification while making the addition. The Tribunal allowed both the Appeals filed by the Assessee.
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) recently quashed the retrospective determination of annual letting value of unsold residential units based on prospective amendment by the Assessing Officer.
The Bench, consisting of Judicial Member S.S. Godara and Accountant Member G.D. Padmahshali, observed that in the context of the impugned Assessment Year 2014-15, the Finance Act of 2017 introduced sub-section (5) to Section 23. This provision states that if a property held as ‘stock in trade’ is not rented out during the year, its annual value after one or two years shall be considered for inclusion under the head ‘Income from House property’. However, it was observed “this amendment came into effect on April 1, 2018, and does not apply to the impugned Assessment Year 2014-15. ”The two-member Bench held that the impugned addition of ₹2,52,000/-, made and sustained in the first appeal, was not justified and should be deleted. In result, the appeal of the assessee is allowed.
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently quashed the penalty demanded failure to audit the National Law University (NLU) under Section 271B of the Income Tax Act, 1961.
The tribunal bench of Accountant Member Anil Chaturvedi and Judicial Member Anubhav Sharma observed that “It can be appreciated that the assessee university has been established by the Act of Legislative Assembly of the National Territory of Delhi, and Subsection (3) of Section 3 of the University Act, provides for the establishment of University and that “The University shall be engaged in teaching and research in law and in allied disciplines.”. The preamble of the University Act makes it very apparent that the purpose of the establishment of a Law University is the establishment of a national-level institution of excellence in the field of legal education and research in the NCT of Delhi.’ It was also noted by the two-member tribunal that, “The object of the university as specified in section 4 of the University Act, the powers and function of the University defined u/s 5 grossly indicate that the University is not engaged in any ‘business’ as understood for the purpose of the Act. It is existing solely for educational purposes. It is not established for the purpose of profit.“ It was thus held that “Tax Authorities below have fallen in grave error on facts and law while invoking the penalty provisions”, allowing the appeal of the assessee-National Law University.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) ordered reassessment in this case where the assessee inadvertently filed the return in the wrong form.
The Bench consisting of Judicial Member, Sanjay Garg and Account Member, Dr. Manish Borad set aside the impugned orders of the lower authorities and restore the matter to the file of Assessing Officer with a direction to examine the contentions raised by the assessee and tax the assessee at the rates as applicable to the assessee considering the revised return filed by the assessee. Both the appeals filed by the assessee against the separate orders dated 19.09.2022 of the National Faceless Appeal got allowed and opened for re-assessment, as a result.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently dismissed the interest charged by the Assessing Officer on reply to notice under Section 148 of Income Tax Act filed within 30 days.
The Single Bench consisting of an Accountant Member Amarjit Singh observed that the assessing officer erred in charging interest under Section 234A of Rs.2,895/- on the reason that assessee has filed the return of income in response to notice under Section 148 of the Income Tax Act within 30 days from the date of notice is restored to the file of the Assessing Officer for deciding the same as per law after verification of the claim made by the assessee. Therefore, this ground of appeal of the assessee was allowed for statistical purposes. The Bench further observed that the assessee made part of the payment of Rs. 51 lac vide cheque no. 620130 drawn from the corporation bank claiming as date of allotment. The payment plan was also referred to a page no. 6 of the document comprising 26 pages placed in the paper book. The Departmental Valuation Officer as per annexure 1(A) of the valuation report had also determined the valuation of the flat as on 01.11.2013 at Rs.7,05,66,565/- on the date of allotment. After considering the provisions of Section 56(2) (vii)(b) of the Income Tax Act. The single-member tribunal Bench directed the assessing officer to restrict the addition to the extent of Rs.5,66,565/- after taking into consideration the value determined on the date of allotment by the District Valuation Officer as on 01.11.2013. In result, the appeal filed by assessee was partly allowed.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no addition could be made in gross receipts reflected in Form 26AS inclusive of service tax.
It was observed by the tribunal that “Addition made by the AO is on account of difference between the figure of gross receipts reported by the assessee which is including the service tax component whereas the figure reported in Form 26AS is inclusive of the service tax component which has been adequately reconciled by the assessee”. Thus, the two member bench of the Rajpal Yadav, (Vice President) and Girish Agrawal, (Accountant Member) allowed the appeal filed by the assessee and deleted the addition made by the Assessing Officer.
The Chennai bench of Income Tax Appellate Tribunal (ITAT) has recently held that subsidy received from the Government of India to encourage the development of biomass co-operation system in industries is capital receipt.
The two member bench of V. Durga Rao, (Judicial Member) and Manjunatha. G (Accountant Member) held that the Subsidy received by the assessee from Government of India through Tamil Nadu Energy Development Agency, is capital subsidy given by the Government to enable the assessee to set up new power plants in line with a program on biomass cogeneration system in industry.
The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that assessing officers could initiate proceedings either under Sections 143(2) or 147 of Income Tax Act, 1961 before completion of assessment in case of deemed income escapement.
It was observed by the tribunal that The AO rightly recorded the reason that reopening of assessment so as to bring the escaped income into tax. The notice issued by AO under section 147 r.w.s. 148 of the Income Tax Act is not time barred on the reason that the AO has not initiated the proceedings by issue of notice under Section 143(2) of the Income Tax Act. Therefore, the two member bench of the Dr. B.R.R. Kumar, (Accountant Member) and Yogesh Kumar Us, (Judicial Member) allowed the appeal filed by the revenue.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest income received by cooperative societies from investment made in the cooperative banks are eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
The Bench further observed that, if there was any interest income which was earned on deposits or investment made with cooperative societies, the same would fall in the category activity or the business, but still would be eligible for deduction under the specific provision of Section 80P(2)(d) of the Income Tax Act.
The Pune Bench of Income Tax Appellate Tribunal (ITAT) held that the addition of long term capital gain by invoking section 50(c) of the Income Tax Act 1961 which does not carry retrospective effect is invalid.
The two member bench comprising of Satbeer Singh Godaraj ( judicial) And Dr. Dipak P. Ripote (Accountant) held that there is no concrete finding either in re-assessment or in the National Faceless Appeal Centre (NFAC) order as to whether the assessee had received whole or part of the consideration by way of the specified modes or not so as to attract sec.50C(1) first and second proviso of the Income Tax Act 1961 inserted by the Finance Act 2016 as they do not carry retrospective effect. The tribunal restore the matter back to the assessing officer for re-adjudication while allowing the appeal.
The New Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the interest income earned on fixed deposit by bank and all other interest income was eligible for deduction under Section 80IA of the Income Tax Act, 1961.
The two member bench comprising of Anubhav Sharma(Judicial) And Shamim Yahya (Accountant) held that the tax Authorities had fallen in error in denying the benefit of Section 80IA of Income Tax Act, 1961 to the assessee/appellant while allowing the appeal.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that expenditure claimed on account of forward premium relating to forward contracts in respect of foreign currency loans are capital expenditure.
It was observed by the tribunal that “provisions of section 43A of the Income Tax Act specifically provides that the amount of increase or decrease in the liability due to fluctuation in exchange rate should be adjusted against the actual cost of the capital expenditure or the cost of acquisition of capital asset.” Further relying upon the decision of CIT vs. Elgi Rubber Products Ltd, the tribunal bench held that having regard to the provisions of Section 43A of the Income Tax Act, the additional amount paid to the ICICI due to fluctuation in exchange rate was capital in nature and not revenue. Finally the two member bench of Mahavir Singh, (Vice President) and Manjunatha.G, (Accountant Member) dismissed the appeal filed by the assessee.
The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has denied exemption under Section 10(10AA) of the Income Tax Act, 1961 as the employee of Ajmer Vidhyut Vitran Nigam could not be regarded as a state or central government employee.
The two-member Bench of Sandeep Gosain (Judicial Member) noticed that the assessee had merely claimed that he was working as State Government Employee whereas the pension and other emoluments had been issued by Ajmer Vidhyut Vitran Nigam Ltd. The said Ajmer Vidyut Vitran Nigam Ltd. was appearing as a Public Sector Undertaking on the official website of the Comptroller & Auditor General in cag.gov.in and also under Rajasthan PSU’s on the website indianpsu.com and other publicly available documents. The Bench dismissed the appeal filed by the assessee.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the expenses recorded in cash books subsequent to survey operations were not bogus.
The two-member Bench of Amit Shukla (Judicial Member) and Padmavathy S. (Accountant Member) noted that the assessee was doing regular business throughout the year and there could not be a situation where no expenses were incurred from the first of the financial year till the date of search. The Bench allowed appeal holding that the expenses booked by the assessee upto the date of survey could not be treated as bogus only for the reason that the same were accounted in the books of account subsequent to the date of search.
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