This yearly digest summarises all the ITAT stories published at taxscan.in in 2023
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the tax authorities were justified in adding income to the assessee’s return due to inadequate evidence for cash payments and partnership formation and found that the assessee had failed to provide any documentary evidence to support his claims and that the tax authorities had properly followed the law in making the addition.
The two-member bench comprising Aby T Varkey (Judicial Member) and Om Prakash Kant (Accountant Member)dismissed the assessee’s allegations of alleged cash payments as undisclosed income due to lack of expert opinion support and also rejected the assessee’s claim of cash payments in a civil suit. The matter was settled out of court, and the ITAT assessed the reasonableness of adding alleged undisclosed cash payments to the firm’s income and dismissed the appeal, upholding the Assessing Officer’s decision.
The Income Tax Appellate Tribunal (ITAT) Delhi bench held that depreciation under Section 32 of the Income Tax Act, 1961 should not be allowed on absence of carrying out business activities.
After considering the facts, the two-member bench of Shri M. Balaganesh, (Accountant Member) and Anubhav Sharma, (Judicial Member) dismissed the appeal filed by the assessee.
The Chennai bench of the Income Tax Appellate (ITAT) Tribunal held that no notice to the registered e-mail ID of the assessee as per the PAN data base/ Income Tax Web Portal was issued is in gross violation of principles of natural justice and provisions of the Income Tax Act and the assessee shall be afforded reasonable opportunity of being heard to substantiate his claim.
The two member bench consisting of Manoj Kumar Aggarwal (Accountant member) and V.Durga Rao (Judicial member) set aside the appellate order and remit the matter back to the file of the CIT(A) to decide the issue afresh in accordance with law by issuing notice to the registered e-mail ID of the assessee enabling the assessee to substantiate his claim with supporting evidences. The assessee is also directed to furnish convincing explanation with supporting evidences before the CIT(A) for consideration. Thus the appeal was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the rights to build and operate toll road are considered as tangible assets and the depreciation shall be allowed.
In reference to the judgment of the Hyderabad Bench in the case of DCIT Hyderabad M/s. Progressive Construction Limited, Hyderabad, ITA no. 214/Hyd./2014 the Two-member bench comprising of N.K. Billaiya (Accountant member) and Anubhav Sharma (Judicial member) held that it can be appreciated from the orders of the Commissioner of Income Tax (Appeal) that the fact that rights under BOT projects have been considered to be intangible assets. Therefore, there is no error in the findings of the Commissioner of Income Tax (Appeal). Thus, the appeal of the revenue was dismissed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the business profit earned by the US talent agency for arranging Maroon 5 performance in India cannot be assessable in India for the want of a Permanent Establishment (PE).
The Two-member bench comprising of G.S. Pannu (President) and Astha Chandra (Judicial member) held that the impugned receipts of the assessee from the Customer constitute business profits and hence are not chargeable to tax in India in the absence of the PE of the assessee in India. Thus, the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the notice issued under Section 148 of the Income Tax Act, 1961 by the assessing officer without accessing the return filed by the assessee shall be treated as void ab initio.
The Two-member bench comprising of C.M. Garg (Judicial member) and B.R.R. Kumar (Accountant member) held that it can be unequivocally assumed that the Assessing Officer has not even examined the return filed by the assessee, hence the reasons recorded were on a wrong factual basis before issuing of the notice under Section 148 of the Income Tax Act, 1961. Hence, the notice issued is treated as void ab initio leading to the assessment completed based on such notice as legally invalid. Thus, the appeal of the assessee was allowed.
The Mumbai Income Tax Appellate Tribunal (ITAT) ruled that concealed income under Section 271(1)(c) is not leviable if it is offered under the Income Disclosure Scheme (IDS) and ruled in favor of an assessee who claimed long-term capital gains on the sale of shares of a penny stock company, M/s Sun Asian.
The Two member bench comprising ABY T. Varkey (Judicial Member) and Amarjit Singh (Accountant Member) ruled that the penalty under Section 271(1)(c) should not be imposed in this case, as the assessee had already disclosed the LTCG on the sale of Sun Asian shares in her income return. The ITAT also ruled that the IDS is a voluntary disclosure scheme that allows taxpayers to disclose undisclosed income without penalty, and concealed income under the IDS will not be penalized.
The Income Tax Appellate Tribunal (ITAT) Delhi bench held that expenses incurred for the infrastructure development of leased property are revenue expenditure. Therefore the bench upheld the addition deleted by the Commissioner of Income Tax (Appeals).
After reviewing the facts submitted by both parties, the two member bench of Shamim Yahya (Accountant Member) and Yogesh Kumar US (Judicial Member) upheld the order of CIT(A) and observed that expenses incurred for the infrastructure development of leased property are revenue expenditure.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that Principal Commissioner of Income Tax (PCIT) was not validly empowered to invoke revisionary provision of Section 263 of the Income Tax Act, 1961.
The Bench comprising of Chandra Mohan Garg, Judicial Member and M.Balaganesh, Accountant Member observed that during limited scrutiny proceedings on the sole issue of source of cash deposit to the bank account of assessee, the Assessing Officer issued to notices along with questionnaire which were duly replied by the assessee along with relevant documentary evidences.
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that Assessing Officer (AO) is duty bound to specify the defects in the books of accounts maintained by the assessee before rejection of books of accounts by applying provisions of Section 145(3) of the Income Tax Act, 1961. Thus directed to delete the addition of Rs. 23,44,406/- being 1% of turnover and other operating income of Rs. 45,44,563/-.
The Bench comprising of Amit Shukla, Judicial Member and Gagan Goyal, Accountant Member observed that Assessee Company is a listed entity on the stock exchange and it is established fact that the entity was involved in the rigging/manipulation of share price.
It is further observed that Legal position with reference to rejection of books of accounts is altogether different whereas the case made by AO and further confirmed by the CIT (A) leads the matter towards specific disallowance /addition. Thus the Bench direct to delete the addition of Rs. 23,44,406/- being 1% of turnover and other operating income of Rs. 45,44,563/- and returned income of Rs. 35,48,140/- declared by assessee is directed to be final figure. Hence the ground of the appeal by the assessee is allowed.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the credit could not be held to be unexplained cash credit and the impugned additions are not sustainable in law.
The two member bench consisting of Mahavir Singh (Vice president) and Manoj Kumar Aggarwal (Accountant member) held that the assessee has duly identified the debtors from whom the cash was received and the same could not be disputed by lower authorities. The PAN of respective debtors as well as quantum of cash realized from each of them has duly been detailed by the assessee before AO during assessment proceedings. No defect has been pointed out in the books of accounts. In such a case, the credit could not be held to be unexplained cash credit and the impugned additions are not sustainable in law. Thus the appeal was allowed.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) set aside the appellate order and remitted the matter back to the file of the Commissioner of Income Tax (Appeals) [CIT (A)] for consideration and to decide the issues afresh in accordance with law after considering the explanations of the assessee and directed the assessee to furnish complete details with material evidences and convincing explanations before the CIT (A).
The Bench comprising of V. Durga Rao, Judicial Member & Manoj Kumar Aggarwal, Accountant Member observed that to meet the ends of natural justices, the assessee shall be given one more opportunity of being heard. Accordingly, set aside the appellate order and remit the matter back to the file of the CIT(A) to decide the issues afresh in accordance with law after considering the explanations of the assessee. The Tribunal further directed the assessee to furnish complete details with material evidences and convincing explanations before the CIT (A) for consideration. Thus the appeal filed by the assessee is allowed for statistical purposes.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that examination of Memorandum of Association would clarify the services in lieu of consideration and so the amount was in the nature of fee and not donations. Thus restored the matter to the files of Commissioner of Income Tax (Exemption) [CIT (E)] for examination.
The Bench comprising of N.K.Billaiya, Accountant Member and Anubhav Sharma, Judicial Member observed that CIT (E) gave the conclusive findings by observing that assessee has failed to file details / information required by the notices to verify the genuineness of the activities and the compliances of any other law being FCRA 2010 the conditions for grant of registration in the case is not satisfied.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that Under Section 68 of the Income Tax Act, 1961, the assessee is required to establish (a) identity (b) Genuineness of the transaction (c) Capacity of the lender /depositor. The initial burden is on the assessee. Hence it was incorrect on the part of the CIT(A) to say that the assessee has never produced the investors because the assessee was never asked to produce the investors.
The two member bench consisting of Anubham Sharma (Judicial member) and N.K. Billaiya (Accountant member) held that it is incorrect on the part of the CIT(A) to say that the assessee has never produced the investors because the assessee was never asked to produce the investors. Considering the facts in totality the bench was of the considered view that the assessee has successfully discharged the onus cast upon it by the provisions of section 68 of the Income Tax Act and the AO has grossly failed in discharging the burden which shifted upon him. Thus the addition was deleted and the appeal was allowed.
The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) has ruled that surrendered income will be treated as income from the medical profession unless there is clear evidence to the contrary and upheld the order of the assessing officer (AO) who had accepted the explanation of the assessee, a doctor, that the surrendered income was from his medical profession, finding no evidence to suggest the income was from an unexplained source.
The Two member bench comprising (Judicial Member) and Vikram Singh Yadav (Accountant Member) allowed the appeal of the assessee and quashed the revision order passed by the PCIT. The ITAT held that the PCIT had not given any cogent reasons for interfering with the order of the AO. The ITAT also held that there was no evidence to suggest that the surrendered income was from an unexplained source.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the absence of cross-verification under Section 133(6) of the Income Tax Act, 1961 should not be taken as the sole basis to disregard the nature and expediency of such expenses and also held that the assessee had reasonably established the nexus between the commission expenses and the purpose of the business.
The Two-member bench comprising Kul Bharat (Judicial Member) and Pradip Kumar Kedia (Accountant Member) ruled that the assessee had provided the AO with ITRs and confirmations for commission receipt, establishing a reasonable connection between commission expenses and business purpose. It also ruled that the absence of cross-verification under Section 133(6) of the Act should not be used as a sole basis to disregard the nature and expediency of such expenses.
The Delhi Bench of Income Tax Appellate Tribunal Held that Commissioner of Income Tax (Appeals) [CIT (A)] defaulted in recharacterizing the rental income as business income and arbitrarily disallowing income tax deduction without any justifiable reasons. Thus restore the matter to the file of the Assessing Officer for redetermination of taxable income under the appropriate head.
The Bench comprising of Chandra Mohan Garg, Judicial Member and Pradip Kumar Kedia, Accountant Member observed that the claim of the assessee that income offered in the past in the similar circumstances has been apportioned under the head ‘income from house property’ and ‘business income’ and the taxable income has been computed after claim of deductions statutorily available and expenses incurred for the purpose of business in accordance with law.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that GE Energy Parts did not have any permanent establishment in India as no expatriate employee was present in India during the impugned assessment years.
The two-member Bench of G.S Pannu, (President) and Saktijit Dey, (Vice President) allowed the appeal filed by the assessee holding that merely following the decision taken by the appellate authorities and High Court in past assessment years, the departmental authorities had concluded the existence of PE without looking into or examining the facts and evidences brought on record, which were very much relevant for deciding the case existence of PE in the impugned assessment years.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that no additions shall be imposed by the assessing officer when the income has been duly explained by the assessee.
The Single-member bench comprised of Kuldip Singh (Judicial member) held that the Commissioner of Income Tax (Appeal) [CIT(A)] had decided the issue in a hurried manner without giving adequate opportunity of being heard to the assessee. Therefore, the order passed by the Commissioner of Income Tax (Appeal) was set aside and the Assessing Officer was directed to treat the amount of Rs.1,85,000/- as the explained income of the assessee and delete the addition. Thus, the appeal filed by the assessee was allowed.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that additions under Section 40A(3) of the Income Tax Act, 1961 cannot be initiated by the assessing officer without furnishing necessary evidences.
The Two-member bench comprising of Chandra Poojari (Accountant member) and Beena Pillai (Judicial member) held that the assessee has not proved the existence of business exigency in making the payment by way of cash otherwise by crossed cheque or DD or electronic clearance system through bank and Assessing Officer also not carried necessary enquiry on this count by examining all the sale deeds entered by theassessee with the parties. So, in the interest of justice, the entire issue in dispute was remitted back to the file of the Assessing Officer for reconsideration. Accordingly, the issue in these appeals with regard to the addition made under Section 40A(3) of the Income Tax Act is remitted back to the Assessing Officer for fresh consideration to decide the same after giving an opportunity of hearing to the assessee. Thus, the appeal of the assessee was partly allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that mere search statements recorded from third parties 5 years ago would not be relevant for framing the current assessment year.
The two-member Bench of Saktijit Dey, (Vice President) and M. Balaganesh, (Accountant Member) allowed the appeal observing that, “When all these facts are staring on us, there is absolutely no scope of disbelieving the purchases made by the assessee from the five suppliers merely based on search statements recorded from certain third parties at Surat during the course of search conducted in AY 2008-09 which are absolutely not relevant for framing the assessment in the AY 2013-14 in the hands of the assessee.” It was further observed that, in any case, nonproduction of a concerned supplier for examination by the assessee would not make the transaction ingenuine.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the deduction claimed under Section 80C of the Income Tax Act, 1961 cannot be rejected merely on the ground of non-mentioning of the claim in the Income Tax Return (ITR).
The Two-member bench comprising of Manish Borad (Accountant member) and Sonjoy Sarma (Judicial member) held that the appellate authority has coterminous power to accept the deduction that was not claimed in the Income Tax Return. So, the entire claim under Section 80C of the Income Tax Act is eligible claim of deduction. The assessee had submitted all relevant documents which are also considered by the appellate authority. Therefore, the claim of the assessee related to deduction under Sections 24(b), 80C & 80D of the Income Tax Act are allowed and the order of the Commissioner of Income Tax (Appeal) was set aside. Thus, the appeal of the assessee was allowed.
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee cannot claim a deduction for the cash purchase of land when the amount exceeds the permissible limit of Rs. 10000/- under Section 40A(3) of the Income Tax Act, 1961.
The Two-member bench comprising of Annapurna Gupta (Accountant member) and Madhumita Roy (Judicial member) held that considering the provisions of law particularly Section 40A(3) of the Income Tax Act and the explanation under Rule 6DD of the Income Tax Rules, 1962, 20% of the entire amount of Rs.8,61,96,310/- i.e. Rs.1,72,39,262/- was disallowed under Section 40A(3) of the Income Tax Act. As a result, the appeal preferred by the assessee was dismissed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the additional holding that the Assessing Officer (AO) could not interpolate the extra payment for every month to the entire 12 months for additional work done by guest teachers.
The two-member Bench of G.S. Pannu, (President) and Amit Shukla, (Judicial Member) allowed the appeal filed by the assessee holding that if the payment had been made through cheque and the details of expenses were duly debited in the books of account, then we fail to understand as to how it was outside the books. The Assessing Officer had treated the difference between the salaries for the month of March for additional work done by the staff for the entire year which he had interpolated for the entire 12 months on presumption basis.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that as per the CBDT (Central Board of Direct Taxes) circular, 500 gms for the assessee, 100 gms for her husband and 250 gms for her two unmarried daughters is the allowable limit for making addition. Thus the Tribunal deleted the addition made as the quantity of gold jewellery found is less to the extent covered by CBDT circular for family member. The Bench comprising of G. S. Pannu, President and Amit Shukla, Judicial Member observed that according to the circular No. 1916 dated 1994, allowable limit for gold jewellery to the extend of 500 gms for the assessee, 100 gms for her husband and 250 gms for her two unmarried daughters. According to the observation then the value of said jewellery works out to Rs.11,31,900/. Thus, if benefit of this circular is being given, then no addition can be made. Thus the Tribunal held that the quantity of gold jewellery found and to the extent it is covered by CBDT circular for family member same should not be treated as unexplained in view of the customary practice in India. Hence appeal of the assessee was allowed.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest expenditure which had not been claimed in the profit and loss account could not be treated as revenue expense for disallowance under Section 14A of the Income Tax Act 1961.
The two-member Bench of G.S. Pannu (President) and Amit Shukla, (Judicial Member) dismissed appeal filed by the revenue holding that the assessee had not claimed any interest expenditure in the profit and loss account and once no expenditure had been claimed in the profit and loss account the same could not have been disallowed under section 14A of Income Tax Act. The Bench further observed that the Assessing Officer had not given any finding or recorded any satisfaction as to why suo moto disallowance made by the assessee for earning of exempt income was not correct having regard to the nature of expenses debited or incurred. The CIT
(A) had simply restricted the disallowance to the exempt income without any even commenting on the suo moto disallowance of the assessee.
The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has upheld the deletion of addition holding that the addition made by the Assessing Officer (AO) towards the share premium under Section 56(2)(viib) of Income Tax Act had already offered to tax by the assessee before the settlement commission.
The two-member Bench of V. Durga Rao, (Judicial Member) and Manjunatha. G, (Accountant Member) dismissed the appeal filed by the revenue holding that the addition made by the Assessing Officer towards security premium in the hands of the assessee was already subjected to tax in the hands of RPP Infra Projects Ltd, which was evident from the order passed by the Income-tax Settlement Commission. Therefore, further addition towards very same income could not be made in the hands of the assessee.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has upheld the deletion of disallowance under Section 40(a)(ia) of Income Tax Act 1961 holding that Tax Deducted at Source (TDS) would not be applicable to professional and consultancy services which were neither availed nor rendered and even not utilised in India.
The two-member Bench of Waseem Ahmed, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) dismissed the appeal filed by the assessee following the decision rendered by ITAT for assessment year 2006-07 in assessee’s own case, which held since the services in question were neither “availed” nor “rendered” and even not “utilised” in India, therefore no tax was required to be deducted at source.
The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that extending corporate guarantee to Associated Enterprise would constitute an international transaction.
The two-member Bench of Waseem Ahmed, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) observed that the ITAT in assessee’s own case for preceding assessment year had held that providing of corporate/financial guarantee would not tantamount to an international transaction, and hence there was no requirement for benchmarking the same. The Bench partly allowed the appeal filed by the assessee holding that extending of corporate guarantee to AE would constitute an “international transaction” and the Assessing Officer was directed to adopt 0.5% as an arm’s length consideration for the corporate guarantee issued by the assessee in favour of its AE.
The Chennai bench of the Income Tax appellate tribunal (ITAT) held that Merely because the claim made by the assessee was not accepted would not lead to automatic levy of penalty. It is settled law that levy of penalty is not automatic.
The two member bench consisting of Mahavir Singh (Vice president) and Manoj Kumar Aggarwal (Accountant member) held that to fall under Section 270A(9)(a) of the Income Tax Act, essentially there has to be misrepresentation of suppression of facts. The same, in the tribunal’s opinion, was not the case here and it was not a fit case for imposition of penalty. Thus the appeal was allowed.
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