This annual digest analyzes all the ITAT stories published in 2023 at taxscan.in
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that non-registration of gift deeds cannot be considered to be a sham transaction as the assessee was in full possession of the property sold by a registered sale deed.
The Assessing Officer (AO) raised concerns about the Rs.12.50 crores credited to the assessee’s account, claiming it as unexplained income under Section 69A. The Commissioner of Income Tax (Appeal) [CIT (A)] argued for the applicability of Section 2(47) (vi), considering the de facto transfer of immovable property through a gift deed, allowing the Section 54 exemption. The addition was deleted, and the CIT (A)’s decision was upheld in the appeal.
The Two-member bench comprising of N.K. Billaiya (Accountant member) and Astha Chandra (Judicial member) held that no doubt the gift deed was not registered but the same cannot be rubbished as the sham transaction since the assessee was in full possession of the said property which was subsequently sold by her by way of a registered sale deed for a consideration of Rs.12.50 crores which was credited to her bank account held with HDFC Bank. By no stretch of the imagination provisions of Section 69A of the Income Tax Act can be applied to such transactions as the credit is the outcome of the sale of property. It is not a case of the revenue that the assessee has introduced her own unaccounted money by depositing the same in her bank account in the garb of the sale of some immovable property. Thus, the appeal of the revenue was dismissed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) set aside the order of the Commissioner of Income Tax (Appeal) [CIT (A)] and held that the death of the director and Chartered Accountant (CA) of the assessee’s company is a reasonable cause in filling of the delay appeal.
The counsel submitted that the appeal has been filed with a delay of 2100 days. He referred to the affidavit filed by the Director of the assessee company. The counsel submitted that due to reasons mentioned in the application for condonation of the appeal i.e. (i) due to the death of the Director and Chartered Accountant dealing with the matter of the assessee company (ii) due to submission of the change of the address to wrong destination by the accountant the assessee could not represent before the CIT (A) and therefore, he submitted that order of the CIT (A) may be restored for deciding afresh.
The Two-member bench comprising Om Prakash Kant (Accountant member) and Rahul Chaudhary (Judicial member) held that the assessee was prevented by sufficient reason in non-representing before the CIT(A). The CIT (A) has passed the impugned order without taking into consideration the submission of the assessee. Before the bench, the counsel has given an undertaking that he should comply with all the notices issued by the CIT
(A). The order of the CIT (A) was set aside and the matter was restored to him for deciding afresh after taking into consideration the submission of the assessee. Thus, the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the Dispute Resolution Panel (DRP) order passed without Document Identification Number (DIN) number shall be treated as invalid.
The counsel argued that the absence of a DIN in the DRP order violates CBDT Circular No.19/2019, rendering the order void ab initio. The jurisdiction assumed is invalid, and the proceedings are vitiated. The DRP order lacks a DIN in its body, making it invalid. Subsequent communication of the DIN is considered superfluous.
The Two-member bench comprising of Shamim Yahya (Accountant member) and Kul Bharat (Judicial member) held that the impugned DRP order was invalid and shall be deemed to have never been passed. Therefore, the impugned DRP order was quashed and the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that no Tax Deducted at Source (TDS) under Section 192B of the Income Tax Act, 1961 on payments made to consultant doctors and retainer doctors.
The TDS survey on M/s. Fortis Group found a liability of Rs. 2, 91, 71,684 under Section 192B, with the assessee having deducted Rs. 1, 10, 06,561. The Assessing Officer deemed the assessee an ‘assessee in default’ for not deducting Rs. 1,81,65,123 as TDS on payments to consultant and retainer doctors, treating them as salary. The order was passed by the ACIT Circle 74(1), New Delhi under Section 201(1)/201(1A) of the Income Tax Act.
The Two-member bench comprising of BRR Kumar (Accountant member) and Astha Chandra (Judicial member) held that the provisions of Section 194J of the Income Tax Act apply to the retainer-doctors and not those of Section 192B of the Income Tax Act after noting differences between the two types of agreements i.e. salaried doctors and doctors appointed on a retainer ship basis. Certain clauses in the contract with retainers gave the erroneous impression to the AO that creating an employer-employee relationship has been explained by the assessee that they do not create such a relationship. Thus, the appeal of the revenue was rejected.
The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) held that the deduction under Section 57 of the Income Tax Act, 1961 shall be allowed on the cost of funds and proportionate administrative expenses for earning interest income.
The co-operative society, after filing a return declaring Rs.2, 50,200 income with a deduction of Rs.33, 00,407 under Section 80P, faced a Section 154 order by the Assessing Officer. The AO disallowed Rs.23, 94,857 of the Section 80P claim and added Rs.9, 05,550 interest income, resulting in an income of Rs.44, 56,157. The appeal is pending at the National Faceless Appeal Centre [CIT (A)].
The Single-member bench comprising of George George K (Vice-President) held that the deduction of the cost of funds and proportionate administrative expenses was a deduction under Section 57 of the Income Tax Act for interest income assessed as “Income from Other Sources”. This prayer of the assessee has been accepted by the jurisdictional High Court in the case of Totgars Co-operative Society Ltd. vs. ITO. In light of the above judicial judgment of the High Court, the AO was directed to allow the cost of funds and proportionate administrative expenses for earning interest income to the extent of Rs.9, 05,550/- as a deduction under Section 57 of the Income Tax Act. Thus, the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made under Section 56 of the Income Tax Act, 1961 and held that the interest income generated on funds owned by the Government of India (GOI) is not an income in hands of the appellate company.
NHIDCL, a government-owned entity, faced an AO’s addition under Section 56 of the Income Tax Act for treating interest as income. The CIT (A) ruled in favor of NHIDCL, emphasizing its role as a GOI Nodal Agency, earning agency charges per MORTH’s circular. Funds from the government were used for project execution, not treated as income. Establishment expenses were covered by agency charges, and funds were managed separately to meet project requirements.
The Two-member bench comprising of B.R.R. Kumar (Accountant member) and Yogesh Kumar US (Judicial member) held that when an assessee collects certain income on behalf of the Government and remits the income back to the government and TDS was deducted in the name of the assessee then in all practical purposes income collected by the assessee was its income in hands of the assessee and the rent paid back to the Government was its expenses and the TDS credit/refund will be provided to the assessee in whose name TDS has been deducted. Hence, in this situation also there would be no income chargeable to tax. Therefore, the order of the CIT(A) was upheld and the appeal of the revenue was dismissed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) set aside the order of the Principal Commissioner of Income Tax (PCIT) while granting relief to NTPC and held that the proceeding under Section 263 of the Income Tax Act, 1961 cannot be initiated on account of income received from the fly ash and cenosphere.
The assessee’s return showed a NIL income and a loss to be carried forward. PCIT initiated Section 263 proceedings, deeming the assessment as prejudicial to revenue. The issue revolved around assessing Rs.88, 26, 37,126/- on fly ash and cenosphere sales. The Authorized Representative cited a similar case where the Tribunal favored the assessee, urging consistency. The appeal sought to uphold the Tribunal’s decision in favor of the assessee.
The Two-member bench comprising B.R.R. Kumar (Accountant member) and Yogesh Kumar U.S. (Judicial member) held that no addition was called for on account of income from fly ash and cenosphere. Accordingly, the impugned order passed under Section 263 of the Income Tax Act by the PCIT was hereby set aside. And the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the claim of exemption under Section 10(10)(i) of the Income Tax Act, 1961 in respect of gratuity and leave encashment shall be allowed when the assessee is an employee holding a civil post.
The counsel argued that the issues align with precedents like Ram Kanwar Rana vs. ITO and Manohar Lal Batra vs. ITO, where the Tribunal favored employees of Hisar Agricultural University. The Departmental Representative cited a CBDT notification, asserting that university employees aren’t state employees, and hence, the monetary limit applicable to government employees doesn’t extend to them.
The Two-member bench comprising of Shamim Yahya (Accountant member) and Kul Bharat (Judicial member) held that it was demonstrated that the Cabinet Committee on Security (CCS) conduct rules are applicable to the employees of Hisar Agriculture University and they are treated at par with the Scientists of Indian Council of Agricultural Research (ICAR). Under these undisputed facts, there was no reason to take a different view on the matter. The AO was directed to delete the impugned addition. Thus, the appeal of the assessee was allowed.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the corpus-specific voluntary contribution is a capital receipt and cannot be offered to tax in the case of trust not registered under Section 12A of the Income Tax Act, 1961.
The AO, assuming jurisdiction under Section 263, held the assessment erroneous and prejudicial to revenue’s interest due to corpus donation treatment. The AO found the assessee ineligible for exemption under Section 11(1)(d) of the Income Tax Act regarding the Rs. 44.25 crore corpus donation from Bandhan-Konnagar, an approved trust, as the assessee wasn’t registered under Section 12A of the Income Tax Act.
The Commissioner of Income Tax (Appeal) [CIT (A)] observed that the impugned receipt is a capital receipt that is to be kept permanently and only accretions are to be used. The utilization of the grant is governed by the directions of the donor and since the grant was not in the form of a corpus donation but was a specified grant given for utilization as per the directions of the donor, hence was a capital receipt and, accordingly, directed the AO to delete the impugned addition.
The Income Tax Appellate Tribunal (ITAT), Delhi bench has annulled the disallowance of a long-term capital loss arising from the sale of shares of a private company to its initial promoters
Paramjit Gandhi, a director at M/s Progressive Tools and Components Pvt. Ltd, faced an income tax challenge for the AY 2013-14. The assessing officer disallowed a declared long-term capital loss on the sale of shares in M/s. Flexpack Technology Pvt. Ltd (FPTPL), deeming it not genuine. The CIT (A) upheld the decision. In the tribunal’s second appeal, the assessee’s counsel argued the shares were sold to mitigate FPTPL losses, presenting supporting documents. The Revenue’s counsel asserted the transaction’s legitimacy but was ultimately transferred to the initial promoters through Smt. Sunita Jain.
After careful consideration, the two-member bench, consisting of M. Balaganesh (Accountant Member) and Anubhav Sharma (Judicial Member), found that the assessee, facing challenges, had genuinely sold the shares to Sunita Jain at a negotiated price of Rs. 3 per share, considering FPTPL’s significant losses. The tribunal, based on its review of facts and records, deleted the disallowance of the long-term capital loss incurred on the sale of shares to the initial promoters. Consequently, the tribunal allowed the appeal of the assessee
The Delhi High Court upheld the direction of the Income Tax Appellate Tribunal (ITAT) to exclude e-Clerx as comparable. In the case of Future First Info Services Ltd, the Commissioner, Income Tax(Appeals) partially allowed the appeal, directing a re-computation of the average PLI and reviewing rent expenses and Section 40A(2)(b) additions. The Tribunal, in its order dated 10.05.2021, dismissed the revenue’s appeal, deleting the Assessing Officer’s additions for rent expenditure and Section 40A (2)(b) payments, and upheld the exclusion of certain comparable. The appellant argued that e-Clerx should not have been excluded, citing pending legal challenges and asserting that stringent comparability standards weren’t necessary. The respondent emphasized differences in structure and functionality between Future First and e-Clerx.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “In contrast, as detailed above, the respondent/assesse has employed fresh young graduates, engaged in simply punching in the data. Another significant aspect is that e-Clerx carries out its substantial business on outsourcing model, which makes it different from the respondent/assesse. The high end KPO services provider cannot be compared with the ITeS, which fall under the category of BPO services provider.”
Therefore, as regards rejection of e-Clerx as comparable in the present case, we find no error in the decision of the Tribunal ” the Court noted.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that stamp duty value on the date of allotment is to be taken for the purposes of Section 56(2)(vii)(b) of the Income Tax Act, instead of date of registration.
The assessee declared a total income of ₹5, 93,520, facing limited scrutiny. The assessing officer applied Section 56(2)(vii)(b) of the Income Tax Act, citing a variance between the property’s agreement and stamp duty values. The assessee argued that the agreement date, not the registration date, should be considered. The Tribunal, citing precedents, noted the agreement on 16.12.2010, and partial payment before registration, concluding in favor of the assessee. The revenue representative supported the CIT (A) order. The Tribunal upheld the assessee’s stance, considering the agreement date for Section 56(2)(vii)(b).
The bench, also found that, in the case of Poonam Ramesh Shahjwan wherein on the similar facts the value of the flat was determined on the date of booking of flat after taking into consideration the payment made by the assessee through banking channel before the registration of the flat as laid down in the proviso to Section 56(2) (vii)(b) of the Income Tax Act.
Thus the bench directed the AO, that the stamp duty value on the date of allotment in the case of the assessee on 16.10.2010, to be taken for the purpose of Section 56(2)(vii)(b) of the Income Tax Act and not stamp value as on the date of registration of sale deed.
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) quashed the confirmation of addition under Section 56(2)(vii)(b) of the Income Tax Act, done solely for payment made by other co-owner before registration.
The assessee, declaring ₹5,93,520 income, faced scrutiny for purchasing property jointly with her husband for ₹84, 15,300. The Stamp Duty Authority valued it at ₹1, 32, and 82,000. The AO invoked Section 56(2)(vii)(b), taxing50% of the difference. The assessee argued the agreement date’s relevance and cited precedent. The Tribunal, acknowledging the joint ownership, agreed with the assessee’s stance, considering the agreement date for Section 56(2)(vii)(b), and rejected the revenue’s claim.
The Tribunal Bench of Judicial Member Kuldip Singh and Accountant Member Amarjit Singh observed that, “The registration of the purchased property was made on 29.12.1014. However, the property was allotted as per the letter of allotment filed dated 16.12.2010. The first cheque for payment towards the purchase of the property was made on 18.12.2010. The assessee has paid ₹ 27, 73, 980/- before registration of the agreement with the registrar of stamps, Maharashtra.”
Considering the decision in Sanjay Dattatraya Dapodikar wherein it was held that where date of agreement for fixing amount of consideration for purchase of a plot of land and date of registration of sale deed were different the bench noted that, assessee, prior to date of agreement, had paid a part of consideration by cheque, provisos to section 56(2) (vii)(b) being fulfilled, stamp value as on date of agreement should be applied for purpose of said section. The tribunal bench found no merit in the decision of the Commissioner of Income Tax (Appeals) [CIT (A)], that before the registration of the flat only other co-owner i.e. Ajay Kumar Singh, husband of the assessee has made payment. It was thus held that, since, it is joint property owned by assessee and her husband, that it is immaterial who had made payment before the date of registration of the property.
The Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) held that addition under Section 69A of the Income Tax Act, 1961 when the specific notes form a part of the gross sale.
The assessee, operating as Balaji Fertilizers, admitted gross sales of Rs. 1,24,57,139 with a net profit of Rs. 3,39,879. As the return of income was not filed, the AO estimated income at 8% of the gross sales, totaling Rs. 9, 40,811. Additionally, cash deposits of Rs. 40, 27,750, including Rs. 6, 97,000 during demonetization, were treated as ‘unexplained’ under Section 69A. The Authorized Representative argued that the specified notes’ deposit was part of sales, while the Departmental Representative contested this, urging dismissal of the appeal.
The Single-member bench comprising of K. Narasimha Chary (Judicial member) held that there was no reason for the AO to dispute the genuineness of Rs. 6, 97,000/- merely because it was in specified notes. Revenue does not say that there was no cash in hand in the business conducted by the assessee. In these circumstances, having regard to the volume of business and also cash deposits in the entire year and also during the demonetization period relating to such business, the bench was of the considered opinion that there was no reason not to believe that the deposits in specified notes was also part of cash sales. Since the net profit was estimated, this particular deposit cannot be brought to tax separately. Hence, the Assessing Officer was directed to delete the same.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the addition under Section 69A of the Income Tax Act, 1961 cannot be imposed when the assessee doesn’t hold the ownership of the money and there is no evidence found concerning the cash.
During a Section 132(1) search at the Chartered Accountant assessee’s residence, with an initially declared income of Rs. 12,16,68,990, a subsequent notice under Section 153A was issued. The AO added Rs. 1.45 crores as actual cash arranged/paid by the assessee to HKA, making a total income addition of Rs. 1,45,00,000 under Section 69A in the assessment order under Section 153A/143(3) of the Income Tax Act.
The Two-member bench comprising of BRR Kumar (Accountant member) and Astha Chandra (Judicial member) held that it was not a case in which the assessee was found to be in possession of the cash of Rs. 1.45 crore in the search operation. Therefore, it cannot be presumed that the assessee was the owner of the said cash. To attract the provisions of Section 69A of the Income Tax Act sine qua non was “ownership” of money etc. which has not been recorded in the books of account. The AO has made only the presumption that the said cash was ‘available with the assessee’ without bringing on record any material in support thereof. Thus, the appeal of the revenue was dismissed.
The Income Tax Appellate Tribunal (ITAT), Chennai bench upheld the disallowance made by the Income Tax Department, stating that the assessee failed to produce supporting documents for the helper allowance claimed as a deduction under Section 10(14)(i) of the Income Tax Act, 1961.
The Director of Annai Builders Real Estate Pvt. Ltd., Thanushkodi Narayanan, initially filed her income tax return for AY 2012-13. Later, in the return filed under Section 153A for AY 2017-18, she claimed a helper allowance of Rs.4,80,000, not present in the original return. The AO disallowed it as no additional salary income was offered. Despite special audit, no supporting documents were provided. The Tribunal upheld the disallowance. The assessee, represented by B. Ramakrishnan, argued expenses were incurred, while N.B. Som, representing the Revenue, supported the Commissioner (Appeals) observations.
The tribunal observed that the assessee could not provide any evidence or file documents related to the claim of the helper allowance paid to them. After reviewing the facts and records, the two-member bench of Rajesh Kumar (Accountant member) and Mahavir Singh (Vice President) concluded that the assessee failed to produce supporting documents for the expenditure on the helper allowance claimed as a deduction under Section 10(14)(i) of the Income Tax Act, 1961. Consequently, the bench dismissed the appeal of the assessee.
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the reopening of the assessment under Section 147 of the Income Tax Act, 1961 cannot be initiated after the expiry of 4 years based on the failure of the assessee in deducting the Tax Deducted at Source (TDS) on interest payment.
The assessee, involved in residential construction, faced scrutiny under Section 143(3). The assessment was later reopened under Section 147, with the reason that the assessee didn’t deduct TDS on interest payments to Reliance Home Finance. The Commissioner (Appeals) deemed the reassessment, initiated after four years, unjustified, finding no failure to disclose material facts. Consequently, the reassessment under Section 147 and Section 148 was quashed.
The Two-member bench comprising of Mahavir Singh (Vice-President) and Manjunatha G (Accountant member) held that reopening was beyond 4 years and as the original assessment was framed under Section 143(3) of the Income Tax Act, the Revenue could not establish any failure on the part of the assessee to disclose any material facts necessary for its assessment, the reopening in the present case was bad in law. Hence, the bench found no infirmity in the order of CIT(A), and the same was confirmed. Therefore, the appeal of the Revenue was dismissed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted another opportunity to the assessee and held that the addition as unexplained purchase expenses shall be made on failure to establish any evidence for eviction of encroacher.
During a Section 133A search at the Assessee’s business premises, a voluntary declaration of Rs. 1,10,06,000 was made by Shri Rajaram Ganpat Vichare, a partner. The AO summoned Shri Ganesh Vithal Indore, but he neither appeared nor responded. The AO, considering the Assessee’s failure to provide evidence of eviction efforts or legal actions, questioned a transaction of Rs. 1,30,00,000 allegedly paid to Shri Ganesh Vithal Indore. The Commissioner affirmed the addition due to doubts surrounding the transaction.
The Two-member bench comprising Prashant Maharishi (Accountant member) and N.K. Choudhry (Judicial member) held that Shri Ganesh Vithal Indore was also the appropriate person to establish his possession over the encroached property/land by submitting the relevant documents and/or other direct or indirect evidence
To ensure a fair decision and uncover the truth, the issue is deemed appropriate for remand to the AO. The AO is directed to summon Shri Ganesh Vithal Indore, taking necessary measures if he doesn’t appear. The assessee is granted another opportunity to substantiate its stance on the encroached land and establish the transaction’s genuineness with evidence. The issue is remanded for a de-novo decision by the AO.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) granted relief to PVR and held that the subsidy given by the state government on account of the development of multiplexes in the state is a capital receipt.
The counsel for the assessee stated that the issue is no more resintegra as it has been decided by this Tribunal in favor of the assessee and against the revenue in A.Y. 2006-07 in ITA No.1897/Del/2010.
The Two-member bench comprising N.K. Billaiya (Accountant member) and Astha Chandra (Judicial member) by referring to the direct judgments of the Bombay High Court in M/s Chapalkar Brothers and that of the Supreme Court judgment in the case of Ponni Sugars & Chemicals Ltd., which has approved many such judgments cited in the body of the order, held that the subsidy received by the assessee was capital in nature.Thus, the appeal of the assessee was allowed.
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted another opportunity to the assessee due to the failure of the Chartered Accountant (CA) to register the email ID on the income tax portal.
The cooperative society declared rental income of Rs.61,56,782, claiming a Section 24(a) deduction of Rs.18,23,010. It also sought deductions of Rs.69,746 for insurance premium and Rs.10,337 for land revenue tax, resulting in a total house property income of Rs.42,53,689. The AO added Rs.12,25,000 for hoarding rental income and Rs.69,746 for unexplained expenditure under Section 69C, framing the assessment under Section 143(3). The assessee was notified through email and RPAD, but did not appear for the appeal.
The Two-member bench comprising of Kuldip Singh (Judicial member) and Amarjit Singh (Accountant member) held that when the assessee brought on record the fact that due to a lapse on the part of his newly engaged CA who could not update his email ID on the income tax portal the notice was not received, the assessee was required to be given another opportunity to pursue its appeal before the Commissioner of Income Tax (Appeal) [CIT(A)] to comply with the rule of natural justice. Therefore, the order of the CIT(A) was set aside and the appeal of the assessee was allowed.
The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that the disallowance under Section 14A of the Income Tax Act, 1961 shall not be made when no demonstrable evidence has been shown against the expenditure related to earning of tax-free income.
The assessee revised the income to Rs.1,99,51,420. In the scrutiny assessment, a notice under Section 143(2) was issued. The assessee voluntarily disallowed Rs.9,134 under Section 14A. The AO, considering Section 14A with Rule 8D and citing the Supreme Court’s Maxopp Investment Limited vs. CIT, made a 1% disallowance based on Rule 8D(2), considering annual averages of monthly opening and closing balances of investment values. The counsel argued the investment in Mutual Funds mandated dividend reinvestment.
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