ITAT Weekly Round Up

A Round Up of the ITAT Cases Reported at Taxscan Last Week
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This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal ( ITAT ) reported at Taxscan.in during the previous week 2nd June 2024 to 8th June 2024.

Mere Difference of Opinion with AO not a Base to Exercise Revision Jurisdiction under Income Tax Act: ITAT The Mullanpur Garibdas Co-operative Multipurpose Society vs The PCIT-II CITATION: 2024 TAXSCAN (ITAT) 699

The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT ) has held that a mere difference in opinion with the Assessing Officer ( AO ) is not a valid base to exercise Revisionary Jurisdiction under the Income Tax Act, 1961. The Tribunal quashed the revision order under Section 263 of the act.

The Bench observed that the assessment order has recorded the details called for during the assessment proceedings and the order also states that “the books of account were examined and no adverse inference was drawn and the exemption claimed under Section 80P was allowed”.

Payment made Overseas for Providing Information on Tariff Change is not FTS: ITAT sets aside TDS Demand u/s 195 of Income Tax Act ACIT vs Lx Pantos India Private Limited CITATION: 2024 TAXSCAN (ITAT) 701

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) held that payment made overseas for providing information on Tariff Change is not FTS and set aside the demand of Tax Deducted at Source ( TDS ) under section 195 of the Income Tax Act, 1961.

The Two-member Bench comprising Kul Bharat (Judicial Member) and M. Balaganesh (Accountant Member) observed that it is not the case that overseas parties have their Permanent Establishment (“PE”) in India and derive income from the business set up and controlled in India. Hence, such an amount is not chargeable to tax in India and no tax needs to be deducted at source.

Claim as Residential House having no Basic Amenities for Habitation is invalid: ITAT upholds Disallowance u/s 54 of Income Tax Act DCIT vs Sandeep Hooda CITATION: 2024 TAXSCAN (ITAT) 702

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) found that the claim of a residential house having no basic amenities for habitation is invalid and upheld the disallowance under section 54 of the Income Tax Act, 1961.

The two-member Bench comprising Saktijit Dey (Vice President) and M. Balaganesh (Accountant Member) observed that the assessee had not constructed the residential house within the prescribed time and in fact had not constructed a residential house at all on or before 25.09.2017 which could be construed as a residential house, habitable for its dwelling. Accordingly, deduction under section 54 had been rightly denied by the AO.

Failure to prove genuinity of Income from Agriculture Activities: ITAT upholds Addition Shri D. Ramagopal vs ACIT CITATION: 2024 TAXSCAN (ITAT) 703

The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) recently upheld the addition made by the assessing officer due to failing to provide the genuine income from the agriculture activities.

After reviewing the facts the ITAT bench of Mahavir Singh, ( Vice President ) and Manoj Kumar Aggarwal (Accountant Member) observed that the assessee has made unsubstantiated claims of agriculture income. Whatever documents have been filed by the assessee to support this income, has been found to be bogus and non-genuine. Therefore, the claim made by the assessee has rightly been denied.

ITD can’t cure defect in Notice issued u/s 148 of Income Tax Act against Dead person by issuing Manual Notice in name of Legal Heir: ITAT quashes Reassessment Proceedings Late Lodaya Navalbai Raichand vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 704

The Bangalore  bench of Income Tax Appellate Tribunal ( ITAT ) while quashing the reassessment proceedings  held that the Income Tax Department could not cure defect in notice issued under section 148 of the Income Tax Act, 1961 against the dead person by issuing manual notice in the name of legal heir.

After reviewing the facts the ITAT bench of Chandra Poojari, (Judicial Member)and Beena Pillai (Accountant Member) quashed the reassessment proceedings held that the Income Tax Department could not cure defect in notice issued under section 148 of the Income Tax Act, 1961 against the dead person by issuing manual notice in the name of legal heir.

Invalid Notice issued prior to Filing of ITR: ITAT quashes Assessment order M/s. Mideast Integrated Steels Ltd vs ACIT CITATION: 2024 TAXSCAN (ITAT) 705

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order after finding that the notice issued by the Income Tax Department was invalid and which was filed prior to filing the Income Tax Return

The tribunal observed that the assessee had filed its return of income on 26.12.2016. Whereas, as per the observations of the Assessing Officer in the body of the assessment order, notice under section 143(2) of the Act was issued to the assessee on 23.09.2015. Thus, it is established on record that notice under section 143(2) of the Income Tax Act was issued and served on the assessee prior to the filing of the return of income by the assessee.

Amount transferred from Current Account to Deposit Account to maintaining shortfall of Accounts cannot be consider Income of Assessee: ITAT deletes Addition ITO vs M/s. Aaditra Foundations CITATION: 2024 TAXSCAN (ITAT) 706

The Chennai bench of Income Tax Appellate Tribunal ( ITAT ) after deleting the addition made by the assessing officer held that the amount transferred from the current account to maintain the shortfall of the account could not be considered the income of the assessee .

It was observed that the assessee is holding a current account. In case of surplus funds beyond a certain threshold limit, the excess funds would be transferred to a deposit account and whenever there is a shortfall in the current account, the amount is transferred back to the current account. Therefore, it is a cyclical transaction and deposits could not be considered to be the income of the assessee.

Payment received by Non Resident assessee from Indian Company for IUC cannot be taxed as Royalty in India u/s 9(1)(vi) of Act on absence of DTAA: ITAT M/s. Globe Teleservices Ltd vs The Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 707

The Bangalore bench of Income Tax Appellate Tribunal (ITAT) held that payment received by the non resident assessee from an Indian Company for IUC could not be taxed as royalty in India under Section 9(1)(vii) of the Income Tax Act, 1961 in the absence of Double Taxation Avoidance Agreement (DTAA).

After reviewing the facts the ITAT bench of Beena Pillai, (Judicial Member )and Laxmi Prasad Sahu(Accountant Member) relied upon the decision of Karnataka High Court in case of Vodafone Idea Ltd. hold that the payments received by the assessee cannot be held to be royalty under section 9(1)(vi) of the Income Tax Act.

ITAT directs to verify Peak Credits in Undisclosed Bank Account of ICICI Bank Gulshan Grover vs ITO CITATION: 2024 TAXSCAN (ITAT) 708

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) directed to verify the peak credits in an undisclosed bank account of ICICI Bank.

After reviewing the facts the ITAT bench of Amit Shukla, (Judicial Member) and M. Balaganesh, (Accountant Member) observed that “the peak credit working requires factual verification by the  AO. Hence, it is appropriate to restore this issue to the file of the AO for verification of the peak credit workings and bring to tax only the peak credit as undisclosed income of the assessee”.

Assessee failed to Prove Entries of Credit against Addition section/s 68 of Income tax Act: ITAT allows Revenue Dept’s Appeal Income Tax Officer vs M/s. Mangalvani Commercial Pvt. Ltd. CITATION: 2024 TAXSCAN (ITAT) 709

In a recent ruling, the Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) confirmed the addition made under Section 68 of the Income Tax Act, 1961 while allowing the revenue department’s appeal. The Tribunal observed that addition is valid as the assessee failed to prove entries of credit against the same.

The two member Bench of the ITAT comprising of Anikesh Banerjee ( Judicial Member ) and Dr. Manish Borad ( Accountant Member ) observed that once it is not specifically provided that sum should be received only through banking channels and the mention is only about the credit entry, then it entails into all the credit entries and the AO is well within his jurisdiction to examine the same.

Rejection of Registration of Trust due to Mismatch of Trust name in Legal Documents and PAN database: ITAT directs Re adjudication Parul University Alumni Association vs Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 710

The  Ahmedabad  bench of Income Tax Appellate Tribunal ( ITAT ) directed readjudication after finding that the CIT(Exemption) rejected the registration of trust due to mismatch of trust name in legal documents and PAN database .

It was observed by the tribunal that the assessee/applicant trust has been able to reasonably explain the mismatch between the name as appearing in the legal documents submitted by the assessee/applicant trust before CIT (Exemptions) and the name as appearing in the PAN database.

No Addition u/s 68 of Income Tax Act on Share Premium allowable when Identity & Creditworthiness of Share Subscribers Proved: ITAT Dream Valley Barter vs ITO CITATION: 2024 TAXSCAN (ITAT) 711

In a recent ruling, the Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) held that once the assessee has proved the identity and creditworthiness of the share subscribers,the burden shifts upon the Assessing Officer ( AO ) to examine the evidence and made independent inquiries.The Tribunal found that the addition under Section 68 of Income Tax Act is not valid as the AO failed to point out the discrepancies.

The two member Bench of the ITAT comprising of Sanjay Garg (Judicial Member) and Dr. Manish Borad (Accountant Member) observed that the assessee discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction and the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries.

Payments on ‘Transactional Charges’ not covered u/s 194J(1)(ba) of Income Tax Act: ITAT deletes Penalty Ambience Private Limited vs ITO CITATION: 2024 TAXSCAN (ITAT) 712

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty order passed by the Commissioner of Income Tax  ( Appeal ) ( CIT(A) ) under section 271C. of the Income Tax Act, 1961 and observed that the payments on account of ‘transactional charges’ to be not covered by section 194J(1)(ba) of the act.

The two-member Bench comprising Anubhav Sharma (Judicial Member) and Dr. B.R.R. Kumar (Accountant Member) observed that the tax authority considered the ‘Transaction charges as ‘Professional charges’ paid to directors falling in limb (ba) of sub-section (1) of section 194J of the Act, it comes up that the PCIT has accepted the plea of the assessee that payments made to directors on account of sitting fee is allowable.

Ratification Order under Income Tax Act Passed on Non Existing Entity is Invalid: ITAT DCIT Cirlce-3(4) vs IDBI Bank Ltd CITATION: 2024 TAXSCAN (ITAT) 713

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) held that a rectification order passed in the name of a non-existent entity, despite informing Revenue regarding its merger is invalid.

The two member Bench comprising Prashant Maharishi (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that the Assessing Officer was aware about the merger still, the Assessing Officer chose to pass the rectification order in the name of a non-existent entity.

Payment to Pollution Control Board for Environmental Norms Violation does not amount to Penalty, No Disallowance under Income Tax Act: ITAT Ma jhaulia Sugar Industries Pvt. Ltd vs Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 714

The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) has held that payment made by the assessee to the Pollution Control Board for violation of environmental norms would not be penal and held that no disallowance can be made under the Income Tax Act,1961 against this.

The two-member Bench of the ITAT comprising Rajpal Yadav (Vice-President) and Rajesh Kumar (Accountant Member) observed that the adjustment under Section 143(1)(a) was made based on an incorrect claim which is apparent from information in the return as provided by the assessee.

Failure to File SFT within Stipulated Date given in Notice u/s 285 BA of Income Tax Act: ITAT confirms Penalty u/s 271FA The Waghodia Urban Co. Op. Bank Limited vs The Director of Income Tax CITATION: 2024 TAXSCAN (ITAT) 715

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) confirmed the penalty under Section 271FA for failure to file the Statement of Financial Transactions ( SFT ) within the stipulated date given in the notice under Section 285BA of the Income Tax Act.

Further the single member bench of the tribunal comprising Suchithra Kamble  ( Judicial member) noted that the factual aspect in the present case clearly set out that the assessee despite giving one month period has failed to file the SFT return within the stipulated date given in notice under Section 285BA(5) of the Income Tax Act.

Taxpayer is Co-Owner of Bank Account, No Concealment of Income: ITAT deletes penalty u/s 271(1) (c) of Income Tax Act Suchit Arvindbhai Patel vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 716

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 observing that there is no concealment of income  particulars. The taxpayer who is the co-owner of the bank account whose deposits have been added was also not taken into account either by the Assessing Officer ( AO ) or by the Commissioner of Income Tax (Appeals) [CIT (A)]. 

The two member bench of the tribunal comprising Anupama Gupta (Accountant member) and Suchithra Kamble (Judicial member) concluded that the assessee was the third co-owner of the Bank Account whose deposits have been added was also not taken into account either by the Assessing Officer or by the CIT (A). Thus, this amounts to non-application of mind by invoking Section 271(1)(c) of the Income Tax Act which was  a penalty. Therefore, in the present assessee’s case, the penalty does not sustain. Appeal of the assessee was allowed.

No Order can be Passed in Name of Non-Existent Entity: ITAT quashes Income Tax Assessment Order M/s. Patil Construction vs Deputy Commissioner of Income Tax CITATION: 2024 TAXSCAN (ITAT) 717

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the Income Tax Assessment Order, stating that no order can be passed in the name of a non-existent entity.

The two member bench of the tribunal comprising Gagan Goyal ( Accountant member ) and Amit Shukla ( Judicial member ) noted that amalgamating company was  not in existence and had been amalgamated much prior to the commencement of the proceedings, then no order can be passed in the name of nonexistent entity even if the assessee had participated in the proceedings or not? If intimation has been given, it is the duty of the AO not only to issue notices in the case of amalgamate company to pass the order in the name of the existing entity in which erstwhile company has been amalgamated. Accordingly, the entire assessment order was bad in law because order in the case of a non-existing entity cannot be sustained at all

Money Introduced from JDS Industries not Deemed Taxpayer’s Own Income: ITAT deletes Addition of 4.45 Core u/s 69 M/s.Global Ship Trade P.Ltd. vs ITO CITATION: 2024 TAXSCAN (ITAT) 718

The Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the addition of Rs. 4.45 crore under Section 69, of Income Tax Act, 1961 ruling that money introduced from JDS Industries is not deemed the taxpayer’s own income.

The two member bench of the tribunal comprising Siddhartha Nautiyal ( Judicial member ) and  Annapurna Gupta ( Accountant member) failed to understand, how the funds received by the assessee from JDS can be treated as its own funds when the money trail unraveled by the Department itself clearly revealed the ultimate beneficiary to be VMS Industries. There can be no other conclusion drawn from the facts before the department but that of VMS Industries being the ultimate beneficiary of the transactions, and the assessee only being intermediary in the entire process. The AO of VMS Industries and the AO “SCMPL” have also admitted to this fact. Even the AO of VMS Industries agreed with the same while taxing the entire share capital received in it, in its hands. Thus there appears to be clear unanimity between the AO’s of all the three entities that the money brought into assessee and SCMPL was  only as intermediary, with M/s VMS being the ultimate beneficiary of the same.

Assessment/Reassessment in a Search-Related Case Cannot Be Passed Without Proper Approval by Competent Authority: ITAT MDLR Airline vs DCIT CITATION: 2024 TAXSCAN (ITAT) 719

In a significant case, the Income Tax Appellate Tribunal ( ITAT ) of the New Delhi bench held that assessment or reassessment in a search-related case cannot be passed without proper approval of the competent authority  and quashed the same. It was observed that the approval granted under section 153D of the Income Tax Act clearly indicates that the Approving Authority has neither examined the assessment records nor the seized materials.

The two-member Bench comprising of Saktijit Dey (Vice President) and Naveen Chandra (Accountant Member) observed that the approval granted under Section 153D of the Act clearly indicated that the Approving Authority has neither examined the assessment records nor the seized materials.

Claim u/s 80M of Income Tax Act Allowable when Deduction of Amount was Equal to Dividend Distributed within Due Date: ITAT Purnasons Pvt. Ltd vs ITO CITATION: 2024 TAXSCAN (ITAT) 720

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) held that claim under Section 80M of Income Tax Act, 1961 is allowable when deduction of amount was equal to dividend distributed within due date.

The two member Bench of the ITAT comprising of Pradip Kumar Choubey (Judicial Member) and Dr. Manish Borad (Accountant Member) found that in the year in which the dividend was received, the assessee company would be allowed a deduction of an amount equal to and not exceeding the amount of dividend “distributed” on or before the due date. Further observed that the dividend was paid to the shareholders of the assessee before due date under section  139(1) via cheques. The ITAT allowed the assessee’s appeal. To Read the full text of the Order CLICK HERE

Treating Cash Deposit During Demonetization as unexplained cash without rejecting Books of account is Invalid: ITAT Pilani Industrial vs ACIT CITATION: 2024 TAXSCAN (ITAT) 721

In a recent case, the New Delhi of the Income Tax Appellate Tribunal ( ITAT ) held that treating the cash deposit as unexplained cash without rejecting the books of account is invalid.

The two member Bench comprising of Vimal Kumar (Judicial Member) and S Rifaur Rahman (Accountant Member) observed that when entries in books of account in regard to cash balances were held to be genuine, there was no escape from conclusion that assessee had offered reasonable explanation as to source of all high denomination notes which it encashed and it was not open to ITAT to accept genuineness of those books and accept assessee’s explanation in part and reject same in regard to balance sum.

Date of Acquisition of New Property must be Date of Possession: ITAT allows Deduction under Income Tax Act Sunil Amritlal Shah vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 722

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that the date of possession of new property is to be considered as the date of acquisition while considering the deduction under Section 54 of the Income Tax Act,1961 on the purchase of new property. The tribunal held the assessee eligible for Income Tax deduction.

The two-member bench of Raj Kumar Chauhan (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that the date of possession of the new property should be considered as the date of acquisition of the property. By agreeing to purchase, the assessee has acquired the right to purchase the property and did not purchase it as it was under construction.

No Price Paid for Acquiring Bonus Shares: ITAT dismisses Valuation of Bonus Shares u/s 55(2)(aa)B of Income Tax Act M/s. Zash Traders vs ACIT CITATION: 2024 TAXSCAN (ITAT) 723

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT )dismissed the valuation of bonus shares under Section 55(2)(aa)B of the Income Tax Act, 1961 as the taxpayer admitted to not paying any price for acquiring them.

The bench observed that the provision of sub-clause (i) of clause (b) in section 55(2)(b) of the Income Tax Act is in respect of financial assets, where a purchase price has been paid by an assessee for acquiring such financial asset. Whereas, in present facts, the assessee has admittedly not paid any price for acquiring the bonus shares. Under such circumstances, the specific provision relating to acquisition of financial assets under Section 55(2)(aa)B(iiia) of the Income Tax Act, without any cost would be applicable.

Taxpayer fails to Construct Residential House within Prescribed Time: ITAT disallows Section 54 Deduction under Income Tax Act DCIT vs Sandeep Hooda CITATION: 2024 TAXSCAN (ITAT) 724

In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) disallowed the claim of deduction under Section 54 of the Income Tax Act,1961, because the taxpayer failed to construct a residential house within the prescribed time.

The two member bench of the tribunal comprising Sakti Dey ( Vice President ) and M. Balaganesh ( Accountant member ) had no hesitation to hold that the assessee had not constructed the residential house within the prescribed time and in fact had not constructed a residential house at all on or before 25.09.2017 which could be construed as a residential house, habitable for its dwelling. Accordingly, deduction under Section 54 of the Income Tax Act had been rightly denied by the AO in the instant case. ITAT considered opinion, was thoroughly misplaced. With these observations, the grounds raised by the revenue are allowed. Accordingly, appeal of the revenue was allowed.

JCIT issues Penalty Order under Income Tax Act beyond Limitation, Deemed Invalid: ITAT deletes Penalty ITO vs Turner General Entertainment Networks India Pvt. Ltd CITATION: 2024 TAXSCAN (ITAT) 725

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty, noting that the Joint Commissioner of Income Tax ( JCIT ) ought to have passed the order on or before 31.03.2015, and since the penalty order was passed on 25.02.2016, it was barred by limitation, deemed invalid.

Further the two member bench of the tribunal comprising Saktijit Dey ( Vice President) and M. Balaganesh ( Accountant member) found that If a 6 months period is constructed from this date, then the JCIT (TDS) ought to have passed the order on or before 31.03.2015 and since the penalty order was passed on 25.02.2016, it would be barred by limitation. Further found that this dispute has been directly addressed by the Jurisdictional High Court in the case of PCIT vs. JKD Capital & Finlease Ltd. wherein the limitation period mentioned in provisions of Section 275(1) (c) of the Income Tax Act was subject matter of interpretation in the context of levy of penalty under Section 271E of the Income Tax Act.

ITAT allows Claim of Deduction u/s 80P (2) (a) (i) in respect of Interest Earned from Credit Facilities extended to members including Nominal / Associate Members M/s. Sullia Taluk vs The Income-tax Officer CITATION: 2024 TAXSCAN (ITAT) 726

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the claim of deduction under Section 80P (2)(a)(i) in respect of interest earned from credit facilities extended to members, including nominal and associate members.

The two member bench of the tribunal comprising Waseem Ahemed ( Accountant member) and Beena Pillai ( Judicial member) allowed the claim of the assessee under Section 80P(2)(a)(i) of the Income Tax Act in respect of the interest earned by the assessee from credit facilities extended to members that includes nominal / associate members. Accordingly, appeal of the assessee was allowed.

Approval Granted u/s 153 D clearly indicates Approving Authority neither Examined Assessment Records nor Seized Materials: ITAT quashes Assessment Order MDLR Airline (P) Ltd vs DCIT CITATION: 2024 TAXSCAN (ITAT) 727

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the assessment order, stating that the approval granted under Section 153D clearly indicates the approving authority neither examined the assessment records nor the seized materials.

The two member bench of the tribunal comprising Naveen Chandra (Accountant member) and Saktijit Dey (Vice President) quashed the assessment orders while deciding the legal grounds raised by the assessee, the ground raised on merits have become purely academic, hence do not require adjudication. Accordingly, the assessee’s appeals were allowed.

Disallowance u/s 14A of Income Tax Act not available in respect of Investments not yielding Tax-Free Income: ITAT DCIT vs Paranjapee Schemes Construction Ltd CITATION: 2024 TAXSCAN (ITAT) 729

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that disallowance under section 14 A of the Income Tax Act, 1961 is not available in respect of investments not yielding tax-free income.

The two-member bench of Amit Shukla ( Judicial Member ) and Renu Jauhri ( Accountant Member ) has observed that no disallowance under section 14A of the Income Tax Act is warranted in respect of investments not yielding tax-free income for the appellant.

Cash Deposits made From Parent’s Accumulated Savings and Income from Agricultural Activities: ITAT Deletes Income Tax Addition u/s 69A Vivek Prahladbhai Patel vs The Income Tax Officer CITATION: 2024 TAXSCAN (ITAT) 730

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the Income tax addition of unexplained money. It was found that the cash deposit was made from the assessee’s parent’s accumulated savings and income from agricultural activities.

The two member bench of Suchitra Kamble ( Judicial Member ) and Makarand V. Mahadeokar ( Accountant Member ) has observed that the AO did not conduct any independent verification or inquiry into the claims made in the affidavits. The AO has simply dismissed the affidavits without assigning any cogent reasons. The CIT (A), too, has upheld the AO’s order without addressing the merits of the affidavits or the explanation provided by the assessee.

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