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 from July 23 to July 29, 2022
The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the complete reliance on the Chartered Accountant/Consultant cannot be a ‘reasonable cause’ for condoning the delay of 2172 days and the assessee shall be vigilant during the appeal proceedings. A bench comprising Shri Inturi Rama Rao (Accountant Member) and Shri S.S. Viswanethra Ravi (Judicial Member) observed that this appeal was filed through Advocate later on the said Advocate withdrew his vakalat vide this letter dated 11-07- 2022. The ld. DR vehemently opposed the reasons explained by the assessee in his affidavit. We note that the delay of 2172 days are abnormal and the assessee could not explain reasons which really prevented the assessee in filing appeal in time before the ITAT except stating that due to advice of his Chartered Accountant/Consultant, in our opinion is not reasonable cause which really prevented the assessee in filing the appeal in time.
The Pune bench of the Income Tax Appellate Tribunal (ITAT), while deleting an addition for cash deposit, has held that the clubbing of income under the provisions of the Income Tax Act, 1961 is possible in the case of minor children only. Deleting the addition, the Tribunal held that “Mr. Jasnani vehemently argued that the learned lower authorities have rightly gone by assessee’s PAN for taxing the impugned cash deposits in his hands. He could hardly have rebut the clinching fact that the assessee’s son; who was a minor at the time of account opening, has become a major on 23.05.2011 who is assessable in his independent capacity. We also wish to quote section 64(1A) of the Act wherein clubbing of income is provided in case of a “minor” child only which is not the case before us. Faced with the situation, we conclude that both the learned lower authorities have erred in law and on facts in adding the impugned cash deposits of Rs.13.73 lacs in assessee’s hands. The same stands deleted.”
The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has directed the Assessing Officer to rectify the order passed without considering the TDS Statement under form 16 by invoking section 154 of the Income Tax Act, 1961 and held that the employer is responsible for less deduction of TDS. Allowing the plea of the assessee, the Tribunal held that “The assessee has the opportunity to file revise return of income by following the provision of section 139(5) of the Income Tax, however he lost the opportunity but that does not mean that the mistake made by the assessee cannot be corrected. As such the provisions of section 154 of the Act are applied for both i.e. for assessee as well as income tax authority referred u/s 119 of the Act. Thus we hold that there is a mistake apparent from record which needs to be rectified under the provisions of section 154 of the Act.”
The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the capital gain exemption under section 54 of the Income Tax Act, 1961 cannot be denied on the sole ground that the amount invested in the capital gain account is utilized for the purchase of new house without the NOC from Assessing Officer within two years as permitted in the statute. A bench consists of Sh. Saktijit Dey, Judicial Member Dr. B. R. R. Kumar, Accountant Member observed that “It is not in dispute that an amount of Rs. 40,00,000/- has been invested in the specified bonds, in this case, REC Bonds and purchased house for Rs .82,50,000/-. Hence, the observation of CIT(A) that the assessee is not eligible for claim of exemption u/s 54 and u/s 54F is against the provisions of the Act. With regard to the closer of the account without the NOC of the Assessing Officer, the broad provisions and compliance of the law surpass the mere default in not taking the prior permission of the ITO before closer of the account, especially when the amounts have been utilized for purchase of the house in accordance with the provisions of the Act within two years from the date of sale.”
An assessment order framed against a non-existing company is void ab initio, the Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) had quashed the assessment order. In light of various precedents, it was observed that a notice issued to a non-existent company would be void-ab-initio and no valid jurisdiction can be assumed by the assessing officer by issuing such an invalid notice. Since the assessee company ceased to be in existence on the date when the AO passed the order of assessment, an assessment so framed is not sustainable in the eyes of law.
The Vishakhapatnam bench of the Income Tax Appellate Tribunal (ITAT), has quashed an order for non-deduction of TDS while making payment towards the purchase of a property, under section 201(3) of the Income Tax Act, 1962 by considering that the NRI seller has already offered the amount of capital gain received. A bench of Shri Duvvuru Rl Reddy (Judicial Member) & Shri S Balakrishnan, (Accountant Member) has observed that the assessee has purchased a property during the FY 2010-11 relevant to the AY 2011-12 on 7/3/2011. The assessee has paid a sum of Rs. 54,22,000/- out of which Rs. 50,39,500/- was paid to the NRI. As per the provisions of section 195 of the Act, the assessee is required to deduct tax at source on payments made to non-residents. In the instant case, the assessee required to deduct the tax at source on the sums chargeable to capital gains.
The Income Tax Appellate Tribunal (ITAT), Delhi bench, while deleting penalty under section 271(1)(c) of the Income Tax Act, 1961 has held that the money cannot be treated as ‘unaccounted’ merely because of non-response from the creditors solely because of non-response from the creditors. A bench of Shri Saktijit Dey, Judicial Member and Dr. B.R.R. Kumar, Accountant Member observed that the addition based on which the Assessing Officer imposed penalty under section 271(1)(c) of the Act was on account of sundry creditors.
The Income Tax Appellate Tribunal (ITAT), Surat Bench presided by Pawan Singh, Judicial Member, and Dr. Arjun Lal Saini, Accountant Member has held that delay in filing Income Tax Return under bona fide belief that no taxable income and deletes penalty u/s 271F.The Authority observed that the assessee filed a return of income, though it was filed belatedly. The assessee has a reasonable cause for not filing the return of income on the pretext that he is not having taxable income. The Authority thus held that “the assessee has shown reasonable cause for not filing the return of income before the due date of return. Therefore, we direct the Assessing Officer to delete the penalty levied under Section 271F of the Act”.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench has held that sale proceeds of investment in shares made as ‘investor’ are treated as ‘capital gains’, not as ‘business income’. The Tribunal observed that Clause 3(b) of the above CBDT circular No. 6/2016 made it clear in respect of listed shares and securities held for more than 12 months immediately preceding the date of its transfer if the assessee desires to treat the income arising from the transfer thereof as Capital Gain, the same shall not be put to dispute by the Assessing Officer.
The Income Tax Appellate Tribunal (ITAT), Mumbai has held that Interim Resolution Professionals (IRP) is the authorized person to file an appeal against the assessment order once a moratorium is declared. The Tribunal observed that proceedings under the Insolvency and Bankruptcy Code (I&B Code) have already been initiated/decided and a moratorium has been declared by prohibiting all the proceedings against the corporate debtors including the execution of any judgment, decree, or order of any court of law, tribunal, arbitration panel or other authority, hence appeals not filed by the Interim Resolution Professionals (IRP) who can file an appeal with approval of the committee of creditors are not maintainable.
The Income Tax Appellate Tribunal(ITAT), Mumbai bench has held that cost of improvement and due indexation benefit on house property is deductible while computing capital gain. The Tribunal observed that there is no bar for the assessee to incur certain expenditures for the house in cash. As long as the source for the said cash payment is explained from the disclosed income of the assessee, no fault could be attributed to the assessee.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench has held that the nature of land sold is to be ascertained based on the sale deed executed. The Coram of Mr. Kul Bharat, Judicial Member, and Mr. Pradip Kumar Kedia , Accountant Member while dismissing the appeal observed that the sale deed demonstrates that what was being transferred was industrial land. Therefore, there is no ambiguity in the facts. The objection of the assessee that land was agricultural land is devoid of merit.
The Income Tax Appellate Tribunal (ITAT), Kolkata has ruled that, the assessee entitled to the credit of TDS as denial of TDS in the intimation order under Section 143(1) was without assigning reasons. The bench consisting of Sanjay Garg, Judicial Member and Rajesh Kumar, Accountant Member observed that “The Assessing Officer has not granted the credit of TDS of Rs. 79,028/- which was apparently and undisputedly to be given to the assessee as this amount is duly appearing in the form 26AS. The CIT(A) dismissed the appeal of the assessee on the ground of being late without deciding the issue on merits. We also note that a rectification petition moved by the assessee before the AO dated 20.1.2020 requesting the AO to grant the credit of TDS of Rs. 79,028/- is also pending before the AO. Considering the facts and circumstances in totality, we are of the considered view that the assessee is entitled to credit of TDS which was denied in the intimation u/s 143(1) of the Act.”
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has quashed revision under section 263 and upholds the claim of Mutuality by the Cricket Club of India. The Coram of Mr. M. Balaganesh, Accountant Member and Smt. Kavitha Rajagopal, Judicial Member by relying on the decision of the Supreme Court in Malabar Industrial Co Ltd has observed that once a possible view has been taken by the AO in the assessment proceedings, the same cannot be a subject matter of revision by the PCIT in the section 263 proceedings, merely because the PCIT is of a different view on the same set of facts.
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has held that shipping income derived in India from international traffic is not taxable in India as per India – UAE tax treaty. The Tribunal observed that the mere fact that an appeal against the said judgment is pending before Supreme Court does not dilate the binding nature of this precedent. Once the jurisdictional High Court takes a view, lower courts and authorities are bound to follow the same-in letter and in spirit.
The Income Tax Appellate Tribunal (ITAT), Mumbai held that capital gain exemption u/s 54F cannot be denied on grounds of joint ownership in two residential flats. The bench consisting of Pramod Kumar, Vice President, and Sandeep Singh Karhail , Judicial Member held that “joint ownership of the assessee, in the present case, in 2 residential Flats, namely, Flat No. A–408 and B–504 on the date of transfer of original capital asset will not disentitle the assessee from claiming relief under section 54F of the Act. Further, as it is not disputed that the aforesaid properties were purchased by the assessee within the prescribed time, therefore, we are of the considered view that the assessee is entitled to claim benefit under section 54F of the Act.”
The Income-tax Appellate Tribunal (ITAT), Delhi bench has imposed a cost of Rs. 10,000 on the assessee observing that the latter failed to appear before the first appellate authority on eight occasions. A bench comprising Dr. B. R. R. Kumar (Accountant Member) and Sh. Anubhav Sharma (Judicial Member) observed that the assessee has failed to appear on 8 occasions before the CIT(A) and has taken up the grounds before the Tribunal pertaining to legal principles of “audi alteram partem” and sustenance of order of the AO by the CIT(A).
The Income Tax Appellate Tribunal (ITAT), Pune bench has held that the capital gain exemption under section 54F of the Income Tax Act, 1961 shall not be allowable to a new house purchased in the name of wife. The Tribunal observed that “the section 54F have two important phrases, “an assessee being an individual” and “the assessee has purchased”. Thus the section starts with the word “an assessee being an individual” and then refers to the same assessee as “the assessee has purchased” means the assessee who has sold the asset has to purchase the new asset withing the specified time period. The section 54F uses the word, “purchased a residential house”, here the word purchased is used, it does not mean invested. The purchase has to be a legal purchase. To have an effective purchase the name of the person must be mentioned in the document. In this case the purchase agreement is in the name of the wife of the assessee who is an independent assessee earning income independently. We find strength from the order of Hon’ble Rajasthan High Court.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has held that Air India cannot be deemed as ‘Assessee in Default’ in respect of payment to Air India Engineering Services Ltd (AIESL) and directs fresh adjudication. The Coram of Mr. Baskaran B.R. (Accountant Member) and Kavitha Rajagopal (Judicial Member) “we are of the view that, in the interest of natural justice, the alternative contention of the assessee may be accepted. However, the claim of the assessee requires verification at the end of the AO. Accordingly, we set aside the order passed by CIT(A) and restore the alternative contention in all the years under consideration to the file of the AO for examining it by the law”.
In a major relief to IBM India, the Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the Company need not required to TDS on payment to IBM Philippines for rendering of payroll related services. The Tribunal held that “the contention of the revenue in its ground of appeal is that the above said decision rendered by the ITAT has not reached finality. However, since the Ld DRP has followed the decision rendered by the Tribunal in respect of very same issue in the proceeding initiated u/s 201 of the Act and held that the payments made to IBM Philippines is not liable to TDS in the assessee’s own case for the current year, we have no other option but to confirm the decision rendered by Ld DRP. Accordingly, we dismiss this ground of revenue.”
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT)has refused to condone the delay in filing the appeal by the State Bank of India (SBI) due to the change of Branch manager being not a valid ground.It was observed that the appeal filed by the assessee was beyond the due date as prescribed in the provision even after excluding the COVID period. Further observed that the assessee cannot expect to entertain their appeal because they are after all the bank, notwithstanding the fact that the delay was not sufficiently explained.
Income to be assessed as per MOU for sharing profit and loss of business and not on TDS deducted in name of assessee under PAN Number, so was held by Income Tax Appellate Tribunal (ITAT), Kolkata.The bench consisting of Sanjay Garg, Judicial Member and Rajesh Kumar, Accountant Member held that “We restore the matter to the file of AO for verifying the MOU and deciding the issue in accordance with the facts and our observation given hereinabove. Needless to say, that income has to be assessed as per terms and conditions of MOU and not based on the TDS deducted in the name of assessee under her PAN no whereas the TDS credit in full has to be given to the assessee.”
The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that the protective assessment under the Income Tax Act, 1961 cannot be made when the contract based on which the addition was made is a subject matter of litigation pending before the Court/Arbitrator.After analyzing the facts and documents, the Tribunal observed that AO arrived profit on these transactions at Rs.3,09,40,750/- as unaccounted sale proceeds. However, Ld. CIT(A) sustained only addition of Rs.24,44,500/- out of Rs.3,09,40,750/-made by AO.
The Income Tax Appellate Tribunal (ITAT), Chennai ruled that Mere technical lapse should not come in way of taxpayers seeking justice.The bench consisting of V Durga Rao, Judicial Member, and Manoj Kumar Aggarwal, Accountant Member held that “the principle of natural justice demands that reasonable opportunity should have been provided by CIT(A) to the legal heir to rectify the defects. The electronic appeal, as well as the manual appeal, has been filed by the legal heir within the stipulated time and there is no fault. Mere technical lapses should not come in the way of taxpayers seeking justice.”
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