ITAT Weekly Round-Up

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 August 27 to September 3, 2022

Indian Overseas Bank vs Commissioner of Income-tax - 2022 TAXSCAN (ITAT) 1146

Income Tax Appellate Tribunal (ITAT), Mumbai allowed delay condonation petition filed by Indian Overseas Bank Employees Co-operative Society on delay of 163 days due to late receipt of intimation under Section 143(1) via email. The bench consisting of Prashant Maharshi, Accountant Member and Kavitha Rajagopal, Judicial Member observed that “, we are of the considered view that the assessee has not wilfully delayed the filing of appeal and we find that there is no negligence on the part of the assessee, as the assessee has filed appeal manually in time. We find that the reasons mentioned are bonafide and it amounts to sufficient cause for the delay in filing appeal electronically before the CIT(A).

Clean Coal Enterprises Pvt. Limited vs Assistant Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1249

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT), has held that no search was conducted on the assessee and upholds the deletion of penalty under section 271AAB on undisclosed income. The Coram of Mr. Rajpal Yadav, Vice-President (KZ), and Mr. Girish Agrawal, Accountant Member while deleting the appeal has held that “Assessing Officer has imposed a penalty of Rs.1.98 crores without making any reference to the income determined in the hands of the assessee, rather taking cognizance of the statement of searched person, who might have disclosed Rs.6.6 crores. It is totally against the law and the 1s t Appellate Authority has rightly appreciated the facts and circumstances by deleting the penalty”.

Ravi Developments vs ACIT - 2022 TAXSCAN (ITAT) 1251

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has deleted the addition made on the allegation of bogus purchase on borrowed satisfaction from the Value added tax (VAT) department without proper cross-verification. The Coram of Mr B.R. Baskaran, Accountant Member, and Mr Anikesh Banerjee, Judicial Member observed that the whole addition was made on borrowed satisfaction from the VAT department and no proper cross-verification was made by the revenue authorities. The stock was exhausted by the assessee during the year through sales. Hence, the Tribunal has held that “we are declining the order of the Ld. CIT(A) and directed to delete the addition amount of Rs. 62,32,777/-.”

M/s. Jai Balaji Industries Limited vs Deputy Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1247

The Income Tax Appellate Tribunal (ITAT), Kolkata has held that the Assessing Officer fails to cross verify Tax Deduction at Source (TDS) details from the concerned party and deletes addition. The Coram of Mr. Rajpal Yadav, Vice-President (KZ), and Mr. Girish Agrawal, Accountant Member while allowing the appeal has held that without adopting that course of cross verification of details from the concerned party, the AO keeps on drawing the inference of defects in the details of the assessee by way of a deductive reasoning method. Hence, the disallowance is not sustainable.

ABC PAPERS LIMITED vs PR. COMMISSIONER OF INCOME TAX - 2022 TAXSCAN (SC) 164

The division bench of the Supreme Court has held that appeals against Income Tax Appellate Tribunal (ITAT) order lies before the High Court in whose jurisdiction the Assessing Officer who passes the assessment order is situated. The Supreme Court observed that the jurisdiction of a High Court is not dependent on the location of the ITAT, as sometimes a Bench of the ITAT exercises jurisdiction over a plurality of states.The jurisdiction of a High Court stands on its own footing by virtue of Section 260A read with Section 269 of the Act. While interpreting a judicial remedy, a Constitutional Court should not adopt an approach where the identity of the appellate forum would be contingent upon or vacillates subject to the exercise of some other power.

Shri A. Vijayakant vs ACIT -  2022 TAXSCAN (ITAT) 1252

The Income Tax Appellate Tribunal (ITAT), Chennai bench has granted partial relief to the Tamil movie actor Vijayakant in various income tax issues. Upholding the order of the department, the Tribunal held that “from the factual matrix, it is clear that the document has been found from the possession of the assessee’s premises. The same reveal payment on account of repair of vehicle which is in the possession of the assessee. The onus was on assessee to negate the allegation of revenue. However, no such onus was discharged. Accordingly, no infirmity could be found in the impugned order on this issue. In the result, this ground stand dismissed. The appeal stands partly allowed to the extent indicated in the order.”

Bharat kumar Somabhai vs ITO - 2022 TAXSCAN (ITAT) 1258

The Income Tax Appellate Tribunal (ITAT), while condoning a delay of 2985 days, has held that the law protects only those who are vigilant. After analysing the facts and the documents, the bench comprising Ms. Annapurna Gupta, Accountant Member and Shri T.R. Senthil Kumar, Judicial Member observed that 10 opportunities given to the assessee.

Credit Suisse AG vs ACIT - 2022 TAXSCAN (ITAT) 1248

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has held that Minimum Alternate Tax (MAT) provisions under section 115JB are applicable only to domestic companies and not to foreign companies. The Coram of Mr. M. Balaganesh, Accountant Member, and Mr. Kuldip Singh, Judicial Member while dismissing the appeal of the revenue has held that “when the accounts of CSMB do not incorporate the aforesaid five items of income earned by CSSB, the department cannot impose MAT provisions by using the fiction which is contrary to the Banking Regulation Act, 1949. The provisions of the Income Tax Act cannot require CSMB to re-write the accounts in a manner different than what is stipulated in the Banking Regulation Act, 1949. Hence, even on merits, the question of applying the MAT to CSSB’s income does not arise”.

SS Commotrade Private Limited vs Income Tax Officer - 2022 TAXSCAN (HC) 635

The Calcutta High Court held that the reassessment proceedings initiated beyond the limitation period are not sustainable. Justice Md. Nizamuddin held that “let the respondents file an affidavit in opposition within four weeks; the petitioner to file a reply thereto, if any, within one week thereafter. The matter shall appear for a final hearing in the monthly list of November 2022. In the meantime, there will be no further proceeding based on the impugned order dated 30th July 2022 being Annexure P-6 to the writ petition till the disposal of the writ petition.”

Kalra Papers Pvt. Ltd vs Income-tax Officer - 2022 TAXSCAN (ITAT) 1213

The Income Tax Appellate Tribunal (ITAT), Delhi Bench presided by Mr. N.K. Billaiya, Accountant Member, and Mr. N.K. Choudhry, Judicial Member has deleted the penalty imposed under section 271(1)(c) since the notice under section 274 fails to specify concealment or furnishing of inaccurate particulars of income. The Tribunal while deleting the imposition of penalty observed that the notice under section 274 read with section 271(1)(c) of the Act without specifying the limb under which the penalty proceedings have been initiated and proceeded, proves that the notice is issued in a stereotyped manner without applying mind which is bad in law, hence cannot be considered a valid notice sufficient to impose penalty u/s 271(1)(c).

M/s. Vipul Ltd vs ACIT - 2022 TAXSCAN (ITAT) 1189

No Penalty u/s 271C when delay in filing appeal occurred due to ambiguity on direction contained in statutory document, so was held by the Income Tax Appellate Tribunal (ITAT), New Delhi. The Bench consisting of Dr BRR Kumar, Accountant Member and Anubhav Sharma, Judicial Member relied on the judgment in TDI Infrastructure Ltd v. Addl CIT, and held that “Once the fact of receipt of amounts received by HUDA being deposited in Consolidated Fund of State is established, there can be no second opinion that Assessee was rightly directed by DTCP, Haryana to not deduct the TDS. Even otherwise no intentional default is attributed to assessee and the default, if any, was on account of ambiguity which had arisen out of a direction contained in a statutory document, so no penalty can be justified u/s 271C of the Act, which is meant to address contumacious conduct.”

Mr.R.Vasimalai vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1171

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) ruled that the addition as unexplained investment in difference in value on the purchase of property without considering co-owner is not valid. Shri Mahavir Singh, Vice President and Shri G Manjunath, Accountant Member set aside the appeal filed by the assessee to the file of the CIT(A) and directed the CIT(A) to decide both the appeals simultaneously. The appeal filed by the assessee was allowed for statistical purposes.

Smt.Nitaben Shaileshbhai Patel vs ITO - 2022 TAXSCAN (ITAT) 1259

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the “true copies” submitted before the income tax authorities do not have evidentiary value under the Income Tax Act, 1961. Dismissing the appeal, the Tribunal observed that the assessee has chosen to make this plea of restoring her matter to the lower authorities before us without even making any effort to substantiate the explanation offered.

DZ Bank vs DCIT - 2022 TAXSCAN (ITAT) 1260

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench consisting of Rahul Chaudhary, Judicial Member, and Om Prakash Kant, Accountant Member held that supporting evidence is mandatory for claiming TDS Credit in absence of a TDS Certificate. In the background of the above facts and circumstances, statutory provisions, and judicial precedents, we feel it appropriate to restore this issue of granting credit of tax deducted source to the file of the Assessing Officer for verification as to whether the assessee has shown interest income corresponding to the TDS in profit and loss account for the year under consideration and whether the tax has been deducted at source by the payer of the income.”

GE Power Systems India Private Limited vs Assistant Commissioner of Income Tax -    2022 TAXSCAN (ITAT) 1262

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that CSR expenses cannot be added to book profit under section 115JB of the Income Tax Act, 1961.The assessee, held that none of the clauses above provides that CSR expenses have to be added to book profit.

Balaji Autos vs The Assistant Commissioner of Income Tax - 2022 TAXSCAN (ITAT) 1263

The Income Tax Appellate Tribunal (ITAT), Chennai bench consisting of Mahavir Singh, Vice President and G Manjunatha, Accountant Member dismissed appeal stating delay of 1070 days on lack of prima facie bonafidenes. The Tribunal observed that “We have also carefully considered reasons given by the assessee for delay in filing of the appeal. We find that prima facie the reasons given by the assessee, in the affidavit for condonation of delay of 1070 days, seems to be not bona fide.

Nekkanti Systems Private Limited vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1264

While upholding the revisional order, the Income Tax Appellate Tribunal (ITAT) Hyderabad bench has held that the set off of loss incurred in share trading by the directors with the income of the company is not valid.The Tribunal observed that the activities of share trading were carried out by the directors in their capacity from their unique client codes and the losses/income, if any, caused on account of such activities carried out by the directors from their unique client codes cannot be allowed in the hands of the assessee company.

Kulvinder Singh Kohli vs ACIT - 2022 TAXSCAN (ITAT) 1266

Original cost and period of acquisition of property by previous owner is relevant for claim of capital gain, so was held by the Income Tax Appellate Tribunal (ITAT), New Delhi. The Bench consisting of N K Billaiya, Accountant Member and N K Choudhry, Judicial Member held that “As per section 49 of the Act, where the capital asset became the property of the Assesseeon any distribution of assets on the total or partial partition of a Hindu undivided family, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the Assessee, as the case may be.

M/s. NDTV Studios Ltd vs Income Tax Officer - 2022 TAXSCAN (ITAT) 1268

In a major setback to NDTV, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has confirmed the orders of the income tax department disallowing the deduction claim towards pre-operative expenses. the Tribunal held that “the assessee had also not taken the premises on rent and had not completed the setting up of the facilities for running the studio. Therefore, the assessee was not in a position to solicit customers till the end of May 2009 before the start of Leave and License Agreement 05/06/2009. In view of the above, we have no hesitation to hold that the business had not been set up during the previous year relevant to Assessment Year 2009-10. Further, in our opinion, disallowance made by the A.O which has been confirmed by the Ld.CIT(A) is in order and we do not find any error or legal infirmity the approach of the Lower Authorities.”

M/s. Avisha Credit Capital Ltd vs ITO - 2022 TAXSCAN (ITAT) 1267

Rectification proceedings cannot be invoked by Assessing Officer (AO) in case of Debatable Issue, so was held by the Income Tax Appellate Tribunal (ITAT), New Delhi. Saktijit Dey, Judicial Member observed that “Thus, from the aforesaid facts, it is patent and obvious that the issue, whether the loss on sale of shares claimed by the assessee is a trading loss or capital loss is a highly debatable issue. That being the factual position emerging on record, in my considered opinion, proceeding under section 154 of the Act could not have been initiated by the Assessing Officer to rectify the so-called mistake as it is not a mistake in the nature of mistake apparent on the fact of record. Therefore, I delete the addition of Rs.6,00,000/-.”

Google India Pvt. Ltd vs Deputy Commissioner of Income Tax -   2022 TAXSCAN (ITAT) 1269

In a major relief to Google India, the Income Tax Appellate Tribunal (ITAT), Bangalore has quashed the orders and notices for TDS default as the same were barred by limitation. The Tribunal, after considering facts and arguments from both sides, held that “In the facts of the case for the years under consideration, the period of four years from the end of the financial year in which payment is made or credit is given, expires on 31.03.2012 whereas the notice is issued by the AO on 20.11.2012. Therefore respectfully following the decision of the coordinate Bench of the Tribunal (supra), we hold that the orders of the AO passed u/s. 201(1) & 201(1A) of the Act are barred by limitation and hence quashed. In view of our decision on the preliminary issue of limitation, the other grounds on merits are rendered infructuous and hence do not require separate adjudication.”

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