ITAT Weekly Round-Up

This weekly summary analyses the major Income Tax Appellate Tribunal (ITAT) stories that have been published at Taxscan.in. during the previous week from June 17 to 23, 2023.

ITAT Upholds Disallowance made u/s 143(1) of Income Tax Act on ground of Late Deposition of Employee’s Contribution to PF/ESI
Nandi Hospitality Services Private Limited vs Deputy Commissioner of Income-tax  2023 TAXSCAN (ITAT) 1435

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) upheld the disallowance made by the assessing officer under section 143(1) of the Income Tax Act,1961 on the ground of late Deposition of Employee’s Contribution to provident fund (PF) or Employee State Insurance (ESI). 

The two-member panel comprising Chandra Poojari (Accountant) and Beena Pillai (Judicial) upheld the disallowance made by the assessing officer under section 143(1) of the Income Tax Act while dismissing the appeal filed by the assessee. 

Exception to Fees Levied for Late Filing of TDS Prior to 1.6.2015: ITAT Sets Aside Notice

M/s. Lifeline Medicare Hospitals Private Limited vs CIT(A) National Faceless Appeal Centre  2023 TAXSCAN (ITAT) 1421

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that no fee shall be levied under Section 234E of Income Tax Act, 1961 on late Filing of Tax Deducted at Source (TDS) prior to 01.04.2015 and set aside the demand notice issued under Section 200A of the Income Tax Act,1961.

The ITAT bench comprising of Shri Prashant Maharishi, (Accountant Member) and Ms. Kavitha Rajagopal,(Judicial Member) relied on the decision given in case of Fatheraj Singhvi vs. Union of India wherein it was held that  “no computation of fee for the demand or the intimation for the fee under Section 2343E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent authority for intimation for payment of fee under Section 234E can be said as without any authority of law”.

Employees Contribution to PF/ESI Deposited after Due Date is not Allowable as Deduction u/s 36(1)(va) of Income Tax Act: ITAT

Creative Textile Mills Pvt. Ltd vs DCIT  2023 TAXSCAN (ITAT) 1433

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that Employees contribution to PF/ESI deposited after due date under the Income Tax Act is not allowable as deduction under Section 36(1)(va) of the Income Tax Act, 1961.

Following the decision of the Madras High Court rejected the prayer of the counsel of the assessee for restoring the matter back to the Assessing Officer (AO). The two-bench member comprising of Om Prakash Kant (Accountant member) and Kavitha Rajagopal (Judicial member) dismissed the appeal made by the assessee. To Read the full text of the Order CLICK HERE

ITAT Upholds Deletion of Addition made on Account of Unsecured Loan due to Failure to Produce Genuine Documents

ITO vs Bansal Separators and Spares Pvt. Ltd 2023 TAXSCAN (ITAT) 1416

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Appeals) for deleting the addition made by the assessing officer on account of an unsecured loan due to failure to produce genuine documents. 

The two-member panel comprising Amit Shukla ( Judicial) and S. Rifaur Rahman ( Accountant) held that there was no merit in the case built by the assessing officer and upheld the decision made by the Commissioner of Income Tax (Appeals) while dismissing the appeal filed by the revenue. 

Non- compliance to Notice cannot be a Reason to Disallow Retention of Income to Charitable Organisation : ITAT Orders Readjudication of Exparte Order

Smt. Dakuben Saremalji Sancheti Nadol Charitable Trust vs National Faceless Appeal Centre   2023 TAXSCAN (ITAT) 1436

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that non- compliance to the notice by the assessee cannot be a reason to disallow 15 % retention of income to charitable organization and  thus ordered the First Appellate Authority to readjudicate the matter.

The Bench comprising of Shri Aby T Varkey (Judicial Member) and Shri Om Prakash Kant (Accountant Member) observed that the appeal has been decided ex-parte without taking into consideration the submission of the assessee and the assessee is willing to co-operate, therefore in the interest of substantial justice it is appropriate to restore back the appeal to the CIT(A) for readjudication of the case.

Persistent Loss Filter can be Applied only if there is Loss in Three Successive Assessment Years: ITAT

M/s. Nordex India Pvt. Ltd vs The Deputy Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1432

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the persistent loss filter could be applied only if there was loss in three successive assessment years.

The two-member Bench of Beena Pillai, (Judicial Member) and Padmavathy S (Accountant Member) remanded the comparable to the AO for necessary verification holding that if two out of the three preceding assessment year the comparable had earned profits it could not be held a persistent loss making company.

CAM charges paid by TCNS Clothing liable to 2% TDS u/s 194C: ITAT
TCNS Clothing Co. Limited vs ACIT (TDS)  2023 TAXSCAN (ITAT) 1427

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the Common Area Maintenance charges (CAM) paid by the TCNS Clothing Company would be liable to 2% of the Tax Deducted at Source (TDS) under Section 194C of the Income Tax Act 1961.

The two-member Bench of Challa Nagendra Prasad (Judicial Member) and Pradip Kumar Kedia (Accountant Member) allowed the appeal holding that   the CAM charges paid by the assessee would be liable for TDS only at 2% under Section 194C of the Income Tax Act and not at 10% under Section 194I of the Income Tax Act.

Additional Income cannot be Treated as Unexplained Expenditure to Invoke Section 115BBE of Income Tax Act: ITAT

ACIT vs Devender Rao Gourkanti   2023 TAXSCAN (ITAT) 1423

The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) held that the additional income cannot be treated as unexplained expenditure under Section 69C of the Income Tax Act, 1961 to attract income tax under Section 115BBE of the Income Tax Act.

ITAT confirmed the order directing the AO to tax the amount of Rs. 5, 08, 98,100/- under normal provisions of the Income Tax Act.

NFAC cannot Adjudicate Appeals already Disposed of by CIT(A): ITAT direct Department to Pay Cost
Karnataka Sangha vs ITO  2023 TAXSCAN (ITAT) 1408

The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has held that National Faceless Appellate Center (NFAC) could not adjudicate appeals already disposed of by Commissioner of Income Tax (Appeals)[CIT(A)].  Therefore, the bench directed the department to pay the cost.

The two-member bench of Vikas Awasthy (Judicial Member) and Gagan Goyal (Accountant Member) after considering the submission of the both parties observed it is an absolute slackness on the part of the department to fix an appeal for hearing that had already been disposed of. Therefore, the bench directed the department to pay cost Rs.10,000/- i.e. equivalent to the fee paid by the assessee for filing appeal before the Tribunal.

Addition on Transfer Pricing of Corporate Guarantee Fee without Proper Verification of Account: ITAT Directs Re-adjudication
Deputy Commissioner of Income Tax vs KEC International Limited  2023 TAXSCAN (ITAT) 1415

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the addition made on transfer pricing of corporate guarantee fee without proper verification of account. 

The two-member bench comprising B.R. Baskaran (Accountant ) and Rahul Chaudhary (Judicial) directed the transfer pricing officer to recomputed the transfer pricing adjustment by taking a rate of 0.6% as arm’s length rate for corporate guarantee fee for all corporate guarantee given by the assessee while allowing the appeal filed by the assessee.

Addition made on Unexplained Investment u/s 69 of Income Tax Act without Proper Application of Mind: ITAT Deletes Addition

Vijaykumar Kanaiyalal Matta vs Income Tax Officer  2023 TAXSCAN (ITAT) 1409

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT) deleted an addition made by the assessing officer on unexplained investment under section 69 of the Income Tax Act,1961 without the proper application of mind.

The bench observed that the provisions of section 69 of the Income Tax Act would get triggered if the investment was made from unaccounted money having a source in India and received or deemed to receive in India or accrue or arise or deemed to accrue or arise in India. Thus the source-based taxation the assessee being NRI would be eligible for treaty benefit in respect of his income earned in Muscat.  The two-member panel comprising Vikas Awasthy (Judicial) and Amarjit Singh ( Accountant) held that the addition made under section 69 of the Income Tax Act on account of unexplained investment was unsustainable and is liable to be deleted while allowing the appeal filed by the assessee. 

Interest u/s 234C Against EY Global Delivery to be Levied on Returned Income not on Assessed Income: ITAT

M/s. EY Global Delivery Services India LLP vs The Deputy Commissioner of Income Tax   2023 TAXSCAN (ITAT) 1412

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest charged under Section 234C of the Income Tax Act, 1961 against EY global Delivery Services India should be levied on the returned income and not upon the assessed income.

The Bench further directed the Assessing Officer (AO) to restrict the levy of interest under Section 234C of the Income Tax Act to the returned income instead of the assessed income. Similar issue has been decided in Strides Pharma Science Ltd. vs Dy. Commissioner of Income Tax which held that, “As per the provisions of section 234C of the Act, interest is levied either on failure to pay advance tax by the assessee or on shortfall in payment of advance tax as compared to tax due on returned income. While remitting the matter to the department for re-computation of interest, the Tribunal held that “In the present case, the dispute is whether the interest under section 234C of the Act would be calculated on “returned income” or on “assessed income”

Penalty u/s. 271(1)(c) Cannot be Levied Merely because Claim was not Accepted or not Found to be Acceptable: ITAT

Sabharwal Food Industries Pvt. Ltd vs DCIT 2023 TAXSCAN (ITAT) 1413

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the penalty under Section 271(1)(c) of the Income Tax Act 1961 could not be levied merely because the claim was not accepted or not found to be acceptable.

The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) deleted the penalty holding that  “Assessing Officer dismissed claim of expenditure of assessee on account of violation of section 40A(3) of the Income Tax Act, without raising any other allegation or ground of dismissal and as the assessee disclosed and recorded entire claim on medical emergencies in its books of accounts then neither it can be alleged that assessee has furnished inaccurate particulars of income or has concealed particular of its income.”

Receipts from Centralised Service Income by Radisson Hotels International are not Taxable as FTS/FIS under Article 12(4)(a) of India-USA DTAA: ITAT

M/s. Radisson Hotels International Incorporated vs ACIT   2023 TAXSCAN (ITAT) 1414

The Delhi Bench of Income Tax Act has held that the receipts from centralised service income by Radisson Hotels international would not be taxable as fees for technical services (FTS) or fees for included services (FIS) under Article Double Taxation Avoidance Agreement (DTAA).

The Bench further observed that, “Rather than centralised service income being ancillary and incidental to royalty income, in reality, it is a reverse situation. In such a scenario, it cannot be said that centralised service income, being ancillary and incidental to royalty income, would fall under Article 12(4)(a) of the Tax Treaty.”

Capital Gains cannot be Taxable when Transfer of Land Taken Place in Previous Year of Assessment proceedings: ITAT

Gajanan Parshuram Khismatrao vs Income Tax Officer  2023 TAXSCAN (ITAT) 1410

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that capital gains cannot be taxable when the transfer of land took place in the previous year of the assessment proceedings. 

The two-member bench comprising Prashant Maharishi (Accountant) and Sandeep Singh Karhail (Judicial) held that land was transferred by the assessee along with the other 17 co-owners to the builder/developer in the previous year and therefore, capital gains, if any, thereon cannot be taxed in the year of assessment while allowing the appeal filed by the assessee. 

Late Deposition of Employees Contribution to PF/ESI would Trigger Disallowance u/s 36(1)(va) of Income Tax Act : ITAT

M/s P A Zaveri vs DCIT CPC-Bangalore  2023 TAXSCAN (ITAT) 1411

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the deposition of Employees contribution to Provident fund (PF) or Employee State Insurance (ESI) after the due date would trigger disallowance under section 36(1)(va) of the Income Tax Act,1961. 

The two-member panel comprising B.R. Baskaran (Accountant) and Rahul Chaudhary (Judicial) held that disallowance made by the assessing officer while processing the return of income under Section 143(1) of the Income Tax Act was as per the law while dismissing the appeal filed by the assessee.

Assessment Proceedings Completed without Giving Sufficient Opportunity to Assessee: ITAT Directs Re-adjudication

M/s. Comfortable Abode Private Limited vs ACIT  2023 TAXSCAN (ITAT) 1418

The Bangalore bench of the Income Tax Appellate Tribunal ( ITAT) directed the assessing officer to re-adjudicate the assessment order without giving sufficient opportunity to the assessee. 

The two-member bench comprising Chandra Poojari (Accountant) and Beena Pillai (Judicial) directed the assessing officer to re-adjudicate the matter by giving an opportunity of hearing to the assessee while allowing the appeal filed by the assessee.

Mere Mistake in Service Tax Return does not Mean Income of Assessee has been Suppressed: ITAT Quashes Income Tax Addition

Analysys Mason India Pvt. Ltd. vs ACIT 2023 TAXSCAN (ITAT) 1407

Quashing the Income Tax addition,the Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that the difference of service tax return and the revenue that occured due to the wrong exchange rates applied to export income transaction while filing the service tax return is a ‘mere mistake’ and not ‘suppression of income’ by the assessee.

The Tribunal held that the difference between service tax return and the revenue was occurred due to the wrong exchange rate applied to export income transaction while filing the service tax return, which being a genuine mistake and that the Department has not alleged or proved any mens- rea on the part of the assessee who has also tried to revise the service tax return.

Ignorance that Income Earned from Partnership Liable to Tax not Reasonable Cause for Late Filing of ITR: ITAT Upholds Penalty

Ashwin Liladhar Shah vs National Faceless Appeal Centre   2023 TAXSCAN (ITAT) 1406

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that ‘Reasonable Cause’ needs to be substantiated for failure of filing of return in order to claim exemption to penalty under Section 271F of the Income Tax Act 1961 and ignorance that the income earned from the partnership firm is liable to tax is not a reasonable cause for late filing of Income Tax Returns (ITR).

The Tribunal stated that Ignorantia juris non excusat which means “ignorance of law is no excuse” holds applicable not only to a common man but also to a person who has to hold the integrity of the law of land. ITAT drew the inference that the reason stated by the assessee for the failure in filing the ITR is not a ‘reasonable cause’ nor is it sufficient to delete the impugned penalty levied by the A.O. and confirmed by the CIT (A), hence the assessee is liable to pay the penalty.

Lease Rental Income received from letting out of School Building with Amenities shall be Treated as “Income from House Property”: ITAT

Kanakia Gruhnirman Pvt. Ltd. vs DCIT  2023 TAXSCAN (ITAT) 1405

The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has held that lease rental income received from letting out of school buildings with amenities should be treated as Income from House Property.

The two- members bench Vikas Awasthy (Judicial Member) and S. Rifaur Rahman (Accountant Member)observed that the assessee declared the income earned from letting of school building with amenities under the Head `income from House Properties’  from assessment year 2009-10. This issue was decided by the CIT(A) and ITAT in favour of the assessee till the assessment year 2012-13 Therefore, the bench allowed the appeal filed by the assessee.

No disallowance on claim of Capital Loss computed after Transfer of Possession of Property: ITAT deletes Addition

M/s.Archean Realty P. Ltd. vs The Dy. Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1403

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that no disallowance on a claim of capital loss is computed after the transfer of possession of the property.

The two-member bench of Durga Rao (Judicial Member) And Manjunatha. G (Accountant Member) observed that since, the possession of the property has been handed over to the buyer in the financial year 2014-15 relevant to the assessment year 2015-16, in our considered view, the transfer has been defined under Section 2(47)(v) r.w.s.53A of Transfer of Property Act, 1882, took place in the assessment year 2015-16 only. Therefore, the bench allowed the appeal filed by the assessee.

ITAT quashes Assessment Framed in name of Artificial Juridical Person Instead of Local Authority

Ganna Vikas Parishad vs JCIT  2023 TAXSCAN (ITAT) 1404

The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently quashed assessment framed in the name of an artificial juridical person instead of local authority.

The single member bench of Kul Bharat, (Judicial Member) held that the AO could not have changed the status from ‘Local Authority’ to ‘Artificial Juridical person’ and therefore the assessment framed by the AO is liable to be cancelled.

Claim of LTCG u/s 10(38) of Income Tax Act Rejected due to Non submission of Documents: ITAT Quashes Order
M/s Ahmednagar Investments Pvt. Ltd vs Deputy Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1399

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the order of the assessing officer (AO) for rejecting the claim of long-term capital gain (LTCG) under section 10(38) of the Income Tax Act,1961 on grounds of non-submission of documents. 

The two-member panel comprising Vikas Awasthy(Judicial) and S Rifaur Rahman (Accountant) held that the Commissioner’s exercise of the power of enhancement made an addition in respect of business income by disallowing the losses holding them to be fictitious and bogus and also made an addition in respect of the Long-Term Capital Gains which otherwise are exempted under the provisions of section 10 (38) of the Income Tax Act. Thus, liable to be deleted while allowing the appeal filed by the assessee.

ITAT quashes Assessment Order passed during Covid-19 without Providing Proper Opportunity to Assesee

Jamal Mohideen Haroon Imran Khan vs Income Tax Officer  2023 TAXSCAN (ITAT) 1402

The Chennai bench of Income Tax Appellate Tribunal (ITAT) has quashed the assessment order passed during the Covid -19 period without providing proper opportunity to the assessee.

It was observed by the tribunal that the CIT(A) has failed to grant a proper opportunity to the assessee since the assessee was unaware about the NFAC scheme/hearing and the concerned staff, auditor and counsel who were handing all the appeal papers were passed away in the Covid 19 period and the assessee became handicapped to approach the NFAC on the hearing.

As a result, the first appellate order was overturned by the two-member bench of V. Durga Rao (judicial member) and Manoj Kumar Aggarwal (accountant member), who also directed the CIT(A) to offer the assessee one more chance to be heard.

Appeal Not Maintainable on Non-Payment of Admitted Tax during Filing of Return u/s 249(4) of Income Tax Act: ITAT

Dy. Commissioner of Income Tax vs M/s Sukhbir Agro Energy Ltd  2023 TAXSCAN (ITAT) 1398

The Amritsar Bench of Income Tax Appellate Tribunal (ITAT) held that the appeal order is not maintainable for violation of Section 249(4) of Income tax Act, 1961 for non-payment of the admitted tax.

The Tribunal remitted back the matter to the Commissioner of Income Tax (Appeal) for fresh adjudication of the issue in regards to contravention of Section 249(4) of the Income Tax Act and allowed the appeal for statistical purposes.

Addition made by AO u/s. 115BBE of Income Tax Act on ground of Late filing of ROI: ITAT Directs Re-adjudication

Apcer Life Sciences India Limited vs Assessing Officer  2023 TAXSCAN (ITAT) 1401

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed the Assessing Officer (AO) to re-adjudicatethe addition made under section 115BBE of the Income Tax Act, 1961 on the ground of late filing of Return of Income (ROI).

The two-member bench comprising Prashant Maharishi (Accountant) and Kavitha Rajagopal (Judicial) held that section 115BBE of the Income Tax Act applies only when sections 68, 69, 69A, 69B, 69C, and 69D of the Income Tax Act are invoked and here it does not come under the mandate of section 115BBE of the Income Tax Act. Furthermore, the assessee’s appeal was allowed since the AO’s addition was erroneous, and the AO was ordered to re-adjudicate. 

ITAT Directs AO to delete Addition made u/s 68 of Income Tax Act based on Mere Suspicion

Shri Abhishek Doshi vs Asstt. Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1400

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed the Assessing Officer (AO) to delete the addition made under section 68 of the Income Tax Act,1961 based on mere suspicion. 

The two-member bench comprising B.R Baskaran (Accountant) and Sandeep Singh Karhail (Judicial) held that the AO had not given any adverse comments or drawn adverse inferences on the documentary evidence submitted by the assessee and the addition made under section 68 of the Income Tax Act was merely on presumptions, suspicion, surmises, and conjectures disregarding the direct evidence placed on record and are liable to be deleted.  While allowing the assessee’s appeal, the bench further instructed the AO to remove the addition made in accordance with Section 68 of the Income Tax Act. 

Valuation of Disputed Property for Stamp Value: ITAT Directs AO to Refer DVO

Bhausaheb Sopanrao Bhoir vs ITO 2023 TAXSCAN (ITAT) 1397

The Pune Bench of Income Tax Appeal Appellate Tribunal (ITAT) held that where the stamp value of the immovable property is disputed by the assessee  and where the assessee asserts that the stamp value is excessive on the ground mentioned in Section 50C(2) of Income Tax Act,1961, the Assessing Officer (AO) may refer the valuation of such property to the Departmental Valuation Officer (DVO).

The bench directed to set aside the impugned order and the matter was remitted back to the file of the AO for making a reference to the Departmental Valuation Officer (DVO) for determining the value of the property afresh. Thereafter, the computation of the capital gain will be done by the AO after allowing a reasonable opportunity of hearing to the assessee.

ITAT allows Foreign Travel Expenses Incurred for Obtaining Charitable Donations

M/s. Agastya International Foundation vs Assistant Commissioner of Income Tax   2023 TAXSCAN (ITAT) 1393

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has allowed foreign travel expenses incurred for obtaining charitable donations.

The two-member Bench of Chandra Poojari, (Accountant Member) And George George K, (Judicial Member) observed that the expenditure incurred was for obtaining the donations from the various donors who were stationed abroad and the utilisation of the donation was also for the objects of the Trust.

The Bench allowed the appeal filed by the assessee and held that since the donations received were utilised for charitable purpose which was never doubted by the AO, the foreign travel expenses incurred for obtaining the above said donations should be allowed as an expenditure.

Cash Deposit with Substantial Proof of Source Not to be treated as Unexplained Cash Credit u/s 68 of Income Tax Act: ITAT

DCIT vs M/s. Kundan Jewellers Pvt Ltd   2023 TAXSCAN (ITAT) 1392

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has held that the cash deposit made by the assessee with substantial proof of source shall not be treated as Unexplained Cash Credit under Section 68 of the Income Tax Act, 1961.

The two-member bench consisting of Shri Prashant Maharishi (Accountant Member) and Shri Pavan Kumar Gadale (Judicial Member), having found no merit in the revenue’s appeal, upheld the order of CIT(A) and dismissed the appeal filed by the revenue against the assessee.

ITAT Upholds addition made on account of Trading in Penny Stock Shares of Shell Company

Tarachand Agrawal vs The ITO 2023 TAXSCAN (ITAT) 1394

The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has upheld the addition made by the assessing officer on account of trading in  penny stock shares of a shell company.

The two  member bench of Annapurna Gupta, (Accountant Member) and Madhumita Roy, (Judicial Member)  observed that no one appeared for assessee and did not appear while several chances were given to assesee. The bench upheld the addition made by the lower authority on account of trading in Penny Stock of Vax Housing Finance Corporation Ltd.and confirmed it was a sham transaction.

ITAT quashes Reassessment based on vague and Innocuous Information regarding Accommodation Entry provided to Entry Operators

SFS Infinite Ltd. vs DCIT 2023 TAXSCAN (ITAT) 1395

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reopening of the assessment based on vague and innocuous information regarding accommodation entry provided to the entry operators.

The two-member bench of Chandra Mohan Garg (Judicial Member)  and  Pradip Kumar Kedia(Accountant Member) allowed the appeal filed by the assessee.  Om Prakash, counsel appeared for the revenue. No one appeared for the assessee while the appeal was considered before the tribunal.

No Penalty shall be levied u/s 270A of Income Tax Act on  Inadvertently  Reported Annual Value of  House Property by Accountant: ITAT

S. Saroja vs Deputy Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1396

The Chennai bench of Income Tax Appellate Tribunal (ITAT) has recently held that no penalty should be levied  under Section 270A of Income Tax Act 1961 on inadvertently reported annual value of house property by an accountant.

The two  member benches of Mahavir Singh, (Vice President)  and Manjunatha. G, (Accountant Member ) deleted thepenalty levied under Section 270A of Income Tax Act towards under reporting of income in respect of annual value of house property.

ITAT Upholds Disallowance made by AO on Payment of Interest Expenditure u/s. 201(1A) of Income Tax Act due to late payment of TDS

Living Liquidz SM Trades LLP vs Assessing Officer 2023 TAXSCAN (ITAT) 1391

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the disallowance made by the assessing officer on payment of interest expenditure under section 201(1A) of the Income Tax Act,1961 due to late payment of Tax Deducted at Source (TDS). 

The two-member bench comprising Prashant Maharishi (Accountant) And Kavitha Rajagopal (Judicial) held that disallowance of interest expenses paid under section 201(1A) of the Income Tax Act on late payment of TDS was penal and not compensatory and upheld the disallowance made by the assessing officer while dismissing the appeal filed by the assessee.

Penalty Imposed u/s271(1)(c) of Income Tax Act without Application of Mind: ITAT Set asides Order

I.G. International Pvt. Ltd. vs ACIT 2023 TAXSCAN (ITAT) 1389

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) quashed the penalty imposed under section 271(1)(c) of the Income Tax Act,1961 by the assessing officer without the application of mind. 

The two-member bench comprising Vikas Awasthy (Judicial) and Amarjith Singh (Accountant) held that the notice issued by the assessing officer under section 274 of the Income Tax Act was defective and the penalty imposed under section 271(1)(c) of the Income Tax Act was not as per the law and are liable to be quashed while allowing the appeal filed by the assessee. 

Claim of Deduction u/s 54F of Income Tax Act rejected due to late filing of revised ROI: ITAT Directs Re-adjudication

Smt. Kusumben Amritlal Sanghavi vs Dy. Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1390

The Rajkot bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for the rejection of the claim of deduction under section 54F of the Income Tax Act,1961 due to late filing of revised return of income (ROI). 

The two-member bench comprising Annapurna Gupta (Accountant) and Madhumita Roy (Judicial) held that the assessee was entitled to get the deduction claimed under section 54F of the Income Tax Act and directed the assessing officer to re-adjudicate the matter for allowing the deduction to the assessee while allowing the appeal filed by the assessee. 

Revised Return filed within Time Limit u/s 139(5) of Income Tax Act is Valid Return: ITAT Deletes Disallowance of Unamortized Brokerage Expense

ACIT vs M/s. Deutsche Asset Management (India) Pvt. Ltd.  2023 TAXSCAN (ITAT) 1385

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the disallowance of unamortized brokerage expense as the revised return filed within the time limit prescribed under Section 139(5) of the Income Tax Act, 1961 was a valid return.

The two-member Bench of B.R. Baskaran (Accountant Member) and Pavan Kumar Gadale (Judicial Member) dismissed the appeal filed by the revenue relying upon decision rendered by Supreme Court in Goetze P Ltd, which held that the assessee could make fresh claim by filing revised return of income.

The ITAT bench further held that even if the revised return of income was not filed, the tribunal could admit any fresh claim. In the instant case, the assessee had claimed the deduction of unamortized brokerage expenses through revised return so the same was admissible.

Stamp Value Less than Agreement Value: ITAT Deletes Addition u/s 56(2)(vii)(b) of Income Tax Act

Ms. Shilpa Gautam vs Income Tax Officer  2023 TAXSCAN (ITAT) 1387

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the additions made under Section 56(2)(vii)(b) of the Income Tax Act 1961 holding that the stamp value was less than the agreement value.

The two-member Bench of Prashant Maharishi (Accountant Member) Rahul Chaudhary (Judicial Member) allowed the appeal and deleted the addition made under Section 56(2)(vii)(b) holding that as the stamp value as was less than the agreement value.

ESOP Expenses can be Claimed in the Year of Vesting: ITAT Allows Deduction

ACIT vs M/s. Deutsche Asset Management (India) Pvt. Ltd  2023 TAXSCAN (ITAT) 1385

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has allowed the deduction holding that the Employees Stock Award Plan (ESOP) expenses could be claimed in the year of vesting.

The Two-member Bench of B.R. Baskaran (Accountant Member) and Pavan Kumar Gadale (Judicial Member) dismissed the appeal filed by the revenue and allowed the deduction in respect of Employee Stock Option Plan (ESOP) expenses referring to the decision in Biocon Ltd which held that the deduction could be claimed in the year of vesting.

Failure to Substantiate Expenditure Incurred Exclusively for Business: ITAT Disallows Education Expenditure u/s 37(1) of Income Tax Act

HVD Distributors Pvt. Ltd vs Dy. Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1388

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has disallowed the education expenditure under Section 37(1) of the Income Tax Act 1961 as the assessee failed to substantiate the expenditure had incurred exclusively for the purpose of business.

The two-member Bench of B.R. Baskaran, (Accountant Member) and Sandeep Singh Karhail, (Judicial Member) dismissed the appeal filed by the assessee as no sufficient basis was brought on record to show how the financial support provided by the assessee to its Director to pursue MSc in International Business Management was wholly and exclusively for assessee’s business purpose and has a direct relationship with the assessee’s business activity. The bench affirmed the disallowance of the Director’s education expenditure under Section 37(1) of the Income Tax Act.

Income Portion of On-Money Assessable in the Year in Which Sale of Flat is Declared: ITAT

Magnates Enterprises vs ACIT  2023 TAXSCAN (ITAT) 1386

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the income portion of on-money could be assessable in the year in which the sale of flats has been declared.

The two-member Bench of B.R. Baskaran (Accountant Member) and Kavitha Rajagopal (Judicial Member) set aside the impugned order holding that, the income portion of the on-money was assessable in the year in which the sale of the concerned flat is declared by the assessee.

Disallowance made by AO due to Non-Submission of Business Vouchers: ITAT Directs Re-adjudication

Garve Motors Private Limited vs DCIT 2023 TAXSCAN (ITAT) 1384

The Pune bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication to the assessing officer for the disallowance made on the ground of the nonsubmission of business vouchers. 

The two-member bench comprising S.S. Viswanethra Ravi ( Judicial ) and G.D. Padmahshali (Accountant) directed the assessing officer to re-adjudicate the matter and directed to restrict the disallowance to 5% in the interest of justice while allowing the appeal filed by the assessee.

ITAT Upholds Revisionary Order by AO on ground of Twin Satisfaction Envisaged u/s 263 of Income Tax Act

Abhishek Sheti Udyog Bhandar vs Pr. Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1383

The Pune bench of the Income Tax Appellate Tribunal (ITAT) upheld the revisionary order passed by the assessing officer on the ground of twin satisfaction envisaged under section 263 of the Income Tax Act,1961.

The two-member bench comprising S.S Godara (Judicial) and G. D. Padmahshali (Accountant) held that no inquiries into the substantial deposits at the first instance and further failure to carry out analysis in terms of directions were adequately sufficient to attract twin satisfaction as envisaged under section 263 of the Income Tax Act. 

 It was also held that the revisionary power done by the assessing officer under section 263 of the Income Tax Act was as per the law and is not liable to be deleted while dismissing the appeal filed by the assessee. 

Service Tax Paid by Contractor for Value of Work is not Part of Gross Receipts for Purpose of Computing Presumptive Tax u/s 44AD of Income Tax Act: ITAT

Sagarkumar Ishwarbhai Bhavani vs ITO 2023 TAXSCAN (ITAT) 1382

The service tax paid by the contractor for the value of the work is not included in gross receipts for the purposes of computing the assessee’s presumptive tax under Section 44AD of the Income Tax Act of 1961, according to the Kolkata bench of the Income Tax Appellate Tribunal (ITAT).

The Single Member Bench of Aby T. Varkey, (Judicial Member) observed that “service tax collected by assessee from its customers is on behalf of the Government and it needs to be deposited by the assessee in the relevant account of the Government. Therefore ‘service tax’ collected by assessee does not partake the character of income as referred to in section 5 of the Income Tax Act; and therefore, cannot be included in the gross receipt of assessee for the purpose of computing the presumptive taxation under Section 44AD of Income Tax Act.” Therefore, the bench allowed the appeal filed by the assessee.

No Penalty shall be Levied u/s 271b of Income Tax Act ,if Assessee Proves Reasonable Cause for Failure to Furnish Audit Record :ITAT

Kartick Das Bairagya vs Income Tax Officer  2023 TAXSCAN (ITAT) 1381

The Kolkata bench of Income Tax Appellate Tribunal (ITAT) has held that no penalty should be levied under section 271B of Income Tax Act, 1961, if the assessee proved the reasonable cause for failure to furnish audit report on loss suffered from share trading.

The Two-member bench of Rajpal Yadav (Vice President) and Girish Agrawal(Accountant Member)  held that no penalty shall be imposed on the person if he proved that there was a reasonable cause for the failureas provided under Section  273B of the Income Tax Act. 

No Addition can be made u/s 69A of Income Tax Act if Repaid Loan Transactions Records in Book of Accounts: ITAT

Arun I Keshwarni vs ITO 10(1)(3) 2023 TAXSCAN (ITAT) 1380

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that no addition could be made under Section 69A of the Income Tax Act 1961 if repaid loan transactions are recorded in book of accounts of the assessee.

The Two-member bench of Pavan Kumar Gadale (Judicial Member) and Padmavathy S. (Accountant Member) held that the assessee has recorded the impugned transactions in the books of accounts and has also provided explanations/evidence explaining the source of the loan transaction. Thus, AO was not correct in treating the loan transaction as an income under Section 69A Income Tax Act.

Delay in Filing Return of Income and Form 10B due to outbreak of Pandemic of Covid-19:ITAT allows Exemption u/s 11 of Income Tax Act

Income Tax Officer vs Camellia Educare Trust  2023 TAXSCAN (ITAT) 1379

The Kolkata bench of Income Tax Appellate Tribunal (ITAT) allowed exemption under section 11 of Income Tax Act 1961 on delayed filing of return of income and Form 10B due to the outbreak of Pandemic of Covid-19.

The Two-member bench of Rajpal Yadav, (Vice President) and Girish Agrawal, (Accountant Member) observed that the assessee has filed belated return under Section 139(4) of the Income Tax Act which the department has not held to be a defective return under Section 139(9). Also, it was processed by accepting the revenue and capital expenditure though denying the exemption claimed under Section 11 Income Tax Act   and computed the total income equal to the total receipts of the assessee for the year. Moreover, regarding the claim under Section 11 of Income Tax Act, the CPC failed to issue prior intimation to the assessee before making an adjustment. There fore the bench allowed the appeal filed by the assessee.

ITAT Deletes Addition on Disallowance of Subcontract Expenses on Ground of Lack of Evidence

V M Matere Infrastructures (India) Private Limited vs ACIT  2023 TAXSCAN (ITAT) 1377

The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently deleted the addition on disallowance of subcontract expenses on ground of lack of evidence.

The Tribunal concluded that the sub-contractual payments made by the appellant were genuine in the given circumstances, and the Assessing Officer erred in treating them as non-genuine. Consequently, the revenue’s appeals were rejected. No other grounds or arguments were presented during the proceedings. Therefore, the appellant’s seven appeals were partly allowed, and the revenue’s four cross-appeals were dismissed.

Addition made by AO by treating Agricultural Income as income from Undisclosed Sources : ITAT Deletes Addition

Shri Lalit Kumar vs The ITO 2023 TAXSCAN (ITAT) 1372

The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition made by the assessing officer by treating the agriculture income as income from the undisclosed sources. 

A single-member bench comprising Sanjay Garg( Judicial) held that the addition made by the assessing officer to the agricultural income as income from undisclosed sources was liable to be deleted while allowing the appeal filed by the assessee.

A single-member bench comprising Sanjay Garg( Judicial) held that the addition made by the assessing officer to the agricultural income as income from undisclosed sources was liable to be deleted while allowing the appeal filed by the assessee.

A single-member bench comprising Sanjay Garg( Judicial) held that the addition made by the assessing officer to the agricultural income as income from undisclosed sources was liable to be deleted while allowing the appeal filed by the assessee.

Residuary Provisions under Income Tax Act not Applicable to Disallowances for Late Payment of EPF & ESI: ITAT

M/s.Cognizant Technology Solutions India Pvt.Ltd. vs ACIT 2023 TAXSCAN (ITAT) 1378

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) held that the residuary provisions which are present under the Income Tax Act are not applicable to disallowances for late payment of Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI).

The one-bench comprising of Manoj Kumar Aggarwal (Accountant Member) observed that provisions of Section 37(1) are residuary provisions. Any expenditure which falls within the ambit of Sec.30 to 36 and if it is found not to be fulfilling the conditions laid under those provisions, the same could not be claimed alternatively u/s 37(1).

ITAT quashes Revision Order passed u/s 263 of Income Tax Act during Covid -19 Pandemic

Subhash Devidas Mind vs PCIT 2023 TAXSCAN (ITAT) 1375

The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently quashed the revision order passed under Section 263 of Income Tax Act 1961 during covid-19 pandemic.

The two member bench of Inturi Rama Rao(Accountant Member)and S.S. Viswanethra Ravi, (Judicial Member) observed that the assessee  could  not represent the matter before the Principal commissioner of Income Tax on account of  difficulties faced on account of Covid-19  Pandemic which constitute a reasonable and sufficient cause for  non-appearance. Therefore, the bench allowed the appeal filed by the assessee.

Claim of Legal and Professional Expenses Rejected on ground of Non Existence of Taxable Business in form of PE : ITAT Directs Re-adjudication

SIS Live vs Assistant Commissioner of Income Tax 2023 TAXSCAN (ITAT) 1373

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication to the assessing officer for rejecting the claim of legal and professional expenses on grounds of the nonexistence of taxable business in the form of permanent establishment (PE).

The two-member bench comprising G.S. Pannu(President )and Saktijit Dey (Judicial) directed re-adjudication to the assessing officer to decide the assessee’s claim of disallowance of brought forward loss and set off the current year’s loss against the current year’s income while allowing the appeal filed by the assessee. 

Interest Income earnedon Fixed Deposits with Cooperative/Scheduled Bank eligible for Deduction u/s 80P(2)(a)(i) of Income Tax  Act: ITAT

Jankalyan Nagari Sahakari Patsanstha Ltd.vs ITO 2023 TAXSCAN (ITAT) 1374

The Pune bench of Income Tax Appellate Tribunal (ITAT) has recently held that interest income earned on fixed deposits with the cooperative /scheduled bank is eligible for deduction under Section 80P (2)(a)(i) of Income Tax Act 1961.

A single member bench of Inturi Rama Rao, (Accountant Member) allowed the appeal filed by the assessee and held that interest income earned on fixed deposits with  cooperative/scheduled banks partakes the character of the business  income, which is eligible for deduction  under Section  80P(2)(a)(i) of the Income Tax Act.

Claim of Deduction u/s 40(a)(ia) of Income Tax Act rejected on ground of Non Deduction of TDS: ITAT Dismisses Appeal of Assessee

Shri G. Krishnamurthy vs The DCIT  2023 TAXSCAN (ITAT) 1376

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT) dismissed the appeal filed by the assessee for rejecting the claim of deduction under section 40)a)(ia) of the Income Tax Act,1961 on the ground of non deduction of Tax deducted at source (TDS). 

The two-member bench comprises Mahavir Singh(Vice President) and Manjunatha. G(Accountant) held that the claim made by the assessee was not as per the law and is liable to be dismissed. 

No Disallowance u/s.40A (3) of Income Tax Act on Payment made towards Purchase of Beer from State Government: ITAT

Harshdeep Singh Juneja vs The Deputy Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1371

The Raipur bench of Income Tax Appellate Tribunal (ITAT) has held that there is no disallowance under Section 40A (3) of Income Tax Act, 1961 on payment made towards purchase of beer from state government.

The two member bench of Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) restored the matter to the file of AO and set aside the order of disallowance regarding the payment made towards purchase of beer from state government .

ITAT quashes Time Barred Reassessment Notice Issued u/s 148 of Income Tax Act based on Information from Investigation Wing regarding Bogus Expense

Humboldt Wedag India Pvt. Ltd vs ACIT 2023 TAXSCAN (ITAT) 1368

The Delhi bench of Income Tax Appellate Tribunal (ITAT) has quashed a time barred reassessment notice issued under Section 148 of Income Tax Act 1961 based on information from investigation wing regarding bogus expenses.

The two-member bench of Chandra Mohan Garg (Judicial Member) and Pradip Kumar Kedia (Accountant Member) find that the income chargeable to tax has escaped assessment ‘by reason of the failure on the part of the assessee to disclose fully and truly all material facts’ necessary for assessment. In the absence of such allegation, the jurisdiction assumed under Section 148 Income Tax Act to reopen a completed assessment is clearly void ab initio.

Thus, the issuance of notice under Section 147/148 Income Tax Act is time barred and void ab initio. Further, the reassessment order framed was without jurisdiction and is illegal. Therefore, the bench allowed the appeal filed by the assessee.

No addition can be made on basis of Rejected Book of Account by Assessing Officer: ITAT

Five Star Construction Company vs The Deputy Commissioner of Income Tax  2023 TAXSCAN (ITAT) 1370

The Raipur bench of Income Tax Appellate Tribunal (ITAT) has ruled that no addition could be made on the basis of a rejected book of account by the Assessing Officer.

The two-member bench of Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) relied upon the decision of supreme court in case CIT Vs. K.Y Pilliah & Sons held that “once the books of account of an assessee are rejected as unreliable then it is open to the AO to estimate the assessee’s profits considering the profit which was earned in similar business.” R.B Doshi, counsel appeared for the assessee. Piyush Tripathi, counsel appeared for the revenue.

Default in Proper Communication by CA to NRI Assessee of Income Tax Notices: ITAT Condones Delay of 379 Days

Dominic Savio Dasilva vs CIT  2023 TAXSCAN (ITAT) 1369

The Delhi bench of Income Tax Appellate Tribunal (ITAT) has directed the Commissioner for de novo adjudication, by condoning the delay of 379 days in filing the appeal due to the default of Charted Accountant (CA) in complying with the income Tax notices.

The bench observed that the reasonable opportunity for the assessee to be heard before the appeal was dismissed was not made clear in the commissioner’s contested ruling. As a result, there was a flagrant violation of the Principles of Natural Justice. Hence the Tribunal affirms the assessee’s right to a fair and reasonable opportunity to be heard while setting aside the CIT(A)’s  order and directed for a new adjudication of the case.

CIT(A)’s Direction to take Appropriate action on Tax Perquisites u/s. 17 of Income Tax Act exceeds exceeds Jurisdiction confer by S.251: ITAT

Adaab Hotels Ltd vs DCIT 2023 TAXSCAN (ITAT) 1362

The Delhi bench of Income Tax Appellate Tribunal (ITAT) held that the direction by Commissioner of Income Tax (Appeals) [CIT(A)] to take appropriate action on tax perquisites under Section 17 of the Income Tax Act, 1961 exceeds the jurisdiction conferred by section 251 of Income Tax Act.

The Two-member bench of N. K. Billaiya (Accountant Member) and C.N. Prasad (Judicial Member) held that the direction of CIT(A) exceeds the jurisdiction conferred by Section 251 of the Income Tax Act,1961.

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