ITAT Agra Judgments — May 2019

The Tribunal held that Section 56(2)(vii)(b)(ii) applies to property purchased for consideration, not just gifts. The CIT(A) was justified in confirming the addition as the proviso to sub-clause (c) of Section 56(2)(vii) was correctly considered.

The Tribunal found that the volume of evidence presented by the assessee, including ledger accounts and bills, required examination. It held that the CIT(A) did not adequately discuss the basis for his disallowance.

The Tribunal held that the cash deposits and withdrawals in the bank account were made regularly and could be considered as business turnover. Following the principle of consistency with the preceding assessment year and the nature of the assessee's business, the addition of the peak credit balance was deleted.

The Tribunal held that the reassessment proceedings were initiated without any new material and were based solely on a change of opinion by the Assessing Officer. Therefore, the reasons recorded were not valid in the eyes of the law.

The Tribunal held that the assessee's business activities included transportation of goods, making higher depreciation admissible. It also ruled that the office repair expenses were revenue in nature as no new asset of enduring nature was created.

The Tribunal held that the AO exceeded jurisdiction by rejecting books of accounts and making additions beyond the scope of limited scrutiny without converting it to complete scrutiny. The estimation of net profit at 10% was deemed arbitrary, ignoring the assessee's past business results.

The CIT(A) deleted the additions, finding no rationale for rejecting the books of account and accepting the project completion method. The Tribunal upheld the CIT(A)'s decision, noting that the advances were old balances and not received in the impugned year.

The Tribunal held that the reassessment proceedings were initiated based on 'borrowed satisfaction' as the AO did not independently apply his mind to the information received from the DGIT(Inv.). The reasons recorded by the AO lacked a nexus with tangible material, making the notice under Section 148 and subsequent reassessment proceedings invalid.

The Tribunal found that while the AO was justified in investigating the high refund to TDS ratio, the disallowances made by the AO and sustained by the CIT(A) lacked proper quantification of bogus expenses. Therefore, the matter was remanded to the AO for re-adjudication.