ITAT Ahmedabad Judgments — January 2019

The Tribunal held that the penalty order was arbitrary and erroneous as the authorities below did not conduct independent inquiries during penalty proceedings. The Tribunal relied on judicial precedents stating that penalty proceedings are quasi-criminal and require fresh consideration.

The Tribunal noted that the issue was covered by a Gujarat High Court decision. While the AR conceded the issue was against the assessee, they argued about the relevant due date. The Tribunal ultimately dismissed the Revenue's appeal.

The Tribunal allowed the deletion of commission expenses, finding the genuineness could not be doubted without tangible material. The Revenue's appeal was dismissed due to low tax effect, as per CBDT circular.

The Tribunal allowed the appeal regarding the salary income discrepancy, stating that Form 26AS exceeding Form 16 is not sufficient grounds for addition without further evidence. However, the appeal concerning undisclosed interest income was dismissed as the assessee did not advance arguments.

The Tribunal held that the books of account cannot be rejected partially and if rejected, income from all sources needs to be estimated. It directed the AO to estimate income for both trading and commission businesses on a reasonable basis.

The Tribunal held that the frequency and magnitude of transactions alone cannot be the criteria to classify the income as business activity. The intention of the assessee at the time of purchase is paramount.

The Tribunal held that a defective penalty notice under Section 274, which does not specify the exact limb of Section 271(1)(c) for which penalty is being levied, is not fatal to the penalty proceedings, especially when the jurisdictional High Court's decision supports this view.

The Tribunal held that the assessee is eligible for exemption under Section 54F for the amount invested beyond the prescribed period but before registration, provided there were sufficient reasons beyond the assessee's control. The AO was directed to verify the investment amount.

The Tribunal held that the assessee's explanation regarding shortages and the sale of dismantled machinery as scrap was not disproven by the revenue. The Tribunal found the shortage within the permissible limit and set aside the additions made by the lower authorities.

The Tribunal held that ownership of land is not necessary to derive agricultural income, as per Section 2(1A) of the Act. It also noted that the assessee had consistently declared such income, which was accepted in prior years.

The Tribunal allowed expenses related to wooden work and other material expenses, noting they were incurred for business purposes and carried forward from previous years. However, the disallowance of miscellaneous work expenses was also set aside as opening balances from a prior year accepted by revenue cannot be disturbed.

The Tribunal held that ad-hoc disallowances should be based on some scientific basis and that the AO erred by not referencing earlier years' expenses or comparable cases. For the Rs. 96,773 addition, the Tribunal found no infirmity in the lower authorities' orders as the assessee failed to provide sufficient details.