ITAT Ahmedabad Judgments — January 2020

The Tribunal held that the CIT(A) had rightly adjudicated the issue in favour of the assessee, following its own previous decisions on identical facts. The expenditure was considered revenue in nature.

The Pr.CIT held that the initial assessment was erroneous and prejudicial to the interest of the Revenue, directing the AO to conduct further inquiries. The appeal is against this order.

The Tribunal held that expenses crystallized in the current year due to dispute resolution are allowable, even if relating to prior periods. The Tribunal also found that the CIT(A) had correctly deleted the additions made by the AO on various grounds, including freight expenses, advertisement film, credit card expenses, and under-invoicing, due to lack of proper evidence or flawed methodology by the AO.

The Tribunal upheld the deletion of the addition of Rs. 1,60,09,128/-. Regarding the Section 54B claim, the Tribunal noted that the CIT(A) admitted additional evidence and considered the assessee's explanation that the purchase of new land preceded the sale of old land to maintain farmer status under the Gujarat Land Revenue Code. The Tribunal found the CIT(A)'s reasoning for allowing the claim, including the reinvestment of sale proceeds, to be just. The Tribunal also upheld the deletion of the addition of Rs. 77,86,500/-. The CIT(A) had considered comparable instances provided by the assessee, which were not disputed by the AO, and found no possibility of excess cash payment. Furthermore, the Tribunal agreed with the CIT(A) that when the assessee disputed the property's value as per stamp valuation authority, the AO ought to have referred the matter to the DVO for determining the fair market value under Section 50C(2). The Tribunal found no infirmity in the CIT(A)'s order on this issue and upheld it. The appeal of the Revenue was dismissed.

The Tribunal held that expenses crystallized in the current year due to dispute resolution are allowable, even if relating to prior periods. The Tribunal also found that the CIT(A) had correctly deleted the additions made by the AO on various grounds, including freight expenses, advertisement film, credit card expenses, and under-invoicing, due to lack of proper evidence or flawed methodology by the AO.

The Tribunal held that since the services were rendered and utilized outside India, and the income did not accrue in India, TDS deduction was not required. It also noted that even if the expense related to an earlier year, disallowance is not permissible if the liability crystallized in the current year and the expense was not claimed twice.

The Tribunal held that these incomes could be considered as business income and allowed partners' remuneration to be calculated after considering these sources. The CIT(A)'s order was set aside.

The Tribunal allowed the assessee's prayer for withdrawal of the appeal. The Departmental Representative had no objection to the withdrawal.

The Tribunal held that the claim under Section 54B was not allowable as the land was not used for agricultural purposes in the preceding two years. For Section 54EC, the Tribunal allowed deduction for investments made within six months of the transfer but disallowed investments made prior to the sale.

The Tribunal held that interest earned on surplus funds deposited with banks, whether scheduled or cooperative, is not attributable to the assessee's business operations and therefore not eligible for deduction under Section 80P(2)(d). The Tribunal also noted that cooperative banks are excluded from the benefit of Section 80P by Section 80P(4).

The Tribunal held that the expenditure incurred for improving the existing business was revenue expenditure allowable in full, not subject to amortization under Section 35D. Furthermore, the Tribunal upheld the deletion of disallowances under Section 14A, as the assessee had not earned any exempt income.

The Tribunal set aside the matter back to the AO for a fresh decision. This was done to provide the assessee with an opportunity to be heard and submit necessary material, as the original proceedings were deemed to have violated the principles of natural justice.

The Tribunal held that Section 234E is applicable for late filing of TDS statements, but the obligation to deduct TDS under Section 194IA is per transferee. Therefore, if the consideration for each transferee is below Rs. 50 Lakhs, Section 194IA is not applicable, and consequently, the late fee under Section 234E for such amounts is not leviable.

The Tribunal found that while the source of Rs. 3,10,000/- towards stamp duty remained unexplained, the remaining amount of cash deposits was partly explainable due to continuous withdrawals and deposits. The presumption by revenue authorities was based on suspicion.

The Tribunal remitted the issue of capital gains on the land to the AO for fresh adjudication, considering the agricultural nature of the land and VUDA's proposal for residential zone. The Tribunal also remitted the issue of unexplained cash credits to the AO for fresh consideration, acknowledging the unorganized nature of agricultural transactions.

The Tribunal found that the assessee argued the facts were different from a previous year and presented statements of commission agents. The Tribunal set aside the matter to the CIT(A) for fresh adjudication considering these statements.

The Tribunal found the assessee's justification for the delay to be genuine and that the CIT(A) should have provided an opportunity to file an affidavit. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the case back to the CIT(A) to condone the delay and decide the appeal on merits.

The Tribunal held that the appeal was not maintainable due to low tax effect, as per the enhanced monetary limits prescribed by CBDT Circular No. 17 of 2019. This circular applies retrospectively to pending appeals.

The tribunal held that denying the assessee an opportunity to cross-examine the creditors, whose statements formed the basis of the addition, violated the principles of natural justice. Therefore, the matter was set aside to the Assessing Officer for fresh adjudication.

The Tribunal held that a delay in furnishing the tax audit report does not necessarily constitute a 'failure' attracting penalty under Section 271B. The Tribunal noted that the income declared was accepted without variation and there was substantial compliance, thus the penalty was not exigible.

The Tribunal noted that the assessee had provided cheque numbers and bank statements, which were ignored by the lower authorities. The matter was set aside to the Assessing Officer for a fresh decision after giving the assessee an opportunity to be heard.

The Tribunal held that a delay in furnishing the tax audit report does not necessarily constitute a 'failure' attracting penalty under Section 271B. The Tribunal noted that the income declared was accepted without variation and there was substantial compliance, thus the penalty was not exigible.

The Tribunal condoned the delay in filing the appeal, prioritizing substantial justice over technicality. It directed the CIT(A) to admit the appeal and adjudicate the issues on merit, while levying a cost of Rs. 5,000/- on the assessee for the delay.

The Tribunal condoned the delay in filing the appeal before the CIT(A) and the current appeal before the ITAT, citing the assessee's genuine hardship. The case was remitted back to the CIT(A) for re-examination.

The Tribunal dismissed the Revenue's appeal as not maintainable due to CBDT Circular No. 17 of 2019, which enhanced the monetary limit for appeals. The tax effect in this case was below the revised threshold.

The Tribunal held that remuneration paid to a partner who is a karta of an HUF and actively engaged in the firm's business is allowable. The disallowance made by the Revenue was not justified.

The Tribunal held that disallowance under Section 14A cannot exceed the exempt income earned. Therefore, the disallowance was restricted to Rs. 50,000.

The Tribunal held that interest earned on surplus funds deposited with banks, whether scheduled or co-operative, is not attributable to the assessee's primary business of providing credit facilities to its members. Therefore, such interest income is not eligible for deduction under Section 80P(2)(a)(i) or 80P(2)(d).

The Tribunal held that the AO acted beyond the jurisdiction conferred by the CIT's order under Section 263 regarding the Section 40A(3) disallowance. For the Section 40(a)(ia) disallowance, the Tribunal found the factual premise of a single payment exceeding Rs. 20,000 to be incorrect.

The Tribunal allowed the assessee's request to withdraw the appeal. Consequently, the appeal filed by the assessee was dismissed as withdrawn.

The Tribunal found merit in the assessee's argument that amounts transferred between their own bank accounts should not be treated as unexplained investment for a second time. Therefore, the Tribunal directed the Assessing Officer to grant relief for this amount.

The Tribunal held that the assessee's activity of manufacturing bio-feeds from purchased agro-waste, which are then processed into biological agents, qualifies for deduction under Section 80JJA. The CIT(A)'s decision allowing the deduction was upheld.

The Tribunal upheld the reopening of the assessment and confirmed the addition of gifts as unexplained income. It held that merely receiving gifts via account payee cheques is insufficient to prove genuineness without establishing the occasion, relationship, or gift deeds.

The Tribunal held that if an assessment is reopened for a specific reason and no addition is made on that ground, the AO cannot make additions on other issues that came to notice during the reassessment proceedings. Therefore, the reassessment order was quashed.

The Tribunal held that the CIT(A) is obligated to decide appeals on merits, even ex parte, and cannot dismiss them solely for non-appearance without addressing the issues. The order of the CIT(A) was set aside for fresh adjudication.

The Tribunal held that Government Securities held by a bank, mandated for maintaining liquidity ratios, are to be treated as stock-in-trade. Any loss or deterioration in their value is allowable as a deduction under Section 37 of the Income Tax Act.

The Tribunal held that the CIT(A) was obligated to decide the appeal on merits even in an ex parte order. Since the CIT(A) failed to address the grounds of appeal, its order was set aside.

The Tribunal held that the reopening of assessment was valid as it was based on a comparative analysis of bank transactions and ITS data. However, the addition of Rs. 63,50,000/- under Section 69 was deleted as the assessee had explained the source of deposits as received in a professional capacity for land transactions, supported by the purchaser's confirmation.

The Tribunal dismissed the appeal as the assessee failed to remove the defects and did not appear before the Tribunal, despite being served with notice.

The Tribunal dismissed the assessee's appeal, upholding the CIT(A)'s findings. The Tribunal found no perversity in the CIT(A)'s reasoning and noted the absence of any contrary explanation or supporting documents from the assessee.

The Tribunal upheld the estimated addition of GP at 15% as it was in line with the assessee's past performance. However, it set aside the penalty imposed on this estimated addition, citing a Gujarat High Court decision.

The Tribunal upheld the CIT(A)'s decision to allow 60% depreciation on data processing equipment, finding them to be computers or computer-related items. The issue of depreciation on the car was set aside to the AO for fresh adjudication.

The Tribunal upheld the reassessment proceedings initiated under Section 147 as valid, given the assessee's failure to file a return and the information available to the AO. The Tribunal also confirmed the addition of Rs. 13,11,000/- as unexplained cash deposit, finding the assessee's explanations contradictory and unsubstantiated.

The Tribunal deleted the penalty under Section 271D, finding bonafide reasons for accepting cash deposits from relatives under the given circumstances. However, it upheld the penalty under Section 271(1)(c) for concealment of income and non-filing of return, as the assessee had taxable non-agricultural income.

The Tribunal held that the assessee had a bona fide and reasonable cause for not filing the appeal electronically on time due to technical difficulties with the new system. Therefore, the CIT(A) was not justified in dismissing the appeal on this ground.

The Tribunal condoned the delay in filing the appeal. While agreeing that income should be estimated, it found the CIT(A)'s 4% Net Profit rate unscientific. The Tribunal directed the Assessing Officer to adopt a 2% Net Profit rate, effectively reducing the addition by 50%.

The Tribunal held that the AO was obligated to refer the matter to the DVO when the assessee raised objections regarding the property's title and marketability. The stamp duty valuation alone cannot always be considered the fair market value.

The Tribunal held that for a charitable trust registered under Section 12A, the special provisions of Chapter III of the Income Tax Act apply. Therefore, the provisions of Chapter IV concerning 'income from house property' and its deductions are not attracted when determining the trust's income for exemption purposes.

The Tribunal held that the CIT's action under Section 263 was not justified as the AO's order allowing the deduction was not erroneous per se, especially in light of a co-ordinate bench's decision favouring the assessee.

The Tribunal held that the assessee demonstrated the money's movement through banking channels and its prompt return. Considering the totality of circumstances, a benign view was taken in favor of the assessee.