ITAT Bangalore Judgments — January 2023

The Tribunal directed the Assessing Officer to verify the assessee's claims and consider them in accordance with the law for several grounds, including revenue reconciliation, technical consultancy charges, Form 26AS differences, and dealers' commission. The appeal was allowed for statistical purposes on these grounds.

The Tribunal held that the CIT(E) was justified in initiating Section 263 proceedings for the issues of cash deposits during demonetization and the mismatch in the value of imported goods, as these were not adequately verified by the AO. However, the Tribunal also noted that the AO had conducted some inquiries regarding donations and import values.

The Tribunal held that teaching Vedas, in this context, is not exclusively a religious activity but rather a charitable one, falling under education and relief of the poor. The assessee's other charitable activities further supported this classification.

The Tribunal restored the issue of deduction under Section 80P to the CIT(A) for fresh adjudication. This was because the assessee was not given a sufficient opportunity of hearing in the first appellate proceedings, and the case was decided ex parte.

The Tribunal condoned the delay in filing the appeal. The assessee argued that an LLP is a firm and eligible for exemption under Section 10(2A), citing a Kerala High Court judgment.

The Tribunal held that Section 80AC mandates filing the return by the due date for claiming deductions under Chapter VI-A. The assessee's belated filing disentitled it from the Section 80P deduction, and the CIT(A)'s order was upheld.

The Tribunal found that the CIT(A)/NFAC passed the order without considering the assessee's submissions, violating the principles of natural justice. Therefore, the issue was remitted back to the CIT(A)/NFAC for a fresh decision.

The Tribunal decided as follows: 1. Ground No. 1, concerning the validity of the assessment for want of proper service of notice under section 143(2), was dismissed as not pressed by the assessee. 2. Regarding Ground No. 2, the Tribunal noted the history of the issue, including the CIT(A)'s partial relief based on CBDT Instruction No. 1916 in the first round and a subsequent remand by the Tribunal. In the impugned order, the CIT(A) granted relief only up to 500 gms of gold to the wife, rejecting reliance on bills as originals were not produced. The judgment does not explicitly state the Tribunal's finding on this ground, but the overall result indicates partial allowance, suggesting some relief might have been granted or the issue was not fully decided in favour of the revenue. 3. For Ground No. 3, the Tribunal upheld the addition of Rs. 8,50,000/- under section 68. The Tribunal found that the assessee failed to discharge the primary onus of proving the identity, creditworthiness of the lender (M/s Seva Enterprises), and genuineness of the transaction. Despite the loan confirmation and bank statements, the absence of PAN numbers, the suspicious dating of the confirmation documents (prior to the search but not retained by the assessee), and the lack of further evidence to prove the lender's identity and creditworthiness led the Tribunal to conclude that the transaction was not genuine. The onus was not discharged merely by routing through banking channels. The appeal was partly allowed.

The Tribunal noted that the assessee's contention regarding the unique employer-employee relationship and the nature of payments was raised for the first time. Therefore, the issue was remitted back to the AO for factual verification.

The Tribunal found substance in the assessee's application requesting a fresh adjudication by the CIT(A). The CIT(A) had erroneously stated that no evidence was furnished, which the DR conceded.

The Tribunal noted that the issues raised in Ground Nos. 2 (disallowance of superannuation fund) and 3 (non-granting of foreign tax credit) had been rectified by the AO through a rectification order dated 15.12.2022. Consequently, the assessee's AR submitted that these grounds were not pressed. The Tribunal accordingly dismissed these two grounds as not pressed. Regarding Ground No.4, which pertains to the computation of interest under Section 234C, the assessee contended that it should be computed on the returned income. The Tribunal accepted this contention and directed the AO to recompute the interest under Section 234C as per the provisions of the Act on the returned income. Ground No.1 was considered general and not warranting separate adjudication, and Grounds 5 & 6 were consequential. The appeal was partly allowed.

The Tribunal noted that both the AO and the CIT(Appeals) failed to consider the second revised return filed by the assessee. Therefore, the matter was remitted back to the AO for fresh verification of the issues, considering the second revised return.