ITAT Bangalore Judgments — July 2024

The Tribunal noted that the CIT(A) had dismissed the appeal for non-prosecution and had not adjudicated the issues on merits. Considering the assessee's prayer and the potential fault of the tax consultant, the Tribunal decided to remit the issue back to the CIT(A) for fresh consideration.

The Tribunal held that Rule 128(9) of the Rules does not provide for disallowance of FTC for delay in filing Form 67. It was further held that filing Form 67 is a directory, not mandatory, requirement, and that Double Taxation Avoidance Agreements (DTAA) override the Act and Rules. The Tribunal agreed with the assessee that the issue was not debatable.

The Tribunal held that the additional evidence filed by the assessee, including financial statements, cash book, bank statements, and registration certificate, were essential for adjudicating the case. The Tribunal admitted this additional evidence.

The Tribunal held that SanDisk India cannot be considered a dependent agency PE of the assessee for the year under consideration. There was no transaction between the assessee and SanDisk India, nor were they associated enterprises during the relevant financial year. Consequently, no addition could be made for Fees for Technical Services (FTS) or attribution of profits earned by SanDisk India.

The Tribunal noted that while the assessee attempted to explain the sources of cash deposits, no documentary evidence was submitted to substantiate the claims. The Tribunal also referred to CBDT guidelines regarding the examination of cash deposits during demonetization. The Tribunal found that the burden of proof was on the assessee to establish the genuineness of the deposits.

The CIT(A) confirmed the AO's order. The Tribunal observed that the matter required further verification. The Tribunal restored the issue to the AO for re-examination.

The Tribunal held that an assessment order passed in the name of a non-existent entity after its amalgamation is void ab initio and without jurisdiction. The assessment order was correctly quashed by the CIT(A) as it was passed against an entity that had ceased to exist.

The Tribunal noted that the CIT(Appeals) had not properly appreciated the facts of the case and had summarily rejected the appeal. The dispute primarily concerned the short granting of interest under Section 244A and TDS refund.

The assessment order was passed in the name of a non-existent entity, Scientific Atlanta India, which had merged with Cisco India. Since the assessee company ceased to exist prior to the assessment year in question, the assessment order was considered void ab initio and thus invalid.

The tribunal held that the assessee was not obligated to pay advance tax as per Sections 208 and 209 of the Act because there was no taxable income. Therefore, the CIT(A) was not justified in dismissing the appeal on the ground of non-compliance with Section 249(4)(b) of the Act.

The Tribunal condoned the delay in filing the appeal, citing no malafide intention and following the Supreme Court's ratio in Collector, Land Acquisition v. Mst.Katiji & Ors. The Tribunal found that the assessee had not been properly served and remitted the matter back to the CIT(A) for fresh consideration after affording a reasonable opportunity of hearing.

The Tribunal held that the assessee failed to furnish necessary documents in support of their claim before the NFAC. Therefore, the issue was remitted back to the NFAC to decide the same after calling for corroborative documents. The assessee was directed to cooperate with the NFAC by furnishing necessary details.

The ITAT held that the AO's assessment order was flawed because it did not adhere to the CBDT guidelines for penny stock cases. The Tribunal noted that the assessee's grounds of appeal and the scrip involved were similar to a previous case decided by a coordinate bench. Relying on that precedent, the Tribunal decided to remand the matter back to the AO for a denovo assessment.

The Tribunal held that the assessee was not provided with a reasonable opportunity to present his case before the CIT(A). The Tribunal also found the reason for non-appearance convincing, considering the assessee's change of residence and the rejection of the adjournment request.

The Tribunal noted that the CIT(A) had dismissed the appeal without adjudicating on merits, despite an email address for communication being provided and specific requests not to send notices via email. The Tribunal found that the CIT(A)'s order might have been passed without adequate opportunity for the assessee.

The Tribunal noted that while the CIT(A) allowed deduction u/s 80P(2)(a)(i), the FAA had confirmed other disallowances, and the assessee failed to prove them wrong. The Tribunal agreed that it's unclear if all income is business income and therefore requires verification.

The Tribunal condoned the 8-day delay in filing the appeal, following the Supreme Court's ratio in Collector, Land Acquisition v. Mst. Katiji & Ors. It was noted that both the AO and CIT(A) orders were passed ex-parte without providing the assessee a proper opportunity to be heard. Therefore, the Tribunal decided to remit the issue back to the AO for fresh consideration.

The Tribunal held that the assessee's explanation regarding the source of funds as donations for the trust and temple construction was genuine. The AO had accepted a significant portion of the deposits as being from legitimate sources. The use of the wrong PAN was a mistake and not a sole ground for addition. The addition of Rs. 11,91,915/- was not sustained.

The Tribunal held that the professional charges incurred for identifying potential acquisitions, even if the transactions did not materialize, should be treated as revenue expenditure, following jurisdictional High Court precedents. Regarding Section 14A, the Tribunal found that since the assessee had not earned any exempt income during the year, no disallowance under Section 14A could be made.

The Tribunal noted that the amount invested in fixed assets (solar panels and water treatment plants) should be considered as application of income. The AO erred in considering gross receipts instead of net surplus for exemption calculation. The CIT(A) rightly corrected the computation error made by the AO. The grounds raised by the revenue were dismissed.

The Tribunal noted that the assessee had deposited Rs. 3,25,000 in old currency notes and the CIT(A) had allowed relief of Rs. 75,000, leaving Rs. 2,50,000 in dispute. Considering the nature of business and the turnover reported, and the fact that the assessee maintained no books of account, the Tribunal allowed the ground related to the addition of Rs. 2,50,000, considering it meagre in relation to the turnover. However, the Tribunal upheld the CIT(A)'s order regarding the estimation of profit at 8% under Section 44AD, finding no infirmity.

The Tribunal held that the CIT(A) was correct in deleting the addition of deemed rental income based on the principle of equality before law, as similar transactions by co-owners were not subjected to addition. Regarding capital gains, the Tribunal applied the principle of consistency, noting that similar gains in previous AYs were treated as long-term, and thus upheld the CIT(A)'s order. However, the issue regarding income from alleged plant and machinery was remitted to the AO for fresh examination due to lack of clear findings on the rent amount and TDS deduction.

The first paragraph of the original order has been corrected to accurately reflect that the appeal was filed by the revenue. No other changes were made to the order dated 02.07.2024.

The Tribunal held that the assessee had provided primary documentary evidence, including names, addresses, PANs, and bank statements of the loan parties, to justify the source of cash. The AO, without conducting independent inquiries or presenting contrary material, rejected this evidence based on surmises and conjectures. Relying on Supreme Court precedent, the Tribunal stated that the onus shifts to the AO to disprove the evidence once primary evidence is provided.

The Tribunal acknowledged the significant delay but emphasized that substantial justice should prevail over technicalities. Citing various High Court and Supreme Court judgments, the Tribunal noted that the absence of a counter-affidavit from the revenue and the principle of advancing substantial justice warranted condonation of delay.

The Tribunal held that the assessee is eligible for additional depreciation on machinery used for processing milk, following a previous decision in their own case. However, the claim for deduction of rental income from the milk parlor was dismissed as it did not arise from the activity of milk supply. The issue regarding interest earned from cooperative banks was set aside to the AO for fresh adjudication considering net interest income.

The Tribunal held that the eligibility for deduction under Section 80P(2)(a)(i) concerning interest income from credit facilities provided to members, including nominal/associate members, requires fresh consideration by the AO. The Tribunal also remitted the issue of deduction under Section 80P(2)(d) on interest income from investments in co-operative banks and commercial banks back to the AO for verification. The issue regarding the cost of funds for earning interest income was also remitted to the AO for fresh computation.

The Tribunal held that the penalty under Section 271(1)(c) read with Explanation 5A can only be levied when incriminating material is found during the search. Since no such material was found, and the income was voluntarily surrendered by the assessee, the penalty was not sustainable. The Tribunal noted that penalty proceedings are independent of assessment but require independent evidence.

The Tribunal noted that the assessee could not substantiate the delay in accordance with law, and the Ld.CIT(A) had dismissed the appeal for non-appearance. However, in the interest of justice, the appeals were remitted back to the Ld.CIT(A) for filing a condonation petition.