ITAT Bangalore Judgments — November 2024

The Tribunal held that the assessee had a reasonable cause for the delay in furnishing the tax audit report as it was the first year of audit and the assessee was under the honest and bonafide belief that the report could be filed along with the return. The Tribunal found that the breach was technical and without any loss to the exchequer.

The Tribunal noted that in the assessee's own case for subsequent assessment years, the ITAT had allowed similar expenditure as revenue expenditure. Following this precedent and in the absence of any distinguishing facts, the Tribunal upheld the CIT(A)'s order.

The Tribunal noted that the CIT(A) had passed the order before the issue of a relevant CBDT circular regarding condoning delays in filing Form 10B. Considering the circular and cited judgments, the Tribunal decided to remit the issue back to the jurisdictional AO for fresh consideration, ensuring the assessee is given a sufficient opportunity of hearing.

The Tribunal held that the assessee is entitled to deduct expenses incurred in earning interest income from co-operative banks under Section 57 of the Income Tax Act, 1961. However, the burden of proof lies with the assessee to substantiate these expenses with adequate evidence.

The Tribunal held that while income from deposits with cooperative societies may be eligible for deduction, income from deposits with cooperative banks, especially those holding an RBI license and functioning like commercial banks, is not eligible for deduction under Section 80P(2)(d) due to the exclusion provided by Section 80P(4). However, if the deposits were made due to a statutory compulsion under the Karnataka Cooperative Societies Act, the income might be considered business income and eligible for deduction under Section 80P(2)(a)(i).

The Tribunal noted that in the assessee's own case for subsequent assessment years, the ITAT had decided the issue in favor of the assessee, allowing such expenditure as revenue expenditure. Since no contrary material was presented by the revenue, the Tribunal respectfully followed the ITAT's order.

The Tribunal condoned the delay of 51 days for AY 2018-19 and 34 days for AY 2019-20, stating that substantial justice should be preferred over technical considerations. The appeals were admitted for adjudication on merits.

The Tribunal acknowledged the delay in filing the appeal and the audit report, but condoned the delay in filing the appeal itself. However, it was held that the delay in filing the statutory Form 10B could not be condoned by the appellate authority and that the assessee was not eligible for exemption under Section 11 due to non-compliance with the mandatory filing requirements. The Tribunal set aside the CIT(A)'s order and restored the file to the AO to consider the condonation petition pending before the CIT(Exemptions).

The Tribunal held that the addition for closing stock of eggs was made without considering that the goods were perishable and sold immediately after purchase, and evidence of sales was provided. For the addition related to closing stock of maize, the Tribunal found that the AO's reasoning was based on statistical analysis without considering the practicalities of a small poultry farm and the burden placed on the assessee to prove consumption, especially when purchases were not doubted and no credit was given for opening stock in the subsequent year.

The Tribunal held that the levy of penalty under Section 271B is not automatic and requires the absence of a reasonable cause, as per Section 273B. The assessee has demonstrated a reasonable cause for the failure to file the audit report on time due to unforeseen circumstances. The Tribunal also noted that the assessee had committed a technical breach without any loss to the revenue.

The Tribunal noted that the assessee did not file proper submissions with evidence before the CIT(A) and the AO's additions were based on evidence. However, considering the interest of justice and equity, and the assessee's claim of not being aware of appellate proceedings before CIT(A), the issue was remitted back to the CIT(A) for fresh consideration.

The Tribunal noted that the assessee is undergoing insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, and a moratorium has been declared. Under Section 14 of the IBC, no suits can continue against the corporate debtor during the moratorium period.

The Tribunal held that the assessee is entitled to deduct expenses incurred in earning interest income from co-operative banks under Section 57 of the Income Tax Act. However, the burden of proof lies with the assessee to substantiate these expenses with evidence.

The Tribunal held that two appeals for the same assessment year against the same order are not admissible simultaneously. Consequently, ITA No. 1940/Bang/2024 was dismissed as infructuous, and ITA No. 1941/Bang/2024 was admitted for adjudication. Regarding the grounds raised, the Tribunal ruled that the CIT(A) acted within his powers under Section 250(4) by not treating the submitted documents as additional evidence and that his deletion of the addition under Section 68 was factually supported. For the second ground concerning Section 80P(2)(d) deduction, the AO was directed to verify if the interest was earned from investments in co-operative societies, with a direction for de-novo consideration if the income was classified under 'Income from other sources'.

The Tribunal condoned the delay in filing the appeal before the CIT(A) considering the assessee's advanced age and the apparent strength of the case on merits. The Tribunal found that the CPC likely made a double addition of income, which was not verified by the authorities below.

The Tribunal condoned the delay in filing the appeal, acknowledging the reasonable cause presented by the assessee regarding their employees' unfamiliarity with online procedures. The Tribunal restored the matter to the file of the AO for fresh examination, directing the assessee to provide details of cash sources and member KYC.

The Tribunal held that for unabated assessment years, additions can only be made if incriminating material is found during a search. In this case, the revenue failed to demonstrate any incriminating material related to the rental income, and the AO's addition was based on pre-existing records and FMV estimation, which is not sufficient for an addition in an unabated assessment year.

The Tribunal noted that penalty under section 271B of the Act cannot be levied if the assessee has not maintained books of accounts. It relied on a jurisdictional High Court judgment stating that if no books of accounts are maintained, the question of auditing does not arise. Therefore, penalty under section 271B cannot be imposed.

The Tribunal held that the assessee trust was eligible for exemption under Section 11 for the assessment year in question, as its registration under Section 12AA was granted while assessment proceedings were pending, and its activities remained consistent. The rental income was therefore to be treated as income derived from property held under trust.

The Tribunal observed that the CIT(A) had not passed the order in accordance with the provisions of section 250(6) of the Act, and sufficient opportunity may not have been granted. Therefore, the matter was restored to the CIT(A) for adjudication afresh.

The Tribunal noted that the assessee, a senior citizen, had received retirement benefits of Rs.20,38,444 which were deposited in his bank account. Considering the substantial withdrawals made before demonetization and the assessee's age, the Tribunal decided to condone the delay in filing the appeal.

The Tribunal acknowledged that the assessee could not submit the details due to circumstances beyond their control, despite holding 80G recognition since 2008. Granting one more opportunity would not prejudice any party.

The Tribunal noted that the assessment order did not record any satisfaction with respect to the twin charges for penalty. The penalty notice was found to be defective, similar to the case cited from the Karnataka High Court. The Tribunal restored the appeal to the AO for a fresh decision after allowing the assessee to substantiate their legal arguments and merits.

The Tribunal, relying on a High Court judgment, dismissed the claim for deduction under section 80P(2)(d) for interest income. However, it held that such income is taxable under "income from other sources" and the attributable cost is allowable under section 57 of the Act.

The Tribunal noted that the appeal was decided ex-parte without hearing the assessee. The assessee's representative argued that hearing notices were not received on the correct email ID, leading to non-appearance. The Tribunal accepted the undertaking that the assessee would appear if granted another opportunity.

The Tribunal noted that the assessee was not given proper opportunity to produce documents and that an employee had left the company. The Tribunal decided to remit the issue back to the AO for denovo consideration, with a cost imposed on the assessee.

The Tribunal noted that the appeals were filed with a delay but condoned it due to reasonable cause. The Tribunal found that the appeals before the CIT(A) were not properly appreciated and, in the interest of justice, remitted the issue back to the AO for denovo consideration with a cost of Rs. 10,000/- for each assessment year.

The Tribunal noted that the assessee had furnished purchase bills, e-way bills, and bank payment records. While the Commercial Tax Department alleged bogus supplies, the AO did not conduct independent verification. The Tribunal, in the interest of justice, decided to grant the assessee another opportunity to substantiate the genuineness of the purchases.

The Tribunal held that Section 115JB is not applicable to nationalized banks, as they are not considered 'companies' under the Act, following a Special Bench decision. The disallowances related to CSR expenditure and penalties were also found to be allowable as business expenditure.

The Tribunal held that Section 115JB is not applicable to nationalized banks, as they are not considered 'companies' under the Act, referencing a Special Bench order. The disallowance of CSR expenditure was allowed based on High Court judgments, as the expenditure was incurred voluntarily and for business purposes. Penalties imposed by the RBI were also allowed as revenue expenditure, being compensatory and not punitive. The issue of sundry assets written off was remitted to the Assessing Officer for de novo consideration.

The Tribunal held that for unabated assessment years, additions cannot be made under Section 153A of the Income Tax Act in the absence of incriminating material found during a search. The Revenue failed to demonstrate any such material related to the rental income. The AO's addition was based on pre-existing records and estimation, which is insufficient.

The Tribunal noted that the assessee had not maintained proper books of accounts and failed to respond to notices. However, considering the facts and circumstances, and in the interest of justice, the Tribunal decided to provide one more opportunity to the assessee to represent their case. The penalty under Section 271B was quashed based on the High Court's judgment.

The Tribunal held that the issue of interest income eligibility for deduction under section 80P(2)(d) is no longer res-integra in light of the High Court's judgment in Totgars Society. Therefore, the claim for deduction under section 80P(2)(d) was dismissed. However, the Tribunal considered the income to be taxable under 'income from other sources' and allowed the cost attributable to such income under section 57.

The Tribunal condoned the delay attributable to the COVID period and also the remaining delay of 97 days due to the Managing Partner being a Senior Citizen. The case was set aside to the file of the CIT(A) for fresh adjudication on merits.

The Tribunal noted that the assessee had not received hearing notices due to incorrect email ID being used, leading to an ex-parte order by the CIT(A). The assessee undertook to appear before the CIT(A) if given another opportunity.

The Tribunal held that Rule 128(9) of the Income-tax Rules, 1962, does not provide for the disallowance of FTC due to a delay in filing Form 67. It was further held that filing Form 67 is a directory requirement and not mandatory. The Tribunal also noted that DTAA provisions override the Act and Rules cannot be contrary to the Act.