ITAT Bangalore Judgments — December 2024

The Tribunal noted that the interest income in question was not received from members for providing credit facilities, but from surplus investments. Citing Supreme Court judgments, it was held that such interest income falls under 'other income' and not 'profits and gains of business' attributable to the society's core activity. The Tribunal directed the AO to verify if interest/dividend was received from investments with co-operative societies for potential deduction under Section 80P(2)(d).

The Tribunal held that the delay in filing the appeal was due to a reasonable cause and that in such cases, substantial justice should be preferred over technicalities. Citing Supreme Court and High Court judgments, the Tribunal found that the delay was not deliberate and that refusing to condone it would defeat a meritorious case. Therefore, the delay was condoned, and the appeal was admitted for adjudication.

The Tribunal held that the delay of 38 days was sufficiently explained by the chartered accountant's affidavit, which indicated a misapprehension rather than carelessness. The Supreme Court's decision in 'Collective Land Acquisition' was cited to support a liberal approach to condoning delays in the interest of substantial justice.

The assessee has opted for resolution under the Vivad Se Vishwas Scheme, 2024, which requires the withdrawal of pending appeals. The AR submitted that the appeal pending before the Tribunal should be permitted to be withdrawn in compliance with the scheme.

The Tribunal noted that the assessee did not get an effective opportunity of hearing before the Assessing Officer and the Dispute Resolution Panel. Additional evidence was not admitted by the DRP due to procedural non-compliance and time constraints.

The CIT(A) allowed the assessee's appeal, holding that interconnect charges are not royalty, relying on decisions of the Hon'ble Karnataka High Court and the dismissal of SLP by the Supreme Court. The Tribunal noted that identical issues in similar cases have been decided in favor of the assessee by coordinate benches.

The Tribunal held that since the delay in filing Form 10 was condoned by the CIT(Exemptions), the first ground of appeal regarding accumulation of income should be allowed. For the second ground concerning depreciation, the matter was restored to the AO for verification of whether claiming depreciation would amount to double deduction.

The Tribunal condoned the delay in filing the appeal. It noted that the Ld.CIT(A) had passed an ex-parte order. While the assessee submitted a paper book, the Tribunal did not go into the merits of the issue due to the ex-parte nature of the lower authority's order.

The Tribunal noted that while the assessee adopted PCM, it failed to substantiate its claims regarding total construction cost, revenue recognition, and expenditure allocation. The audited accounts were found to be sketchy and lacked proper evidence. The Tribunal directed the AO to re-examine the issue after the assessee substantiates various project-specific details.

The Assessing Officer (AO) treated the cash deposit as unexplained investment under Section 69 of the Income Tax Act. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee's appeal, noting that documents filed were in vernacular and without translation, and no application was made under Rule 46A for admitting additional evidence. The Tribunal restored the matter to the AO for fresh examination.

The Tribunal held that the CIT(A)'s decision that sufficient opportunities were granted was incorrect, given that assessment proceedings occurred during the COVID-19 period. Therefore, the matters were restored to the AO for fresh decision.

The Tribunal held that the CIT(A)'s decision that sufficient opportunities were granted was incorrect, considering the assessment proceedings occurred during the Covid-19 period. Therefore, the matters were restored to the file of the AO for fresh consideration.

The assessee expressed a desire to withdraw the present appeal. The Departmental Representative did not object to this withdrawal. The Tribunal perused the record and observed that Form 2 contained details of the disputed tax and the settled amount.

The Tribunal held that the AO had consciously decided not to levy penalty under section 271(1)(c) as no addition was made to the returned income and penalty u/s 271F was initiated. The provisions of section 271(1)(c) are not mandatory. Therefore, the action of the PCIT under section 263 was not justifiable.

The Tribunal considered the rival submissions and observed that the matter requires fresh consideration by the AO. The AO is directed to verify the availability of TDS credit, examine the TDS certificate from the employer, and consider the updated Form 26AS.

The Tribunal held that the assessee had provided overwhelming documentary evidence, including agreements, invoices, bank statements, vendor's GST registration, and MCA data, to substantiate the genuineness of the expenditure. The Tribunal also noted that Section 69C deals with the source of expenditure, not its authenticity. Relying on judicial precedents, the Tribunal stated that the assessee cannot be held responsible for the non-appearance of the vendor before the AO, especially when the assessee has provided sufficient evidence.

The Tribunal noted that the assessee could not substantiate the entire opening cash balance and deposits from relatives and friends. However, considering the assessee's status and past practices, a portion of the opening balance was accepted. The addition on account of turnover was upheld.

The Tribunal found that the assessee deserves another opportunity to substantiate its claim that the cash deposit was received from its members. Directions were given to the assessee to submit member details and KYC information, and to produce the cash book to demonstrate the opening balance.

The Tribunal held that the CIT(A)'s order was in clear violation of Rule 46A of the IT Rules as additional evidence was admitted without giving the AO an opportunity. The Tribunal restored the matter to the file of the AO for fresh examination, directing the assessee to submit details within 90 days.

The Learned A.R. for the assessee did not press the grounds of appeal during the hearing. Consequently, the appeal was dismissed as withdrawn.

The Tribunal condoned the delay in filing the appeal, considering the explanation provided by the assessee to be bonafide and a sufficient reason. The Tribunal noted that the author of the trust is elderly and has limited access to communication, and the trust lacks employees for administrative work. While condoning the delay, the Tribunal decided to grant the assessee one more opportunity to represent its case before the CIT(Exemptions).

The Tribunal found that the CIT(A) had issued notices to an incorrect email address which was not provided by the assessee in its Form 35. Therefore, the assessee was denied an opportunity of being heard. The Tribunal held that the appeal needs to be restored to the file of the CIT(A) for a fresh adjudication.

The Tribunal noted that the issue depends on how the evidence is viewed and whether the assessee can establish that the cash deposit is from business sales, which are already offered for taxation. The AO had accepted the book results of the Bar & Restaurant business.

The Tribunal noted a mismatch between the turnover reported in the return and contract receipts in Form 26AS. Despite notices under Section 133(6) to M/s. SML Electricals Pvt. Ltd., no response was received. The CIT(A) had also not called for reports from the contractee. Considering the lack of sufficient evidence and the interest of justice, the Tribunal decided to remit the issue back to the AO for fresh consideration.

The CIT(A) deleted the addition related to M/s. SML Electricals Pvt. Ltd. but upheld other additions made by the AO. The Tribunal noted a mismatch in turnover reported and contract receipts, lack of response from M/s. SML Electricals Pvt. Ltd. to AO's notice, and the assessee's inability to provide documentary evidence for other additions.

The Tribunal held that voluntary transfer pricing adjustments or ALP adjustments made pursuant to an APA, resulting in increased profits, are eligible for deduction under Section 10AA. The proviso to Section 92C(4) does not bar such a claim as it applies only to adjustments made by the Transfer Pricing Officer (TPO).

The Tribunal held that while the assessee may not have been authorized to receive SBNs post-demonetization, the source of the cash deposit was accounted sales made by the assessee, which were not disputed by the AO or CIT(A). The Tribunal relied on a Supreme Court decision stating that no addition can be made if sales are shown and undisputed.

The Tribunal held that the AO's estimation of profit at 10% was arbitrary and unsupported, upholding the CIT(A)'s reduction to 6.05%. The addition for unexplained investment in property was deleted as the AO failed to provide evidence beyond the registry value. The disallowance of commission expenses was reversed as the amount was contractually retained and never received by the assessee, thus not attracting TDS liability. The addition for unexplained jewellery was deleted by applying the limits prescribed by CBDT Circular No. 1916.

The Tribunal noted that neither the AO nor the CIT(A) considered relevant CBDT circulars for verifying demonetized cash deposits and did not provide adequate opportunity to the assessee. Therefore, the issue was remitted back to the AO for fresh consideration after allowing the assessee an opportunity to present evidence and in light of relevant CBDT instructions.

The Tribunal found that the CIT(A)/NFAC passed the order after a significant delay of over 4 years without providing a reasonable opportunity of being heard to the assessee, which is a violation of natural justice principles. Therefore, the Tribunal decided to remit the matter back to the CIT(A)/NFAC.

The assessee contended that the ALP determined in MAP proceedings between Indian and US competent authorities for US-based AEs should also be applied to non-US based AEs. The Tribunal noted that the assessee had settled disputes for both segments under the MAP and decided to refer the matter back to the TPO for a fresh TP study in light of adjustments accepted with US-based entities.

The Tribunal found sufficient cause for the delay in filing the appeal before the CIT(A), relying on the judgment in Collector, Land Acquisition Vs. MST. Katiji and Others. The delay was condoned, and the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal noted that the addition was made due to the assessee's non-response and exploitation of their background. The Tribunal referred to CBDT Circular No. 14/XL-35 dated 11.04.1955, emphasizing that tax officers should not take advantage of an assessee's ignorance and should assist them in determining correct income. The Tribunal found that the AO erred by considering gross receipts and not verifying the correct income.

The Tribunal noted the delay and the reasons provided by the assessee, emphasizing the need for justice and fair play. It was of the opinion that the assessee deserved another opportunity to present their case.

The Tribunal condoned the delay in filing the appeal due to a dispute among partners. However, noting the assessee's consistent non-appearance before the lower authorities, the Tribunal restored the matter to the AO for fresh adjudication with a cost of Rs. 50,000 per assessment year.

The Tribunal noted that the assessee had entered into Mutual Agreement Procedures (MAP) with the competent authority. The amounts disputed, including "information & technology fees" and "commission on sales," were settled and accepted by the assessee in the MAP proceedings. Therefore, any protective additions made by the AO or DRP were considered not tenable.

The Tribunal held that since the assessee settled its dispute with the competent authority under MAP and accepted the adjustments, the protective additions made by the AO and DRP were not tenable and deserved to be deleted. The confirmed/settled additions under MAP have precedence over protective additions.