ITAT Bangalore Judgments — April 2025

The Tribunal noted that the assessee had opted for the Vivad Se Vishwas Scheme and had paid the taxes as demanded. The Revenue's representative did not object to the withdrawal. Therefore, the Tribunal dismissed the appeal as withdrawn.

The Tribunal held that the CIT(A) erred by not properly serving notices on the assessee, especially since the assessee had opted out of email communication. The CIT(A) also failed to consider the Supreme Court decision cited by the assessee. Therefore, the appeal is restored to the file of the CIT(A) for a fresh decision on merits after proper notice.

The Tribunal condoned the delay in filing the appeal, citing the assessee's attempt to settle the dispute under the Direct Tax Vivad Se Vishwas Scheme and difficulties with electronic communication. The ex-parte order of the Ld.CIT(A) was set aside and the issue was restored for denovo consideration.

The Tribunal held that the presence of nominal members does not disentitle the assessee society from claiming deductions under Section 80P(2)(a)(i), following the Supreme Court judgment. Therefore, the assessee is entitled to the claimed deductions.

The Tribunal held that the additions were made on assumptions and presumptions without corroborative evidence. The retracted admission and loose sheets lacked evidentiary value, and the AO failed to establish a nexus between the seized material and the assessee's income for the relevant assessment years.

The Tribunal condoned the 205-day delay in filing the appeal, finding the reasons (death of tax practitioner, unawareness of e-portal) valid. It set aside the ex-parte order of the CIT(A) and remitted the issue back to the CIT(A) for fresh adjudication after hearing the assessee. The appeal was allowed for statistical purposes.

The Tribunal found that the issues were similar for both assessment years and decided to take them up together. The Tribunal noted that the assessee's claim for deduction for interest income as per Section 80P(2)(a)(i) and dividend income as per Section 80P(2)(d) was not raised before the lower authorities. Therefore, the Tribunal remitted the issues back to the AO for verification of the statutory requirements for deposit and to consider the deduction claims.

The Tribunal held that the AO failed to provide sufficient corroborative evidence to support the additions made based solely on the loose slips and retracted sworn statements. Citing a similar case (M/s. Emkay Hindusthan Infrastructure), the Tribunal emphasized that while statements under the Income Tax Act are vital, they require corroborative evidence, which was absent here. The Tribunal concluded that suspicion cannot substitute for evidence, and therefore, the additions made towards unaccounted income and under Section 40(a)(ia) were deleted.

The Tribunal observed that the assessee was not heard before the CIT(A). In the interest of justice, both the quantum appeal (ITA No. 2300/Bang/2024) and the penalty appeal (ITA No. 2301/Bang/2024) were restored to the file of the CIT(A) for fresh adjudication, with directions for the assessee to respond to notices.

The Tribunal, relying on the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd., held that the presence of 'C' class (nominal) members does not violate the mutuality concept, thus entitling the assessee to deduction under Section 80P(2)(a)(i). It also confirmed entitlement to deduction under Section 80P(2)(d). The CIT(A)'s order denying Section 80P(2)(a)(i) was set aside, and the remission to the AO was deemed unnecessary.

The Tribunal held that the additions were based on assumptions and presumptions without sufficient corroborative evidence. The seized materials, being loose slips and statements not fully supported by independent evidence or cross-examination, were not sufficient to sustain the additions.

The Tribunal held that the reassessment proceedings were based on invalid assumption of jurisdiction and incorrect information. The PCIT's order under Section 263 was not sustainable as the reassessment proceedings, which formed its foundation, were invalid. The Tribunal also found that the PCIT had not specified what further enquiries the AO should have made.

The Tribunal held that the CIT(E) did not confront the assessee with the findings of his inquiries regarding the vendor's non-existence and cancelled GST registration, denying the assessee an opportunity to present counter-evidence. Therefore, the matter was restored to the CIT(E) for fresh consideration.

The Tribunal held that the additions were based on assumptions and presumptions without sufficient corroborative evidence. The seized materials, particularly loose slips, lacked specific details and were not adequately verified. The Tribunal noted that the sworn statements were not independently corroborated and relied on the principle that mere suspicion or unverified entries cannot form the basis of an addition.

The Tribunal noted that the documents were submitted to the ITO (Exemption) and not directly to the CIT(E). The case was remitted back to the CIT(E) for fresh consideration, with a direction to provide a reasonable opportunity to the assessee to submit documents.

The Tribunal condoned the delay of 255 days in filing the appeal before it, considering the mistakes of the counsel. Furthermore, the Tribunal condoned the delay of 124 days in filing the appeal before the CIT(A), acknowledging the impact of the COVID-19 pandemic and the fear gripping the nation.

The ITAT condoned the delay in filing the appeal before the CIT(A), finding it to be in the interest of justice, citing the precedent of Collector, Land Acquisition vs. Mst. Katiji. The tribunal remitted the issue of foreign tax credit back to the Assessing Officer (AO) for a fresh decision after due verification, directing the AO to decide the issue as per law.

The Tribunal held that the CIT(A) had correctly deleted the addition made by the AO. The Tribunal noted that the estimated income offered during the search was not consistently applied by the AO and that the audited book results, accepted by the AGM and ROC, should generally be accepted. The estimated income was also stated to be without incriminating documents, contradicting an earlier CBDT instruction.

The Tribunal held that the CIT(E) had not properly considered the facts and documents submitted by the assessee, including financial statements and evidence of running an ITI college. The CIT(E) also failed to provide a personal hearing. Therefore, the Tribunal set aside the CIT(E)'s orders.

The Tribunal held that the CIT(A) had correctly decided the appeal in favor of the assessee. They found no infirmity in the CIT(A)'s order, noting that the estimated income offered during the search was not consistently applied by the AO and that the books of accounts were audited and accepted. The Tribunal also noted that the issue of additional income offered towards referral fees was not raised before the CIT(A).

The Tribunal noted that while the assessee claimed to have submitted documents, they were not submitted before the appropriate authority (CIT(E)). The appeals are remitted back to the CIT(E) for fresh consideration with an opportunity for the assessee to submit documents and be heard.

The Tribunal held that the notices under Section 148 and the order under Section 148A(d) were invalid because the prior approval was not obtained from the competent authority as required by Section 151 of the Act. Specifically, for reassessment proceedings initiated beyond three years from the end of the assessment year, approval should be from the Principal Chief Commissioner or Chief Commissioner, not the PCIT.

The Tribunal recorded the submission from the authorized representative and granted permission to withdraw the appeal. Consequently, the appeal was dismissed as withdrawn.

The Tribunal noted that the assessee had opted for the Direct Tax Vivad Se Vishwas Scheme, 2024. Given this, the Tribunal found no purpose in continuing the appeal proceedings.

The Tribunal held that the CIT(E) did not confront the assessee with the findings of his enquiries, denying the assessee an opportunity to present counter-evidence. Therefore, the matter was restored to the CIT(E) for fresh consideration after giving the assessee an opportunity of hearing and to verify the submitted evidence.

The ITAT, relying on the Hon'ble Supreme Court's judgment in `Mavilayi Service Co-operative Bank Ltd. v. CIT`, held that the mere presence of "C" class or nominal members does not disentitle a co-operative society from claiming deduction under Section 80P(2)(a)(i). The Tribunal set aside the CIT(A)'s findings on the mutuality issue and held that the assessee is entitled to deductions under both Section 80P(2)(a)(i) and Section 80P(2)(d).

The Tribunal held that the presence of nominal members does not disentitle the assessee society from claiming deduction under section 80P(2)(a)(i) and 80P(2)(d) of the Act, following a Supreme Court judgment. Therefore, the assessee is entitled to the claimed deductions.

The Tribunal held that while the assessee's stand was contradictory, it was mandatory for the assessee to be heard. Therefore, the appeals were restored to the CIT(A) with a direction to issue one more notice via email and decide the issues on merits.

The tribunal held that the CIT(A)'s finding that the assessee had not filed his return of income was incorrect, as the assessee had filed the return in response to the notice u/s 148. Consequently, section 249(4)(b) was wrongly applied.

The Tribunal held that additions cannot be made based solely on loose sheets or uncorroborated documents without any supporting evidence. The retracted statement of the Managing Director was also not given credence. The Tribunal found that the impounded materials lacked specific details and that the AO failed to establish a nexus or provide cogent evidence connecting these materials to the assessee's undisclosed income.

The Tribunal noted that the issue required verification at the Assessing Officer (AO) level. Therefore, the matter was remitted back to the jurisdictional AO to provide a reasonable opportunity of being heard to the assessee and allow TDS credit as per law.

The Tribunal held that the CIT(E) had not properly considered the facts and documents submitted by the assessee. The Tribunal noted that the assessee had indeed commenced charitable activities by establishing an ITI college and that the financial statements supported the application of income towards its objects. Furthermore, the CIT(E) had not granted a personal hearing.

The Tribunal condoned the delay in filing the present appeal, citing the demise of the assessee's authorized representative and the illness of the previous AR as valid reasons. Considering these circumstances, the Tribunal found the assessee's explanations for non-appearance before the Ld.CIT(A) to be genuine.

The Tribunal found that the CIT(A) erred in allowing the appeal based on documents not presented to the AO. The Tribunal set aside the CIT(A)'s order and remitted the issue to the AO for de novo consideration.

The Tribunal found that the AO's estimation of 25% GP was arbitrary and unreasonable, considering the nature of the business. The CIT(A) had previously directed the AO to adopt a net profit rate of 12.5% and accepted that hire charges formed part of the total turnover. The Tribunal, considering the profit margins in past years and the nature of the business, directed that the net profit be estimated at 9% of the gross receipts.

The Tribunal found that the assessee made genuine, continuous efforts to resolve the issue, and the CPC's disallowance without prior notice denied an opportunity to be heard. Recognizing the arguable nature of the deduction claim and to prevent prejudice to the co-operative society, the Tribunal condoned the significant delay, set aside the CIT(A)'s order, and remitted the matter for a fresh decision on merits after hearing the assessee.

The Tribunal observed that if the funds were deposited as a mandatory requirement under the Karnataka Co-operative Societies Act, the interest and dividend income would be eligible for Section 80P deduction. Since this crucial aspect was not adequately verified by the lower authorities, the Tribunal remitted the issues back to the AO to verify the factual claim. If found mandatory, the deduction under Section 80P(2)(a)(i) or 80P(2)(d) should be allowed; otherwise, the income should be assessed under Section 56 with eligible deductions under Section 57.

The Tribunal held that the 'other discounts' were allowable as they were substantiated with ledger accounts and invoices, despite not being reflected in the original bills. Regarding Section 45(4), the Tribunal found that no transfer of capital assets occurred and thus the addition was not sustainable.

The Tribunal held that the disallowance of 'other discounts' was incorrect as the assessee had provided sufficient substantiation, and the discount was allowed at the time of payment realization. Regarding the addition under Section 45(4), the Tribunal found that there was no transfer of assets or benefit to the new partner, and thus the provisions of Section 45(4) were not applicable, relying on various High Court and Supreme Court decisions.

The Tribunal held that the write-off of advances to the subsidiary was an allowable expenditure under Section 37(1) of the Income Tax Act. The advances were made for the expansion of the assessee's business, and the write-off was a bona fide commercial decision due to the adverse impact of the COVID-19 pandemic on the hospitality industry.

The Tribunal held that the write-off of advances to the subsidiary was allowable under Section 37(1) of the Act. The Tribunal considered the facts that the advances were made for business expansion, the subsidiary was facing financial difficulties, and the write-off was a commercial decision. The Tribunal also noted that disallowing the write-off would lead to double addition. Therefore, the appeal filed by the Revenue was dismissed.

At the time of hearing, the assessee's counsel indicated contemplation of settlement under the VSV Scheme, 2024. Consequently, the Tribunal dismissed the appeal as withdrawn, granting liberty to refile if the issue remains unresolved.

The Tribunal noted that the assessee had settled the dispute under the DTVSV Scheme, 2024, and all required forms were processed. In light of the settlement, and as per the provisions of Section 91(2) of the DTVSV Scheme, the appeal was dismissed as withdrawn.

The Tribunal condoned the delay in filing the appeal before the CIT(A) due to sufficient cause, including technical glitches and the COVID-19 pandemic. The issue of exemption under Section 11 was remitted back to the CIT(A) for fresh consideration.

The Tribunal held that the inter-connect service charges paid by Indian telecom operators are not taxable as royalty, following the decisions of the Karnataka High Court and the Supreme Court in similar cases. The order of the CIT(A) was upheld.

The ITAT condoned the delay in filing the appeal, accepting the assessee's bona fide belief in pursuing a rectification remedy. On merits, the ITAT held that since the assessee was subject to mandatory audit under state law, it was entitled to the CBDT's extended due date of 31.10.2019. Thus, the return filed on 25.09.2019 was timely, and the Section 80P deduction was allowable.

The Tribunal noted that as per Section 91(2) of the DTVSV Scheme, 2024, appeals pending before the ITAT are deemed withdrawn upon issuance of a certificate. Since the necessary certificates were issued, the Tribunal considered the appeals as withdrawn.