Loading ITAT cases…
132 orders · Page 3 of 3
The Tribunal held that the addition of Rs. 23 lakhs made by the AO was purely based on assumptions and surmises, relying solely on the statement of Mr. Nagaraj Eti without any corroborative evidence. The Tribunal noted that Mr. Nagaraj Eti's recollection of amounts received from miners was approximate and based on memory. The Revenue failed to conduct further inquiries by examining the entities from whom cash was allegedly received. The Tribunal found that the Revenue had not substantiated the amounts received from miners with any tangible material. Consequently, the Tribunal directed the AO to delete the addition made on a notional basis without cogent evidence. As the quantum additions were deleted, the penalty appeals were rendered infructuous and did not survive. The grounds raised by the assessee were allowed.
The Tribunal upheld the decision of the learned Additional/Joint CIT(A) and dismissed the assessee's appeal. The Tribunal found that the explanation offered by the assessee for the 899-day delay in filing the appeal before the lower appellate authority was neither reasonable nor bona fide. The Tribunal agreed with the lower appellate authority that the assessee failed to demonstrate a sufficient cause for the belated filing. Specifically, the Tribunal rejected the assessee's contention that he was regularly following developments in leave encashment cases and only became aware of favorable orders after consulting professionals, stating this was not a sufficient cause for such a substantial delay. Consequently, the Tribunal was not inclined to condone the delay of 899 days in filing the appeal before the learned Additional/Joint CIT(A). The ratio decidendi is that a significant delay in filing an appeal, even when substantial justice is invoked, requires a demonstrably reasonable and bona fide cause, and mere belated discovery of favorable legal developments after a prolonged period of inaction is generally not considered sufficient cause.
The Tribunal held that the order passed under Section 148A(d) dated 28.07.2022 and the consequential notice issued under Section 148 dated 28.07.2022 are illegal and bad in law for being violative of the provisions of Section 151(ii) of the Act. The Tribunal relied on the Supreme Court's decision in UPI v. Rajeev Bansal. It reasoned that for AY 2017-18, the period of three years from the end of the assessment year expired on 31.03.2020. Due to the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), the extended period for obtaining sanction under Section 151(i) was up to 30.06.2021. However, the order under Section 148A(d) was passed on 28.07.2022, and the notice under Section 148 was issued on the same day, after the expiry of the extended period. Therefore, as per Section 151(ii), the approval should have been obtained from the Principal Chief Commissioner or Chief Commissioner, not the Principal Commissioner. The Tribunal concluded that non-compliance with Section 151(ii) vitiates the AO's jurisdiction to issue the notice under Section 148. Consequently, the impugned order and notice were quashed and set aside, and all consequential proceedings were also set aside. The appeal of the assessee was allowed.
The Tribunal accepted the assessee's request to withdraw the present appeal for the assessment year 2022-23. The reasoning was based on the assessee's submission that the appeal was a duplicate, having been filed again inadvertently after an initial appeal against the same order had already been lodged. The Revenue did not oppose this request. Consequently, the Tribunal dismissed the appeal as withdrawn. No specific issue regarding the merits of the assessment or the order of the CIT(A) was decided. The operative direction was to dismiss the appeal as withdrawn.
The Tribunal held that the AO rightly levied penalty under Section 271(1)(c) of the Act. Regarding the first issue, the Tribunal found that the assessee not only concealed particulars of income but also furnished inaccurate particulars. The AO had specified both limbs in the show cause notice and penalty order, thus there was no breach of natural justice. The judgments relied upon by the assessee were distinguished. The Tribunal also noted that the assessee had an opportunity to be heard and provided a written reply, indicating awareness of the charges. Regarding the second issue, the Tribunal held that the assessee failed to prove its explanations were bonafide and that all material facts were disclosed, thus failing the test prescribed under Explanation 1 to Section 271(1)(c). The assessee's admission of income post-detection did not absolve it from the penalty provisions. The AO rightly levied the minimum penalty of Rs. 66,89,000/-. No issue was expressly left undecided.
The Tribunal held that the notice issued under Section 148 of the Income Tax Act, 1961, dated 27.07.2022, was indeed barred by limitation by 44 days. Applying the principles laid down by the Supreme Court in Union of India Vs. Rajeev Bansal, the Tribunal calculated the surviving period for issuing the notice. The computation showed that the last date for issuing the notice under Section 148 was 14.06.2022, whereas the actual notice was issued on 27.07.2022. The Tribunal noted that the assessee did not file a response to the show cause notice, and the period of two weeks granted for the reply also needed to be excluded. Consequently, the order passed under Section 148A(d) and the notice issued under Section 148, both dated 27.07.2022, were quashed and set aside as being barred by limitation. All consequential proceedings were also quashed and set aside. The Tribunal did not decide on the merits of the addition under Section 50C, as the entire reassessment proceedings were vitiated by the limitation issue.
The Tribunal held that the excess cash and excess stock of gold and silver jewellery found during the survey pertained to the assessee's business and were not undisclosed income. The survey was conducted during the relevant financial year (2016-17), and the accounts were not yet finalized. The assessee duly recorded the excess cash in his capital account and the excess stock in his trading account when finalizing his financial statements for the year ending March 31, 2017. No evidence suggested sources of income other than the declared business. Therefore, the provisions of Sections 69/69A/69B were not applicable. The addition made by the AO under these sections was deleted. The Tribunal allowed the assessee's appeal on this issue. Ground No. 3 was rendered academic and kept open.
The Tribunal noted that the AO had made both substantive and protective additions of the same amount, Rs. 1,03,00,000/-, which is contrary to the principle of avoiding double addition. The Tribunal observed that the Revenue's appeal was primarily against the CIT(A)'s direction to tax only the net profit on cash receipts of Rs. 1,03,00,000/-. The assessee's AR submitted that the tax effect in the Revenue's appeal was below the monetary limit of Rs. 60,00,000/- prescribed by the CBDT. The Tribunal computed the tax effect based on the restriction of the addition to net profit and found it to be Rs. 33,41,835/-, which is below the monetary limit. Therefore, the Revenue's appeal was dismissed on the grounds of low tax effect. Consequently, the assessee's cross-objection was dismissed as infructuous. The Tribunal granted liberty to the Revenue to seek withdrawal if the appeal falls under exceptions to the CBDT circular.
The Tribunal held that the interest earned by the society on investments in banks is attributable to the activity of carrying on business in banking or providing credit facilities to its members, and thus, is eligible for deduction under section 80P(2)(a)(i) of the Act. The Tribunal respectfully followed the decisions of the Hon’ble jurisdictional High Court of Karnataka in cases like Tumkur Merchants Souharda Credit Co-operative Ltd. and distinguished the Supreme Court's decision in Totgars Co-operative Sale Society Ltd. vs. ITO, noting that the latter dealt with section 80P(2)(d) and not section 80P(2)(a)(i). The Tribunal found that the authorities had mixed up issues related to different sub-sections of section 80P. Consequently, the Tribunal directed the AO to allow the entire interest income as a deduction under section 80P(2)(a)(i) as claimed by the assessee. The issue regarding the status of the assessee as an AOP and the violation of section 250(6) was implicitly addressed by allowing the deduction, thereby not upholding the AO's reasoning on mutuality.
The Tribunal held that the appeal of the assessee is dismissed. The core issue revolved around the allowability of deduction under Section 80P when the return of income was filed belatedly. The Tribunal referred to Section 80AC of the Income Tax Act, as amended by the Finance Act, 2018, which clearly stipulates that no deduction under Part C of Chapter VI-A of the Act shall be allowed unless the return of income is furnished on or before the due date specified under Section 139(1). The Tribunal noted that the assessee had not filed its return within the due date for the Assessment Year 2019-2020 and had filed it belatedly. The Tribunal found that Section 80AC limits the allowability of deductions to returns filed within the due date and does not extend to returns filed belatedly. The Tribunal also relied on the Madras High Court's decision in AA520 Veerappampalayam Primary Agricultural Co-operative Credit Society Ltd. Vs. DCIT, which held that deductions under Part C of Chapter VI-A are admissible only if the return is filed within the prescribed due date, and no claim under these provisions would be admissible in the case of a belated return. Therefore, the Tribunal concluded that the deduction under Section 80P could not be allowed.
The Tribunal decided the issues as follows: Regarding Ground No. 4 (unexplained investments under Section 69): The judgment excerpt does not contain the Tribunal's decision on this ground. It is noted that the assessee raised grounds regarding the addition of Rs. 50,56,000 on account of unexplained investments, but the provided text does not detail the Tribunal's finding or reasoning on this specific issue. Regarding Ground No. 5 (disallowance of labour charges): The judgment excerpt does not contain the Tribunal's decision on this ground. The assessee raised grounds concerning the ad hoc disallowance of labour charges amounting to Rs. 19,94,068, but the provided text does not detail the Tribunal's finding or reasoning on this specific issue. Regarding Ground No. 6 (unexplained cash credits under Section 68): The Tribunal found that the assessee received unsecured loans totaling Rs. 17,57,435, of which Rs. 1,93,304 from HDFC Bank was not added. The remaining Rs. 15,64,130 was treated as unexplained. The assessee claimed these were opening balances from the preceding financial year, supported by loan confirmations from four out of five parties and ledger accounts. However, the assessee failed to provide other documentary evidence like bank statements for the preceding year, and the balance sheet for that year was not on record. The Tribunal deemed it appropriate to grant one more opportunity to the assessee to furnish supporting documentary evidence. The issue was restored to the Jurisdictional AO for de novo adjudication, with a direction to delete the addition under Section 68 if it is found that the loan was not received in the year under consideration. Ground No. 6 was allowed for statistical purposes. Regarding Ground No. 7 (interest under Sections 234A, 234B, and 234C): This ground was held to be consequential in nature and did not require separate adjudication, given the decision on other grounds. Operative directions: The issue concerning Section 68 was restored to the AO for de novo adjudication. The appeal was partly allowed for statistical purposes.
The Tribunal noted that the AO rejected the revised cash book due to alleged changes and increased sales. The assessee contended that the initial cash book was incomplete and the revised one is correct and verifiable with audited accounts. For the addition of INR 19,40,830, the Tribunal restored the issue to the AO for de novo adjudication, directing the assessee to reconcile inconsistencies in the revised cash book and provide explanations. Regarding the cash deposits of INR 11,01,395, the Tribunal observed that the details relied upon by the assessee were not examined by the lower authorities. Therefore, this issue was also restored to the AO for de novo adjudication, with a direction to the assessee to explain and substantiate the claim of cash deposits and transfers. No order was to be passed without affording a reasonable opportunity of hearing. The impugned order was set aside, and the grounds were allowed for statistical purposes.
The Tribunal decided the issues as follows: 1. Regarding the TP adjustment, the Tribunal noted the communication from CBDT confirming a MAP resolution between India and Denmark, which relieved the entire TP adjustment. Consequently, the assessee was permitted to withdraw the grounds related to TP issues, and these were not adjudicated. 2. For the corporate tax grounds concerning the 20% disallowance of expenses (travel, miscellaneous, repairs, stores & spares), the Tribunal found the disallowance to be without basis and based on assumptions and surmises. The assessee had furnished detailed annexures, and the AO's remand report did not point out specific deficiencies. The Tribunal allowed the grounds raised by the assessee in respect of these disallowances. 3. On the issue of MAT credit under Section 115JAA, the Tribunal observed that the DRP had not adjudicated it as it was not related to the variations proposed by the AO. Considering the provision and the need for verification, the Tribunal remitted this issue to the AO for consideration. 4. Regarding interest under Sections 234A, 234B, and 234C, the AO was directed to compute it after giving effect to the order. The operative direction for the corporate tax grounds is the setting aside of the 20% disallowance.
The Tribunal held that the reassessment proceedings were valid. Regarding the addition, the Tribunal found that the AO was not justified in estimating the net profit at 8% of the turnover. The Tribunal noted that the AO had accepted the assessee's business of egg trading and the turnover of Rs. 9,05,02,400/-, and also accepted that the cash deposits of Rs. 7,14,99,300/- were from sale proceeds. The Tribunal emphasized that once cash deposits are accepted as sale proceeds, only the profit element remains taxable. Relying on the principle of consistency, as the AO had accepted a net profit of 0.62% for AY 2019-20 from the same business, and considering the competitive nature of the egg market with low margins, the Tribunal directed the AO to compute the net profit at 1% of the total turnover. This decision was influenced by the assessee's failure to submit complete documentation and to meet the ends of justice. The addition of Rs. 67,40,729/- was thus modified.
The Tribunal condoned the delay of 47 days, adopting a liberal and justice-oriented approach, noting the assessee's senior citizen status, reliance on a consultant, and the Revenue's lack of serious objection. Regarding the addition of Rs. 12,00,000, the Tribunal held that the assessee's explanation was reasonable and probable. It reasoned that the assessee's undisputed ownership of substantial agricultural land held for several years could not be disregarded, even if agricultural income was not explicitly shown in the ROI for the year under consideration. The Tribunal noted that the trading business commenced only during the year, and the Revenue had not brought any material to show any other source for the unexplained money. The fact that the AO accepted a portion of the deposit as explained further supported the assessee's claim. Therefore, the Tribunal set aside the CIT(A)'s finding and directed the AO to delete the addition of Rs. 12,00,000. The ground raised by the assessee was allowed.
The Tribunal condoned the delay of 71 days in filing the appeal before the CIT(A)/NFAC, finding the assessee's explanation that notices went to her email's spam folder to be plausible and a sufficient cause. The Tribunal admitted the appeal for adjudication on merits. Regarding the merits, both parties conceded that the assessee could not represent her case before the AO, leading to an ex-parte order and an addition of Rs. 11,22,000 under section 69A. In the interest of justice, equity, and fair play, the Tribunal decided to remit the entire issues in dispute back to the file of the AO for fresh adjudication. The Tribunal imposed a token cost of Rs. 2,000 on the assessee for continued negligence in responding to statutory notices. The assessee is directed to produce all relevant details and evidence before the AO, and a reasonable opportunity of being heard must be granted. The Tribunal explicitly stated that further default would not entitle the assessee to any leniency.
The Tribunal held that the notice under Section 148 of the Act in the present case must be treated as having been issued on 01.04.2021. The Tribunal noted that while the notice bore the date 31.03.2021 and was digitally signed on that date, the material placed by the assessee showed its receipt on the ITBA portal on 01.04.2021. Following the judgment of the Hon'ble Bombay High Court in Shreenath Finstock (P.) Ltd. v. Union of India, the Tribunal reasoned that the date of digital signature or the internal receipt registry does not establish the date of issuance when the electronic record shows transmission and receipt on a later date. The delay in triggering the transmission through the ITBA system is attributable to the Department. Consequently, the reassessment completed under the unamended provisions of Section 147 and 148 could not be sustained, as it should have been dealt with under the substituted reassessment regime effective from 01.04.2021. The reassessment order dated 29.03.2022 was set aside. The grounds relating to the addition on merits were left open as they did not require adjudication.
The Tribunal held that the NFAC had not considered the genuine reasons provided by the assessee for the delay in filing the appeal, which were supported by medical records. Therefore, the delay was condoned. On merits, the Tribunal noted that the AO's addition was based on an excel sheet seized from M/s. JM Jain group, which clearly mentioned the business name as 'Shri Collection', whereas the assessee's concern is 'Tanushree Exports'. The Tribunal found it unclear how the AO made the assessment in the assessee's name, especially since the assessee had not appeared before the AO or NFAC to present these facts. The Tribunal was satisfied that the issue required further examination by the AO, who had not conducted sufficient enquiry. Consequently, the orders of the AO and NFAC were set aside, and the issue was remitted to the AO for fresh consideration, including the disallowance under Section 40(a)(ia), with an opportunity for the assessee to be heard and produce documents.
On the first issue, the Tribunal held that the AO wrongly invoked Section 44AD as the assessee's turnover exceeded the prescribed limit. While the rejection of books of account was justified due to the non-maintenance of quantitative stock details and failure to furnish supporting bills, the estimation of profit at 8% was arbitrary. The Tribunal noted that the assessee had declared net profits in preceding and subsequent years ranging from 1.76% to 2.94%, and during the year under appeal, it declared 3.76%. Since the declared profit was higher than in surrounding years, no further addition was warranted on estimation. The Tribunal directed the deletion of the addition of Rs. 28,11,910/-. On the second issue, the Tribunal found that the assessee had reasonably explained the source of the cash deposit of Rs. 17,50,000/- as arising from its regular business receipts and available cash balance, as evidenced by the cash book showing a balance of Rs. 22,34,688/- as of 08.11.2016. The Tribunal observed that the rejection of books of account for estimating business profit does not automatically render cash generated from recorded sales as unexplained. The Revenue failed to bring any positive material on record to establish that the deposit came from an external source or that the declared turnover was bogus. The Tribunal set aside the CIT(A)'s finding and directed the deletion of the addition of Rs. 17,50,000/- made under Section 69A. The ratio decidendi for the first issue is that when books are rejected, estimation must be based on reasonable grounds, considering past and future performance, and not on an inapplicable presumptive rate. For the second issue, the ratio is that a cash deposit made during demonetisation, if explained by available cash balance from regular business, cannot be treated as unexplained money solely due to the rejection of books or the timing of the deposit, without contrary evidence.
The Tribunal held that the Commissioner of Income Tax (Exemptions) had dismissed the assessee's appeals for want of documents. However, the facts indicated that the assessee had furnished the requisite documents, as evidenced by page 26 of the paper book. Therefore, in the interest of justice and fair play, the Tribunal decided to set aside the issue to the CIT(E) for fresh adjudication in accordance with the law. The assessee was granted liberty to furnish any additional documents if desired by the CIT(E) and was directed to cooperate with the proceedings and avoid unnecessary adjournments. The grounds of appeal were allowed for statistical purposes.
The Tribunal held that the Commissioner of Income Tax (Exemptions) had dismissed the assessee's appeals for want of documents. However, the facts indicated that the assessee had furnished the requisite documents, as evidenced by page 26 of the paper book. Therefore, in the interest of justice and fair play, the Tribunal decided to set aside the issue to the CIT(E) for fresh adjudication in accordance with the law. The assessee was granted liberty to furnish any additional documents if desired by the CIT(E) and was directed to cooperate with the proceedings and avoid unnecessary adjournments. The grounds of appeal were allowed for statistical purposes.
The Tribunal condoned the delay of 210 days in filing the appeal, finding the reasons provided by the legal heir to be satisfactory and in the interest of justice. Regarding the additional ground challenging the CIT(A)'s order passed in the name of the deceased assessee, the Tribunal dismissed it, noting that the assessee had filed the appeal before the CIT(A) and there was no evidence that the death was intimated to the lower authority. However, concerning the main issue of unexplained investment, the Tribunal admitted the additional evidence (Syndicate Bank statement showing a Rs. 20 Lakh withdrawal on 19/04/2012) under Rule 29, considering it a vital document. Since this document was not examined by the lower authorities, the Tribunal set aside the assessment order and remitted the issue back to the AO for fresh consideration in light of the additional evidence. The AO was directed to provide an opportunity of being heard to the assessee's legal heir during the remand proceedings. The appeal was allowed for statistical purposes.
The Tribunal noted that the assessee's primary contention was that the transaction was not a transfer of property but an allotment of a flat by a cooperative housing society to its member, based on contributions towards construction costs. The assessee relied on Section 92 of the West Bengal Co-operative Societies Act, 2006, arguing that such an allotment is not a transfer but a confirmation of the right to occupy. The assessee also submitted that the deed of assignment was executed for revenue record purposes. The Tribunal observed that the learned CIT(A) upheld the addition under section 56(2)(x)(b) by considering the difference between the stamp duty value and the purchase consideration, presuming that part of the price was paid in cash to cover undisclosed income. The Tribunal found that the learned CIT(A) had not dealt with the specific submissions of the assessee regarding the nature of the transaction as an allotment by a cooperative society and the applicability of Section 92 of the West Bengal Co-operative Societies Act, 2006. Therefore, the Tribunal set aside the order of the learned CIT(A) and remanded the issue back to the learned CIT(A) to decide the appeal afresh after considering all the submissions and documents, including the applicability of Section 92 of the West Bengal Co-operative Societies Act, 2006, and the nature of the transaction. The Tribunal expressly left undecided the issue of whether the flat was handed over in AY 2018-19.
The Tribunal decided to condone the delay of 77 days in filing the appeal, accepting the assessee's explanation of being computer illiterate, facing communication issues due to residing in his native village, and experiencing health problems. Regarding the addition under Section 69A, the Tribunal found that the assessee, a goldsmith with meager earnings, had explained the cash deposits. The explanation that Rs. 4,80,000/- was given by his father for deposit, as the father was aged and lacked a bank account, was considered plausible, especially given the restrictions and KYC issues during demonetization that led to staggered deposits. The Tribunal noted that the authorities had not provided any material to disprove the assessee's claim. Therefore, the Tribunal directed the AO to delete the addition of Rs. 7,16,367/- made under Section 69A. The ratio decidendi is that when an assessee provides a plausible explanation for cash deposits, supported by a confirmation and considering the peculiar circumstances of demonetization, the addition under Section 69A should not be made without contrary evidence.
The Tribunal dismissed Ground Nos. 1, 5, and 6 as infructuous, and Ground No. 2 as not pressed. Regarding the effective issues (Ground Nos. 3 & 4), the Tribunal examined the Fair Market Value (FMV) of the property as on 01.04.1981. The Tribunal noted that the valuation report clearly stated its purpose was to determine the FMV as on 01.04.1981. The report contained details of the method and rates, including separate values. The Tribunal found that the first page of the report explicitly stated the valuation date as 01.04.1981, and the subsequent pages detailed the property and documents. The Tribunal observed that the AO adopted Rs. 64,800 as the cost of acquisition, while the assessee claimed Rs. 2,88,000 based on the valuer's report. The Tribunal's reasoning focused on the clarity of the valuation report regarding the date. The Tribunal did not explicitly decide on the reference to the DVO or the stamp duty value in the provided text, but the focus of the detailed analysis was on the FMV of the property as on 01.04.1981. The operative direction was to decide the appeal based on the findings.
The Tribunal held that the disallowance of agricultural income of Rs. 12,12,690/- and its addition as income from other sources by the lower authorities was unsustainable. The Tribunal noted that the Revenue did not dispute the agricultural landholding, and the remand report accepted that the assessee carried on agricultural activity. Furthermore, the receipt of agricultural sale proceeds in cash was also accepted as a normal mode of transaction among local farmers. The assessee had consistently declared agricultural income in preceding and subsequent years. Relying on the principle established in Erki Krishnamurthy HUF v. ITO, the Tribunal held that once agricultural operations and landholding are accepted, an estimate made without comparable data or scientific basis cannot be sustained. The subsequent condition of one property being converted to housing sites did not negate agricultural activity in the relevant year. Therefore, the Tribunal directed the AO to accept the agricultural income of Rs. 12,12,690/- declared by the assessee and delete the addition. The ground raised by the assessee was allowed.
The Tribunal noted that the assessee was denied exemption under sections 11 and 12 of the Income Tax Act due to its failure to produce the registration certificate required under section 12AA. The assessee had neither furnished the certificate before the Assessing Officer nor any information before the CIT(A) despite notices. Before the Tribunal, the assessee sought condonation of delay in applying for registration under section 12AA and requested the matter be restored to the Assessing Officer to enable it to apply for registration and thereafter claim relief under sections 11 and 12 or any other applicable exemption provision. The Tribunal agreed to restore the matter to the Assessing Officer. The assessee was directed to apply for registration under section 12A within 90 days from the order date, with an application for condonation of delay. The Assessing Officer was directed to decide the remaining issues based on the outcome of that application. The Tribunal also directed the Assessing Officer to examine the claim for exemption under section 10(23C) without registration under section 12AA, if applicable, upon production of requisite details by the assessee, even though this contention was not raised before the lower authorities. The appeal was allowed for statistical purposes.
The Tribunal held that the learned CIT(A) erred in refusing to condone the delay. The Tribunal found that the assessee had provided a specific explanation supported by an affidavit, detailing the announcement and holding of elections for its managing committee, the outgoing committee becoming functus officio, and the subsequent steps taken to file the appeal. The Tribunal considered the principles laid down by the Supreme Court in Collector, Land Acquisition, Anantnag v. Mst. Katiji and Others and N. Balakrishnan v. M. Krishnamurthy, emphasizing the need for a practical consideration of the explanation for delay and the acceptability of the explanation as the criterion, rather than the length of the delay. The Tribunal acknowledged a discrepancy in the dates of receipt of the assessment order but found that it did not establish that the entire explanation was false or that the delay was deliberate. The Tribunal was satisfied that sufficient cause existed for not filing the appeal within the prescribed period and condoned the delay of 86 days. Consequently, the order of the CIT(A) was set aside, and the appeal was restored to the file of the CIT(A) for adjudication of the original grounds on merits. The Tribunal clarified that this restoration did not grant registration under section 12A/12AB or recognize entitlement to exemption under sections 11 and 12, and the substantive contentions of the assessee remained open for adjudication by the CIT(A).
The Tribunal held that the determination of the ALP of interest at nil could not be sustained. The reasoning was that the current interest obligation was displaced by a conclusion about eventual equity ownership, material terms of conversion were inaccurately stated, and a nil price was not established through an asserted method. The Tribunal directed the deletion of the transfer pricing adjustment of Rs. 3,40,27,280/-. It clarified that it was not determining a universally applicable arm's length rate for CCDs. Grounds 1 to 3 and 8 were allowed to the extent stated. The Tribunal also set aside the DRP's alternative disallowance under sections 36(1)(iii) and 37(1), as it substantially rested on the proposition that CCDs already represented issued equity. The consequential direction to reduce the capital asset or work-in-progress base was also set aside as it was founded on the nil-ALP conclusion. The Tribunal directed the AO to verify the amount actually capitalized and apply governing provisions. Regarding Section 94B, the AO was directed to verify the original computation and give effect to the disallowance and any consequential carry-forward, ensuring the same amount is not disallowed twice. The Tribunal expressed no view on statutory interest or fees beyond directing recalculation. The issue concerning initiation of proceedings under section 270A was deemed premature. The operative directions included deleting the transfer pricing adjustment, setting aside the alternative disallowance, and giving consequential effect to directions concerning capitalization, Section 94B, and statutory levies.
The Tribunal held that the penalty order under appeal could not be sustained. The reasoning was that the transfer-pricing adjustment, which was the foundation for the impugned penalty, had been set aside by the Tribunal's earlier order dated January 28, 2019, for fresh adjudication. The Tribunal explicitly noted that its prior order had not expressed any opinion on the merits of the transfer-pricing issues. Therefore, the adjustment did not constitute a concluded determination and required reconsideration. The Tribunal also took note of the fact that in the second round, the Assessing Officer had passed a fresh assessment order and initiated fresh penalty proceedings. Consequently, the penalty order founded upon the earlier, now set-aside, transfer-pricing adjustment was quashed. The Tribunal clarified that it had not expressed any opinion on the merits of the fresh assessment or the validity of the fresh penalty proceedings, which were to be dealt with independently. The appeal filed by the assessee was allowed.
The Tribunal held that the notice under section 148 dated 24.04.2023 was issued beyond the limitation prescribed under section 149(1)(a), read with the applicable provisos. The Tribunal calculated the limitation period, noting that the ordinary period of three years from the end of assessment year 2019-20 expired on 31.03.2023. After excluding the reply period and applying the sixth proviso to section 149(1), the permissible period for issuance of notice under section 148 expired on 21.04.2023. Therefore, the notice issued on 24.04.2023 was beyond the permissible period. The Tribunal also noted that the CIT(A) incorrectly identified the date of the notice under section 148 as 29.03.2023, whereas this date pertained to the notice under section 148A(b). Consequently, the notice under section 148 was invalid, and the reassessment founded upon it could not be sustained. The impugned order of the CIT(A) was set aside, and the reassessment order was quashed. The Tribunal stated that since the reassessment was quashed on limitation, the jurisdictional contentions and other objections concerning the basis of reopening, as well as the grounds concerning the deduction under section 80GGC and reliance on third-party material, did not require separate adjudication and were left open or became academic. The Tribunal expressed no opinion on the genuineness of the donation or the admissibility of the deduction on merits.