ITAT Chandigarh Judgments — May 2019

The Tribunal held that as per the Supreme Court's decision in Aarham Softronics, substantial expansion can lead to a new 'initial assessment year', entitling the assessee to 100% deduction for the period of expansion, up to a total of 10 years.

The Tribunal held that the Revenue's appeal was not maintainable in light of CBDT Circular No. 3/2018, which mandates that appeals should not be filed if the tax effect is below Rs. 20 lakhs. The assessee's cross-objection was withdrawn.

The Tribunal followed its own prior decision in the assessee's own case for an earlier assessment year, which dealt with identical facts and issues. The Tribunal found no merit in the Revenue's appeal.

The Tribunal set aside the penalty issue to the file of the CIT(A) to be adjudicated along with the pending quantum appeal. The CIT(A) was directed to decide the matter afresh.

The Tribunal held that the issuance of a notice under Section 148 of the Act is a foundational requirement for reopening an assessment. A notice issued in the name of a deceased person is void and not curable under Section 292B or 292BB of the Act, as it is a substantive error and not a procedural irregularity. The Tribunal relied on the Bombay High Court's decision in 'Sumit Balkrishna Gupta Vs. ACIT' and the Delhi High Court's decision in 'Rajender Kumar Sehgal Vs. ITO'. The Tribunal found no force in the revenue's contention that the legal heir should have informed the AO, especially since the service was by affixation and not witnessed. Regarding Sh. Navpreet Singh's appeal, the Tribunal found that the service by affixation was not valid. The affixture order lacked specific address details, the process was not properly witnessed, and the AO issued the order for affixture without waiting for the outcome of service by registered post. Furthermore, the AO later obtained the assessee's office address but did not serve the Section 148 notice there. Therefore, the Tribunal concluded that there was no valid service of notice under Section 148 on either assessee, rendering the consequent assessment proceedings unsustainable. Both appeals were allowed, quashing the notices and assessment proceedings.

The Tribunal held that issuing a notice under Section 148 to a deceased person is a foundational error, making the proceedings void. The service through affixation was also found to be invalid due to lack of proper procedure and evidence.

The Tribunal held that the CIT(A) wrongly segregated the surrender made on account of cash and jewellery, stating it was assessable under Section 69A. The Tribunal followed its earlier decision in the case of Sanjeev Goyal, stating that if income is disclosed during search, tax paid, and included in the return, no penalty under Section 271AAA is leviable for not specifying the manner of earning.

The Tribunal, following a co-ordinate bench decision, held that the amount received was compensation for retrenchment and loss of job, thus a capital receipt. Consequently, no part of the amount was taxable.

The Tribunal held that the initial filing of a consolidated appeal within the due date demonstrated a bonafide mistake. Condoning the delay was deemed appropriate given the pragmatic approach to such matters and the lack of prejudice to the revenue.

The Tribunal upheld the penalty on unaccounted sales, citing the assessee's admission and the Assessing Officer's scientific calculation. However, it directed remission on penalty for short-term capital gains related to cost of improvement.

The Tribunal held that the penalty on the jewellery addition was to be obliterated as it was made on a protective basis. However, the penalty on the undisclosed income of Rs. 6,40,503/- was upheld as the assessee did not meet the conditions for relief under Section 271AAA(2).

The Tribunal noted the repeated non-appearance of the assessee and presumed a lack of seriousness in pursuing the appeal. Consequently, the appeal was dismissed.