ITAT Chennai Judgments — October 2024

The Tribunal held that as per Article 15(1) of the India-Thailand DTAA, the salary income is taxable in Thailand. The DTAA provisions override the Act, and therefore, the CIT(A) correctly deleted the addition.

The Tribunal condoned the delay in filing the appeal before the CIT(A), citing reasonable causes such as statutory audit obligations and the impact of the COVID-19 pandemic, aligning with Supreme Court decisions on condonation. As the CIT(A) did not decide the grounds of appeal on merits, the Tribunal set aside the CIT(A)'s order and remitted the matter back for fresh adjudication.

The Tribunal held that the guarantee fees received by the assessee were not taxable in India. This was based on the provisions of the India-Korea DTAA, specifically Article 22 concerning 'Other Income' and Article 7 concerning 'Business Profits'. The Tribunal noted that the assessee did not have a Permanent Establishment in India and that the income should be taxed in Korea, the country of residence, as per the DTAA.

The Tribunal noted that the assessee failed to provide essential documents to substantiate their claim before the lower authorities. While the assessee presented an agreement with PepsiCo India Holdings Pvt. Ltd. and financial statements, they admitted that the evidence could not be produced earlier.

The Tribunal found that the assessee had submitted relevant documents as per the paper book, which the CIT(E) apparently did not consider. Therefore, the Tribunal deemed it appropriate to remand the matter back to the file of the CIT(E) for fresh consideration.

The Tribunal noted that the disallowance was restricted by the CIT(A) based on evidence produced by the assessee, and the penalty was imposed solely on the ground of non-submission of vouchers. Citing High Court precedent, the Tribunal held that non-submission of vouchers does not amount to concealment of income, and thus, the penalty is not maintainable.

The Tribunal noted that the cash deposits were related to transport charges and the assessee, engaged in a small transport business, had limited knowledge of tax proceedings. However, there was no evidence to claim presumptive income under Section 44AE and the assessee had failed to provide necessary details. The Tribunal directed the Assessing Officer to treat 15% of the addition as income from business and delete the rest.

The Tribunal held that the AO had failed to conduct proper inquiries and verifications regarding the cash payment for the property purchase and the genuineness of sundry creditors/debtors. The PCIT's revision order was upheld because the AO's assessment was passed without necessary examination, making it erroneous and prejudicial to the interest of revenue.

The Tribunal noted that the assessee was not given an opportunity to present their case before the Assessing Officer. Therefore, in the interest of natural justice, the matter was remanded to the Assessing Officer for fresh consideration.

The Tribunal noted that the assessee had not provided compliance before the CIT(A). In light of the assessee's request for another opportunity and accepting the submissions of the AR, the matter was remanded back to the CIT(A) for fresh consideration.

The Tribunal noted that the CIT(E) rejected the application for registration and approval without considering the documentary evidence submitted by the assessee. Therefore, the matter was remanded back to the CIT(E) for fresh consideration.

The Tribunal held that the reopening of assessment by the Assessing Officer was invalid as it was based on a 'change of opinion' and not on any tangible material or new information. This was consistent with previous decisions of the Tribunal on similar facts for other assessment years and relied on Supreme Court judgments.

The Tribunal held that the Assessing Officer (AO) passed the assessment order without conducting proper inquiries and verifications regarding the cash payment for property purchase and the genuineness of sundry debtors/creditors. This rendered the assessment order erroneous and prejudicial to the interest of the Revenue, justifying the PCIT's revisionary order under Section 263 of the Act.

The Tribunal condoned the delay in filing the appeal, finding the reasons provided to be reasonable in the interest of justice. The Tribunal also admitted additional grounds of appeal concerning the jurisdictional issue of the notices issued under sections 148 and 143(2) of the Income Tax Act. The Tribunal held that the notices were issued by a non-jurisdictional officer and were thus invalid, vitiating the reassessment proceedings. However, the Tribunal addressed the substantive grounds concerning the land classification and cash deposits.

The Tribunal held that the Assessing Officer failed to conduct adequate inquiries into the demerger expenses, interest and bank charges, and the claim of brought forward losses. The Tribunal found that the PCIT rightly invoked Section 263 of the Act, as the assessment order was both erroneous and prejudicial to the interest of revenue. The Tribunal concurred with the PCIT's conclusion that the assessee had understated its profit.

The Tribunal held that the addition of share capital was not based on incriminating material found during the search. The Tribunal further noted that the Hon'ble Supreme Court decision in PCIT vs. Abhisar Buildwell (P.) Ltd. states that additions under section 68 based on regular books of account cannot be sustained without incriminating material.

The Tribunal held that the foreign exchange forward contracts were not speculative transactions as they were entered into for hedging and settled by actual delivery. It further relied on the Supreme Court's decision in CIT vs. Woodward Governor India (P) Ltd. to allow the year-end provision for foreign exchange fluctuations as expenditure.

The Tribunal held that the assessment orders were indeed time-barred because they were dispatched and served after the stipulated limitation period, violating Section 153B of the IT Act. Consequently, the appeals filed by the Revenue were dismissed.

The Tribunal noted that the assessee had issued crossed cheques with two transverse lines, which, according to the assessee, meant 'account payee only' in practice. The AO did not doubt the genuineness of the expenditure or its commercial expediency. The Tribunal held that the crossed cheques, with clear bank debit and credit entries, satisfied the objective of Section 40A(3), which is to ensure verifiable transactions and curb cash payments.

The Tribunal held that the assessee's payments made via crossed cheques, which had two transverse lines, were not in violation of Section 40A(3). The Tribunal noted that the genuineness of the expenditure and its commercial expediency were not doubted by the AO or CIT(A), and the bank statements confirmed the transfer of funds to the parties' accounts.

The Tribunal noted that the assessee followed Accounting Standard AS-11 and mercantile accounting. The Supreme Court's decision in CIT vs. Woodward Governor India (P) Ltd was considered relevant. The Tribunal found that foreign currency forward contracts are not 'commodities' and thus Section 43(5) is not applicable. The transactions were settled by actual delivery, not on a net-net basis.

The Tribunal held that foreign exchange forward contracts are not commodities and thus outside the scope of Section 43(5). They are also settled by actual delivery, not on a net-net basis, further excluding them from speculative transactions. The loss on these contracts, incurred in the ordinary course of business, is allowable as expenditure under Section 37.

The Tribunal noted that the assesse made payments through cheques with two transverse lines, which were debited from the assesse's bank account and credited to the parties' accounts. The genuineness of the expenditure was not doubted by the AO or CIT(A). The Tribunal considered the amended provisions of Section 40A(3) and circulars, and held that crossed cheques with two transverse lines are acceptable modes of payment, not falling under the mischief of Section 40A(3).

The Tribunal held that the assessment orders were indeed time-barred as they were not dispatched within the prescribed period. The date of dispatch, not the date of signing, is considered for determining limitation. Consequently, the assessment orders were quashed, rendering the issues regarding additions under Section 40A(3) academic.

The Tribunal held that the assessment orders, though dated 31.12.2017, were dispatched on 06.01.2018 and served on 08.01.2018, which was beyond the time limit prescribed by Section 153B of the Act. Therefore, the assessment orders were considered time-barred and annulled.

The Tribunal held that the assessment orders were dispatched after the limitation period and therefore were time-barred. The grounds relating to the merits of the addition under Section 40A(3) became academic as the assessment orders were set aside.

The CIT(A) deleted the addition, finding that the cash receipt from sales and debtors was supported by VAT returns and debtor confirmations, and thus the cash deposit was explained. The Tribunal agreed, noting that the assessee provided explanations for the cash deposits, reconciled them with VAT returns, and there was no tangible evidence to prove the cash was unaccounted.

The Tribunal noted that the CIT(A) had not considered the merits of the case and had only focused on the delayed filing. It was also noted that the assessee had provided justified grounds for the delay.

The assessee's writ petition was dismissed, allowing them to pursue a statutory appeal within two weeks, with the CIT(A) to entertain it without reference to limitation. However, the assessee filed an appeal with a significant delay (203 days) which the CIT(A) dismissed in limine, not condoning the delay. The Tribunal, considering the interest of justice, directed the CIT(A) to condone the delay and adjudicate the appeal on merits.

The Tribunal held that the AO has the power to issue a corrigendum to rectify errors in an assessment order, provided it does not withdraw or substitute the original order. The corrigendum, in this case, was issued to correct factual errors in the original assessment order and did not alter the substantive findings. Therefore, the corrigendum was considered valid.

The assessee's authorized representative stated that the appeal was not maintainable as a similar appeal was already preferred before another bench and withdrawn. The assessee requested permission to withdraw the present appeal.