ITAT Chennai Judgments — January 2025

The Tribunal held that the 'market adjustments' did not fall within the definition of 'undisclosed income' as per Explanation (c) to Section 271AAB, as there was no incriminating material found during the search to substantiate it as such. It was reiterated that a penalty under Section 271AAB is not automatic merely because an addition is accepted to avoid litigation, and discretion must be applied. Consequently, the penalty was deemed not sustainable in law.

The Tribunal upheld the CIT(A)'s decision, confirming that the assessee had sufficiently explained the sources of cash deposits from jewel loan redemptions and earlier bank withdrawals, supported by books of accounts and no negative cash balance. The Tribunal also concurred with the grant of telescoping benefit for the seized cash against the additional interest income offered by the assessee.

The Tribunal admitted the appeal, acknowledging the assessee's negligence but considering the facts of the case. The assessment was restored to the AO for fresh adjudication, with a direction for the assessee to substantiate their case.

The Tribunal acknowledged the binding precedent that Section 80AC(ii) disallows deductions under Chapter VIA for belated returns. However, noting that the assessee had filed a condonation application for the delay under Section 119(2)(b) which was pending, the appeal was restored to the CIT(A) to reconsider the claim based on the outcome of the condonation application.

The Tribunal held that artificial segregation of cash deposits during demonetization and other periods was not justified. It also found that the gross profit rate declared by the assessee was 1.74%.

The Tribunal, considering natural justice despite the assessee's negligence, set aside the impugned ex-parte order. The case was restored to the CIT(A) for de novo adjudication, granting the assessee another opportunity to present their case and supply information.

The Tribunal acknowledged the assessee's claim that the advances were received as a power agent, with tax liability resting on the property owner. However, lacking conclusive proof of this, the assessment was restored to the Assessing Officer to verify the claim and for the assessee to submit requisite documents.

The Tribunal held that after the amendment to Section 13(9) with effect from 01-04-2016, filing Form No.10 within the due date under Section 139(1) is mandatory, not merely directory. It emphasized that a remedial mechanism for condonation of delay under Section 119 is already available via CBDT Circular No.03/2020. Therefore, the appeal was restored to the CIT(A) to consider any condonation application filed by the assessee within three months, failing which the AO's action would be confirmed.

Recognizing the assessee's negligence but upholding the principle of natural justice, the Tribunal decided to grant another opportunity. It set aside the impugned order and restored the assessment to the AO for fresh consideration, with the condition that the assessee pays Rs.2,000/- to the 'Tamil Nadu State Legal Services Authority'.

The Tribunal held that the adjustment stemmed from a potential misreporting by the Tax Auditor, where the net effect on profit should have been Nil. Accepting the assessee's submission, the issue was remitted back to the Jurisdictional AO for verification.

The Tribunal upheld the CIT(A)'s decision to quash the reopening, finding that the original assessment for AY 2013-14 was a scrutiny assessment under Section 143(3) where the issue of 'provision for return rights' was specifically examined by the AO. Since no new tangible material was available and there was no failure on the assessee's part to disclose material facts, the reopening beyond the four-year period amounted to a mere change of opinion and was invalid. This decision was consistent with the Tribunal's own precedent for the assessee's AY 2011-12 and principles laid down by the Supreme Court and High Courts. Consequently, both the revenue's appeal and the assessee's cross-objection were dismissed.

The Tribunal held that the reimbursements received by the assessee were for warranty expenses incurred by dealers outside India and were cost-to-cost reimbursements, not FTS. Therefore, they were not taxable in India.

The Tribunal noted the assessee's decision to opt for the DTVSV Scheme and consequently dismissed the appeals as withdrawn. Liberty was granted to restore the appeals if the scheme resolution fails.

The Tribunal noted the assessee's intention to withdraw the appeal under the Direct Tax Vivad Se Vishwas Scheme. Therefore, the appeal was dismissed as withdrawn, with liberty granted for restoration if the scheme resolution fails.

The Tribunal confirmed the disallowance of employee contributions to PF & ESI due to delayed deposit, citing the Supreme Court's 'Checkmate Services' ruling. However, it held that interest on delayed remittances of TDS, PT, Service Tax, ESI, and PF were compensatory in nature and thus allowable as business expenditure under Section 37(1) of the Income Tax Act, based on the Supreme Court's 'Lachmandas Mathuradas' decision and other pronouncements.

The Tribunal held that the AO passed the assessment order during the moratorium period declared by the NCLT, which is prohibited under Section 14 of the IBC, 2016. Therefore, the assessment order is annulled, and the addition made by the AO is deleted.

The Tribunal acknowledged the assessee's decision to resolve the dispute under the DTVSV, 2024, and accordingly dismissed the appeal as withdrawn. The Tribunal also granted the assessee the liberty to seek restoration of the appeal if the resolution under the DTVSV, 2024 fails.

The CIT(A) deleted the addition, observing that the assessee had discharged the onus with documentary evidence. The Tribunal agreed, finding that the AO was not justified in disallowing a significant portion of purchases based on doubts and surmises.

The Tribunal condoned the 171-day delay in filing the appeal, acknowledging a reasonable cause. Subsequently, due to the assessee's choice to opt for the VSVS Scheme and request for withdrawal, the appeal was dismissed as withdrawn, with a provision for reinstatement if the VSVS application is rejected.

The Tribunal held that the disallowance of discount extended to prepaid distributors is not sustainable as the issue is settled by the Supreme Court in favor of the assessee. Similarly, the disallowance of year-end accruals was also deleted as the provision was reversed on the next day and TDS was accounted for in the subsequent year, a view supported by High Court decisions.

The Tribunal held that the assessee acted as an agent or broker and not as the recipient of the funds in his own right. The cash was immediately handed over to the land brokers on behalf of the Principal. Therefore, the assessee cannot be held liable for the penalty under Section 271D read with Section 269SS.

The Tribunal found that both the AO and CIT(A) orders were passed ex-parte due to the assessee's non-compliance. In the interest of natural justice, the assessee was granted another opportunity to present their case. The orders of the AO and CIT(A) were set aside, and the matter was remitted back to the AO for fresh adjudication.

The Tribunal noted that the assessee failed to appear during both assessment and appellate proceedings. Finding that the CIT(A) restricted the disallowance to Rs. 10,00,000/- without any supporting basis, the Tribunal set aside the CIT(A)'s order. The matter was remanded back to the CIT(A) to pass a fresh order after providing proper opportunity to the assessee to be heard.

The Tribunal held that the assessee was an agent/broker acting on behalf of a principal, not the actual recipient of the 'specified sum' in his own independent right, as defined under Section 269SS. It further noted that there was a 'reasonable cause' under Section 273B, given that the amendment introducing 'specified sum' to Section 269SS came after the MoU date, and the assessee, being a middleman, was unaware of the change. Consequently, the penalty levied under Section 271D of the Income Tax Act was not imposable on the assessee.

The Income Tax Appellate Tribunal found that there was sufficient cause for the 90-day delay in filing the appeal before the CIT(A), citing the assessee's parents' ill-health due to Covid-19. The Tribunal directed the CIT(A) to condone the delay and adjudicate the appeal on merits.

The Tribunal set aside the CIT(E)'s order, deeming it appropriate to grant the assessee a fresh opportunity. The case is remanded to the Ld. CIT(E) for de novo adjudication of the application in Form 10AB, with directions for the assessee to upload and substantiate its documents.

The Tribunal observed that the assessee did not appear before the lower authorities. However, in the interest of justice, the assessee should be given one more opportunity to present evidence.

The Tribunal, in the interest of justice and considering an undertaking from the assessee's representative, set aside the CIT(A)'s order. The case was remanded to the Assessing Officer for a fresh hearing, directing that the assessee be provided a proper opportunity to substantiate her case regarding the cash deposits and transactions.

The Tribunal held that the reopening of assessment was valid as there was material found during the survey. The addition for renovation cost was upheld. However, the matter of ad-hoc disallowances was restored to the AO for fresh adjudication after providing the assessee an opportunity to submit evidence.

The Tribunal upheld the reopening of the assessment under Section 147, finding sufficient material based on the survey and the assessee's admission of unaccounted renovation investment. The addition of Rs. 41 lakhs for property renovation was confirmed. However, the ad-hoc disallowances of business expenses (10% purchases, 10% rent, 20% salary/staff welfare) and the addition of proprietor's capital (Rs. 98,37,445/- for AY 2017-18) were restored to the AO for fresh adjudication, directing the AO to provide the assessee with an opportunity to submit supporting documents.

The Tribunal treated the appeal as dismissed as withdrawn, considering the assessee's election to resolve the dispute under the DTVSV Scheme, 2024. It also granted the assessee liberty to restore the appeal if the scheme's resolution fails.

The Tribunal held that the penalty order, which levied penalty for 'concealment of income', was not commensurate with the penalty notice and assessment order, which specified 'furnishing of inaccurate particulars of income'. Thus, the levy of penalty was considered invalid.

The Tribunal, after examining the cash flow statement for FY 2011-12, found that the assessee had sufficient opening cash balance and successfully explained the source of expenses for the 'Land and Improvement'. Consequently, the addition of Rs.6,87,612/- made by the AO was deleted.

The Tribunal condoned the delay in filing the appeal and admitted it. Considering the assessee's submission regarding the trustee's unfamiliarity with online operations and the interest of justice, the Tribunal set aside the order and remanded the case to the CIT(E) for a fresh hearing.

The Tribunal, while deprecating the assessee's attitude, decided to provide one more opportunity for the assessee to represent their case. The matter was remitted to the AO for fresh adjudication.

The Tribunal held that the reopening of assessment was based on sufficient material found during the survey, and the assessee's admission regarding the renovation cost provided a reason to believe that income had escaped assessment. The addition on account of renovation was upheld. However, the matter of disallowance of expenses was restored to the AO for fresh adjudication with directions for the assessee to provide supporting evidence.

The tribunal held that the reopening of assessment was justified as the AO had reason to believe income had escaped assessment based on survey findings. The addition for renovation was upheld as the assessee admitted the expense but did not account for it. However, the disallowances of expenses were restored to the AO for proper verification, allowing the assessee to submit evidence.

The Tribunal condoned the delay in filing the appeal after finding sufficient cause. It held that a further opportunity should be given to the assessee to represent its case, restoring the matter to the AO for fresh adjudication.

The Tribunal found merit in the assessee's explanation for the delay and noted that the CIT(A) had failed to address the case on its merits. Consequently, the Tribunal set aside the CIT(A)'s order, condoned the delay of 341 days, and remitted the matter back to the CIT(A) for fresh readjudication on merits, granting the assessee an opportunity of being heard.

The Tribunal noted that the CIT(A) had issued hearing notices which were partly complied with, and the assessee's request for adjournment was denied. In the interest of justice, the assessee was provided one more opportunity to represent their case.

The Tribunal upheld the CIT(A)'s decision in most cases, confirming that write-offs were justified, income was correctly treated as house property income, reassessment proceedings were invalid, and the addition for unexplained expenditure was not substantiated. Most of Revenue's grounds of appeal were dismissed.

The Tribunal condoned the delay in filing the appeal and the appeal was allowed for statistical purposes. The case was remitted back to the AO for de novo assessment after providing the assessee with an opportunity of being heard.

The Tribunal condoned the 26-day delay in filing the appeal, accepting the assessee's justification of adverse health issues. In the interest of justice and equity, the Tribunal restored the matter to the file of the Assessing Officer for a de novo assessment, granting the assessee another opportunity to present their case. The assessee is directed to cooperate and not seek unnecessary adjournments.

The Tribunal held that the write-off of bad debts was valid and confirmed the CIT(A)'s deletion of the addition. It also upheld the CIT(A)'s decision to treat income as house property income, not business income. The reassessment proceedings were dismissed. Grounds related to additional evidence, fit-out rent, interest claims, and unexplained expenditure on shares were also dismissed in favor of the assessee, confirming the CIT(A)'s orders.

The Tribunal held that the CIT(A) erred in dismissing the appeals solely on the ground of a 15-day delay in filing without providing an opportunity for the assessee to explain the delay, thus violating the principles of natural justice.

The Tribunal partly allowed the assessee's appeal by directing the AO to adopt a 0.50% guarantee commission, remanding the AMP expenses issue for fresh examination as per Delhi High Court rulings, and deleting the Section 14A disallowance relating to sufficient own funds while remanding other Section 14A computations. The export agency commission disallowance, foreign exchange loss/hedging cost on ECBs, and balance additional depreciation claims were all allowed, citing various High Court and Supreme Court precedents. However, the notional royalty adjustment was upheld.

The Tribunal held that the CIT(A) erred in dismissing the appeals without providing the assessee an opportunity to explain the delay, violating the principles of natural justice. The CIT(A) was directed to condone the delay and hear the appeals on merit.

The Tribunal condoned the delay in filing the appeals before the CIT(A), holding that there was a sufficient cause due to ambiguity in the law and reliance on subsequent favorable judicial pronouncements. The matter was restored to the CIT(A) for decision on merits.