ITAT Cuttack Judgments — July 2019

The Tribunal held that the Assessing Officer's failure to conduct proper inquiries into the cash deposits made the assessment order erroneous and prejudicial to the revenue's interests. Therefore, the revision order by the Principal CIT was upheld.

The Tribunal found that the assessee had provided sufficient documentary evidence to show the cash deposits were from prior withdrawals. However, since expenses were debited to the P&L account for these receipts, the Tribunal directed the AO to estimate net profit at 10% on the Rs. 9,35,000/-.

The Tribunal held that non-filing of Form 26A with the Director General of Income Tax (Systems) does not automatically warrant disallowance under Section 40(a)(ia) if the form was otherwise properly submitted. However, the assessee is liable for interest under Section 201(1A) for non-deduction of TDS.

The Tribunal held that the penalty is not sustainable because the assessee was not specifically made aware of whether the penalty was for concealment of income or furnishing inaccurate particulars. The AO's non-application of mind in issuing a general notice was also noted.

The Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A)'s file for fresh adjudication. Both parties are to be given an opportunity of being heard.

The Tribunal found that the CIT(A) had dismissed the appeals without proper adjudication and without giving the assessee an opportunity to be heard. Therefore, the orders of the CIT(A) were set aside.

The Tribunal held that the CIT(A) has no power to dismiss an appeal without considering the merits and that Section 250(6) of the Income Tax Act mandates a speaking order. The order of the CIT(A) was set aside.

The Tribunal held that as per departmental instructions (Circular No. 3/2018), appeals with a tax effect below Rs. 20 lakhs should not be filed or should be withdrawn. Therefore, the appeal was dismissed on this technical ground.

The Tribunal, considering the nature of business and the assessee's concession, restricted the net profit rate to 6% of gross turnover, reducing it from the CIT(A)'s 6.5%. No further depreciation was allowed.

The Tribunal held that the CIT(A) passed an ex-parte order without providing an opportunity of hearing. In the interest of justice, the assessee was granted another opportunity to present its case before the CIT(A).

The Tribunal held that the higher interest rate on unsecured loans from directors was justified due to the absence of collateral and the need to meet business requirements. Annualizing the bank loan interest rate showed a comparable figure, making the 15% rate not excessive.

The Tribunal condoned the delay in filing the appeal. It confirmed the estimation of net profit at 8% on undisclosed sales, finding it not excessive for the shoe business. The addition of interest income was upheld after allowing the statutory deduction under Section 80TTA.

The Tribunal held that the penalty under Section 271(1)(c) is unsustainable if the notice issued by the AO does not clearly specify whether the proceedings are for concealment of income or for furnishing inaccurate particulars. The Tribunal found that the notice in this case was a printed proforma with irrelevant clauses not struck out, indicating a non-application of mind by the AO.

The Tribunal found that the assessee was not granted a reasonable opportunity of hearing. Therefore, the CIT(A)'s ex parte order was set aside to provide a fresh adjudication.

The Tribunal upheld the AO's estimation of gross profit at 5% of turnover, finding it justified given the assessee's cash sales and lack of contrary evidence. The addition on account of interest was also confirmed due to the assessee's failure to submit submissions.

The Tribunal held that reopening the assessment based on a change of opinion without any fresh tangible material is not permissible. The Tribunal quashed the reassessment proceedings as the Assessing Officer had already dealt with the information and sought to rectify it under Section 154.

The Tribunal dismissed the Revenue's appeal as the tax effect was below the prescribed limit for filing appeals. Consequently, the assessee's cross objection was also dismissed as infructuous.

The Tribunal held that the reassessment was based on a mere change of opinion, as the remuneration paid to partners was reflected in the audited accounts and audit report considered during the original assessment. The Tribunal relied on the Supreme Court's decision in CIT v. Kelvinator of India Ltd. stating that reopening based on a change of opinion is not permissible.

The tribunal confirmed the addition related to the undervaluation of closing stock. However, the addition for the negative cash balance was set aside and remitted to the Assessing Officer for fresh adjudication. The addition for contravention of Section 40A(3) was deleted.

The Tribunal held that as per departmental instructions (Circular No. 3/2018), appeals with a tax effect below Rs. 20 lakhs should not be filed or should be withdrawn. Therefore, the appeal was dismissed without going into the merits.

The Assessing Officer passed a fresh assessment order in line with the Tribunal's previous directions. The revenue agreed that their appeal had become infructuous in light of the fresh assessment.

The Tribunal allowed the appeal regarding the addition for unexplained bank credit as the source was explained by a cheque. It also allowed the deletion of depreciation addition as the asset purchases were not disputed. However, other additions were dismissed.

The Tribunal upheld the CIT(A)'s order, finding no reason to interfere as the assessee failed to comply with the earlier direction to produce all loan creditors before the Assessing Officer.

The Tribunal found that the AO's disallowance of 20% was on the higher side. Therefore, the disallowance was restricted to 10% for business promotion expenses and 50% for making & repairing charges.

The Tribunal noted that the assessee had no further grievance regarding the assessment order for AY 2013-14. Both the assessee's representative and the Revenue's representative agreed with this submission.