ITAT Delhi Judgments — June 2017

The Tribunal held that the CIT(A) had not undertaken independent inquiry to verify the documents and arguments submitted by the assessee. Therefore, in the interest of natural justice, the issues were set aside to the Assessing Officer for de novo verification.

The Tribunal held that the CIT(A) erred in passing an ex-parte order on a deceased person without providing a reasonable opportunity of being heard to the legal heir. The case was set aside for fresh adjudication.

The Tribunal held that the delay in filing the transfer pricing documents was explained by reasonable cause and that the penalty under Section 271G is discretionary. The Tribunal followed the jurisdictional High Court's decision in CIT vs. Leroy Somer & Controls (India) Pvt. Ltd.

The Tribunal held that the assessee had sufficient cash in hand as per her balance sheets from preceding years, which was not shown to have been utilized elsewhere. Therefore, the addition sustained by the CIT(A) was not justified.

The Tribunal held that the AO had not established a nexus between interest-bearing funds and interest-free loans given to the assessee's sons. Since the assessee had sufficient interest-free funds (sundry creditors) and the AO did not prove diversion of interest-bearing funds, the disallowance was deleted. For other expenses, the Tribunal found the ad-hoc disallowance excessive and reduced it.

The Tribunal deleted the penalty, respectfully following the Bombay High Court's decision in Godrej and Boyce Manufacturing Co. Ltd. vs. DCIT, which held Rule 8D to be prospective. This decision was also upheld by the Supreme Court, making the issue final.

The CIT(A) held that Section 154 could not be invoked for disallowing advances as application of income, as it was a debatable issue and not a mistake apparent from the record. The ITAT upheld the CIT(A)'s decision.

The Tribunal held that the CBDT Circular No. 21 of 2015, read with Section 268A of the Income Tax Act, mandates that appeals with a tax effect below Rs. 10,00,000/- should not be filed or pressed. Therefore, the Revenue should not have filed the appeal.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 2,00,000, finding it to be an ad-hoc disallowance without sufficient basis. The Tribunal also concurred with the CIT(A)'s deletion of the brand promotion expenses disallowance, agreeing that these were routine business expenses incurred for the ongoing business.

The Tribunal found that the CIT(A) passed a non-speaking order and rejected submissions on technical grounds. Therefore, the case was set aside to the CIT(A) for a fresh decision after providing adequate opportunity and considering all evidence.

The Tribunal held that the Revenue should not have filed the appeal given the low tax effect and the binding CBDT circulars. The appeal was dismissed without going into the merits of the case.

The Tribunal held that the CBDT Circular No. 21 of 2015, which sets a monetary limit for filing appeals, is applicable retrospectively to pending appeals. Therefore, the Revenue should not have filed these appeals.