ITAT Delhi Judgments — March 2024

The Tribunal ruled that the CIT(A) acted incorrectly by dismissing the appeals without discussing the merits, as Section 250(6) mandates a reasoned decision on points of determination. Citing judicial precedent, the ITAT stated that CIT(A) must address issues on merits even in ex parte proceedings. Consequently, the orders were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal found the CIT(A)'s order cryptic and devoid of independent findings, noting that the assessee was not given adequate opportunity. Therefore, the Tribunal, with no objection from the Ld. DR, restored the appeal to the Ld. CIT(A) for fresh adjudication. The CIT(A) is directed to decide the matter in accordance with law after providing the assessee a proper opportunity of being heard.

The Tribunal ruled that the CIT(A) acted incorrectly by dismissing the appeals without discussing the merits, as Section 250(6) mandates a reasoned decision on points of determination. Citing judicial precedent, the ITAT stated that CIT(A) must address issues on merits even in ex parte proceedings. Consequently, the orders were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal ruled that the CIT(A) acted incorrectly by dismissing the appeals without discussing the merits, as Section 250(6) mandates a reasoned decision on points of determination. Citing judicial precedent, the ITAT stated that CIT(A) must address issues on merits even in ex parte proceedings. Consequently, the orders were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal held that the appeal was not maintainable as it was filed in the name of a deceased person without proper substitution by legal heirs. Consequently, the appeal was dismissed, with liberty granted to the legal heirs to restore it after rectifying the procedural defect.

The Tribunal noted that the source of acquisition was explained by the assessee's husband's income and a home loan. To ensure principles of natural justice, the Tribunal set aside the orders of the lower authorities and restored the matter to the AO for a fresh decision after providing an opportunity to be heard.

The Tribunal upheld the CIT(A)'s decision, noting that an identical issue in the assessee's own case for previous assessment years was decided in favour of the assessee. Following the Supreme Court's ruling in Engineering Analysis Center of Excellence Pvt. Ltd. Vs. CIT, the Tribunal reiterated that merely granting access to a database without transferring any underlying copyright or the right to exploit it does not qualify as royalty.

The Tribunal upheld the CIT(A)'s decision, noting that an identical issue in the assessee's own case for previous assessment years was decided in favour of the assessee. Following the Supreme Court's ruling in Engineering Analysis Center of Excellence Pvt. Ltd. Vs. CIT, the Tribunal reiterated that merely granting access to a database without transferring any underlying copyright or the right to exploit it does not qualify as royalty.

The Tribunal held that the assessee had filed a presumptive income return and the AO had conducted necessary inquiries during the original scrutiny assessment. The PCIT's finding that the AO lacked diligence was erroneous, as the PCIT merely substituted his own view without identifying specific errors prejudicial to the revenue. Therefore, the PCIT's order under Section 263 was set aside.

The Tribunal, with no objection from the Departmental Representative, decided to restore the appeal to the file of the Ld.CIT(A) for fresh adjudication. The Ld.CIT(A) is directed to provide adequate opportunity of being heard to the assessee.

Following a precedent set in the case of *Neeta Garg Vs. ITO*, the Tribunal directed the Assessing Officer to accept Form 67 filed with the revised return of income. The AO is further directed to decide the claim for foreign tax credit on merits after providing adequate opportunity to the assessee, rather than denying it on technical grounds.

The Tribunal, considering the statutory provisions of the IBC, including Section 238, and a Supreme Court precedent (Pr. CIT Vs. Monnet Ispat and Energy Limited), ruled that the assessee is estopped from pursuing the appeals during the moratorium. Consequently, the appeals were dismissed, granting the assessee liberty to seek remedial measures and revival once the moratorium period concludes.

The Tribunal held that no business profits are attributable to the alleged PE of the assessee in India, following the principle that if an associated enterprise is remunerated at arm's length, no further profit attribution is required.

The Tribunal ruled that the burden of proof in penalty proceedings differs from that in assessment proceedings, and merely rejecting an explanation in quantum assessment does not automatically justify a penalty under Section 271(1)(c). Considering the assessee's deceased status and the plausibility of the explanation provided, the Tribunal found the penalty unjustified and directed its deletion.

The Tribunal held that the AO was not justified in disallowing the purchases. The assessee had discharged its initial burden by providing evidence of purchases and corresponding sales, which were not doubted by the revenue. The Tribunal also noted that the assessee was not given an opportunity to cross-examine the supplier.

The Tribunal noted the ex-parte assessment and that the CIT(A) decided the appeal without the AO's report on additional evidence. Therefore, the Tribunal restored the appeal to the file of the AO for a de novo adjudication. The AO is directed to provide adequate opportunity of being heard to the assessee and decide the matter afresh in accordance with law.

The Tribunal found merit in the assessee's challenge to the AO's jurisdiction under Section 147. It held that the 'reasons to believe' recorded by the AO were either based on 'reason to suspect' without objective material, or on an incorrect application of law, or contained a typographical error regarding the assessment year, or lacked factual basis. Consequently, the re-assessment order was deemed bad in law and quashed due to invalid jurisdiction.

The Tribunal held that the amount received was an advance (byana) for the purchase of land, as affirmed by the statement of Shri Vinod Kumar under section 131 of the Act. Since it was an advance and not a loan, its receipt and repayment in cash did not contravene the provisions of sections 269SS and 269T. Therefore, the penalties levied under sections 271D and 271E were not justified, and the AO was directed to delete them.

The Tribunal held that the amount received was an advance (byana) for the purchase of land, as affirmed by the statement of Shri Vinod Kumar under section 131 of the Act. Since it was an advance and not a loan, its receipt and repayment in cash did not contravene the provisions of sections 269SS and 269T. Therefore, the penalties levied under sections 271D and 271E were not justified, and the AO was directed to delete them.

The ITAT observed that the CIT(A) erred by deciding the appeal on merits first and then rejecting the application for additional evidence. Consequently, the tribunal allowed ground No. 3 of the assessee's appeal, set aside the CIT(A)'s order on merits, and directed the CIT(A) to admit the additional evidences and pass a fresh order after affording the assessee an opportunity of being heard.

The Tribunal held that the construction of the new house prior to the sale of the old property does not disentitle the assessee to the deduction under Section 54. It was also held that the source of funds for construction, whether from sale proceeds or borrowed funds, is not a bar to claiming the deduction, provided the investment is made within the stipulated time.

The Tribunal observed that the tax effect in the appeal was indeed below Rs. 50 lakhs. Citing CBDT Circular No. 21/2015 dated December 10, 2015, which prohibits the Revenue from filing appeals before the ITAT for tax effects less than Rs. 50 lakhs, the Tribunal dismissed the appeal as not maintainable.

The Departmental Representative raised no objection to the assessee's request for withdrawal. The tribunal granted permission to the assessee to withdraw the appeal, and as a consequence, the appeal was dismissed as withdrawn.

The Tribunal ruled that the CIT(A) acted incorrectly by dismissing the appeals without discussing the merits, as Section 250(6) mandates a reasoned decision on points of determination. Citing judicial precedent, the ITAT stated that CIT(A) must address issues on merits even in ex parte proceedings. Consequently, the orders were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal ruled that the CIT(A) acted incorrectly by dismissing the appeals without discussing the merits, as Section 250(6) mandates a reasoned decision on points of determination. Citing judicial precedent, the ITAT stated that CIT(A) must address issues on merits even in ex parte proceedings. Consequently, the orders were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal ruled that the CIT(A) acted incorrectly by dismissing the appeals without discussing the merits, as Section 250(6) mandates a reasoned decision on points of determination. Citing judicial precedent, the ITAT stated that CIT(A) must address issues on merits even in ex parte proceedings. Consequently, the orders were set aside, and the matters were restored to the CIT(A) for fresh adjudication.

The Tribunal held that no business profits are attributable to the alleged PE of the assessee in India, following the principle that if an associated enterprise is remunerated at arm's length, no further profit attribution is required.

The Tribunal held that the issue of taxability of cloud services income as 'Royalty' is consistently decided in the assessee's favour in its own case for prior assessment years (2010-11 onwards) and is covered by the Supreme Court's decision in Engineering Analysis Center of Excellence Pvt. Ltd. Vs. CIT. It reaffirmed that revenue from cloud services is not taxable as royalty. The Tribunal also directed the AO to consider the assessee's rectification application regarding computational errors.

The Tribunal held that no business profits are attributable to the alleged PE of the assessee in India, following the principle that if an associated enterprise is remunerated at arm's length, no further profit attribution is required.

The Tribunal held that the reassessment proceedings were valid as the AO had sufficient and relevant material to form a belief that income had escaped assessment. However, the addition made under Section 69 was based on retracted statements recorded under duress, which are not admissible evidence.

The Tribunal found that the TPO erred in rejecting the assessee's "Other Method" and its reliance on contemporaneous third-party market quotations for determining the Arm's Length Price. It concluded that the comparables chosen by the TPO were functionally dissimilar as they were manufacturers, while the assessee was a trader. Therefore, the tribunal directed the deletion of the transfer pricing adjustment.

The Tribunal restored the matter to the CIT(A) for fresh adjudication, directing the CIT(A) to hear the assessee's objections after affording them an opportunity of being heard. The Tribunal noted that the grounds of appeal are allowed for statistical purposes.

Relying on the Supreme Court's decision in Checkmate Services Ltd. and the Bombay High Court's decision in Rohan Kargawnker, the tribunal held that deductions for employee contributions to PF and ESI are only permissible if deposited on or before the due dates specified under the respective PF/ESI Acts. The timing of the assessment order (u/s 143(3) or 143(1)(a)) does not alter this established legal principle.

The Tribunal directed the exclusion of 'Infobeans Technologies Ltd.' as a comparable. It also restored the issue of trade payables/receivables to the Assessing Officer for re-adjudication. The addition related to TDS reconciliation was also restored to the Assessing Officer for fresh examination.

The Tribunal held that the penalty notices issued under Section 271AAB were defective as they did not specify the charges against the assessee, violating principles of natural justice. Consequently, the penalty proceedings were quashed.

The Tribunal held that the penalty notices issued under Section 271AAB were defective as they did not specify the charges against the assessee, violating principles of natural justice. Consequently, the penalty proceedings were quashed.

The Tribunal noted that the quantum addition related to long-term capital gain, which was the basis for the penalty, had already been deleted by an earlier Tribunal order. Therefore, the Tribunal held that the penalty levied under section 271(1)(c) could not stand and directed the Assessing Officer to delete it.

The Tribunal held that the penalty notices issued under Section 271AAB were defective as they did not specify the charges against the assessee, violating principles of natural justice. Consequently, the penalty proceedings were quashed.

The Tribunal held that the TPO erred in segregating and benchmarking the intra-group services payment independently when the assessee had aggregated all closely linked transactions under TNMM. The Tribunal also noted contradictory observations by the DRP and the TPO's failure to follow a specific method for ALP determination.

The Tribunal held that since the revised return for AY 2014-15, claiming STCL carry forward, was accepted by the AO and the assessment attained finality, the assessee had a vested right to set off this loss in AY 2015-16. Denying this set off in rectification proceedings for AY 2015-16 was unjust and illegal.

The Tribunal observed that the CIT(A) did not adjudicate the actual issue in dispute regarding the ad-hoc disallowance of expenses. Consequently, the appeal is restored to the file of the CIT(A) for de novo adjudication in accordance with law, allowing the grounds raised by the assessee for statistical purposes.

The ITAT noted that the DR had no objection to restoring the appeal for fresh consideration. Considering the submissions, the ITAT restored the appeal to the file of the Ld. CIT(A) for fresh adjudication on merits, after providing adequate opportunity of being heard to the assessee.

The Tribunal observed that the assessee was unrepresented before both the AO and CIT(A), and the CIT(A) dismissed the appeal without addressing its merits. To uphold natural justice and provide a proper opportunity, the Tribunal set aside the orders of the lower authorities. The matter was restored to the AO for a fresh de novo assessment, allowing the assessee an opportunity of being heard.

The Tribunal found that the assessee had demonstrated reasonable cause for the cash repayment, recognizing the urgent circumstances related to obtaining the NOC and the bona fides of the transaction. It concluded that the breach of Section 269T was merely technical or venial, causing no prejudice to the Revenue, and that the 100% penalty was disproportionate. The Tribunal therefore exonerated the assessee and directed the AO to delete the penalty.

The Tribunal held that the assessee's claim for exemption under Article 13(4) of the India-Mauritius DTAA was not sustainable. It found that the company lacked sufficient economic substance and its control and management were effectively exercised from outside Mauritius, indicating it was primarily a conduit for tax avoidance.

The Tribunal held that the final assessment order was passed beyond the limitation period prescribed under Section 144C(13) of the Income Tax Act. Therefore, the assessment order is rendered non est by operation of law.

The Tribunal upheld the PCIT's order, noting that the assessee failed to appear or present evidence to counter the PCIT's findings. The Tribunal agreed that the PCIT had made specific inquiries into the unsupported deposits, unlike the Assessing Officer, concluding there was no error in the PCIT's findings.

The Tribunal ruled that once book results are rejected and net profit is estimated (here, at 9%), the PCIT cannot legally invoke revisionary jurisdiction u/s 263 to make specific disallowances u/s 40(a)(ia) from the same books, as all expenditures are subsumed in the estimated profit. The Tribunal also upheld the validity of the revision notice issued by ITO, HQ on behalf of PCIT u/s 263.

The Tribunal observed that the assessee was not given a proper opportunity before the lower authorities, and the CIT(A) dismissed the appeal without considering its merits. Therefore, the Tribunal set aside the orders of the lower authorities and remanded the case back to the AO for fresh adjudication after allowing the assessee a reasonable opportunity of being heard.

The Tribunal dismissed the Revenue's appeal as not maintainable due to low tax effect (below Rs. 50 lakhs). The assessee's cross-objection was also dismissed as infructuous because the assessee's grievances had already been addressed and necessary benefits received from the AO through an order under Section 154 of the Income-tax Act, 1961.