ITAT Delhi Judgments — March 2024

The Tribunal allowed the appeal regarding the disallowance of duty drawback written off and held that interest under Section 234B is not chargeable when tax is deducted at source by the buyer. Interest under Section 234C was to be charged only on returned income.

The Tribunal allowed the appeal regarding the disallowance of duty drawback written off and held that interest under Section 234B is not chargeable when tax is deducted at source by the buyer. Interest under Section 234C was to be charged only on returned income.

The Tribunal held that interest under Section 234B of the Act is not chargeable when tax has been deducted at source by the buyer. The chargeability of interest under Section 234D is consequential. For AY 2020-21, the AO was directed to verify the chargeability of interest under Section 234A.

The Tribunal, emphasizing substantial justice over technicalities and finding no malafide intent by the assessee, directed the CIT(A) to condone the 1441-day delay. It ordered the CIT(A) to admit the appeal and adjudicate it de novo on its merits, providing the assessee a fair opportunity.

The Tribunal deleted the transfer pricing adjustment, stating it cannot be made with reference to entire turnover and should be restricted to international transactions. The club expenditure was allowed as a business expense, following previous decisions in the assessee's own case.

The Tribunal, relying on various High Court precedents, held that the Commissioner (Pr. CIT) acting under section 263 cannot direct the initiation of penalty proceedings under section 271(1)(c) or 273, as penalty proceedings are independent of assessment proceedings. It clarified that the AO's failure to initiate penalty does not make the assessment order erroneous or prejudicial to the interest of revenue. Consequently, the Tribunal quashed the PCIT's revision order.

The Income Tax Appellate Tribunal restored the appeal to the Ld.CIT(A) for fresh adjudication on merits, emphasizing the need to provide the assessee with an adequate opportunity of being heard. The assessee is directed to cooperate with the proceedings.

The Tribunal held that since the foundational addition of Rs. 41,36,250/- under Section 69, on which the penalty u/s 271(1)(c) was based, has already been deleted and upheld by appellate authorities, the penalty cannot legally survive. Accordingly, the Assessing Officer was directed to delete the penalty.

The Tribunal, relying on various High Court precedents, held that the Commissioner (Pr. CIT) acting under section 263 cannot direct the initiation of penalty proceedings under section 271(1)(c) or 273, as penalty proceedings are independent of assessment proceedings. It clarified that the AO's failure to initiate penalty does not make the assessment order erroneous or prejudicial to the interest of revenue. Consequently, the Tribunal quashed the PCIT's revision order.

The Tribunal allowed the appeal regarding the Section 40(a)(ia) disallowance, ruling that a mere technical error in mentioning the TDS section should not lead to disallowance when TDS was actually deducted and remitted. However, the claim for DDT refund was dismissed, relying on a Special Bench decision that DTAA benefits do not automatically apply to DDT paid under Section 115O. The Tribunal also held that interest charges were consequential and penalty proceedings premature for adjudication.

The Tribunal held that the addition made by the AO was academic in nature, as the revenue had already been taxed in subsequent years at the same tax rate. The deletion of addition by the CIT(A) was upheld.

The Tribunal noted that Section 251 of the Income Tax Act does not confer power upon the CIT(A) to dismiss an appeal for non-prosecution. Consequently, in the interest of justice, the Tribunal restored the matter to the file of the CIT(A) to examine the issues afresh after providing the assessee a proper opportunity of being heard.

The Tribunal, relying on various High Court precedents, held that the Commissioner (Pr. CIT) acting under section 263 cannot direct the initiation of penalty proceedings under section 271(1)(c) or 273, as penalty proceedings are independent of assessment proceedings. It clarified that the AO's failure to initiate penalty does not make the assessment order erroneous or prejudicial to the interest of revenue. Consequently, the Tribunal quashed the PCIT's revision order.

The tribunal held that the transaction had commercial expediency and business exigency, as the loan from ALPL was used to repay EMIs on a bank loan where ALPL was a co-borrower and the transaction protected the director's mortgaged property. Since the loan benefitted both ALPL and the assessee and was in the nature of a business transaction, it could not be considered a deemed dividend under section 2(22)(e) of the Act. Additionally, ALPL's accumulated profits were less than the added amount.

The Tribunal, relying on previous ITAT judgments, held that once TDS is deducted and deposited with the government, the assessee is entitled to the credit, even if the corresponding income is not offered for tax due to being considered not taxable. It emphasized that the Income-tax Department cannot refuse credit simply because the income was not disclosed in the return or deemed non-taxable. Therefore, the assessee was found entitled to the TDS credit and subsequent refunds.

The Tribunal found no reason to interfere with the order of the CIT(A) as the assessee failed to controvert the findings with cogent evidence. The additions made in the assessment were confirmed by the High Court.

The tribunal, relying on the Supreme Court's decision in Checkmate Services Ltd. and the Bombay High Court's ruling in Rohan Kargawnker, upheld the principle that deductions for employee contributions to PF and ESI are permissible only if deposited on or before the due dates prescribed under the respective Acts, irrespective of the return filing due date. Consequently, the addition of Rs. 4,65,87,733/- was largely justified. However, the specific sum of Rs. 6,20,890/- for ESI was remanded to the Assessing Officer for verification of whether the delayed remittance due to a public holiday falls under the General Clauses Act.

The Tribunal, relying on previous ITAT judgments, held that once TDS is deducted and deposited with the government, the assessee is entitled to the credit, even if the corresponding income is not offered for tax due to being considered not taxable. It emphasized that the Income-tax Department cannot refuse credit simply because the income was not disclosed in the return or deemed non-taxable. Therefore, the assessee was found entitled to the TDS credit and subsequent refunds.

The Tribunal determined that the assessee had sufficiently explained the nature and source of the credited funds as the return of a prior advance. Consequently, it held that Section 68 of the Act was not applicable, and directed the deletion of both the primary addition of Rs. 83,63,86,000/- and the related 1% commission addition.

The Tribunal allowed the appeal for AY 2017-18 for statistical purposes and allowed the appeal for AY 2018-19. The decision on foreign tax credit was based on the jurisdictional High Court's ruling in the Wipro Ltd. case.

The Tribunal held that since the original revision order under Section 263 of the Act, which was the foundation for the consequential proceedings, had already been quashed by the Tribunal, those consequential proceedings could not legally survive. The Tribunal found no error in the CIT(A)'s decision to quash these consequential proceedings. Consequently, the revenue's appeal was dismissed.

The Tribunal held that the interest expenses were for business purposes as borrowed funds were used for advancing interest-bearing loans. It also found that notional interest was wrongly added on advances for which interest income was already offered. Finally, it ruled that disallowance under Section 14A cannot exceed exempt income, and the assessee had already made a sufficient suo-motu disallowance.

The Tribunal found no evidence to support the revenue's claim that the 'amounts sent' were routed through hawala by the assessee, and noted that the assessee had provided sufficient documentation to prove the FDI receipts from LGF Cyprus. It was observed that the CBDT Foreign Tax Division had also confirmed LGF raising money through shares for investment, with no adverse comments. The Tribunal ruled that the revenue's addition was based on mere suspicion and surmise, and the presumption u/s 292C was not applicable to a Section 153C assessee in this context. Consequently, the addition u/s 69 was deleted.

The Tribunal allowed the appeal for AY 2017-18 for statistical purposes and allowed the appeal for AY 2018-19. The decision on foreign tax credit was based on the jurisdictional High Court's ruling in the Wipro Ltd. case.

The Tribunal held that for unabated assessment years, additions under Section 153A can only be made if there is incriminating material found during the search. Since no such material was found for the additions in question, the deletion by the CIT(A) was upheld.

The Tribunal observed that no show cause notice was issued by the Assessing Officer before making the addition under section 68. Both the assessee's representative and the Departmental Representative agreed to restore the entire appeal to the Assessing Officer for fresh adjudication (de novo). Consequently, the appeal was allowed for statistical purposes.

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s finding that cash withdrawals subsequently redeposited within a week were not unexplained. For the issues raised in the assessee's cross-objection concerning capital received from Smt. Vandana and advance for property, the Tribunal remanded the matter back to the Assessing Officer for further verification and examination.

The Tribunal acknowledged the assessee's right to appeal but emphasized the responsibility to comply with notices. While not preempting the assessee's grievance, the Tribunal observed that the assessee's conduct was burdening the justice system. Therefore, the Tribunal directed the assessee to pay Rs. 5,000/- to the Prime Minister's National Relief Fund and remanded the case to the CIT(A) for a fresh hearing, with specific instructions to provide the assessee an opportunity of being heard.

The Income Tax Appellate Tribunal (ITAT) found that the lower authorities erred in making an ad-hoc 30% disallowance without disputing the genuineness of the vouchers or providing contrary evidence. The Tribunal emphasized that substantial travel expenses are natural in the initial setup phase of a business and that the onus on the assessee to prove expenses should not be interpreted to cover up mere book entries, but rather to show commercial expediency.

The Tribunal held that the assessee had sufficient own funds to advance interest-free loans and that the borrowed funds were used for income-earning purposes. Therefore, no disallowance on account of interest was warranted.

The Tribunal held that the assessee had sufficient own funds to advance interest-free loans and that the borrowed funds were used for income-earning purposes. Therefore, no disallowance on account of interest was warranted.

The Tribunal noted that the reassessment order and the initial appeal to CIT(A) were made during the assessee's lifetime, with his demise being informed only during later appeal proceedings for another AY. Recognizing the need for a fair opportunity, the Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication on merits, allowing the assessee a reasonable opportunity of being heard.

The Tribunal held that the addition was not sustainable as the assessee was not a party to the agreement to sell, which was cancelled and not executed. No evidence of payment by the assessee beyond the registered sale deed value was found.

The Tribunal held that the addition was not sustainable as the assessee was not a party to the agreement to sell, which was cancelled and not executed. No evidence of payment by the assessee beyond the registered sale deed value was found.

The Tribunal found that the appeal was filed beyond the statutory limitation period. As the assessee failed to file any application for condonation of delay, the appeal was dismissed as invalid.

The Tribunal held that the assessee had sufficient own funds to advance interest-free loans and that the borrowed funds were used for income-earning purposes. Therefore, no disallowance on account of interest was warranted.

The Tribunal held that the assessee had sufficient own funds to advance interest-free loans and that the borrowed funds were used for income-earning purposes. Therefore, no disallowance on account of interest was warranted.

The Tribunal determined that granting the assessee an opportunity to file submissions would not prejudice the revenue. Consequently, the matter was remanded back to the CIT(A) for adjudication on merits, and the appeal was allowed for statistical purposes.

The Tribunal upheld the CIT(A)'s decision, observing that the identical addition had already been confirmed on a substantive basis in the hands of Smt. Saroj Bhatia's husband, Sh. Ram Prakash Bhatia, by both the CIT(A) and ITAT. Consequently, the protective addition in the assessee's case was not sustainable.

The Tribunal held that the assessee had sufficient own funds to advance interest-free loans and that the borrowed funds were used for income-earning purposes. Therefore, no disallowance on account of interest was warranted.

The Tribunal held that BVG India Limited is a good comparable for the FMS segment based on its financials and segment reporting, and rejected the assessee's request for its exclusion. Ashiana Maintenance Services Limited was rejected as a comparable due to lack of segment reporting and revenue from café sales.

The Tribunal held that the search and seizure operation was valid, even if conducted on a group and not solely on the assessee, citing Section 292CC and judicial precedents. Regarding the property purchase, the Tribunal found no merit in the assessee's contention that a reference to the Valuation Officer was mandatory.

Following precedents from the Delhi and Bombay High Courts, the Tribunal held that an omnibus notice under section 274 read with section 271(1)(c), which does not specify the charge, is fundamentally flawed and renders the penalty proceedings void. Consequently, the Tribunal set aside the penalty imposed by the lower authorities and directed its deletion.

The Tribunal held that for unabated assessment years (where the time limit for issuing notice under section 143(2) had lapsed), additions under Section 153A cannot be made without incriminating material found during the search. Citing the Supreme Court judgment in PCIT Vs. Abhisar Buildwell Pvt. Ltd., the Tribunal found no such material to support the estimated additions based on electricity consumption. Consequently, the additional grounds of appeal were allowed, and the assessment orders were quashed.

The Tribunal held that for unabated assessment years (where the time limit for issuing notice under section 143(2) had lapsed), additions under Section 153A cannot be made without incriminating material found during the search. Citing the Supreme Court judgment in PCIT Vs. Abhisar Buildwell Pvt. Ltd., the Tribunal found no such material to support the estimated additions based on electricity consumption. Consequently, the additional grounds of appeal were allowed, and the assessment orders were quashed.

The Tribunal held that for unabated assessment years (where the time limit for issuing notice under section 143(2) had lapsed), additions under Section 153A cannot be made without incriminating material found during the search. Citing the Supreme Court judgment in PCIT Vs. Abhisar Buildwell Pvt. Ltd., the Tribunal found no such material to support the estimated additions based on electricity consumption. Consequently, the additional grounds of appeal were allowed, and the assessment orders were quashed.

The Tribunal held that the assessee had a reasonable cause for the delay in furnishing the Tax Audit Report. It clarified that this was not a case of failing to get accounts audited but merely a delay in furnishing the report, which was eventually submitted with the revised return within the legally permissible time. Therefore, the Tribunal vacated the penalty imposed under Section 271B of the Act.