ITAT Delhi Judgments — April 2024

Following the precedent set by PCIT vs. JKD Capital & Finlease Ltd. (Del. High Court), the Tribunal concluded that penalty proceedings under section 275(1)(c) are initiated from the date of reference by the AO to the JCIT (25.09.2014). Since the penalty order was passed on 25.02.2016, which is beyond the statutory 6-month period (expiring 31.03.2015), the penalty order was deemed squarely barred by limitation and required to be deleted. The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s finding.

Referring to the Delhi High Court's decision in PCIT vs. Era Infrastructure (India) Ltd., the Tribunal held that no disallowance under Section 14A is permissible in the absence of exempt income, a principle applicable up to A.Y. 2021-22. Since the assessee had no exempt income, the disallowance confirmed by the CIT(A) was not justified.

The Income Tax Appellate Tribunal (ITAT) noted that the CIT(A) had proceeded ex-parte despite a valid adjournment request from the assessee. The ITAT deemed the request for *de novo* adjudication fair and reasonable. Consequently, the ITAT restored the appeal to the file of the CIT(A) for fresh adjudication, ensuring the assessee is given a reasonable opportunity of being heard and allowed to furnish fresh evidence.

The Tribunal deleted the additions, finding that the creditors' balances were part of running accounts with payments made in subsequent years. It held that there was no evidence of remission or cessation of liability, which is a prerequisite for invoking Section 41(1).

The Income Tax Appellate Tribunal (ITAT) held that the physical inspections confirmed the absence of basic amenities (such as boundary walls, a proper kitchen, washroom, electricity, and water connection) on the new property. These amenities are essential for a structure to be considered a habitable residential house. Therefore, the assessee failed to construct a qualifying residential house within the prescribed three-year period (by 25.09.2017) as mandated by Section 54. The certificates relied upon by the CIT(A) were deemed to lack evidentiary value in light of the objective findings from the physical inspections. Consequently, the deduction claimed under Section 54 was rightly denied by the AO.

The Tribunal held that the assessee had a bonafide belief that TDS was not required on transaction charges, as there was no specific head for such payments under Section 194J. The penalty was therefore not justified.

The Tribunal held that the approval granted under Section 153D was invalid as it was mechanical and lacked due application of mind, rendering the assessment orders invalid. Consequently, the assessment orders were quashed.

The Tribunal held that the approval granted under Section 153D was invalid as it was mechanical and lacked due application of mind, rendering the assessment orders invalid. Consequently, the assessment orders were quashed.

The Tribunal dismissed the appeal for AY 2013-14 due to low tax effect. For AY 2014-15, the Tribunal upheld the CIT(A)'s deletion of penalty, finding no case of furnishing inaccurate particulars of income as the assessee had accepted the Assessing Officer's view and paid the demand promptly.

The Tribunal dismissed the Revenue's appeal as not maintainable, confirming that the tax effect was below the monetary limit of Rs. 50 lakhs set by CBDT Circular No. 17/2019 for departmental appeals to the ITAT. It granted the Revenue liberty to seek recall of the order if the tax effect is later found to exceed the limit or if any exceptions apply.

The Tribunal held that the provision for customer discounts was a lesser realization of sale price and crystallized during the year, following Supreme Court and High Court precedents. It also held that computer peripherals form part of integrated computer systems eligible for computer depreciation, following High Court decisions.

The Tribunal held that the approval granted under Section 153D was invalid as it was mechanical and lacked due application of mind. Consequently, the assessment orders passed based on this invalid approval were also quashed.

The tribunal accepted the assessee's explanation for cash deposits, finding Rs. 20,00,000/- as a gift from his sister and Rs. 19,85,000/- from his sons' agricultural land sale to be duly explained, covering the entire cash deposit of Rs. 37,39,500/-. Regarding cheque deposits of Rs. 14,69,190/-, the tribunal remanded Rs. 9,00,000/- relating to bounced cheques to the AO for verification, while sustaining the remaining Rs. 5,69,190/- due to lack of evidence.

The Tribunal held that the approval granted under Section 153D was invalid as it was mechanical and lacked due application of mind. Consequently, the assessment orders passed based on this invalid approval were also quashed.

The Tribunal held that the approval granted under Section 153D was invalid as it was mechanical and lacked due application of mind. Consequently, the assessment orders passed based on this invalid approval were also quashed.

The tribunal held that, as per CBDT Instruction No. 1/2011, an ITO lacked jurisdiction to issue a Section 143(2) notice when the returned income exceeded Rs. 30 lakhs. It clarified that Section 124(3) applies to territorial, not pecuniary, jurisdiction. Therefore, the assessment framed under Section 143(3) based on a jurisdictionally flawed notice was quashed as void ab initio.

The Tribunal held that the approval granted under Section 153D was invalid as it was mechanical and lacked due application of mind, rendering the assessment orders invalid. Consequently, the assessment orders were quashed.

The Tribunal dismissed the appeal for AY 2013-14 due to low tax effect. For AY 2014-15, the Tribunal upheld the CIT(A)'s deletion of penalty, finding no case of furnishing inaccurate particulars of income as the assessee had accepted the Assessing Officer's view and paid the demand promptly.

The Tribunal held that the approval granted under Section 153D was invalid as it was mechanical and lacked due application of mind. Consequently, the assessment orders passed based on this invalid approval were also quashed.

The Tribunal upheld the CIT(A)'s decision, agreeing that the transactions were not genuine investments but rather accommodation entries to route unaccounted money. The abnormal appreciation in share prices of penny stock companies, coupled with the assessee not being a regular investor, supported this conclusion.

The Tribunal held that in respect of completed/unabated assessments made under Section 153A, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of a search operation under Section 132 of the Act, citing the Supreme Court decision in PCIT v. Abhisar Buildwell (P.) Ltd. Since no incriminating material was found, the additions made by the AO were unsustainable.

The Tribunal observed that the assessee was not given proper opportunity of being heard by the lower authorities, violating natural justice. Consequently, the assessment order was set aside, and the case was remitted back to the AO for fresh adjudication, ensuring the assessee receives a fair chance to present their case and evidence regarding cash deposits.

The Tribunal held that assessments under Section 153A must be based on incriminating material found during the search. Since no such material was found for the additions made, the assessment was quashed as bad in law.

The Income Tax Appellate Tribunal dismissed the assessee's appeal. The tribunal noted that no one appeared for the assessee despite repeated notices, and no material was placed on record to controvert the findings of the CIT(A). Therefore, the CIT(A)'s findings were upheld.

The Tribunal held that assessments under Section 153A must be based on incriminating material found during the search. Since no such material was found for the additions made, the assessment was quashed as bad in law.

The Tribunal noted the assessee's claim that Form 67 was filed and the FTC was allowed but not computed. It directed the AO to verify these facts and, if found correct, to grant the relief in accordance with law. The Tribunal allowed the appeal for statistical purposes, remanding the matter to the AO for re-verification.

The Tribunal upheld the decision of the CIT(A) to delete the additions. For M/s Jain & Co., the Tribunal found that the company had sufficient cash sales to justify the cash deposits and the investment. For M/s H.G. Exims Pvt. Ltd., the Tribunal noted that the share application money was eventually refunded, indicating a genuine transaction.

The Tribunal held that since the adjustment for fixed assets was not part of the draft assessment order or its computation, and thus the final assessment order was not in conformity with the draft, the said adjustment was not legally permissible.

The Tribunal held that since the adjustment for fixed assets was not part of the draft assessment order or its computation, and thus the final assessment order was not in conformity with the draft, the said adjustment was not legally permissible.

The Tribunal held that the transfer of excess liability during demerger, resulting in a capital reserve, is a capital transaction. It is not required to be routed through the profit and loss account for book profit computation under Section 115JB.

The Tribunal held that since the assessment for the relevant year was already completed and unabated at the time of search, additions under Section 153A could only be made if based on incriminating material found during the search. As no such material was found, the additions were not sustainable.

The Tribunal dismissed both appeals for AY 2008-09 and AY 2009-10. For AY 2008-09, the disallowance of Rs. 1,12,27,857/- u/s 40A(3) was upheld due to lack of material from the assessee to controvert the CIT(A)'s findings. The grounds challenging the reopening of assessment were also dismissed. For AY 2009-10, the disallowance of Rs. 1,51,80,843/- u/s 40A(3) and the grounds against reopening were similarly dismissed, applying the same reasoning due to identical facts.

The Tribunal acknowledged the genuine hardship and directed the Assessing Officer to allow the TDS credit of Rs. 9,54,132/- for AY 2012-13. This allowance is conditional upon verification of facts and potentially through an application by the assessee under Section 119(2)(b) of the Income Tax Act, 1961, to address the grievance.

The Tribunal held that the penalty was initiated for under-reporting but imposed at the rate for misreporting. Since the AO did not establish misreporting as per Section 270A(9), the penalty rate should have been 50% for under-reporting.

The Tribunal held that the addition for unexplained jewellery was to be decided after verifying the company's disclosures. For the scrap sales, the addition was remitted back to the Assessing Officer to determine if the company had disclosed the income, and if not, the addition could be sustained in the assessee's hands.

The Tribunal held that advertisement and business promotion expenses, even if providing enduring benefits, are revenue in nature and not capital. The AO failed to provide evidence of creating an intangible asset, and the expenses were incurred for business expediency in a competitive market.

The Tribunal held that the addition for unexplained jewellery was to be decided after verifying the company's disclosures. For the scrap sales, the addition was remitted back to the Assessing Officer to determine if the company had disclosed the income, and if not, the addition could be sustained in the assessee's hands.

The Tribunal held that in respect of completed/unabated assessments made under Section 153A, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of a search operation under Section 132 of the Act, citing the Supreme Court decision in PCIT v. Abhisar Buildwell (P.) Ltd. Since no incriminating material was found, the additions made by the AO were unsustainable.

The Tribunal dismissed both appeals for AY 2008-09 and AY 2009-10. For AY 2008-09, the disallowance of Rs. 1,12,27,857/- u/s 40A(3) was upheld due to lack of material from the assessee to controvert the CIT(A)'s findings. The grounds challenging the reopening of assessment were also dismissed. For AY 2009-10, the disallowance of Rs. 1,51,80,843/- u/s 40A(3) and the grounds against reopening were similarly dismissed, applying the same reasoning due to identical facts.

The Tribunal held that since the assessment for the relevant year was already completed and unabated at the time of search, additions under Section 153A could only be made if based on incriminating material found during the search. As no such material was found, the additions were not sustainable.

The tribunal held that a valid notice under section 143(2) is a sine qua non for a valid assessment under section 143(3) and such notice can only be issued after the return of income is filed. Issuing the notice before the return was filed constituted a jurisdictional error that could not be cured by Section 292BB, even if the assessee participated in the proceedings. Consequently, the tribunal quashed the assessment order, finding it invalid.

The Tribunal held that the assessee was not given a proper opportunity of being heard, which constituted a violation of natural justice. Therefore, the Tribunal quashed the impugned orders of the CIT(A) and remanded the issues back to the CIT(A) for de novo adjudication, directing a fresh hearing and consideration of all evidence.

The Tribunal found that the AO had indeed conducted adequate inquiries regarding the unsecured loans. Regarding depreciation, the Tribunal held that even if the claim was erroneous, it did not render the assessment prejudicial to the revenue as the assessee's income was otherwise exempt. The Tribunal also noted that the PCIT raised fresh issues without proper show cause notice, violating natural justice. Consequently, the revision order u/s 263 was quashed.

The Tribunal, referring to earlier Coordinate Bench decisions, stated that the due date for depositing employees' contributions to PF/ESI must be reckoned from the actual date of salary disbursement, not the month to which it relates. Consequently, the issue was restored to the Assessing Officer for factual verification of the salary disbursement dates and a fresh decision after providing the assessee with an opportunity of being heard.

The Tribunal held that the assessee was not given a proper opportunity of being heard, which constituted a violation of natural justice. Therefore, the Tribunal quashed the impugned orders of the CIT(A) and remanded the issues back to the CIT(A) for de novo adjudication, directing a fresh hearing and consideration of all evidence.

The Tribunal upheld the CIT(A)'s decision, confirming that the entire liquor business was effectively operated by the assessee AOP, and its income was offered to tax by the AOP and accepted by the AO. Therefore, disallowing only the license fee, while other related expenses were allowed, was not justified. The Tribunal dismissed the Revenue's appeal.

The Tribunal upheld the CIT(A)'s decision to delete both disallowances. It noted that the CIT(A) had correctly relied on previous judgments of the Delhi High Court and co-ordinate benches in the assessee's own case, which established that no disallowance under Section 14A was warranted without exempt income, and expenses under Section 36(1)(xii) were allowable.

The Tribunal noted that both the assessment and first appellate orders were passed ex-parte. Considering the assessee's claim of non-service of notices, the Tribunal restored the matter to the Assessing Officer for a de novo assessment. The AO is directed to provide a reasonable opportunity of hearing, and the assessee is to provide their current email ID for notice service.

The Tribunal held that the assessee was not given a proper opportunity of being heard, which constituted a violation of natural justice. Therefore, the Tribunal quashed the impugned orders of the CIT(A) and remanded the issues back to the CIT(A) for de novo adjudication, directing a fresh hearing and consideration of all evidence.

The Tribunal observed that the assessee was genuinely prevented from appearing before the First Appellate Authority due to counsel's illness, thus being deprived of a reasonable opportunity of being heard. Consequently, the Tribunal set aside the impugned ex-parte order and restored the matter to the Assessing Officer for fresh adjudication, with a directive to provide the assessee a proper hearing.