ITAT Delhi Judgments — September 2024

The ITAT held that the CIT(A) erred by dismissing the appeal ex parte for non-prosecution without deciding on merits. The CIT(A) is obligated to pass a speaking order on all grounds of appeal as per Section 250(6) of the Act.

The ITAT condoned the six-month delay in filing the appeal, citing 'sufficient cause' and the principle of substantial justice. It found that the CIT(A) summarily disposed of the appeal without a speaking order on all grounds, specifically failing to address the brought forward losses and lacking reasoning for confirming commitment charges disallowance. The matter was remitted back to the CIT(A) for fresh adjudication on merits.

The ITAT held that the CIT(A) is statutorily obligated under section 250(6) of the Income Tax Act to dispose of an appeal on merits through a speaking order, even if the assessee failed to appear, and cannot dismiss it solely for non-prosecution. Citing precedent, the ITAT set aside the CIT(A)'s order and remitted the matter back for fresh adjudication on merits, ensuring the assessee a proper opportunity of hearing.

The ITAT condoned the delay in filing the appeal, noting that while there was negligence, there was no mala fide intention and sufficient cause existed. Without commenting on the merits of the disallowance, the ITAT set aside the CIT(A)'s ex-parte order and remitted the issue of EDC charges back to the CIT(A) for a fresh decision on merits.

The Tribunal noted that a Coordinate Bench, in the assessee's own case for AYs 2008-09 to 2010-11, had already held the purchase costs of paintings to be revenue expenditure allowable under Section 37. Given this precedent and the allowance of the entire purchase costs as expenditure in earlier years, the current appeals regarding depreciation on the same paintings became infructuous and were dismissed.

The Tribunal dismissed the Revenue's appeal as not maintainable. This decision was based on CBDT Circular No. 09/2024 dated 17.09.2024, which sets the monetary limit for filing departmental appeals to the ITAT at Rs. 60 lakhs, and the admitted tax effect of Rs. 34,79,216/- was below this threshold.

The Tribunal remitted the disputed issues back to the file of the AO for fresh consideration, directing the AO to provide adequate opportunity of being heard to the assessee. The AO was also instructed to verify the return of income concerning the exempt nature of a partner's share of profit from a firm.

The ITAT held that the CIT(A) erred by dismissing the appeal for non-prosecution without adjudicating on the merits of the case. Consequently, the ITAT remitted the issues back to the CIT(A) for a fresh decision after providing the assessee with an adequate opportunity of being heard.

The Tribunal found that the Revenue failed to demonstrate that the assessee's cash sales or opening cash in hand were fictitious, noting that the AO had not rejected the books of account or doubted the genuineness of the opening cash. It also highlighted inconsistencies in the AO's calculation of negative cash balance and confirmed that petrol pumps were allowed cash sales during demonetization. Relying on a similar precedent (Ramesh Kochar), the Tribunal concluded that the addition under Section 69A was unwarranted and deleted the entire amount.

The Tribunal noted that a Coordinate Bench, in the assessee's own case for AYs 2008-09 to 2010-11, had already held the purchase costs of paintings to be revenue expenditure allowable under Section 37. Given this precedent and the allowance of the entire purchase costs as expenditure in earlier years, the current appeals regarding depreciation on the same paintings became infructuous and were dismissed.

The Tribunal held that the assessee was merely a pass-through entity for routing unaccounted income of beneficiaries. Since the beneficiaries were identified and information disseminated, and the commission income was already taxed in the hands of the entry operators, no further addition for unexplained credits or commission income should be made in the assessee's hands. The Tribunal relied on its precedent in Zed Enterprises (P) Ltd., where similar facts led to the same conclusion.

The Tribunal held that in reassessment proceedings under Section 153A, additions must be based on incriminating material found during search, which was absent here. The Tribunal also agreed that ITC is a balance sheet item and not part of profit and loss, thus not affecting taxable income.

The Income Tax Appellate Tribunal (ITAT) observed that the CIT(A) had dismissed the appeal for non-prosecution after sending notices to a wrong email address, which was a violation of natural justice. The ITAT held that the CIT(A) should have decided the appeal on merits. Consequently, the ITAT remitted the issues back to the CIT(A) to consider them afresh and pass an order as per law, after providing the assessee an adequate opportunity of being heard.

The Tribunal upheld the CIT(A)'s decision, finding that the diversion of funds to related parties was for commercial expediency and that the loan was utilized for business purposes. Therefore, the disallowance of interest and processing fees was not justified.

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the Assessing Officer was invalid. Consequently, the additions made to the assessee's income were unsustainable.

The Tribunal held that the assessee was merely a pass-through entity for routing unaccounted income of beneficiaries. Since the beneficiaries were identified and information disseminated, and the commission income was already taxed in the hands of the entry operators, no further addition for unexplained credits or commission income should be made in the assessee's hands. The Tribunal relied on its precedent in Zed Enterprises (P) Ltd., where similar facts led to the same conclusion.

The Tribunal held that the CIT(A) correctly allowed the assessee's appeal by deleting the addition. The Tribunal found that the cash deposited was explained by the available cash balance as on 08.11.2016, which was built up from undisputed cash withdrawals and opening balances verified by prior year ITRs.

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the Assessing Officer was invalid. Consequently, the additions made to the assessee's income were unsustainable.

The Tribunal held that the assessee had discharged the primary onus by producing corroborative evidence, and the Revenue failed to disprove the genuineness of the transactions. The Tribunal relied on various High Court and Tribunal decisions concerning the same scrip, finding the LTCG to be bona fide.

The Tribunal held that the CIT(A) correctly allowed the assessee's appeal by deleting the addition. The Tribunal found that the cash deposited was explained by the available cash balance as on 08.11.2016, which was built up from undisputed cash withdrawals and opening balances verified by prior year ITRs.

The Tribunal upheld the CIT(A)'s decision, finding that the diversion of funds to related parties was for commercial expediency and that the loan was utilized for business purposes. Therefore, the disallowance of interest and processing fees was not justified.

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the Assessing Officer was invalid. Consequently, the additions made to the assessee's income were unsustainable.

The ITAT allowed the appeal for statistical purposes, restoring the issue to the AO. The tribunal found that the intimation regarding the adjustment was sent to a wrong email address, violating principles of natural justice.

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the Assessing Officer was invalid. Consequently, the additions made to the assessee's income were unsustainable.

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the Assessing Officer was invalid. Consequently, the additions made to the assessee's income were unsustainable.

The Tribunal held that the assessee was merely a pass-through entity for routing unaccounted income of beneficiaries. Since the beneficiaries were identified and information disseminated, and the commission income was already taxed in the hands of the entry operators, no further addition for unexplained credits or commission income should be made in the assessee's hands. The Tribunal relied on its precedent in Zed Enterprises (P) Ltd., where similar facts led to the same conclusion.

The Tribunal held that the assessee had discharged the primary onus by producing corroborative evidence, and the Revenue failed to disprove the genuineness of the transactions. The Tribunal relied on various High Court and Tribunal decisions concerning the same scrip, finding the LTCG to be bona fide.

The Tribunal held that the assessee was merely a pass-through entity for routing unaccounted income of beneficiaries. Since the beneficiaries were identified and information disseminated, and the commission income was already taxed in the hands of the entry operators, no further addition for unexplained credits or commission income should be made in the assessee's hands. The Tribunal relied on its precedent in Zed Enterprises (P) Ltd., where similar facts led to the same conclusion.

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the Assessing Officer was invalid. Consequently, the additions made to the assessee's income were unsustainable.

The Tribunal held that additions based on estimation of profit are not tenable when transactions are part of audited financial statements. It also held that ITC is a balance sheet item and not a profit and loss account item, thus not impacting profitability.

The Tribunal held that filing Form 67 along with the return of income is a directory, not mandatory, requirement. Since the assessee subsequently filed Form 67 and the ITAT had previously ruled in favor of allowing foreign tax credit in similar circumstances, the claim should be allowed.

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the Assessing Officer was invalid. Consequently, the additions made to the assessee's income were unsustainable.

The Tribunal observed that it was not clear whether notices were properly served on the assessee by the lower authorities. It decided to grant the assessee one more opportunity, restoring the appeal to the CIT(A) for de novo adjudication with a direction to provide a reasonable opportunity of hearing. The assessee was also instructed to respond diligently to notices issued by the CIT(A).

The Tribunal acknowledged that lower authorities provided sufficient opportunity, yet the assessee claimed non-receipt of notices and a significant gap between the last notice and the impugned order. To ensure natural justice, the Tribunal set aside the CIT(A)'s ex-parte order and restored the assessment to the Assessing Officer for a fresh determination, with directions for the assessee to cooperate.

The Tribunal determined that the assessee's grievance was specifically against the adjustment made under section 143(1), not the subsequent 143(3) assessment order that accepted the returned income. As 143(1) proceedings are independent, the appeal against the 143(3) order was dismissed as infructuous. However, the Tribunal granted liberty to the assessee to file a fresh appeal against the 143(1) intimation or a 154 rectification order within 30 days from this order's service, condoning the delay.

The Tribunal held that the lower authorities failed to properly consider the assessee's evidence, which showed that the cash deposits were from business receipts and that the Revenue had not controverted this material. Consequently, the addition of Rs. 7,24,000/- as unexplained income was deemed unsustainable and deleted. Grounds 2 and 4 of the appeal were specifically allowed.

The Tribunal held that the compensation received for delayed property delivery, even if calculated on an interest basis, is a capital receipt and not taxable. The disallowance of interest expenditure by the AO was also upheld.

The tribunal held that penalty under Section 271(1)(c) cannot be levied when the assessee, in response to a reassessment notice, voluntarily offers the undisclosed income to tax and the Assessing Officer accepts the return without making any further additions or disallowances. It emphasized that for a penalty to be imposed, there must be an actual addition or disallowance made by the AO, and the concealment must relate to the return of income filed.

The Tribunal observed that the assessee did not receive the last notice of hearing from the CIT(A), which prevented them from presenting their case effectively. Therefore, the matter was remitted back to the CIT(A) with directions to grant a fresh opportunity of being heard to the assessee and to decide the issues afresh. The assessee was also directed to cooperate with the Assessing Officer.

The Tribunal, taking note of the counsel's submission, dismissed the appeal as infructuous, stating that no cause of action remained. However, the assessee was granted the liberty to seek restoration of the appeal if any valid cause emerged subsequently.

The Tribunal held that the Act does not mandate the CIT(A) to dismiss an appeal merely for non-prosecution and requires a reasoned order on merits. While noting the assessee's non-cooperative conduct, in the interest of justice, the Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A) for fresh adjudication after providing a reasonable opportunity to the assessee.

The Tribunal noted the assessee's non-cooperation but held that the CIT(A) erred by dismissing the appeal and rejecting additional evidence without obtaining a remand report from the AO. Consequently, the Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A) for a fresh de novo adjudication, directing the assessee to comply with notices.

The Tribunal observed that the CIT(A)'s order was ex-parte and, without commenting on the merits of the disallowance, set aside the impugned order. The case is restored to the file of the CIT(A) for a de novo adjudication, ensuring the assessee is provided a reasonable opportunity to make submissions in accordance with law.

The Tribunal held that since the quantum additions were deleted, the penalty orders, being consequential, would not sustain. Therefore, the penalty orders were quashed.

The ITAT observed that the CIT(A) dismissed the appeal ex-parte without deciding on its merits, a practice contrary to settled legal principles. Consequently, the ITAT restored the appeal to the file of the CIT(A) for de-novo adjudication, ensuring a proper opportunity of being heard.

The Income Tax Appellate Tribunal upheld the CIT(A)'s decision, finding no infirmity in the order. It held that the assessee had discharged its onus by explaining the source of funds for the investment, supported by documentary evidence and the established creditworthiness of the partners. The Tribunal reiterated that if the AO had doubts about the partners' creditworthiness, measures should be taken against the partners individually, not the firm.

The Tribunal held that since the penalty was consequential to the additions, and those additions were deleted, the penalty orders would not sustain. Therefore, the penalty orders were quashed.

The Tribunal found that the assessee deserved a reasonable opportunity to be heard, noting claims of non-receipt of physical notices and late receipt of the assessment order. It set aside the CIT(A)'s order and remitted the matter back to the AO for a fresh de-novo assessment, with instructions for the assessee to comply and the AO to provide reasonable opportunities for hearing.

The Tribunal observed that the CIT(E)'s orders were ex-parte and held that the assessee was not afforded a reasonable and adequate opportunity of being heard. Consequently, both appeals were restored to the file of the CIT(E) for reconsideration, with directions to provide the assessee a proper opportunity and for the assessee to furnish the requested documents.

The Tribunal observed that the CIT(E)'s orders were ex-parte and held that the assessee was not afforded a reasonable and adequate opportunity of being heard. Consequently, both appeals were restored to the file of the CIT(E) for reconsideration, with directions to provide the assessee a proper opportunity and for the assessee to furnish the requested documents.