ITAT Jaipur Judgments — January 2020

The Tribunal held that Explanation 5A to Section 271(1)(c) requires the AO to refer to incriminating material to attract the provision. Since the AO failed to do so, the Explanation was not applicable. Therefore, the order of the CIT(A) deleting the penalty was upheld.

The Tribunal held that Explanation 5A to Section 271(1)(c) requires the AO to refer to incriminating material to attract the provision. Since the AO failed to do so, the Explanation was not applicable. Therefore, the order of the CIT(A) deleting the penalty was upheld.

The Tribunal held that Explanation 5A to Section 271(1)(c) requires the AO to refer to incriminating material to attract the provision. Since the AO failed to do so, the Explanation was not applicable. Therefore, the order of the CIT(A) deleting the penalty was upheld.

The Tribunal held that while the corporate membership expense was not linked to the society's objects and thus disallowed, the disallowance of depreciation was restored to the AO for verification. The cash payment disallowance under Section 40A(3) was upheld as it related to capital expenditure.

The Tribunal condoned the delay in filing the appeal before the CIT(A) due to sufficient cause. The order of the CIT(A) was set aside, and the appeal was restored to the file of the AO for a fresh assessment.

The ITAT held that the additional depreciation claim was not allowable as the assessee's business of mining and trading marble did not fall under manufacturing or production. However, the disallowance of interest payment on delayed TDS was deleted as the payees had accounted for the income and paid taxes.

The tribunal held that interest paid on delayed payment of sales tax, excise, service tax, and EPF is allowable as a business expenditure. However, interest on delayed TDS payment was not allowed.

The Tribunal held that the valuation of the seized jewellery was excessive and not done in the presence of the owner. The CIT(A) had not properly dealt with the grounds for revaluation. Therefore, the matter was restored to the AO for fresh adjudication.

The Tribunal held that the CIT wrongly invoked Section 12AA(4) as it applies to cancellation of existing registration, not initial grant. At the stage of granting registration, the CIT should verify the trust's objects and genuineness of activities, not the applicability of Section 13.

The Tribunal held that the assessments were untenable and bad in law due to procedural irregularities in initiating and concluding proceedings under different sections. The Tribunal also deleted additions made on merits, finding no incriminating material and accepting the assessee's explanations for unaccounted income.

The Tribunal held that the assessee's method of accounting (project completion) was regularly followed and not overridden by the Guidance Note from ICAI, which is recommendatory. For commission expenses, the assessee failed to prove services rendered, leading to disallowance except for one party.

The Tribunal held that the assessee's method of estimating accrued interest on unmatured fixed deposits, which could vary from the bank's calculation but would neutralize over time, did not constitute concealment. Penalty should not be imposed merely because it is lawful, but requires judicious discretion.

The Tribunal held that the service of notice under Section 148 of the Income Tax Act is a mandatory and jurisdictional requirement, not a mere procedural one. The Tribunal noted that the CIT(A) had correctly pointed out that the assessee company was dissolved before the CIT(A)'s order. Regarding service, the Tribunal found that Shri Chandan, who allegedly received the notice, was neither an employee of the assessee nor authorized to receive such notice. The fact that he affixed the stamp of M/s. Durga Motor Company further indicated the notice was not served on the assessee. The Tribunal relied on the Delhi High Court's decision in CIT vs. Chetan Gupta, which held that Section 292BB is prospective and participation in proceedings does not waive the requirement of proper service of notice under Section 148. Since the assessment year was 2007-08, Section 292BB was not applicable. The Tribunal concluded that without valid service of the Section 148 notice, the Assessing Officer lacked jurisdiction, and the reassessment order was liable to be quashed. The CIT(A)'s decision was upheld.

The tribunal upheld the penalty under Section 271A for failure to maintain books of account. However, it deleted the penalty under Section 271B, following a coordinate bench's decision that penalty for non-audit is not leviable if books of account were not maintained in the first place.

The Tribunal held that while the amendment to Section 200A was prospective, the AO had jurisdiction to levy fees under Section 234E if the TDS statement was filed and processed after June 1, 2015. Fees could be levied for the period of default continuing after June 1, 2015.

The Tribunal held that the conditions for invoking Explanation 5A to Section 271(1)(c) were not met as the salary income was not found during the search proceedings. The omission was considered a bonafide mistake discovered during assessment, not during the search.

The Tribunal held that since the additions for depreciation on non-existing assets and prior period expenses were deleted by the Tribunal, the penalty levied on these items could not survive. Regarding doubtful debts, the Tribunal noted that the assessee had disclosed all relevant facts, and a mere disallowance of a claim does not amount to furnishing inaccurate particulars or concealment of income.

The Tribunal upheld the rejection of books of account as Ground No. 1 was not pressed. While acknowledging the assessee's explanation for the lower GP rate, the Tribunal found the AO's addition of Rs. 25,00,000/- to be meager and not arbitrary, considering the potential addition based on past GP rates.

The Tribunal held that issuing multiple notices for the same information constitutes only one default. The assessee's explanation of transfer was considered for the last notice, but not for the earlier ones. Therefore, the penalty was restricted to one default.

The tribunal noted that the assessee did not wish to press the appeal. The revenue did not object to the withdrawal. Therefore, the appeal was dismissed as withdrawn.

The Tribunal held that the reassessment proceedings initiated by the AO under Section 147 were not valid. The Tribunal noted that the notice under Section 148 was issued with an incorrect address and in the name of a non-existent company, which was a substantive illegality and not a procedural defect. The Tribunal relied on the decision of the Hon'ble Jurisdictional High Court in Principal Commissioner of Income-tax vs. G & G Pharma India Ltd., and the Supreme Court in Principal Commissioner of Income-Tax v. Maruti Suzuki India Ltd., to conclude that the AO had not applied his mind to the material before issuing the notice. The Tribunal found that the AO's reasons for reopening were unhelpful and did not demonstrate application of mind to the evidence. Consequently, the reassessment order was quashed as void ab initio. As a result, the addition of Rs. 45 lacs made by the AO under Section 68 was directed to be deleted. The Tribunal expressly did not give findings on Ground No. 4 raised by the assessee, as it had quashed the reassessment order.

The Tribunal held that the penalty under Section 271AAB is not mandatory and requires the surrendered income to fall within the definition of 'undisclosed income'. The seized documents, being an electrical plan, did not inherently reveal any undisclosed income or expenditure.

The Tribunal upheld the reduced addition of 15% of the agricultural income, finding that it could not be conclusively stated that the assessee incurred no expenditure. The Tribunal deemed it appropriate not to disturb the CIT(A)'s finding.

The Tribunal held that the deposit of cash and non-filing of return constituted tangible material for reopening the assessment. The Tribunal also found that the assessee failed to substantiate the source of the cash deposit with satisfactory evidence, thus upholding the addition made by the AO.

The Tribunal held that the assessee's grounds regarding the initiation of proceedings were not pressed and were dismissed. Regarding the capital gains addition, the Tribunal noted the assessee's submission but did not provide a final decision in the provided excerpt.

The Tribunal held that since the assessee objected to the stamp duty valuation, the Assessing Officer should have referred the matter to the Departmental Valuation Officer (DVO) for determination of fair market value. As this was not done, the matter was set aside.

The Tribunal held that there was no basis for withdrawing the exemption granted to the assessee university. The university was carrying out genuine educational activities, and the running of a hospital was for teaching and training purposes, not commercial gain.

The Tribunal found that the AO had relied on incorrect figures regarding loan amounts and repayments to directors. After examining the ledger accounts, the Tribunal concluded that the directors' accounts were settled before the end of the financial year, and the loan from ICICI Bank was ultimately used to repay the interest-free advances from directors for property acquisition. Therefore, no disallowance of interest expenditure was warranted.

The Tribunal found that the AO had relied on incorrect figures regarding loan amounts and repayments to directors. After examining the ledger accounts, the Tribunal concluded that the directors' accounts were settled before the end of the financial year, and the loan from ICICI Bank was ultimately used to repay the interest-free advances from directors for property acquisition. Therefore, no disallowance of interest expenditure was warranted.

The Tribunal held that the AO's failure to issue a draft assessment order, as mandated by Section 144C(1), renders the final assessment order illegal and void. The opportunity to discuss the TPO's order with the assessee's AR does not absolve the AO of this mandatory procedural requirement.