ITAT Jaipur Judgments — April 2020

The Tribunal held that the notice issued under Section 148 in the name of a deceased assessee, without proper substitution of legal heirs as per Section 159, is invalid. Consequently, the assessment framed based on such a notice is also bad in law.

The Tribunal upheld the CIT(A)'s deletion of the addition. It held that Section 41(1) is not applicable when liabilities continue to be recognized in the books of accounts and there is no clear evidence of remission or cessation of liability.

The Tribunal held that the addition on account of unverifiable purchases in the non-SEZ unit was not justified given the volume of verifiable sales and purchases. For the SEZ unit, the GP rate should consider past averages. The apportionment of indirect expenses was to exclude expenses exclusively incurred by the SEZ unit.

The Tribunal held that the addition made by the Assessing Officer was not sustainable. The AO estimated the net profit rate without rejecting the books of accounts and incorrectly applied Section 44AF, as the assessee's turnover exceeded the prescribed limits and the business model was different from retail trade.

The Tribunal held that the assessee's undertaking was situated in a notified industrial area as per CBDT notification and satisfied other conditions for deduction under Section 80-IC(2)(a)(ii). The previous year's assessment also supported the eligibility.

The Tribunal held that the reopening of assessment was valid as the assessee had not filed a return and had made undisclosed time deposits. However, the addition for unexplained bank deposits was deleted as the assessee had sufficiently explained the source of the deposits as gifts from relatives, supported by evidence.

The tribunal restricted the disallowance under Section 14A to the extent of exempt income. It also directed a fresh adjudication on the disallowance of commission paid to non-residents, as the AO and CIT(A) had not properly examined the nature of services and taxability in India. The disallowance of depreciation was found to be uncalled for.

The Tribunal noted technological issues in e-filing and correspondence, leading to disputes about information exchange. In the interest of justice, the matter was set aside to the CIT(E) for a fresh examination.

The Tribunal found that the CIT(E) had not properly adjudicated the condonation of delay application for registration from the inception date. Therefore, the matter was remanded back to the CIT(E) for a fresh examination of the delay condonation.