ITAT Jaipur Judgments — August 2022

The Tribunal held that the PCIT was justified in initiating revision proceedings as the AO had not conducted proper inquiry into the genuineness of share capital and premium received from entities identified as shell companies. The assessment order was set aside and the case was remanded for fresh adjudication.

The Tribunal held that the PCIT erred in passing the revision order as the AO had already conducted thorough inquiries and verified the documents submitted by the assessee. The revision was not permissible as the AO's order was not erroneous or prejudicial to the revenue.

The Tribunal held that the CIT(A) failed to consider the entire submission of the assessee and the evidence provided. It noted that the income from house property was consistently shown at Rs. 1,37,444/- in both the return and computation of total income, despite the disallowance of interest. Therefore, the disallowance of interest was not justified.

The Tribunal held that the amendment brought by the Finance Act, 2021, to Section 36(1)(va) read with Section 43B of the Act is prospective and not retrospective. Therefore, the amended provisions are not applicable for the assessment year 2020-21.

The Tribunal upheld the protective addition made in the hands of the assessee. It acknowledged that while there's no statutory provision for protective assessment, it's a recognized practice to safeguard revenue when there's ambiguity about who is liable to pay tax.

The Tribunal held that for invoking Section 263, both conditions of the order being erroneous and prejudicial to the revenue must be met. In this case, while there might have been an error in taxing the wrong person, it was not prejudicial to the revenue as the capital gains were not accrued to the assessee. Therefore, the PCIT's order under Section 263 was quashed.

The Tribunal held that the income in question was in the nature of business income and not unexplained cash credit. Consequently, Section 115BBE could not be invoked. The Tribunal also found that the Pr. CIT acted beyond jurisdiction in directing initiation of penalty proceedings under Section 271AAC.

The Tribunal upheld the PCIT's finding that the assessment order was erroneous and prejudicial to the interest of revenue. The assessee failed to demonstrate that the AO had made a conscious decision on merits after due inquiry regarding the non-deduction of TDS on interest paid to retired partners.

The Tribunal held that litigation expenses incurred to protect the business, especially when the assessee is in possession but not ownership of the property, are revenue in nature. The Tribunal also directed the AO to recalculate interest on refund till the actual date of grant.

The Tribunal held that the PCIT's order under Section 263 was contradictory. While the PCIT concluded that the subsidy and grant should be taxed, they also stated that the issues could not be examined at that stage and set aside the assessment order. The Tribunal found this approach to be bad in law.

The Tribunal held that the PCIT cannot direct the AO to initiate penalty proceedings under Section 263, as penalty proceedings are not part of assessment proceedings. The revisionary decision was considered vague and bad in law.

The Tribunal held that while the PCIT's order was passed ex-parte, the assessee's last-minute adjournment request without valid reasons could be seen as avoiding proceedings. Therefore, the case was remanded back to the PCIT for a fresh hearing.

The Tribunal held that the assessee trust was registered under Section 12AA since 1966 and had continuously received the benefit of Section 11. Despite a technical re-application due to system changes, the department had allowed similar expenses in prior years. Therefore, the AO was directed to grant the benefit of Section 11.

The Tribunal held that the PCIT was justified in considering the assessment order erroneous and prejudicial to the revenue's interest due to lack of proper inquiry regarding disallowance under Section 14A and the treatment of subsidy receipts. The matter was set aside for fresh assessment.

The Tribunal condoned the delay in filing the appeal, citing the COVID-19 pandemic and the Supreme Court's directions. The Tribunal also held that the disallowance of employees' PF contribution deposited late but before the return filing due date was incorrect, relying on its previous decisions.

The Tribunal held that the scholarship liability was ascertained and not contingent, allowing the deletion of the disallowance. For other expenses, the Tribunal was convinced by the assessee's justifications and past history, leading to their deletion.

The Tribunal allowed the appeal concerning the disallowance of scholarship expenses and electricity connection charges, finding them to be contrary to law. The issue of interest under sections 234A, 234B, 234C, and 234D was directed to be acted upon consequentially.

The Tribunal upheld the disallowance of Rs. 4,26,000/- related to contributions for a water Anicut and establishing a police station. However, it deleted the addition of Rs. 33,000/- on account of alleged undeclared rental income.

The Tribunal partly allowed the appeal. It deleted disallowances related to interest expenses on the grounds that the funds were not demonstrably used for capital expenditure and that the assessee had sufficient interest-free funds. However, it upheld disallowances for expenses considered capital in nature, such as construction and networking, and for penalties related to unauthorized construction.

The Tribunal held that the assessee had discharged its primary onus by establishing the identity, capacity, and genuineness of the share applicants. The cash nature of the transaction, in itself, did not invalidate the investment, especially when evidence was provided.

The Tribunal held that the AO had conducted proper inquiries and considered the assessee's replies. The assessment order, which included an addition of Rs. 1 crore, was not considered erroneous or prejudicial to revenue.

The Tribunal held that the addition of Rs. 14 lacs on account of alleged on-money was not justified as the seized document indicated capital contribution for a joint venture, not on-money payment. The addition for construction expenses was also deleted as the expenses pertained to a firm and were recorded in its books.

The Tribunal held that the AO had conducted sufficient inquiry and verified the assessee's claim with supporting documents. Therefore, the invocation of section 263 by the PCIT was unjustified as there was no lack of inquiry.