ITAT Jaipur Judgments — February 2024

The Tribunal held that the purchases from M/s Om Sales Corporation and M/s Laxmi Arts were genuine. The addition of Rs. 48,45,446/- for unexplained stock was directed to be deleted. The disallowance of 50% of expenses was partly deleted, with a 25% disallowance on traveling, conveyance, and telephone expenses confirmed. The addition of Rs. 4,00,000/- for a gift from the father was deleted as genuine.

The Tribunal noted that the assessee failed to provide explanations and evidence for the cash deposits, leading to an ex-parte assessment by the AO and dismissal of the appeal by the CIT(A). The Tribunal, however, considered the assessee's plea for another opportunity due to perceived lack of proper hearing, while also acknowledging the revenue's argument about the assessee's non-compliance.

The Tribunal noted that the CIT(A) dismissed the appeal ex-parte due to the assessee's lack of compliance. However, considering the facts and grievance, the Tribunal felt that one more opportunity should be given to the assessee to contest the case before the CIT(A) and submit necessary replies.

The tribunal noted that the issue of reliability charges being part of transfer price for deduction u/s 80-IA had been decided in favour of the appellant in earlier assessment years, and thus, the assessee's claim was allowed. The disallowance of education cess was confirmed, and the contention regarding exclusion of deductions under Section 80-IA and 80-IC from book profit under Section 115JB was also decided in favour of the assessee.

The Tribunal noted that similar issues were decided in favour of the assessee in earlier years and therefore upheld the orders of the CIT(A) in most cases. The appeals filed by the revenue were dismissed, and the appeals filed by the assessee were partly allowed. Specifically, the disallowance of Education Cess was confirmed for most years, but deductions related to captive power plants, solid waste management systems, water treatment systems, and rail systems were allowed as claimed by the assessee.

The tribunal condoned the delay in filing the appeal. However, it upheld the decision to treat the liquidated damages as revenue receipt. The tribunal relied on various Supreme Court and High Court decisions, stating that compensation for delay in supply of medicines, being in the ordinary course of business, is revenue in nature.

The Tribunal noted that the account in question was an NRE account and that, as per banking guidelines, cash cannot be deposited in Indian Rupees into an NRE account. The Tribunal found that the money was wired from outside India, and considering the assessee's NRI status, it could not be considered as income taxable in India. Therefore, the addition made by the AO was deleted.

The Tribunal noted that the assessee was provided multiple opportunities but failed to provide explanations or evidence. However, considering the assessee's plea for one more opportunity and the fact that lower authorities passed ex-parte orders, the Tribunal decided to restore the matter to the AO.

The Tribunal condoned the delay in filing the appeal due to genuine reasons presented by the assessee. However, it was noted that the assessee was lethargic and non-cooperative throughout the proceedings, including not providing documentary evidence. The lower authorities also noted the non-compliance of the assessee. Despite the assessee's prayer for another opportunity, the appeal was allowed for statistical purposes, with costs awarded against the assessee.

The Tribunal noted that a mistake in the assessment year was made by the assessee in Form 35. The CIT(A) had rejected the appeal as erroneous and not maintainable due to this deficiency. The Tribunal restored the matter to the CIT(A) with a direction to allow the assessee to file a revised appeal memo.

The Tribunal held that Section 43CA is not applicable because the agreement to sell was executed much before the section became effective. The tribunal further noted that 90% of the sale consideration was received within five days of the agreement, fulfilling the spirit of the provisions of Section 43CA(3) and (4). The AO's failure to refer the matter to the Valuation Cell was also noted.

The Tribunal noted that the assessee failed to provide proper explanation or evidence during appellate proceedings before the lower authorities. The lower authorities also found non-compliance and lack of cooperation from the assessee. Due to these procedural lapses and lack of substantive evidence from the assessee's side, the Tribunal found no reason to interfere with the lower authorities' orders.

The Tribunal noted that the assessee had provided cash flow statements and bank statements to explain the source of the deposits. Several High Court and ITAT judgments were relied upon by the assessee, which supported the view that such deposits, when explained with documentary evidence, should not be treated as unexplained. The Tribunal found that the assessee had sufficiently explained the source of the cash deposits.

The CIT(A) accepted Rs. 87.50 lacs from father and Rs. 1.50 lacs from business income as explained sources, but did not accept the Rs. 50 lacs from customers, confirming the addition of Rs. 50 lacs. The Tribunal, however, found that the assessee had discharged his burden by providing names, addresses, sale agreements, and Khasra Girdawari of the customers, and noting that Rs. 30 lacs from these customers in the previous year was accepted. Therefore, the addition of Rs. 50 lacs was deleted.

The Tribunal held that the revised computation of income, which was accepted by the Assessing Officer, constituted a valid disclosure. Relying on Gujarat High Court's decision, the Tribunal stated that disclosure made during assessment proceedings, even if not through a revised return, is valid and sufficient for avoiding penalty.

The Tribunal noted that the notice u/s 148 was issued after the limitation period expired. The Tribunal also found that the reassessment proceedings were initiated without following the mandatory procedures laid down under the Act and relevant judicial pronouncements. Therefore, the Tribunal held that the notice and consequent assessment were invalid.

The Tribunal held that the amendment to Section 50C, which is curative in nature, should be allowed retrospectively. Therefore, the long-term capital gain should be computed based on the actual sale consideration received (Rs. 67,11,000/-), and the deduction under Section 54F should be computed proportionately.