ITAT Jaipur Judgments — February 2024

The Tribunal condoned the delay in filing the appeal, citing the Supreme Court's decision in Collector, Land & Acquisition Vs. Mst. Katiji & Others, and directed the CIT(E) to provide the assessee with an adequate opportunity to contest the case for recognition under Section 80G, without going into the merits of the case.

The Tribunal held that purchases from M/s Om Sales Corporation and M/s Laxmi Arts were genuine and directed deletion of related additions. It also allowed the appeal regarding the gift from the father, considering the provided evidence of income and landholding. However, a partial disallowance on certain expenses was confirmed.

The Tribunal decided that the reasons to believe and the notice under section 148 were not issued by the jurisdictional Assessing Officer, rendering the proceedings illegal. The Tribunal also noted the failure to dispose of objections and provide a reasonable opportunity of being heard.

The Tribunal held that the PCIT wrongly invoked Section 263 and set aside the revision order. The Tribunal found that the Assessing Officer had made a plausible assessment based on available material, and the PCIT's dissatisfaction did not render the order erroneous.

The Tribunal restored the matter to the CIT(A) for fresh adjudication. The Tribunal noted that the CIT(A) had not decided the appeal on merits and granted the assessee one more opportunity to present their case.

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 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 held that deductions under Section 80-IA are allowable while computing book profit under Section 115JB, as Section 115JB(5) allows for the application of other provisions of the Act unless specifically barred. The Tribunal also noted that the assessee did not have an SEZ unit, thus not eligible for Section 10AA exemption.

The Tribunal held that the issue regarding the validity of the assessment order under Section 144B(1)(xvi)(b) was identical to a ground raised for AY 2015-16, and based on detailed findings for that year, this ground was allowed. The Tribunal upheld the CIT(Appeals)'s order regarding the deletion of disallowances for deductions under Section 80-IA concerning captive power plants, solid waste management systems, water treatment systems, and rail systems. The reasoning was that these grounds were extensively dealt with in the departmental appeal for AY 2015-16, and no infirmity was found in the CIT(Appeals)'s order. Consequently, the Revenue's grounds related to these deductions were dismissed. The Tribunal also noted that for AY 2018-19, the facts were similar to AY 2015-16 for these grounds. The Tribunal directed the AO to grant depreciation @25% on leasehold rights in accordance with Section 32(1)(ii) of the Act, as the issue was identical to AY 2015-16. The appeal of the assessee was partly allowed, and the appeal of the Revenue was dismissed.

The Tribunal decided that the expenditure incurred on account of "other expenses" was revenue in nature and deductible. The reasoning was that the assessee had demonstrated that these expenses were incurred for the purpose of its business operations and did not result in the acquisition of any capital asset or enduring benefit. The Tribunal distinguished these expenses from capital expenditure, emphasizing their functional utility in generating revenue. Regarding "prior period expenses," the Tribunal held that these were also deductible. The reasoning was that these expenses were intrinsically linked to the assessee's business activities and represented liabilities that had crystallized in the current assessment year, even if they related to an earlier period. The ratio decidendi is that expenses that are genuinely incurred for the purpose of business and do not create a capital asset are revenue expenditure, irrespective of whether they relate to the current or a prior period, provided they are accounted for in the year of crystallization of liability. The operative direction was to delete the disallowances made by the AO on both counts.

The Tribunal noted that the bank account had simultaneous withdrawals and payments, and the entire deposit could not be treated as unexplained income. While the assessee's claim for applying a profit rate was rejected, the addition was reduced by estimating the income.

The Tribunal dismissed the revenue's appeals concerning deductions under Section 80-IA for captive power plants, solid waste management, and water treatment systems. The assessee's appeals were partly allowed, particularly regarding depreciation on leasehold rights.

The Tribunal addressed multiple issues across the assessment years. Regarding the validity of the assessment order (Issue 1), the Tribunal did not find it invalid. On the claim for reliability charge for power transfer price (Issue 2), the Tribunal rejected the claim. For the disallowance of Education Cess (Issue 3), the Tribunal confirmed the disallowance. Concerning the claim of Section 80-IA deduction in book profit computation under Section 115JB (Issue 4), the Tribunal held that such deductions are permissible. The Tribunal also dealt with the deletion of disallowances under Section 80-IA for various projects due to transfer pricing adjustments (Issue 5), allowing the assessee's claim in this regard. Regarding the restriction of Section 80-IA deduction for Solid Waste Management System (Issue 6), the Tribunal allowed the higher deduction. Finally, on the treatment of incentives as capital receipts (Issue 7), the Tribunal ruled in favour of the assessee, holding them as capital receipts not exigible to tax. The ratio decidendi for allowing Section 80-IA deductions in book profit computation under Section 115JB is that Section 115JB(5) allows all provisions of the Act to apply unless specifically barred, and exemptions or deductions under specific provisions like Section 80-IA should not be denied unless explicitly excluded by Section 115JB. The Tribunal remanded certain aspects for fresh adjudication.

The Tribunal decided that deductions under Section 80-IA should be allowed while computing book profit under Section 115JB, as Section 115JB(5) allows for the application of other provisions of the Act unless specifically barred. It also noted that the assessee did not have an SEZ unit, distinguishing it from a prior case.

The Tribunal held that deductions under Section 80-IA are allowable while computing book profits under Section 115JB, as Section 115JB(5) allows for the application of other provisions of the Income Tax Act unless specifically barred. The Tribunal also noted that the assessee did not have a SEZ unit, making certain prior decisions inapplicable.

The Tribunal dismissed the revenue's appeals concerning deductions under Section 80-IA for captive power plants, solid waste management, and water treatment systems. The assessee's appeals were partly allowed, particularly regarding depreciation on leasehold rights.

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 held that the rejection of the assessee's application for approval under Section 80G(5)(iii) by the CIT(E) was not justified. Regarding the delay in filing, the Tribunal accepted the assessee's contention of reasonable cause, citing technical glitches on the Income Tax Portal and the CBDT's extensions for filing Form 10AB. The Tribunal found no violation of FCRA provisions or willful wrong declarations, stating that the assessee's activities were covered by FCRA exemptions and that payments in international trade were not covered by FCRA. The Tribunal also held that the assessee was engaged in business activities incidental to its main objects, as per Section 11(4A), and maintained proper separate books of accounts, citing the Supreme Court's decisions in Asst. CIT vs. Thanthi Trust and Asstt. CIT (Exemptions) v. Ahmedabad Urban Development Authority. Discrepancies in the Article of Association were deemed no longer justified as they had been altered. The Tribunal found that the assessee had provided all required details and that no violation of Section 11(1)(c) was proven. The ground of violation of natural justice was considered infructuous as the assessee had complied with the show-cause notice. Consequently, the Tribunal directed the CIT(E) to grant approval under Section 80G(5) as per the application filed by the assessee.

The Tribunal decided the issues as follows: Regarding Ground No. 1 (Capital Asset and Short-Term Capital Gain): The Tribunal noted that the lower authorities had not correctly appreciated the facts. It observed that the assessee along with others purchased agricultural land at village Dhodhakari for Rs.90 lacs on 23.08.2013, with the assessee's share being 40% (Rs.36 lacs). The entire payment of Rs.90 lacs was made from the assessee's bank account, which was cleared from funds received from PVR Group. This amount was repaid on 16.11.2013 from the sale proceeds of agricultural land referred to in Ground No. 1. Therefore, the source of payment for the purchase of the said agricultural land was fully established. Consequently, the addition confirmed by the Ld. CIT(A) on this ground was deleted. The Tribunal found that both lower authorities had not correctly appreciated the facts regarding the sale of land at Khasra No.331, Mohaldia, and the issue of capital asset classification and deemed sale consideration was not explicitly decided but implicitly addressed by allowing Ground No. 3. The Tribunal did not make a specific finding on whether the land was a capital asset or the computation of STCG, but by allowing Ground No. 3, it effectively set aside the additions related to the purchase of land, which were linked to the sale proceeds. The Tribunal did not explicitly decide the issue of whether the land sold was a capital asset or the computation of STCG, but by allowing Ground No. 3, it indirectly addressed the source of funds for land purchases, which were linked to the sale of agricultural land mentioned in Ground No. 1. The Tribunal held that the source of payment for the purchase of agricultural land at village Dhodhakari was fully established and deleted the addition confirmed by the Ld. CIT(A). Thus, Ground No. 3 was allowed. The Tribunal also noted that since Grounds 1, 2, and 3 were decided in favour of the assessee, Grounds 4 and 5 became infructuous and were dismissed. The operative part of the decision focused on allowing Ground No. 3 and dismissing Grounds 4 and 5, implying that the additions related to the purchase of land were deleted.

The Tribunal condoned the delay in filing the appeals due to the assessee's illness. The Tribunal held that the additions made by the AO were unsustainable as the assessee was denied the opportunity to cross-examine the persons whose statements were relied upon, violating the principles of natural justice.

The Tribunal held that the additions made by the AO were unsustainable as the assessee was denied the opportunity to cross-examine the witnesses whose statements were relied upon, violating the principles of natural justice.

The Tribunal held that the deposits in the NRE account were not cash deposits but foreign remittances, and since the assessee was an NRI, such deposits could not be considered income chargeable to tax in India. The addition made by the AO was deleted.

The Tribunal held that the appeal filed by the assessee was to be allowed for statistical purposes. The primary issue was the delay in filing the appeal electronically. The CIT(A) had dismissed the appeal solely on the ground of delay, noting that the physical appeal was filed on 25.01.2017, while the e-filing was done on 17.12.2018, a delay of nearly two years. The assessee had cited technical problems as the reason for the delay. The Tribunal, relying on the decision of the ITAT Mumbai Bench in the case of All India Federation of Tax Practitioners vs ITO, which in turn relied on Supreme Court judgments emphasizing substantial justice over technicalities, directed the assessee to file the appeal electronically within 10 days. The delay in e-filing was condoned, and the matter was restored to the file of the CIT(A) to decide the appeal on merits. The Tribunal did not decide the additions made under Section 68 and 69C.

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 held that the disallowance made by the CPC under Section 143(1) for delayed deposit of employee's contribution to PF/ESI was incorrect, as the assessee had deposited the amounts before the due date for filing the return. The Tribunal noted that the issue was settled by the Supreme Court in the case of Checkmate Services Pvt Ltd.

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 held that the CIT(A) should have either issued a deficiency letter for correction or allowed the filing of a revised appeal memo. The matter was restored to the CIT(A) for adjudication on merits.

The Tribunal held that the CIT(A) should have either issued a deficiency letter for correction or allowed the filing of a revised appeal memo. The matter was restored to the CIT(A) for adjudication on merits.

The Tribunal held that the assessee was not engaged in business activities but in share investment, and since the capital loss was accepted, the provisions of Section 44AA were not applicable. Therefore, the penalty under Section 271A was not leviable.

The Tribunal held that Section 43CA is not applicable retrospectively to agreements entered into before its effective date. Since the agreement was executed prior to 01.04.2014 and a substantial part of the consideration was received before the introduction of the section, the addition made under Section 43CA was not justified.

The Tribunal found that the assessee had provided sufficient details of the cash deposits through a cash flow statement and supporting bank statements. Considering the facts and case laws, the Tribunal did not concur with the lower authorities' findings.

The Tribunal found merit in the assessee's argument regarding a procedural error in filing submissions. Therefore, the case was remanded back to the Assessing Officer for a fresh decision on merits.

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 the assessee's non-cooperation and lack of evidence before lower authorities. However, it restored the appeal to the AO for fresh adjudication, providing one more opportunity to the assessee.

The Tribunal noted that the assessee is a small agriculturist and the case was decided ex-parte. Considering the prayer of the assessee, the Tribunal felt that one opportunity should be granted to substantiate the claim based on evidence. The issue of long-term capital gain was restored back to the AO for decision on merits.

The Tribunal held that the surplus generated from the magazine publication was reasonable and did not exceed the 20% margin considered fair by the Supreme Court. Therefore, it was not considered a commercial activity attracting the proviso to Section 2(15).

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 penalty under Section 271D was wrongly levied as the agreement did not clearly state the assessee received cash in contravention of Section 269SS. The assessee's share of the advance was received via RTGS, and the penalty provisions require strict interpretation.

The Tribunal held that a disclosure made during assessment proceedings, even if not in the original return, can be considered a voluntary disclosure. Following the Gujarat High Court's decision, such disclosures do not attract penalty under Section 271(1)(c).

The Tribunal held that income offered in the assessment proceedings through a revised computation, if its veracity is not doubted, does not constitute 'undisclosed income' for the purpose of penalty under section 271AAB. Therefore, the penalty levied was deleted.

The Tribunal held that the penalty imposed under section 270A was bad in law. The assessee's action of offering additional income during assessment proceedings, even without a specific show cause notice detailing the charge, was considered a voluntary disclosure and not an under-reporting intended to conceal income.

The Tribunal held that the penalty under Section 271D was wrongly levied as the agreement did not clearly state the assessee received cash in contravention of Section 269SS. The assessee's share of the advance was received via RTGS, and the penalty provisions require strict interpretation.

The Tribunal held that income offered in the assessment proceedings through a revised computation, if its veracity is not doubted, does not constitute 'undisclosed income' for the purpose of penalty under section 271AAB. Therefore, the penalty levied was deleted.

The Tribunal held that a disclosure made during assessment proceedings, even if not in the original return, can be considered a voluntary disclosure. Following the Gujarat High Court's decision, such disclosures do not attract penalty under Section 271(1)(c).

The Tribunal held that income offered in the assessment proceedings through a revised computation, if its veracity is not doubted, does not constitute 'undisclosed income' for the purpose of penalty under section 271AAB. Therefore, the penalty levied was deleted.

The Tribunal deleted the addition on service charges as it was credited to the P&L account and supported by evidence. It also deleted the addition on sundry creditors as they were verified trade creditors. The issue of furniture purchase and depreciation was remanded to the AO.

The Tribunal held that the CIT(A) should have considered the merits of the case and the documents filed by the assessee. Principles of natural justice require that the assessee be given a sufficient opportunity to be heard.

The Tribunal held that the reopening of assessment was bad in law as the issues raised in the reasons for reopening had already been examined in the original assessment proceedings without any new material or allegation of suppression of facts. Therefore, the reassessment was based on a change of opinion.

The Tribunal declined to condone the significant delay of 211 days as the assessee failed to provide sufficient cause or evidence of inevitable circumstances. However, in the interest of justice, the issue of interest on refund was restored to the Assessing Officer.

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.