ITAT Jaipur Judgments — August 2024

The Tribunal held that registration under the Rajasthan Public Trust Act is mandatory for obtaining registration under Section 12AB of the Income Tax Act. The assessee failed to comply with this mandatory requirement and did not provide sufficient evidence of its charitable activities.

The Tribunal held that the assessee failed to comply with the provisions of Section 12AB of the Income Tax Act by not providing necessary documents and not being registered under the Rajasthan Public Trust Act. The Tribunal also noted that the assessee's application for Section 80G registration was correctly rejected as it was not registered under Section 12A, 12AA, or 10(23C).

The Tribunal noted that the assessee had declared the excess stock as income, and the AO had accepted this. The PCIT's view that the AO failed to apply proper provisions was contested by the assessee, who argued that the income was business income and Section 115BBE was not applicable. The Tribunal, after considering the facts and case laws, held that the PCIT's order was erroneous and prejudicial to the interest of the revenue.

The ITAT noted that the rejection of books of accounts was a recurring issue in earlier years. However, concerning the estimation of profit, the Tribunal directed the AO to verify the net profit (NP) rates for the past years and compare them with the segmental NP results declared for the current year. The AO was instructed to apply the average NP rate of the past three years if the declared NP rate was lower, and accept the declared NP rate if it was higher. The Tribunal also directed the AO to allow depreciation and interest.

The Tribunal held that the PCIT's order was not justified. The AO had conducted necessary inquiries and taken a plausible view by accepting the surrendered income as business income and taxing it at normal rates. The PCIT could not substitute her own view for that of the AO when the AO's view was sustainable.

The PCIT found that the AO had not properly applied the relevant provisions of the Act, specifically concerning the purchase of immovable property and the applicability of Section 56(2)(x). The PCIT set aside the assessment order and directed the AO to reassess the income. The assessee appealed this order.

The Tribunal observed that the CIT(E) had not sufficiently dealt with the nature of the assessee's own activities and had relied on the alleged violations of the recipient trust. The Tribunal found that the CIT(E) should have examined the assessee's charitable activities and objects. Therefore, the Tribunal set aside the CIT(E)'s order and restored the issue to the CIT(E) for fresh consideration.

The Tribunal held that the assessee had sufficiently explained the source of the cash deposit with evidence. The lower authorities' observations were based on surmises and conjectures without rebutting the assessee's evidence. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted.

The Tribunal noted that the assessee, acting as a commission agent, is not required to disclose turnover on which TDS was deducted under section 194Q. The commission received should be considered for income tax purposes. The Tribunal relied on a CBDT circular and a coordinate bench decision in a similar case.

The Tribunal noted that the PCIT initiated proceedings under section 263 based on two issues: disallowance of deduction under section 80IA and the penal nature of delay in delivery charges. The Tribunal found that the AO had considered the relevant facts and evidence, and his view was plausible. The Tribunal held that the PCIT cannot substitute the AO's view with his own understanding, nor can the scope of limited scrutiny be expanded under section 263. The Tribunal concluded that the PCIT's order was not sustainable.

The Tribunal found that the assessee was deprived of a proper hearing before the CIT(A) as the appeal was dismissed on the same day the assessee filed an adjournment application. The CIT(A) also failed to consider the reduced addition and the assessee's grounds of appeal.

The Tribunal noted that the cost of acquisition and the claim for deduction u/s 54F were not properly considered by the lower authorities due to non-submission of details by the assessee. The findings of the CIT(A) in the individual's case and the assessee's case were contradictory. Therefore, the Tribunal decided to remand the matter back to the AO to decide the issue of allowability of cost of acquisition and deduction u/s 54F.

The Tribunal noted that the reasons for rejection were curable defects. Considering the principles of natural justice and the fact that the assessee has applied for registration under the Rajasthan Public Trust Act, 1959, the Tribunal decided to give the assessee one more chance to rectify the defects.

The Tribunal noted that the CIT(A) had not considered the submissions filed by the assessee, merely because they were filed late, though before the decision was rendered. The Tribunal also noted that the addition was made in the mother's case, while the property was sold by the father. Therefore, the Tribunal deemed it fit to remand the matter back to the AO for fresh consideration.

The Tribunal held that the PCIT's order was not justified. The AO had made proper enquiries and applied his mind to the facts, taking a plausible view. The excess stock and cash were found to be related to the regular business income and thus should be taxed at normal rates, not under Section 115BBE. The PCIT cannot substitute his own view for the AO's plausible view.

The Tribunal held that the PCIT's action under Section 263 was based on an audit objection and not on an independent application of mind. The AO had conducted proper inquiries and taken a plausible view, which could not be substituted by the PCIT's differing opinion. Therefore, the PCIT wrongly assumed jurisdiction.

The Tribunal held that the PCIT's order under Section 263 was not justified for the excess cash issue, as the AO had applied his mind and made a plausible view. For the excess stock issue, the Tribunal found that the AO had also applied his mind and taken a plausible view. Thus, the PCIT's assumption of jurisdiction under Section 263 was not warranted.

The Tribunal noted that the CIT(E) primarily relied on the nature of the donee trust's activities rather than the assessee's own activities and objects. The Tribunal set aside the CIT(E)'s order, directing them to decide the issue afresh after examining the assessee's objects and activities. The appeals were allowed for statistical purposes.

The Tribunal held that the PCIT's revision order was not justified. It reasoned that since the excess stock was identifiable and related to the assessee's regular business, it should be taxed as business income, and Section 115BBE is not applicable. The Tribunal noted that the assessee had incorporated the transaction in its books of account and offered it for tax, making the AO's assessment not erroneous.

The Tribunal held that statements recorded under Section 131 have evidentiary value and are not to be discarded if not retracted. The court observed that the assessee failed to provide satisfactory explanations or evidence to counter the admission made by the director during the survey and post-survey proceedings.

The Tribunal noted a delay of 2 days in filing the appeal, which was condoned based on the assessee's counsel's office mistake. The Tribunal allowed an additional ground challenging the validity of the notice under section 148, stating that the approval for such a notice was required from the Joint Commissioner, not the Principal Commissioner, making the notice void ab initio.

The tribunal noted that the assessment was done ex-parte and the CIT(A) dismissed the appeal considering the assessee's submission as an afterthought. The tribunal decided to remand the matter back to the AO for a decision based on evidence and submissions.

The Tribunal condoned the delay in filing the appeals after noting the reasons provided by the assessee. The Bench found that the lower authorities had erred in not considering the facts presented by the assessee, particularly regarding the filing of the ITR and the payment of demands. The appeals were allowed for statistical purposes.

The Department's representative had no objection to the withdrawal request. Therefore, the Tribunal allowed the assessee to withdraw the appeal.

The Tribunal condoned the 415-day delay in filing the appeal, acknowledging the assessee's severe illness as a sufficient cause. The matter was restored to the Assessing Officer for a fresh decision, allowing the assessee another opportunity to present their case, with the stipulation against frivolous adjournments.

The Tribunal condoned the delay in filing the appeals, finding sufficient cause. The Tribunal noted that the lower authorities had misconstrued facts regarding the filing of ITRs and the payment of advance tax. The appeals were set aside to the file of the CIT(A) for fresh adjudication on merits.

The Tribunal held that the reassessment notice was invalid as it was based on a 'change of opinion' and borrowed satisfaction, not on fresh tangible material. The assessment relied heavily on a third-party statement without corroborative evidence or an opportunity for the assessee to cross-examine. The court also noted that the transaction was supported by documentary evidence and reflected in the regular books of accounts.

The Tribunal held that while the assessee's explanation for non-compliance was not satisfactory, the repeated notices for the same information constituted a single default. The penalty provisions are deterrent in nature, not for revenue generation. Therefore, a penalty for each non-compliance was not justified.

The Tribunal noted that the reasons for rejection by the CIT(E) were curable in nature and that the assessee had provided additional evidence. The Tribunal deemed it fit to grant the assessee one more chance to contest the case before the CIT(E).

The CIT(A) allowed the appeal, holding that the additions made by the AO were without jurisdiction. The CIT(A) relied on various High Court and ITAT judgments, stating that additions in reassessment proceedings can only be made based on the formation of belief on which the case was reopened, not on other transactions. The Tribunal upheld the CIT(A)'s order.

The Tribunal noted that the CIT(A) had dismissed the assessee's appeal ex-parte for non-compliance. However, the assessee contended that they had furnished a reply with documentary evidence, which was not considered. The Tribunal found merit in the assessee's specific ground that the CIT(A) erred in dismissing the appeal without considering the submitted reply and evidence.

The Tribunal noted that the CIT(A) had partly allowed the appeal. However, the assessee did not file any written submissions or documentary evidence countering the CIT(A)'s order. Therefore, the Tribunal had no option but to confirm the order of the CIT(A).

The Tribunal held that statements recorded during a survey under Section 133A of the Act have no evidentiary value as the officer is not authorized to administer an oath. Furthermore, the addition on account of trading was not supported by tangible material. The Tribunal relied on judicial precedents to support its decision.

The Tribunal noted that the AO relied solely on the statement of GCPL's director without proper cross-examination of the director or GCPL. The assessee had provided documentary evidence for the loan, including PAN, bank statements, and confirmations, discharging their onus. The Tribunal also observed that similar additions in cases involving loans from GCPL had been deleted by coordinate benches of the ITAT and High Courts. The Tribunal emphasized that the onus shifts to the revenue to prove otherwise once the assessee provides necessary documentation for the genuineness and creditworthiness of the loan.

The Tribunal held that while the original appeal to the CIT(A) was filed with a significant delay of 584 days, the delay was partly attributable to the COVID-19 pandemic and an apparent misunderstanding by the assessee's counsel regarding limitation rules. The Tribunal condoned the delay considering these factors and the fact that the assessee should not be punished for the counsel's errors. The matter was remanded back to the Assessing Officer.

The Tribunal observed that the CIT(A) erred in not considering the circumstances of the assessee, particularly the death of the karta's son which prevented the assessee from participating effectively in the proceedings. The Tribunal allowed the appeal in ITA No. 413/JPR/2024 for statistical purposes, remanding it to the CIT(A) to decide based on additional evidence. The appeal in ITA No. 414/JPR/2024, concerning the penalty, was allowed, directing the AO to delete the penalty.

The Tribunal condoned the delay in filing the appeal, allowing the assessee's prayer due to sufficient cause. The Tribunal also admitted the additional evidence filed by the assessee. However, for the lethargic and negligent action of the assessee, a cost of Rs. 2,000/- was imposed.

The Tribunal noted that while the assessee raised several grounds regarding procedural irregularities and lack of opportunity, the appeal in ITA No. 413/JPR/2024 was allowed for statistical purposes, remanding the matter back to the CIT(A) for fresh adjudication based on additional evidence. The penalty levied under section 271(1)(b) in ITA No. 414/JPR/2024 was deleted, considering the reasonable cause for non-compliance due to the death of the assessee's son and the karta's mental state, and also considering the admission of additional evidence by the CIT(A).