ITAT Kolkata Judgments — February 2018

The Tribunal held that the penalty was unsustainable because the show cause notice issued under Section 274 did not specify whether the proceedings were for concealment of income or furnishing inaccurate particulars. Following the decision of the Karnataka High Court, the Tribunal upheld the deletion of the penalty.

The Tribunal held that if the income is not chargeable to tax in India, then the obligation to deduct TDS under Section 195 does not arise. The commission paid to foreign agents for services rendered outside India, without any business connection in India, is not taxable in India.

The Tribunal held that the appeal before the CIT(A) was decided ex-parte without sufficient opportunity for the assessee to be heard. In the interest of justice, the matter was to be decided on merits by the CIT(A) after giving a reasonable opportunity.

The Tribunal found the CIT(A)'s order to be cryptic, non-speaking, and ex parte. Therefore, the Tribunal set aside the order and restored the matter to the CIT(A) for fresh adjudication.

The Tribunal held that the penalty was unsustainable because the show cause notice issued under Section 274 of the Act did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income. The Tribunal followed the decision of the Karnataka High Court in CIT vs. Manjunatha Cotton and Ginning Factory.

The Tribunal held that the CIT(A) erred in disposing of the appeal ex parte without giving the assessee a reasonable opportunity to be heard. The Tribunal found that the CIT(A) should have provided sufficient time for the assessee to present its case.

The Tribunal held that the penalty imposed under Section 271(1)(c) was unsustainable because the show cause notice issued under Section 274 did not specify whether the charge was for concealment of particulars of income or furnishing inaccurate particulars of income. The Tribunal followed the decision of the Karnataka High Court in CIT vs. SSA's Emerald Meadows.

The Tribunal held that the reference to the VO was invalid as per Section 55A of the Income Tax Act, 1961, because the assessee had declared a value higher than the fair market value determined by the VO. Furthermore, the amendment to Section 55A, which would have allowed such a reference, was not applicable to the assessment year in question.

The Tribunal, following various High Court and Supreme Court judgments, held that an appeal requires effective prosecution. Since the assessee failed to appear, the appeal was dismissed for want of prosecution.

The Tribunal held that the transaction of selling shares by a company to its subsidiary is not considered a transfer under Section 47(iv) of the Income Tax Act. Therefore, the question of computing capital gains or losses does not arise.

The Tribunal held that coal mining is considered a manufacturing activity, entitling the assessee to additional depreciation. It found that the AO had conducted necessary inquiries and verified the claim, making the Pr. CIT's order unsustainable.

The Tribunal held that the CIT(A) should have provided a reasonable opportunity to the assessee to present their case, even if they failed to appear on earlier dates. Denying justice without a proper hearing is not permissible.

The Tribunal held that deficits from earlier years can be treated as an application of income in the current year, provided the expenses were incurred for charitable purposes. The Tribunal relied on judicial precedents and CBDT circulars supporting this view.

The Tribunal held that the CIT(A) and AO erred in passing ex-parte orders without affording a reasonable opportunity of being heard. Non-service of notices was a critical factor in denying natural justice.

The Tribunal held that the penalty imposed was unsustainable because the show cause notice did not specify the exact charge against the assessee. Following the precedent of the Hon'ble Karnataka High Court, the Tribunal decided that a defective show cause notice invalidates the penalty proceedings.

The Tribunal held that the CIT(A) erred in deciding the appeal ex parte without providing a reasonable opportunity to the assessee. In the interest of justice, the matter was set aside to the CIT(A) for fresh disposal.

The Tribunal held that the legal fiction in Section 2(22)(e) does not extend to beneficial shareholders and loans received from a company where the assessee is not a registered shareholder cannot be treated as deemed dividend.

The Tribunal held that the assessment order passed under section 143(3)/147 without disposing of the objections raised by the assessee challenging the validity of reopening is bad-in-law and liable to be cancelled.

The Tribunal held that the AO should have referred the matter to the valuation officer for determining the fair market value of the property, as per the proviso to Section 56(2)(vii)(b)(ii). This decision was based on a jurisdictional High Court ruling.

The CIT(A) deleted the addition after the assessee submitted a sale deed and bank statement showing the amount was received by cheque as advance for flat booking. The Tribunal found no infirmity in the CIT(A)'s order.

The Tribunal upheld the disallowance for cash purchases. It deleted the disallowance for non-deduction of TDS on transport charges, finding it a one-off transaction without a contract. The disallowance on sundry debtors was restricted to 10% as initially observed by the AO.

The Tribunal held that the difference in sales could not be treated as unexplained cash credit under Section 68 as it was not recorded as such. Similarly, the difference in purchases could not be treated as unexplained expenditure under Section 69C as it was duly shown in the return.

The Tribunal held that the reopening of the assessment after four years was barred by limitation as the conditions under the first proviso to Section 147 were not met. Consequently, the reassessment order was deemed invalid.

The Tribunal found sufficient cause for the assessee's non-appearance before the CIT(A). The ex-parte order of the CIT(A) was set aside, and the matter was remanded for fresh disposal on merits.

The Tribunal held that the CIT(Appeals) correctly deleted the addition as the assessee's balance sheets filed with the return already reflected the ownership and registration charges for the flat. The AO's inference of a second flat was arbitrary.

The Tribunal held that the activity of producing poultry feed constitutes manufacture and production of an article, making it eligible for deduction under Section 80IB. It also held that the penalty under Section 271AAB was not leviable as the issue of deduction under Section 80IB was decided in favour of the assessee and no material seizure supported the claim of undisclosed income.

The Tribunal found merit in the assessee's contention that notices were not served due to an address error. Therefore, the ex-parte order of the CIT(Appeals) was set aside.

The Tribunal held that Section 14A is applicable to exempt income from partnership firms, overruling the CIT(A)'s reliance on a superseded decision. However, it directed that only net interest expenditure should be considered for disallowance, following a Gujarat High Court ruling.

The Tribunal held that the CIT(A) failed to provide a proper opportunity of being heard to the assessee, violating the principles of natural justice. The matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the CIT(A) failed to provide a proper opportunity of being heard to the assessee, violating the principles of natural justice. The matter was restored to the CIT(A) for fresh adjudication.

The tribunal held that a company, even without active business, incurs necessary expenses for its existence. However, expenses related to rental income, for which statutory deductions are already claimed, cannot be allowed again. Therefore, the disallowance was restricted to 10% of the claimed expenses.

The Tribunal found that the CIT(A) should have provided another opportunity to the assessee, especially considering the medical grounds for the prior adjournment. The ex parte order was passed without proper reasoning.

The Tribunal found that the CIT(A) failed to consider the assessee's written submissions and application for an additional ground of appeal. Therefore, the CIT(A)'s order was set aside.

The Tribunal held that the CIT(A) failed to provide a proper opportunity of being heard to the assessee, violating the principles of natural justice. The matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the Principal CIT erred in revising the assessment order on the ground of lack of enquiry without affording the assessee an opportunity to be heard on this specific issue. The revision was quashed as it violated principles of natural justice.

The Tribunal held that the penalty under Section 271(1)(b) should not be imposed when there are substantial compliances and the default is not willful or deliberate. The Tribunal relied on its own previous order in the assessee's case and Supreme Court judgments.

The Tribunal held that the CIT(A) failed to provide a proper opportunity of being heard and did not pass a reasoned order as required by Section 250(6). The principle of audi alteram partem was violated.

The Tribunal held that the penalty imposed under Section 271(1)(c) was invalid because the show cause notice issued under Section 274 did not clearly specify the charge against the assessee, i.e., whether it was for concealment or furnishing inaccurate particulars of income.

The Tribunal found merit in the assessee's contention that there was a sufficient cause for their absence before the CIT(A) and that the ex-parte order did not comply with Section 250(6) of the Act. Therefore, the order was set aside.

The Tribunal held that if the payment for services is treated as bogus, then the receipt of services should also be treated as bogus. Since the assessee acted as an intermediary and earned a profit, and the Service Tax Department found no adverse findings, the disallowance was incorrect.

The Tribunal noted that the amount represented an outstanding payable by the assessee for share purchases, not a payment received from M/s. Survottam Enterprises Ltd. Therefore, Section 2(22)(e) was not applicable. However, as this factual position was not fully examined by the lower authorities, the matter was restored to the Assessing Officer.

The Tribunal held that the amount received by the assessee as his share of goodwill on retirement from the firm is a capital receipt and not chargeable to tax, as there was no transfer of goodwill. The addition made by the Assessing Officer and confirmed by the CIT(Appeals) was deleted.

The Tribunal found that the assessee had filed relevant documentary evidence, including vouchers and ledger extracts, which were not adequately verified by the lower authorities. Therefore, the case was restored to the AO for fresh adjudication.

The Tribunal noted that the assessee had produced books of account during the original assessment but failed to do so during remand proceedings as they were misplaced. Given the affidavit undertaking to produce them and the fact that the disallowance was largely based on non-production, the matter was restored to the AO.

The Tribunal held that Section 271AAB is not mandatory but discretionary, as it uses the word 'may'. Furthermore, the income found in 'other documents' maintained in the normal course, even if not in regular books of account, does not fall under the definition of 'undisclosed income' for the purpose of Section 271AAB.

The Tribunal held that the assessee failed to establish the genuineness of the payments made to the sub-contractors. Since the sub-contractors could not be verified and the payments were made to non-existent entities, the disallowance was justified.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance on tyre purchases, finding that payments were subsequently made and the AO's disallowance was not justified. The Tribunal also upheld the higher depreciation on dumpers and tippers, agreeing that they are essential machinery for construction activities and qualify for higher depreciation.

The Tribunal held that disallowance under Section 14A cannot be made if no exempt income is received or receivable during the relevant previous year. Following the decision in Cheminvest Ltd., the Tribunal upheld the deletion of the disallowance.

The Tribunal upheld the deletion of the addition made by the CIT(A). It found that the interest income was correctly accounted for on an accrual basis in the prior year, and the reimbursement amounts were not the assessee's income but actual expenses incurred on behalf of a principal, duly supported by evidence and confirmed by the principal.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance on tyre purchases, finding that payments were subsequently made and the AO's disallowance was not justified. The Tribunal also upheld the higher depreciation on dumpers and tippers, agreeing that they are essential machinery for construction activities and qualify for higher depreciation.