ITAT Kolkata Judgments — February 2024

The Tribunal held that employees' contribution to PF/ESI, if not deposited by the statutory due date, is not eligible for deduction as per Section 36(1)(va) of the Income Tax Act. This decision follows the Supreme Court ruling in Checkmate Services Pvt. Ltd.

The Tribunal held that the disallowance of the share trading loss was uncalled for. It found that the assessee had provided all relevant documents, and the addition was based on a preponderance of probabilities without direct evidence or opportunity for cross-examination.

The Tribunal found that the loan was interest-bearing, transacted through banking channels, and duly repaid with TDS. The assessee had provided all necessary documentation, and the AO/CIT(A) failed to point out any discrepancies or conduct proper inquiries.

The Tribunal found merit in the assessee's contention that the ex-parte order was passed without a reasonable opportunity of being heard. Consequently, the matter was remanded back to the CIT(A) for re-examination.

The Tribunal held that the difference between the stamp duty valuation and the consideration was less than the 10% threshold prescribed by the third proviso to Section 50C(1). Therefore, the consideration paid by the assessee should be considered the full value. The amendment to Section 50C(1) was considered curative and applicable retrospectively.

The Tribunal held that the payments made via bearer cheques were for procurement of agricultural produce from farmers or their agents, falling under the exceptions of Rule 6DD, thus no disallowance under Section 40A(3) was warranted. Similarly, other grounds concerning cash payments, demonetization deposits, and business expenditures were also decided in favor of the assessee.

The Tribunal held that the penalty notice issued by the AO did not clearly specify the default committed by the assessee. Therefore, the penalty order passed under Section 272B was considered void and unsustainable.

The Tribunal held that the assessee was not liable to collect tax at source as they were second-stage sellers and had obtained declarations (Form 27C/27BA) from buyers stating the tendu leaves were for manufacturing purposes. The Tribunal relied on CBDT Circular No. 660/1993 and various judicial precedents.

The Tribunal held that the assessee had discharged its primary onus by furnishing sufficient documentary evidence to prove the identity, creditworthiness of share applicants, and genuineness of the transactions. Therefore, the addition made by the Assessing Officer and confirmed by the CIT(A) was deleted.

The Tribunal held that as per CBDT Circular No. 17/2019, appeals with a tax effect of Rs. 50 lakhs or less should not be filed by the Revenue. This circular is applicable retrospectively to pending appeals.

The Tribunal condoned the delay in filing the appeal against the Section 263 order, finding the assessee's explanation reasonable. It then quashed the Section 263 order and the consequential assessment order as unsustainable and beyond the period of limitation.

The Tribunal held that the AO and CIT(A) failed to conduct independent inquiries and examine the evidence submitted by the assessee regarding the identity, creditworthiness, and genuineness of the share transactions. The lower authorities made additions mechanically without proper application of mind.

The Tribunal decided to remit both issues back to the AO for verification. For PF & ESI, the AO needs to differentiate between employer and employee contributions and apply relevant sections. For TDS, the difference of Rs. 500/- needs verification.

The Tribunal found that the CIT(A)'s conclusions were contrary to the facts. It held that the assessee should be given a reasonable opportunity to present its case and supporting documents.

The Tribunal held that the assessee was not liable to collect tax at source as they were second-stage sellers and had obtained declarations (Form 27C/27BA) from buyers stating the tendu leaves were for manufacturing purposes. The Tribunal relied on CBDT Circular No. 660/1993 and various judicial precedents.

The Tribunal upheld the addition of Rs. 45,00,00,000/- as unexplained cash credit. The assessee failed to provide the necessary identity, creditworthiness, and genuineness of the transactions despite opportunities.

The Tribunal held that the assessee was not liable to collect tax at source as they were second-stage sellers and had obtained declarations (Form 27C/27BA) from buyers stating the tendu leaves were for manufacturing purposes. The Tribunal relied on CBDT Circular No. 660/1993 and various judicial precedents.

The Tribunal found that the CIT(A) failed to consider the assessee's submissions. The Tribunal also noted vagueness in the AO's assessment order regarding the reasons for reopening and the basis of the addition. Therefore, the matter was remitted back to the AO for de novo adjudication.

The Tribunal condoned the delay in filing the appeal against the Section 263 order, finding the assessee's explanation reasonable. It then quashed the Section 263 order and the consequential assessment order as unsustainable and beyond the period of limitation.

The Tribunal found that while the assessee proved the transaction with M/s. Miller Traders Pvt. Ltd., the identity and source of M/s. Falcon Tyres Ltd. remained unproven. However, the legal grounds regarding the reopening were raised for the first time before the ITAT.

The Tribunal held that the disallowance on account of non-payment of employee PF & ESI contributions should be set off against the determined loss. The issue of TDS credit was relegated to the Assessing Officer for verification and grant.

The tribunal issued a corrigendum to correct a typographical error in its previous order. The corrected order states that the revenue's appeal is allowed.

The Tribunal held that there is no bar on filing the application for final registration before the expiry of six months from the provisional registration period. The application should be made at the earliest possible event, which is expected from the assessee.

The Tribunal noted that only a short period was given for response to notices, and in the interest of justice, granted the assessee one more opportunity. The orders of the CIT(Exemption) were set aside.

The Tribunal held that the impugned additions made by the Assessing Officer were based on post-search inquiries and not on incriminating material found during the search that had a live nexus with the assessee or showed escapement of income. The assessment years in question were completed assessments prior to the search, and no assessment was pending. The unsecured loans were from group concerns, duly reflected in the regular books of accounts, audited financial statements, and filed with the returns under Section 139(1). The identity, creditworthiness, and genuineness of these transactions were not in dispute. For M/s. Merlins Kolkata, the funds were received from its partners, and their identity and genuineness were also established, with creditworthiness demonstrated. Therefore, the additions under Section 68, the disallowance of interest expenditure, and the addition for unexplained expenditure under Section 69C were not sustainable. The Tribunal upheld the CIT(A)'s deletion of these additions on legal grounds, as the AO had erred in assuming jurisdiction under Section 153A/143(3) without incriminating material. Consequently, the grounds raised by the revenue were dismissed.

The Tribunal held that the impugned additions made by the Assessing Officer were based on post-search inquiries and not on incriminating material found during the search that had a live nexus with the assessee or showed escapement of income. The assessment years in question were completed assessments prior to the search, and no assessment was pending. The unsecured loans were from group concerns, duly reflected in the regular books of accounts, audited financial statements, and filed with the returns under Section 139(1). The identity, creditworthiness, and genuineness of these transactions were not in dispute. For M/s. Merlins Kolkata, the funds were received from its partners, and their identity and genuineness were also established, with creditworthiness demonstrated. Therefore, the additions under Section 68, the disallowance of interest expenditure, and the addition for unexplained expenditure under Section 69C were not sustainable. The Tribunal upheld the CIT(A)'s deletion of these additions on legal grounds, as the AO had erred in assuming jurisdiction under Section 153A/143(3) without incriminating material. Consequently, the grounds raised by the revenue were dismissed.

The Tribunal held that the impugned additions made by the Assessing Officer were based on post-search inquiries and not on incriminating material found during the search that had a live nexus with the assessee or showed escapement of income. The assessment years in question were completed assessments prior to the search, and no assessment was pending. The unsecured loans were from group concerns, duly reflected in the regular books of accounts, audited financial statements, and filed with the returns under Section 139(1). The identity, creditworthiness, and genuineness of these transactions were not in dispute. For M/s. Merlins Kolkata, the funds were received from its partners, and their identity and genuineness were also established, with creditworthiness demonstrated. Therefore, the additions under Section 68, the disallowance of interest expenditure, and the addition for unexplained expenditure under Section 69C were not sustainable. The Tribunal upheld the CIT(A)'s deletion of these additions on legal grounds, as the AO had erred in assuming jurisdiction under Section 153A/143(3) without incriminating material. Consequently, the grounds raised by the revenue were dismissed.

The Tribunal held that the impugned additions made by the Assessing Officer were based on post-search inquiries and not on incriminating material found during the search that had a live nexus with the assessee or showed escapement of income. The assessment years in question were completed assessments prior to the search, and no assessment was pending. The unsecured loans were from group concerns, duly reflected in the regular books of accounts, audited financial statements, and filed with the returns under Section 139(1). The identity, creditworthiness, and genuineness of these transactions were not in dispute. For M/s. Merlins Kolkata, the funds were received from its partners, and their identity and genuineness were also established, with creditworthiness demonstrated. Therefore, the additions under Section 68, the disallowance of interest expenditure, and the addition for unexplained expenditure under Section 69C were not sustainable. The Tribunal upheld the CIT(A)'s deletion of these additions on legal grounds, as the AO had erred in assuming jurisdiction under Section 153A/143(3) without incriminating material. Consequently, the grounds raised by the revenue were dismissed.

The Tribunal held that the impugned additions made by the Assessing Officer were based on post-search inquiries and not on incriminating material found during the search that had a live nexus with the assessee or showed escapement of income. The assessment years in question were completed assessments prior to the search, and no assessment was pending. The unsecured loans were from group concerns, duly reflected in the regular books of accounts, audited financial statements, and filed with the returns under Section 139(1). The identity, creditworthiness, and genuineness of these transactions were not in dispute. For M/s. Merlins Kolkata, the funds were received from its partners, and their identity and genuineness were also established, with creditworthiness demonstrated. Therefore, the additions under Section 68, the disallowance of interest expenditure, and the addition for unexplained expenditure under Section 69C were not sustainable. The Tribunal upheld the CIT(A)'s deletion of these additions on legal grounds, as the AO had erred in assuming jurisdiction under Section 153A/143(3) without incriminating material. Consequently, the grounds raised by the revenue were dismissed.

The Tribunal held that the impugned additions made by the Assessing Officer were based on post-search inquiries and not on incriminating material found during the search that had a live nexus with the assessee or showed escapement of income. The assessment years in question were completed assessments prior to the search, and no assessment was pending. The unsecured loans were from group concerns, duly reflected in the regular books of accounts, audited financial statements, and filed with the returns under Section 139(1). The identity, creditworthiness, and genuineness of these transactions were not in dispute. For M/s. Merlins Kolkata, the funds were received from its partners, and their identity and genuineness were also established, with creditworthiness demonstrated. Therefore, the additions under Section 68, the disallowance of interest expenditure, and the addition for unexplained expenditure under Section 69C were not sustainable. The Tribunal upheld the CIT(A)'s deletion of these additions on legal grounds, as the AO had erred in assuming jurisdiction under Section 153A/143(3) without incriminating material. Consequently, the grounds raised by the revenue were dismissed.

The Tribunal noted that only a short period was given for response to notices, and in the interest of justice, granted the assessee one more opportunity. The orders of the CIT(Exemption) were set aside.

The Tribunal held that the impugned additions made by the Assessing Officer were based on post-search inquiries and not on incriminating material found during the search that had a live nexus with the assessee or showed escapement of income. The assessment years in question were completed assessments prior to the search, and no assessment was pending. The unsecured loans were from group concerns, duly reflected in the regular books of accounts, audited financial statements, and filed with the returns under Section 139(1). The identity, creditworthiness, and genuineness of these transactions were not in dispute. For M/s. Merlins Kolkata, the funds were received from its partners, and their identity and genuineness were also established, with creditworthiness demonstrated. Therefore, the additions under Section 68, the disallowance of interest expenditure, and the addition for unexplained expenditure under Section 69C were not sustainable. The Tribunal upheld the CIT(A)'s deletion of these additions on legal grounds, as the AO had erred in assuming jurisdiction under Section 153A/143(3) without incriminating material. Consequently, the grounds raised by the revenue were dismissed.

The Tribunal held that the assessee was eligible to apply for final registration after obtaining provisional approval, irrespective of prior commencement of activities. The rejection by the CIT(Exemption) was based on a misinterpretation of the relevant provisions.

The Tribunal held that once the assessee qualifies as a non-resident, salary received for services rendered outside India is not taxable in India as per Section 5(2)(b) of the Income Tax Act. The Tribunal relied on various judicial precedents supporting this view, even in cases where a tax residency certificate was not initially provided.

The Tribunal held that the CIT(Appeals) order was not sustainable due to procedural irregularities and that the Assessing Officer had not examined the issue under the correct provisions of Section 69. Therefore, the matter was set aside for re-examination.

The Tribunal held that the impugned additions made by the Assessing Officer are not sustainable in law. The primary reasoning was based on the submission that no incriminating material was found during the search action conducted under section 132(1) of the Act. Furthermore, the Tribunal noted that the assessment year in question was 2009-10, and the time to issue a notice under section 143(2) of the Act had already elapsed on 03.09.2010, meaning there was no pending or unabated assessment. The Tribunal relied on the decision of the Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell Pvt. Ltd. ([2023] 149 taxmann.com 399 (SC)), which held that in cases of non-abated or completed assessments, no additions can be made under section 153A in the absence of any incriminating material found during the search. Consequently, all impugned additions were ordered to be deleted. The appeal of the assessee was allowed.

The Tribunal held that while the common shareholder (KSWPL) might be liable for deemed dividend, the assessee company (ASMSPL) receiving the loan is not. The deeming fiction of Section 2(22)(e) cannot be extended to the recipient concern when the beneficial shareholder is distinct.

The Tribunal held that the CIT(A) failed to follow the mandate of Section 250(6) by passing ex-parte orders without analysis and reasons. The impugned orders were set aside.

The Tribunal condoned the delay in filing the appeal. Following the Supreme Court's decision in Checkmate Services (P.) Ltd., the Tribunal upheld the disallowance of the delayed deposit of employees' contribution to PF & ESI.

The Tribunal held that the assessee failed to provide sufficient evidence to prove that the expenses were incurred wholly and exclusively for business purposes. The available ledger entries and bills were not considered adequate proof.

The Tribunal held that the aggregation method should be applicable for the transfer pricing study and directed the TPO/AO to re-adjudicate the two issues. The Tribunal also stated that the Return on Capital Employed (ROCE) method would not be accepted for the purchase of fixed assets.

The Tribunal decided to restore the issue of interest accrued on compensation awarded to the file of the AO for fresh adjudication. It also restored the issue of employees' contribution towards EPF & ESIC and sundry balances written off to the file of the AO for fresh adjudication.

The tribunal upheld the AO's disallowance of 50% of the house loan interest. However, the issue of the refund of loan amount was remitted back to the AO for verification.

The Tribunal held that the CIT(E) erred in assuming jurisdiction under Section 263 as the AO had followed the directions of the CIT(A) and a prior year's assessment order which was upheld on appeal. The CIT(E) should not have gone into the merits of the exemption claim.

The Tribunal held that due to the moratorium declared under the IBC, the appeal could not be proceeded with. The assessee was granted liberty to seek restoration if the resolution process concluded in their favor.

The Tribunal held that the AO's view of applying 8% on deposits was plausible, especially since the person responsible for the deposits had admitted ownership and income was assessed in his hands. The PCIT's revisionary order was quashed as the conditions for invoking Section 263 were not met.

The Tribunal held that the Assessing Officer did not apply his mind to the facts of the case and relied on borrowed satisfaction. The reopening of assessment was based on incorrect information regarding the company name and lacked proper application of mind, making it bad in law.

The Tribunal restored the case to the AO for de novo adjudication. The AO was directed to decide the issue on its merits after providing the assessee with a reasonable opportunity of being heard.

The Tribunal held that the CIT(A) failed to follow the mandate of Section 250(6) by passing ex-parte orders without analysis and reasons. The impugned orders were set aside.

The Tribunal condoned the delay, finding sufficient cause for the delay in filing the appeal. The Tribunal also noted that the CIT(A) had passed an ex-parte order without proper analysis, thus restoring the appeal to the CIT(A) for fresh adjudication.