ITAT Kolkata Judgments — April 2025

The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s decision. The Tribunal found that the assessee had successfully proven the identity, creditworthiness, and genuineness of the loan transaction from a sister concern under Section 68. For Section 14A, it was held that no disallowance was warranted as the assessee did not earn any exempt income during the year.

The Tribunal condoned the delay in filing the appeal. The appeal was restored to the file of the AO for readjudication after granting the assessee an opportunity of being heard, subject to payment of costs.

The Tribunal held that PMS expenses incurred by the assessee, a NBFC engaged in investment activities, are allowable as business expenses under Section 37 of the Act. The Revenue's appeal was dismissed as infructuous.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The tribunal condoned the 25-day delay, finding the reasons provided by the assessee to be genuine and bona fide. Citing various Supreme Court judgments emphasizing decision on merits rather than technicalities, the tribunal set aside the CIT(A)'s order and restored the case for fresh adjudication on its merits.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The Tribunal held that the additional ground raised by the assessee, challenging the validity of the assessment framed under Section 144/263 due to an invalid revisionary order under Section 263, was a purely legal issue. All necessary facts were on record, and no further verification was required. The Tribunal admitted the additional ground, relying on Supreme Court decisions in Jute Corporation of India Ltd. and National Thermal Power Co. Ltd., and the Calcutta High Court decision in PCIT vs. Britannia Industries Ltd. The Tribunal found that the revisionary order under Section 263 was indeed bad in law as it sought to revise issues not forming the basis of the original reassessment under Section 147. The Tribunal quashed the assessment order dated 20.12.2018 passed under Section 144/263, citing the Supreme Court's dismissal of the SLP in PCIT Vs. Bulbul Agrawal, which upheld the principle that the validity of an order can be challenged in collateral proceedings. Consequently, the appeals for AY 2008-09 to 2013-14 were allowed on this legal issue. For AY 2015-16 and 2016-17, concerning Section 40A(3) additions for coal, bricks, labour, and carriage inward, the Tribunal restored the issues to the AO for fresh examination, as the lower authorities had not gone into the depth of the evidence. For AY 2020-21, the appeal was also restored to the AO for de novo decision due to non-response from the assessee.

The Tribunal, relying on a Calcutta High Court judgment, held that the failure to file Form 10IC within the due date was a procedural lapse, not a substantive defect, especially given the difficulties during the COVID-19 pandemic. The matter was remanded to the Assessing Officer to reconsider the Form 10IC filed by the assessee and determine the appropriate relief.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The Tribunal held that since the assessee had already obtained relief from the CIT(A) on the related rectification appeal, the current appeal against the earlier CIT(A) order had become infructuous and did not require further adjudication.

The Tribunal remitted the case back to the Assessing Officer for fresh adjudication. This decision was made to provide the assessee with an opportunity to furnish documentary evidence regarding its business, the sources of cash deposits, and its claims for deduction under Section 80P, which it had failed to provide to the lower authorities.

The Tribunal admitted the additional ground challenging the Section 263 order, finding it invalid and quashing the subsequent assessment. For other years, issues regarding Section 40A(3) violations and unexplained credits were restored to the Assessing Officer for fresh examination.

The Tribunal upheld the order of the NFAC. Regarding the corporate guarantee fee, the Tribunal found no infirmity in the NFAC's order, which followed the coordinate bench's decision for AY 2013-14 and 2014-15, holding that the 1% corporate guarantee fee charged by the assessee was at arm's length. The NFAC's reasoning, which noted the TPO's benchmarking exercise suffered from fundamental infirmity and cited various High Court and Tribunal decisions, was accepted. Consequently, the Revenue's grounds related to this issue were dismissed. Concerning the inter-unit transfers, the Tribunal found the NFAC's order to be reasonable. The NFAC had deleted the transfer pricing adjustment by agreeing with the assessee that higher profitability of eligible units was due to commercial decisions to manufacture higher margin products and relied on decisions like DCIT vs. M/s Century Plyboards (I) Ltd. and Greenply Industries Ltd. vs. ACIT. The Tribunal respectfully followed these decisions and directed the deletion of the transfer pricing adjustment of ₹91,71,780/- and ₹87,75,918/- made in relation to inter-unit transactions. The Revenue's appeal was dismissed.

The Tribunal condoned the delay in filing the appeals before the Ld. CIT(A), acknowledging the reasons provided. Consequently, both the quantum and penalty issues were restored to the file of the Assessing Officer for fresh re-adjudication, ensuring the assessee is given a proper hearing.

The Tribunal ruled that disallowance under Section 14A read with Rule 8D cannot surpass the exempt income, citing various High Court judgments. The Tribunal set aside the appeals to the Assessing Officer with instructions to restrict the disallowance to the exempt income. It declined to restore the matter to the CIT(A) despite the ex-parte order, considering it an 'open and shut case'.

The Tribunal found that the partners' salary was as per the partnership deed and Section 40(b), and estimation-based disallowances of salary/welfare expenses were unsustainable. It also held that TDS was not applicable to part-time accountant's remuneration and that donation expenses for puja pandals were essential for the liquor business. Consequently, all disallowances were deleted.

The Tribunal held that the reopening of assessment was invalid due to the AO's failure to consider the revised return and the flawed approval process. The assessment proceedings were quashed based on these legal infirmities.

The Tribunal held that income could not be estimated solely on the GP rate without allowing business expenses, and directed the AO to allow such deductions. It also ruled that additions for unexplained cash credit and undisclosed loans/advances were not sustainable when income was already estimated using a GP rate, directing their deletion. However, the Tribunal upheld the addition of interest accrued on FDR with UCO Bank, dismissing the assessee's ground on this issue.

The Tribunal condoned the delay in filing the appeals before the Ld. CIT(A), acknowledging the reasons provided. Consequently, both the quantum and penalty issues were restored to the file of the Assessing Officer for fresh re-adjudication, ensuring the assessee is given a proper hearing.

The Tribunal ruled that disallowance under Section 14A read with Rule 8D cannot surpass the exempt income, citing various High Court judgments. The Tribunal set aside the appeals to the Assessing Officer with instructions to restrict the disallowance to the exempt income. It declined to restore the matter to the CIT(A) despite the ex-parte order, considering it an 'open and shut case'.

The Tribunal condoned the delay in filing the appeal, finding the reasons bonafide, sufficient, and reasonable. It restored the appeal to the file of the Ld. Assessing Officer, directing a de novo adjudication after providing the assessee a reasonable opportunity of being heard.

The Tribunal condoned a 5-day delay in the revenue's appeal and first addressed the assessee's challenge. It found the reasons recorded for reopening the assessment under Section 147 to be vague and based on borrowed satisfaction, thereby quashing the reopening. Additionally, the Tribunal upheld the CIT(A)'s deletion of the addition on merits, finding that the assessee had provided sufficient evidence for the share sale transactions.

The Tribunal found no infirmity in the orders of the lower authorities, confirming the addition. The appeal was dismissed due to the non-cooperation and non-appearance of the assessee and their representative.

The Tribunal observed partial non-compliance by the assessee and decided to restore the appeal to the AO for de-novo consideration. The assessee was granted an opportunity to furnish evidences and produce directors for examination on oath, with the appeal being allowed for statistical purposes.

The Tribunal condoned the 27-day delay in filing the appeal, finding it for sufficient and bonafide reasons. It followed a co-ordinate bench decision which held that the reopening of assessment and subsequent addition were not sustainable, as the AO had not correctly appreciated the facts, and the transaction had been thoroughly examined under the Benami Property Transactions Act, 1988. The Tribunal therefore set aside the CIT(A)'s order and directed the AO to delete the addition.

The Tribunal found partial non-compliance by the assessee with respect to documents and Section 131 summons. Therefore, it restored the case to the file of the Ld. AO for a de novo decision, granting the assessee liberty to furnish additional evidence and directing them to produce the directors for examination.

The Tribunal found merit in the assessee's contention that the notice under Section 143(2) was issued in violation of CBDT instructions. Consequently, the assessment framed based on this invalid notice was also deemed invalid and liable to be quashed.

The Tribunal condoned the delay in filing the appeals, finding the reasons provided by the assessee bonafide. For AY 2008-09, it accepted the gift from the mother as genuine, supported by a gift deed, and directed the AO to delete the addition. For AY 2013-14, the Tribunal found that the 40% disallowance of expenses was estimated without any reasonable basis, even in the context of an ex-parte assessment under Section 144, and directed the AO to delete this addition.

The Tribunal held that the property was purchased and fully paid for in an earlier assessment year (AY 2012-13), and only the conveyance deed was registered in the impugned assessment year (AY 2014-15). The additions made by the AO were based on a misunderstanding of the facts.

The Tribunal condoned the delay in filing the appeals, finding the reasons provided by the assessee bonafide. For AY 2008-09, it accepted the gift from the mother as genuine, supported by a gift deed, and directed the AO to delete the addition. For AY 2013-14, the Tribunal found that the 40% disallowance of expenses was estimated without any reasonable basis, even in the context of an ex-parte assessment under Section 144, and directed the AO to delete this addition.

The Tribunal found that the alleged escaped income from commodity dealing was already fully disclosed in the assessee's profit and loss account and total income computation, matching the original return. Consequently, the very foundation of the reopening under Section 147 failed, leading to the quashing of the reopening proceedings and the consequent assessment order.

The Tribunal held that the reopening of assessment was invalid due to the Assessing Officer's non-application of mind to the information received and the PCIT's mechanical approval. The reasons recorded were scanty, vague, and conflicting, and the approval lacked independent application of mind.

The Tribunal held that since the information for reopening the assessment was derived from a search and seizure action on another entity, the special provisions of Section 153C should have been invoked. Resorting to Section 147 was deemed incorrect.

The Tribunal held that the reopening of assessment was invalid on two grounds. Firstly, the reasons recorded by the AO were vague and scanty, lacking specific details of transactions and parties, indicating a lack of independent application of mind and borrowed satisfaction. Secondly, the approval granted by the PCIT was mechanical and invalid. The Tribunal noted that the PCIT's endorsement of 'yes it is fit case' and the quick turnaround time for approval suggested a lack of objective consideration. Relying on judicial pronouncements, including the distinction made by a co-ordinate bench regarding the applicability of Prem Chand Shaw (Jaiswal), the Tribunal found that the PCIT failed to satisfactorily record his concurrence, and the mere use of the expression 'Yes, I am satisfied' does not reflect an independent application of mind. Consequently, the impugned notice under Section 148 was set aside, and the reopening of assessment and the assessment framed by the AO were quashed. The appeal of the assessee was allowed.

The Income Tax Appellate Tribunal (ITAT) upheld the decision of the Ld. CIT(A), confirming the deletion of the addition. The ITAT reasoned that the contingent liability, though reported in the tax audit, was not debited to the Profit and Loss Account and does not represent an actual expense or liability for accounting purposes.

The Tribunal dismissed the grounds relating to the PF/ESI disallowance, holding it to be a prima facie adjustment permissible under Section 143(1) as per the Hon'ble Apex Court's decision in *Checkmate Services Pvt Ltd*. The issue of TDS credit was restored to the file of the AO for re-examination, with a direction to allow the credit if it was for a merged company.

The Tribunal found that the assessee had furnished extensive details and evidences for the loan creditors, proving their identity, creditworthiness, and the genuineness of transactions, including loans taken on interest through banking channels with TDS deducted. The Tribunal noted that the investigation report and statements did not directly link the assessee to any hawala entries. Relying on High Court precedents, the Tribunal concluded that the AO failed to bring any material on record to disprove the assessee's evidence. Therefore, the addition made by the AO was deleted.