Loading ITAT cases…
61,638 tribunal orders from the Mumbai bench.
Counted from the judgments of this bench on BharatTax. The figure is how many of them cite each decision.
Additions for alleged bogus purchases should be restricted to the profit element, not the entire turnover. The profit element is often estimated at 12.5% of the purported bogus purchases.
Appellate authorities can consider new claims and additional grounds if the relevant facts are already on record. The purpose of assessment is to correctly determine tax liability, allowing both parties to raise issues.
Where an assessee claims that investments were made out of own funds, interest disallowance under Section 14A read with Rule 8D may not apply if the assessee demonstrates the availability of sufficient interest-free funds to cover such investments.
In Section 153A proceedings, the scope of assessment extends to abated proceedings, enabling an assessee to raise fresh legal claims that could have been made in regular assessment proceedings.
When an assessee possesses interest-free funds sufficient to cover investments yielding tax-free income, it is presumed that such investments were made from these interest-free funds, precluding disallowance of interest expenditure under Section 14A.
Penalty under Section 271(1)(c) for furnishing inaccurate particulars or concealment of income is not automatically leviable if the assessee has made a full disclosure of all particulars and the addition or disallowance arises from a difference of opinion.
Rule 8D, for computing disallowance under Section 14A for expenses related to exempt income, applies from Assessment Year 2008-09 onwards; for prior years, a reasonable disallowance must be made. The disallowance under Section 14A cannot exceed the actual exempt income earned.
Delay in filing appeals, when supported by sufficient or justifiable cause, should be condoned with a liberal approach to ensure substantial justice. This principle prioritizes the cause of justice over mere technicalities.
Disallowance under Section 14A is not automatic and requires the Assessing Officer to record satisfaction before applying Rule 8D. Only investments yielding exempt income are considered for disallowance, irrespective of their strategic nature.
An assessee cannot raise a new claim or a claim not made in the original or revised return of income for the first time directly before the Assessing Officer during assessment proceedings.
For revision under Section 263, the Assessing Officer's order must be both erroneous and prejudicial to the interests of the revenue; if either condition is not met, the revisionary jurisdiction cannot be invoked. An order is not erroneous merely because the Assessing Officer did not record the details of enquiries conducted, provided due enquiries were made.
The Revenue is entitled to look behind the apparent form of a transaction to discover its true nature, applying the test of human probabilities and surrounding circumstances. If transactions defy logic or are unnatural, they can be treated as bogus, even if supported by some documentation, especially in cases of cash credits or unexplained investments.
If an assessee makes purchases from bogus parties, but the underlying goods are genuinely acquired and sold, only the profit margin embedded in such purchases, and not the entire value of the bogus purchases, should be added to the assessee's income.
A disallowance under Section 14A of the Income-tax Act, 1961, for expenditure incurred in relation to exempt income cannot be made if the assessee has not earned any exempt income during the relevant previous year.
Appellate authorities can entertain fresh claims or revised computations of income made by an assessee, even if these were not submitted through a revised return of income.
The principle of consistency applies in tax matters, meaning a fundamental aspect found to be true in one assessment year should not be changed in a subsequent year if the order was not challenged.
Tax authorities must judge evidence using the test of human probabilities and consider the apparent as real until there are reasons to believe it is not. They can rely on circumstantial evidence and the preponderance of probabilities to determine the genuineness of transactions.
Disallowance computed under Section 14A, read with Rule 8D, cannot be added to book profits under Section 115JB for Minimum Alternate Tax (MAT) purposes. Additionally, for Section 14A disallowance, only investments that yielded exempt income during the year are considered for calculating their average value.
An Assessing Officer cannot initiate reassessment proceedings under Section 147 of the Income Tax Act based on a mere change of opinion. Reassessment is permissible only when there is fresh tangible material leading to the belief of income escapement, not merely a review of existing facts.
In non-abated assessments, the Assessing Officer can make additions under section 153A based on books of accounts or documents found during a search but not produced during the original assessment, provided such material is incriminating.
Most recent orders on record, from 2026.
The Tribunal held that the issuance of a notice under Section 143(2) of the Income Tax Act, 1961, is a mandatory statutory requirement for framing an assessment. The Tribunal referred to the decision of the Hon'ble Supreme Court in CIT v. Laxman Das Khandelwal, which held that while Section 292BB deems a notice valid if the assessee participates in proceedings, it does not cure the complete absence of a notice. In the present case, the Tribunal found that no notice under Section 143(2) was issued by the Assessing Officer within the prescribed period before proceeding to frame the assessment. Consequently, the assessment framed under Section 144 of the Act for Assessment Year 2016-17 was held to be bad in law and was quashed. Ground No. 1 of the assessee's grounds of appeal was allowed. The operative direction was to quash the assessment order.
The Tribunal allowed the appeal for AY 2013-14, quashing the assessment as being beyond the permissible block period. It held that for an 'other person' under section 153C, the relevant date for reckoning the period is when the seized material is received by the Assessing Officer having jurisdiction over that person. The assessment for AY 2013-14 was initiated beyond the six-year period preceding the receipt of material. Furthermore, the extended period under the fourth proviso to section 153A (as applicable to 153C) was unavailable as the conditions requiring evidence of an undisclosed asset of ₹50 lakh or more were not met. The loan entry itself, recorded as a liability, did not constitute an asset without further evidence. For AYs 2014-15 to 2017-18, the Tribunal allowed the appeals by deleting the interest disallowances. It reasoned that these were unabated assessments and the additions were not based on incriminating material found during the search with the necessary nexus. The adverse material relied upon (inability to identify agent, spot verification, third-party statements) did not constitute material found during the assessee's search. For AY 2018-19, the Tribunal allowed the appeal on merits, deleting the interest disallowance. It found that the loan and repayment were confirmed by the lender's director with supporting documents, and the interest was paid through banking channels after TDS. The premise that the interest payment was unexplained was not sustainable. The claim for TDS credit for AY 2014-15 was to be verified and granted.
The Tribunal allowed the appeal for AY 2013-14, quashing the assessment as being beyond the permissible block period. It held that for an 'other person' under section 153C, the relevant date for reckoning the period is when the seized material is received by the Assessing Officer having jurisdiction over that person. The assessment for AY 2013-14 was initiated beyond the six-year period preceding the receipt of material. Furthermore, the extended period under the fourth proviso to section 153A (as applicable to 153C) was unavailable as the conditions requiring evidence of an undisclosed asset of ₹50 lakh or more were not met. The loan entry itself, recorded as a liability, did not constitute an asset without further evidence. For AYs 2014-15 to 2017-18, the Tribunal allowed the appeals by deleting the interest disallowances. It reasoned that these were unabated assessments and the additions were not based on incriminating material found during the search with the necessary nexus. The adverse material relied upon (inability to identify agent, spot verification, third-party statements) did not constitute material found during the assessee's search. For AY 2018-19, the Tribunal allowed the appeal on merits, deleting the interest disallowance. It found that the loan and repayment were confirmed by the lender's director with supporting documents, and the interest was paid through banking channels after TDS. The premise that the interest payment was unexplained was not sustainable. The claim for TDS credit for AY 2014-15 was to be verified and granted.
The Tribunal, noting the agreement of both parties, decided to restore the disputed assessment issues directly to the Assessing Officer for fresh adjudication. The Tribunal found that the CIT(A) did not examine the additions on merits and that the controversy required examination of primary documents concerning the investment, payment dates, amounts, and their sources. The Tribunal reasoned that the assertions regarding payments made in the relevant year and the housing loan disbursement in a subsequent year could not be accepted without inquiry. Section 69 concerns investments made in the financial year immediately preceding the assessment year. The Tribunal set aside the impugned appellate order and the assessment on the issues raised in Grounds Nos. 12 to 19 and restored these issues to the file of the Assessing Officer for fresh adjudication. The Assessing Officer was directed to examine the agreement, developer's ledger, receipts, reconciliation of consideration with payments, housing loan disbursement, utilization, husband's contribution, and determine the investment attributable to the assessee and whether its nature and source are explained. The assessee was to be afforded an opportunity to furnish evidence. The Assessing Officer was also to reconsider the addition of bank interest and the claim of deduction under section 80TTA, and determine the applicability of section 115BBE and interest/fee levies afresh. The stay application was dismissed as infructuous because the appeal was disposed of and issues were restored to the Assessing Officer. The appeal was allowed for statistical purposes.
The Tribunal allowed the appeal for AY 2013-14, quashing the assessment as being beyond the permissible block period. It held that for an 'other person' under section 153C, the relevant date for reckoning the period is when the seized material is received by the Assessing Officer having jurisdiction over that person. The assessment for AY 2013-14 was initiated beyond the six-year period preceding the receipt of material. Furthermore, the extended period under the fourth proviso to section 153A (as applicable to 153C) was unavailable as the conditions requiring evidence of an undisclosed asset of ₹50 lakh or more were not met. The loan entry itself, recorded as a liability, did not constitute an asset without further evidence. For AYs 2014-15 to 2017-18, the Tribunal allowed the appeals by deleting the interest disallowances. It reasoned that these were unabated assessments and the additions were not based on incriminating material found during the search with the necessary nexus. The adverse material relied upon (inability to identify agent, spot verification, third-party statements) did not constitute material found during the assessee's search. For AY 2018-19, the Tribunal allowed the appeal on merits, deleting the interest disallowance. It found that the loan and repayment were confirmed by the lender's director with supporting documents, and the interest was paid through banking channels after TDS. The premise that the interest payment was unexplained was not sustainable. The claim for TDS credit for AY 2014-15 was to be verified and granted.
The Tribunal allowed the appeal for AY 2013-14, quashing the assessment as being beyond the permissible block period. It held that for an 'other person' under section 153C, the relevant date for reckoning the period is when the seized material is received by the Assessing Officer having jurisdiction over that person. The assessment for AY 2013-14 was initiated beyond the six-year period preceding the receipt of material. Furthermore, the extended period under the fourth proviso to section 153A (as applicable to 153C) was unavailable as the conditions requiring evidence of an undisclosed asset of ₹50 lakh or more were not met. The loan entry itself, recorded as a liability, did not constitute an asset without further evidence. For AYs 2014-15 to 2017-18, the Tribunal allowed the appeals by deleting the interest disallowances. It reasoned that these were unabated assessments and the additions were not based on incriminating material found during the search with the necessary nexus. The adverse material relied upon (inability to identify agent, spot verification, third-party statements) did not constitute material found during the assessee's search. For AY 2018-19, the Tribunal allowed the appeal on merits, deleting the interest disallowance. It found that the loan and repayment were confirmed by the lender's director with supporting documents, and the interest was paid through banking channels after TDS. The premise that the interest payment was unexplained was not sustainable. The claim for TDS credit for AY 2014-15 was to be verified and granted.
The Tribunal allowed the appeal for AY 2013-14, quashing the assessment as being beyond the permissible block period. It held that for an 'other person' under section 153C, the relevant date for reckoning the period is when the seized material is received by the Assessing Officer having jurisdiction over that person. The assessment for AY 2013-14 was initiated beyond the six-year period preceding the receipt of material. Furthermore, the extended period under the fourth proviso to section 153A (as applicable to 153C) was unavailable as the conditions requiring evidence of an undisclosed asset of ₹50 lakh or more were not met. The loan entry itself, recorded as a liability, did not constitute an asset without further evidence. For AYs 2014-15 to 2017-18, the Tribunal allowed the appeals by deleting the interest disallowances. It reasoned that these were unabated assessments and the additions were not based on incriminating material found during the search with the necessary nexus. The adverse material relied upon (inability to identify agent, spot verification, third-party statements) did not constitute material found during the assessee's search. For AY 2018-19, the Tribunal allowed the appeal on merits, deleting the interest disallowance. It found that the loan and repayment were confirmed by the lender's director with supporting documents, and the interest was paid through banking channels after TDS. The premise that the interest payment was unexplained was not sustainable. The claim for TDS credit for AY 2014-15 was to be verified and granted.
The Tribunal allowed the appeal for AY 2013-14, quashing the assessment as being beyond the permissible block period. It held that for an 'other person' under section 153C, the relevant date for reckoning the period is when the seized material is received by the Assessing Officer having jurisdiction over that person. The assessment for AY 2013-14 was initiated beyond the six-year period preceding the receipt of material. Furthermore, the extended period under the fourth proviso to section 153A (as applicable to 153C) was unavailable as the conditions requiring evidence of an undisclosed asset of ₹50 lakh or more were not met. The loan entry itself, recorded as a liability, did not constitute an asset without further evidence. For AYs 2014-15 to 2017-18, the Tribunal allowed the appeals by deleting the interest disallowances. It reasoned that these were unabated assessments and the additions were not based on incriminating material found during the search with the necessary nexus. The adverse material relied upon (inability to identify agent, spot verification, third-party statements) did not constitute material found during the assessee's search. For AY 2018-19, the Tribunal allowed the appeal on merits, deleting the interest disallowance. It found that the loan and repayment were confirmed by the lender's director with supporting documents, and the interest was paid through banking channels after TDS. The premise that the interest payment was unexplained was not sustainable. The claim for TDS credit for AY 2014-15 was to be verified and granted.
The Tribunal held that the Ld. CIT(A) had not complied with the procedural requirements of Rule 46A of the Income-tax Rules, 1962, as he failed to record in writing the reasons for admitting the additional evidence. The Tribunal relied on the Hon'ble Delhi High Court's decision in Manish Build Well Pvt. Ltd., which held that the procedure prescribed in Rule 46A must be scrupulously followed, and the powers under Section 250(4) do not override these procedural requirements. The Tribunal noted that the Assessing Officer did not have an opportunity to examine the documents relating to fresh loans as they were not submitted before him. Consequently, the Tribunal deemed it appropriate to restore the matter back to the Ld. CIT(A) with a direction to adjudicate the same afresh while complying with the requirements of Rule 46A. The other grounds raised by the Revenue on merits and the cross-objections filed by the assessee were rendered infructuous at this stage.
The Tribunal held that Ground No. 17 (which was not fully detailed in the provided text but implied to be related to penalty proceedings) was premature as no penalty order was under appeal and dismissed it. Regarding Ground No. 8 (section 14A), the Tribunal noted the assessee's suo motu disallowance of Rs.1,00,56,473 and the previous Tribunal order directing examination. Considering the legislative clarification in section 14A (effective 01.04.2022) regarding expenditure in relation to income not forming part of total income, and the assessee's own quantification, the Tribunal decided to retain the suo motu disallowance of Rs.1,00,56,473. Any further disallowance by the AO would be restricted to exempt income earned, and no further disallowance if such income is nil. For Grounds 3 and 9, concerning the difference in total income between the assessment order and computation sheet, the Tribunal directed the AO to reconcile the figures and remove any excess not supported by the assessment order, allowing these grounds for statistical purposes. For Grounds 10 and 11, regarding the tax rate, the Tribunal directed the AO to verify the applicable rate for AY 2017-18 and apply the correct rate with surcharge and cess, allowing these grounds for statistical purposes. For Ground 12 (section 234B interest), the AO was directed to recompute interest based on the final income, tax liability, and credits, disposing of the ground. For Grounds 13-15 (section 91 relief, TDS credit, tax payment credit), the AO was directed to examine the claims, grant relief or credit found due after reconciliation, allowing these grounds for statistical purposes. Ground 16 (penalty proceedings u/s 270A) was dismissed as premature.
The Tribunal decided to address Ground No. 2 first, as its adjudication would impact the consideration of the remaining grounds. This ground pertains to the refusal to condone the delay in filing the appeal before the learned CIT(A). The Tribunal noted that the assessee had raised grounds concerning the addition of Rs. 65,00,000/- as long-term capital gains and alleged errors in the CIT(A)'s dismissal of the appeal without proper opportunity. The Tribunal's decision on the merits of the appeal, including the addition of Rs. 65,00,000/-, is contingent on the outcome of the delay condonation issue. The judgment does not provide the Tribunal's finding on the merits of the addition or the other grounds of appeal.
Regarding Ground Nos. 1 and 2, the Tribunal held that for a donation to be considered a corpus donation under Section 11(1)(d), there must be a specific direction from the donor. The receipt mentioning naming the building or crediting the amount to the Building Fund Account does not, by itself, establish such a specific direction. The Tribunal found no infirmity in the lower authorities treating the Rs. 21,50,000/- from Shri Praful Satra and Rs. 50,00,000/- from Shri Harshad Mehta as general donations, as the necessary material establishing the donor's specific direction was not brought on record. Thus, Ground Nos. 1 and 2 were dismissed. For Ground No. 3, concerning the Rs. 88,29,000/- from Satra Properties Ltd., the Tribunal noted the assessee's contention that the transaction was cancelled and the money returned. Since these facts required verification and had a direct bearing on whether the amount was a taxable income or an advance under a cancelled transaction, the Tribunal set aside the order of the CIT(A) and restored the matter to the Assessing Officer. The Assessing Officer was directed to verify the original arrangement, cancellation documents, accounts, and bank statements. If cancellation and repayment are confirmed, the amount would not be included in taxable income. Ground No. 3 was allowed for statistical purposes. For Ground No. 4, regarding expenditure towards charitable objects, the Tribunal held that the treatment of donations as general donations does not automatically justify the rejection of eligible expenditure. However, the assessee must substantiate the expenditure. The issue was restored to the Assessing Officer to verify the expenditure of Rs. 2,27,839/- with supporting evidence. If verified as incurred for charitable objects, the claim would be allowed as application of income. Ground No. 4 was allowed for statistical purposes.
The Tribunal, considering the rival submissions and the overall facts and circumstances, decided to condone the delay in filing both appeals before the CIT(A). The Tribunal emphasized that the cause of substantial justice deserves preference over technical considerations. The assessee's explanation for the delay, relating to a change in email address and not being well-versed with technicalities of notice service, was accepted as a valid reason, despite the assessment being completed ex-parte under Section 144 r.w.s. 147. The Tribunal condoned the delay subject to the payment of costs of Rs. 5,000/- to the Income Tax Department. Consequently, the impugned orders of the CIT(A) were set aside, and both matters were restored to the file of the CIT(A) for adjudication on merits. The CIT(A) was directed to afford the assessee a fair and reasonable opportunity, and the assessee was directed to be more vigilant in future.
The Tribunal upheld the order of the CIT(A) setting aside the assessment. The Tribunal noted that the assessment order was indeed passed under Section 144/147 read with Section 144B. While the assessee had furnished replies, no return of income was filed under Section 139 or in response to the Section 148 notice, meaning the assessment was not converted into one under Section 143(3). The Tribunal found that the proviso to Section 251(1)(a), which empowers the CIT(A) to set aside an assessment made under Section 144 and refer it back to the AO for fresh assessment, was in force at the time of the CIT(A)'s order (19.03.2026). The CIT(A) had not sustained the addition but had provided the assessee another opportunity to substantiate her explanation. The Tribunal held that the objections concerning limitation, validity of reopening, approval under Section 151, and the applicability of Section 69A, as well as the explanation for the gift, remained open for consideration in fresh proceedings before the AO. The assessee was directed to cooperate and furnish necessary material. The Tribunal explicitly stated that its decision upholding the CIT(A)'s order did not express any opinion on these substantive issues.
The Tribunal decided to examine each addition independently. Regarding the Rs. 4,44,500 deposited in the Union Bank of India, the Tribunal found that the assessee's wife, Smt. Hansa Kirtikant Vora, had provided an affidavit confirming ownership, and the amount was reflected in her return of income. The account was jointly held. The Tribunal held that the mere fact of joint ownership did not make the entire deposit the assessee's unexplained money, especially when the wife claimed ownership and it was reflected in her return. Thus, the addition of Rs. 4,44,500 was directed to be deleted. For the Rs. 9,44,600 deposited in the Central Bank of India, the Tribunal found the assessee's cash statement, while showing an increase in cash balance, lacked independent or contemporaneous evidence. The explanation of retaining substantial cash at home for medical emergencies was not convincing. However, acknowledging that a portion of prior withdrawals might have remained unutilized, the Tribunal adopted a balanced view. It considered Rs. 4,44,600 as reasonably explained from earlier cash withdrawals and directed its deletion. The remaining addition of Rs. 5,00,000 was confirmed as unexplained under section 69A.
The Tribunal held that the matter should be restored to the file of the AO. The Tribunal noted that while the DSIR quantifies eligible expenditure, the principles of natural justice require that the assessee be given an opportunity to justify its expenses. The judgment highlighted the lack of clarity on the DSIR's mechanism for examining expenditure and the basis for exclusion. Therefore, the AO was directed to seek a report from the DSIR explaining the basis for non-certification/exclusion of Rs. 142.37 lakhs (Rs. 138.03 lakhs revenue and Rs. 4.34 lakhs capital expenditure) in Form 3CL. The DSIR/AO must provide the assessee with an adequate opportunity to substantiate its claim with accounts, vouchers, and technical documentation. The AO is to decide the issue afresh after affording the assessee a reasonable opportunity of being heard. The alternative contention regarding capital expenditure under Section 35(1)(iv) read with Section 35(2) was also found to have merit and requires examination in accordance with law. The Tribunal respectfully followed decisions of coordinate benches in M/s. Asian Paints Limited and M/s. Reliance Industries Ltd.
The Tribunal held that the Extended Producer Responsibility (EPR) income of Rs. 4.31 Crores should be treated as operating income for computing the assessee's entity-level operating margin. The Tribunal noted that the DRP itself had observed that EPR is integral to the assessee's business and that comparable companies earning EPR income are functionally similar. The Tribunal reasoned that since the EPR activity was considered as part of the assessee's functional profile for selecting comparables and the assessment proceeded on the basis of entity-level profitability, the EPR receipts arising from the same business cannot be excluded. The Tribunal found the DRP's reasoning for exclusion flawed, particularly as it retained the corresponding expenditure as operating costs. The Tribunal emphasized that when the entire business is considered together, both operating income and operating expenditure must be treated consistently. A computation that includes expenditure but excludes revenue from the same activity distorts the operating profitability. Therefore, the Tribunal directed the TPO/AO to recompute the assessee's entity-level operating margin by including the EPR income as operating income, considering the related operating expenditure consistently, and to determine the consequential transfer pricing adjustment, if any. The Tribunal allowed Ground No. 1.6. The assessment order was set aside to the extent of the transfer pricing adjustment under consideration and the matter was restored to the file of the TPO/AO for recomputation. The remaining grounds were not examined as they became academic.
The Tribunal held that the disallowance of Rs. 58,53,826/- was not sustainable and directed its deletion. The Tribunal found that the Assessing Officer's first basis for disallowance, that particulars were not given, did not survive as tenant-wise details and the basis of credit notes were on record. The Tribunal noted that the CIT(A) did not doubt the genuineness of the credit notes or the bona fides of the tenancies. Regarding the second basis, that amounts were not offered as income in earlier years, the Tribunal clarified that a provision for doubtful debts is an accounting entry and does not mean the underlying rent was kept out of income. Furthermore, Rule 4, as it stands, does not contain a condition that rent must have been included in the assessed income of an earlier year. The Tribunal also found that the CIT(A)'s ground for sustaining the disallowance, namely non-compliance with Rule 4 due to lack of evidence of tenants vacating or legal proceedings, was not applicable in the commercial context of negotiated settlements with established brands. The Tribunal reasoned that insisting on eviction or legal proceedings in such scenarios would defeat the object of the Explanation to Section 23, which is to exclude rent that the owner cannot realize. The Tribunal also noted the consistent allowance of similar claims by the Revenue in prior assessment years. Therefore, the disallowance was deleted, and the deduction was allowed.
The Tribunal, considering the rival submissions and the overall facts and circumstances, decided to condone the delay in filing both appeals before the CIT(A). The Tribunal emphasized that the cause of substantial justice deserves preference over technical considerations. The assessee's explanation for the delay, relating to a change in email address and not being well-versed with technicalities of notice service, was accepted as a valid reason, despite the assessment being completed ex-parte under Section 144 r.w.s. 147. The Tribunal condoned the delay subject to the payment of costs of Rs. 5,000/- to the Income Tax Department. Consequently, the impugned orders of the CIT(A) were set aside, and both matters were restored to the file of the CIT(A) for adjudication on merits. The CIT(A) was directed to afford the assessee a fair and reasonable opportunity, and the assessee was directed to be more vigilant in future.
The Tribunal held that the issue was squarely covered by the decisions of a coordinate bench of the ITAT in the cases of the assessee's husband and father-in-law for the Assessment Year 2016-17, where identical additions concerning the sale of shares of M/s. Yamini Investment Limited were deleted. The CIT(A) had also relied on these decisions. The Tribunal noted that the sale of shares was evidenced by transactions through a registered stock exchange at specific trade times, and the net receipts were credited to the assessee's bank account. The Tribunal found no tangible material on record to treat the sale proceeds as unexplained cash credit or to add them under deeming provisions. Furthermore, the addition of Rs. 3,32,373/- under Section 69C for commission was also deleted by the CIT(A) as the primary addition of capital gains was deleted and the commission was paid for shares sold on a recognized stock exchange. The Tribunal found no reason to interfere with the CIT(A)'s order due to the doctrine of binding precedents and the need for judicial consistency, as the Revenue could not distinguish the facts or present new evidence. Accordingly, the grounds raised by the Revenue were dismissed.
The Tribunal held that the rectification order withdrawing the TDS credit was unsustainable in law. Firstly, the issue of whether TDS credit can be withdrawn by way of rectification when the deductor revises its statement is debatable and capable of two views, meaning it is not a 'mistake apparent from the record' as required for Section 154. The Tribunal relied on the Delhi High Court's decision in BDR Finvest (P.) Ltd., which held that credit cannot be denied to the deductee if the deductor fails to deposit the tax, as the deductee has followed the Act's regime. The principle applies with greater force here, as the CPC did not find non-deduction or non-deposit, only a revision by the deductor. The Revenue's remedy lies against the deductor. Secondly, the rectification order increased the assessee's liability, thus requiring a notice under Section 154(3) and an opportunity of being heard, which was not provided. Therefore, the rectification order is invalid on this count as well. The Tribunal set aside the CIT(A)'s order, cancelled the rectification order, deleted the demand, and restored the TDS credit of Rs. 20,46,000/-. The consequential interest under Sections 234B and 234C was also directed to be adjusted. The Revenue was at liberty to proceed against the deductor.
The Tribunal held that the assessee did not respond to the notices of the PCIT during the revisionary proceedings under section 263 of the Act. The assessee's request to file additional evidence before the Tribunal was noted. In this factual matrix, the Tribunal found no error on the part of the PCIT in invoking revisionary powers under section 263 and setting aside the case for fresh assessment after verification. The Tribunal was of the considered view that the order passed by the PCIT under section 263 needed no interference. Consequently, the appeal filed by the assessee was dismissed.
The Tribunal held that the addition of Rs. 26,35,000/- on account of cash deposited during the demonetization period was not justified. The Tribunal found that the AO's reliance solely on the alleged unusual surge in cash sales was insufficient, especially when the assessee had provided material evidence such as stock and sales statements, VAT returns, month-wise cash sales and deposits, and copies of bills. The Tribunal noted that the assessee demonstrated a growth in both credit and cash sales compared to the previous year, negating the allegation of an abnormal increase. The Tribunal concluded that making an addition on mere suspicion was not justified, given the nature of the assessee's business and the corresponding increase in sales during the festival season. Regarding the addition of Rs. 7,52,667/- on account of the difference in purchases, the Tribunal held that the assessee complied with Accounting Standard 11 and Section 145(2) of the Act by using the exchange rate on the date of payment for foreign creditors. The Tribunal found no mismatch requiring further reconciliation, as the difference arose from the timing of valuation. Consequently, the grounds were decided in favour of the assessee.
The Tribunal held that the references made by the Assessing Officer to the Transfer Pricing Officer under Section 92CA(1) for Assessment Years 2015-16 and 2016-17 were invalid. The Tribunal reasoned that these references were made after the omission of clause (i) of Section 92BA of the Income-tax Act, 1961, and the subscription-fee payments in question fell solely within the ambit of the omitted clause. The Tribunal followed the decisions of coordinate benches in Yorkn Tech Pvt. Ltd. and Infrastructure Leasing and Financial Services Ltd., which had directly addressed similar situations where references were initiated after the omission of Section 92BA(i) for transactions that fell under that clause. The Tribunal distinguished the case of Dixon Technologies, which involved a pre-omission TPO determination. Consequently, the Tribunal directed the deletion of the transfer-pricing adjustments of ₹5,93,01,029 for Assessment Year 2015-16 and ₹9,22,52,862 for Assessment Year 2016-17. The alternative grounds on the merits of the transfer pricing adjustments and procedural grounds under Sections 144C and 153 were left undecided as the primary jurisdictional issue was decided in favour of the assessee, granting effective relief.
The Tribunal dismissed the Revenue's appeal. Regarding the deletion of the addition under Section 68, the Tribunal noted that the assessee provided complete details of the non-resident Indian investor, including name, address, PAN, bank statements through an NRE account, Indian income-tax return, and US individual income-tax return. The US tax return showed gross income exceeding Rs. 1 crore, establishing financial capacity and creditworthiness. The authorities failed to produce adverse material to prove the transaction was an accommodation entry or that funds originated from the assessee. Furthermore, a coordinate bench had previously accepted the identity, genuineness, and creditworthiness of the same investor for AY 2010-11. Respectfully following this precedent and finding that the primary onus was discharged, the Tribunal upheld the CIT(A)'s deletion. Consequently, grounds (a) and (b) were dismissed. Regarding the deletion of the disallowance under Section 14A, the Tribunal noted that there was no dispute that the assessee had not earned any exempt income during the relevant year. It is a settled legal position that Section 14A cannot be invoked in the absence of actual exempt income, as held by the Supreme Court in CIT vs. Chettinad Logistics (P.) Ltd. and Pr. CIT vs. State Bank of Patiala. Rule 8D is a machinery provision and cannot override the substantive mandate of Section 14A. Therefore, the Tribunal upheld the CIT(A)'s deletion, dismissing ground (c).