ITAT Mumbai Judgments — June 2017

The Tribunal held that the first issue regarding AY 2006-07 requires factual verification by the AO. For the second issue concerning AYs 1995-96 and 1996-97, the Tribunal found the claim to be covered in favor of the assessee based on High Court judgments.

The Tribunal found that the assessee had provided substantial evidence suggesting the loans and interest payments were on behalf of a society. The lower authorities had not properly appreciated this evidence. Therefore, the matter was restored to the AO for fresh adjudication.

The Tribunal held that TDS credit should be allowed for the entire amount of rent offered to tax, including unrealized rent, as it is considered income for the purpose of TDS credit. The rectification under Section 154 was considered inappropriate for a debatable issue.

The Tribunal found that the assessee had already declared profit on sales made from bogus purchases. Therefore, it directed the AO to re-compute the income by applying a profit rate of 10% on the bogus purchases, considering it to be a reasonable rate.

The Tribunal held that concealment of income and furnishing inaccurate particulars of income are distinct defaults. The AO must specify the exact breach for initiating penalty proceedings, and the penalty order can only be based on the ground for which notice was issued. Failure to do so is fatal to the penalty.

The Tribunal set aside the ex-parte order of the CIT(A) and restored the issue to the CIT(A)'s file for fresh adjudication. This was done in the interest of natural justice to provide the assessee with another opportunity to be heard.

The Tribunal held that the assessee had sufficient interest-free funds of her own to cover the loan advanced to her husband. Therefore, the interest income from the loan to her husband should not be disallowed.

The Tribunal directed the AO to compute the WDV for depreciation purposes based only on orders that have reached finality, meaning only depreciation actually claimed or directed to be allowed should be considered. The AO was also instructed to give effect to any Supreme Court decision on the pending matter.

The Tribunal held that the assessee failed to provide any documentary evidence to substantiate the claim of the loan. Therefore, the addition made by the AO and upheld by the CIT(A) was confirmed.

The Tribunal upheld the CIT(A)'s decision, following the Bombay High Court's ruling in the assessee's own case. The High Court held that the revenue cannot reject the rent determined by the assessee without cogent material indicating fraud or collusion.

The Tribunal held that penalty on gift receipts was not justified as the assessee had not concealed particulars of income. Penalty on rental income difference was confirmed due to unsubstantiated explanation. Penalty on undisclosed contract receipts was set aside for verification of the assessee's claim of offering income in the succeeding year.

The Tribunal, taking into consideration the CBDT circular and the undisputed factual aspect presented by the assessee, dismissed the appeal filed by the Revenue in limine.

The Tribunal admitted the additional evidence furnished by the assessee before the CIT(A) in the interest of natural justice. The issue of unexplained cash deposits was restored to the AO for examination of these evidences and fresh decision.