ITAT Mumbai Judgments — October 2017

The Tribunal held that Section 14A is not applicable to insurance companies whose profits are computed under Section 44, as this section has an overriding effect. Therefore, the disallowance made by the Assessing Officer was rightly deleted by the CIT(A).

The Tribunal upheld the decision of the CIT(A) to restrict the addition to 12.5% of the purchases. It was held that while the suppliers were bogus, the purchases themselves were not entirely fictitious, and the motive was to inflate purchase prices to suppress profits.

The Tribunal upheld the CIT(A)'s decision, agreeing that Section 14A disallowance is not applicable when income is computed under the Tonnage Tax Scheme. This is because the scheme allows only expenses related to the shipping business.

The Tribunal decided several grounds in favor of the assessee, following its own earlier decisions and jurisdictional High Court rulings. Some grounds were restored to the CIT(A) for fresh adjudication.

The Tribunal held that the issue is squarely covered by the jurisdictional High Court's decision in CIT vs. Institute of Banking Personnel. Therefore, the CIT(A)'s order allowing the carry forward of deficit was upheld.

The Tribunal held that the addition of Rs. 5,00,000 was justified as the assessee failed to provide confirmation from the lender. However, the addition of Rs. 30,00,000 was deleted as the CIT(A) found the transaction substantiated by the lender's confirmation and evidence of fund utilization for land purchase.

The assessee's counsel requested to withdraw the appeal, and the Departmental Representative had no objection. The Tribunal allowed the withdrawal application.

The Tribunal held that the assessee's explanation for not including the income was reasonable and bonafide, especially considering they came forward voluntarily. Therefore, the penalty levied under Section 271(1)(c) could not be sustained.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 15% of the bogus purchases. It reasoned that since the AO did not reject the assessee's sales, the entire purchase amount could not be added, and only the profit element embedded in the purchases should be taxed.

The Tribunal granted the assessee's request to withdraw the appeal. The Departmental Representative had no objection to this request.

The Tribunal upheld the CIT(A)'s decision, stating that since the AO had not rejected the assessee's sales and there cannot be sale without purchase, the addition should only be to the extent of the profit element embedded in the purchases. The Tribunal relied on High Court judgments that sustained additions at 12.5% of bogus purchases.

The Tribunal found that the assessee failed to reconcile the balance amount with the liability shown in the balance sheet. However, it was deemed necessary for the AO to verify the facts to establish whether the entire amount was a revenue receipt.

The Tribunal held that the entire amount of bogus purchases could not be added as income since the AO had not rejected the books of account and accepted the sales. The Tribunal directed the AO to make an addition of 9% of the bogus purchases, representing the element of tax saved.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 12.5% of the bogus purchases, following High Court precedents. The Tribunal noted that the AO had not rejected the assessee's sales, implying purchases were made from other parties.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal held that the factory building was a capital asset, and since it was not used for business, Section 50 of the Act regarding depreciation was not applicable. The surplus on sale was to be treated as Short Term Capital Gain, not income from other sources.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal deleted the disallowance of unproved expenses, finding that the AO made the addition on presumptions without evidence. The issue of brokerage expenses was set aside to the AO for fresh adjudication after allowing the assessee to produce evidence.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal upheld the CIT(A)'s order, confirming the addition of 12.5% of the bogus purchases. It reasoned that since the AO accepted the sales and did not reject the books of account, the entire purchase amount could not be added. The addition should reflect the profit element embedded in the purchases, as per High Court decisions.

The Tribunal held that the assessee's explanation for not including the income was reasonable and bonafide, especially considering they came forward voluntarily. Therefore, the penalty levied under Section 271(1)(c) could not be sustained.

On the issue of alleged bogus purchases, the Tribunal held that even if the statements/affidavits of the hawala dealers were discarded, the assessee failed to discharge its primary onus of proving the genuineness of the purchases and the utilization/consumption of the material for its construction business. The assessee could not produce the parties, their latest addresses, or evidence of goods movement (delivery challans, lorry receipts, octroi receipts, site stock register/gate passes). The significant fall in profitability in the impugned year compared to preceding years also remained unexplained. Therefore, the Tribunal upheld the disallowance of 100% of the alleged bogus purchases, citing the Hon'ble Supreme Court's decision in N.K. Protein Ltd. The Tribunal found no prejudice to the assessee due to the non-granting of cross-examination opportunities, as the primary onus was not discharged. The appeal on this ground was dismissed. On the issue of disallowance of interest paid to partners, the Tribunal noted the assessee's submission that it is a partnership firm, not an AOP, and filed additional evidence including a supplementary partnership deed. These documents require verification. Therefore, the Tribunal set aside this issue to the file of the AO for necessary verification and enquiry, including the genuineness of the stamp papers used for the supplementary partnership deed. The AO was directed to adjudicate denovo after providing an opportunity of being heard to the assessee. The appeal on this ground was allowed for statistical purposes.

The Tribunal held that since the AO accepted the sales and did not reject the books of account, the entire purchases could not be added. Following High Court precedents, the Tribunal sustained an addition of 12.5% of the total bogus purchases, representing the profit element.

The Tribunal set aside the CIT(A)'s order confirming the penalty and restored the issue to the CIT(A) for fresh adjudication. This was because the quantum appeal was restored to the CIT(A), and the findings in the quantum appeal would impact the penalty.

The Tribunal found that the CIT(A) had deleted the addition solely by following another order without appreciating the facts of the present case. The AO had made detailed observations regarding the assessee's failure to prove identity, genuineness, and creditworthiness of the lender.

The Tribunal held that the assessee claimed depreciation in good faith, following past practices accepted by the department. There was no concealment of income or furnishing of inaccurate particulars, as the claims were based on available information and interpretations of law. Therefore, the penalty was not justified.

The Tribunal held that the CIT(A) erred by not forwarding the additional evidence to the AO for examination as per Rule 46A(3) of the Income-tax Rules, 1962. Therefore, the matter was set aside and restored to the AO for de-novo adjudication.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) had erred in accepting the assessee's contentions without proper verification of the sources of credits, especially in the context of a search assessment and non-cooperative assessee. The appellate order of the CIT(A) was set aside.

The Tribunal found that the CIT(A) did not conduct sufficient inquiry and that the assessee failed to cooperate during assessment proceedings. Therefore, the matter was set aside and restored to the AO for de-novo adjudication.

The Tribunal held that the disallowance of depreciation was incorrect. It relied on the jurisdictional High Court's decision that depreciation is allowable even if the asset's cost was treated as application of income in the year of purchase, distinguishing the Supreme Court's ruling in Escorts Ltd.

The Tribunal upheld the CIT(A)'s decision, stating that since the AO did not reject the assessee's sales and accepted the sales shown, the entire purchases could not be added. The Tribunal agreed that only the profit element embedded in the purchases should be added, citing High Court precedents.

The Tribunal held that the relationship between the assessee and the doctors was not that of employer-employee, as the doctors were independent professionals. Therefore, the assessee was not liable to deduct tax under Section 192 of the Act.

The Tribunal upheld the CIT(A)'s decision to restrict the addition for bogus purchases to 12.5% of the impugned amount, considering it a reasonable percentage to cover revenue leakage. The Tribunal also upheld the deletion of the addition for TDR difference, finding no merit in the revenue's grounds.

The Tribunal found merit in the assessee's contention that quantity details were reconciled and certified by the tax auditor. Therefore, disallowing the entire purchase was not justified.

The Tribunal held that while the assessee failed to prove the genuineness of purchases, the profit element estimated by the lower authorities was on the higher side. Therefore, the addition was restricted to 8% of the value of bogus purchases.

The Tribunal found that one issue regarding unexplained expenses for AY 2007-08 was not properly examined and remitted it back to the Assessing Officer for fresh examination. The ground related to the limitation period for serving the assessment order was dismissed.

The Tribunal found that the First Appellate Authority (FAA) had not properly considered the assessee's submissions regarding the inclusion/exclusion of comparables in the transfer pricing analysis. Therefore, the matter was restored to the FAA for fresh adjudication.

The Tribunal noted that the Hon'ble Apex Court later ruled that transaction charges paid to stock exchanges for common services do not constitute 'technical services' for which TDS under Section 194J is liable. Therefore, the case was restored to the CIT(A) for re-adjudication.

The Tribunal upheld the additions made by the Assessing Officer and confirmed by the CIT(A). The assessee failed to provide any evidence to substantiate its claims before any of the authorities.

The Tribunal upheld the CIT(A)'s decision, agreeing that the profit from the sale of shares should be treated as short-term capital gains. The Tribunal also confirmed the CIT(A)'s direction to verify and allow the set-off of short-term capital loss from a previous year.

The Tribunal held that the Assessing Officer failed to prove that the conditions of Section 41(1) were fulfilled, as there was no evidence of the assessee obtaining any benefit from the outstanding liability. The liability to the Government of Maharashtra remained due to a stay order, and the liability to another party was acknowledged.

The Tribunal held that the reimbursement of expenses was not subject to a mark-up, following its own previous decisions. It also directed the AO to verify the assessee's claim regarding interest under Section 234B and dismissed the penalty proceedings as premature.