ITAT Mumbai Judgments — April 2021

The Tribunal held that if the assessee has sufficient own interest-free funds to cover investments, no disallowance under Section 14A read with Rule 8D is warranted. The disallowance was restricted to the amount declared by the assessee.

The tribunal found that while the assessee failed to prove the genuineness of purchases, the 12.5% profit estimation was on the higher side. Therefore, the addition was restricted to 6% of the bogus purchases.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 8% of the bogus purchases, considering it a reasonable profit margin for the trading of iron and steel. The High Court's ruling that only the profit element in bogus purchases can be taxed was also noted.

The Tribunal held that the assessee had provided sufficient documentary evidence, including an MOU with Khar Gymkhana and board resolutions, to substantiate the professional fees paid to its directors. It also noted that the directors had offered this income for tax.

The Tribunal found that while the assessee failed to prove the genuineness of purchases, the 12.5% profit estimation was on the higher side. The addition was restricted to 6% of the bogus purchases to meet the ends of justice.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 2% of the alleged bogus purchases, finding it judicious and correct based on various case laws and the assessee's own case. The assessee's cross-objections regarding the validity of reopening and the addition were dismissed.

The Tribunal held that the revenue authorities cannot dictate business decisions like managing creditors and debtors. It also found that estimated disallowances on travelling and telephone expenses were made without cogent material.

The Tribunal found that the CIT(A) decided the matter without giving the assessee a reasonable opportunity to be heard. Therefore, the CIT(A)'s order was set aside.

The Tribunal held that since the assessee has opted for the 'Viwad Se Vishwas Scheme', the appeal filed by the Revenue has become infructuous. The appeal was dismissed as such.

The Tribunal followed a Madras High Court order and disposed of the appeals as withdrawn, noting the assessee's intention to utilize the Vivad Se Vishwas Scheme. Liberty was granted to the assessee for restoration of appeals if the scheme's outcome is unfavorable.