ITAT Mumbai Judgments — October 2021

The Tribunal held that the income-tax authorities erred in concluding that there was a business connection or a PE in India. The Tribunal relied on its own previous decision in the assessee's own case for an earlier assessment year, which dealt with identical facts.

The Tribunal held that the reassessment proceedings and the consequent order were invalid because the notice under Section 148 was issued to a non-existent company. Furthermore, reopening on the same grounds as the original scrutiny assessment was considered impermissible as it amounted to a change of opinion.

The Tribunal noted that the assessee had opted for the 'Vivad se Vishwas Scheme 2020' and received Form-3. Therefore, keeping the appeal pending would serve no purpose.

The Tribunal held that the withdrawal of approval for the payee institution subsequent to the donation does not affect the assessee's right to claim deduction under Section 35(1)(ii), especially since the payee was approved at the time of payment. The Tribunal also noted that the disallowance under Section 14A was accepted by the assessee.

The CIT(A) deleted the addition, finding that the assessee had provided documentary evidence to substantiate the identity, genuineness, and creditworthiness of the lenders. The tribunal upheld the deletion, noting that the loans were repaid through banking channels before the search and survey actions.

The Tribunal held that the reopening of assessment was invalid as it was based on 'borrowed satisfaction' and lacked independent application of mind by the AO. The AO failed to verify the information, leading to erroneous reasons for reopening.

The Tribunal held that the AO's conclusion of the transaction being bogus was not supported by cogent material and was based on conjecture. The assessee had discharged the initial onus by demonstrating that the share transactions were conducted through banking channels and demat accounts.

The Tribunal upheld the CIT(A)'s decision, stating that the Assessing Officer made the disallowance on surmises and conjectures without finding any defect in documentation or evidence of the assessee's involvement in manipulation. The reliance on general investigation reports without specific evidence against the assessee was deemed insufficient.

The Tribunal held that the department failed to provide material to irrefutably falsify the assessee's claim of genuine purchase and sale of shares. Therefore, the disallowance of LTCG exemption and the addition for commission expenditure were vacated.

The Tribunal held that disallowance under Section 14A cannot exceed the exempt income earned. It also held that mark-to-market losses on forex forward contracts are allowable only in the year of actual loss, not on the balance sheet date if maturity is in a subsequent period.

The Tribunal upheld the CIT(A)'s decision that completed assessments do not abate and that proceedings under Section 153A/153C are limited to fresh incriminating material found during a search. It also ruled on specific disallowances and interest income classification.

The Tribunal held that the CIT(E)'s scope of inquiry for granting registration under Section 12AA is limited to the genuineness of activities and compliance with other laws, not the utilization of income or tax payment on specific income streams. The Tribunal found that the assessee had offered the income to tax and that the CIT(E) had wrongly rejected the registration.

The Tribunal held that the Assessing Officer (AO) failed to record proper satisfaction before invoking Rule 8D for Section 14A disallowances, and that lease rentals paid on motor vehicles are deductible. Consequently, the disallowances were directed to be deleted.

The Tribunal treated the appeals as withdrawn, following the precedent set by the Madras High Court regarding the Vivad Se Vishwas Scheme. The assessee was granted liberty to restore the appeals if the scheme's outcome was unfavorable.

Following a Madras High Court order, the tribunal treated the appeals as withdrawn since the assessee chose to avail the Vivad Se Vishwas Scheme. The assessee was granted liberty to restore the appeals if the scheme's outcome was unfavorable.

The Tribunal held that while 100% disallowance for bogus purchases is not justified when sales are not doubted, a partial disallowance of 12.5% is appropriate. The Tribunal also upheld the deletion of expenses disallowed by the AO, stating they were incurred for the assessee's business. The disallowance under Section 14A was also upheld as no exempt income was earned.

The Tribunal held that the Assessing Officer (AO) failed to record proper satisfaction before invoking Rule 8D for Section 14A disallowances, and that lease rentals paid on motor vehicles are deductible. Consequently, the disallowances were directed to be deleted.

The Tribunal held that the Revenue's appeal was not maintainable as the tax effect was below the threshold limit specified in CBDT Circular No. 17/2019. The exception for external agency information in CBDT Circular No. 3/2018 applied to additions, not penalties.

The ITAT admitted the additional evidence, stating the assessee should not suffer for non-filing of information. The matter was set aside and restored to the Assessing Officer for a fresh decision on merits.

The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the technical ground of manual filing, especially when subsequent e-filing might have occurred. Following precedent, the matter was remitted back to the CIT(A) for adjudication on merits.

The ITAT held that the PCIT validly invoked revisionary jurisdiction to examine the applicability of Section 40(a)(ia) regarding interest and hire charges. The AO was directed to examine these specific aspects in the set-aside assessment.

The Tribunal held that the CIT(A) erred in confirming additions made under section 153A without any incriminating material found during the search in unabated assessment years. The Tribunal also noted issues with the reopening of assessments and the CIT(A)'s enhancement of income without proper procedure.

The Tribunal held that the reopening was invalid as it was based on borrowed satisfaction and lacked a rational connection between the information received and the AO's belief of income escapement. The reasons recorded were merely suspicions, not a belief of escaped income.

The Tribunal held that penalty cannot be levied when an ad-hoc estimation is made, as it does not amount to concealment or furnishing inaccurate particulars. The deletion of penalty by the CIT(A) was upheld.

The Tribunal noted that the assessee had successfully opted for the Vivad Se Vishwas Scheme and received a certificate from the revenue. Therefore, the Tribunal accepted the assessee's request to withdraw the appeal.

The Tribunal disagreed with the addition of 100% of the bogus purchases, considering that the assessee had capitalized these assets and not claimed depreciation. Following a precedent from a previous assessment year where 12.50% was applied to bogus purchases, the Tribunal directed the AO to apply this rate.

The Tribunal upheld the CIT(A)'s order, finding that the issues were covered by its own previous decision for the A.Y. 2011-12. The Tribunal followed the precedent set in the prior year's judgment regarding the treatment of interest income, lease rentals, and accumulation of income.

The Tribunal held that the reassessment proceedings were invalidly initiated. The AO had previously accepted similar transactions from the same non-resident in earlier assessment years, indicating a lack of application of mind. Furthermore, the AO incorrectly applied Section 68 and its proviso to a non-resident, and the proviso was not applicable for the assessment year in question.

The Tribunal held that the assessee, being a co-operative society, is entitled to deduction under Section 80P(2)(d) for interest earned from a co-operative bank. The Tribunal also allowed the deduction claimed under Section 80P(2)(c).

The Tribunal held that the AO failed to examine the affidavits filed by the assessee to support the cash deposits. Since the AO did not test the affidavits, their contents were to be accepted as true, and penalty was not automatic merely because an addition was confirmed.

The Tribunal refused to condone the delay as the reasons provided were not supported by evidence or arguments. The assessee's counsel could not provide any supporting details for the delay.

The Tribunal upheld the CIT(A)'s decision, finding that the reassessment was initiated without any new material and constituted a change of opinion. The reassessment was also initiated beyond four years without establishing any failure on the part of the assessee to disclose material facts.

The Tribunal held that earmarked grants, even with conditions for utilization, are voluntary contributions and should be treated as income. The decision of the jurisdictional High Court in CIT v. Gem & Jewellery Export Promotion Council was followed, setting aside the orders of the lower authorities.

The Tribunal held that no penalty is leviable when income is estimated. The CIT(A)'s deletion of the penalty was found to be justifiable, especially since the addition was restricted to 13.76% of the bogus purchases on an estimated basis.

The tribunal noted that the assessee had opted for the Vivad Se Vishwas Scheme and Form No. 3 had been issued. The assessee wished to withdraw the appeal.

The Tribunal dismissed the appeal regarding the Section 50C addition, finding no reason to interfere with the lower authorities' orders. However, for the Section 56(2)(vii)(b)(ii) addition, the Tribunal set aside the orders and remanded the issue to the AO to refer the property to the Departmental Valuation Officer (DVO) for determining the fair market value.

The Tribunal held that the ITSC's observation regarding interest beyond March 2008 was a jurisdictional limitation and not a denial of entitlement. The Tribunal further clarified that the pending appeals did not relate to the quantification of refunds. Therefore, the assessee was entitled to interest under Section 244A of the Act on the delayed refunds.

The Tribunal found that the CIT(A) had not adjudicated the specific ground of appeal. The revenue's representative agreed that the matter could be restored to the CIT(A) for adjudication.

The Tribunal found that the AO's calculation of the addition was incorrect. Following the Gujarat High Court's decision, the Tribunal restricted the profit rate on bogus purchases to 12.5% and directed the AO to recalculate the disallowance accordingly.

The Tribunal found that the CIT(A)'s order was not a speaking order, failing to adjudicate the issues properly. Therefore, the Tribunal set aside the CIT(A)'s order.

The Tribunal held that the property was transferred in favour of the assessee in FY 2011-12, with possession since 1958 and a conveyance deed executed in 2011. Therefore, the provisions of Section 56(2)(vii)(b) were not applicable to the transaction.

The CIT(A) restricted the profit rate on bogus purchases to 12.5%, considering that the assessee might have purchased goods from the grey market and obtained accommodation bills. The Tribunal found no infirmity in this decision.

The Tribunal held that the allegations of the AO regarding capital losses lacked evidence and that the CIT(A)'s deletion of additions was justified. Regarding disallowance of expenses, the Tribunal directed deletion of power and fuel disallowance and reduced disallowance for rent, rates, taxes, and miscellaneous expenses.

The Tribunal directed the AO to exclude maintenance expenses from disallowances under Section 14A and restrict them to direct expenses related to exempt income. The Tribunal also allowed the depreciation and interest claimed by the assessee, citing consistency and the fact that the asset was used for business and capital gains were offered to tax.

The assessee opted for the Vivad Se Vishwas Scheme, and Form No. 3 was issued. The assessee wished to withdraw the appeal, which was permitted by the Tribunal.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 25% of the bogus purchases. This was based on the principle of consistency, as a similar decision was made in the assessee's own case for the subsequent assessment year.

The Tribunal held that earmarked grants, even with conditions for utilization, are voluntary contributions and should be treated as income. The decision of the jurisdictional High Court in CIT v. Gem & Jewellery Export Promotion Council was followed, setting aside the orders of the lower authorities.

The Tribunal held that the compensation received was for outlays of expenditures incurred due to project delays initiated by Boeing, and the expenses were related to business expansion. The Tribunal also allowed the appeal regarding commission payments, following a previous decision in the assessee's own case.

The Tribunal held that the addition based on a loose sheet entry and a conflicting statement from the seller, without independent inquiry or cogent material, is not sustainable. The burden of proving the actual consideration lies with the Revenue.