ITAT Mumbai Judgments — May 2022

The Tribunal held that the initiation of reassessment proceedings under Section 147 was not valid. This was primarily due to procedural irregularities in obtaining the approval for reopening the assessment, specifically the sequence of recording reasons and granting sanction.

The Tribunal held that the amendments to Sections 36(1)(va) and 43B of the Income Tax Act by the Finance Act, 2021, are prospective and effective from assessment year 2021-22. Therefore, contributions made before the due date of filing the return under Section 139(1) are allowable as deductions.

The Tribunal upheld the CIT(A)'s decision, holding that Section 14A disallowance cannot be made when no exempt income is earned or claimed by the assessee. Consequently, the addition made to book profit under Section 115JB was also deleted.

The Tribunal held that the amendment brought by the Finance Act, 2021, regarding the due date for remittance of employee's contribution to PF/ESI, is prospective. Therefore, for the assessment year in question (prior to the amendment's effective date), the assessee's payment before the due date of filing the return of income under Section 139(1) is allowable as a deduction.

The Tribunal upheld the validity of the reopening of the assessment. However, it directed the AO to restrict the addition to 12.5% of the Rs. 25 lakhs, representing the profit embedded in the purchases, as the assessee had made payment by cheque and the AO had not disturbed the sales.

The tribunal noted that the assessee's tax disputes were settled under the Vivad Se Vishwas Act, and the competent authority had issued the necessary forms. The departmental representative could not controvert this submission.

The Tribunal held that the CIT(A) erred in passing an ex-parte order without ensuring proper service of notice and providing adequate opportunity of hearing to the assessee. Therefore, the case was remitted back to the CIT(A) for fresh adjudication.

The Tribunal acknowledged the assessee's involvement in obtaining bogus purchase bills but found the 12.5% profit estimation to be high. Considering the GP ratio and other materials, the Tribunal restricted the addition to 6% of the bogus purchases.

The Tribunal held that the initiation of reassessment proceedings under Section 147 was not valid. This was primarily due to procedural irregularities in obtaining the approval for reopening the assessment, specifically the sequence of recording reasons and granting sanction.

The Tribunal held that the CPC cannot make such disallowances under Section 143(1) when the issue is debatable and covered by jurisdictional High Court decisions. The disallowance was reversed as the contributions were deposited before the due date of filing the return of income.

The Tribunal deleted the addition of ₹2,69,736/- as the assessee's explanation of cash withdrawals and redeposits was deemed sufficient. The addition of ₹1,30,000/- was also partly deleted, considering it as gifts rather than loans. The disallowance of expenditure was restricted to 10%.

The Tribunal held that the initiation of reassessment proceedings under Section 147 was not valid. This was primarily due to procedural irregularities in obtaining the approval for reopening the assessment, specifically the sequence of recording reasons and granting sanction.

The Tribunal held that the addition should be restricted to the profit element embedded in the bogus purchases, not the entire amount. It directed the AO to compute the gross profit at 6.41% on the bogus purchases, aligning with the assessee's actual gross profit margin.

The Tribunal allowed Ground 1 with a direction to the AO to decide based on Supreme Court ruling after assessee submits expense details. Ground 2 was dismissed as the issue was not final. Ground 3 was dismissed as scrap was generated during manufacturing.

The Tribunal noted the assessee's request to withdraw the appeal and, with no objection from the revenue, dismissed the appeal as withdrawn.

The Tribunal held that the reassessment was invalid because the AO's reasons were based on an incorrect assumption of facts. The assessee had indeed disclosed speculation profit, making the set-off permissible and negating any failure to disclose.

The Tribunal held that the CPC cannot make such disallowances under Section 143(1) when the issue is debatable and covered by jurisdictional High Court decisions. The disallowance was reversed as the contributions were deposited before the due date of filing the return of income.

The Tribunal held that the CPC cannot make such disallowances under Section 143(1) when the issue is debatable and covered by jurisdictional High Court decisions. The disallowance was reversed as the contributions were deposited before the due date of filing the return of income.

The Tribunal held that the Ld. CIT(A) did not properly appreciate the facts and that the peak credit method was justified given the chronological entries on a single page. Therefore, the addition was restricted to the peak credit amount.

The Tribunal held that while the initial adjustment under Section 143(1)(a) was proper, the disallowance itself was not justified. The Tribunal relied on jurisdictional High Court decisions stating that such payments are allowable if made before the due date of filing the income tax return.

The Tribunal held that substantial evidence, including the mother's pension book showing cash withdrawals, was produced by the assessee. Since this evidence was not fully scrutinized by the AO, the case was remitted back to the AO for verification.

The Tribunal found that the CIT(A) had not decided the appeal on merits. Therefore, in the interest of justice, the appeal was remitted back to the CIT(A) for a fresh decision.

The Tribunal upheld the CIT(A)'s order, finding no illegality or perversity. The CIT(A) had correctly estimated the profit element at 6% of the bogus purchases, considering the assessee's average gross profit over 19 years.

The Tribunal held that the AO erred in invoking Rule 8D without proper justification and directed deletion of the disallowance under Section 14A. For the stock adjustment issue, the Tribunal restored the matter to the AO for fresh adjudication.

The Tribunal found no infirmity in the lower authorities' order taxing 3% of the circular trading/accommodation entry provided by the assessee. The assessee failed to demonstrate the actual percentage of income earned.

The Tribunal found that the CIT(A) incorrectly upheld the ad-hoc disallowance, especially since the CIT(A) himself noted that expenses in this business are difficult to prove completely and no major infirmities were found. Therefore, the disallowance was directed to be deleted.

The Tribunal held that OCDs with an option for conversion into equity are in the nature of quasi-capital and not simple debt. Therefore, the imputation of interest at a benchmarked rate was inappropriate.

The Tribunal acknowledged the assessee's reasons for not filing submissions before the CIT(A) and granted an opportunity to present the case. The orders of the CIT(A) were set aside.

The Tribunal held that the amendment brought by the Finance Act, 2021, regarding disallowance of delayed employee contributions to PF/ESI, is prospective. Therefore, for the assessment year in question, the assessee's claim for deduction would be allowable if payments were made before the due date of filing the return of income.

The Tribunal found the assessee's reasons for not filing submissions before the CIT(A) to be justified. The case was restored to the CIT(A) to provide the assessee with an adequate opportunity to be heard.

The Tribunal found that the CIT(A) decided the appeal ex-parte without providing adequate opportunity of being heard to the assessee. Therefore, the case was remitted back to the CIT(A) for a fresh decision.

The Tribunal held that since the quantum additions for bogus unsecured loans, interest, and commission were deleted by a previous Tribunal order, the penalty levied on these additions was rightly deleted by the CIT(A). However, the penalty on bogus purchases, which was sustained on an estimation basis, was also directed to be deleted.

The Tribunal held that the OCDs were quasi-equity in nature and not simple debt. Following a coordinate bench decision, the Tribunal found that the true reward was the opportunity to own capital on favorable terms, not just interest.

The Tribunal found that the assessee was not provided with an adequate opportunity of being heard. Therefore, to ensure a fair adjudication and avoid further litigation, the case was remitted back to the Assessing Officer for a fresh decision.

The Tribunal held that since the quantum additions for bogus unsecured loans, interest, and commission were deleted by a previous Tribunal order, the penalty levied on these additions was rightly deleted by the CIT(A). However, the penalty on the profit element of bogus purchases, which was an estimated addition, was also deleted as no penalty is leviable on estimated additions.

The Tribunal found that the assessee did not receive a proper opportunity during the assessment proceedings. Therefore, the issue was remanded back to the Assessing Officer to decide afresh after giving the assessee an opportunity to present their submissions and documents.

The Tribunal noted that the assessee was prevented from accessing their portal due to the blocked PAN and had not been represented before the CIT(A). In the interest of substantial justice, the matter was restored to the CIT(A) for a fresh decision.

The Tribunal recalled its previous order as the appeal could not be dismissed as withdrawn under the Vivad se Vishwas Scheme due to the assessee's failure to complete the settlement process. The appeal was restored for hearing on merits.

The Tribunal upheld the CIT(A)'s decision to delete the addition. It found that the assessee, being a UK tax resident with substantial earnings there, had provided sufficient evidence, including bank statements and certificates, to substantiate the source of funds.

The Tribunal held that the assessee had discharged the burden of proof by submitting sufficient documentary evidence regarding the identity, creditworthiness, and genuineness of the loan transaction. Consequently, the addition of the unsecured loan and the disallowance of interest were deleted.

The Tribunal held that OCDs with an option for conversion into equity are in the nature of quasi-capital and not simple debt. Therefore, the imputation of interest at a benchmarked rate was inappropriate.

The Tribunal held that the assessee had discharged the burden of proof by submitting sufficient documentary evidence regarding the identity, creditworthiness, and genuineness of the loan transaction. Consequently, the addition of the unsecured loan and the disallowance of interest were deleted.

The Tribunal held that since the quantum additions for bogus unsecured loans, interest, and commission were deleted by a previous Tribunal order, the penalty levied on these additions was rightly deleted by the CIT(A). However, the penalty on bogus purchases, which was sustained on an estimation basis, was also directed to be deleted.

The Tribunal held that since the quantum additions for bogus unsecured loans, interest, and commission were deleted by a previous Tribunal order, the penalty levied on these additions was rightly deleted by the CIT(A). However, the penalty on bogus purchases, which was sustained on an estimation basis, was also directed to be deleted.

The Tribunal held that the yield spread approach adopted by the assessee for benchmarking the guarantee commission was valid. The rejection of this method by the authorities below was not legally sustainable. The TPO's reliance on bank guarantee quotes was also found to be inappropriate.

The Tribunal held that the assessee had discharged the burden of proof by submitting sufficient documentary evidence regarding the identity, creditworthiness, and genuineness of the loan transaction. Consequently, the addition of the unsecured loan and the disallowance of interest were deleted.

The Tribunal allowed the assessee to furnish additional evidence of a housing loan taken for the balance sale consideration. The matter was remanded back to the Assessing Officer for reconsideration.

The Tribunal held that the OCDs were quasi-equity in nature and not simple debt. Following a coordinate bench decision, the Tribunal found that the true reward was the opportunity to own capital on favorable terms, not just interest.

The Tribunal held that the assessee had discharged the burden of proof by submitting sufficient documentary evidence regarding the identity, creditworthiness, and genuineness of the loan transaction. Consequently, the addition of the unsecured loan and the disallowance of interest were deleted.