ITAT Mumbai Judgments — February 2024

The Tribunal held that the CIT(A) erred in denying the treaty benefits to ADIA based on the flimsy ground of a suspicious mobile number. The Tribunal noted that ADIA's registration, PAN, address, and its specific mention in Article 24(2)(b)(ii) of the India-UAE DTAA as an eligible government entity were sufficient to establish its claim.

The Tribunal held that if an AO reopens an assessment based on specific reasons but makes additions on entirely different grounds without a fresh notice, the reassessment is not sustainable. The reassessment order was quashed as it lacked jurisdiction.

The Tribunal held that since no additions were made on the issue for which the assessment was reopened, the reassessment proceedings were invalid. The Tribunal also allowed the club membership fees and stock exchange charges as business expenditure.

The Tribunal held that if an assessment is reopened for a specific reason and no addition is made on that basis, the AO cannot make additions on other grounds without a fresh notice. Therefore, the reassessment order was quashed.

The Tribunal held that since no additions were made on the issue for which the assessment was reopened, the reassessment proceedings were invalid. The Tribunal also allowed the club membership fees and stock exchange charges as business expenditure.

The Tribunal held that investments not yielding exempt income should be excluded from the disallowance calculation. It further held, following High Court judgments, that dividend earned on shares held as stock-in-trade would not attract disallowance under Section 14A.

The Tribunal observed that the assessee had been non-compliant before the lower authorities and even before the Tribunal. Considering the nature and quantum of additions, the Tribunal decided to remand the issues back to the CIT(A) for fresh adjudication.

The Tribunal noted that the assessee had produced invoices, ledger accounts, GST returns, and proof of payment through banking channels for the transactions with M/s A.K. Industry. While the AO and CIT(A) relied on the CGST's findings about bogus entities, the Tribunal found that the AO and CIT(A) did not doubt the corresponding sales or contract work executed by M/s A.K. Industry. The Tribunal held that if payments were made via cheque, TDS was deducted, and there was corresponding work, the entire payment should not be disallowed.

The Tribunal confirmed the addition sustained by the CIT(A) at 6.5% of the bogus purchases, following a coordinate bench's decision on similar facts. The Tribunal also directed the deletion of interest charged under sections 234A and 234C.

The Tribunal held that the Assessing Officer should have provided an opportunity to the assessee before rectifying the TDS deduction. It also noted that the depositor had offered the interest income to tax, which could exempt the assessee from demand under the first proviso to Section 201(1A).

The Tribunal held that the reassessment proceedings were bad in law due to the Assessing Officer not disposing of the assessee's objections properly. Therefore, the reassessment order was set aside.

The assessee requested to withdraw the appeal, stating that it was filed before the wrong bench (Mumbai instead of Indore) due to an oversight and that a similar appeal has already been filed before the correct bench.

The Tribunal held that the appeals could not be continued during the moratorium period as per Section 14 of the IBC. The assessee had also not obtained permission from the National Company Law Tribunal to continue the proceedings.

The Tribunal held that depreciation is allowable on a block of assets, even if some assets within the block are obsolete. It followed its co-ordinate bench's decision in the assessee's own case for earlier assessment years.

The Tribunal directed the Assessing Officer (AO) to consider the assessee's claim for exemption on long-term capital gains and decide it in accordance with the law, to avoid multiplicity of litigation.

The Tribunal held that depreciation is allowable on a block of assets, even if some assets within the block are obsolete. It followed its co-ordinate bench's decision in the assessee's own case for earlier assessment years.

The Tribunal decided that expenses incurred in connection with the buy-back of shares are allowable as revenue expenditure, following the Bombay High Court's decision in CIT v. Hindalco Industries Ltd. Other issues were also adjudicated based on previous coordinate bench decisions.

The Tribunal, following the Bombay High Court's decision in Principal CIT vs Mohammed Haji Adam & Co, held that additions for bogus purchases should be restricted to the GP rate of genuine purchases. The issue was remitted back to the AO for factual verification.

The Tribunal held that if a penalty under Section 271A is levied for non-maintenance of books of accounts, no penalty under Section 271B is leviable for failure to get accounts audited. The Tribunal also held that if the returned income and assessed income are the same, no penalty under Section 271(1)(c) can be levied for concealment of particulars of income. The penalty under Section 271B and Section 271(1)(c) were deleted.

The Tribunal held that while the purchases might be non-genuine, a profit element should be estimated. Following a coordinate bench decision, the Tribunal directed the AO to estimate the profit from non-genuine purchases at 2%.

The Tribunal held that depreciation is allowable on a block of assets, even if some assets within the block are obsolete. It followed its co-ordinate bench's decision in the assessee's own case for earlier assessment years.

The Tribunal upheld the CIT(A)'s decision, stating that since the land was held as stock-in-trade, capital gains tax was not attracted. Business income accrues only upon receipt and sale of constructed spaces, not merely on the execution of the development agreement.

The Tribunal held that if a penalty under Section 271A is levied for non-maintenance of books of accounts, no penalty under Section 271B is leviable for failure to get accounts audited. The Tribunal also held that if the returned income and assessed income are the same, no penalty under Section 271(1)(c) can be levied for concealment of particulars of income. The penalty under Section 271B and Section 271(1)(c) were deleted.

The Tribunal held that the AO's addition was unsupported by cogent material. The assessee had discharged the initial onus by showing purchases and sales through banking channels, dematerialized shares, and receipt of consideration via banking. The AO's inquiry was deficient, and there was no evidence of the assessee's involvement in any illicit arrangement.

The Tribunal held that the assessee had discharged its initial burden by providing identity, capacity, and genuineness of the creditors. The Tribunal found that the AO relied solely on the retracted statements of entry operators without proper cross-examination, making it unsafe to rely on them.

The Tribunal, following the Bombay High Court's decision in Principal CIT vs Mohammed Haji Adam & Co, held that additions for bogus purchases should be restricted to the GP rate of genuine purchases. The issue was remitted back to the AO for factual verification.

The Tribunal decided that expenses incurred in connection with the buy-back of shares are allowable as revenue expenditure, following the Bombay High Court's decision in CIT vs. Hindalco Industries Ltd. The Tribunal also noted that other issues were covered by previous coordinate bench decisions.

The Tribunal acknowledged that the AO had conducted independent inquiries and relied on vendor admissions of being entry providers. However, it also noted that the AO had not disputed the assessee's sales or rejected the books of accounts.

The Tribunal held that in view of pronouncements by the Hon'ble Supreme Court (Pr. Commissioner of Income Tax Vs. ABC Papers Ltd.) and the Hon'ble Bombay High Court (MSPL Ltd. Vs. Pr. Commissioner of Income Tax), the jurisdiction for hearing these appeals lies with the Kolkata Benches of the ITAT. Since the appeals were filed before the Mumbai benches, they were dismissed with liberty to present them before the Kolkata Benches within 60 days.

The Tribunal held that the additions made for agricultural income from A.Y. 2013-14 to 2018-19 were unsustainable, as the assessee's landholding supported the claimed income. The addition of ₹12 lacs for A.Y. 2019-20 was also explained by the assessee's past savings. The ₹2 lacs belonging to the sister, supported by an affidavit, was also not sustainable in the assessee's hands.

The Tribunal held that the additions made for agricultural income from A.Y. 2013-14 to 2018-19 were unsustainable, as the assessee's landholding supported the claimed income. The addition of ₹12 lacs for A.Y. 2019-20 was also explained by the assessee's past savings. The ₹2 lacs belonging to the sister, supported by an affidavit, was also not sustainable in the assessee's hands.

The Tribunal held that the additions made for agricultural income from A.Y. 2013-14 to 2018-19 were unsustainable, as the assessee's land holding and partial proof of produce indicated genuine agricultural activity. The addition of ₹12 lacs for A.Y. 2019-20 was also explained by the assessee's past savings. The ₹2 lacs belonging to the sister, supported by an affidavit, was also not sustainable in the assessee's hands.

The Tribunal held that in view of pronouncements by the Hon'ble Supreme Court (Pr. Commissioner of Income Tax Vs. ABC Papers Ltd.) and the Hon'ble Bombay High Court (MSPL Ltd. Vs. Pr. Commissioner of Income Tax), the jurisdiction for hearing these appeals lies with the Kolkata Benches of the ITAT. Since the appeals were filed before the Mumbai benches, they were dismissed with liberty to present them before the Kolkata Benches within 60 days.

The Tribunal held that the additions made for agricultural income from A.Y. 2013-14 to 2018-19 were unsustainable, as the assessee's landholding supported the claimed income. The addition of ₹12 lacs for A.Y. 2019-20 was also explained by the assessee's past savings. The ₹2 lacs belonging to the sister, supported by an affidavit, was also not sustainable in the assessee's hands.

The Tribunal noted that the AO's addition was based on the premise that the share price was jacked up and not supported by financial performance, and that the investigation report identified the script as a penny stock. However, the AO did not record any specific findings to incriminate the assessee. The assessee provided documentary evidence to support the genuineness of the transaction, and the Tribunal found that the assessee was a regular investor. The Tribunal relied on a High Court decision in a similar case.

The Tribunal held that the additions made for agricultural income from A.Y. 2013-14 to 2018-19 were unsustainable, as the assessee's landholding supported the claimed income. The addition of ₹12 lacs for A.Y. 2019-20 was also explained by the assessee's past savings. The ₹2 lacs belonging to the sister, supported by an affidavit, was also not sustainable in the assessee's hands.

The Tribunal held that the additions made for agricultural income from A.Y. 2013-14 to 2018-19 were unsustainable, as the assessee's landholding supported the claimed income. The addition of ₹12 lacs for A.Y. 2019-20 was also explained by the assessee's past savings. The ₹2 lacs belonging to the sister, supported by an affidavit, was also not sustainable in the assessee's hands.

The Tribunal allowed the assessee to produce additional evidence regarding the contracts for Section 80-IA deduction, remanding the issue to the CIT(A) for re-examination. The grounds related to Section 36(1)(va) and dividend distribution tax were dismissed.

The Tribunal held that while interest income from cooperative banks might not be eligible for deduction under Section 80P(2)(a), it could be eligible under Section 80P(2)(d) if the investment was with another cooperative society. The Tribunal noted that Section 80P(4) disallows deduction for cooperative banks, not for cooperative societies investing in them.

The Tribunal held that while interest income from cooperative banks might not be eligible for deduction under Section 80P(2)(a), it could be eligible under Section 80P(2)(d) if the investment was with another cooperative society. The Tribunal noted that Section 80P(4) disallows deduction for cooperative banks, not for cooperative societies investing in them.

The tribunal found that the CIT(A) overlooked the assessee's adjournment request and passed the order in violation of natural justice. Therefore, the impugned order was set aside.

The Tribunal held that the additions made for agricultural income from A.Y. 2013-14 to 2018-19 were unsustainable, as the assessee's landholding supported the claimed income. The addition of ₹12 lacs for A.Y. 2019-20 was also explained by the assessee's past savings. The ₹2 lacs belonging to the sister, supported by an affidavit, was also not sustainable in the assessee's hands.

The Tribunal held that the assessee is entitled to the benefit of the grace period for TDS deposit as it was made on the next working day after a holiday, as per the General Clauses Act. The Tribunal also agreed that the second proviso to Section 40(a)(ia) applies retrospectively, and if the payees have already offered the income and paid taxes, the assessee cannot be held in default.

The Tribunal noted that the CIT(A) passed an ex-parte order due to the assessee's non-appearance. The assessee's representative submitted an affidavit stating they did not receive hearing notices. The Tribunal, in the interest of justice, granted the assessee another opportunity.

The Tribunal held that the project completion method is best suited for the assessee's project, considering the complexities and cost escalations. The AO was not justified in assessing income on an estimated basis when the assessee consistently followed the project completion method in other years. The admission made before the AO was not precluded from challenge due to erroneous appreciation of facts.

The Tribunal noted that the assessee was willing to produce documentary evidence if the matter was restored. Considering the interest of substantial justice, the Tribunal decided to provide one more opportunity to the assessee. The matter was restored back to the file of the Ld. CIT(A) for a fresh decision.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. The Tribunal held that the CIT(A) erred in dismissing the appeal as infructuous based on the VSV Scheme, as the assessee was not eligible for the scheme against the assessment order in question. The Tribunal set aside the CIT(A)'s order.

The Tribunal, considering the rival submissions and material on record, found that although the CIT(A) had provided opportunities, the assessee could not appear or utilize them. However, keeping in view the additions made by the Assessing Officer and the submissions of the assessee's AR, the Tribunal was of the opinion that the assessee should be given one more opportunity of being heard. Furthermore, the additional evidences furnished by the assessee were admitted as they went to the root of the matter and were not available for verification during the earlier appellate proceedings. Consequently, the Tribunal restored the issue and all additional evidences to the file of the Ld. CIT(A) for de novo adjudication in accordance with law. The assessee was directed to file all evidences before the Ld. CIT(A) and cooperate with the proceedings, while the Ld. CIT(A) was directed to provide adequate opportunity of being heard. The appeals were allowed for statistical purposes.

The Tribunal held that rental income from the mall, including amenities, constitutes business income. It also directed the AO to re-examine the allocation of expenses and allow deductions for income earned wholly and exclusively for business purposes.

The Tribunal noted that the assessee was willing to produce documentary evidence if the matter was restored. Considering the interest of substantial justice, the Tribunal decided to provide one more opportunity to the assessee. The matter was restored back to the file of the Ld. CIT(A) for a fresh decision.