ITAT Mumbai Judgments — June 2024

The Tribunal held that the trusts are not AOPs but are revocable trusts. The income is liable to be assessed in the hands of the beneficiaries as their shares were known since inception, making it a determinate trust.

The Tribunal found that for unabated assessment years, additions cannot be made based on material that is not incriminating. The seized document in question was determined to be a shareholding pattern, not incriminating evidence.

The Tribunal decided the issues as follows: 1. Regarding the jurisdiction for AYs 2013-14 and 2014-15 under the fourth proviso to Section 153A, the Tribunal found that the notings on Page 52 of Annexure A-1, showing payments of Rs. 55 lacs and Rs. 80 lacs, did not represent income in the form of an 'asset' as defined in Explanation 2 to the fourth proviso. These were inferred as expenditure. Since the condition precedent of having income in the form of an 'asset' exceeding Rs. 50 lakhs was not met, the reopening of assessments for these AYs was vitiated. Therefore, the Tribunal quashed the assessment orders for AYs 2013-14 and 2014-15. 2. On the issue of on-money receipts, the Tribunal held that only the profit element embedded in the on-monies should be assessed to tax, not the entire value. Agreeing with the consistent view of judicial pronouncements and following the assessee's offer, the Tribunal upheld the assessee's offer of 8% of the on-money receipts as fair and reasonable. The AO was directed to delete additions made on account of on-monies over and above the assessee's offer of 8% in AYs 2015-16, 2016-17, 2017-18, 2019-20, and 2020-21. The ratio is that for on-money receipts in real estate, only the profit element is taxable, and an estimation of 8% is considered reasonable based on precedent. 3. Concerning the unaccounted rental income for AY 2021-22, the Tribunal confirmed the addition of Rs. 2,40,000/-. The assessee was unable to dislodge the fact that Mr. S K Choudhary was operating a business from the assessee's premises and admitted to paying rent in cash. The Tribunal found it impossible for someone to operate commercially from the premises without the assessee's knowledge or involvement, thus upholding the Ld. CIT(A)'s finding.

The Tribunal held that the trusts are not AOPs but are revocable trusts. The income is liable to be assessed in the hands of the beneficiaries as their shares were known since inception, making it a determinate trust.

The Tribunal held that the supply of software did not constitute royalty, aligning with previous decisions in the assessee's own case. It also ruled that income from royalty and fees for technical services should be taxed on a receipt basis, as per the India-Germany DTAA and prior judicial pronouncements.

The Tribunal agreed with the Ld. CIT(A) that a specific document (GCL-HD-1) was not incriminating. It was a shareholding pattern document, verifiable from the company's records prior to the search, and did not demonstrate undisclosed income.

The Tribunal agreed with the Ld. CIT(A) that a specific document (GCL-HD-1) was not incriminating. It was a shareholding pattern document, verifiable from the company's records prior to the search, and did not demonstrate undisclosed income.

The Tribunal held that for unabated assessment years, seized material must be incriminating to justify additions. In this case, the seized document was found not to be incriminating as it represented a shareholding pattern already verifiable from company records.

The Tribunal decided the issues as follows: 1. Regarding the jurisdiction for AYs 2013-14 and 2014-15 under the fourth proviso to Section 153A, the Tribunal found that the notings on Page 52 of Annexure A-1, showing payments of Rs. 55 lacs and Rs. 80 lacs, did not represent income in the form of an 'asset' as defined in Explanation 2 to the fourth proviso. These were inferred as expenditure. Since the condition precedent of having income in the form of an 'asset' exceeding Rs. 50 lakhs was not met, the reopening of assessments for these AYs was vitiated. Therefore, the Tribunal quashed the assessment orders for AYs 2013-14 and 2014-15. 2. On the issue of on-money receipts, the Tribunal held that only the profit element embedded in the on-monies should be assessed to tax, not the entire value. Agreeing with the consistent view of judicial pronouncements and following the assessee's offer, the Tribunal upheld the assessee's offer of 8% of the on-money receipts as fair and reasonable. The AO was directed to delete additions made on account of on-monies over and above the assessee's offer of 8% in AYs 2015-16, 2016-17, 2017-18, 2019-20, and 2020-21. The ratio is that for on-money receipts in real estate, only the profit element is taxable, and an estimation of 8% is considered reasonable based on precedent. 3. Concerning the unaccounted rental income for AY 2021-22, the Tribunal confirmed the addition of Rs. 2,40,000/-. The assessee was unable to dislodge the fact that Mr. S K Choudhary was operating a business from the assessee's premises and admitted to paying rent in cash. The Tribunal found it impossible for someone to operate commercially from the premises without the assessee's knowledge or involvement, thus upholding the Ld. CIT(A)'s finding.

The Tribunal observed that the assessee, claiming to be a student, asserted the appeal was timely filed after receiving the demand notice. Since no effective hearing on merits occurred before the CIT(A), the matter was remanded back to the CIT(A) to provide the assessee a fresh opportunity to substantiate claims regarding the transaction and timely filing.

The Tribunal held that for unabated assessment years, seized material must be incriminating to justify additions. In this case, the seized document was found not to be incriminating as it represented a shareholding pattern already verifiable from company records.

The Tribunal held that the assessment order was passed without jurisdiction as the revenue failed to produce orders under Section 120(4)(b) and Section 127 of the Act. Consequently, the assessment order was set aside.

The Tribunal held that the assessee had discharged its onus by proving the identity, creditworthiness, and genuineness of the loan creditors. The loans were routed through banking channels, repaid, and interest was paid, with tax deducted at source. Therefore, the addition under Section 68 was unjustified.

The Tribunal held that for unabated assessment years, seized material must be incriminating to justify additions. In this case, the seized document was found not to be incriminating as it represented a shareholding pattern already verifiable from company records.

The Tribunal found that for unabated assessment years, additions cannot be made based on material that is not incriminating. The seized document in question was determined to be a shareholding pattern, not incriminating evidence.

The Tribunal held that the delay in filing the appeal before the CIT(A) should be condoned, citing the Supreme Court's direction to exclude the period from 15.03.2020 till 28.02.2022 for limitation purposes due to the COVID-19 pandemic. The CIT(A)'s observation that the condonation petition lacked supporting evidence was found to be not in consonance with the Apex Court's order.

The Tribunal held that the seized document and the statement of Mr. Tabrez Shaikh did not constitute incriminating material for an unabated assessment year. Therefore, the addition made under Section 68 was unsustainable.

The Tribunal referred to the Delhi High Court's decision in Maxopp Investment Limited, stating that Section 14A applies retrospectively, but Rule 8D applies prospectively from AY 2007-08. For prior periods, the assessee could adopt a reasonable method after the AO rejected their claim with cogent reasons.

Citing Supreme Court and High Court precedents on the principle of telescoping, the Tribunal ruled that intangible additions (undisclosed profits) offered by a firm can be used to explain cash found with a partner. As the firm's declared intangible additions were sufficient to cover the seized cash, the Tribunal deemed the addition of Rs. 12,32,000/- in the assessee's hands unsustainable. The AO was directed to delete the addition.

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal held that the assessee had a sufficient cause for the 171-day delay in filing the appeal before the CIT(A), citing medical reasons and being abroad. The Tribunal relied on the Apex Court's judgment in Collector Land Acquisition, Anantnag.

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal held that the CIT(A) was not justified in dismissing the appeal as time-barred, considering the extension granted by the Supreme Court due to the Covid period. Regarding the merits, the assessee did not press the ground relating to the disallowance of employees' PF/ESI contribution, which was confirmed. For the provision for gratuity, the Tribunal noted the assessee's claim of voluntary disallowance and that the CPC made a subsequent disallowance, leading to a potential double disallowance.

The Tribunal noted that the AO did not strike off either of the charges (concealment or inaccurate particulars) in the penalty notice. Relying on the Larger Bench decision of the Hon'ble Jurisdictional High Court in Mohd. Farhan A. Shaikh (supra), the Tribunal held that a defective notice would vitiate the penalty proceedings. The Tribunal distinguished the case of Veena Estate (P) Ltd. (supra) relied upon by the Revenue.

The Tribunal noted that the AO did not strike off either of the charges (concealment or inaccurate particulars) in the penalty notice. Relying on the Larger Bench decision of the Hon'ble Jurisdictional High Court in Mohd. Farhan A. Shaikh (supra), the Tribunal held that a defective notice would vitiate the penalty proceedings. The Tribunal distinguished the case of Veena Estate (P) Ltd. (supra) relied upon by the Revenue.

The Tribunal noted that the AO did not strike off either of the charges (concealment or inaccurate particulars) in the penalty notice. Relying on the Larger Bench decision of the Hon'ble Jurisdictional High Court in Mohd. Farhan A. Shaikh (supra), the Tribunal held that a defective notice would vitiate the penalty proceedings. The Tribunal distinguished the case of Veena Estate (P) Ltd. (supra) relied upon by the Revenue.

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal found that the assessee was not given adequate opportunity to be heard. Therefore, the case was restored to the file of the Ld. CIT(A). The assessee was directed to submit a reconciliation statement and update their email address, and the Ld. CIT(A) was directed to decide the issue afresh after providing a reasonable opportunity.

The Tribunal set aside the CIT(A)'s order and remanded the matter to the AO. It directed the AO to re-examine the average sale rate of flats for the assessment year 2014-15. An addition for 'on money' under Section 69 should only be made if the average sale rate is found to be higher than the actual transaction value, and only to the extent of the difference, after providing the assessee a fair opportunity of hearing.

The Tribunal noted that the assessee did not appear or respond to any notices issued by the authorities below. However, it also observed that the principles of natural justice did not seem to have been complied with in substance, particularly concerning the delivery of notices and the opportunity for representation. Therefore, the Tribunal deemed it just and proper to remit the matter back to the file of the learned CIT(A) for denovo adjudication on merits. The assessee was directed to be diligent and cooperative in attending hearings and making submissions. The Tribunal clarified that it had not made any observations on the merits of the case. The impugned ex-parte order was set aside, and the appeal was partly allowed. The specific grounds regarding the validity of reopening, the ex-parte order, and the addition under Section 68 were not decided on merits but were to be adjudicated by the CIT(A).

The Tribunal held that Section 70(2) of the Income Tax Act does not restrict the set-off of short-term capital losses against short-term capital gains based on different tax rates. The Tribunal allowed the set-off of both current year and brought forward short-term capital losses.

The Tribunal held that the employee's contribution of Rs. 14,57,217/- is confirmed for addition based on the Apex Court's decision in Checkmate Services Pvt Ltd. However, the employer's contribution of Rs. 17,32,682/- is remitted back to the Assessing Officer for verification of challans to allow deduction under section 43B of the Act.

The Tribunal held that acquiring a portion of an existing residential house property qualifies for deduction under Section 54F. The assessee is not disentitled from claiming the exemption merely because they purchased an undivided share in the property.

The Tribunal noted that the assessee's counsel conceded the mistake of challenging the Section 143(3) order instead of the Section 143(1) intimation. As the grounds of appeal had no relevance to the impugned Section 143(3) order, the appeal was deemed infructuous. Consequently, the Tribunal dismissed the appeal.

The Tribunal held that both the assessment order and the CIT(A)'s order were passed ex-parte, denying the assessee a reasonable opportunity of being heard. The assessee's non-compliance was due to genuine reasons (mental and physical health issues).

The Tribunal noted that the CIT(A) dismissed the appeal ex-parte without considering the submissions and material on record, which was a lapse. The Tribunal found it appropriate to remit the matter back to the CIT(A) for denovo adjudication in the interest of justice and fair play, directing the assessee to be cooperative in the hearings.

The Tribunal condoned the 17-day delay in filing the appeal, finding sufficient cause due to the huge demand and the assessee's situation as an alleged accommodation entry provider. The Tribunal noted that the assessee did not participate productively before the CIT(A) and also failed to participate in the assessment proceedings. In the interest of justice and fair play, the Tribunal restored the matter to the Assessing Officer for de novo investigation and determination of tax liability. The Assessing Officer is directed to carry out necessary investigations, identify beneficiaries, determine the income earned from the activity, and decide the tax liability after affording the assessee an opportunity to present arguments and evidence within 90 days. The Tribunal explicitly stated that no observations were made on the merits of the case. The appeal is partly allowed.

The Tribunal noted that for AY 2009-10, the assessee faced unforeseen circumstances which prevented electronic filing within the stipulated period. For AY 2012-13, the CIT(A) failed to consider the assessee's submissions. Therefore, both appeals were restored to the CIT(A) for de novo adjudication.

The Tribunal noted that for AY 2009-10, the assessee faced unforeseen circumstances which prevented electronic filing within the stipulated period. For AY 2012-13, the CIT(A) failed to consider the assessee's submissions. Therefore, both appeals were restored to the CIT(A) for de novo adjudication.

The Tribunal held that the CIT(A) erred in dismissing the appeal ex-parte without adjudicating the grounds on merits as required. The Tribunal restored the matter to the CIT(A) for de novo adjudication after granting a reasonable opportunity of hearing to the assessee.

The Tribunal noted that the CIT(A) dismissed the appeal without adjudicating on merits, solely based on non-compliance. The Tribunal found that the notices were not received by the assessee and in the interest of justice, granted an opportunity to represent the case.

The Tribunal allowed the assessee to file additional evidence to prove the genuineness of the transactions and the creditworthiness of the loan parties. The case was restored to the Assessing Officer for consideration of this new evidence.

The Tribunal noted that the assessee had indeed recorded derivative gains of Rs. 1,27,27,019/- in its financial statements. It held that the basis for reopening the assessment was factually incorrect as the assessee had earned genuine derivative gains. The Tribunal further observed that even if the income were not genuine, it could not be added as unexplained cash credit under Section 68.

The Tribunal held that interest paid prior to taking possession of the flat should form part of the cost of acquisition and is eligible for indexation. Regarding interest expenses for the period after possession, the Tribunal found that the assessee had not claimed these as deductions in earlier years, contrary to the revenue's allegation, and thus allowed the claim.

The Tribunal heard the learned counsel for the appellant who submitted that the jurisdiction in the matter lies with the Bangalore Bench of the Income Tax Appellate Tribunal. Therefore, the appeal may be permitted to be withdrawn with the liberty to file the same before the Hon’ble Bangalore Bench. The learned Departmental Representative for the revenue stated that they have no objection to the withdrawal of the appeal with the liberty sought by the appellant. In view of the application made by the appellant and the submissions made by both the parties, the Tribunal dismissed the present appeal as withdrawn with the liberty to the appellant to file the same before the appropriate forum as per law. The specific grounds of appeal regarding the invocation of section 69A, section 2(24), and section 115BBE were not adjudicated upon by the Tribunal.

The Tribunal held that both the AO and Ld. CIT(A) erred by proceeding on wrong facts, particularly misunderstanding that the assessee had paid the legal and professional charges for merger advice, rather than received them. Given that the assessee provided evidence of payment to advisors and detailed explanations, the Tribunal found the addition to be erroneous and directed its deletion.