ITAT Mumbai Judgments — October 2024

The Tribunal held that the reassessment proceedings, while initiated based on information received, were ultimately rendered academic as the additions made on merits were deleted. Regarding the addition of Rs. 1,46,172/- as notional commission expenses, the Tribunal found that the AO's allegations regarding the source of funds, email usage, and shareholder means were not adequately dealt with by the CIT(A) despite the assessee providing counter-submissions and documentary evidence. The Tribunal noted that the AO had relied heavily on the investigation wing's report without independent verification. The Tribunal observed that the AO's presumption of commission on purchases from non-genuine parties was based on conjecture, and the ad-hoc application of commission at 0.25% was not sustainable. Consequently, the addition on account of ad-hoc commission was deleted. Similar issues for other assessment years were also decided in favour of the assessee. The Tribunal also noted that for AY 2018-19, the addition was made on account of alleged commission on purchases from specific entities, and the assessee had submitted purchase invoices, warehouse receipts, delivery orders, bank statements, and GST returns. The Tribunal, following its findings in other appeals, deleted the addition on account of alleged commission. The legal issues regarding the validity of reassessment were kept open as the additions on merits were deleted.

The Tribunal decided on various grounds. Regarding the addition of Rs. 28,03,000/- (mentioned in point 8.3 of the judgment, though not explicitly numbered as an issue), the Tribunal held that the payments were not related to the assessee but to Mrs. Sujata Dalvi, a different assessee, thus quashing the addition in the hands of the current assessee. For the addition of Rs. 52,50,000/- on account of unexplained payments to the D’Mello family (issue 9), the Tribunal found that the addition was made without considering the facts. Evidence showed that cheques were issued for a proposed property purchase, but payment was stopped due to disputes, and no payments were actually made. Therefore, the addition was quashed. Concerning the addition of Rs. 3,28,000/- for unexplained investment in a car (issue 20), the Tribunal confirmed the addition as the assessee's representative could not provide documentary evidence of cash payment or any bank transaction. For the addition of Rs. 2,33,000/- on account of gifts received (issue 21), the Tribunal quashed the addition, noting it was based solely on a recorded statement without corroborative evidence of assets found. The Tribunal also noted that grounds related to approval under section 153D, additions under sections 69, 69A, 69C, and penalty/interest under section 271(1)(c) were either not pressed or dismissed. The revenue's appeal was dismissed.

The Tribunal held that the notices issued under Section 153C for Assessment Years 2011-12 and 2012-13 were time-barred and without jurisdiction. Consequently, the assessment orders for these years were deemed invalid, rendering the grounds on merit infructuous.

The Tribunal decided on various additions made by the Assessing Officer. In some instances, additions were quashed due to lack of evidence or being made in the hands of the wrong assessee. However, one addition related to unexplained investment in a car was confirmed due to insufficient documentary evidence.

The Tribunal noted that the appeals were filed against orders that were emanated from the AO's order passed under section 143(3) of the Income-tax Act. The grounds of appeal raised by the assessees were largely common, relating to additions made by the AO under various sections of the Act and the confirmation of these additions by the CIT(A).

The Tribunal held that the assessment orders for AY 2011-12 and AY 2012-13 were invalid and without jurisdiction. This was based on the finding that the notice issued under Section 153C was time-barred, as the satisfaction for initiating proceedings against the 'other person' was recorded after the permissible period.

The Tribunal held that the notices issued for Assessment Years 2011-12 and 2012-13 were time-barred and issued without jurisdiction, following a previous ruling. Consequently, the assessment orders for these years were deemed invalid.

The Tribunal held that the assessment orders for AY 2011-12 and AY 2012-13 were invalid and the notices issued for these years were time-barred and without jurisdiction. Consequently, the grounds on merit became infructuous. The appeals related to AY 2011-12 and AY 2012-13 were allowed.

The Tribunal held that assessment notices under Section 153C for AY 2011-12 and 2012-13 were time-barred and without jurisdiction, as the satisfaction note was recorded on 11.09.2018. It also ruled that the Section 143(3) assessment for AY 2017-18 was without jurisdiction since normal assessments abate under Section 153C. Most additions for unexplained expenditure/investments, cash deposits, and proposed payments were quashed or deleted, often citing the presumptive taxation scheme (Section 44AD), telescoping principle, or lack of actual transactions/proof, except for an unexplained investment in a car (Rs. 3,28,000/-) which was confirmed.

The Tribunal held that the notices issued for Assessment Years 2011-12 and 2012-13 were indeed time-barred and without jurisdiction, following a previous ruling. Consequently, the assessment orders for these years were deemed invalid.

The Tribunal decided on various additions made by the Assessing Officer. In some instances, additions were quashed due to lack of evidence or being made in the hands of the wrong assessee. However, one addition related to unexplained investment in a car was confirmed due to insufficient documentary evidence.

The Tribunal condoned the delay in filing the appeal. The Tribunal noted that the Commissioner had considered the assessee's business of scrap sale and that the entire cash deposits might not be treated as unexplained. However, the Commissioner confirmed the addition to the extent of Rs.15,95,000/- for deposits during the demonetization period.

The Tribunal decided on various additions made by the Assessing Officer. In some instances, additions were quashed due to lack of evidence or being made in the hands of the wrong assessee. However, one addition related to unexplained investment in a car was confirmed due to insufficient documentary evidence.

The Tribunal held that the assessment orders for Assessment Years 2011-12 and 2012-13 were invalid and without jurisdiction because the notices issued were time-barred. Consequently, the grounds on merit became infructuous for these years.

The Tribunal held that the facts of the Totgar's case were distinguishable and not applicable. Relying on various High Court decisions and its own coordinate bench rulings, the Tribunal found that the interest income earned by the cooperative society from a cooperative bank is eligible for deduction under section 80P(2)(d).

The Tribunal noted that notices were sent to an unrelated email, leading to non-compliance. The appeal was dismissed ex-parte, and the matter was restored to the CIT(A) for a fresh notice and decision on merits after giving the assessee an opportunity of being heard.

The Tribunal found that the Ld. CIT(A) had adjudicated the appeal in default without a finding on merits. Citing Section 250(6) of the Act, which mandates a reasoned order, the Tribunal felt it appropriate to set aside the Ld. CIT(A)'s order and restore the appeal for a fresh decision.

The Tribunal acknowledged the delay but admitted the appeal for adjudication, citing Supreme Court precedents regarding condonation of delay. The Tribunal found that the Ld. CIT(A) passed an ex-parte order without a reasoned decision, which violates Section 250(6) of the Act.

The Tribunal found that the Ld. CIT(A) had adjudicated the appeal in default without a finding on merits. Citing Section 250(6) of the Act, which mandates a reasoned order, the Tribunal felt it appropriate to set aside the Ld. CIT(A)'s order and restore the appeal for a fresh decision.

The Tribunal noted that the assessee failed to appear before the Ld. Commissioner due to miscommunication, despite opportunities. The Ld. Commissioner decided the appeal ex-parte. The Tribunal found that for proper decision and substantial justice, the case should be remanded.

The Tribunal held that the reassessment proceedings, while initiated based on information received, were ultimately rendered academic as the additions made on merits were deleted. Regarding the addition of Rs. 1,46,172/- as notional commission expenses, the Tribunal found that the AO's allegations regarding the source of funds, email usage, and shareholder means were not adequately dealt with by the CIT(A) despite the assessee providing counter-submissions and documentary evidence. The Tribunal noted that the AO had relied heavily on the investigation wing's report without independent verification. The Tribunal observed that the AO's presumption of commission on purchases from non-genuine parties was based on conjecture, and the ad-hoc application of commission at 0.25% was not sustainable. Consequently, the addition on account of ad-hoc commission was deleted. Similar issues for other assessment years were also decided in favour of the assessee. The Tribunal also noted that for AY 2018-19, the addition was made on account of alleged commission on purchases from specific entities, and the assessee had submitted purchase invoices, warehouse receipts, delivery orders, bank statements, and GST returns. The Tribunal, following its findings in other appeals, deleted the addition on account of alleged commission. The legal issues regarding the validity of reassessment were kept open as the additions on merits were deleted.

The Tribunal held that if long-term capital gains are exempt under the DTAA, Section 74 of the Act is not triggered, and losses should not be set off. However, the exemption claim itself was not tested, leading to a remand.

The Tribunal held that the conversion of tenancy rights into ownership rights, as opposed to the purchase of an immovable property, does not attract Section 56(2)(x). The assessee merely acquired ownership of the flat he already occupied as a tenant.

The Tribunal restored the issue back to the Assessing Officer to provide the assessee with another opportunity to justify that their turnover was higher than reported due to a mistake, supported by prior year's turnover figures.

The Tribunal held that surcharge is leviable only when the total income exceeds Rs.50 lakhs, as per the First Schedule to the Finance Act, 2022. Since the assessee's total income was less than Rs.50 lakhs, the surcharge was not applicable.

The Tribunal held that the assessee society is entitled to deduction under section 80P(2)(d) of the Act on interest earned from deposits with cooperative banks, as this issue has been decided in favour of the assessee in several previous ITAT decisions and High Court judgments.

The Tribunal held that the Assessing Officer's own verification and recommendation for deletion of the addition during remand proceedings indicated no infirmity in the Ld. CIT(A)'s order. The AO's action of recommending deletion and then filing an appeal against it was not appreciated. Therefore, the grounds raised by the Revenue were rejected.

The Tribunal held that for deposits made after the due date due to public holidays, the matter should be restored to the Assessing Officer for verification. However, for delays attributed to technical glitches in the EPFO portal, the claim for deduction was rejected as the law does not permit deductions beyond the prescribed date.

The Tribunal noted that the power to condone the delay in filing Form 9A and Form 10 rests with the Commissioner of Income Tax (CIT) under section 119(2)(b) of the Act. Since the petition for condonation of delay is pending before the CIT(E), that decision will prevail.

The Tribunal held that once the CIT(A) rectified the mistake and substituted the order reference, the appeal against the reassessment order should have been revived. The inability to decide due to system limitations was not a valid ground.

The Tribunal held that surcharge is leviable only when the total income exceeds Rs.50 lakhs, as per the First Schedule to the Finance Act, 2022. Since the assessee's total income was less than Rs.50 lakhs, the surcharge was not applicable.

The Tribunal set aside the ex-parte order of the Ld. CIT(A) to provide the assessee another opportunity to present their case. The issues were restored to the file of the Ld. CIT(A) for fresh adjudication after hearing the assessee.

The Tribunal held that expenses incurred on increasing authorized share capital for issuing bonus shares are revenue expenditure, not covered by Section 35D. It also found that the Assessing Officer erred in treating loans and commission expenses as bogus without proper inquiry, but restored the issue of a specific loan to the AO for further examination.

The Tribunal observed that the appellant's AR had initially agreed to the additions but later retracted. Considering the appellant's plea of being a small employee and requesting one final opportunity to present evidence for cash deposits and agricultural income, a lenient view was taken. The matter was remitted to the CIT(A) for fresh consideration.

The Tribunal held that surcharge is leviable only when the total income exceeds Rs.50 lakhs, as per the First Schedule to the Finance Act, 2022. Since the assessee's total income was less than Rs.50 lakhs, the surcharge was not applicable.

The Tribunal held that the CIT(A) rightly dismissed the appeal because the adjustments made in the section 143(1) intimation were not examined on merits during the section 143(3) scrutiny proceedings. Therefore, the grounds raised were not emanating from the assessment order being appealed.

The Tribunal noted that while the AO relied on the Investigation Wing's report and unserved notices, the assessee provided supporting purchase bills, sales bills, and other documents. Acknowledging the difficulty in directly linking purchases to sales and considering that a similar addition in AY 2009-10 was restricted to 12.5% profit, the Tribunal decided to estimate the profit on alleged bogus purchases at 12.5%.

The Tribunal found that the Ld. CIT(A) is required to pass a reasoned and speaking order on the grounds raised by the assessee, even in the absence of submissions. Therefore, the Tribunal set aside the order of the Ld. CIT(A) and restored the matter to him for a fresh decision.

The Tribunal noted that the appellant assessee did not offer any sufficient cause or make sincere efforts to seek condonation for the significant delay in filing the appeals. Multiple opportunities were given, but no satisfactory explanation was provided.

The Tribunal held that the PCIT erred in initiating revision proceedings under Section 263 as the issues raised were already considered by the DRP. The Tribunal quashed the notice and set aside the PCIT's order.

The Tribunal held that rental income should be assessed under 'Income from House Property' due to consistency and the nature of the assets. Regarding F&O transactions, the Tribunal applied Section 43(5) of the Act, which excludes certain derivative transactions from speculative classification, upholding the CIT(A)'s decision. For the Section 14A disallowance, the Tribunal followed the Bombay High Court's ruling that no disallowance is required if no exempt income is earned.

The Tribunal held that the assessee removed the defects pointed out in the notice u/s. 139(9) of the Act. The benefit lost due to late filing should be restored, and the return should be processed as a normal return. The CPC's failure to do so was a curable mistake apparent from the record.

The CIT(A) restricted the addition to the profit element embedded in the purchases (12.5%) and deleted the penalty. The Tribunal upheld the CIT(A)'s decision, noting that penalty under Section 271(1)(c) cannot be levied when additions are made on an estimated basis without concrete evidence of concealment.

The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 4,68,796. The Tribunal found that the assessee had furnished detailed documents, and failure to provide information in a specific format devised by the AO was not a sole basis for treating purchases as bogus.

The Tribunal held that the disallowance of Rs. 31,23,656/- u/s 14A was not justified as the assessee had not claimed the dividend income as exempt. The disallowance of Rs. 1,12,74,887/- as bad debt was also found unjustified as the assessee had provided complete details. The issue regarding Rs. 74,09,078/- treated as interest income instead of capital gain was restored to the AO for fresh decision. The disallowance of director's remuneration was also restored to the AO for fresh adjudication. The disallowance of travelling expenses was found to be on an ad-hoc basis and not justified.

The Tribunal noted that the CIT(A) had not adjudicated the additional ground of appeal filed by the assessee. Therefore, the Tribunal restored the case to the file of the CIT(A) for adjudicating this additional ground on merit.

The Tribunal found that the assessee had a reasonable cause for the delay in filing the online appeal and was not negligent, as evidenced by the timely filing of a physical copy. The Tribunal directed the CIT(A) to condone the delay and decide the appeal on its merits.

The Tribunal held that the foreign tax credit was allowable, following the principle of consistency and prior ITAT rulings. It found that the tax withholdings in the source countries were not unreasonable or incorrect, even if interpretations of DTAA provisions differed.

The Tribunal held that the foreign tax credit was allowable, following the principle of consistency and prior ITAT rulings. It found that the tax withholdings in the source countries were not unreasonable or incorrect, even if interpretations of DTAA provisions differed.

The Tribunal acknowledged the Supreme Court's decision in ACIT vs. Ahmedabad Urban Development Authority regarding the scope of Section 2(15). The Tribunal set aside the CIT(A)'s order and restored the issues to the AO for fresh examination in light of the Supreme Court's ruling, affording the assessee an opportunity to be heard.