ITAT Mumbai Judgments — November 2024

The Tribunal held that the Assessee had discharged the onus of proving the genuineness of the transactions by submitting various documents. There was no allegation of price rigging against the Assessee, nor had any adverse order or penalty been imposed on them. Relying on several High Court and Tribunal judgments involving similar issues and penny stocks, the Tribunal found that the Assessee could not be fastened with liability based solely on investigation wing findings.

The Tribunal noted continuous non-compliance by the assessee despite specific opportunities and directions. The appeal was listed for hearing multiple times, but the assessee or their representative did not appear.

The Third Member, by majority, upheld the order of the Judicial Member, which reversed the CIT(A)'s deletion of additions. The issue revolved around whether the documentation provided by the assessee was sufficient to discharge the onus under Section 68, especially when the lenders were non-existent.

The Tribunal held that the value determined by the Charity Commissioner for the sale of the property, which was subsequently registered at a higher price, should be considered the fair market value. Therefore, invoking Section 50C was not justified as the actual sale consideration was higher than the stamp duty valuation.

The Tribunal condoned the delay of 4 days, acknowledging sufficient cause shown by the assessee in her affidavit. The Tribunal noted that the CIT(A) had passed ex-parte orders due to the assessee's non-appearance despite multiple opportunities. However, considering the interest of justice, the Tribunal restored the matters to the Assessing Officer for de novo adjudication on merits.

Despite the assessee's non-cooperative attitude and failure to avail opportunities for hearing, the Tribunal, considering the interest of justice and fair play, and an assurance of compliance from the AR, decided to set aside the assessment order. The matter is remanded to the Assessing Officer for a de novo assessment, granting the assessee a final chance to furnish proper representation and evidence.

The Tribunal held that the assessee was prevented by sufficient cause from producing evidence during assessment proceedings due to technical glitches on the ITBA portal. The Tribunal restored the issue pertaining to the addition under section 69 to the file of the CIT(A) for de novo adjudication after admitting and considering the additional evidence.

The Tribunal observed that the appeal should have been filed before the Delhi Benches due to the territorial jurisdiction. Citing a Supreme Court judgment, the Tribunal dismissed the present appeal.

The Tribunal held that for unabated assessment years, additions under section 153A can only be made if based on incriminating material found during search and seizure. The AO's reliance on a statement recorded under section 132(4) without other incriminating material was insufficient. Furthermore, the remuneration paid to the partner was found to be for services rendered and had been offered to tax by the partner, making the disallowance unsustainable on merits as well.

The Tribunal held that the delay in filing the appeal was covered by the period extended by the Hon'ble Supreme Court due to COVID-19. Therefore, the appeal was within the limitation period and admitted. The Tribunal also noted that the CIT(A) did not decide the issue on merit, which is not in accordance with law.

The Tribunal was of the opinion that the penalty appeal should be remanded to the Ld.CIT(A) to be considered along with the quantum appeal, ensuring the assessee is granted a proper opportunity of being heard.

The Tribunal noted that the assessee has opted for the Vivad Se Vishwas scheme for the appeals. In view of this, the appeals were considered withdrawn and dismissed as infructuous. Liberty was granted to both parties to file an application for recalling the appeals if the scheme application is not accepted.

The Tribunal held that for unabated assessment years, additions can only be made if based on incriminating material found during the search and seizure operation. The statement recorded under section 132(4) alone cannot be considered as incriminating material for initiating proceedings under section 153A. Furthermore, the remuneration paid to the partner was for services rendered, and since it was offered to tax in the hands of the partner, it should be allowable as an expenditure for the assessee firm. Therefore, the disallowances made by the AO were unsustainable.

The Tribunal observed that disallowance under section 14A cannot exceed the exempt income earned. It restored the matter to the AO for verification of the assessee's claim of no exempt income. Regarding the warranty provision, the Tribunal remanded the issue to the AO to verify if it was made on a scientific basis, to be considered in light of the Supreme Court's decision if found to be on a scientific basis.

The Tribunal held that additions made under Section 153A require incriminating material found during the search. The statement recorded under Section 132(4) of the Act, relied upon by the AO, does not constitute incriminating material for making additions. Furthermore, the remuneration paid to the partner was offered to tax by the partner, making the disallowance unsustainable. The Tribunal noted that Ms. Vora's contribution to the firm was established, and her remuneration was allowable as a business expenditure.

The Tribunal held that the assessee had successfully demonstrated a reasonable cause for non-filing of returns due to the protracted dispute between committee members, which was finally settled by the High Court. Therefore, the penalty for concealment of income was not justified.

The CIT(A) held that the reopening of the case was bad in law and deleted the addition on merits, finding that the assessee had provided sufficient documentation and the AO failed to establish any rigging or cash trail. The Tribunal concurred, noting that the assessee had not claimed LTCG/STCG and had included the transactions in the profit and loss account.

The Tribunal found that the Ld. CIT(A) did not follow the due procedure under Rule 46A of the Rules when admitting and considering additional evidence. Therefore, the order of the Ld. CIT(A) was set aside, and the matter was remanded back to the Ld. CIT(A) to follow the prescribed procedure.

The Tribunal held that a statement or document received from a third party cannot be relied upon for making an addition without giving the assessee an opportunity to cross-examine the person who made the statement or to contradict the document. Similarly, a suo-moto disclosure made before the Settlement Commission without corroborative material cannot be the sole basis for an addition.

The Tribunal condoned the delay in filing the assessee's appeal. The Tribunal found that the CIT(A) upheld the AO's rejection of books but found the AO's profit estimation unreasonable. The Tribunal restored the issue of expenses to the AO for de novo adjudication, directing the assessee to provide all details and evidence.

The Tribunal noted that the assessee was not granted a proper opportunity of being heard and that the authorities below did not consider relevant CBDT circulars. Therefore, the issue was remanded back to the Assessing Officer for necessary verification considering the specific financial year of deposit and applicable circulars.

The Commissioner deleted the addition, noting that while the shares were penny stocks, the Assessee traded them in the regular course of business to make a quick profit and was not part of a rigging nexus. The Commissioner also found that the AO erred in treating sale proceeds without considering purchase costs and that the Assessee incurred a net loss. The Tribunal upheld the Commissioner's decision.

Given the assessee's decision to opt for the Vivad Se Vishwas Scheme, the appeals were deemed withdrawn and consequently dismissed as infructuous. The tribunal granted liberty to both the assessee and the revenue to file an application for recalling the appeals if the Vivad Se Vishwas Scheme application is not accepted.

The Tribunal condoned the delay in filing the appeals. It observed that the additional documentary evidence supporting the charitable nature of the assessee's activities, presented during the appeal, was not available to the CIT(Exemption) during the initial adjudication. Therefore, the Tribunal restored the matter to the CIT(Exemption) for a fresh adjudication and decision on merits regarding both the Section 12AB registration and Section 80G approval applications.

The Tribunal dismissed the Revenue's appeal because the tax effect (Rs. 58 lakh) was below the monetary limit of Rs. 60 lakh for appeals to the ITAT, as per CBDT Circular no.9 of 2024. Consequently, the assessee's cross-objection became infructuous and was also dismissed, with a provision for restoration if the Revenue's appeal is later recalled.

The Tribunal held that additions made under section 153A assessments require incriminating material found during search and seizure. The AO's reliance on a statement recorded under section 132(4) without other incriminating material was insufficient. Furthermore, the remuneration paid to the partner was found to be a legitimate business expense and had already been offered to tax by the partner.

The Tribunal held that additions made under Section 153A require incriminating material, which was absent in this case. Even for abated assessments, the disallowance was not sustainable on merits because the remuneration paid to the partner was a business expense, and the income was already taxed in the hands of the partner.

The Tribunal noted that the disallowance made by the AO and upheld by the CIT(A) was contested by the assessee based on previous years' own cases where similar issues were decided in favor of the assessee. The Tribunal relied on previous decisions of the High Court and ITAT, stating that the disallowance cannot exceed the total expenditure. The Tribunal deleted the disallowance made by the AO.

The Tribunal condoned the 4-day delay in filing the appeals, acknowledging the assessee's explanation of sufficient cause. The Tribunal noted that the impugned orders were passed ex parte due to the assessee's non-appearance.

The Tribunal held that the Assessing Officer's conclusion of a colorable device was irrational and unsustainable as the transactions were genuine. The law does not require an assessee to pay more tax if they arrange their affairs legitimately to reduce their tax liability.

The Tribunal affirmed the CIT(A)'s decision, ruling that the internal audit memo, which was the sole basis for reopening the assessment, did not qualify as 'information' within the meaning of Explanation 1 to Section 148 of the Income Tax Act prior to its amendment by the Finance Act, 2022. As the notice under section 148 was issued before the amendment's effective date, the reassessment proceedings were held to be void ab initio and consequently quashed. The deletion of the addition under section 68 was rendered infructuous.

The Tribunal held that the assessee had demonstrated a reasonable cause for non-filing of returns due to a prolonged dispute between old and new committee members, which was finally settled by the High Court in 2019. Consequently, the penalty for concealment of income was not justified.

Given the assessee's decision to opt for the Vivad Se Vishwas Scheme, the Tribunal deemed all four appeals as withdrawn and infructuous, consequently dismissing them. The Tribunal also granted liberty to both the assessee and the revenue to file an application for recalling the appeals if the application under the Vivad Se Vishwas Scheme is not accepted.

The ITAT upheld the CIT(A)'s order, concluding that the second reopening of assessment was invalid. The Tribunal found that the AO did not have a fresh 'reason to believe' and that the amounts added in the second reassessment were already included in the first assessment. Consequently, the deletion of the addition by the CIT(A) was affirmed.

The Tribunal held that the assessee had maintained and furnished required documentation and information for transfer pricing. The Tribunal also noted that the primary reason for the penalty was the AO's view that the TNNM method was inappropriate without segmental financials, but the AO ultimately accepted the assessee's benchmarking. Furthermore, the Tribunal found that the issue was identical to a previous year where the penalty was deleted.

The Tribunal held that the requirement to issue a draft assessment order under Section 144C is mandatory for eligible assessees and its non-compliance constitutes an incurable jurisdictional defect, not merely a procedural irregularity. Relying on various High Court judgments, including the jurisdictional Bombay High Court, the Tribunal concluded that Section 292B of the Act cannot save such orders.

The tribunal upheld the disallowance of provision for leave encashment under Section 43B(f), affirming that it is deductible only on actual payment. However, it ruled that Section 115JB of the Act is not applicable to the assessee bank, citing a Special Bench decision for 'corresponding new banks'.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the deduction for MVAT paid under protest under Section 43B. For the assessee's cross-objections regarding deductions under Section 80G and Section 35AC, and the addition of Trait Fees, the Tribunal set aside the CIT(A)'s order and remanded these issues back to the AO for fresh adjudication, allowing the assessee to furnish additional evidence.

The Tribunal held that for unabated assessment years, additions under section 153A can only be made based on incriminating material found during search. The statement recorded under section 132(4) alone, without other incriminating material, is insufficient to sustain such additions, as per the Supreme Court decision in Abhisar Buildwell (P.) Ltd. Furthermore, the remuneration paid to the partner was found to be allowable as a business expense since it was offered to tax in the hands of the partner and the work done by her was established.

The Tribunal found that the assessee's business nature had drastically changed, leading to increased expenses. However, it also noted that the assessee had not adequately responded to certain notices. Considering that bills and vouchers for expenses were available and could potentially justify the expenditure, the Tribunal decided to restore the issue to the AO for fresh adjudication, granting the assessee an opportunity to present evidence and be heard.

The tribunal considered the provisions of Rule 128(9) which states that Form 67 shall be furnished on or before the due date for filing the return of income. The tribunal noted that the Revenue contended this 'shall' to be mandatory, while the assessee relied on coordinate bench decisions holding the condition to be directory. Following the precedents of coordinate benches which have decided this issue in favor of the assessee, considering the delay in filing Form 67 as a procedural irregularity.

The Assessing Officer (AO) is duty-bound to refer the matter to the Department Valuation Officer (DVO) when the assessee objects to the property's valuation. The AO's failure to do so, despite the assessee's specific objection and request for reference, renders the assessment incomplete.

The Tribunal held that the reassessment proceedings initiated under Section 147 were bad in law as there was no fresh tangible material and the reasons recorded did not indicate an application of mind. The Assessment Order passed under Section 143(3) read with Section 147 was quashed.