ITAT Mumbai Judgments — January 2025

The Tribunal held that the penalty under Section 271(1)(c) is not imposable when the addition is made purely on an estimation basis, especially concerning bogus purchases. Citing decisions from its own benches and the Rajasthan High Court, the Tribunal found the penalty unsustainable.

The Tribunal held that the assessee had incurred a loss and not claimed any capital gain. The transactions were carried out through a registered broker via banking channels, and the addition made by the AO was unsustainable. The deletion of the addition by the CIT(A) was upheld.

The Tribunal held that the additions made on account of alleged cash loan transactions and notional interest were unsustainable as they were not based on cogent evidence. The seized material and statements from third parties were not sufficient corroboration.

The Tribunal condoned the delay in filing the appeal. It acknowledged the inadvertent mistake in ticking the 'religious' activity box and noted that the assessee had not carried out any such activities. The matter was remitted back to the CIT(E) for a fresh order.

The Tribunal noted that the evidence for the refund claim was not fully verified by the lower authorities. Therefore, the issue was remitted back to the Assessing Officer (AO) for thorough verification of all furnished evidence, with a direction to analyze the claim in accordance with the law and grant the assessee an opportunity of being heard.

The Tribunal held that the penalty under Section 271(1)(c) is not imposable when the addition is made purely on an estimation basis, especially concerning bogus purchases. Citing decisions from its own benches and the Rajasthan High Court, the Tribunal found the penalty unsustainable.

The Tribunal held that the additions made on account of alleged cash loan transactions and notional interest were unsustainable as they were not based on cogent evidence. The seized material and statements from third parties were not sufficient corroboration.

The Tribunal held that the additions made on account of alleged cash loan transactions and notional interest were unsustainable as they were not based on cogent evidence. The seized material and statements from third parties were not sufficient corroboration.

The Tribunal upheld the CIT(A)'s decision, finding that the services provided did not make technical knowledge available to the Indian subsidiary, a condition for taxing them as FTS under the India-UK DTAA. Managerial services were also not covered under FTS.

The Tribunal set aside the CIT(A)'s order, directing the Assessing Officer to re-adjudicate the claim. This involved verifying if the assessee was covered by Clause (aa) of Explanation 2 to Section 139(1) of the Act, which defines a later due date for assessees requiring a report under Section 92E.

The Tribunal noted that the tax challan was placed in the paper book and the Ld.CIT(A) had not decided the issue on merits. Therefore, in the interest of justice, the issue is remanded back to the Ld.CIT(A) for necessary verification and decision on merits.

The Tribunal held that the CIT(A) was justified in deleting the additions. The AO's reliance on a 'Base Note' for the existence of a second account was found insufficient, as the note primarily detailed one account and the BUP ID in question was identified as a client profile code, not a separate account number.

The Tribunal followed its own orders and decisions of Coordinate Benches, which held that ESOP expenses are allowable as revenue expenditure under Section 37(1) of the Act. The Tribunal noted that similar issues had been settled in favour of the assessee in earlier years.

The Tribunal held that the additions made by the AO were not sustainable. The primary issue was the validity of the reopening under Section 147. The Tribunal noted that the AO relied on information from the Investigation Wing regarding M/s. Supreme Multitude Pvt. Ltd. being a shell company. However, the assessee had provided all necessary documentary evidence, including confirmations, PAN cards, and sample bills, for the purchases made, which were found to be genuine by the AO during the original assessment. The Tribunal found that the AO treated the purchases as non-genuine merely on suspicion and without disproving the documentary evidence provided by the assessee. Furthermore, the Tribunal observed that the principles of natural justice were violated as the third-party information was not shared with the assessee, and an opportunity to cross-examine the source of information was denied. Relying on various Supreme Court and High Court judgments, including Andaman Timber Industries vs CCE and CIT v. Ashwani Gupta, the Tribunal concluded that additions based on unshared third-party statements without an opportunity for cross-examination are not sustainable. The Tribunal directed the AO to delete the additions. The issue of reopening based on suspicion and violation of natural justice was decided in favour of the assessee.

The Tribunal held that the Assessing Officer erred in disallowing the creditworthiness without proper verification and also noted that the additions were made arbitrarily. The Tribunal decided to remit the issue back to the Assessing Officer for necessary verification of the financial statements of the unsecured creditors.

The Tribunal held that the CIT(A)'s approach was incorrect. An appeal against a rectification order cannot be dismissed solely on the grounds that the original order was appealable. Even an appealable order can suffer from a mistake apparent on record. The CIT(A)'s order was set aside, and the issue was remitted back to the Assessing Officer for de novo adjudication.

The Tribunal held that the additions made on account of alleged cash loan transactions and notional interest were unsustainable as they were not based on cogent evidence. The seized material and statements from third parties were not sufficient corroboration.

The Tribunal held that the additions made on account of alleged cash loan transactions and notional interest were unsustainable as they were not based on cogent evidence. The seized material and statements from third parties were not sufficient corroboration.

The Tribunal held that the AO erred in making additions solely based on seized material and statements without corroborative evidence. The denial of cross-examination to the assessees violated principles of natural justice.

The Tribunal upheld the CIT(A)'s decision, finding that the services provided did not make technical knowledge available to the Indian subsidiary, a condition for taxing them as FTS under the India-UK DTAA. Managerial services were also not covered under FTS.

The Tribunal upheld the deletion of the penalty by the CIT(A). It reasoned that the issue of residential status was debatable and had been consistently treated in a certain way in prior years, and that the assessee had filed the revised return as a non-resident under protest.

The Tribunal held that the issue of disallowance was debatable and the Assessee's explanation for claiming deduction was reasonable. The Tribunal found that the disallowance did not amount to 'undisclosed income' as defined in Section 271AAB, and therefore, the Assessing Officer erred in invoking the penalty provisions.

The Tribunal held that the BUP IDs were not account numbers and that the assessee did not hold any account beneficially with HSBC Bank, Geneva. The Tribunal also found that the reassessment proceedings were not valid.

The Tribunal held that the penalty under Section 271(1)(c) is not imposable when the addition is made purely on an estimation basis, especially concerning bogus purchases. Citing decisions from its own benches and the Rajasthan High Court, the Tribunal found the penalty unsustainable.

The Tribunal held that the assessee had established the purchase of shares through proper banking channels and the source was not doubted. Merely classifying shares as penny stocks does not justify disallowing losses or additions under Section 69. The assessee is entitled to carry forward the losses.

The Tribunal held that the BUP IDs were not account numbers and that the assessee did not hold any account beneficially with HSBC Bank, Geneva. The Tribunal also found that the reassessment proceedings were not valid.

The Tribunal held that the BUP IDs were not account numbers and that the assessee did not hold any account beneficially with HSBC Bank, Geneva. The Tribunal also found that the reassessment proceedings were not valid.

The CIT(A) deleted the additions, finding that the 'Base Note' relied upon by the AO did not conclusively prove the existence of a separate undisclosed account. The tribunal upheld the CIT(A)'s decision, agreeing that the evidence was insufficient to establish the existence of the alleged second account.

The Tribunal held that the BUP IDs were not account numbers and that the assessee did not hold any account beneficially with HSBC Bank, Geneva. The Tribunal also found that the reassessment proceedings were not valid.

The Tribunal held that the disallowance under Section 14A was not warranted as the assessee had sufficient interest-free own funds to cover investments. Regarding the addition under Section 68, the Tribunal found that the assessee had discharged its onus to prove the identity, genuineness, and creditworthiness of the loan creditor.

The Tribunal held that the assessee had established the purchase of shares through proper banking channels and the source was not doubted. Merely classifying shares as penny stocks does not justify disallowing losses or additions under Section 69. The assessee is entitled to carry forward the losses.

The Tribunal upheld the CIT(A)'s decision, finding that the services provided did not make technical knowledge available to the Indian subsidiary, a condition for taxing them as FTS under the India-UK DTAA. Managerial services were also not covered under FTS.

The Tribunal allowed the withdrawal of the appeals as the disputed tax was settled under the VSV Scheme. Liberty was granted to the assessee to seek recall of the order if circumstances warranted.

The Tribunal held that the CIT(A)'s approach was incorrect. An appeal against a rectification order cannot be dismissed solely on the grounds that the original order was appealable. Even an appealable order can suffer from a mistake apparent on record. The CIT(A)'s order was set aside, and the issue was remitted back to the Assessing Officer for de novo adjudication.

The Tribunal upheld the CIT(A)'s decision, finding that the services provided did not make technical knowledge available to the Indian subsidiary, a condition for taxing them as FTS under the India-UK DTAA. Managerial services were also not covered under FTS.

The Tribunal held that the additions made on account of alleged cash loan transactions and notional interest were unsustainable as they were not based on cogent evidence. The seized material and statements from third parties were not sufficient corroboration.

The Tribunal held that the issue of commission on bogus purchases was settled under the VSV Scheme. However, the issue of 'other investment' was not examined during reassessment proceedings and was therefore validly subject to revision. The Tribunal also upheld the PCIT's jurisdiction.

The Tribunal held that the learned PCIT had jurisdiction to pass the order under section 263 as, on the date of the impugned order (30.03.2024), the assessee's PAN was under the charge of the learned PCIT, Mumbai. The Tribunal found no merit in the assessee's contention regarding jurisdiction, citing section 127(4) of the Act which dispenses with the need to re-issue notices. Regarding the substantive issues, the Tribunal found that the AO, during the re-assessment proceedings, had specifically sought details of unsecured loans, and the assessee had provided comprehensive details of loans from Pradip Patel, Upesh Thakkar, and M/s. Mehta Finance, along with supporting documents. Crucially, the assessee had no transaction with Shri Jignesh Shah. Therefore, the AO was satisfied that the alleged fictitious loan was not a transaction of the assessee, and no addition was made. The Tribunal held that the PCIT's allegation that the AO did not examine this issue was unfounded. Concerning the cash transaction with M/s. Mehta Finance, the Tribunal noted that the PCIT referred to information from Central Circle-1(4), Ahmedabad, but failed to provide details of its receipt by the AO. As no material was placed on record by the Revenue to substantiate this, the Tribunal agreed with the assessee that this information was not available to the AO. Consequently, the Tribunal found no basis to sustain the revisionary proceedings under section 263 on either issue. The revisional order was quashed.

The Tribunal allowed the deduction under Section 80G, finding the donation eligible despite the AO's contention. It also allowed the beneficial tax rate under the India-Canada tax treaty for interest income, noting consistent past rulings in favor of the assessee.

The Tribunal allowed the withdrawal of the appeals as the disputed tax was settled under the VSV Scheme. Liberty was granted to the assessee to seek recall of the order if circumstances warranted.

The Tribunal held that the AO erred in making additions solely based on seized material and statements without corroborative evidence. The denial of cross-examination to the assessees violated principles of natural justice.

The Tribunal acknowledged that the Assessee offered the income on a cash basis in the relevant year and the TDS was reflected in 26AS. It restored the matter to the Assessing Officer with directions to verify if the claimed TDS corresponds to the income offered in AY 2018-2019 and if it has not been claimed in any preceding assessment years, and then to grant the credit.

The Tribunal upheld the CIT(A)'s decision, finding that the services provided did not make technical knowledge available to the Indian subsidiary, a condition for taxing them as FTS under the India-UK DTAA. Managerial services were also not covered under FTS.

The Tribunal upheld the CIT(A)'s decision, finding that the services provided did not make technical knowledge available to the Indian subsidiary, a condition for taxing them as FTS under the India-UK DTAA. Managerial services were also not covered under FTS.

The Tribunal held that the determination of nil price for intra-group services would result in a reduction of the assessee's income and erode the Indian tax base. Therefore, the transfer pricing provisions could not be invoked in this situation as per Section 92(3) of the Income Tax Act.

The Tribunal held that the issue regarding the disallowance was debatable, especially given the conflicting judicial precedents at the time. The Supreme Court's decision in Checkmate Services Private Ltd. settled the issue later. Therefore, levying penalty under Section 271(1)(c) was considered erroneous.

The Tribunal found that the assessee failed to provide adequate proof for the direct expenses, hence disallowance was justified. However, for salary expenses, the Tribunal directed a fresh verification by the AO due to discrepancies in claimed amounts and the need to ascertain actual payments.

The Tribunal held that for assessment year 2009-10, regarding bogus purchases, the assessee fell into the category where the entire amount of bogus purchases should be disallowed because the assessee failed to substantiate the linkage between the goods reported in bogus purchases and actual sales using day-to-day inventory records or a stock register. The AO noted no stock register was produced. Therefore, the finding of the CIT(A) was set aside, and the AO's order was sustained, allowing the Revenue's grounds. Regarding unexplained bank deposits/credits, the Tribunal followed its finding for assessment year 2009-10 and decided the grounds mutatis mutandis for both assessment years. The operative direction was that the assessee's appeals were dismissed, and the Revenue's appeals were allowed. The issue of whether the entire amount of bogus purchases should be added was decided in favour of the Revenue, and the issue of restricting the addition of bank deposits to 2% was decided against the assessee and in favour of the Revenue.

The Tribunal held that the reassessment proceedings were valid. Regarding bogus purchases, the Tribunal distinguished between cases where goods linked to bogus bills are connected to genuine sales (allowing for a percentage-based disallowance representing grey market procurement benefits) and cases where no such linkage or inventory records exist (warranting full disallowance). For the assessment year in question, the assessee fell into the latter category, having failed to substantiate the linkage between bogus purchases and actual sales using inventory records or a stock register. Therefore, the entire amount of bogus purchases was liable to be disallowed, setting aside the CIT(A)'s finding and sustaining the AO's order. The addition for unexplained bank deposits was also dealt with. The Tribunal's decision on this point is not fully detailed in the provided excerpt, but it implies a reversal of the CIT(A)'s partial relief. The operative direction is that the assessee's appeals are dismissed, and the Revenue's appeals are allowed.

The Tribunal held that the CIT(E) had taken a different stand compared to when granting registration u/s 12A for the same activities. The expenses were considered minor and within the MOA's scope, thus the rejection of the 80G application was not justified.