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347 orders · Page 3 of 7
The Tribunal condoned the delay of approximately 230 days in filing the appeal, considering the assessee's age (72 years), medical condition, and the circumstances explained, citing the Supreme Court's decisions in Collector, Land Acquisition v. Mst. Katiji and N. Balakrishnan v. M. Krishnamurthy. The Tribunal found that the CIT(A) had dismissed the appeal mainly due to the assessee's non-compliance and failure to furnish evidence, without examining the merits of the addition. The addition of ₹43,00,000/- was based on documents and statements from a third party, which required examination of evidence and the assessee's explanation. The Tribunal held that the CIT(A) did not examine the merits of the addition. Therefore, the Tribunal set aside the order of the CIT(A) and restored the matter to his file for fresh adjudication. A cost of ₹10,000/- was imposed on the assessee, payable to the Prime Minister's National Relief Fund, as a condition for granting this opportunity, acknowledging the assessee's failure to pursue appellate proceedings despite several opportunities. The appeal was allowed for statistical purposes.
The Tribunal found that the assessee had furnished detailed submissions and documentary evidence concerning the disputed issues, including the acquisition and valuation of fixed assets, depreciation, cash received, and reconciliation of accounts. A legal objection regarding the AO exceeding the scope of limited scrutiny was also raised. However, the NFAC upheld the additions without independently examining the evidence or submissions, merely referring to the assessment order. The Tribunal held that the impugned order was cryptic and lacked independent reasoning on material issues, rendering it unsustainable. Consequently, the Tribunal set aside the NFAC's order and restored the matter to the NFAC for fresh adjudication on all grounds, including the legal objection. The NFAC was directed to examine all relevant evidence and submissions and pass a reasoned and speaking order after affording the assessee an opportunity of being heard. The assessee was directed to cooperate and furnish necessary documents.
The Tribunal admitted the additional grounds of appeal as they were purely legal. Regarding the first issue, the Tribunal held that the AO did not specify any variations under Section 270A(2) or Section 270A(9) but merely stated that proceedings were initiated for under-reporting of income due to misreporting. Following the decisions of the Delhi High Court in *Schneider Electric South East Asia (Hq) Pte Ltd. v. ACIT* and others, the Tribunal concluded that the notice issued under Section 270A was bad in law, and consequently, the penalty order was also bad in law. On the second issue, the Tribunal noted that the assessee's return filed in response to the Section 148 notice was accepted without variation because the assessee had voluntarily withdrawn the Section 80GGC deduction. Citing the Surat Bench decision in *Mr. Dipesh Narendrakumar Patel v. ITO*, which followed the Delhi High Court's ruling, the Tribunal held that since the AO accepted the return without additions, the income could not be termed as under-reported or misreported. Therefore, the penalty levied under Section 270A was quashed. The appeal was allowed, and the AO was directed to delete the penalty.
The Tribunal had to decide whether the addition of Rs. 15 lacs made under Section 41(1) of the Income Tax Act, 1961, was valid. The assessee contended that Section 41(1) is not applicable as the amount in dispute is not a trading liability and that the lender company, M/s. Aneri Fincap Ltd., is a genuine entity. The Tribunal's decision on this issue and the reasoning are not fully provided in the excerpt. However, the judgment indicates that the assessee's counsel argued that Section 41(1) was wrongly invoked. The excerpt ends abruptly while the assessee's counsel is making a submission regarding the genuineness of the company. Therefore, the final finding, ratio, and operative directions are not ascertainable from the given text.
The Tribunal, considering the additional written submissions and the peculiar facts, observed that the Ld. Commissioner had rejected the assessee's plea concerning the IBC moratorium for want of supporting documents. The assessee has now undertaken to furnish these documents. In the interest of justice, the Tribunal restored the matter to the file of the jurisdictional Assessing Officer for fresh adjudication. The Assessing Officer is directed to examine the applicability and effect of the IBC moratorium on the liability under sections 201(1) and 201(1A) of the Act, after considering the relevant documents and affording a reasonable opportunity of being heard. The assessee is directed to furnish the requisite documents and cooperate in the proceedings. The appeal is allowed for statistical purposes.
The Tribunal noted that both the assessment order and the CIT(A)'s order were passed ex parte, without effective participation from the assessee. The assessee provided an affidavit explaining that non-compliance was due to bona fide administrative circumstances, including the cessation of business operations after a slump sale and the abrupt discontinuation of practice by their Chartered Accountant. The Tribunal acknowledged that it is a settled principle of natural justice that an assessee should not be condemned unheard when a bona fide cause is shown for non-appearance. Since neither the AO nor the CIT(A) had an effective opportunity to examine the merits of the case, the Tribunal, in the interest of natural justice and fair play, decided to set aside the impugned orders and restore the proceedings to the file of the AO for fresh adjudication on merits. A cost of Rs. 5,000/- was imposed on the assessee, payable to the Prime Minister's National Relief Fund. The AO was directed to frame the assessment afresh after affording a reasonable opportunity of being heard. The assessee was directed to update its communication details and cooperate fully, with liberty to the AO to complete the assessment based on available material if the assessee failed to cooperate. The Tribunal explicitly stated that this decision did not express any opinion on the merits of the dispute.
The Tribunal held that the reassessment proceedings initiated under Section 147 read with Section 148 of the Act for Assessment Year 2019-20 are bad in law and quashed. The Tribunal noted that the assessment was reopened based on search and seizure action under Section 132 of the Act in the RUPPs Group. The Ld. Counsel for the assessee argued that the proviso to Section 148A(c) specifically excludes the applicability of Section 148A when information is obtained from a search under Section 132 in the case of another person and pertains to the assessee. In such cases, the procedure under Section 148A becomes unnecessary and without the authority of law. The Tribunal, respectfully following the decision of its Coordinate Bench in Amit Pahuja v. DCIT, held that once the case falls within the exception provided in the proviso to Section 148A, the issuance of a notice under Section 148A(b) and the passing of an order under Section 148A(d) are wholly unnecessary and without the authority of law. Consequently, the notice issued under Section 148 and the consequential reassessment proceedings were quashed. The Tribunal also noted that the alleged escapement of income was below the threshold limit for invoking the extended period of limitation under Section 149(1)(b). The appeal of the assessee was allowed.
The Tribunal held that the reassessment proceedings for AY 2020-21 were unsustainable because the alleged escapement of contract receipts from Manipal University, which formed the basis for reopening, had already been accounted for and offered to tax by the assessee. The jurisdictional foundation for reassessment did not survive. Consequently, the reassessment order for AY 2020-21 was set aside. The Tribunal also directed the AO to allow depreciation on goodwill for AY 2020-21, subject to verification, as the disallowance was based on amendments introduced by the Finance Act, 2021, which were not applicable retrospectively. The addition to book profit under section 115JB for AY 2020-21 was also deleted as the underlying depreciation disallowance was deleted. The Tribunal allowed the appeal for AY 2020-21. For AY 2016-17, the judgment excerpt does not provide the specific findings on all grounds, but the operative part indicates that the appeal was allowed. The core reasoning for setting aside reassessment proceedings for AY 2020-21 is that the basis for reopening was factually unsustainable, as the income was already offered to tax. The ratio is that reassessment proceedings cannot be sustained if the alleged escaped income has already been disclosed and taxed, and that amendments to tax laws cannot be applied retrospectively to deny claims valid under the law applicable to the assessment year.
The Tribunal held that the reassessment proceedings for AY 2020-21 were unsustainable because the alleged escapement of contract receipts from Manipal University, which formed the basis for reopening, had already been accounted for and offered to tax by the assessee. The jurisdictional foundation for reassessment did not survive. Consequently, the reassessment order for AY 2020-21 was set aside. The Tribunal also directed the AO to allow depreciation on goodwill for AY 2020-21, subject to verification, as the disallowance was based on amendments introduced by the Finance Act, 2021, which were not applicable retrospectively. The addition to book profit under section 115JB for AY 2020-21 was also deleted as the underlying depreciation disallowance was deleted. The Tribunal allowed the appeal for AY 2020-21. For AY 2016-17, the judgment excerpt does not provide the specific findings on all grounds, but the operative part indicates that the appeal was allowed. The core reasoning for setting aside reassessment proceedings for AY 2020-21 is that the basis for reopening was factually unsustainable, as the income was already offered to tax. The ratio is that reassessment proceedings cannot be sustained if the alleged escaped income has already been disclosed and taxed, and that amendments to tax laws cannot be applied retrospectively to deny claims valid under the law applicable to the assessment year.
The Tribunal dismissed the first ground concerning the refund of Rs. 4,23,469/-. The Tribunal noted that the assessee itself computed the total tax payable under the Vivad-se-Vishwas Scheme at Rs. 14,61,647/-, and after adjusting prepaid taxes, computed the tax payable at Rs. 10,58,110/-. This amount was paid by the assessee. The Tribunal observed that the TDS amount of Rs. 4,03,537/- (note: judgment mentions Rs. 4,26,469/- in para 2 and Rs. 4,03,537/- in para 8, the latter being the figure used in the calculation) was never mentioned in the declaration or thereafter until after the dispute was settled. As there was no order by a departmental authority crystallizing this refund claim, the departmental authorities were justified in rejecting it. Regarding the second ground for a refund of Rs. 5,56,403/-, the Tribunal directed the Assessing Officer to factually verify the assessee's claim. If any amount was recovered by the assessee post-settlement exceeding the amount payable/paid under the Vivad-se-Vishwas Scheme, the same was to be refunded to the assessee. This ground was allowed for statistical purposes.
The Tribunal held that the addition sustained by the first appellate authority deserves to be deleted. The Tribunal noted that Section 56(2)(viib) read with Rule 11UA allows the assessee to choose the method of valuation, and the assessee had provided valuation reports using the DCF method. The AO, not being an expert, should not have rejected the expert's report without obtaining an opinion from another valuer. The Tribunal agreed with the first appellate authority that the AO could not change the method of valuation from DCF to Net Asset Value (NAV). However, the Tribunal found that the first appellate authority also erred in determining the value of shares at Rs. 137.91 per share based on industry performance and growth rates, deeming it unscientific. The Tribunal accepted the assessee's explanation for the variation between projected and actual profits, attributing it to the closure of General Motors India and noted that the transaction was between closely linked entities for a genuine business purpose. Therefore, the addition made under Section 56(2)(viib) was directed to be deleted. The Tribunal's finding on the issue is that the addition under Section 56(2)(viib) was not justified.
The Tribunal held that the addition sustained by the first appellate authority deserves to be deleted. The Tribunal noted that Section 56(2)(viib) read with Rule 11UA allows the assessee to choose the method of valuation, and the assessee had provided valuation reports using the DCF method. The AO, not being an expert, should not have rejected the expert's report without obtaining an opinion from another valuer. The Tribunal agreed with the first appellate authority that the AO could not change the method of valuation from DCF to Net Asset Value (NAV). However, the Tribunal found that the first appellate authority also erred in determining the value of shares at Rs. 137.91 per share based on industry performance and growth rates, deeming it unscientific. The Tribunal accepted the assessee's explanation for the variation between projected and actual profits, attributing it to the closure of General Motors India and noted that the transaction was between closely linked entities for a genuine business purpose. Therefore, the addition made under Section 56(2)(viib) was directed to be deleted. The Tribunal's finding on the issue is that the addition under Section 56(2)(viib) was not justified.
The Tribunal held that for invoking Rule 8D, the AO must record satisfaction with regard to the assessee's claim concerning expenditure related to exempt income, having regard to the assessee's accounts, as per Section 14A(2). The Hon'ble Supreme Court in Maxopp Investment Ltd. v. CIT also emphasized this requirement. Regarding the provision for expenses (Ground No. 4), the Tribunal found that under the mercantile system, an accrued liability based on a reasonable estimate cannot be disallowed merely because the exact quantification is pending. The provision related to the relevant previous year, was based on an estimate, reversed in the subsequent year, and actual expenditure was accounted for upon receiving invoices. The Tribunal noted that identical disallowances were deleted in the assessee's own case for earlier years, supporting the principle of consistency. Therefore, the disallowance of Rs. 65,03,738/- under normal provisions and the corresponding addition to book profit under Section 115JB were deleted. For the TDS credit (Ground No. 5), the Tribunal directed the AO to verify the claim from relevant records and allow credit to the extent legally admissible. Ground No. 1 was treated as consequential. The initiation of penalty proceedings under Section 270A was held to be premature and dismissed. The appeal was allowed, with Ground No. 5 allowed for statistical purposes.
The Tribunal held that an error, if any, in selecting the relevant clause in Form No. 10AB is a curable procedural defect in the facts of the present case. The application ought to be examined with reference to its substance and the approval actually held by the assessee. The Tribunal noted inconsistencies in the CIT(E)'s discussion regarding the applicable clauses of the first proviso to section 80G(5). Clause (ii) applies where an institution is approved and its approval is due to expire, while clause (iii) applies where an institution has been provisionally approved and seeks regular approval. The CIT(E) incorrectly referred to clause (ii) for regularisation of provisional approval. Therefore, the Tribunal set aside the impugned order and restored the matter to the file of the CIT(E). The CIT(E) is directed to verify the nature and period of the approval held by the assessee, permit correction of the relevant clause in Form No. 10AB if required, and reconsider the application under the applicable provision of the first proviso to section 80G(5). The assessee is to furnish relevant documents. No issue was expressly left undecided.
The Tribunal held that in the interest of justice, the appeal should be restored to the file of the CIT(A). The assessee had not been able to file a detailed petition for condonation of delay before the CIT(A). Therefore, the Tribunal granted the assessee an opportunity to file a petition for condonation of delay before the CIT(A), which would then be considered by the CIT(A) in accordance with law after providing adequate opportunity to the assessee. The Tribunal explicitly stated that the appeal was allowed for statistical purposes. The substantive claim regarding the benefit of Section 115BAA was not decided on merits by the ITAT, as the matter was remanded back to the CIT(A).
The Tribunal held that a conditional assessment order could not have been passed by the AO without obtaining the report of the DVO, especially when Section 142A of the Income-tax Act mandates the DVO to submit the report within six months. The Tribunal relied on the decisions in Rajni Birla v. ITO, Lalit Kumar Jalan v. ITO, and Shri Zulfi Revdjee v. ACIT. It was held that the assessment order passed without awaiting the DVO's report, when such report was statutorily awaited, is not sustainable. The subsequent rectification order was also deemed unsustainable as it sought to alter the assessment based on fresh material. The assessee's statutory right under Section 50C(2) was violated, vitiating the assessment for breach of mandatory procedure and principles of natural justice. Consequently, the assessment order was quashed, and the additions made therein were directed to be deleted. Grounds No. 2 and 3 were allowed, rendering other grounds academic.
The Tribunal held that the addition of Rs.7,23,18,982/- under section 69A of the Income Tax Act, 1961, was justified. The reasoning was based on the assessee's failure to provide any material to rebut the adverse findings of the Assessing Officer, which were affirmed by the Commissioner (NFAC). Specifically, the assessee did not reconcile the discrepancies between bank credits and trade receivables, nor did it furnish any cogent documentary evidence to substantiate its claims or counter the observation that it might be a paper company. The Tribunal found no infirmity in the decision of the Commissioner (NFAC) in sustaining the addition. The ratio decidendi is that in the absence of satisfactory explanation and documentary evidence to justify unexplained credits in bank accounts, the addition made by the Assessing Officer under section 69A, and sustained by the appellate authority, will be upheld. The operative direction is that the appeal filed by the assessee is dismissed. The assessee was granted liberty to seek recall of the ex parte order upon demonstrating sufficient cause for non-appearance.
The Tribunal allowed the assessee's appeal and directed the deletion of the penalty levied under Section 270A. The Tribunal noted that the Assessing Officer did not specify any of the variations mentioned under Section 270A(2) or Section 270A(9) of the Act. Instead, the AO stated that penalty proceedings were initiated for under-reporting of income which was a consequence of misreporting. The Tribunal found that the notice issued under Section 270A did not specify the limb of the provision attracted. Relying on the decisions of the Hon'ble Delhi High Court in Schneider Electric South East Asia (Hq) Pte Ltd. v. ACIT, Prem Brothers Infrastructure LLP v. NFAC, and GE Capital US Holding, Inc. v. DCIT, the Tribunal held that in the absence of details specified by the AO as to which limb of Section 270A was attracted, the impugned penalty was liable to be quashed. Consequently, the notice issued under Section 270A was held to be bad in law, and therefore, the penalty order passed was also bad in law. The Tribunal did not decide on the other grounds raised by the assessee as the issue of the notice being bad in law was decisive.
The Tribunal considered the rival submissions and the judicial precedents. The core issue was the allowability of interest expenditure of Rs. 73,36,433/- incurred on borrowed funds used for acquiring NCDs, either as a deduction under section 57 or as part of the cost of acquisition under section 48. The Tribunal noted that an identical issue regarding the capitalization of interest paid on borrowed funds used for acquiring securities/shares as the cost of acquisition was decided by the Hon'ble Madras High Court in CIT v. Trishul Investments Ltd. (supra). In that case, it was held that interest paid for the acquisition of shares partakes of the character of the cost of the asset and is rightly capitalized along with the cost of acquisition for computing capital gains. Respectfully following this precedent, the Tribunal held that the interest paid on borrowings utilized for acquiring NCDs constitutes part of the actual cost of acquisition and should be taken into account under section 48. The Tribunal directed the Assessing Officer to add the interest expenditure of Rs. 73,36,433/- to the cost of acquisition of the NCDs and re-compute the capital gains accordingly. The ground raised by the assessee was allowed.
The Tribunal held that the appeal of the assessee should be restored to the file of the Ld. CIT(E). The reasoning was based on the totality of facts and circumstances, particularly the explanation provided by the assessee regarding the non-receipt of notices due to outdated email IDs on the Income-tax portal. The Tribunal acknowledged that the non-participation was not deliberate or intentional and that the assessee was now prepared to furnish all relevant documents and explanations. The ratio decidendi is that an ex-parte order, especially concerning registration under Section 12AB, should be set aside if the assessee demonstrates a lack of opportunity due to genuine technical or procedural lapses, provided the assessee is willing to cooperate and present its case. The operative direction was to restore the matter to the CIT(E) for fresh adjudication after providing an adequate opportunity to the assessee.
The Tribunal held that the penalty orders levied under Section 271(1)(c) of the Income Tax Act for Assessment Years 2010-11 and 2011-12 would not survive. The reasoning was that the Tribunal's earlier order dated 05.06.2024 had set aside the assessments for these years to the Assessing Officer for de novo consideration. As a consequence of the assessments being set aside, the quantum additions no longer existed. Therefore, the penalty orders, which were based on these quantum additions, were rendered unsustainable. The Tribunal set aside the orders passed by the Assessing Officer under Section 271(1)(c) for both assessment years. The operative direction was to set aside the penalty orders.
The Tribunal held that the penalty orders levied under Section 271(1)(c) of the Income Tax Act for Assessment Years 2010-11 and 2011-12 would not survive. The reasoning was that the Tribunal's earlier order dated 05.06.2024 had set aside the assessments for these years to the Assessing Officer for de novo consideration. As a consequence of the assessments being set aside, the quantum additions no longer existed. Therefore, the penalty orders, which were based on these quantum additions, were rendered unsustainable. The Tribunal set aside the orders passed by the Assessing Officer under Section 271(1)(c) for both assessment years. The operative direction was to set aside the penalty orders.
The Tribunal held that the assessee is, in principle, entitled to the exemption under Section 54G of the Act. The Tribunal acknowledged that the assessee had acquired land in Vadodara in 2012, constructed a factory building, purchased plant and machinery, and physically shifted its undertaking. It also noted that loans obtained for the Vadodara unit construction were repaid from the capital gains earned on the sale of urban properties. The Tribunal admitted the additional evidence furnished by the assessee, which established the utilization of loan amounts for construction and repayment of loans from capital gains. Citing the Supreme Court's decision in Commissioner of Income Tax v. Fibre Boards (P) Ltd., the Tribunal stated that since the assessee had made actual purchases, completed construction, repaid loans, and shifted the business, the case was even stronger than Fibre Boards where only advances were paid. The Tribunal restored the additional evidence to the AO for verification. Subject to this verification, the assessee's claim for exemption under Section 54G was allowed. The appeal of the assessee was allowed.
The Tribunal held that the matter requires verification by the Assessing Officer. While the assessee had not offered the interest income, it had claimed credit for TDS of Rs. 55,000/-. The Tribunal agreed that the assessee cannot claim TDS credit for income it denies receiving. However, it also noted that the deductor had confirmed the error in reporting and subsequently corrected its TDS statement, and the assessee had produced the corrected Form 26AS. The Tribunal reasoned that entries in Form 26AS are for verification and do not, by themselves, establish income accrual. Therefore, the Tribunal restored the matter to the AO to verify the deductor's confirmation, the correction in the TDS statement, the revised Form 26AS, and the assessee's books. If verification confirms no interest income accrued or was received and the TDS entry was a mistake, the AO should not tax the amount. The AO was also directed to ensure no TDS credit is allowed for such income, making necessary adjustments if credit was already granted.
The Tribunal allowed the assessee's appeal and directed the deletion of the penalty levied under Section 270A. The Tribunal noted that the Assessing Officer did not specify any of the variations mentioned under Section 270A(2) or Section 270A(9) of the Act. Instead, the AO stated that penalty proceedings were initiated for under-reporting of income which was a consequence of misreporting. The Tribunal found that the notice issued under Section 270A did not specify the limb of the provision attracted. Relying on the decisions of the Hon'ble Delhi High Court in Schneider Electric South East Asia (Hq) Pte Ltd. v. ACIT, Prem Brothers Infrastructure LLP v. NFAC, and GE Capital US Holding, Inc. v. DCIT, the Tribunal held that in the absence of details specified by the AO as to which limb of Section 270A was attracted, the impugned penalty was liable to be quashed. Consequently, the notice issued under Section 270A was held to be bad in law, and therefore, the penalty order passed was also bad in law. The Tribunal did not decide on the other grounds raised by the assessee as the issue of the notice being bad in law was decisive.
The Tribunal noted that the assessee had filed an application seeking to withdraw the instant appeal. The assessee's counsel submitted that the assessee had filed an appeal against the rejection order passed by the CIT (Exemption) under section 80G of the Act. However, the assessee subsequently filed an application for provisional registration under section 12A of the Act, which was accepted by the CIT (Exemption), granting registration from AY 2022-23 to 2026-27. In light of this development, the assessee wished to withdraw the ITAT appeal as the matter for which the appeal was filed was now resolved. The Revenue did not dispute these averments. Therefore, the Tribunal dismissed the assessee's appeal as withdrawn, subject to all just exceptions. No specific issue regarding the merits of the 80G(5) proceedings was decided.
The Tribunal held that the CIT(A) was not justified in dismissing the appeal solely for non-prosecution, as section 250(6) of the Act mandates adjudication on merits. While non-compliance cannot be disregarded, it should not dispense with the statutory requirement of adjudication. The Tribunal found that the CIT(A) had not individually adjudicated the various issues raised by the assessee, including the scope of section 154 jurisdiction and the substantive claims for exemption. The Tribunal also noted the fair concession by the Revenue to restore the matter. Therefore, the Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A)'s file for fresh adjudication on merits. The CIT(A) was directed to examine all grounds, including the jurisdictional challenge under section 154, the effect of delayed Form 10B, claims under sections 11(1)(a), 11(1)(d), and 11(2), and to pass a speaking order. The assessee was directed to cooperate fully. The Tribunal expressed no final opinion on the merits of the claims. The grounds were allowed for statistical purposes.
The Tribunal held that the assessee's failure to establish the identity and genuineness of the named suppliers, coupled with returned notices and denial by one party, created doubt regarding the purchases. The authorities below had an evidentiary basis for their findings to this extent. However, the Assessing Officer acknowledged that goods were obtained from other sources in the open market and bills were procured from hawala operators. The dispute was thus about the source and particulars of purchases, not about the procurement of material for sales. The Tribunal noted that where sales are accepted and the existence of goods is implicit, the entire purchase amount cannot automatically be treated as income. Such an approach would tax the whole purchase value. The appropriate consequence is to tax the profit element embedded in the purchases. The Tribunal relied on Bombay High Court decisions in Principal Commissioner of Income Tax v. Mohommad Haji Adam & Co., Principal Commissioner of Income Tax v. Paramshakti Distributors Pvt. Ltd., Principal Commissioner of Income Tax v. Pinaki D. Panani, and Principal Commissioner of Income Tax v. Rishabhdev Technocable Ltd., as well as Gujarat High Court decisions in CIT v. Bholanath Poly Fab (P.) Ltd. and CIT v. Simit P. Sheth. The Tribunal estimated the profit element at 12.5% of Rs. 16,80,732/-, restricting the addition to Rs. 2,10,092/-. The balance addition was deleted. This finding is confined to the facts of the case.
The Tribunal held that the expression 'sufficient cause' under section 249(3) of the Income-tax Act, 1961, and section 5 of the Indian Limitation Act, 1963, should be interpreted liberally to advance substantial justice. Citing the Supreme Court's decisions in Collector, Land Acquisition Vs. Mst. Katiji & Others and N. Balakrishnan Vs. M. Krishnamurthy, the Tribunal emphasized that a litigant should not be denied a hearing on merits due to a non-deliberate delay, especially when a reasonable explanation is provided. The Tribunal found the assessee's explanation for the 146-day delay – the inadvertent misplacement of the assessment order within the office process – to be pragmatic and justice-oriented, not mala fide or a deliberate attempt to delay proceedings. Therefore, the Tribunal condoned the delay of 146 days. Having condoned the delay, the Tribunal found it appropriate to remit the matter back to the file of the CIT(A) for adjudication of the appeal on merits, as the appeal was dismissed in limine on limitation. The CIT(A) was directed to decide the appeal afresh after providing the assessee with a reasonable opportunity of being heard and to make all relevant submissions. The grounds raised by the assessee were allowed for statistical purposes.
The Tribunal noted that both the assessment order and the CIT(A)'s order were passed ex-parte. The assessee's primary contention was that M/s. Punjab Sind Foods (India) was a sole proprietary concern of Shri Jasvinder Singh Bajaj, and the income, including cash deposits and bank transactions, had already been offered to tax in his individual return of income filed under PAN AERPB2252G for AY 2012-13. The Tribunal acknowledged that taxing the same income under two different PANs would amount to double taxation, which is impermissible. However, since both lower authorities passed ex-parte orders without proper verification, the factual claim that the income was already offered to tax required examination. Applying the principles of natural justice, the Tribunal found it fit to set aside the CIT(A)'s order and remit the entire matter back to the Assessing Officer for a fresh assessment on merits. The Assessing Officer is directed to verify whether the bank transactions and cash deposits were indeed offered to tax in Shri Jasvinder Singh Bajaj's individual return. The assessee is directed to cooperate and furnish all evidence. The Assessing Officer shall decide the matter after affording a reasonable opportunity of being heard. No specific finding was given on the other grounds raised by the assessee as the matter was remanded.
The Tribunal upheld the order of the CIT(A) and dismissed the appeal of the Revenue. The Tribunal found no infirmity in the CIT(A)'s conclusion. The Tribunal noted that the CIT(A) had appreciated the reply and explanations adduced by the assessee, accepted the assessee's contentions, and deleted the addition. The Tribunal observed that the addition was made by the AO without bringing on record any material facts and findings, and the books of account were not found to be suffering from any defect and were not rejected. The Tribunal agreed with the CIT(A)'s finding that the cash deposits were traceable to earlier cash withdrawals, duly recorded in the books of account, and that there were sufficient cash withdrawals to support the assessee's submissions. The ratio decidendi is that where cash deposits are traceable to recent withdrawals and are supported by audited books of account, they cannot be rejected solely on the basis of demonetization period deposits, especially when the AO has not brought forth specific defects or rejected the books.
The Tribunal held that the core legal issue was whether the impugned notice under section 148 dated 20.07.2022 was barred by limitation. It referred to the Supreme Court's decision in Union of India v. Rajeev Bansal, which held that only the surviving period of limitation available as on 30.06.2021 can be utilized for issuing a fresh notice under section 148, after excluding the period consumed in compliance with section 148A(b). The first proviso to section 149(1) acts as a substantive bar preventing the revival of reassessment proceedings that were already time-barred under the old regime. Applying this ratio, the Tribunal found that the original notice was issued on 10.06.2021, leaving only 20 days of surviving limitation. After accounting for the period for compliance with section 148A(b), the outer date for issuing a fresh notice under section 148 was 04.07.2022. Since the Assessing Officer issued the notice on 20.07.2022, it was clearly barred by limitation. The Tribunal also noted that the jurisdictional High Court of Bombay in Hitesh Ramniklal Shah vs. ACIT had taken a similar view. Consequently, the CIT(A) was justified in quashing the reassessment proceedings on the ground of limitation. As the reassessment order was rendered invalid on this preliminary legal ground, all other grounds raised by the Revenue on merits became academic and required no separate adjudication.
The Tribunal held that the assessment order dated 22.05.2023 was null and void because it was passed during the moratorium period under section 14 of the IBC. The Tribunal found that the Revenue's reliance on the Dishnet Wireless Ltd. case was distinguishable on facts, as in the present case, the notice under section 148 was issued long after the NCLT order imposing moratorium, and there was no approval of any resolution plan on record. The Tribunal also found the reliance on Sundaresh Bhatt to be misplaced, as it pertained to the Customs Act and was distinguished in other judgments. The Tribunal followed the decision of the jurisdictional Hon'ble Bombay High Court in Smaaash Entertainment Pvt. Ltd., which held that assessment proceedings could not be initiated or continued against a corporate debtor while the moratorium under section 14 of IBC was in operation, especially in light of section 238 of IBC giving overriding effect to the IBC. The Tribunal noted that the factual assumption in the Revenue's ground no. 1 regarding a sanctioned CIRP was not borne out by the record. The Tribunal dismissed the Revenue's grounds of appeal and did not examine the merits of the additions made, as the assessment order was held void ab initio. The question of remedies available to the Revenue after the moratorium ends was left undecided.
The Tribunal held that the factual matters regarding the applicability of section 41(1) had not been reconciled in the orders below. The Tribunal noted that the assessee's reply to the show-cause notice, which included financial statements, required consideration. The statement of profit and loss did not show any expenditure debited for the relevant years, supporting the assessee's claim that the sum was never claimed as an expense. However, the balance sheet showed trade payables, and it was unclear if the disputed amount was included or how it was dealt with. For section 41(1) to apply, an allowance or deduction must have been made, and a benefit obtained by remission or cessation. The Tribunal found that these factual aspects needed examination. Therefore, the order of the CIT(A) sustaining the addition was set aside, and the issue was restored to the AO for a fresh examination. The AO was directed to verify the balance sheet, ledger accounts, nature and period of the charge, and whether any deduction was allowed in earlier years, and to consider if a benefit was obtained by remission or cessation. The assessee was to be given an opportunity to respond. The Tribunal expressed no final view on taxability.
The Tribunal held that the addition made under section 68 of the Act could not be sustained. The AO made the addition without negating any of the evidence produced by the assessee to demonstrate the genuineness of the transactions, which were conducted on a stock exchange platform through a recognized broker and banking channels. The Tribunal noted that the transactions were corroborated by documentary evidence, and the Revenue had not brought any material on record to prove the sham nature of the transactions or the assessee's participation in price rigging or with entry providers. The AO's conclusion was based on the analysis of the company's financials and information from the Investigation wing regarding alleged penny stocks, but this was unsupported by cogent material. The assessee had discharged the burden by submitting documentary evidence. The Tribunal also noted that the assessee had purchased shares at an average cost of Rs. 11.18 and sold them at Rs. 10.95, indicating a small loss, not an unusual jump in share price. Securities Transaction Tax (STT) was paid, and sale proceeds were routed through banking channels. Consequently, the addition of Rs. 1,17,80,499/- under section 68 was set aside and directed to be deleted. The consequential addition of Rs. 35,34,150/- as commission under section 69C was also directed to be deleted as it had no foundation. The Tribunal deemed it unnecessary to adjudicate other grounds relating to proceedings under section 148 as they became academic.
The Tribunal held that the Commissioner erred in rejecting the applications for renewal of registration solely for the absence of a formal trust deed or Memorandum of Association. Following a coordinate bench's decision in a similar case, the Tribunal observed that Rule 17A(2)(a) applies to institutions established under a written instrument, while Rule 17A(2)(b) allows for documentary evidence of creation or establishment for institutions constituted otherwise. The Tribunal noted that Section 1 of the Indian Trusts Act, 1882, excludes public or private religious or charitable endowments, thus Section 5 of that Act cannot mandate a written instrument in such cases. The Tribunal found that the Commissioner had not adequately examined the substantive evidentiary value of the documents provided by the assessee, such as the Charity Commissioner's registration certificate and application. Consequently, the Tribunal set aside the impugned order and restored the applications to the Commissioner for fresh adjudication, with a direction not to reject them merely for want of a separate trust deed or Memorandum of Association without examining the alternative documentary evidence contemplated under Rule 17A(2)(b). The Tribunal expressed no final opinion on the assessee's eligibility for renewal.
The Tribunal noted that the primary dispute concerned the addition of Rs. 50,00,000/- under Section 68 for share capital. The AO made this addition based on information from the Investigation Wing, Kolkata, identifying the investor companies as providing accommodation entries. The CIT(A) upheld the addition, finding the assessee had not satisfactorily established the creditworthiness of the investors or the genuineness of the transactions. During the appeal, the assessee submitted additional documentary evidence. The Tribunal found that this additional evidence, including subscriber company master data, share application forms, resolutions, company secretary certificates, bank statements, and ROC filings, was essential for proper adjudication. Consequently, the Tribunal decided to admit this additional evidence and restore the matter to the file of the AO for fresh adjudication after considering this evidence. The addition of Rs. 1,00,000/- under Section 69C was consequential to the Section 68 addition. The Tribunal did not decide the merits of the addition of Rs. 1,00,000/- but implicitly remanded it along with the main issue.
The Tribunal held that the addition of ₹22,66,666 under Section 69 of the Income-tax Act, 1961, was not sustainable. The Tribunal reasoned that while the assessee's name on the purchase agreement established her interest, it did not automatically mean the consideration attributable to her share came from her unexplained funds. The source of investment must be determined by how the consideration was paid and the evidence explaining those payments. The assessee's explanation was supported by the contemporaneous agreement, loan document, and banking particulars showing payments made through identified banking channels by family members. The Assessing Officer had not presented any material to contradict the assessee's explanation or show that she contributed undisclosed funds. The CIT(A) also failed to identify any defect in the payment trail. Therefore, the absence of a formal gift deed or loan agreement did not, by itself, invalidate the evidence of the bank loan and payments by family members. The Tribunal set aside the order of the CIT(A) and deleted the addition. Any grounds challenging penalty proceedings were considered premature as no penalty order was under appeal. The appeal was allowed.
The Tribunal held that the TPO had fundamentally erred in recharacterizing the assessee's premixing activity as manufacturing. The Tribunal noted that the premixing process involved simple dry blending based on customer-provided formulations, without any substantial product transformation, chemical reaction, heating, or cooling. It was an ancillary function undertaken to facilitate the distribution business, not an independent manufacturing segment. The Tribunal considered the assessee's segmental disclosures in financial statements and the functional differences between the assessee and independent manufacturing companies. The Tribunal observed that the assessee's operating margin of 3% fell within the arm's length range of 2.23% to 3.17% for distribution comparables. Furthermore, an alternative computation by the assessee, attributing a separate return to the premixing function, also showed the overall margin within the arm's length range. The Tribunal concluded that the mere undertaking of premixing does not justify recharacterizing the entire distribution business as manufacturing. Therefore, the transfer pricing adjustment proposed by the TPO and upheld by the DRP was unjustified and deleted. Ground No. 3 of the appeal, relating to the transfer pricing adjustment, was allowed.
The Tribunal held that the Revenue's appeal was not maintainable due to the tax effect being below the threshold stipulated in CBDT Circular No. 9/2024. The Tribunal noted the fair concession made by the learned Departmental Representative regarding the applicability of the circular to pending appeals. Consequently, the Tribunal rejected the Revenue's appeal on this specific ground. The appeal was dismissed without delving into the merits of the case. No other issues were expressly left undecided.
The Tribunal held that the entire amount paid towards credit card bills cannot automatically be treated as income. Payments towards credit card bills represent expenditure or discharge of liabilities. If funds used for these payments include money drawn from another credit card account and subsequently used for repayment, the movement of funds itself cannot be regarded as income. The mere fact that payments were made in cash does not, by itself, establish that the entire amount represented escaped income. However, the assessee's explanation could not be accepted in its entirety due to deficiencies in supporting evidence for the opening cash balance, business receipts, and brokerage claims. The Tribunal found that treating the entire amount as income was not justified. Instead, a more reasonable approach was to estimate the income attributable to the activity. The Tribunal estimated the income at 8% of the aggregate amount of Rs. 5,36,500/-, which worked out to Rs. 42,920/-. The AO was directed to restrict the addition to Rs. 42,920/- and delete the balance addition of Rs. 4,93,580/-. The grounds relating to section 69C and the consequential application of section 115BBE were partly allowed.
The Tribunal held that the allotment letter dated 17 July 2013, read with contemporaneous payment material and the conduct of the parties, evidenced an agreement fixing the consideration before the property registration. The Tribunal found that the material supported the assessee's claim that consideration, or part of it, was paid through banking channels on or before the allotment date. The stamp duty value on the allotment date was stated to be ₹61,98,357, which was below the consideration. Therefore, the Tribunal was satisfied that the requirements of the first and second provisos to section 56(2)(x) were met. The stamp duty value prevailing on the later registration date could not displace the valuation date contemplated by the first proviso. Consequently, the addition of ₹35,17,869 made under section 56(2)(x) was not sustainable. The Tribunal ordered the deletion of this addition. The levy of interest was directed to be recomputed, and the penalty proceedings were deemed premature.
The Tribunal held that the Commissioner erred in rejecting the applications for renewal of registration solely for the absence of a formal trust deed or Memorandum of Association. Following a coordinate bench's decision in a similar case, the Tribunal observed that Rule 17A(2)(a) applies to institutions established under a written instrument, while Rule 17A(2)(b) allows for documentary evidence of creation or establishment for institutions constituted otherwise. The Tribunal noted that Section 1 of the Indian Trusts Act, 1882, excludes public or private religious or charitable endowments, thus Section 5 of that Act cannot mandate a written instrument in such cases. The Tribunal found that the Commissioner had not adequately examined the substantive evidentiary value of the documents provided by the assessee, such as the Charity Commissioner's registration certificate and application. Consequently, the Tribunal set aside the impugned order and restored the applications to the Commissioner for fresh adjudication, with a direction not to reject them merely for want of a separate trust deed or Memorandum of Association without examining the alternative documentary evidence contemplated under Rule 17A(2)(b). The Tribunal expressed no final opinion on the assessee's eligibility for renewal.
The Tribunal held that the assessee had discharged its primary onus under Section 68 by submitting almost all primary details for all lenders, including identity particulars, loan account confirmations, and bank statements evidencing transactions through banking channels. The identity of lenders was not doubted by the AO, and the transactions were done through banking channels, with loans also being repaid. The Tribunal found that the AO did not make any independent inquiry to cross-verify the assessee's contentions, even in remand proceedings. The Tribunal noted that the CIT(A) failed to adjudicate the issue judiciously, solely relying on the remand report and not appreciating that the amounts were repaid. The Tribunal concluded that the CIT(A) was not justified in upholding the addition of Rs. 2.06 crore. Consequently, the appellate order was set aside, and the AO was directed to delete the impugned addition.
The Tribunal condoned the delay of 75 days in filing the appeal, finding sufficient cause due to the assessee pursuing a rectification application before the CIT(A). The Tribunal held that the CIT(A) erred in dismissing the assessee's appeal as defective without adjudicating the substantive grounds on merits. The CIT(A)'s order was based solely on procedural deficiencies, failing to address the addition of Rs. 4,00,000/- made under section 69A. The Tribunal noted the assessee's dispute regarding the non-furnishing of documents, claiming they were uploaded on the e-filing portal, but did not examine this factual assertion. Citing the requirement under section 250(6) for a reasoned and speaking order, the Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A)'s file for fresh adjudication. The CIT(A) was directed to provide the assessee an opportunity to be heard, furnish requisite documents, verify uploaded documents, consider rectification of procedural deficiencies, and pass a reasoned order on merits. The Tribunal clarified that it had not expressed any opinion on the merits of the addition or other substantive issues, leaving them open for the CIT(A)'s adjudication. The appeal was allowed for statistical purposes.
The Tribunal held that the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, is unsustainable. The Tribunal noted that the addition on account of alleged bogus purchases was ultimately restricted to 3% purely on an estimation basis. Following the Supreme Court's decision in CIT v. Reliance Petroproducts Pvt. Ltd., which stated that mere disallowance does not attract penalty unless concealment or inaccurate particulars are satisfied, and the jurisdictional Bombay High Court's decisions in Pr. CIT-6 v. Colo Colour Pvt. Ltd. and Pr. CIT-17 v. Anil Bajaria, which held that penalty cannot be sustained on estimated additions without material establishing concealment or inaccurate particulars, the Tribunal found the penalty to be unsupportable. Consequently, the Tribunal set aside the impugned order and directed the Assessing Officer to delete the penalty of Rs. 2,26,119/-.
The Tribunal held that Ground 1, challenging the validity of the Section 143(2) notice, was dismissed as not pressed by the assessee. Grounds 2 and 3, challenging the DRP directions and the time-barring of the assessment order, were dismissed as infructuous in view of the relief granted on the substantive addition. Regarding Ground 4, the Tribunal found that the assignment deeds, despite certain restrictions concerning territory and brand protection, reflected a transfer of ownership of registered trademarks. The consideration was for the alienation of trademark rights, not for the use of property belonging to the assessee. The Tribunal relied on the OECD Model Tax Convention commentary and the specific provisions of the assignment deeds, which indicated a transfer of rights in perpetuity and absolute ownership. It concluded that the alienation of these capital assets fell under Article 13(6) of the India-Switzerland DTAA, making the gains taxable only in Switzerland. Therefore, the addition of Rs. 433,14,76,894 was deleted. Grounds 4(a) and 4(b) were allowed. Ground 4(c) was left open. Grounds 5(a) and 5(b), concerning the tax rate and levy of surcharge/cess, became academic and did not require separate adjudication. Ground 6, challenging penalty proceedings, was consequential and no independent finding was rendered. The appeal was partly allowed.