ITAT Raipur Judgments — September 2022

The Tribunal held that the reopening of the assessment was invalid as it was done beyond the four-year period without fulfilling the conditions of the first proviso to Section 147. The assessee had disclosed the transportation charges and not failed to disclose material facts.

The Tribunal held that the AO invalidly assumed jurisdiction for imposing penalty as the assessee was not properly put to notice regarding the specific default. The penalty was also unsustainable as it was imposed for both concealment of income and furnishing inaccurate particulars, which are distinct defaults.

The Tribunal held that the reopening of the assessment was beyond the permissible period of four years as the assessee had disclosed all material facts. Consequently, the assessment order was quashed.

The Tribunal found merit in the assessee's claim that the CIT(Appeals) enhanced the income without affording a proper show-cause notice as required by Section 251(2) of the Act. Therefore, the matter was restored to the CIT(Appeals) for fresh adjudication.

The Tribunal held that the assessee had proved the identity and creditworthiness of the share applicant and the genuineness of the transaction. It also held that no disallowance under Section 14A was warranted in the absence of exempt income.

The Tribunal found that the assessee had justifiable reasons for not participating in the proceedings before the CIT(Appeals) due to non-receipt of notices. Therefore, the matter was restored to the CIT(Appeals) for re-adjudication.

The Tribunal held that the AO invalidly assumed jurisdiction for imposing penalty as the assessee was not properly put to notice regarding the specific default. The penalty was also unsustainable as it was imposed for both concealment of income and furnishing inaccurate particulars, which are distinct defaults.

The Tribunal upheld the decision of the CIT(Appeals) and dismissed the Revenue's appeal. The Tribunal found that the assessee had substantiated the identity and creditworthiness of the lender companies and the genuineness of the loan transactions with irrefutable documentary evidence, including balance sheets and bank statements. The Tribunal noted that the AO had failed to conduct necessary verifications under Section 133(6) or 131 of the Act to disprove the assessee's claim. The Tribunal observed that the AO had made no attempt to dislodge the authenticity of the loan transactions and had not even referred to the material placed on record by the assessee. The Tribunal also highlighted that a significant portion of the outstanding loans had been repaid by the assessee through banking channels prior to the scrutiny assessment, further substantiating the genuineness of the transactions. The Tribunal concurred with the CIT(Appeals) that the loans could not be characterized as unexplained cash credits under Section 68. The ratio decidendi is that once an assessee provides sufficient documentary evidence to establish the identity, creditworthiness, and genuineness of loan transactions, the onus shifts to the AO to disprove them, and failure to do so, coupled with the absence of any investigation by the AO, warrants deletion of additions made under Section 68. The Tribunal dismissed all grounds of appeal raised by the revenue.

The Tribunal held that the reassessment proceedings were invalid because the AO obtained approval for reopening the case from the Commissioner of Income-tax instead of the Joint Commissioner, as required by Section 151 of the Act for cases reopened after four years. Consequently, the assessment order was quashed.

The Tribunal held that the special allowance received by the assessee is not to be included in the definition of 'salary' for HRA exemption calculation, as it is not dearness allowance. Therefore, the disallowance made by the AO was incorrect.

The Tribunal held that the inadvertent carry forward of a business loss, which was admitted by the assessee upon being pointed out, does not amount to furnishing inaccurate particulars of income. Therefore, the penalty under Section 271(1)(c) is not sustainable.

The Tribunal held that Section 4 of the Limitation Act, 1963, which deals with court closures, is not applicable to the e-filing of income tax returns. As there is no provision to condone the delay in filing returns, the assessee's request was declined.

The Tribunal held that Section 45(3) of the Income Tax Act, 1961, governs the taxation of capital gains arising from the transfer of a capital asset to a firm as capital contribution. The value recorded in the firm's books at the time of transfer is considered the full value of consideration.

The Tribunal held that additions based on information from the Commercial Tax Department do not fall under the exceptions to the monetary limit for appeals. Therefore, the Revenue's appeal was dismissed as not maintainable.

The Tribunal held that the addition was based solely on a retracted statement obtained under alleged pressure, without corroborating evidence. The department failed to substantiate the source of the cash or disprove the retraction.

The Tribunal held that the deduction under Section 54F was allowable as the assessee had made full payment and taken possession of the property, satisfying the conditions for purchase. The Tribunal also allowed the claim for cost of improvement, considering that expenses for construction materials are often from the unorganized sector and the property sold was a double-storeyed house.

The Tribunal held that the reassessment proceedings were invalid because the AO obtained approval for reopening the case from the Commissioner of Income-tax instead of the Joint Commissioner, as required by Section 151 of the Act for cases reopened after four years. Consequently, the assessment order was quashed.

The CIT(Appeals) deleted the addition, finding that the assessee had substantiated the purchases with documentary evidence. The Tribunal upheld the CIT(Appeals)'s order, stating that the Commercial Tax Department's reason for deeming the seller bogus (failure to deposit VAT) was not sufficient to declare the assessee's purchases as bogus.

The Tribunal held that the pre-operative expenses, being routine revenue expenditure and written off due to the abandonment of the project by a Supreme Court order, were allowable as a deduction in the year of abandonment.

The Tribunal held that Section 45(3) of the Income Tax Act, 1961, governs the taxation of capital gains arising from the transfer of a capital asset to a firm as capital contribution. The value recorded in the firm's books at the time of transfer is considered the full value of consideration.

The Tribunal dismissed the assessee's appeal. It found no merit in the grounds raised, upholding the CIT(A)'s decision on both the addition for unrecorded sales and the disallowance for non-deduction of TDS, citing lack of evidence and proper legal reasoning.

The Tribunal held that the enhancement by the CIT(A) was made without providing the assessee with a reasonable opportunity of being heard, violating principles of natural justice and Section 251(2) of the Income Tax Act. The AO's addition based on estimation without sufficient evidence was also questioned.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. It held that the assessee institution existed solely for educational purposes and the denial of exemption by the CCIT was unjustified.

The Tribunal held that the partnership deed provided a manner of quantifying remuneration by specifying a distribution ratio, satisfying one of the conditions in CBDT Circular 739. Therefore, the addition made by the AO was deleted.

The Tribunal held that the issue of whether moulds, dies, and tools are plant and machinery eligible for higher depreciation or revenue expenditure is debatable and cannot be rectified under Section 154. It also noted the consistent practice of the department allowing higher depreciation in prior and subsequent years.

The Tribunal held that the CIT(Exemption) was not justified in rejecting the application. The Tribunal found that the activities were incidental to the main charitable objects and that generating surplus or charging fees does not automatically disqualify an institution from being charitable.

The Tribunal noted that disallowance on a lump-sum basis is not justifiable. It also observed that the lower authorities did not conclusively determine if non-income generating investments were made from interest-free funds, which could only be answered by a fund flow analysis.

The Tribunal found that the AO's adoption of 8% estimated income lacked a reasoned basis. The CIT(A) also did not add value to the AO's findings. Given the complexity and lack of necessary documents, the issues were restored to the AO for re-adjudication.

The Tribunal held that the addition made by the AO was based on presumption without cogent evidence. The AO had the option to conduct independent inquiries to disprove the lenders' creditworthiness, which was not done. Therefore, the addition was quashed.

The Tribunal held that the rejection of the registration application by the CIT(E) was not justified. Regarding the ground that the society was established for a particular community, the Tribunal noted that the assessee society has charitable as well as religious objects. Citing the Gujarat High Court's decision in CIT Vs. Barkate Saifiyah Society, it was held that Section 13(1)(b) applies only to trusts purely for charitable purposes; if a trust has both charitable and religious objects, Section 13(1)(b) is not applicable. Furthermore, the Tribunal observed that the issue of attracting Section 13(1)(b) and denying exemption under Sections 11 and 12 is a matter to be looked into during assessment proceedings, not at the stage of granting registration under Section 12AA. The primary criteria for registration are the objects of the trust, proper application details, and compliance with the prescribed format. The Tribunal also referred to a coordinate bench decision in Shree Vimalnath Jain Swetamber Mandir Trust, which held that the genuineness of activities is not a criterion for granting registration when the trust is just commencing activities. Consequently, the Tribunal set aside the CIT(E)'s order and directed him to grant registration under Section 12AA.

The Tribunal found discrepancies in the assessee's submissions and noted that the CIT(A) might have admitted additional evidence without following proper procedure. Therefore, the matter was remanded back to the CIT(A) for fresh adjudication.

The Tribunal held that differences in sundry creditors' balances due to discounts accounted for by the assessee but not by the creditors do not warrant an addition. For AY 2012-13, the Tribunal found the profit estimation rate to be incorrect and allowed a partial deletion of the addition.

The Tribunal held that the disallowance was based on presumptions and possibilities rather than specific evidence of non-business expenditure. Since the assessee's profits had increased and expenses were otherwise verifiable, the disallowance was not justified.

The Tribunal held that the AO failed to point out specific defects in the assessee's accounts for the current year to justify rejection. Past disclosures before the Settlement Commission, made under different circumstances, could not be extrapolated to the current year without fresh evidence.

The Tribunal held that the CIT's satisfaction regarding the genuineness of activities is not a criterion at the time of granting registration under Section 12AA. It also noted that the applicability of Section 13(1)(b) is a matter for assessment proceedings, not for registration.

The Tribunal held that differences in sundry creditors' balances due to discounts accounted for by the assessee but not by the creditors do not warrant an addition. For AY 2012-13, the Tribunal found the profit estimation rate to be incorrect and allowed a partial deletion of the addition.

The Tribunal held that the AO failed to point out specific defects in the assessee's accounts for the current year to justify rejection. Past disclosures before the Settlement Commission, made under different circumstances, could not be extrapolated to the current year without fresh evidence.

The Tribunal held that the cancellation of registration under Section 12AA(3) is not justified solely on the basis of receipts from commercial activities exceeding the limits prescribed in the proviso to Section 2(15). Such cancellation can only occur if the activities are not genuine or not in accordance with the trust's objects.

The tribunal held that the CIT(Appeals) is statutorily obligated to decide appeals on merits and cannot dismiss them for non-prosecution. The order of the CIT(Appeals) was set aside.

The Tribunal held that the CIT(A) cannot summarily dismiss an appeal for non-prosecution and is obligated to decide it on merits. The order of the CIT(A) was set aside, and the case was remanded for de novo consideration.

The Tribunal restored the issue of Rs. 3,09,93,450/- to the AO for verification of transportation receipts from M/s Coal Feeder, Raipur. The AO was directed to vacate the addition for Rs. 18,87,536/- and sustain the estimation for Rs. 53,88,774/-.

The Tribunal held that the CIT(Appeals) has a statutory obligation to dispose of appeals on merits and cannot summarily dismiss them for non-prosecution. The matter was restored to the CIT(Appeals) for disposal on merits.

The Tribunal upheld the CIT(A)'s deletion of the addition for most of the unsecured loans, finding that the assessee had discharged its onus. However, a small addition of Rs. 2,000/- for an unsecured loan was upheld due to lack of substantiation.

The Tribunal held that the assessee failed to discharge the onus of proving the genuineness of the purchases. The lack of documentary evidence, including vouchers and the supplier's address, along with the absence of boulders in the stock statement, fortified the lower authorities' view.

The Tribunal held that the CIT(Exemption) has no power to condone the delay in filing the application for exemption. However, it was found that the delay in disposal by the CIT did prevent the assessee from filing for the subsequent AY on time.

The Tribunal held that CSR expenses incurred voluntarily, for the purpose of business, are allowable as revenue expenditure under Section 37(1) of the Income Tax Act. Explanation 2 to Section 37(1) is not applicable retrospectively and only applies to expenses incurred under statutory obligation.

The Tribunal held that NRDA's activities were for the advancement of general public utility, benefiting a section of the public, and not primarily for profit. Therefore, they were not hit by the proviso to Section 2(15) and the exemption under Section 11 should be allowed.

The Tribunal held that NRDA's activities were for the advancement of general public utility, benefiting a section of the public, and not primarily for profit. Therefore, they were not hit by the proviso to Section 2(15) and the exemption under Section 11 should be allowed.