ITAT Rajkot Judgments — December 2023

The Tribunal held that an assessment order passed in the name of a deceased person, when the AO was aware of the death and the legal heir's representation, is void-ab-initio and not curable under Section 292B. The AO's failure to recognize the legal heir renders the assessment invalid.

The Tribunal observed that the entire appellate proceedings were completed within a short span of one month, and the assessee had sought adjournments. Therefore, the Tribunal restored the matter to the CIT(A) for a de-novo consideration to provide the assessee with a due opportunity to present its case.

The Tribunal held that the assessee's objects clearly indicated activities beyond solely education. Therefore, the rejection of the application by the CIT(Exemption) was upheld, and the appeals were dismissed.

The Tribunal held that there is no prohibition for the Principal CIT to raise another issue during revision proceedings if the assessment order has overlooked it. The Tribunal found no infirmity in the PCIT's order as the Assessing Officer had not adequately explained the lack of inquiry regarding TDS non-deduction.

The Tribunal held that penalty under section 271AAB cannot be levied on an ad-hoc disclosure made without reference to any incriminating material found during the search. It also held that penalty cannot be levied on an addition made on estimation.

The Tribunal held that for assessment years prior to AY 2021-22, the non-obstante clause under Section 43B does not absolve the assessee-employer from the liability to deposit employee's contribution by the due date as a condition for deduction. The Supreme Court's decision in Checkmate Services (P.) Ltd. was followed.

The Tribunal held that the assessee's objects clearly indicate activities beyond solely education. Therefore, the application for registration under Section 10(23C)(vi) was rightly rejected by the CIT(Exemption).

The Tribunal held that the Assessing Officer should have conducted independent inquiries rather than rejecting explanations based solely on suspicion. The addition related to share capital from Shri Amrish L Sadrakiya was set aside.

The Tribunal restored the issue of transfer pricing adjustment and disallowance of bank guarantee commission to the Assessing Officer (AO) for fresh adjudication. The Tribunal noted that similar issues in earlier assessment years were set aside for fresh assessment.

The Tribunal held that since the assessee and his son were non-residents and the funds were transferred through banking channels from overseas to an NRE account, the additions were not sustainable. The Tribunal found a lack of proper application of mind by the lower authorities.

The Tribunal held that since the assessee and his son were non-residents and the funds were transferred through banking channels from overseas to an NRE account, the additions were not sustainable. The source of funds, though questioned by the lower authorities, was considered sufficiently explained in the context of non-resident status and international remittances.

The Tribunal found the disallowance on freight expenses to be on the higher side and restricted it. It also deleted the entire disallowance on toll tax expenses, considering them statutory.

The Tribunal found no infirmity in the Assessing Officer's assessment. The PCIT's own observations accepted the loan repayment as capital expenditure, and the depreciation claimed was already disallowed by the AO.

The Tribunal held that the Assessing Officer had conducted necessary inquiries and verified the cash transactions during demonetization. The Tribunal found that the PCIT's grounds for revision, particularly regarding the HDFC bank deposits, were factually incorrect and based on a misinterpretation of the records.

The Tribunal agreed with the PCIT that the original assessment order was erroneous and prejudicial to the revenue. The assessee's contention of no prejudice was a new argument not raised before the PCIT and required verification, thus it could not be considered to overturn the revisionary order.

The Tribunal held that the reclassification of income by the AO from presumptive business income to FTS, without any adverse findings on the assessee's books of accounts, amounted to a mere change of opinion or head of income. Consequently, it did not constitute furnishing inaccurate particulars of income to attract penalty.

The Tribunal held that the assessment order was erroneous and prejudicial to the interest of the revenue because the Assessing Officer failed to properly verify the claim for deduction under Section 54B. The Tribunal confirmed the order of the Principal CIT.

The Tribunal upheld the CIT(A)'s decision, finding that the retained amount was a common trade practice to ensure VAT compliance by suppliers and was refunded in subsequent years. The purchases themselves were accepted as genuine.

The Tribunal held that the assessee had provided a cash book showing sufficient cash withdrawals to justify the deposits. The revenue failed to discharge its onus to prove the cash was used for other purposes, thus no addition was warranted.

The Tribunal held that interest on enhanced compensation is a revenue receipt and taxable. Relying on the Supreme Court's decision in Bikram Singh, it was determined that such interest is not part of the compensation itself and is therefore taxable.

The Tribunal held that the AO failed to provide any tangible material to prove the assessee paid on-money. It noted that the CIT(A) had deleted similar additions in the case of the developer and restricted additions to profit element in another instance.

The Tribunal held that the PCIT exceeded his jurisdiction as the assessment was selected for limited scrutiny on depreciation, not on the classification of lease rent income. Therefore, the PCIT could not revise the assessment on this ground.

The Tribunal held that the cash payments were genuine, made at the insistence of the vendors, and supported by bank withdrawals and confirmations. Therefore, the disallowance under Section 40A(3) was not warranted.

The Tribunal held that the monthly religious dinner expense was for staff welfare and thus allowable as a business expenditure. It also ruled that the interest-free loan given to a long-term employee was not a business expenditure disallowance, citing consistency with previous years. The employee food expenses were also allowed as they were supported by bills and constituted a small percentage of turnover.

The Tribunal held that the addition on account of undervaluation of closing stock was to be deleted as it would have a cascading effect on future years. Regarding interest expenditure, it was held to be allowable under Section 36(1)(iii) as the investment was in a business asset.

The Tribunal held that the Pr.CIT's order under Section 263 was not sustainable as there was no error found in the assessment order. The Pr.CIT's own admission that the assessee claimed a lesser deduction contradicted his conclusion of an excess claim.

The Tribunal upheld the rejection of the assessee's valuation report, finding it self-serving and lacking basis. It agreed with the CIT(A) that the entire consideration received for the shares, exceeding the FMV, was taxable under Section 56(2)(viib), including the face value.

The Tribunal restored the issue to the CIT(A) for fresh adjudication on merits after admitting the appeal. This was done in the interest of justice, acknowledging the discrepancy between Form 35 and the assessment order.

The Tribunal held that the assessee had sufficient cash available to advance the gift to his brother, as evidenced by withdrawals from the bank account. The Tribunal also noted that the donor had sufficient funds in his bank account, and the revenue failed to prove the allegation of undisclosed income.

The Tribunal held that the approval granted under Section 10(23C)(vi) was specific to the institutions mentioned at the time of approval and did not automatically extend to newly added institutions. The claim for exemption under Section 11 was also not considered valid as it was not claimed in the return and required verification.

The Tribunal held that Section 41(1) is not applicable as the assessee never claimed any deduction or allowance for the loan received. The written-off loan was for capital purposes and not for trading activities, thus not a revenue receipt.