ITAT Surat Judgments — April 2018

The Tribunal held that the Addl. CIT failed to provide an opportunity of being heard to the assessee before issuing directions under Section 144A, which were prejudicial. Therefore, the assessment order was set aside.

The Tribunal held that the scrap sold by the assessee did not fall under the definition of 'scrap' as provided in Explanation (b) to Section 206C, as it was not generated from the assessee's manufacturing process and some items were reusable. Therefore, the assessee could not be held in default.

The Tribunal held that the interest income earned on margin money deposits, kept as collateral for availing credit facilities, is intrinsically linked to the business operations. Therefore, it is eligible for deduction under Section 10AA.

The Tribunal held that since the AO had revised Form 26AS at the assessee's request, the issue needed to be restored to the AO for fresh adjudication. The AO was directed to verify and examine the receipts as per the revised Form 26AS.

The Tribunal held that the AO should have referred the property for valuation to the DVO as per Section 50C(2)(a) when the assessee objected to the stamp duty valuation. The CIT(A) also erred in not directing the AO to do so. The issue of fair market value determination was remitted to the AO for reference to the DVO.

The Tribunal held that the CIT(A) violated principles of natural justice by not considering the additional evidence and not giving the assessee an opportunity to present its case. The matter was remanded to the AO for fresh adjudication.

The Tribunal held that while the purchases were not fully substantiated, the addition should be restricted to 5% of the total alleged bogus purchases, considering the industry average profit rates and the fact that payments were made by account payee cheques.