ITAT Surat Judgments — April 2019

The Tribunal noted that the disallowance led to an unrealistic profit margin. It held that while the AO did not reject the books of account, the disallowance under Section 40A(3) resulted in an absurd profit. Therefore, the disallowance was restricted to 8% of the total turnover.

The Tribunal deleted the addition of Rs. 66,71,001 on account of opening cash balance, finding it explained by documentary evidence. It also deleted the addition of Rs. 17,90,000 as the amount paid for development expenses was found to be received back as refund, supported by cash book entries.

The Tribunal held that the interest expenses were for working capital and not directly attributable to qualifying assets. Furthermore, the expenses were allowed in preceding and succeeding years, and the project was substantially completed, making capitalization unnecessary. The enhancement was also made without proper notice.

The Tribunal held that the CIT(A) failed to provide a proper opportunity of hearing, violating the principle of natural justice (audi alteram partem). The appeal was restored to the CIT(A) for reconsideration after allowing a proper hearing.

The Tribunal held that the reopening of assessment was based on incorrect facts, specifically the erroneous belief that the assessee had not filed a return. The Tribunal quashed the reopening proceedings and the subsequent assessment order.

The Tribunal upheld the CIT(A)'s decision, agreeing with the AO that the sale of plots constituted capital gains, not business income. This was based on the assessee's own prior treatment of the plots as fixed assets and a previous Tribunal ruling on similar facts.

The Tribunal upheld the disallowance of commission paid to a relative due to lack of verification and the suspicious nature of the transaction. It also upheld the disallowance of a portion of job charges but found the disallowance of salary to relatives to be arbitrary and deleted it.

The Tribunal directed the Assessing Officer to adopt the peak of deposits in the bank account for calculating unexplained cash credit. It also instructed the AO to restrict the disallowance of total expenses to 10%.

The Tribunal found that the CIT(A) failed to provide a proper opportunity of hearing, violating the principle of natural justice. The appeal was restored to the CIT(A) for reconsideration after allowing a proper hearing.

The Tribunal held that while there was a default, the penalty should not be levied for each non-compliance with notices. Following a precedent, the penalty was restricted to Rs. 10,000 for the first default.

The Tribunal held that the CIT(A) failed to provide a proper opportunity of hearing, violating the principle of natural justice. The appeal was restored to the CIT(A) for reconsideration after allowing a proper hearing.

The Tribunal upheld the disallowance of commission paid to a relative due to lack of verification and the suspicious nature of the transaction. It also upheld the disallowance of a portion of job charges but found the disallowance of salary to relatives to be arbitrary and deleted it.