"ITAT Upholds CIT(A)'s Order Restricting Disallowances in Revenue's Appeal for AY 2014-15, Emphasizing Lack of Substantiated Evidence"

The Revenue appealed against the order of the Ld. CIT (Appeals)–2, Ahmedabad, dated 04/07/2017, concerning the assessment u/s 143(3) of the Income Tax Act, 1961 for AY 2014-15. The AO had made several additions including disallowance u/s 14A, treating loss on trading in shares as non-genuine, and disallowance of speculation loss. The Ld. CIT(A) partly allowed the appeal by restricting disallowances. The Revenue's appeal challenged these deletions, but the Tribunal upheld the Ld. CIT(A)'s decision, emphasizing the lack of substantiated evidence supporting the AO's conclusions.

Tribunal Upholds Dismissal of Appeals and Cross Objection in IL&FS Case, Affirms NCLT's Directions

The case ITA No. 281/Del/2017 and 2287/Del/2017 along with Cross Objection No. 48/Del/2021:

The appeals and cross objection arose from separate orders of the CIT (A)-12, New Delhi, dated 18.11.2016 and 10.01.2017 for A.Y. 2013-14 and 2012-13, respectively, u/s 143(3) of the IT Act, 1961.

The National Company Law Tribunal, Mumbai Bench, in its order dated 02.02.2021, directed the extinguishment of all claims and liabilities of IL&FS Environmental & Infrastructure Services Limited and related entities upon payment of purchase consideration. The Tribunal approved the sale and acquisition of shareholdings as proposed.

Consequently, both appeals were dismissed, with liberty granted to the assessee and revenue to approach the Tribunal after completion of proceedings as per the NCLT's order. Cross Objection No. 48/Del/2021 (related to A.Y. 2012-13) was also dismissed following the dismissal of the revenue's appeal.

Overall, the Tribunal upheld the NCLT's directions, resulting in the dismissal of all appeals and cross objections in this matter.

Tribunal to Adjudicate on Deemed Rent Assessment for Ahmedabad Property in Assessee's Appeals for A.Y. 2016-17 and 2017-18

The appeals filed by the assessee challenge two separate orders from the Ld. CIT (A)/NFAC, Delhi for A.Y. 2016-17 and 2017-18. Both orders confirm an addition of Rs. 52,83,945 towards deemed rent u/s 23(1)(a) of the IT Act, 1961 for a property owned by the assessee at Devs Arcade Mall, Ahmedabad. The main contention was that the property should have been assessed u/s 23(1)(c) due to its prior letting history and periods of vacancy, as argued by the assessee. However, both the AO and the CIT(A) rejected this claim, emphasizing that the property was not let out during the relevant assessment years and thus, deemed rental value u/s 23(1)(a) applied. The CIT(A) upheld the AO's decision, prompting the appeals before the tribunal.

ITAT Remits NRI's Tax Dispute Back to AO for Jurisdiction Review for A.Y. 2010-11

The Revenue and cross objection by the assessee, the ITAT has remitted the matter back to the AO for a fresh determination of jurisdiction. The case involves the A.Y. 2010-11, with the AO initially rejecting the assessee's books of accounts and making significant additions to the income. The assessee, an NRI, argued that the jurisdiction assumed by the AO and the CIT (A) was defective due to his non-resident status. The ITAT, considering both parties' submissions and the evidence presented, directed the AO to first examine the jurisdiction issue and then pass an appropriate order.

The High Court Directs Petitioner to Seek Stay on Tax Demand, Orders Prompt Decision by Local Committee on Assessment Dispute

The High Court heard arguments from both parties regarding a notice issued to the petitioner u/s 226(3) of the IT Act, 1961, demanding tax payment and penalties based on an assessment order. The petitioner had filed an appeal against the assessment order, which was pending before the CIT (A), but had not sought a stay on the demand. Additionally, the petitioner had submitted an application to the Local Committee under CBDT Circular dated 23 April 2022 concerning the assessment's high-pitch nature, which was also pending.

The Court directed the petitioner to file a stay application before the CIT(A) regarding the demand. It also ordered the Local Committee to promptly decide on the petitioner's application within 10 days, including any administrative directions concerning coercive recovery prevention. All other legal contentions were left open. The petition was disposed of accordingly, with no costs awarded.

Tribunal Overturns Rs. 18.8 Lakh Penalty on Assessee for AY 2011-12, Citing Quantum Appeal Victory

The assessee appealed against the order of the CIT(A)-28, New Delhi, dated 25.01.2019, which upheld a penalty of Rs. 18,80,120/- imposed by the AO u/s 271(1)(c) of the ITAct, 1961 for the A.Y. 2011-12. The grounds of appeal included challenges to the legality and factual basis of the penalty imposition.

The facts revealed that the Assessing Officer had initiated penalty proceedings based on additions made during assessment, alleging inaccurate particulars of income. However, the ITAT Delhi Bench 'G' had subsequently ruled in favor of the assessee in the quantum appeal, deleting the additions made by the AO.

In light of the ITAT's decision to delete the additions, the Tribunal concluded that the basis for initiating penalty proceedings u/s 271(1)(c) no longer existed. Therefore, the Tribunal allowed the assessee's appeal, overturning the penalty imposed by the AO.

The Tribunal ruled in favour of the assessee, finding that since the additions on which the penalty was based had been deleted in the quantum appeal, the penalty u/s 271(1)(c) could not be sustained.

Tax Tribunal Upholds CIT(A)'s Decision: Disputed Rs. 5.04 Cr Addition Deleted in AY 2012-13

The appeal by the revenue and the cross objection by the assessee pertain to the A.Y. 2012-13. The Revenue contested the deletion of an addition of Rs. 5,04,80,000 made by the Assessing Officer, arguing that the assessee failed to prove the genuineness of transactions with "Keshav Impex," identified as a provider of bogus accommodation entries. They also cited procedural lapses in the appellate process. The assessee, on the other hand, objected to the validity of the assessment reopening u/s 148 and challenged the addition on merit, asserting that they had only sold goods to Keshav Impex and not purchased from them.

After hearing arguments and examining evidence, the CIT (A) ruled in favour of the assessee. The CIT(A) found that the Assessing Officer had not adequately substantiated the claim of bogus purchases from Keshav Impex and had failed to disprove the transaction of sale by the assessee. The CIT(A) thus deleted the entire addition.

The Tribunal upheld the CIT(A)'s decision, noting that the Assessing Officer had not presented any new evidence to challenge the assessee's claims effectively. Therefore, both the revenue's appeal and the assessee's cross objection were dismissed.

US Citizen in India Challenges Denial of Foreign Tax Credit Due to Late Form 67 Filing for A.Y. 2019-20

The appeal concerns the A.Y. 2019-20 where the assessee, a US citizen residing in India, filed for foreign tax credit (FTC) of Rs. 20,18,809 u/s 90 of the IT Act for taxes paid in the USA. The CPC disallowed this claim due to the late filing of Form 67, required under Rule 128 of the Income Tax Rules. The CIT (A) upheld this disallowance, stating that Form 67 must be filed before the due date u/s 139(1) of the Act. The assessee contends that Form 67 filing is procedural and not mandatory, citing relevant case law and arguing that denial of FTC based on procedural lapses is unjustified. The High Court and Tribunal decisions have varied interpretations on whether Form 67 filing is mandatory for FTC claims, influencing the outcome of similar cases.

Assessee Appeals Transfer Pricing Adjustments for A.Y. 2012-13 Under DRP Direction

The assessee appealed against the final assessment order for the A.Y. 2012-13 u/s 143(3), 92CA(3), and 144C(5) of the IT Act, 1961, following directions from the Dispute Resolution Panel (DRP). The dispute arose over transfer pricing adjustments related to IT-enabled services provided to Associated Enterprises (AEs). The Transfer Pricing Officer recommended adjustments, which were partially accepted in the draft assessment order. The DRP directed further adjustments, leading to the final assessment.

Key issues included the inclusion/exclusion of comparables for determining Arm's Length Price (ALP), negative working capital adjustment, and computation of interest on outstanding receivables. The Tribunal excluded comparables previously deemed unsuitable in the assessee's own case and directed adjustments in line with previous rulings. The appeal partially allowed adjustments based on these considerations.

Penalties u/s 271D and 271E Invalidated: ITAT Rules in Favour of Assessee

The appeals filed by the assessee against penalty orders u/s 271D and 271E of the IT Act, 1961:

1. Background: The assessee, engaged in real estate business, filed a return showing nil income for A.Y. 2011-12. The assessment was reopened u/s 147 based on information from a search operation.

2. Reassessment Quashed: The reassessment order was subsequently quashed by the ITAT, Mumbai, stating that proceedings u/s 147 were not validly initiated based on search material. This decision was based on a finding that such material should only trigger proceedings u/s 153C, not section 147.

3. Penalty Imposition: Despite the reassessment being quashed, the Assessing Officer imposed penalties u/s 271D and 271E for alleged violations related to transactions without banking channels (269SS and 269T violations).

4. Appeals to CIT(A) and Further Proceedings: The CIT(A) upheld the penalties, arguing that penalty proceedings are separate from assessment proceedings. The assessee then appealed to the ITAT challenging this decision.

5. ITAT Decision: The ITAT allowed the appeals, citing the Supreme Court's decision in CIT vs. Jayalakshmi Rice Mills, where it was held that penalties u/s 271D and 271E do not survive if the assessment order itself is quashed. The ITAT noted that the penalties were based on an assessment that was invalidated, thus rendering the penalties invalid as well.

6. Outcome: The ITAT allowed all three appeals (ITA No. 4140/MUM/2023, ITA No. 4141/MUM/2023, and ITA No. 4121/MUM/2023), thereby deleting the penalties imposed u/s 271D and 271E for AY 2011-12 and AY 2010-11.

The key legal and procedural aspects of the case, focusing on the invalidation of penalties due to the quashing of the reassessment order by the ITAT.

ITAT Grants Relief to Assessee: Reverses CIT (E)'s Rejection of 80G Approval Application, Citing Extended Filing Window and Judicial Precedents

The assessee appealed against the order of the CIT (E), Delhi dated 26.03.2024, which rejected their application for approval u/s 80G(5) of the IT Act. The grounds of appeal centered on the timing of the application and its compliance with statutory provisions. The Commissioner had rejected the application stating it was not filed within the prescribed time limits despite the assessee's arguments about provisional registration and other procedural aspects.

During the appeal, the assessee cited Circular No. 7/2024 issued by the CBDT, allowing for a fresh application in Form 10AB until 30.06.2024 in cases where earlier applications were rejected due to timing issues. Additionally, the assessee referenced recent judgments supporting their case.

The ITAT allowed the appeal, directing the Commissioner to reconsider the application in light of the CBDT circular and recent judgments, emphasizing that the time limit for filing the application had been extended. The appeal was allowed for statistical purposes, indicating a procedural victory for the assessee based on updated legal provisions and judicial precedents.

Co-op Society Appeals Dismissal of Rs. 6,04,396 Deduction Under IT Act 1961, Wins Appeal on Rectification Grounds

The appeal was filed by B2345 Vikas Complex Cooperative Housing Society Ltd against the appellate order passed by the Additional CIT (A) – 1, Jaipur for A.Y. 2021-22. The appeal challenged the dismissal of their claim u/s 80P(2)(D) of the IT Act, 1961 by the Central Processing Centre in an order dated 25/10/2022, which was subsequently processed u/s 143(1)(a).

The society's claim for deduction of Rs. 6,04,396/- was disallowed in the initial processing of the return, prompting an application for rectification u/s 154 on 20/12/2022, which was rejected. The appeal to the CIT(A) was dismissed primarily due to a delay in filing beyond the statutory limit, despite reasons cited related to the rectification process delay.

The society contended that it was eligible for deduction u/s 80P(2)(D) on interest income from cooperative banks, arguing that cooperative banks also qualify as cooperative societies under relevant state acts. The CIT(A) did not condone the filing delay but the appellate tribunal found justification in the rectification application delay, allowing the appeal on merit, granting the deduction u/s 80P(2)(D).

ITO Appeals Bogus Purchase Addition, Tribunal Upholds 12.5% Addition for A.Y. 2009-10

The appeal was filed by the ITO, Mumbai for the A.Y. 2009-10 against an appellate order by the CIT (A), Delhi. The issue arose from reassessment due to alleged bogus purchases totaling ?42,32,703. The Assessing Officer added 25% of this amount to the assessee's income, contested by the assessee and partially upheld by CIT (A) at 12.5%. The dispute also included challenges to the reopening of assessment. The tribunal upheld CIT (A)'s decision, applying principles from judicial precedents, including requiring the assessee to demonstrate profit differences on alleged bogus purchases versus genuine ones.

Revenue Challenges CIT(A) Ruling on Rs. 5.39 Crore and Rs. 10.32 Crore Additions for A.Y. 2015-16

The appeal concerns the A.Y. 2015-16 under the IT Act, 1961. The Revenue challenged the CIT(A)'s decision that deleted Rs. 5,39,15,000 for residential unit sale proceeds u/s 28(iv) and Rs. 10,32,40,650 for Rupam Tower investment valuation. Key issues include the nature of Rupam Tower's construction and its valuation, along with disputes over deductions u/s 54F and the residential classification of Rupam Tower for tax benefits. The assessee supported the CIT(A)'s deletions, arguing against the business nature of transactions.

ITAT Overturns CIT(A) Decision, Deletes ?9.35 Lakh Addition for Hasmukhlal Harjivan Shah HUF in Interest Deduction Dispute

The case involves Hasmukhlal Harjivan Shah HUF appealing against the appellate order of the Additional CIT (A)-5, Kolkata, for A.Y. 2017-18. The original assessment u/s 143(3) of the IT Act, 1961 disallowed a deduction claimed u/s 57(iii) for interest expenditure. The Assessing Officer added ?9,35,523 to the total income, alleging under-reporting of interest income. The CIT(A) upheld this addition, prompting the appellant's appeal. The Income Tax Appellate Tribunal found the addition baseless, as the interest income declared was supported by loan confirmations and Form 26AS, leading to the deletion of the addition. The tribunal allowed the appeal, overturning the CIT(A)'s decision.

Tax Neutrality Upheld: Tribunal Deletes Rs. 1.27 Crore Addition in A.Y. 2015-16 Property Sale Dispute

The appeal concerns the A.Y. 2015-16 where the assessee, a property development company, sold flats but disputed the valuation applied by the AO. The AO added Rs. 1,27,85,800/- to the assessee's income based on stamp valuation, disregarding the actual sale agreements and subsequent reporting of income in the following year. The assessee argued before the Tribunal that the additions were not justified u/s 43C proviso and invoked principles of tax neutrality as upheld in precedent (Realest Builders & Services Ltd. case). The Tribunal ruled in favour of the assessee, deleting both disputed additions from the assessment, citing the principle of tax neutrality and ensuring income is not doubly taxed.

Penalties Cancelled: Assessee Wins Appeal Against Disallowed Expenses in A.Y. 2016-17

The Assessee appealed against the order of the Learned CIT(A), NFAC, Delhi for A.Y. 2016-17. The Assessee initially filed a return of income claiming a business loss and a refund. During scrutiny, several expenditures were disallowed by the Assessing Officer, including prior period expenses and deductions u/s 54 for construction and improvement costs. Penalties were imposed u/s 271(1)(c) for alleged concealment of income. The Assessee appealed these penalties, arguing that the disallowances were bona fide and not deliberate attempts to conceal income. The appeal was successful, with the tribunal citing precedents that inadvertent claims without benefiting from them do not warrant penalties u/s 271(1)(c). Thus, the penalties were canceled, and the Assessee's appeal was allowed.

Appeal Against CIT(A)'s Reduction of Bogus Purchase Disallowance Dismissed for A.Y. 2011-12

The Revenue filed an appeal against the CIT (A)'s order dated 27th December 2023, issued u/s 250 of the IT Act, 1961, for A.Y. 2011-12. The appeal contested the deletion of a disallowance of Rs. 1,34,21,728/-, originally imposed by the AO at 100% on alleged bogus/unsubstantiated purchases. The CIT(A), operating from the NFAC in Delhi, reduced the addition to 12.5% and dismissed the appeal by the Revenue. The dispute centered on whether the purchases were genuinely made, with the CIT(A) basing their decision on the absence of conclusive evidence against the assessee.

Non-Profit's Tax Exemption Appeal for A.Y. 2021-22 Remitted: Tribunal Directs Net Income Assessment

The appeal was filed by the Assessee against the order of the CIT (A) for A.Y. 2021-22. The Assessee, a non-profit company, had filed its return claiming exemption u/s 11 of the IT Act, 1961. However, the Assessing Officer rejected this claim as the Assessee was not registered u/s 12A of the Act. Consequently, the Assessing Officer taxed the total receipts of the Assessee. The Commissioner (A) upheld this decision, noting the lack of proper registration and supporting documentation (Forms 10B/10BB). 

The Assessee appealed, primarily arguing that the Commissioner (A) erred in not deciding on the principle of mutuality and in not allowing expenses against receipts. During the appeal, the Assessee chose to press only one ground related to re-assessment of taxable income by the Assessing Officer. The Tribunal remitted the issue back to the Assessing Officer, directing assessment based on net income rather than gross receipts and considering the principle of mutuality. Other grounds of appeal were dismissed.

Revenue's Appeal Dismissed: CIT(A) Deletes Rs. 1.76 Cr Addition U/s 69 for A.Y. 2013-14

This appeal by the revenue concerns the A.Y. 2013-2014 u/s 153A/143(3) of the IT Act, 1961. The CIT (A) deleted an addition of Rs. 1,76,00,000 made by the AO u/s 69 of the Act regarding unexplained advances. The AO had made the addition based on advances against land, claiming lack of documentary evidence from the assessee. The CIT(A) concluded that no incriminating material was found during the search and seizure operation, citing the Supreme Court's decision in ACIT vs. Abhisar Buildwell Pvt. Ltd. (454 ITR 212), which held that additions cannot be made without such material. The Revenue's appeal was dismissed, affirming the CIT(A)'s decision.

Tax Appeals Challenging Unexplained Cash Deposits Partially Upheld by Tribunal

The appeals were filed by the Assessee against orders of the Learned CIT (A) for A.Y. 2011-12 and 2012-13. The assessments were reopened u/s 147 due to cash deposits and other credits in the Assessee's bank account that were deemed unexplained u/s 69A of the IT Act, 1961. The Assessing Officer completed the assessments u/s 144/147 after issuing notices, to which the Assessee did not respond adequately. The Assessee, an agriculturist, argued before the Ld. CIT(A) that the deposits were from cash withdrawals and pleaded ignorance of tax matters. However, the Ld. CIT(A) upheld the additions, noting the Assessee's failure to substantiate claims and respond to notices.

The Assessee appealed, challenging jurisdiction u/s 147, legality of additions u/s 69A, and procedural lapses. The appeal was represented by the Assessee's widow, who lacked knowledge of the Assessee's financial dealings. The Tribunal partially allowed the appeals for both assessment years, granting relief on grounds related to cash deposits linked to withdrawals, citing similar precedents.

Both appeals were partially allowed by the Tribunal, overturning some additions but upholding others, based on the evidence and submissions presented.

Assessee's Appeal Successful: Tribunal Cancels Penalty U/s 271(1)(c) for A.Y. 2014-15 Over Inconsistent Grounds

The assessee appealed against a penalty imposed u/s 271(1)(c) of the IT Act, 1961 for A.Y. 2014-15, challenging additions to estimated income from share trading transactions. The CIT (A)-NFAC, Delhi upheld the penalty. The assessee argued that the penalty was initially based on 'inaccurate particulars of income' but was later imposed for 'concealment of income', altering the AO's original satisfaction. Citing legal precedents, including New Sorathia Engineering Company vs. CIT (2006) and CIT vs. Manu Engineering Works (1980), it was contended that the penalty lacked legal basis due to inconsistent grounds. The Tribunal set aside the penalty, cancelling the imposed penalty and allowing the assessee's appeal.

Interest Expense Disallowance for A.Y. 2009-10 Upheld: Tribunal Affirms CIT(A)'s Decision

The appeal for A.Y. 2009-10 involves an addition of Rs. 10,87,419/- by the AO disallowed as interest expenses. The Assessing Officer found no direct nexus between the interest expenses claimed and the income from other sources, mainly interest from fixed deposits and savings accounts, which were exempt from tax. The CIT(A) upheld the AO's decision, stating the expenses weren't incurred wholly and exclusively for earning taxable income. The appellant argued that the expenses were related to taxable income earned from partnership firms, including interest on capital and remuneration. However, the tribunal affirmed the CIT(A)'s decision, dismissing the appeal.

Appeals Dismissed: CIT(A) Upholds Assessments on Unexplained Credits and Share Valuation Differences

1. ITA No. 2961/Del/2022 for A.Y. 2013-14:
   - The issue was the addition of Rs. 14,50,000/- as unexplained credits u/s 68 of the IT Act, 1961.
   - Assessee failed to establish the identity, creditworthiness, and genuineness of the transaction related to receiving Rs. 14,50,000/-.
   - CIT(A) confirmed the addition as the assessee did not provide required documents like ITR, bank statements, and confirmation from the payer.
   - Appeal dismissed as the assessee did not participate, and the CIT(A)'s order was upheld.

2. ITA No. 2960/Del/2022 for A.Y. 2017-18:
   - The issue was the addition of Rs. 10,75,000/- u/s 56(2)(vii)(c) concerning the difference in fair market value and actual consideration paid for shares.
   - AO assessed fair market value at Rs. 48.60/- per share while shares were acquired at Rs. 40/- per share.
   - Assessee's contention that Section 56(2)(vii)(c) did not apply was rejected; CIT(A) confirmed the addition.
   - Appeal dismissed due to non-participation of the assessee, and CIT(A)'s decision upheld.

Both appeals were dismissed due to the assessee's failure to substantiate claims and participate in proceedings, leading to confirmation of additions by the CIT(A) and subsequent dismissal by the appellate authority.

Tribunal Allows Withdrawal of Appeal with Liberty to Challenge Intimation u/s 143(1) for AY 2014-15

The assessee appealed against the NFAC's order dated 21.08.2023 for AY 2014-2015. There was a 178-day delay in filing, which was condoned due to sufficient reasons provided by the assessee. The initial issue was the denial of Section 11 benefits in the intimation u/s 143(1), and the subsequent rejection of a rectification application u/s 154, upheld by the CIT(A). The assessee sought to withdraw the current appeal to file a fresh appeal against the intimation u/s 143(1). The Tribunal allowed this withdrawal and granted liberty to appeal against the Section 143(1) intimation. The appeal was dismissed as withdrawn.