ITAT Chennai Upholds Deletion Of Unexplained Money Addition Against Forex Commission Agent

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of an addition of ₹3.44 crore made against an individual who worked as a commission agent for foreign exchange companies. It held that cash withdrawn from the agent's own bank account for disbursal to customers could not be treated as unexplained money under Section 69A of the Income Tax Act, which addresses unexplained assets. The case involved an individual who acted as an authorised sub-agent for...

ITAT Delhi Quashes Reassessment After AO Failed To Decide Objections Before Proceeding

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently quashed a reassessment against Meramandali Finvest Ltd., holding that the Assessing Officer was required to dispose of the assessee's objections to the reopening by passing a separate speaking order before proceeding with the reassessment. A bench of Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra observed: "It is now settled law by a series of judicial precedents that the failure of the...

ITAT Ahmedabad Upholds Rejection Of Tax Deduction Claim On ₹12 Lakh Donation To Political Party

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the denial of a tax deduction claimed by a salaried taxpayer on a ₹12 lakh donation made to a political party, holding that he failed to establish that the contribution was genuine and eligible for deduction. A division bench of Vice-President Dr. B.R.R. Kumar and Judicial Member Rahul Chaudhary observed, "the assessee has failed to establish that the impugned contribution represented a genuine donation eligible for...

AO Cannot Grant Fresh Opportunity To Extend Reassessment Notice Deadline: ITAT Ahmedabad

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) on 7 July held that a reassessment notice issued after the expiry of the prescribed “surviving period” under the Income Tax Act, 1961 is barred by limitation. Vice President Dr. B.R.R. Kumar and Judicial Member Rahul Chaudhary allowed the appeal filed by Scarlet Tradelink Private Limited against the order of the National Faceless Appeal Centre for Assessment Year 2016-17 and quashed the reassessment proceedings. The Bench observed:...

Non-Recourse Sale Of Future Rent Receivables Not Borrowing Or Interest For TDS Purposes: ITAT Chennai

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) on 6 July held that discounting charges arising from the assignment of future rent receivables on a non-recourse basis cannot be treated as interest under the Income-tax Act, 1961, and therefore do not attract tax deduction at source (TDS) under Section 194A (which requires deduction of tax on interest other than interest on securities). A Single Member Bench comprising Judicial Member R. Muralidhar allowed seven appeals filed by OPC...

Gujarat High Court Quashes Income Tax Reassessment Over Pre-2012 Property Valuation Rule

The Gujarat High Court has quashed an income tax reassessment notice issued over the valuation of land sold in 2009. It held that the reassessment in the case was unsustainable because the assessing officer sought to adopt a lower fair market value despite the unamended law governing the assessment. A division bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati held that the amendment made to Section 55A through the Finance Act, 2012 applied only prospectively. It therefore could not...

Pre-Search Material Cannot Be Basis For Additions In Completed Search Assessments: Bombay High Court

The Bombay High Court has recently reiterated that the Income Tax Department cannot make additions in a completed assessment under the search assessment provisions on the basis of material that was already in its possession before the search. Dismissing two appeals filed by the Revenue, the court also held that the Department had failed to establish that the assessee owned the foreign bank accounts sought to be taxed. A division bench of Justice B.P. Colabawalla and Justice Firdosh P....

Section 263 Assessment Cannot Survive After Original Order Is Quashed As Time Barred: ITAT Kolkata

On 8 July, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) held that a fresh assessment order passed pursuant to revision proceedings cannot survive once the original assessment has been quashed as time barred. It becomes “invalid and void ab initio” since the original assessment no longer exists in law. Judicial Member Pradip Kumar Choubey and Accountant Member Rajesh Kumar allowed the cross objection filed by Dozco India Private Limited and dismissed the Revenue's appeal as...

ITAT Delhi Deletes ₹13.97 Crore TP Adjustment Against Coca-Cola India Over Delayed Receivables

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that Coca Cola India Inc.'s Indian branch cannot be subjected to a transfer pricing adjustment over delayed recovery of receivables from its Associated Enterprises (AEs) where it had no borrowings and its working capital requirements were entirely funded by its US head office. A bench of Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman partly allowed the Revenue's appeal only on the issue of interest...

ITAT New Delhi Quashes NIIT Revision, Says Action Was Triggered By Higher Authorities' 'Pressures'

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 8 July held that revision proceedings under Section 263 of the Income Tax Act cannot be sustained when the Commissioner of Income Tax acts under the pressure of higher authorities instead of independently applying his mind. Judicial Member Satbeer Singh Godara and Accountant Member M. Balaganesh partly allowed NIIT Ltd.'s appeals for Assessment Years 2000-01 to 2005-06 and quashed the revision proceedings initiated against the...

Revenue Cannot Disallow Purchases As Bogus After Accepting Corresponding Sales: ITAT Ahmedabad

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has recently quashed the reopening of an assessment and deleted an addition of ₹22.47 crore made against a trader in copper scrap and ingots, holding that the Revenue failed to establish that the purchases were bogus despite accepting the corresponding sales. A tribunal comprising Judicial Member Sanjay Garg and Accountant Member Annapurna Gupta observed: "If the assessee has made the sales, it is obvious that he has also made the...

Madras High Court Quashes Reassessment Based On Material Already Examined During Original Assessment

The Madras High Court has recently set aside reassessment proceedings initiated against an engineering equipment manufacturer after finding that the Income Tax Department reopened the assessment based on material that had already been disclosed and examined during the original assessment. Justice Senthilkumar Ramamoorthy observed that the reassessment amounted to an impermissible change of opinion. "On comparing the above reasons for reopening with the reply of the petitioner to the notice...