INCOME TAX
ITAT Cases Monthly Round Up: May 2024
Bonafide Mistake Committed By Assessee While Applying For Registration In Form 10AB Instead Of Form 10A, Merits To Be Condoned: Hyderabad ITATCase Title: Mandava Foundation verses Income Tax OfficerOn finding that it is proper to condone the mistake committed by the assessee while applying for registration in Form 10AB instead of Form 10A of the Income Tax Act, the Hyderabad ITAT directed the CIT(E) to hear and dispose of the request of the assessee by allowing it to apply under Form...
Approving Authority Has Acted As Mere Rubber Stamp While Granting Approval U/s 153D: Delhi ITAT Quashes Assessment Passed Without Application Of Mind
On finding that the approval granted u/s 153D is not in accordance with the provisions of the Income Tax Act, the New Delhi ITAT held the approval granted u/s 153D is invalid and set aside the order passed by the First Appellate Authority as he acted as a mere rubber stamp. Section 153D of the Income Tax Act, mandates that no order of assessment or reassessment shall be passed by an AO below the rank of Joint Commissioner without the prior approval of the Joint Commissioner or a...
Claim As Residential House, No Basic Amenities For Habitation Found; Delhi ITAT Upholds Disallowance Of Deduction U/s 54
On finding that all the basic amenities desired for a living, were not available in the subjected property rendering it to be non-habitable, the New Delhi ITAT held that the assessee had not constructed the residential house, and hence, deduction u/s 54 of the Income Tax Act, was rightly denied by the AO. Section 54 of the Income Tax Act, indicates that an individual or HUF selling a residential property can avail tax exemptions from Capital Gains if the capital gains are invested...
No Addition Is Permitted U/s 68 Without Linking Alleged Entries Of Cash With That Of Material Seized During Course Of Search: Mumbai ITAT
On finding that the AO has failed to prove that the seized documents were related to the assessee, the Mumbai ITAT held that the addition made by the AO u/s 68 of the Income Tax Act, without bringing any concrete evidence on record incriminating the assessee is not sustainable, and deserves to be deleted. The ITAT went on to hold that the order passed is an un-reasonable order and in cryptic manner, as the entire loan pertaining to assessee was added as unexplained credit without...
Cash Deposits During Demonetization Can't Be Treated As Unexplained Without Rejecting Books Of A/C: Delhi ITAT
On finding that Department had acted without any evidence to make disallowance u/s 69 r.w.s 115BBE of the Income Tax Act, the New Delhi ITAT held that treating the cash deposit as unexplained cash without rejecting the books of account, is legally not permissible. As per Section 69 of Income tax Act, where in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any...
Deduction Of Amount Equal To And Not Exceeding “Dividend Distributed” On Or Before Due Date Is Allowable U/s 80M On Receipt Basis: Kolkata ITAT
While referring to the provisions of section 80M of the Income Tax Act, that the assessee company would be allowed a deduction of an amount equal to and not exceeding the amount of dividend “distributed” on or before the due date, the Kolkata ITAT held that assessee is rightly within law to claim deduction u/s 80M. Section 80M of the Income Tax Act, was introduced by the Finance Act 2020 to exempt inter-corporate dividends from tax when received from a domestic company before 1st April...
Every Payment Made By Taxpayer For Violation Of Environmental Norms Is Not Penal In Nature: Kolkata ITAT Deletes Addition
Finding that the AO has nowhere examined the order of the Pollution Control Board asking the assessee to make the payment, the Kolkata ITAT held that every payment made by the assessee to the Board for violation of environmental norms would not be penal, and hence, deleted the addition made by AO. The Bench of the ITAT comprising of Rajpal Yadav (Vice-President) and Rajesh Kumar (Accountant Member) observed that “The Assessing Officer has nowhere examined the order of the Pollution...
Not Deducting TDS U/S 194J On Account Of Bonafide Belief, Does Not Attract Levy Of Penalty U/S 271C: Delhi ITAT
On finding that the assessee has a valid reason to consider the payments on account of 'transactional charges' to be not covered by section 194J(1)(ba) of the Income Tax Act, the New Delhi ITAT ordered to delete the penalty order passed by the CIT(A) u/s 271C. As per Section 194J(1)(ba) of Income Tax Act, any payment made to the director like sitting fees, remuneration, or any other sum other than those on which tax deductible u/s 192 is to be considered for deduction of tax at source...
No Addition Is Permitted U/s 68 On Account Of Share Premium Once Taxpayer Has Proved Identity & Creditworthiness Of Share Subscribers: Kolkata ITAT
On finding that the CIT(A) has failed to point out any defect and discrepancy in the evidence and details furnished by the assessee but simply upheld the order of the AO in a mechanical manner, the Kolkata ITAT held that once the assessee has proved the identity and creditworthiness of the share subscribers, the burden shifts upon the AO to examine the evidence and made independent inquiries. Since the AO has failed to conduct proper examination of evidences relating to share premium,...
Equal Amount Of Investment In Equity Of Other Entity Was Made Against Credits In Form Of Share Capital & Premium: Kolkata ITAT Justifies Addition U/s 68
Noticing that against the alleged credits in the form of share capital & share premium, an equal amount of investment in equity of other entity has been made, the Kolkata ITAT confirmed the addition made u/s 68 of the Income Tax Act. Section 68 of the Income Tax Act, aims to ensure individuals and corporations transparently disclose their income by addressing unexplained cash credits in their books of accounts, placing the responsibility on the taxpayer to prove the legitimacy of ...
No Addition Is Permitted U/S 41(1) In Absence Of Evidence Showing Cessation Of Liability: Delhi ITAT
The New Delhi ITAT held that unless and until there is evidence to show that the liability has ceased to exist, there cannot be any addition u/s 41(1) of the Income Tax Act, and hence, deleted the addition made by AO. As per Section 41(1) of the Income tax Act, where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee, and subsequently during any previous year the assessee has obtained,...
Mere Difference Of Opinion With AO Is No Basis To Exercise Revisionary Power U/s 263: Chandigarh ITAT Confirms Sec 80P Deduction Granted By AO
The Chandigarh ITAT quashed the revision order u/s 263 holding that application of mind is discernible from examination of the record and that “the power under Section 263 of the Act was exercised on the basis of a mere difference in opinion with the AO, rendering such exercise of revisionary power to be invalid”. Section 263 of the Income Tax Act is a provision that empowers the Commissioner of Income Tax to revise any order passed by an assessing officer if the Commissioner believes...