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Untitled Document

TODAY'S CASE (DIRECT TAX)

Taxindiaonline.com



July 31, 2020

++ Additions framed on account of bogus purchases merit being restricted in quantum where the corresponding sales and stock position are not disputed: HC

++ LRs of deceased assessee are not statutorily obliged to inform the Revenue about the assessee's demise - proceedings initiated against deceased assessee are void: HC

++ Power of revision cannot be exercised in respect of an issue which is carefully examined by the AO & is pending consideration before the CIT(A): ITAT

++ Deduction claimed u/s 35(1)(ii) cannot be disallowed where the registration of the donor-company subsequently gets cancelled: ITAT

July 30, 2020

++ AO can estimate profits by invoking provisions of Section 40A(2), if there is no doubt about expenses incurred by assessee: ITAT

++ Additions cannot be framed in respect of any amount of purchases which have been held to be genuine & in respect of which no adverse is drawn: ITAT

++ Provisions of Section 2(22)(e) pertaining to deemed dividend, cannot be applied based on assumptions, presumptions or suspicions: ITAT

July 29, 2020

++ Provisions of Section 194C for TDS deduction apply onto any contractor who engages sub-contractors for performance of whole or part of task undertaken by contractor: SC

++ Case warrants re-consideration on remand to avoid double taxation, where assessee claims that recipient of payment made by assessee discharged the requisite TDS liability: ITAT

++ It is the assessee's prerogative to judge the expediency of any expenses incurred in course of business - any expenses incurred solely for business purposes are allowed u/s 37(1): ITAT

++ An employer is not statutorily obliged to submit evidence showing that its employees have actually utilized the amount paid towards Leave Travel Concession: ITAT

++ No penalty is imposable where any incriminating material suggesting any undisclosed income of the assessee is not found during Search operations: ITAT

July 28, 2020

++ Income generated by an SEZ developer, from letting out of premises and developed space along with other amenities, is taxable as Profits & Gains of business: HC

++ Assessment order passed without examination of returns filed by assessee, is unsustainable: ITAT

++ AO is obliged to conduct independent enquiry before framing additions on account of unexplained cash credit: ITAT

++ Tribunal cannot straightaway allow an assessee's claim of having incurred loss due to non-recovery of advances - case remanded for examination of additional evidence submitted in support of claims: ITAT

July 27, 2020

++ Penalty notice is invalidated if it omits to specify exact charge against assessee between concealment of income or furnishing inaccurate particulars of income: ITAT

++ Re-opening of assessment - recording reasons to believe are insufficient to resort to such proceedings where assessee's failure to make full & true disclosure of material facts is not stated: ITAT

++ Assessment order passed in the name of a company which merged with another entity, is not sustainable, more so where Revenue was aware of such proceedings: ITAT Assessment order passed in the name of a company which merged with another entity, is not sustainable, more so where Revenue was aware of such proceedings: ITAT

++ 331-day delay in filing appeal merits being condoned where such delay is caused due to lapses on part of the assessee's accountant: ITAT

July 25, 2020

++ Additions framed for unexplained cash credits are upheld, where no explanation is provided for demonetised currency deposited in assessee's bank account - attachment of bank account is also upheld, where assessee does not reply to SCNs issued to it: HC

++ Assessee cannot be held to be in default for short-deduction of TDS on rent paid, where assessee deducted, collected & paid tax on share of rent paid to each co-owner of property: ITAT

++ Re-opening of assessment is unsustainable if based solely on information received from Inv Wing & where AO does not conduct independent enquiry into the matter: ITAT

++ Penalty order passed u/s 271(1)(c) is inavalidated if it omits to mention specific charge against assessee between concealment of particulars of income or furnishing inaccurate particulars thereof: ITAT

July 24, 2020

++ It is fit case for remand where Tribunal follows own findings recorded in assessee's own case for past AY, but omits to record independent reasons for doing so: HC

++ Penalty is leviable u/s 271(1)(c), where it is found to not be leviable u/s 271AAA - assessee cannot seek to evade penalty proceedings, where order imposing penalty has attained finality: HC

++ Disallowance u/s 40A(3) r/w Rule 60DD(j) need not be made, where no deduction is claimed by or allowed to the assessee in respect of purchases: HC

++ Remission of liability u/s 28(iv) is not taxable since the receipts therefrom were in form of cash: ITAT

++ Where providing hostel facility to students is covered under ambit of Section 2(15), then generation of any surplus therefrom is not taxable & will not lead to denial of exemption: ITAT

++ Additions framed on account of unexplained cash credits are upheld where assessee fails to provide satisfactory explanation for the same: ITAT

July 23, 2020

++ Stay petition merits being allowed without insisting on pre-deposit of duty, where such unconditional stay was allowed in earlier AYs as well: ITAT

++ Penalty notice is unsustainable if it omits to specify exact charges levelled against assessee, between concealment of income & furnishing inaccurate particulars of income: ITAT

July 22, 2020

++ Deduction is allowed in respect of interest paid on funds borrowed for purpose of purchasing property: ITAT

++ Addition in respect of unaccounted purchase merits being restricted to profit element embedded in such purchases: ITAT

++ Additions framed on account of unexplained cash credits are sustainable where assessee fails to provide complete details regarding source of such income: ITAT

July 21, 2020

++ Deduction u/s 10B cannot be allowed where assessee has no income left after setting off unabsorbed depreciation, carried forward from earlier AYs: HC

++ Re-assessment cannot be challenged on grounds that Revenue failed to obtain necessary details, whilst the assessee concomitantly attempts to scuttle & obstruct attempts to obtain correct & complete information: ITAT

++ Deduction u/s 80IC is allowed where assessee undertakes substantial expansion after claiming deduction - year of completing expansion would be treated as its initial AY: ITAT

July 20, 2020

++ AO directed to dispose off application for stay on recovery of demand, where applicant's financial position is not sound enough so as to be able to pre-deposit part of the duty demanded: HC

++ Re-opening of assessment is unsustainable where based on the same set of facts which were available during original assessment, thus amounting to change of opinion: HC

++ Since imposition of late fee u/s 234E is mandatory in nature, presence of a reasonable cause is of no aid to the assessee: ITAT

++ Where a trust is found to be engaged in activities of a charitable nature, expenses incurred by it in this regard cannot be disallowed: ITAT

July 18, 2020

++ Additions on account of undisclosed income were framed by lower authorities without recording findings in respect of cash withdrawn by assessee or usage of such cash - matter remanded for reconsideration: ITAT

++ The window for disallowance u/s 14A is only to the extent of that expenditure incurred by assessee in relation to tax exempt income: ITAT

++ Bonus paid to two director shareholders of company can be allowed if made as part of salary in terms of Board Resolution which is linked to services rendered by them: ITAT

July 17, 2020

++ It is trite law that doctrine of res judicata is inapplicable in income tax matters: ITAT

++ When there are no allegations of AO having contravened mandate of Sections 234E or 200A, adjustment made on account of late filing fee u/s 234E cannot be set aside: ITAT

++ Till date of conversion, Compulsory Convertible Debentures qualify as debt - interest paid on CCDs cannot be disallowed on grounds that they will later be converted to equity: ITAT

++ Issuing of notice in the name of the correct person is the foundational requirement for commencing assessment proceedings - notice issued in name of deceased person is invalid: ITAT

July 16, 2020

++ For granting deduction u/s 35(2AB), recognition granted to the facility concerned as well as expenses incurred on in-house R&D facilities must be examined: ITAT

++ Deduction on account of loss incurred due to fluctuation in forex rates can be allowed only upon ascertaining whether such loss is capital or revenue in nature: ITAT

July 15, 2020

++ Adopting rate of turnover @ 8% for best of judgment assessment, is without any basis, where insufficient grounds are furnished for rejecting books of accounts: HC

++ Exemption u/s 54F is allowed if new residential house is purchased within two years from date of transfer of original asset: ITAT

++ Cash transactions between family members during hour of need cannot be deemed to be loan or advance, even if such transaction is reflected as a loan for accounting purposes: ITAT

++ It is trite law that nomenclature in books of accounts cannot be used to determine the nature of any transaction: ITAT

++ In case of joint bank account holding, advances received by one holder cannot be interlinked with or reflected in the balance sheet of the other holder: ITAT

July 14, 2020

++ Additional amount paid in pursuance of application under Kar Vivad Samadhan Scheme, beyond 30-day limitation period, but within a reasonable period, is acceptable for allowing the application: HC

++ Penalty notice is invalid where it omits to specify exact charge against assessee between concealment of income & furnishing inaccurate particulars thereof: ITAT

++ Matter warrants remand where AO frames addition in respect of cash deposited in bank account, without examining source thereof: ITAT

++ Where cash credit found in assessee's books is established to have been invested by a particular person, then assessee-investee is not obligated to prove that such amount has been taxed in hands of the investor: ITAT

July 13, 2020

++ Fair Market Value of property was ascertained without allowing assessee to access DVO's report or without considering assessee's objections to such valuation - case remanded: ITAT

++ Matter warrants remand where additional evidence is presented for first time before CIT(A), with AO being unable to examine the same: ITAT

++ Estimation of income at exorbitant figures based solely on past history of assessee, is unsustainable: ITAT

July 11, 2020

++ Additions framed u/s 68 are unsustainable if the AO does not specify the nature of amounts received by assessee & without examining credits in books of accounts: ITAT

++ Additions framed on account of client code modification as alleged bogus contrived loss merits being sustained where assessee is unable to disprove the illicit nature of such transaction: ITAT

++ New Show Cause Notice cannot be issued where proceedings initiated through previous SCN are pending & have not yet been disposed off: ITAT

++ Deduction u/s 80IA cannot be denied on sole grounds that separate P&L a/c and balance sheet were not produced: ITAT

July 10, 2020

++ Insertion of some figures by the assessee, which are incoherent with some other figures in the I-T return, qualifies as a mistake apparent on record and such error warrants rectification: ITAT

++ Activity of developing minor ports in a State is in keeping with advancement of general public utility u/s 2(15) of the Act, and the trust Board engaged in such activity is entitled to exemption u/s 11: ITAT

++ Penalty order is unsustainable where it omits to specify exact charge against assessee between concealment of particulars of income & furnishing inaccurate particulars thereof: ITAT

July 09, 2020

++ For valid transfer of assessment, detailed reasons must be discernible from notice issued u/s 127 - sufficiency of reasons recorded is not subject matter for judicial review: HC

++ Additions framed in respect of income from derivative transactions are not tenable where the NSE states that no income was derived by assessee from such transaction: ITAT

July 08, 2020

++ Assessee indulged in bogus transactions involving shares, despite knowing the illicit nature of such activities & also sought to legitimise illicit money under guise of exempt capital gains - additions framed on grounds of unexplained cash credit are sustained: ITAT

++ Where assessee's accounts have been audited & balance sheet stands certified, then genuineness of creditors cannot be doubted: ITAT

++ Income surrendered by assessee in course of Survey proceedings is taxable as income falling u/s 68 to 69D, if no explanation is given for such amount - higher tax rate u/s 115BBE is applicable: ITAT

July 07, 2020

++ Provisions of Section 269SS are inapplicable where both lender of cash and borrower are having agricultural income & neither of them has any taxable income as per I-T Act: ITAT

++ Loss from currency derivative transactions entered into by assessee will not be treated as speculative, where such transactions are conducted in recognized stock exchange & of which assessee is a member: ITAT

++ Penalty cannot be levied on assessee for suo motu revision of tax computation, before any finding is rendered by AO in this regard: ITAT

++ Where AO finds that certain land obtained by assessee qualifies as capital asset, the AO is required to refer the matter to DVO for ascertaining its Fair Market Value: ITAT

July 06, 2020

++ Receipt of cash gift through banking channels is per se insufficient to establish creditworthiness of donor or genuineness of such gift: HC

++ Provisions of Section 2(22)(e) cannot be invoked where assessee-company maintains running transactions with its subsidiary: ITAT

++ Expenses incurred on transactions conducted with sister unit, for purposes of business, merit being allowed: ITAT

++ Expenses incurred on repair & annual maintenance of computers are revenue expenses & are eligible for deduction: ITAT

July 04, 2020

++ One turnover figure cannot be taxed in the hands of two different assessees, one of whom is a partnership firm while the other is a proprietary concern of the former: ITAT

++ Assessee's claim of having suffered business losses cannot be rejected based on presumptions alone & without rebutting documentary evidence submitted by assessee: ITAT

++ Where the revision order itself has been quashed, then assessment order passed pursuant to revision order, has no legs to stand & becomes infructuous: ITAT

July 03, 2020

++ Relief for Vodafone - Bombay HC rules once assessment order u/s 143(1) has already attained finality resulting in refund, then same cannot be withheld by Revenue

++ Assessment order passed without proper consideration of factual matrix, merits being quashed: HC

++ Where amount of cash compensation & duty drawback is not yet sanctioned, such amounts are not taxable in such AY as they have not yet accrued to the assessee: HC

++ Attachment of assessee's bank accounts merits being lifted where 11% of the tax demand is already recovered through garnishee proceedings: HC

July 02, 2020

++ Appellate authority cannot sustain additions framed by AO, based on assumptions or presumptions & without considering evidence submitted by assessee: ITAT

++ Penalty notice is bad in law if it does not state exact charge against assessee, between concealment of particulars of income & furnishing inaccurate particulars thereof: ITAT

++ Assessment order passed ex parte merits being quashed if reasonable explanation is given for non-appearance on date of hearing: ITAT

++ Power of revision u/s 263 need not be exercised where AO conducts adequate enquiry into relevant issues & where assessment order is neither erroneous nor prejudicial to Revenue's interest: ITAT

July 01, 2020

++ If no incriminating material was found during course of search, then that amount of total income determined under earlier completed assessments is to be adopted in fresh assessments u/s 153A without making any further addition: ITAT

++ Re-assessment order merits being quashed where it is passed without due application of mind on part of AO: ITAT

++ Penalty notice issued u/s 274 is invalid if it does not specify exact charges against the assessee as to whether it is imposed for concealing particulars of income or for furnishing inaccurate particulars thereof: ITAT

++ A family settlement deed for partition of property by its owner, amongst the owner's children, cannot be treated as a colorable device, if no ulterior motive is made out behind such instrument: ITAT