TODAY'S CASE (DIRECT TAX)

October 31, 2020

++ SCN u/s 143(2) is void ab initio, if it was issued at the old address even though the AO was made aware of the new address: ITAT

++ Where expenses are incurred in respect of a capital asset, such expenses do not mechanically become capital in nature: ITAT

October 30, 2020

++ 47-day delay in filing appeal is condoned where caused by the assessee having to change the legal counsel handling the matter: ITAT

++ Penalty notice issued u/s 271(1)(c) r/w Section 274 is sustainable where the AO omits to strike off the relevant charge u/s 271(1)(c), for which such penalty was imposed: ITAT

++ Penalty in respect of bogus purchases, cannot be levied where it is based on an estimation of the assessee's income from such purchases: ITAT

October 29, 2020

++ Assessment order passed in respect of a company which ceased to exist upon its amalgamation, is unsustainable: ITAT

++ Penalty u/s 271(1)(c) is not sustainable where additions have been framed on ad hoc basis: ITAT

++ Validity of re-assessment proceedings does not attain finality, solely because the assessee did not contest the same before the AO but contests the same before the CIT(A): ITAT

October 28, 2020

++ Assessment completed after due date, on the basis of special audit conducted belatedly u/s 142(2A), is void ab initio: ITAT

++ Admission fees paid to obtain membership of a stock exchange is treatable as capital asset: ITAT

++ Unexplained excess stock found during the course of the survey is to be treated to be part of book profits & taxable under head 'profits & gains of business or profession': ITAT

October 27, 2020

++ Bogus purchases - additions framed warrant being restricted to the profit element embedded therein: ITAT

++ Re-assessment proceedings cannot be initiated in respect of an issue which is not listed in the grounds for initiating re-assessment: ITAT

++ An AO cannot resort to re-opening of assessment so as to revisit an issue which already was touched upon during original assessment: ITAT

++ Search assessment u/s 153A is non est where initiated in respect of a non existent entity: ITAT

++ Deduction is not allowed in respect of provisions made for expenses to be incurred in future: ITAT

October 24, 2020

++ Re-opening of assessment is unwarranted when there is no failure on part of assessee to make full & true disclosure of material facts: HC

++ Additions framed based on cancelled money receipt found in course of Search proceedings, are unsustainable, where not corroborated by any evidence: ITAT

++ Payment made through banking channels is insufficient to establish genuineness of the transaction in respect of which such payment is made: ITAT

++ Exemption granted u/s 10(23C) to an educational institution cannot be revoked where it is not established that such institution functioned with profit motive: ITAT

October 23, 2020

++ Late fees u/s 234E cannot be levied when processing TDS statements for a period when enabling provisions were not in effect: ITAT

++ Penalty order issued u/s 271(1)(c) merits being quashed where it does not specify as to which sub-section has been invoked to initiate such proceedings: ITAT

++ Additions framed by AO are unsustainable where based on apprehension of assessee having unauthorisedly claimed deduction u/s 36(1)(vi) twice: ITAT

October 22, 2020

++ Search assessment order passed u/s 153A is unsustainable where no material incriminating the assessee is found in course of search proceedings: ITAT

++ Club expenses incurred by assessee cannot be allowed as business expenses, where they are found to have been incurred for personal use: ITAT

++ Proviso to section 36(1)(iii) mandates capitalization of interest only in respect of capital assets purchased out of borrowed funds: ITAT

++ Limitation period of six months for deciding the application for registartion u/s 12AA is applicable to remanded matters: ITAT

October 21, 2020

++ It is trite law that any refund payable to an assessee has to be disbursed at time of issuance of order u/s 143(1), unless the order withholding the refund has been passed u/s 241A: HC

++ Amalgamation of companies - it is necessary for the amalgamated company to satisfy the mandate of provisions u/s 72A before claiming set off of accumulated loss incurred by the amalgamating company: HC

++ Loss incurred on account of cancellation of forward contracts does not qualify as speculative losses falling within the provisions of Section 43(5): HC

++ An amount received by assessee on the transfer of family asset would attract the provisions of capital gains, when the same was a part of a family settlement: ITAT

October 20, 2020

++ Additions framed u/s 69 on account of unexplained investment, are unsustainable, where based on assumptions of there being unexplained assets & whereas no such asset came into existence in the assessee's name: HC

++ Penalty proceedings are invalidated where twin charges u/s 274 have both been struck off in the SCN issued to the assessee: ITAT

++ Expenses incurred on repairs cannot be treated as capital in nature, where such repair work was very essential: ITAT

++ Registration u/s 12AA granted to assessee with effect from a new date is unwarranted, where assessee had only applied for a duplicate registration certificate: ITAT

October 19, 2020

++ Payment made to a trust formed for the benefit of employees of the company, of which the assessee was a shareholder & whose shares the assessee had sold, does not qualify as expenditure incurred wholly in connection with transfer of asset: HC

++ Bogus purchases - only the profit element embedded therein is to be disallowed, rather than the entire quantum of purchases made: ITAT

++ Search assessment is invalid where it is completed even before search operations are conducted or where any material incriminating the assessee has not yet been found: ITAT

++ Where assessee did not claim exemption in respect of one residential property, the assessee can avail such benefit in respect of a second house or plot of land: ITAT

October 17 , 2020

++ When initiating penalty proceedings u/s 271(1)(c), the AO is obligated to specify the exact charges against the assessee which led to imposition of penalty: ITAT

++ Where assessee pays TDS under contractual liability, such expenditure merits being allowed: ITAT

++ Bogus purchases - Entire amount of purchases need not be disallowed & addition is to be framed only of the profit element embedded therein: ITAT

++ Additions framed based on information received from DIT (Investigation), are unsustainable, since such authority does not qualify as an external source in the nature of law enforcement agencies such as CBI, ED, DRI or SFIO: ITAT

October 16 , 2020

++ Power of revision cannot be invoked if there are two views possible in respect of an issue & where AO adopts one of these courses or where the CIT disagrees with such course taken by AO: ITAT

++ Application for exemption u/s 10(23C)(vi) is rightly rejected where claimant-institution does not furnish information necessary to verify its genuineness: ITAT

++ Penalty u/s 271AAB is unsustainable where specific charge forming basis for penalty proceedings, is not mentioned in the SCN: ITAT

October 15 , 2020

++ Where AO has thoroughly deliberated over an issue during original assessment, the AO cannot touch upon such issue again in rectification proceedings u/s 154: ITAT

++ Only the net interest expenditure has to be considered when computing disallowances u/s 14A - such disallowance cannot exceed quantum of exempt income earned in the relevant AY: ITAT

++ Expenditure incurred by pharmaceutical company on free samples sent to doctors & medical practitioners, cannot be disallowed solely on grounds that such sales promotion expenditure was discouraged by Indian Medical Council Regulations: ITAT

++ Advance received by assessee from a company in which assessee's spouse is a partner, will be construed as amount lent by the company on behalf of assessee's spouse - such amount is treatable as a gift from spouse: ITAT

October 14 , 2020

++ AO cannot frame disallowance on ad hoc basis without first rejecting the books of account: ITAT

++ Any liability which arises only on the happening of certain events in the future, qualifies as crystallized liability: ITAT

++ Order passed ex parte by CIT(A) is not sustainable, where it is not a speaking order: ITAT

October 13 , 2020

++ Additions on account of unexplained cash credit are unwarranted where identity & genuineness of creditors has been established: ITAT

++ Service of Show Cause Notice by way of affixture at address no longer being used by assessee, is invalid service: ITAT

October 12 , 2020

++ Disallowance of bogus purchases are to be restricted to difference between gross profit on normal purchases & purchases made through bogus routes: ITAT

++ Where a company meets its business exigencies of fund requirements by borrowing from its group concerns, such transaction do not attract provisions of deemed dividend u/s 2(22)(e): ITAT

++ Re-assessment order is invalid where grounds which form basis for such proceedings are entirely different from those grounds stated in the SCN: ITAT

++ Re-assessment based upon an issue which was already looked into during original assessment, qualifies as change of opinion & is invalid in law: ITAT

October 10 , 2020

++ Penalty u/s 271(1)(c) cannot be imposed where any concealment of particulars of income or furnishing inaccurate particulars thereof, is not attributed to the assessee: ITAT

++ Addition framed in hands of assessee for bogus purchases are unsustainable, where based on statements recorded from a third party in course of Survey proceedings conducted at third party's premises: ITAT

++ Power of revision need not be invoked by CIT where AO passed assessment order after due application of mind: ITAT

++ Deduction u/s 80IB(10) is allowed in respect of profit from sale of car parking space, where such area is integral part of housing project which is eligible for deduction: ITAT

++ Entity carrying out manufacture activity in SEZ unit is eligible for deduction u/s 10AA: ITAT

October 09 , 2020

++ Where income of a society arising from non-members, exceeds that income generated from its members, then principle of mutuality is inapplicable onto such institution: ITAT

++ Order passed ex parte merits being set aside to enable assessee to put forth evidence hitherto not presented before the authorities: ITAT

++ Books of accounts cannot be rejected solely because shortages claimed by assessee in current AY are lower than the shortages claimed & allowed in earlier AYs: ITAT

October 08 , 2020

++ Expenditure incurred on computer software does not entail any enduring benefit & so qualifies as capital in nature: ITAT

++ Where ECB loan is taken for capital expenditure, then interest earned on temporary parking of such fund is treatable as capital receipt: ITAT

++ That income which yielded exempt income is liable to be taken into consideration vide application of provisions under Rule 8D(2)(iii): ITAT

++ Deduction u/s 10A cannot be denied for returns u/s 139(1) not being filed within due date, where CBDT had condoned one-day delay in filing returns: ITAT

October 07 , 2020

++ Re-opening of assessment is unwarranted where it is not established that income escaped assessment due to failure of assessee to make full & true disclosure of material facts: HC

++ Penalty u/s 271(1)(c) is not imposable for every failure to perform a statutory obligation - penalty leviable if only assessee acted contumaciously or in wilful defiance of law: HC

++ A company amalgamated with another ceases to exist in the eyes of law - assessment order passed against such amalgamating company is void ab initio: ITAT

++ Additions framed on basis of conjecture & without pointing out any defect in books of account, are unsustainable: ITAT

++ Provisions of section 50C of the Act are inapplicable to sale of development rights of land owned by assessee: ITAT

October 06 , 2020

++ Appellate authorities can admit any new claims raised by assessee, where such fresh claims are made through revised returns of income: ITAT

++ 442-day delay in filing appeal not condonable where assessee provides vague explanations for delay & does not submit any evidence to bolster its case: ITAT

++ Penalty u/s 271D & u/s 271E is not imposable where assessee harbors bona fide belief of not having accepted any deposits: ITAT

++ AO is required to consider the actual transactions made by an assessee & to ignore any trivial mistakes occurring in books of accounts: ITAT

October 05 , 2020

++ High Court's intervention is unwarranted where issue at hand is purely factual & where efficacious remedy of appeal is available to assessee: HC

++ Although rule of Res Judicata is inapplicable to I-T cases, courts are still obligated to follow any settled position in law permeating through several AYs: HC

++ Additions framed upon invoking best of judgment assessment cannot be based on books of account which had earlier been rejected: ITAT

++ Penalty u/s 271D & u/s 271E is not imposable where assessee harbors bona fide belief of not having accepted any deposits: ITAT

October 03 , 2020

++ High Court not obliged to intervene in some issue not involving substantial question of law & if factual findings recorded by Tribunal are not perverse in any manner: HC

++ Re-assessment - reasons recorded for resorting to such proceedings, must necessarily be supplied to assessee - service of the same to assessee's AR is deemed to be valid: ITAT

++Provisions made for expenses under 31 heads, being a practice regularly followed over several AYs, cannot be deemed to be ad hoc provisions in current AY: ITAT

October 01 , 2020

++ Discount given on sales cannot be treated as being commission coming under scope of Section 194H: ITAT

++ Provisions u/s 14A r.w.r 8D are not applicable while computing the book profit u/s 115JB: ITAT

++ Additions framed on the basis of surmises and not based on any material incriminating the assessee, are unsustainable: ITAT