TODAY'S CASE (DIRECT TAX)

December 31, 2021

++ I-T - Excess of income over expenditure by itself is no reason to hold that charitable trust is not engaged in charitable activities: HC

++ I-T - Prior approval u/s 151 acts as safeguard against re-assessment in an arbitrary fashion & hence such approval must be granted with due application of mind & recording of reasons for upholding the same: HC

++ I-T - Sum of money incurred for earning profit from partnership firm which is already exempt u/s 10(2A) warrants no disallowance u/s 14A: ITAT

++ I-T - If objects of assessee are charitable in nature, and it is proposed to carry out its activities in accordance to objects, then CIT (E) cannot reject registration application u/s 12AA : ITAT

++ I-T - redemption of preference shares is a sale and is also a transfer by relinquishment of asset by shareholder and accordingly the same is taxable as capital gains: ITAT

++ I-T - Share application money by closely held company - nature and source of such sum to be explained: ITAT

++ I-T - If no inquiry nor hearing opportunity given, Sec 263 order is not valid: ITAT

December 30, 2021

++ I-T - Offence of non-filing of ITR cannot be charged in respect of PAN sought to be surrendered by assessee: HC

++ I-T - Writ remedy cannot be invoked where assessee received adequate opportunity to make its representations & file necessary documents : HC

++ I-T - Stage of proceedings is irrelevant for alteration of charges: HC

++ I-T - Where AO did not touch upon a certain issue despite all material being available, it cannot be inferred that AO did not apply mind when passing the order: HC

++ I-T - Re-assessment is invalidated where sanction is mechanically granted due to AO not having submitted entire file before sanctioning authority: HC

++ I-T - Assessment order passed u/s 144 r/w 147 is unsustainable where it is found that the officer who passed the order did not have the requisite jurisdiction to do so: ITAT

++ I-T - AO, while framing assessment u/s 153A in respect of unabated assessment, can make disallowance only on basis of incriminating material unearthed during search: ITAT

++ I-T - Intimation u/s 143(1) should be communicated if there is an adjustment made in return resulting either in demand or reducing in refund and any non-communication cannot be enforced and are not valid :ITAT

December 29, 2021

++ I-T - Search assessment cannot be initiated based on any document recovered during search operation but which has not been conclusively linked to the assessee : HC

++ I-T - Assessment order cannot be sustained where it is passed without granting opportunity of personal hearing to the assessee: HC

++ I-T - Re-assessment order merits being quashed where assessee's reply to SCN not considered: HC

++ I-T - Notice or order passed in respect of an entity which has ceased to exist due to its amalgamation with another entity, is invalid : HC

++ I-T - Power of revision under Section 263 cannot be exercised based on surmises alone & where AO is found to have made adequate enquiry into issues involved: ITAT

++ I-T - While assuming jurisdiction u/s. 263, it is mandatory for Pr. CIT to state reasons for considering assessment order as erroneous in so far as prejudicial to interest of revenue: ITAT

++ I-T - If there is no evidence against someone being an entry provider, it cannot be assumed that he managed to route money from creditors of assessee: ITAT

December 28, 2021

++ I-T - Expenses incurred on raising floor height of godown is revenue in nature where no new asset comes into existence & where such expense ensures smooth functioning of existing business: HC

++ I-T - Where primary facts necessary for assessment are fully & truly disclosed, the AO is entitled to reopen the assessment on a change of opinion : HC

++ I-T - Interest under Section 215 cannot be charged during re-assessment proceedings: HC

++ I-T - A dopting date of purchase of flat on 10.02.2007 the assessee's claim for Sec 54F is valid as it is within one year : ITAT

++ I-T - Profit on sale of land is required to be taxed in hands of firm & not assessee as AO fails to bring any evidence suggesting funds out of personal resources : ITAT

++ I-T - If receipt of amount of ST is included in income in earlier years, then its payments also qualify for deduction from total income : ITAT

December 27, 2021

++ I-T - Physical appeal filed by assessee is not invalid if assessee is unable to file electronic appeal on account of inaccessibility to Income tax portal : ITAT

++ I-T- Matter of share capital issue can be remanded to verify year when amount is received and credited by assessee as if it is prior to AY under consideration, then addition u/s 68 can be deleted : ITAT

++ I-T - Where on date of search & seizure proceedings assessment has not abated, no addition can be made in absence of any incriminating material : ITAT

++ I-T - In absence of contrary being proved by Revenue and following decision of Tribunal in assessee's own case for AY 2010-11, claim of deduction u/s 80P(2)(a)(i) is to be allowed : ITAT

++ I-T - Once loss is disclosed in ITR & it is not disputed in scrutiny assessment proceedings, such loss is deemed to have been accepted & its quantification cannot be disputed later: ITAT

++ I-T - When there is no order from HC on issue of disallowance of payment to charitable trust, then order of Tribunal is binding on Revenue: ITAT

++ I-T - Application for rectification & revision cannot be filed concurrently: ITAT

++ I-T - Addition cannot be made solely based on statement made u/s 133A without substantiating material: ITAT

December 24, 2021

++ I-T - Where from given set of circumstances, two inferences of facts can be drawn, then inferences drawn by lower court will not be interfered with by higher court: HC

++ I-T - Re-assessment is unsustainable where causal link leading to inference of taxable income escaping assessment is not established: HC

++ I-T - Re-assessment initiated by new AO due to disagreement with findings of erstwhile AO is invalid, being based on change of opinion: HC

++ I-T - When assets of a particular block are used for business, all assets falling within the block must not necessarily be simultaneously used for being entitled to depreciation : ITAT

++ I-T - In absence of any evidence on record that assessee maintained any foreign bank account in AY under appeal or earned any interest thereon, the CIT (A) is justified in deleting addition on account of interest on money lying in HSBC Bank at Geneva : ITAT

++ I-T - Successor AO cannot issue notice for reopening assessment based on reasons recorded by predecessor: ITAT

++ I-T - Circumstantial and surrounding evidences cannot be ignored while deciding whether a transaction is sham or genuine : ITAT

++ I-T- CIT (A) is right to allow set off of MAT credit for surcharge and education cess instead of adjusting same from tax on total income before charging surcharge & cess : ITAT

December 23, 2021

++ I-T - Re-assessment is not tenable if mandatory approval u/s 151 is not obtained & where reasons recorded by AO are not final: HC

++ I-T - Where on consideration of material on record, one view conclusively is taken by AO, it is not be open to re-open assessment based on same material so as to take another view: HC

++ I-T - Re-assessment is unsustainable if based on change of opinion & where assessee makes full & true disclosure of relevant facts necessary for assessment: HC

++ I-T - Re-opening of assessment is unsustainable when there is no tangible material available on record to conclude that income had escaped assessment : HC

++ I-T - Issue of violating Sec 13 when building contract work is awarded to Managing Trustee and assessee's right to exemption u/s 11, needs to be remanded as there has been no discussion on such aspects, in order passed by lower authorities : HC

December 22, 2021

++ I-T - Once tangible basis has been disclosed for re-opening assessment, it would not be appropriate for writ court to prevent enquiry whatsoever by AO: HC

++ I-T - Petition filed by a party is not maintainable where it approaches court with unclean hands, having suppressed material facts with intention to impede administration of justice : HC

++ I-T - Government/Executive cannot make or change law of the land by way of Explanations to Notifications without specific Authority from Legislature to do so : HC

++ I-T - Expenditure on replacement of dies and moulds are to be allowed as current repairs: HC

++ I-T - Clarification by ITO cannot add new qualifications beyond provisions of DTVSV Act, 2020 and that clarification can only operate within contours specified in DTVSV Act, 2020: HC

++ I-T - Interest earned by cooperative society engaged in banking, arising from deposits made with other cooperative banks, is eligible for deduction u/s 80P : HC

++ I-T - Disallowance u/s 14A cannot exceed exempt income : ITAT

++ I-T - ALV of property, which could not be let out during relevant year, should be nil as per sec 23(1)(c): ITAT

++ I-T - Case can be remanded to prove creditworthiness of Directors and genuineness of transactions : ITAT

December 21, 2021

++ I-T - u/s 221, penalty can be warded off only if assessee shows that default was for good and sufficient reasons: ITAT

++ I-T - Case can be remanded as assessee failed to furnish source of cash available with creditors: ITAT

++ I-T - If borrowed funds are utilized for purpose of business, interest paid thereon would be squarely allowable as deduction u/s 36(1)(iii): ITAT

++ I-T - Depreciation claimed cannot be denied on the ground that plant and machinery of new assets purchased during the year are not put to use : ITAT

++ I-T - Deduction on account of bad debt is allowed u/s 36(l)(vii) r.w.s. 36(2) by merely writing off debt as irrecoverable in assessee's accounts : ITAT

December 20, 2021

++ I-T - Deduction on account of CSR expenses actually incurred can be disallowed by invoking Explanation 2 to Section 37(1) of the Act, only from AY 2015-16 as same is applicable prospectively w.e.f. 01/04/2015: ITAT

++ I-T - Re-assessment can be sustained where AO fails to show there to be any cogent reasons leading to formation of belief that taxable income had escaped assessment: ITAT

++ I-T - Periodic maintenance cost incurred by assessee is an allowable expenditure u/s 37(1): ITAT

++ I-T - On account of failure of assessee to prove genuineness of purchases made from parties, profit element from these purchases shall be estimated at 4%: ITAT

December 18, 2021

++ I-T - There is an error in levying penalty u/s 271D when no tax avoidance and tax evasion is alleged or proved : ITAT

++ I-T- Explanatory memorandum to Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021, thus additions made u/s 36(1)(va) deserves to be deleted : ITAT

December 17, 2021

++ I-T - Since activities carried out is charitable in nature even under amended definition u/s 2(15) hence, assessee is entitled for exemption u/s 11 : ITAT

++ I-T- Late deposit of employees contribution to provident fund and ESI, cannot be disallowed if it is deposited before the due date of the filing of the return : ITAT

++ I-T- Notice u/s 148 issued after lapse of four years from relevant assessment years without obtaining approval from Pr. CIT/CIT has to be set aside : ITAT

++ I-T- If in all previous AYs, assessee's claim of rent as income from house property has been accepted, hence following rule of consistency such claim can be allowed in current AY: ITAT

++ I-T - Assessee has not written back sundry creditors to its income as no longer payable, hence, liability has not ceased to exist, provisions of Sec 41(1) cannot come into operation at all: ITAT

++ I-T - Omission on part of legal counsel to suggest filing an appeal, should not result in assessee facing penalty & interest along with tax demand: ITAT

++ I-T - No addition in respect of share capital can be made without any incriminating material found during course of search : ITAT

++ I-T - Reopening of assessment cannot be made on mere suspicion in absence of any reliable information or evidence to form belief that income has escaped assessment : ITAT

December 16, 2021

++ I-T - Additions u/s 68 on account of unexplained cash credits cannot be framed based solely on suspicions, where assessee discharges initial onus of establishing creditworthiness of donors: ITAT

++ I-T - Expenses incurred by industrial unit in overhauling old machinery qualifies as revenue in nature where no new asset is created & preserving old machinery entails no enduring advantage : ITAT

++ I-T - Assessment completed u/s 143(1) or 143(3) cannot be disturbed unless there is any incriminating material found in course of search relatable to such AY : ITAT

++ I-T - Since AO had issued notice u/s 142(1) calling for all details of share subscribers/share premium, PCIT u/s. 263 could not pass revision order on finding that source of share subscribers had not been properly enquired by AO : ITAT

++ I-T - CIT (A) in exercise of revisional jurisdiction cannot set aside assessment order for sole purpose of initiating penalty proceedings merely because of failure of AO to record his opinion about leviability of penalty : ITAT

++ I-T - After amendment to Explanation-1 to section 10(10D) a Keyman Insurance Policy even on assignment would remain such, hence, would come within exception provided u/s 10(10D)(b) therefore would not be eligible for exemption u/s 10(10D) : ITAT

++ I-T - Documents found from premises of third parties during search conducted u/s 132(1) are relevant only if they incriminate assessee : ITAT

December 15, 2021

++ I-T - Disallowance u/s 14A cannot be made where assessee did not utilise any interest-bearing funds for purpose of making investment: ITAT

++ I-T- Re assessment order passed on basis of 'change of opinion' as against that as is held while framing regular assessment u/s 143(3) can not be sustained : ITAT

++ I-T- Since notice issued u/s 148 is not validly served on the assessee, therefore, assessment order passed u/s 143(3) r.w.s. 147 without valid service of notice u/s 148 is  void ab initio : ITAT

++ I-T - Without getting any defect in assessee's books regarding genuineness of consultancy charges, consultancy fee incurred wholly for business purpose cannot be disallowed on ad-hoc basis: ITAT

++ I-T - In absence of factual details, AO has rightly treated cost of software purchases as capital expenditure and allowed applicable depreciation : ITAT

++ I-T - Case can be remanded as lower authorities has proceeded with matter on the basis of misconceived and incorrect facts : ITAT

++ I-T - Subsequent mode of acquisition will not change nature of taxability : ITAT

December 14, 2021

++ I-T - Re-opening of assessment beyond 4-year limitation period is unsustainable when there is no tangible evidence to prove that any taxable income escaped assessment: HC

++ I-T - Additions u/s 69A on account of unexplained money cannot be framed based on conjecture alone: HC

++ I-T- Addition made simply based on statement recorded during course of assessment proceedings and without giving reference to any incriminating material found during course of search is not sustainable : ITAT

++ I-T - Rent or revenue derived from land in India used for agricultural purpose also qualifies as agricultural income: ITAT

++ I-T - If some incidental activities are carried out by a charitable organization whose dominant and prime objective is not a profit motive, organization cannot be deemed to be pursuing non charitable objects : ITAT

December 13, 2021

++ I-T - CBDT Circular dated 06.09.2019 r.w. OM dated 16.09.2019 is applicable to appeals filed on or after 16.09.2019 by Revenue, where tax effect may be low but appeal can still be filed on merits: HC

++ I-T - Revenue authorities can initiate reassessment proceeding on or after 01.04.2021, only as per substituted law u/s 148A and not pre-existing laws : HC

++ I-T - Revenue authorities can initiate reassessment proceeding on or after 01.04.2021, only as per substituted law u/s 148A and not pre-existing laws : HC

++ I-T - AO cannot make addition u/s 68 based on suspicion in absence of any legally supported documents : HC

++ I-T - Excess stock found in course of search with neither separate identity nor independent physical existence cannot be treated as undisclosed investment u/s 69 : HC

December 11, 2021

++ I-T- Since assessee has furnished relevant details and evidences to prove genuineness of share transaction, addition made u/s 68 treating same as unexplained cash credit cannot be sustained : ITAT

++ I-T- Additional evidences submitted by assessee being necessary for deciding appeal, can be admitted : ITAT

++ I-T- A ssessee is entitled to claim exemption u/s 11 with respect to its activity of renting out hostel facilities to students being in nature of education : ITAT

December 10, 2021

++ I-T - Re-assessment is unsustainable where it is not based on any tangible evidence establishing that taxable income escaped assessment : HC

++ I-T - Transfer of assessment from one jurisdiction to another cannot be sustained where no reasons are recorded for such transfer : HC

++ I-T - Petition seeking to invoke revisional jurisdiction under Sec 264 cannot be dismissd in limine : HC

++ I-T - TDS u/s 194G not to be levied incentives earned by commission agents selling lottery tickets issued by various Government Departments: HC

++ I-T - Retrospective provision in taxing Act which is for removal of doubts cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood : ITAT

++ I-T - Since application for registration u/s 12AA had already attained finality and CIT (E) had not drawn any adverse inference with regard to 'lease hold land' fee concession, therefore order of CIT (E) denying registration u/s 12AA is bad in law: ITAT

++ I-T- Since AO is shifting his responsibility to special auditor thus reference to special audit is an invalid reference contrary to law, thus assessment order passed therefore in extended period as a consequence of invalid reference is barred by limitation : ITAT

December 09, 2021

++ I-T- In absence of any incriminating material found in course of search in premises of assessee, addition made in respect of long term capital gain is not sustainable : ITAT

++ I-T- CIT(A) ought not to have cancelled orders imposing penalty as order holding assessments to be invalid has not become final: ITAT

++ I-T- Reference for special audit u/s 142(A) is invalid and the assessment orders so passed in the extended time are held to be barred by limitation : ITAT

++ I-T- Capital gain arising on sale of agricultural land - since it is not capital asset u/s. 2(14)(iii) it is not chargeable to tax : ITAT

++ I-T- Since no satisfaction as contemplated u/s 153C is recorded by AO of searched person thus assessment order passed is illegal for assumption of jurisdiction u/s 153C: ITAT

++ I-T - Since assessee is maintaining regular books of account which are audited and all transactions are fully supported by bills and vouchers, no addition can be made in respect of genuine losses : ITAT

++ I-T- AO estimated much higher net income from contract which comes to unreasonable net profit and CIT(A) rightly estimated net profit of assessee at 8% of contract receipt which resulted into restriction of addition : ITAT

++ I-T- If disallowance of provision for expenses and claim for donation has enhanced business income then consequential claim for deduction u/s 80P(2)(a)(i) should also be worked out on enhanced income : ITAT

December 08, 2021

++ I-T - Faceless Assessment - High Court directs Revenue to ascertain if NFAC can rescind final order passed without issuing SCN or passing draft order: HC

++ I-T - If assessee's intention is to merely let out property or its part, resultant income must be assessed only as income from other sources : HC

++ I-T- Once acquisition proceedings are initiated under law, character of acquisition remains compulsory in nature and hence Section 194LA will apply : HC

++ I-T - Deduction cannot be allowed simultaneously u/s 80IA & u/s 80HHC: HC

++ I-T - Payment made by Trust to trustees towards services rendered, if found to be unreasonable, does not amount to violation of Section 13(1)(c): HC

++ I-T - Non-filing of statement u/s 194(c)(7) cannot take away benefit, which will accrue to assessee u/s 194(c)(6) : HC

December 07, 2021

++ I-T - Assessment order will be held to be valid only when it is backed by proper reasoning : HC

++ I-T - For purpose of claiming deduction u/s 57(iii), it is not required that expenditure incurred is deductible only if expenditure results in any actual income: HC

++ I-T - U/s 132, authorised officer who conducts search and seizure becomes functus officio, w.r.t. seized articles/documents, after 15th day from seizure : HC

++ I-T - Undisclosed income - Additions unsustainable where based solely on unsigned documents & not backed by evidence: ITAT

++ I-T - Since assessee has been able to discharge initial burden establish identity, creditworthiness and genuineness as regards transactions concerning allotment of shares, no addition required to be made u/s 68 & 69C : ITAT

December 06, 2021

++ I-T - High Court need not delve into merits of issue involving transfer pricing adjustment due to factual nature of such exercise: HC

++ I-T - Where complainant is a public servant, period of limitation for filling application against acquittal order is six months and in every other case it is 60 days u/s 378(5) of the Cr. P.C : HC

++ I-T- Re-issuance of notice already issued by AO having jurisdiction u/s 143(2) and now subsequently transferred to another AO is not required :ITAT

++ I-T- When AO completed assessment u/s 143(3) making certain addition in respect of unexplained investment he can't reopen the assessment for enhancement of addition merely on basis of report of DVO : ITAT

++ I-T- Revisional proceedings are not rightly held as cash receipts on account of sales cannot be doubted if the assessee has sufficient stock : ITAT

December 04, 2021

++ I-T- Where declaration of assessee in respect of unaccounted professional receipts is found to be correct and in order for all years and in fact found to be more than figures as worked out by Department, same has to be sustained: ITAT

++ I-T - PCIT(C) cannot pass exparte order cancelling registration granted u/s 12AA without providing due and reasonable opportunity of being heard to assessee : ITAT

December 03, 2021

++ I-T - Purpose of e-Assessment scheme is defeated where final order is passed in undue haste & without allowing assessee to file reply to draft order - costs of Rs. 25000/- imposed on AO : HC

++ I-T - Interest earned on funds received by assessee from GOI Department for setting up projects on their behalf and returned to them is not to be assessed in hands of assessee : HC

++ I-T - Submitting incorrect claim for expenditure does not amount to inaccurate particulars of such income, liable for penalty u/s 271(1)(c) : HC

++ I-T - As per CBDT Circular 3/2016 assessee is not required deduct TDS as consideration received on 01.04.2000 to 31.05.2013 is to be taxed as capital gains in hands of recipients : ITAT

++ I-T - Reference made by AO to DVO for determination of different aspects of matter being invalid, assessment order is to be set aside : ITAT

++ I-T - Additions framed on allegations of unaccounted payments made by assessee, cannot be sustained where based on presumptions alone : ITAT

++ I-T - Notice issued by AO u/s 274 r.w.s. 271(1)(c) is bad in law, if it does not specify under which limb of sec. 271 (1)(c) penalty proceedings have been initiated : ITAT

++ I-T - No disallowance can be made when no payments made by assessee violate provisions of sec. 194C: ITAT

December 02, 2021

++ I-T - Exemption of income from computation in total income, merits being disallowed where assessee makes payments having no relation to general purpose of running trust: HC

++ I-T - deduction claimed u/s 80HHE is to be worked out on basis of adjusted book profit u/s 115JA : HC

++ I-T - Power of revision is rightly exercised where AO omits to make adequate enquiry into relevant issues: ITAT

++ I-T - Approval u/s 80G merits being allowed to a trust engaged in activities of a religious as well as charitable nature : ITAT

++ I-T - Brought forward business loss can only be set off against business profit and not from interest income which falls under head of 'income from other sources' : ITAT

++ I-T - Property of assessee being under construction property cannot have generated any income chargeable under head Income from house property and assessee being owner of one residential property is eligible for exemption u/s 54F : ITAT

++ I-T- In absence of meeting mandatory requirement of belongingness of seized documents with assessee, AO is not within his power to invoke section 153C, therefore, AO is statutorily correct in invoking provisions of section 148 : ITAT

December 01, 2021

++ I-T - Additional depreciation in respect of vehicles is allowable only where they are used in the business of the assessee : HC

++ I-T - Deduction u/s 80IB(10) is allowed where housing projects are approved by local authorities on land measuring a minimum of one acre & irrespective of number of housing projects : HC

++ I-T- If claim of capital gain is accepted by AO after necessary inquiry then order of AO cannot be branded as erroneous merely because order does not contain details which PCIT feels should have been included: HC

++ I-T - CIT(A) enjoys plenary & co-terminus powers as that of AO; CIT(A) can entertain any claims of assessee which were inadvertently omitted to be raised: ITAT

++ I-T - Mere deficiency in agreement can not invalidate the agreement when both parties have acted on the terms of the agreement for which sufficient documentary evidences have been filed by the assesse before lower authorities : ITAT

++ I-T - In limited scrutiny assessment AO cannot travel beyond scope to enquire about TDS details which is not the subject-matter of such limited scrutiny : ITAT

++ I-T - Sum received as corpus fund by flat owner in housing society, on account of hardship caused by re-development, qualifies as capital receipt not taxable as income of assessee: ITAT

++ I-T - Penalty u/s 271AA is not imposable where assessee pays tax with interest in respect of surrendered income declared subsequent to search operations: ITAT