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DATE: May 15, 2018 (Date of pronouncement)
DATE: May 24, 2018 (Date of publication)
AY: 2013-14
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CITATION:
S. 40A(3) Rule 6DD: No disallowance can be made for cash payments if the transaction is genuine and the identity of the payee is known. Rule 6DD is not exhaustive. The fact that the transaction does not fall with Rule 6DD does not mean that a disallowance has to be per force made (all judgements considered)

The legal proposition that arises from the above decision of the Hon’ble Rajasthan High Court is that the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration and which should be examined before invoking the rigours of section 40A(3) of the Act

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DATE: December 22, 2017 (Date of pronouncement)
DATE: January 29, 2018 (Date of publication)
AY: 2012-13
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S. 145(2): Law on how revenue should be recognized by a developer of property under the “percentage completion method” in the light of Accounting Standards AS-1, AS-7 & AS-9, the Guidance Note on Accounting for Real Estate Transactions issued by the ICAI and several judgements on the issue explained

As per AS 7, the recognition of revenue and expenses by reference to the stage of completion of a contract is often referred to as the percentage completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed

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DATE: July 27, 2017 (Date of pronouncement)
DATE: August 24, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 143(2)/ 144C: Though service of the notice is not a condition precedent to conferment of jurisdiction upon the AO to deal with the matter, it is a condition precedent to making of the order of assessment. Accordingly, the s. 143(2) notice has not only to be issued before the expiry of the limitation period but has also to be served upon the assessee before the expiry of the limitation period. Conflict between VRA Cotton Mills (P&H) and Lunar Diamonds 281 ITR 1 (Del) explained in light of CBDT Circular No. 549 dated 31.10.1989

Service under the 1961 Act is not a condition precedent to conferment of jurisdiction in the ITO to deal with the matter but it is a condition precedent to making of the order of assessment. The Hon’ble High Court, in our opinion, lost sight of the distinction and under a wrong basis felt bound by the judgment in Banarsi Devi’s case

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DATE: May 24, 2017 (Date of pronouncement)
DATE: May 30, 2017 (Date of publication)
AY: 2011-12
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CITATION:
Penalty u/s 272A(2)(c) for delay in filing TDS returns cannot be levied if the delay was caused due to requirement to collect PAN of payees. The non-availability of the PAN of the payees is a reasonable cause. The delay is unintentional and it causes no loss to the revenue as the TDS has been deducted and deposited in the treasury. Wrong levy of penalty u/s 272A(2)(k) (failure to deliver TDS certificate) instead of u/s 272A(2)(c) (delay in filing TDS returns) shows that AO is not clear of the charge and vitiates the penalty proceedings

The assessee has submitted that since there were large number of deductees scattered throughout the country, a fact not disputed by the Revenue, it took them some time to collect the PANs of these deductees and thereafter, it was able to upload the e-TDS returns in the IT system maintained by the Revenue. Further, the taxes have deducted and deposited at the prescribed rate with delay of few days. Hence, there is no loss to the Revenue which is caused due to the delay in filing of the e-TDS returns which is totally unintentional. Further, our attention was drawn to the decision of the Coordinate Benches in case Collector Land Acquisition v. ACIT (2012) taxmann.com 22(Chd.), CIT Branch Manager (TDS), UCO Bank vs. ACIT [2013] 35 taxmann.com 45 (Cuttack – Trib) and Branch Manager, State Bank of India v. ACIT [2014] 41 taxmann.com 268 (Cuttack – Trib) wherein non availability of PAN was held to be a reasonable cause for delay in filing of the e-TDS return. Given the peculiarity of the facts in the present case where there was a change effected in the IT system for mandatory requirement of PANs of all deductees before the returns can be validated and uploaded, the fact that there were large number of deductees spread throughout the country and efforts were made by the assessee to obtain their PANs numbers, the fact that taxes have been deducted and deposited, hence no loss to the Revenue, we find that assessee has a reasonable cause for delayed filing of its e-TDS returns in terms of section 273B and the penalty under section 272(A)(K) is hereby deleted

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DATE: April 10, 2017 (Date of pronouncement)
DATE: April 22, 2017 (Date of publication)
AY: 2007-08
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Bogus purchases: Merely non-appearance of the supplier in absence of any other corroborate evidence cannot be a basis to justify the stand of the Revenue that the transaction of purchase is bogus

The only grievance of the Assessing Officer is that the assessee has failed to produce the party so as to establish genuineness of the transaction and secondly, no payment has been made to the party till the year end. The ld.CIT(A) while confirming the disallowance has stated that though confirmation has been obtained from the party, however, a simple confirmation is not sufficient to establish the fact of purchase without elaborating what more is required from the assessee to justify its claim

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DATE: November 25, 2016 (Date of pronouncement)
DATE: January 11, 2017 (Date of publication)
AY: 2007-08
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S. 143(3): An addition towards income cannot be made merely on the basis of the statement of a third party that an amount has been paid to the assessee in the absence of conclusive evidence

Now the issue which requires our consideration is whether the addition can be sustained solely on the basis of the statement of Shri Hanuman Yadav, when there is no material placed on record that Shri Hanuman Yadav has made any claim against the assessee in any court of law seeking cancellation of sale deed or filing a recovery suit. The Coordinate Bench of the Tribunal after following the ratio laid down by Hon’ble Supreme Court under the similar circumstances in Union of India vs. T. R. Verma 1957 SC 882 and Kishan Chand Chellaram vs. CIT, 125 ITR 713 (SC) has held in the case of Ghanshyam Das Agarwal vs. ITO in ITA No. 1161/JP/2010 that in the absence of any conclusive evidence the document could not have been disbelieved. The D/R could not point out any binding precedent wherein it has been held that the oral statement would over ride the documentary evidence. Therefore, respectfully following the decision of the Coordinate Bench in the case of Ghanshyam Das Agarwal vs. ITO in ITA No. 1161/JP/2010, we are of the view that the AO was not justified to make addition solely on the basis of the statement of Shri Hanuman Yadav when there was a registered sale deed and more particularly when the maker of statement has not challenged the sale deed before any court of law. It is also not placed on record whether the sale deed was executed under coercion.

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DATE: September 14, 2016 (Date of pronouncement)
DATE: September 21, 2016 (Date of publication)
AY: 2008-09
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S. 271B: Penalty for delay in furnishing tax audit report should not be imposed if there is no mala fide reason for the delay. Dispute with auditor is a reasonable cause u/s 273B for the delay in furnishing the tax audit report

The delay made by the assessee firm in filing the return of income is for the first time i.e. in A.Y. 2008-09 which was on account of dispute of audit fee between the assessee and the auditor. Hence, it appears that the dispute with the statutory auditor is a reasonable cause within the meaning of Section 273B as held in the case of Kripa Industries (I) Ltd. vs. JCIT by ITAT Pune Bench (2002) 76 TTJ 502 (Pune) that there is no mala fide reason for not obtaining the accounts audited in time and penalty u/s 271B should not be imposed

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DATE: July 27, 2016 (Date of pronouncement)
DATE: August 5, 2016 (Date of publication)
AY: 2010-11
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CITATION:
S. 50C: Valuation is a matter of estimation and some degree of difference is bound to be there. If the difference between the stamp duty valuation and the declared sale consideration is less than 10%, addition u/s 50C should not be made

Valuation is always a matter of estimation where some degree of difference is bound to occur. The difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10%

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DATE: May 6, 2016 (Date of pronouncement)
DATE: June 2, 2016 (Date of publication)
AY: 2007-08
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Penalty under Explanation 5A to s. 271(1)(c) cannot be levied on the basis of a mere surrender by the assessee if no incriminating material has been found during search. MAK Data 358 ITR 593 (SC) considered

It is undisputed fact that during the course of search, no incriminating documents were found and seized. The assessee surrendered the additional income under section 132(4) at Rs. 15 lacs and requested not to impose penalty u/s 271(1)(c) of the IT Act. The AO imposed the penalty by invoking the Explanation 5A to section 271(1)(c) of the Act, which has been confirmed by ld. CIT (A) by considering the judgment of Hon’ble Supreme Court in the case of MAK Data Pvt. Ltd. vs. CIT (2013) 358 ITR 593 (SC). But for imposing the penalty under Explanation 5A on the basis of statement recorded during the course of search, it is necessary to be found incriminating documents and is to be considered at the time of assessment framed under section 153A of the Act

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DATE: November 4, 2015 (Date of pronouncement)
DATE: April 22, 2016 (Date of publication)
AY: 2009-10
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CITATION:
S. 40(a)(ia), though inserted w.e.f. 01.04.2013, is retrospective in operation because it is curative and intended to remedy an unintended consequence. Accordingly, if the payee has paid the tax, the payer will not suffer a disallowance

The second proviso to s. 40(a)(ia) inserted by the Finance Act, 2012 is curative in nature intended to supply an obvious omission, take care of an unintended consequence and make the section workable. Section 40(a)(ia) without the second proviso resulted in the unintended consequence of disallowance of legitimate business expenditure even in a case where the payee in receipt of the income had paid tax, and, therefore, the second proviso although inserted with effect from 1st April, 2013 is curative in nature and has retrospective effect

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