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of <h1>ITAT Mumbai 'F' Bench revises addition under section 68, citing pandemic delays</h1> <h3>Khyati Sales Agency Pvt. Ltd. Versus DCIT, Cent. Cir-8 (1), Mumbai</h3> Khyati Sales Agency Pvt. Ltd. Versus DCIT, Cent. Cir-8 (1), Mumbai - TMI Issues:1. Disposal of Miscellaneous Applications related to ITA. Nos. 7105/M/2017 to 7108/M/2017 for A.Ys. 2006-07 to 2009-10.2. Addition of income under section 68 of the Income Tax Act, 1961 based on accommodation entries.3. Appeal regarding addition of Rs. 2,34,52,668/- under section 68 for A.Y. 2006-07.4. Consideration of decisions in cases of Chaitali Sales Agency Pvt. Ltd. and Gold Star Finvest Pvt. Ltd.5. Procedural issue of delayed pronouncement of orders due to Covid-19 lockdown.Issue 1: Disposal of Miscellaneous ApplicationsThe Miscellaneous Applications related to ITA. Nos. 7105/M/2017 to 7108/M/2017 for A.Ys. 2006-07 to 2009-10 were disposed of by the Hon'ble ITAT Mumbai 'F' Bench. The applications were filed in connection with the order passed for A.Y. 2006-07, and the decisions in the cases of Chaitali Sales Agency Pvt. Ltd. and Gold Star Finvest Pvt. Ltd. were not initially considered. The order dated 25.03.2019 was recalled due to the mistake apparent on record, and the case was directed to be refixed by the Registry.Issue 2: Addition of Income under Section 68The appeal pertained to the addition of Rs. 2,34,52,668/- under section 68 of the Income Tax Act, 1961, based on accommodation entries. The appellant argued that only the commission earned should be added to taxable income, not the entire transaction amount. The assessment was completed treating 4% as income, which was later revised to 100% addition. The CIT(A) upheld the disallowance, leading to the filing of the Miscellaneous Application.Issue 3: Appeal for A.Y. 2006-07The appeal for A.Y. 2006-07 was related to the addition of income under section 68. The appellant contended that the commission earned should be the taxable amount, not the full transaction value. The case involved the issuance of accommodation entries and the assessment under section 153C of the Act.Issue 4: Consideration of Previous DecisionsThe decisions in the cases of Chaitali Sales Agency Pvt. Ltd. and Gold Star Finvest Pvt. Ltd. were not initially addressed in the order dated 25.03.2019. These cases were confirmed by the Hon'ble Bombay High Court, and their applicability could impact the merits of the present case. Therefore, the order was recalled to consider these decisions, as they were relevant to the case.Issue 5: Procedural Delay due to Covid-19 LockdownThe delay in pronouncing the order was attributed to the Covid-19 lockdown situation, which severely impacted judicial functioning. The lockdown restrictions and subsequent extensions led to disruptions in the functioning of the ITAT Mumbai. The exceptional circumstances caused by the pandemic and the subsequent orders extending limitations justified the delay in pronouncing the order. The Miscellaneous Applications filed by the assessee were allowed due to these exceptional circumstances.In conclusion, the judgment addressed various issues related to the disposal of Miscellaneous Applications, the addition of income under section 68, consideration of previous decisions, and the procedural delay caused by the Covid-19 lockdown. The order was recalled to consider relevant decisions, and the delay in pronouncing the order was justified due to the unprecedented circumstances caused by the pandemic.
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