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Case Laws
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AI Text Quick Glance by AI Headnote
AI TextQuick Glance (AI)Headnote
Section 263 revision fails when assessment inquiry was made and no material shows error or revenue prejudice.
Section 263 revision is not sustainable where the assessment record shows that the Assessing Officer raised specific queries on the balance written off claim and the assessee furnished replies with supporting details. A revisional authority cannot invoke Explanation 2 to section 263 merely on a general allegation that further verification should have been made. Revision requires material showing both error in the assessment order and prejudice to the interests of revenue; a bare assertion of insufficient inquiry is not enough without evidence that additional verification would have changed the result.
AI TextQuick Glance (AI)Headnote
Mandatory approval for reassessment notice was defective, so the notice and assessment were treated as invalid.
Reassessment proceedings were held invalid because the approval for issue of notice was obtained from the Principal Commissioner, while the governing provision required approval from the Principal Chief Commissioner after three years from the end of the relevant assessment year. That defect was treated as jurisdictional and went to the root of the reassessment power. As the mandatory precondition was not satisfied, the notice and the consequential assessment could not stand, and the assessment order was quashed in favour of the assessee.
AI TextQuick Glance (AI)Headnote
Redevelopment compensation as capital receipt, and appellate enhancement requires prior notice and hearing before income is increased.
A redevelopment-related lump-sum paid for hardship, shifting and temporary displacement was treated as a capital receipt rather than consideration for transfer, so it was held not taxable as capital gains in the assessee's hands. The separate addition relating to additional carpet area was introduced at the first appellate stage and amounted to enhancement of income; because enhancement requires a reasonable opportunity of being heard and no such opportunity was shown, that direction was set aside and the matter remitted for reconsideration after due notice and hearing.
AI TextQuick Glance (AI)Headnote
CSR-linked donations may qualify for section 80G deduction despite business-expense disallowance when statutory donation conditions are met.
Section 263 revision cannot rest on an alleged lack of enquiry where the Assessing Officer specifically examined a section 80G claim, considered supporting material and adopted a possible view; a different view alone does not make the assessment unsustainable. CSR expenditure disallowed under section 37(1) remains capable of qualifying separately for deduction under section 80G, which operates at the gross-total-income stage, if the payment is a donation to an eligible institution and all statutory conditions are met. CSR origin alone does not create a statutory bar to the deduction.
AI TextQuick Glance (AI)Headnote
Genuine share transactions defeat penny stock suspicion and prevent denial of capital gains exemption and unexplained cash credit additions.
Contemporaneous documentary evidence, including share acquisition records, demat credit, exchange-based sale, SEBI-registered brokers and banking channels, is treated as strong support for the genuineness of long-term share transactions. A general investigation report or a penny stock allegation, without independent corroboration or defects in the assessee's records, is insufficient to deny exemption under section 10(38) or to sustain an addition under section 68. Once the share transaction is accepted as genuine, any consequential allegation of accommodation-entry commission also fails for want of an independent . The text emphasises that later suspension of trading does not by itself invalidate earlier completed transactions.
AI TextQuick Glance (AI)Headnote
Limitation under customs law barred the demand where extended period could not be justified on the facts.
Limitation governed the dispute, and the classification issue was not examined. A show cause notice issued about four years after the initial clearance was found unsustainable because the appellant had consistently classified prior and subsequent imports in the same manner, supporting a bona fide belief. The absence of penalty under Section 114AA of the Customs Act, 1962 did not itself establish that there was no suppression, but the record still did not justify use of the extended period. The principle applied was that the extended period under Section 28(1) is available only where suppression or wilful misstatement is established, so the demand was held time-barred.
AI TextQuick Glance (AI)Headnote
Extended limitation and CENVAT credit denial fail where bona fide conduct and record evidence defeat suppression and delay objections.
Extended limitation could not be invoked where the taxpayer had commenced taxable activity, availed and used input service credit, and sought GST migration, because the record showed bona fide conduct rather than suppression; the show cause notice was therefore time-barred and the demand could not survive. CENVAT credit also could not be denied on the ground of delayed availment, because the Tribunal found that the credit had been taken and used within the relevant period and the objection was factually unsupported on the record. The impugned order was set aside with consequential relief.
AI TextQuick Glance (AI)Headnote
SARFAESI procedure and contempt jurisdiction determined the challenge: enforcement measures were set aside, while contempt was not entertained.
A SARFAESI challenge succeeded where the borrower questioned the demand notice, possession notice and the Section 14 order, and the Tribunal found no material showing any borrower objection under Section 13(3A) but also no rebuttal from the secured creditor on alleged defects in service, affixture and publication of the possession notice or on compliance verification before invoking Section 14. The possession notice and the magistrate's order were set aside for non-compliance with mandatory procedure. A separate contempt complaint based on breach of the stay order was not entertained because the Tribunal noted it had no contempt jurisdiction, and the complaint was closed.
AI TextQuick Glance (AI)Headnote
Transfer pricing on ESOP and RSU benefits fails where no actual cost or liability was borne by the assessee.
Transfer pricing adjustment on ESOP or RSU employee perquisite value was held unsustainable where the assessee incurred no actual cost and recorded no corresponding liability. The relevant arm's length computation required profit margin to be derived from costs actually incurred, and "incurred" was read as an existing financial obligation or outflow. Because the foreign parent granted the shares, the assessee neither acquired the shares nor bore the grant cost, and the TDS reimbursement was treated as a reimbursement without mark-up. A hypothetical or notional cost could not be imputed for transfer pricing purposes, and the adjustment was deleted.
AI TextQuick Glance (AI)Headnote
Comparability adjustments under transfer pricing require import duty exclusion and working capital relief where material differences distort margins.
Under the Resale Price Method, import duty borne on imported traded goods must be excluded from operating cost where the duty materially affects comparability with uncontrolled comparables having negligible import content, because Rule 10B requires reasonably accurate adjustments for material differences affecting gross profit margins. Working capital differences are also a recognised comparability factor; where the assessee furnishes the necessary data, the adjustment should be considered in determining the arm's length price. On these principles, relief was granted on both import duty and working capital adjustment, resulting in partial allowance of the transfer pricing claim.
AI TextQuick Glance (AI)Headnote
Online coaching is commercial training, not OIDAR; Rajasthan place-of-supply rules make the supply intra-State.
Digitally delivered coaching for competitive examinations remained commercial training and coaching because the live classes, recorded lectures, mentoring, doubt-clearing sessions, tests, and study material showed instructor-led training; the platform was only the mode of delivery, so the service did not fall within OIDAR. For place of supply, the specific rule for training services applied, and because the supplier's operations and the place of supply were both in Rajasthan, the supply was treated as intra-State despite students being outside the State. The tax liability was therefore CGST and Rajasthan SGST, not IGST.
AI TextQuick Glance (AI)Headnote
TNGST assessment disputes on input tax credit and penalty sent back for fresh reconsideration
An assessment order under the TNGST Act, 2017 dealing with reconciliation discrepancies, input tax credit issues, interest and penalty was set aside and remanded for fresh consideration. The Court treated the objections on penalty and interest as involving mixed questions of fact and law, noted that the assessee had reversed the CESS amount and raised specific statutory objections, and found the matter suitable for reconsideration by the original authority rather than relegation to the appellate remedy. The entire issue was therefore sent back for fresh decision on the merits.
AI TextQuick Glance (AI)Headnote
Input tax credit blocking lapses after one year, and a pre-decisional hearing is required before ledger restriction.
Rule 86A(3) of the CGST Rules limits blocking of input tax credit in the electronic credit ledger to one year, after which the restriction lapses by operation of law and the credit must be unblocked. The Bombay HC also held that blocking of input tax credit has serious civil consequences and ordinarily requires a pre-decisional hearing; absent extraordinary circumstances, failure to afford such hearing renders the blocking action unsustainable. The provisional attachment and blocking were therefore set aside, and release of the ledger and attached bank accounts was directed in accordance with law.
AI TextQuick Glance (AI)Headnote
Mandatory draft assessment procedure under section 144C cannot be bypassed when the order itself finalises liability and issues demand notices.
Section 144C requires the Assessing Officer to issue only a draft assessment order to an eligible assessee and complete assessment after the statutory procedure is followed. An order styled as a draft but which itself computes taxable income, determines tax payable, and is accompanied by demand and penalty notices is in substance a final assessment order, not a draft order. Such non-compliance is a jurisdictional defect and cannot be cured by section 292B. Demand and penalty notices may be issued only after assessment is completed in accordance with section 144C, so the impugned assessment and consequential notices were quashed.
AI TextQuick Glance (AI)Headnote
GST fraud allegations and limited evidence justified bail subject to conditions safeguarding the trial.
Bail was granted in a GST-related fraud matter because the applicant's name did not appear in the FIR, the alleged linkage was limited to call detail records, and the prosecution could not displace the contention that the alleged conduct, even if accepted, fell within the Central Goods and Services Tax Act, 2017 framework. The Court treated the alleged monetary value as relevant to the offence classification under section 132(1)(iii) and found, prima facie, that the nature of the accusations, supporting material, and apprehension of witness tampering did not justify continued custody. Bail was therefore allowed subject to conditions protecting the trial and evidence.
AI TextQuick Glance (AI)Headnote
Uncorroborated seized paper cannot justify unexplained investment addition when statutory presumptions are rebutted by contrary evidence.
A seized paper alleging cash payment for property was held insufficient to sustain an addition for unexplained investment under section 69B because it lacked transaction particulars, signatures and corroboration. The statutory presumptions under sections 132(4A) and 292C were treated as rebutted by the assessee through the seller's affidavit confirming receipt as per the registered sale deeds and a valuation report supporting the declared consideration. In the absence of inquiry from the seller or other supporting evidence, the addition could not rest on conjecture, and the Revenue's challenge failed.
AI TextQuick Glance (AI)Headnote
Unexplained cash deposits and property investment claims require credible evidence; one addition upheld, the other remanded for verification.
Cash deposits during demonetisation were not explained by the assessee's reconciliation of capital balance and alleged realisation from debtors, as no supporting evidence of such realisation was produced and credit had already been allowed for cash in hand; the sustained addition was upheld. Unexplained investment in immovable property was not substantiated on the material filed, so the source and timing of payments required factual verification; the matter was remanded to the Assessing Officer for fresh examination with supporting details to be furnished.
AI TextQuick Glance (AI)Headnote
TDS compliance and genuine agricultural receipts defeated disallowance and unexplained-income addition under the Income-tax Act.
Disallowance under section 40(a)(ia) could not survive where the assessee produced the ledger, TDS return and Form 26AS showing deduction and deposit of tax on the payment, as those documents established compliance and removed the basis for disallowance. Addition of apple-sale agricultural income as unexplained income under section 69A was also unsustainable because ownership of 7,500 apple trees was supported by the will and land records, the Revenue did not dispute that ownership, and the declared income matched earlier accepted years; in the absence of contrary corroborative material, the receipts could not be treated as unexplained. Both additions were deleted.
AI TextQuick Glance (AI)Headnote
Procedural fairness in appellate service: email-only notices without consent justified remand for fresh hearing.
An appellate disposal made solely on email notices was unsustainable where the assessee had not consented to receive notices by email in the appeal form. The tribunal held that, in the absence of effective service through an agreed mode, the assessee could not be faulted for non-response and the appellate authority should have used an alternative mode consistent with the stated choice. The order was therefore set aside on procedural fairness grounds and the matter was restored for fresh adjudication after granting an effective opportunity of hearing.
AI TextQuick Glance (AI)Headnote
Disallowance of loss from discontinued operations fails where audited disclosures and business purpose support the expenditure claim.
Disallowance of loss from discontinued operations was found unsustainable where the assessee's slump sale, audited accounts, segment disclosures and note disclosures supported the expenditure claimed. The valuation report used to fix sale consideration was held irrelevant to tax allowability, which had to be tested independently under section 37(1). As no adverse material showed the expenses were unvouched, unsupported or not incurred for business purposes, the proportionate restriction lacked a factual basis. The deletion of the addition was therefore upheld and the disallowance was directed to be removed.

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1995 (9) TMI 94 - AT - Income Tax

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Validity of reassessment upheld based on loan transaction doubts; ITAT affirms CIT (A) decision.
The ITAT upheld the validity of the reassessment proceedings initiated by the Assessing Officer under section 147(b) based on information received from ... Summary

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Acts Income Tax