This weekly round-up analytically summarizes the key stories related to the Income Tax Appellate Tribunal ( ITAT ) reported at Taxscan.in during the previous week 23rd June 2024 to 29th June 2024

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that disallowance under Income Tax Act, 1961 cannot be based on presumptions of earning dividend income in future. It was found that the Assessing Officer ( AO ) has proceeded for disallowance made based on presumptions that the investment was made from borrowed funds bearing interest expenditure, which may earn dividend income in the future.

The two-member bench of Raj Kumar Chauhan (Judicial Member) and Padmavathy S (Accountant Member) has observed that the AO has proceeded for disallowance made based on presumptions that the investment was made from borrowed funds bearing interest expenditure, which may earn dividend income in the future, and the disallowances and additions are permissible under Section 14A read with Rule 8D of the Income Tax Rules, 1962.

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) has deleted the income tax addition of ‘On Money’ due to lack of information about receipt of money.

The  two member bench of Anikesh Banerjee (Judicial Member) and B.R. Baskaran (Accountant Member) has observed that the entries made in the document fall short of certain material facts, viz., date and mode of receipt of “on money,” who had paid the money, to whom the money was paid, date of agreement, etc.

The Income Tax Appellate Tribunal ( ITAT ), Mumbai upheld the exemptions under Section 11 of Income Tax Act and questioned the validity of the Assessing Officer’s findings in a recent appeal filed by Revenue on grounds of excessive payments made to specific persons under the charitable trust on account of salary and rent. The Revenue was represented by Shri H. M. Bhatt.

The Two Member Bench constituted by Prashant Maharishi ( Accountant Member ) and Sandeep Singh Karhail ( Judicial Member )  observed the AO’s findings to be erroneous and baseless, and discovered the payments paid by assessee on salary and rent was not excessive of what may be reasonably paid to specified persons under Section 13(3) of the Income Tax Act.

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that revisionary jurisdiction under the Income Tax Act, 1961 cannot be invoked on allegation of improper inquiry by Assessing Officer ( AO ). The Tribunal viewed that the assessment order was held to be erroneous and prejudicial to the interest of revenue merely on the allegation that the Assessing Officer has not made an inquiry and verification regarding cash deposits and scrap sales.

The two-member bench of Saktijit Dey (Vice President) and Naveen Chandra (Accountant Member) has observed that allegation of lack of inquiry by the Assessing Officer has to be substantiated based on record. The tribunal held that exercise of jurisdiction under Section 263 is invalid and, hence, unsustainable, as the assessment order cannot be held to be erroneous and prejudicial to the interest of Revenue.

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Section 50C of the Income Tax Act, 1961 can be applied only to capital asset not to leasehold rights.

A two member bench of Kul Bharat (Judicial Member) and Avdhesh Kumar Mishra (Accountant Member) has observed that only if a capital asset, be it land, a building, or both, is transferred and the consideration received or accruing as a result of such transfer is less than the value adopted, assessed, or assessable by the stamp valuation authority, the deeming fiction under Section 50C (1) shall be activated to substitute the adopted, assessed, or assessable value as the full value of the consideration received or accruing as a result of the transfer.

The Cuttack Bench of Income Tax Appellate Tribunal ( ITAT ) has condoned the delay of 145 days in filing an Income Tax appeal as the assessee failed to receive the orders sent through email, as many of these orders are going to spam folders.

The two-member bench of George Mathan ( Judicial Member ) and Manish Agarwal ( Accountant Member ) has observed that the assessee mistakenly did not receive the orders sent through email, as many of these orders are going to spam folders. Further viewed that the explanation given by the assessee was satisfiable for condoning the delay of 145 days in filing the appeal before the CIT (A).

The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) has quashed the order rejecting the approval under Section 80G of the Income Tax Act as the Central Board of Direct Taxes ( CBDT ) has extended the due date for filing Form 10A/10AB via press release dated April 25, 2024, to June 30, 2022.

The two-member bench of Beena Pillai (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) has observed that the CBDT extended the due date of filing Form 10A/Form 10AB up to June 30, 2024, in respect of certain provisions of Section 10(23C), Section 12A, Section 80G, and Section 35 of the Income Tax Act.

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) has held that deduction under the Income Tax Act cannot be denied due to wrong classification in Income Tax return ( ITR ).

The two-member bench of Manu Kumar Giri ( Judicial Member ) and Manoj Kumar Aggarwal ( Accountant Member ) has observed that inadvertent non-reporting in tax audit report by the auditor is bonafide when all details are available in ITR on records although such deduction was find mentioned in wrong classification in ITR as the discussed supra. Deductions based on the genuine claim of the assessee cannot be denied especially in the circumstances as narrated above. As such the assessee has claimed deduction under section 43B of the Act and the same should have been allowed by the authorities below.

While allowing the appeal, the Tribunal held that inadvertent non-reporting in a tax audit report by the auditor is bona fide when all details are available in the ITR on records, although such a deduction was found to be in the wrong classification in the ITR. The deductions based on the genuine claim of the assessee cannot be denied.