Direct Tax Annual Digest 2024: Part II

Cash-In-Hand Out Of Business Profits Declared In Return U/s 44AD, Can't Be Plainly Added As Unexplained Money: Delhi ITATWhile allowing the appeal against the addition on account of unexplained money, the New Delhi ITAT held that if the assessee's contention is that it had turnover exceeding the limit u/s 44AD of the Income Tax Act, then CIT(A) ought to have acted in accordance with law. The Bench comprising of Kul Bharat (Judicial Member) observed that, “If the assessee's contention is that it had turnover exceeding the limit u/s 44AD, the learned CIT(A) ought to have taken action in accordance with law. However, he merely sustained the addition made by the AO. Therefore, the claim of the assessee regarding business transaction in cash is not adverted by the lower authorities by giving a clear finding.”Taxpayer Can't Be Penalised For Failure To Get Its Books Of Accounts Audited If There Exists Reasonable Cause For Such Failure: Jaipur ITAT While allowing the appeal against the order passed u/s 271B of the Income tax Act, the Jaipur ITAT held that provision of section 273B gives power to the taxing authority not to impose the penalty if the assessee proves that there was a reasonable cause for failure to get the books of accounts audited and directed the AO to delete such addition. The Bench of the ITAT comprising of Sandeep Gosain (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) observed that, “Merely because the assessee has not challenged the finding of the CIT(A) in quantum in the penalty proceeding the assessee cannot be called upon to pay the penalty as failure to get the books of accounts audited and failure file the audit report. The reasons advanced by the assessee this he has offered the income under the head capital and under that head though the income / receipt 1 Cr there is no requirement to get the books of accounts audited and therefore, this being the reasonable cause for the assessee. The provision of section 273B gives power to the taxing authority not to impose the penalty if the assessee proves that there was a reasonable cause for such failure.”Once Taxpayer Shows Reasonable Cause For Accepting Cash Loan, Burden Shifts On AO To Prove That Such Cause Lacks Bonafide: Chennai ITAT On finding that the explanation against cash receipts offered against show cause notice before the authorities were reasonable, the Chennai ITAT held that levy of penalty u/s 271D of the Income Tax Act, is untenable. The Bench of the ITAT comprising of V. Durga Rao (Judicial Member) and Manjunatha, G (Accountant Member) reiterated while referring the case of Ms. Nanda Kumari v. ITO that, “the assessee had shown a cause for having received the amount in cash. Therefore, if the assessee had shown a cause, the burden shifts on the Assessing Officer to establish that the cause shown is not a reasonable cause by examining the cause shown and establish that it lacks bona fides.”Interest & Dividend Derived By One Cooperative Society From Its Investment Held With Another One Is Eligible For Deduction U/s 80P(2)(D): Pune ITAT On finding that the views adopted by the tax authorities are not in conformity with legal position and binding judicial precedents, the Pune ITAT set-aside the impugned order passed by the AO and reversed the denial of deduction u/s 80P(2)(d) of the Income Tax Act, 1961. The Bench of the ITAT comprising of Partha Sarathi Choudhury (Judicial Member) and G. D. Padmahshali (Accountant Member) observed that, “On perusal of section 80P(2)(d), it is ostensibly clear that interest & dividend income derived by one cooperative society from its investment held with other cooperative societies is eligible for deduction u/s 80P(2)(d) of the Act. For the purpose the chief determinant factor entitling a claim of deduction u/s 80P(2)(d) in the hands of assessee society is that, interest & dividend income should have been earned by it from an investment made with any other cooperative society registered under the provisions of law, irrespective of its nomenclature with which such paying society i.e. the payer is known for.”Delay In Uploading Application Shall Not Alone Form Basis For Denial Of Registration U/s 80G In Case Of Technical Glitches: Chandigarh ITAT On finding that the dismissal of the application on the ground of being barred by limitation is not justified, the Chandigarh ITAT set aside the order of dismissal of final registration u/s 80G of the Income Tax Act and restored the matter to the file of the CIT(E) to decide the application after giving adequate opportunity to the assessee to present its case, irrespective of the fact that there was any delay in uploading the application. The Bench of the ITAT comprising of Sanjay Garg (Judicial Member) and Vikram Singh Yadav (Accountant Member) observed that, “the assessee had duly tried to upload the application for final registration u/s 80G(5) of the Act within the extended period of limitation. However, the same could not be uploaded...

Direct Tax Annual Digest 2024: Part II

Pankaj Bajpai

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