The ITAT Delhi dismissed the Revenue’s appeal, ruling that when sales are accepted and only purchases are proven bogus (due to non-existent suppliers/cancelled GST), only the profit element embedded in the purchases can be taxed, not the entire Rs.69C expenditure. The Tribunal upheld the application of the assessee’s own 1.39% Gross Profit rate on the bogus purchases, rejecting the AO’s arbitrary 25% addition.
The Lucknow ITAT ruled that a cash deposit cannot be treated as unexplained income if the assessees prior cash withdrawals from the bank are greater than the amount deposited. The burden shifts to the Revenue to prove the cash was used elsewhere, which they failed to do in this case.
The ITAT Ahmedabad remanded a charitable trusts tax case, ruling that the AO violated natural justice by making a Rs. 2.24 crore addition based on a third-party search statement without providing the assessee with copies of the statement or documents for rebuttal. The Tribunal directed the CIT(A) to decide the matter on merits after giving the trust a proper opportunity to contest the evidence.
SIA 140 defines Internal Controls and clarifies management’s and the Internal Auditor’s responsibilities for their design, implementation, and assessment, covering financial, operational, and compliance risks.
SIA 130 mandates that the Chief Internal Auditor establish a documented Internal Audit Process and a formal Quality Assessment and Improvement Program (QAIP). This ensures that internal audits are conducted systematically, resources are adequately skilled, and objectives are met in conformance with ICAI Standards.
The ITAT Pune substantially reduced a penalty under Rs. 271(1)(b), ruling that issuing successive notices for the same set of information constitutes only a single, continuing default, not multiple independent offenses. The Tribunal restricted the penalty to Rs. 10,000 for the initial non-compliance, deleting the balance Rs. 30,000.
SIA 120 requires internal audit terms to be formalized in a Charter (in-house) or Engagement Letter (outsourced). This ensures clear scope, authority, deliverables, and the nature of assurance provided.
ICAI’s SIA 110 establishes 10 Basic Principles for all internal audits, focusing on credibility (Independence, Integrity, Competence) and performance (Risk-Based Audit, Due Care). Adherence and documentation are mandatory.
Delhi High Court held that penalty duly imposed on employee of Custom House Agent [CHA] for failure to ensure clean credentials of the importer. Accordingly, appeal dismissed and order passed by CESTAT upheld.
QSIA 2 mandates independent Peer Review (often regulatory) and Third-Party Assessments (voluntary) of internal audit functions to ensure compliance with ICAI Standards, ethical practices, and continuous quality improvement.
