ITAT Chennai held that where unaccounted purchases are found and the corresponding sales are not doubted, only the profit element embedded in such purchases can be brought to tax, and not the entire purchase value. Accordingly, addition towards unaccounted purchases duly restricted.
The Tribunal held that capital gains from property transferred to a spouse without consideration must be taxed in the hands of the transferor under Section 64(1)(iv). Assessing it again in the transferee spouse’s hands was invalid.
The Tribunal held that reopening beyond three years requires sanction from higher authorities under Section 151(ii). Since approval was obtained only from the PCIT, the reassessment notice was declared invalid.
The Tribunal held that Section 269SS does not apply when cash is received as part of final sale consideration at the time of property registration. Since no advance was involved, penalty under Section 271D was deleted.
The tribunal examined whether the tax authority correctly calculated allowable promotional expenses. It held that the disallowance based on an incorrect assumption about the number of gifts issued was unsustainable.
The issue was whether the entire bank deposits could be treated as unexplained income under Section 69. The tribunal held that deposits linked to business activity cannot be fully taxed and directed estimation of profit at 8%.
The tribunal examined whether penalties could continue when the fresh assessment order did not record satisfaction for initiating them. It ruled that absence of such satisfaction makes the penalties invalid in law.
The tribunal considered whether total bank credits could be added as unexplained money. It held that when deposits are consistent with declared turnover and business activity, they cannot be treated as unexplained income.
The tribunal noted discrepancies in the dispatch register used to prove issuance of the notice. Because the records did not inspire confidence, the tribunal held the reassessment notice to be time-barred.
The Tribunal held that when the difference between purchase price and DVO valuation falls within the 10% tolerance band, no addition can be made under section 56(2)(vii). The addition based on stamp duty value was therefore deleted.
