ITAT Mumbai ruled that once reassessment proceedings are quashed as void ab initio, the satisfaction recorded therein for initiating penalty proceedings cannot survive independently. The Tribunal relied on the Supreme Court ruling in Jaya Lakshmi Rice Mills.
The Tribunal ruled that only 8% of disputed purchases could be added where the assessee had disclosed corresponding sales and made payments through banking channels. Entire purchase disallowance was held to distort true business income.
Mumbai ITAT held that genuine outstanding trade liabilities arising from accepted business transactions cannot be treated as unexplained cash credits under Section 68. The Tribunal ruled that once purchases and expenses are accepted, corresponding creditor balances cannot be taxed separately.
The Tribunal deleted penalty levied on society charges and depreciation disallowances after finding that the claims were fully disclosed in books and audited financial statements. It held that ad hoc disallowances alone cannot trigger concealment penalty.
Mumbai ITAT treated appeals against rejection of Section 12AB and 80G registration as infructuous after the CIT(E) subsequently granted approval following the Bombay High Court ruling. The original rejection had been based solely on absence of an irrevocability clause in the trust deed.
Mumbai ITAT held that granting only seven days for compliance before dismissing an appeal violates principles of natural justice. The Tribunal restored the Section 69C addition matter for fresh adjudication after finding inadequate hearing opportunity.
Mumbai ITAT held that the 10% tolerance band introduced under Section 56(2)(x)(b)(B) is curative and retrospective in nature. The Tribunal deleted addition arising from stamp duty valuation difference as the variation was only 7.44%.
Mumbai ITAT held that Section 69A cannot be invoked where loan transactions are fully routed through banking channels and recorded in regular books of account. The Tribunal deleted the addition despite Revenue alleging the transactions were accommodation entries based on third-party search material.
ITAT Mumbai held that disallowance computed under Section 14A cannot be directly added while computing book profits under Section 115JB. Matter was remanded for fresh computation following the Vireet Investment ruling.
The Tribunal held that once transactions are treated as bogus, there is no basis for separately allowing expenses reflected in gross profit. Telescoping was therefore restricted to net income disclosed in the return.
