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 ITAT While 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 ought to have acted in accordance with law. 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. However, the PCIT did not give any specific finding to controvert the written submissions filed by the assessee during the course of 263 proceedings and proceeded to hold that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue.” Simple Disagreement With Plausible Views Of AO Is No Basis For CIT To Assume Jurisdiction U/s 263: Kolkata ITAT While quashing the invalid exercise of jurisdiction by PCIT u/s 263 of the Income Tax Act, without satisfying the conditions precedent for such section, the Kolkata ITAT held that the PCIT cannot invoke the jurisdiction u/s 263 to substitute his view in place of AO on the ground that he does not agree with the view taken by the AO. The Bench of the ITAT comprising of Suchitra R. Kamble and Annapurna Gupta observed that “since the income of the wife of the assessee stands accepted in her hands by the Department in scrutiny assessment vide order passed u/s 143 of the Act, on returns filed in consequence to the search action conducted on her u/s 153A of the Act, we find that there is no case with the Revenue now to tax the same income in the hands of the assessee also in terms of the clubbing provisions of Section 64 of the Act.” AO Fails To Scrutinize Cash Payments By Assessee Under Lens Of Sec 40A; Indore ITAT Upholds Revisional Interference U/s 263 On finding a lack of inquiry on the part of AO in allowing cash sales, which renders the assessment order erroneous so far as it is prejudicial to the interests of revenue, the Indore ITAT upheld the order of disallowance u/s 40A of the Income Tax Act, passed by Pr. The Bench of the ITAT comprising of Vijay Pal Rao and Manish Borad observed that “If the assessee takes a plea that the payment in cash was made as per the demand of the seller then it is up to the AO to conduct inquiry to verify this fact from the seller itself, but in the absence of any query or inquiry conducted by the AO, the question of any explanation by the assessee to claim that the case of the assessee falls in the exception provided under Rule 6DD of the Income-tax Rules is pre matured.” Assessment By AO Can't Be Termed As Prejudicial To Interest Of Revenue If It Doesn't Result In Any Loss To Revenue: Indore ITAT On finding that the facts of the case do not warrant application of section 263 of the Income Tax Act, the Indore ITAT set aside the revision order passed by PCIT and restored the original assessment-order passed by the AO.