The requirement to maintain books of account under Section 44AA of the Income-tax Act, 1961, does not apply to a “Local Authority” that is not engaged in a regular business or profession. Issue Can a penalty be legally levied under Section 271A of the Income-tax Act, 1961, on a “Local Authority” for an alleged failure… Read More »

An addition under Section 68 of the Income-tax Act, 1961, is invalid if the assessee successfully proves the identity, creditworthiness, and genuineness of the transaction with documentary evidence. Issue Can an Assessing Officer (AO) make an addition for an unexplained cash credit under Section 68 if the taxpayer has provided a complete and comprehensive set… Read More »

An investor company’s creditworthiness is proven by its balance sheet and net worth, not just by its income for a particular year. Issue Can the creditworthiness of a corporate investor be rejected and a share capital transaction be treated as bogus under Section 68 of the Income-tax Act, 1961, simply because the investor company has… Read More »

A case was remanded for a fresh decision to allow the Assessing Officer to examine crucial additional evidence that was filed late by the taxpayer. Issue Should an appellate authority, like the Income Tax Appellate Tribunal, admit additional evidence that is filed for the first time at a late stage of the proceedings, if that… Read More »

An addition cannot be made on the closing balance of assets without any fresh investment. Issue Can an Assessing Officer (AO) make an addition for unexplained investments or unexplained loans by simply treating the entire closing balance of such assets at the end of the year as unexplained, without bringing any evidence on record to… Read More »

“Tax arrear” under the DTVSV Act includes disputed tax, interest, and penalty. Issue Does the term “tax arrear,” as defined and used in the Direct Tax Vivad Se Vishwas (DTVSV) Act, 2020, include only the base disputed tax amount, or does it also comprehensively cover the interest and penalty that are related to that disputed… Read More »

Books of account cannot be rejected due to a simple typographical error in the tax audit report, especially when the error has been explained and rectified. Issue Can an Assessing Officer (AO) reject a taxpayer’s entire books of account under Section 145(3) of the Income-tax Act, 1961, and estimate their profits, based solely on discrepancies… Read More »

A tax demand is invalid if it is based on a clear typographical error in the tax audit report, and a revised report can be used to correct such an error. Issue Can a prima facie adjustment made by the Centralized Processing Center (CPC) under Section 143(1)(a) of the Income-tax Act, 1961, which arises from… Read More »

An application for registration under Section 80G cannot be rejected without the authority properly considering the assessee’s explanation regarding the nature of its expenses. Issue Can an application for approval under Section 80G(5) of the Income-tax Act, 1961, be rejected on the grounds of excessive religious expenditure without the adjudicating authority properly considering the assessee’s… Read More »

The stamp duty value on the date of the agreement should be considered for Section 56(2)(x) if part of the payment was made at that time through a banking channel. Issue For the purpose of applying the deeming provision of Section 56(2)(x) of the Income-tax Act, 1961, should the stamp duty value be taken on… Read More »