No Incriminating Evidences found, Only Excel sheet found — ITAT Deletes ₹25 Cr Addition in Moser Baer Group Case

 

DCIT Vs Indian Hydro Electric Power Pvt. Ltd. (ITAT Delhi)

No Incriminating Evidence, Only Excel — ITAT Deletes ₹25 Cr Addition in Moser Baer Group Case

Search was conducted on the Moser Baer Group, covering Assessee’s premises. During search, an Excel sheet titled “Funds Position” was found on a group employee’s laptop, showing loan entries. Based solely on this &  statements of Rajiv Agarwal &  Neeraj Jain (both later retracted),   AO treated ₹ 25.05 crore as unexplained loans u/s 68 &  ₹ 25.05 lakh as commission u/s 69.

 

CIT(A) deleted the additions holding there was no incriminating material &  that the alleged statements were retracted, uncorroborated, &  obtained under coercion. Assessee had furnished full evidence—PAN, ITRs, audited accounts, bank statements, confirmations, &  proof of repayments—proving identity, creditworthiness, & genuineness of lenders.

 

Tribunal upheld CIT(A), noting that:

• The Excel sheet, found from a third-party laptop, only reflected book entries & was not incriminating.
• Retracted statements without corroboration have no evidentiary value.
• AO denied cross-examination, violating natural justice.

ANALYSIS OF SEC 56(2) - GIFTS FROM RELATIVES

 

An analysis of Sec 56(2):

Section 56(2)(x) of the Income Tax Act, 1961, is an anti-abuse provision designed to tax money or property received without consideration (or for inadequate consideration) that exceeds a certain limit. It taxes this receipt under the head “Income from Other Sources.”

This section generally stipulates that any sum of money or property received without consideration (i.e., as a gift) is taxable in the hands of the recipient if its value exceeds ₹50,000 in a financial year.

That Indicates that  a transfer of money, movable property (like shares or jewellery), or immovable property (like a house) received as a genuine gift from a specified relative is fully exempt from income tax, regardless of the value.

The definition of ‘relative’ for this exemption is specific and covers the immediate family circle. It includes:

• Spouse of the individual.
• Brother or sister of the individual.
• Brother or sister of the spouse of the individual.
• Brother or sister of either of the parents of the individual.
• Any lineal ascendant or descendant of the individual (e.g., parents, grandparents, children, grandchildren).
• Any lineal ascendant or descendant of the spouse of the individual.
• Spouse of any of the individuals mentioned above

 

Disclosure & documentation

Even though a gift from a relative is exempt, it is highly advised that the recipient disclose the receipt in their Income Tax Return (ITR). This practice is crucial for maintaining transparency and preventing future tax queries:

1. ITR Disclosure: The amount should be reported in the “Exempt Income” schedule of the ITR form. This clearly informs the Income Tax Department that a large sum was received, but it is not being offered for tax as it falls under a statutory exemption.

2. Reconciling with AIS: High-value banking transactions, especially those involving significant cash transfers or remittances, are tracked and reported by financial institutions to the tax department. These will likely reflect in the recipient’s Annual Information Statement (AIS). If the amount appears in the AIS but is not accounted for in the ITR, it may trigger an automated tax notice.

3. Documentation: Recipients should always retain supporting documentation for the gift, such as:

• A Gift Deed (formally executed and ideally notarized).
• Bank transfer records showing the flow of funds from the relative’s

account to the recipient’s account

 

 

 

 

 

Madras HC Quashes Assessment as Notices Uploaded Only on GST Portal

 Madras HC Quashes Assessment as Notices Uploaded Only on GST Portal

VMC Polychem LLP Vs Commercial Tax Officer (Madras High Court)

Madras High Court held that non-responding to notice and non-appearance on hearing due to fact that notices were uploaded only through GST portal and there was no service of notice via physical mode. Accordingly, order set aside on ground of violation of principles of natural justice.

The challenge in this Writ Petition is to the order passed by the first respondent issued under section 73 of the CGST Act along with summary of the order both dated 29.01.2025 relating to the FY 2021-2022 and to quash the same and to direct the respondent No.3 to lift the Bank attachment of the Petitioner held with Respondent No.4 and direct the 1st Respondent to assess the matter afresh.

Mr. R. Sandeep Bagmar learned counsel appearing for the petitioner would submit that the first respondent has issued a notice in DRC-01A dated 28.10.2022, pursuant to which, the second respondent issued two show cause notices in DRC-01A dated 26.08.2023 and another dated 13.09.2023, in respect of the same tax period, subsequently, the proceedings under DRC-01 dated 13.09.2023 were dropped by order dated 13.09.2023; that in respect of the show cause notice dated 26.08.2023, the petitioner filed a reply along with supporting documents 08.09.2023. It is further contended by the learned counsel for the petitioner after filing the first reply, personal hearing opportunity was afforded to the petitioner on 14.09.2023, but, subsequently, vide notice dated 13.09.2024, the personal hearing fixed on 14.09.2024 has been cancelled; that thereafter, the petitioner filed reply on 10.10.2023 and after the said reply, no personal hearing was afforded to the petitioner and since there was no communication from the respondent-Department nearly for a period of 1 1/2 year.

 The petitioner was under the bona fide belief that the proceedings contemplated under show cause notice dated 26.08.2023 would have been dropped, but, the first respondent, all of a sudden, passed the impugned assessment order dated 29.01.2025, whereby, the reply filed by the petitioner has been summarily rejected.

herefore, the learned counsel assailed the impugned order both on the ground of

 i) violation of principles of natural justice and

 ii) assessment proceedings passed under 73 of the GST after a lapse of 1 1/2 years is untenable.

Government Advocate (T) for the respondents 1 to 3 would submit that a show cause notice dated 26.08.2023 was issued by the first respondent fixing the personal hearing date on 14.09.2023, though the personal hearing was cancelled by virtue of notice dated 13.09.2023, however, pursuant to the detailed reply filed by the petitioner on 10.10.2023, another notice dated 25.10.2024 was issued to the petitioner, thereby, fixing the personal hearing on 04.11.2024, and the petitioner also participated in the proceedings and addressed the issue on duplication of proceedings, pursuant to which, proceedings were dropped therefore, the question of non-provision of personal hearing opportunity does not arise at all. Further, it is contended that the show cause notice dated 26.08.2023 has been followed by three reminder notices dated 17.07.2024, 16.08.2024 and 25.10.2024, and therefore, the petitioner cannot blame the respondent-Department that the assessment order has been passed without affording an opportunity of personal hearing and thus, prays for dismissal of the Writ Petition.

On perusal of records, it is seen that a notice in Form GST DRC- 01A dated 28.10.2022 was issued by the first respondent, based on which, two show cause notices were issued by the second respondent to the petitioner under DRC-01A dated 26.08.2023 and another dated 13.09.2023. Since the said two show cause notices were in respect of the same issue and for the same tax period, the proceedings contemplated vide subsequent show cause notice dated 13.09.2023 were dropped by the second respondent by order dated 13.09.2023. So far as the show cause notice dated 26.08.2023 is concerned, fixing the personal hearing on 14.09.2023, the petitioner filed a reply along with supporting documents on 08.09.2023. However, on 13.09.2023, a notice was issued to the petitioner stating that the personal hearing opportunity scheduled on 14.09.2023 was cancelled, hence, the petitioner, who was not able to make his submission in detail, uploaded the reply and other supporting documents on 13.09.2023 and 10.10.2023 and sought for personal hearing opportunity. Thereafter, since there was no communication from the respondent-Department, the petitioner was under the bona fide belief that proceedings contemplated under show cause notice dated 26.08.2023 might have been dropped. Whereas, the first respondent proceeded to confirm the proceeding contained in the show cause notice dated 26.03.2023 on the ground that the petitioner failed to respond to any of the notices issued by the respondent-Department dated 17.07.2024, 16.08.2024 and 25.10.2024 and passed the impugned order on 29.01.2025.

it is crystal clear that the reason assigned by the petitioner for non-responding to notices dated 17.07.2024, 16.08.2024 and 25.10.2024 is due to the fact that the same were uploaded only through the Portal, that too, after a lapse of nearly 1 1/2 years, and further, the petitioner, who was under the bona fide belief that the proceedings would have dropped in furtherance of the show cause notice dated 26.03.2023, had not occasioned to open the portal and hence, such notices were totally unnoticed by the petitioner and only when the petitioner received an intimation from the respondent-Department as regards recovery proceedings dated 18.07.2025, which was received by the petitioner on 25.07.2025, the petitioner came to know of the impugned proceedings.

Therefore, this Court is of the view that the reason cited by the petitioner for non-responding to the notices sent by the respondent-Department and non-appearance on the hearing date is acceptable and such failure on the part of the petitioner cannot be found fault with by the respondent-Department, when admittedly, the respondent-Department failed to serve such notice on the petitioner via. Physical mode of service, as contemplated under Section 169 of the Act but served only through the Portal. Therefore, as rightly pointed out by the learned counsel for the petitioner the impugned order is untenable on the ground of violation of principles of natural justice.

RELEASE OF NEW ITR 2

 The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, has officially notified a revised Income Tax Return (ITR) Form ITR-2 applicable for the Assessment Year (AY) 2025-26.

DENIAL OF ITC ON MERE MENTIONING OF WRONG GSTN IS NOT PERMISSIBLE

 B. Braun Medical India Pvt. Ltd. Vs Union of India & Ors (Delhi High Court)

The Delhi High Court addressed a petition filed by B. Braun Medical India Pvt. Ltd. against an order that denied their Input Tax Credit (ITC) claim on mere misrepresentation by one of its suppliers on Purchase Invoices.

M/s. Ahlcon Parenterals (India) Limited, incorrectly stating B. Braun’s Mumbai GSTN on invoices, instead of their Delhi GSTN.

This error resulted in a demand of approximately Rs. 5.66 crore being raised against B. Braun. The company argued that the incorrect GSTN was a simple supplier error, and they provided purchase orders and invoices to substantiate their claim of being a Delhi-based entity. The court noted that the Department’s counter-affidavit did not contest the fact that the company’s name was correctly listed on the invoices. Further, the Department admitted that no other entity had claimed ITC on these specific purchases, highlighting the sole basis for rejection being the GSTN error. The court acknowledged the potential for substantial financial loss to B. Braun if the ITC was denied due to this minor error.

The Court after cross examining all the records, the submissions and the counter-affidavit, decided to allow B. Braun’s petition in part. The impugned order, which had rejected the ITC claim, was set aside. The court permitted B. Braun to avail the ITC for the specified periods.  This decision was made on the understanding that B. Braun would not pursue its challenge to the constitutional validity of Section 16(2)(aa) of the Central Goods and Ser-vices Tax Act, 2017, if the ITC was granted. The court emphasised the factual supply of goods and the absence of any other ITC claim on the same transactions. The ruling effectively prioritized the substance of the Transaction over a procedural error, ensuring that the company was not penalised for a mistake made by its supplier. The judgement underscores the importance of considering the practical aspects of business transactions and the need for a balanced approach in enforcing tax regulations.

 

Calcutta HC Orders Restoration of GST Registration, Allows assessee 45 Days to Settle Dues

 Chhabi Rani Kundu Vs Union of India & Ors. (Calcutta High Court)

The Calcutta High Court addressed a writ petition filed by Chhabi Rani Kundu, challenging the cancellation of her GST registration due to non-filing of returns. The petitioner argued that she had since paid all due revenue and expressed willingness to settle any remaining liabilities to reinstate her registration. The court acknowledged the petitioner’s submissions and the cited judgment, and rendered a directive addressed for  resolving the dispute.

In its order, the Calcutta High Court set aside the cancellation orders issued by the WBGST authority. The court advised the authority to restore the petitioner’s GST registration and open the online portal for 45 days. This period will allow the petitioner to pay any outstanding revenue, including penalties, as specified by the authority within 15 working days.

The court also stated  that if the petitioner failed to make the required payments within the allotted time, the GST authority would be permitted to re-block the portal and cancel the registration again. 

AMOUNT WRITTEN BACK CAN NOT BE TREATED AS TURNOVER FOR APPLICABILITY OF SECTION 44AB

 

Case Reference:  Rohtak Panipat Tollway Private Limited Vs Deputy Director of Income Tax (Gujarat High Court)

In a significant move, the Gujrat High Court ruled out an order issued by Dy. Director of Income Tax that had declared the income tax return filed by Rohtak Panipat Tollway Private Limited for the Assessment Year 2022-23 as invalid.

The main issue in that assessment order issued by the department that whether a substantial accounting entry, described as “excess provision written back,” constituted “turnover” or “gross receipts” necessitating a mandatory tax audit under Section 44AB of the Income Tax Act, 1961.

the company filed its return declaring a  loss of approximately ₹184.28 crore. Subsequently, the Income Tax department’s Centralized Processing Centre (CPC) issued a notice under Section 139(9), deeming the return defective. The reason cited was the absence of a Tax Audit Report required under Section 44AB, as the company’s financial statements showed ‘other income’ exceeding the ₹10 crore threshold specified in the Act. This ‘other income’ primarily comprised ₹4,710.43 Lakh (approx. ₹471 crore) labelled as “excess provision of unwinding of discount on NHAI premium written back.

The argument by petitioner contended that this amount did not represent revenue from its business operations and therefore did not fall under the definition of “total sales, turnover or gross receipts” that triggers the audit requirement under Section 44AB. It explained that this entry resulted from writing back a liability provision related to premium payments to the National Highways Authority of India (NHAI). This liability ceased to exist following the termination of the company’s Concession Agreement with NHAI. The company further supported its stance by referencing the Guidance Note on Tax Audit issued by the Institute of Chartered Accountants of India (ICAI), which explicitly states that write-backs of provisions no longer required do not form part of gross receipts for Section 44AB purposes

The  department argued that its automated CPC system detected the income figure exceeding the threshold, mandating the audit. It maintained that the company’s reply was considered but found unacceptable, leading to the invalidation order. The department also contended that the ICAI’s Guidance Notes were not legally binding in income tax proceedings. However, the High Court analyzed the nature of the written-back amount, confirming it stemmed from the cessation of a previously recorded liability and was not income generated from operational activities.

While justifying  its decision, the High Court referred to the Supreme Court’s judgment in Commissioner of Income-tax VII, New Delhi vs. Punjab Stainless Steel Industries (2014). This precedent addressed the definition of “turnover,” interpreting it narrowly as proceeds from the core business activity. Significantly, the Supreme Court in that case also kept relying on ICAI Guidance Notes, stating that material published by a recognized professional body after due deliberation carries weight. Applying this rationale, the Gujarat High Court concluded that the write-back amount could not be classified as turnover or gross receipts. Consequently, the requirement for a tax audit under Section 44AB was not triggered, rendering the invalidation order under Section 139(9) unsustainable. The court quashed the order dated December 13, 2023, and directed the authorities to process the company’s original tax return.