ITAT Ahmedabad Judgments — July 2025

The Tribunal ruled that since the underlying assessment order, which formed the basis for the penalty under Section 270A, had been set aside for fresh assessment, the additions made therein did not survive. Consequently, the penalty imposed or confirmed based on those non-existent additions could not be upheld. The Tribunal quashed the CIT(A)'s order partly confirming the penalty, but clarified that the AO is free to re-initiate penalty proceedings after completing the fresh assessment, if necessary.

The Tribunal, following earlier decisions of its Co-ordinate Benches, held that CBDT Notification No. 31/2023 dated 24.05.2023, which increased the leave encashment exemption limit to Rs. 25 lakhs with retrospective effect from 01.04.2023, is applicable. Since the assessee's claimed amount was below this enhanced limit, the full exemption of Rs. 7,65,404 was allowed, and the disallowance made by the lower authorities was deleted.

The Tribunal held that the assessee had adequately explained the source of the cash deposits. The assessee, engaged in the resale of building material, maintained audited books under Section 44AB and was subject to VAT scrutiny. The Tribunal found that the cash deposits were out of genuine cash sales, duly recorded in the books, supported by cash memos and invoices, and reflected in VAT returns. The audit under VAT and finalization in Form 304 corroborated the genuineness. The Tribunal noted a growth in business activity and consistent cash inflows. The assessee had furnished details of parties from whom cash exceeding ₹2 lakh was received, along with dates, amounts, and invoices, and the AO made no inquiries to disprove this. The Tribunal stated that once prima facie evidence is produced, the burden shifts to the Department to rebut it. The increase in cash sales during the festive season was considered plausible for the business. The opening cash balance discrepancy was attributed to a clerical error. Therefore, the addition of ₹1,01,94,386/- under Section 68 was deleted. The order of the CIT(A) was set aside.

The Tribunal held that the assessee had demonstrated sufficient cause for the delay in filing the appeal before the CIT(A). The Tribunal found that denying the assessee an opportunity to contest substantial additions on merits solely due to the delay, when a reasonable cause was explained, would be an act of substantial injustice, violating principles of natural justice.

The Tribunal held that the appeal filed by the assessee is dismissed. The Counsel for the assessee conceded that he had nothing to state in the matter and acknowledged that both in facts and in law, there was no mistake on the part of the Ld. CIT(A) in upholding the rectification of the original order. The Tribunal agreed with the Ld. CIT(A)'s finding that the rectification under Section 154 was valid as it corrected a mistake apparent from the record. The reasoning was that the assessee's own representative accepted the correctness of the CIT(A)'s order and the AO's rectification. Therefore, the addition of ₹1,21,24,288/- was confirmed as part of the rectified assessment. No issue was expressly left undecided.

The Tribunal held that the PCIT wrongly invoked the revisionary jurisdiction under Section 263 of the Act. The assessment order was found to be neither erroneous nor prejudicial to the revenue, as the Assessing Officer had conducted necessary inquiries and the assessee had provided sufficient documentation. The PCIT's view was considered a change of opinion, which is impermissible.

The Tribunal found no infirmity in the CIT(A)'s order refusing to condone the delay, as the assessee failed to provide a justifiable reason. Relying on various judicial precedents, the Tribunal held that delay cannot be condoned without sufficient cause and that the assessee was not diligent and was guilty of negligence.

The Tribunal dismissed the Revenue's appeals, upholding the decision of the CIT(A). The Tribunal agreed that the assessment orders passed under Section 143(3) read with Section 153C for AY 2014-15 and 2015-16 were beyond the jurisdiction of the Assessing Officer. The core of the decision rested on the interpretation of the proviso to Section 153C of the Act, which dictates that for a person other than the searched individual, the 'date of search' is construed as the 'date of receiving the books of account or documents or assets seized' by the Assessing Officer having jurisdiction over that other person. The Tribunal noted that the seized documents were deemed transferred to the common Assessing Officer on the date of recording the satisfaction note, which was August 4, 2022. Therefore, the six preceding years for which proceedings under Section 153C could be initiated were AY 2017-18 to AY 2022-23. Since the notices for AY 2014-15 and 2015-16 were issued based on a satisfaction note recorded in AY 2022-23, they were beyond the permissible time limit. The Tribunal found no reason to interfere with the CIT(A)'s findings and ruled that the Revenue's grounds of appeal were devoid of merit. The issue of merits was rendered academic due to the jurisdictional defect.

The Tribunal held that donations made by a registered charitable trust to another registered charitable trust out of the current year's income qualify as application of income under Section 11(1)(a) of the Income Tax Act. A technical reading of the trust deed should not defeat statutory allowance.

The Tribunal held that the estimation of gross profit by the Assessing Officer was not legally tenable, especially considering that a Coordinate Bench had deleted a similar estimation in the assessee's own case for earlier assessment years. The Tribunal further noted that the fall in GP was adequately explained by the assessee.

The Tribunal found merit in the assessee's plea that both the AO and CIT(A) failed to provide adequate opportunity of hearing and conduct independent verification of facts regarding the nature of the land and the recharacterization of income. Consequently, the Tribunal set aside the matter to the Assessing Officer for de novo adjudication, allowing the assessee proper opportunity to be heard and present evidence.

The Tribunal dismissed the Revenue's appeals, upholding the decision of the CIT(A). The Tribunal agreed that the assessment orders passed under Section 143(3) read with Section 153C for AY 2014-15 and 2015-16 were beyond the jurisdiction of the Assessing Officer. The core of the decision rested on the interpretation of the proviso to Section 153C of the Act, which dictates that for a person other than the searched individual, the 'date of search' is construed as the 'date of receiving the books of account or documents or assets seized' by the Assessing Officer having jurisdiction over that other person. The Tribunal noted that the seized documents were deemed transferred to the common Assessing Officer on the date of recording the satisfaction note, which was August 4, 2022. Therefore, the six preceding years for which proceedings under Section 153C could be initiated were AY 2017-18 to AY 2022-23. Since the notices for AY 2014-15 and 2015-16 were issued based on a satisfaction note recorded in AY 2022-23, they were beyond the permissible time limit. The Tribunal found no reason to interfere with the CIT(A)'s findings and ruled that the Revenue's grounds of appeal were devoid of merit. The issue of merits was rendered academic due to the jurisdictional defect.

The Tribunal condoned the delay, finding that the assessee's failure to file the appeal on time was due to circumstances beyond their control, including issues with their tax consultant. The matter was restored to the Assessing Officer for de novo consideration.

The Tribunal held that the PCIT's assumption of jurisdiction under Section 263 was not sustainable as the AO had applied his mind to the available documents, including the registered valuer's report. The DVO's report was not part of the record considered by the AO, and its absence did not automatically render the assessment order erroneous.

The Tribunal condoned the delay, finding that the assessee's failure to file the appeal on time was due to circumstances beyond their control, including issues with their tax consultant. The matter was restored to the Assessing Officer for de novo consideration.

The ITAT acknowledged the assessee's argument regarding potential duplication of taxation if the investment was genuinely from her husband's disclosed sources. While noting the non-compliance before the CIT(A) was not condonable, the Tribunal granted the assessee one final opportunity to substantiate her claim. Thus, the CIT(A)'s order was set aside, and the matter was restored to the Assessing Officer for a fresh adjudication, with the assessee directed to furnish all relevant documentary evidence.

The Tribunal held that the cash deposits were satisfactorily explained as arising from daily business receipts and supported by evidence like the bank passbook and dispatch records. Therefore, Section 69A was not attracted.

The Tribunal held that the appeal of the assessee should succeed and the penalty be deleted. The Tribunal reasoned that the mere fact that a return was filed in response to a notice under section 148 does not automatically justify the invocation of section 270A(2)(b) unless there is a demonstrable act of under-reporting in substance. The statute is not intended to penalize delayed but truthful compliance, especially when no tax loss arises and the income is fully traceable in departmental systems. The Tribunal referred to the decision in Archana Achyut Sail Vs. ITA, which held that if there was no disallowance or addition made by the AO in the income disclosed in pursuance of a notice under section 148, no penalty could be levied. The Tribunal emphasized that the AO has discretion under section 270A(1) to impose a penalty, which must be exercised judiciously, considering the facts and circumstances. In this case, the return filed was complete, truthful, and supported by verifiable evidence. The income was already subjected to TDS, and the assessment was concluded without any addition or disallowance. The omission to file the return under section 139(1), while not condonable, did not constitute under-reporting or misreporting in the statutory sense. The AO ought to have exercised discretion not to impose penalty due to complete tax compliance, absence of concealment, and voluntary disclosure. Therefore, the penalty of Rs. 2,23,277/- was directed to be deleted.

The ITAT held that the PCIT's order passed under Section 263 was not sustainable in law. The Tribunal found that the PCIT, despite being aware that the issues were decided in the assessee's favor by the ITAT in prior years, had acted in gross disregard of judicial hierarchy and misused power by revising the assessment merely because the Revenue had appealed the ITAT orders to the High Court. Consequently, the PCIT's order was set aside.

The Tribunal upheld the deletion of the addition of Rs. 15,30,650/- made under section 69A. It reasoned that the principle that the application of income already subjected to tax cannot be taxed again is well-established. The assessee's Authorized Representative (AR) demonstrated that the impugned sum of Rs. 15,30,650/- was within the scope of suppressed sales and collections identified from the seized material. Since the profit element on the entire suppressed turnover had already been estimated and taxed, a separate addition under section 69A was not tenable. The Tribunal affirmed the CIT(A)'s order deleting the addition. The revenue's grounds of appeal (Nos. 5 and 6) were dismissed, and the assessee's grounds (Nos. 6(i) and 6(ii)) were allowed.

The Tribunal held that while an assessment against a deceased person can be a nullity, the conduct of the legal heir and the stage of proceedings are crucial. It noted that the CIT(A) failed to consider the aspect of waiver and the distinction between nullity and irregularity.

The Tribunal held that foreign exchange fluctuation loss related to the acquisition of capital assets must be capitalized under Section 43A, and the assessee's contention regarding advance payments was rejected. The Tribunal also noted that the Revenue's appeal was dismissed, and the assessee's appeal was partly allowed.

The Tribunal upheld the deletion of the addition of Rs. 15,30,650/- made under section 69A. It reasoned that the principle that the application of income already subjected to tax cannot be taxed again is well-established. The assessee's Authorized Representative (AR) demonstrated that the impugned sum of Rs. 15,30,650/- was within the scope of suppressed sales and collections identified from the seized material. Since the profit element on the entire suppressed turnover had already been estimated and taxed, a separate addition under section 69A was not tenable. The Tribunal affirmed the CIT(A)'s order deleting the addition. The revenue's grounds of appeal (Nos. 5 and 6) were dismissed, and the assessee's grounds (Nos. 6(i) and 6(ii)) were allowed.

The Tribunal held that Section 43A applies to changes in liability due to exchange rate fluctuations after the acquisition of an asset. The loss on advance payments for capital goods, even if made before acquisition, is to be capitalized and added to the actual cost of the asset.

The Tribunal held that there is no legal requirement for a partnership deed to be registered or notarized. Even if the supplementary deed were rejected, the remuneration should be allowed as per the original deed, as the quantum of allowable remuneration remained the same.

The Tribunal acknowledged the assessee's non-compliance in responding to notices but found that the CIT(Exemption) had not examined the application on merits. Therefore, the order of rejection was set aside, and the matter was remanded to the CIT(Exemption) for fresh adjudication on merits with an opportunity for the assessee to be heard. A cost of Rs. 5,000/- was imposed on the assessee for non-compliance.

The Tribunal noted that the assessee had been granted provisional registration and no longer had a grievance. The Revenue did not object, and the appeal was treated as withdrawn.

The Tribunal held that the AO failed to bring any record to suggest the seized pages related to unaccounted purchases by the assessee's group. Relying on a coordinate bench's decision, the Tribunal found no evidence to support the additions made by the AO.

The Tribunal held that the AO failed to bring any record to suggest the seized pages related to unaccounted purchases by the assessee's group. Relying on a coordinate bench's decision, the Tribunal found no evidence to support the additions made by the AO.

The Tribunal held that the AO failed to bring any record to suggest the seized pages related to unaccounted purchases by the assessee's group. Relying on a coordinate bench's decision, the Tribunal found no evidence to support the additions made by the AO.

The Tribunal held that the AO failed to bring any record to suggest the seized pages related to unaccounted purchases by the assessee's group. Relying on a coordinate bench's decision, the Tribunal found no evidence to support the additions made by the AO.

The Tribunal held that the AO failed to bring any record to suggest the seized pages related to unaccounted purchases by the assessee's group. Relying on a coordinate bench's decision, the Tribunal found no evidence to support the additions made by the AO.

The Tribunal acknowledged the assessee's request to withdraw the appeal and the Departmental Representative's no-objection. Consequently, the appeal filed by the assessee was dismissed as withdrawn.

The Tribunal held that the AO failed to bring any record to suggest the seized pages related to unaccounted purchases by the assessee's group. Relying on a coordinate bench's decision, the Tribunal found no evidence to support the additions made by the AO.

The Income Tax Appellate Tribunal upheld the CIT(A)'s decision to delete the addition. The Tribunal concluded that the very basis for reopening the assessment was invalid as there was no evidence of Rs.3,62,60,000/- accommodation entries in the assessee's bank account, and the Revenue failed to provide necessary evidence for their claim.

The tribunal condoned the 296-day delay in filing the appeal as the Revenue had no serious objection. It set aside the ex-parte order of the CIT(A) and remanded the case, directing the CIT(A) to grant the assessee one more opportunity for a hearing on merits, expecting the assessee's cooperation.

The Tribunal condoned the 41-day delay in filing the appeal, subject to the assessee paying a cost of Rs. 5000/- to the Income Tax Department. The matter was remitted back to the CIT(E) with a direction to provide the assessee one more opportunity of hearing for the registration of the Trust under Section 12AB.

The Tribunal set aside the ex-parte orders passed by the lower authorities. The assessee was directed to file additional documents and evidence before the AO, who was instructed to provide a reasonable opportunity of hearing and pass a fresh order.

The Tribunal upheld the TPO's view that transactions between the PE and its head office constitute international transactions. It also confirmed that certain activities performed by a third party (VEL) and the PE itself for after-sales support and warranty services related to offshore supply contracts are taxable in India.

The tribunal, while acknowledging regular cash sales, found the high cash sales in October-2016 and the use of two bill books unexplained. However, it held that the AO was incorrect in treating the *entire* deposit as unexplained. The tribunal deemed Rs. 10 lakhs of the cash deposit as explained and sustained the addition only for the balance amount of Rs. 4,42,000/-. Consequential grounds regarding interest and penalty were dismissed.

The CIT(A) deleted the addition, noting that the funds were debited from the assessee's account and not credited, thus Section 68 was not applicable. The Tribunal found no infirmity in the CIT(A)'s order, as the Revenue failed to demonstrate the order was erroneous.

The Tribunal dismissed the assessee's jurisdictional challenge, finding the assessee had participated in proceedings without objection and the PAN was registered under the AO's jurisdiction. It also upheld the CIT(A)'s power under Section 251(1)(a) to set aside the matter of the addition to the AO for considering additional evidence and fresh adjudication.

The Tribunal noted that the assessee had complied with the requirements of the Direct Tax Vivad Se Vishwas Scheme, 2024. Consequently, the appeal filed by the assessee was dismissed as withdrawn.

The Tribunal held that the assessee's argument that the disallowance of depreciation on inflated cost of assets (Rs. 55,32,934/-) is not sustainable on merits due to the decision in 'Flourish Purefoods Pvt. Ltd.' is rejected. The Tribunal noted that the 'Flourish Purefoods Pvt. Ltd.' case dealt solely with depreciation on bogus purchases, whereas the present case also involves depreciation on inflated asset values. Therefore, the assessee cannot derive benefit from that decision for the disallowance on inflated costs. Since no other argument was raised against the penalty on this portion, the CIT(A)'s order confirming the penalty is upheld. Regarding depreciation on bogus purchases (Rs. 7,86,414/-), while the issue appeared similar to 'Flourish Purefoods Pvt. Ltd.', the Tribunal found critical differences. The assessee had accepted the CIT(A)'s order confirming this disallowance. Furthermore, the revenue authorities found that the suppliers were not traceable, VAT registrations were cancelled, and an admission was made by an associated person that the suppliers were bogus entities. These facts were not demonstrated to be identical to the 'Flourish Purefoods Pvt. Ltd.' case. Consequently, the Tribunal held that the assessee could not derive benefit from the 'Flourish Purefoods Pvt. Ltd.' decision and that the findings of fact by the revenue authorities regarding bogus purchases remained uncontroverted. Thus, the assessee was held liable for concealing/furnishing inaccurate particulars of income. The CIT(A)'s order confirming the penalty on disallowance of depreciation pertaining to bogus/inflated assets is upheld.

The Tribunal held that the CIT(E) erred in rejecting the application based on religious expenses without proper verification, especially when the assessee had a limited time to respond to the show cause notice. The Tribunal found that the religious expenses exceeded the limit only in one year, and not in FY 2023-24 as observed by the CIT(E).

The Tribunal found the PCIT's order unsustainable. It held that the PCIT had not arrived at conclusive findings regarding the incorrectness of the claims and that the interpretation of depreciation provisions by the PCIT was against the law. The Tribunal also considered the triviality of the amount in relation to the total income.

The Tribunal noted the ex-parte assessment lacked a clear breakdown of the addition and that the assessee was not given adequate opportunity to explain the sources of credit card payments. Therefore, it decided to remand the matter back to the Assessing Officer for fresh adjudication, directing the AO to provide the assessee a reasonable opportunity to be heard and to furnish necessary documents.

The Tribunal noted the assessee's counsel's submission that they were unable to present their case before the revenue authorities. In the interest of justice, the Tribunal remanded the matter to the Assessing Officer for a de novo assessment, directing the assessee to provide all necessary submissions and comply with the notices.

The Tribunal held that the taxation of unutilized accumulated income under Section 11(3) must be in the correct year. The matter was set aside to the AO for verification of the assessee's claims and to ensure no double taxation occurs.