ITAT Ahmedabad Judgments — December 2025

The Tribunal noted that the assessee had already explained to the PCIT that TDS was duly deducted, advance payments were correctly accounted for, and loans were received via banking channels (citing a clerical error in the audit report). It was also established that the AO had previously examined these issues during assessment. The Tribunal concluded that the PCIT passed the revision order mechanically, without considering the assessee's explanations or valid reasoning, thus the original assessment order was neither erroneous nor prejudicial to the revenue.

The Tribunal held that the CIT(A) was correct in upholding the Section 14A disallowance but erred in directing its allocation between units, stating it should be allocated in the ratio of sales. For employee benefit expenses, the Tribunal agreed with the CIT(A) that the Assessee's division-based allocation was more scientific and rational than the AO's generalized method, thus deleting the AO's addition of ₹9,35,31,350/-. Regarding channel partner/retail promotion and conference expenses, the Tribunal upheld the CIT(A)'s confirmation of the disallowances, relying on the Supreme Court's decision in Apex Laboratories Pvt Ltd, which prohibits deductions for freebies to doctors, and finding that the Assessee failed to prove the AO's 7.5% estimation was excessive or arbitrary. The Tribunal noted that the issue of PF disallowance under Section 36(1)(va) was conclusively settled by the Supreme Court in Checkmate Services Pvt Ltd, implying the CIT(A)'s decision on this point (though not fully detailed in the excerpt) would align with that ruling. The Tribunal agreed with the CIT(A) that notional disallowances under Section 14A cannot be added to book profits under Section 115JB, deleting the AO's addition. For Section 80JJAA, the Tribunal found the CIT(A) erred in rejecting the claim solely on the technical ground of not furnishing revised Form 10DA, remanding the issue to the CIT(A) for examination on merits. For AY 2022-23, the Tribunal dismissed the Department's ground regarding employee expense allocation and allowed its ground regarding the exclusion of excise duty refund from book profit. The Assessee's grounds for AY 2022-23 concerning Section 37(1) disallowances were dismissed, while the ground for Section 80JJAA was allowed for statistical purposes. The overall result for all years was a partial allowance for both the Department and the Assessee.

The Tribunal made the following decisions: For AY 2018-19: 1. Regarding Section 14A disallowance, the CIT(A) was correct in upholding the disallowance but erred in directing allocation between units. The Tribunal upheld the CIT(A)'s decision to delete the addition to book profit under Section 115JB, relying on the Gujarat High Court in Gujarat Fluorochemicals Ltd. and Bombay High Court in Bengal Finance & Investment Pvt Ltd, holding that notional disallowances under Section 14A cannot be added to book profits. 2. The addition of ₹9,35,31,350/- for employee benefit expenses was deleted in full, upholding the CIT(A)'s finding that the assessee's division-based allocation was rational and consistent with CAS-7, and the AO arbitrarily imposed a different ratio. 3. The disallowances of channel partner/retail promotion expenses and conference expenses under Section 37(1) were confirmed in full, following the Supreme Court in Apex Laboratories Pvt Ltd, as the assessee failed to demonstrate that no part of the expenditure related to prohibited payments to doctors. 4. The PF disallowance under Section 36(1)(va) was deleted, following the Supreme Court in Checkmate Services Pvt Ltd, which held that employees' contribution deposited beyond the due date but before the due date of filing the return of income is allowable. For AY 2021-22: 5. The issue concerning Section 80JJAA deduction was restored to the CIT(A) with a direction to examine the claim on merits, without dismissing it on the technical ground of non-filing of Form 10DA, following judicial precedents on similar matters. For AY 2022-23: 6. Ground No. 1 of the Department's appeal (employee expenses allocation) was dismissed, aligning with the decision for AY 2018-19. Ground No. 2 of the Department's appeal (excise duty refund from book profit) was allowed, reversing the CIT(A)'s decision. 7. Grounds 1 and 2 of the assessee's appeal (Section 37(1) disallowances) were dismissed, aligning with the decision for AY 2018-19. Ground 3 of the assessee's appeal (Section 80JJAA deduction) was allowed for statistical purposes, aligning with the decision for AY 2021-22. The ratio decidendi for the PF disallowance is that the Supreme Court ruling in Checkmate Services Pvt Ltd is binding, allowing credit for employee contributions deposited late but before the return filing due date. For employee benefit expenses, the principle is that more scientific and substantiated allocation methods should prevail over generalized ones. For Section 14A addition to book profit, the principle is that notional disallowances cannot be added to book profits.

The Tribunal upheld the Section 14A disallowance but directed its allocation. It deleted the addition related to employee benefit expenses, finding the assessee's allocation method more scientific. Disallowances for channel partner/retail promotion and conference expenses were partly upheld.

The Tribunal upheld the Section 14A disallowance but directed its allocation. It deleted the addition related to employee benefit expenses, finding the assessee's allocation method more scientific. Disallowances for channel partner/retail promotion and conference expenses were partly upheld.

The Tribunal upheld the Section 14A disallowance but directed its allocation. It deleted the addition related to employee benefit expenses, finding the assessee's allocation method more scientific. Disallowances for channel partner/retail promotion and conference expenses were partly upheld.

The Tribunal held that since the PCIT's order u/s 263 was set aside by a coordinate bench, the consequent assessment order could not survive. The CIT(A) had rightly quashed the assessment order. Similarly, the penalty order u/s 271(1)(c) was also quashed.

The Tribunal upheld the Section 14A disallowance but directed its allocation. It deleted the addition related to employee benefit expenses, finding the assessee's allocation method more scientific. Disallowances for channel partner/retail promotion and conference expenses were partly upheld.

The Tribunal upheld the Section 14A disallowance but directed its allocation. It deleted the addition related to employee benefit expenses, finding the assessee's allocation method more scientific. Disallowances for channel partner/retail promotion and conference expenses were partly upheld.

The Tribunal held that the seized diary and vouchers, found from a third party and not part of the assessee's regular books, were 'dumb documents' without evidentiary value. The AO failed to establish a nexus between the diary entries and the assessee's transactions or examine the author of the document.

The Tribunal held that the reassessment proceedings were invalid and liable to be quashed. The foundational premise for reopening, that the share transaction was not disclosed, was factually incorrect as the original return clearly disclosed the sale of shares and the claim for exemption under section 10(38). A disclosed transaction does not ipso facto constitute escapement of income. The reasons for reopening relied exclusively on general information from the Investigation Wing regarding penny stocks without any independent material or enquiry correlating it to the assessee's specific transaction. Such uncorrelated, generic information cannot constitute tangible material for jurisdiction under section 147. The Tribunal noted that all primary facts were disclosed, no failure to disclose was demonstrated, and the reasons lacked material relatable to the assessee's transaction. Furthermore, even on merits, the addition under section 68 was unsustainable. The assessee had furnished complete primary evidences, and the AO had not identified any defect or carried out independent verification. The addition was made by importing generic findings without establishing a nexus with alleged operators. Compellingly, the assessee's husband faced similar reassessment proceedings for the same period and scrip, which were completed without addition, accepting the genuineness of the transaction. The Tribunal emphasized consistency and parity in tax administration, holding that the contradictory stand in the assessee's case could not be sustained. Consequently, the reassessment was quashed, and the addition was deleted.

The Tribunal held that the CIT(A) was justified in deleting the additions for all assessment years. The Tribunal found that the seized day-cash-book/diary of the Venus Group, found from a third party's premises, was a 'dumb document' with no evidentiary value in the absence of corroboration. The Assessing Officer had neither examined the writer of the diary nor any connected person from the Venus Group, nor established a direct nexus between the diary entries and the assessee's recorded transactions. The Tribunal relied on several binding precedents, including Nishant Construction Pvt. Ltd. vs. ACIT, Prarthana Constructions Pvt. Ltd., Common Cause vs. UOI, and Hitesh B. Patel. These precedents establish that loose papers, diaries, and third-party documents not forming part of regularly maintained books of account have no independent evidentiary value unless corroborated by independent evidence. The Revenue failed to bring any material to controvert the factual findings of the CIT(A) or show any infirmity in the appellate order. The legal grounds challenging the validity of reassessment were kept open but not adjudicated due to the decision on merits.

The Tribunal held that the PCIT's exercise of revisionary jurisdiction under Section 263 was not justified. The assessee had already disclosed the gold in prior wealth tax returns, and the quantity in question was not significant enough to warrant further inquiry when already disclosed. The assessment order was not erroneous.

The Tribunal condoned the delay in filing the appeal subject to the deposit of costs and set aside the CIT(E)'s order. The matter was restored to the CIT(E) for a fresh decision, with provisional registration continuing until then.

The Tribunal held that the disallowance under Section 36(1)(iii) was not sustainable. It found that the assessee had sufficient interest-free funds, including partners' capital and accumulated profits, which exceeded the partners' drawings.

The Tribunal held that the seized diary and vouchers, found from a third party and not part of the assessee's regular books, were 'dumb documents' without evidentiary value. The AO failed to establish a nexus between the diary entries and the assessee's transactions or examine the author of the document.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the assessee was eligible to claim exemption under sections 11 and 12 for Assessment Year 2021-22. The Tribunal reasoned that the assessee had a valid and subsisting registration under section 12A throughout the relevant previous year. The application for re-registration under section 12AB was made within the extended time granted by the CBDT. The fact that the new registration under section 12AB was granted on 13.01.2022, after the return for AY 2021-22 was filed on 31.12.2021, and the omission of the new registration number in the ITR, were considered a timing and technical mismatch, not a substantive ground to deny exemption. The Tribunal referred to the proviso to section 12A(2), which provides that where registration is granted after the due date, exemption shall not be denied if the objects and activities remain the same. The Tribunal found that the CPC and CIT(A) were not justified in denying exemption on this technical ground. Consequently, the disallowances of application of income (Rs. 3,67,53,006) and accumulation (Rs. 59,97,501) were directed to be deleted. The Assessing Officer was directed to allow the exemption as claimed.

The Tribunal held that the CIT(E) did not provide adequate opportunity to the assessee to present its case. The reasons for non-compliance were due to preoccupation with income tax filing and audit reports.

The Tribunal held that the grounds challenging the validity of notices issued under Section 148 and the subsequent proceedings were dismissed as the AO had independent reasons for reopening and did not solely rely on information from searches under Section 132/132A. For grounds related to merits, the cases were remanded to the CIT(A) for fresh adjudication.

The Tribunal held that the grounds challenging the validity of notices issued under Section 148 and the subsequent proceedings were dismissed as the AO had independent reasons for reopening and did not solely rely on information from searches under Section 132/132A. For grounds related to merits, the cases were remanded to the CIT(A) for fresh adjudication.

The Tribunal held that the grounds challenging the validity of notices issued under Section 148 and the subsequent proceedings were dismissed as the AO had independent reasons for reopening and did not solely rely on information from searches under Section 132/132A. For grounds related to merits, the cases were remanded to the CIT(A) for fresh adjudication.

The ITAT acknowledged the assessee's medical condition which prevented participation in prior proceedings. In the interest of justice, the tribunal decided to remand the matter back to the Assessing Officer for a fresh adjudication on the merits, ensuring the assessee is given a proper opportunity of hearing and to present all evidence.

The Income Tax Appellate Tribunal noted that the CIT(A) failed to adjudicate the crucial legal ground concerning the validity of the Section 148 notice issued to a deceased person. Consequently, the Tribunal set aside the matter to the CIT(A) with a specific direction to adjudicate this legal ground. Ground 1, which pertained to the legal validity of the notice, was allowed for statistical purposes, while other grounds raised by the assessee were dismissed.

The Tribunal noted that the assessee had requested not to send hearing notices by email and had not participated in hearings despite opportunities. Considering the non-cooperation, the Tribunal imposed costs on the assessee. However, to meet the ends of justice, the Tribunal directed the JAO to allow the assessee to submit additional documents and get one more opportunity for hearing.

The Tribunal noted that the assessee had requested not to send hearing notices by email and had not participated in hearings despite opportunities. Considering the non-cooperation, the Tribunal imposed costs on the assessee. However, to meet the ends of justice, the Tribunal directed the JAO to allow the assessee to submit additional documents and get one more opportunity for hearing.

The Tribunal noted that the assessee had requested not to send hearing notices by email and had not participated in hearings despite opportunities. Considering the non-cooperation, the Tribunal imposed costs on the assessee. However, to meet the ends of justice, the Tribunal directed the JAO to allow the assessee to submit additional documents and get one more opportunity for hearing.

The Tribunal acknowledged the delay in filing the appeal and condoned it. Regarding the non-compliance before the CIT(A), the Tribunal was not convinced with the assessee's explanation. It noted that in the faceless scheme, notices are mandatorily sent via email, and it was not stated that these were not received. The CIT(A) had granted six opportunities, all of which were missed by the assessee, indicating negligence and lethargy. Consequently, the Tribunal imposed a cost of Rs. 10,000/- on the assessee, payable to the Prime Minister’s National Relief Fund within 15 days. Subject to this payment, the CIT(A) was directed to allow one more opportunity to the assessee to explain the source of cash deposits. The assessee was also directed to make full compliance and furnish supporting evidence. If the assessee failed to comply, the CIT(A) would be at liberty to pass an order based on available material. The appeal was allowed for statistical purposes.

The Tribunal, acknowledging the assessee's handicap and the ex-parte nature of previous orders due to consultant's oversight, found the delay not deliberate. The matter was remanded to the Assessing Officer to verify evidence and adjudicate on merits, ensuring an opportunity for hearing under principles of natural justice.

The Tribunal found that the assessee regularly dealt in cash as a Kariyana Trader and that the cash deposits were from daily sales, a fact not disputed by the AO or CIT(A). As the assessee had demonstrated the source of cash deposits and provided details, the Tribunal concluded that the addition under Section 69A was not justified.

The Tribunal noted that the assessee had requested not to send hearing notices by email and had not participated in hearings despite opportunities. Considering the non-cooperation, the Tribunal imposed costs on the assessee. However, to meet the ends of justice, the Tribunal directed the JAO to allow the assessee to submit additional documents and get one more opportunity for hearing.

The Tribunal held that the loan was given to a sister concern and not to a shareholder who is a beneficial owner of shares, therefore it cannot be termed as dividend under Section 2(22)(e). The decision of a previous Tribunal case with the same parties was also noted.

The Tribunal held that the issues were covered by its previous decisions in the assessee's own case for earlier years. The CIT(A)'s order was upheld, and the Revenue's appeal was dismissed.

The Tribunal found that lower authorities failed to examine the Input Tax Credit (ITC) implications under GST law related to the disputed purchases and the commercial rationale for the assessee potentially bearing ITC loss. The matter is remanded to the Assessing Officer to verify ITC claims, GST returns, and the supplier's bank accounts, and to allow the assessee a fresh opportunity to prove the genuineness of the transactions.

The Income Tax Appellate Tribunal dismissed the Revenue's appeal, affirming the Ld. CIT(A)'s decision. The Tribunal found that the assessee had submitted all relevant documents (capital gain statements, demat statements, bank statements) proving the genuineness and creditworthiness of the share transactions, which had been overlooked by the AO. The assessee had also duly reported the transaction in their capital gain computation.