ITAT Ahmedabad Judgments — February 2026

The ITAT, considering the assessee's plea for another opportunity to produce evidence, set aside all four appeals to the file of the CIT(A) for fresh adjudication. The CIT(A) was directed to grant a final opportunity to the assessee, subject to a cost of Rs. 5,000/- for each appeal (totaling Rs. 20,000/-) to be deposited in the 'Prime Minister National Relief Fund' within 15 days, with the assessee mandated to comply or risk a decision on merits.

The Tribunal held that the AO was unjustified in adopting a lower deemed cost of acquisition for the assessee compared to her co-owners without cogent reasons, thus allowing the assessee's claimed long-term capital gain based on Rs.37,84,000/-. For the Section 54EC deduction, the tribunal found that the investment was made within the prescribed period (47 days after the last consideration receipt), thereby allowing the deduction.

The Tribunal held that the commission paid to the director was not justified, as it related to duties already covered by his existing remuneration and salary as a full-time working director. The assessee failed to establish a direct nexus between the commission and services beyond the director's defined responsibilities, thus sustaining the original addition.

The Income Tax Appellate Tribunal (ITAT) found no infirmity in the CIT(A)'s order, noting that all issues raised by the Revenue were 'legacy issues' previously decided in favor of the assessee. The ITAT upheld the deletion of disallowances related to the deduction under section 80P(2)(d), 10% additional depreciation, and additional depreciation on Milk Cans and Equipment. Consequently, the Revenue's appeal was dismissed.

The Tribunal acknowledged that the CIT(A) dismissed the appeals due to the assessee's non-compliance. However, considering the assessee's request for a further opportunity to collect and submit evidence, the Tribunal set aside all matters to the file of the CIT(A). The CIT(A) is directed to provide one final opportunity, subject to the assessee depositing a cost of Rs. 5,000/- per appeal to the 'Prime Minister National Relief Fund' within 15 days, and to comply with all requirements.

The Tribunal held that the assessee failed to provide corroborative evidence for the genuineness of the alleged loan transaction from Narayan and Company, including loan documents, interest payment, or intent to repay the interest-free loans. Since the assessee could not establish the genuineness or business purpose of the unsecured loans, the addition of Rs. 32,70,000/- as unexplained money u/s 69A was rightly confirmed by the CIT(A).

The ITAT acknowledged the assessee's non-compliance before the CIT(A) but granted one final opportunity to present evidence. All matters were set aside to the file of the CIT(A) with a direction to allow the assessee to furnish materials in support of their grounds. This opportunity is subject to the payment of Rs. 5,000/- per appeal to the 'Prime Minister National Relief Fund' within 15 days, with non-compliance granting the CIT(A) liberty to decide on merits.

The Tribunal condoned a delay in filing the appeal and found that the assessee had a genuine reason for non-appearance, namely the consultant's illness, which was supported by filings before the CIT(A). It also noted the assessee's initial response to the notice under section 148 and filing of the return, concluding that the penalty under section 271(1)(b) was not correctly imposed as per the Act's specific conditions.

The Tribunal found that the assessee had responded to the notice under section 148 and filed the return. The non-appearance before the Assessing Officer was due to the consultant's illness, which was accepted as a genuine reason for non-appearance. Therefore, the Tribunal concluded that the penalty imposed under section 271(1)(b) was not justified, and the facts for both assessment years were identical.

The tribunal upheld the rejection of the assessee's books of account. However, it allowed the benefit of Rs. 1,40,079/- for opening cash in hand as on 01.10.2016 and Rs. 11,38,662/- for cash withdrawals, totaling approximately Rs. 12.70 lakhs, as explained sources for the cash deposit. The remaining amount of cash deposited was confirmed as unexplained, and the applicability of the special tax rate under Section 115BBE was upheld for the confirmed addition.

The tribunal acknowledged the assessee's request for more time to gather evidence from third parties. Given the repeated non-compliance before the CIT(A), the tribunal set aside all four appeals to the CIT(A) for fresh adjudication. The CIT(A) is directed to provide a final opportunity to the assessee to submit materials and information, subject to a cost of Rs. 5,000/- per appeal, to be deposited in the 'Prime Minister National Relief Fund' within 15 days.

The Tribunal held that the reopening was invalid and bad in law. The reasons for reopening were a mere change of opinion, as they were the same as those for a previously withdrawn notice u/s 154, and the Assessing Officer failed to consider that the assessee had already disallowed Rs. 7.5 lacs in transport expenditure in the original assessment.

The Tribunal found that the CIT(A) erred by passing an ex-parte order without granting the assessee a proper opportunity to be heard. Consequently, the matter was remanded back to the CIT(A) to properly verify the evidence, adjudicate the case on merits, and adhere to the principles of natural justice.

The Tribunal found that significant debit entries existed in the assessee's bank statement, indicating withdrawals used for either investments or business expenses. Consequently, it was held that the deposits could not be treated as undisclosed income under Section 69A of the IT Act, thereby negating the addition made by the AO.

The Tribunal condoned the delay in filing the appeal, set aside the ex-parte order passed by the CIT(A), and remanded the matter back to the CIT(A) for fresh adjudication on merits. This restoration was subject to the assessee depositing a cost of Rs. 5,000/- in the Prime Minister's National Relief Fund.

The Tribunal upheld the CIT(A)'s decision to delete the additions, ruling that the reopening of assessment was based on 'borrowed satisfaction' without the AO conducting independent inquiries or corroborating evidence. The AO failed to establish a money trail, the relation of Shri Gautam Shah with the assessee, or provide cross-examination rights, thereby violating natural justice. Furthermore, the AO did not conduct proper inquiries regarding estimated sales based on a broker's advertisement, which was not demonstrably linked to the assessee.

The Tribunal upheld the CIT(A)'s decision, affirming that the Assessing Officer (AO) had conducted a fair inquiry and accepted the assessee's explanations, making no variations to the returned income in the main assessment order. The discrepancy, which caused the addition, was found to be solely within the computation sheet and could not override the substantive findings of the assessment order.

The Tribunal allowed the assessee's application for the admission of additional evidence, recognizing its importance for a just decision. Consequently, the Tribunal set aside the CIT(A)'s order and restored the case to the Assessing Officer for a de novo assessment, directing the AO to provide the assessee with a proper opportunity to furnish the necessary details and evidence.

The Income Tax Appellate Tribunal (ITAT) found sufficient cause for the delay, noting that it was not deliberate and that confirming the addition without hearing would cause grave prejudice. Citing Supreme Court precedents, the ITAT emphasized a justice-oriented approach over technicalities in condonation matters. Therefore, the ITAT condoned the delay and remanded the appeal back to the CIT(A) for adjudication on merits after providing due opportunity of hearing to the assessee.

The Tribunal upheld the CIT(A)'s decision, confirming that the assessee did not earn any exempt income for the relevant year. It also observed that the assessee's own funds were substantially higher than its investments, and the AO failed to establish a direct nexus between borrowed funds and the investments. Consequently, based on binding judicial precedents, the Tribunal found no error in the deletion of the disallowance under Section 14A.

The Tribunal held that the correct due date for filing the return for an assessee who is a partner in a firm requiring tax audit was 31-10-2023. Since the assessee filed her original and revised returns, along with Form 10IE, within this extended due date, the tax computation should be done as per the new tax regime under Section 115BAC.

The Tribunal condoned the 105-day delay in filing the appeal, finding the assessee's explanation genuine. Noting that both the Assessing Officer and CIT(A) had passed ex-parte orders, the Tribunal remanded the entire matter back to the Assessing Officer for a fresh adjudication on merits, directing the assessee to furnish the required details within a reasonable time.

The CIT(A) deleted both additions, ruling that the assessment reopening was invalid due to 'borrowed satisfaction' by the Assessing Officer (AO) without independent inquiry and denial of cross-examination. The ITAT upheld the CIT(A)'s decision, confirming that the AO failed to establish a money trail, the nexus of the third party with the assessee's projects, or corroborate the information, making the assessment bad in law.

The Tribunal acknowledged the technical mismatch in Form 10AC. It directed the Assessing Officer to accept the assessee's Form 10AC with the correct registration section (12A/12AA) after verification. Subsequently, the AO is to adjudicate the assessee's claim for exemption under Section 11 of the Act.

The CIT(A) deleted both additions, ruling that the reopening of assessment was invalid due to 'borrowed satisfaction' from the Investigation Wing without independent inquiry by the AO, and because the assessee was denied the right to cross-examine third parties whose statements formed the basis of the additions. The Tribunal upheld the CIT(A)'s decision, emphasizing the AO's failure to conduct independent verification, establish a money trail, or provide necessary evidence, thus dismissing the Revenue's appeals.

The Tribunal found that the same interest rate was accepted by the Revenue in an earlier assessment year and that the AO failed to demonstrate the 10.15% rate was above the fair market rate. Citing a High Court judgment, it was held that mere difference in interest rates to various companies does not make the rate excessive. Consequently, the impugned disallowance was ordered to be deleted, and the appeal was allowed.

The Tribunal deleted the additions for unexplained unsecured loans (u/s 68) and consequential interest expenditure (u/s 69C), finding the assessee had provided sufficient evidence of identity, creditworthiness, genuineness, and repayment. It also deleted the disallowance of excess interest payments, asserting that the AO cannot interfere with commercial expediency. The addition for unexplained income (u/s 69A) was deleted, clarifying it was service tax liability, not income. The CIT(A)'s deletion of statutory dues disallowance (u/s 43B) and dismissal of premature penalty grounds were upheld, and the AO was directed to recompute interest u/s 234B and 234C.

The CIT(A) upheld all additions, finding the cash book fabricated, the plea of 'accountant's mistake' to be an afterthought, and the assessee's failure to establish identity, creditworthiness, and genuineness of the sources. The ITAT noted the assessee's non-appearance and lack of prosecution, deciding the appeal on merits. The ITAT found no infirmity in the CIT(A)'s conclusions, confirming the additions as the assessee failed to discharge the onus under sections 68 and 69A of the Act.

The Tribunal condoned the delay of 551 days, set aside the CIT(A)'s ex-parte order, and restored the matter back to the file of the CIT(A) for fresh adjudication on merits. This was subject to the assessee depositing a cost of Rs. 5,000/- in the Prime Minister's National Relief Fund, ensuring a proper opportunity of hearing.

The Tribunal ruled that the proviso to Section 44AB(2), which increases the tax audit threshold to Rs. 10 crore, was not applicable for the assessment year 2022-23, as its effective date was 01-04-2021. Since the assessee failed to file the mandatory audit report for AY 2022-23, the penalty imposed under Section 271B was found to be justified.

The Tribunal held that once a return of income is filed in response to a notice under section 148, the Assessing Officer is mandatorily required to issue a notice under section 143(2) to scrutinize the return. The subsequent framing of assessment under section 144 does not dispense with this mandatory requirement. Therefore, the assessment order was declared void ab initio, and consequently, the penalties levied under sections 271(1)(c) and 271F were deleted.

The Tribunal observed that the same assessment unit had taken inconsistent stands by accepting presumptive income for AY 2017-18 but making an addition under Section 69C for AY 2018-19 for similar transactions. It ruled that the addition of Rs.17,52,838/- as unexplained expenditure for crypto purchases under Section 69C was unjustifiable and without proper reasoning, especially given the assessee's offer of presumptive income and the Revenue's lack of specific transaction details. The grounds of appeal were allowed.

The Additional CIT(A) allowed the assessee's appeal, concluding that Form 10B was uploaded on time and that technical glitches should not lead to penalization. The Tribunal affirmed this decision, finding no justification to deny exemption under Section 11, as the facts were similar to a precedent where belated filing due to technical issues was excused. The Revenue's appeal was therefore dismissed.

The Tribunal noted that both the Assessing Officer and CIT(A) had passed ex-parte orders without a real and meaningful opportunity of hearing or verifying the assessee's details due to the assessee's constraints. Condoning a 215-day delay in appeal filing, the Tribunal remanded the matter back to the Assessing Officer for proper verification of evidences, details, and adjudication of issues on merits, directing the assessee to cooperate fully.

The Tribunal upheld the CIT(E)'s initial rejection as justified due to non-compliance within the statutory period. However, granting a final opportunity, the Tribunal directed the CIT(E) to reconsider the application after the assessee pays a cost of Rs. 10,000 to the Prime Minister National Relief Fund and resubmits all necessary documents.

The Income Tax Appellate Tribunal observed that the assessee consistently failed to appear for hearings and did not furnish any relevant materials, evidences, or a paper book to substantiate the grounds of appeal. Therefore, the Tribunal dismissed the appeal for non-prosecution.

The Tribunal imposed a cost of Rs. 10,000/- on the assessee to be deposited to the Prime Minister National Relief Fund due to the delay and lack of reasonable explanation for non-furnishing documents. Subject to the payment of this cost, the CIT(E) was directed to grant the assessee one more opportunity to submit the required details and documents, and then reconsider the application for renewal of registration as per law.

The Tribunal observed that while the assessee failed to produce sales bills before the lower authorities, they presented land holding and agricultural produce details before the Tribunal. Therefore, the matter was remanded back to the Assessing Officer for proper verification of these new evidences and re-adjudication on merits, granting the assessee an opportunity of hearing.

The Tribunal found that the assessee consistently demonstrated that cement suppliers issued separate debit notes for transportation charges and that the purchase value did not include the carting component. It also noted that the lower authorities failed to consider the detailed reply and supporting evidence filed by the assessee. Therefore, the disallowance was found to be unjustified.

The Tribunal, relying on previous coordinate bench decisions and a Jurisdictional High Court judgment, noted that the addition was based on unverified information and lacked concrete evidence directly linking the assessee to the alleged 'on-money' transaction. It emphasized that additions cannot be made based solely on presumptions or third-party confessions without corroborative proof, and observed procedural lapses. Consequently, the protective addition made in the hands of the deceased assessee was deleted.

The ITAT observed that the CIT(A) admitted additional evidence without forwarding it to the AO for a remand report and failed to examine crucial aspects like whether transactions were routed via demat accounts, if the assessee was a regular trader, or the nature of scrip purchases (stock exchange vs. off-market). Consequently, the tribunal set aside the CIT(A)'s order and remanded the matter to the Jurisdictional AO for fresh adjudication, allowing the assessee to present all evidence.

The Tribunal held that after a return is filed in response to a notice under section 148, the issuance of a notice under section 143(2) is a mandatory statutory requirement for the Assessing Officer to scrutinize the return. The subsequent framing of an assessment under section 144 does not negate this requirement. Since no notice under section 143(2) was issued, the assessment order was declared void ab initio, and consequently, the related penalty orders were also deleted.

The Tribunal upheld the CIT(E)'s decision, stating that the application for final registration was correctly dismissed due to the absence of prior provisional registration. As the assessee had already secured provisional registration post-rejection, the Tribunal found no merit in the present appeal. Consequently, the appeal was dismissed.

The ITAT set aside the matter to the CIT(A), directing that a final opportunity be given to the assessee to represent its case on merits. This was conditional on the assessee depositing a cost of Rs. 10,000/- to the Prime Minister National Relief Fund within 15 days, failing which the CIT(A) could decide based on available records.