ITAT Allahabad Judgments — August 2025

The Tribunal acknowledged the assessee's claims of non-registration on the IT Portal, being a small taxpayer, and valid explanations for deposits. It held that the CIT(A) should have considered the additional evidence and remanded the case back to the Assessing Officer for a de novo assessment to properly examine the evidence, directing the assessee to comply, or else the amounts would be liable to tax.

The Tribunal condoned the delay in filing the appeal, acknowledging that the assessee's non-compliance before the lower authorities was due to the prolonged illness and subsequent demise of his legal counsel. Given the potential for the assessee to explain the deposits, the Tribunal restored the matter to the file of the AO for fresh consideration in accordance with the law.

The ITAT condoned the delay in filing the appeal due to the assessee's medical condition. It held that the AO erred in rejecting the audit report without proper consideration and remanded the entire matter back to the AO to re-examine the audit report, book results, the addition under section 69A, and the claim for section 80C deduction afresh, in accordance with law.

The Tribunal, noting the assessee's non-appearance, upheld the CIT(A)'s decision to sustain the total disallowance of Rs.36,43,963/-. It reiterated that interest and penalties paid for statutory defaults, such as delayed payment of taxes or filing of returns, are not considered expenses incurred for business purposes and are therefore not deductible, citing various Supreme Court and High Court precedents.

The Tribunal noted that the assessee was not represented during the hearing. After considering the arguments of the Departmental Representative and perusing the record, including the detailed order of the CIT(A), the Tribunal found no reason to deviate from the CIT(A)'s findings. The Tribunal confirmed all three additions made by the AO and upheld by the CIT(A), stating that the assessee failed to provide sufficient evidence to challenge them, especially regarding the creditworthiness for the unsecured loan.

The ITAT condoned the delay in filing the appeal. It held that the CIT(A) erred by passing an ex-parte order without affording sufficient opportunity to the assessee and by failing to issue a speaking order as mandated by Section 250(6) of the IT Act. The ITAT set aside the CIT(A)'s order and remanded the matter back for a de novo speaking order after providing the assessee a reasonable opportunity of being heard.

The Tribunal found the assessee's explanation, supported by evidence including the school manager's confirmation and wife's affidavit, to be acceptable. It ruled that the lower authorities disbelieved the explanation based on mere suspicion and conjecture, setting aside the CIT(A)'s order and directing the deletion of the entire addition of Rs. 25,59,405/-.

The Tribunal noted that the assessee did not receive a reasonable opportunity to present relevant details to the CIT(A). Therefore, the two contested issues—disallowance of security charges and addition under Section 43B concerning VAT—were restored to the file of the CIT(A) for fresh adjudication, with directions to provide the assessee a proper opportunity of being heard.