ITAT Allahabad Judgments — September 2026

The Tribunal held that the assessee's grievance regarding the denial of an adequate and effective opportunity of being heard could not be brushed aside. The Tribunal noted that the assessee had raised specific grounds challenging the additions under Section 69A and had claimed specific sources for the deposits. However, the CIT(A) dismissed the appeal in limine without making any independent inquiry or verifying the assessee's claims. The Revenue also failed to place any material on record to prove verification attempts. Therefore, considering the totality of facts and to subserve the interest of principles of natural justice, the Tribunal set aside the impugned order of the CIT(A). The CIT(A) was directed to consider the assessee's submissions afresh on merits. The grounds raised in the appeal were allowed for statistical purposes. The Tribunal did not decide on the merits of the additions themselves, as the case was remanded.

The Tribunal held that the notice issued under Section 148 of the Income Tax Act, 1961, was invalid. The assessment year in question was 2017-18, and the notice was issued on 29.07.2022, which is beyond three years from the end of the relevant assessment year. As per Section 151(ii) of the Act, in such cases, the approval for issuing the notice must be granted by the Pr. CCIT. However, in this case, the approval was granted by the Pr. CIT-1, Bhubaneswar. Following the decision of the Hon'ble Supreme Court in ITO vs. Prakash Pandurang Patil, the Tribunal found that the approval was granted by a lower authority and not the appropriate authority. Consequently, the notice issued under Section 148 was quashed, and the consequential assessments were also rendered invalid and quashed. The appeal of the assessee was allowed.

The Tribunal held that the approvals granted under Section 153D were unsustainable and liable to be quashed. The reasoning was based on the observation that the approval letters were stereotype, lacked reference to any discussions or considerations between the Additional Commissioner and the Assessing Officer, and demonstrated a non-application of mind. The Tribunal noted that the Supreme Court in M/s Serajuddin & Co. emphasized the need for the approving authority to indicate its thought process and examine the draft orders, which was absent in the impugned approvals. The fact that multiple approvals were granted in a single letter further supported this conclusion. The Tribunal also referred to the Supreme Court's decision in DCIT vs. Sunil Kr. Sharma. Consequently, the assessment orders, being consequential to the invalid approvals, were also quashed. However, the Tribunal clarified that the returns of income filed in response to notices under Section 153C/153A would remain valid, and the disclosed income would not be disturbed.

The Tribunal held that the approvals granted under Section 153D were unsustainable and liable to be quashed. The reasoning was based on the observation that the approval letters were stereotype, lacked reference to any discussions or considerations between the Additional Commissioner and the Assessing Officer, and demonstrated a non-application of mind. The Tribunal noted that the Supreme Court in M/s Serajuddin & Co. emphasized the need for the approving authority to indicate its thought process and examine the draft orders, which was absent in the impugned approvals. The fact that multiple approvals were granted in a single letter further supported this conclusion. The Tribunal also referred to the Supreme Court's decision in DCIT vs. Sunil Kr. Sharma. Consequently, the assessment orders, being consequential to the invalid approvals, were also quashed. However, the Tribunal clarified that the returns of income filed in response to notices under Section 153C/153A would remain valid, and the disclosed income would not be disturbed.

The Tribunal held that the notice issued under Section 148A(b) of the Income Tax Act, 1961, was indeed invalid. A perusal of the facts revealed that the notice was issued on March 14, 2024, and the assessee was directed to comply by March 21, 2024. This clearly did not provide the statutory seven days' clear time. The Tribunal found support for this view in the decision of the Hon'ble Jharkhand High Court in the case of Satish Kumar (W.P (T) No.2640 of 2023 dated 28.08.2023). Consequently, following the precedent set by the Jharkhand High Court, the Tribunal quashed the notice issued under Section 148A of the Act. As the assessment order was based on this invalid notice, it also stood quashed. The appeal of the assessee was allowed.

The Tribunal found no basis for estimating the profit at 20% of the turnover, deeming it arbitrary. Similarly, the Tribunal found no justification for considering the Rs. 98,000/- as unexplained, given the explanation provided by the assessee. Considering the nature of the business, turnover, and the specific facts of the case, the Tribunal deemed it reasonable to estimate the assessee's income on a profit of 8% of the total turnover. This total turnover was to include both the reported business turnover of Rs. 85,42,021/- and the cash deposit of Rs. 98,000/-, which was to be considered as part of the business proceeds. Consequently, the order of the Ld. CIT(A) was set aside, and the Assessing Officer was directed to re-compute the income based on this 8% profit estimation. The Tribunal did not expressly leave any issue undecided.

The Tribunal held that the addition of Rs. 16,90,000/- as unexplained cash credit was not called for. The Tribunal noted that the assessee is a pensioner with no other income besides pension and interest. The AO himself accepted Rs. 2,50,000/- as a plausible source of cash holding. The Tribunal found no evidence to suggest the assessee earned any other income. The assessee's claim that the money was kept for his son's marriage was considered a plausible explanation that was not found to be false. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted. The ratio decidendi is that if an assessee provides a plausible explanation for cash deposits, and there is no evidence to the contrary, such deposits should not be treated as unexplained income, especially when the assessee is a pensioner with limited income sources.

The Tribunal noted that the assessee was absent for the hearing and had not provided any evidence to support his claims regarding non-service of notices or failure of the department to comply with mandatory conditions. Therefore, all legal grounds raised by the assessee were dismissed. However, considering the assessee's claim of running a regular business of coaching, which was not considered by the AO in holding the cash deposits as unexplained, the Tribunal, in the interest of justice, restored the matter to the file of the AO. This was to allow the assessee an opportunity to submit necessary evidence demonstrating that the cash deposits were not unexplained and the addition was not required. The AO was directed to consider these evidences and pass a fresh order. The issue of condoning the delay was implicitly set aside by restoring the matter to the AO.

The ITAT decided to condone the delay in filing the appeal before the CIT(A), emphasizing that substantial justice should take precedence over technicalities. The Tribunal noted that the original assessment order was passed ex parte because the assessee failed to produce details before the Assessing Officer. In the interest of justice, the ITAT restored the issues to the file of the Assessing Officer for adjudication on merits. The assessee was to be provided with an adequate opportunity of being heard. The ratio decidendi is that procedural delays and technicalities should not bar substantive justice, and parties should be given a fair chance to present their case, especially when the original assessment was ex parte.

The Tribunal held that the NFAC had failed to consider the written submissions filed by the assessee and that the assessment order was passed ex parte. In the interest of justice, the Tribunal decided to restore the issues in the appeal to the file of the Assessing Officer for adjudication on merits. The Assessing Officer was directed to provide the assessee with an adequate opportunity of being heard. The ratio decidendi is that an ex parte assessment order passed without considering the assessee's submissions violates principles of natural justice and warrants a remand for proper adjudication. The operative direction is to restore the matter to the Assessing Officer.

The Tribunal held that the issue of whether the difference in sales amounts between the ITR and financial statements was examined by the AO during the original assessment with reference to VAT returns, and the AO was satisfied that the difference was due to a typographical error. Therefore, it could not be considered a mistake apparent from the record without specifying the mistake. Disregarding the AO's view after inquiry, solely based on an audit observation of a contradiction, amounts to forming an opinion based on speculation and borrowed satisfaction. The Tribunal noted that these facts were presented to the CIT(A) in the statement of facts but were disregarded. Consequently, the Tribunal found that the AO's action in passing a rectification order under Section 154, being based on borrowed satisfaction and without a finding of mistake in the inquiries conducted during assessment, was not maintainable. The rectification order was quashed, and the addition of Rs. 80,60,870/- was deleted. The appeal of the assessee was allowed.

The Tribunal, considering the peculiar facts of the cases, held that the assessee deserved one more opportunity to present its case. The Tribunal restored the files to the Assessing Officer with a direction to provide the assessee with an opportunity to present its case and produce necessary evidence for the impugned transactions. The Tribunal cautioned the assessee to fully comply with the AO's directions in the set-aside proceedings, failing which the AO would be at liberty to pass orders based on available material, even if ex-parte. The Tribunal found that the first appellate authority had dismissed the appeals in limine due to delay, and the AO had made additions ex-parte. The ratio decidendi is that in cases of procedural dismissal for delay, especially where substantial issues of assessment are pending, and where the assessee claims genuine reasons for delay and lack of opportunity, a restorative approach in the interest of substantial justice is warranted. The appeals were allowed for statistical purposes.

The Tribunal, considering the peculiar facts of the cases, held that the assessee deserved one more opportunity to present its case. The Tribunal restored the files to the Assessing Officer with a direction to provide the assessee with an opportunity to present its case and produce necessary evidence for the impugned transactions. The Tribunal cautioned the assessee to fully comply with the AO's directions in the set-aside proceedings, failing which the AO would be at liberty to pass orders based on available material, even if ex-parte. The Tribunal found that the first appellate authority had dismissed the appeals in limine due to delay, and the AO had made additions ex-parte. The ratio decidendi is that in cases of procedural dismissal for delay, especially where substantial issues of assessment are pending, and where the assessee claims genuine reasons for delay and lack of opportunity, a restorative approach in the interest of substantial justice is warranted. The appeals were allowed for statistical purposes.

The Tribunal, considering the peculiar facts of the cases, held that the assessee deserved one more opportunity to present its case. The Tribunal restored the files to the Assessing Officer with a direction to provide the assessee with an opportunity to present its case and produce necessary evidence for the impugned transactions. The Tribunal cautioned the assessee to fully comply with the AO's directions in the set-aside proceedings, failing which the AO would be at liberty to pass orders based on available material, even if ex-parte. The Tribunal found that the first appellate authority had dismissed the appeals in limine due to delay, and the AO had made additions ex-parte. The ratio decidendi is that in cases of procedural dismissal for delay, especially where substantial issues of assessment are pending, and where the assessee claims genuine reasons for delay and lack of opportunity, a restorative approach in the interest of substantial justice is warranted. The appeals were allowed for statistical purposes.

The Tribunal, considering the peculiar facts of the cases, held that the assessee deserved one more opportunity to present its case. The Tribunal restored the files to the Assessing Officer with a direction to provide the assessee with an opportunity to present its case and produce necessary evidence for the impugned transactions. The Tribunal cautioned the assessee to fully comply with the AO's directions in the set-aside proceedings, failing which the AO would be at liberty to pass orders based on available material, even if ex-parte. The Tribunal found that the first appellate authority had dismissed the appeals in limine due to delay, and the AO had made additions ex-parte. The ratio decidendi is that in cases of procedural dismissal for delay, especially where substantial issues of assessment are pending, and where the assessee claims genuine reasons for delay and lack of opportunity, a restorative approach in the interest of substantial justice is warranted. The appeals were allowed for statistical purposes.

The Tribunal held that the penalty under Section 271(1)(c) could not be sustained because the notice issued under Section 148 was bad in law, and the assessee's returned income was accepted. Therefore, the penalty was directed to be deleted.