ITAT Amritsar Judgments — June 2025

The Tribunal condoned the delay in filing the appeal due to the counsel's medical condition. It held that the assessee's business activity and presumptive income under Section 44AD had been consistently accepted in prior assessment years. Applying the principle of consistency and considering the available opening cash balance and inventory, the Rs. 7 lakhs seized cash was satisfactorily explained as business proceeds. Therefore, the addition made under Section 69A was deleted.

The tribunal found that the case was deficient in factual evidence and that the specific claim under Section 80P(2)(d) for interest from cooperative banks had not been properly adjudicated by the lower authorities. There was a lack of bifurcation of interest income and specific details of investments in cooperative banks versus other commercial banks. Consequently, the tribunal remanded the matter for all assessment years back to the CIT(A) for fresh factual verification and adjudication after obtaining necessary particulars from the assessee and a report from the AO.

The Tribunal found a significant deficiency in factual evidence and a lack of bifurcation regarding interest income from different types of banks in the earlier assessment stages. It noted that the specific claim for deduction under Section 80P(2)(d) for interest from cooperative banks was not properly adjudicated by the CIT(A). Therefore, the Tribunal remanded the matter for all assessment years back to the CIT(A) for a fresh adjudication, requiring the assessee to provide necessary particulars and documentary evidence.

The tribunal found that the factual evidence was deficient and the assessee's specific claim for deduction under Section 80P(2)(d) for interest from cooperative banks was not properly adjudicated by the lower authorities. The matter was remanded back to the CIT(A) for re-adjudication to verify if the interest income was solely from cooperative banks and to obtain necessary reports from the AO.

The Tribunal noted a lack of clear factual evidence and contradictions in the assessee's submissions regarding the nature of the banks where investments were made. Since the specific claim under Section 80P(2)(d) remained un-adjudicated with proper documentation, the Tribunal remanded the matter for all assessment years back to the CIT(A). The CIT(A) is instructed to re-adjudicate the issue after obtaining necessary particulars from the assessee and a report from the AO.

The Tribunal found that the bank account was not opened or operated by the assessee, and the cash deposits did not belong to him. Therefore, the addition of Rs. 15 crore made on a protective basis in the hands of the assessee was not legally justified and was directed to be deleted. The Tribunal did not adjudicate on the legal issues regarding the validity of reassessment proceedings, having decided the appeal on merits.

The Tribunal noted that compliance with Rule 17A(2)(c) was not possible without a valid re-registration certificate, which was still pending. Consequently, the Tribunal remanded both the application for Section 12A registration and Section 80G approval back to the CIT(E) for fresh adjudication. The assessee is directed to submit the fresh registration certificate and other documentary evidence, and the CIT(E) is to provide a reasonable opportunity of being heard before proceeding afresh.

The tribunal remanded both matters back to the CIT(E) for fresh adjudication. It directed the assessee to obtain and submit the fresh re-registration certificate from the Registrar of Societies, J&K, along with other supporting documents. The CIT(E) was instructed to provide a reasonable opportunity of being heard and proceed with the applications afresh upon receipt of the required certificate.

The Tribunal found that the assessee was not given proper and reasonable opportunity to file necessary particulars, including the amended trust deed. Consequently, both appeals were remanded back to the file of the CIT(E) for fresh adjudication, with directions to grant the assessee 30 days to submit all documents and for the CIT(E) to provide a fair hearing.

The Tribunal observed that a revised Trust Deed was provided to them and acknowledged that the assessee was denied reasonable opportunity by the CIT(E). Consequently, both appeals were remanded to the CIT(E) for fresh adjudication. The CIT(E) was directed to grant the assessee a 30-day window to submit documents and ensure a proper hearing, with no opinion expressed on the merits.

The ITAT condoned the 117-day delay in filing the revenue's appeal due to technical glitches. It upheld the CIT(A)'s decision, confirming that the assessee's land was indeed used for agricultural purposes for the two years preceding the sale, as evidenced by revenue records (jamabandi). Given that the sale proceeds were fully reinvested in other agricultural land, the assessee is entitled to the exemption under Section 54B, and thus the revenue's appeal was dismissed.

The Tribunal held that the Rs. 10 lakhs from the agreement to sell was adequately explained, as the unregistered agreement and supporting affidavits were valid evidence, and the revenue authorities failed to cross-examine witnesses. For the Rs. 6,75,000/- agricultural income, the Tribunal accepted the explanation, noting that J-Forms and lease deeds, even if in the father's name or unregistered, established the existence of agricultural activity by the family, and the genuineness of agricultural sale proceeds was not doubted. The legal grounds regarding reopening u/s 148 were not adjudicated as the appeal was allowed on merits.

The Tribunal held that the reassessment proceedings were invalid from the outset (void ab initio) because the reasons recorded by the AO were factually incorrect and based on wrong figures, and the approval granted by the higher authorities under Section 151 was mechanical, without proper application of mind. Furthermore, the Tribunal found that the agricultural income from the 30 acres of land was sufficient to explain the cash deposit of Rs. 5.61 lakhs.

The Tribunal held that filing Form 10CCB before the completion of assessment proceedings constitutes sufficient compliance, as the requirement is directory and not mandatory. It further ruled that the adjustment made under Section 143(1) merged with the subsequent Section 143(3) scrutiny assessment, thus making the appeal against the Section 143(3) order valid. Consequently, the assessee is entitled to the deduction u/s 80IA(4)(iv), and the AO is directed to take cognizance of the belatedly filed audit report.

The Tribunal observed that the assessee was not given a proper opportunity to rebut the CIT(E)'s findings. Therefore, the matter was remanded back to the CIT(E) with directions to issue a show cause notice, allow the assessee to present its case, and then re-adjudicate according to law, after considering all explanations and submissions judiciously. The Tribunal explicitly stated it did not express any opinion on the merits, keeping all legal issues open.

The Tribunal noted that the CIT(A) had not adjudicated all issues raised by the assessee, despite the rectification order. Therefore, to ensure a complete and fair hearing on merits, the case was remanded back to the CIT(A) for fresh adjudication, with proper opportunity given to the assessee.

The tribunal observed that the CIT(E) rejected the application without issuing a show cause notice, violating principles of natural justice. It found that the trust's objects were charitable and noted evidence of medical, books, and langar expenses. The tribunal consequently remanded the matter back to the CIT(E) for fresh consideration of the registration application, directing the assessee to provide all necessary documentary evidence. A second appeal concerning cancellation of registration (ITA 551/Asr/2024) was dismissed as infructuous.

The Tribunal affirmed the CIT(A)'s decision, holding that the reassessment proceedings were initiated without proper application of mind and based on mere suspicion, despite the assessee furnishing elaborate documentary evidence of actual work execution and banking transactions. It emphasized that the AO failed to conduct a proper inquiry or verify the supplied evidence, and the non-production of the LOI alone, which the AO could have obtained, was not a valid reason to disbelieve the entire work. Consequently, the Section 148 notice was deemed invalid and illegal, rendering the subsequent assessment void ab initio.

The Tribunal observed that the return was filed within the extended period allowed by CBDT and TOLA, and the audit report was available to the AO before assessment completion. Considering the delay was unintentional (due to auditor being affected by COVID) and the assessee is a registered charitable trust, the Tribunal directed the AO to accept the audit report and grant the claimed exemptions under Section 11.

The Tribunal observed that the CIT(A) had not adjudicated all issues raised by the Assessee. To ensure a clear adjudication, the case was remanded back to the CIT(A) for fresh adjudication on merits, providing the Assessee with a due opportunity of hearing. One appeal (ITA 566/ASR/2024) was allowed for statistical purposes, and the other (ITA 572/ASR/2024) was dismissed as infructuous.

The Income Tax Appellate Tribunal upheld the CIT(A)'s decision to quash the Section 148 notice, finding it invalid. The Tribunal concluded that the AO failed to apply his mind to the extensive evidence provided by the assessee, which clearly demonstrated the actual execution of contract work. The reopening was based on mere suspicion and factual errors, without the AO making efforts to disprove the documents or obtain information directly from the principal contractor, thus rendering the Section 148 notice legally unsustainable.

The tribunal noted that the trust's objects were charitable and that visible activities like medical camps and langar were supported by records. It found that the CIT(E) had violated principles of natural justice by not issuing a show cause notice before rejecting the application. Consequently, the tribunal remanded the main appeal (ITA 225/Asr/2024) back to the CIT(E) for fresh consideration, directing the assessee to provide all supporting evidence. A separate appeal (ITA 551/Asr/2024) against a cancellation order was dismissed as infructuous.

The Tribunal upheld the disallowances but significantly reduced the amounts. The disallowance for wages was restricted to Rs.2 Lacs (from Rs.20 Lacs). The disallowance for diesel/LDO expenses was restricted to Rs.2 Lacs (from Rs.10.35 Lacs). The disallowance for crusher sand and bajri was restricted to Rs.1 Lac (from Rs.7.05 Lacs). The lump sum addition of Rs.2.50 Lacs for freight and cartage was confirmed as reasonable. The Tribunal considered the assessee's improved net profit rate in the current year compared to previous years when estimating the reduced additions.

The Tribunal, considering the assessee's amended Memorandum of Association (MOA), its broad membership base, and activities promoting general public utility, along with relevant precedents, found that the assessee's activities fell within the definition of charitable purpose. It concluded that the activities were not for business but in support of its main object, making it eligible for registration. The appropriate authority was directed to grant the registration.

The ITAT condoned the 89-day delay in filing the appeals, accepting the reasons provided. However, the Tribunal found that the Assessee failed to provide sufficient proof that its activities were genuinely charitable and for the benefit of the general public, rather than primarily for its members or through unethical pharmaceutical company sponsorships. Consequently, the ITAT upheld the CIT(E)'s rejection of the registration application.

The Tribunal observed that necessary documents regarding prior ITAT remands and the status of exemption applications from CIT(E) were not on record. Due to the lack of clarity on whether the AO had received the remanded order and the non-disposal of the exemption application by CIT(E) within six months, the Tribunal decided to remand the entire case back to the Assessing Officer for fresh adjudication on merits after proper verification of all claims and affording the assessee an opportunity of hearing.

The Tribunal first condoned the 89-day delay in filing the appeals, as the Revenue had no objection. On the merits, the Tribunal upheld the CIT(E)'s decision, concluding that the assessee failed to provide sufficient proof that its activities were genuinely charitable and primarily for the benefit of the general public. The Tribunal found that the activities, including seminars and conferences, mainly benefited the association's members and involved networking with pharmaceutical companies, which did not fall under the definition of 'charitable purpose' as defined in Section 2(15) of the Income Tax Act, 1961.

The Tribunal found that the 'Iqrarnama' did not bear the assessee's genuine signatures, lacked proper identification, and was a third-party document with no established link to the assessee. Since no cross-examination was allowed and the Assessing Officer failed to rebut the handwriting expert's report, the additions made solely on the basis of this unreliable document were deleted. The Tribunal relied on the principle that a person cannot be held accountable for writings made by a third party.

The tribunal held that the agreement for Rs.155 Lacs was a 'dumb document' without corroborative evidence, and directed the AO to adopt the actual sale consideration of Rs.90 Lacs. For carry forward of capital losses, citing Special Bench and High Court decisions, the tribunal ruled that claims made in returns filed in response to a Section 153A notice within the allowed time, in abated assessments, must be allowed.

The Tribunal observed that the assessee's Articles of Association allowed for a wide spectrum of members and that there were no allegations of spending funds contrary to its objects. It concluded that the assessee was entitled to registration under Section 12A(1)(ac)(iii). The appropriate authority was directed to grant the registration, allowing the revenue to scrutinize fund utilization during assessment.

The Tribunal ruled that the assessee was indeed entitled to the registration, noting its long existence, provisional registration, and Articles of Association allowing for diverse membership. It found no evidence of funds being used for non-object purposes and directed the CIT(E) to grant the registration.

The Income Tax Appellate Tribunal held that the assessee had sufficiently explained the source of the Rs. 13 Lacs cash. The explanation involved the movement of cash between directors, specifically from an imprest balance held by one director, which was duly reflected in the audited financial statements and further corroborated by a director's statement. Consequently, the Tribunal found the addition made by the AO and confirmed by the CIT(A) to be unsustainable.