ITAT Amritsar Judgments — October 2026

The Tribunal held that the notice dated 30.07.2022, issued under Section 148 of the amended Income Tax Act, 1961, was barred by limitation as per Section 149(1)(b) of the Act, following the Supreme Court's decision in Union of India vs. Rajeev Bansal. The Tribunal calculated the surviving time limit for issuing the notice. The original notice under Section 148 was deemed to have been issued on 29.06.2021. The extended limitation as per the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, was up to 30.06.2021. This left only one day of surviving time. Considering the proviso to Section 149(1)(b), an additional seven days were allowed, extending the time limit to 16.06.2022. However, the order under Section 148A(d) was passed on 29.07.2022, and the fresh notice under Section 148 was issued on 30.07.2022, which was significantly beyond the permissible time limit. The Tribunal relied on the Delhi High Court's decision in Ram Balram Buildhome (P.) Ltd. vs. ITO and the Bombay High Court's decision in Hitesh Ramniklal Shah vs. Assistant Commissioner of Income-tax, which followed similar reasoning. Consequently, the notice under Section 148 was declared void ab initio and quashed. The entire reassessment proceedings and the assessment order dated 03.05.2023 were also quashed. The alternative ground raised by the assessee was allowed, rendering the remaining grounds infructuous.

The Tribunal allowed the appeal on the additional ground raised by the assessee concerning the validity of the assessment order. The Tribunal noted that the assessee filed a belated return in response to a notice under section 142(1), and the AO treated this return as invalid, subsequently proceeding under section 144 without issuing a notice under section 143(2). The Tribunal, respectfully following the decision in Kamlesh Pramod Gandhi vs. ITO and other coordinate bench decisions, held that the non-issuance of a notice under section 143(2) after a belated return is filed in response to a notice under section 142(1) (or section 148 in the cited cases) makes the assessment order invalid and without jurisdiction. The Tribunal found the facts in the present case identical to those decided by the coordinate benches. Therefore, the assessment order dated December 18, 2019, was set aside and quashed as bad in law. Consequently, the other grounds raised by the assessee challenging the additions on merit became infructuous and were not adjudicated.

The Tribunal held that the expenses amounting to Rs. 83,47,183/-, comprising advisory fees and event and execution charges, were incurred wholly and exclusively in connection with the transaction of sale of unlisted equity shares and are therefore allowable under Section 48(i) of the Act. The Tribunal observed that the genuineness of the sale transaction was not in dispute. It noted that the assessee, along with other shareholders, had engaged 7i Advisors LLP as a consultant to find a buyer and secure the best price for their shares in M/s. Lilac Medicare Pvt. Ltd. The Tribunal found that the advisory fees and event and execution expenses were necessary for finding buyers, preparing documents, conducting due diligence, and finalizing the deal with Tosoh Corporation and Tosoh Asis Pte Ltd. Japan. The Tribunal's view was fortified by the Hon'ble Delhi High Court's decision in Kausalya Devi Vs. CIT, which allows expenses inextricably linked to the transfer of a capital asset. Consequently, the disallowance made by the Assessing Officer was deleted, and the grounds of appeal raised by the assessee were allowed.

The Tribunal held that the issue for consideration was the estimation of the Net Profit rate on suppressed gross receipts. It acknowledged that the assessee had suppressed receipts and claimed unproven expenses. The CIT(A) had applied a Net Profit rate of 25% on unaccounted sales turnover, relying on various judicial precedents that only the profit element embedded in suppressed receipts is taxable, not the entire receipts. The Tribunal noted that the assessee had declared a Net Profit rate of 19% in its books, which increased to 21.85% after offering additional income. Considering the assessee's contention regarding Section 44AD and the benchmark rates, and finding the CIT(A)'s 25% rate to be high, the Tribunal deemed it appropriate to apply a Net Profit rate of 23% on the unaccounted sales turnover. The Revenue's grounds of appeal were dismissed, and the assessee's cross-objections were partly allowed. The issue of telescoping was dismissed as infructuous. The decision for the husband applied mutatis mutandis to the wife.

The Tribunal held that the issue for consideration was the estimation of the Net Profit rate on suppressed gross receipts. It acknowledged that the assessee had suppressed receipts and claimed unproven expenses. The CIT(A) had applied a Net Profit rate of 25% on unaccounted sales turnover, relying on various judicial precedents that only the profit element embedded in suppressed receipts is taxable, not the entire receipts. The Tribunal noted that the assessee had declared a Net Profit rate of 19% in its books, which increased to 21.85% after offering additional income. Considering the assessee's contention regarding Section 44AD and the benchmark rates, and finding the CIT(A)'s 25% rate to be high, the Tribunal deemed it appropriate to apply a Net Profit rate of 23% on the unaccounted sales turnover. The Revenue's grounds of appeal were dismissed, and the assessee's cross-objections were partly allowed. The issue of telescoping was dismissed as infructuous. The decision for the husband applied mutatis mutandis to the wife.

The Tribunal held that the disallowance of royalty expenditure of Rs. 1,59,22,685/- was not justified. Citing the Gujarat High Court's decision in CIT vs. Indian Petrochemicals Corporation Limited, the Tribunal found that the liability to pay royalty on rejections/waste dumps for F.Y. 2007-08 and F.Y. 2008-09, initiated by the Director of Mines, Geology, crystallized during the year under consideration. Therefore, it was allowable as business expenditure. The Tribunal also held that the interest expenditure of Rs. 78,73,785/- on delayed payment of royalty was allowable. Referencing the Apex Court's decision in CIT vs. Ahmedabad Cotton Manufacturing Company Ltd., the Tribunal reasoned that the interest was paid not for any breach or infraction of law but due to delayed payment, which was compensatory in nature and incurred wholly and exclusively for the purpose of business to ensure continuity. Thus, the CIT(A)'s findings were reversed, and both royalty and interest expenditures were allowed.

The Tribunal admitted the legal issue challenging the validity of the notice under Section 148, as it goes to the root of the reassessment proceedings and no fresh facts were required for investigation, relying on the judgment of the Hon'ble Apex Court in National Thermal Power Co. Ltd. Vs. CIT (229 ITR 383). The Tribunal also noted that the CIT(A) had not adjudicated some of the legal issues raised before it. Citing the judgment of the Delhi High Court in Divine Infracon Pvt. Ltd. Vs PCIT [2025, 171 taxmann.com 92 (Del)], the Tribunal held that it has no jurisdiction to decide a ground not arising from the impugned order of the first appellate authority. Consequently, the order of the CIT(A) was set aside, and the grounds of appeal raised by the assessee were allowed for statistical purposes. The matter was remitted back to the file of the CIT(A) for necessary adjudication of the legal issues. The assessee was directed to provide updated contact details and remain vigilant. No specific finding was given on the addition of Rs. 95,30,000/-.

The Tribunal noted that the assessee failed to make any submissions before the CIT(A) to justify its Gross Profit rate and credit card expenses. Despite the CIT(A) having dealt with the merits, the Tribunal, in the larger interest of justice, decided to set aside the impugned order. The issues raised in the appeal were restored to the file of the CIT(A) for fresh adjudication. The Tribunal directed the CIT(A) to provide a reasonable opportunity of hearing to the assessee. The assessee was also directed to provide its latest email ID and contact details and to remain vigilant regarding notices from the ITBA portal, avoiding unnecessary adjournments. The appeal was allowed for statistical purposes.

The Tribunal held that the assessee had successfully demonstrated the submission of requisite documents. The CIT(Exemption) had rejected the application for registration without considering these documents. Therefore, the Tribunal found it appropriate to provide the assessee with an opportunity of being heard. The Tribunal set aside the impugned order passed by the CIT(Exemption) and allowed the grounds of appeal raised by the assessee for statistical purposes. The CIT(Exemption) was directed to provide a reasonable opportunity of hearing to the assessee, consider all filed documents, and pass a speaking order in accordance with the law. The Tribunal explicitly stated that it was not commenting on the merits of the case.

The Tribunal held that there is no dispute that the entire suppressed sales cannot be brought to tax, and only the profit attributable to unrecorded sales should be taxed. Considering the totality of facts and in the interest of justice, to cover all leakages including disallowance under Section 40A(3), the Tribunal deemed it appropriate to restrict the addition by estimating the Gross Profit at 25% of the unrecorded sales. This is after giving the benefit of income already disclosed by the assessee in the return filed in response to the notice under Section 153A. The Assessing Officer is directed to recompute the income for all three assessment years accordingly. The impugned orders of the CIT(A) are set aside, and the grounds of appeal are partly allowed. The issue of whether cash payments were covered under Rule 6DD was implicitly addressed by the Tribunal's decision to estimate gross profit on suppressed sales, thereby factoring in all potential disallowances.

The Tribunal held that there is no dispute that the entire suppressed sales cannot be brought to tax, and only the profit attributable to unrecorded sales should be taxed. Considering the totality of facts and in the interest of justice, to cover all leakages including disallowance under Section 40A(3), the Tribunal deemed it appropriate to restrict the addition by estimating the Gross Profit at 25% of the unrecorded sales. This is after giving the benefit of income already disclosed by the assessee in the return filed in response to the notice under Section 153A. The Assessing Officer is directed to recompute the income for all three assessment years accordingly. The impugned orders of the CIT(A) are set aside, and the grounds of appeal are partly allowed. The issue of whether cash payments were covered under Rule 6DD was implicitly addressed by the Tribunal's decision to estimate gross profit on suppressed sales, thereby factoring in all potential disallowances.

The Tribunal held that there is no dispute that the entire suppressed sales cannot be brought to tax, and only the profit attributable to unrecorded sales should be taxed. Considering the totality of facts and in the interest of justice, to cover all leakages including disallowance under Section 40A(3), the Tribunal deemed it appropriate to restrict the addition by estimating the Gross Profit at 25% of the unrecorded sales. This is after giving the benefit of income already disclosed by the assessee in the return filed in response to the notice under Section 153A. The Assessing Officer is directed to recompute the income for all three assessment years accordingly. The impugned orders of the CIT(A) are set aside, and the grounds of appeal are partly allowed. The issue of whether cash payments were covered under Rule 6DD was implicitly addressed by the Tribunal's decision to estimate gross profit on suppressed sales, thereby factoring in all potential disallowances.

The Tribunal upheld the order of the CIT(A) and dismissed the appeal filed by the Revenue. The Tribunal observed that the Assessing Officer made the addition based on information from the Investigation Wing regarding alleged accommodation entry providers, Shri Surendra Kumar Jain and Shri Virendra Kumar Jain. However, no specific information was received directly linking the assessee to taking accommodation entries. The assessee, a Limited Company, had furnished a complete chain of documents, including share application forms, board resolutions, share receipt letters, confirmations, PAN details of applicants, bank statements, and annual reports, to explain the nature and source of the share application money. The Assessing Officer made the addition relying solely on the Investigation Wing's report without providing a copy of this information to the assessee. The CIT(A) had also considered these documents and concluded that the assessee had discharged its primary onus under Section 68, and the Assessing Officer failed to bring any corroborative material to prove the transactions were bogus. The Tribunal found no discrepancy in the documents furnished by the assessee and agreed with the CIT(A)'s deletion of the addition.

The Tribunal condoned the delay of 23 days in filing the appeal, relying on the judgments of the Hon'ble Apex Court in Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. and Inder Singh Vs. State of Madhya Pradesh, finding that a reasonable cause prevented the assessee from filing within the stipulated time and that the delay was neither deliberate nor intentional. Regarding the merits, the Tribunal, considering the prayer of the assessee and in the interest of justice, decided to afford one more opportunity to the assessee. Without dwelling on the merits, the Tribunal restored all issues raised in the appeal, including additional grounds, to the file of the CIT(A) for necessary adjudication after providing the assessee with a due opportunity. The assessee was directed to provide updated contact details and remain vigilant. The effective grounds of appeal were allowed for statistical purposes.

The Tribunal held that the reasons provided by the assessee for the delay in filing appeals before the First Appellate Authority (NFAC) appeared reasonable, considering the substantial demands and interest imposed, which would create a heavy burden. The Tribunal believed the assessee was prevented by sufficient cause from filing the appeals in time. Furthermore, the Tribunal noted that the assessee's contention that entire credit entries in bank statements cannot be treated as income without considering withdrawals merits consideration. The claim that cheque deposits represent transfers from other bank accounts also requires factual verification. Since the assessee's case on merits was not examined at the first appellate stage due to the in limine dismissal, the Tribunal set aside the impugned orders of the NFAC and restored the issues for fresh adjudication by the Assessing Officer, providing the assessee with a reasonable opportunity of being heard. The Tribunal did not decide the merits of the additions made by the AO.