ITAT Chandigarh Judgments — May 2025

The Tribunal upheld the validity of reassessment proceedings initiated based on specific information and audit objections. The Tribunal also allowed deductions for interest earned from nationalized banks, holding it to be part of normal banking activity. Several grounds related to overdue interest were dismissed as 'not pressed'.

The Tribunal held that the reassessment proceedings were valid as the AO had applied independent judgment and obtained due approval, and the issue was not examined in the original assessment. Regarding the 80P deduction, the Tribunal allowed the appeals, following earlier decisions that interest income from regular banking operations with nationalized banks is eligible for deduction.

The tribunal dismissed the assessee's challenges to the validity of reassessment proceedings, affirming that they were based on tangible information and not a mere change of opinion. However, it allowed the deduction under Section 80P for interest earned from nationalized banks, treating it as income attributable to the cooperative society's operations. The tribunal also deleted additions related to overdue interest on non-standard debts, consistent with NABARD norms and prior judgments, and set aside disallowance under Section 14A as no exempt income was earned from the relevant investments.

The Tribunal held that the addition made by the lower authorities, confirming the CIT(A)'s decision, was not sustainable. The Tribunal found that the assessee had demonstrated sufficient cash in hand which was deposited due to the demonetization scheme announcement.

The Tribunal considered the rival submissions and judicial precedents. In some cases, grounds were dismissed as not pressed or general in nature. The issue of reassessment was upheld based on valid reasons and proper approval. The claim for deduction under Section 80P on interest earned from nationalized banks was allowed, relying on various High Court decisions. Overdue interest claims were also allowed based on past precedents and NABARD norms.

The Tribunal condoned the delay in filing the appeal. It was held that the addition made by the AO was not sustainable as the assessee had demonstrated that the cash deposits in the bank account were received from farmers in lieu of earlier sales, as per the Ministry of Finance notification authorizing cooperative stores to accept specified bank notes against sales.

The Tribunal held that the assessee, being an agriculturist, was not conversant with tax laws and email communication. The physical copy of the assessment order was not served, and the email may not have reached her. Therefore, the delay in filing the appeal should have been condoned.

The Tribunal held that the ex-parte order passed by the CIT(A) was not intentional due to the non-receipt of notices by the assessee. The impugned order was set aside, and the matter was restored to the CIT(A) for a fresh decision.

The Tribunal considered the rival submissions and found that the reassessment proceedings were valid. The disallowance of interest income from nationalized banks was held to be eligible for deduction under Section 80P. Certain grounds were dismissed as not pressed or general in nature.

The Tribunal held that the reassessment was valid, as the issue was not examined in the original assessment and the AO had applied independent judgment. The Tribunal also addressed issues related to overdue interest and deduction under Section 80P, allowing some grounds and dismissing others based on the facts and precedents.

The Tribunal held that the disallowances made by the CPC were not warranted. The Assessing Officer had wrongly rejected the rectification application without properly considering the assessee's claims. The additions made by the lower authorities were not sustainable.

The Tribunal held that the interests of justice would be served by giving the assessee an opportunity to present their case. The impugned order of the CIT(A) was set aside.

The Tribunal held that the scheme, despite being named Voluntary Retirement Scheme (VRS), was in fact a retrenchment scheme due to BSNL's financial losses and the necessity to reduce employee costs. The compensation received was therefore a capital receipt and not taxable.

The Tribunal held that the interests of justice would be served by giving the assessee an opportunity to present their case before the CIT(A). The impugned order was set aside and the matter was restored for a fresh decision.

The Tribunal held that the CIT(A) erred in dismissing the appeal without adjudicating on merits, despite the delay. The Tribunal emphasized the importance of natural justice and affording the assessee an opportunity to be heard.

The Tribunal condoned the delay in filing the appeal before the CIT(A) and the Tribunal, observing that the delay was not intentional. The CIT(A) was directed to hear the appeal on its merits after providing adequate opportunity to the assessee.

The Tribunal held that the reopening of assessment for AY 2014-15 was valid. It also held that interest earned from nationalized banks is eligible for deduction under Section 80P, as it is attributable to the society's operations. The issue of overdue interest was also decided in favor of the assessee based on previous rulings and NABARD norms.

The Tribunal held that the assessee had demonstrated sufficient cash in hand, supported by the Cash Flow Statement and agricultural income. The lower authorities' addition was not justified as the AR could not rebut the factual aspect.

The Tribunal held that the reassessment initiated was valid and not a change of opinion. It was also held that interest earned from nationalized banks by a cooperative society is eligible for deduction under Section 80P, provided it is attributable to the society's operations. Grounds related to overdue interest were allowed as not pressed or based on previous favorable decisions.

The Tribunal condoned the delay in filing the appeal before the CIT(A) considering the facts and the affidavit. However, the Tribunal found that the CIT(A) had not passed a speaking order on merits, and therefore, remanded the case back to the CIT(A) for adjudication afresh.

The Tribunal held that the addition was made solely on the basis of a statement recorded by the Investigation Wing, without providing the assessee an opportunity for cross-examination. Despite relevant documents and banking channel payments, the authorities doubted the purchases. The Tribunal found it illogical that purchases alleged to be bogus were accepted for production and sales. The invocation of Section 115BBE was also deemed not acceptable.

The Tribunal held that both the AO and CIT(A) failed to provide findings on merit and that the assessee was not given adequate opportunity of hearing. To ensure natural justice, the case was remanded back to the CIT(A) for fresh adjudication.

The Tribunal held that the evidence produced, including the title deed, Tehsildar's certificate, and Jamabadi, clearly showed the assessee was the owner of the agricultural land and cultivated it. Therefore, the addition made by the AO and confirmed by the CIT(A) was not sustainable.

The Tribunal held that the CIT erred in taking cognizance under Section 263. The assessment was initially for limited scrutiny, and the CIT's assumption that it was a complete scrutiny was based on wrong facts, leading to erroneous conclusions.

The Tribunal held that the notices were not properly served, violating principles of natural justice and the ratio laid down by the Punjab & Haryana High Court. The ex-parte orders were passed without affording a proper opportunity of being heard to the assessee.

The Tribunal held that Section 43CA of the Income Tax Act was not applicable as the sale agreement date was prior to the asset being put to use, and payments were made through banking channels. Further, the difference between the disclosed sale proceeds and the DVO's valuation was within the permissible limit.

The Tribunal noted that the assessee was not given a proper opportunity to be heard due to defective service of the notice, relying on a Punjab & Haryana High Court judgment. The appeals were accordingly remanded back to the CIT(E) for fresh adjudication.

The Tribunal held that Section 43CA is not applicable if the Stamp Duty Valuation does not exceed 110% of the consideration received. The assessee's interest income was considered part of the sale consideration, and the difference between the disclosed and DVO-determined value was within the permissible limit. The Tribunal also held that interest on conversion charges, after the asset is put to use, is allowable as a revenue expenditure.

For the Section 43CA issue, the Tribunal held that since the difference between the assessee's disclosed sale consideration (including delayed interest, treated as part of sale proceeds) and the DVO's fair market value was less than the 10% tolerance band, no addition was warranted. For the interest on conversion charges, the Tribunal upheld the CIT(A)'s decision, ruling that once the asset (shopping mall) was put to use, such interest should be treated as revenue expenditure under Section 36(1)(iii) and not capital expenditure.

The Tribunal remanded the issue of disallowance of interest payment for non-deduction of TDS back to the AO, directing the assessee to provide proof of tax payment by the recipient. The disallowance for cash purchases exceeding limits was upheld due to violation of Section 40A(3). The disallowance for unverified cash expenses was deleted.

The Tribunal held that Section 43CA applies to transactions involving land or building and that the date of agreement should be considered for valuation, not the date of sale deed, provided payments are made through banking channels. It also held that interest on conversion charges, incurred after the asset was put to use for business, is a revenue expenditure.

The Tribunal held that Section 28(iv) of the Income Tax Act, 1961 applies only to benefits or perquisites in kind, not in money. Since the loan waiver was in monetary terms, it did not attract Section 28(iv). The Revenue also failed to provide evidence for Section 41(1) applicability.

The Tribunal held that surrenders related to construction of office blocks/guest houses and residential houses do not fall under the definition of 'undisclosed income' for Section 271AAB(1A). However, cash found during the search and surrendered does fall under this definition. Consequently, the CIT(A)'s order confirming penalty at 30% on the cash surrender was upheld, and the department's appeal was dismissed.

The Tribunal held that the amounts surrendered for construction of office block/godown/guest house and residential house did not fall under the definition of 'undisclosed income'. However, the cash surrender did fall under this definition, and the penalty was leviable at 30% as per Section 271AAB(1A)(a). The CIT(A)'s order regarding the confirmation of penalty on cash and deletion of penalty on construction amounts was upheld.

The Tribunal held that the PCIT's action under Section 263 was void ab initio because the assessment order itself was flawed, having been based on a notice issued to a non-existent entity. The Tribunal found that the Sri Guru Teg Bahadur Public School was consistently treated as part of the B.N. Khalsa Trust in previous proceedings.

The Tribunal held that the delay was due to bonafide reasons, lack of communication, and service defects, not deliberate conduct. The CIT(A)'s ex parte order was set aside, and the matter was restored for de novo adjudication.

The Tribunal held that the issue of late payment of PF and ESI has been settled by the Supreme Court in the case of M/s Checkmate Services Pvt. Ltd. vs. CIT. Therefore, there is no scope for further interpretation, and the appeal is dismissed.

The Tribunal held that the rejection of the application solely on the ground of selecting a wrong clause, without providing an opportunity to rectify, is not sustainable. Following judicial precedents, procedural defects are curable.

The Tribunal condoned the delay and restored the matter to the CIT(A) for fresh adjudication de novo, emphasizing the interest of natural justice and fair play.

The Tribunal held that the addition of Rs. 4,94,000/- under Section 69A was without merit as the cash flow was supported by contemporaneous records and the AO failed to disprove the genuineness of sales. For the addition of Rs. 1,03,83,822/-, the Tribunal found that while the assessee provided details of payments and bank transactions, the source of the entire amount was not fully substantiated, leading to a partial disallowance.

The Tribunal held that the CIT(E) failed to demonstrate that the assessment order was erroneous or prejudicial to the revenue. The AO had conducted proper inquiry, and the assessee fulfilled the conditions of Section 10(23C)(iiiab) regarding educational purposes and substantial government funding.

The Tribunal held that the CIT(A)'s finding regarding the salary payment being revenue neutral was correct, and thus the related ground should have been allowed. The Tribunal also noted that other grounds adjudicated by the CIT(A) were irrelevant to the assessee.

The Tribunal held that the deduction for bonus and ex-gratia under Section 43B was rightly disallowed for AY 2016-17 as payments were made after the due date, but directed the AO to consider the claim for AY 2017-18. Regarding the second addition, the Tribunal upheld the disallowance under Section 40(a)(ia) as the assessee failed to prove the payments were compensation and not salary/interest, and therefore, TDS was required.

The Tribunal recalled its earlier consolidated order for AYs 2002-03 to 2004-05 on specific grounds, including sale rate of lime stone, business income, and agricultural income. The Tribunal also recalled the order for AY 2003-04 concerning commission income and for AYs 2003-04 and 2004-05 regarding unexplained bank deposits. The appeals are to be re-adjudicated on these limited points.