ITAT Chandigarh Judgments — July 2025

Considering principles of natural justice and potential communication gaps in the faceless regime, the Tribunal set aside the CIT(A)'s order. The appeal was restored to the CIT(A) for a de novo adjudication on merits, directing the assessee to plead and prove their case forthwith.

The Tribunal upheld the re-opening of assessment, stating that as a non-filer, the bank deposits constituted a prima-facie reason for examination, and no error was found in the re-opening procedure. However, on merits, the Tribunal found that the assessee sold agricultural land for Rs. 19 lakhs (though stamp duty was paid on Rs. 9.35 lakhs) and that the AO failed to investigate this source. Inferring no other source of income, the Tribunal deleted the addition.

The Tribunal held that the power to disallow deductions during processing under Section 143(1)(a) was introduced by the Finance Act, 2021, and could not be retroactively applied by CPC Bangalore for Assessment Year 2018-19. Following precedents, the Tribunal deleted the disallowance and directed the AO to grant the deduction claimed under Section 80P(2).

The Tribunal remitted the issue of PF/ESI contributions (Rs. 4,29,357/-) paid within the grace period to the AO for verification. For the notional rental income from unsold flats (Rs. 13,81,464/-), the Tribunal, following the Gujarat High Court and other ITAT decisions, held that such flats, being stock-in-trade, generate 'Income from Business' (Section 28) and not 'Income from House Property' (Section 22/23). As no actual rental income was earned, this addition was deleted.

The tribunal noted the assessee's settlement under the DTVSV Scheme and their desire to withdraw the appeal, to which the Ld. DR had no objection. Consequently, the appeal filed by the assessee was dismissed as withdrawn.

The Tribunal held that both the assessment order and the CIT(A)'s order were not sustainable as they were ex-parte and the CIT(A) failed to follow mandatory procedures. The Tribunal set aside both orders and restored the issues to the AO for fresh adjudication.

The tribunal noted the assessee's non-compliance in submitting documents to both the AO and CIT(A). To uphold natural justice, the case was remanded to the Assessing Officer for a de novo assessment, providing the assessee a fresh opportunity to present all relevant documents and materials.

The Tribunal found procedural irregularities due to non-service of notice under Section 148, violating principles of natural justice, and held the assessment invalid. On merits, the Tribunal accepted the assessee's explanation that the funds were an advance from ancestral agricultural land sale, substantiated by a Bayana agreement and POA, noting similar treatment for a co-owner. Consequently, the addition of Rs. 10,04,000/- under Section 68 was deleted, and the consequential penalty under Section 271(1)(c) was also deleted.

The Tribunal found that both the assessment order and the CIT(A)'s order were ex-parte. While acknowledging the assessee's submissions, the Tribunal set aside both orders and restored the issue to the Assessing Officer for fresh verification and re-adjudication, deeming it appropriate to meet the ends of justice.

The Tribunal acknowledged the Supreme Court's ruling in Checkmate Services (P) Ltd., which mandates strict compliance for timely deposit of employee contributions. However, it found that the CIT(A) failed to adequately examine or verify the assessee's claim of technical glitches with supporting evidence. The matter is, therefore, remanded to the CIT(A) for a de novo adjudication to verify all submitted evidence and afford the assessee a proper hearing, strictly adhering to the Supreme Court's precedent.

The Tribunal, noting the ex-parte nature of both assessment and appellate orders, remanded the cases back to the CIT(A) for fresh adjudication. Emphasizing natural justice, the Tribunal directed that the assessee be given a due opportunity of hearing, with an expectation of cooperation from the assessee.

The Tribunal held that since the third party (M/s HJM Fuels Pvt. Ltd.) had already disclosed the transactions, including those with the assessee, to the Settlement Commission, and taxes were paid, the same amount cannot be subjected to further addition in the assessee's assessment. The appeal was allowed, recognizing that once an amount is disclosed and taxed by a party before the Settlement Commission, it cannot be added again in another's assessment.

The Tribunal condoned the delay in filing the appeal, noting that the CIT(A) order was ex-parte and proper notice was not served. Finding that the CIT(A) failed to follow the mandatory procedure under Section 250(6), the Tribunal set aside both the AO's and CIT(A)'s impugned orders and restored the matter to the AO for fresh adjudication, providing the assessee an opportunity of hearing and the liberty to raise objections against the re-opening of assessment.

The Tribunal, in the interest of natural justice, remanded both appeals back to the CIT(A) for fresh adjudication on merit, with directions to afford due opportunity of hearing to the assessee and for the assessee to cooperate. The appeals were allowed for statistical purposes.

The Tribunal found the CIT(A)'s order incomplete due to the lack of adjudication on the penalty and insufficient examination of the deduction disallowance. It remanded the entire matter back to the CIT(A) for fresh adjudication on both issues, directing reasoned findings and affording the assessee a reasonable opportunity of hearing.

The ITAT condoned the 118-day delay in filing the appeal, finding reasonable cause. It was held that the CIT(A) failed to provide adequate opportunity to the assessee after the communication window was enabled. Therefore, the matter was restored to the Assessing Officer for fresh adjudication, directing the AO to provide reasonable time to the assessee and for the assessee to cooperate.

The Tribunal held that the assessee's illiteracy and unfamiliarity with digital procedures constituted a bona fide reason for the delay. The CIT(A) erred in dismissing the appeal solely on technical grounds without appreciating the genuine cause.

The Income Tax Appellate Tribunal upheld the decision of the CIT(A), affirming that the assessee had indeed filed Form 10B timely. The Tribunal found the CIT(A)'s findings to be balanced, logical, and judicious, and therefore, required no interference.

The Tribunal found that the CIT(A) erred by dismissing the appeal for non-prosecution without ensuring proper notice service under Section 250, violating principles of natural justice. It also noted the CIT(A) failed to adjudicate core issues regarding the validity of reassessment notice, approval under Section 151, and the merits of the addition. The Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication on merits after affording the assessee a reasonable opportunity.

The Tribunal ruled that the assessment was void-ab-initio due to the AO's failure to provide verifiable proof of service of the Section 148 notice, violating principles of natural justice. It accepted the assessee's explanation for the cash deposit as genuine, supported by documentary evidence and consistency with a co-owner's identical transaction. Consequently, both the quantum addition under Section 68 and the consequential penalty under Section 271(1)(c) were deleted.

The Tribunal condoned the delay in filing the appeals. It dismissed the additional ground regarding the necessity of fresh Section 153D approval for assessments made pursuant to Section 263, relying on High Court judgments. Following the Supreme Court's decision in Abhisar Buildwell, the Tribunal held that additions under Section 153A in search assessments are only permissible based on incriminating material found during the search. Since the AO's denial of Section 10(38) exemption was based on suspicion and a generic report without specific incriminating material related to the assessee, the additions were deleted.

The Income Tax Appellate Tribunal (ITAT) found no meaningful rebuttal from the Assessee against the findings of the AO and CIT(A) regarding the unaccounted sales based on the stock shortage. Consequently, the Tribunal upheld the addition made by the AO and confirmed by the CIT(A), finding no reason to interfere with their conclusions.

The ITAT condoned the delay in filing the appeals and rejected the additional ground regarding the non-requirement of Section 153D approval for fresh assessments pursuant to a revisional order under Section 263, citing judicial precedents. However, on the merits of the additions, the Tribunal, relying on the Supreme Court's ruling in *Abhisar Buildwell Pvt. Ltd.*, held that no additions could be made in Section 153A assessments without incriminating material found during the search. Since the AO failed to adduce any such material and merely relied on general reports and suspicion, the denial of exemption under Section 10(38) was not sustainable.

The Tribunal held that the CIT had failed to demonstrate that the additional income was not from the assessee's professional income or that it was from other sources requiring higher tax rates. The Tribunal also noted that the AO had inquired about the issue and accepted the assessee's explanation, and the CIT could not substitute his view for the AO's unless the AO's view was unsustainable.

The tribunal noted that lower authorities confined their findings only to the disputed payment of Rs. 1.25 Cr, without adequately considering the assessee's claim that the original transaction was finalized before Section 194-IA's insertion and that the payment was for enhanced compensation, not consideration for land. Consequently, the tribunal set aside the CIT(A)'s order and remanded the issue back to the CIT(A) for fresh adjudication, directing to consider the transaction's timeline and nature of payment.

The Tribunal partly allowed the Revenue's appeal. It confirmed the deletion of additions related to purchases from three parties (Rs. 7.34 crores) as the supporting evidence was already on the AO's record. However, for the remaining three parties, the unconfirmed sundry creditor, and disallowances for freight and advances, the matter was remanded to the Assessing Officer for fresh adjudication, finding that the CIT(A)'s acceptance of evidence without a remand report constituted a violation of Rule 46A.

The ground relating to disallowance under Section 14A was dismissed as not pressed. The issues concerning the addition on account of NPA provision written back and interest on seed money were remanded back to the Assessing Officer for fresh examination and adjudication.

The Tribunal found the reasons for the inordinate delay to be vague and unsubstantiated, noting a lack of day-to-day explanation as required by Supreme Court precedents. The request for condonation of delay was therefore rejected, leading to the dismissal of the appeal.

The Tribunal condoned the 40-day delay in filing the appeal, acknowledging the assessee's illiteracy and the ex-parte nature of the CIT(A)'s order. It held that the assessee was not given adequate opportunity and therefore remanded the case back to the CIT(A) for fresh adjudication on merits, ensuring a proper opportunity of hearing.

The Tribunal held that both the Assessing Officer and CIT(A) passed ex-parte orders without considering the merits of the case. In the interest of justice and natural justice, the cases were remanded back to the Assessing Officer for fresh decision.

The Tribunal found that both authorities passed ex-parte orders without considering the merits. In the interest of natural justice, the cases were remanded to the AO for a fresh decision, with a proper opportunity for the assessee to be heard.

The tribunal dismissed the ground related to Section 14A as not pressed by the assessee. It remanded the issues concerning the addition of NPA provision written back and interest on seed money back to the Assessing Officer for fresh examination, verification of supporting documents, and adjudication as per law. All other connected appeals were also remanded with similar directions.

The Tribunal found that the issues regarding NPA provision write-back and interest on seed money required fresh examination. Both issues were remanded to the Assessing Officer for adjudication afresh after verifying the facts and accounting methods.

The Tribunal dismissed the Section 14A ground as not pressed. It remanded the issues concerning the addition on account of NPA provision written back and interest on seed money to the Assessing Officer for fresh examination and verification. All other connected appeals were also remanded for statistical purposes.

The Tribunal remanded the issues concerning NPA provision write-back and interest on seed money to the Assessing Officer for fresh examination and verification. The ground related to Section 14A disallowance was dismissed as not pressed by the assessee.

The Tribunal held that if the assessee has sufficient interest-free funds, the AO cannot disallow interest expenses on the grounds that advances were made out of mixed funds, especially when the advances were for business purposes. The CIT(A)'s deletion of disallowances was affirmed.

The Tribunal upheld the CIT(A)'s decision to delete the disallowance under Section 36(1)(iii), finding that the assessee had sufficient interest-free funds to make the advances and was not claiming interest deduction on borrowed funds for non-business purposes. The Tribunal also confirmed the CIT(A)'s deletion of disallowance under Section 14A, as the assessee had not earned any tax-exempt income. Consequently, all appeals filed by the Revenue were dismissed.

The Tribunal upheld the CIT(A)'s findings, concluding that the assessee had adequate interest-free funds (reserves and surplus) to cover the advances, and therefore, no interest expenditure disallowance under Section 36(1)(iii) was warranted. Regarding Section 14A, the Tribunal confirmed that as the assessee had not earned any tax-free income, no disallowance under this section was applicable.

For the land purchase issue, the Tribunal upheld the CIT(A)'s decision, confirming that TDS under Section 194-IA is applicable on urban land transactions exceeding Rs. 50 Lacs, even if used for agriculture. Regarding advertisement payments, the Tribunal, relying on a prior Delhi Tribunal decision, ruled that payments to advertising agencies are covered under Section 194C, thus directing the AO to delete the demand for short-deduction related to this issue.

The Tribunal condoned the delay, noting that the assessment was framed on a best judgment basis. The quantum appeal was set aside to the AO for de novo assessment, and the penalty was also restored for fresh adjudication.

The Tribunal held that if the assessee has sufficient interest-free funds, the advances given from such funds cannot lead to disallowance of interest expenses, even if the advances are for non-business purposes. The AO cannot compel an assessee to earn notional interest income on surplus funds. For assessment years 2011-12 and 2012-13, an issue regarding Section 14A was also decided in favor of the assessee as no tax-free income was earned.

Citing Supreme Court guidelines, the Tribunal condoned the delay in filing the first appeal. It set aside the CIT(A)'s order and restored the case for de novo adjudication by the CIT(A), directing the assessee to present their case promptly.

The Tribunal, invoking principles of natural justice and acknowledging potential communication issues in the faceless regime, set aside the CIT(A)'s order. The case was restored to the CIT(A) for a de novo adjudication, with a direction to the assessee to present its case forthwith.

The Tribunal deleted the addition of Rs. 7.66 Lacs for AY 2017-18, finding it based on projections rather than unearthed undisclosed income, and consequently quashed the related penalty. For AY 2016-17, the Tribunal deleted the penalty on Rs. 42 Lacs, ruling that the voluntary disclosure to honor a commitment, not actual undisclosed assets found during a search, did not meet the criteria for Section 271AAB penalty.

The Tribunal observed that both the Assessing Officer and the Ld. CIT(A) passed impugned orders without properly considering the material facts, documentary evidence, and submissions made by the assessee. Since the issue was not decided on merit by the lower authorities, the Tribunal remanded the case back to the Assessing Officer for a fresh adjudication on merit, ensuring due opportunity of hearing to the assessee.

The Tribunal deleted the addition of Rs. 7.66 Lacs for AY 2017-18, finding that the assessee had substantially honored its commitment based on projections. Consequently, the related penalty under Section 271AAB for AY 2017-18 was also deleted. For AY 2016-17, the penalty on Rs. 42 Lacs was deleted, as the disclosure was a mere undertaking and not based on undisclosed assets or income unearthed during the search under Section 132, thus failing to meet the requirements for penalty imposition.

The Tribunal condoned the delay in filing the appeal. It was held that additions under Section 153A can only be made on the basis of incriminating material found during search. Since no such material was found, the additions were deleted.

The Tribunal held that the addition of Rs. 7.66 Lacs in AY 2017-18 was based on projections from a surrender letter and not on unearthing undisclosed assets, therefore it lacks basis. Similarly, the penalty under Section 271AAB for AY 2016-17 was deemed unsustainable as there was no undisclosed income to invoke penalty provisions.

The Tribunal condoned the delay in filing the assessee's cross-objection. On merits, it upheld the CIT(A)'s deletion of all additions, finding that the assessee had discharged its onus by providing evidence of genuine transactions, and that non-response of third parties to Section 133(6) notices or denial of cross-examination did not justify additions. The Tribunal considered the challenge to the reopening of assessment u/s 148 as academic, given the dismissal of the Revenue's appeal on merits.

The Tribunal set aside the CIT(A)'s order and restored the assessment to the AO for a de novo assessment, directing the assessee to present their case. This decision was made considering natural justice and potential communication issues in the faceless assessment system.