ITAT Chandigarh Judgments — August 2025

The Tribunal held that the CIT (Appeals) ought to have considered the additional evidence sought to be produced by the assessee instead of rejecting it solely on the ground of a procedural defect. The addition of Rs.2 Crore was deemed disproportionate.

The Tribunal held that the provisions of Section 194Q are machinery provisions for tax collection and do not determine the nature of income. Following its precedent, it was ruled that full TDS credit cannot be denied if the transactions are reflected in Form 26AS and accounted for in the assessee's books, even if only commission income is disclosed. The Assessing Officer was directed to grant full TDS credit as reflected in Form 26AS.

The Tribunal upheld the CIT(A)'s order, finding no infirmity in setting aside the ex-parte assessment order and remitting the issues to the AO. The Cross Objection was dismissed as not maintainable and time-barred.

The Tribunal held that the CIT(A) was justified in setting aside the assessment for fresh adjudication, finding no infirmity in the order. However, the directions were modified to ensure the Assessing Officer considers the binding decision in Anish Garg v. ITO and adjudicates the validity of reopening.

The Tribunal found no error in the CIT(A)'s order, stating it was a mere setting aside for fresh enquiry. The Tribunal expressed that such appeals are frivolous and a wastage of resources. The Cross Objection was not pressed.

The Tribunal held that the show cause notice was defective as it did not specify the exact violations attracting penalty under Section 271AAB. The notice only referred to Section 274, which provides for the procedure for imposing penalty and opportunity of hearing, not the charging section itself.

The Tribunal found that the assessee acted under a bona fide mistaken belief regarding the definition of "relative" and had disclosed all material facts. Applying Supreme Court precedents, the Tribunal held that penalty under Section 271(1)(c) is not attracted in cases of bona fide and unintentional errors when there is no attempt to conceal facts. Thus, the penalty was directed to be deleted.

The Tribunal, following its earlier decisions, held that Section 194Q provisions are machinery provisions for tax collection, not determining the income's nature. It ruled that when TDS is deducted on gross transaction value, reflected in Form 26AS, and transactions are accounted for, full TDS credit cannot be denied to a commission agent merely for declaring only commission income. The lower authorities' action was unsustainable.

The Tribunal held that the notice issued by the jurisdictional AO was invalid as it should have been issued by a Faceless AO as per the notification. Following the judgments of the Hon'ble High Court, the re-assessment order was quashed.

The Tribunal held that the CIT(A) was justified in setting aside the assessment for fresh adjudication, finding no infirmity in the order. However, the directions were modified to ensure the Assessing Officer considers the binding decision of a coordinate bench and adjudicates the validity of reopening.

The Tribunal held that the order of the CIT(Appeals) was not sustainable as it failed to follow the mandatory procedure of stating points of dispute and recording reasons. Since the assessment order was also ex-parte, the Tribunal set aside the order to the AO for re-adjudication.

The Tribunal held that the argument that notice u/s 147 was issued on a deceased person is not tenable, as it was issued on the legal heir who had a duty to inform the AO about the death. The Tribunal further directed the AO to first determine if any asset was inherited by the legal heirs before working out the tax liability for recovery.

The Tribunal held that while surplus funds of a charitable institution cannot be used for purposes other than its objectives, the institution's charitable status should not be denied for minor violations. The AO erred in denying exemption as a whole and should have analytically worked out interest income that could be allocated, rather than disallowing the entire surplus.

The tribunal condoned the delay in filing the appeal, accepting the medical grounds presented by the assessee. However, on the substantive issue, it held that the definition of 'relative' in Section 56(2)(vii) is exhaustive and does not include cousins, thus confirming the addition of the gifts to the assessee's income from other sources.

The tribunal held that the CIT (Appeals) was empowered to set aside the assessment order under Section 251(1)(a) of the Income Tax Act, especially after 01.04.2023. Finding no infirmity in the CIT (Appeals) order, the tribunal dismissed the Revenue's appeal.

The Tribunal relegated the issue to the Assessing Officer for verification of whether the Rs.65 lacs GST amount was actually paid by the assessee before the due date of filing the return. If verified, the deduction for this amount under Section 43B is to be allowed to the assessee.

The Tribunal held that since the foundation of the fresh assessment order (the CIT's Section 263 directions) was largely set aside by a prior ITAT order, the AO lacked the jurisdiction to make other additions. The CIT(A) was therefore correct in deleting the additions beyond the Rs. 10 lacs confirmed by the ITAT. The Revenue's appeal is dismissed.

The ITAT upheld the CIT(A)'s decision to set aside the assessment for fresh adjudication but modified the directions. The Faceless Assessing Officer was instructed to specifically consider a binding Coordinate Bench decision on reopening validity and to record a clear finding on the direct nexus between the material relied upon and the alleged escapement of income.

The Tribunal condoned the 27-day delay in filing the appeal, finding the medical explanation reasonable. On merits, noting the CIT(A) had dismissed the appeal ex-parte without proper adjudication, the Tribunal restored the matter to the Assessing Officer for fresh adjudication with adequate opportunity to the assessee to furnish evidence.

The Tribunal held that the CIT(A) was justified in setting aside the assessment for fresh adjudication, finding no infirmity in the order. However, the directions were modified to ensure the Assessing Officer considers the binding decision in Anish Garg v. ITO regarding the validity of reopening.

The Tribunal had already quashed the ld. PCIT's order passed under Section 263, which formed the basis for the fresh assessment. With the foundational Section 263 order being set aside, the AO was denuded of the power to pass any fresh assessment order. Therefore, the ld. CIT (Appeals) rightly quashed the consequential fresh assessment order passed by the AO.

The Tribunal found that both the assessment and first appeal were decided ex parte. Granting another opportunity in the interest of substantial justice, the Tribunal set aside the CIT(A)'s order and remanded the case back to the Assessing Officer for fresh consideration after providing the assessee a reasonable opportunity of being heard.

The Tribunal condoned the delay, acknowledging that the assessee was not heard on merits by the CIT(A). In the interest of natural justice, the matter was remanded to the Assessing Officer for fresh adjudication, with directions for the assessee to cooperate and provide evidence.

The Tribunal, relying on precedent, ruled that Section 194Q are machinery provisions and full TDS credit cannot be denied if reflected in Form 26AS and accounted for, regardless of the assessee being a commission agent declaring only commission income. The lower authorities' action of restricting credit was deemed unsustainable, and the AO was directed to grant full TDS credit.

The Tribunal dismissed the appeal as withdrawn, acknowledging that the dispute with the Revenue had been resolved under the Vivad Se Vishwas Scheme. It was also clarified that if the assessee encounters technical issues preventing the availment of the scheme's benefits, they are entitled to apply for the appeal to be revived under Section 254(2) of the Income Tax Act within the prescribed limitation period.

The Tribunal noted the assessee's nature as a government-controlled cooperative society involved in welfare schemes and emphasized that greater caution is required before invoking section 68 for such entities due to their unique functioning and statutory audit. Finding that the CIT(A) dismissed the appeal ex parte without adjudicating on merits, the Tribunal set aside the CIT(A)'s order and restored the matter to the Assessing Officer for fresh examination, with directions to grant proper opportunity to the assessee.

The Tribunal observed that while there was no independent corroborative evidence from the Revenue, the husband's admission carried evidentiary value and the denial of cross-examination argument was not sustainable in the peculiar facts. To avoid prolonged litigation and multiplicity of proceedings, and considering the assessee's sole source of income was business, the Tribunal directed the AO to assess the Rs. 18,60,000/- as business income instead of unexplained investment under Section 69.

The Tribunal dismissed the appeal as withdrawn, acknowledging the assessee's participation in the 'Vivad Se Vishwas, 2024' Scheme. It was further held that if the assessee is unable to avail the benefits of the scheme due to technicalities, they would be at liberty to revive the appeal by filing a Miscellaneous Application under Section 254(2) of the Act within the prescribed limitation period.

The Tribunal set aside both the ex-parte assessment and CIT(A) orders, granting the assessee a fresh opportunity to explain the case before the Assessing Officer. The matter was restored to the AO for fresh adjudication, with the assessee directed to cooperate by submitting necessary details.

The Tribunal condoned the 370-day delay, finding sufficient cause. It held that the Ld. CIT(A) was duty-bound to examine the assessee's plea of financial hardship before dismissing the appeal under Section 249(4). Consequently, the Tribunal set aside the Ld. CIT(A)'s order and remitted the matter back to the Ld. CIT(A) for fresh adjudication after considering the assessee's request for exemption from tax deposit.

The Tribunal condoned the 900-day delay, finding sufficient cause. It held that the CIT(A) had erred by misdirecting itself and treating the quantum assessment appeal as a penalty appeal. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A) for fresh consideration as an appeal against the quantum assessment order, with directions to process the assessee's VSVS application accordingly.

The tribunal found that the notice under Section 148 was returned undelivered and no further efforts were made for proper service. Citing that valid service of notice under Section 148 is a jurisdictional prerequisite, the tribunal held that the reassessment proceedings were bad in law and quashed the assessment.

The Tribunal found that the assessee had provided sufficient evidence, including the sale deed, agreement to sale, and bank statements, which matched the deposit amount. The purchaser of the land also appeared before the AO and confirmed the transaction. As the AO failed to rebut the evidence, the Tribunal held that the assessee had proved the source of the deposits, and therefore, the addition was ordered to be deleted.

Given that the demand was reduced to NIL, the assessee sought to withdraw the appeal, and the Ld. DR confirmed having no objection to this. The Tribunal accepted the request and accordingly dismissed the appeal as withdrawn.

The Tribunal noted that the firm had legally dissolved on 05/04/2014, rendering it incapable of being assessed in its own name post-dissolution. Since the transactions were already reported by the sole proprietor in his return of income, taxing them again in the hands of the dissolved firm lacked legal justification. Therefore, the Tribunal deleted the addition made by the AO and confirmed by the CIT(A).

The Tribunal admitted additional evidence (J Forms, jamabandi, bank statements) and restored the matter, including related penalty proceedings under Sections 271AAC(1) and 272A(1)(d), to the file of the AO for fresh examination and decision, providing the assessee a reasonable opportunity.

The Tribunal found that the bank account was indeed a joint family account where each member deposited approximately Rs.2 lakhs from their past savings, which is below the Rs.2.5 lakhs limit specified in CBDT Instruction No.03/2017. Consequently, the source of the cash deposit was deemed explained, and the addition made by the AO was ordered to be deleted.

The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's illiteracy and his efforts to engage legal representation. Finding no determination on the merits of the case and in the interest of substantial justice, the Tribunal remitted the matter back to the file of the AO for fresh examination after providing a reasonable opportunity to the assessee.

The Tribunal found that the CIT(A) passed an ex-parte order without addressing the merits or admitting the additional evidence. Given the germane nature of the new evidence, the Tribunal admitted it and remanded the case to the AO for a fresh examination of the additional evidence and a fresh decision on both the quantum and penalty proceedings.

The Tribunal acknowledged the assessee's intent to prosecute the appeal and admitted additional evidence (J Forms, jamabandi, bank statements) as germane to the issue. The matter concerning the quantum addition and the related penalty proceedings under Section 271AAC(1) and Section 272A(1)(d) were set aside and remanded to the AO for fresh examination, verification, and decision after providing a reasonable opportunity to the assessee.

The Tribunal observed that the assessee provided voluminous evidence, including 'H' Forms, sale receipts, and certificates from cooperative societies, to substantiate the agricultural income. Investigations conducted by the AO under Section 131 also confirmed the sale of poplar trees. The Tribunal concluded that the assessee had proved the sources of the deposits, and therefore, the lower authorities were not justified in making the additions, which were consequently deleted.

The Tribunal held that Section 51 of the Income Tax Act was not applicable as the properties were stock-in-trade, not capital assets. It further ruled that the amount could not be added under Section 68 due to established source, nor under Section 56(2)(ix) as the forfeiture provisions were not applicable for the assessment year 2012-13. The Tribunal concluded that no cessation of liability occurred in the relevant assessment year to warrant the addition, thus deleting the impugned addition.

The Tribunal held that the first appellate authority is duty-bound to decide appeals on merits, even if there is non-appearance by the assessee. It set aside the CIT(A)'s order and restored the matter for fresh adjudication, directing the CIT(A) to provide adequate opportunity of hearing to the assessee.

The Tribunal held that the AO's reasoning for making additions was flawed. The Tribunal noted that cash transactions are common in rural areas and that the assessee had provided Aadhar cards and confirmations from lessees/buyers, thus discharging the initial onus. The AO failed to conduct further inquiries to rebut the evidence.

The Tribunal noted that judicial opinion on the issue of filing incorrect audit report form is not uniform. Considering various precedents and CBDT Circular No. 2/2024, the matter was remitted back to the Assessing Officer for fresh examination.

The Tribunal upheld the rejection of the books of account under Section 145(3) but found the estimated gross profit rate of 6% to be high, considering the assessee's past gross profit declarations. The Tribunal directed the AO to re-compute the gross profit at 5.5% on the reported turnover.

The Tribunal held that lower authorities erred by dismissing the appeal without a decision on merits, emphasizing the duty to dispose of appeals on their substantive grounds. It consequently remanded the case back to the Assessing Officer for fresh adjudication, directing the AO to grant sufficient opportunity and the assessee to provide full cooperation and evidence.

The Tribunal condoned the delay of 154 days in filing the appeal, applying the principle of liberal construction of "sufficient cause." It observed that the Assessing Officer and CIT(A) failed to examine the assessee's submissions and supporting evidence regarding the source of cash deposits. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter to the Assessing Officer for fresh consideration, instructing them to provide a proper hearing and examine the evidence.

The Tribunal upheld the denial of the STCL claim, observing that the losses stemmed from a penny stock entity, a fact corroborated by an investigation report and SEBI's trading suspension. The assessee failed to provide evidence demonstrating the genuineness of the claim.