ITAT Chandigarh Judgments — February 2026

The Tribunal acknowledged that while the CIT(E) provided opportunities, the assessee failed to furnish required details. However, considering the submissions were not fully deliberated by the CIT(E) and to uphold natural justice, the Tribunal restored both appeals to the CIT(E) for a fresh decision, directing that proper opportunities be given. A cost of Rs. 5,000 was imposed on the assessee for non-compliance, payable to the 'Poor Patient Welfare Fund'.

The Tribunal condoned the delay in filing the appeal, noting the inadvertent error by the assessee in selecting the wrong application clause on the portal. It directed the CIT(E)/CPC to treat the application as if filed under the correct clause (clause i of the 1st proviso to section 80G(5)) and grant the assessee 5-year permanent recognition under Section 80G. The matter for all appeals was restored to the file of the CIT(E) for a fresh decision, with directions to provide proper opportunity of being heard to the assessee. A cost of Rs. 5,000/- per case was imposed on the assessee for not appearing before lower authorities.

The Tribunal condoned the delay and imposed a cost of Rs. 5,000/- per appeal on the assessee for non-compliance with lower authorities. It found that the assessee was entitled to permanent 5-year registration under section 80G and the error was inadvertent. Consequently, the Tribunal directed the CIT(E)/CPC to treat the application under the correct clause (i) and grant permanent 80G recognition for 5 years. The appeals were allowed for statistical purposes, and the matter was restored to the CIT(E) for a fresh decision with directions to provide due opportunity to the assessee.

The Tribunal condoned the delay in filing the appeals, finding 'sufficient cause' and admitting them for adjudication. It held that the dismissal by the CIT(A) without examining merits violated natural justice. The impugned orders were set aside, and both matters were restored to the Assessing Officer for fresh de-novo adjudication, with directions for both parties to cooperate.

The Tribunal found that the assessee provided sufficient documentary evidence to substantiate the purchases and the actual delivery of goods. It noted that irregularities attributed to transporters, whose services were arranged by the supplier, could not negate the assessee's claim. The Tribunal highlighted the lack of cogent evidence from the AO regarding cash withdrawals or a trail of funds returning to the assessee, and emphasized that acceptance of production results implies acceptance of raw material purchases. Citing similar favorable decisions in other cases involving the same supplier, the Tribunal ruled that the addition under Section 69C could not be sustained.

The Tribunal found that the assessee provided extensive documentary evidence including VAT invoices, Form 26A, transport records, and bank payments, substantiating the genuineness and delivery of purchases. The AO failed to provide concrete evidence to rebut the assessee's documentation or prove cash withdrawals/trails. Considering previous identical cases, the Tribunal deleted the addition and directed the AO to re-compute income.

The tribunal held that the assessee provided sufficient documentary evidence, including bills, transport GRs, statutory VAT forms, and confirmation from the supplier. The alleged discrepancies in transporter information and supplier statements were not concrete enough to negate the actual delivery of goods, especially since production results were accepted. The tribunal found no cogent evidence of cash withdrawals or return of funds by the AO, and noted similar cases where purchases from the same entity were accepted.

The Tribunal found that although the assessee failed to comply with requests for information, the submissions of the assessee were not considered. Considering the principle of natural justice, the Tribunal decided to provide one more opportunity to the assessee. Therefore, the matter was restored to the file of the CIT(E) for a fresh decision, with directions for proper opportunity to be given to the assessee.

The Tribunal found the CIT(A)'s approach to be pedantic and held that the death of the assessee constituted a sufficient and reasonable cause for the delay in filing the appeal. Emphasizing that substantial justice should prevail over technicalities, the Tribunal condoned the delay. Consequently, the CIT(A)'s order was set aside, and the matter was restored for fresh adjudication on merits, with directions to provide a reasonable opportunity of being heard to the legal heirs.

The Tribunal observed that the assessment was framed without complete verification of facts and evidence, and that principles of natural justice mandated providing a proper opportunity of being heard. Consequently, the impugned order was set aside, and the matter remanded to the Assessing Officer for fresh de-novo adjudication. A cost of Rs. 3,000/- was imposed on the assessee for past lapses, to be deposited in the Poor Patient Relief Fund within 30 days, with adjudication conditional on proof of deposit and cooperation.

The Tribunal condoned the delay in filing the appeals, finding sufficient and bona fide reasons. It set aside the CIT(A) orders and restored both matters to the Assessing Officer for fresh de-novo adjudication, directing the AO to provide adequate opportunity and the assessees to cooperate.

The Tribunal found that the CIT(E) failed to conduct a proper and holistic examination of the material on record and did not afford a reasonable opportunity of being heard to the assessee. Emphasizing the provisions of section 12AB, which require examination of the trust's objects and genuineness of activities after granting adequate opportunity, the Tribunal set aside both the orders rejecting 12A registration and 80G approval. The matters were remanded back to the CIT(E) for fresh consideration in accordance with law, ensuring due opportunity of being heard to the assessee.

The Tribunal noted that e-filing was procedural and the requirement arose from 01-04-2016. Given it was the first year of new rules and a condonation mechanism exists, the Tribunal set aside the CIT(A)'s order and restored the matter back to the CIT(A) for fresh adjudication, allowing the assessee to seek condonation from the appropriate authority. The appeal was allowed for statistical purposes.

The Tribunal acknowledged that the Assessee was given opportunities but failed to furnish the required details and documents to the lower authorities, directly approaching the Tribunal. However, considering the principle of natural justice, the Tribunal restored both matters to the CIT(E) for a fresh decision, directing the Assessee to present its case and furnish necessary evidence, while also imposing a cost of Rs. 5,000/- for non-compliance.

The Tribunal confirmed that the assessee failed to provide documentary evidence for the source of the Rs. 50,00,000/- investment, which was in her name. The Assessing Officer's determination that the investment was an unexplained income under Section 69 and belonged to the assessee was upheld. The plea for a protective assessment was rejected as the Assessing Officer had definitively concluded the investment was taxable in the assessee's hands on a substantive basis.

The Tribunal held that while the assessee was negligent in the delay, the appeal should not have been dismissed without examining merits. It set aside the CIT(A)'s order and restored the matter for fresh adjudication, conditional upon the assessee paying Rs. 10,000 as cost and complying with the mandatory requirements of Section 249, including payment of taxes due as per Section 249(4).

The Tribunal found that the purchases were supported by VAT invoices, transport GRs, and banking channel payments, with the supplier arranging transportation. It noted that the AO failed to provide cogent evidence of cash withdrawal or fund return and that acceptance of production implies acceptance of purchases. Citing similar cases, the Tribunal concluded that the assessee had discharged its onus by providing documentary evidence, and the addition based on mere presumption could not be sustained. Therefore, the addition was deleted.

The Tribunal deleted the addition, finding that the assessee had provided sufficient documentary evidence, including VAT invoices, transport GRs, banking payments, and a supplier's affidavit, to prove the genuineness of purchases and delivery of goods. It noted that the AO failed to provide concrete material to rebut the assessee's evidence or prove a cash trail, and referred to similar cases decided in the assessee's favor.

The Tribunal held that the Ld. CIT(E) erred by rejecting the applications based on a technical interpretation without properly examining the genuineness of activities, the objects of the trust, or providing a reasonable opportunity of being heard. Both impugned orders were set aside, and the matters were restored to the Ld. CIT(E) for fresh consideration in accordance with law, after affording due opportunity of being heard to the assessee.

The Tribunal quashed the reassessment proceedings and deleted the impugned additions for both assessment years. It ruled that the material relied upon by the department to reopen the case was never confronted to the assessee, thereby violating the principles of natural justice. This decision was consistent with the Tribunal's earlier ruling in the assessee's own case for AY 2018-19 on identical facts.

The tribunal allowed the telescoping benefit, using surplus funds from AY 1999-2000 and AY 2001-02 to offset shortages and investments in AY 2002-03. Consequently, additions of Rs.2,40,624/- for AY 2000-01 and Rs.16,72,680/- (undisclosed income) & Rs.9,26,322/- (vehicle purchase) for AY 2002-03 were deleted. The capital gains addition for AY 2002-03 was restricted to Rs.2,72,568/-, as computed by the assessee, with the deduction u/s 54 disallowed due to lack of substantiation.

For AY 2019-20, the CIT(A) deleted the additions, finding that the assessee had discharged its onus by providing evidence of identity, creditworthiness, and genuineness, and that the loans were repaid. The Tribunal upheld this decision. For AY 2022-23, the CIT(A) allowed partial relief, maintaining the GP rate as offered by the assessee and granting the benefit of telescoping for the excess/short stock and cash payment, which the Tribunal also upheld, dismissing both appeals by the revenue.

The Tribunal dismissed Ground No. 1, thereby upholding the disallowance of annual maintenance charges due to the assessee's failure to provide adequate details. However, it remanded Ground No. 2, regarding the set-off of maintenance income against the disallowed expenditure, back to the Assessing Officer for fresh adjudication, directing the AO to allow the set-off if the assessee provides satisfactory evidence.

The Tribunal, considering principles of natural justice, admitted the appeal despite the assessee's non-appearance and restored the case to the CIT(A) for fresh adjudication. The assessee was directed to present and prove their case before the CIT(A), with all issues kept open.

The Tribunal observed that the impugned additions were based solely on third-party data, including alleged tally data and statements, which were not confronted to the assessee, thus violating principles of natural justice. Following its earlier decision in the assessee's own case for AY 2018-19, where similar reassessment was quashed, the Tribunal quashed the reassessment proceedings and deleted the additions for both AY 2017-18 and 2019-20.

The Tribunal, applying principles of natural justice, set aside the impugned orders of the CIT(E). The registration applications under sections 12(1)(ac)(ii) and 80G(5)(iii) are restored to the CIT(E) for fresh consideration. The assessee is directed to furnish the required information and substantiate its applications.

For AY 2019-20, the tribunal upheld the CIT(A)'s deletion of the addition, finding that the assessee discharged its onus by providing documents for the loans, which were repaid in the same year, and thus Section 68 was not attracted. For AY 2022-23, the tribunal confirmed the CIT(A)'s decision to apply the assessee's offered GP rate and grant the benefit of telescoping for excess stock, as it was subsumed within unaccounted sales.

The Tribunal considered the application for withdrawal filed by the assessee's counsel and the fact that the DR had no objection. Consequently, the appeal filed by the assessee was dismissed as withdrawn, as per the assessee's request.

The Tribunal found that the ex-parte disposal of appeals was inappropriate given the substantial additions to income and the resulting disproportionate tax liability compared to the assessee's alleged negligence. Consequently, the Tribunal set aside the CIT(A)'s orders for all assessment years and remitted the matters back to the CIT(A) for fresh adjudication. The assessee was granted liberty to submit necessary details before the CIT(A).

The Tribunal noted that the tax effect in the quantum appeal was Rs. 3,77,743/- and in the penalty appeals was Rs. 37,260/- and Rs. 10,000/-, all of which were below the Rs. 60 lacs monetary limit set by CBDT Circular No. 09/2024. Since the appeals did not fall under any exceptional clauses, they were dismissed as not maintainable. However, the Revenue was granted liberty to file a Miscellaneous Application under Section 254(2) if re-verification reveals the tax effect is higher or an exceptional clause applies.

The Tribunal dismissed ground No. 1 of the assessee's appeal, thereby upholding the disallowance of annual maintenance charges due to the non-submission of adequate details. However, ground No. 2, concerning the set-off of the disallowance against maintenance income, was remanded back to the Assessing Officer for fresh adjudication, directing the assessee to provide necessary evidence.

The Tribunal found that the substantial additions of Rs. 1.17 Cr, resulting in a disproportionate tax liability, were not justified by the assessee's alleged negligence in submitting details. It deemed the ex-parte disposal by the CIT(A) inappropriate. Consequently, the Tribunal set aside the CIT(A)'s orders and remanded the issues for fresh adjudication, allowing the assessee to submit all necessary details.

The Tribunal deemed the ex-parte disposal by the CIT(A) inappropriate, especially considering the significant additions to the assessee's income (e.g., Rs. 1.17 Cr). It held that the tax liability was disproportionate to any alleged negligence by the assessee. Consequently, the Tribunal set aside the impugned orders and restored the matters to the CIT(A) for fresh adjudication, allowing the assessee to submit necessary details.

The Tribunal found that the ex-parte disposal leading to a significant tax addition of Rs.1.17 Cr was disproportionate to any alleged negligence, especially considering the assessee's explanation of numerous pending appeals and ongoing compilation of details. Therefore, the Tribunal set aside the CIT(A)'s impugned orders and restored the issues to the CIT(A) for fresh adjudication, granting the assessee liberty to submit necessary details.

The Tribunal observed that the tax effects for the quantum appeal (Rs. 3,77,743/-) and penalty orders (Rs. 37,260/-, Rs. 10,000/-) were all below the Rs. 60 lacs monetary limit prescribed by the CBDT Circular, and none of the exceptional clauses applied. Accordingly, the Tribunal dismissed all three appeals as not maintainable. However, it granted the Revenue liberty to revive the appeals via a Miscellaneous Application if re-verification showed a higher tax effect or if an exceptional clause applied, within the time limit stipulated under Section 254(2) of the Act.

The Tribunal, invoking principles of natural justice, set aside the impugned orders and restored the applications to the file of the CIT(E) for fresh consideration. The assessee was granted another opportunity to submit the necessary documents and prove its applications.

The Tribunal observed that the tax effect in the quantum appeal was Rs.3,77,743/- and in the penalty appeals was Rs.37,260/- and Rs.10,000/-, all being less than the Rs.60 lakh monetary limit prescribed by CBDT Circular No.09/2024 dated 17.09.2024. Consequently, the appeals were deemed not maintainable and were dismissed. The Revenue was granted liberty to revive the appeals via a Miscellaneous Application if re-verification showed a higher tax effect or if exceptional clauses applied, within the time limit of Section 254(2).

The Tribunal, applying principles of natural justice, set aside the impugned order of the CIT(A) and remanded the matter for re-adjudication. The CIT(A) was directed to provide the assessee another opportunity to substantiate its case de novo.

The Tribunal held that the CIT(A) had dismissed the appeal on purely technical grounds without adjudicating the merits. Recognizing that substantial justice should prevail over technicalities, the Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication on merits, with a direction to consider all filed documents.

The Tribunal condoned the delay, admitted the appeal, and restored the case to the CIT(A) for fresh adjudication, directing the assessee to provide evidence for their claim. This restoration was conditional on the assessee depositing Rs. 10,000/- to the Poor Patient Relief Fund of PGI Hospital, Chandigarh, within 30 days.

The Tribunal found that the assessee maintained complete quantitative details, regular books of accounts, and day-wise manual stock registers, which were subjected to tax audit. It noted that sales and purchases were accepted by the VAT department and field enquiries confirmed transactions with the job worker. Consequently, the Tribunal deleted the entire addition of Rs. 55.97 Lacs as well as the ad-hoc profit addition of Rs. 2 Lacs, stating that additions could not be based on mere suspicion. The related penalty levied u/s 271AAC(1) was also quashed.

The ITAT deleted the addition of Rs. 55.97 Lacs, noting that the assessee maintained proper tax-audited books with quantitative details, and field inquiries confirmed transactions with the job worker. The ad-hoc addition of Rs. 2 Lacs for estimated profit was also deleted. Consequently, the penalty of Rs. 2,77,868/- levied under section 271AAC was also set aside.

The Tribunal found the penalty notice valid but held that the penalty itself was not sustainable as the additions resulted from legal disallowances based on disclosed particulars and a bona fide belief, rather than inaccurate particulars or concealment. Since the assessee was under the MAT regime and the additions did not lead to any additional tax liability, the element of tax evasion was missing, rendering the penalty unsustainable.

The Tribunal found that the assessee had sufficient excess funds from AY 1999-2000 and 2001-02 to cover the additions for AY 2000-01 (Rs.2,40,624/-) and for AY 2002-03 (Rs.16,72,680/- for undisclosed income and Rs.9,26,322/- for vehicle purchase), thus deleting these additions. The capital gains addition for AY 2002-03 was restricted to the assessee's own computation of Rs.2,72,568/-, but the deduction u/s 54 was denied due to lack of substantiation.