ITAT Chandigarh Judgments — March 2026

The Tribunal held that the claim for TCS credit, reflected in Form 26AS, was not a fresh claim but arose from statutory records, and its denial on technical grounds would lead to unjust enrichment. Citing the Supreme Court's Goetze (India) Ltd. case, the Tribunal emphasized that appellate authorities have wide powers to entertain such claims. Therefore, it set aside the lower authorities' orders and directed the Assessing Officer/CPC to grant the TCS credit.

The Income Tax Appellate Tribunal (ITAT) dismissed the Revenue's appeal, affirming the CIT(A)'s decision. The Tribunal noted that the Finance Act, 2024, reintroduced Section 251(1)(a) allowing the CIT(A) to set aside assessments for fresh verification of records, especially where natural justice principles were violated. The ITAT concluded that the remand ensures the assessment is based on actual evidence rather than estimates and found no illegality in the CIT(A)'s approach.

The Tribunal held that the assessee had fully invested the net sales consideration of Rs.115.18 Lacs by 30-12-2014, fulfilling the investment requirement for Section 54F. It observed that delays in obtaining necessary permissions were beyond the assessee's control and that Section 54F should be construed liberally. Therefore, the Tribunal directed the AO to allow the deduction under Section 54F, while confirming an addition of Rs.84,940.

Given the moratorium in effect under Section 14(1) read with Section 14(4) of the IBC, which has an overriding effect on other laws including the Income Tax Act, 1961, the Income Tax Appellate Tribunal concluded that the pending appeals could not be continued. Consequently, all appeals were dismissed as non-maintainable, with a provision for either party to seek revival if the circumstances permit in the future.

Considering the moratorium under Section 14 of the IBC, 2016, and the overriding effect of Section 238 of the Code over other laws, including the Income Tax Act, 1961, the Tribunal ruled that the appeals could not be continued. All appeals were dismissed as non-maintainable, with liberty for either party to seek their revival if the moratorium ceases in the future.

The Tribunal ruled that due to the ongoing moratorium under Section 14(1) read with Section 14(4) of the Insolvency & Bankruptcy Code, 2016, the present income tax appeals against the assessee are non-maintainable and cannot be continued. All appeals were dismissed, with liberty granted to either party to seek revival if the moratorium ceases in the future.

The Income Tax Appellate Tribunal held that, in light of the moratorium under Section 14 of the IBC and the overriding effect of Section 238 of the Code, the present appeals against the assessee could not continue. Consequently, all appeals were dismissed as non-maintainable, with a provision for either party to seek revival if circumstances change in the future.

The Tribunal held that the CIT(A) violated principles of natural justice by dismissing the appeal ex-parte without affording the assessee an effective opportunity of being heard, especially since the matter involved a substantial addition under section 69A requiring proper factual examination. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the case for fresh adjudication on merits, imposing a cost of Rs. 10,000/- on the assessee for their conduct.

The Tribunal found that the Assessing Officer mechanically invoked section 144 without duly considering the assessee's replies, violating principles of natural justice. It also noted that the CIT(A) failed to pass a speaking order or properly adjudicate the appeal under section 250(6). Consequently, the matter was set aside and restored to the Assessing Officer for fresh adjudication with adequate opportunity for the assessee.

The Tribunal, considering natural justice, remanded the case back to the CIT(E) to pass a fresh order. The CIT(E) is directed to provide adequate opportunity of being heard to the assessee, who is in turn directed to cooperate by filing necessary documents and avoiding unnecessary adjournments.

The Tribunal observed that the CIT(E) rejected the application due to unfulfilled document requirements, while the assessee contended that no notice for further evidence was received. To ensure natural justice and provide an adequate opportunity to be heard, the case was remanded back to the CIT(E) for a de-novo order, with the assessee directed to cooperate by providing necessary documents.

The Tribunal set aside the CIT(A)'s order, restoring the matter to the Assessing Officer for fresh adjudication, emphasizing the need for proper factual verification regarding capital gains on jointly owned property and adherence to natural justice principles. A cost of Rs. 15,000/- was imposed on the assessee for non-cooperative conduct during earlier proceedings.

The ITAT held that in light of the moratorium under Section 14 of the IBC and the overriding effect of Section 238 of the IBC over other laws, including the Income Tax Act, 1961, the income tax appeals against M/s Winsome Yarns Ltd. are not maintainable. Consequently, all appeals were dismissed, with liberty for either party to seek revival if the moratorium ceases.

The ITAT set aside the orders of the lower authorities and remanded the case back to the Assessing Officer. The AO is directed to re-verify the land's distance from municipal limits, examine the claim of 'Biana' (advance) for cash deposits, and apply cost indexation if the land is ultimately found to be a capital asset.

The Tribunal upheld the CIT(A)'s decision to estimate the Gross Profit rate at 6% on the alleged bogus purchases, affirming that documentation was provided but complete onus was not discharged. Regarding the Rs. 12.60 Lacs addition, the Tribunal confirmed its deletion by the CIT(A), finding no corroboration or evidence linking the WhatsApp chat between two independent parties to the assessee.

The Tribunal acknowledged the assessee's repeated non-compliance during both assessment and appellate proceedings. However, considering principles of natural justice and the substantial nature of the addition, the Tribunal restored the matter to the Assessing Officer for fresh adjudication. The assessee is directed to cooperate, furnish all necessary evidences, and deposit ₹10,000/- as cost to the PGI Poor Patients Welfare Fund within one month, failing which adverse inference may be drawn.

The Tribunal held that the ex-parte order passed by the CIT(A) was unsustainable due to the inconsistent and poorly communicated hearing dates in the notices. The significant addition to the tax liability was also considered disproportionate to any alleged negligence.

The Tribunal held that the reopening of the assessment was based on erroneous facts as the assessee had filed a return. Furthermore, on merits, the assessee had discharged the onus under Section 68 by providing sufficient documentation for the unsecured loans, and the AO failed to provide cogent evidence to disprove the genuineness of these transactions.

The Tribunal held that the reopening of the assessment was based on erroneous facts as the assessee had filed a return, rendering the reassessment jurisdiction invalid. On merits, regarding the unsecured loans, the assessee had discharged its onus by providing sufficient documentary evidence, shifting the burden to the AO to prove otherwise, which was not done. The addition for unexplained expenditure was also deleted as it was explained as pre-operative expenses and reflected in the audited books of accounts.

The Tribunal held that neither the AO nor the CIT(A) applied their mind to the facts. Crucially, the bank account was opened on 29.12.2012, which falls outside the assessment year 2012-13. Therefore, deposits in this account could not be added for the relevant assessment year.

The Tribunal held that the AO failed to examine the assessee's record and the Income Tax Return, passing a non-speaking order. The deposits in the bank account represented the sale consideration of the property, and the re-opening of assessment was not well-founded as the AO did not have complete details.

The Tribunal found no logic in the AO's arbitrary selection of Rs.42 lacs as sale proceeds, especially when the assessee's turnover was significantly higher and no defects were found in the books of account.

The Tribunal held that the additions were not based on any incriminating material found during the search, making them unsustainable. The AO had incorrectly treated the assessment as a regular assessment under Section 143(3), despite the original return having attained finality, and the time limit for regular assessment under Section 143(2) had expired.

The Tribunal held that the CIT(A) erred in dismissing the appeal without considering the assessee's written submissions, which violated principles of natural justice. The assessee was not provided an effective opportunity of being heard.

The Tribunal held that the Assessing Officer could not treat the transactions as bogus solely on suspicion or surmise. The assessee provided documentary evidence, and the transactions were conducted through banking channels on a recognized stock exchange. The tribunal distinguished this case from previous adverse findings by relying on coordinate bench decisions that allowed similar appeals.

The Tribunal held that the additions were based on suspicion and surmises, and the assessee had provided documentary evidence supporting the genuineness of the transactions. The reliance on previous year's search findings without fresh evidence for the current year was also questioned.

The Tribunal held that the addition for alleged suppression of sales based on welcome letters and extrapolation was unsubstantiated and deleted it. The addition for unaccounted construction expenditure was also deleted due to lack of incriminating material and issues with DVO's valuation. The additions for higher GP in jewellery business and unexplained cash credit were also deleted as the revenue's grounds were not sustainable. The assessee's appeal regarding mechanical approval was dismissed.

The Tribunal held that the tax effect involved in the present appeal was below the monetary limit prescribed by the CBDT for filing appeals. As there were no exceptions applicable, the appeal was found to be not maintainable.

The Tribunal held that the additions made by the AO concerning the suppression of sales, based on welcome letters and loose sheets, were unsubstantiated and deleted them. The addition for unexplained construction expenditure was also deleted as no incriminating evidence was found and the DVO's valuation was considered unreliable. The addition for higher GP in the jewellery business was deleted as it was based on a comparison with a sister concern having a different business model, and the assessee's books were found to be in order. The Tribunal also allowed the telescoping of stock discrepancies and cash found, considering it part of the same business activity, and deleted the related additions.

The Tribunal found that the additions were sourced from earlier cash withdrawals and agricultural rental income. The benefit of agricultural rent and earlier cash withdrawals were considered and accepted.

The Tribunal held that the CIT(A) is expected to adjudicate issues on merits, and dismissing an appeal solely for non-prosecution is not in consonance with the Act. However, the assessee also lacked diligence. Therefore, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the addition on account of alleged suppression of sales was unsubstantiated as the evidence relied upon was not cogent and lacked corroboration. The addition for unaccounted construction expenditure was deleted as the reference to the DVO was illegal without incriminating material. The higher gross profit addition was also deleted as it disregarded the audited financial statements. The unsecured loans were accepted as genuine after verifying repayment and other details.

The Tribunal held that the welcome letters were marketing tools and not evidence of actual sale consideration for the alleged on-money additions. Additions for construction costs were not substantiated. The higher GP addition in jewellery was not justified due to different business models. Discrepancies in stock and related cash were allowed to be telescoped.

The Tribunal held that the revision order passed by the PCIT under Section 263 was not sustainable. Once the Assessing Officer had reopened the case, examined all documents, and accepted the returned income without pointing out shortcomings, it was not open for the CIT to revisit the issue under Section 263.

The Tribunal found merit in the assessee's contention that the lower authorities failed to properly examine the evidence and submissions. The CIT(A)'s order also contained factual inaccuracies. Therefore, the Tribunal set aside the order and restored the matter to the Assessing Officer for fresh adjudication.

The Tribunal considered the arguments of both the Assessee and the Revenue regarding the legal issue. The Tribunal found that the CIT(A) had correctly invoked Section 251(1)(a) of the Act, as the assessment order was passed ex-parte. Therefore, the Tribunal held that the CIT(A)'s order was not wrong.

The Tribunal held that the assessee's explanation for the cash deposits was reasonable and plausible. The Tribunal noted that the assessee maintained books of account, had a substantial turnover, and the deposits were within the range of business receipts.

The Tribunal found that the CIT(A) wrongly dismissed the appeal instead of restoring it to the AO as per the earlier directions. The Tribunal admitted the appeal and directed the AO to re-adjudicate the penalty issue.

The Tribunal held that for bogus purchases, the addition should be restricted to the profit element (10%) and not the entire amount. For commission expenses, disallowance was reduced to 20%. For salary and wages, disallowance was restricted to 5% of cash payments. For car expenses, the addition was deleted. For sundry creditors and bonus expenses, the matter was restored to the AO for fresh examination.

The Tribunal held that matters should ordinarily be decided on merits, especially when sufficient cause for delay is shown. It condoned the delay in filing the appeal before the Ld. CIT(A) and set aside the impugned order, restoring the matter to the CIT(A) for fresh adjudication on merits after providing a reasonable opportunity of being heard to the assessee.

The Tribunal, considering the seized material, industry norms, and judicial precedents, held that the CIT(A)'s 10% net profit rate lacked evidentiary support. It determined that a 5% net profit rate on the unaccounted receipts was fair and justified, especially since the books of accounts were rejected under Section 145(3). Consequently, the appeals were partly allowed, directing the application of a 5% net profit rate.

The Special Bench of the Tribunal held that investment in FDRs, even in modes prescribed by Section 11(5), cannot be treated as an application of income for charitable or religious purposes, especially when Form No. 10 for accumulation was not filed. The Tribunal also upheld the validity of the reassessment proceedings. Consequently, the CIT(A)'s decision allowing the assessee's claim was reversed, and the AO's assessment orders were restored.

A Special Bench of the Tribunal ruled that investment in FDRs, without proper compliance like filing Form 10, cannot be treated as an application of income for charitable purposes under Section 11(1), but rather falls under accumulation provisions of Section 11(5). Following this, the Tribunal upheld the validity of the reassessment proceedings, confirming the assessee's failure to fully disclose material facts. Consequently, the CIT(A)'s decision was reversed, and the AO's original assessments were restored.

The Tribunal, following a Special Bench decision, held that investment in FDRs as per Section 11(5) does not constitute an 'application of income' for charitable purposes under Section 11(1), especially when Form No. 10 for accumulation of income has not been filed. The reassessment proceedings initiated by the AO were upheld as valid, as the assessee's non-compliance with statutory provisions and failure to truly disclose material facts justified the belief that income had escaped assessment, refuting the 'change of opinion' argument. Consequently, the CIT(A)'s order in favor of the assessee was reversed.

The Tribunal deleted the additions for sales suppression, finding the 'welcome letters' to be marketing tools without corroborative evidence, and upheld the CIT(A)'s deletion of extrapolated sales suppression as speculative. It also deleted the addition for unexplained cash credits under Section 68, ruling that the assessee had discharged its onus by providing sufficient details and evidence of genuine loan transactions. The ground regarding mechanical approval under Section 153D was dismissed.

The Tribunal observed that the AO's own analysis of seized records indicated a net profit rate of 4-5%. It found no justification for applying a higher rate based solely on suspicion or without concrete evidence of capital-nature expenses. Consequently, the Tribunal held that a 5% net profit rate on unaccounted receipts was fair and equitable, and this decision would apply to all appeals under consideration.

The Tribunal ruled that the identity and genuineness of the donors were established, particularly since the gift was from the assessee's father, whose cash book showed sufficient balance that was accepted in his own scrutiny assessment. It emphasized that a father's gift to his son for necessity does not require a specific "occasion" and that a cash gift, while raising suspicion, cannot be dismissed if genuineness and creditworthiness are proven. Therefore, the addition of Rs.70 lacs was unsustainable and deleted.

The Tribunal held that the CIT(E) should have provided adequate opportunity to the assessee to present its case and furnish necessary documents, considering the principles of natural justice. The matter was restored to the file of the CIT(E) for a fresh decision in accordance with the law, granting the assessee a proper opportunity.