ITAT Chandigarh Judgments — April 2026

The Tribunal held that disallowing the entire contract expense was not justified. The Tribunal decided to set aside the matter to the AO to verify if the contract work was executed and the amount received, and if not satisfied, to estimate profit under Section 44AD.

The Tribunal held that since the sale deed was declared void by the Civil Court due to fraud and non-payment of consideration, and no evidence of receiving sale proceeds was produced, the addition on account of capital gains, even on a protective basis, was not justified. The Tribunal also noted that the Assessing Officer failed to allow deduction for the cost of acquisition.

The Tribunal noted that the assessee failed to provide compliance before both the AO and CIT(A) despite multiple opportunities. However, considering the request for another opportunity, the Tribunal set aside the matter to the CIT(A) with a cost of Rs. 5,000/- to be deposited by the assessee. The assessee was directed to make proper compliance before the CIT(A).

The Tribunal held that the CIT(A) had correctly examined the evidences submitted by the assessee, including cash book, sales registers, and RTO registrations, which established that the cash deposits of Rs. 1,75,18,000/- were from the sale of tractors to farmers and were accounted for. The AO had not pointed out specific defects in these evidences and had not conducted further inquiries during the remand proceedings. Therefore, the addition of Rs. 4,08,15,150/- was not sustainable.

The Tribunal held that the original assessment order under section 147 r.w.s. 144 was set aside by the NFAC to the AO. Consequently, the subsequent rectification order under section 154 also became invalid and infructuous.

The Tribunal held that separate additions for unaccounted purchases and sales were not sustainable when there was a clear nexus between them. For certain assessment years, the Tribunal directed the AO to estimate profit on unaccounted purchases and sales, restricting the addition to that extent. In other cases, certain additions were deleted as they represented advances or were covered by disclosed transactions.

The Tribunal held that the separate addition for unaccounted purchases could not be sustained when the profit element on unaccounted sales was already being considered, as purchases and sales are intrinsically linked. It also directed the application of a 3% profit rate on certain unaccounted sales and deleted other additions where the source of cash or the income element was not established.

The Tribunal held that separate additions for unaccounted purchases and sales could not be sustained if they related to the same underlying transactions. It directed the AO to estimate profit at 3% on unaccounted purchases/sales, thereby modifying the AO's additions. Certain other additions were deleted as they represented advances or were adequately explained by the cash book.

The Tribunal held that the addition for alleged on-money payment for property purchase was not sustainable due to lack of corroboration and conflicting documentation, citing a similar decision in another case. For the addition of unaccounted purchases, the Tribunal found no concrete evidence to correlate the seized material with the assessee's concerns and noted that the presumption under Section 292C is not applicable to third-party searches. The Tribunal also pointed out that the assessee, as a wholesaler, was prohibited from making unaccounted purchases.

The Tribunal held that the addition for alleged on-money payment for property purchase was not sustainable due to lack of corroboration and mismatch in project details, citing a similar prior ruling. For the addition concerning unaccounted liquor purchases, the Tribunal found that the presumption under Section 292C of the Income Tax Act did not apply to the assessee as the incriminating material was found during a third-party search, and there was no concrete evidence linking the entries to the assessee's specific transactions.

The Tribunal held that the additions regarding on-money payment for property purchase were unsustainable due to a lack of corroboration and mismatch in property details, relying on a similar ITAT decision. For the unaccounted liquor purchases, the Tribunal found that the presumption under Section 292C of the Income Tax Act was not applicable to the assessee as the incriminating material was found from a third party's premises. It also noted the lack of evidence directly linking the transactions to the assessee and the prohibition under excise laws against unaccounted purchases by wholesalers. The addition related to a property purchase based on an unregistered agreement to sell was also dismissed for lack of validity and evidence of cash payment.

The Tribunal found that while the assessee firm was involved in both out-of-books purchases and sales, separate additions for both were not sustainable. The Tribunal directed the AO to apply a profit element to the unaccounted sales and deleted certain additions, while partly allowing others. For some years, additions were deleted entirely based on the nexus between purchases and sales.

The Tribunal held that separate additions for unaccounted purchases and sales could not be sustained when the two were intrinsically linked. It directed the Assessing Officer to estimate profit on unaccounted sales at 3% for certain assessment years. Certain additions were deleted entirely as they represented advances or were unsubstantiated. The protective additions were also deleted in most cases.

The Tribunal held that additions based solely on documents/digital data recovered from third parties, without corroborative evidence found on the assessee's premises or statements from the assessee's representatives, cannot be sustained. Opportunity for cross-examination was also not provided. Valuation reports from private individuals also lacked legal sanctity.

The Tribunal held that the additions related to unaccounted sales of plots and SCOs were to be deleted as no incriminating material was found during the search, consistent with previous year's decisions. The addition for unexplained expenditure was also deleted based on prior tribunal rulings. The addition for alleged unaccounted receipts from M/s RIPSS was deleted as it was based on an unsigned MOU without corroborative evidence.

The Tribunal held that additions made solely on the basis of documents or digital data seized from third parties, without any corroborative evidence found from the assessee's premises, cannot be sustained. Reliance on statements of third parties without allowing cross-examination was also deemed improper. Valuation reports obtained from private individuals and not from the DVO, and reports pertaining to commercial property used for residential property estimations, were also found to have no legal sanctity.

The Tribunal held that additions based on third-party documents and presumptions without direct corroboration or admission from the assessee are not sustainable. It was noted that the presumption under Section 292C of the Income Tax Act applies only to the person from whom the material is found, not to others. The Tribunal found no concrete evidence to link the seized material to the assessees' specific transactions.

The Tribunal held that the addition on account of alleged on-money payment for property purchase was not sustainable due to lack of corroboration and inconsistencies in the documents relied upon by the AO. The Tribunal also held that the addition for unaccounted cash purchases was not sustainable as the presumption under Section 292C did not apply to the assessee and there was no concrete evidence to co-relate the entries with the assessee's transactions.

The Tribunal held that separate additions for unaccounted purchases could not be sustained when profit element on unaccounted sales was considered. It directed the AO to apply a profit element of 3% on certain unaccounted purchases and sales. Additions related to advances and unexplained cash were deleted.

The Tribunal held that the addition for alleged on-money payment for property purchase was not sustainable due to lack of corroboration and conflicting documents. Similarly, the addition for unaccounted liquor purchases was not sustained as the presumption provisions did not apply to the assessee, and there was no concrete evidence linking the seized material to the assessee's transactions.

The Tribunal held that separate additions for unaccounted purchases and sales could not be sustained when they were intrinsically linked. It directed the AO to apply a profit element of 3% on unaccounted sales and certain unaccounted purchases. Some additions were deleted entirely, and a protective addition was also deleted.

The Tribunal held that the additions for unaccounted plot/SCO sales and unexplained expenditure were to be deleted, as similar issues for the prior year were decided in favor of the assessee and no incriminating material was found. The addition for unaccounted receipts from M/s RIPSS was deleted due to the unsigned nature of the MOU and lack of evidence. The addition for unexplained expenditure on villas was deleted due to lack of specific details and mention of VAT instead of GST.

The Tribunal found that the assessee prima facie appeared to be in a position to substantiate the cash deposits. Therefore, the Tribunal set aside the impugned order and restored the matter to the AO for a fresh assessment, directing the assessee to prove its case.

The Tribunal held that the addition on account of alleged on-money payment for property purchase was not sustainable due to lack of corroboration and discrepancies in the documents relied upon by the AO. Similarly, the addition for unaccounted cash purchases of liquor was also held unsustainable as the presumption under section 292C of the Income Tax Act does not apply to third-party searches and there was no concrete evidence linking the seized material to the assessee.

The Tribunal held that the addition of Rs. 90 Lacs for alleged on-money payment in a property purchase was not sustainable due to lack of corroboration and discrepancies in the seized documents. Similarly, the addition for alleged unaccounted cash purchases from Shri Kapil Gupta was also dismissed as the presumption under Section 292C does not apply to third-party searches, and no concrete evidence linked the transactions to the assessee. The Tribunal also noted that the wholesaler is prohibited from making unaccounted purchases under excise laws.

The Tribunal held that additions based on third-party documents and presumptions without concrete evidence, especially when the seized material was found from third parties, are not sustainable. The presumption under Section 292C applies only to the person from whom the material was found. The Tribunal noted that the assessee's business operations were regulated by excise laws, prohibiting unaccounted purchases.

The Tribunal held that the addition of Rs. 90 Lacs on account of alleged on-money payment for property purchase was not sustainable as it was based on third-party documents without corroboration and the project/property details did not match. The addition for unaccounted cash purchases of liquor was also dismissed, as the presumption under Section 292C applies only to the person searched, not third parties, and there was no concrete evidence linking the entries to the assessee. However, one addition concerning a property purchase for Rs. 230 Lacs was confirmed as there was insufficient evidence from the assessee regarding the source of funds.

The Tribunal noted that while complete documentation was not provided, the assessee's auditors had verified the books of account and concluded the cash deposits were from regular business. Therefore, the Tribunal allowed 50% of the cash deposit, i.e., Rs. 14 lacs, as arising from liquor business.

The Tribunal accepted the prayer of the assessee's Authorized Representative. The appeal was dismissed as withdrawn.

The Tribunal, considering the principles of natural justice, allowed the assessee's prayer for another opportunity. The impugned order was set aside, and the matter was restored to the AO for a de novo assessment.

The Tribunal held that the impugned cash deposits were sourced from the assessee's sales proceeds, which were supported by sales invoices and VAT returns. The assessee had also offered income on a presumptive basis under section 44AD, and the bank account was part of the financial statements. Therefore, the addition made by the AO was deleted.

The Tribunal noted the lack of documentary evidence provided by the assessee to substantiate the source of cash deposits. While acknowledging the need for natural justice, the Tribunal restored the appeal to the CIT(A) for a fresh adjudication.

The Tribunal held that the deletion of the addition by the CIT(A) was justified. The CIT(A) noted that the percentage of cash sales remained consistent and the AO had not doubted the purchases or rejected the books of accounts. The Tribunal agreed that adding the sales proceeds again would amount to double taxation.

The Tribunal held that the reassessment proceedings were initiated on factually incorrect information regarding the number of bank accounts and the quantum of credits. The CIT(A) had found that the credits were explained as capital contributions, loans, and advances, and were recorded in the books of account, thus not warranting addition under Section 69A. Consequently, the Revenue's appeal was dismissed and the assessee's cross-objection was allowed.

The Tribunal noted the consistent non-compliance by the assessee before the Assessing Officer and CIT(A), but also considered the impact of the COVID-19 pandemic on assessment proceedings. Balancing natural justice with the assessee's conduct, the Tribunal decided to set aside the CIT(A)'s orders and restore the matters for fresh adjudication to the CIT(A). A cost of Rs. 2,00,000/- per appeal was imposed on the assessee for non-compliance.

The Tribunal noted that the assessee's business involved cash sales reflected in VAT returns, and the turnover was not doubted. The assessee also provided a cash flow statement demonstrating sufficient cash balance to cover the deposits. The Tribunal held that additions cannot be made on mere presumptions and that the AO had not found any defects in the assessee's books.

The Tribunal held that the addition of Rs. 1,40,00,000/- was unsustainable as it represented proprietor's imprest cash from the previous year, duly disclosed in audited accounts, and was wrongly construed as unexplained cash credit. The disallowance on account of non-deduction of TCS was also found unsustainable as TCS is not required on sales.

The Tribunal held that since the assessment order, which was the foundation for the penalty, had been set aside by the CIT(Appeals), there was no basis to compute or sustain the penalty. The deletion of the penalty by the CIT(Appeals) was therefore upheld.

The Tribunal held that the CIT(A)'s approach was not sustainable as the decision in Goetze (India) Ltd. pertains only to the Assessing Officer's powers and does not limit appellate authorities. Procedural lapses should not bar substantive justice, and the claim deserves examination on merits.

The tribunal held that the CIT(A)'s approach of disallowing the claim on technical grounds was not sustainable. The tribunal stated that appellate authorities have the power to entertain legitimate claims even if improperly made in the return, and procedural lapses should not impede substantive justice.

The Tribunal held that since the Hon'ble High Court had quashed the notice issued under Section 148, the assessment framed by the Assessing Officer would not survive. Therefore, the Tribunal found no reason to interfere with the impugned order.

The Tribunal noted the assessee's consistent non-compliance with notices and failure to present effective arguments before lower authorities. However, considering the COVID-19 pandemic period and the interest of substantial justice, the Tribunal set aside the CIT(A) orders and restored the matters for fresh adjudication.

The Tribunal found the delay of 47 days to be small and, in the interest of natural justice, decided to allow the assessee another opportunity to present their case before the Assessing Officer.

The Tribunal held that principles of natural justice require a fair opportunity for the assessee to present their case, especially concerning unexplained cash deposits. While acknowledging the assessee's lack of proper pursuit before lower authorities, the Tribunal decided to restore the matter for de novo adjudication to ensure substantial justice.