ITAT Cochin Judgments — March 2025

The Tribunal found the CIT(A)'s order erroneous and contrary to principles of natural justice, as the CIT(A) merely extracted submissions and rejected contentions without proper discussion of the grounds of appeal or documentary evidence. Consequently, the CIT(A)'s order was set aside, and the matter was remanded back for de novo disposal with a reasonable opportunity for the assessee to be heard.

Following Supreme Court judgments in Mavilayi Service Co-operative Bank Ltd. and PCIT V/S Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd., the Tribunal held that a co-operative credit society merely providing credit to its members is not a Co-operative Bank/Bank under the Banking Regulation Act. It concluded that the assessee was entitled to exemption under Section 80P(2) as a credit society and not excluded by Section 80P(4). The Tribunal set aside the CIT(A)'s order, allowing the assessee's claim.

For the INR 25 lakh cash deposit, the tribunal restored the issue to the AO for *de novo* adjudication, noting the assessee was not given adequate opportunity to furnish required documents or produce persons. Regarding the income from land sales, following a similar decision for a prior assessment year, the tribunal also remanded this issue to the AO for re-evaluation with specific directions for verification with KSREC. Both issues were allowed for statistical purposes.

The Tribunal found that the lower authorities failed to appreciate the unique business model of the assessee, which does not always involve physical delivery to the assessee or traditional transportation proofs. The case was remanded to the jurisdictional AO for de novo adjudication, with directions to properly examine all furnished details and the specific nature of the assessee's transactions.

The Income Tax Appellate Tribunal (ITAT) held that the AO's methodology for determining the fair market value as of 01.04.1981 was erroneous and not in accordance with law. The Tribunal observed that the AO should have referred the matter to the Departmental Valuation Officer (DVO) if disputing the assessee's declared FMV, which was not done. It also held that the AO should have accepted the cost of improvement shown by the appellant in the absence of any contrary evidence. Therefore, the ITAT directed the AO to delete the addition.

The CIT(A) dismissed the assessee's appeal due to non-compliance with notices and failure to provide any written submissions or evidence. The Income Tax Appellate Tribunal upheld the CIT(A)'s order, noting the assessee's continued non-appearance and absence of contradictory material, thereby confirming the additions made by the Assessing Officer.

The ITAT remanded the case to the CIT(A), noting the CIT(A) failed to address the validity of the Section 153C assessment concerning the recording of satisfaction by the AOs. The ITAT also found that the seized evidence forming the basis of the addition was not made available to the appellant. The CIT(A) is instructed to re-adjudicate after providing a reasonable opportunity of hearing to the appellant.

The Tribunal observed that the CIT(A) failed to address the satisfaction note recorded by the AOs and the non-provision of seized material to the assessee. As the assessment order was silent on the recording of satisfaction and the evidence was not made available, the Tribunal remanded the matter to the CIT(A) for fresh adjudication, ensuring reasonable opportunity of hearing to the appellant.

The tribunal allowed the assessee to withdraw the appeal, granting liberty to revive it if the application under the Direct Tax Vivad Se Vishwas Scheme, 2024 is rejected. Consequently, the appeal was dismissed as withdrawn.

The ITAT condoned a 14-day delay in filing the appeal due to a technical glitch. The Tribunal noted that the CIT(A) dismissed the appeal without considering the grounds of appeal or facts. Therefore, the ITAT restored the matter to the CIT(A) for a de novo disposal after providing a reasonable opportunity of hearing to the appellant.

The Tribunal noted that the Pr. Commissioner of Income Tax (PCIT) had condoned the delay in filing the appeal under Section 119(2)(b), and the Sr. DR did not object. Considering this, the Tribunal remanded the matter to the AO to decide the issue of Section 80P eligibility based on the PCIT's condonation of delay.

The Tribunal observed that the CIT(A) dismissed the appeal without adequately addressing the assessee's challenge regarding the validity of the Section 153C assessment, specifically concerning the lack of recorded satisfaction by the AOs and the non-supply of seized material. The Tribunal decided to remand the case back to the CIT(A) for fresh adjudication after providing a reasonable opportunity of hearing to the appellant.

Following the jurisdictional High Court judgment, the Tribunal held that the interest income earned by the appellant society from other co-operative banks qualifies for deduction under Section 80P(2)(d) of the Act. The Assessing Officer was directed to allow this claim.

The Tribunal held that Form 10B was available at the time of original processing, and the time limit for its submission is directory, not mandatory. It further ruled that the CPC's suo moto rectification u/s.154, without providing an opportunity of being heard to the appellant, violated principles of natural justice and was invalid. Therefore, the rectification order was quashed, and the original intimation was restored.

The Tribunal held that the ex-gratia payment received by the appellant from the former employer on termination of service clearly falls within the definition of "profits in lieu of salary" as per Section 17(3) of the Income Tax Act, 1961, and is therefore taxable. The decision of the Delhi High Court relied upon by the appellant was deemed inapplicable as it predated the insertion of sub-section (3) to Section 17.

The Tribunal admitted additional evidence filed by the assessee to substantiate the difference in receipts. Observing that these documents were presented for the first time and not considered by lower authorities, the Tribunal restored the issue to the jurisdictional AO for a de novo adjudication, ensuring the assessee is given a reasonable opportunity of hearing. The CIT(A)'s order was set aside.

The Tribunal observed that the lower authorities failed to establish how the seized material from the third party related to the assessee's undisclosed income. It held that mere disclosure of additional income in response to a Section 153C notice does not automatically lead to a conclusion of concealment. Therefore, the matter was remitted back to the CIT(A) for a fresh examination.

The Tribunal held that the CIT(A) was justified in refusing to condone the 1½-year delay in filing the appeal. The assessee's claim of a bona fide belief that its rectification petition was allowed was not substantiated, as it failed to explain how this belief was entertained.

The Tribunal found no evidence on record to support the appellant's contention of being a cottage industry. Consequently, it upheld the decisions of the lower authorities, confirming the disallowance of the Section 80P deduction.

The Income Tax Appellate Tribunal (ITAT) held that the adjustment made by the CPC without issuing a notice of proposed adjustment was contrary to the provisions of Section 143(1) of the Income Tax Act. The matter was remitted back to the CPC for fresh adjudication after issuing the required notice.

The Tribunal, following the jurisdictional Kerala High Court's decision, held that the assessee is not entitled to deduction under Section 80P. This is because the assessee failed to file a valid return of income, which is a statutory pre-condition for claiming deductions under Chapter VI-A, especially after the 2018 amendment to Section 80AC.

The Tribunal dismissed the assessee's appeal, upholding the lower authorities' decision to deny the Section 80P deduction. Relying on a Kerala High Court judgment, it was held that a deduction under Section 80P requires a valid return of income to be filed within the prescribed due date under Section 139(1), and the belated return filed by the assessee was not considered a valid return.

The Tribunal condoned a 22-day delay in filing the appeal, noting it was not willful. It found that the CIT(A) dismissed the appeal without addressing the appellant's grounds of appeal and evidence regarding the source of cash deposits. Therefore, the matter was restored to the file of the CIT(A) for a de novo disposal after affording a reasonable opportunity of hearing to the appellant.

The ITAT held that the Supreme Court's order extending limitation due to COVID-19 was not applicable as the original limitation period for the CIT(A) appeal expired on 27/01/2020, prior to the specified COVID-19 period (15/03/2020 to 28/02/2022). Furthermore, the assessee failed to provide supporting evidence for the claimed illness. Therefore, the ITAT upheld the CIT(A)'s decision to dismiss the assessee's appeal due to the 710-day delay, and consequently, the assessee's appeal before the ITAT was dismissed.

The ITAT condoned the assessee's 11-day delay in filing the appeal before it, finding sufficient cause. It also set aside the CIT(A)'s order, condoned the 4-day delay in filing before the CIT(A), and restored the matter to the CIT(A) for fresh consideration on merits.

The Tribunal observed that the CIT(A) failed to adequately address the assessee's challenge regarding the validity of the assessment under Section 153C, specifically the lack of recorded satisfaction by the AOs and the absence of conclusive evidence. Finding that both the assessment order and CIT(A)'s order were silent on these crucial aspects, the Tribunal remanded the matter back to the CIT(A) for fresh adjudication, ensuring a proper hearing and consideration of all contentions.

The Tribunal held that the appellant is a primary agricultural credit society and does not possess a banking license, thus not falling under the restrictions of Section 80P(4). Relying on the Supreme Court's decision in *Mavilayi Service Co-operative Bank Ltd.*, the Tribunal allowed the Section 80P deduction.

The Tribunal condoned the delay in filing the appeal. On merits, it held that the addition of Rs. 2,42,000 was unwarranted, noting that the earlier withdrawal of Rs. 3,03,000 was undisputed and a mere time gap isn't sufficient to reject the explanation without evidence of alternative utilization. It also referred to CBDT Circular No. 3 of 2017, which states deposits below Rs. 2,50,000 during demonetization require no further verification.

The Tribunal found the assessee's grievance regarding the calculation of business profit at the 3.75% rate and claims for TDS and advance tax credit to be genuine. The matter was restored to the AO for correct computation of business profit and verification of the TDS and advance tax claims.

The Tribunal condoned a delay of 332 days in filing the appeal due to the appellant's illness. On merits, the Tribunal held that employees of the Life Insurance Corporation are not considered Central Government employees, thus upholding the restriction of exemption under Section 10(10) as an incorrect claim.

The Tribunal found merit in the assessee's challenge regarding the lack of reasonable opportunity, non-supply of seized documents/satisfaction note, and the absence of incriminating material for additions under Section 153C. Consequently, the Tribunal set aside the orders of the lower authorities and remanded the matter back to the AO, directing him to furnish seized material copies and provide a fresh opportunity of hearing.

The Tribunal condoned the delay in filing the appeal. Relying on CBDT Instruction No. 03.2007, which advises against scrutinizing small deposits up to Rs. 2,50,000/- from housewives without business income, the Tribunal directed the deletion of the remaining addition of Rs. 2,40,000/-.

The Tribunal condoned the 27-day delay in filing the appeal. Following a binding decision of the Jurisdictional High Court, the Tribunal held that interest income earned by a co-operative society from a District Co-operative Bank is eligible for deduction under Section 80P(2)(d) of the Act. Consequently, the assessee's appeal was allowed.

The Tribunal observed that the lower authorities failed to discuss the terms of the life insurance policy and did not verify if the premium paid exceeded 20% of the sum assured. Consequently, to determine the true nature of the receipt, the matter was remanded to the AO for a de novo assessment.

The Tribunal held that the lower authorities failed to establish a direct link between the seized material from the third party and the appellant's undisclosed income. It emphasized that voluntary disclosure of additional income in response to a Section 153C notice does not automatically lead to a presumption of concealment for penalty under Section 271(1)(c). Consequently, the matter was remitted back to the CIT(A) for de novo disposal after granting the assessee a reasonable opportunity of being heard.

The Tribunal found that the lower authorities failed to establish the link between the seized material from the third-party search and the appellant's undisclosed income. It held that merely disclosing additional income in response to a Section 153C notice does not automatically prove concealment of income. Therefore, the matter was remitted back to the CIT(A) for de novo disposal after a proper discussion of the evidence.

Following the Jurisdictional High Court's decision in PCIT v. Peroorkada Service Co-op. Bank Ltd., the Tribunal held that the interest income received from the District Co-operative Bank is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.

The Tribunal ruled that the disallowance, based on the investment not yielding interest, was unsustainable. Relying on the Supreme Court's decision in Rajendra Prasad Mody, it held that interest expenditure incurred on money borrowed for making investments is an admissible deduction under Section 57(iii) of the Income Tax Act, regardless of whether the investment generated interest income.

Following the Jurisdictional High Court's precedent, the Tribunal held that interest earned by the co-operative society from deposits in banks and treasury, even from surplus funds, does not lose its character as profits attributable to its main business of providing credit facilities. Therefore, the assessee is entitled to the deduction under Section 80P(2)(d) for such interest income.

The Tribunal found that the property was legally settled in favor of the sons and daughter-in-law, and the Power of Attorney was solely for management purposes, not for re-transferring title to the appellant. Therefore, the Assessing Officer's addition under 'income from house property' was deemed unjustified. The Tribunal directed the Assessing Officer to delete the addition of Rs. 2,40,000/-.

The Tribunal, following the Kerala High Court judgment in Vijaya Hospitality and Resorts Ltd. v/s CIT, held that the provisions of Section 115-BBE(2) are applicable only from April 1, 2017. Therefore, for Assessment Year 2014-15, the Assessing Officer was directed to allow the set-off of 'House Property' loss against the income assessed under Section 69 of the Act.

Despite due service, no one appeared on behalf of the assessee. The Tribunal found no material on record to substantiate the appellant society's claim of being a cottage industry. The Tribunal upheld the reasoning of the lower authorities and dismissed the appeals.

The Tribunal, relying on the Kerala High Court's decision, held that for a valid claim under Section 80P, a return of income must be filed within the stipulated time under Sections 139, 142(1), or 148. Since the assessee failed to file a valid return, it is not entitled to the deduction as mandated by Section 80A(5) and the amended Section 80AC, which makes timely filing under Section 139(1) a precondition.

The Income Tax Appellate Tribunal (ITAT) dismissed the appeal, citing CBDT Circular No. 9/2024 dated 17.09.2024, which mandates that the Revenue should not file appeals before the ITAT if the tax effect is below Rs. 60 lakhs. The Tribunal clarified that the issues raised are left open for appropriate future proceedings, and the Revenue may apply for recall if the appeal falls under any exceptions to the circular.

The Income Tax Appellate Tribunal dismissed the appeal as withdrawn, acknowledging the assessee's intention to withdraw the appeal and the respondent's lack of objection.

The Tribunal verified the DR's submission and found it to be correct that the appeal was a duplicate. Consequently, the Revenue's appeal (ITA No.637/Coch/2024) was dismissed as withdrawn.

The Tribunal held that denying the requested personal hearing through video conferencing, despite explicit requests and system confirmation, violates the mandatory provisions of Section 144B of the Income Tax Act and the principles of natural justice. Citing a Delhi High Court judgment, the Tribunal set aside the impugned assessment order and remanded the matter back to the AO for a de novo assessment with a proper opportunity for a VC hearing.

The Tribunal condoned the delay in filing the appeal due to the assessee's medical condition. On merits, it held that the assessee had substantial prior cash withdrawals of Rs. 17,42,000/- during the period 13.04.2016 to 28.09.2016, which were available as a source for the subsequent cash deposits. Consequently, the addition of Rs. 4,83,500/- made by the lower authorities was set aside, and the AO was directed to delete it.