ITAT Cochin Judgments — April 2025

The Tribunal held that the AO was justified in initiating Section 154 proceedings as the Form 10B discrepancy constituted a mistake apparent from record. However, the matter was remanded to the AO with a direction to redetermine the correct amount of income applied for charitable purposes, considering all evidence and not relying solely on the audit report.

The Tribunal condoned the delay in filing the appeal, finding sufficient reasonable cause. It held that the CIT(A) erred by dismissing the appeal ex-parte without considering its merits, as Section 250(6) of the Act mandates framing points of determination and a detailed discussion. Consequently, the Tribunal remanded the matter back to the CIT(A) for a de novo decision on merits after providing a proper opportunity of hearing to the assessee.

The Tribunal held that since the AO had not considered or referred to the DRP proceedings, the matter must be restored to the AO to await DRP directions. The AO is then directed to pass a fresh final assessment order incorporating the DRP's directions, keeping all other contentions open.

The Tribunal held that filing Form 10IE is directory, not mandatory, and since the form was available with the CPC at the time of processing the return, the benefit of the new tax regime should not have been denied. The CPC was directed to amend the intimation to allow the benefit of Section 115BAC.

The Tribunal held that voluntary contributions received by a charitable trust, even for a building fund, are taxable under Section 2(24) of the Income Tax Act if the trust does not have registration under Section 12AA. Consequently, exemption under Section 11 cannot be granted.

The Tribunal held that the AO was justified in estimating the business profit under Section 44AD of the Act, and thus, the addition of Rs. 5,92,823/- under the head 'business' was confirmed. However, since income was estimated under Section 44AD, the Tribunal directed the AO to delete the separate addition of Rs. 3,93,000/- made on account of cash deposits under the head 'income from other sources'.

The Tribunal acknowledged that the appellant's explanation for cash deposits from student fees could not be entirely ruled out. However, since the AO had not properly examined the veracity of this explanation, the matter was remanded back to the AO for a fresh examination of the records and explanation provided by the appellant.

The Tribunal allowed the appellant's application for admission of additional evidence, including invoices and lorry receipts, to prove the sales to Thettayil Traders. Satisfied with the reasons for not presenting this evidence earlier, the Tribunal remanded the case back to the AO to reconsider the issue afresh, taking into account the newly submitted evidence.

The ITAT ruled that the notice issued by the CIT(A) through the ITBA portal was not a valid service as per Section 282(1) of the Income-tax Act and Rule 127(1) of the Income-tax Rules, 1962. Following a High Court precedent, the ITAT remitted the case back to the Assessing Officer for de novo adjudication, ensuring the appellant a reasonable opportunity to be heard.

The Tribunal found that neither the AO nor the CIT(A) properly addressed the validity of the assessment under Section 153C, specifically concerning the recording of satisfaction by the AOs of both the searched person and the assessee, and the non-availability of seized material to the appellant. Thus, the matter is remanded back to the CIT(A) for fresh adjudication in accordance with law, providing the appellant a reasonable opportunity of hearing.

The Income Tax Appellate Tribunal dismissed the appeals, holding that since the appellant trust lacked registration under Section 12AA of the Act, the voluntary contributions received, even if for a building fund, were taxable as per Section 2(24) of the Income Tax Act and did not qualify for exemption under Section 11.

The Tribunal held that corpus donations do not form part of taxable income, but for donations to be considered corpus funds, donors must provide specific directions. As this is a question of fact requiring examination of evidence, the matter is restored to the AO to verify if the donations were indeed corpus funds.

The Tribunal held that the filing of an audit report in Form 10B is procedural and its mere non-filing does not constitute an 'incorrect claim' under Section 143(1) of the Act. Relying on precedents, the ITAT concluded that the adjustment made by the CPC u/s 143(1) was not valid in law and directed the CPC to amend the intimation.

The Tribunal noted that the assessee had opted for the DTVSV Scheme and received Form 2, and the learned D.R. had no objection. In accordance with sections 91(2) and 92(1) of the DTVSV Scheme, the appeal was dismissed as withdrawn, with a liberty to the assessee to seek reinstatement if the DTVSV application is not accepted for any reason.

The ITAT condoned the 141-day delay in filing the appeal. Citing a High Court judgment, the ITAT ruled that service of notice through the ITBA portal is not valid. Consequently, the case was remanded to the CIT(A) for a de novo disposal after providing the appellant a reasonable opportunity of hearing.

The Tribunal found that the AO's ad-hoc disallowance, made without rejecting the books of accounts, was based purely on suspicion and conjectures, lacking specific evidence of discrepancy in the vouchers. It held that suspicion cannot substitute proof and the AO failed to provide a basis for the 20% disallowance. Consequently, the disallowance of Rs. 12,79,633/- was deleted as unsustainable in law.

The ITAT observed that the CIT(A) failed to properly address the assessee's challenge regarding the validity of the assessment under Section 153C, specifically concerning the lack of satisfaction recording and the non-availability of seized material. Therefore, the ITAT remanded the matter back to the CIT(A) for fresh adjudication after providing a reasonable opportunity of hearing to the appellant.

The Tribunal held that the reassessment proceedings initiated under Section 148 were valid and not barred by limitation, as per Section 149(1)(c) for foreign assets. However, on merits, it was ruled that the investments made by the non-resident Indian in a foreign bank were not taxable in India under Sections 4 and 5 of the Income Tax Act, as there was no evidence that the income was sourced in India.

The ITAT condoned a 22-day delay in filing the appeal before it, finding sufficient cause. It set aside the CIT(A)'s ex-parte order, noting the CIT(A) failed to condone the delay or provide a reasonable opportunity of hearing by not using alternate modes of notice. The matter was remanded back to the CIT(A) for de novo disposal with a direction to afford a proper hearing opportunity.

The Tribunal condoned the delay in filing the appeals. Following the jurisdictional Kerala High Court judgment in Pr. CIT v. Peroorkada Service Co-Operative Bank Ltd., the Tribunal held that the interest income earned by the assessee from District Co-operative Banks falls within Section 80P(2)(d) of the Act, and is therefore eligible for deduction under Section 80P.

The Tribunal held that the CIT(A) is bound to dispose of an appeal on merits, even if dismissed ex-parte, citing settled legal position and a Bombay High Court decision. Consequently, the case was remanded to the CIT(A) for a de novo decision on merits after providing a reasonable opportunity of hearing to the assessee.

The Tribunal, following a jurisdictional High Court judgment (Pr. CIT v. Peroorkada Service Co-Operative Bank Ltd.), held that interest income derived from investments with other co-operative societies (like District Co-operative Banks) is eligible for deduction under Section 80P(2)(d) of the Act. However, interest income from Treasury is not covered under Section 80P(2)(d) and is therefore not eligible for this deduction.

The ITAT condoned the appellant's 22-day delay in filing the appeal before them, finding the reasons satisfactory. The Tribunal held that the CIT(A) erred by passing an ex-parte order and dismissing the appeal without condoning the 295-day delay, noting that notices were sent only via email and a reasonable opportunity to explain the delay was not given. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter back for de novo disposal with proper opportunity of hearing.

The Tribunal held that the CIT(A) erred by dismissing the appeal ex-parte without disposing of it on merits, which is contrary to Section 250(6) of the Income Tax Act and established legal precedent. Therefore, the case was remanded back to the CIT(A) for a de novo disposal on merits after providing the assessee a reasonable opportunity of hearing.

The Tribunal held that the disallowance of exemption by the CPC for non-filing of the audit report in Form 10B within the due date was not valid. The filing of the audit report is procedural, and its non-filing does not constitute an incorrect claim, which is a prerequisite for adjustment under Section 143(1).

The Tribunal held that merely offering food to devotees of Lord Ayyappa does not automatically render the assessee's activities purely religious. It set aside the CIT (Exemption)'s order rejecting regular registration under Section 12AB and remanded the matter for fresh consideration to verify other conditions for Section 12AA registration. Consequently, the appeal against the denial of Section 80G approval was also restored to the CIT (Exemption).

The Tribunal noted that the CIT(A) confirmed the addition without properly addressing the validity of the assessment u/s 153C, specifically regarding the lack of a recorded satisfaction note and failure to provide seized evidence to the appellant. Consequently, the Tribunal remanded the matter back to the CIT(A) for fresh adjudication, keeping all contentions open for the appellant.

The Income Tax Appellate Tribunal, taking note of the assessee's intention to withdraw the appeal, dismissed the appeal as withdrawn. The order was pronounced in open court on 29th April, 2025.

The Tribunal condoned the 136-day delay, finding it to be for a genuine and bonafide reason. On merits, the Tribunal, relying on the jurisdictional Kerala High Court judgment in Pr. CIT v. Peroorkada Service Co-Operative Bank Ltd., held that interest income earned by the assessee from Kollam District Co-operative Bank comes within the purview of Section 80P(2)(d) of the Act and is therefore eligible for deduction.

The Tribunal upheld the CIT(E)'s decision, stating that at the time of registration, the CIT(E) must ascertain if the trust is charitable based on its objects. It was found that one of the trust's objects involved canvassing for election candidates, which constitutes political activity and not charitable activity. Since the appellant failed to prove its other activities were charitable, the rejection was justified.

The Tribunal noted that the assessment was completed under Section 143(3) and not Section 144, indicating that the Assessing Officer accepted subsequent compliance. Citing precedents, the Tribunal ruled that in such cases, previous defaults are deemed ignored, and the default cannot be considered willful. Therefore, the penalty imposed under Section 272A(1)(d) was patently wrong and directed its deletion.

The Tribunal ruled that non-filing of Form 10B is a procedural lapse and does not amount to an 'incorrect claim' for adjustment under Section 143(1). Citing precedent, it held the CPC's adjustment was invalid in law and directed the intimation to be amended.

The ITAT condoned a 22-day delay in the appeal before it. It found that the CIT(A) passed an ex-parte order without proper notice service or affording the appellant reasonable opportunity to explain the delay. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter for de novo disposal after a fresh opportunity of hearing.

The Tribunal observed that the CIT(A) confirmed the addition without properly considering the seized material or evidence. It was noted that the assessment order lacked details regarding the necessary satisfaction note from both the AO of the searched person and the assessee for issuing the Section 153C notice. The case is remanded back to the CIT(A) for fresh adjudication, allowing the assessee a proper hearing and keeping all contentions open.

The tribunal upheld the validity of the reassessment proceedings initiated under Section 148, finding them within the time limit under Section 149(1)(c) for foreign assets and supported by reasons to believe income had escaped assessment. However, it held that the investments made outside India by a non-resident Indian were not taxable in India under Section 5(2) of the Income Tax Act, as there was no evidence to prove the funds originated from taxable income sourced in India. Therefore, the addition made was not sustained.

The Tribunal acknowledged the assessee's withdrawal request and the receipt of Form 2 under the Vivad Se Vishwas Scheme. Consequently, the appeal was dismissed as withdrawn, with the assessee retaining the liberty to approach the Tribunal if any adverse order is passed under the Scheme.

The Tribunal held that since the earlier physically filed appeal covering the same subject matter had already been disposed of, the present appeal filed through e-filing was deemed infructuous. Consequently, the present appeal was dismissed without further adjudication.

The Tribunal acknowledged that the assessee possessed supporting documents but failed to furnish translated copies and proper details or verification. Consequently, all three contested additions concerning agricultural income, gifts from relatives, and sale of wood were restored to the file of the CIT(A) for fresh consideration. The CIT(A) is directed to provide the assessee a fresh opportunity to produce all necessary translated documents and details for re-examination.

The Tribunal found that the CIT(Exemption) rejected the application solely based on non-compliance. Considering the assessee's reasons and in the interest of justice, the Tribunal remitted the case back to the CIT(Exemption) to decide afresh after providing a reasonable opportunity of hearing to the assessee and allowing submission of necessary documents.

The Tribunal deleted the protective addition made under Section 68, stating that a protective addition cannot be made when no substantive addition exists in the hands of the other assessee (the managing trustee). For the disallowance of travel expenses, the matter was remanded back to the ld. CIT(A) for fresh adjudication, directing the assessee to provide evidence of expenditure, outcome, and business relevance.

The Tribunal condoned a 92-day delay in filing the appeal, applying the principles for condonation of delay. It held that the CIT(A) erred in dismissing the appeal without considering its merits or providing a proper opportunity of being heard, thereby violating Section 250(6) of the Income Tax Act. The case was remitted back to the CIT(A) for fresh consideration on merits, with a direction for the assessee to produce all necessary documents.

The Tribunal acknowledged that the assessment was completed under Section 144 and the assessee was not given a fair opportunity. In the interest of justice and fair play, the entire issue was remitted back to the Ld. CIT(A) for fresh consideration. The CIT(A) is directed to provide a reasonable opportunity of being heard to the assessee and decide the matter in accordance with law.

The Tribunal held that the mere presence of a clause in the trust deed allowing honorarium/salary payments to trustees does not, by itself, violate Section 13(3) or render the trust ineligible for registration under Section 12AB. Section 13(3) is triggered only by actual payments in excess of reasonable compensation, or benefits not legally due. Since no salary was actually paid to any trustee, the rejection was unjustified, and the Tribunal directed the grant of registration.

The Income Tax Appellate Tribunal, applying the principles laid down by the Apex Court regarding condonation of delay, found that the assessee was not callous. Prioritizing substantial justice over technicalities, the Tribunal condoned the 145-day delay. The matter was remitted back to the CIT(A)/NFAC for fresh adjudication on merits, with directions to provide the assessee a reasonable opportunity of being heard.

The ITAT held that the CIT(A) erred in dismissing the appeal for non-prosecution without deciding it on merits, emphasizing that a CIT(A) must decide cases on merits even *ex parte*. Citing *PCIT v. Premkumar Arjundas Luthra*, the Tribunal remanded the case back to the CIT(A) for a *de novo* decision on merits, after providing the assessee a reasonable opportunity of being heard.

The Tribunal held that the CIT(A)'s order was not a speaking order as it failed to consider all relevant documents (Annexures 2, 3, and 5) submitted by the assessee regarding the gross profit. Consequently, the Tribunal set aside the CIT(A)'s order and remitted the matter back for fresh adjudication, directing the CIT(A) to consider all annexures and pass a speaking order after hearing the assessee.

The Tribunal found that the assessee had discharged its burden by providing details of debenture holders (including Aadhaar/Voter ID if PAN was not available). It noted that PAN is not mandated for amounts below Rs. 50,000/- (under Section 114B during the relevant period) and directed the AO to conduct proper inquiries under Section 133(6). The main additions under Section 68 and consequential interest disallowance for AY 2012-13 were set aside and remitted to the AO for fresh consideration. However, disallowances for ESI, PF (AY 2013-14), and gratuity premium (AY 2012-13) were upheld.