ITAT Cochin Judgments — May 2025

The Tribunal held that the levy of interest under Section 234B is automatic and mandatory, as per the Supreme Court ruling in CIT v. Anjum MH Ghaswala. The AO's failure to levy this mandatory interest in the original assessment constituted a mistake apparent from record, rectifiable under Section 154. Therefore, the AO was justified in levying the interest.

The Tribunal held that interest under Section 234D is automatic and mandatory, and the AO's failure to levy it in the original assessment constituted a rectifiable mistake apparent from the record under Section 154. Therefore, the AO was justified in levying the interest under Section 234D using Section 154 proceedings.

The Tribunal noted that the AO did not make an addition under Section 68, implying the genuineness of the loans was not entirely disputed. Citing Supreme Court precedent (Rajendra Prasad Mody), the Tribunal held that interest expenditure incurred on borrowed money for investment is an admissible deduction under Section 57(iii), even if the investment did not yield interest.

Given that the quantum addition, which formed the basis of the penalty, was set aside by the Tribunal in a separate order, the penalty proceedings under Section 270A were remitted back to the Assessing Officer to be decided afresh in terms of Section 275(1)A of the Act.

The Tribunal observed that the lands were not situated within the prescribed distance for non-agricultural classification under Section 2(14)(iii). Relying on various High Court judgments, it held that the character of the land as agricultural does not change merely due to high sale consideration or potential commercial use, especially when not legally converted. The Tribunal concluded that the lower authorities erred in not considering the subject lands as agricultural, directing the AO to delete the addition and allow agricultural expenditure.

The Tribunal held that the non-compete right acquired by the assessee constitutes an intangible asset eligible for depreciation under Section 32(1)(ii) of the Income Tax Act. It followed the Madras High Court's view which distinguished the Delhi High Court's decision.

The Tribunal held that the assessee's micro-financing activities in rural areas qualified as a charitable activity under the first limb of Section 2(15) of the Act, based on consistent facts and binding precedents from the Tribunal and the Kerala High Court for an earlier assessment year. Consequently, the Tribunal quashed the revisionary orders passed by the PCIT under Section 263.

The Tribunal found that the CIT(A) violated Rule 46A by admitting fresh evidence and deleting the addition without calling for a remand report. Consequently, the matter was restored to the file of the Assessing Officer to properly consider the additional evidence after affording the assessee a reasonable opportunity of being heard.

The Tribunal dismissed the appeal, holding that the appellant's intention, along with other co-venturers, was to purchase and resell the land for profit, constituting an 'adventure in the nature of trade' and making the land 'stock in trade'. Citing case law and lack of evidence for agricultural activity, the Tribunal concluded that the enhanced compensation was not eligible for exemption under Section 10(37) of the Act.

The Tribunal upheld the disallowance of the Section 80P deduction, affirming that the assessee co-operative society was not entitled to it because no return of income was filed, which is a mandatory precondition under Section 80A(5) of the Act. This decision was in line with the jurisdictional High Court's ruling in Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham.

The Tribunal held that the CIT(A) violated Rule 46A of the I.T. Rules and principles of natural justice by accepting additional evidence and deleting additions without affording the AO an opportunity to rebut them. Consequently, the matter was remitted back to the CIT(A) for a de novo disposal with a proper opportunity of hearing to the assessee.

The Tribunal, relying on the Jurisdictional High Court's decision in Chavakkad Service Co-op. Bank Ltd., held that if audit reports are available before the Assessing Authority at the time of finalization of assessments, and the delay is due to a reasonable cause, no penalty under Section 271B should be imposed. Finding the facts identical, the Tribunal deleted the penalty.

The Tribunal remanded the penalty appeal under Section 271E back to the CIT(A). The decision on the penalty issue is to be made based on the outcome of the pending quantum appeal before the CIT(A) concerning the additions made under Section 68 for disbelieved loan creditors.

The Tribunal held that the appellant society, not being a licensed banking company or co-operative bank, could not claim exemption under the proviso to Section 269SS. The Tribunal also found that the appellant failed to demonstrate a reasonable cause for accepting cash deposits, thus not satisfying the conditions for waiver of penalty under Section 273B.

The Tribunal held that the assessee's micro-financing activities in rural areas qualified as a charitable activity under the first limb of Section 2(15) of the Act, based on consistent facts and binding precedents from the Tribunal and the Kerala High Court for an earlier assessment year. Consequently, the Tribunal quashed the revisionary orders passed by the PCIT under Section 263.

The Tribunal denied the condonation of delay, finding the explanation generic and implausible. On merits, relying on jurisdictional High Court precedent, it held that Section 80P deduction is only available if the return is filed within the due date under Section 139(1). Thus, the assessee was not entitled to the deduction.

The ITAT condoned a 169-day delay in filing the appeal, finding reasonable cause due to the Managing Trustee's wife's depression leading to missed communication. The ITAT noted the CIT(A) passed an ex-parte order for non-prosecution and, satisfied with the reasons provided by the assessee, remanded the matter back to the CIT(A) for fresh disposal after providing a reasonable opportunity of hearing.

The Tribunal dismissed the appeal, affirming the validity of the reassessment proceedings initiated under the new regime and stating that the order under Section 148A(d) had attained finality. It was further held that the deduction under Section 54F is admissible only for one residential property, irrespective of whether the purchased units are adjacent, thereby upholding the restriction of relief by the lower authorities.

The Tribunal observed that the CIT(A) merely confirmed the AO's order without properly addressing the validity of the Section 153C assessment or ensuring the seized material was provided to the assessee. Since the assessment order and CIT(A)'s order were silent on the proper recording of satisfaction by the AOs, the matter was remanded back to the CIT(A) for fresh adjudication, with all contentions kept open.

The Tribunal observed that the CIT(A) merely confirmed the AO's order without properly addressing the validity of the Section 153C assessment or ensuring the seized material was provided to the assessee. Since the assessment order and CIT(A)'s order were silent on the proper recording of satisfaction by the AOs, the matter was remanded back to the CIT(A) for fresh adjudication, with all contentions kept open.

The Tribunal observed that the CIT(A) merely confirmed the AO's order without properly addressing the validity of the Section 153C assessment or ensuring the seized material was provided to the assessee. Since the assessment order and CIT(A)'s order were silent on the proper recording of satisfaction by the AOs, the matter was remanded back to the CIT(A) for fresh adjudication, with all contentions kept open.

The Tribunal observed that the CIT(A) merely confirmed the AO's order without properly addressing the validity of the Section 153C assessment or ensuring the seized material was provided to the assessee. Since the assessment order and CIT(A)'s order were silent on the proper recording of satisfaction by the AOs, the matter was remanded back to the CIT(A) for fresh adjudication, with all contentions kept open.

The Tribunal held that the lower authorities failed to discuss the specific evidence from the third-party search that led to the unearthing of the appellant's undisclosed income. It clarified that merely disclosing additional income in response to a Section 153C notice does not automatically prove concealment. The matter was remitted back to the CIT(A) for a de novo disposal after properly considering the evidence.

The Tribunal held that the lower authorities failed to discuss the specific evidence from the third-party search that led to the unearthing of the appellant's undisclosed income. It clarified that merely disclosing additional income in response to a Section 153C notice does not automatically prove concealment. The matter was remitted back to the CIT(A) for a de novo disposal after properly considering the evidence.

The ITAT found no evidence of lending to non-members and clarified that lending for non-agricultural purposes does not imply lending to non-members. However, the assessee failed to discharge the onus of proving its status as a primary agricultural credit co-operative society before the AO. Thus, the matter was remanded to the AO for a de novo assessment with a fresh opportunity for the appellant to be heard.

The Tribunal observed that the DRP wrongly rejected the registered valuer's report without referring it to the DVO or identifying defects. Therefore, the matter is remanded back to the Assessing Officer for fresh adjudication to determine the correct fair market value after providing the appellant an opportunity to be heard.

The Tribunal condoned a minor delay in filing the appeal. Relying on the Jurisdictional High Court judgment in CIT vs. Sahyadri Co-operative Credit Society Ltd., the Tribunal held that the assessee is entitled to a deduction under Section 80P(1)(a) for interest income received from scheduled banks and Treasury, as such income is an enhancement of profits from its principal activity.

The Tribunal permitted the assessee to withdraw the appeal with the liberty to revive it if the application under DTVSV (Form No. 1) is rejected for any reason. Consequently, the appeal was dismissed as withdrawn.

The Tribunal held that the lower authorities failed to discuss the specific evidence from the third-party search that led to the unearthing of the appellant's undisclosed income. It clarified that merely disclosing additional income in response to a Section 153C notice does not automatically prove concealment. The matter was remitted back to the CIT(A) for a de novo disposal after properly considering the evidence.

The Tribunal held that since the appellant failed to submit a registered valuer's report during assessment or CIT(A) proceedings, and presented it for the first time before the Tribunal, the Assessing Officer was justified in adopting the FMV based on the SRO's records. The ITAT's role is to check the due process, not to decide valuation directly.

The ITAT found the CIT(A)'s estimation of profit at 12% of gross receipts to be arbitrary, as it was not based on any material or previous assessments. The Tribunal remanded the matter back to the AO to estimate the income, taking into consideration the previous assessments of the assessee and comparable cases in the same line of business. The penalty appeal under Section 271(1)(a) was also restored to the file of the AO.

The ITAT found the CIT(A)'s estimation of profit at 12% of gross receipts to be arbitrary, as it was not based on any material or previous assessments. The Tribunal remanded the matter back to the AO to estimate the income, taking into consideration the previous assessments of the assessee and comparable cases in the same line of business. The penalty appeal under Section 271(1)(a) was also restored to the file of the AO.

The Tribunal rejected the assessee's petition for condonation of delay in filing the appeal due to lack of supporting documents for the claimed cardiac issues. Consequently, the appeal was dismissed on the ground of delay.

The Tribunal examined the appellant's reasons for the 407-day delay, which primarily revolved around lack of awareness of the CIT(A) order until receiving a penalty order under Section 270A. The Tribunal found the explanation insufficient, concluding that the appellant failed to provide a substantial reason for condonation of delay. Consequently, the condonation petition was rejected, and the appeal was dismissed without adjudicating the merits.

The Tribunal found no plausible explanation for the significant delay of 577 days in filing the appeal. Consequently, the condonation petition was rejected, and the appeal was dismissed without adjudicating on the merits of the case.

The Tribunal condoned the delay in filing the appeal, finding the ITBA portal service to be an invalid method of notice. The order of the CIT(A) was set aside for violating principles of natural justice.

The ITAT held that the scope of adjustment under section 143(1) is limited to incorrect claims based on information in the return, and mere non-filing of an audit report does not constitute an "incorrect claim." Following a previous ITAT decision, the tribunal concluded that the adjustment made by the CPC was invalid in law and directed the CPC to amend the intimation.

The Tribunal held that property acquired through an unregistered memorandum of family settlement does not constitute a 'purchase of residential property' for the purpose of claiming deduction under Section 54. Therefore, the lower authorities were justified in denying the benefit of deduction under Section 54.

The Tribunal noted that the 507-day delay period was covered by the Supreme Court's order on the extension of limitation due to the Covid-19 pandemic. Consequently, the Tribunal remanded the matter back to the CIT(A) with a direction to condone the delay and adjudicate the appeal on its merits.

The Tribunal held that a CIT(A) is duty bound to dispose of an appeal on merits, even if heard ex parte, and cannot dismiss it in limine for non-prosecution. The matter was remanded back to the CIT(A) to decide the appeal de novo on merits after affording a reasonable opportunity of being heard to the assessee.

The Tribunal found the appellant's explanation that the cash deposits were "vazhipadu collections" to be plausible. It held that the addition made by the AO for alleged failure to prove the explanation with documentary evidence was not justified and directed its deletion.

The Tribunal condoned the delay in filing the appeal, finding the reason for non-receipt of notice from the CIT(A) to be valid. It held that service of notice through the ITBA portal is not a valid method of service.

The Tribunal found that the CIT(A) did not dispose of each ground of appeal with a speaking order and showed no application of mind. Therefore, the matter was remanded to the CIT(A) for de novo disposal.