ITAT Indore Judgments — December 2024

The Tribunal, to meet the ends of justice, imposed a cost of Rs. 5,000 on the assessee. Upon compliance, the CIT(A) is directed to grant one more opportunity for hearing and decide the appeal on merits.

The Tribunal noted a discrepancy where the assessee claimed the appeal was for AY 1999-2000, and the Form 35 filed physically was also for AY 1999-2000. However, the CIT(A) passed the impugned order for AY 1998-99, and the appeal fee challan was also for AY 1998-99. The Tribunal found that the CIT(A) had passed an ex-parte order dismissing the appeal as non-maintainable due to the assessee's failure to respond to notices. Considering the apparent mistake at the CIT(A)'s level in disposing of the first appeal under the faceless mechanism and the discrepancy in the assessment years, the Tribunal restored the matter to the CIT(A) for fresh adjudication. The assessee was directed to comply with the notices issued by the CIT(A) on the dates of hearing, failing which the CIT(A) would be at liberty to pass an order as deemed fit. The appeal was allowed for statistical purposes.

The Tribunal noted that the assessee had a meritorious case and that substantial justice should be preferred over technical considerations. It observed that the assessee was entitled to exemption under Section 11/12 based on the proviso to Section 12A(2), as assessment proceedings were pending when registration was granted. The delay was condoned subject to payment of costs.

The tribunal noted the assessee's submission regarding the Vivad Se Vishwas Scheme application. Recording these details, the tribunal decided to dismiss the appeal as withdrawn. The assessee was also informed that they could revive the appeal if their scheme application was rejected.

The Tribunal held that the CIT(A) had overlooked crucial facts and evidence, specifically the statement of the assessee's Saving Bank Account from which Rs. 12,20,000/- was withdrawn on 24.02.2016. The Tribunal also noted that the purchase of agricultural land occurred prior to this withdrawal, negating the Revenue's claim that the withdrawn amount was used for the land purchase.

The Tribunal noted that the addition by the AO was based on surrounding circumstances without direct material, and the CIT(A) dismissed the appeal ex-parte for non-prosecution. The assessee was not given a fair opportunity to present their case.

The Tribunal held that the CIT(A) should have provided a fair opportunity to the assessee to present their case, especially since the assessee claimed the deposits were from agricultural income. The matter was remanded for fresh adjudication.

The Tribunal found that the CIT(A)'s observation that the AO had accepted the opening balance of unsecured loans was incorrect. The AO had explicitly rejected the assessee's claim for the opening balance due to the non-filing of returns and lack of audited accounts for earlier years, without conducting a factual examination of the documents submitted by the assessee. While agreeing with the legal principle that opening balances cannot be taxed in the current year, the Tribunal noted that the factual verification of the assessee's claim was necessary. The Tribunal also observed that the assessee, being a partnership firm, was legally required to file returns from AY 2006-07 onwards, irrespective of income or loss, and the reason provided by the assessee's counsel for non-filing was not legally tenable. Consequently, the Tribunal restored the matter to the file of the CIT(A) for fresh adjudication after necessary factual verification of the opening balance claim, allowing opportunities to both parties and considering any remand report from the AO. Regarding the assessee's cross-objection, the Tribunal directed the CIT(A) to consider the additional legal grounds raised by the assessee and adjudicate them appropriately. Both the appeal and the cross-objection were allowed for statistical purposes.

The Tribunal held that the assessee demonstrated a bona fide inadvertent human mistake in declaring the total cash and cash equivalent balance as cash in hand in the return of income, rather than segregating cash in hand, bank balances, and FDRs. This mistake was evident from the detailed breakup of accounts and was not a mala fide attempt to inflate cash in hand.

The Tribunal held that the CIT(A) erred in confirming the addition without proper verification. While the CIT(A) correctly identified Section 69A as the appropriate section, the matter required detailed verification of the transactions, especially considering the volume of documents produced. The Tribunal noted that merely depositing in Specified Bank Notes should not be a ground for addition if the source is explained.

The Tribunal held that the CIT(E) was not justified in denying registration under Section 12AB solely based on the potential for commercial activity, as the law allows for such activities up to a certain limit and the actual impact is assessed annually. For Section 80G, the Tribunal noted a subsequent CBDT circular extending the filing deadline and a fresh application filed by the assessee.

The Tribunal held that the CIT(E) was not justified in denying registration under Section 12AB solely based on the potential for commercial activity, as the law allows for such activities up to a certain limit and the actual impact is assessed annually. For Section 80G, the Tribunal noted a subsequent CBDT circular extending the filing deadline and a fresh application filed by the assessee.

The Tribunal noted that the assessee had filed a valid belated return for AY 2019-20 based on a CBDT order extending the due date. It was held that the disallowance made by the CPC under Section 143(1) on the grounds of delayed filing was not tenable as per the provisions of Section 143(1) existing at that time, and also considering a consistent view from the ITAT, Rajkot.