ITAT Indore Judgments — January 2025

The ITAT condoned the delays in filing the appeals. It held that since the original revision orders passed by the PCIT under Section 263 had already been quashed by an earlier ITAT order, the consequential fresh assessment orders passed by the AO became infructuous and were also quashed.

The Tribunal condoned the delay in filing the appeal, subject to the assessee depositing Rs. 5,000/- in the Prime Minister Relief Fund. The matter was set aside to the AO for fresh adjudication on merits, with directions for the assessee to fully cooperate and furnish all necessary documents and explanations regarding the cash deposits. The appeal was allowed for statistical purposes.

The Tribunal noted that the assessee had opted for the 'Vivad se Vishwas Scheme, 2024' and completed the necessary formalities, including receiving and accepting Form No. 2. With no objection from the revenue's representative, the Tribunal allowed the assessee's request to withdraw the appeal, dismissing it as withdrawn, while clarifying that the assessee retains the right to recall the order if the scheme application is rejected by the revenue.

The ITAT condoned the delay in filing the appeals. It was held that since the original revision orders under Section 263, which formed the basis for the fresh assessment orders, had already been quashed by a consolidated ITAT order dated 13.01.2021, the consequential fresh assessment orders passed by the AO under Section 263 read with Section 143(3) became infructuous. Therefore, the ITAT allowed the present appeals and quashed the impugned fresh assessment orders.

The Income Tax Appellate Tribunal (ITAT) noted that an identical issue in the assessee's own case for earlier assessment years (AY 2013-14 & 2014-15) was remanded to the AO for fresh adjudication. Respectfully following that order and with agreement from both parties, the Tribunal remanded the current issue back to the AO for fresh adjudication to verify the availability of the assessee's own interest-free funds for making advances, in light of the Supreme Court's judgment in South Indian Bank Ltd v. CIT.

The Tribunal held that Section 35DD is a specific provision for demerger expenses and its deduction should be allowed as a continuing claim. As no exempt income was earned by the assessee during the year under appeal, Section 14A for disallowing expenses related to exempt income was not applicable.

The Tribunal found that the assessee was not given adequate opportunity to submit all evidence. It remanded the case back to the Ld. CIT(E) to reconsider the application for registration under Section 12AB afresh, after allowing the assessee to submit the necessary documentary evidence and proceed as per law.

The Tribunal found that Section 271AAC(1) provides discretion to the AO for penalty initiation, meaning it is not mandatory. Citing a similar ITAT decision and the Supreme Court's view on 'prejudicial to the interests of the revenue', the Tribunal concluded that the AO's order was not erroneous and quashed the PCIT's revision order.

The Income Tax Appellate Tribunal noted that the Departmental Representative had no objection to the withdrawal. Consequently, the Tribunal allowed the assessee's request for withdrawal and dismissed the appeal.

The Tribunal considered the fresh documentary evidence (the trust registration certificate) and, in the interest of justice, remanded the matter back to the file of the Ld. Commissioner of Income-Tax (Exemption) for fresh consideration of the application under Section 12AB based on the newly produced evidence.

The Tribunal condoned the delay, citing the principle of substantial justice and a Supreme Court ruling. It was held that the CIT(A) failed to comply with Section 250(6) of the Income-tax Act by not properly stating the points of determination and reasons for the decision in its orders, which also suffered from non-prosecution.

The ITAT found sufficient cause for the delay and condoned it, citing Section 253(5) and the principle of substantial justice. The ITAT also held that the CIT(A) orders, which merely confirmed the AO's orders without complying with the requirements of Section 250(6) regarding stating points for determination, decision, and reasons, were not proper. Consequently, the ITAT set aside the CIT(A) orders and remanded the matters for fresh adjudication, directing the CIT(A) to provide a proper hearing and the assessee to ensure participation.

The Tribunal found that the true nature of the 'incidental objects' receipts was not adequately examined by the lower authorities, noting conflicting claims by the assessee regarding their nature (grants vs. professional services with invoices). While rejecting the 'rule of consistency' argument, the Tribunal decided to remand the matter to the AO for a fresh adjudication with necessary opportunities for the assessee.

The Tribunal, relying on High Court and ITAT precedents, held that the belated filing of Form 10 is a procedural omission and not a substantive defect, as long as the form is available with the Assessing Officer during assessment. Since Form 10 was filed before the assessment date, the benefit of accumulation under Section 11(2) should not be denied. The matter was remanded to the AO to allow the benefit of accumulation.

The Tribunal quashed the PCIT's revision order, holding that the AO had indeed made inquiries and the assessee had provided detailed submissions regarding the LTCG claim, which the AO had accepted taking a plausible view. The Tribunal emphasized that the PCIT cannot substitute its own opinion for the AO's after due inquiry, especially when the jurisdictional High Court had previously accepted Kappac Pharma shares as genuine in a similar case.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. It held that the addition made by the AO treating cash withdrawals as unexplained expenditure u/s 69C was questionable and that the assessee should be given an opportunity to explain.

The Tribunal, considering the principle of natural justice, remanded the matter back to the CIT(A) for fresh adjudication, directing the CIT(A) to provide adequate opportunity of hearing. The assessee was also directed to ensure participation without seeking unnecessary adjournments.

The Tribunal observed that the revenue authorities failed to produce the mandatory approval under Section 151, stating the approval letter was 'not available/traceable'. Relying on National Thermal Power Co. Ltd. Vs. CIT, the Tribunal held that without the Section 151 approval, the Section 148 notice and subsequent assessment under Section 143(3) read with Section 147 were invalid, leading to the quashing of the assessment order.

The Tribunal condoned the delay in filing the appeal. It allowed the assessee's prayer to remand the matter back to the Assessing Officer, directing the AO to provide an opportunity to the assessee to submit Form No. 26A to claim the benefit of the 2nd Proviso to Section 40(a)(ia) read with the 1st Proviso to Section 201(1) and then pass a fresh order.

The tribunal condoned the 52-day delay in filing the appeal, finding it not intentional or wilful. On merits, considering similar cases, the tribunal set aside the CIT(A)'s order and remanded the matter to the Assessing Officer. The AO is directed to examine the relevant papers and documents from BSNL authorities to decide the claim for exemption under Section 10(10AA)(i) for the period when the assessee was employed by the Government (DOT).

The Tribunal held that while the assessee's opening cash balance of Rs. 19,51,281.08 could not fully explain the entire deposit of Rs. 21,45,000/-, a portion of this balance, amounting to Rs. 19,51,000/-, could be considered as a source for the deposits. Therefore, only the remaining difference of Rs. 1,94,000/- was treated as unexplained.

The Tribunal dismissed the Revenue's appeal. It held that the disallowance under Section 14A was not sustainable for AY 2013-14 as the assessee had no tax-exempt income, noting the prospective application of the Finance Act 2022 Explanation. Regarding the carry forward of losses, the Tribunal upheld the CIT(A)'s decision that the deduction under Section 10A should be allowed before the set-off/carry forward of losses, following Supreme Court's pronouncements.

The tribunal allowed the assessee's request to withdraw the appeal, as the Departmental Representative had no objection. Consequently, the appeal was dismissed as withdrawn. The tribunal further clarified that the assessee is free to file a recall application if their Vivad Se Vishwas application is rejected by the revenue.

The Income Tax Appellate Tribunal affirmed the CIT(A)'s decision, holding that co-operative banks are to be treated as co-operative societies for the purpose of Section 80P(2)(d) deduction. Relying on consistent judicial precedents from various appellate forums including other ITAT benches, the Tribunal found no error in allowing the deduction.

The Tribunal found that both the AO and CIT(A) passed orders ex-parte without proper opportunities to the assessee. Considering the principles of natural justice, the Tribunal decided to remand the matter back to the AO for fresh adjudication.

The Income Tax Appellate Tribunal upheld the decision of the CIT(A), ruling that co-operative banks are to be considered 'co-operative societies' for the purpose of Section 80P(2)(d) deduction. Consequently, the interest income earned by the assessee from these co-operative banks is eligible for the claimed deduction, aligning with various precedents.

The ITAT found 'sufficient cause' for the delay in filing the first appeal, noting the assessee's illness and mental distress resulting from the Corona Pandemic's impact on business. Applying the principle of substantial justice as per *Collector, Land Acquisition Vs Mst. Katiji*, the Tribunal condoned the delay. The case was remanded back to the AO for fresh adjudication, with directions for the assessee to ensure participation and avoid unnecessary adjournments.

The Income Tax Appellate Tribunal (ITAT) remanded the matter back to the CIT(E) for fresh adjudication, citing principles of natural justice and fair play. The assessee is directed to actively participate in hearings and avoid seeking unnecessary adjournments.

The Tribunal, applying the principle of natural justice, remanded the case back to the CIT(E) for fresh adjudication. It directed the assessee to cooperate and not seek unnecessary adjournments, failing which the CIT(E) is at liberty to pass an appropriate order.

The Tribunal noted that this is a recurring issue in the assessee's own cases, and the ITAT has consistently held that such subsidies are capital receipts. Therefore, following its previous decisions, the Tribunal upheld the CIT(A)'s orders.

The Income Tax Appellate Tribunal upheld the orders of the CIT(A), affirming that the CIT(A) was justified in relying on prior ITAT rulings in the assessee's own case for previous assessment years. The Tribunal found no error or illegality in the CIT(A)'s approach and, consequently, dismissed the appeals filed by the revenue.

The Tribunal upheld the CIT(A)'s decision, ruling that interest income earned by a co-operative society from deposits in co-operative banks is eligible for deduction under Section 80P(2)(d). The ITAT reiterated its consistent view that co-operative banks are indeed 'co-operative societies' for the purpose of this section, despite their banking activities, aligning with previous ITAT rulings.

The tribunal condoned the significant delay in filing the appeal, citing the exceptional circumstances presented by the assessee including deaths of key personnel and management change during the COVID period. The matter was remanded back to the CIT(E) for fresh consideration of the registration application, with a direction for the assessee to provide all necessary documents and be afforded a proper opportunity of being heard.

The Tribunal noted that as per the scheme's rules, the assessee is required to withdraw the appeal and file Form 3. Since the assessee is no longer pursuing the appeal and has requested its withdrawal, and the departmental representative did not object, the Tribunal allowed the withdrawal request.

The Income Tax Appellate Tribunal upheld the decision of the CIT(A), noting that various appellate forums, including the Indore bench of ITAT, have consistently held that co-operative banks qualify as 'co-operative societies' for the purpose of Section 80P(2)(d) deduction, even if engaged in banking business. Consequently, the ITAT found no error in the CIT(A)'s orders.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. Noting that the assessee was unrepresented before the lower authorities and had not been given a proper opportunity to explain the source of the cash deposits, the Tribunal remanded the matter back to the Assessing Officer for fresh adjudication on merits, providing the assessee another opportunity to furnish explanations and documentary evidence.

The Tribunal condoned the delay, noting the Revenue's lack of objection. It found that the appeal was not adjudicated on merits by the CIT(A) and therefore remanded the matter back for a fresh hearing and adjudication on the grounds raised.

The Tribunal found that the CIT(A) erred in dismissing the appeal without ensuring proper service of hearing notices to the assessee's registered email or post, and merely uploading to the departmental portal was insufficient per Section 282 and judicial precedents. Citing the obligation of the appellate authority to decide appeals on merits, the Tribunal remanded the case back to the CIT(A) for a de novo hearing, granting the assessee a reasonable opportunity to present its case.

The Tribunal condoned the delay in filing the appeal, finding it unintentional due to the assessee's non-receipt of notices. It held that the CIT(A) failed to issue and serve proper notice of hearing, rendering the ex-parte dismissal invalid. Citing a High Court precedent on proper service, the Tribunal remanded the case back to the CIT(A) for fresh adjudication on merits, directing that a fair opportunity be provided to the assessee.

The Tribunal held that the penalty for the disallowance of additional depreciation was not justified as an identical claim was allowed in the preceding assessment year. However, the penalty for the disallowance of income-tax expenditure was upheld, as it was clearly disallowable under Section 40(a)(ii) and constituted furnishing of inaccurate particulars, despite the claim of inadvertence.

The Tribunal found that the assessee had sufficiently explained the source of the impugned deposits, noting that the audited cash book showed a substantial opening cash balance on 09.11.2016 largely derived from bank withdrawals. Furthermore, the Tribunal held that an addition under Section 68 of the Income Tax Act is not permissible when the Assessing Officer has already rejected the books of accounts under Section 145 of the Act, citing judicial precedents.

The Tribunal, acknowledging the assessee's non-compliance and the AO's basis, and agreeing with the Revenue's prayer, remanded the entire matter back to the AO for fresh adjudication. The AO is directed to provide adequate opportunities to the assessee and pass a fresh order without being influenced by previous findings, while the assessee is instructed to comply with hearings and avoid unnecessary adjournments.

The Income Tax Appellate Tribunal condoned the delay in filing the appeal, acknowledging the medical emergency as sufficient cause under Section 253(5) of the Act. The Tribunal remitted the case back to the CIT(E) for fresh adjudication, directing the assessee to provide complete submissions to all queries.

The ITAT, noting that the assessee did not file an ITR and was non-responsive to AO's notices, allowed the assessee's request for a fresh opportunity. Both the quantum appeal and the penalty appeal were remanded to the CIT(A) for de novo adjudication. The assessee was directed to pay Rs. 10,000/- as cost to the Prime Minister National Relief Fund and make proper submissions to the CIT(A) without seeking adjournments. The CIT(A) was instructed to pass a fresh order uninfluenced by the previous decision.