ITAT Jaipur Judgments — March 2025

The Tribunal held that the approval granted under section 153D of the Act was mechanical and without application of mind, rendering it invalid. Consequently, the entire search assessment was declared illegal and bad in law.

The Tribunal held that once the AO is satisfied with the reasons for reopening and the income initially believed to have escaped assessment is explained, their jurisdiction stops. They cannot tax other income that comes to their notice during the proceedings.

The Tribunal dismissed the revenue's appeal regarding the deletion of additions related to unexplained investment in cash loans, finding no infirmity in the CIT(A)'s order. Similarly, the revenue's grounds concerning unaccounted cash deposits and disallowance of cash payments under Section 40A(3) were also dismissed.

The Tribunal observed that the assessee is an illiterate agriculturist and noted similar transactions by his co-brothers were set aside. It was held that the assessee deserves similar treatment.

The Tribunal decided the issues as follows: Regarding the seized P&L account (Issue 1), the Tribunal allowed the assessee's appeal for AY 2017-18, stating that similar issues for AY 2016-17 were decided in favour of the assessee, and the findings would apply mutatis mutandis. This implies the addition based on the seized P&L account was deleted or modified. Regarding additions for unaccounted sales under Section 68 (Issue 2), the assessee's grounds were allowed for AY 2015-16 and AY 2017-18, indicating that the additions were restricted to profit or deleted. Regarding additions under Section 69C (Issue 3), the assessee's grounds for AY 2015-16 were allowed, suggesting these additions were deleted or modified. Regarding the lump sum surrender (Issue 4), the assessee's ground for AY 2017-18 was allowed, implying no addition could be made on this basis when other additions were already confirmed. Regarding Section 115BBE applicability (Issue 5), the assessee's ground for AY 2017-18 was allowed, meaning the higher tax rate was not applied. Regarding Revenue's Ground No. 1 (unexplained cash loans, Issue 6), the Tribunal dismissed the Revenue's appeal. The reasoning provided by the assessee's counsel, supported by the Tribunal, indicated that the CIT(A) had allowed set-off against undisclosed income, and taxing both income and investment would lead to double taxation. Regarding Revenue's Ground No. 2 (unaccounted cash deposit, Issue 6), the Tribunal dismissed the Revenue's appeal as the CIT(A) had not deleted the addition but confirmed it, albeit with a slight modification, making the Revenue's ground infructuous. Regarding Revenue's Ground No. 3 (Section 40A(3) disallowance, Issue 7), the Tribunal dismissed the Revenue's appeal, finding no infirmity in the CIT(A)'s deletion of the addition based on Rule 6DD(g) and the absence of contrary submissions from the Revenue. The operative direction was that the assessee's appeals were partly allowed, and the Revenue's appeal was dismissed.

The Tribunal held that the assessee failed to provide sufficient evidence to prove his contention regarding the land transaction. The AO's addition of Rs. 42,50,250/- as unexplained investment and the subsequent penalty were upheld.

The Tribunal held that the assessee failed to provide sufficient evidence to prove his contention regarding the land transaction. The AO's addition of Rs. 42,50,250/- as unexplained investment and the subsequent penalty were upheld.

The Tribunal held that the approval granted under section 153D of the Act was mechanical and without application of mind, rendering it invalid. Consequently, the entire search assessment was declared illegal and bad in law.

The Tribunal held that the approval granted under section 153D of the Act was mechanical and without application of mind, rendering it invalid. Consequently, the entire search assessment was declared illegal and bad in law.

The Tribunal held that the scope of Section 153C does not empower the Assessing Officer to make additions beyond what is covered by incriminating material found. The CIT(A)'s order was found to be without infirmity.

The Tribunal decided on the issues as follows: Regarding the P&L account additions (Issue 1), the Tribunal noted that the assessee's contention that the P&L was for bank limit purposes was not explicitly addressed by the lower authorities. However, it found that the addition of Rs. 1.20 crores based on a lump sum surrender for M/s Raja Bricks (AY 2017-18) was made separately from additions based on seized documents. The Tribunal held that when specific additions are made based on seized documents, a separate addition on a lump sum surrender might lead to double taxation. It also noted that the CIT(A) had allowed set-off of investments against undisclosed income, which was more than the investment itself. The Tribunal found no infirmity in the CIT(A)'s order regarding the deletion of additions related to unexplained investment in cash loans (Rs. 65,02,600) for AY 2017-18, stating that both income and investment cannot be taxed to avoid double taxation. The Tribunal dismissed the Revenue's ground on this point. For the addition of Rs. 6,57,000 (unaccounted cash deposit in labour account), the Tribunal held that the CIT(A) sustained the addition based on the cash flow statement, considering it covered, and thus no separate addition was required. The Tribunal found no infirmity in this finding. For the deletion of Rs. 7,08,500 under Section 40A(3), the Tribunal upheld the CIT(A)'s deletion, relying on Rule 6DD(g) and the absence of contrary submissions. The Tribunal held that the addition of Rs. 3,27,370 for alleged unaccounted sales (AY 2017-18) should be restricted to the profit element, not the entire sale, citing various precedents. Similarly, for other unaccounted sales additions, the Tribunal directed that only the net profit rate should be applied. The Tribunal did not find infirmity in the CIT(A)'s decision regarding the P&L account additions for AYs 2015-16 and 2016-17, and the addition of Rs. 12,55,058 for AY 2017-18, as the assessee's explanation regarding cash balance and receipt of advance was not accepted by the CIT(A). The Tribunal also upheld the CIT(A)'s decision to tax additions at 60% under Section 115BBE for AY 2017-18, as the amendment was applicable from April 1, 2017. The operative directions were that the assessee's appeals were partly allowed, and the Revenue's appeal was dismissed.

The Tribunal held that the issuance of a notice under section 153C requires the Assessing Authority to record satisfaction, which must refer to seized material pertaining to or having information with respect to the specific year for which the notice is issued, and that this material must have a bearing on the determination of total income for that year. The Tribunal found that in the present case, the seized material referred to in the satisfaction note pertained to AY 2013-14 and did not quantify or specify any additional income for the years under appeal. There was also no reference to seized material in the satisfaction note concerning the issues on which additions were made in the assessment order. Consequently, the Tribunal concluded that there was no valid satisfaction under section 153C for the years under appeal, rendering the jurisdiction assumed by the AO in issuing the notice under section 153C without basis or authority. The assessment orders were therefore not sustainable. The Tribunal also referred to the Supreme Court's decision in Deputy Commissioner of Income-tax v. U. K. Paints (Overseas) Ltd., which held that assessments under section 153C are rightly set aside if no incriminating material was found. The Tribunal allowed the appeals, setting aside the orders of the CIT(A) and the AO, but noted that it would be open for the Revenue to initiate reassessment proceedings under section 147/148 if permissible under law, as observed by the Supreme Court in Pr. CIT v. Abhisar Buildwell (P.) Ltd.

The Tribunal held that the CIT(A) was correct in deleting the additions made by the AO. The primary reason for the deletion was the invalidity of the notice issued under section 153C of the Act. The Tribunal noted that for a valid notice under section 153C, the AO must record satisfaction, and this satisfaction must refer to seized material pertaining to the specific year for which the notice is issued and must indicate the impact or implication of such material on the determination of total income for that year. In the present case, the seized material referred to in the satisfaction note pertained to AY 2013-14 and did not quantify or specify any additional income for the years under appeal. There was no reference to seized material in the satisfaction note concerning the issue on which additions were made in the assessment order. Therefore, the jurisdiction assumed by the AO in issuing the notice under section 153C was without basis, rendering the notice and subsequent assessment order unsustainable. The Tribunal relied on the Supreme Court decision in Deputy Commissioner of Income-tax v. U. K. Paints (Overseas) Ltd. The Tribunal dismissed all grounds raised by the Revenue and consequently dismissed all appeals. The Tribunal also noted that it would be open for the Revenue to initiate reassessment proceedings in accordance with law if permissible.

The Tribunal allowed the additional grounds raised by the assessee. Specifically, regarding the additional ground concerning the validity of the approval under section 153D, the Tribunal found significant force in the assessee's arguments. It was held that the approval granted by the Additional CIT on December 26, 2019, for 200 cases, including the assessee's, was mechanical and lacked application of mind, given the limited time available and the volume of cases. The Tribunal referred to the Allahabad High Court's decision in PCIT vs. Sapna Gupta, which emphasized that approval under section 153D cannot be a mere formality or a mechanical exercise. The Tribunal also cited the Apex Court's judgment in Union of India v. Rajeev Bansal, highlighting the importance of prior approval to ensure due process. Consequently, the Tribunal concluded that the approval under section 153D was invalid and bad in law, vitiating the assessment order. As the entire search assessment was declared illegal and bad in law due to the invalid approval, the Tribunal deemed it unnecessary to adjudicate the other grounds on merits, as they would be academic. Therefore, all appeals of the assessee were allowed.

The Tribunal held that the scope of Section 153C does not empower the Assessing Officer to make additions beyond what is covered by incriminating material found. The CIT(A)'s order was found to be without infirmity.

The Tribunal dismissed the revenue's appeal regarding the deletion of additions related to unexplained investment in cash loans, finding no infirmity in the CIT(A)'s order. Similarly, the revenue's grounds concerning unaccounted cash deposits and disallowance of cash payments under Section 40A(3) were also dismissed.

The Tribunal held that the addition was made purely on the basis of third-party statements and digital records without corroborative evidence or details of the alleged purchases. The Tribunal relied on a jurisdictional High Court decision stating that additions cannot be made solely on third-party statements.

The Tribunal partly allowed the appeal. It held that additions for unsecured loans amounting to Rs. 79,00,000/- were explained and should be deleted. Interest on TDS was allowed as compensatory, and trading loss was also allowed. However, other grounds were not explicitly detailed in the provided excerpt.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, considering the assessee's prolonged period in judicial custody and other litigations. The quantum appeals were restored to the AO for fresh adjudication, and the penalty appeals were also restored pending the outcome of the quantum appeals.

The Tribunal condoned the delay in filing the appeals, acknowledging the assessee's difficult circumstances. The quantum appeals were restored to the Assessing Officer for fresh adjudication, and the penalty appeals were also restored to await the outcome of the quantum appeals.

The Tribunal held that while the lower authorities had dismissed the appeals on grounds of delay, the ITAT, as a higher appellate forum, has the power to condone such delays if sufficient cause is shown. The Tribunal acknowledged the assessee's difficult circumstances, including prolonged judicial custody, bail conditions restricting his movement, and subsequent re-arrest, which demonstrably prevented him from actively pursuing his appeals. The Tribunal found that these were valid reasons for the inordinate delays. Consequently, the Tribunal condoned the delays in filing the appeals. Regarding the quantum appeals, the Tribunal noted that the assessee was ex-parte before the AO and CIT(A) and could not present his defense. To ensure that the lis between the parties is decided on merits and to provide the assessee an opportunity of being heard, the quantum appeals were restored to the file of the AO for fresh adjudication, with a direction to provide adequate opportunity of hearing and consider the mental agony of the assessee. The Tribunal clarified that this decision did not reflect on the merits of the dispute. As the fate of the penalty appeals was dependent on the quantum appeals, the penalty appeals were also restored to the file of the AO to act in accordance with law, following the decision on the quantum appeals. The appeals were allowed for statistical purposes.

The Tribunal held that the CIT(Exemption) had erred in cancelling the registration granted to the assessee under Section 12A of the Income Tax Act, 1961. The Tribunal found that the CIT had not properly considered the explanation offered by the assessee and had proceeded on assumptions without sufficient evidence. The Tribunal noted that the alleged diversion of funds and deviation from charitable objects were not conclusively proven. The Tribunal emphasized the importance of providing a fair opportunity to the assessee to explain any alleged discrepancies before taking such a drastic step as cancellation of registration. The Tribunal reasoned that the CIT's order lacked the necessary factual basis and legal justification. Therefore, the Tribunal set aside the order of the CIT(Exemption) and directed the restoration of the registration granted to the assessee. The issue of whether the trust had violated its objects or diverted funds was not decided on merits, but the cancellation was quashed on procedural grounds.

The Tribunal held that the interest income earned by the assessee from fixed deposits with a cooperative bank is not eligible for deduction under Section 80P of the Income Tax Act, 1961. The Tribunal reasoned that Section 80P(2)(a)(i) allows deduction for income derived from the business of a cooperative society, which includes carrying on the business of banking or providing credit facilities to its members. The assessee, being a builder and developer, does not carry on the business of banking or providing credit facilities. The interest income earned from fixed deposits, even if from a cooperative bank, is essentially income from investment and falls under the head 'Income from Other Sources'. The Tribunal noted that the assessee's reliance on the M/s. Totgars Cooperative Sale Society Ltd. case was misplaced, as that case dealt with a cooperative society itself claiming deduction on interest income earned from its surplus funds invested. In this case, the assessee is not a cooperative society. Therefore, the disallowance of the deduction of Rs. 1,20,000/- by the AO and upheld by the CIT(A) was confirmed. The operative direction was to dismiss the appeal.

Regarding Ground No. 1, challenging the initiation of proceedings under Section 147 read with Section 148, the Tribunal found that no new facts or submissions were presented by the assessee to controvert the findings of the lower authorities. Therefore, the invocation of proceedings under Section 147 read with Section 148 was upheld, and this ground was dismissed. Concerning Ground No. 2, the addition of Rs. 4,50,000/-, the Tribunal noted a discrepancy in the AO's assessment order regarding the filing of the return. However, upon perusing the documentary evidence furnished by the assessee, including salary statements, bank statements, balance sheets, contract notes, and ledger accounts, the Tribunal was convinced that the assessee had a proper source for the investment of Rs. 4,50,000/- in shares. The Tribunal found that the broker had issued a contract note, and the payment was verifiable from the assessee's bank statement, with the source of funds being a receipt from S.R. Proteins P Ltd. The Tribunal concluded that the addition was not sustainable and directed its deletion. Ground No. 2 was allowed. As the issue of interest under Sections 234A, 234B, and 234C was not separately addressed in the operative part of the judgment after the allowance of Ground No. 2, it is considered implicitly resolved by the deletion of the addition. The appeal was partly allowed.

The Tribunal noted that the assessee's explanation regarding the source of funds (NBFC, RIICO, directors) was not provided to the authorities below and was vague in the affidavit. The Tribunal also observed that the conversion of the company to an LLP on 26.05.2015, with payments spanning two financial years (FY 2014-15 and FY 2015-16), was not properly disclosed. The Tribunal considered the assessee's legal ground that assessment cannot be done in the name of a non-existing entity, relying on the Supreme Court's decision in PCIT vs. Maruti Suzuki India Ltd. The Tribunal found that half of the payment pertained to the preceding year, and the entire addition could not be made in the current year. Therefore, the matter was restored to the AO to re-examine the addition, giving the assessee a proper opportunity to be heard and to produce documents substantiating identity, genuineness, and creditworthiness of creditors under section 68. The assessee was directed to cooperate without seeking adjournments. The grounds were partly allowed for statistical purposes.

The Tribunal held that the appeals filed before the CIT(A) were significantly delayed and the appellant failed to provide sufficient cause or documentary evidence to justify the delay. Consequently, the appeals were dismissed.

The Tribunal held that while the assessee did not provide satisfactory explanations for non-participation in appeal proceedings, considering the serious nature of allegations and the issues involved, another opportunity should be granted for effective adjudication. The appeal was disposed of for statistical purposes, and the matter was remanded to the CIT(A).

The Tribunal held that non-registration under the Rajasthan Public Trust Act, 1959, is not an essential requirement for registration under Section 12AB of the Income Tax Act, and the trust has since obtained the registration. Regarding the second ground, the Tribunal found that the appellant trust was not given sufficient time to respond to the show cause notice.

The Tribunal held that the appeals filed before the CIT(A) were significantly delayed and the appellant failed to provide sufficient cause or documentary evidence to justify the delay. Consequently, the appeals were dismissed.

The Tribunal held that while Section 54F was not applicable as the property was leased to a bank, the assessee could claim deduction under Section 54. The AO was directed to allow the claim under Section 54 after verification.

The Tribunal restored the appeal to the CIT(A) for a decision on merits, allowing the condonation of delay. However, the assessee was burdened with costs of Rs. 5,000/- due to non-diligence in filing the appeal within the prescribed limitation period.

The Tribunal condoned the delay in filing the appeal. Following a coordinate bench decision and Supreme Court pronouncements, the Tribunal held that the assessee is entitled to claim exemption under section 54 to the extent of investment made up to the date of filing the belated return.

The Tribunal held that the Khasra Girdawari entries corroborated the assessee's claim of agricultural activities on the land for the relevant period. The department failed to provide contrary evidence, thus the CIT(A)'s decision was justified.

The Tribunal found a significant procedural lapse by the CIT(A) in accepting additional evidence without following Rule 46A and noted inconsistencies in the assessee's conduct. The Tribunal set aside the CIT(A)'s order and remanded the matter for fresh adjudication.

The assessee, during the hearing, prayed for withdrawal of both appeals. The Revenue had no objection to the withdrawal. Although the delay was not condoned, the appeals were dismissed as withdrawn by the assessee.

The Tribunal noted that the exemption limit for leave encashment was revised to Rs. 25,00,000 by CBDT notification. Therefore, the assessee is eligible for the full claimed amount of Rs. 9,60,409.

The assessee, having opted for the Vivad Se Vishwas Scheme 2024, sought to withdraw the cross-objection. The Tribunal allowed the withdrawal of the cross-objection. The Department's appeal was dismissed as indicated.

The Tribunal held that the AO had not rejected the books of accounts and therefore, could not disallow cash deposits merely on suspicion of huge sales on a single day. The availability of opening stock was undisputed, and the assessee had made a disclosure under PMGKY for certain discrepancies.

The Tribunal held that the AO's approach of treating the surrendered income as business income was a plausible view, even if another view was possible. Therefore, the twin conditions of Section 263 (erroneous and prejudicial to revenue) were not met.