ITAT Jodhpur Judgments — May 2025

The Tribunal held that rejection of an application for contravening Section 13(1)(c) or 12A(4) is not a sufficient reason for cancellation of registration under Section 12A. The Ld.CIT(E) did not doubt the genuineness of the trust's activities, and the issue was only regarding benefit to a specified person. The matter was remanded for further verification.

The ITAT held that the CIT(A)'s power to enhance income under Section 251(1)(a) is strictly limited to matters that were part of the assessment record and expressly or implicitly considered by the Assessing Officer. Since the addition related to silver was a new source of income not dealt with by the AO in the original assessment orders for AY 2014-15 and 2016-17, the CIT(A) acted beyond its jurisdiction. The Tribunal emphasized that new sources of income, if any, should be addressed through remedial provisions like Sections 147, 154, or 263 of the Act.

The Tribunal held that the assessee had submitted relevant documents, including an affidavit and agricultural land records, to support the claim of agricultural income. The Tribunal found that the quantification of income was an issue due to co-ownership.

The Tribunal observed that the assessee, operating under Section 44AD, was not obligated to maintain books of account and that the realization of sundry debtors was a part of his business. Since the Assessing Officer had not rejected the affidavits regarding the sources of funds, the Tribunal concluded that the addition made for unexplained investment was unjustified and deleted it.

The Tribunal held that the CIT(A) erred in enhancing the assessee's income by introducing new issues (undisclosed silver) that were not germane to the original assessment orders for AY 2014-15 and 2016-17. Citing Supreme Court precedents, the ITAT affirmed that the CIT(A)'s power of enhancement under Section 251(1)(a) is restricted to matters considered by the Assessing Officer, and does not extend to discovering new sources of income not previously dealt with. Therefore, the additions made by the CIT(A) based on such enhancement powers were deleted.

The Tribunal noted that the assessee, an elderly lady, had sufficient cash balance as per her cash flow statement and cash book. Relying on a coordinate bench's decision in a similar case, the Tribunal held that the advanced age of the assessee and her demonstrated habit of preserving savings made the holding of cash to the extent of Rs. 10,79,484/- not questionable.

The Tribunal observed that the AO's assessment was slipshod and lacked independent inquiry, including not examining the seller. The assessee provided evidence, including bank statements, to prove the transaction was not theirs. The Tribunal also criticized the CIT(A)'s approach of setting aside the case without deciding the issues.

The Tribunal noted that the assessee raised a legal ground regarding the denial of natural justice, as the appellate order was passed before a remand report was provided. Consequently, the Tribunal decided to remand the matter back to the CIT(A) for a fresh decision.

The Tribunal found that the orders of the CIT(E) were passed ex-parte without considering the assessees' submissions. It was noted that the assessees had subsequently obtained the required registration under the Rajasthan Public Trust Act and the Societies' Act. The Tribunal decided to remand the matters to the CIT(E) for fresh adjudication.

The Tribunal held that since the assessee maintained proper books of accounts and the cash deposits were recorded therein, the conditions for invoking Section 69A were not met. The AO had not rejected the books of accounts and failed to provide concrete evidence that the realization from debtors was bogus. Consequently, the addition made by the AO and confirmed by the CIT(A) was deemed erroneous and was directed to be deleted. The additional ground regarding the applicability of the tax rate under Section 115BBE became academic.

The Tribunal held that the PCIT erred in invoking Section 263, as the issues raised had already been duly examined by the Assessing Officer during both the Section 153A and Section 148 proceedings. Given the thorough scrutiny, the assessment order could not be deemed erroneous or prejudicial to the interest of the revenue. Consequently, the Tribunal quashed the PCIT's order under Section 263, finding it perverse to facts and bad in law.

The Tribunal acknowledged the assessee's severe illness and inability to comprehend notices, which led to ex-parte orders and a denial of natural justice. Therefore, the interest of justice would be served by remitting the matters back to the Ld. CIT(A) for a fresh adjudication.

The Tribunal noted that the NFAC rejected the appeal ex parte without specifying the service of notices under section 250. Recognizing the assessee's arguable case and principles of natural justice, the order was set aside. The matter is remanded to the CIT(A)/NFAC for fresh adjudication on merits, granting the assessee a full opportunity to present their case and evidence.

The Tribunal acknowledged that the assessee was ex-parte before the AO and CIT(A) and could not put forth their defence. While noting the assessee's lethargic approach, the Tribunal emphasized the importance of deciding the lis on merits and restoring the matter to the AO to provide one more opportunity of hearing, with a cost of Rs. 2,000/- imposed on the assessee.

The Tribunal held that the assessee has now complied with the provisions of Section 12AB(1)(b)(i)(B) of the Act by obtaining the valid registration certificate. The CIT(E) is directed to give the assessee a reasonable opportunity to submit this certificate.

The Tribunal held that inadequate opportunity to the assessee is a violation of principles of natural justice. Relying on the Supreme Court judgment in Tin Box Company vs. CIT, the Tribunal stated that an assessment order must be made after giving a reasonable opportunity to the assessee.

The Tribunal held that the proportionate disallowance of TDS credit is bad in law when receipts are part of business income and reflected in Form 26AS. The matter is restored to the AO to examine Form 26AS and give credit for TDS mismatch, ensuring it's subject to Section 199 and Rule 37BA.

The Tribunal accepted the assessee's grievance as genuine and condoned the delay in filing the appeal before both the CIT(A) and the Tribunal. Considering the peculiar facts of the case and the interest of justice, the matter was restored to the CIT(A) for fresh adjudication on merits.

The Tribunal condoned the delay in filing the appeal, finding the reasons to be bonafide. It was held that the assessee had correctly filed the return under section 44AD as books of account were not maintained. The department failed to establish that the bank deposits were unexplained income.

The Tribunal noted that as per CBDT Circular No. 452 of 1986, a 'Kaccha Arhatia' acts as an agent, and only the gross commission is considered turnover, not sales on behalf of principals. The Tribunal found that the lower appellate authority (JCIT(A)) did not fully appreciate the facts and restored the matter to the AO. The AO was directed to examine Form 26AS and give credit for TDS mismatch, if any, after verification, subject to provisions of Section 199 and Rule 37BA.

The Tribunal held that the AO was not justified in rejecting the books of account and invoking section 145(3) without pointing out specific discrepancies. The reliance on a comparable case with a higher GP rate was also found to be incorrect, especially as the assessee was a wholesaler and the comparable was a retailer. The application of section 115BBE was also deemed inappropriate as the additions were not made under sections 68 or 69.

The Tribunal held that the AO invoked Section 145(3) based on a misconception of law without appreciating facts or pointing out specific discrepancies in the books of account. The GP rate of 12.24% declared by the assessee was considered reasonable given the past history and nature of business (wholesale). The addition based on a higher GP rate and the invocation of Section 115BBE were found to be not in conformity with the law.

The Tribunal held that the Ld. CIT(A)'s dismissal of the appeal on grounds of non-compliance with section 249(4)(a) was not justified. However, the assessee was unable to substantiate claims made before the Ld. CIT(A) regarding additions by the AO.

The Tribunal held that the ex-parte order by the CIT(A) was a violation of the principles of natural justice as it was passed without adequately proving the service of hearing notices and providing the assessee an opportunity to present their case. The Tribunal referred to the Supreme Court's ruling in Tin Box Company vs. CIT, emphasizing the need for a reasonable opportunity of being heard.

The Tribunal held that the AO made the addition without considering the assessee's submissions and that the lower authorities acted in violation of natural justice. The Tribunal found that the total cash available to the assessee was sufficient to explain the disputed deposit.

The Tribunal found the CIT(A)/NFAC's observation contradictory regarding the treatment of Bitcoin trading income. It was held that for business profit from trading activity, tax is chargeable at normal rates. The addition made by the AO u/s 69 of the Income Tax Act was restricted to Rs. 2,49,364.

The appellate tribunal held that the CIT(A) ought to have adjudicated the appeal on merits after ensuring proper service of notice and providing an adequate opportunity to the assessee. Relying on Supreme Court precedent, the tribunal emphasized the importance of the 'opportunity of being heard'.

The Tribunal observed that while the assessee did not comply with the notices, the repeated notices for the same information should not multiply the default. They relied on previous judgments to support the view that penalty should be restricted to one default.

The Tribunal dismissed grounds challenging the validity of search proceedings and assessment under sections 153A/132/143(2). However, it held that the additions made by the AO for alleged underreporting of sales and extra business receipts for all assessment years were illegal and invalid. The Tribunal concluded that the AO failed to invoke specific provisions of the IT Act, made additions based on assumptions without rejecting the books of accounts, and did not provide cross-examination, thus violating natural justice. Consequently, Ground No. 3 for A.Y. 2013-14 to 2016-17 and Ground Nos. 3&4 for A.Y. 2015-16 to 2016-17 were allowed, and the corresponding additions were deleted.

The Tribunal noted that the AO did not invoke any specific provisions of the Income Tax Act for making the additions and did not reject the books of accounts. Relying on various judicial pronouncements, the Tribunal held that additions cannot be made merely on suspicion, assumption, or presumptions without cogent material evidence and proper application of law. The Tribunal found the additions made by the AO to be illegal and deleted them.

The Tribunal noted that the AO did not invoke any specific provisions of the Act while making the additions. It was held that the AO's actions were contrary to the facts of the case and the principles of natural justice. The Tribunal also observed that the AO relied on seized documents without proper verification and did not provide an opportunity for cross-examination. The Tribunal cited various judgments to support its findings.

The Tribunal ruled that the additions made by the Assessing Officer were unsustainable because specific provisions of the Income Tax Act, 1961, were not invoked. It was observed that the additions were based on assumptions and presumptions from seized documents, without rejecting the books of accounts under Section 145(3) or providing corroborative evidence. Citing various judicial precedents, the Tribunal emphasized that additions cannot be made based on suspicion without legal justification or proper procedure. Consequently, the Tribunal deleted the additions made by the AO and confirmed by the CIT(A) for all assessment years.

The Tribunal considered the jurisdictional issue regarding the notice u/s 148 and found it valid as the AO had applied his mind to the gathered information and formed a reason to believe in escapement of income. However, for additions related to bank deposits, consultancy income, and intraday trading profits, the Tribunal found procedural defects or insufficient evidence and set aside these issues for fresh adjudication.

The Tribunal held that the jurisdictional issue regarding the issuance of notice u/s 148 by the ACIT was valid, as the ACIT had applied his mind to the information and formed a reason to believe that income had escaped assessment. However, regarding the additions made, particularly the addition on account of estimated consultancy income and the addition on account of intraday trading profits, the Tribunal found procedural defects.

The assessee requested to withdraw the appeal as they have opted for settlement under the Vivad Se Vishwas Scheme. The DR had no objection to the withdrawal.

The appeal was filed by the assessee against an order of the Commissioner of Income Tax (appeals). The assessee sought to withdraw the appeal due to settling the dispute under the Vivad Se Vishwas Scheme. The DR had no objection to the withdrawal.

The Tribunal found that the CIT(A) had rejected the appeal ex-parte, violating principles of natural justice. The court noted that the assessee's delay in filing the appeal was due to genuine reasons and condoned it.

The Tribunal noted that the assessee had furnished Form 1 and 2 for settlement under the Direct Tax Vivad Se Viswas Scheme, 2024. The DR had no objection to the withdrawal request.

The tribunal held that the notice issued under Section 148 to a non-existent firm, after all its partners had died, was without jurisdiction and invalid. It was noted that the Assessing Officer failed to implead all legal heirs as per Section 189(3) of the IT Act and did not pass a speaking order on the objections raised by the assessee regarding the validity of the notice. Citing Supreme Court precedents, the tribunal concluded that the assessment proceedings initiated on such an invalid notice are illegal and void.

The Tribunal noted that the assessment was completed ex-parte due to the assessee's non-compliance. However, considering the substantial additions and the fact that the assessee had now submitted relevant documents and pleaded for a final opportunity, the Tribunal decided to restore the matter to the AO for de novo adjudication.

The Tribunal held that the notice issued under Section 148 to a non-existent firm, whose all partners had died, was invalid. The Assessing Officer failed to pass a speaking order on the assessee's objections and did not implead all legal representatives as required by Section 189(3). Consequently, the reassessment proceedings and the notice were quashed, rendering them illegal and void.

The Tribunal held that a notice issued under section 148 to a non-existent firm after the death of all its partners is invalid. The Assessing Officer failed to pass a speaking order on the assessee's objections and did not implead all legal heirs as mandated by section 189(3) of the Income Tax Act, 1961. Therefore, the reassessment proceedings and the subsequent orders by the CIT(A) were quashed.