ITAT Jodhpur Judgments — June 2025

The ITAT upheld the CIT(A)'s decisions, ruling that belated filing of Form 10CCB before assessment completion constitutes substantial compliance, relying on Supreme Court precedents for liberal interpretation of beneficial provisions. The Tribunal also affirmed that income tax authorities cannot interfere with genuine business decisions like discount expenses for a new hospital, dismissing the disallowance. Lastly, it confirmed that the other incomes were integrally related to the hospital's specified business, thus allowing the set-off of losses.

The Tribunal deleted the additions of Rs. 33,47,041/- for unaccounted interest income, Rs. 71,94,000/- for unaccounted income from loose papers, and Rs. 5,04,06,700/- from a diary, categorizing them as "dumb documents" lacking corroborative evidence. The addition of Rs. 2,27,23,474/- for unexplained investment in gold jewellery was also deleted, recognizing it as 'streedhan' or customarily acquired property, noting the AO failed to provide contrary evidence. However, an addition of Rs. 78,000/- for rental income was upheld as the assessee could not substantiate its claim of not receiving rent.

The Tribunal noted that the property was a commercial asset specifically designed for business, and the income derived from its exploitation was business income. The assessee's claim for depreciation on such assets was deemed in order, aligning with the business definition and Supreme Court precedents.

The Tribunal held that the CIT(A) was justified in allowing the deduction claimed under Section 35AD. The Tribunal noted that while the online filing of the report was delayed, it was submitted before the final assessment order. Reliance was placed on judicial pronouncements that allow deductions even if the audit report is filed late, provided it is before the completion of assessment. Regarding the disallowance of discount expenses, the Tribunal found no infirmity in the CIT(A)'s order, considering the initial years of operation and the discretion of the assessee in business expenses. The ground related to set off of losses of specified business against other income for AY 2017-18 was also rejected.

The Tribunal noted that the assessee provided cash books emphasizing regular cash deposits from cash sales and that the AO and CIT(A) had not doubted most of these deposits. The Tribunal found the CIT(A)'s inference that VAT orders did not prove justification for cash sales to be insufficient. Relying on the principle of consistency and the evidence presented, the Tribunal held that the CIT(A)'s order was perverse.

The Tribunal observed that the CIT(A) did not appreciate the facts of the case on merits. It was noted that the Assessing Officer himself accepted the cash deposited in the form of non-SBN as trade receipts. The Tribunal found that the deposits made during the demonetization period were out of trade receipts and duly recorded in the assessee's books, and the CIT(A) erred in sustaining the addition.

The Tribunal held that the Assessing Officer (AO) had conducted a thorough inquiry during the assessment proceedings, applying his mind to the issues raised by the assessee. The AO had taken a considered view in accepting the assessee's explanations regarding the depreciation claim and the expenses. Therefore, the assessment order was not erroneous or prejudicial to the interest of the revenue. The invocation of Section 263 was deemed unjustified.

The Tribunal dismissed all revenue appeals, upholding the CIT(A)'s decision to allow the section 35AD deduction. It ruled that belated filing of Form 10CCB before assessment completion was not fatal, citing judicial precedents. The Tribunal also confirmed the deletion of disallowance for discount expenses, recognizing the assessee's business discretion. Furthermore, it agreed that the other income sources were related to the hospital business and thus eligible for set-off against specified business losses.

The Tribunal held that the assessee, a retired government employee with a spouse also in service, had accumulated savings from their combined salaries. The withdrawal of Rs. 16,81,500/- from his bank account over a period of time, from which the cash deposit was made, was supported by bank statements and salary records. The AO failed to provide material to disprove the assessee's explanation or to show alternative use of the withdrawn funds.

The Tribunal held that the reopening of assessment under Section 147 was invalid because the notice was issued beyond the four-year period prescribed from the end of the assessment year. Furthermore, the reasons recorded by the AO did not demonstrate a failure on the part of the assessee to disclose full and true material facts. The Tribunal also noted that the INS guidelines were not binding on the assessee and that the original assessment under Section 143(3) had accepted the assessee's books of accounts.

The Tribunal noted that the seized documents relied upon by the lower authorities had no evidentiary value. The rent deeds, which were notarized and evidenced by independent witnesses, clearly indicated a rent of Rs. 80,000/- per month. The declaration by Harsh Bhawnani also supported this rent amount.

The Tribunal ruled that the reassessment proceedings were void ab-initio due to the AO's failure to properly serve the notice under Section 148, which is a mandatory jurisdictional requirement, and the department could not provide proof of service. It criticized the CIT(A) for setting aside the case instead of deciding on its merits, especially since the assessee had provided sufficient evidence. Therefore, the Tribunal deleted the addition of Rs.1,75,20,300/- made by the AO.

The Tribunal held that the penalty order was passed beyond the limitation period prescribed under section 275 of the IT Act, 1961. The initiation of penalty proceedings was considered to be the date of the assessment order where the reference to the Joint Commissioner was made.

The Tribunal held that the approval under Section 153D of the Act is a mandatory requirement and cannot be granted mechanically without application of mind. The Addl. CIT's approval was found to be a hollow approval, lacking objectivity and proper consideration of the case material, rendering the assessment orders illegal and void ab initio.

The Tribunal upheld the CIT(A)'s order, rejecting all three grounds of the revenue's appeal. It found that the assessee had provided sufficient evidence for sales, bank deposits, and the genuineness of unsecured loans, and mere non-response to notices under section 133(6) did not disprove the documentation. The Tribunal emphasized that treating amounts already declared as sales as cash credit under section 68 would lead to an impermissible double addition.

The Tribunal noted that the assessee claimed the bank accounts were not opened by him but by a third party, Mr. Bharat Bomb, by misusing his KYC. Evidence, including an FIR and a CBI investigation, indicated that Mr. Bharat Bomb had fraudulently opened accounts in various names. The Tribunal found that the assessee had satisfactorily proved that the bank accounts were not opened by him and that his name and KYC were misused.

The Tribunal held that the CIT(E) acted in a hurried and irrational manner by rejecting the application without appreciating the merits and genuineness of the trust's activities. The Tribunal considered it fit to remand the matter back for fresh adjudication.

The Tribunal held that goodwill is an asset under Explanation 3(b) to section 32(1) and eligible for depreciation. The decision of the CIT(A) was based on correct interpretation of law and followed established judicial precedents, including the Supreme Court's decision in Smifs Securities Ltd. v. CIT.

The Tribunal held that the CIT (Exemption) acted in a hurried and irrational manner by rejecting the applications solely based on the pending RPT Act registration. The Tribunal also noted that the issue of the genuineness of activities is not relevant at this preliminary stage, as the trust is yet to commence its activities. The matter was remanded back to the CIT (Exemption) for fresh adjudication.

The Tribunal held that the CIT (Exemption) acted in a hurried and irrational manner. The Rajasthan Public Trust Act registration was pending at the time of rejection and was granted shortly after. The issue of genuineness of activities was deemed premature as the trust had not yet commenced activities.

The Tribunal found that the CIT(A) had acted in violation of principles of natural justice by confirming the assessment order passed ex-parte without proper consideration of the assessee's case. The Tribunal noted that the AO adopted stamp duty value without addressing the assessee's claims.

The Tribunal held that the approval under Section 153D of the Act is a mandatory requirement for search assessments and cannot be granted mechanically. The approval granted by the Additional CIT was found to be perfunctory and lacking application of mind, thus vitiating the assessment orders.

The Tribunal held that the approval granted under Section 153D of the Act was mandatory and required due application of mind by the approving authority. The approval in this case was granted mechanically and without proper scrutiny, thus vitiating the assessment orders. The assessment orders were therefore held to be illegal and void ab initio.

The Tribunal held that the approval granted under Section 153D was mechanical and lacked due application of mind, making the assessment orders illegal and void ab initio. The Tribunal relied on Supreme Court and various High Court judgments to support this finding.

The CIT(A) partly allowed the appeal, deleting the addition of Rs. 30,00,000/-. However, the CIT(A) upheld the addition of Rs. 1,25,00,000/-, primarily relying on the assessee's statement made during the survey, despite the assessee retracting the same. The Tribunal, per contra, noted that statements recorded under section 133A lack evidentiary value without corroborative material.

The Tribunal held that the income surrendered during the survey should be taxed as normal business income and not under Section 115BBE. The reasons for the survey selection were also questioned. The Tribunal found that the AO wrongly invoked deeming provisions and taxed the income at a special rate.

The Tribunal held that the assessee had provided sufficient evidence regarding the source of cash deposits as business sales, which were duly recorded in the books of account. It also noted that the AO had not rejected the books of account. For unsecured loans, the assessee provided confirmations, and the onus shifted to the AO to prove otherwise, which was not done.

The Tribunal held that no additions could be made u/s 153A without incriminating material found during the search. The documents recovered pertained to Harsh Hospitality, not the assessee. The addition was based on presumption and not on concrete evidence linking the rental income to the assessee. Therefore, the addition sustained by the CIT(A) was set aside.

The Tribunal held that the appellant had demonstrably proved that the bank account and portfolio of assets were owned by the BWR Trust and not by the appellant in her individual capacity. The Tribunal found that the source of funds was adequately explained and established the existence of the Trust and its ownership of the assets. Furthermore, the Tribunal found that the invocation of Section 153A was not justified in the absence of incriminating material found during the search.

The Tribunal held that the reassessment proceedings were validly initiated as the reasons recorded by the AO were based on specific, credible, and tangible material. The Tribunal also found that the assessee failed to prove the genuineness of the transactions and the creditworthiness of the investors, especially when the entities involved were identified as entry operators. The court ruled that mere production of documents is not sufficient to discharge the burden under section 68 if the transaction lacks commercial rationale and substance.

The tribunal noted that the AO/CPC disallowed TDS credit due to a mismatch between total receipts in the ITR and Form-26AS. The assessee, a 'Kaccha Arhatia', acts as an agent. The tribunal referred to CBDT Circular No. 452 of 1986 and previous decisions.

The Tribunal held that the reassessment proceedings were validly initiated as the reasons were based on specific, credible, and tangible material, including the statement of an entry operator. The assessee failed to prove the genuineness of the share capital transactions and the creditworthiness of the investors, especially since the entities were identified as shell companies used for accommodation entries. The additions made were justified.

The Tribunal noted that the CIT (Exemption) acted in a hurried and irrational manner by rejecting the application without considering the submission on the genuineness of activities. The Tribunal found that the assessee had a good and arguable case for registration and, in the interest of natural justice, decided to remand the matter back to the CIT (Exemption) for fresh adjudication.

The Tribunal noted that as per CBDT Circular No. 452/1986, a 'Kachha Arhatiya' acts as an agent and only their commission is considered turnover, not the sale value of the crop. The Tribunal directed the AO to examine and verify the contents of Form 26AS and grant credit for TDS mismatch, if any, after considering that the TDS was deducted on the farmer's sale and not the assessee's turnover.

The Tribunal held that a 'Kachha Arhatia' acts as an agent, and only the gross commission is to be considered for turnover computation. The assessee is entitled to credit of TDS deducted, and any mismatch should be resolved by verifying Form 26AS and rectifying TDS statements.

The Tribunal noted that the assessment orders were passed ex parte without providing adequate opportunity for hearing. The AO and CIT(A) did not address the merits of the case concerning the source of funds being sale proceeds of agricultural land.

The Tribunal observed that the AO did not provide specific reasons or comparable cases to justify the higher GP rate of 20.92%, especially considering the perishable nature of fruits and the increase in turnover. The Tribunal held that the AO was not justified in estimating the profit at 20.92% without proper justification.

The Tribunal noted that the CIT(A) dismissed the appeal for want of prosecution without following the mandatory procedure of formulating questions and recording reasons. The Tribunal set aside the CIT(A)'s order.

The Tribunal held that the authorities below had passed orders ex parte without granting adequate opportunity of hearing to the assessee. The case was remanded back to the Assessing Officer (AO) for a de novo assessment, requiring the AO to issue a Show Cause Notice and pass a reasoned order after considering all evidence.

The Tribunal held that the authorities below failed to address the merits of the case and confirm the addition ex parte without granting the assessee adequate opportunity for a hearing. Relying on the principles of natural justice and Supreme Court pronouncements, the Tribunal decided to restore the matter for fresh consideration.

The Tribunal condoned the delay in filing the appeal. It held that the surrendered income, including Rs. 25 lacs for excess stock, had a direct nexus with the assessee's business operations and should be treated as business income, not deemed income under sections 69/69A/69B/69C, rendering section 115BBE inapplicable. Consequently, the Tribunal deleted the additions for excess stock, disallowed expenses (Rs. 10,67,531/- and Rs. 4,21,933/-), and the addition for rental income (Rs. 48,000/-), directing the AO to tax the income at normal rates.

The Tribunal condoned the delay in filing the appeal. However, after considering the facts and the ruling of the Apex Court in the case of Checkmate Services (P.) Ltd., the Tribunal found no reason to interfere with the impugned order.

The Tribunal held that the authorities below erred by passing ex-parte orders without granting the assessees a reasonable opportunity of being heard. The Supreme Court's observation in the Tin Box Company vs. CIT case was cited, emphasizing that assessment orders must be made after providing an adequate opportunity for the assessee to present their case.

The Tribunal noted that the AO and CIT(A) failed to address the merits of the case and made decisions ex parte without providing adequate opportunity to the assessee. The Tribunal emphasized the importance of the principles of natural justice and the right to a fair hearing.

The Tribunal observed that the assessment and appellate authorities had passed orders ex parte without appreciating the facts and without granting adequate opportunity to the assessee. Reliance was placed on Supreme Court and High Court judgments emphasizing the right to a fair hearing.

The Tribunal accepted the assessee's request for withdrawal. The Tribunal noted that the assessee had filed an application to withdraw the appeal, citing that it did not qualify under Section 253 of the Act.

The tribunal held that the appeals were decided ex-parte by the Ld.CIT(A) without properly considering the assessee's submissions and evidence, leading to a denial of natural justice. Therefore, the interest of justice would be served by remanding the matters back to the Ld.CIT(A) for fresh adjudication.

The Tribunal held that the assessee should be given a reasonable opportunity of hearing before the CIT(A) for submitting arguments, as the appeal decision was made without considering the assessee's evidence. This denial of opportunity constitutes a violation of natural justice.

The Tribunal found that the CIT(A) erred in dismissing the appeal ex-parte without ensuring proper service of notice. The Tribunal emphasized that appeals should be decided on merits after giving an opportunity of being heard.