ITAT Jodhpur Judgments — July 2025

The Income Tax Appellate Tribunal (ITAT) remanded the matter back to the AO. The AO is directed to re-examine the Form 26AS and ITR, verify the assessee's status as a 'Kachha Arhatia' (pure agent) in accordance with CBDT Circular No. 452 of 1986, and allow full TDS credit if the corresponding income has been offered for taxation and the assessee substantiates their claim with documentary evidence. The assessee is to be given an opportunity to reconcile any mismatches by filing an updated TDS statement.

During the pendency of the appeal, the assessee sought withdrawal due to opting for the Direct Tax Vivad Se Vishwas Scheme, 2024. The department had no objection to the withdrawal.

The Tribunal noted that the document from 1997 indicated permission for trade as a "Joint" trader, and the categories for commission agent were struck out. Furthermore, the assessee's income as a commission agent could not be clearly deciphered or segregated from trading income in the ITR and other submissions. The Tribunal found that the CIT(A) had not properly verified or discussed the material submitted by the appellant.

The Tribunal noted that the certificate of the Krishi Upaj Mandi Samiti indicated the assessee was acting as a trader. However, the assessee claimed to be a Kachha Adatiya. The Tribunal restored the matter to the AO to examine Form 26AS and give credit for TDS mismatch, allowing the assessee an opportunity to provide further documentation.

The CIT(A) rightly dismissed the appeals as not maintainable because the appeals were filed against the wrong orders. The Tribunal noted that the assessee's counsel made a mistake in not challenging the correct penalty orders.

The Tribunal noted that the registration under the Rajasthan Public Trust Act, 1959, was obtained after the rejection order, and therefore, it could not be considered for the application. However, the Tribunal allowed the assessee liberty to file a fresh application for provisional registration, with a direction to the CIT to condone the delay.

The CIT(A) was justified in dismissing the appeals as not maintainable because the assessee failed to challenge the correct penalty orders before the appellate authority. The Tribunal noted that the counsel for the appellant admitted this as a mistake.

The Tribunal noted that the assessee is required to substantiate their claim of being a Kachha Arhatia with documentary evidence. The certificate from the Krishi Upaj Mandi Samiti indicated business as a trader, not exclusively a commission agent. The matter was restored to the AO to examine Form 26AS, verify the TDS mismatch, and give credit if the corresponding income was offered for taxation.

The Tribunal noted that the appellant had applied for registration under the RPT Act during the pendency of the Section 12AB application, though it was still pending. A prior decision by a Coordinate Bench held that registration under RPT Act is not an essential requirement for Section 12AB registration. The Tribunal found the delay in filing the appeal to be for a sufficient cause.

The Tribunal held that the AO/CPC incorrectly disallowed the full TDS credit. The AO was directed to examine the Form 26AS, verify the TDS claim against the assessee's status as a Kachha Adatiya, and allow credit for any TDS mismatch after due verification. The assessee was given an opportunity to rectify TDS statements.

The Tribunal noted that the assessee requested to withdraw the appeal, and the Departmental Representative had no objection. The Tribunal accepted the assessee's request as genuine.

The assessee has opted for the benefit under the Direct Tax Vivad Se Viswas Scheme, 2024, and has furnished the necessary documents. The Departmental Representative has no objection to the assessee's request for withdrawal of the appeal.

The Tribunal observed that the AO/CPC did not correctly appreciate the facts and the nature of a 'Kachha Arhatia's' business. They noted that the appellant claimed to be a middleman, and as per CBDT circulars, only commission should be considered as turnover, not the sale value of goods sold on behalf of principals. The matter was remanded to the AO to re-examine the TDS claim.

The tribunal held that the assessee failed to provide a reasonable or sufficient cause for non-compliance with the notices. The argument of unawareness due to technical reasons or online mode of communication was not accepted, citing the legal principle 'Ignorantia Juris non excusat'.

The Tribunal held that once the department accepts a consolidated surrender of income based on physical stock inventory, and the assessee honors this by declaring the income, no further additions can be made without discovering discrepancies in audited books or impounded incriminating documents. Given that the stocks of the sister concerns were kept at one premises and a consolidated surrender was accepted, the AO's additions, partly confirmed by the CIT(A), were unwarranted and based on assumption.

The Tribunal held that the developer agreement was a business transaction, not a sale deed. The activity of joining lands and constructing houses was an adventure in the nature of trade. Therefore, the AO was justified in treating the profit on sale of properties as business income. The Tribunal also noted that the prior ITAT decision was not based on merits and had no precedent value for this case. The limited issue of claim of expenditure was restored to the AO for examination of bills and vouchers.

The Tribunal held that the AO erred in not considering the stock reconciliation and the surrendered amount. The additions made were based on assumption and presumption, and not on any discrepancy found in the audited books of account.

The Tribunal noted that the reassessment proceedings for Assessment Year 2015-16 were initiated through notices issued after April 1, 2021. Relying on the Supreme Court's decision in Union of India vs. Rajeev Bansal, the Tribunal held that such notices are required to be dropped as they would not fall for completion within the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Consequently, the impugned notice and related proceedings were set aside, and the assessment order was quashed.

The Tribunal held that the CIT(A) did not appreciate the facts and arbitrarily confirmed the assessment order. The authorities below acted in violation of the principles of natural justice by not giving the assessee a reasonable opportunity to be heard and present their case. The matter was restored to the AO for a de novo assessment.

The Tribunal held that the AO erred in ignoring the stock reconciliation and the surrender accepted by the department. The additions made were based on assumptions and presumptions, not on discrepancies found in the audited books of account.

The Tribunal observed that the department accepted a surrendered income of Rs. 50,00,000/- for stock discrepancies collectively. The Tribunal found that if the department accepted this surrender based on consolidated stock reconciliation, it was axiomatic that the stocks were kept jointly. Therefore, the additions made by the AO were considered unwarranted.