ITAT Kolkata Judgments — April 2025

The Tribunal held that since the assessee had validly exercised the option under Section 115BAA for AY 2021-22 and revenue authorities had not found any error in such claim and allowed the option for that year, the assessee was not required to exercise the option again for subsequent assessment years as per Section 115BAA(5). Therefore, the assessee is eligible for the lower tax rate of 25% under Section 115BAA.

The Tribunal held that the final assessment order passed by the Assessing Officer, giving effect to the DRP's directions, was invalid and a nullity because it lacked the mandatory signature of the concerned Assessing Officer. Citing prior judgments, the Tribunal reiterated that signing is a legal requirement and not a curable procedural defect, thus quashing the unsigned order.

The Tribunal found that the revenue failed to produce any evidence of a show cause notice being issued to the assessee before making adjustments in the intimation u/s 143(1). Emphasizing the mandatory nature of a show cause notice under the first proviso to Section 143(1) for any adjustments, the Tribunal quashed the intimation issued u/s 143(1).

The Tribunal noted that the CIT(A) deleted additions based on facts not available to the AO. The Tribunal found that the CIT(A) might have been influenced by documents not presented to the AO. It was also noted that the assessee did not appear before the Tribunal. Therefore, the Tribunal decided to remand the matter back to the AO.

The Tribunal found that the assessee, though not a cooperative bank under Section 80P(4), had collected the SBNs from its members against loan recoveries. It was established that the assessee provided sufficient details regarding the identity, genuineness, and creditworthiness of the members and their deposits. Consequently, the Tribunal ruled that the addition made by the lower authorities as unexplained income was unsustainable.

The Tribunal upheld the CIT(A)'s decision to delete the penalty, finding no under-reported income or misreporting within the meaning of Section 270A. It observed that the major disallowance concerning Section 80P was debatable and had already been deleted in the quantum appeal, thereby negating the basis for the penalty.

The Tribunal acknowledged that the CIT(A) lacked the power to set aside the case after 01.06.2001. Consequently, it set aside the CIT(A)'s order and remanded the assessment order back to the Assessing Officer for a de novo assessment, allowing the assessee to raise all legal issues, including the validity of the notice under Section 143(2).

The Tribunal acknowledged that the assessee had opted for the Vivad-se-Vishwas Scheme and had formally requested to withdraw the appeal. Accordingly, the appeal was dismissed as withdrawn.

The Tribunal condoned the delay in filing the appeal, recognizing the rectification application as a reasonable cause. It held that the issuance of a show cause notice is a condition precedent for an intimation under Section 143(1), and changing the assessee's status without one is not permissible. Consequently, the intimation issued under Section 143(1) was quashed.

The Tribunal found that the CIT(A)'s change in the basis of addition without notice violated principles of natural justice. It also noted that the Assessing Officer's addition lacked detailed examination and rejection of books of account. Consequently, the entire matter was remanded back to the Assessing Officer for fresh consideration, with directions to provide the assessee a reasonable opportunity of being heard.

The Tribunal held that the club entrance fees of Rs.11,80,000/- were a legitimate business expenditure and should be allowed. Relying on Supreme Court precedent (Mahalaxmi Sugar Mills Ltd.), it affirmed that tax authorities must grant relief if facts justify, even if no specific claim was initially made, and directed the AO to allow the deduction and recompute the total income.

The Tribunal accepted the assessee's prayer for withdrawal of the appeal, noting that the assessee had opted to settle the dispute under the DTVSV Scheme, 2024. Consequently, the appeal was dismissed as withdrawn.

The Tribunal held that the intimation issued under Section 143(1) was unsustainable because no show cause notice had been issued to the assessee as required by the first proviso to Section 143. The addition made under Section 143(1) was therefore deleted, and it was clarified that verification could only be done under Section 143(3).

The Tribunal condoned the delay in filing the appeal, finding the reasons bonafide. It observed that the CIT(A) dismissed the appeal without addressing the merits due to non-compliance. The Tribunal decided to restore the matter to the CIT(A) for fresh adjudication, providing the assessee an opportunity to present its case, thereby setting aside the AO's order as confirmed by the CIT(A).

The Tribunal held that the Ld. CIT(A) was correct in allowing the deduction under Section 80P(2)(a)(i) as the assessee is a co-operative society and not a cooperative bank excluded by Section 80P(4). The impugned order of the Ld. CIT(A) was affirmed.

The tribunal, in the interest of justice, restored the issues to the Ld. CIT(A) for fresh adjudication, granting the assessee another opportunity. This restoration is conditional upon the assessee paying a cost of Rs. 50,000 per appeal to Legal Aid Services within sixty days. Failure to comply will result in the confirmation of the Ld. CIT(A)'s orders.

The Tribunal restored the appeal to the file of the AO for proper verification. The AO was directed to re-examine the matter considering the assessee's submissions and the documents filed, particularly the role of the assessee as an authorized signatory for corporate entities in the property transaction.

The ITAT restored the appeals to the Ld. CIT(A) for fresh adjudication, granting the assessee one more opportunity in the interest of natural justice. This is conditional on the assessee paying Rs. 50,000/- per appeal to Legal Aid Services within 60 days, failing which the Ld. CIT(A)'s order will be confirmed.

The Tribunal condoned the delay in filing the appeal and, in the interest of justice, restored the matter to the Ld. CIT(A) for fresh adjudication. This restoration was made conditional upon the assessee paying a cost of Rs. 50,000/- to Legal Aid Services within sixty days, failing which the CIT(A)'s order would stand confirmed.

The Tribunal upheld the order of the Ld. CIT(A), finding no infirmity in it. The CIT(A) had correctly applied the principles laid down by the Apex Court regarding Section 80P deductions for co-operative societies, even if they lend to members for non-agricultural purposes, unless Section 80P(4) specifically applies.

The tribunal observed that the CIT(A)'s order was ex-parte and, considering an affidavit from the assessee explaining the reasons for non-compliance and undertaking to comply, decided to restore the appeal to the CIT(A) for fresh adjudication. The order confirmed by the CIT(A) was set aside, and the appeal was allowed for statistical purposes.

The Tribunal found the assessee's reasons for delay plausible and not false. Consequently, it condoned the delay in filing both appeals before the Ld. CIT(A) and restored the issues to the CIT(A) for fresh adjudication on merits, after granting the assessee an adequate opportunity of being heard.

The ITAT upheld the CIT(A)'s deletion, noting that the identity, genuineness, and creditworthiness of the subscribers were established, with most directors appearing and giving statements. The high share premium was justified by the assessee's investment in a joint venture with a globally recognized brand (Delsey SA), and similar share allotments were accepted in prior assessment years.

The Tribunal, relying on a precedent set by a coordinate bench, held that funds collected as "development fund" for building and repair expenditure constitute corpus contributions and not revenue receipts, as they were specifically resolved to be used for capital purposes. The Tribunal found the lower authorities were factually incorrect in treating these funds as revenue. Consequently, the AO was directed to re-compute the income by excluding these development fees and to allow the exemption under Section 10(23C)(iiiad) of the Act.

The Tribunal ruled that the penalty notice issued by the AO under Section 271(1)(c) read with Section 274 was legally flawed because it failed to specify the precise charge for the penalty and lacked recorded satisfaction in the assessment order. Consequently, the penalty order was set aside, and the AO was directed to delete the levied penalty for both assessment years.

The Tribunal held that for AY 2022-23, a surcharge of 10% should apply as the income was below Rs. 1 Crore, and for AY 2023-24, NIL surcharge should apply as the income did not exceed Rs. 50,000. It directed the Assessing Officer to re-calculate the tax liability accordingly, including interest as per law on the revised tax levied.

The Income Tax Appellate Tribunal issued a Corrigendum Order to rectify this error. The correct respondent's address, "I.T.O., Ward - 27(1), Kolkata, Durgachak, Haldia, West Bengal, 721602", was specified, modifying the original order to this extent.

The Tribunal set aside the disallowances for oil & fuel expenses and truck running expenses, finding the AO's basis to be surmises without valid proof. It directed the AO to allow interest on the self-occupied house loan under Section 24(b). For the non-deduction of TDS on finance charges and the difference in secured loan, the issues were restored to the file of the AO for verification and re-adjudication after providing sufficient opportunity of hearing to the assessee.

The Tribunal held that for AY 2022-23, a 10% surcharge should be applied as the income was below Rs. 1 Crore, and for AY 2023-24, NIL surcharge should be applied as the income did not exceed Rs. 50,000/-. The lower authorities erred in invoking Section 164 read with Section 2(29C) and applying a higher surcharge. The Assessing Officer was directed to re-calculate interest under Sections 234B and 234C as per the correct tax liability.

The ITAT set aside the CIT(Appeals) order, remitting the matter back to the CIT(Appeals) to provide the assessee one more opportunity of being heard, in adherence to the principles of natural justice. The assessee was cautioned to cooperate with the proceedings.

The Tribunal condoned the delay in filing the appeal. To ensure natural justice, it set aside the CIT(A)'s order and remitted the matter back to the CIT(A) with directions to provide the assessee another opportunity to present their case, with a caution for prompt cooperation.

The Income Tax Appellate Tribunal noted that the revenue challenged the Ld. CIT(A)'s order on merits but failed to challenge the legal issue of 'change of opinion' on which the Ld. CIT(A) decided the appeal. As the legal issue decided by the Ld. CIT(A) remained unchallenged and became final, the Tribunal dismissed the revenue's appeal as infructuous.

The Tribunal upheld the Commissioner of Income Tax (Appeals)'s decision that the reopening of assessment was bad in law. The notice under Section 148 was issued beyond the prescribed time limit, and the Assessing Officer failed to adequately address the assessee's objections regarding the genuineness of the transaction and that the income was already disclosed.

The Tribunal set aside the penalty order, ruling that the penalty notice issued under Section 271(1)(c) read with Section 274 was invalid. This was because the notice did not specify the exact charge (concealment or inaccurate particulars), and the assessment order lacked a recorded satisfaction for initiating penalty proceedings.

The Tribunal noted that the assessee had opted for the Vivad Se Vishwas scheme and paid taxes. The Departmental Representative had no objection to the withdrawal of the appeal.

The Tribunal noted that the payments were made to individual labourers who were under the direct supervision of the assessee, indicating an employer-employee relationship rather than a contractual one. The Assessing Officer failed to identify a contractor or establish the existence of a contract for carrying out specified work. Relying on case law, the Tribunal found that Section 194C and consequently Section 40(a)(ia) were not applicable.

The Tribunal deleted the addition u/s 68, finding that the share application money was received in the preceding year and later converted to share capital or refunded, citing relevant judicial precedents. The addition u/s 14A was also deleted as no exempt income was earned by the assessee during the year. The issue regarding the AIR mismatch/Section 50C, which pertained to assets treated as stock-in-trade and the applicability of Section 43(A), was remitted back to the Assessing Officer for fresh adjudication after hearing the assessee.

The CIT(A) deleted the addition, finding that the assessee had sufficiently explained the source of the cash deposits, including the ₹80 lacs accepted by the Settlement Commission. The CIT(A) also noted the remaining balance was explained through cash available in books. The ITAT upheld the CIT(A)'s order, emphasizing that the Settlement Commission's order had attained finality, thereby preventing double taxation and confirming that the source of the cash deposits was adequately explained.

Citing CBDT Instruction No. 9 of 2024, which sets a monetary limit for filing appeals before the Tribunal, the Tribunal dismissed the Revenue's appeal as non-maintainable due to the low tax effect. It was noted that the case did not fall under any of the exceptions specified in the instruction. The Revenue was granted liberty to file a Miscellaneous Application if re-verification shows the tax effect is higher or the case falls under exceptions.

The Tribunal held that the Assessing Officer reopened the assessment on borrowed satisfaction without independent application of mind or recording a clear finding as to the escapement of income. Citing precedents, it was decided that the reopening was invalid and a nullity in law, thus quashing the assessment order.

Given the assessee's participation in the VSVS 2024 Scheme, the assessee requested to withdraw the appeal, which was not opposed by the Ld. DR. The Tribunal dismissed the appeal as withdrawn, granting the assessee the liberty to revive the appeal if they are unsuccessful in the VSVS-24 for any reason.

The Tribunal held that the revisional order under Section 263 was invalid because the issues raised by the Pr.CIT were not the subject matter of the reassessment proceedings that culminated on 15.03.2022. Furthermore, the time limit for revising the original assessment dated 15.10.2018 under Section 263 had already expired, making the Pr.CIT's action time-barred.

The Tribunal held that additions cannot be solely based on higher stock figures presented to a bank for securing credit limits, especially when the assessee's books of accounts were duly audited and the stock information was verified by auditors. The Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition.

The Tribunal condoned the delay in filing the appeals, noting the assessee's ownership of agricultural land and the acceptance of agricultural income by the department in previous assessment years (AY 2005-06, 2006-07) even under Section 143(3). Finding the addition to be without basis, the Tribunal set aside the Ld. CIT(A)'s order and directed the Assessing Officer to delete the addition.

The Tribunal noted that the CIT(Exemption)'s orders were ex-parte and based on the assessee's non-prosecution. In the interest of justice, the Tribunal set aside these orders and remitted the matter back to the ld. CIT(Exemption) for fresh adjudication.