ITAT Lucknow Judgments — January 2026

The tribunal, referencing its previous decisions, restored the matter to the AO for recomputation of the admissible deduction under section 80P. It held that interest derived from statutory reserve funds, share capital, and provident fund balances of seasonal employees (mandated by U.P. Cooperative Societies Act and Rules) should be considered attributable to the business and eligible for 80P deduction. Additionally, the tribunal clarified that the return for A.Y. 2020-21 was not belated due to the CBDT's extended due date, thus rendering section 80AC inapplicable. Certain grounds of appeal were allowed, others dismissed as infructuous.

For A.Y. 2019-20, the Tribunal deleted the penalty, finding that no reportable transactions existed for the relevant SFT codes, and thus the assessee had a bona fide belief of no filing obligation. For A.Y. 2021-22, the Tribunal deleted the penalty, considering the belated rectification of defective SFTs a technical or venial breach, relying on the principle established in *Hindustan Steel Limited* that penalties should not be levied for minor, non-deliberate errors, especially given the operational difficulties cited.

The Tribunal held that the impugned order could not be sustained as it was passed against a deceased person without formal substitution of legal heirs. Citing Section 159(2a) of the Act, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication against the legal representative. The grounds raised in the appeal were allowed for statistical purposes.

The Tribunal, relying on precedents, held that the Assessing Officer's failure to refer the property valuation to the DVO, as mandated by Section 50C(2) and the proviso to Section 56(2)(vii)(b) of the Act, renders the addition unsustainable. Consequently, the impugned appellate order was set aside, and the Assessing Officer was directed to delete the addition of Rs. 11,59,091/-. The other grounds related to jurisdiction were deemed academic.

For AY 2005-06, the Tribunal quashed the assessment, holding it was barred by limitation as the proceedings under section 153C were initiated beyond the six-year period from the date the seized material came into the AO's possession. For AY 2009-10, the Tribunal dismissed the appeal, finding no merit in the grounds as the AO had merely reiterated the income assessed in an earlier 143(3) proceeding.

The Tribunal condoned the delay in filing the appeal before the CIT(A). It held that the assessment reopening was invalid because the alleged escaped income was below Rs. 50 lakhs and more than three years had elapsed from the relevant assessment year, requiring mandatory prior approval from the PCCIT, which was not obtained or demonstrated. Consequently, the assessment order was quashed. The Tribunal also noted that the assessee had explained the source of the cash deposit as sale proceeds of agricultural land, supported by sale deeds.

The tribunal restored all appeals to the AO for recomputation of admissible deduction under section 80P. The AO is directed to consider interest earned on investments made as per sections 58 and 59 of the U.P. Cooperative Society Act and Rule 173 of the U.P. Cooperative Society Rules as income attributable to business activities. It was held that interest from PF balance of seasonal employees is not the society's income and that the assessee is eligible for deduction as the CBDT-extended due date for return filing (15.02.2021) was met (return filed 13.02.2021), thus Section 80AC does not apply.

The Tribunal, citing CBDT Circular 37/2016 and judicial precedents, held that even if management expenses are disallowed, any resulting enhanced income related to the business activity, for which Chapter VI-A deduction (Section 80P) is claimed, would still be eligible for deduction under Section 80P. The matter was remanded to the AO to allow the assessee to furnish evidence for the management expenses, with a direction to grant the Section 80P benefit on the enhanced income if substantiation is provided.

The Tribunal found that the assessee had a reasonable cause for non-compliance, citing her minimal education, lack of prior interaction with the tax department, and reliance on a professional who failed to make submissions. Noting that the assessee eventually complied during assessment proceedings, the Tribunal concluded that it was not a fit case for penalty.

The Tribunal admitted additional grounds challenging the jurisdiction for A.Y. 2005-06. While it found the initiation of Section 153C proceedings justified due to seized material pertaining to the assessee, it held that the A.Y. 2005-06 assessment was time-barred under the first proviso to Section 153C(1) r.w.s. 153A, as it fell outside the six assessment years reckoned from the date of the AO's jurisdiction/satisfaction. For A.Y. 2009-10, the Tribunal dismissed the appeal, noting that the AO had merely adopted the income from previous 143(3) proceedings and other issues were already decided by the ITAT.

The Tribunal restored the appeals to the Assessing Officer for re-computation of the admissible deduction under Section 80P. It held that interest earned on investments made in accordance with sections 58 and 59 of the U.P. Cooperative Societies Act and Rule 173 of the U.P. Cooperative Society Rules, 1968, is attributable to the assessee's business activities. It also clarified that interest from PF balances of seasonal employees is not the society's income, and the extended due date for ITR filing (due to COVID) meant Section 80AC did not bar the deduction.

The Income Tax Appellate Tribunal (ITAT) condoned a 77-day delay in filing the appeal. The ITAT observed that the CIT(A) did not provide the assessee with a reasonable opportunity of being heard, granting only one day to respond to a second notice after a significant delay of three and a half years. Consequently, the ITAT restored the matter to the CIT(A) to afford the assessee a fresh, reasonable opportunity to submit evidence explaining the cash deposits.

The ITAT found that despite the assessee's non-compliance, specific legal issues regarding the quantum of additions and eligibility for deductions (Section 54F) were raised in the grounds of appeal but not considered by the CIT(A). Therefore, the ITAT restored the matter to the AO for a fresh decision, directing the assessee to furnish necessary materials for examination.

The Tribunal condoned the 342-day delay, finding sufficient cause due to the ex-parte nature of the CIT(A) order and lack of effective representation. As the CIT(A) had not decided the case on merits, the Tribunal set aside the impugned order and remanded the matter back to the CIT(A) for fresh adjudication after providing a proper opportunity of being heard to the assessee.

The Tribunal deleted the Section 271FA penalty for AY 2019-20, ruling that the obligation to file SFTs arises only with actual specified transactions and a bona fide belief of their absence constitutes reasonable cause. For AY 2021-22, the Section 271FAA penalty was also deleted, as the subsequent rectification of defects, though delayed, was considered a technical or venial breach, not warranting a penalty under the principles laid down by the Supreme Court.

The ITAT condoned the delay in filing the appeal. Observing that neither the Assessing Officer nor the CIT(A) provided reasonable opportunity to the assessee, and the CIT(A)'s order was ex-parte, the Tribunal set aside the CIT(A)'s order. The matter regarding the disallowance was restored to the Assessing Officer for a de novo assessment, with directions to provide proper opportunity to the assessee.

The Tribunal found that both the Assessing Officer and the CIT(A) failed to provide the assessee with a reasonable opportunity of being heard. Consequently, the CIT(A)'s order was set aside, and the disputed issues were remitted back to the Assessing Officer for a de novo speaking order after providing due opportunity to the assessee.

The Tribunal observed that the assessee's replies and documentary evidence filed through the e-filing portal were not considered by either the Assessing Officer or the CIT(A). Therefore, the impugned appellate order of the CIT(A) was set aside. The disputed matters were restored to the file of the Assessing Officer for a fresh de novo assessment order, ensuring reasonable opportunity to the assessee and due consideration of all materials.

The ITAT found that the assessee was not provided a proper opportunity to present their case before the CIT(A). Consequently, the impugned appellate order of the CIT(A) was set aside, and the issues in dispute were restored back to the CIT(A) for a de novo order after providing reasonable opportunity to the assessee.

The Tribunal observed that both the Assessing Officer's and CIT(A)'s orders were ex-parte, denying the assessee a proper opportunity. Accepting the assessee's request and with no objection from the Revenue, the Tribunal set aside the CIT(A)'s order. The case was restored to the Assessing Officer for a de novo assessment, with a direction to provide the assessee a reasonable opportunity of being heard.

The Tribunal set aside the CIT(A)'s order, observing that the AO had rejected the assessee's explanation summarily and passed the assessment order without providing reasonable opportunity. The issue of the Rs.2,58,000/- addition was remitted to the Assessing Officer for a de novo assessment after granting the assessee a proper opportunity of being heard.

The Tribunal condoned the delay in filing the appeal to CIT(A) due to medical grounds and noted the ex-parte assessment without reasonable opportunity. It set aside the CIT(A)'s order and restored the matter of the Rs. 4,09,907/- addition to the Assessing Officer for a de novo assessment after providing proper opportunity to the assessee.

The Tribunal noted the absence of the assessee's representation and, based on the Departmental Representative's submission for factual verification, remitted all issues back to the Assessing Officer (AO). The AO is directed to pass a fresh order in accordance with law after providing a reasonable opportunity to the assessee.

The Tribunal held that the CIT(A) erred in dismissing the appeal for non-prosecution without passing a speaking order on merits. Consequently, the CIT(A)'s order was set aside, and the matter was remanded for a de novo decision on merits after providing the assessee a reasonable opportunity of being heard.

The Tribunal held that since the PCIT's order under Section 263 was set aside, the original assessment order stood revived. Therefore, the CIT(A)'s dismissal of the appeal against the original assessment as infructuous was incorrect. This appeal (ITA 174/LKW/2019) was restored to the CIT(A) for adjudication on merits. The cross-appeals (ITA 161/LKW/2019 and 209/LKW/2019) arising from the consequential order (which relied on the now-set-aside 263 order) were dismissed as infructuous.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision to delete the addition. The Tribunal ruled that the presumptions under sections 132(4A) and 292C of the Income Tax Act do not apply to third parties from whom documents were not seized. It found no corroborative evidence linking the assessee to the alleged transaction and noted that the seized documents were considered 'dumb documents' without clear, unambiguous details or independent verification.

The ITAT held that the opening cash balance was adequately explained by disclosed income of the assessee and family members from earlier years. It ruled that any doubt regarding the opening balance from a preceding financial year should lead to an adverse reference in that preceding assessment year, not the current one. Consequently, the addition of Rs.1,19,462/- was deleted.

The Tribunal held that since its prior order had set aside the PCIT's u/s 263 order, the original assessment order automatically revived. Therefore, the CIT(A)'s decision to dismiss the assessee's appeal (ITA 174/LKW/2019) as infructuous was incorrect and was set aside, with the grounds restored to the CIT(A) for adjudication on merits. Consequently, the cross-appeals (ITA 161/LKW/2019 and ITA 209/LKW/2019), which were based on a consequential order stemming from the now-set-aside 263 proceedings, were deemed infructuous and dismissed.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order. It held that purchases could not be deemed bogus solely because the supplier did not file an income tax return, especially when the supplier was GST registered, filed GST returns, and the assessee provided all necessary documentation and inventory details. The Tribunal also confirmed that interest on late TDS payment is compensatory and not disallowable under Explanation 1 to sub-section 1 of section 37 of the Income Tax Act.

The Tribunal held that since its own order had set aside the PCIT's Section 263 order, the original assessment order revived. Therefore, the CIT(A) erred in dismissing the appeal against the original assessment as infructuous, and this appeal (ITA 174/LKW/2019) was remanded to the CIT(A) for adjudication on merits. Consequently, the cross-appeals (ITA 161/LKW/2019 and ITA 209/LKW/2019) originating from the now non-existent consequential assessment order were dismissed as infructuous.

The Tribunal dismissed the appeal in limine without delving into its merits due to the assessee's persistent failure to rectify the noted defects. However, the Tribunal granted the assessee liberty to seek restoration of the appeal after all deficiencies are properly addressed, in accordance with the law.

The Tribunal found that the CIT(E)'s rejection order was not a speaking order, as it did not clearly specify how the expenditure was not aligned with the trust's objects. Consequently, the matter was restored to the file of the CIT(E) to allow the assessee another opportunity to present evidence of its charitable activities and proper utilization of funds.

The Tribunal observed that the CIT(A) erred by admitting additional evidence without a speaking order and without disposing of the AO's objections, which is contrary to the legal scheme. It clarified that only current year's unaccounted credits, not carry-forward balances, lacking documentary evidence for creditworthiness and genuineness, can be sustained as additions. Therefore, the case was remanded back to the CIT(A) to re-examine the additional evidence, address the AO's objections properly, and pass a fresh order in accordance with law.

The Tribunal condoned the delay in filing the appeal on medical grounds. Recognizing that both the assessment order and the CIT(A)'s appellate order were passed ex-parte without providing a reasonable opportunity of being heard, the Tribunal set aside the CIT(A)'s order. The matter was remanded to the Assessing Officer for a de novo assessment with specific directions to provide the assessee a reasonable opportunity of being heard regarding the disputed additions.

The Income Tax Appellate Tribunal (ITAT) noted that the assessee filed a paper book with additional evidences and the Departmental Representative did not object to their admission or the request for remand. The ITAT restored the disputed issue regarding the addition of Rs. 19,18,500/- back to the Assessing Officer (AO). The AO is directed to pass a de novo assessment order after providing a reasonable opportunity to the assessee and considering all relevant materials.

The Tribunal noted that in the separate quantum appeal (ITA No. 445/LKW/2024), the addition of unexplained money under section 69A, which formed the basis for the penalty, had already been deleted. The deletion was based on the finding that the assessee acted merely as an agent of the bank, and the deposited money pertained to the bank. Consequently, as the underlying addition was deleted, the penalty imposed under section 271AAC(1) does not survive.

The Tribunal admitted new evidence (a bank certificate confirming most deposits were in new currency) as material. It found it just to remand the matter back to the AO to re-examine whether the deposits were indeed from cash sales and properly accounted for in the assessee's turnover. The AO was directed to frame a fresh assessment after considering all new and existing evidence, including books of accounts and the audit report.

The ITAT found sufficient cause for the delay, citing the assessee's rural location, manual operations, and late awareness of the demand. It condoned the delay and remitted the case back to the Assessing Officer. The AO was directed to verify the assessee's eligibility for exemption under section 10(26AAB), even if not originally claimed in the return of income.

The Tribunal condoned the delay, invoking the principle of substantial justice, and noted the assessee's prima facie claim of tax exemption as a government-funded entity. It held that the assessee deserved an opportunity to present evidence to substantiate its exemption claim and contest the additions. Consequently, the case was remanded to the Assessing Officer for fresh adjudication on merits, with a directive for the assessee to ensure full compliance during the proceedings.

The Tribunal found that the Revenue imposed an unfair burden on the assessee by requiring information without providing access to impounded documents, and both the Assessing Officer and CIT(A) failed to grant reasonable opportunity. Therefore, all disputed issues were restored to the Assessing Officer with directions to make available copies of all impounded materials, provide reasonable opportunity to the assessee, and pass de novo orders adhering to principles of natural justice.

The Tribunal observed that the Revenue placed an undue burden on the assessee by demanding information without providing access to impounded documents. It was also noted that the CIT(A) and Assessing Officer failed to provide reasonable opportunity to the assessee. Consequently, all disputed issues were restored to the Assessing Officer with directions to make available all impounded materials, provide reasonable opportunity, and pass de novo orders adhering to natural justice principles.

The Tribunal found that the Revenue placed an undue burden on the assessee by demanding information without providing access to impounded documents. It ruled that both the Assessing Officer and the CIT(A) failed to provide reasonable opportunity, violating natural justice principles. All issues were restored to the Assessing Officer with directions to provide impounded materials and pass de novo orders with due process.

The ITAT found that the ld. CIT(A) failed to consider the assessee's submissions and grounds, including crucial legal issues regarding the validity of the penalty notice under section 274 r.w.s. 271(1)(c) and violations of natural justice. Therefore, the tribunal restored the matter to the CIT(A) for fresh adjudication after properly considering all arguments and evidence. The appeal was allowed for statistical purposes.

The Tribunal upheld the addition made by the Assessing Officer under section 68, finding that the appellant failed to prove the identity, creditworthiness, and genuineness of the share application money transactions. The impugned order of the CIT(A) was confirmed, and the appeal was dismissed, partly due to the assessee's failure to appear for hearings and remove registry defects.

The tribunal dismissed the appeal in limine due to it being barred by limitation and defective. However, the assessee was granted liberty to seek restoration of the appeal by first rectifying the noted defects and filing a proper application for condonation of delay, which will then be dealt with in accordance with law.

The Tribunal observed that a penalty under Section 271AAC(1) is contingent on the finality of the underlying quantum addition under Section 115BBE, against which the assessee's appeal was still pending. Considering the assessee's claim of not receiving the penalty order as a valid reason for delay and applying the principle of hearing matters on merits, the Tribunal allowed the appeal. The case was remitted back to the AO to reconsider the penalty after the outcome of the quantum appeal.

The Tribunal condoned the delay in filing the appeals, acknowledging the counsel's medical condition and the assessee's circumstances, citing Collector of Land Acquisition Vs. MST. Katiji & Ors. It set aside the quantum assessment order (ITA 301) and restored the matter to the Assessing Officer for fresh adjudication on merits, finding the previous order based on guesswork. Consequently, the penalty orders under sections 271(1)(b), 271(1)(c), and 271F were also set aside and remanded to the AO for fresh consideration, as their foundation was the original assessment.

The Tribunal condoned the significant delay in filing the appeals, accepting the 'reasonable cause' plea. It found that the lower authorities had not adjudicated the quantum appeal on merits. Consequently, the Tribunal set aside the quantum assessment order and all related penalty orders, remanding the matters back to the Assessing Officer for fresh assessment and reconsideration of penalties in accordance with the law.