ITAT Nagpur Judgments — March 2025

The Tribunal confirmed that the tax effect in all the Revenue's appeals was indeed below Rs.60 lakhs. Consequently, applying the CBDT Circular No.09 of 2024, which also covers pending appeals, the Tribunal dismissed all the appeals, granting the Revenue liberty to seek recall if any appeal falls under an exception to the Circular.

The Tribunal held that since the tax effect in all the appeals filed by the Revenue was below the revised monetary limit of Rs. 60 lakhs as per CBDT Circular No. 09/2024, the appeals were not maintainable and deserved to be dismissed. The Tribunal dismissed all appeals, granting the Revenue liberty to seek recall if any appeal fell under the exceptions mentioned in the CBDT Circular.

The Tribunal condoned the delay in filing the appeal. Considering that the orders of the lower authorities were ex-parte and to uphold the principles of natural justice, the Tribunal decided to grant one opportunity to the assessee to present its case.

The Tribunal, while acknowledging the ex-parte nature of the orders, felt that principles of natural justice require one opportunity for the assessee. Therefore, the impugned order was set aside.

The Tribunal noted that both the assessee's Authorized Representative and the Departmental Representative agreed that the tax effect in these appeals was below the monetary limit. The Tribunal further clarified that the revised monetary limit applies to all pending appeals, as per CBDT circulars.

The Tribunal noted that identical issues concerning the same assessee (husband of Shri Naresh Grover) were decided in favor of the assessee by a coordinate bench in consolidated order dated 21/03/2025. The Tribunal found no reason to deviate from that decision.

The Tribunal condoned the delay of 60 days, finding sufficient and reasonable cause and no mala fide intention. The Tribunal noted that the rejection was based on a technicality (wrong sub-clause used) and not on the merits of the trust's charitable activities. The Tribunal also referred to legislative changes and prior tribunal decisions supporting their view.

The Tribunal noted that the assessee has opted for the Direct Tax Vivad se Vishwas Scheme, 2024, and requested to withdraw the appeals. The Tribunal granted liberty to the assessee to restore the appeals if the scheme's outcome is not favorable.

The assessee's counsel submitted that the assessee opted for the Direct Tax Vivad se Vishwas Scheme, 2024, and requested to withdraw the appeals. The Tribunal noted that if the assessee does not succeed under the scheme, they can seek restoration of the appeals.

The Third Member upheld the Judicial Member's decision, finding that the CIT(A)'s order did not violate Section 250(6) of the IT Act for not adjudicating the legal ground challenging the reassessment. It was also held that the CIT(A)'s order need not be set aside for rejecting the assessee's legal ground as general in nature.

The Tribunal held that the rejection of the deduction claim solely on the ground of missing bills and vouchers was not justified, especially since the sale proceeds were utilized for construction. The AO's addition under Section 54F and the separate addition under Section 50C were also deemed unjustified.

The Tribunal held that interest income earned by the assessee from investments in cooperative banks registered under the Cooperative Societies Act is eligible for deduction under Section 80P(2)(d). Furthermore, following CBDT Circular No. 37/2016, the Tribunal directed that deduction under Section 80P(2)(a)(i) should be allowed on enhanced income due to disallowances made by the AO.

The Tribunal held that the assessee's land holding and agricultural activity were previously accepted. The AO's observations that no agricultural activities were carried out and that undisclosed income was ploughed back were found baseless. The invocation of Section 69A and 69C was deemed incorrect as the nature and source of agricultural income were established. Minor discrepancies in bills were not fatal.

The Tribunal upheld the CIT(A)'s decision, confirming that the assessee had sufficiently discharged the onus by providing all documentary evidence of genuine share transactions, including purchase through banking channels, dematerialization, and sale through a recognized stock exchange with STT paid. The Tribunal noted that the AO failed to provide specific evidence linking the assessee to price manipulation or connivance with entry operators, relying instead on a general investigation report that was not specific to the assessee's transactions. Thus, the addition under section 68 was unsustainable.

The Tribunal held that taking possession of the property along with a registered sale agreement amounts to a 'transfer' under Section 2(47) of the Transfer Act. Therefore, Section 56(2)(vii)(b) of the Income Tax Act, 1961, is applicable.

The Tribunal noted that similar issues concerning the same assessee were decided in favor of the assessee in the husband's case, where the Revenue's appeals were dismissed. The Tribunal found no reason to deviate from that decision.

The Tribunal noted the assessee's non-cooperation with the Assessing Officer and CIT(A). While not commenting on the merits, the Tribunal restored the matter to the CIT(A) for a detailed order on merits.

The Tribunal noted that the assessees had been granted registration under section 12AA, indicating their charitable objects and activities were genuine. Relying on a precedent from the Jaipur Bench, which was also supported by Allahabad High Court rulings, the Tribunal held that procedural defects should not be a ground for denying 80G approval when the trust's genuineness is established.

The Tribunal observed that while the assessee's new registration number was not available at the time of processing, the rectification application under section 154 was still pending. Therefore, the Tribunal set aside the impugned order and restored the matter to the Assessing Officer for a fresh decision.

The Tribunal held that the procedural breach regarding the loan was venial and not material to the trust's objects. The CIT(E) had amplified a curable defect and failed to consider the repayment of the loan and the opportunity for a reasonable hearing.

The Tribunal held that the provisions of Section 56(2)(vii)(b) of the Act were not applicable as the agreement for sale was entered into before the amendment. The Tribunal relied on the principle that the character of a transaction should be determined based on the law prevailing at the time it was initially entered into. Therefore, the addition made by the AO was not sustainable.

The Tribunal held that the penalty order lacked specification of the relevant sub-clause of Section 270A(2) and that there was no provision for a 100% penalty. Therefore, the penalty sustained by the CIT(A) was quashed, and the assessee's grounds were allowed.

The Tribunal found that the CIT(E)'s action of cancelling the provisional registration based on a technicality (wrong sub-section mentioned) was unjustified and against natural justice. Relying on previous judgments, the Tribunal held that a technical error in mentioning the sub-section should not be a reason for cancellation.

The Tribunal held that there was no element of purchase or organized activity, nor any active involvement of the assessee as a trader. The assessee was a passive investor holding the land for a considerable period to enhance capital appreciation. The Tribunal placed reliance on the judgment in CIT v/s Mohammed Mohideen, wherein it was held that sale of property developed by the owner for better price is realization of capital investment, not business profit. The Tribunal found the CIT(A)'s reliance on subsequent conduct to be flawed.

The Tribunal held that the assessee was primarily a passive investor and the activity of selling plots did not amount to a business activity. The conversion of land and sale of plots was considered a realization of capital investment rather than an adventure in the nature of trade.

The Tribunal observed that the society's activities, particularly conferences sponsored by pharmaceutical companies with TDS, indicated a commercial nature rather than eleemosynary. The end users or beneficiaries of the activities were not clearly identified, and the evidence provided was insufficient to prove the genuineness of charitable work. The Tribunal agreed with the Departmental Representative that the element of charity was absent.

The Tribunal held that the assessee failed to provide satisfactory evidence and explanations regarding the outstanding advances for sale, which were shown as liability for many years and were not supported by proper confirmations or details. The AO was justified in treating these outstanding advances as cessation of a trading liability under Section 41(1) of the Act.

The Tribunal held that the amendment to section 200A of the Income Tax Act, enabling the levy of late fees under section 234E, was effective from 01.06.2015. Therefore, levying late fees for TDS statements filed before this date is not legally tenable. The Tribunal relied on decisions of various High Courts and its own coordinate benches.

The assessee has opted to settle disputes under The Direct Tax Vivad Se Vishwas Scheme, 2024. The assessee requested to withdraw the appeals, with a liberty to file fresh appeals if the Department's decision is not acceptable.

The Tribunal referred to CBDT Circular No. 9/2024 and other relevant circulars, noting that subsequent circulars have superseded earlier ones and that exceptions for audit objections have been removed. The Tribunal found that the appeal was not maintainable due to low tax effect, citing decisions of the Rajasthan High Court and Indore Bench of the Tribunal.

The Tribunal held that the difference of Rs. 43,78,000 related to the sale of plots to Sharmila Bhoyar was revenue for AY 2020-21 as the agreement to sell was executed and the sale consideration was received in FY 2019-20. Thus, ground no. 2 was allowed. For ground no. 3, the addition of Rs. 13,66,111 was deleted as it was a current tax and not a deduction. For ground no. 4, concerning unexplained expenditure of Rs. 7,76,408, the Tribunal allowed the appeal, stating that a miniscule portion of commission claimed cannot be considered unexplained when reflected in the books of account.

The Tribunal found that the orders of the lower authorities were cryptic and that the assessee did not effectively participate. The Tribunal questioned how income already disclosed in the return could be added, leading to potential double taxation. The matter was restored to the AO for de novo assessment.

The Tribunal held that the transactions were genuine, supported by documentary evidence like contract notes and bank transfers, and that the assessee was not involved in price rigging. Relying on various High Court judgments, the Tribunal found no evidence of a nexus between the assessee and fraudulent activities, and that SEBI's investigation had not found any manipulation or wrongdoing by the assessee.

The Tribunal held that the Assessing Officer's actions were baseless and surprised that he reclassified short-term capital gains, already taxed under section 111A, to be taxed under section 68. The Tribunal noted that SEBI's acquittal orders for the companies involved were conclusive. Consequently, the appeals by the Department were dismissed.

The Tribunal noted that SEBI, the market regulator, had investigated Iris Media Works Ltd. and Trinity Tradelink Ltd. and found no evidence of price manipulation or fraudulent practices. The Tribunal also observed that the assessee had furnished all necessary documents, transactions were routed through banking channels, and there was no evidence to link the assessee with any price rigging or fraudulent schemes. Several High Court and ITAT judgments were cited where similar issues were decided in favor of the assessee.

The Tribunal noted that the assessee shifted their stand from 'debtor realization' to 'cash sales' and failed to provide any evidence for either claim. The significant discrepancy between the declared debtors (Rs. 80,100) and the amount of deposit (Rs. 1,16,22,557) rendered the explanation unbelievable. The Tribunal upheld the lower authorities' action of treating the excess deposit as unexplained income.

The Tribunal noted the lenient view taken towards small trusts and, in the interest of natural justice, set aside the CIT(E)'s order. The CIT(E) is directed to adjudicate the matter on merits after providing a reasonable opportunity to the assessee.

The Tribunal held that the CIT(E)'s action was unjustified and against natural justice. The use of an incorrect sub-section was a technical error and not a valid reason for cancelling the registration, especially when the activities were genuine and other requirements were met.

The Tribunal noted that while the lower authorities did not accept the revised Form 9A due to it being filed late and outside the prescribed online revision process, the assessee did attempt to file it before the assessment completion. In the interest of justice, the matter was restored to the Assessing Officer to re-examine the revised Form 9A and its acceptability.

The Tribunal noted that the CIT(E) summarily rejected the application without considering its merits. It referred to Section 292B of the Income Tax Act, which states that minor defects do not invalidate actions if they conform to the Act's substance. The Tribunal opined that an inadvertent technical error should not be fatal to the registration.

The tribunal held that the period from March 15, 2020, to February 28, 2022, should be excluded for limitation purposes due to the COVID-19 pandemic, as per Supreme Court rulings. This exclusion made the assessee's filing of the audit report within the extended period. Therefore, the CIT(A)'s decision to grant exemption was upheld.

The Tribunal held that the penalty order lacked specific mention of the sub-clauses of Section 270A(2) under which the penalty was levied. The Tribunal noted that the penalty for misreporting is 200% and for under-reporting is 50%, and there's no provision for a 100% penalty. Therefore, the penalty sustained by the CIT(A) was quashed.

The Tribunal condoned the delay of 60 days in filing the appeal, finding sufficient cause and no mala fide intention. The Tribunal observed that the rejection was primarily on a technical ground, and other tribunals have previously held that a wrong sub-section mention should not lead to cancellation of registration. The Tribunal also noted that recent amendments in the Union Budget 2025 propose to overlook such technical errors.

The Tribunal held that the rejection by the CIT(E) was based on a procedural defect and not on any deficiency in the trust's charitable activities. Citing previous judgments, the Tribunal noted that registration under Section 12AA being granted indicated the genuineness of the trust's objects. Therefore, denial of Section 80G approval solely on procedural grounds was incorrect.

The Tribunal held that the rejection was based on a procedural defect and not on any deficiency in the trust's charitable activities. Relying on previous judgments, the Tribunal stated that once 12AA registration is granted, 80G approval should not be denied unless specific conditions under Section 80G(5) are not met, which was not the case here.

The Tribunal held that the AO was bound to issue a show-cause notice before making any addition or disallowance, as per CBDT instructions and judicial precedents. The failure to do so violates the principle of natural justice. Therefore, the CIT(A)'s annulment of the assessment order was justified.

The Tribunal held that the late filing of Form 10B should not necessarily bar the claim for exemption under sections 11 and 12 of the Income Tax Act. The assessee had substantially complied with the time limits, and rejection on hyper-technical grounds was not warranted.

The Tribunal found the CIT(E)'s rejection order fallible because the assessee's submissions were not considered. The impugned order was set aside, and the matter was remanded to the CIT(A) for re-adjudication, with directions to properly consider the assessee's replies and provide a reasonable opportunity of being heard.