ITAT Patna Judgments — December 2025

The Tribunal found that applying a GP rate on seized turnover for brick kiln business was unjustified. A net profit rate of 16% was deemed appropriate for undisclosed turnover. The addition for unexplained money introduced was deleted due to sufficient cash availability. The Section 50C issue was remanded. The addition for unexplained expenditure was deleted due to lack of nexus and the principle of telescoping.

The Tribunal noted that the CIT(A) dismissed the appeal for non-prosecution, which is not empowered by law according to case precedents. The Tribunal also observed that proper representation was not made by the assessee at both the AO and CIT(A) stages. Considering the interest of justice, the Tribunal decided to provide one more opportunity.

The CIT(A) dismissed the assessee's appeal ex parte due to non-compliance. The Tribunal found that the CIT(A)'s order was passed without considering the merits of the case. Consequently, the Tribunal restored the appeal to the Assessing Officer for fresh consideration after allowing the assessee an opportunity to submit evidence.

The Tribunal restored the appeal to the CIT(A) for fresh consideration after affording the assessee an opportunity to present evidence. The CIT(A) had dismissed the appeal without considering documentary evidence.

The Tribunal noted that the CIT(A)'s order was ex parte and lacked consideration of merits. The assessee's counsel requested restoration of the appeal to the Assessing Officer for fresh consideration with an opportunity to submit evidence. The DR did not object.

The Tribunal noted that some documents supporting the assessee's claims, particularly regarding agricultural income and gifts, were not filed before the lower authorities. In the interest of justice, the Tribunal decided to set aside the order of the CIT(A) and remand the matter back to the AO.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of all three additions. It confirmed that the AO's calculation under the Percentage Completion Method had a conceptual error. It also agreed that the stamp duty value for Section 43CA should be based on the date of agreement execution, not sale deed registration, and that interest on service tax and TDS is an allowable deduction.

The ITAT upheld the order of the CIT(A), noting that the AO had failed to conduct independent inquiries or provide additional evidence to controvert the documentary evidence furnished by the assessee. The tribunal found that the assessee had discharged its onus under Section 68 by proving the identity, creditworthiness of investors, and genuineness of transactions. The CIT(A)'s order was deemed reasoned and speaking, warranting no interference.

The Tribunal condoned the delay in the assessee's cross-objection. It set aside the CIT(A)'s order and upheld the reopening of assessment, finding sufficient material for the AO's 'reason to believe'. However, regarding the merits of the addition, the Tribunal found that the cash deposits were accounted for as cash sales and accepted by the AO. Adding them again under Section 68 or 69A would lead to double taxation, which is not permissible, thus upholding the CIT(A)'s deletion of the addition on merits. The appeals of the Revenue and the assessee's Cross Objection were partly allowed.

The Tribunal found that the assessee had provided invoices, transport receipts, and evidence of payment through banking channels. The fact that the sales were consignment sales and the corresponding sales were not disbelieved by the lower authorities was considered. The Tribunal noted that the supplier's manufacturing unit was in Jharkhand, but notice was served at a Kolkata address, and the verification unit could not locate the company there.

The Tribunal held that the same income cannot be taxed twice. The deposits in the bank account were explained as sale proceeds from the proprietary concern, which were duly incorporated in its audited accounts and balance sheet. The addition made by the AO under Section 69A was thus not sustainable as the source of the funds was explained.

The Tribunal noted that the appeal was filed with a delay of 35 days, for which the assessee provided reasons related to technical issues with the online portal. The Tribunal found these reasons to be sufficient and condoned the delay. The CIT(E)'s order was set aside, and the case was remanded to the CIT(E) for examination on merits.

The Tribunal held that the AO's addition was unsustainable on two grounds: incorrect invocation of Section 69A and the risk of double taxation. The cash deposits represented sales that were already accounted for in the assessee's books, which were not disputed by the AO. The Tribunal also noted that the additional evidence provided by the assessee, bank certificates, were clarificatory and not new evidence under Rule 46A.

The Tribunal held that the compensation received for compulsory acquisition of land under the National Highways Act, 1956, is exempt from income tax as per Section 96 of the RFCTLARR Act, 2013, and CBDT Circular No. 36/2016. Section 50C is not applicable in cases of compulsory acquisition as stamp duty is not involved.

The Tribunal held that the amortization of premium paid on the purchase of government securities classified as HTM is revenue expenditure. This is consistent with prudential norms issued by the RBI and jurisprudence from various High Courts, including the Bombay High Court. The AO is directed to allow the deduction.

The Tribunal held that the AO failed to provide evidence of collusive or sham transactions and did not allow cross-examination of parties whose statements were relied upon. The CIT(A) had appreciated the evidence submitted by the assessee and correctly concluded that the payment received could not be treated as unexplained cash credit.

The Tribunal found that the assessee was indeed non-compliant, leading to an ex-parte decision. However, it noted that the CIT(A) failed to set out the points of determination and reasons for the decision as required by Section 250(6) of the Act. Therefore, in the interest of justice, the matter was restored to the CIT(A) for a fresh adjudication with a reasonable opportunity for the assessee to be heard.

The Tribunal found merit in the assessee's revised valuation for diamond jewellery, noting that the assessee had already offered income covering the discrepancy, and directed the AO to delete this addition. Regarding the unexplained cash, the Tribunal accepted the assessee's claim that ₹3,50,000 belonged to Ghanshyam Prasad Gupta (HUF), citing the HUF's legitimate income from rental and lichi sales, despite not filing tax returns, and directed the AO to delete this addition as well.

The Tribunal held that the amortization of premium paid on the purchase of government securities, especially when undertaken to maintain statutory liquidity ratios as per RBI guidelines, constitutes revenue expenditure. This is consistent with the prudential norms of the RBI and is also supported by various judicial precedents.

The Tribunal noted that the 12AA approval was not cancelled. Therefore, there was merit in the assessee's argument that exemption should have been granted. The Tribunal set aside the order of the CIT(A) and remanded the issue back to the AO.

The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the ground of delay without considering the merits. The assessee's reasons for delay, such as lack of education and ignorance of e-proceedings, were considered sufficient cause. Therefore, the CIT(A)'s order was set aside.

The CIT(A) allowed the assessee's appeal, noting that the Assessing Officer did not conduct independent inquiries and merely relied on a previous assessment order. The Tribunal found that the CIT(A) adjudicated on issues not arising from the assessment order under section 153C and that the appeal before the CIT(A) was against the order passed under section 153C, not the section 144 order.

The tribunal held that the addition made by the AO was based solely on the non-deduction of TDS on works contract receipts and suspicion, without sufficient evidence. The tribunal also noted that the principle of natural justice was violated as the assessee was not given a proper opportunity to be heard.

The Tribunal noted that while the assessee claimed to have paid tax on the excess stock, the amount of Rs. 32,77,500 was also included in purchases, making the addition tax-neutral. Since the assessee claimed expenditure on account of purchases to this extent and the addition did not appear to have been subjected to any tax, the Tribunal found no justification for relief.

The Tribunal noted that a transfer under Section 2(47)(v) of the Income Tax Act, 1961, occurs when possession is handed over in part performance of a contract, even if legal title hasn't transferred. However, considering that the JDA was cancelled and additional evidence was presented, the Tribunal decided to set aside the CIT(A)'s order and remand the matter to the AO for de novo assessment.

The Tribunal noted that the assessee, being a semi-educated villager, was unaware of the proceedings and that the distinction between ₹5.33 Lakh and ₹5.33 Crore was crucial. The delay in filing the appeal before the CIT(A) was attributed to the assessee's circumstances and lack of proper representation. The Tribunal admitted additional evidence, including a bank certificate confirming the ₹5.33 Lakh deposit.

The Tribunal noted that the assessee's representative was unavailable due to COVID-19 and had sought adjournments that were not granted. The Tribunal decided to set aside the CIT(A)'s order and remit the matter to the AO for fresh assessment.

The Tribunal noted that the assessee failed to provide adequate explanation and evidence before the lower authorities. However, in the interest of justice, the Tribunal decided to remand the case back to the Assessing Officer to provide one more opportunity for the assessee to explain the source of the deposit.

The Tribunal observed that the assessee had provided an explanation regarding the sources of the cash deposits (Stridhan and sale proceeds) to the AO, which was not considered by the lower authorities. In the interest of justice and fair play, the Tribunal set aside the CIT(A)'s order and remanded the case to the AO for a fresh opportunity of hearing and a decision on merits.

The ITAT observed that the CIT(A) dismissed the appeal for non-prosecution without proper adjudication, which is not empowered by law. Citing relevant case laws, the Tribunal held that the CIT(A) should have passed a speaking order on merits.