ITAT Pune Judgments — May 2025

The Tribunal set aside the ex-parte order of the CIT(A)/NFAC due to technical reasons (spam email) and remanded the matter back for a fresh decision after providing the assessee with a reasonable opportunity of being heard.

The Tribunal found the penalty notice issued under Section 274 read with Section 271(1)(c) to be defective because it vaguely mentioned both 'concealment of income' and 'furnishing inaccurate particulars' without specifying the exact charge. Relying on the Bombay High Court Full Bench decision in Mohd. Farhan A. Shaikh vs. DCIT, the Tribunal ruled that such an omnibus and vague notice is invalid. Consequently, the penalty imposed was directed to be deleted.

The Tribunal held that net gain from foreign currency transactions and translations should be considered as operating income. It also decided on the inclusion/exclusion of comparable companies for calculating the Arm's Length Price (ALP), directing a recalculation of PLI for determining the ALP of the international transaction of ITeS.

The Tribunal held that as per the Maharashtra Cooperative Societies Act, 1960, 'members' include 'nominal members'. Relying on the Supreme Court decision in Mavilayi Service Co-operative Bank Ltd. vs. CIT, it was held that the assessee is eligible for deduction under Section 80P(2)(a)(i) on interest earned from nominal members.

The Tribunal noted that the assessee had settled the tax dispute under the Direct Tax Vivad Se Vishwas Scheme and had paid the determined tax demand. Therefore, the appeal was dismissed as withdrawn.

The Tribunal held that the assessment proceedings were not carried out in accordance with judicial precedents, specifically citing the judgment of the Bombay High Court in Asian Paint Ltd. The Assessing Officer failed to provide the statutory four-week period after disposing of the assessee's objections before concluding the assessment.

The Tribunal held that the amount of Rs. 2,64,260/- was correctly applied from accumulated income of earlier years and not from the current year's income. Therefore, it was not includible in the total expenditure of Rs. 10,37,511/- and the disallowance was unjustified.

The Tribunal dismissed grounds challenging the general validity of adjustments u/s 143(1)(a) and the debatable nature of the Section 36(1)(va) disallowance, as they were either not pressed or found to be without merit. However, recognizing the complexity, conflicting judicial views, and lack of clarity on specific provisions regarding the set-off of brought forward business loss against short-term capital gains from depreciable assets, the Tribunal remitted this specific issue back to the Assessing Officer for fresh adjudication.

The Tribunal noted that the assessee failed to furnish documentary evidence to substantiate the source of cash deposits and investment in gold jewellery before the lower authorities. However, considering the details submitted in the paper book and the fact that the assessment was framed ex-parte, the issues were remitted to the Assessing Officer for de novo adjudication with a reasonable opportunity of hearing.

The Tribunal remitted the core legal issue, which concerned the validity of the penalty notice under Section 270A for failing to specify the exact clause of under-reporting of income, back to the Learned CIT(A)/NFAC for fresh adjudication. Other grounds of appeal were deemed premature.

The Tribunal ruled that the CIT(A) erred in dismissing the appeal without adjudicating on the merits, emphasizing that Section 250(6) mandates a decision on all appeal grounds. It clarified that the doctrine of merger does not apply when a Section 143(3) order merely adopts Section 143(1) adjustments without independent discussion. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter for fresh adjudication on all grounds, ensuring the assessee a reasonable opportunity of hearing.

The Tribunal held that for private discretionary trusts, the surcharge is to be computed based on the slab rates prescribed in the Finance Act, not necessarily the highest rate. Income from specific sources like dividend, short-term capital gains (u/s 111A), and long-term capital gains (u/s 112A) are subject to a maximum surcharge of 15%.

The Tribunal held that the CIT(A) erred in accepting additional evidence without giving the Assessing Officer an opportunity to rebut. The creditworthiness of Pranav International Ltd. was found doubtful. Therefore, the issues related to Pranav International Ltd. and Franco Itely were restored to the AO for fresh adjudication, with a direction to provide the assessee an opportunity to present evidence. Other grounds were also decided, with some allowed for statistical purposes.

The Tribunal found that Explanation (g) to Section 12AB(4), used for cancellation, came into effect after the assessee's application and grant of registration, and thus could not be applied retrospectively. It also noted that the previous cancellation was under appeal, meaning it had not attained finality when the new application was made. The Tribunal quashed the PCIT's cancellation order and remanded the issue back to the PCIT for a fresh examination to determine if the assessee is currently carrying out genuine charitable activities post-registration in 2021.

The Tribunal held that the CIT(A) was justified in dismissing the appeal as withdrawn, as the assessee voluntarily sought to pursue an alternative remedy. The Tribunal further noted that the delay in filing the present appeal before it was due to the assessee's own actions and not a reasonable cause.

The Tribunal noted that the CIT(A)/NFAC correctly disallowed the deduction u/s 80P(2)(d) due to the belated filing of the return, as per Section 80AC. However, it also acknowledged the CBDT Circular 13/2023 allowing for condonation of delay under certain circumstances. Regarding the larger amount claimed based on mutuality, the Tribunal decided to remand the issue to the AO.

The Tribunal condoned the delay in filing the appeals, noting the Supreme Court's emphasis on substantial justice over technicalities. The Tribunal set aside the CIT(E)'s orders and restored the matters to the CIT(E)'s file for fresh adjudication, with a direction to grant the assessee an opportunity to explain its case.

The Income Tax Appellate Tribunal (ITAT), citing Supreme Court precedents on condonation of delay, held that the Ld. CIT(A)/NFAC should have adopted a liberal approach and condoned the delay. The Tribunal set aside the CIT(A)'s order and restored the matter, directing the CIT(A)/NFAC to condone the delay and decide the appeal on its merits after giving the assessee due opportunity of being heard.

The Tribunal held that the surcharge should be computed based on the slab rates prescribed in the Finance Act for overall income, and for specific income types like dividend and capital gains, the surcharge rate shall not exceed 15%. The CIT(A) erred in confirming the 37% surcharge on the entire income.

The Tribunal condoned the 202-day delay in filing the appeals, citing Supreme Court judgments prioritizing substantial justice. It set aside the impugned orders of the Ld. CIT(E) and remanded the cases back for fresh adjudication. The CIT(E) was directed to provide the assessee with an opportunity to explain and substantiate their case afresh.

The Tribunal found that the CIT(A)/NFAC dismissed the assessee's appeal without condoning the delay due to non-appearance, which was attributed to a family marriage function. The Tribunal set aside the order and remanded the matter to the CIT(A)/NFAC to decide the appeal afresh after condoning the delay and providing an opportunity of hearing.

The Tribunal condoned the delay in filing the appeal, finding reasonable cause for the delay. The Tribunal set aside the order of the CIT(A)/NFAC and restored the matter to his file for adjudication afresh on merits, after providing a reasonable opportunity of hearing to the assessee.

The Tribunal noted that the quantum case appeal for the same assessment year had already been remanded back to the CIT(A) after condoning the delay. Therefore, to maintain parity, the Tribunal also remanded the penalty appeal to the CIT(A) with a direction to decide it afresh after condoning the delay and providing a reasonable opportunity of hearing.

The Tribunal found that the assessee had indeed obtained registration under Section 12AA prior to 01.04.2021. Therefore, the order of the CIT was set aside, and the matter was remanded for fresh consideration.

The Tribunal restored the issue to the CIT(E) for fresh adjudication, granting the assessee one final opportunity to submit the requisite details. The Tribunal noted that a co-ordinate bench had previously remanded a similar 12A application.

The Tribunal held that the wrong selection of a section code/clause should not disentitle the assessee to its rightful claim and cannot be treated as fatal. Citing previous decisions with similar facts, the Tribunal set aside the CIT(E)'s order.

The Tribunal held that the Assessing Officer's order accepting unsecured loans without verifying the identity, genuineness, and creditworthiness of the lenders was erroneous and prejudicial to the revenue. The PCIT rightly invoked Section 263 jurisdiction.

The Tribunal held that the Transfer Pricing Officer (TPO) erred in invoking Safe Harbour Rules (Rule 10TA) when the assessee had not exercised this option. The Tribunal found that foreign exchange gain and loss arising from business transactions should be considered as operating income/cost, aligning with normal business understanding and commercial principles. The assessee's calculation of OP/OC at 12.89% was held to be correct.

The Tribunal held that the order passed under Section 154 of the IT Act was bad in law as it was made without providing the assessee an opportunity of being heard. The Tribunal also found that the investment was made by the assessee's wife from her own funds and the assessee was only a second holder.

The Tribunal accepted the assessee's contention that the cash deposits of Rs. 18,87,000/- were advances received against the sale of four agricultural lands, supported by affidavits from his younger brother and nephew. The remaining amount of Rs. 1,86,000/- was also accepted as being from past savings.

The Tribunal restored the issues to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details.

The Tribunal held that the Assessing Officer (AO) had accepted the assessee's contentions during the scrutiny proceedings and had not made any disallowance under Section 40(a)(i). The AO's inadvertent inclusion of the CPC's disallowance while computing total income was considered an error. Therefore, the disallowance was deleted.

The Tribunal found that the assessee's reconciliation of sales receipts was not adequately demonstrated and that the rejection of the assessee's reconciliation by the Assessing Officer and the CIT(A) was not justified. The matter was restored to the Assessing Officer for fresh adjudication after accurate computation of receipts, removing duplicate entries, and then estimating profit if suppressed sales were found.

The Tribunal noted that the assessee was in the business of buying and selling recharge coupons and that the cash deposits were for sales and payments to network providers. It held that only commission income needed to be computed and restored the case to the AO for a de novo assessment.

The Tribunal condoned the delay in filing the appeal, noting the assessee's illiteracy, lack of technical knowledge, and issues with notice service. The CIT(A)'s order was set aside for de novo adjudication on merits, providing the assessee a reasonable opportunity of hearing.

The Tribunal held that the penalty was not leviable as the additions/disallowances were made on an estimated basis. The Tribunal followed its own earlier decision and various High Court precedents stating that penalty cannot be imposed when income is determined on an estimate basis.

The Tribunal noted that the CIT(A) passed a non-speaking order without dealing with the merits of the case. In the interest of justice, the Tribunal restored the matter to the CIT(A) for a fresh adjudication, granting one more opportunity to the assessee.

The Tribunal held that for category 'A' transactions (servicing spares), the margins with AEs were comparable to those with non-AEs and did not require adjustment. However, for categories 'B' and 'C' (sourcing components for AE manufacturing), internal comparables were absent, and benchmarking by internal TNMM was inappropriate. Consequently, this issue was remanded to the Assessing Officer for fresh verification.

The Tribunal condoned the delay of 159 days, accepting the assessee's explanation of communication gap and lack of sufficient knowledge. On merits, the Tribunal found that the assessee had complied with notices and decided to grant one more opportunity.

The Tribunal, relying on the Special Bench decision in ACIT vs. Vireet Investment Pvt. Ltd., held that only investments yielding exempt income during the year should be considered for computing the average value for disallowance under Section 14A read with Rule 8D. The matter was restored to the Assessing Officer to verify the investments that yielded exempt dividend income for a fresh computation.

The Tribunal found that the CIT(A) dismissed the appeal based on the incorrect impression that the assessee had not furnished any reply or compliance. The Tribunal noted that compliance was made before the predecessor authorities and during remand proceedings. The ex-parte order of the CIT(A) was set aside.

The Tribunal observed that additions based solely on suspicion or guesswork are not permissible. It noted that the assessee's reconciliation of sales figures, after excluding duplicate entries, should be properly verified. The matter was restored to the Assessing Officer for accurate computation.

The Tribunal held that the AO's rejection of the assessee's reconciliation statement was not justified. It found that the assessment required thorough verification and directed the AO to recompute the receipts/sales, excluding duplicate entries, and then estimate profit on any suppressed amount. The appeals were allowed for statistical purposes.

The Tribunal found that the Assessing Officer's rejection of the assessee's reconciliation statement and subsequent addition was not justified. The matter was restored to the Assessing Officer for fresh adjudication, with directions to accurately compute receipts after removing duplicate entries.