ITAT Raipur Judgments — January 2025

The Tribunal held that the AO arbitrarily rejected the assessee's explanations regarding the source of cash deposits, particularly from cash withdrawals, opening cash-in-hand, and declared income, without sufficient justification or contrary evidence. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the case to the AO for re-adjudication, allowing the assessee to provide fresh evidence.

The Tribunal dismissed the appeal, holding that the revised return was non-est as it was filed beyond the statutory time limit. It upheld the disallowance of exemptions under Sections 10A/10AA due to the absence of supporting evidence. The additional ground for exemption under Section 10(23C)(iiiad) was also rejected because the original return was filed belatedly, and the necessary facts to ascertain its eligibility were not on record.

The ITAT observed that the AO's show cause notice under Section 148A(b) provided only 5-6 days for response, which violates the statutory mandate of not less than 7 days. Citing the jurisdictional High Court's decision, the ITAT ruled that this procedural lapse constituted a violation of natural justice, rendering the reassessment proceedings and the subsequent orders under Section 148A(d) and 148 illegal and void ab initio. The matter was quashed and restored to the AO for fresh assessment after providing the assessee a proper opportunity of being heard.

The tribunal held that the CIT(E) violated the principles of natural justice by rejecting the application solely on technical grounds without issuing a show-cause notice or providing the assessee with an opportunity to clarify or address the perceived ineligibility. Consequently, the tribunal set aside the CIT(E)'s order and restored the matter for fresh adjudication, directing the CIT(E) to provide the assessee with a reasonable opportunity of being heard.

The tribunal upheld the CIT(A)'s decision, ruling that the assessee's income was unconditionally exempt under section 10(26AAB) as per CBDT Circular No. 18/2017. It stated that filing the wrong ITR form was a bona fide mistake and income tax authorities should not penalize assessees for such errors, directing the AO to allow the exemption upon filing the correct ITR form.

The Income Tax Appellate Tribunal found no infirmity in the orders of the lower authorities, which had rightly upheld the penalties imposed by the AO. The Tribunal noted the assessee's consistent lackadaisical approach and failure to provide reasonable cause for non-compliance. Consequently, the ITAT dismissed all appeals.

The Income Tax Appellate Tribunal upheld the orders of the lower authorities, finding no infirmity in the penalties imposed under sections 271(1)(b) and 272A(1)(d). The Tribunal noted the assessee's continuous non-participation and failure to provide any explanation or reasonable cause for non-compliance at any stage of the proceedings.

The Tribunal quashed the addition of Rs.50,65,900/- under Section 56(2)(vii)(b), finding that the AO lacked valid jurisdiction to make such an addition in a limited scrutiny case without converting it to complete scrutiny. Regarding the Section 54B claim, the Tribunal, upon reviewing Khasra documents, concluded that agricultural use for 1.424 hectares and 1.781 hectares of the sold lands was sufficiently proven for the two years preceding transfer, thereby partly allowing the deduction subject to verification of other statutory conditions.

The Tribunal observed that the benami transaction issue, forming the basis of the reassessment, was under adjudication before the Appellate Tribunal for Prevention of Money Laundering (ATPML), New Delhi, and the Adjudicating Authority had identified joint beneficial owners. Thus, the entire addition for unexplained investment could not be solely sustained in the assessee's hands. The case was remanded to the Assessing Officer for fresh adjudication, to consider the PBPT Authorities' orders and allocate the addition among the respective beneficial owners.

The Income Tax Appellate Tribunal (ITAT) observed the assessee's consistent non-compliance and lack of explanation throughout the assessment and appellate stages. Finding no perversity in the orders of the lower authorities, the ITAT upheld the penalties imposed by the AO and confirmed by the CIT(A). The appeals were dismissed due to the assessee's failure to furnish any reasonable cause for non-compliance.

The Tribunal granted permission for the withdrawal of the appeal, as the Departmental Representative had no objection to the request. Accordingly, the appeal filed by the assessee company was dismissed as withdrawn.

The Income Tax Appellate Tribunal permitted the assessee to withdraw the appeal as requested. The Tribunal clarified that should the order for full and final settlement in “Form 4” not be passed by the designated authority, the assessee would retain the liberty to seek restoration of the appeal.

The ITAT condoned the 278-day delay, acknowledging the assessee's justifiable reason for not participating in the CIT(A) proceedings due to non-receipt of physical notices. Consequently, the CIT(A)'s ex-parte order was set aside, and the matter was remanded for fresh adjudication, ensuring the assessee a proper opportunity of being heard on all issues, including the AO's assumption of jurisdiction.

The Income Tax Appellate Tribunal (ITAT) found that the CIT(Appeals) erroneously failed to adjudicate the critical jurisdictional ground raised by the assessee concerning the non-issuance of a Section 143(2) notice, despite the assessee having filed a return of income after receiving a Section 148 notice. Citing Supreme Court precedents, the ITAT deemed the CIT(Appeals)'s omission as evasive. Consequently, the ITAT set aside the order of the CIT(Appeals) and restored the matter back to the CIT(Appeals) for specific adjudication on the jurisdictional validity of the assessment, after providing the assessee a reasonable opportunity to be heard.

The Tribunal found that the AO provided an unreasonably short response time of 3 days during a COVID-19 lockdown period for the assessee to reply to the show cause notice/draft assessment order, constituting a violation of natural justice. Citing several High Court judgments, the Tribunal set aside the assessment order and remitted the matter back to the AO for fresh adjudication, ensuring a reasonable opportunity of being heard is provided to the assessee.

The Tribunal found that the CIT(A) passed an ex-parte order without properly notifying the assessee about the hearing, as the assessee had explicitly opted out of email communications in Form-35, while notices were sent electronically. Consequently, both the quantum appeal (ITA No. 547/RPR/2024) and the penalty appeal (ITA No. 546/RPR/2024) were restored to the file of the CIT(A) for fresh adjudication after providing a reasonable opportunity of being heard to the assessee.

The Tribunal found the assessee's explanation regarding the source of cash from pre-demonetization sales plausible, supported by turnover details and sale register entries. However, acknowledging the assessee's failure to provide irrefutable documentary evidence during the original assessment proceedings, the Tribunal decided to restore the matter to the AO for re-adjudication, granting the assessee a fresh opportunity to substantiate his claim.

The Tribunal observed that the assessee's "Form 35" indicated an opt-out from email communication for notices, yet CIT(A) notices were sent electronically via ITBA. This led to the assessee being unaware of the hearings and being denied a reasonable opportunity. Consequently, the Tribunal set aside the CIT(A)'s order and remitted both the quantum appeal (ITA No.547/RPR/2024) and the consequential penalty appeal (ITA No.546/RPR/2024) back to the CIT(A) for fresh adjudication after providing proper notice and opportunity.

The ITAT condoned the 307-day delay in filing the appeal, noting that the assessee had specifically opted out of email communication in 'Form-35' and did not receive physical notices for the CIT(A) proceedings. Finding that the assessee was unjustly denied a reasonable opportunity to be heard before the first appellate authority, the ITAT set aside the ex-parte order of the CIT(A) and remanded the matter back for fresh adjudication.

The tribunal, considering the facts presented, permitted the assessee to withdraw the captioned appeal. Consequently, the appeal filed by the assessee was dismissed as withdrawn.

The tribunal declined the assessee's request to keep the appellate proceedings in abeyance. It decided to dismiss the appeal as withdrawn, noting that the assessee had chosen an alternate remedy under VSVS-2024. The tribunal, however, granted the assessee liberty to seek restoration of the appeal if the final settlement order (Form 4) under VSVS-2024 is not passed by the designated authority.

The Tribunal permitted the assessee to withdraw the appeal, dismissing it as withdrawn. It was clarified that if the order for full and final settlement of tax arrears under 'Form 4' is not passed by the designated authority, the assessee would be at liberty to seek restoration of the appeal.

The Tribunal dismissed the revenue's appeal, upholding the Ld. CIT(A)'s decision to delete the VAT disallowance. It held that Section 43B of the Income Tax Act is not attracted when the unpaid VAT liability, though reflected in the balance sheet, has not been claimed as an expenditure or debited to the Profit & Loss Account. This decision was in line with judgments of the Chhattisgarh High Court in similar cases involving the assessee's sister concerns. The assessee's cross-objection was consequently dismissed as academic/infructuous.

The Tribunal found that the assessee had explicitly opted out of email communications in their Form-35, but the CIT(A) had sent all hearing notices electronically via ITBA. Consequently, the assessee was unaware of the scheduled hearings and could not participate. The Tribunal, finding no fault on the assessee's part, set aside the CIT(A)'s ex-parte order and remanded the matter for fresh adjudication, instructing the CIT(A) to provide a reasonable opportunity of being heard.

The Tribunal found that the CIT(A) violated the principles of natural justice (audi-altram-partem) by proceeding ex-parte and disposing of the appeal without considering or rejecting the assessee's adjournment request. The matter was therefore remanded back to the CIT(A) for re-adjudication.

The ITAT found that the assessee had explicitly opted out of receiving notices via email in their 'Form-35' memorandum of appeal. As all notices for hearing fixation were issued electronically through ITBA, the assessee was genuinely unaware of the appellate proceedings, thereby being deprived of a proper opportunity to be heard. Consequently, the ITAT set aside the ex-parte order of the CIT(A) and remanded the matter back for fresh adjudication, directing the CIT(A) to provide a reasonable opportunity to the assessee to present its case.

The Income Tax Appellate Tribunal upheld the penalties imposed by the CIT(A) under Section 271(1)(c) for all three components: the unexplained cash credits in partners' capital accounts (Rs.9 lacs), the understatement of net profit (Rs.33,52,197/-), and the claim for inadmissible expenses (Rs.4,16,975/-). The Tribunal found that the assessee failed to provide plausible explanations for these discrepancies, thus constituting concealment of income or furnishing of inaccurate particulars.

The Tribunal found the assessee's explanation for the cash deposits unsubstantiated. However, by applying CBDT Instruction No. 3/2017, it determined that the assessee could reasonably have Rs. 3,50,000/- cash in hand, and accordingly restricted the unexplained cash addition under Section 69A to Rs. 7,50,000/-. The additional grounds challenging the AO's jurisdiction were dismissed after a valid transfer order under Section 127(2) was found.

For AY 2014-15, the Tribunal remanded the turnover difference issue to the AO for verification of the assessee's reconciliation claim. For AY 2017-18, the Tribunal upheld the unexplained investment addition but remanded the turnover discrepancy for verification; it deleted the Section 40A(3) disallowance as subsumed by the 8% profit offer, but upheld the delayed ESI/PF disallowance. For AY 2018-19, the Tribunal upheld the short-declared income addition and the unexplained investment addition due to the assessee's voluntary agreement, but deleted the Section 40A(3) disallowance for similar reasons as AY 2017-18.

The ITAT partly allowed the appeal, remanding the specific issues concerning undisclosed capital investment (Rs. 96,99,743/-), clerical error treated as short-term capital gain (Rs. 5,98,030/-), and unexplained investment in furniture/fittings (Rs. 1,45,473/-) back to the AO for fresh adjudication. The Tribunal noted that the assessee had provided new evidence, such as banking channel transactions and supporting documents, warranting further verification. Other general grounds of appeal were dismissed.

The Tribunal found that the reassessment was invalid as the A.O. had reopened the assessment based on a mere 'change of opinion' on facts already available and examined during the original assessment proceedings. The issue regarding the land's value and its disputed nature was queried and replied to during the original assessment to the satisfaction of the A.O. Therefore, re-appreciation of these existing facts without new material did not confer valid jurisdiction for reopening under Section 147, as per the Supreme Court's ruling in CIT vs. Kelvinator of India Ltd.

The Income Tax Appellate Tribunal (ITAT) noted the assessee did not appear for the hearing and no application for adjournment was filed. The Senior Departmental Representative pointed out that the appeal was filed with a delay of 125 days without any application for condonation of delay. Consequently, the Tribunal dismissed the appeal solely due to the un-condoned delay in filing.

For AY 2014-15, the matter of turnover difference was remanded to the AO for re-verification. For AY 2017-18, the addition for unexplained investment was upheld, the disallowance under Section 40A(3) was deleted, the turnover difference was remanded, and the disallowance for delayed ESI/PF contributions was upheld. For AY 2018-19, the addition for lower net profit declared was upheld, the Section 40A(3) disallowance was deleted, and the addition for unexplained investment was upheld because the assessee had agreed to it.

For AY 2014-15, the addition of Rs.1,36,15,941/- for turnover discrepancy was remanded to the AO for re-verification. For AY 2017-18, the addition of Rs.18,08,007/- for unexplained investment and Rs.84,398/- for delayed PF/ESIC contributions were upheld. The addition of Rs.3,43,651/- for turnover difference was remanded, and the disallowance of Rs.6,00,000/- u/s 40A(3) was deleted as the assessee's enhanced net profit offer during survey covered such discrepancies. For AY 2018-19, the additions of Rs.2,77,000/- for short-declared income and Rs.7,33,566/- for unexplained investment were upheld, while the disallowance of Rs.4,17,448/- u/s 40A(3) was deleted for similar reasons.

The Tribunal held that the ad-hoc disallowance of transportation expenses by the AO and its partial confirmation by the CIT(A) were unjustified. The Tribunal found no specific infirmity in the assessee's claim, noting that payments were made through banking channels to identified persons, duly reported in Form 26AS, and the assessee's GP/NP rates were progressive. Disallowance under Section 37 of the Income Tax Act requires specific conditions (bogus, capital/personal, or illegal expenditure) to be met, which the lower authorities failed to establish.

The ITAT held that the CIT(A)'s dismissal of the appeal without addressing specific legal grounds, including the validity of reassessment proceedings and natural justice violations, was arbitrary and constituted a mistake apparent from record. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter back for fresh adjudication, directing the CIT(A) to afford the assessee a reasonable opportunity of being heard and to submit fresh documentary evidence.

The Tribunal, guided by the Jurisdictional High Court and the Supreme Court's ruling in Checkmate Services Pvt. Ltd., affirmed that employee contributions to EPF/ESIC paid after the statutory due date are not deductible, irrespective of payment before the ITR filing due date. It concluded that the issue is no longer debatable and the disallowance under section 143(1)(a) was valid.

The Tribunal condoned the delay in filing appeals but dismissed all substantive grounds. It upheld the validity of consolidated assessment orders citing a jurisdictional High Court precedent and confirmed the additions related to Gross Profit and commission due to the assessee's non-responsiveness and lack of plausible explanations. The Tribunal also directed the AO to compute interest under Sections 234A, 234B, and 234C as consequential.

The ITAT condoned the delay in filing appeals. However, it dismissed the additional grounds challenging the validity of consolidated assessment orders under Section 153D, citing jurisdictional High Court precedents. The tribunal further upheld the ex-parte orders of the CIT(A) and the assessment orders by the AO, including the additions related to the 8% GP rate on undisclosed sales and the 1% commission on bogus sales, due to the assessee's consistent non-representation and lack of plausible explanations during the appellate proceedings. Interest computation was deemed consequential.

The Tribunal condoned a 152-day delay in filing the appeal, noting the assessee had opted out of email communication and had not received a physical copy of the CIT(A)'s order, becoming aware only through the e-portal. On merits, the Tribunal found that the CIT(A) had summarily upheld the A.O.'s addition without considering the reconciliation chart. Therefore, the Tribunal restored the matter to the file of the ADDL/JCIT(A) for re-adjudication, granting the assessee a reasonable opportunity of being heard and to submit fresh documentary evidence.