ITAT Raipur Judgments — February 2025

The Income Tax Appellate Tribunal found the assessee's explanation for the 1316-day delay, primarily due to unawareness of the assessment proceedings caused by notices being sent to an outdated email ID, to be a bonafide omission. Adopting a liberal and justice-oriented approach, the ITAT condoned the delay, set aside the CIT(A)'s order, and restored the matter to the CIT(A) for re-adjudication on merits, granting the assessee a reasonable opportunity to be heard and to furnish fresh documentary evidence.

The ITAT found that the CIT(A) erred by dismissing the appeal on grounds of delay without properly verifying the actual date of service of the assessment order or confronting the assessee with the discrepancy. Given the evidence suggesting the assessment order was actually dated 29.12.2017, not 29.12.2016, and issued subsequent notices, the ITAT restored the matter to the CIT(A) for fresh adjudication. The CIT(A) is directed to re-adjudicate after verifying the correct factual position regarding the assessment order's date and providing a reasonable opportunity of being heard, leaving the merits open.

The Tribunal condoned the delay in filing the appeal. Relying on CBDT Instruction No. 03/2017, which states that cash deposits up to Rs. 2.5 lakhs by individuals without business income do not require verification, the Tribunal further reduced the addition. The final addition was scaled down to Rs. 3 lakhs (Rs. 5.50 lakhs - Rs. 2.50 lakhs).

The ITAT found that the CIT(A) had disposed of the appeal in a piecemeal manner by not adjudicating the jurisdictional issues related to the reopening of assessment under Section 147. Therefore, the tribunal remanded the entire matter back to the CIT(A) to re-adjudicate all issues, including the validity of the reassessment proceedings and the claim of "borrowed satisfaction." Both the revenue's appeal and the assessee's cross-objection were allowed for statistical purposes.

The Tribunal, relying on Supreme Court judgments in Ashish Agrawal and Rajeev Bansal, and its own decision in Kachrulal Jitendra Kumar, found that the Section 148 notices issued by the AO for both assessment years were beyond the prescribed period of limitation, even after accounting for extensions under TOLA and the directions of the Apex Court. Consequently, the reassessment orders were quashed for want of valid assumption of jurisdiction.

The Tribunal, relying on Supreme Court judgments in Ashish Agrawal and Rajeev Bansal, found that the reassessment notices issued under Section 148 (new regime) for both AYs were beyond the statutory limitation period. Consequently, the assumption of jurisdiction by the AO was invalid, and the assessment orders were quashed. The revenue's appeals were dismissed as infructuous, and the assessee's cross-objections were allowed.

The Tribunal, applying the Supreme Court judgments in Ashish Agrawal and Rajeev Bansal, found that the order under section 148A(d) dated 26.07.2022 and the subsequent notice under section 148 dated 29.07.2022 were issued beyond the period of limitation, which expired on 14.06.2022. Consequently, the assessment order passed by the Ld. AO was quashed due to a lack of valid assumption of jurisdiction, and other grounds of appeal regarding the merits of the addition were left open.

The Tribunal held that the reassessment order passed by the AO u/s 147 r.w.s. 143(3) for AY 2012-13 was illegal and void-ab-initio. This was because a search and seizure operation u/s 132 was initiated against the assessee on 26.11.2019, while the reassessment proceedings (initiated on 30.03.2019 and concluded on 31.12.2019) were pending. As per the second proviso to section 153A(1) of the Income Tax Act, any pending assessment or reassessment for the relevant six assessment years abates upon the initiation of a search, and assessment must then be framed under section 153A. Consequently, the AO lacked jurisdiction to complete the section 147 assessment.

The Tribunal vacated the addition for deemed dividend, finding the loans were from a preceding year. It remanded the disallowance under Section 14A and the deemed sales tax addition to the AO for factual verification and fresh adjudication. The Rs.2 crore unexplained capital credit was also remanded for further opportunity to the assessee to present evidence. However, the Rs.68.62 lakh unexplained credits (related to agricultural income shortfall and other credits), which the assessee had offered as additional income, was upheld due to insufficient explanation of source and nature.

The ITAT upheld the validity of the reassessment proceedings, rejecting the assessee's argument of a mere 'change of opinion' due to new material surfaced post-survey. The tribunal affirmed the CIT(A)'s decision to sustain additions for bogus purchases by applying a 10% GP rate (adjusted for disclosed GP) and for unexplained investment (based on peak purchases). Consequently, both the assessee's and revenue's appeals against the CIT(A)'s orders for all three assessment years were dismissed.

The Tribunal upheld the validity of the reassessment proceedings, rejecting the 'change of opinion' argument, as new material emerged from post-survey investigations. It affirmed the CIT(A)'s method of quantifying the profit element on bogus purchases by applying a 10% GP rate, minus the already declared GP, citing market conditions and the assessee's trading nature. The Tribunal also sustained the addition for unexplained investment (peak purchase amount), noting the assessee's admitted involvement in bogus billing activities.

The Income Tax Appellate Tribunal (ITAT) upheld the validity of the reassessment proceedings, finding that new material (survey findings, assessee's admissions about bogus transactions and benami concerns) constituted valid grounds, not merely a change of opinion. The ITAT affirmed the CIT(Appeals)' method of quantifying the profit element on bogus purchases by applying a GP rate of 10% (after adjusting for the assessee's disclosed GP rate of 1.53% for A.Y. 2013-14, 1.45% for A.Y. 2014-15, and 1.41% for A.Y. 2015-16), and also upheld the additions for unexplained investment (peak amount) for all assessment years. Both the assessee's and revenue's appeals were dismissed.

The Income Tax Appellate Tribunal (ITAT) dismissed both the assessee's and the revenue's cross-appeals across all three assessment years, thereby upholding the Commissioner of Income-Tax (Appeals)'s (CIT(A)) decision. The CIT(A) had confirmed the bogus nature of the purchases but scaled down the additions by applying a 10% Gross Profit (GP) rate (net of GP already declared by the assessee) on the value of such purchases. The Tribunal also confirmed the additions for unexplained investment (peak amount) and rejected the assessee's challenge to the validity of reassessment proceedings, finding they were based on new material from post-survey investigations and not merely a "change of opinion".

The Tribunal upheld the decision of the CIT(A), dismissing the revenue's appeal. It was held that the assessee had discharged its primary onus by providing all necessary documents and explanations for the share application money and premium. The AO failed to conduct independent inquiries under Sections 131 or 133(6) of the Act to disprove the evidence. The Tribunal reiterated that once the assessee discharges its onus, additions under Section 68 cannot be sustained without refuting the submitted evidence through proper investigation.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision to delete the addition. The Tribunal found no substantial material or corroborative evidence to establish a nexus between the assessee and 'Mayura Yogesh', and the revenue failed to prove that the alleged transactions were carried out by the assessee. The addition was based on borrowed opinion, presumptions, and surmises, without independent inquiries or a clear link to the assessee, which is impermissible under law.

The Income Tax Appellate Tribunal held that the CIT(A) erred by not adjudicating the legal grounds raised by the assessees regarding jurisdictional issues, specifically the non-issuance of notice under section 143(2) and the absence of a transfer order under section 127. Consequently, the Tribunal remanded the matter back to the CIT(A) for the limited purpose of deciding these legal grounds, ensuring proper opportunity for the assessees.

The Tribunal found that the CIT(A) had indeed overlooked and not adjudicated the fundamental legal grounds concerning the AO's jurisdiction. The ITAT ruled that it was the duty of the CIT(A) to decide all issues raised by the assessee. Consequently, the case was remanded back to the CIT(A) with specific directions to adjudicate these legal grounds, ensuring proper opportunity for the assessee to present their case.

The Tribunal allowed the assessee's appeal for statistical purposes, setting aside the CIT(A)'s ex-parte order. It found that the assessee had justifiable reasons for non-participation as notices were sent electronically despite an opt-out on Form 35. The matter was remanded to the CIT(A) for fresh adjudication, directing them to provide a reasonable opportunity of hearing and verify the actual cash deposit amount and its source.

The Income Tax Appellate Tribunal (ITAT) held that the CIT(A) erred by admitting and relying on additional documentary evidence without providing the AO a reasonable opportunity to examine or rebut it, thereby violating the mandatory provisions of Rule 46A of the Income Tax Rules, 1962. The ITAT concluded that the CIT(A)'s order vacating the additions was unsustainable due to this procedural irregularity. Consequently, the matter was restored to the CIT(A)'s file for fresh adjudication after properly confronting the additional evidence to the AO.