ITAT Rajkot Judgments — March 2025

The Tribunal acknowledged that the orders passed were ex-parte and that the assessee was not given sufficient opportunity to be heard. While noting the assessee's non-compliance, the Tribunal decided to restore the appeals to the Assessing Officer for fresh adjudication.

The Tribunal noted that the assessee had not complied with notices issued by the NFAC and the AO, and had not submitted relevant documents. The assessment was framed under section 147 r.w.s. 144 and 144B. The Tribunal observed a lack of due care, attention, and a non-cooperative attitude from the assessee in pursuing the case for AY 2018-19. While the assessee prayed for an opportunity to explain the case before the lower authority, the Tribunal directed the assessee to deposit a cost of Rs. 5,000/- to the Prime Minister's Relief Fund. In the interest of justice and to provide a due opportunity, the Tribunal set aside the order of the NFAC and remanded the matter back to the file of the AO for fresh adjudication on merits. The appeal was allowed for statistical purposes.

The Tribunal noted that there should not be two assessment orders for the same issues and assessment year. Since the Tribunal's prior order had already directed a fresh assessment, and to avoid duplication, the PCIT's order was quashed.

The ITAT condoned the 370-day delay, finding sufficient cause due to the accountant's oversight and the assessee's unawareness. It held that the CIT(A) violated principles of natural justice by passing an ex-parte order without providing adequate opportunity of hearing. The ITAT set aside the CIT(A)'s order and remitted the matter back to the CIT(A) for de novo adjudication on merits.

The Tribunal found no substantive or corroborative evidence to establish that the money deposited in the Hawala operator's account belonged to the assessee. It followed its own precedent from an assessee's group case (Shri Mukesh Kumar Vrajlal) where similar additions were deleted due to lack of evidence, concluding that the Revenue failed to provide such evidence. Therefore, the Tribunal deleted the addition made by the Assessing Officer.

The Tribunal dismissed the Revenue's appeals concerning the deletion of additions for washing/handling loss, purchases from group concerns, brokerage/commission expenses, iron-ore expenses, and sales to group concerns. The Tribunal allowed the assessee's cross-objections for statistical purposes regarding preliminary expenses under Section 35D, directing the AO to verify eligibility. However, the cross-objection concerning depreciation on land cost was dismissed.

The Tribunal held that the reasons recorded by the AO for reopening the assessment were invalid as they lacked specific details like the bank account number and did not demonstrate due application of mind. Consequently, the reassessment proceedings were quashed.

The Tribunal upheld the PCIT's revision order, confirming that the AO's assessment was erroneous and prejudicial to the revenue. The Tribunal found that the AO failed to conduct proper inquiries into the large cash deposits, did not treat unexplained deposits as cash credits under Section 68, and incorrectly applied Section 44AD despite the assessee's high turnover and non-audited accounts. The assessee's non-cooperation and failure to provide customer details were noted, making the AO's view unsustainable.

For ITA No. 51/Rjt/2021 (Pari Anil Gandhi), the tribunal found that the Assessing Officer had adequately inquired into LTCG, housing loan interest, and unsecured loans, thus setting aside the PCIT's revision on these three issues. However, the PCIT's finding on deemed rent income was upheld. For ITA No. 57/Rjt/2021 (Late Smt. Priti Anil Gandhi), the tribunal quashed the PCIT's revision order entirely, holding it invalid as it was passed against a deceased person.

For the appeal of Pari Anil Gandhi, the Tribunal quashed the PCIT's revision concerning LTCG, housing loan interest, unsecured loans, and household withdrawals, finding the Assessing Officer had conducted sufficient inquiry and applied his mind. However, the PCIT's revision regarding deemed rent income on certain properties was upheld. For the appeal of Late Smt. Priti Anil Gandhi, the Tribunal entirely quashed the PCIT's revision order, holding it invalid as it was passed against a deceased person despite prior intimation of death.

The Tribunal dismissed the Revenue's appeals concerning the deletion of additions for washing/handling loss, purchases from group concerns, brokerage/commission expenses, iron-ore expenses, and sales to group concerns. The Tribunal allowed the assessee's cross-objections for statistical purposes regarding preliminary expenses under Section 35D, directing the AO to verify eligibility. However, the cross-objection concerning depreciation on land cost was dismissed.

The Tribunal dismissed the Revenue's appeals concerning the deletion of additions for washing/handling loss, purchases from group concerns, brokerage/commission expenses, iron-ore expenses, and sales to group concerns. The Tribunal allowed the assessee's cross-objections for statistical purposes regarding preliminary expenses under Section 35D, directing the AO to verify eligibility. However, the cross-objection concerning depreciation on land cost was dismissed.

The Tribunal dismissed the Revenue's appeals concerning the deletion of additions for washing/handling loss, purchases from group concerns, brokerage/commission expenses, iron-ore expenses, and sales to group concerns. The Tribunal allowed the assessee's cross-objections for statistical purposes regarding preliminary expenses under Section 35D, directing the AO to verify eligibility. However, the cross-objection concerning depreciation on land cost was dismissed.

The Tribunal dismissed the Revenue's appeals concerning the deletion of additions for washing/handling loss, purchases from group concerns, brokerage/commission expenses, iron-ore expenses, and sales to group concerns. The Tribunal allowed the assessee's cross-objections for statistical purposes regarding preliminary expenses under Section 35D, directing the AO to verify eligibility. However, the cross-objection concerning depreciation on land cost was dismissed.

The Tribunal noted that the assessee failed to comply with multiple notices issued by the CIT(A) and attributed this to the consultant not informing them. While acknowledging the non-cooperative attitude, the Tribunal also noted the Revenue's representative did not object to the assessee's request for an opportunity to explain the case. Therefore, the Tribunal set aside the order of the lower authority.

The Tribunal noted that the loan was taken when Chancellor Commodeal Pvt. Ltd. was not declared a shell company and was repaid through banking channels. However, since the company was later declared a shell company by the Government, the Tribunal directed the Assessing Officer to tax 15% of the loan amount as income.

The Tribunal condoned the delay in filing the appeal on humanitarian grounds. However, considering the assessee's consistent non-compliance with notices during assessment and appellate proceedings, the Tribunal decided to set aside the lower authorities' orders.

The Tribunal noted that the assessee had failed to comply with notices issued by the lower authorities and did not attend hearings. However, considering the assessee's submission that they were not informed about the hearing, the Tribunal set aside the order of the lower authority.

The Tribunal held that since the assessee firm had sufficient interest-free funds in the form of partners' capital (Rs. 49,49,096/-) which were higher than the interest-free advances given, there was no need to establish a nexus with borrowed funds. Therefore, disallowing interest expenditure under Section 36(1)(iii) was not justified.

The Tribunal held that the Assessing Officer failed to obtain the necessary approval from the Principal Commissioner of Income Tax (Exemption) before issuing the notice under Section 148. Consequently, the assessment order and the CIT(A)'s order were quashed.

The Tribunal held that the penalty under Section 270A cannot be levied as the assessee had a bona fide belief that the deduction was allowable, having been allowed in previous years. The Tribunal found no intention to under-report or misrepresent facts.

The Tribunal noted that the AO did not point out any specific defects or discrepancies in the assessee's books of accounts, nor did it conduct independent inquiries. The auditor also mentioned that the decline in Gross Profit Margin was due to market competition and increased costs. Therefore, the rejection of books of account and the addition were deemed unsustainable.

The Tribunal held that the AO had conducted adequate inquiries and applied his mind before passing the assessment order. The PCIT's view that the order was erroneous and prejudicial to revenue due to lack of inquiry was not sustainable.

The Tribunal held that the reopening of assessment was bad in law as the information relied upon by the AO was incorrect. Furthermore, the addition under section 69A of the Act was not applicable as the transactions were recorded in the assessee's books of account. The ITAT Mumbai Bench decision in DCIT Vs. Karthik Construction Co. was followed.

The Assessing Officer made additions under section 69, and the assessee sought to withdraw the appeal to settle tax arrears under the Direct Tax Vivad se Vishwas Scheme, 2024. The Departmental Representative had no objection to the withdrawal.

The Tribunal noted that the delay in filing the appeal was neither deliberate nor intentional but due to circumstances beyond the assessee's control. The Tribunal also observed that the assessee was negligent in following up with their old consultant regarding notices. Despite this, the Tribunal decided to give the assessee one more opportunity to present their case before the lower authority.

The Tribunal heard the matter and accepted the assessee's request to withdraw the appeal. The Department's representative had no objection to the withdrawal.