ITAT Rajkot Judgments — April 2025

The Tribunal held that the penalty notices issued under section 271(1)(c) were defective as they simultaneously charged both "concealment of income" and "furnishing inaccurate particulars," without specifying the exact limb, thus vitiating the proceedings. For penalties under section 271AAB(1)(c), it was held that penalties cannot be levied on additions based on estimation or where the underlying additions themselves have been deleted by the Tribunal, applying the maxim "Sublato fundamento cadit opus." Consequently, all penalties were deleted.

The Tribunal held that while time limits are important, substantial justice should be preferred over technical considerations, especially in cases of non-deliberate delay. Relying on precedent, the Tribunal condoned the delay of 522 days.

The Tribunal held that the penalty notices under section 271(1)(c) were defective for clubbing both "concealment of income" and "furnishing inaccurate particulars" without specifying the charge. It also ruled that penalties cannot be levied on additions based on estimation (deemed rent) and that penalties are not sustainable if the underlying additions (unexplained investment from seized documents) are deleted by the Tribunal, applying the maxim "Sublato fundamento cadit opus".

The Tribunal held that the penalty notices issued under section 271(1)(c) were defective as they ambiguously charged the assessee with both "concealment of income" and "furnishing inaccurate particulars of income" without specifying the exact ground, thus vitiating the proceedings. For the penalties under section 271AAB(1)(c), the Tribunal ruled that penalties cannot be levied on additions based on estimation (like deemed rent) or on additions that have been subsequently deleted by a higher authority (like the seized document addition), applying the principle of "Sublato fundamento cadit opus".

The Tribunal held that the penalty notices issued under section 271(1)(c) were defective as they ambiguously charged both "concealment of income" and "furnishing inaccurate particulars of income" without specifying which limb applied, thereby vitiating the proceedings ab initio. For penalties under section 271AAB(1)(c), it was determined that no penalty could be levied on additions based on estimation or on those that had already been deleted by the Tribunal. Consequently, the penalties were deleted.

The Tribunal held that the penalty notices issued under Section 271(1)(c) were defective as they simultaneously charged both "concealment of income" and "furnishing inaccurate particulars of income" without specifying the applicable limb, contrary to Supreme Court and High Court precedents. For penalties under Section 271AAB(1)(c), the Tribunal found that the underlying additions for deemed rent were based on estimation and additions from seized documents had already been deleted by a prior Tribunal order. Consequently, the Tribunal deleted all penalties imposed on the assessee.

The Tribunal held that the Assessing Officer's order was neither erroneous nor prejudicial to the interest of the revenue. The explanation provided by the assessee regarding the source and nature of the excess stock was accepted. Consequently, the revisional jurisdiction exercised by the PCIT under section 263 was found to be improper.

The Tribunal held that the PCIT's order under section 263 was not sustainable. The Assessing Officer had conducted inquiries and accepted the assessee's explanation regarding the excess stock. The explanation provided by the assessee about the nature and source of income was considered satisfactory and accepted by the survey officer. The Tribunal found that the Assessing Officer's order was neither erroneous nor prejudicial to the interest of the revenue, and therefore, the condition precedent for invoking revisional jurisdiction under section 263 was absent.

Both parties agreed that the matter should be remitted back to the Assessing Officer for further examination of the dissolution deed, individual partner affidavits, and registration status. The Tribunal decided to set aside the AO's order and remit the matter back for fresh adjudication after giving the assessee an opportunity to be heard.

The Tribunal acknowledged the explanation for the delay, citing the serious illness and death of the assessee's tax consultant and the assessee's reliance on him. The Tribunal also noted that the CIT(A) order was ex-parte and non-speaking, violating principles of natural justice.

The Tribunal held that interest earned from cooperative banks is eligible for deduction under Section 80P(2)(d) of the Act, referencing several jurisdictional High Court judgments. The Tribunal found that the Assessing Officer had taken a plausible view based on existing judicial precedents. The revisional order passed by the PCIT u/s 263 was quashed as it was not sustainable in law.

The Tribunal ruled that penalty notices under section 271(1)(c) were invalid as they ambiguously charged both "concealment of income" and "furnishing inaccurate particulars" without specifying the exact default. Penalties under section 271AAB(1)(c) for deemed rental income were deleted as they were based on estimated additions, and penalties for additions from seized documents were deleted because the underlying additions had already been set aside by a previous Tribunal order, applying the maxim "Sublato fundamento cadit opus".

The Tribunal noted that the CIT(A) order was ex-parte and non-speaking, and that the issue was not decided as per Section 250(6) of the Act. Considering the principles of natural justice, the Tribunal decided to grant the assessee another opportunity.

The Tribunal condoned the delay in filing the appeal. It was held that the CIT(A)'s order was ex-parte and non-speaking, violating the principles of natural justice as the assessee was not given a sufficient opportunity to be heard. The matter was remitted back to the Assessing Officer for de novo adjudication.

The Tribunal noted that the addition made by the assessing officer was Rs. 1,55,000/-, which falls within the maximum amount not chargeable to tax (Rs. 2,50,000/-). Both parties agreed that this amount was within the exempted limit.

The Tribunal condoned the 44-day delay in filing the appeal before the CIT(A) after considering the reasons provided by the assessee. The Tribunal noted that the CIT(A) had not adjudicated the case on merits, violating the principle of natural justice.

The Tribunal condoned the delay of 255 days, noting that the mistake was by the tax consultant and not intentional. The Tribunal restored the matter to the CIT(A) for de novo adjudication, deeming it in the interest of justice to give the assessee a fresh opportunity.

The Tribunal noted that both the assessee's counsel and the revenue's DR agreed that the matter should be remitted back to the Assessing Officer for further examination of documents like the dissolution deed and affidavits. The Tribunal set aside the AO's order and remitted the matter for fresh adjudication.

The assessee's counsel requested to withdraw the appeal at the outset. The Revenue did not object to the withdrawal request. The Tribunal accepted the prayer for withdrawal.

Both the assessee and revenue agreed that the matter should be remitted back to the AO for fresh adjudication. The Tribunal set aside the order of the AO and allowed the assessee an opportunity to present their case.

The Tribunal noted that the CIT(A) passed an ex-parte order without affording the assessee a proper hearing, violating principles of natural justice. The Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for a fresh adjudication.

The Tribunal noted that the assessee, being a senior citizen, had relied on his tax consultant who unfortunately passed away after a prolonged illness. The Tribunal found that the assessee had explained the sufficient cause for the delay and therefore condoned the delay. The Tribunal also found that the CIT(A) order was an ex-parte and non-speaking order, violating principles of natural justice.

The Tribunal held that the proceedings initiated under Section 147 were invalid as no incriminating material was found during the search. The addition based solely on a third-party affidavit, without corroboration or an opportunity for cross-examination, was unsustainable. The Tribunal also noted that the assessee's own affidavit, disproving the on-money payment, was ignored without reason.

The Tribunal noted that the Ld. CIT(A)'s order was non-speaking and did not address the merits of the case. The assessee was not afforded sufficient opportunity to be heard, violating the principles of natural justice. As the assessee is an agriculturist, advance tax was not payable on exempt income.

The assessee's counsel informed the tribunal that the assessee did not wish to press the appeal. The Departmental Representative raised no objection to this submission.

The Tribunal condoned the delay in filing the appeal, considering the interest of justice and the explanation provided. The Tribunal noted that the CIT(A)'s order was ex-parte and non-speaking and did not decide the issue as per the mandate of Section 250(6). Therefore, one more opportunity was granted to the assessee.

The Tribunal condoned the delay, noting that it was due to the tax consultant's mistake. The Tribunal found that the CIT(E)'s order was non-speaking and lacked proper adjudication as per statutory provisions. The Tribunal emphasized the principle of natural justice.

The assessee's counsel informed the tribunal that the assessee did not wish to press the appeal. The Departmental Representative raised no objection to this submission.

The Tribunal condoned the delay of 634 days, holding that the delay was due to reasons attributable to the previous tax consultant and the need to find a new consultant. The Tribunal also found that the assessee now possesses all the required documents.

The Tribunal condoned the delay in filing the appeal, acknowledging that the assessee's absence from hearings was due to non-service of notices on the correct email. The Tribunal noted that the CIT(A) did not decide the merits of the issue and restored the matter to the Assessing Officer for fresh adjudication.

The Tribunal held that the issue was squarely covered by earlier judgments of its own Coordinate Bench and Division Bench, which had decided the 'on-money' issue concerning Parijat Residency in the assessee's favor. It emphasized that additions cannot be made solely based on third-party affidavits without corroborating evidence or an opportunity for cross-examination. Finding no change in facts or law, the Tribunal allowed the assessee's appeal, directing the deletion of the addition.

The Tribunal noted that the assessee could not plead its case successfully before the CIT(A) and the CIT(A) did not pass the order as per section 250(6) of the Act. Principles of natural justice require that the affected party be given sufficient opportunity to be heard.

The tribunal held that the Assessing Officer had conducted sufficient inquiry into both issues during the original assessment proceedings. For the notional interest on loans, the assessee demonstrated having adequate interest-free funds. For the notional rent on unsold flats, the tribunal noted that Section 23(5) of the Income Tax Act provided for a 'cooling period' during which such property, if held as stock-in-trade, would have a nil annual value, and this period was not over for the relevant assessment year. Citing Supreme Court precedents, the tribunal concluded that since the AO had taken a plausible view after due inquiry, the PCIT's revisionary order u/s 263 was not justified as the original assessment was neither erroneous nor prejudicial to the revenue.

The Tribunal noted that the assessee could not plead their case effectively before the CIT(A) and that the CIT(A) order did not comply with the mandate of section 250(6) of the Act. Considering the principle of natural justice, the Tribunal decided to grant the assessee another opportunity to present their case before the Assessing Officer.

The Tribunal found merit in the assessee's submission that filing Form 10B during appellate proceedings can be considered sufficient compliance. Citing various judicial precedents, the Tribunal directed the Assessing Officer to verify Form 10B and allow the exemption claim.

The Tribunal condoned the delay in filing the appeal, acknowledging mitigating circumstances. The Tribunal restored the matter to the Assessing Officer for de novo adjudication, directing that the assessee be given a sufficient opportunity to be heard.

The Tribunal held that the PCIT had not properly exercised jurisdiction under Section 263 as the twin conditions of the AO's order being erroneous and prejudicial to the revenue were not met. The Tribunal found that the AO had applied his mind and taken a plausible view in all the issues raised by the PCIT.

The Tribunal observed that the appeal's tax effect was below the monetary limit of Rs. 60,00,000/- prescribed by CBDT Circular No. 09/2024 dated 17.09.2024 for filing appeals before the Appellate Tribunal. As CBDT circulars are binding on the Revenue, the appeal was dismissed in limine for being contrary to the Department's policy decision.

The Tribunal noted that no substantive addition was made in the hands of the true owner, M/s. Om Jewellers. Since the Department failed to make a substantive addition against the true owner, a protective addition in the hands of the assessee, who is not the true owner, cannot be sustained.

The Tribunal condoned the delay in filing the appeals, finding sufficient and reasonable cause, and admitted the appeals for hearing. On the merits of the Section 263 order, the Tribunal found that the AO had conducted proper enquiries on all three issues, and the views taken by the AO were plausible, rendering the assessment orders neither erroneous nor prejudicial to the interest of the revenue. The Tribunal emphasized that the PCIT's revisional jurisdiction under Section 263 was improperly exercised as the twin conditions (erroneous and prejudicial) were not met, thereby quashing the PCIT's order.

The Tribunal condoned the delay in filing the appeals, finding the reasons provided to be genuine and sufficient. After considering the arguments, the Tribunal quashed the PCIT's orders and allowed the appeals. The issues revolved around excess stock found during a survey, non-deduction of TDS on contract/sub-contract expenses, and the classification of 'Row expenses' as revenue expenditure.

The Tribunal held that the assessee did not have a proper opportunity of being heard before the CIT(A) and the ex-parte order needed to be set aside. The case was remanded to the Assessing Officer for fresh consideration.

The Tribunal condoned the delay due to mitigating circumstances. It ruled that the ex-parte order by the CIT(A) violated natural justice as the assessee was not given sufficient opportunity to be heard. The Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for a fresh adjudication (de novo) after granting the assessee a proper hearing. A cost of Rs. 5000 was imposed on the assessee for their non-compliance attitude, which was subsequently deposited.

The Tribunal acknowledged that the CIT(A) passed an ex-parte order without delving into the merits. Consequently, the Tribunal decided to restore the issue to the Assessing Officer for fresh adjudication, emphasizing the need for adequate hearing opportunities. A cost of Rs. 10,000/- was imposed on the assessee, which has already been deposited.

The Tribunal noted that the assessee had passed away before the assessment order was framed, and the PCIT had also passed the revision order against a deceased person. Relying on High Court and ITAT precedents, the Tribunal held that proceedings initiated against a dead person are a nullity. Therefore, the revision order passed by the PCIT was quashed.

The learned Departmental Representative did not object to the assessee's submission. Therefore, the appeal was treated as withdrawn by the Tribunal.

The Tribunal condoned the delay, finding the reasons provided to be convincing and constituting a reasonable cause. The Tribunal also noted that the CIT(A) had dismissed the appeal ex-parte without providing the assessee an adequate opportunity to be heard, violating principles of natural justice.