ITAT Rajkot Judgments — May 2025

The Tribunal found that the Assessing Officer failed to establish a direct link between the assessee and the third-party documents, did not properly examine the assessee's detailed submissions, and denied the assessee the opportunity for cross-examination. Citing principles of natural justice, the Tribunal held that additions based on uncorroborated third-party documents without providing cross-examination cannot be sustained. Thus, the order of the CIT(A) was set aside.

The Tribunal held that the write-off of investments due to capital reduction, duly approved by the High Court, constituted an actual extinguishment of assets, not a 'provision for diminution in value of any asset' under section 115JB(2)(i), thus disallowing the addition to book profit. It also ruled that the CIT(A)'s enhancement of assessment without a show cause notice violated natural justice and section 251(2) of the Act. Furthermore, the rental income from the CFS was considered business income directly linked to eligible industrial undertaking, making it eligible for deduction under section 80-IA, consistent with prior judicial pronouncements and circulars.

The Tribunal held that the assessment order was framed in haste without proper inquiry and violated the principles of natural justice. The seized documents were considered "dumb documents" without sufficient corroborative evidence. The Tribunal emphasized that additions cannot be made based solely on such documents without examining them and providing an opportunity for cross-examination.

The Tribunal held that the assessment orders were framed in haste, violating principles of natural justice, as the Assessing Officer failed to examine submitted documents and conduct third-party inquiries. The assessee's request for cross-examination was also not adequately addressed. Therefore, the appeals were remitted back to the Assessing Officer for fresh adjudication.

The Income Tax Appellate Tribunal found that the assessment orders were framed in haste without proper inquiry, examination of the assessee's extensive submissions and documentary evidences, or conducting third-party verification. Crucially, the assessee was not provided an opportunity for cross-examination of the third party (Shri Vijay Nagda and Neelkanth Group) whose seized documents formed the basis of the additions, violating the principles of natural justice. Consequently, the ITAT set aside the CIT(A)'s orders and remitted all cases back to the Assessing Officer for fresh adjudication on merits.

The Tribunal held that the assessment order was framed in haste without conducting proper inquiry, examining evidence, or conducting third-party inquiry. The assessee's submissions and documentary evidence were not properly considered. Crucially, the opportunity for cross-examination was denied, violating natural justice principles. The additions were made based on 'dumb documents' without corroborative evidence.

The Tribunal noted that the assessment order was framed in haste and violated principles of natural justice, as the AO failed to examine documentary evidence submitted by the assessee and conduct necessary third-party inquiries. The assessee also contended that seized documents were "dumb documents" without direct corroboration. The Tribunal observed that the AO and CIT(A) had not properly verified the status of the assessee as an agent/commission agent. Therefore, the matter was remitted back to the Assessing Officer for fresh adjudication.

The Tribunal noted that the assessment order was framed hastily without proper examination of the assessee's evidence or conducting third-party inquiries. The principles of natural justice, including the opportunity for cross-examination, were allegedly violated. The Tribunal found that the seized documents were 'dumb documents' without sufficient corroboration and that the addition was based on surmises and conjectures.

The Tribunal held that the assessment orders were framed in haste without properly examining the assessees' detailed submissions and documentary evidence. It found that the lower authorities failed to conduct third-party inquiries, establish a clear nexus between the assessees and the seized documents, or provide an opportunity for cross-examination of Shri Vijay Nagda. Citing principles of natural justice, particularly 'audi alteram partem', the Tribunal set aside the CIT(A)'s order and remitted all cases back to the AO for fresh adjudication on merits after conducting proper inquiry and examination of all evidence.

The Tribunal noted that the assessee claimed the cash deposits were from opening balance, gift from son, agricultural income, and withdrawal from a joint bank account. While some portions were accepted, the Tribunal found that the assessee had not submitted sufficient proof for the entire amount. Therefore, a 10% addition of the sustained amount was considered appropriate.

The Tribunal held that the issuance of a notice under Section 143(2) of the Income Tax Act is mandatory and not procedural. The omission on the part of the AO to issue such a notice is not a curable procedural irregularity. The Tribunal referred to the Supreme Court's decision in ACIT vs. Hotel Blue Moon, emphasizing that the requirement of notice under Section 143(2) cannot be dispensed with.

The Tribunal noted that the delay was not deliberate or intentional and that the cause of substantial justice should be preferred over technical considerations. The reasons provided for the delay, including medical issues and procedural transitions, were found to be convincing and constituted a reasonable cause. The Tribunal also found that the assessee did not receive adequate opportunity of being heard at the CIT(A) level due to non-receipt of notices on the correct email address.

The Tribunal condoned the delay in filing the appeal before the CIT(A), ruling that the delay was not deliberate and substantial justice should take precedence over technical considerations. It set aside the ex-parte order of the CIT(A), finding it to be in violation of Section 250(6) and principles of natural justice for not providing sufficient opportunity of hearing. The case was remitted back to the Assessing Officer for a fresh de novo adjudication on merits, with directions to provide the assessee a fair hearing and opportunity to present evidence.

The Tribunal condoned both the 216-day delay in filing the appeal before it and the 872-day delay in filing the appeal before the CIT(A), finding sufficient cause due to the tax consultant's demise and non-jurisdictional notices. It further held that the CIT(A)'s ex-parte order was not compliant with Section 250(6) of the Act and violated natural justice. Consequently, the case was remitted to the Assessing Officer for a de novo adjudication, with directions to afford the assessee a proper hearing on merits.

The Tribunal held that while adhering to legal provisions is important, substantial justice should be preferred. Citing precedents, the Tribunal decided to condone the delay, considering the mistake of the advocate should not penalize the assessee. The appeal was admitted for hearing on merit.

The Tribunal condoned the delay of 346 days, considering the assessee's circumstances and the principle of substantial justice over technicalities. It was noted that the CIT(A)'s order was non-speaking and lacked a proper adjudication of the grounds raised.

The Tribunal found that the Ld. CIT(A) violated principles of natural justice by not providing the assessee a proper opportunity for a personal hearing via video conferencing, despite specific requests. Citing settled law on natural justice, the Tribunal set aside the CIT(A)'s order and remitted the matter back for de novo adjudication, directing the CIT(A) to afford sufficient opportunity of being heard to the assessee. The Tribunal also noted that the assessee could raise legal issues regarding the validity of the reassessment proceedings.

The Income Tax Appellate Tribunal (ITAT) observed that the assessee was not given adequate opportunity to furnish all required documents, particularly concerning the 'source of the source' of investments and loans, during the PCIT's revision proceedings. Upholding principles of natural justice, the ITAT set aside the PCIT's order and remitted the entire matter back to the PCIT for de-novo adjudication. The PCIT was directed to conduct proper inquiries after allowing the assessee a full opportunity to be heard and submit all necessary evidence.

The Tribunal condoned the delay, citing that the issue arose due to a previous tax consultant's mistake and that substantial justice should be preferred over technical considerations. The Tribunal also noted that the CIT(A) passed an ex-parte and non-speaking order without deciding the grounds raised by the assessee.

The Tribunal noted that the appeals were against orders passed by the NFAC/CIT(A) which were alleged to be without considering facts, circumstances, and submissions, and thus violative of natural justice. Specifically, the assessee claimed not to have been provided an opportunity for a video conference hearing. The Tribunal agreed that the principles of natural justice were violated and restored the matter to the CIT(A) for fresh adjudication.

The Tribunal noted that the CIT(A) had passed the order without providing the assessee with adequate opportunity of being heard, which is a violation of the principles of natural justice. Therefore, the Tribunal set aside the order of the CIT(A) and remitted the matter back for de novo adjudication.

The Tribunal held that the CIT(A) erred in upholding the addition made under Section 68 as Bogus Purchase. The Tribunal noted that the Assessing Officer himself characterized the transactions as 'Circular Transactions' and that the assessee had provided extensive documentary evidence to substantiate the genuineness of the purchases. Relying on judicial precedents, the Tribunal found that in cases of circular transactions, only the profit margin or a nominal addition is justifiable, not the entire purchase value treated as bogus.

The Tribunal noted the assessee's negligence in pursuing the case and failure to provide necessary documents. However, considering the interest of justice, the Tribunal set aside the CIT(E)'s order and remanded the matter back for fresh adjudication, directing the assessee to pay a cost of Rs. 2,000/- to the Prime Minister Relief Fund.

The Tribunal held that the AO wrongly framed the assessment order under section 144 when the assessee had provided sufficient details and documents. The Tribunal also found that the AO failed to issue a mandatory notice under section 143(2) before framing the assessment. The court emphasized that even if the return is filed belatedly, the issuance of a section 143(2) notice is crucial for jurisdiction when the AO intends to make an assessment at a higher income.

The Tribunal held that the assessee had discharged the onus to prove the identity, creditworthiness, and genuineness of the share capital. It noted that the AO had accepted 89% of the share capital as genuine and that the same documents and evidences were provided for the remaining 11% which was disputed. The Tribunal also referred to case law which states that if the creditor is an income tax assessee, their creditworthiness cannot be disputed by the AO of the assessee.

The Tribunal condoned the delay of 508 days in filing the appeal, emphasizing the principle of 'substantial justice' over technicalities and adopting a liberal approach to condonation, citing precedents. The Tribunal restored the appeal to the CIT(A) with a direction to decide the issues afresh on merits, ensuring the assessee is provided a reasonable opportunity of hearing. The assessee was also directed to be vigilant in future compliance.

The Assessing Officer found that the assessee had not sufficiently proved the genuineness and creditworthiness of the lenders, especially since some lenders had cash deposits in their accounts just before advancing the money, and their advanced amounts exceeded their declared income. The CIT(A) upheld the addition. However, the Tribunal noted that the assessee had provided substantial documentation including confirmations, PAN, bank statements, and financial statements of the lenders. The Tribunal held that the assessee had discharged its primary onus by providing these documents, and it was for the AO to further investigate if any doubts remained.

The Tribunal noted that the assessee was not given a proper opportunity to explain the case before the AO, and principles of natural justice were violated. The addition was made based on presumptions and borrowed satisfaction without independent inquiry or opportunity for cross-examination.

The Tribunal noted that the assessee was not afforded sufficient opportunity of being heard and could not effectively present their case before the Ld. CIT(A). The Ld. CIT(A)'s order was considered a non-speaking order and a violation of the principle of natural justice. Therefore, the Tribunal restored the matter back to the Assessing Officer for de novo adjudication.

The Tribunal noted that the assessee was not given a sufficient opportunity of being heard due to non-receipt of notices. The Tribunal decided to restore the matter to the Assessing Officer for de novo adjudication, allowing the assessee to present additional evidence and arguments.

The Tribunal held that the CIT(A) passing an order without a remand report from the Assessing Officer, despite calling for one, violates the principles of natural justice. The matter was restored to the Assessing Officer for de novo adjudication.

The tribunal held that denying justice due to a procedural lapse, especially in the early stages of e-filing implementation, would be unjust. The assessee's counsel undertook to be more vigilant in future.

The Tribunal noted that the assessee is entitled to the exemption claimed under Section 80P(2)(a)(iii), (iv), and (d). It was also noted that the same exemption was allowed in a previous year. The Tribunal observed that the assessee committed an error in filing the return by claiming the exemption under the wrong sub-clause.

The Tribunal acknowledged that the assessee was unaware of the e-filing system, especially in 2016 when it was new. Despite the procedural lapse, justice should not be denied. The Tribunal restored the appeals to the CIT(A) for adjudication on merit.

The Tribunal noted that the assessment was carried out under Section 144 r.w.s. 263 of the Act, and the CIT(A) confirmed the Assessing Officer's order based on available materials, which was insufficient for natural justice. The Tribunal emphasized that principles of natural justice require an opportunity to be heard.

The Tribunal held that the assessee failed to comply with statutory notices during assessment and appellate proceedings, and did not provide valid reasons or additional evidence as per Rule 46A. The assessee's non-cooperative attitude and failure to appear before the lower authorities and the Tribunal led to the dismissal of the appeals.

The Tribunal held that the assessee was non-cooperative and failed to provide documentary evidence during assessment and appellate proceedings. No application was filed under Rule 46A for submitting additional documents, and in Form 35, 'No records added' was mentioned. The assessee also failed to appear for hearings before the Tribunal.

The Tribunal observed that the CIT(A) confirmed the AO's orders based on insufficient material, violating principles of natural justice which mandate adequate opportunity of being heard. Consequently, the Tribunal set aside the CIT(A)'s orders and remitted the matter back to the Assessing Officer for de novo adjudication, directing the AO to provide the assessee with a proper opportunity to present their case and evidence. For statistical purposes, the appeals were treated as allowed.

The Tribunal noted that provisions for NPAs are for disclosure purposes as per RBI guidelines and are not claimed as an expense. The assessee voluntarily maintains higher provisions, which is not prohibited. The Supreme Court ruling in Southern Technologies Ltd. confirms that provisions for NPAs are not allowable expenses. Therefore, no addition should be made.

The Tribunal noted that the assessee sold brass scrap to brass parts manufacturers and not to other traders. It was also observed that while Form 27C declarations were received and submitted belatedly, there was no evidence on record regarding the timely filing of Form 27EQ. Relying on judicial precedents, a minor delay in filing declarations is considered a procedural lapse and does not negate the seller's non-liability to collect TCS if the goods are for manufacturing purposes.

The ITAT condoned the 114-day delay, finding it neither intentional nor deliberate, noting the CIT(A) order was served on an incorrect email-ID and the consultant lacked taxation knowledge. The Tribunal held that the CIT(A)'s ex-parte order, passed without adjudicating issues on merit and violating Section 250(6) and principles of natural justice, was vitiated. The matter was remitted back to the Assessing Officer for a fresh assessment with proper opportunity of hearing.

The Tribunal set aside the Ld. CIT(A)'s order and remitted the quantum assessment proceedings back to the Assessing Officer for fresh adjudication on merits, allowing the assessee to furnish additional documents and evidence. Consequently, the related penalty proceedings were also remitted to the Assessing Officer, with liberty to initiate fresh penalties as per law after the fresh quantum assessment.

The Tribunal set aside the Ld.CIT(A)'s orders and remitted all quantum and penalty proceedings back to the Assessing Officer for fresh adjudication on merit. The assessee was allowed to furnish additional documents and evidence. The penalties were also remitted as their validity depends on the outcome of the quantum proceedings, with the AO given liberty to initiate fresh penalties if warranted.

The Tribunal noted the assessee's financial difficulties and desire to contest the appeal on merit. The Tribunal accepted the assessee's prayer to set aside the CIT(A)'s order and remit the quantum proceedings back to the Assessing Officer for fresh adjudication. Consequently, the penalties imposed were also set aside, with liberty to the Assessing Officer to initiate fresh penalties.

The Tribunal noted that the quantum assessment addition in the assessee's own case had already been restored back to the Assessing Officer. Consequently, the penalty levied under Section 270A would not survive.

The Tribunal condoned the delay, finding it to be neither intentional nor deliberate, and admitted the appeal for hearing on merit. The Tribunal also noted that the CIT(A) passed an ex-parte order without providing proper opportunity to the assessee, violating principles of natural justice.

The Tribunal acknowledged the assessee's request to submit further evidence and noted that justice requires providing an opportunity to present such evidence. The Tribunal also considered that the CIT(A) order was passed without providing a fair opportunity of hearing, violating natural justice principles.

The Tribunal condoned the delay in filing the appeal before the CIT(A) as the reasons provided were convincing and constituted sufficient cause. On merit, the Tribunal followed its own prior decision in the case of Shri Avadh Nagarik Sahkari Mandli Ltd., wherein it was held that interest income from cooperative banks is eligible for deduction under section 80P(2)(d).