ITAT Rajkot Judgments — June 2025

The Tribunal held that the PCIT's invocation of Section 263 was not justified as the AO had conducted enquiries, even if the PCIT disagreed with the outcome. The distinction between 'lack of enquiry' and 'inadequate enquiry' was emphasized, stating that revisionary powers are only applicable in cases of 'lack of enquiry'. The assessment orders were found to be plausible views of the AO and not erroneous. However, in one specific case (ITA No. 331/RJT/2024), the appeal was partly allowed regarding the late payment of employee's contribution to PF.

The Principal Commissioner of Income-tax (PCIT) invoked revisionary powers under Section 263 of the Income-tax Act, 1961, arguing that the Assessing Officer (AO) failed to conduct proper inquiry and examination. The Tribunal found that while the AO did conduct inquiries, the PCIT disagreed with the AO's plausible view, which is not a valid ground for revision. The Tribunal also noted that the issue of late payment of employee's PF contribution was correctly addressed.

The Tribunal held that the PCIT's invocation of Section 263 was largely invalid as the AOs had conducted inquiries, issued notices under Section 142(1), and taken a plausible view of the facts. Citing various High Court and Supreme Court judgments (e.g., Sunbeam Auto Ltd., Malabar Industrial Co. Ltd., Ranka Jewellers), the Tribunal emphasized that a PCIT cannot revise an assessment merely because of a different opinion or 'inadequate inquiry' if some inquiry was conducted. Consequently, most of the PCIT's Section 263 orders were quashed. However, in ITA No. 331/RJT/2024 (Dhruv Print Pack Industries), the PCIT's order regarding the late payment of employee's contribution to PF of Rs. 1,41,718/- was upheld, consistent with binding precedents.

The Tribunal dismissed the appeal in limine, noting that the tax effect of the appeal (less than Rs. 60,00,000/-) fell below the revised monetary limits for filing appeals before the ITAT, as specified by CBDT Circular No. 09/2024 dated 17.09.2024. The Tribunal emphasized that CBDT circulars are binding on the Revenue.

The Tribunal determined that the rejection by the CIT(E) was based on a typographical error. Citing similar precedents, the Tribunal directed the CIT(E) to admit the application under the correct Section 12A(1)(ac)(iii) and adjudicate it on merits, allowing the assessee to submit an amended application and relevant documents. The appeal was allowed for statistical purposes.

The Tribunal condoned the delay in filing the appeal, citing substantial justice over technicalities. Regarding the merits, the Tribunal decided to remit the issue of employee PF contributions paid within the grace period back to the Assessing Officer for examination of the submitted additional evidence. The addition on account of employee PF not paid within the grace period would be disallowed.

The Tribunal held that CBDT Circulars are binding on the Revenue. Since the appeal was filed contrary to the policy decision laid down in the circular, it was dismissed. The revenue is at liberty to move the tribunal for recalling the order if the tax effect is later found to be more than Rs.60 lakhs.

The Tribunal noted that the assessee was unaware of the online proceedings before the CIT(A), leading to an ex-parte order without adjudication on merits. Therefore, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the AO for fresh adjudication after providing the assessee with an opportunity to be heard.

The Tribunal noted that the CIT(A)'s order was ex parte and non-speaking, and that the assessee did not get a sufficient opportunity to present their case. In the interest of natural justice, the Tribunal decided to set aside the CIT(A)'s order and remit the matter back for de novo adjudication, with liberty for the assessee to produce evidence.

The Tribunal noted that the delay in filing was due to notices being sent to a wrong email address, and the assessee was unaware of the proceedings. The Tribunal condoned the delay and heard the appeal on merits. The Tribunal set aside the order of the CIT(A) and remitted the matter back to the Assessing Officer for fresh adjudication.

The Tribunal held that the PCIT's invocation of Section 263 was not justified because the AO had conducted inquiries, even if the PCIT deemed them inadequate or if the PCIT had a different opinion. The Tribunal distinguished between a 'lack of inquiry' and an 'inadequate inquiry,' stating that Section 263 is applicable only in cases of a complete lack of inquiry. The PCIT cannot substitute his opinion for that of the AO when the AO has applied his mind and taken a plausible view. However, in one case (ITA No. 331/RJT/2024 regarding late payment of PF contribution), the PCIT's order was upheld.

The Tribunal noted that the delay in filing the appeal and non-appearance before the CIT(A) were due to the outdated email address of the tax consultant, which prevented the assessee from being aware of the proceedings. The Tribunal condoned the delay and set aside the CIT(A)'s order.

The Tribunal condoned the 1132-day delay in filing the appeal before the CIT(A), acknowledging mitigating circumstances and following a liberal approach. It noted that both the assessment order and the CIT(A) order were ex-parte and lacked a proper hearing on merits. Consequently, the Tribunal remitted the entire matter back to the Assessing Officer for a de novo adjudication, after imposing a cost of Rs. 2000/- on the legal heirs, to ensure natural justice and a fresh hearing on merits.

The tribunal condoned a 15-day delay in filing the appeal, finding it not deliberate. It noted that the CIT(A) disposed of the appeal ex-parte without ensuring proper service of notice. To ensure justice, the tribunal set aside the CIT(A)'s order and remanded the matter back to the Assessing Officer for fresh adjudication on merits, directing that the assessee be given a due opportunity to present evidence.

The Tribunal held that the AO had conducted inquiries by issuing notices under Section 142(1) and examining the assessees' replies, distinguishing this from a complete 'lack of inquiry'. Citing judicial precedents, the Tribunal affirmed that a mere difference of opinion or an allegedly inadequate inquiry, when the AO's view was plausible, does not justify invoking Section 263. Consequently, all PCIT orders under Section 263 were quashed as void, except for one case (ITA No. 331/Rjt/2024) which was partly allowed regarding the disallowance of late employee's PF contributions, aligning with binding Supreme Court and High Court decisions.

The Income Tax Appellate Tribunal (ITAT) found that the AO had conducted inquiries by issuing notices under Section 142(1) and that assessees had provided explanations and documents. The Tribunal held that a difference of opinion between the PCIT and the AO, or merely 'inadequate' inquiry (as opposed to a complete 'lack' of inquiry), does not provide grounds for revision under Section 263, citing various judicial precedents. Consequently, the PCIT's revision orders were quashed for most appeals, except for one case (Dhruv Print Pack Industries, ITA No. 331/RJT/2024) where the late payment of employee's PF contribution was upheld as an addition based on Supreme Court and High Court judgments.

The Tribunal noted that the assessee submitted documents at the fag-end of the proceedings and did not comply with other notices. However, principles of natural justice require an opportunity to be heard. Therefore, the matter was restored to the CIT(E) for de novo adjudication.

The Tribunal, considering the reasons provided by the assessee, including the impact of the COVID-19 pandemic and the process of seeking legal advice for alternative remedies, condoned the delay of 945 days in filing the appeal before the CIT(A). The Tribunal restored the matter to the file of the CIT(A) for fresh adjudication on merits.

The Tribunal condoned the delay in filing the appeal due to the assessee's unawareness of online proceedings. The Tribunal noted that the CIT(A) had disposed of the appeal ex-parte without adjudicating on merits. The Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication.

The Tribunal condoned the delay in filing the appeals before the ITAT, acknowledging the medical emergency as a sufficient cause. It was held that the Ld. CIT(A) had not adjudicated the appeals on merits and had violated the principles of natural justice by not providing sufficient opportunity to be heard.

The Tribunal condoned the delay of 141 days and 214 days in filing the appeals before the CIT(A) based on the medical grounds provided by the assessee, noting that the lower authority did not adjudicate the appeals on merits and thus violated the principles of natural justice. The Tribunal restored both appeals to the file of the CIT(A) for fresh adjudication on merits.

The Tribunal noted that the order of the CIT(E) was ex-parte, despite a notice being issued. The assessee had not submitted all required documents. Therefore, the Tribunal set aside the order of the CIT(E) and remitted the matter back for fresh adjudication.

The Tribunal held that the PCIT's invocation of Section 263 was not sustainable. The Tribunal distinguished between 'lack of inquiry' and 'inadequate inquiry', stating that the latter does not automatically render an order erroneous. The AO's assessment, based on plausible views and consideration of submitted documents, could not be considered erroneous or prejudicial to the revenue merely because the PCIT had a different opinion. The Tribunal found that inquiries were indeed conducted by the AO, and the PCIT's reasoning for revision was not valid. However, in one specific case (ITA No. 331/RJT/2024 concerning Dhruv Print Pack Industries), the late payment of employee's contribution to PF was upheld.

The Tribunal noted that the primary objectives of the trust were charitable, and expenses on religious activities, if any, were within the 5% limit as per Section 80G(5B). The Tribunal directed the CIT(E) to verify the percentage of Jivdaya expenses (animal welfare) against the total income and grant approval if it falls below 5%.

The Tribunal held that the PCIT's assumption of jurisdiction under Section 263 was not permissible as the AO had conducted inquiries and taken plausible views. The Tribunal distinguished between 'lack of inquiry' and 'inadequate inquiry', stating that the latter does not justify revision under Section 263. The PCIT cannot substitute his opinion for that of the AO.

The Income Tax Appellate Tribunal (ITAT) held that in most cases, the AO had conducted inquiries and taken a plausible view based on available records, and the PCIT could not invoke Section 263 merely for holding a different opinion or deeming the inquiry 'inadequate'. Distinguishing between 'lack of inquiry' and 'inadequate inquiry', the ITAT quashed the PCIT's revisional orders as ab initio void for all assessees, except for the issue of late payment of employee's provident fund contribution in the case of Dhruv Print Pack Industries (ITA No. 331/Rjt/2024), which was upheld based on judicial precedents.

The Tribunal ruled that the Assessing Officer (AO) had conducted proper inquiries by issuing notices and examining documents. Citing Supreme Court and High Court precedents, it held that the PCIT cannot invoke Section 263 merely because a different view is possible or an inquiry is deemed "inadequate" rather than "lacking." Therefore, the PCIT's revisional jurisdiction was largely quashed, except for the issue of late payment of employee's Provident Fund contribution in one specific case (ITA No. 331/RJT/2024), which was upheld against the assessee.

The tribunal quashed the assessment proceedings, finding that the Assessing Officer had exceeded the scope of the limited scrutiny. The case was selected for limited scrutiny on specific issues, and the disallowance of Section 54F on the grounds that the asset was stock-in-trade was not part of those specified reasons. Consequently, the merits of the additions became academic as the assessment itself was quashed.

The Tribunal noted that the assessee did not appear or file documents before the Ld. CIT(E), leading to the rejection of their application. The assessee's counsel undertook to provide the necessary documents and participate actively in the proceedings. Both parties agreed that the matter should be remitted back for fresh adjudication.

The Tribunal noted that the assessee did not appear before the CIT(E) and did not provide the requested documents. The counsel for the assessee undertook to submit all required documents and participate actively, requesting one more opportunity.

The Ld. CIT(A) deleted the addition after receiving a factual report from the same AO. The report clarified that during V.K. Group's assessment, the AO had re-examined the 'EmmEss-Gold' software and confirmed that entries like '1'/'2' signified inward entries, not quantity, and were duly accounted for. The Tribunal upheld the CIT(A)'s decision, ruling that since the alleged incriminating material's author (V.K. Group) had accounted for the transactions and no addition was made in their case, and no incriminating material was found from the assessee, the addition was baseless.

The Tribunal noted that the Assessing Officer's initial addition was based on an interpretation of 'EmmEss-Gold' software data, which was later corrected by the same Assessing Officer when assessing V.K. Group. The subsequent verification by the Assessing Officer in the V.K. Group's assessment confirmed that the entries represented inward vouchers and not unaccounted purchases. The Tribunal found no incriminating material against the assessee and thus dismissed the Revenue's appeals.

The Tribunal held that the Assessing Officer (AO) failed to conduct proper inquiry and verification regarding the penny stock transactions, which were found to be dubious and used to introduce unaccounted money as LTCG. The AO's failure to examine the financial statements and other crucial details rendered the assessment order erroneous and prejudicial to the interest of the revenue.

The CIT(A) deleted the addition, citing a violation of natural justice principles due to the failure to allow cross-examination and inconsistencies in the evidence. The Tribunal upheld the CIT(A)'s order, finding no infirmity in the deletion of the addition based on the unreliable evidence and procedural violations.

The Tribunal remitted all appeals (including both Revenue's and assessees' cross-objections) back to the file of the AO for fresh adjudication on merits. It observed that the assessment orders were passed in a hurried manner, lacking proper inquiry and opportunity for the assessee to furnish details. The Tribunal directed the assessees to provide comprehensive lists of beneficiaries and customers, along with their addresses and confirmations, to substantiate their claim of acting as commission agents.

The Tribunal found that assessment orders were made in haste without adequate inquiry or opportunity for the assessees to provide necessary details (e.g., customer/beneficiary lists and confirmations). Following precedents, the Tribunal remitted all appeals back to the Assessing Officer for fresh adjudication, directing proper investigation into the nature of the assessees' businesses (legitimate commission agent vs. illegal money laundering) and the source of cash deposits. Penalty proceedings were also remitted back to the AO.

The Tribunal held that the AO's addition of the entire amount of cash deposits was not justified. The Tribunal noted that the assessee claimed to be a commission agent (shroff/angadia) and that the cash deposits belonged to ceramic manufacturers. However, the assessee failed to provide sufficient evidence to substantiate this claim. The Tribunal also observed that the assessment was made in a hurried manner, violating principles of natural justice. Consequently, the matter was remitted back to the Assessing Officer for fresh adjudication.

The Income Tax Appellate Tribunal found that the assessment orders were passed in a hurried manner without proper inquiry, and the assessees failed to provide crucial details like names and addresses of customers and beneficiaries to substantiate their claim of being commission agents. Therefore, following precedent, the Tribunal remitted all appeals back to the file of the Assessing Officer for fresh adjudication to conduct a thorough examination of the nature of the assessees' business and collect necessary supporting evidence. The cross-objections filed by the assessees were dismissed as infructuous.

For Bharatkumar Bhatiya, all appeals from both the assessee and Revenue are restored to the file of the AO for fresh adjudication, following prior tribunal judgments on similar cases. For Damjibhai Lekhraj Thavrani and Kherajmal Lekhrajbhai Thavrani, the matters are also remitted back to the AO for fresh examination due to issues with jurisdiction, non-cooperation, and failure to provide necessary details. In all cases, the Revenue's appeals are allowed for statistical purposes, and the assessees' cross-objections are dismissed as infructuous, with the core issues remanded for fresh adjudication.

The Tribunal held that the assessee had filed the revised return within the time limit prescribed under Section 139(5) of the Act. The AO should have considered the revised return and amended the intimation accordingly. Relying on precedents, the Tribunal found that a genuine claim should not be denied due to technicalities or procedural lapses.

The Tribunal noted that the assessee could not submit the required documents due to the severe illness of a responsible person. The Tribunal acknowledged the principles of natural justice and fair play, stating that the assessee should be given a sufficient opportunity to present their case. Therefore, the matter was restored to the CIT(E) for de novo adjudication.

The Tribunal considered the arguments and the material on record. It found that the assessee was a distributor of recharge vouchers and the amounts received and reinvested were reflected in the bank statement and supported by documents. The Tribunal concluded that the lower authorities had not considered the facts and documents properly.

The Tribunal noted that the assessee had provided substantial evidence, including bank statements, confirmation letters, and proof of interest payment with TDS, to establish the genuineness, identity, and creditworthiness of the lender. The CIT(A) had also deleted the addition, finding that the assessee had discharged its onus.