ITAT Rajkot Judgments — July 2025

The Tribunal condoned the delay in filing the appeal due to sufficient cause. The Tribunal noted that the assessee's trust objects were not in consonance with Section 80G(5) but allowed the assessee to modify its trust deed for the benefit of the general public. The CIT(E) was directed to examine and accept the modified trust deed and grant registration if found eligible.

The Tribunal noted that the "satisfaction note" prepared by the Assessing Officer was defective as it did not meet the statutory conditions, including the Rs. 50 lakh threshold for certain search cases and the requirement of incriminating material relatable to the assessee. Furthermore, the property mentioned in the satisfaction note was not in the assessee's name, and no agreement for the property was found. Consequently, the assessment orders for AYs 2012-13, 2013-14, and 2014-15 were quashed for being without jurisdiction. The other appeals were partly allowed or dismissed.

The Tribunal condoned the delay of 411 days, considering the explanation provided by the assessee and the fact that the delay occurred due to the mistake of the tax consultant, not a deliberate act of the assessee. The Tribunal also noted that the CIT(A) had not decided the issue on merits but had passed an ex-parte order. Therefore, the Tribunal set aside the order of the CIT(A) and remitted the matter back for fresh adjudication.

The Tribunal noted that the assessee's appeal was not pressed and was dismissed. The Tribunal then addressed the Revenue's grounds of appeal. For the sundry creditors issue, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition. For the unsecured loan issue, the Tribunal upheld the CIT(A)'s partial deletion, confirming an addition of Rs. 18,00,000/-.

The tribunal noted that the assessee wished to withdraw the appeal and the Revenue's counsel had no objection. Therefore, the tribunal decided to treat the appeal as dismissed as withdrawn.

The Tribunal dismissed all grounds of the Revenue's appeal. It confirmed the CIT(A)'s deletion of Rs. 99.76 lakhs related to sundry creditors (advances for Satakhats), finding that the assessee had proven identity, creditworthiness, and genuineness. For unsecured loans, the Tribunal upheld the CIT(A)'s decision to confirm an addition of Rs. 18 lakhs for three creditors lacking sufficient evidence, while deleting the remaining Rs. 65 lakhs, thereby dismissing the Revenue's grounds for a higher addition. Finally, the Tribunal upheld the CIT(A)'s allowance of expenses for vacating land encroachments and land development, finding the CIT(A)'s estimated allowance for encroachment expenses reasonable and the development expenses legitimate for converted land.

The Tribunal condoned the delay of 141 days, stating that the reasons provided by the assessee constituted a sufficient cause. The Tribunal noted that the PCIT's order was passed ex-parte as the assessee could not appear and submit required documents due to non-service of notices.

The Tribunal set aside the orders of the Ld. CIT(E) and remitted the matters back for fresh adjudication. The assessee is given an opportunity to file the required details and documents.

The Tribunal condoned the delay of 141 days, holding that the delay was not intentional or deliberate as the assessee had not received physical copies of the orders and notices. The appeals were then remitted back to the Ld.PCIT for fresh adjudication.

The Tribunal noted the assessee's counsel agreed to modify the trust deed to include objects for the general public's benefit and not solely the specific community. The Tribunal directed the CIT(E) to examine the modified objects and, if eligible, grant registration to the assessee-trust in accordance with law.

The Tribunal set aside the orders of the Ld. CIT(E) and remitted the issue back to the Ld. CIT(E) for fresh adjudication. The Ld. CIT(E) was directed to examine the documents and evidence for both applications and grant approval if the assessee is eligible.

The Tribunal noted that the CIT(A) had not decided the issue as per the mandate of Section 250(6) of the Act. The Tribunal found it proper to set aside the order of the CIT(A) and restore the matter to the Assessing Officer for fresh adjudication, granting the assessee an adequate opportunity to be heard and produce evidence.

The Tribunal acknowledged the assessee's explanation of sufficient cause for the delay, considering the technical errors in TDS filing and the time taken for rectification attempts. The Supreme Court's exclusion of the COVID-19 period for limitation purposes was also considered. The Tribunal decided to condone the delay of 834 effective days.

The Tribunal noted that the fixed deposit of Rs. 25,00,000/- was made in 2015 from GBP remittance received from the UK and was later transferred between branches. This was not a fresh remittance or investment in the current assessment year. The DRP had confused the FD number with a bank account number. The Tribunal found the addition of Rs. 25,00,000/- and interest of Rs. 1,094/- to be not taxable.

The Tribunal held that the CIT(A) should have admitted the additional evidence produced by the assessee, as it was not provided to the Assessing Officer. The Tribunal also noted that the CIT(A) had not followed the principle of natural justice by not providing these evidences to the AO for his comments.

The Tribunal noted that the assessee did not wish to press the appeals, and the Departmental Representative had no objection. Considering the prior quashing of the PCIT's order u/s 263 and the assessee's submission, the Tribunal decided to treat the appeals as dismissed as withdrawn.

The Tribunal considered the assessee's request for withdrawal of the appeal, noting that the assessee had opted for the "Direct Tax Vivad Se Vishwas Scheme, 2024". The Tribunal allowed the assessee to withdraw the appeal.

The Tribunal acknowledged that the assessee had sufficient cause for the delay, citing technical errors in TDS filing and the Assessing Officer's failure to fully comply with the CIT(A)'s directions. Considering the importance of substantial justice, the Tribunal condoned the effective delay of 834 days.

The Tribunal acknowledged that the delay in filing the appeals was due to the non-compliance of the Assessing Officer with the CIT(A)'s directions to rectify TDS mismatches, which prevented the assessee from filing the appeals within the stipulated time. The Tribunal found the reasons provided for the delay to be sufficient and convincing.

The assessee's counsel submitted that the Tribunal had previously quashed the PCIT's order under section 263 in related appeals. Consequently, the assessee did not wish to press these appeals. The Departmental Representative had no objection to this.

The Tribunal noted that the delay, despite being substantial, was due to a bona fide issue arising from the non-compliance of the CIT(A)'s order by the Assessing Officer. Considering the interest of substantial justice and the efforts made by the assessee, the delay was condoned.

The Tribunal noted that the delay in filing was due to the Assessing Officer's failure to fully comply with the CIT(A)'s directions, and that the assessee had made genuine efforts to rectify the TDS mismatch. Considering the principles of substantial justice, the Tribunal condoned the delay.

The Tribunal condoned the 48-day delay in filing the appeal, finding the reasons provided to be reasonable and sufficient. The Tribunal noted that the CIT(A) had not decided the issue in respect of the grounds raised by the assessee as per section 250(6) of the Act. Therefore, the Tribunal set aside the order of the CIT(A).

The Tribunal held that the trust's objects for the benefit of a backward community should not be considered religious objects. The trust is eligible for approval under section 80G(5) of the Act.

The assessee requested to withdraw the appeal because the condonation of delay for filing the income tax return under Section 119(2)(b) of the Act was granted. The Revenue's representative had no objection to the withdrawal.

The Tribunal condoned the delay, noting that it was not intentional or deliberate and that the assessee should not be penalized for the consultant's mistake. On merits, the Tribunal found the CIT(A)'s order to be ex-parte and non-speaking. It held that principles of natural justice require adequate opportunity for hearing, which was not provided. The matter was remitted back to the Assessing Officer for de novo assessment.

The Tribunal noted that Section 80G(5B) clarifies that an institution incurring religious expenditure not exceeding 5% of its total income shall be deemed eligible. Given the case laws and the provision, even if the trust has religious objects, if the expenditure is within the 5% limit, it is eligible. Therefore, the matter is directed to the Ld. CIT(E) to examine the expenditure.

The Tribunal observed that the assessee's business was cash-oriented. While acknowledging that the entire deposit might not be profit, the Tribunal found merit in the assessee's submission that only a profit element should be taxed. Considering the smallness of the amount and the cash nature of the business, the Tribunal directed the AO to make an addition of 5% of the disputed amount.

The Tribunal noted that the issue was covered by a previous decision of the same bench in the case of Shri Avadh Nagarik Sahkari Mandli Ltd. The Tribunal found that the Assessing Officer's view was plausible and sustainable in law, based on earlier judgments of the jurisdictional High Court. Therefore, the revisionary order passed by the PCIT under Section 263 was quashed.

The Tribunal noted the trust's prior registration under Section 12A and provisional 80G approval, and its main activities (dharmshala and bhojanshala) served the general public charitably. Applying Explanation 1 to Section 80G, which states that an institution for the benefit of Scheduled Castes, backward classes, or Scheduled Tribes shall not be deemed to be for the benefit of a religious community, the Tribunal held that the Nanabhai Bharvad Samaj falls under these categories. Therefore, the religious nature of its objects, in this context, should not prevent 80G approval, and the CIT(E) was directed to grant the approval.

The Tribunal noted that the objects of both trusts primarily focused on general public benefits, despite some objectives appearing specific to a community. The Tribunal questioned the CIT(E)'s finding that 'Leuva Patels' and 'Kadva Patels' constitute a religious community or caste, citing previous judgments. The Tribunal also observed that the CIT(E) did not provide specific findings on whether the trusts had utilized their income for the benefit of any particular community or caste.

The Tribunal held that the issuance of a notice under section 143(2) of the Income-tax Act, 1961, is mandatory for the Assessing Officer to acquire jurisdiction to make an assessment, especially when the return of income filed by the assessee is considered, even if belatedly. The absence of such a notice renders the assessment order null and void.

The Tribunal found that the trust's objects largely serve the general public and that the temple is open to all castes and communities, despite the trust being registered in the name of a religious community. Due to the assessee's non-appearance and incomplete documentation before the CIT(E), the matter was remitted back to the CIT(E). The CIT(E) was directed to provide another opportunity to the assessee to submit complete documents and re-adjudicate both registration and approval applications afresh in accordance with law.

The Tribunal held that the objects of both trusts, despite some being community-specific, also encompassed general public benefits. Furthermore, the Tribunal noted that 'Leuva Patel' and 'Kadva Patel' are historically agriculturists and not a religious community or caste. Therefore, the CIT(E)'s order was set aside.

The Tribunal noted that while the trust's objects are charitable, the CIT(E) found them confined to a particular family/community. However, upon reviewing the objects, the Tribunal found that most of them are for general public benefit and that the Mandir is open to all. The Tribunal decided to set aside the CIT(E)'s order and remit the matter back for fresh adjudication.

The Tribunal held that while the trust has some spiritual objectives, they are not exclusively religious and do not benefit a particular religious community. The non-obstante clause in object 5(D) stating "WITHOUT DISCRIMINATIONS OF RELIGION OR CAST" makes it clear that the object is not purely religious. The Tribunal also noted that the trust's main activity is running schools, which is a charitable purpose, and no expenditure has been incurred on religious activities.

The Tribunal accepted the assessee's explanation for non-compliance, citing the director's limited education and reliance on an accountant. In the interest of justice, both appeals were allowed for statistical purposes, and the matters were restored to the CIT(E) for a fresh (de-novo) adjudication, with the assessee directed to provide all necessary documents and evidence.

The Tribunal noted that the assessee's representative assured compliance and, considering the facts and interest of justice, restored the matter back to the CIT(E) for de-novo adjudication. The assessee was directed to submit the required documents and evidence.

The Tribunal noted that the CIT(A) passed an ex-parte order without adjudicating the appeal on merit. Considering the interest of justice, the Tribunal decided to provide an opportunity to the assessee to present their case before the lower authority.

The Tribunal noted that while the trust's objects were charitable, they were primarily for the benefit of the Rajput Kshatriya Samaj community. However, the assessee contended that they had not yet started any activities and sought an opportunity to submit further evidence regarding their objects, activities, and expenditures. The Tribunal decided to grant one more opportunity to the assessee.

The Tribunal condoned the delay in filing the appeal, attributing it to wrong advice from the tax consultant. On the merits, the Tribunal upheld the PCIT's revisionary order, concluding that the original assessment was indeed erroneous and prejudicial to the revenue due to the AO's failure to properly investigate claims regarding depreciation, cash sales during demonetization, and income tax expenses, aligning with the tax auditor's report and judicial precedents for Section 263.

The Tribunal found that the CIT(A) did not consider all facts and materials, did not call for a remand report, and passed a cryptic and non-speaking order. The Tribunal also noted that the assessee was not given sufficient opportunity during assessment proceedings. Therefore, the matter was remitted back to the CIT(A) for fresh adjudication.

The Tribunal acknowledged the assessee's failure to prove the source of cash deposits but decided against taxing the entire amount under Section 115BBE. Instead, citing a Gujarat High Court judgment on 'on money,' the Tribunal directed the Assessing Officer to make an addition of 30% of the total cash deposited (Rs. 12,05,070/-) and tax it at normal rates.

The Tribunal noted that the CIT(A) had correctly examined the facts and circumstances of the case. The CIT(A) had rightly considered that cash deposits alone cannot be treated as income, and that both cash deposit and withdrawal should be considered. The CIT(A) estimated the income at 5% of the total cash deposits as a profit element. The Tribunal found no infirmity in the CIT(A)'s conclusion.

The Tribunal noted that the assessee had shifted their residence and updated their address with the department. Notices for reassessment were sent to the old address, and the assessee was unaware of the proceedings. The Tribunal held that the assessee should not be penalized for the delay in filing the appeal before the CIT(A) due to these circumstances.

The Tribunal noted the assessee's negligence in complying with the CIT(A)'s notices and imposed a cost of Rs. 2000/-. However, to ensure justice and provide an opportunity for a fresh adjudication on merits, the matter was remanded back to the CIT(A).

The Tribunal condoned the delay in filing the appeals, noting mitigating circumstances. On merits, it was observed that the CIT(A) had dismissed the appeals for non-payment of advance tax, which was required under Section 249(4)(b) of the Act. However, considering that the lower authorities passed ex-parte orders and the assessee was uneducated and from a remote area, the Tribunal decided to give the assessee another opportunity.

The Tribunal condoned the delay, noting mitigating circumstances for the assessee. The Tribunal also observed that the lower authorities' orders were ex-parte. Therefore, one more opportunity was granted to the assessee to present their case.

The Tribunal held that the provisions of section 13(1)(b) of the Income Tax Act, 1961 are not applicable to the assessee trust as it was created before April 1, 1961. Therefore, the denial of exemption based on this section was incorrect. The Tribunal directed the CIT(E) to re-adjudicate the issue after providing the assessee with an opportunity to be heard, provided the trust fulfills other conditions under Section 12AB.