ITAT Rajkot Judgments — November 2025

The Tribunal held that the cash deposits were from business activities. However, the assessee failed to adequately explain the bifurcation of total cash deposits into turnover and direct income. The Tribunal directed the Assessing Officer to make an addition at the rate of 6% on the total cash deposited, considering the inconsistencies in the evidence.

The tribunal held that interest received on enhanced compensation for compulsory acquisition of agricultural land, awarded under Section 28 of the Land Acquisition Act, is to be considered part of the compensation and not 'interest' in the taxable sense. This is based on judicial precedents, including decisions from the Supreme Court and the jurisdictional High Court of Gujarat.

The Tribunal noted that the assessee failed to explain the delay and did not file a petition for condonation of delay. It was held that the law of limitation requires sufficient cause for condonation, which was not provided by the assessee.

The Tribunal noted that the notice for reassessment under Section 148 was issued after the prescribed time limit. Additionally, the sanction for issuing the notice was obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner. Consequently, the notice was deemed invalid and time-barred.

The Tribunal observed that the Assessing Officer had issued only one proper show-cause notice for the penalty, and the other two instances were merely reminders concerning the first original notice. Consequently, the Tribunal deleted the penalty of Rs. 20,000/- pertaining to the two reminders and confirmed the penalty of Rs. 10,000/- for the single valid show-cause notice.

The Tribunal held that Section 44AB requires an audit only if the assessee's total sales/turnover/gross receipts exceed the prescribed threshold. If commission income is below the threshold limit, tax audit is not applicable, and therefore, no penalty under Section 271B can be levied. The assessee consistently maintained that they are a commission agent and only receive commission, passing over the main amount to the counterparty.

The Tribunal held that a mere cash book does not constitute complete books of accounts, and the assessee failed to provide corroborative evidence for the opening balance and entries. The Tribunal also noted that quoting a wrong section does not invalidate an assessment order if the AO had the necessary jurisdiction. However, it observed that the assessment order was framed in haste without proper inquiry and that the principle of natural justice might have been violated.

The Tribunal noted that the tax audit report did not show any disallowance for transportation expenses and that all such charges were paid through banking channels. The assessee provided Form No. 3CD and ledger accounts, confirming the genuineness of the expenses.

The Tribunal condoned the delay in filing the appeal. The ground related to disallowance of Rs. 1,71,051/- was not pressed. Regarding transportation expenses of Rs. 2,10,706/-, the Tribunal found that the expenses were genuine and paid through banking channels, and thus deleted the addition.

The Tribunal condoned the delay in filing the appeal, citing the advocate's mistake and the principle of substantial justice. While acknowledging that the assessee had provided some explanations for the cash deposits (agricultural loans, past savings, fixed deposit maturities), the Tribunal found that the assessee failed to sufficiently prove all personal expenses and drawings. Therefore, a net profit of 10% was adopted on the cash deposit.

The Tribunal noted that the Supreme Court in CIT vs. M/s. Avani Exports & Anr. held that exporters with turnover below and above Rs. 10 Crores should be treated similarly for deduction under Section 80HHC. The issue was squarely covered in favor of the assessee by this judgment.

The Tribunal noted that the quantum addition, which formed the basis for the penalty, had been deleted in a prior appeal. Relying on the legal maxim 'Sublato fundamento cadit opus', the Tribunal held that if the foundation fails, the superstructure also falls.

The Tribunal held that the notice issued under section 148 of the Act for Assessment Year 2015-16 was time-barred and invalid as it was issued after the prescribed due date. Consequently, the reassessment order for AY 2015-16 was quashed. The Tribunal also deleted penalties imposed for AY 2015-16 as the assessment order was void ab initio. For other assessment years, the Tribunal partly allowed the appeals, directing the Assessing Officer to adopt a net profit rate of 3% on cash deposited in bank accounts for taxable income.

The Tribunal held that the notice under Section 148 for AY 2015-16 was issued after the prescribed period of limitations, making it invalid and time-barred. Consequently, the assessment order and all consequential penalty proceedings were quashed.

The Tribunal held that the notice issued under Section 148 for AY 2015-16 was time-barred and invalid as it was issued after the prescribed due date, relying on the Gujarat High Court judgment. Consequently, the assessment order and all subsequent penalty proceedings initiated based on it were quashed. For other assessment years, the Tribunal allowed appeals partly, directing the AO to adopt a net profit rate of 3% on cash deposits/credits.

The Tribunal held that the notice under Section 148 of the Act for AY 2015-16 was issued after the prescribed time limit, making it invalid and consequently quashed the assessment order and related penalty proceedings. For other assessment years (AY 2013-14, 2014-15, 2016-17), the Tribunal partly allowed the appeals on merits, directing the AO to adopt a net profit rate of 3% on the cash deposited in bank accounts. The Tribunal also deleted penalties imposed under Section 271(1)(c) and 271A, relying on earlier precedents and the assessee's eligibility for presumptive taxation.

The Tribunal held that the notice issued under Section 148 of the Act for AY 2015-16 was time-barred and invalid, as it was issued after the prescribed period. Consequently, the assessment order and all subsequent penalty proceedings for AY 2015-16 were quashed. For other assessment years, the Tribunal found that the AO and CIT(A) had erred in estimating the profit. The Tribunal directed the AO to adopt a net profit rate of 3% on cash deposited/credits in bank accounts for those years, considering the assessee's business as a commission agent.

The Tribunal held that the reasons recorded by the Assessing Officer for reopening the assessment were defective and based on borrowed satisfaction. The reopening was initiated for further inquiry rather than for a strong belief of escapement of income. The court noted that no primary inquiry was conducted before issuing the notice.

The Tribunal noted that the assessee consistently followed a cash basis for recognizing duty drawback since its inception, which is in accordance with the doctrine of prudence and general trade practice. Reliance was placed on the High Court of Bombay judgment in CIT vs. Matchwell Electricals (1) Ltd. and the Supreme Court in CIT vs Citibank N.A. The Tribunal held that there was no loss to the revenue by adopting the cash basis and that the method followed by the assessee was fair and consistent.

The Tribunal noted that the notice under Section 148 was issued on 21.04.2021, which was after the stipulated time limit for AY 2015-16. Relying on various judicial pronouncements, including the jurisdictional High Court of Gujarat, the Tribunal held that the notice was time-barred and invalid. Consequently, the assessment order and all consequential penalty proceedings were quashed.

The Tribunal followed a previous ruling in the assessee's own case, directing the AO to adopt a net profit rate of 3% on the total cash deposited/credits in the bank accounts for AY 2017-18. For the penalty appeal under Section 271A, the Tribunal noted that the assessee was opting for the presumptive income scheme under Section 44AD and was therefore not required to maintain books of accounts, leading to the deletion of the penalty.

The Tribunal noted that the assessee had submitted bank statements and evidence to support their claim of commission-based business. Following a precedent set in the assessee's own case, the Tribunal directed the AO to adopt a net profit rate of 3% of the total cash deposited/credited in the bank accounts. For the penalty appeal, the Tribunal deleted the penalty under section 271A, as the assessee was opting for a presumptive taxation scheme under section 44AD, which does not require maintenance of books of accounts.

The Tribunal found that while the assessee's contention regarding the need to reject books of accounts had some merit, the assessee was not entitled to complete relief. Considering the inconsistencies in the submitted documents and evidence, the Tribunal directed the AO to make an addition at a net profit rate of 3.50% on the gross turnover, instead of the previously determined 4%.

The Tribunal held that the reassessment proceedings initiated by the Assessing Officer were bad in law. The reasons recorded for reopening were found to be based on borrowed satisfaction and for the purpose of conducting further enquiry, rather than on tangible material indicating escapement of income. Reliance was placed on High Court judgments stating that assessments cannot be reopened solely for verification purposes.

The Tribunal noted that the assessee had commenced activities and filed applications within the extended time limit. Despite the CIT(E)'s inability to condone the delay, the Tribunal found genuine reasons for the delay and decided to condone it. The CIT(E) was directed to admit the applications and examine the conditions for approval under Section 80G(5)(iii).

The Tribunal found that the delay in filing the application was due to technical reasons and condoned it. The Tribunal directed the CIT(E) to admit the applications and examine the conditions for approval under Section 80G(5)(iii) of the Act.

The Tribunal found that the notice under Section 148 for AY 2015-16 was issued beyond the prescribed time limit and thus quashed the assessment order and related penalties for that year. For other assessment years, the Tribunal held that gross credits in bank accounts cannot be treated as income without considering explanations and business activities. An estimation of net profit at 3% was directed for these years. Penalties for non-maintenance of books of account were deleted for assessees opting for presumptive taxation.

The Tribunal held that the notice issued under Section 148 for Assessment Year 2015-16 was time-barred and invalid as it was issued after the stipulated period. Consequently, the reassessment order and all related penalty proceedings for that year were quashed. For other assessment years, the Tribunal partly allowed appeals, directing the Assessing Officer to adopt a net profit rate of 3% on cash deposits/credits after considering the assessee's submission of earning commission and the nature of business.

The Tribunal quashed the reassessment proceedings and all related penalties for AY 2015-16, finding the notice under Section 148 to be time-barred as it was issued after March 31, 2019. For other assessment years (2013-14, 2014-15, 2016-17) decided on merits, the Tribunal directed the AO to adopt a net profit rate of 3% on bank credits. Penalties under Section 271(1)(c) for estimated additions were deleted, and the penalty under Section 271A for non-maintenance of books was deleted for an assessee opting for presumptive taxation under Section 44AD.

The Tribunal held that the notice issued under Section 148 for AY 2015-16 was invalid as it was issued after the prescribed time limit, quashing the assessment order and consequently the penalties for that year. For other assessment years, the Tribunal directed the Assessing Officer to adopt a net profit rate of 3% on the cash deposited in the bank accounts, considering the assessee's business as commission-based and the lack of proper documentation. Penalties were deleted where they were based on estimated additions or where the assessee was eligible for presumptive taxation.

The Tribunal held that the AO's 100% addition of trading receipts deposited in the bank account was erroneous. Considering the assessee's business of trading brass components and the nature of deposits as trading receipts, the Tribunal estimated the profit at 8% of the cash deposited in the bank account and directed the AO to make the addition accordingly under the head of income from business and profession, not under Section 115BBE.

The Tribunal held that the assessing officer had conducted necessary inquiries and taken a plausible view by disallowing only 25% of the alleged bogus purchases, relying on judicial precedents. The PCIT's action of revising the assessment order under section 263 was found to be erroneous as it was based on a disagreement with the assessing officer's opinion and not a lack of inquiry.

The Tribunal noted that the assessee indeed acted as a commission agent with a margin of 1% to 1.25%. The Tribunal found that the AO's addition of 4% was on the higher side and that in a similar case, a 2% profit rate/commission rate was estimated by the ITAT, Rajkot Bench. Therefore, the addition was directed to be made at 2% of the total turnover.

The Principal CIT (PCIT) invoked section 263, holding that the assessment order was erroneous and prejudicial to revenue as the assessing officer did not conduct sufficient inquiries. The Tribunal found that the assessee provided all necessary documents and evidence, and the assessing officer had conducted sufficient inquiries. The Tribunal held that the PCIT's order under section 263 was not sustainable.

The Tribunal held that the Assessing Officer conducted adequate inquiry, and the PCIT erred in assuming jurisdiction under Section 263. The assessment order was not found to be erroneous or prejudicial to the interest of revenue. The PCIT's order was quashed, and the assessee's appeal was allowed.

The Tribunal noted that the Chief Commissioner of Income Tax had granted condonation of delay in filing the return. Since the delay was condoned and the issue of late filing was resolved, the disallowance of deduction under Section 80P based on the late filing was no longer tenable.

The Tribunal condoned the delay in filing the appeal due to the tax consultant's mistake. Regarding the merits, the Tribunal estimated a 10% profit element on the cash deposit sustained by the CIT(A), amounting to Rs. 74,800/-, and directed the AO to tax this amount at the normal rate of income tax, not under Section 115BBE.

The Tribunal noted that the assessee failed to provide sufficient documentary evidence for the purchases. Both the assessee's counsel and the revenue's DR agreed that an addition of Rs. 1,80,000/- would be sufficient. The Tribunal directed the AO to make an addition of Rs. 1,80,000/- to the assessee's income.

The Tribunal noted that the assessee was not given a sufficient opportunity to be heard, violating the principles of natural justice. The CIT(A) did not adjudicate the case on merits. Therefore, the appeals were restored back to the CIT(A) for fresh adjudication.

The Tribunal noted that the assessee was not given sufficient opportunity to be heard and could not plead their case before the CIT(A), violating the principle of natural justice. Therefore, the appeals were set aside and remitted back to the CIT(A) for fresh adjudication.

The Tribunal noted that the reasons recorded for reopening the assessment were not based on tangible material but on suspicion, and lacked due application of mind by the Assessing Officer. The Tribunal found the reassessment proceedings to be bad in law and quashed them.

The Tribunal noted that the assessee was not given sufficient opportunity to be heard and could not plead their case before the CIT(A), which violated the principle of natural justice. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matters back for de novo adjudication.

The Tribunal noted that the assessee was not given sufficient opportunity to be heard before the CIT(A) and that the case was not adjudicated on merits, violating the principles of natural justice. Therefore, the appeals were restored to the file of the CIT(A) for de novo adjudication.

The Tribunal noted that the AO did not specifically identify defects in the evidence provided by the assessee nor declared the evidence as bogus. Although the source of the unsecured loan was explained, the summons to creditors were unserved. Therefore, to meet the ends of justice and safeguard revenue, the Tribunal directed the AO to make an addition at the rate of 10% of the unsecured loan amount, considering it as income.

The Tribunal noted that a coordinate bench in the assessee's own case had previously dealt with a similar issue. In that case, it was observed that if the entity does not exist, subsequent proceedings and penalties do not survive. Consequently, the appeals were restored to the Assessing Officer to verify the existence of the assessee at the relevant time.

The tribunal noted that the appeals were filed significantly beyond the prescribed limitation period and the assessee had not filed any application for condonation of delay. Citing the lack of "sufficient cause" and the general rule of limitation, the tribunal decided not to condone the delay. The tribunal emphasized that the assessee was repeatedly reminded about the delay but failed to provide justification.

Following a previous Tribunal order in the assessee's own case, the Tribunal determined that if the entity did not exist at the time the notices were issued, the proceedings and penalties under Sections 142(1), 271(1)(b), and 271F would not survive. The appeals are thus restored to the Assessing Officer to verify the assessee's existence at the relevant time and grant appropriate relief if the entity is found to be non-existent.

The Tribunal held that interest received under Section 28 of the Land Acquisition Act, 1894, on enhanced compensation for agricultural land partakes the character of compensation itself and is an accretion to the value of the land. It is not to be treated as 'interest' falling under Section 145A of the Income Tax Act or taxable under the head 'income from other sources'. The Tribunal relied on the jurisdictional High Court's decision in Movaliya Bhikhubhai Balabhai vs. ITO and the Supreme Court's decision in CIT vs. Ghanshyam (HUF).