ITAT Rajkot Judgments — December 2025

The Tribunal acknowledged that the assessee had indeed made a data entry error in the ITR, and the actual agricultural income was Rs. 6,39,780. However, considering that some of the provided documents were not entirely reliable and to protect the revenue's interest, the Tribunal directed an ad-hoc addition of 5% of the agricultural income.

The Tribunal held that the gift was received from a relative (husband) and therefore falls under the exemption provided in Section 56(2)(x) of the Income Tax Act. The Tribunal also noted that Section 69A was not applicable as the property was recorded in the books of account.

The Tribunal held that the Assessing Officer (AO) failed to demonstrate any substantive defect in the assessee's books of account or records. The non-maintenance of a day-to-day stock register or quantitative details in the original Form 3CD, which was later rectified, was considered a technical lapse rather than a ground for rejecting the books of account under Section 145(3). The Tribunal noted that the assessee had submitted inventory movement registers, rectified reports, and inventory records, which, along with third-party documentation like GST returns and supplier invoices, provided complete information. The Tribunal cited the cases of Subhendu Kumar Subudhi vs. CIT and CIT vs. Smt. Poonam Rani, emphasizing that the absence of a stock register alone does not render account books incomplete or inaccurate, and that Section 145(3) is intended to protect revenue from genuine doubts about account reliability, not to penalize mere technical omissions. Since the AO could not prove the unreliability, incorrectness, or incompleteness of the accounts, the rejection of books of account was deemed wrong. Consequently, the addition made by the AO on account of estimated profit was deleted. The Tribunal did not explicitly address grounds 1, 4, 5, and 6, but the allowance of the appeal based on the deletion of the addition implies these grounds were also decided in favour of the assessee.

The Tribunal noted that the CIT(A)'s order was an ex-parte and non-speaking order, and the issue was not decided as per the mandate of Section 250(6) of the Act. Therefore, one more opportunity was granted to the assessee.

The Tribunal found that the assessee had substantiated his agricultural activities and the source of cash deposits with documentary evidence. Therefore, the entire addition was not justified.

The Tribunal noted that the CIT(A) passed an ex parte and non-speaking order without granting the assessee sufficient opportunity of being heard. Citing principles of natural justice, the Tribunal held that the assessee should be granted a fair opportunity to contest their case.

The Tribunal found that while the assessee had provided some evidence for the cost of improvement, there were inherent weaknesses. Therefore, a 10% disallowance of the indexed cost of improvement was deemed sufficient to protect the revenue's interest, rather than a full disallowance.

The Tribunal held that the Assessing Officer's reasons for reopening the assessment lacked a rational connection to the formation of belief regarding income escapement. The AO did not adequately establish that the client code modifications were for tax evasion.

The Tribunal held that the Assessing Officer had conducted sufficient inquiry, and the PCIT cannot invoke Section 263 merely because he disagrees with the AO's conclusion or believes further inquiry was needed. The AO's decision on the extent of inquiry is within their domain.

The Tribunal condoned the delay in filing the appeal, citing a liberal approach in such matters and the mistake of the tax consultant. On merits, the Tribunal held that since the Assessing Officer accepted a substantial portion of the cash as agricultural income, the remaining addition of Rs. 5,00,000/- was not sustainable, especially as the assessee was exclusively an agriculturist.

The Tribunal noted that the assessee was not afforded sufficient opportunity of being heard and the Ld. CIT(A) order was ex-parte and non-speaking. It was held that principles of natural justice require a fair opportunity of hearing.

The Tribunal noted that the assessee is an agriculturist and provided evidence of land holdings and agricultural activities. While the entire cash deposited could not be treated as income, a profit element embedded in the sale of agricultural production could be added on a presumptive basis. Therefore, the Tribunal directed the AO to make an addition of 10% of the total amount deposited.

The Tribunal observed that the assessee was not afforded a proper opportunity to explain its case and submit supporting documents for registration under section 12A(1)(ac)(iii). Consequently, the Tribunal remitted the matter back to the Commissioner of Income Tax (Exemption) with directions to grant the assessee a fair and due opportunity to present its case and submit all necessary documents.

The Tribunal held that the principles of natural justice and fair play require that an affected party be granted a sufficient opportunity of being heard. The Ld. CIT(A) had issued six notices for hearing, but there was no compliance from the assessee. However, the order of the Ld. CIT(A) was silent on the service of these notices. Considering this, and in the interest of justice, the Tribunal decided to set aside the order of the Ld. CIT(A) and remit the matter back to the file of the Ld. CIT(A) for fresh adjudication. The assessee would be given due opportunity to plead their case. The Tribunal allowed the appeal for statistical purposes.

The Tribunal condoned the delay in filing the appeal, acknowledging the genuine circumstances presented by the Assessee, particularly the advanced age of its trustees and their unfamiliarity with online communication methods. The Tribunal directed the Assessee to deposit a cost of Rs. 8,000/- to be deposited with the Prime Minister's Relief Fund.

The Tribunal noted that the delay in filing the appeal was due to the tax consultant's pregnancy, which prevented timely compliance with notices. The Tribunal condoned the delay, considering it a genuine reason and a matter of natural justice. The appeal was set aside and remanded to the assessing officer for fresh adjudication.

The Tribunal noted that the assessee had not complied with notices issued by the Assessing Officer and the CIT(Appeals) for submitting documents and attending hearings. The Tribunal observed that the assessee had been negligent in pursuing the case before the lower authorities. In the interest of justice, and to provide one more opportunity to the assessee to explain the case, the Tribunal directed the assessee to deposit a cost of Rs. 2,000/- with the Prime Minister's Relief Fund within 10 days. The Tribunal set aside the orders of the lower authorities and remitted the matter back to the Assessing Officer for fresh adjudication on merit, after giving the assessee a due opportunity of being heard. The appeal was allowed for statistical purposes.

The ITAT noted that the Ld. CIT(A) had issued multiple notices to the assessee to submit documents in support of their case, but the assessee did not comply. The Tribunal invoked the Latin maxim 'Vigilantibus non dormientibus jura subveniunt' (the law assists those who are vigilant about their rights and not those who sleep over their rights), affirming that this principle is upheld by higher courts. The Tribunal also observed that the assessee had not complied with notices issued by the AO and had been negligent in pursuing the case. Consequently, the ITAT directed the assessee to deposit a cost of Rs. 10,000 with the Prime Minister's Relief Fund within 10 days. In the interest of justice, the Tribunal granted the assessee an opportunity to present their case before the AO. The order of the lower authorities was set aside, and the matter was remitted back to the file of the AO for fresh adjudication on merits, after providing the assessee with a due opportunity of being heard. The Tribunal did not decide the substantive issues of additions, disallowances, or penalties.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal noted that the assessee was given sufficient opportunities but failed to submit necessary documents and evidence, showing non-compliance and negligence in pursuing the case. The Tribunal imposed a cost of Rs. 500/- and remitted the matter back to the AO for fresh adjudication, granting an opportunity to the assessee to present their case.

The Tribunal decided that the additions made by the Assessing Officer were not substantiated by the evidence. The Tribunal found that the seized documents, which formed the basis of the additions, were not corroborated by other evidence and that the assessee's explanations were plausible.

The Tribunal found that the CIT(A) failed to properly address the AO's detailed findings and corroborative evidence regarding 'on-money' receipts. The CIT(A) relied solely on the assessee's submissions without rebutting the AO's analysis.

The Tribunal upheld the order of the Ld. CIT(A) regarding the deletion of additions and the principle of natural justice. It was held that the opportunity for cross-examination was not required as the assessee had admitted ownership of the seized documents and had been provided with copies of rough cash books and statements, along with an opportunity to reply. The Tribunal noted that the Ld. CIT(A) had accepted a working submitted by the assessee without proper examination, which was contrary to the mandate of section 250(6) of the Income Tax Act. The Tribunal found that the Ld. CIT(A)'s order lacked specific findings on the source of data in the assessee's working and failed to examine its basis. Consequently, the Tribunal found the Ld. CIT(A)'s order to be not in accordance with the statutory provisions, implying a need for proper examination of the assessee's working.

The Tribunal held that the Ld. CIT(A) had erred in deleting the additions made by the AO. Regarding the addition of Rs.17,83,19,200/- (Issue 1), the Tribunal found that the seized pen drive data, corroborated by the statement of Shri Himanshu Raiyani and Shri Nikhil Patel, clearly indicated the maintenance of two sets of books – one accounted and one unaccounted. The 'MIRACLE' software contained date-wise entries of unaccounted cash receipts. The Tribunal noted that the AO had relied on this digital data which was admitted by the stakeholders. Therefore, the deletion by the Ld. CIT(A) was set aside, and the AO's addition was restored. On the issue of the profit rate (Issue 2), the Tribunal found that the Ld. CIT(A) had adopted an arbitrary rate of 15% without proper appreciation of the facts. Given the clear evidence of unaccounted transactions, the Tribunal restored this issue to the Ld. CIT(A) to re-examine and decide the profit rate on the unaccounted receipts, considering the evidence on record. Regarding the timing of income recognition (Issue 3), the Tribunal held that the Ld. CIT(A) erred in applying the accrual basis. The Tribunal reasoned that when unaccounted cash receipts are found, the income should be taxed in the year of receipt, as it represents actual cash inflow. The deletion by the Ld. CIT(A) was set aside, and the AO's method of taxing on receipt basis was restored. Concerning the deletion of Rs.2,83,20,000/- from sale of scrap (Issue 4), the Tribunal found that the Ld. CIT(A) had deleted this without appreciating the seized documents which clearly mentioned the assessee receiving this sum towards the sale of demolition scrap (IMLA). The AO had relied on the P&L account from the seized soft data. The Tribunal restored this issue to the Ld. CIT(A) for fresh adjudication based on the evidence. The Tribunal did not expressly leave any issue undecided.

The Tribunal noted that the AO did not properly examine the assessee's status as a trader or commission agent and did not thoroughly scrutinize the books of account. However, the reopening of assessment was deemed valid. The Tribunal found that the assessee deserved an opportunity to provide explanations and supporting documents to the lower authorities.

The Tribunal noted that notices were issued by the CIT(A) for submission of documents, which the appellant did not comply with. The assessee also failed to comply with notices for hearings issued by the AO. The Tribunal observed that the assessee did not exercise due care and attention and was negligent in pursuing the case before the AO and CIT(A). Due to this non-cooperative attitude, the Tribunal directed the assessee to deposit a cost of Rs. 5,000/- with the Prime Minister's Relief Fund within 10 days and submit the receipt. In the interest of justice, the Tribunal granted an opportunity to the assessee to present their case before the AO. Consequently, the Tribunal set aside the orders of the lower authorities and remitted the matter back to the file of the AO for fresh adjudication on merits, after providing the assessee with a due opportunity of being heard, in accordance with law. The issue of whether the income was agricultural and the treatment of bank deposits/withdrawals was not decided on merits by the Tribunal, as the matter was remanded.

The Tribunal noted that the AO did not properly examine the assessee's status as a trader or commission agent and did not thoroughly scrutinize the books of account. However, the reopening of assessment was deemed valid. The Tribunal found that the assessee deserved an opportunity to provide explanations and supporting documents to the lower authorities.

The Tribunal noted that the CIT(A)'s order was ex-parte and non-speaking, and that the issue was not decided as per the mandate of section 250(6) of the Act. Therefore, the Tribunal decided to give the assessee one more opportunity to present their case.

The Tribunal found that the assessee had provided substantial evidence regarding agricultural income and cash withdrawals. However, due to some deficiencies in the supporting documents, the Tribunal directed a partial disallowance to protect the revenue's interest.

The Tribunal acknowledged the "sufficient cause" for the delay in filing the appeal, citing the assessee's circumstances and relevant legal precedents. The Tribunal condoned the delay and, in the interest of natural justice and fair play, decided to give the assessee another opportunity to present their case.

The Tribunal condoned the delay of 240 days in filing the appeal. While acknowledging the revenue's argument regarding the burden of proof, the Tribunal found the assessee's reasons for delay convincing, citing the Supreme Court's judgment in Collector, Land Acquisition vs Mst. Katiji and others, emphasizing that substantial justice should be preferred over technical considerations. On merits, the Tribunal noted that the assessment was carried out under section 147 r.w.s. 144 and the CIT(A)'s order was ex-parte and non-speaking. The Tribunal held that the assessee was not given sufficient opportunity of being heard, constituting a violation of the principle of natural justice. Consequently, the CIT(A)'s order was set aside, and the issue was remanded to the Assessing Officer for fresh adjudication, with the direction to afford the assessee an opportunity of being heard and to allow them to submit further evidence. A cost of Rs. 500/- was imposed on the assessee, payable to the Prime Minister National Relief Fund.

The Tribunal acknowledged that the assessee was not given sufficient opportunity to be heard and found the CIT(A)'s order to be ex-parte and non-speaking. Upholding natural justice, the tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer for a de novo assessment, with a direction to grant adequate opportunity to the assessee. A cost of Rs. 5,000/- was imposed on the assessee for their non-compliance, payable within 3 weeks to the Prime Minister Relief Fund.

The Tribunal noted that the CIT(A) had issued notices for hearing which remained uncomplied with, and observed that the assessee failed to avail the opportunity to explain the case, appearing not interested in pursuing the appeal. However, the Tribunal also observed that the CIT(A)'s order discussed notices issued but not their service. The Tribunal further noted that the assessee had not filed details supporting the addition of Rs. 11,00,000 before the AO. Considering these points, the Tribunal was of the view that one more opportunity should be given to the assessee to present his case before the AO. Therefore, the matter was restored back to the file of the AO for adjudication after giving due opportunity of being heard to the assessee. The CIT(A) was directed to afford an opportunity of being heard before deciding the issue, and the assessee was granted liberty to submit further evidence. The appeal was allowed for statistical purposes.

The Tribunal condoned the significant delay in filing the appeals, citing sufficient cause and the principle of substantial justice over technicalities. The matter was then restored to the Assessing Officer for de novo adjudication.

The Tribunal decided to condone the delays of 634 days in the quantum appeal and 477 days in the penalty appeal, exercising discretion in favour of the assessee. The Tribunal noted that the assessee should not be penalized for the mistake committed by their advocate/CA and found the reasons explained for the delay to be mitigating circumstances. On the merits, the Tribunal observed that the assessment order was passed ex-parte under Section 144 of the Act and the impugned order of the CIT(A) was also ex-parte and non-speaking. The Tribunal concluded that the assessee was not given sufficient opportunity of being heard and could not plead their case successfully before the lower authorities. Citing the principles of natural justice and fair play, the Tribunal decided to restore both the quantum and penalty appeals to the file of the Assessing Officer for de novo assessment. The quantum appeal was treated as allowed for statistical purposes. The penalty appeal was allowed because the additions in the quantum assessment were restored, meaning the penalty would not survive at this stage, though the AO was at liberty to initiate fresh penalty proceedings after the de novo assessment.

The Tribunal decided to condone the delays of 634 days in the quantum appeal and 477 days in the penalty appeal, exercising discretion in favour of the assessee. The Tribunal noted that the assessee should not be penalized for the mistake committed by their advocate/CA and found the reasons explained for the delay to be mitigating circumstances. On the merits, the Tribunal observed that the assessment order was passed ex-parte under Section 144 of the Act and the impugned order of the CIT(A) was also ex-parte and non-speaking. The Tribunal concluded that the assessee was not given sufficient opportunity of being heard and could not plead their case successfully before the lower authorities. Citing the principles of natural justice and fair play, the Tribunal decided to restore both the quantum and penalty appeals to the file of the Assessing Officer for de novo assessment. The quantum appeal was treated as allowed for statistical purposes. The penalty appeal was allowed because the additions in the quantum assessment were restored, meaning the penalty would not survive at this stage, though the AO was at liberty to initiate fresh penalty proceedings after the de novo assessment.

The Tribunal condoned the significant delay in filing the appeals, citing sufficient cause and the principle of substantial justice over technicalities. The matter was then restored to the Assessing Officer for de novo adjudication.

The Tribunal held that the cash book maintained by the assessee, which showed sufficient cash on hand before demonetization, was not disputed by the Assessing Officer. However, due to a lack of supporting documents like agreements and purchase bills, the Tribunal found some weakness in the assessee's explanation.

The Tribunal held that the addition made by the TPO/AO was unsustainable in law because the relevant provision under which the TPO's order was passed had been omitted from the statute with effect from April 1, 2017, and the assessment order was passed after this date. The Tribunal also noted that the assessee had adopted the CUP method, and no transfer pricing adjustment was required.

The Tribunal noted the assessee's consistent non-compliance and lack of cooperation throughout the proceedings. However, considering the interest of justice and to provide an opportunity for a fair hearing, the Tribunal decided to grant the assessee another chance to present their case.

The Tribunal found that the reasons for reopening the assessment were erroneous as the transactions were duly recorded in the assessee's books of account. While the source of cash deposit was explained, to safeguard revenue, the Tribunal directed the AO to make an addition of 10% on the cash deposit amount.

The Tribunal held that the protective addition made in the hands of the assessee should be deleted. For the gold valued at Rs. 17,05,744/- (560.24 gms), the Tribunal noted that the CIT(A) had deleted this addition after observing that the assessment order in the case of M/s. Global Jewels India Limited had already brought this amount to tax as unexplained income, thereby confirming that the substantive addition was made in the hands of the real owner. Regarding the gold valued at Rs. 10,68,864/- (350 gms), the Tribunal observed that the assessment order in the case of M/s. Jiya Gems Pvt. Ltd. for AY 2018-19, dated 31.12.2019, clearly stated that the unaccounted gold weighing 480.760 grams, allegedly sent by M/s. Jiya Gems Pvt. Ltd. to the assessee, constituted its unexplained income and was added to its total income under section 69A read with section 115BBE. Therefore, as substantive addition had already been made in the hands of the real owner, M/s. Jiya Gems Pvt. Ltd., the protective addition in the hands of the assessee was deleted. The Tribunal expressly left undecided the validity of the assessment order passed under section 153C, as the appeal was decided on merits concerning the additions.

The Tribunal held that the Principal Commissioner of Income Tax (PCIT) had wrongly invoked the revisionary power under section 263 of the Income Tax Act, 1961. The Tribunal found that the assessee had submitted a paper book containing details of staff salary payments, which were also available before the PCIT during the proceedings. Crucially, the Tribunal noted that the Assessing Officer (AO) had examined the details of cash payments towards staff salary and had issued a notice under section 142(1) of the Act, to which the assessee had furnished all required information. The Tribunal further observed that the salary payments of Rs. 5,85,000/- were made in cash, but each individual salary payment to an employee did not exceed Rs. 20,000/-. Therefore, the individual payments did not exceed the prescribed limit under section 40A(3) of the Act. Consequently, the Tribunal quashed the order passed by the PCIT dated 29.03.2024, finding no justification for the revision. All grounds of appeal were disposed of accordingly.