ITAT Ranchi Judgments — June 2025

The Tribunal held that the assessment order passed against the assessee on 11.03.2022 (or 28.03.2022) was invalid as it was issued against a non-existent entity, given the assessee bank's prior merger and cessation of existence. Relying on the Supreme Court's judgment in PCIT vs. Marutiy Suzuki India Ltd., the Tribunal concluded that such an order is a substantive illegality and without jurisdiction, making the impugned addition unsustainable.

The Tribunal considered a report from the Circle Officer dated 13.05.2025, which confirmed that the land sold by the assessee was agricultural land. Based on this, the Tribunal concluded that no capital gains arose from the transaction. Consequently, the appeal was allowed, and the AO was directed to delete the addition of long-term capital gains.

The Tribunal held that the assessment order dated 18.12.2018 was bad in law, null, and void, as it was passed against non-existent persons without issuing fresh notice to the correct legal heir. This action violated principles of natural justice and statutory compliance. Consequently, the impugned order and the alleged addition were quashed.

The Tribunal held that the addition of Rs. 48,00,000 was unsustainable as the assessee had already shown this amount as income in its audited books and had not claimed it as a corpus donation. Making such an addition would constitute a double addition. Therefore, the Tribunal directed the Assessing Officer to delete the addition.

The Tribunal determined that the CIT(A)'s ex-parte dismissal was improper as notices were sent to an outdated email address and not the one provided in Form No. 35, denying the assessee adequate opportunity. The appeal was dismissed on procedural grounds without considering the merits. Therefore, the Tribunal remanded the case back to the CIT(A) for re-examination on merits, directing both parties to ensure diligent compliance with notices.

The Tribunal noted that the CIT(A)'s order was passed ex-parte without addressing the merits, which is contrary to section 250(6) of the Act. In the interest of justice and fairness, the Tribunal remanded the entire issue back to the CIT(A) for fresh examination on merits, after providing the assessee a reasonable opportunity to present their case and submit relevant documents, with a directive for the assessee to fully cooperate.

The Tribunal held that the CIT(A)'s ex-parte dismissal without ensuring proper service of notice and without examining the merits of the case, as required by Section 250(6) of the Act, was not justified. The case was therefore remanded back to the CIT(A) to be re-examined on merits after providing the assessee a fresh opportunity to be heard.

The Tribunal held that the CIT(A)'s ex-parte dismissal without addressing the merits violated Section 250(6) of the Act. Consequently, the Tribunal remanded the entire issue back to the CIT(A) for a fresh examination on merits, directing that the assessee be given a reasonable opportunity to present their case.

The Tribunal found that the CIT(A) passed its order ex parte without addressing the merits of the case, contrary to Section 250(6) of the Act. Therefore, the Tribunal remanded the entire issue back to the CIT(A) for fresh adjudication on merits, after providing the assessee a reasonable opportunity of being heard.

The Tribunal considered the submissions of both parties regarding the assessee's status as a 'State' under Article 12 of the Constitution of India. The assessee argued it is an instrumentality of the government due to deep and pervasive state control, monopoly status, and performance of sovereign functions. The revenue contended that the assessee did not appear before the AO, leading to an ex-parte assessment.

The Tribunal observed that the assessee group declared an additional income of ₹6.40 crores. The Assessing Officer treated entire receipts as undisclosed income, while the CIT(A) reduced this to 25% of the receipt. The revenue challenged this reduction, arguing it was a reduction from the AO's assessment. The Tribunal found that the claim of enhancement by the AR was not substantiated. It was noted that the CIT(A) was right in allowing a claim for expenses and adding only the Gross Profit (GP).

The ITAT held that the CIT(A) was justified in allowing expenses, determining that only the gross profit (GP) was liable for addition, given that the banquet hall capacity made the full diary amounts improbable as undisclosed income. For AYs 2012-13, 2013-14, and 2016-17, the AO was directed to assess GP at 15% of the difference between impounded documents and book entries. Additions for AY 2017-18, based on extrapolation, were deleted entirely, and for AY 2018-19, cash and stock additions were remanded for verification against the assessee's books, with protective additions being deleted and assessees' original disclosures confirmed.

The Tribunal upheld the CIT(A)'s approach of allowing for expenses and adding only Gross Profit (GP). For AYs 2012-13, 2013-14, and 2016-17, the AO is directed to assess an additional GP at 15% of the difference between impounded documents and book entries. Additions based on extrapolation for AY 2017-18 were deleted, and for AY 2018-19, the treatment of cash and stock found during the survey was remanded for verification against book entries. Protective additions made by the AO were deleted.

The Tribunal noted that according to Section 143(1) of the Act, a show cause notice is mandatory before making any adjustment in the intimation. A perusal of the records indicated that no such notice was issued to the assessee.

The Tribunal confirmed that assessee was entitled to claim expenses, allowing assessment based on Gross Profit. It directed the AO to assess 15% GP on the difference between impounded documents and books for certain years of Kaveri restaurant, deleted additions based on unsupported extrapolation for AY 2017-18, and remanded the cash/stock issue for AY 2018-19 for verification against books. Protective additions were deleted, and initial disclosures confirmed.

The Tribunal noted that the assessee had not made any representation before the Assessing Officer. Consequently, the issues in the appeal were restored to the file of the AO for adjudication, with directions to consider the applicability of the 'State' status and other related legal issues.

The CIT(A) reduced the additions, estimating income at 25% of the receipts found in impounded documents and deleting protective additions. The Tribunal upheld the CIT(A)'s view that assessees are entitled to claim expenses, and only the gross profit (GP) is taxable. For certain assessment years, the AO was directed to assess GP at 15% of the difference between impounded documents and recorded books for Kaveri Restaurant. Additions made by extrapolation for A.Y. 2017-18 were deleted, and issues of cash and stock for A.Y. 2018-19 were remanded for verification against the books.

The Tribunal confirmed that assessees were entitled to a claim for expenses, and only Gross Profit (GP) was liable to be added. It directed the AO to estimate additional income at 15% of the difference between impounded documents and books for AYs 2012-13, 2013-14, and 2016-17. For AY 2017-18, additions based on extrapolation were deleted, and for AY 2018-19, the issue of cash and stock additions was restored to the AO for re-examination. Protective additions were also deleted.

The CIT(A) had reduced the additions, estimating income at 25% of the receipts from impounded documents, recognizing the assessees' entitlement to claim expenses. The Tribunal directed the AO to assess Gross Profit at 15% of the difference between impounded document figures and book entries for Kaveri Restaurant for AYs 2012-13, 2013-14, and 2016-17. Additions based on extrapolated income for AY 2017-18 were deleted, and issues regarding cash and stock for AY 2018-19 were remanded for verification against books. Protective additions made by the AO were deleted.

The Tribunal held that the CIT(A) was correct in allowing a claim for expenses and adding only the Gross Profit. It was also held that the claim of enhancement by the AR was unsubstantiated. Certain additions were deleted, while others were directed to be assessed by the Assessing Officer based on specific percentages.

The Tribunal held that the assessee is entitled to a claim of expenses, and only the Gross Profit (GP) is liable to be added. In some cases, additions made by the Assessing Officer were reduced by the CIT(A). The Tribunal also directed the Assessing Officer to re-examine certain cash and stock findings.

The tribunal noted that the statements might have been pre-prepared. While upholding the assessee's right to claim expenses, it was decided that only the Gross Profit (GP) should be added. The additions confirmed by the CIT(A) were largely deleted, except for a specific case related to delayed PF and ESI payments.

The Tribunal held that only the gross profit (GP) was liable to be added, not the entire receipts. For Kaveri Restaurant, it directed assessment at 15% GP on the difference for AYs 2012-13, 2013-14, 2016-17, deleted the addition for AY 2017-18 due to lack of evidence, and restored the issue of cash and stock for AY 2018-19 to the AO for verification. Protective additions were deleted as substantive additions had been modified, and the assessee's original disclosures were confirmed.

The Tribunal affirmed that assessees are entitled to claim expenses, with only Gross Profit (GP) liable for addition. For A.Y. 2012-13, 2013-14, and 2016-17, the AO is directed to assess GP at 15% of the difference between impounded documents and book entries. Additions for A.Y. 2017-18 were deleted due to estimation by extrapolation without evidence. For A.Y. 2018-19, cash and stock additions are remanded to the AO for verification against book records. Protective additions were deleted, and assessee's disclosures in their returns were confirmed.

The Tribunal largely upheld the CIT(A)'s view that assessees were entitled to claim expenses and only gross profit (GP) should be added. For Kaveri Restaurant (AY 2012-13, 2013-14, 2016-17), the AO was directed to assess GP at 15% of the difference between impounded figures and book entries. For Kaveri Restaurant (AY 2017-18), additions based on extrapolation were deleted due to lack of evidence, and for AY 2018-19, the issue of cash and stock found during the survey was remanded to the AO for verification against books, with no addition to be made if recorded. Protective additions were deleted, and substantive ones modified. An addition for delayed PF/ESI payment for Dinanath Hotels (AY 2018-19) was accepted.

The Tribunal largely accepted the CIT(A)'s decision to estimate income by applying a gross profit rate (15%) to the difference between recorded and impounded receipts for certain assessment years. For other years, additions based on extrapolation were deleted, and issues of cash/stock were remanded for verification against books. Protective additions were largely deleted as substantive additions were addressed.

The Tribunal held that the CIT(A) was correct in allowing a claim for expenses and adding only the Gross Profit (GP). However, the CIT(A)'s enhancement was found to be without notice. For certain assessment years, the Assessing Officer was directed to assess GP at 15% of the difference between impounded documents and recorded amounts.

The Tribunal noted that the Assessing Officer had made protective and substantive additions. The CIT(A) had reduced some additions and estimated income at 25% of the receipts found in the impounded documents. The Tribunal reviewed the rival submissions, considering that a claim for expenses should be allowed and only Gross Profit (GP) added. For some assessment years, the Assessing Officer was directed to assess GP at 15% of the difference between impounded documents and recorded amounts, while for others, additions were deleted due to lack of evidence or being excessively estimated.

The Tribunal held that the entire receipts found in the diaries could not be treated as undisclosed income. It acknowledged the assessee's right to claim expenses and that only the Gross Profit (GP) should be added. The additions made by the Assessing Officer were modified, and some were deleted.

The Tribunal held that the CIT(A) was correct in allowing a claim for expenses and adding only the Gross Profit (GP). The Tribunal also noted that the assessees themselves had disclosed a significant amount as additional income. Additions made by the Assessing Officer were modified or deleted based on the specific facts and assessment years.

The Tribunal considered the rival submissions and perused the chart submitted by the Authorized Representative. It was noted that the assessees were entitled to claim expenses, and only the Gross Profit (GP) was liable to be added. The Tribunal also directed the Assessing Officer to assess GP at 15% of the difference between book figures and impounded documents for certain assessment years.

The Tribunal held that the assessee has not made any representation or provided details to the Assessing Officer. Therefore, the issues in the appeal are restored to the file of the AO for readjudication. The AO is directed to consider the applicability of the 'State' status for the assessee, examining it against the criteria set forth in previous judicial decisions.

The Tribunal determined that the entire receipts could not be treated as undisclosed income due to practical limitations, and assessees were entitled to claim expenses, making only the gross profit liable for addition. For AY 2012-13, 2013-14, and 2016-17, the Assessing Officer was directed to assess gross profit at 15% of the difference between impounded documents and book entries. Additions for AY 2017-18 based on extrapolation were deleted entirely, and the issue of cash and stock for AY 2018-19 was remanded to the AO for verification against book entries. An addition for delayed PF/ESI payment was upheld.

The Tribunal noted that the Assessing Officer's report and the order sheet entries indicated that no notice under section 148 of the Act was served on the assessee. Consequently, the assessment order passed under section 147 r.w.s 144 and the penalty orders were deemed unsustainable.

The Tribunal observed that the reasons recorded by the AO for reopening were vague and did not clearly indicate any specific evasion by the assessee. The AO's own uncertainty about the taxability of capital gains and the absence of a mention of non-disclosure by the assessee were noted. Consequently, the issuance of the notice under section 148 and the subsequent reopening of assessment were deemed invalid.

The Tribunal observed that the tax effect in the appeal, Rs. 48,52,410/-, was indeed below the CBDT's monetary threshold of Rs. 60,00,000/- for revenue appeals. Consequently, the Tribunal held that the revenue's appeal was not maintainable.

The Tribunal noted that the report from the Assessing Officer indicated that while a notice u/s 148 was generated, its service on the assessee was not conclusively proven. The Tribunal found that the assessee also submitted an order sheet entry with personal details and stated they had no PAN.

The Tribunal held that the business cannot be considered to have ceased merely due to the suspension of the mining license, especially since the assessee is actively pursuing restoration through litigation and has kept its machinery ready for use. Therefore, the expenses and depreciation claimed by the assessee should be allowed.

The Tribunal noted that the CIT(A) had categorically held the assessee to be a going concern. The revenue failed to disprove this finding. Therefore, the CIT(A)'s decision on revaluation of closing stock was upheld, making the ITAT Kolkata's decision in Shyam Prasad Agarwal inapplicable.

The Tribunal condoned the delay in filing the appeal before the CIT(A) after being satisfied with the assessee's reasonable cause. The Tribunal also noted that the assessee could not produce evidence before the AO, leading to an assessment under section 147 r.w.s 144 of the Act.

The Tribunal considered the assessee's application for withdrawal of the appeal. As the assessee had applied for and received approval under the Vivad se Vishwas Scheme, 2024, the Tribunal allowed the withdrawal.

The Tribunal held that the DTAA does not apply to Dividend Distribution Tax (DDT) paid by a domestic company. The transfer pricing adjustment was found to be erroneous as the AO applied the resale price method to incomparable products. The disallowance under Section 14A r.w.s 8D for computing book profit was upheld.

The Tribunal noted that the CIT(A) had granted several opportunities but the assessee failed to comply, resulting in ex-parte orders. However, the assessee's AR undertook to cooperate in the proceedings. Therefore, in the interest of justice, the appeals were restored to the file of the AO for fresh adjudication with a cost of Rs. 10,000/- per appeal imposed on the assessee.

The Tribunal allowed the appeal on the issue of double disallowance of miscellaneous expenses, holding that the assessee's suo moto disallowance was sufficient. Hindustan Copper Limited was excluded as a comparable due to functional and product dissimilarities. The interest rate on loans to the sister concern was recomputed at 9%, and the corporate guarantee fee was fixed at 0.5%. The AO was directed to adopt State Electricity Board rates for calculating the Section 80-IA deduction. The disallowance of foreign travel expenses was deleted as the assessee had already made a higher disallowance under FBT.

The Tribunal held that the Assessing Officer's report indicated that notice u/s.148 of the Act was not served on the assessee. Consequently, the assessment order passed under u/s.147 r.w.s 144 was quashed.

The Tribunal observed that the CIT(A) had granted multiple opportunities to the assessee, but they failed to comply. However, considering the undertaking by the assessee's AR to cooperate, the Tribunal restored the appeals to the file of the AO for fresh adjudication, directing the assessee to cooperate and furnish all documents.

The Tribunal held that even if the farmers were unaware of applying for share application money, it could be treated as an unsecured loan. The source of funds from IDBI bank and routed through farmers' accounts was clear, and the transactions were confirmed as genuine by the farmers and the bank. The amounts were also repaid.