ITAT Ranchi Judgments — July 2025

The ITAT observed that the CIT(A) admitted fresh evidence without allowing the Assessing Officer an opportunity to examine it or provide a remand report, violating Rule 46A of the Income Tax Rules. Consequently, the ITAT decided to restore the matter back to the CIT(A) to afford the AO a reasonable opportunity of being heard and to seek a remand report on the fresh evidence.

The Tribunal granted the appellant's prayer, allowing the withdrawal of the appeal. Consequently, the appeal was dismissed as withdrawn.

The Tribunal condoned a two-month delay in filing the appeal, accepting that it was not intentional. Recognizing the assessee's claim that non-compliance before the CIT(A) was due to the COVID-19 period and filed adjournment petitions, the Tribunal remanded the matter back to the CIT(A). The CIT(A) is directed to decide the issue afresh, providing the appellant a reasonable opportunity to be heard and to submit all necessary details.

The Tribunal held that the Assessing Officer's action of rejecting purchases while accepting sales and not rejecting the assessee's books of account was not legally sustainable. The Tribunal found merit in the assessee's submissions and deleted the addition made by the Assessing Officer.

The Tribunal held that the notice issued under Section 148A(b) was bad in law because it provided only 5 days for compliance, contrary to the Jurisdictional High Court's mandate of at least seven clear days. Consequently, the impugned order passed by the CIT(A) was set aside, and the Assessing Officer was directed to delete the addition made against the assessee.

The Tribunal found that the reassessment proceedings were initiated beyond four years from the end of the relevant assessment year. Crucially, the Assessing Officer's reasons for reopening did not allege any failure by the assessee to disclose material facts. Relying on the Supreme Court's judgment in Ganga Saran & Sons (P) Ltd. vs. ITO, the Tribunal ruled the reassessment was invalid and directed the deletion of additions.

The Tribunal held that the proceedings initiated under Section 148 and the addition made for disallowing LTCG were invalid as no incriminating material was found during the search to disbelieve the assessee's claim. Relying on the Hon'ble Apex Court's decision in PCIT Vs Abhisar Buildwell Pvt Ltd and previous Tribunal decisions, the addition made by the AO and confirmed by the CIT(A) was deleted. All appeals of the assessee were allowed.

The Tribunal, following the Supreme Court decision in PCIT Vs Abhisar Buildwell Pvt Ltd and a prior Tribunal decision in Smt. Saroj Agarwal Vs ACIT, held that in the absence of any incriminating material found during the search, no addition could be made for unabated/completed assessments. It also noted that similar LTCG claims of a family member were accepted, leading to the deletion of the addition made by the Assessing Officer for disallowing the assessee's claim of exemption under Section 10(38).

The Tribunal held that the CIT(A)'s power under Section 251 of the Income Tax Act is limited to confirming, reducing, enhancing, or annulling the assessment order for the year under appeal only. The CIT(A) does not have the authority to issue directions to reopen assessments for other years. Therefore, the CIT(A)'s direction to reopen the assessment for AY 2015-16 was beyond its jurisdiction and contrary to the principles of natural justice, and thus set aside.

The Tribunal, relying on Supreme Court and jurisdictional High Court judgments, found no incriminating material to disbelieve the assessee's claim of LTCG exemption under Section 10(38). It noted that an identical claim by a family member was accepted. Consequently, the addition made by the AO and confirmed by the CIT(A) was deleted, and all appeals were allowed.

The Tribunal held that the assessee did not claim deductions under Section 36(1)(viia)(d) but claimed actual bad debts under Section 36(1)(vii), having written them off in its books as irrecoverable and having added back provisions for bad debts in its return. Therefore, the AO's order was neither erroneous nor prejudicial to revenue, rendering the PCIT's Section 263 order invalid.

The Tribunal held that no addition could be made in respect of completed/unabated assessments where no incriminating material was found during the search, relying on the Supreme Court decision in PCIT Vs Abhisar Buildwell Pvt Ltd. It found no evidence linking the assessee to alleged manipulation or to disbelieve the LTCG claim. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted, and all appeals were allowed.

The Income Tax Appellate Tribunal upheld the decision of the CIT(A) to delete the penalty. The Tribunal acknowledged that the assessee is a public sector undertaking, running in losses, and had already paid tax under Section 115JB of the Act. It was noted that the company itself admitted the mistake, attributing it to an inadvertent error by its Accountant/Auditor, and therefore, the entire company should not be held responsible for underreporting of income.

The Income Tax Appellate Tribunal (ITAT) held that the show cause notice issued under Section 274 for initiating penalty proceedings was defective. It failed to specifically state whether the penalty was for concealment of income or for furnishing inaccurate particulars, thus rendering the notice ambiguous and the subsequent penalty illegal as per various High Court and Supreme Court precedents. Consequently, the tribunal set aside the penalty orders.

The Tribunal held that the valuation method used by the survey team for stock was arbitrary, as the assessee had already accounted for the income in its P&L. It further noted that once income is accepted as business income, taxing it under Section 69A as unexplained investment is impermissible. Consequently, the addition of Rs.5,55,488/- under Section 69A was deleted.

The Tribunal held that the penalty notices issued under Section 274 read with Section 271(1)(c) were defective because they did not explicitly specify whether the penalty was for concealment of income or for furnishing inaccurate particulars. Relying on various High Court and Supreme Court precedents, the Tribunal reiterated that ambiguous penalty notices where inapplicable limbs are not struck off vitiate the penalty proceedings. Consequently, the Tribunal set aside the penalty orders and directed the AO to delete the penalties.

The Tribunal held that a show cause notice for penalty under section 274 read with 271(1)(c) must specifically state the precise charge, either concealment of income or furnishing inaccurate particulars. Failure to strike off the inapplicable limb in the notice renders it defective, thereby vitiating the penalty. Relying on several High Court and Supreme Court judgments, the Tribunal set aside the penalty orders.

The Tribunal held that the proceedings initiated under Section 148 were invalid as no incriminating material was found during the search operation under Section 132/132A. Relying on Supreme Court and High Court judgments, and the principle of consistency with similar cases decided by the Tribunal, the addition made by the Assessing Officer and confirmed by the CIT(A) regarding the disallowance of Long Term Capital Gain exemption under Section 10(38) was deleted.

The Tribunal quashed the assessments, ruling that in the absence of incriminating material found during the search, no addition could be made for completed or unabated assessments, citing Supreme Court decisions. It further held that the assessee's bona fide share transactions, supported by documents, could not be treated as bogus merely due to alleged involvement of brokers in price manipulation, especially when similar transactions for other family members were accepted. The Tribunal also relied on its previous decisions and the Jharkhand High Court's ruling on similar facts.

The Tribunal held that a show cause notice issued under Section 274 for initiating penalty proceedings under Section 271(1)(c) is defective if it does not explicitly specify whether the penalty is for 'concealment of income' or 'furnishing inaccurate particulars of income' by striking off the inappropriate limb. Citing various High Court and Supreme Court precedents, the Tribunal ruled that such a defective notice vitiates the penalty proceedings. Consequently, the penalty orders passed by the lower authorities were set aside, and the Assessing Officer was directed to delete the penalties.

The Tribunal, following the Supreme Court's Abhisar Buildwell Pvt Ltd decision and its own precedent in Smt. Saroj Agarwal Vs ACIT, held that no incriminating material was found during the search to disbelieve the assessee's claim of LTCG under Section 10(38). Emphasizing consistency with prior decisions on similar facts for family members, the additions made by the AO and confirmed by the CIT(A) were deleted. All appeals of the assessee were allowed.

The Tribunal, relying on various High Court and Supreme Court judgments and its own precedent, held that a penalty notice under section 274 read with section 271(1)(c) is vitiated and bad in law if it fails to strike off the inapplicable words and does not specifically indicate the limb of default (concealment of income or furnishing inaccurate particulars). Consequently, the penalty orders were set aside, and the Assessing Officer was directed to delete the penalties.

The Tribunal held that the penalty notices issued under Section 274 read with Section 271(1)(c) were defective because they failed to specify the precise limb of default (concealment of income or furnishing inaccurate particulars). Citing previous judgments, including its own, the Tribunal ruled that such an ambiguous notice vitiates the penalty, setting aside the orders of the CIT(A) and directing the deletion of the penalties.

The Tribunal, relying on Supreme Court decisions (PCIT vs Abhisar Buildwell Pvt Ltd) and its own previous judgments, held that no addition could be made in completed/unabated assessments under Section 153A without incriminating material found during the search. It also found no specific adverse findings or evidence of price manipulation linking the assessee to bogus LTCG. Consequently, the addition made by the Assessing Officer and confirmed by the CIT(A) was deleted, emphasizing consistency with prior cases and lack of incriminating evidence.

The Tribunal ruled that no incriminating material was found during the search to justify the disallowance of LTCG, referring to the Supreme Court's decision in PCIT Vs Abhisar Buildwell Pvt Ltd. It also noted that an identical issue for a family member had been accepted. Consequently, the Tribunal directed the deletion of the addition made by the Assessing Officer and confirmed by the CIT(A).

The Tribunal noted that all facts were disclosed in the return. It held that merely declaring income under a different head, subsequently reclassified during assessment, does not automatically amount to concealment or furnishing inaccurate particulars under Section 271(1)(c) in the absence of a proven dishonest intent or material concealment. Therefore, the penalty was directed to be deleted.

The Tribunal held that since the assessee had not paid tax on the disclosed undisclosed income, they were liable for a 60% penalty under Section 271AAB(1)(c), which is automatic and leaves no discretion to the Assessing Officer. The argument regarding the vague penalty notice was rejected, as the penalty provision is self-executing. The Tribunal upheld the penalty imposed by the Assessing Officer and confirmed by the CIT(A).

The Tribunal held that the reassessment proceedings initiated under Section 147 were bad in law because the Assessing Officer, while issuing the notice, did not specify any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Relying on Supreme Court precedent, the Tribunal stated that such a condition is essential for reopening a completed assessment after four years. Consequently, the reassessment proceedings were set aside, and the Assessing Officer was directed to delete the addition.