ITAT Surat Judgments — May 2025

The Tribunal held that the income of Rs.98,00,000/- received from the sale of a piece of land, after negotiation for purchase, rightly offered as business income and should not be reclassified as income from other sources. Indirect expenses are necessary for business operations and cannot be disallowed. Section 115BBE is not applicable for AY 2016-17.

The Tribunal noted that the assessee could not present its case before the CIT(E) due to not receiving the notices, resulting in an ex parte order. Observing that principles of natural justice require an opportunity to be heard, the Tribunal decided to restore the matter to the CIT(E) for fresh adjudication.

The Tribunal held that assessment and penalty proceedings are distinct and separate. A mere claim that is not sustainable in law does not automatically amount to furnishing inaccurate particulars of income. The Tribunal relied on the Supreme Court's decision in CIT vs. Reliance Petroproducts (P) Ltd and a coordinate bench decision where penalty was deleted in similar circumstances.

The Tribunal considered the assessee's application for withdrawal and, with liberty to both parties to file a Miscellaneous Application for restoration if the scheme settlement fails, dismissed the appeal as withdrawn.

The Tribunal found that the CIT(A) order was violative of the principles of natural justice as the assessee was not given a sufficient opportunity to be heard. Therefore, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that Section 91 of the Income-tax Act is not applicable for claiming FTC on South Carolina state taxes because India has a Double Taxation Avoidance Agreement (DTAA) with the USA, and Article 2 of the DTAA limits the covered taxes to federal taxes. The Tribunal also noted that the issue of whether state taxes are covered by the DTAA is debatable and not an 'error apparent on record' for rectification under Section 154. Interest levied under Sections 234B and 234C was held to be mandatory and automatic.

The Tribunal found the reasons for delay insufficient and unsupported by evidence, deeming them general and self-serving. Citing Supreme Court precedents, it emphasized that a 'liberal approach' for condoning delay cannot override the law of limitation when negligence and lack of diligence are apparent. Consequently, the Tribunal refused to condone the 806-day delay.

The Tribunal heard both parties and considered the assessee's application for withdrawal. The appeal was dismissed as withdrawn with liberty to both parties to seek restoration if the DVSV-2024 application is not settled.

The Tribunal ruled that the actual transfer of property occurred in AY 2013-14, affirming the application of Section 50C for that year. This decision was based on the full consideration being received and actual possession transferred on the registered sale deed date, and the buyer's legal ineligibility to acquire agricultural land earlier. To prevent double taxation, the AO was directed to grant credit for any taxes already paid by the appellant in AY 2012-13 concerning this transaction.

The Tribunal observed that the Settlement Commission/Interim Board of Settlement had already settled the firm's income, including the disputed bank deposits, and the department had accepted this order. Making a separate protective addition in the assessee's hands would lead to double addition, which is impermissible. Therefore, the protective addition was deleted.

The Tribunal noted that the principle of audi alteram partem (hear the other side) was not fully followed. Considering the circumstances beyond the appellant's control and their assurance of future vigilance, the appeal was restored to the CIT(E) for a fresh decision.

The Tribunal held that the AO had conducted sufficient inquiry and considered the assessee's submissions, making a plausible decision. The PCIT's action was considered a change of opinion, which is not permissible under Section 263. The Tribunal also noted that the matter was pending before the CIT(A) for fresh adjudication.

The Tribunal noted that the assessee could not pursue the case effectively before the lower authorities due to the death of their tax consultant. The assessee had not raised grounds of appeal before the CIT(A). However, in the interest of justice, the Tribunal set aside the CIT(A)'s order and restored the matter for fresh adjudication.

The Tribunal held that the assessee had provided details of expenses and TDS deduction. The PCIT, instead of verifying the provided documents and deciding the issue, set aside the matter to the AO for fresh assessment. The Tribunal found that the PCIT should have accepted the assessee's explanation and passed an order accordingly.

The Tribunal acknowledged the unintentional non-participation of the assessee due to improper notice delivery. It set aside the impugned orders of the CIT(A) and restored the matters for fresh adjudication, directing the CIT(A) to serve physical notices and allow the assessee a proper opportunity to present its case. The CIT(A) was also directed to consider a remand report if new evidence is submitted.

The Tribunal noted that the assessee was not conversant with the proceedings and missed the notices. Considering the interest of justice, the Tribunal decided to give the assessee an opportunity to present their case.

The Tribunal noted that a previous order by the same bench had deleted the major part of the quantum addition. The remaining minor addition of Rs. 36,730 was also confirmed on an estimation basis. The Tribunal held that the nature of this addition did not warrant the levy of penalty under section 271(1)(c) as it did not indicate concealment of income or furnishing of inaccurate particulars.

The Tribunal held that Section 195(6) of the Income Tax Act was amended effective from 01.06.2015, but the rules prescribing the form and manner of furnishing information (Rule 37BB) were notified only from 01.04.2016. Before this amendment, Form 15CA was only required for remittances where the income of the payee was chargeable to tax.

The Tribunal observed that the CIT(A) order was not in coherence with Section 250(6) of the Income Tax Act. The interest of justice would be served by giving the assessee an opportunity to present their case.

The Tribunal noted that the assessee-trust was not conversant with the proceedings and claimed they did not receive the notices. The Tribunal found that granting an opportunity to present their case would serve the interests of justice.

The Tribunal held that in the interest of natural justice, the matter should be set aside and remanded back to the CIT(A) to provide the assessee with another opportunity for hearing and to decide the appeal on merits by passing a speaking order. The assessee was directed to furnish all relevant materials and details before the CIT(A).

The Tribunal noted the delay in filing the appeals and the Assessee's explanation regarding non-receipt of notices. The Revenue had no objection to setting aside the matter back to the CIT(A). Therefore, the exparte appellate orders were set aside.

The Tribunal held that the assessee's business involved selling vouchers for cash, which was then deposited into the bank account. The large cash deposits during the demonetization period, amounting to Rs.10,56,40,151/-, with only Rs.7,05,500/- being in old currency, were not unjustified. The lower authorities failed to properly verify the bank statements and agreements.

The Tribunal noted the delay in filing and the assessee's explanation that notices were not received. The Revenue had no objection to setting aside the matter. The exparte orders were set aside with a direction to issue physical hearing notices.

The appeal was dismissed in limine due to non-rectification of defects and non-appearance of the assessee or their legal heirs. The appeal was filed by the assessee, and no one appeared on their behalf for the hearing.

The Tribunal observed that the income in question was clearly that of the individual, Shri Kantilal Punjyabhai Patel, and not the assessee HUF. However, the AO had passed an ex-parte order and the CIT(A) had not considered the assessee's submitted details. Therefore, in the interest of justice, the Tribunal set aside the CIT(A)'s order and remitted the issue back to the AO for fresh assessment.

The Tribunal held that the addition made by the AO was based solely on a presumption arising from a difference in the net profit ratio, without identifying any defects in the assessee's books of account or evidence. The Tribunal noted that various factors can influence profit rates, and the AO had not found any inflation of expenses or suppression of sales. Relying on previous judgments, the Tribunal concluded that such an approach without concrete evidence is not justifiable.

The Tribunal held that the AO had considered the issue of fictitious losses, examined the explanation and details provided by the assessee, and made a considered decision. The PCIT's action to invoke Section 263 was not sustained as it was not a case of 'lack of inquiry' but rather a difference of opinion. The Tribunal found that the AO had applied his mind to the facts and taken a considered view.

The Tribunal held that the AO had conducted sufficient inquiries and applied his mind before accepting the assessee's explanation regarding the impugned losses from derivative trading. The PCIT's order under Section 263 was considered erroneous because the AO's assessment could not be deemed 'erroneous in so far as it is prejudicial to the interests of revenue' when the AO had made a considered decision after examining the facts and evidence.

The CIT(A) dismissed the assessee's appeal due to a 62-day delay in filing and the lack of a "sufficient cause" for the delay. The Tribunal found that the delay, though significant, could be considered with sufficient cause, given the circumstances. Therefore, the Tribunal set aside the CIT(A)'s order.

The Tribunal condoned the 2-day delay in filing the appeal, finding the assessee's non-compliance with the lower authorities was not deliberate but due to genuine reasons like business disruption and incorrect email communication.

The CIT(A) deleted the addition, finding that M/s Sheetal Exports was engaged in genuine business and that the transactions were normal business transactions. The Tribunal upheld the CIT(A)'s order, noting that similar proceedings against related parties were also accepted by the AO and that the revenue failed to provide evidence to rebut the findings.

The Tribunal noted that for a trust to be denied registration under Section 80G, its purpose should not be wholly or substantially religious. The Tribunal observed that the CIT(E) had rejected the application without proper inquiry into the actual expenditure on religious purposes and without addressing the trust's submissions. Therefore, the matter was restored to the CIT(E) for fresh adjudication.

The Tribunal held that the assessee's non-compliance with CIT(A) notices was not deliberate but due to non-receipt. Additional evidence furnished by the assessee was admitted, and the matter was restored to the AO for fresh adjudication, considering the substantial justice principle.

The Tribunal held that the CIT(A) has co-terminus powers with the AO and should have admitted the additional evidence. The Tribunal observed that a mistake was made in filing the certificate for an earlier year, and the correct certificate for the subject year was submitted to the CIT(A).

The CIT(A) upheld the AO's addition, considering the lenders' small means and cash deposits. The Tribunal found that the CIT(A) did not consider the repayment of loans in the subsequent year, nor did they forward additional evidence to the AO. Relying on Gujarat High Court precedents, the Tribunal set aside the CIT(A)'s order.

The Tribunal held that the inclusion of the word "religious" in the trust's objects, or even expenditure of less than 5% of income on religious purposes, does not automatically disqualify a trust from being considered charitable under Section 80G. The CIT(E) had rejected the applications without proper inquiry and without addressing the submissions of the assessee, which was against the principles of natural justice.

The Tribunal noted that the assessee claimed to have income below the taxable limit, thus not liable to pay advance tax. Following precedents where similar issues arose, the Tribunal held that the CIT(A) should have decided the appeal on its merits.

The Tribunal held that the assessee had provided sufficient details and documentary evidence to explain the source of the cash deposit, including cash sales, debtor realizations, and opening cash balance. The Tribunal noted that the AO had not invoked Section 145(3) and that the books of account were not rejected. The Tribunal also relied on judicial precedents that stated adding an amount already offered to tax would result in double taxation.

The ITAT noted that the assessee had requested an adjournment before the CIT(A), which was not considered, leading to an ex-parte order. The Revenue had no objection to setting aside the matter.

The Tribunal held that while electronic filing is mandatory, the assessee's manual filing within the prescribed period should not be dismissed on a technicality. Citing Supreme Court judgments, it was emphasized that procedural rules are subservient to substantive justice. The CIT(A) ought not to have dismissed the appeal solely on the ground of not filing electronically.

The ITAT held that while electronic filing is mandated, procedural rules are subservient to substantial justice. Citing Supreme Court judgments, the Tribunal stated that technical considerations should not negate justice. The dismissal of the appeal solely on the ground of not filing electronically was considered improper.

The Tribunal noted that both the quantum additions and the penalty were based on estimations. Citing various High Court and ITAT decisions, the Tribunal held that penalty under Section 271(1)(c) cannot be levied on additions made on an estimated basis. The direction of the CIT(A) to delete the penalty was upheld.

The Tribunal held that the dismissal of the appeal by the CIT(A) without admitting additional evidence and without calling for a remand report from the Assessing Officer was against the principles of natural justice. The matter was set aside.

The Tribunal condoned the delay in filing the appeal and, after hearing both parties, held that the assessee was eligible for the indexed cost of acquisition from 01.04.1981. The lower authorities had erred in ignoring the valuation report and not allowing the indexed cost.

The Tribunal condoned the delay of 117 days. The Tribunal set aside the ex-parte order of the CIT(A) and directed that a fresh opportunity of hearing be given to the assessee.

The Tribunal held that the CIT(A) did not pass a speaking order as required by section 250(6) of the Act and dismissed the appeal solely on the ground of non-compliance, which was violative of the provisions. The Tribunal found that the assessee deserved another opportunity to contest the case on merit.

The Tribunal noted that while the assessee did not file the return, they later claimed to have paid tax and produced documentation like cash books and bank statements. Considering the principles of natural justice, the Tribunal decided to set aside the orders of the lower authorities.