ITAT Surat Judgments — July 2025

The Tribunal held that the CIT(A) rightly adopted Net Profit (NP) rate instead of Gross Profit (GP) rate. However, the NP rate of 2.5% was considered on the higher side. The Tribunal directed the AO to apply an NP rate of 2% on the total unaccounted purchases. The addition for unexplained initial capital was deleted as there was no evidence. The issue regarding goods returned was allowed for statistical purpose.

The Tribunal held that the continued operation of the bank account under the old PAN, even after purported dissolution and conversion to a new firm, suggested the dissolved entity was still functionally active. The assessee's failure to provide concrete documentary evidence to link the transactions to the new firm's accounts rendered the explanation insufficient.

The Tribunal found that the CIT(A) had not considered the rejoinder of the assessee and the decisions relied upon by them. The appellate order was passed without considering these aspects.

The Tribunal held that the additions made under Section 69A of the Act were not justified as the amounts were accounted for in the assessee's books and reflected in the ITR. The foundational requirement for Section 69A, that money is not recorded in books of account, was absent. The Tribunal also noted that the grounds regarding the validity of the re-opening notices were academic as the appeal was decided on merits.

The Tribunal held that the reopening notice issued under section 148 of the Income Tax Act for AY 2015-16, dated 29-07-2022, was beyond the limitation period prescribed under section 149 of the Act and thus void ab initio and bad in law. This decision was based on the judicial precedents set by the Supreme Court in the cases of Rajeev Bansal and Deepak Steel and Power Ltd., where the revenue had conceded that notices issued after April 1, 2021, for AY 2015-16 would not be tenable.

The CIT(A) dismissed the assessee's appeal for non-prosecution, upholding the AO's addition. The Tribunal noted that the CIT(A) passed an ex-parte order without considering the adjournment request and set aside the order.

The Tribunal condoned the delay of 327 days in filing the appeal, acknowledging the service of hearing notices to a wrong email ID. The Tribunal also noted that the assessment order was ex-parte.

The Tribunal set aside the CIT(E)'s ex-parte orders and restored both matters to the Ld. CIT(E) for fresh consideration, granting the assessee an opportunity to present its case. It directed the CIT(E) to provide adequate opportunity and the assessee to promptly respond to future notices.

The Tribunal held that the assessee's legal ground regarding the reopening of assessment under Section 147 was not justified as the assessee participated in the assessment proceedings. The payment of VAT was made in 2020, validating the reopening. The CIT(A) rightly directed the AO regarding the VAT amount of Rs. 29,02,973/-. The estimation of gross profit was also considered justified as the assessee did not maintain stock registers and the AO had grounds for rejection of books. The appeals and cross-objections were dismissed.

The Tribunal noted that the assessee paid the VAT subsequently. The legal ground raised by the assessee regarding the reopening of assessment was dismissed. The Tribunal found that the CIT(A) rightly directed the AO regarding the VAT figure. The estimation of gross profit was also upheld as the assessee failed to maintain proper records and provided no stock details. The appeals and cross-objections were dismissed.

The tribunal held that the reopening of assessment was valid as the assessee participated in proceedings despite late VAT payment. The tribunal upheld the CIT(A)'s direction regarding the VAT amount of Rs. 29,02,973/-, and dismissed the grounds related to the addition on account of estimated gross profit, considering the CIT(A)'s estimation based on previous years' GP ranging from 2.2% to 4%.

The Tribunal found that the interests of justice would be served by giving the assessee an opportunity to present its case. Therefore, the impugned orders of the CIT(E) were set aside, and the matter was restored to the CIT(E) for a fresh decision, with a direction to provide adequate opportunity to the assessee.

The Tribunal noted that the assessee made part compliance but failed to furnish documentary evidence for the claimed interest expenses. Although the non-compliance was attributed to the death of the original CA, the Tribunal, considering the principles of natural justice, decided to grant one more opportunity to the assessee.

The appeal of the assessee was dismissed as withdrawn based on the submission that the assessee has availed the Vivad se Vishwas Scheme. Liberty is granted to revive the appeal if the benefit of the scheme is not allowed.

The tribunal, following a co-ordinate bench decision for a co-owner of the same properties, noted that the DVO's valuation of Rs. 510 per Sq. Meter was high due to factors like high-tension lines and lack of proper access. It directed the Assessing Officer to adopt a uniform rate of Rs. 450 per Sq. Meter for both properties, thereby restricting the addition to Rs. 3,53,300/-.

The CIT(A) rightly refused to condone the delay, citing the lack of sufficient cause and the precedents established by the Supreme Court regarding the law of limitation and the principles of condoning delays. The Tribunal found no infirmity in the CIT(A)'s order.

The Tribunal held that the law of limitation is founded on public policy and "sufficient cause" must be a cogent reason for delay. The Tribunal noted that the assessee, a limited company filing regular returns, could not establish a sufficient cause for the inordinate delay of over 11 years. Relying on Supreme Court precedents, the Tribunal found no infirmity in the CIT(A)'s order.

The CIT(A) refused to condone the delay, finding no sufficient cause and deeming the delay not bona fide. The Tribunal, after considering various Supreme Court decisions on limitation and condonation of delay, found no infirmity in the CIT(A)'s order. The Tribunal held that the appellant failed to provide a cogent reason for the inordinate delay.

The Tribunal upheld the CIT(A)'s order, finding that the assessee failed to demonstrate a sufficient cause for the inordinate delay in filing the appeal. The Tribunal emphasized that liberal interpretation of 'sufficient cause' cannot be used to defeat the law of limitation, especially in cases of inordinate delay and lack of diligence.

The CIT(A) refused to condone the delay as the assessee failed to provide sufficient cause, relying on several Supreme Court judgments. The Tribunal upheld the CIT(A)'s order, noting the inordinate delay of over 11 years and 5 months and the lack of cogent reasons from the assessee.

The Income Tax Appellate Tribunal held that the law of limitation is founded on public policy and that "sufficient cause" for condoning delay must be adequate and a justifiable reason. Mere reliance on liberal or justice-oriented approaches cannot defeat the law of limitation, especially in cases of inordinate delay, negligence, or want of due diligence.

The CIT(A) refused to condone the delay as there was no sufficient cause presented, nor was there documentary evidence to support the claims. The tribunal upheld the CIT(A)'s order, stating that inordinate delay, negligence, and lack of due diligence are not grounds for condonation.

The ITAT upheld the CIT(A)'s decision, confirming that there was no infirmity in refusing to condone the significant delay of more than 11 years in filing the appeals. Relying on various Supreme Court precedents, the Tribunal reiterated that "sufficient cause" for delay must be genuinely established, and inordinate delay due to negligence or lack of diligence cannot be condoned. As the delay was not condoned, the Tribunal did not delve into the merits of the original tax demands.

The Tribunal held that the provisions of Section 13(1)(b) are attracted only at the time of assessment for granting exemption, not at the time of granting registration under Section 12A. The Tribunal noted that while some objects were specific to a religious community, the majority were for the general public. Therefore, Section 13(1)(b) was not applicable for denying registration.

The Tribunal held that the objects of the trust were not solely for the benefit of a particular religious community but were largely charitable in character for the general public. The Tribunal further noted that Section 13(1)(b) of the Act is applicable only at the time of granting exemption and not at the time of granting registration. Relying on judicial precedents, the Tribunal concluded that the denial of registration was erroneous.

The Tribunal condoned the delay in filing appeals, finding it unintentional. It held that the CIT(E) rejected the applications without providing adequate opportunity of hearing to the trusts and without properly considering the details already submitted. Citing the principle of 'audi alteram partem', the Tribunal set aside the CIT(E)'s orders and remanded all five cases back to the CIT(E) for fresh consideration, with directions to provide the appellant-trusts a proper opportunity to be heard and submit evidence.

The Income Tax Appellate Tribunal (ITAT) condoned the 56-day delay in filing appeals, noting it was neither deliberate nor intentional and emphasizing that substantial justice should prevail. The ITAT found that the CIT(E) had violated the principle of audi alteram partem by not providing the trusts a proper opportunity of hearing and by not considering all submitted details. Consequently, the ITAT set aside the CIT(E)'s orders and remanded all five cases for fresh consideration, directing the CIT(E) to provide adequate opportunities of hearing to the appellants.

The Tribunal condoned a 56-day delay in filing the appeals, deeming it unintentional. It found that the Ld. CIT(E) had rejected the applications without providing a proper opportunity of hearing to the trusts and without adequately considering the submitted details, thus violating the principle of *audi alteram partem*. Consequently, the Tribunal set aside the CIT(E)'s orders and remitted all five matters back to the Ld. CIT(E) for fresh consideration, with directions to provide adequate and reasonable opportunities of hearing to the appellants.

The Tribunal condoned the 56-day delay in filing appeals, finding it unintentional. It observed that the Ld. CIT(E) passed the orders without adequately considering the details submitted by the appellants and without providing a proper opportunity of hearing, thereby violating the principle of *audi alteram partem*. Consequently, the Tribunal set aside the Ld. CIT(E)'s orders and remitted all five cases back to the Ld. CIT(E) for fresh consideration and a fresh order, after granting the appellants a reasonable opportunity of hearing.

The Tribunal condoned the 56-day delay in filing the appeals, noting it was unintentional and due to the previous CA's mistake. It held that the CIT(E) erred by rejecting the applications without considering submitted details and without providing adequate opportunity of hearing, violating the principle of audi alteram partem. Therefore, the Tribunal set aside the CIT(E)'s orders and remitted all five cases back for fresh consideration and orders after giving the assessee-trusts a fair hearing.

The Tribunal observed that while the assessee provided some details, complete documentation like PAN and confirmations from parties were lacking. However, considering the minor variation in cash deposits compared to the previous year, the Tribunal accepted the source of Rs. 10,00,000/- of the cash deposit. The addition of Rs. 1,52,700/- was sustained.

The Tribunal noted the assessee's failure to appear and submit evidence during assessment and appellate proceedings. However, in the interest of justice, the matter was restored to the Assessing Officer for de-novo consideration, allowing the assessee to present supporting evidence. A cost of Rs. 10,000/- was imposed on the assessee.

The Tribunal observed that no specific inquiry was made by the AO regarding the applicability of Section 23(5) of the Act concerning notional rent on unsold stock-in-trade. The PCIT found this to be an omission, rendering the assessment order erroneous and prejudicial to the revenue. The Tribunal agreed that there was a lack of inquiry by the AO on this aspect.

The Tribunal found that the CIT(A) had dismissed the appeal based on non-compliance without sufficient opportunity for the assessee. The Tribunal held that the assessee deserves one more opportunity to contest the case on merit.

The Tribunal noted that the issue of restricting additions to 6% of bogus purchases has been consistently decided by various Benches of the ITAT and upheld by the jurisdictional High Courts, including the Gujarat High Court in the case of Surya Impex. Following these precedents, the Tribunal directed the AO to restrict the addition to 6% of the impugned purchases.

The Tribunal directed the AO to restrict the addition for bogus purchases to 6% of the total creditors, amounting to Rs. 6,31,668/-, instead of Rs. 15,86,728/- sustained by the CIT(A). Regarding the addition for unaccounted stock, the Tribunal confirmed the finding of the CIT(A) and dismissed the ground raised by the assessee due to lack of verifiable evidence and non-audit of the relevant accounts.

The Tribunal held that the information used to reopen the assessment was already available to the Assessing Officer during the original assessment proceedings. Reopening based on information that was already on record and using it after a considerable time lapse was considered a change of opinion, which is not permissible. Therefore, the notice for reopening and the reassessment order were quashed.

The Tribunal condoned the delay of 48 days, finding it neither intentional nor deliberate and constituting sufficient cause. The Tribunal set aside the order of the CIT(E) and remitted the matters back to the CIT(E) for de novo consideration, granting the assessee an adequate opportunity of being heard.

The CIT(A) passed an ex-parte order without discussing the merits of the case, violating principles of natural justice. The assessee's failure to comply with notices was noted, but the Tribunal held that an opportunity of hearing should have been provided.

The Tribunal noted that the assessee's detailed submission was filed on the same day the CIT(E) passed an ex-parte order without considering it. Emphasizing the principles of natural justice, the Tribunal decided to provide the assessee another opportunity to present its case.

The Tribunal noted that the appeals were filed late by 48 days, but condoned the delay, considering the reasons provided as sufficient cause. The Tribunal found that the CIT(E) rejected the applications without a proper hearing. Consequently, the Tribunal set aside the order of the CIT(E) and remitted the matter back for de novo adjudication, directing the CIT(E) to grant adequate opportunity of hearing to the assessee.

The Tribunal held that the CIT(E) erred in ignoring the struck-off portion of clause 4(13) of the trust deed and wrongly concluded that the trust was not for charitable purposes. The Tribunal noted that the trust had incurred significant expenses on medical relief and Goushala donations, and no expenses were incurred on religious activities.

The Tribunal restored both the quantum and penalty appeals to the Assessing Officer for de-novo consideration, considering the assessee's age and the claim of wrong email communication by CIT(A). This restoration is conditional upon the assessee paying a cost of Rs. 10,000/- for each appeal to the Prime Minister Relief Fund. The appeals are allowed for statistical purposes.

The Tribunal noted that while there was no dispute about the purchase and sale dates, both lower authorities found no agricultural activity conducted on the land. Given the assessee's death during appellate proceedings and the need for a fair hearing, the Tribunal set aside the CIT(A)'s order.

The Tribunal held that the assessee failed to provide any justifiable reason for the inordinate delay of over 8 years in filing the appeal in ITA No. 96/Srt/2025, and thus, the appeal was dismissed as time-barred. For ITA No. 221/Srt/2024, considering the arguments and in the interest of justice, the matter was restored to the file of the CIT(A) for de-novo consideration, subject to payment of costs.

The CIT(A) has the power to enhance the assessment under Section 251(1)(a) of the Act. However, Section 251(2) mandates providing a reasonable opportunity of hearing to the appellant before any enhancement.

The Tribunal noted the assessee's advanced age, her husband's recent passing, and the inadvertent non-appearance due to the accountant's oversight. Considering these factors and the substantial additions, the Tribunal decided that, in the interest of justice, the matter should be restored to the Assessing Officer for a de-novo consideration to allow the assessee an opportunity to present her case on merits.

The Tribunal observed that the Ld. CIT(A) denied the assessee adequate opportunity of hearing, rejected additional evidence submission under Rule 46A, and refused a remand report. Concluding that principles of natural justice were violated, the Tribunal restored the matter to the Ld. CIT(A) for de-novo consideration, allowing the assessee to place supporting evidence on record.

The Tribunal held that the assessee failed to provide any justifiable reason for the inordinate delay of over 8 years in filing the appeal against the section 263 order. Citing various judicial precedents, the Tribunal concluded that the delay was due to negligence and inaction on the part of the assessee. For the second appeal concerning the CIT(A) order, the Tribunal agreed to restore the matter for de-novo consideration.

The Tribunal observed that the Ld. CIT(A) dismissed the appeal in a hurried manner without considering the evidence submitted by the assessee. The Tribunal felt that in the interest of justice, the matter should be restored to the file of the Ld. CIT(A) for de-novo consideration.