ITAT Surat Judgments — August 2025

The Tribunal noted that the Surat District Co-operative Bank Ltd. is a registered cooperative society. Citing decisions of the Gujarat High Court in Ashwanikumar Arban Co-operative Society Ltd. and Rajkot Lodhika Sahakari Kharid Vechan Sangh Ltd., the Tribunal held that deduction under Section 80P(2)(d) is available for income earned as interest on investments made with a cooperative bank, which is itself a cooperative society. The delay in filing the appeals was condoned subject to a cost of Rs. 10,000.

The Tribunal noted that the additions were made on an estimation basis. It is settled law that penalties under Section 271(1)(c) cannot be levied on estimated additions. The Tribunal relied on previous decisions of the ITAT and High Courts supporting this view.

The Tribunal noted that the additions in the assessment order were made on an estimation basis. It is settled law that no penalty is leviable on estimated additions. The Tribunal relied on previous decisions of ITAT and High Courts which held that penalty under Section 271(1)(c) cannot be levied on estimated additions. The delay in filing the appeals was condoned.

The Tribunal, relying on decisions of the Gujarat High Court, held that interest income earned by a co-operative society from investments in a co-operative bank is eligible for deduction under Section 80P(2)(d). The delay in filing the appeals was condoned subject to a cost.

The Tribunal held that the notice issued under section 148 was invalid because the sanction for it was obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT), as required by Section 151(ii) of the Act for cases beyond the 3-year limit. Consequently, the reassessment order and the penalty levied were quashed.

The Tribunal noted that while the supplier M/s. S.K. Enterprises was involved in bogus invoicing and GST credit without movement of goods, the assessee had provided supporting documents like invoices, ledger accounts, and bank statements. However, the assessee failed to provide stock registers and details of the actual movement of goods, making it difficult to verify the genuineness of the purchases. The Tribunal distinguished the case from precedents where payments were proved and purchases were considered genuine.

The Tribunal held that the AO's estimation of 8% profit was unsustainable as it lacked basis and comparable data. The CIT(A)'s estimation of 4% was also deemed incorrect as it was higher than industry norms and the appellant's demonstrated performance. The Tribunal directed the AO to compute the income at 2.7% of the turnover.

The Tribunal noted that the addition in the assessment order was made on an estimation basis. It is settled law that penalty cannot be levied on estimated additions. The Tribunal referred to various decisions of the ITAT and High Courts that support this view. The Tribunal also considered that similar penalties in the case of sister concerns were deleted by the ITAT.

The Tribunal held that penalty is not leviable on additions made on an estimation basis. This was supported by various judicial precedents, including decisions of the ITAT on similar cases involving sister concerns.

The Tribunal noted that the trust deed's objects were confined to the Visha Shrimali Jain Samaj community and were not for the benefit of the public at large. The claimed amendment to the trust deed, which would have allowed for broader charitable activities, was not substantiated with credible evidence, as a copy was not filed with the CIT(E) or the Tribunal. Therefore, the Tribunal found no reason to differ from the CIT(E)'s finding.

The Tribunal held that the notice issued u/s 148 dated 25.07.2022 was invalid because the sanction for it was obtained from the Principal Commissioner (PCIT) instead of the Principal Chief Commissioner (PCCIT) or Chief Commissioner (CCIT), as required by Section 151(ii) of the Act for cases where the limitation period for reassessment had expired beyond 31.03.2021 and the escaped income was less than Rs. 50 lakh. Consequently, the reassessment order and penalty were quashed.

The Tribunal held that the assessee failed to discharge the primary onus placed upon him under Section 68 of the Act to satisfactorily explain the identity and creditworthiness of the persons from whom credits were received and the genuineness of the transactions. The assessee did not produce any documentary evidence to demonstrate forgery, nor did he take timely action to contest the alleged misuse of his identity. Reliance on a previous case was found to be misplaced due to distinguishable facts.

The Tribunal noted that while complete details were not provided to the AO, substantial evidence including bank statements, confirmations, and identity proofs were submitted to the CIT(A), and the AO did not object. The Tribunal also considered that commission expenditure was accepted as genuine in other AYs and that the assessee was not liable for TDS as it was the first year of audit under Section 44AB.

The Tribunal held that the assessee had provided complete details of capital introduction by partners to the CIT(A), including ITRs, computation of income, and bank statements, which were not filed before the AO. Relying on the decisions of the Gujarat High Court and Supreme Court, the Tribunal observed that if the capital introduction is reflected in the books and confirmed by partners, the inquiry should be made at the partner's level, not the firm's. The addition of partner's capital as unexplained investment is not tenable.

The Tribunal held that any proceedings initiated or notice issued against a deceased person are invalid and a nullity in law. Relying on High Court and Supreme Court precedents, it was established that an assessment order cannot be made on a dead person.

The Tribunal held that the assessee-trust's main objects were religious in nature, which is a contravention of Section 80G(5)(iii). The expenditure on religious activities significantly exceeded the 5% limit stipulated in Section 80G(5B), making the trust ineligible for approval.

The CIT(A) observed that the assessee could not provide a proper explanation for the fall in GP and also failed to produce stock records and quantitative details. The CIT(A) upheld the AO's action of rejecting the books of account and confirming the addition. However, the Tribunal noted that the CIT(A) failed to consider the remand report and rejoinder submitted by the appellant, violating principles of natural justice.

The Tribunal, following the decisions of the jurisdictional High Court in cases like Ashwinkumar Arban Co-operative Society Ltd. and Kutch District Co-operative Milk Producers Union Ltd., held that deduction under Section 80P(2)(d) is available to cooperative societies on interest earned from investments made with a cooperative bank, which itself is a cooperative society. The Tribunal noted that the Hon'ble High Court had distinguished the Supreme Court's decision in Totagars Co-operative Sales Society Ltd. and concluded that the assessment was not erroneous.

The Tribunal held that the deduction under section 80P(2)(d) is available to co-operative societies on income earned as interest on investment made with a co-operative bank, which itself is a co-operative society. This is in line with various High Court decisions that have considered and distinguished the Supreme Court's ruling in Totagars.

The Tribunal held that the CIT(A) rightly deleted the additions. The repayment of loans in the subsequent year, accepted by the AO, negated the addition under Section 68. Similarly, the deletion of interest and commission expenses was justified as they were consequential to the deletion of the principal loan additions.

The Tribunal held that since the repayment of loans was accepted by the AO and supported by judicial precedents, the addition on account of unsecured loans under section 68 was not sustainable. Consequently, the consequential additions on account of interest expenses and commission on bogus loans were also deleted. The Tribunal also dismissed the additional ground raised by the appellant regarding the validity of reopening under section 147, finding no infirmity in the CIT(A)'s order.

The CIT(A) dismissed the assessee's appeal on grounds of limitation, noting a delay of 5 months in filing. The CIT(A) found no sufficient cause for the delay, relying on a Supreme Court decision. The Tribunal observed that the CIT(A) did not consider the reasons for delay provided by the assessee, such as the assessment order being served at the wrong address, and thus dismissed the appeal without considering the merits.

The Tribunal held that the CIT(A) was correct in deleting the additions because the loans were repaid in subsequent years and the assessee had provided sufficient details regarding the identity, creditworthiness, and genuineness of the lenders. The Tribunal also dismissed the additional ground raised by the assessee regarding the validity of reopening of assessment under section 147 of the Act.

The Tribunal held that the interest earned by a co-operative society from investments made with a co-operative bank, which is itself a co-operative society, is eligible for deduction under section 80P(2)(d) of the Act. The Gujarat High Court and other High Courts have consistently held this view. The introduction of sub-section (4) of section 80P was not intended to exclude co-operative banks from such deductions.

The Tribunal held that interest earned by a cooperative society from its investment in a cooperative bank is eligible for deduction under Section 80P(2)(d) of the Act. The Gujarat High Court and other judicial precedents support this view, distinguishing it from investments in non-cooperative banks.

The Tribunal held that since the repayment of loans was accepted by the AO and supported by judicial precedents where repayment in a subsequent year is accepted, no addition under Section 68 can be made. Consequently, the disallowance of interest expenses and commission paid for these bogus loans also cannot be sustained.

The CIT(A) set aside the AO's order and remanded the case back for fresh assessment without deciding the jurisdictional and legal grounds raised by the assessee. The Tribunal, relying on previous judgments, held that the CIT(A) should have decided these grounds first.

The Tribunal held that the deduction under Section 80P(2)(d) is available for income earned as interest on investments made with a cooperative bank, provided the bank itself is a cooperative society. The Tribunal relied on various High Court decisions, which distinguished the Supreme Court's ruling in Totagars Co-operative Sale Society Ltd.

The Tribunal condoned the delay in filing the appeals, citing substantial justice over technicalities, subject to a payment of Rs. 10,000. The Tribunal set aside the orders of the CIT(E) and remitted the matters back for de novo consideration, directing the CIT(E) to grant adequate opportunity of hearing to the assessee.

The Tribunal held that the appellant failed to discharge the onus of explaining the nature and source of the funds. The claim of forgery lacked credibility, as the appellant's signatures were found on the PAN application and bank account opening forms. The appellant's non-cooperation and inconsistent stands weakened his defense. The reopening of the case and the additions were based on credible information and tangible material.

The Tribunal found that the assessee was not given adequate opportunity of hearing due to issues with notice service. In the interest of substantial justice, the Tribunal condoned the delay in filing appeals, set aside the orders of the CIT(E), and remitted the matters back for fresh consideration.

The Tribunal acknowledged that the delay in filing appeals was not intentional and was due to sufficient cause. It was held that the CIT(E)'s orders were passed in violation of natural justice principles due to insufficient service of notices. Therefore, the appeals were allowed for statistical purposes, and the matters were remitted back to the CIT(E) for fresh consideration after providing adequate opportunity of hearing.

The tribunal noted the assessee's submission and the Revenue's lack of objection. Consequently, the appeal was dismissed as withdrawn by the tribunal.

The Tribunal held that the appellant's claim of forgery was not substantiated by evidence. The appellant's inconsistent stands and failure to provide explanations or evidence to counter the findings of the AO and CIT(A) weakened his case. The onus was on the appellant to explain the nature and source of the funds, which he failed to discharge.

The Tribunal held that the assessee failed to discharge the onus to explain the nature and source of the unexplained cash deposits and credits. The claim of forgery of PAN and bank accounts was not substantiated with evidence. The assessee's inconsistent stands and non-cooperation throughout the proceedings weakened his defense.

The Tribunal held that the AO-CPC failed to provide an intimation to the assessee regarding the adjustment made, which is a mandatory requirement under the first proviso to section 143(1) of the Act. Therefore, the adjustment was not as per the mandate of the law. The decision in Arham Pumps vs. DCIT was also relied upon.

The Tribunal held that the assessee failed to discharge the onus of explaining the nature and source of the funds in the bank accounts. The claim of forgery and identity misuse lacked credibility due to inconsistent stands and lack of evidence. The reassessment and penalty proceedings were deemed valid.

The Tribunal held that the appellant failed to discharge the onus under Section 69A to explain the nature and source of funds. His claims of forgery and non-involvement lacked credibility due to inconsistent stands and a failure to provide evidence. The reassessment and penalty proceedings were found to be validly initiated and conducted.

The Tribunal held that the appellant's claim of forgery and identity misuse lacked credibility. The appellant's signatures were found on the PAN application and bank account opening forms, and he failed to provide conclusive evidence to substantiate his allegations. The onus was on the appellant to explain the nature and source of the funds, which he failed to do, despite multiple opportunities.

The Tribunal held that the appellant's claim of forgery and identity misuse lacked credibility. The evidence indicated the appellant's signatures were on the PAN application and bank account opening forms. The appellant failed to discharge the onus under section 69A to explain the nature and source of funds. His inconsistent stands and failure to provide evidence weakened his defense.

The Tribunal held that the appellant's claims of forged PAN and bank accounts lacked credibility, as evidence pointed to the appellant's own signatures on the applications. The appellant failed to provide satisfactory explanations for the large cash deposits and credits, and also failed to cooperate with the assessment and appellate proceedings. The onus to prove the legitimacy of the transactions was on the appellant, which was not discharged.

The Tribunal, following the decisions of the jurisdictional High Court in cases like Ashwanikumar Arban Co-operative Society Ltd. and Kutch District Co-operative Milk Producers Union Ltd., held that the assessee is eligible for deduction under Section 80P(2)(d) on interest earned from investments in cooperative banks which are themselves cooperative societies. The reliance on Totagars by the revenue was distinguished.

The Tribunal acknowledged that the assessee faced delays in filing appeals and applications due to issues with notice service and a misunderstanding of the process. It was held that the principles of natural justice require adequate opportunity for the affected party to be heard. Therefore, the Tribunal set aside the orders of the CIT(E) and remitted the matters back for fresh consideration.

The Tribunal held that the assessee had provided sufficient evidence, including confirmations, income tax returns, and bank statements, to establish the genuineness of the loans and their repayment in subsequent years. The PCIT's order, which set aside the AO's assessment order, was found to be incorrect.

The Tribunal noted that the CIT(A)'s ex-parte order was violative of Section 250(6) of the Act, as it was passed solely on the ground of non-compliance without addressing the merits. The Tribunal held that the assessee deserved another opportunity to present their case.

The Tribunal held that the Assessing Officer failed to issue a mandatory notice under section 143(2) of the Act, which is a curable defect. Relying on Supreme Court and other High Court decisions, the Tribunal found the assessment order to be invalid.

The Tribunal held that the order passed by the CIT(Exemption) rejecting the assessee's application was on the grounds that the appellant failed to reply to a notice which was not served on the appellant. The Tribunal set aside the order and directed the CIT(E) to adjudicate the matter after giving the appellant a due opportunity.

The CIT(A) dismissed the assessee's appeal for non-compliance and failure to provide evidence. However, the Tribunal found that the CIT(A)'s order violated Section 250(6) of the Act by not providing reasons and denied a proper hearing. The Tribunal considered the assessee deserved another opportunity.

The Tribunal held that the AO erred in reopening the assessment without sufficient reason and passing an ex-parte order without providing a proper opportunity to be heard. The addition of Rs. 12,39,000 as long-term capital gain was also questioned for not considering indexed cost of acquisition and not referring the matter to the DVO for valuation.