ITAT Surat Judgments — December 2025

The Tribunal held that the additional ground challenging the validity of reassessment proceedings was admitted as it was purely legal. Regarding the addition of ₹41,40,000/- as unexplained cash credits, the Tribunal found that the assessee failed to provide satisfactory evidence for the source of cash deposits and the utilization of withdrawals. The matter was restored to the Assessing Officer for fresh examination.

The Income Tax Appellate Tribunal found an apparent inconsistency between the recitals in the registered sale deeds and the notarised possession letters regarding the timing and manner of cash payments for land purchase. The Tribunal held that the CIT(A)'s deletion of the addition was premature due to lack of detailed verification of documentary evidence and reconciliation of discrepancies. The matter was restored to the Assessing Officer for re-examination to verify date-wise cash payments, their sources, and reconciliation with registered instruments.

The Tribunal remanded both issues back to the Assessing Officer. For the interest disallowance, the AO must verify if interest was actually charged and offered to tax for Sidhdev Trading LLP and whether advances were made from the assessee's own interest-free funds. For the section 143(1) adjustment concerning statutory dues under section 43B, the CIT(A)'s refusal to adjudicate was deemed incorrect, and the AO was directed to verify the allowability of payments on merits.

The Tribunal noted that the AO had already allowed a benefit of ₹30,00,000/- for cash withdrawals, and the addition of ₹1,30,00,000/- pertained to alleged cash receipts from buyers towards service tax. The Tribunal found that notices under Section 133(6) to buyers yielded no response, the cash receipts lacked buyer signatures, and the explanation of receiving service tax in cash while the sale consideration was through banking channels was contrary to normal business conduct.

The Tribunal held that the notice issued under Section 148 was beyond the 'surviving time' as per the Supreme Court's decision in Union of India vs. Rajeev Bansal, making it invalid and time-barred. Consequently, the reassessment order was quashed.

The Tribunal held that the notice issued under Section 148 of the Act was time-barred as it was issued beyond the 'surviving time' permitted by law, as interpreted by the Supreme Court in Union of India vs. Ashish Agarwal and Rajeev Bansal. Consequently, the reassessment orders were quashed.

The Tribunal held that the amendment brought by the Finance Act, 2022, regarding the application of accumulated funds, is prospective and does not apply to accumulations made prior to AY 2023-24. Therefore, the addition made by the AO and confirmed by the CIT(A) was not sustainable.

The Tribunal held that while the assessee recorded cash sales and corresponding deposits, they failed to satisfactorily discharge the onus under section 68 of the Act to explain the nature and source of cash credits. The lack of specific verifiable details and the surrounding circumstances rendered the explanation improbable. However, the Tribunal also noted that the AO could not simultaneously treat cash deposits as unexplained and accept corresponding sales as business turnover, as this would lead to double taxation.

The Tribunal held that income from VDAs is taxed under section 115BBH at a flat rate of 30%, and this specific provision does not allow for the rebate under section 87A. While section 115BAC(1A) provides for a rebate under certain conditions, the income taxed under section 115BBH falls under a different regime and is therefore not eligible for the rebate under section 87A. The proviso to section 87A, effective from 1/04/2024, allows rebate when total income is chargeable under section 115BAC(1A) and does not exceed Rs. 7 lakh. However, the assessee's VDA income is taxed separately under section 115BBH, making the section 87A rebate inapplicable in this scenario.

The CIT(A) upheld the penalty, stating they had no power to grant immunity under section 270AA and that the assessee did not fall within the exceptions of section 270A(6). The Tribunal noted that the delay in filing Form 68 was only one day, a procedural lapse, and relied on previous decisions where such delays were not a bar to immunity.

The Tribunal noted that both the AO and CIT(A) passed ex-parte orders. The assessee contended that they were not given adequate opportunity of hearing due to circumstances beyond their control. The Tribunal, considering the interest of justice, decided to grant one more opportunity to the assessee.

The CIT(A) set aside the AO's order and remanded the matter for fresh adjudication without deciding the jurisdictional and legal grounds raised by the assessee, specifically the issue of the notice being issued to a deceased person. The Tribunal held that the CIT(A) erred by not deciding the jurisdictional issue first.

The Tribunal found that the Assessing Officer and CIT(A) did not dispute the fact that the assessee, along with his brother, jointly owned and cultivated agricultural land. The assessee had provided details of agricultural produce and expenses, which were not disproved. The increase in income was attributed to the brother not taking his share in that particular year.

The tribunal noted the assessee's cash-intensive transportation business and that deposits were recorded in books, making section 69A inapplicable for the bulk amount. It sustained an addition of Rs.10,00,000/- for unexplained cash deposits, granting relief of Rs.25,00,000/- from the CIT(A)'s sustained addition. The ground challenging the initiation of penalty under section 271(1)(c) was dismissed as premature.

The Tribunal noted that the PCIT passed the order under Section 263 without providing the assessee with adequate notice and opportunity for hearing, which violates principles of natural justice. Although the PCIT observed non-compliance with show-cause notices, the fact of non-service of these notices was not contested by the revenue.

The Tribunal condoned the delay in filing Form 10IC, noting technical glitches and a Gujarat High Court decision. The Assessing Officer was directed to process the assessee's return under Section 115BAA of the Act, subject to verification of other conditions, and to provide an opportunity for hearing.

The Tribunal admitted additional evidence for the quantum appeal (ITA No.451/SRT/2025), noting procedural irregularities and inconsistencies with a co-owner's assessment, and remanded the matter to the AO for a de novo examination. For the penalty appeal (ITA No.452/SRT/2025), recognizing that some reasonable cause existed alongside a degree of laxity, the Tribunal restricted the penalty under section 272A(1)(d) from Rs. 30,000 to Rs. 10,000.

The Tribunal condoned the delay in filing the appeal, finding it not deliberate. While acknowledging the assessee's failure to provide satisfactory explanations for non-compliance before lower authorities, the Tribunal restored the matter to the CIT(A) to ensure principles of natural justice are met.

The tribunal noted that the AO relied on an investigation wing report stating the purchases were bogus. However, the assessee claimed the transactions were genuine and supported by evidence. The tribunal observed that the case might not have been properly adjudicated by the lower authorities.

The Tribunal held that the principle of consistency requires that if the department accepts a factual position in earlier years, it should not be disturbed in subsequent years without material change or contrary evidence. The assessee had consistently declared agricultural income in prior years which was accepted by the department. The documents submitted by the assessee substantiated the agricultural activity.

The Tribunal found that both assessment and appellate proceedings suffered from a denial of opportunity to be heard. The Tribunal admitted additional evidence, including co-owner assessment details, highlighting an inconsistency. Consequently, the matter was remanded for a de novo examination by the AO for proper adjudication.

The Tribunal held that statutory notices issued to a deceased person are invalid and not legally sustainable. Proceedings conducted against a dead person are considered a nullity. Therefore, the assessment order passed under section 144 and the order of the CIT(A) are quashed.

The Tribunal held that the CIT(A) order was not sustainable as it was passed ex-parte without adjudicating on merits. The Tribunal admitted the additional evidence filed by the assessee as it was crucial for proper adjudication. The matter was remanded back to the CIT(A) for fresh adjudication.

The Tribunal condoned the delay in filing the appeal, finding the reason genuine. It held that the CIT(E) erred in rejecting the application solely on the ground of delay, as the time limit had been extended by CBDT circulars. The Tribunal also noted that the merits of the application were not discussed.

The Tribunal considered the grounds of appeal concerning the disallowance of deduction u/s 80P(2)(d) on interest and dividend income earned from a cooperative bank. The Tribunal relied on the decisions of the Hon'ble Gujarat High Court in the cases of Ashwanikumar Arban Co-operative Society Ltd. and PCIT vs. Rajkot Lodhika Sahakari Kharid Vechan Sangh Ltd., which held that such income is eligible for deduction.

The Tribunal noted the assessee's non-cooperation but found that the CIT(A) confirmed the addition without a proper hearing. The Tribunal decided to provide another opportunity to the assessee, subject to payment of costs.

The Tribunal condoned the delay in filing the appeal before the CIT(A), noting that the CIT(A) had ignored the assessee's reasons for the delay and passed a non-speaking order without considering the merits. Consequently, the Tribunal remanded the issues back to the CIT(A) for proper adjudication and verification, ensuring an opportunity of hearing is provided to the assessee.

The Tribunal noted that the assessee had subsequently provided details of cash withdrawal and deposit, along with supporting documents like bank statements and property deeds. Considering the interest of justice and fair play, the Tribunal felt that the assessee deserved another opportunity to present her case.