ITAT Surat Judgments — October 2026

The Tribunal noted that while the assessee claimed the land was situated more than 8 kms from municipal limits and was agricultural, the AO had not verified this aspect. The AO had commented on the location by comparing it with another relative's treatment of similar land as a capital asset but did not conduct actual verification of the distance from municipal limits. Furthermore, the valuation report was not commented upon, and the AO had not called for a District Valuation Officer's (DVO) report. Therefore, the Tribunal found that these aspects required verification. Consequently, the matter was remanded back to the file of the AO for proper verification of the contested issues and adjudication as per the Income Tax Act, ensuring the assessee is given an opportunity of hearing following the principles of natural justice. The appeal was partly allowed for statistical purposes.

The Tribunal noted that the appeal before the CIT(A) was dismissed solely on the ground of a 14-day delay. The assessee's representative argued that since the quantum appeal has been decided by the Tribunal and remanded back to the AO, the present matter should also be remanded back to the AO. The Tribunal, after hearing both parties and perusing the materials, observed that the quantum issue is before the AO. Therefore, the AO will take cognizance of the penalty under Section 271(1)(c) of the Act. The matter was accordingly remanded back to the file of the AO for adjudication. The Tribunal explicitly stated that the assessee must be given an opportunity of hearing, following the principles of natural justice. No specific finding was given on the merits of the penalty or the delay condonation, as the case was remitted back to the AO. The Tribunal did not decide the issue of whether the penalty should be deleted on merits.

The Tribunal held that the PCIT erred in invoking revisionary powers under section 263. The Assessing Officer (AO) had made inquiries into the expenses, including Trademark & Copyright expenses, by issuing notices under section 142(1) and receiving replies with sample invoices. The AO applied his mind and passed the assessment order. The Tribunal noted that when there are two plausible views on an issue, section 263 cannot be invoked. It was observed that various decisions, including those of the Supreme Court and High Courts, have taken the view that such expenses are revenue expenditure. Therefore, the revisionary powers could not be invoked in these circumstances, and the order passed under section 263 was not correct. The Tribunal allowed the appeal of the assessee. The issue regarding the PCIT's power to revise an order passed by the National e-Assessment Centre was not explicitly decided but was implicitly addressed by allowing the assessee's appeal on the merits of the section 263 invocation.

The Tribunal held that the Assessing Officer (AO) was not justified in rejecting the books of account under Section 145(3) of the Act. The Tribunal reasoned that a fall in the net profit rate, especially when accompanied by a substantial increase in turnover, is not by itself a defect in the books of account. The AO had not pointed out any specific false, unvouched, incomplete, or incorrect entries. Regarding the variation in rates, the Tribunal found that the assessee's explanation that prices depended on the date of booking and other factors was plausible and supported by details of earlier bookings. The Tribunal noted that the registration date of an agreement was not necessarily the date the price was fixed. The Tribunal also found that the quantification of the addition was unsustainable, as the AO applied a uniform highest rate without evidence that any flat was sold at that rate based on its booking date. The CIT(A)'s reduction of the addition was also considered to be without basis. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition.

The Tribunal allowed the appeal of the assessee. The Tribunal noted that the facts of the present case were similar to the decision in Nakul Aggarwal, where the Mumbai Tribunal allowed the benefit of Section 54F. In the present case, the assessee had expressed the desire to combine the flats into one unit at the time of booking in August 2016. Although two separate agreements were executed due to the builder's plan approval stage, the assessee intended to purchase only one flat. The revised approval plan was taken from MHADA on 24.11.2000 (this date appears to be a typo in the judgment and likely refers to a later date, possibly related to the amalgamation approval). The Tribunal found that the assessee had the intention to purchase one flat only, and on paper, it appeared to be separate agreements. The Tribunal distinguished the case of Rahul Garg, stating that the Delhi Tribunal's decision did not consider whether the local authority's plan approval was given separately and categorically mentioned the merger of two properties. Therefore, the deduction claimed by the assessee under Section 54F should have been allowed by the Assessing Officer.

The Tribunal first addressed the cross-objections filed by the assessee concerning the applicability of Section 153C versus Section 148 for reopening the assessment. The assessee contended that since the AO's order was based on information from the search in the Bhanwarlal Jain group's case, Section 153C should have been invoked, not Section 148, rendering the proceedings void. The Tribunal noted a significant delay of 290 days in filing the cross-objections and observed that the assessee claimed non-receipt of the Revenue's memo of appeal. The Tribunal then proceeded to hear the Revenue's appeal. The Revenue's primary ground was that the CIT(A) erred in deleting the addition of Rs. 19,05,750/- made on account of bogus purchases. The Revenue argued that these purchases were sham transactions from paper concerns of the Bhanwarlal Jain group, which provided accommodation entries. The Revenue relied on the Gujarat High Court's decision in N.K. Industries Ltd. vs. DCIT, upheld by the Supreme Court, which stated that 100% of purchases from bogus parties should be added. The Revenue also argued that the CIT(A) should have conducted independent inquiries. The judgment does not record the assessee's arguments on the Revenue's grounds of appeal, nor does it record the Tribunal's decision on the merits of the Revenue's appeal or the assessee's cross-objections.

The Tribunal noted that the assessee had claimed deduction under Section 80P in its original return and that the reassessment was initiated specifically concerning the eligibility of interest income for this deduction. The Tribunal found that the omission of the deduction in the return filed in response to the Section 148 notice was explained as inadvertent, supported by the original return's claim, the tax liability declared in the revised return, and the detailed written submission filed during reassessment. The Tribunal distinguished the reliance on Commissioner of Income-tax Vs. Sun Engg. Works Pvt. Ltd. (supra) by stating that the claim was not raised for the first time during reassessment but was already made in the original return and reiterated. Consequently, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh adjudication, directing that the claim should not be rejected merely for being omitted from the revised return. The AO is to verify the eligibility and quantum of deduction in accordance with law, affording the assessee a reasonable opportunity of being heard. Ground No. 1 was dismissed as non-pressed.

The Tribunal held that while the AO did not doubt the assessee's civil construction work, the confirmations provided by the parties were insufficient as they lacked PAN numbers, copies of ITRs, balance sheets, or profit and loss accounts. The creditworthiness of these parties was not established. Although the assessee provided a revised computation including profit from construction under Section 44AD, the cash flow statement did not reflect the source of these parties. The Tribunal noted that the assessee provided bills for civil work to two parties, Mr. Kishorebhai Patel and Tusharbhai Patel, who were neighbors and whose work related to residential houses. However, the assessee did not provide a bifurcation of cash received and deposited on various dates. Consequently, the Tribunal directed that the declared business profit from construction activity under Section 44AD should be considered, and the peak credit should be added to the extent of 9%, which was considered prevalent in the construction business. The appeal was partly allowed.

The Tribunal noted that both the Assessing Officer and the CIT(A) had passed ex-parte orders. There were no details provided by either authority indicating proper service of hearing notices to the assessee. Consequently, the Tribunal found it appropriate to remand the matter back to the file of the Assessing Officer. The AO is directed to verify the details and evidences filed by the assessee and adjudicate the issues on merits as per the Income Tax Act. The assessee is to be given an opportunity of hearing, following the principles of natural justice. The issue regarding penalty proceedings under Section 271(1)(c) was not expressly decided as the matter was remanded. The Tribunal allowed the appeal of the assessee for statistical purposes.

The Tribunal upheld the CIT(A)'s decision. Regarding the first and third issues, the Tribunal found that the properties sold by the assessee were open plots and not residential houses, thus the AO's finding that the assessee was in possession of more than one residential house was incorrect. The assessee was not in possession of more than one residential house at the time of sale of the original assets, and therefore, the deduction u/s 54F could not be disallowed on this basis. Concerning the second issue, the Tribunal noted that the assessee had purchased open land and deposited Rs. 25,00,000/- in the capital gains account, which was utilized for the construction of a new residential house within the specified time. The AO had failed to consider the deposit and its utilization, as well as the construction agreement and photographs of the new house. The Tribunal held that the AO wrongly concluded that the deduction was claimed only for the purchase of land and not for a residential house. The fact that the land purchased was agricultural land was not material, as an agriculturist can construct a residential house on agricultural land without restriction under Section 54F. Therefore, the CIT(A) rightly allowed the deduction. The Tribunal found no need to interfere with the CIT(A)'s findings. The issue regarding the violation of principles of natural justice was not explicitly decided but implicitly addressed by the Tribunal's re-examination of the facts and evidence.

The Tribunal held that the Principal Commissioner of Income Tax (PCIT), Ranchi, had jurisdiction to pass the order under section 263. The Tribunal found that despite the section 127 order dated 19.03.2019, the PAN was never migrated to Kolkata, and the case records and statutory proceedings continued to remain with the Ranchi authorities. The Tribunal emphasized that jurisdiction should be viewed in practical terms of control over assessment records, citing CIT Vs. Sahara Indian Financial Corporation Ltd. The Tribunal considered the jurisdictional challenge raised by the assessee as a technical objection without substance, as the de facto and de jure jurisdiction continued with the Ranchi authorities. The Tribunal also noted that the PCIT's order under section 263 was supervisory in nature, intended to correct erroneous orders prejudicial to the revenue. It found that the AO's order dated 15.05.2017 had disregarded the direction under section 264 to examine the genuineness of share capital/premium, rendering the assessment order erroneous and prejudicial to the revenue. Therefore, the Tribunal held that the revision order dated 05.02.2021 was not only within jurisdiction but also mandated by law. The Tribunal did not explicitly address the ground of limitation raised by the assessee.

The Tribunal admitted the additional evidence furnished by the assessee, including the Chartered Accountant's certificate, under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, finding it to have a direct and material bearing on the nature and character of the impugned receipts. The Tribunal noted the assessee's contention that Rs. 58,968/- and Rs. 93,089/- of the interest income were inter-departmental, and the remaining was eligible for deduction under Section 80P(2)(a)(iii). Since these factual aspects had not been examined or verified by the lower authorities, the Tribunal, in the interest of substantial justice, restored the matter to the file of the AO. The AO was directed to examine the additional evidence, verify the nature and character of the receipts, and then adjudicate the assessee's claim for deduction under Section 80P, providing the assessee with a reasonable opportunity of being heard. The issue of whether the remaining interest income is eligible for deduction under Section 80P(2)(a)(iii) was left to be decided by the AO.

The Tribunal allowed Ground Nos. 2 (2.1, 2.2, 2.3 & 2.4), which pertains to the addition of Rs. 2,49,000/- as unexplained cash credit under Section 68. The Tribunal noted that the revenue did not dispute the assessee's money transfer activity. The assessee had explained that cash received from customers for money transfers was deposited and transferred, and the details, including genuineness and creditworthiness of parties, were provided to the CIT(A). Therefore, the Tribunal found that Section 68 was not rightly invoked and the addition confirmed by the CIT(A) did not sustain. Grounds related to the violation of natural justice (Ground No. 1) and rejection of additional evidence (Ground No. 3) were dismissed as the Tribunal adjudicated the issues on merit. The Tribunal did not explicitly mention whether the CIT(A) violated natural justice or erred in rejecting evidence, as these were not adjudicated on merit. The operative direction is to delete the addition of Rs. 2,49,000/-.

The Tribunal noted that the assessee's grounds of appeal primarily concern the classification of the land as agricultural or non-agricultural and the consequent denial of deduction under Section 54B. The assessee's argument hinges on the fact that the land should have been treated as agricultural, and if it were treated as non-agricultural, the benefit of Section 54B should have been allowed. The Tribunal observed that the Ld. NFAC's order seems to have relied on a statement made by the assessee regarding the allowance of deduction u/s 54B if the land was treated as non-agricultural. The Tribunal found this reasoning to be contrary to the rule of law, as assessment should be based on statutory provisions and facts, not on such conditional statements. The Tribunal also noted the reliance on the Goetz (India) Ltd. case by the Ld. NFAC. The Tribunal decided to set aside the order of the Ld. CIT(A) and restore the issue to the file of the Ld. AO for fresh adjudication after considering the nature of the land and the applicability of Section 54B. The Tribunal directed the AO to decide the issue afresh after providing an opportunity of being heard to the assessee.

The Tribunal held that the issue of the validity of the notice under Section 148 being issued beyond the 'surviving time' was squarely covered by the Supreme Court's decision in Union of India Vs. Rajeev Bansal (supra). The Tribunal noted that the AO issued the notice under Section 148A(b) on 25.05.2022, giving the assessee time to reply until 08.06.2022. Thereafter, the AO had a 'surviving time' of 8 days to issue the new notice under Section 148, which would have expired on 16.06.2022. However, the AO issued the impugned notice dated 28.07.2022, which was beyond this period and therefore invalid. The Tribunal followed a co-ordinate bench's decision in ITA 479 & 480/SRT/2025, Kanchan Devi Agarwal Vs. ITO, which dealt with identical facts and reached the same conclusion. Consequently, the reassessment proceedings initiated under Section 147 and the assessment order dated 25.05.2023 were quashed and set aside as time-barred. The legal ground raised by the assessee was allowed. Since the assessment order was quashed, the grounds relating to the merits of the addition were rendered infructuous and kept open undecided. The appeal was allowed.

The Tribunal held that the assessee did not file any return under Section 139 for AY 2008-09. In response to a notice under Section 148, the assessee filed a return on 30.10.2015, declaring a total income of Rs. 1,41,360/- and paid self-assessment tax and interest of Rs. 6,010/-. The Tribunal noted that the declared total income of Rs. 1,41,360/- was above the exemption limit for AY 2008-09. Consequently, the Tribunal concluded that there was a failure on the part of the assessee to file the return mandatorily required under Section 139. Therefore, the penalty under Section 271F was rightly levied by the Ld. AO. The Tribunal found no reason to interfere with the order of the Ld. AO and accordingly dismissed the appeal. No issue was expressly left undecided.

The Tribunal held that the assessment framed by the AO under Section 144 read with Section 147 without issuing a notice under Section 143(2) cannot be sustained in law, given the peculiar facts and circumstances of the case. The Tribunal noted that the AO, in the assessment order, had stated that the return filed by the assessee was invalid as it was filed after the due date mentioned in the notice under Section 148. However, the AO subsequently accepted and acted upon this belatedly filed return by computing the total income based on it. The Tribunal found that when the AO accepts and acts upon a return filed by the assessee, it is obligatory for the AO to issue a notice under Section 143(2) for making an assessment under Section 143(3) or 144. The Tribunal distinguished the reliance placed by the revenue on the Gauhati High Court decision in Commissioner of Income-tax vs. Shankar Lall Goenka, stating that the facts in that case were materially different and did not deal with the controversy of the mandatory requirement of issuing a Section 143(2) notice after a return is filed in response to a Section 148 notice. The Tribunal, following the principle that if two reasonable constructions of a taxing provision are possible, the one favoring the assessee should be adopted, concluded that the assessment order was liable to be quashed on this jurisdictional ground. Consequently, the remaining grounds raised by the assessee were rendered academic and not requiring adjudication. The assessment order dated December 30, 2019, was quashed.

The Tribunal condoned the delay of 751 days in filing both appeals. The Tribunal found that the circumstances narrated by the President of the assessee-society in the affidavit constituted a "sufficient cause" as per Section 253(5) of the Act. It also referred to Supreme Court judgments in Collector, Land Acquisition Vs Mst. Katiji and others and Inder Singh Vs. The State of Madhya Pradesh, emphasizing a justice-oriented approach where substantial justice is opposed to technical considerations. The Tribunal held that the merits of the case should not be scuttled merely on the basis of limitation. Regarding the grounds of appeal, the Tribunal respectfully followed the decision of a co-ordinate bench rendered in the assessee's own case (ITA No. 1050/SRT/2024). This co-ordinate bench had held that interest and dividend earned from co-operative banks are eligible for deduction under Section 80P(2)(d) of the Act, even after considering the decision in PCIT vs. Totagars Co-operative Sale Society (supra). The co-ordinate bench also noted that the jurisdictional High Court's decision in Surat Vankar Sahkari Sangh (supra) has binding precedent. Therefore, the Tribunal directed the Assessing Officer to allow the deduction claimed by the assessee under Section 80P(2)(d) of the Act in both assessment years under consideration. The grounds raised by the assessee were allowed.

The Tribunal condoned the delay of 751 days in filing both appeals. The Tribunal found that the circumstances narrated by the President of the assessee-society in the affidavit constituted a "sufficient cause" as per Section 253(5) of the Act. It also referred to Supreme Court judgments in Collector, Land Acquisition Vs Mst. Katiji and others and Inder Singh Vs. The State of Madhya Pradesh, emphasizing a justice-oriented approach where substantial justice is opposed to technical considerations. The Tribunal held that the merits of the case should not be scuttled merely on the basis of limitation. Regarding the grounds of appeal, the Tribunal respectfully followed the decision of a co-ordinate bench rendered in the assessee's own case (ITA No. 1050/SRT/2024). This co-ordinate bench had held that interest and dividend earned from co-operative banks are eligible for deduction under Section 80P(2)(d) of the Act, even after considering the decision in PCIT vs. Totagars Co-operative Sale Society (supra). The co-ordinate bench also noted that the jurisdictional High Court's decision in Surat Vankar Sahkari Sangh (supra) has binding precedent. Therefore, the Tribunal directed the Assessing Officer to allow the deduction claimed by the assessee under Section 80P(2)(d) of the Act in both assessment years under consideration. The grounds raised by the assessee were allowed.

The Tribunal held that the assessee's appeal should be allowed. The Tribunal noted that the due date for filing the return of income was extended by CBDT Circular No. 08/2021 dated 30.04.2021 to May 31, 2021. The assessee filed its return on March 30, 2021, and uploaded the audit report (Form 10B) on March 27, 2021, both within the extended period. Therefore, the adjustment made under Section 143(1) indicating 'no form filed' was incorrect. The Tribunal also observed that the assessee is a registered trust under Section 12A and that disallowing the expenditure claim without providing an opportunity for explanation was unjustified. The Assessing Officer's disallowance/adjustment was deemed incorrect, and the CIT(A) had ignored these facts. The case laws cited by the assessee were also found to support its case.

The Tribunal held that the reassessment proceedings are governed by the new provisions of Section 147/148A, which were substituted by the Finance Act, 2021, and became effective from April 1, 2021. The notices under Section 148, though dated March 31, 2021, were admittedly served on the assessee via email on April 1, 2021. As per the Supreme Court's decision in Union of India and others Vs. Shri Ashish Agrawal and others (444 ITR 1)(SC) and the jurisdictional High Court's decision in Saumil Avinash Baheti Vs. ITO, a notice issued on March 31, 2021, but served on April 1, 2021, should be treated as a notice under Section 148A(b) of the Act. Following this, the AO was required to pass an order under Section 148A(d) and then issue a fresh notice under Section 148. In the present case, the AO did not follow the procedure under Section 148A, nor did he pass an order under Section 148A(d). Therefore, the notice under Section 148 was neither within the time limit of the old provisions nor in accordance with the amended provisions. Consequently, the notice under Section 148 was quashed, and the assessment orders passed in pursuance thereof were set aside. Since the appeals were decided on a legal ground in favour of the assessee, other grounds were left undecided.

The Tribunal held that the reassessment proceedings are governed by the new provisions of Section 147/148A, which were substituted by the Finance Act, 2021, and became effective from April 1, 2021. The notices under Section 148, though dated March 31, 2021, were admittedly served on the assessee via email on April 1, 2021. As per the Supreme Court's decision in Union of India and others Vs. Shri Ashish Agrawal and others (444 ITR 1)(SC) and the jurisdictional High Court's decision in Saumil Avinash Baheti Vs. ITO, a notice issued on March 31, 2021, but served on April 1, 2021, should be treated as a notice under Section 148A(b) of the Act. Following this, the AO was required to pass an order under Section 148A(d) and then issue a fresh notice under Section 148. In the present case, the AO did not follow the procedure under Section 148A, nor did he pass an order under Section 148A(d). Therefore, the notice under Section 148 was neither within the time limit of the old provisions nor in accordance with the amended provisions. Consequently, the notice under Section 148 was quashed, and the assessment orders passed in pursuance thereof were set aside. Since the appeals were decided on a legal ground in favour of the assessee, other grounds were left undecided.

The Tribunal restored the matter to the file of the Assessing Officer (AO) for fresh adjudication. The Tribunal acknowledged the principle of natural justice and noted that no prejudice would be caused to the revenue by restoring the matter. The AO was directed to provide the assessee with a necessary opportunity of hearing and pass an appropriate order, uninfluenced by his earlier order. The assessee was directed to be vigilant and ensure participation in hearings without seeking unnecessary adjournments. The Tribunal explicitly stated that the appeal was allowed for statistical purposes, implying that the substantive issues were not decided on merits at this stage. The specific findings on the validity of reassessment, the nature of cash deposits, and the applicability of section 115BBE were left to be decided by the AO upon fresh adjudication.

The Tribunal held that the disallowance of Rs. 8,00,001/- paid as commission to Abhishek Bhutra (HUF) and Ghishulal Bhutra (HUF) was not justified. The Tribunal found that these two HUFs were not related to the assessee, contrary to the AO's observation. The nature of business of these HUFs was clearly stated in their respective Income Tax Returns as commission agents, commodity brokers, and auctioneers, which the AO had failed to consider. The payments were made through banking channels, TDS was deducted, and the HUFs had declared this income in their returns, which were accepted by the department. The HUFs also showed salary expenditure, indicating they were engaged in commission activities with manpower. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted. The appeal of the assessee was allowed.

The Tribunal held that the reopening of the assessment under section 147 was invalid. It was not disputed that the original assessment was completed under section 143(3) after scrutiny, and the reopening was based on particulars available in the Balance Sheet schedule, which was part of the original assessment record. Crucially, the Tribunal found that the very issue was examined during the original assessment, with the assessee providing a specific explanation on 12.10.2015 regarding the amounts to ITOCHU Corporation and D-3 Textiles Pvt. Ltd., supported by ledger accounts. The Ld. AO had completed the original assessment without making any adverse inference or disallowance. The observation of the Ld. CIT(A) that the issue "remained untouched" was contrary to the material on record. Therefore, the reopening was based on the same material available during the original assessment, amounting to a mere change of opinion, which cannot be sustained in law. Consequently, the notice under section 148 and the reassessment order were quashed. On merits, the Tribunal found that the premise of the Ld. AO that the assessee had advanced interest-free loans was not supported by the material. The amount to ITOCHU Corporation was an advance against raw material purchases, followed by actual purchases within a month. The amount to D-3 Textiles Pvt. Ltd. represented remuneration receivable, not a loan. Thus, even on merits, the disallowance was not sustainable. The grounds raised by the assessee were allowed.

The Tribunal noted the submission of the assessee that it had subsequently obtained registration under Section 12A/12AB on 11.06.2026, which was placed on record. The Ld. DR for the revenue did not object to this submission or the assessee's prayer. Faced with this situation, the Tribunal decided to remand the matter back to the file of the Ld. CIT(E) for a fresh adjudication. The Ld. CIT(E) is directed to consider the subsequent registration granted under Section 12A/12AB and examine the fulfillment of other statutory conditions, if any, in accordance with the law. The Ld. CIT(E) is also directed to afford a reasonable opportunity of hearing to the assessee before passing a fresh order. The appeal was allowed for statistical purposes.

The Tribunal, in its consolidated order for D.R. Corporation (ITA No. 265/SRT/2024) and D.R. Associates (ITA No. 264/SRT/2024), decided that the principle laid down in CIT vs. Ashaland Corporation (supra) regarding income accrual upon title transfer is applicable. The Tribunal acknowledged the assessee's submission that it had offered further income for AYs 2024-25 and 2025-26, and intended to offer income for AY 2026-27, which would complete the entire on-money receipts surrendered during the survey. For D.R. Corporation, the Tribunal set aside the CIT(A)'s finding confirming the addition of Rs. 1,27,65,645/- and directed the AO to verify the assessee's claim of offering undisclosed income in AYs 2016-17 to 2023-24. If found correct, the addition to that extent was to be deleted. For D.R. Associates, the Tribunal applied the same principle, setting aside the CIT(A)'s confirmation of Rs. 1,54,26,375/- and directing the AO to verify the claim of offering income in AYs 2025-26 to 2026-27. The AO was directed to make a limited verification and delete the addition if the claim was correct. The Tribunal clarified that the direction was confined to AYs up to 2026-27, as per the undertaking filed by the assessee. An additional ground regarding deduction under Section 80-IB(10) was dismissed as not pressed by the assessee.

The Tribunal held that the additions made by the AO and confirmed by the CIT(A) were not justifiable. The Tribunal noted that the Revenue itself had taken a stand in the co-owners' cases (Bharatiben Ganeshbhai Parekh and Minakshiben Bipinchnadra Parekh) that the immovable property was situated beyond 8 kms from the local limits of the municipal corporation. The Tribunal also considered the certificates produced, which stated the land had a population of 1650 and was situated beyond 8.2 kms from the Surat Municipal Corporation limits. These documents supported the assessee's claim that the land was rural agricultural land and not a capital asset. Therefore, the capital gains were not chargeable to tax. The Tribunal allowed the assessee's appeal, setting aside the additions made by the AO and confirmed by the CIT(A). No issue was expressly left undecided.

The Tribunal held that the addition of Rs. 60,20,939/- made under Section 41(1) of the Income-tax Act, 1961, is not sustainable. The Tribunal found that the second condition of Section 41(1), namely "cessation or remission" of liability, was not satisfied in respect of any of the three liabilities. The assessee continued to show these liabilities in its books of account as payable, and the revenue had not provided any material to establish that the creditors had foregone their claims or that the liabilities had ceased to exist. The Tribunal reiterated the principle laid down by the Hon'ble Supreme Court in Commissioner of Sugauli Sugar Works (supra) that the expiry of the limitation period does not extinguish a debt but merely bars its enforcement. Therefore, the mere fact that the liabilities remained outstanding for 6 to 8 years does not, by itself, establish remission or cessation. The Tribunal also noted that due to the absence of complete details regarding earlier years' records and the nature of expenses for Tushariben V Bhatt's liability, it was not possible to definitively ascertain whether the first condition of Section 41(1) (allowance or deduction in an earlier year) was met. However, since the second condition was demonstrably not met, the addition was deleted. The AO was directed to delete the addition of Rs. 60,20,939/-.

The Tribunal condoned the delay in filing the first appeal before the CIT(A), citing the principle of natural justice and noting that no prejudice would be caused to the revenue. The matter was restored to the file of the AO for fresh adjudication, at the risk and responsibility of the assessee. The AO was directed to provide an opportunity of hearing and pass an appropriate order, uninfluenced by the earlier order. The assessee was directed to remain vigilant and ensure participation. Regarding the penalty appeal, the Tribunal upheld the penalty of Rs. 10,000 imposed under Section 271(1)(b) for non-compliance with notices, noting that the AO had taken a proper view in imposing the penalty despite multiple instances of non-compliance. The penalty appeal was dismissed. The quantum appeal was allowed for statistical purposes.

The Tribunal held that the notice issued by the Assessing Officer under Section 148 of the Income Tax Act, 1961, dated 29.06.2022, was time-barred and therefore invalid. The Tribunal relied on the Supreme Court's decision in Union of India v. Rajeev Bansal (supra) and the jurisdictional High Court's pronouncements, which established that notices issued under Section 148 beyond the 'surviving time' were invalid. The Tribunal noted that the AO issued the notice on 29.06.2022, which was beyond the permissible period calculated based on the assessee's reply to the Section 148A(b) notice and the 'surviving time' available. Consequently, the assessment order passed under Section 147 was quashed and set aside as it did not survive. The legal ground raised by the assessee was allowed. As the assessment order was quashed, other grounds on merits were rendered infructuous and left undecided.

The Tribunal admitted the additional ground raised by the assessee challenging the validity of the notice issued under Section 148. The Tribunal noted that the issue was no longer res integra, referencing the Supreme Court's decision in Union of India Vs. Rajeev Bansal. In that case, the Revenue conceded that for AY 2015-16, all notices issued on or after April 1, 2021, are liable to be dropped as they fall outside the completion period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The Tribunal also referred to the Gujarat High Court's decisions in Mayurkumar Babubhai Patel and Sorathia Mahesh Veljibhai HUF, which followed the Supreme Court's precedent and held that notices issued after April 1, 2021, for AY 2015-16 are barred by limitation. Since the original notice under Section 148 was issued on June 28, 2021, and a subsequent notice was issued on July 24, 2022, the Tribunal held that the reassessment proceedings are barred by limitation and without jurisdiction. Consequently, the impugned reassessment order passed by the AO was quashed. As the reassessment order itself was quashed, the other grounds related to the merits of the addition were left undecided.

The Tribunal condoned the delay in filing the first appeal before the CIT(A), citing the principle of natural justice and noting that no prejudice would be caused to the revenue. The matter was restored to the file of the AO for fresh adjudication, at the risk and responsibility of the assessee. The AO was directed to provide an opportunity of hearing and pass an appropriate order, uninfluenced by the earlier order. The assessee was directed to remain vigilant and ensure participation. Regarding the penalty appeal, the Tribunal upheld the penalty of Rs. 10,000 imposed under Section 271(1)(b) for non-compliance with notices, noting that the AO had taken a proper view in imposing the penalty despite multiple instances of non-compliance. The penalty appeal was dismissed. The quantum appeal was allowed for statistical purposes.

The Tribunal, in its consolidated order for D.R. Corporation (ITA No. 265/SRT/2024) and D.R. Associates (ITA No. 264/SRT/2024), decided that the principle laid down in CIT vs. Ashaland Corporation (supra) regarding income accrual upon title transfer is applicable. The Tribunal acknowledged the assessee's submission that it had offered further income for AYs 2024-25 and 2025-26, and intended to offer income for AY 2026-27, which would complete the entire on-money receipts surrendered during the survey. For D.R. Corporation, the Tribunal set aside the CIT(A)'s finding confirming the addition of Rs. 1,27,65,645/- and directed the AO to verify the assessee's claim of offering undisclosed income in AYs 2016-17 to 2023-24. If found correct, the addition to that extent was to be deleted. For D.R. Associates, the Tribunal applied the same principle, setting aside the CIT(A)'s confirmation of Rs. 1,54,26,375/- and directing the AO to verify the claim of offering income in AYs 2025-26 to 2026-27. The AO was directed to make a limited verification and delete the addition if the claim was correct. The Tribunal clarified that the direction was confined to AYs up to 2026-27, as per the undertaking filed by the assessee. An additional ground regarding deduction under Section 80-IB(10) was dismissed as not pressed by the assessee.

The Tribunal held that the addition of Rs. 45,00,000/- made by the AO under Section 68 and upheld by the CIT(A) was not sustainable and therefore deleted. The Tribunal reasoned that while the revenue's material indicated M/s Naman Sales was allegedly involved in accommodation entries, the notice to it remained unserved, and the concern was not found at its address, there was no material on record to establish a nexus between M/s Naman Sales' alleged activities and the impugned receipt. Crucially, no evidence was presented to show that the assessee had paid cash or routed its own unaccounted money through M/s Naman Sales. The Tribunal also found merit in the assessee's contention regarding double taxation. It noted that the assessee had provided contemporaneous documents (sales invoices, stock register, account confirmation) evidencing the underlying business transaction with M/s Naman Enterprises. The Tribunal concluded that the mere routing of payment through another concern, without establishing an independent source or a link to the assessee's own unaccounted money, could not by itself justify treating the receipt as unexplained credit under Section 68, especially when the corresponding sales income had already been recorded and assessed. The assessee succeeded in this appeal.