ITAT Visakhapatnam Judgments — February 2025

The Tribunal held that the digital evidence obtained from the seized pendrive was inadmissible. It found that the revenue authorities failed to comply with the mandatory conditions laid down under Section 65B(2) and (4) of the Indian Evidence Act for the admissibility of electronic records, citing previous ITAT and Supreme Court judgments (Anvar P.V. and Arjun Pandit Rao Khotkar cases). Since the addition was based on inadmissible evidence and no other corroborating material was brought on record, the addition of Rs. 16,47,945/- was deleted. The appeals for subsequent assessment years were also allowed as the issues and facts were identical.

The Tribunal noted that in a related case, it had already held the seized pendrive to be inadmissible evidence under Section 65B of the Indian Evidence Act due to non-compliance with prescribed procedures for digital evidence. Since the Revenue failed to bring any corroborating material beyond the inadmissible digital evidence, the addition of Rs. 16,47,645/- on account of alleged interest payment was deleted. All appeals filed by the assessee for various assessment years were consequently allowed.

The Tribunal ruled that the digital evidence from the seized pen drive was inadmissible as the certificate under Section 65B of the Indian Evidence Act was not properly obtained. Citing precedents, it held that additions cannot be sustained solely on such inadmissible evidence without corroborating material. Consequently, the addition of Rs. 16,47,645/- made on account of alleged interest payments was deleted for all assessment years.

The Tribunal held that the digital evidence (pen drive data) was inadmissible as the certificate required under Section 65B of the Indian Evidence Act was not valid and the prescribed procedure for seizing such evidence was not followed, as established in a prior ITAT ruling concerning the same group. Since the addition of Rs. 16,47,645/- for interest payment was based solely on this inadmissible evidence without any corroborating material, it could not be sustained. Consequently, the addition was deleted.

The Tribunal upheld the disallowance, stating that delay in depositing employee's PF/ESI contributions is not excusable without proof of timely submission to bankers, following the Supreme Court's Checkmate Services judgment. It confirmed that the CPC has the power under Section 143(1) to disallow such claims if apparent from the record, and the levy of interest under Sections 234A, 234B, 234C is consequential.

The Tribunal found that the AO's addition was solely based on digital evidence from a pendrive, which had been previously ruled inadmissible by the ITAT in a related case (M/s. Polisetty Somasundaram v. DCIT) due to non-compliance with the mandatory conditions of Section 65B of the Indian Evidence Act. As no corroborating material was presented, the Tribunal held that the inadmissible digital evidence could not be used to make additions. Consequently, the addition of Rs. 16,47,945/- was deleted.

The Tribunal considered the manual filing of Form-10, subsequent electronic filing, and a CBDT Circular allowing condonation of delay for such filings for the relevant assessment years. It ruled that the delay was due to inadvertence and directed the AO to delete the disallowance, treating the Form-10 filing as valid.

The Tribunal found that the house property loss of Rs. 11,07,867/- claimed by the assessee was not in dispute and should have been allowed to be set off against the assessed income. The AO's failure to do so was an error. Therefore, the Tribunal directed the AO to allow the set-off of the loss as claimed.

The Tribunal dismissed the appeal as withdrawn, granting the assessee the liberty to file a Miscellaneous Application for reinstatement if their application under the Vivad Se Vishwas Scheme is not accepted by the Revenue.

The Tribunal upheld the addition related to gifts from the wife, finding insufficient evidence for the cash withdrawals and the rationale for the gift. However, it deleted the addition of Rs. 32,21,150/- pertaining to deposits made outside the demonetization period, as the AO traveled beyond the scope of the notice issued under Section 142(1) and the sources were adequately explained.

The Income Tax Appellate Tribunal found that the assessee had substantially explained the source of the cash deposits, attributing them to earlier withdrawals from matured fixed deposits and accumulated agricultural income. The Tribunal disagreed with the CIT(A)'s view and concluded that no addition under Section 69A was justified.

The tribunal upheld the orders of the lower authorities, concluding that the assessee did not provide cogent documentary evidence to establish the genuineness, identity, and creditworthiness of the unsecured loan creditors. Consequently, the additions under Section 68 and disallowances of interest and other expenses under Section 37(1) were confirmed.

The Tribunal held that the assessee had properly explained the sources of the cash deposits with corroborative evidence, and these explanations were not disputed by the Revenue. Consequently, the addition made by the Assessing Officer, based on surmises and conjectures, was deemed unjustified and ordered to be deleted.

The Tribunal admitted additional evidence and found that the funds originated as a material advance from M/s. Three Seasons Exim Ltd to the assessee-firm, subsequently re-cycled through the partners back to the company. Since the original source of funds was established and transactions occurred via banking channels, the Tribunal held that the addition under Section 68 was not justified.

The Tribunal noted that the assessee, despite not holding a liquor license personally, was engaged in the business of purchase and sale of liquor, as evidenced by bank statements showing payments to APBCL and the Revenue not disputing similar business income in prior years. The Tribunal found the AO's view to be a plausible one. Therefore, the Tribunal set aside the PCIT's revisional order, thereby upholding the original assessment order passed by the AO.

The Tribunal condoned the 20-day delay in filing the appeal, finding it to be for a reasonable cause. It allowed the assessee's appeal to be withdrawn as requested, with a proviso that if the assessee's case is not accepted under the 'Vivad Se Viswas' scheme, they would be at liberty to file a Miscellaneous Petition to reinstate the appeal.

The tribunal allowed the assessee's request to withdraw the appeal, which was conceded by the Departmental Representative, and accordingly dismissed the appeal as withdrawn. The tribunal also clarified that if the assessee's case under the 'Vivad Se Viswas' scheme is not accepted by the Revenue, the assessee has the liberty to file a Miscellaneous Petition to reinstate the appeal within the statutory time limit.

The Tribunal allowed the request for withdrawal and dismissed the appeal as withdrawn. However, it granted the assessee the liberty to file a Miscellaneous Petition to reinstate the appeal if their case is not accepted under the 'Vivad Se Viswas' scheme by the Revenue.

The Tribunal allowed the withdrawal of the appeal and dismissed it as withdrawn. It was clarified that if the assessee's case is not accepted under the 'Vivad Se Viswas' scheme, the assessee would be at liberty to file a Miscellaneous Petition to reinstate the appeal within the prescribed time limit.

The Tribunal observed that the assessee deliberately excluded sale proceeds from one property and wrongly claimed housing loan interest as business loss, characterizing these as acts of commission, not inadvertence. The Tribunal found no infirmity in the CIT(A)'s order upholding the penalty for misreporting income.

The Tribunal quashed the assessment order, finding that the show-cause notice under Section 148A(b) failed to provide the mandatory minimum seven days for reply, rendering the reassessment proceedings void ab initio. Additionally, the escaped income of Rs. 31,10,000/- was below the Rs. 50 lakhs threshold stipulated in Section 149(1)(b), making the notice under Section 148 invalid.

The ITAT ruled that the delay in filing Form 10B was a rectifiable procedural defect, citing High Court and ITAT precedents, and directed the AO/CPC to allow the deduction. Regarding the Section 10(23C) approval, the tribunal noted the clerical error in selecting the sub-clause and directed the Principal Commissioner of Income Tax to provide another opportunity to rectify it, acknowledging the assessee's original educational object.

The Tribunal held that while the assessee ought to have correctly claimed the allowance of expenditure and AOP status when filing the return, this 'technical mistake' should not deny the benefit of allowing legitimate expenses. The Tribunal directed the Assessing Officer to examine the expenditure and allow it against the gross receipts in accordance with the law.

The Tribunal acknowledged that the assessee was not registered under Section 12AA, thus not entitled to Section 11 exemption. However, it ruled that the assessee's technical mistake of not claiming expenditure or AOP status in the original return should not deny the benefit of allowing expenditure. The Ld. AO was directed to examine the expenditure from gross receipts and allow it in accordance with law.

The Tribunal, considering the principles of natural justice, decided to grant the assessee one more opportunity to submit evidence. The matter was remitted back to the CIT(A) for fresh consideration, with a direction to call for a remand report from the AO.

The Income Tax Appellate Tribunal partly allowed the appeal. It ruled that an opening balance of Rs. 16,34,783/- and a corpus donation of Rs. 20,00,000/- from the Managing Trustee used for construction should not be treated as income. However, the remaining cash donations amounting to Rs. 65,54,317/- were upheld as unexplained additions due to the assessee's failure to provide valid evidence or third-party confirmations.

The Tribunal held that the sale deed was registered without proper payment of sale consideration to the vendor. The discrepancy in the dates of the cheques and the sale deed registration further indicated issues with the transaction. Consequently, the revenue authorities rightly concluded that the assessee made the investment through unexplained sources.

The Tribunal dismissed the assessee's appeal, agreeing with the lower authorities that the explanation for holding Rs. 50,00,000/- in cash unutilized for over six months lacked convincing documentary evidence. It observed a pattern of serially continuous voucher numbers in the firm's cash book for payments to the assessee, suggesting an afterthought to justify the deposits. Therefore, the addition of Rs. 38,00,000/- under Section 69A read with Section 115BBE was confirmed.

The Tribunal found the assessee's explanation of keeping gold loan amounts idle for over 20 months, incurring interest, and then depositing them due to demonetization, to be unacceptable. The Tribunal concluded that no person would incur such costs without utilizing funds for their stated purpose and therefore upheld the addition of Rs. 20,15,000/- by the lower authorities as unexplained cash deposits.

The Tribunal held that the land, though falling under APCRDA, was not situated within a municipal or cantonment board limit as defined by Section 2(14)(iii) of the Income Tax Act. Since the Revenue failed to prove the land's classification as a capital asset and the assessee proved agricultural activities, the transfer of said land would not attract long-term capital gains. The appeal was allowed following previous tribunal decisions on identical issues.

The Tribunal upheld the CIT(A)'s decision. It ruled that the deduction u/s 80IB(11A) does not have to be claimed from the initial assessment year if no profit was generated, and the assessee was otherwise eligible. Regarding cash deposits, it found them recorded in audited books and satisfactorily explained as business receipts, hence not constituting unexplained money u/s 69A. Consequently, the Revenue's appeals for both assessment years were dismissed, and the assessee's Cross-Objections were dismissed as infructuous.

The Tribunal upheld the CIT(A)'s decision, ruling that Section 80IB(11A) does not mandate claiming deduction in the initial assessment year if no profit was generated, and the assessee had fulfilled conditions. For the cash deposits, the Tribunal found them properly recorded in audited books and adequately explained as business sales and cash on hand, thus Section 69A was not applicable. Accordingly, the AO's additions were deleted.

The Tribunal held that the assessee provided a reasonable explanation for the cash deposits, supported by documentary evidence like sale deeds, details of cash receipts from plot sales (Rs. 16,46,000/-), and bank withdrawal details (Rs. 16,50,000/-). The explanation about retaining funds for medical emergencies, supported by a brother's death certificate, was found plausible, and the AO's observation about hospital payments was deemed insufficient to negate the explanation.