ITAT Visakhapatnam Judgments — July 2025

The Tribunal held that income of a non-resident is taxable in India only if received or accrued in India. Since the assessee provided sufficient evidence that the funds for property purchase were remitted from her husband's bank account in UAE to NRE accounts in India, and the Assessing Officer failed to prove that the source was earned in or rooted from India, the additions under Section 69 for both assessment years cannot be sustained. The legal ground regarding non-issuance of Section 143(2) notice became academic.

The Tribunal upheld the CIT(A)'s rejection of the jurisdictional challenge, stating that it was not a transfer under Section 127 for administrative convenience but a correction of incorrect filing by the assessee. Regarding the addition, the Tribunal directed the Assessing Officer to delete the addition of Rs.4,51,170/- paid through the bank, as the source was traceable to declared income. However, the Tribunal sustained the addition of Rs.6,89,000/- paid in cash, as the assessee failed to explain its source.

The Tribunal held that the additions under Section 69 could not be sustained as the assessee is a non-resident and the source of funds for the property purchase was from outside India via her husband's NRE account. It emphasized that income of a non-resident is taxable in India only if received or accrued in India, and the Assessing Officer failed to establish that the source of payment originated or was rooted in India. Consequently, the Tribunal directed the deletion of the additions for both assessment years.

The Tribunal affirmed the Pr.CIT's order, noting that the Assessing Officer failed to conduct any inquiry into the belated payment of employee's contribution to PF and ESI. Relying on the Supreme Court's decision in Checkmate Services, the Tribunal reiterated that such contributions are deductible only if deposited on or before the due dates mandated by welfare enactments. The lack of inquiry by the AO rendered the assessment order erroneous and prejudicial to the interest of the Revenue, justifying the Section 263 revision by the Pr.CIT.

The Tribunal found that the CIT(A)'s order was in gross contravention of the Tribunal's directions and contrary to the facts on record, as relevant details and submissions were not considered. The Tribunal also noted the assessee's alternative plea to restrict additions to a peak credit.

The Tribunal found that there was an inordinate delay of 643 days in filing the appeals. Since the assessee neither filed an application for condonation of delay nor provided any sufficient cause for the delay, the appeals were deemed not maintainable as they were barred by limitation.

The Tribunal determined that the appeals were not maintainable as the assessee failed to explain the 643-day delay or seek condonation. Consequently, the appeals were held to be barred by limitation and liable for dismissal.

The ITAT condoned the 291-day delay, finding sufficient cause and deeming it neither intentional nor deliberate. It set aside the ex-parte order of the CIT(A) and remanded the matter for fresh adjudication, instructing the CIT(A) to consider the assessee's relevant details, records, and evidence after affording a proper opportunity of hearing.

The Tribunal, following its own previous decisions and the Supreme Court's ruling in Bokaro Steel, held that the interest earned on capital grants, specifically allocated for LIS projects and where the assessee had no discretionary control over the funds, is not taxable as business income. It also confirmed that the expenditure incurred for cyclone damage restoration was revenue expenditure, allowable under Section 37(1) of the Income Tax Act.

Given that the assessee had obtained registration under Section 12AA, the appeal against the rejection under Section 12AB became superfluous. The assessee sought to withdraw the appeal, and the Departmental Representative did not object. The Tribunal dismissed the appeal as withdrawn.

The Tribunal held that the assessee, acting as a 'kaccha arahtia' (commission agent), is eligible for credit of the entire TDS amount deducted at source. The turnover of a 'kaccha arahtia' includes only the commission charged and not sales made on behalf of principals.

The ITAT found the delay of 516 days to be inordinate and unsupported by plausible or justifiable reasons. The explanations provided by the assessee, including opting for the Vivad Se Vishwas Scheme and a mistaken belief about receiving notices by post despite providing an email ID, were deemed unsubstantiated and indicative of casual/lackadaisical conduct. Citing Supreme Court precedents, the tribunal dismissed the appeal on the ground of limitation.

The Tribunal held that the notice issued under Section 148 on 06.04.2022 for AY 2015-16 was barred by limitation as the six-year period for such notice expired on 31.03.2022 under the unamended provisions of Section 149(1)(b). Furthermore, the Assessing Officer failed to provide the mandatory minimum of "not less than seven days" for the assessee to reply to the show cause notice under Section 148A(b). Consequently, the reassessment proceedings were deemed without jurisdiction and quashed.

The tribunal, relying on High Court precedents, held that the Pr.CIT exceeded jurisdiction under Section 263 by directing the AO to initiate penalty proceedings under Section 271(1)(c). It clarified that penalty proceedings are independent of assessment proceedings, and the assessment order is not rendered erroneous or prejudicial merely due to the AO's failure to record an opinion on penalty. Consequently, the Pr.CIT's order was set aside.

The Tribunal, in the interest of natural justice and considering the substantial demand, granted the assessee one final opportunity to present its case and relevant documents before the CIT(A). The case has been remanded back to the CIT(A) for re-adjudication, with the expectation that the assessee will cooperate with the proceedings.

The ITAT dismissed the assessee's ground challenging the time-barred nature of the Section 148 notice. However, to ensure natural justice, the tribunal remanded the case to the CIT(A), directing the assessee to file a condonation petition for the delayed appeal. The CIT(A) is instructed to consider the petition and, if sufficient cause is shown, adjudicate the appeal on its merits after providing a final opportunity to the assessee.

The tribunal held that neither the AO nor the CIT(A) formally rejected the assessee's books of accounts before making an ad-hoc disallowance or estimating profit, which is a prerequisite as per legal precedents. Since there was no valid reason for the 2% profit estimation, the matter is set aside to the CIT(A) for fresh adjudication, granting the assessee another opportunity to substantiate purchase claims.

The Tribunal, following its own previous decisions and the Supreme Court's ruling in Bokaro Steel, held that the interest earned on specific capital grants, being inextricably linked to the grants, cannot be assessed as business income. Regarding the cyclone expenditure, the Tribunal held that it was allowable revenue expenditure under Section 37(1) as it was in the ordinary course of business to maintain and resume operations, irrespective of the source of funding or pending reimbursement.

The Tribunal affirmed the CIT(A)'s decision, holding that the interest earned on unutilized capital grants for LIS projects is not taxable as business income. This is because the funds are allocated for a specific purpose, the interest is inextricably linked to the grants, and the assessee has no discretion over its use, consistent with prior Tribunal rulings and the Supreme Court's decision in M/s Bokaro Steel. Furthermore, the Tribunal upheld the allowance of the expenditure for cyclone restoration as revenue expenditure under Section 37(1) of the Act, recognizing it as an ordinary business expense for maintaining operations, irrespective of the funding source or pending reimbursement.

The Tribunal upheld the CIT(A)'s decision, ruling that the interest earned on capital grants for specific projects is a capital receipt, not business income, as it is inextricably linked to the grants, following the Supreme Court's decision in Bokaro Steel. The Tribunal further held that the expenditure for cyclone damage restoration was a revenue expenditure, incurred in the ordinary course of business to maintain operations, and thus allowable under Section 37(1) of the Act. Both issues were decided in favor of the assessee by dismissing the revenue's appeals.

The Tribunal, following its own precedents, ruled that the interest income on grants for specific projects was inextricably linked to the capital grants and thus not taxable as business income. It also confirmed that the expenditure for cyclone damage restoration was an allowable revenue expenditure under Section 37(1), being an expense incurred in the ordinary course of business to maintain operations. Consequently, both issues were decided in favor of the assessee, upholding the CIT(A)'s decision.

The Tribunal observed that since the A.O. had accepted the assessee's business income under the presumptive scheme of Section 44AD, a complete rejection of the business nature of the deposits was contradictory. Although the assessee failed to provide conclusive evidence for the source of deposits, the Tribunal directed that the addition under Section 68 should be restricted to the 'peak credit' in the bank account, as cash withdrawals could have been re-deposited, citing previous Tribunal decisions. The A.O. was directed to re-verify the peak credit amount.

The Tribunal found that an effective opportunity of hearing was not afforded to the assessee, noting the rapid succession of notices issued by the CIT(A). It set aside the impugned order of the CIT(A) and remanded the matter back for fresh adjudication, directing the CIT(A) to provide an appropriate opportunity of hearing to the assessee.

The tribunal found that both the AO's disallowance and the CIT(A)'s profit estimation were made without formally rejecting the books of accounts, which is a necessary pre-condition for such actions. Citing High Court judgments, the tribunal ruled that without a valid rejection of books, estimation of profit is not sustainable. Therefore, the case was remanded back to the CIT(A) for fresh adjudication, allowing the assessee another opportunity to substantiate the purchases.

The Tribunal condoned the 28-day delay in filing the appeal, acknowledging sufficient cause due to address mix-up and grievance resolution. It directed the Ld. CIT(A) to reconsider the assessee's belatedly filed return of income, submitted in response to the Section 148 notice, and to decide the case on merits, also considering any additional evidences. The jurisdictional grounds raised by the assessee were not adjudicated due to the remand.

The Tribunal condoned the 21-day delay in filing the appeals before it. For the quantum appeal (ITA 479/VIZ/2024), the Tribunal remitted the case back to the Learned CIT(A) to decide on the condonation petition for the 179-day delay and then to adjudicate the appeal on merits. Consequently, the penalty appeal (ITA 480/VIZ/2024) under Section 271(1)(c) was allowed, as the penalty order could not stand independently once the quantum assessment was reopened for review.

The Tribunal condoned the assessee's 21-day delay in filing the appeal before it and remitted the quantum appeal back to the CIT(A) to reconsider the condonation of the original 179-day delay and then adjudicate on merits. Consequently, the penalty appeal under Section 271(1)(c) was also allowed as it was deemed consequential to the quantum appeal.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, confirming that the AO's order violated the principles of natural justice. The Tribunal emphasized that denial of the right to cross-examine third parties, whose statements or evidence formed the basis of an addition, renders the assessment order a nullity. The ITAT noted that the AO failed to provide proper copies of the excel sheets or allow cross-examination, and the presumption under Section 132(4A) could not be drawn against an assessee not subjected to a search operation.

The Tribunal upheld the CIT(A)'s decision, ruling that the interest earned on unutilized capital grants for LIS was inextricably linked to the grants and thus not taxable as business income, following the principle established in *Bokaro Steel*. Regarding the extraordinary expenditure for cyclone damage, the Tribunal confirmed it was revenue expenditure incurred in the ordinary course of business to maintain operations and was therefore allowable under Section 37(1) of the Income Tax Act.

The Tribunal dismissed the grounds relating to notional interest on outstanding receivables and interest on ECB, maintaining consistency with its previous decisions for the assessee. The ground concerning disallowance of royalty was remitted back to the TPO, subject to the outcome of a pending Advance Pricing Agreement (APA). The ground for disallowance of leasehold amortization charges was allowed, based on consistency with prior decisions that such charges are revenue expenditure.

The ITAT found that the Ld. CIT(E)'s rejection order was non-speaking and did not provide a proper opportunity to the assessee. Therefore, the ITAT set aside the rejection order and remanded the matter back to the Ld. CIT(E) to provide another opportunity to the assessee to furnish details and pass a speaking order on merits.

The Income Tax Appellate Tribunal (ITAT) found the 32-day delay to be justified by bonafide reasons of the assessee's illness, supported by an affidavit and medical prescription. Adopting a justice-oriented approach, and citing a Supreme Court decision, the ITAT condoned the delay and remanded the matter back to the CIT(A) for re-adjudication on the merits of the assessment.

The Income Tax Appellate Tribunal condoned the delay of 402 days in filing the appeal before the CIT(A)-NFAC, accepting the assessee's reason of ill health. The Tribunal remitted the matter back to the CIT(A)-NFAC for fresh adjudication on merits, with a direction for the assessee to cooperate.

The Tribunal dismissed both appeals on the grounds of inordinate delay in filing, finding the assessee's explanation for the delay unsubstantiated and concocted. The assessee's claim of blaming an earlier tax consultant and delayed knowledge of the CIT(A)'s order was not accepted due to lack of evidence and inconsistencies. Consequently, the Tribunal declined to condone the delay, and the appeals were dismissed as time-barred without addressing the merits of the disallowance.

The Tribunal held that since the Ld. CIT(A), in the quantum appeal, directed the AO to recompute capital gains, resulting in a Long-Term Capital Loss of Rs.20,00,615/-, the capital gains became non-taxable. Consequently, the foundation for the penalty under Section 271(1)(c) ceased to exist, and thus, the penalty levied by the AO was not sustainable.

The Tribunal held that the employee's contribution to PF/ESI must be deposited within the prescribed due dates under the relevant Acts to be allowed as a deduction under Section 36(1)(va). The amendment by the Finance Act, 2021, is clarificatory and retrospective. The Supreme Court's decision in Checkmate Services Pvt. Ltd. was also cited, reinforcing this view.

The Tribunal observed that the delay in filing the appeal before the CIT(A) fell within the period excluded by the Hon'ble Supreme Court's decision during the COVID-19 pandemic. Condoning the delay, the Tribunal remitted the matter back to the CIT(A) for fresh adjudication on merits in accordance with law and natural justice.

The Tribunal held that for a 'kaccha arahtia', turnover includes only gross commission and not sales effected on behalf of principals, as per CBDT Circular No. 452. Therefore, the CPC was not justified in applying Rule 37BA by treating gross sales as income, and the assessee was eligible for full TDS credit. The Tribunal set aside the lower authorities' orders, directing the AO to grant the entire TDS credit.

The Tribunal, relying on CBDT Circular No. 452 (1986) and previous consistent decisions, held that as a 'kaccha arahtia' (commission agent), the assessee's turnover includes only gross commission and not sales on behalf of principals. It set aside the lower authorities' orders and directed the AO to grant the entire amount of TDS credit for both assessment years.

The Tribunal condoned the delay of 928 days, finding the assessee's medical reasons as a sufficient cause. It remitted the matter back to the CIT(A)-NFAC to decide the appeal on merits, granting the assessee another opportunity to submit relevant documents, while cautioning the assessee to cooperate promptly.

The Tribunal held that the delay in filing Form 10B is a procedural default and should not lead to the denial of exemption under section 11, especially when the audit report was available before the return was processed. Citing various High Court judgments, the Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to allow the exemption under section 11 on merits and in accordance with law.

The Tribunal quashed the penalty of Rs. 46.76 lacs imposed under Section 271D of the Income Tax Act. It held that the Assessing Officer failed to record the requisite satisfaction for initiating penalty proceedings in the body of the assessment order. Citing Supreme Court and High Court judgments, the Tribunal emphasized that such recorded satisfaction is a mandatory prerequisite for the valid assumption of jurisdiction to impose penalties under Sections 271D and 271E of the Act.

The Income Tax Appellate Tribunal (ITAT) held that although the assessment order was technically served via email as per the Information Technology Act, the 26-day delay in filing the appeal was not inordinate and due to bonafide reasons. Citing Supreme Court precedent, the ITAT emphasized adopting a justice-oriented and liberal approach for condoning delays. The ITAT set aside the CIT(A)'s order and remanded the matter back to the CIT(A) to condone the delay and decide the appeal on its merits.

The tribunal found the CIT(Exemptions)'s rejection order to be non-speaking and lacking specific findings or objective analysis of documents. It noted that the CIT had failed to elaborate on any deficiencies or record clear findings on the genuineness of activities or compliance with Section 12AB conditions. The tribunal emphasized the requirement for quasi-judicial authorities to pass reasoned orders.

The Tribunal allowed the Revenue's request to withdraw the duplicate appeals. Consequently, both appeals for assessment years 2017-18 and 2018-19 were dismissed as withdrawn.

Given that the appeals were duplicates and the assessee's counsel had no objection, the Tribunal allowed the Revenue to withdraw its appeals. Consequently, both appeals were dismissed as withdrawn.

The Tribunal ruled that rejecting the application based solely on a technical or clerical error in selecting a section code was not justified and violated principles of natural justice. It emphasized that procedural mistakes should not defeat substantive rights, especially for charitable institutions, and restored the matter to the Ld.CIT(E) to reconsider the application on merits after allowing the assessee to rectify the procedural errors.

The Tribunal condoned the delay in filing the appeal. It held that the CIT(A) erred by arbitrarily disregarding the AO's favorable Remand Report without offering specific defects or conducting further verification. Finding the assessee's explanation of redeposited withdrawn funds credible, the Tribunal directed the AO to delete the addition made under Section 69 of the Act.