ITAT Visakhapatnam Judgments — August 2025

The Tribunal, following its earlier decision in 'The Chebrole Large Sized Co-operative Society Limited Vs. ITO', held that interest income derived by a primary agricultural co-operative society from fixed deposits in nationalized banks, made from its own surplus funds, is eligible for deduction under Section 80P(2)(a)(i) of the Act. Consequently, the disallowance made by the A.O. for Rs. 16,88,240/- was directed to be vacated.

The Tribunal dismissed the assessee's appeal, upholding the Pr. CIT's order under Section 263. It affirmed that the A.O.'s assessment was erroneous and prejudicial as he failed to conduct necessary inquiries into the genuineness of the cash gifts, their prolonged retention, and subsequent transfer. The Tribunal also rejected the assessee's jurisdictional challenge, citing her failure to question the A.O.'s jurisdiction within the statutory 30-day period as per Section 124(3)(a) of the Income Tax Act.

The Tribunal ruled that an appeal against a Section 143(1) intimation does not become infructuous due to a subsequent Section 154 rectification order, as rectification merely modifies the original order which retains its independent appealability. Citing Kothari Industrial Corporation Ltd. vs. Agricultural Income-tax Officer (1998) 230 ITR 306 (Kar), the Tribunal remanded the case to the A.O. for verification, directing that the addition be vacated if the income was indeed disclosed in the return.

The Tribunal held that the reassessment proceedings initiated for A.Y. 2015-16 by notice under Section 148 dated 06.04.2022 were without jurisdiction and invalid. The notice was barred by limitation as per the first proviso to Section 149(1)(b) of the unamended Income Tax Act, 1961, as the six-year time limit expired on 31.03.2022. The Tribunal followed Supreme Court precedents, which clarified that for A.Y. 2015-16, notices issued on or after April 1, 2021, must be dropped.

The Tribunal condoned a 19-day delay in filing the appeal and, following a previous Coordinate Bench decision, found that Rule 87 of the Income Tax Rules, 1962, was erroneously applied by the lower authorities for Provident Fund contributions. The Tribunal set aside the disallowance of Rs.1,69,779/- and also deleted the Rs.42,19,631/- addition confirmed by the CIT(A), as it was adjudicated on a ground not raised before him.

The Tribunal found that the assessee failed to discharge its onus to substantiate the salary expenditure beyond the amount supported by EPF records. It held that the A.O. and CIT(A) were justified in disallowing the unsubstantiated portion, as the expenditure did not meet the conditions of being wholly and exclusively for business purposes under Section 37(1) of the Income Tax Act. Consequently, the appeal filed by the assessee was dismissed.

The Tribunal rejected the condonation petition, finding the reasons, particularly the attempt to blame the advocate, unacceptable. It held that the assessee failed to prove a reasonable and sufficient cause for the 155-day delay and therefore dismissed the appeal in limine.

The Tribunal held that the reassessment proceedings and the consequent assessment order were without jurisdiction. The notice issued under section 148 of the Act was found to be invalid and barred by limitation.

The Tribunal found the Ld.CIT(E)'s rejection order to be non-speaking, lacking specific reasons for the denial. Citing natural justice, the Tribunal set aside the impugned order and remanded the matter back to the Ld.CIT(E) to provide the assessee another opportunity to furnish all required documents and pass a fresh speaking order on merits.

The Tribunal held that the reassessment notice issued under Section 148 of the Act on 19.04.2022 was barred by limitation as per the unamended provisions of Section 149(1)(b) of the Act, which expired on 31.03.2022. Consequently, the reassessment proceedings were deemed to be without jurisdiction.

The Tribunal, adopting a liberal approach to 'sufficient cause' based on Apex Court decisions, condoned the 468-day delay, finding it bona fide and not deliberate negligence. The case is remanded back to the Ld. CIT(A) for a decision on merits, with directions to provide the assessee a proper opportunity of hearing.

The Tribunal observed that the assessee failed to produce the required details before the lower authorities. Applying principles of natural justice, the Tribunal remitted the case back to the Assessing Officer to examine the details regarding members and commission income, allowing the assessee another opportunity to furnish the same for a decision on merits.

The tribunal noted the insertion of a new proviso to Section 12A (w.e.f. 01.10.2024) empowering the CIT to condone delays for reasonable cause. Since the rejection order was issued after this proviso came into effect, the tribunal held that the Ld. CIT(E) erred by not considering the assessee's explanation for delay and the new statutory provision. The tribunal set aside the order and remanded the matter back to the Ld. CIT(E) for re-consideration of delay condonation and the application on merits, granting the assessee an opportunity of being heard.

The Tribunal found 'sufficient cause' for both the 39-day delay before the CIT(A) and the 212-day delay before the ITAT. Citing the principle of liberal construction for condonation of delay and the pursuit of substantial justice, the ITAT condoned all delays and remanded the case back to the Ld. CIT(A) for a decision on merits after providing the assessee a proper opportunity of hearing.

The Tribunal, applying a liberal interpretation of 'sufficient cause' and principles of substantial justice, condoned the delay in filing the appeal before the Ld. CIT(A). The matter is remanded back to the Ld. CIT(A) for a decision on merits after providing the assessee with a proper opportunity of hearing. This decision also applies to the identical appeal for AY 2020-21.

The Income Tax Appellate Tribunal condoned the delay in filing the appeal, emphasizing a liberal interpretation of 'sufficient cause' and the principle of natural justice. The tribunal remanded the case back to the CIT(A) to decide the appeal on its merits, directing the CIT(A) to provide sufficient opportunity of hearing to the assessee.

The Tribunal condoned the delay in filing the appeal before the Ld. CIT(A), citing a liberal approach for 'sufficient cause' which included an accident and the COVID-19 pandemic. It held that substantial justice should be preferred over technical considerations and remanded the case back to the Ld. CIT(A) to decide the appeal on its merits after providing a proper opportunity of hearing to the assessee.

The Tribunal, noting the assessee's non-compliance but also the substantial penalty and the request for an opportunity, decided to grant a final chance for substantiation. The case was remanded back to the CIT(A) for fresh adjudication, with the expectation of full cooperation from the assessee.

The tribunal found that the Ld. CIT(E) had not passed a speaking order, having merely stated the lack of substantial charitable activities without providing specific reasons or findings. In the interest of natural justice, the tribunal set aside the impugned order, remanding the matter back to the Ld. CIT(E) to grant the assessee another opportunity to submit required documents and to decide the case on merits by passing a speaking order.

The Tribunal found the Ld. CIT(E)'s order non-speaking, observing that it merely stated a lack of substantial charitable activities without specifying how the activities were non-charitable. In the interest of natural justice, the Tribunal set aside the impugned 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 Tribunal found that the CIT(E)'s rejection order was casual, non-speaking, and lacked specific reasons for deeming the activities not charitable. It set aside the impugned order and remitted the matter back to the CIT(E) to provide another opportunity to the assessee to submit documents and to pass a speaking order deciding the case on merits.

The Income Tax Appellate Tribunal found that the CIT(A)'s orders deleting the addition and penalty were 'non-speaking' and 'devoid and bereft of any reasoning.' The Tribunal strongly deprecated this manner of disposal and set aside both the quantum appeal and the penalty appeal, remanding the matters to the CIT(A) for fresh adjudication. The CIT(A) was directed to pass a speaking and reasoned order after affording the assessee a reasonable opportunity of being heard.

The Tribunal condoned the delay of 182 days in filing the appeal, citing bonafide reasons. It noted conflicting High Court views on applying the enhanced tax rate under Section 115BBE (60%) versus the pre-amended rate (30%) for AY 2017-18. Following the principle of adopting the view favorable to the assessee in case of non-jurisdictional High Court conflicts, the Tribunal directed the AO to apply the pre-amended tax rate of 30% on the addition made under Section 69A.

The Tribunal held that the Pr.CIT exceeded his jurisdiction in invoking Section 263 to direct the AO to initiate penalty proceedings under Section 270A. Citing various High Court judgments, the Tribunal concluded that penalty proceedings are distinct from assessment proceedings, and an AO's non-recording of satisfaction for penalty does not render the assessment order erroneous or prejudicial to the revenue for the purpose of Section 263. Additionally, the assessee's case did not meet the conditions for penalty under Section 270A as the returned income was accepted by the AO.

The tribunal observed that the CIT(A) mistakenly considered a National Faceless Appeal Centre (NFAC) order pertaining to a different assessee (Shri Dhana Raju Thota) as belonging to the current assessee. Given this error, the tribunal remitted the case back to the CIT(A) for fresh adjudication on merits, ensuring the assessee is given an opportunity to be heard.

The Tribunal held that it is an admitted fact that the assessee received the gift from her mother. However, since the sources of the donor (mother) could not be definitively proved, and the gift amount was already treated as income in the hands of the mother (though that assessment was pending), adding the same amount in the hands of the assessee was not justifiable.

The Tribunal held that the JDA entered into in 2012 was the deemed date of acquisition. Since the sale of two flats occurred in AY 2017-18, after more than three years from the deemed acquisition, it should be treated as Long-Term Capital Gain. The AO erred in considering the JDA entered in FY 2016-17.

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to grant relief. It held that the amendment to the proviso of Section 201(1), extending benefits to non-residents, is clarificatory and retrospective in nature, not imposing new liability. As the seller had discharged their tax liability, there was no revenue leakage, and thus the assessee could not be considered an 'assessee in default'.

The Tribunal held that the Pr.CIT exceeded jurisdiction by revising the assessment order under section 263 solely for non-initiation of penalty proceedings under section 270A. Citing judicial precedents, it reiterated that penalty proceedings are distinct from assessment proceedings, and an AO's decision not to initiate penalty does not automatically render the assessment order erroneous or prejudicial to the revenue. Consequently, the impugned revision order passed by the Ld.Pr.CIT was quashed.

The Tribunal, relying on various High Court precedents, held that penalty proceedings are independent and separate from assessment proceedings. Therefore, the AO's omission to record satisfaction for initiating penalty under Section 270A does not make the assessment order erroneous or prejudicial to the interest of the revenue. The Pr.CIT exceeded its jurisdiction by invoking Section 263 merely to direct the initiation of penalty proceedings.

The Tribunal held that penalty proceedings are independent of assessment proceedings and the AO's failure to record satisfaction for initiating penalties does not render the assessment order erroneous or prejudicial to the interest of the revenue. Relying on various High Court precedents, the Tribunal concluded that the Pr.CIT exceeded his jurisdiction under section 263 by substituting his view and directing penalty initiation. Consequently, the impugned revision orders passed by the Ld.Pr.CIT were quashed.

The Tribunal found that the fact of the gift from the mother was undisputed and since the mother's assessment, where the source of the gift was questioned and an addition was made, was pending adjudication before the CIT(A), the same amount could not be simultaneously added in the hands of the assessee. Therefore, the addition under section 69 was not justifiable.

The Tribunal condoned a 9-day delay in the Revenue's appeals. It set aside the CIT(A)'s order and remitted the matter back to the CIT(A) with a direction to reconsider the issue by applying the Hon'ble Supreme Court's decision in ACIT (E) v. Ahmedabad Urban Development Authority, which pertains to charitable institutions undertaking commercial activities. All appeals were allowed for statistical purposes.

The Tribunal held that income from Fly Ash sale, being restricted by environmental notifications for specified purposes, is not revenue income but a Balance Sheet item. The Section 14A disallowance must be restricted to 1% of the investments that actually yielded exempt income, not total investments. Disallowance under Section 40(a)(iib) for water and police guard charges was not applicable as these levies were not exclusively on the assessee. For AY 2020-21, CSR expenditure disallowance was upheld due to a statutory amendment. However, for earlier assessment years, similar CSR expenditure was deemed allowable business expenditure. The issue of liquidated damages was remitted back to the AO for verification.

The Tribunal held that proceeds from Fly Ash sales are not revenue income, as they are controlled by government notifications for specified purposes and should be treated as a Balance Sheet item. Disallowance under Section 14A for expenses related to exempt income was restricted to 1% of the investment on which dividend income was earned. Disallowance under Section 40(a)(iib) for water and police guard charges was deleted, as the charges were not levied exclusively on the assessee. For liquidated damages, the matter was remitted back to the AO for verification. For CSR expenditure, disallowance was upheld for AY 2018-19 onwards due to statutory changes (Section 35AC), but for earlier assessment years (e.g., AY 2015-16), it was allowed as business expenditure.

The ITAT acknowledged the revenue's contention that the CIT(A) failed to consider the Supreme Court's decision in ACIT (E) v. Ahmedabad Urban Development Authority concerning commercial activities of charitable institutions. Both parties agreed to remit the case. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter back to the CIT(A) for fresh adjudication, directing them to consider the Supreme Court's ruling.

The Tribunal condoned a 9-day delay in the revenue's appeals. It set aside the CIT(A)'s order and remitted the matter back to the CIT(A) with a direction to reconsider the case by taking into account the Supreme Court's decision in ACIT (E) v. Ahmedabad Urban Development Authority and pass a detailed speaking order. All appeals filed by the revenue are allowed for statistical purposes.

The Tribunal observed that the Ld. CIT(A) had failed to consider a relevant Supreme Court decision (ACIT (E) v. Ahmedabad Urban Development Authority) while passing its order. With the consent of both the Departmental Representative and the Authorized Representative, the Tribunal set aside the Ld. CIT(A)'s order and remitted the matter back for fresh consideration in light of the Supreme Court's ratio. The appeals were allowed for statistical purposes.

The Tribunal observed that the Ld. CIT(A) had failed to consider the Supreme Court's decision in ACIT (E) v. Ahmedabad Urban Development Authority regarding commercial activities and charitable registration. With mutual agreement from both parties, the Tribunal set aside the CIT(A)'s orders and remanded the matters back to the Ld. CIT(A). The CIT(A) was directed to reconsider the issues in light of the Supreme Court's ruling and pass a detailed speaking order. Consequently, all appeals by the Revenue were allowed for statistical purposes.

The Tribunal condoned a 9-day delay by the Revenue in filing appeals. It held that the CIT(A) erred by not considering a relevant Supreme Court judgment on commercial activities of charitable institutions. Consequently, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the CIT(A) for fresh adjudication in light of the Supreme Court's decision.

The Tribunal observed that the Ld. CIT(A) had not considered the Supreme Court's decision in ACIT (E) v. Ahmedabad Urban Development Authority regarding commercial activities of charitable institutions. Both the revenue and the assessee agreed to remit the matter back to the Ld. CIT(A) for reconsideration. The Tribunal set aside the Ld. CIT(A)'s order and directed a fresh decision in light of the Supreme Court's ruling.

The Tribunal found that the Ld. CIT(A) had indeed not considered the Supreme Court's decision in ACIT (E) v. Ahmedabad Urban Development Authority. With the consent of both the Ld. DR and Ld. AR, the Tribunal set aside the CIT(A)'s order and remitted the matter back for fresh adjudication. The Ld. CIT(A) was directed to consider the Supreme Court's decision and pass a detailed speaking order. All appeals filed by the revenue were allowed for statistical purposes.

The Tribunal condoned a 9-day delay in the revenue's appeals. Noting that the Ld. CIT(A) had not considered the Supreme Court's decision in *ACIT(Exemptions) v. Ahmedabad Urban Development Authority*, and with both parties in agreement, the Tribunal set aside the CIT(A)'s order. The matter was remitted back to the Ld. CIT(A) to re-examine the issues in light of the Supreme Court's ruling and pass a fresh speaking order.

The Tribunal condoned a 9-day delay in filing the appeals and then set aside the order of the Ld. CIT(A) for the assessment year under consideration. The matter was remitted back to the file of the Ld. CIT(A) with a direction to reconsider the issue by taking into account the Supreme Court decision in ACIT(Exemptions) v. Ahmedabad Urban Development Authority regarding commercial activities and their impact on Section 12AA registration, and to pass a detailed speaking order.

The Tribunal ruled that Fly Ash sale proceeds are not revenue income but a Balance Sheet item, restricted for specified environmental purposes. Disallowance under Section 14A should be limited to 1% of the investments that actually yielded exempt income. Disallowance under Section 40(a)(iib) for water and police guard charges was held inapplicable as the levies were not exclusive to the assessee. CSR expenditure for AY 2015-16 was allowed as business expenditure, while for AY 2020-21, it was dismissed due to a statutory amendment. The issue of liquidated damages was remitted back to the AO for verification.

The Tribunal condoned a 94-day delay in filing the appeal, accepting the assessee's explanation of lack of proper knowledge and pending tax proceedings. It allowed the admission of additional evidences under Rule 29 of ITAT Rules. Consequently, the matter was remitted back to the Assessing Officer for a fresh adjudication on merits, taking into account the newly submitted evidences.

The Tribunal condoned the 169-day delay in filing the appeal due to the assessee's medical condition. Following a similar precedent, the Tribunal set aside the CIT(A)'s order, remitting the case back to the CIT(A) for disposal on merits, emphasizing that Section 249(4)(b) regarding advance tax would not apply if the assessee had no taxable income.