Addition under section 69A deleted as assessee satisfactorily explained demonetisation cash deposits through cash flow statement and banking records; delay of 28 days in filing appeal condoned.

Issue: The issue before the Tribunal was whether the addition of Rs 9,40,000 made under section 69A of the Income-tax Act towards unexplained cash deposits during the demonetisation period was justified, and whether the delay of 28 days in filing the appeal deserved condonation.

Fact: The assessee, a Hindu Undivided Family engaged in small-scale lending activities to agriculturists and petty traders, deposited cash in bank accounts during the relevant year. The Assessing Officer treated the deposits as unexplained money under section 69A on the ground that the assessee failed to maintain proper books, loan registers, and borrower confirmations. The CIT(A) confirmed the addition. Before the Tribunal, the assessee explained that the deposits were sourced from interest income, loan recoveries, opening cash balance, and accumulated funds, supported by a cash flow statement and bank records. The assessee also sought condonation of 28 days’ delay in filing appeal stating that the appellate order uploaded electronically on the portal was not immediately noticed due to bona fide misunderstanding regarding service of orders.

Held: The Tribunal condoned the delay of 28 days holding that the explanation was reasonable, bona fide, and not attributable to negligence or mala fide intention. On merits, the Tribunal held that the assessee had satisfactorily explained the source of cash deposits through cash flow statements and banking records. It observed that small-scale lending activities are generally informal and strict documentation may not always be maintained. Since the Revenue failed to bring any positive material to disprove the assessee’s explanation or establish that the deposits represented undisclosed income, the addition under section 69A could not be sustained merely on suspicion. Accordingly, the addition of Rs 9,40,000 was deleted and the appeal of the assessee was allowed.

ITAT Remands Demonetization Cash Deposit Addition for Fresh Examination After Accepting Agricultural Income Plea and Additional Evidence

Issue: The issue before the Tribunal was whether the addition of Rs 10,25,000 under section 69A read with section 115BBE on account of cash deposits during the demonetization period was justified, and whether the assessee should be granted another opportunity to explain the source of deposits in light of fresh claims and additional evidence relating to agricultural income and allied activities.

Fact: The assessee did not file the return of income for AY 2017-18. Based on SFT information, the Assessing Officer noticed cash deposits of Rs 10,25,000 in the Canara Bank account during the demonetization period. Several notices under sections 142(1), 144(1), and summons under section 131 were issued, but no compliance was made by the assessee. Consequently, the assessment was completed ex parte under section 144 and the cash deposits were treated as unexplained money under section 69A. Before the CIT(A), the assessee explained that he was engaged in milk supply business and had deposited accumulated cash collections to repay a loan account, but the CIT(A) confirmed the addition. Before the Tribunal, the assessee sought condonation of delay of 330 days, stating that he was an illiterate agriculturist conversant only with Hindi, suffering from poor health, and unaware of online tax procedures. The assessee further contended that the earlier counsel failed to properly present the case and omitted to explain that the deposits were also sourced from agricultural activities. Additional evidence such as agricultural sale bills, KCC account details, khasra records, and affidavits were produced to establish agricultural income.

Held: The Tribunal condoned the delay holding that sufficient and bona fide cause was shown by the assessee. On merits, the Tribunal observed that the assessment under section 144 was valid because the assessee had failed to comply with repeated notices and summons issued by the department. However, the Tribunal noted that before the CIT(A), the case was argued only on the basis of milk supply business and no plea regarding agricultural income was raised. At the second appellate stage, the assessee produced a completely new set of documents and additional evidence relating to agricultural activities, which had never been examined by the lower authorities. The Tribunal held that although the assessee had taken excessive leeway with law, the matter should nevertheless be decided on real income and merits after proper verification. Accordingly, the Tribunal set aside the orders of the lower authorities and remanded the matter back to the Assessing Officer for fresh adjudication on a de novo basis after examining all material and evidence. The assessee was directed to fully cooperate and comply with future notices, and a cost of Rs 2,500 was imposed on the assessee. The appeal was allowed for statistical purposes.

ITAT Restores Section 12AB Registration Matter to CIT(E) Due to Violation of Natural Justice and Lack of Findings on Genuineness of Trust Activities

ISSUE: Whether the rejection of registration application under Section 12AB of the Income-tax Act, 1961 by the CIT(Exemption) on the ground of non-submission of documents and details was justified.

FACTS: The assessee trust, SUBHADRABEN PRATAPSINH CHARITABLE TRUST, filed Form 10AB seeking registration under Section 12AB. The CIT(Exemption), Ahmedabad issued notices seeking documents and details, but according to the department, no compliance or adjournment request was made. The application was therefore rejected and provisional registration, if any, was cancelled. Before the Tribunal, the assessee contended that the non-compliance was inadvertent, adequate opportunity was not granted, and the application was rejected mechanically without examining the charitable objects or genuineness of activities. The assessee also stated that it was ready to furnish all required documents.

HELD: The Tribunal observed that the application was rejected mainly due to non-submission of details and that the CIT(Exemption) had not recorded any finding regarding the charitable objects or genuineness of the trust’s activities. Considering the principles of natural justice, the Tribunal set aside the impugned order and restored the matter to the file of the CIT(Exemption) for fresh adjudication after granting adequate opportunity of hearing. The assessee was directed to furnish all required documents promptly. The appeal was allowed for statistical purposes.

SBI Not Assessee in Default for Non-Deduction of TDS on LTC Payments Made Under High Court Interim Protection: ITAT Ahmedabad

Issue: The issue before the Tribunal was whether the assessee, State Bank of India Currency Administration Cell, could be treated as an assessee in default under Section 201(1) and liable for interest under Section 201(1A) for failure to deduct TDS under Section 192 on Leave Travel Concession (LTC/LFC) payments made to employees who undertook journeys involving a foreign leg, despite interim directions of the Hon’ble Madras High Court restraining such deduction.

Fact: The Assessing Officer held that exemption under Section 10(5) read with Rule 2B was available only for travel within India and disallowed exemption where employees travelled through foreign destinations. Relying on the Supreme Court decision in State Bank of India v. ACIT, the AO treated the assessee as an assessee in default under Sections 201(1) and 201(1A). The CIT(A) confirmed the order holding that LTC exemption ceased once a foreign leg was involved. The assessee contended that during the relevant years it was bound by interim orders of the Madras High Court directing that LTC reimbursements would not be treated as income for TDS purposes and, therefore, no tax could be deducted.

Held: The Tribunal held that though the Supreme Court had settled the issue on merits against the assessee regarding exemption under Section 10(5), the assessee could not be treated as an assessee in default under Section 201(1) for the relevant period because it had acted in compliance with binding interim directions of the Madras High Court. The Tribunal followed earlier decisions of the Ahmedabad Bench, Agra Bench and Kerala High Court and held that when judicial orders prohibited deduction of tax, non-deduction could not amount to default. Consequently, the demand raised under Section 201(1) and interest levied under Section 201(1A) were deleted and both appeals of the assessee were allowed.

Delay condoned; ex parte CIT(A) order set aside; matter remanded to Assessing Officer for fresh adjudication with cost imposed.

Issue: The assessee filed an appeal against the order of NFAC/CIT(A) for AY 2020–21, where the first appellate order was ex parte due to non-representation, leading to a challenge on procedural fairness and denial of opportunity of hearing, along with a delay of 183 days in filing the appeal before CIT(A).

Fact: The Tribunal noted mitigating circumstances and condoned the delay in filing the appeal before CIT(A). It further observed that the CIT(A) passed an ex parte and non-speaking order without proper adjudication on merits, resulting in violation of principles of natural justice. However, the assessee’s non-compliance was also taken into account, and a cost of Rs. 5,000 was imposed, directed to be deposited in the Prime Minister National Relief Fund. The matter was remanded to the Assessing Officer for de novo adjudication with a direction to provide adequate opportunity of hearing and pass a speaking order.

Held: The Tribunal set aside the order of the CIT(A), restored the matter to the Assessing Officer for fresh adjudication, condoned the delay in filing appeal before CIT(A), imposed cost of Rs. 5,000 on the assessee, and allowed the appeal for statistical purposes.

Cash Deposits Out of Recorded Cash Sales Cannot Be Taxed Again Under Section 68 Without Proper Verification; Matter Restored to AO for Fresh Adjudication

ISSUE: Whether the addition of Rs. 57,25,000/- made under section 68 read with section 115BBE of the Income Tax Act, 1961 in respect of cash deposits during demonetization period was justified when the assessee claimed that such deposits represented realization of recorded cash sales forming part of disclosed turnover and whether adequate opportunity of hearing was granted during assessment proceedings.

FACT: The assessee, an individual engaged in trading of electronics through proprietary concerns M/s. SKS Enterprises and M/s. Omega Marketing, filed return of income for A.Y. 2017–18 declaring income of Rs. 4,11,940/-. The case was selected for scrutiny to examine cash deposits during demonetization. The Assessing Officer observed that cash deposits of Rs. 57,25,000/- were made in various bank accounts during demonetization period and treated the same as unexplained cash credits under section 68 read with section 115BBE on the ground that no satisfactory explanation was furnished. The assessee contended before the CIT(A) and Tribunal that the deposits represented realization of cash sales duly recorded in books of account and already offered as turnover amounting to Rs. 6,29,40,485/- out of total turnover of Rs. 23,75,21,243/-. It was further submitted that relevant documents including tax audit report, schedules and bank statements had been uploaded on the e-proceeding portal on 12.12.2019 and that only four working days’ time had been granted to respond to the show cause notice. The CIT(A) substantially confirmed the addition except granting relief of Rs. 2,00,000/-.

HELD: The Tribunal held that the Assessing Officer proceeded on the premise that no proper explanation or supporting evidence had been furnished despite the assessee having uploaded tax audit report, schedules and bank statements on the e-proceeding portal. It was observed that the Assessing Officer had not carried out verification of books of account, bank statements, turnover disclosed or the claim that the deposits represented realization of cash sales. The Tribunal further observed that once sales are duly recorded in books of account and corresponding receipts are offered as part of business turnover, the same amount cannot again be taxed separately as unexplained cash credit as it would result in impermissible double taxation. However, since factual verification of the claim was necessary, the Tribunal restored the entire issue relating to addition under section 68 read with section 115BBE to the file of the Assessing Officer for fresh adjudication with direction to examine books of account, bank statements, cash sales and supporting evidences after granting adequate opportunity of hearing to the assessee. The appeal was allowed for statistical purposes.

Charitable status upheld; nominal fee not treated as commercial activity, registration under Section 12AB and approval under Section 80G(5) directed to be granted.

Issue: The appeals concern rejection of registration under Section 12AB and approval under Section 80G(5) of the Income Tax Act, 1961 by the CIT(E), on the ground that the assessee trust’s activities were not charitable in nature and were allegedly commercial.

Fact: The assessee trust, engaged in skill and personality training since 1993, had earlier registration under Section 12A and had applied for renewal under Section 12AB along with Section 80G approval. The CIT(E) rejected the applications holding that the activities did not qualify as “education” under Section 2(15) and lacked genuineness, citing absence of voluntary contributions and treating the activities as commercial.

Held: The Tribunal held that even if the activities do not strictly fall under “education”, they fall within “advancement of general public utility”, and charging nominal fees does not make the activities commercial. Finding no adverse material to doubt genuineness, the Tribunal directed grant of registration under Section 12AB from the date of application and consequently also directed approval under Section 80G(5), allowing both appeals.

NFAC Order Set Aside; Matter Remanded to CIT(A) for Fresh Adjudication with Direction to Pass Speaking Order After Granting Proper Opportunity of Hearing

Issue: Whether the NFAC appellate order passed under Section 250 of the Income-tax Act is sustainable when it is alleged to be ex parte and rendered without effective consideration of the assessee’s detailed submissions, thereby violating principles of natural justice and requirements of a speaking order under Section 250(6).

Fact: The assessee, a private limited company, faced additions made in assessment under Section 143(3) for A.Y. 2015-16. In appeal proceedings, the assessee filed multiple detailed written submissions over a long period, supported by voluminous records. However, the appellate authority did not appear to have considered these submissions in the order, which lacked proper discussion of material placed on record.

Held: The order of the NFAC was set aside and the matter was remanded back to the CIT(A) for fresh adjudication on merits. The appellate authority has been directed to provide a reasonable opportunity of hearing, consider all evidences and submissions, and pass a reasoned speaking order in accordance with law. The appeal was allowed for statistical purposes.

Addition of Rs.11,30,000 deleted for lack of nexus between reopening reason and evidence; appeal allowed

Issue: The appeal concerned addition of Rs.11,30,000 treated as unexplained income on the allegation of transactions with M/s Apex Commotrade Pvt. Ltd. despite the assessee’s denial and lack of supporting evidence from the Revenue.

Fact: The assessee’s bank records showed receipt of Rs.11,30,000 from Rudraksha Dealer, not M/s Apex Commotrade Pvt. Ltd. The Assessing Officer proceeded with the addition solely on the assumption of transactions with Apex Commotrade Pvt. Ltd., without producing any corroborative material. Even the Departmental Representative conceded that no evidence existed linking the assessee to Apex Commotrade Pvt. Ltd., though the amount matched the bank entry.

Held: The addition was held unsustainable as it lacked any evidentiary basis and suffered from a complete absence of live link between the reopening reason and the assessed transaction. Accordingly, the addition of Rs.11,30,000 was deleted and the appeal of the assessee was allowed.

Ex-parte CIT(A) Order Set Aside; Matter Remanded to AO for De Novo Adjudication with Cost of Rs. 2,500 Imposed and Appeal Allowed for Statistical Purposes

Issue: The assessee’s appeal for AY 2019-20 was filed with a delay of 214 days against an ex-parte and non-speaking order passed by the NFAC/CIT(A) arising from assessment under section 147 read with section 144 of the Act, and also raised the grievance of denial of proper opportunity before the appellate authority.

Fact: The Tribunal condoned the delay after being satisfied with the affidavit explaining mitigating circumstances. It observed that the CIT(A) had passed an ex-parte order without proper discussion on merits, resulting in violation of principles of natural justice. The Department did not object to remand. The assessee sought opportunity to produce additional evidence, which was accepted in principle.

Held: The Tribunal set aside the order of the CIT(A) and remitted the matter to the Assessing Officer for de novo adjudication. The Assessing Officer was directed to pass a speaking order after granting adequate opportunity of hearing and considering additional evidence, while the assessee was also directed to cooperate and comply. A cost of Rs. 2,500 was imposed on the assessee for non-compliance, payable to the Prime Minister National Relief Fund. The appeal was allowed for statistical purposes.

Limited opportunity of hearing before rejection of Section 12AB registration and consequential denial of Section 80G approval warrants restoration of matter to CIT(E) for fresh adjudication.

ISSUE: Whether the rejection of the assessee’s application for registration under Section 12AB and consequential cancellation of provisional registration by the Ld. CIT(E) for alleged non-compliance and non-furnishing of documents was justified in law, and whether the assessee was entitled to one more opportunity for substantiating its claim. A further issue was whether rejection of approval under Section 80G solely on the ground of absence of valid registration under Section 12A/12AB could survive when the registration issue itself was restored for fresh consideration.

FACT: The assessee trust, namely Prarthana Foundation Charitable Trust, filed Form No. 10AB seeking registration under Section 12A/12AB of the Income-tax Act, 1961. During the proceedings, the office of the Ld. CIT(E), Ahmedabad issued notices requiring the assessee to furnish documents and details prescribed under Rule 17A(2). According to the department, despite service of notices, the assessee neither filed replies nor produced supporting documents and did not seek adjournment. Consequently, the Ld. CIT(E) rejected the application for registration, cancelled the provisional registration already granted, and directed the assessee to compute tax liability under Section 115TD. Simultaneously, the assessee’s application for approval under Section 80G(5) filed in Form No. 10AB was also rejected as non-maintainable on the ground that the assessee did not possess a valid registration under Section 12A/12AB, which was considered a mandatory pre-condition for grant of approval under Section 80G. The assessee challenged both orders before the Tribunal contending that only limited opportunity had been granted and that it was in a position to furnish all requisite documents and evidences.

HELD: The Tribunal held that the rejection of registration under Section 12AB was primarily based on non-compliance by the assessee in furnishing documents and details; however, considering that only limited opportunity of hearing had been granted and the proceedings involved serious consequences affecting charitable status, the assessee deserved one more effective opportunity to substantiate its claim. Accordingly, the Tribunal set aside the impugned order and restored the matter to the file of the Ld. CIT(E) for de novo adjudication after granting reasonable and adequate opportunity of hearing. The assessee was directed to furnish all documents prescribed under Rule 17A(2) and fully cooperate without seeking unnecessary adjournments. In relation to approval under Section 80G, the Tribunal observed that the rejection was solely consequential to the denial of registration under Section 12A/12AB and since the registration issue itself had been restored for fresh consideration, the issue of approval under Section 80G also required reconsideration. Therefore, the order rejecting approval under Section 80G was also set aside and restored to the file of the Ld. CIT(E) for fresh adjudication in accordance with law after deciding the registration proceedings. Both appeals of the assessee were accordingly allowed for statistical purposes.

Condonation of Delay Allowed and Matter Remanded to CIT(A) for Fresh Adjudication on Merits

Issue: The appeal before the Tribunal arose from the order of the National Faceless Appeal Centre (NFAC) dated 28.11.2025, which had dismissed the assessee’s appeal against a penalty order passed under section 271(1)(c) of the Income Tax Act, 1961, on the ground of concealment of income, primarily due to delay of 295 days in filing the appeal before the CIT(A).

Fact: The assessee, an individual engaged in ironing business, had filed return for AY 2015–16 declaring income of Rs.18,56,110/-. Penalty proceedings under section 271(1)(c) were concluded by the Assessing Officer on 27.04.2018. The appeal before CIT(A) was delayed by 295 days, which was explained through an affidavit stating that the case file was misplaced by the earlier tax consultant and the assessee had to change the consultant. Despite recording these reasons, the CIT(A) refused to condone the delay and dismissed the appeal in limine. Before the Tribunal, the Departmental Representative supported the impugned order, and no one appeared for the assessee.

Held: The Tribunal held that the delay was not deliberate and arose due to circumstances beyond the assessee’s control, constituting sufficient cause for condonation. Relying on the principles laid down by the Hon’ble Supreme Court in Collector, Land Acquisition, Anantnag & Ors. vs. Mst. Katiji and Inder Singh vs. State of Madhya Pradesh, the Tribunal condoned the delay of 295 days. Since the CIT(A) had not adjudicated the matter on merits, the Tribunal set aside the order and remanded the case to the CIT(A) for fresh adjudication after granting reasonable opportunity of hearing to the assessee. The appeal was allowed for statistical purposes.

ITAT Remands Quantum and Penalty Appeals for Fresh Adjudication Due to Ex-Parte Disposal by CIT(A)

Issue: Whether the reassessment proceedings under sections 147/148 of the Income Tax Act and the addition of Rs.1,24,88,907/- under section 69A, along with penalty under section 271(1)(c), were sustainable when the assessee failed to comply before the Assessing Officer and CIT(A), and whether the ex-parte appellate orders required reconsideration.

Facts: The assessee, a director of M/s Planet National Holdings, had not filed the return of income for AY 2011-12. Information received from the Investigation Wing revealed that the assessee had received Rs.1,24,88,907/- through cheque from Shri Dhansukhlal Shah, partner of M/s Daya Builders, Mumbai. Since the assessee failed to explain the source and genuineness of the amount, reassessment proceedings were initiated under section 148 and assessment was completed ex-parte under sections 147 r.w.s. 144 by making addition under section 69A. The CIT(A) upheld the reopening as well as the addition and also confirmed penalty under section 271(1)(c), primarily on account of non-compliance by the assessee. Before the Tribunal, the assessee contended that both the quantum and penalty appeals were decided ex-parte without proper adjudication on merits and sought remand for fresh consideration.

Held: The Tribunal observed that the assessee had indeed failed to furnish explanations regarding the source and genuineness of the deposits before the lower authorities, and the CIT(A) had decided the appeals ex-parte. Considering the overall facts and in the interest of justice, the Tribunal refrained from expressing any opinion on merits and set aside the impugned orders. The matters relating to reopening, quantum addition, and penalty were remanded back to the file of the CIT(A) for fresh denovo adjudication after providing adequate opportunity of hearing to the assessee. Both appeals were accordingly allowed for statistical purposes.

Reassessment Quashed as Notice Barred by Limitation; Entire Proceedings Held Void Ab Initio

ISSUE; The present appeal challenges the order of CIT(A) dated 25.02.2025 for AY 2015–16, mainly disputing validity of reassessment proceedings under section 147/148, alleged violation of natural justice due to short notice, and addition of Rs. 433,57,29,066 under section 68 on account of alleged bogus sales treated as unexplained cash credits.

FACT: The assessee declared income of Rs. 11,85,921 for AY 2015–16. Reassessment was initiated based on Investigation Wing information alleging accommodation entries through certain entities. Assessment was completed under section 147 read with section 144B on 29.05.2023 making addition of Rs. 433,47,29,066 by treating sales as bogus. CIT(A) upheld reopening and addition, relying on investigation reports and absence of supporting evidence like transport records and stock details. The assessee argued lack of adequate opportunity, invalid reopening, and that credits were genuine sales receipts.

HELD: The Tribunal held that notice under section 148 issued on 07.06.2021 for AY 2015–16 was barred by limitation in view of binding Supreme Court rulings including Rajeev Bansal and Deepak Steel & Power. Since the foundational notice itself was invalid, all subsequent proceedings including order under section 148A(d) and assessment order were held void ab initio. Consequently, the reassessment order and CIT(A) order were quashed, and the additions were not examined on merits as they became academic. The appeal was allowed.

Matter remanded to AO for fresh adjudication due to non-supply of complete DGFT data; additions set aside for statistical purposes.

Issue: Whether the addition made by the Assessing Officer on account of unreconciled differences in import and export figures as reported by the DGFT and those reflected in the assessee’s books is justified.

Fact: The assessee, engaged in manufacturing and trading activities, filed return declaring income of Rs.11,65,47,682. During assessment, discrepancies were found between DGFT data and assessee’s declared figures of imports and exports. The assessee submitted partial reconciliation and stated that complete DGFT details were not provided. The Assessing Officer made additions of Rs.2,12,263 for imports and Rs.63,41,446 for exports for unreconciled differences, which were confirmed by the CIT(A).

Held: The Tribunal observed that partial reconciliation was already furnished and complete DGFT data was not properly shared with the assessee. In the interest of natural justice, the matter was restored to the Assessing Officer for de novo adjudication with a direction to supply full DGFT data to the assessee and allow proper reconciliation. The additions were set aside for statistical purposes and the appeal was allowed accordingly.

Delay condoned on medical grounds; FTC allowed subject to verification and matter remanded for fresh adjudication

Issue: Whether the delay of 198/205 days in filing appeals before ITAT could be condoned and whether denial of Foreign Tax Credit (FTC) on account of belated filing of Form 67 along with other additions under the Income Tax Act was sustainable in law.

Fact: The assessee filed appeals for AYs 2017-18 and 2018-19 against NFAC orders with delay explained through affidavit citing serious lumbar spine medical condition, hospitalization, and major spinal surgery. The AO had made additions relating to disallowance of FTC under sections 90/91, disallowance under section 37, and section 40(a)(ia), which were confirmed by CIT(A) through brief orders. The assessee contended that Form 67 was filed before completion of assessment though belated, while claiming FTC under DTAA. The Revenue opposed relying on procedural compliance requirements and cited judicial precedent.

Held: The Tribunal condoned the delay considering genuine medical hardship and admitted the appeals. It held that filing of Form 67 is directory and not mandatory, and FTC cannot be denied merely for procedural delay, subject to verification of eligibility. The matters relating to additions and FTC were remanded to the AO for fresh adjudication after granting due opportunity to the assessee, and the appeals were partly allowed for statistical purposes.

Processing and extraction of garnet sand from beach sand amounts to “manufacture”; assessee entitled to Section 10B deduction.

Issue: Whether the activity of extraction, separation, processing, and grading of garnet from raw beach/river sand amounts to “manufacture” under Section 2(29BA) of the Income Tax Act, 1961, thereby entitling the assessee, a 100% Export Oriented Unit, to deduction under Section 10B of the Income Tax Act, 1961 for Assessment Years 2009-10 to 2011-12.

Facts: The assessee was engaged in processing raw beach/river sand into industrial garnet through multiple technical stages including spiral separation, wet screening, cross-flow separation, rare earth magnetic separation, purification, and precision grading. The Assessing Officer denied deduction under Section 10B on the ground that the activity was merely cleaning of sand and did not constitute manufacture, relying on the decision in Lucky Minmat Pvt. Ltd. v. CIT. The CIT(A) allowed the claim by relying on earlier Tribunal decisions including ACIT v. Vetrivel Minerals and Trimex Sands Pvt. Ltd. v. PCIT. The assessee also demonstrated that the process transformed raw sand into a commercially distinct industrial product and that similar activities had previously been accepted by the Revenue as manufacturing for deduction purposes.

Held: The Tribunal held that the assessee’s activities amounted to “manufacture” within the meaning of Section 2(29BA). It observed that the process involved substantial transformation of raw sand into a distinct industrial garnet product with different character, name, and use. The Tribunal relied on earlier coordinate bench decisions and the judgment of the Madras High Court affirming that such mineral processing activities constitute manufacturing. Accordingly, the assessee was held entitled to deduction under Section 10B, and the disallowances made by the Assessing Officer for AYs 2009-10 to 2011-12 were directed to be deleted. The Revenue’s appeals were dismissed.

Reassessment Notice Quashed as Time-Barred under Section 149 Applying Rajeev Bansal Principle

ISSUE: Whether the notice issued under section 148 of the Income Tax Act on 27/07/2022 was barred by limitation under section 149, thereby rendering the reassessment proceedings under section 147 invalid.

FACTS: The assessee filed a return for AY 2014–15 declaring Rs. 2,19,770. A notice under section 148 was originally issued on 22/06/2021 (old regime), later deemed as a section 148A(b) notice per Ashish Agarwal. Relevant material was supplied on 26/05/2022, granting time till 13/06/2022 for response (no reply filed). The AO passed an order under section 148A(d) and issued a fresh notice under section 148 on 27/07/2022, followed by an addition of Rs. 2,36,97,035 under section 68. The surviving limitation period, computed as per Rajeev Bansal, was 9 days (till 22/06/2022), but the notice was issued beyond this date.

HELD: Applying the Supreme Court rulings in Ashish Agarwal and Rajeev Bansal, the tribunal held that the notice dated 27/07/2022 was time-barred as it exceeded the permissible surviving limitation period. Consequently, the notice was void ab initio, and the entire reassessment proceedings and resultant order under section 147 r.w. 144B were quashed. Appeal allowed in favour of the assessee.

Tribunal remands closing stock valuation dispute to AO for fresh verification; addition set aside subject to AS-2/ICDS compliance

ISSUE: Whether the addition of Rs. 1,36,55,830 for alleged undervaluation of closing stock—based on absence of bifurcation and non-verification of cost—was justified, and whether the assessee’s method of valuation (cost or NRV, using weighted average cost) was properly examined by the lower authorities.

FACTS: The assessee, engaged in manufacturing and sale of gold ornaments, valued closing stock at cost or NRV whichever is lower, applying the weighted average cost method in line with AS-2 and ICDS-II. The AO made an addition due to lack of bifurcation of stock (18 ct., 22 ct., gold bars) and absence of verifiable cost details, adopting market value instead. CIT(A) upheld this view. However, records showed that the assessee had furnished item-wise stock details and claimed consistent accounting practice, which were not adequately examined by the authorities.

HELD: The tribunal set aside the orders of the lower authorities and remanded the matter to the AO for de novo adjudication, directing proper verification of the assessee’s valuation method and supporting details. It held that if the valuation is found compliant with prescribed accounting standards, no addition should be made; thus, the appeal was allowed for statistical purposes.

Matter Restored to CIT(A) for Fresh Adjudication After Reconsideration of Delay Condonation Request

Issue: The issue before the Tribunal was whether the learned CIT(A) was justified in dismissing the assessee’s appeals for assessment years 2020-21 and 2022-23 solely on the ground of delay in filing the appeals, without adjudicating the additions made by the Assessing Officer on merits, and whether the delay deserved condonation.

Fact: The assessee filed appeals against the orders passed by the learned CIT(A) under section 250 of the Income Tax Act. The appeals before the CIT(A) were dismissed due to a delay of 179 days in filing. The assessee contended that he was not well versed with income tax procedures and had completely relied upon his Chartered Accountant for compliance matters. It was submitted that the assessee was under a bona fide belief that the appeals had been filed within time, but later discovered that the previous Chartered Accountant had filed them belatedly. The CIT(A) rejected the explanation holding that it was vague and reflected lack of due diligence.

Held: The Tribunal held that, in the interest of justice and fair play, the assessee should be granted one more opportunity to explain the reasons for delay before the learned CIT(A). Accordingly, the Tribunal restored the matter to the file of the CIT(A) for fresh adjudication after reconsidering the assessee’s request for condonation of delay. The Tribunal directed the assessee to submit all supporting documents and affidavits and to appear on all hearing dates without default. Consequently, the impugned orders were set aside and the appeals were allowed for statistical purposes.

ITAT restricted demonetization cash deposit addition to 10% after accepting agricultural income and supporting evidences furnished by assessee.

Issue: Whether the addition of Rs.6,80,000 made under section 69A on account of cash deposits during the demonetization period was justified, when the assessee explained the deposits through opening cash balance, agricultural income, salary income, and bank withdrawals, and whether the agricultural income declared by the assessee could be accepted on the basis of land records and supporting documents.

Facts: The assessee filed return of income for AY 2017-18 declaring taxable income of Rs.2,93,380 and exempt agricultural income of Rs.2,96,050. During scrutiny assessment, the AO noticed cash deposits of Rs.11,50,000 in cooperative bank accounts during demonetization and sought explanation. The assessee submitted cash flow statements, bank statements, proof of agricultural land holdings of 28 bighas, salary income details, withdrawals from bank, and evidence of agricultural operations. The AO accepted only Rs.4,70,000 as explained cash availability and treated the balance Rs.6,80,000 as unexplained money under section 69A. The CIT(A) confirmed the addition. Before the Tribunal, the assessee contended that all supporting evidences regarding agricultural income, opening cash, and other sources had been furnished and were ignored by the lower authorities.

Held: The Tribunal condoned the delay of 47 days in filing the appeal considering the assessee’s illness and in the interest of justice. On merits, the Tribunal observed that the assessee had produced substantial documentary evidence including land records, cash flow statements, bank statements, salary income details, and proof of agricultural activities, which were not properly examined by the AO. However, since some documents were self-serving in nature, the Tribunal held that complete deletion of the addition was not justified. To balance the interests of justice and revenue protection, the Tribunal restricted the addition to 10% of Rs.6,80,000, amounting to Rs.68,000, taxable at normal rates and not under section 115BBE. Accordingly, the appeal of the assessee was partly allowed.

ITAT Remands Section 68 Addition Matter for Fresh Examination Due to Non-Consideration of Assessee’s Evidence by AO and CIT(A)

Issue: Whether the addition of Rs. 80,00,000 made under Section 68 of the Income Tax Act on account of share capital and share premium received by the assessee was justified, despite the assessee claiming to have furnished documentary evidence proving the identity, creditworthiness of investors, and genuineness of the transactions, and whether the rejection of additional evidence under Rule 46A by the Ld. CIT(A), NFAC was proper.

Fact: The assessee company received share capital and share premium from various investor companies during AY 2016-17. The case was selected for limited scrutiny to verify the source and genuineness of such receipts. During assessment proceedings, the assessee furnished documents including incorporation certificates, MOA/AOA, financial statements, valuation reports, bank statements, and ledger accounts. Notices under Section 133(6) were issued to investor companies, and most investors confirmed the investments along with supporting documents. However, the Assessing Officer treated the amount of Rs. 80,00,000 as unexplained cash credit under Section 68 alleging failure to establish identity, creditworthiness, and genuineness. The Ld. CIT(A), NFAC confirmed the addition and refused to admit additional evidence filed under Rule 46A, despite the assessee explaining that certain documents could not be uploaded earlier due to technical glitches.

Held: The Tribunal observed that the evidences, documents, and detailed submissions filed by the assessee were not properly considered either by the Assessing Officer or by the Ld. CIT(A). It held that the authorities below failed to adequately examine the material placed on record before sustaining the addition under Section 68. Accordingly, the matter was remanded back to the file of the Assessing Officer for fresh adjudication on merits after considering all evidences and submissions furnished by the assessee. The Tribunal directed the Assessing Officer to provide adequate opportunity of hearing to the assessee and ordered the appeal to be allowed for statistical purposes.

ITAT upholds CIT(A): assessment quashed as void ab initio for failure to issue mandatory draft order under section 144C in TP adjustment

ISSUE: Whether the assessment order passed u/s 153A r.w.s. 263 without issuing a mandatory draft assessment order u/s 144C(1) to an “eligible assessee” was valid in law, and whether such defect was merely procedural or a jurisdictional illegality.

FACTS: The assessee company, engaged in manufacture/export of garnet and ilmenite, was subjected to search proceedings u/s 132. Pursuant to revision proceedings u/s 263, the AO referred specified domestic transactions to the TPO u/s 92CA. The TPO proposed an upward TP adjustment of Rs.39,21,15,575/- relating to inter-unit transfer pricing between the Srikakulam EOU and Visakhapatnam SEZ unit. The AO directly incorporated the adjustment and passed the final assessment order dated 30.03.2024 u/s 153A r.w.s. 263 without issuing a draft assessment order u/s 144C(1). The assessee challenged the assessment before CIT(A), contending that it was an “eligible assessee” and denial of draft order deprived it of the statutory right to approach the DRP. CIT(A) accepted the contention and annulled the assessment as void ab initio. Revenue appealed before the Tribunal arguing that the omission was only a curable procedural defect and matter should be remanded to AO for fresh compliance.

HELD: The Tribunal dismissed the Revenue’s appeal and upheld the order of CIT(A). It held that once TP adjustment prejudicial to the assessee was proposed, issuance of a draft assessment order u/s 144C(1) became mandatory. Failure to issue such draft order was not a procedural irregularity but a foundational jurisdictional defect rendering the assessment void ab initio and non est in law. Section 292B could not cure absence of jurisdiction. The Tribunal relied on Vijay Television (Madras HC), Enfinity Solar Solutions, JCB India Ltd., SHL India Pvt. Ltd., Sumitomo Corporation India Pvt. Ltd. and assessee’s own earlier case. It further held that the matter could not be remanded merely to cure the defect, since a void assessment cannot be revived by conferring fresh jurisdiction on the AO. Consequently, the assessment order dated 30.03.2024 was annulled and Revenue’s appeal was dismissed.

ITAT Restores 12AB Registration Matter to CIT(E) for Fresh Opportunity of Hearing on Principles of Natural Justice

Issue: whether the ex parte order passed by the Commissioner of Income Tax (Exemption), Ahmedabad rejecting registration under Section 12AB of the Income Tax Act without adequate participation from the assessee trust should be sustained, or whether another opportunity of hearing should be granted in the interest of natural justice.

Fact: The assessee trust filed an appeal against the order dated 18.07.2025 whereby registration under Section 12AB was denied. The assessee submitted that although two hearing opportunities were granted on 09.04.2025 and 22.05.2025, it had already furnished various details and had earlier received provisional registration in Form 10AC on 04.07.2024 for Assessment Years 2025-26 to 2027-28. The assessee requested one final opportunity to submit all relevant documents before the CIT(E). The Revenue opposed the request on the ground of non-cooperation by the assessee but agreed that, if granted, it should be treated as the final opportunity.

Held: The Tribunal observed that the assessee had already been granted provisional registration and that denial of final registration occurred due to non-participation in the proceedings. Considering the principles of natural justice, the Tribunal set aside the matter to the file of the CIT(E) with a direction to provide one final opportunity of hearing to the assessee for adjudication of registration under Section 12AB on merits. The assessee was directed to file all necessary and relevant documents before the CIT(E). Accordingly, the appeal was treated as allowed for statistical purposes.

ITAT Dismisses Revenue Appeal, Upholds Deletion of Interest Disallowance, Section 68 Additions and Purchase Discrepancy Adjustment

ISSUE: Whether the CIT(A) was justified in (i) deleting disallowance of interest expense of Rs. 1,26,30,730, (ii) admitting additional evidence and deleting additions under Section 68 and business income, and (iii) deleting addition of Rs. 1,15,79,384 arising from alleged purchase discrepancies.

FACTS: The Assessing Officer disallowed interest alleging diversion of borrowed funds, made additions under Section 68 for unsecured loans, and added Rs. 1,15,79,384 due to mismatch in purchases. CIT(A) found that the assessee had sufficient interest-free funds, no nexus was established between borrowed funds and non-business use, and loans were genuine supported by bank records, TDS, PAN, and confirmations. The purchase difference was reconciled as arising from TCS treatment, discounts, and accounting differences without excess claim of expenditure.

HELD: The Tribunal upheld CIT(A)’s order, holding that the AO failed to establish nexus for interest disallowance, additions under Section 68 were rightly deleted as loans were genuine, and the purchase discrepancy addition was unjustified. All grounds raised by the Revenue were dismissed and the appeal was rejected.