The issue was whether high cash sales recorded before demonetisation, and subsequently deposited, could be taxed as unexplained income. The ITAT ruled that since the sales were already recorded, audited, and offered for tax, the deposits could not be taxed again under Section 68 or 69. The key takeaway is that when books of accounts are accepted and corroborated by stock and VAT returns, genuine sales receipts cannot be subjected to double taxation based on mere suspicion or averages.
This ITAT ruling draws a clear line: it upheld the legal and evidence-based addition of ₹6.12 lakh for deemed rental income on multiple house properties, but simultaneously deleted the entire ₹5,87,500 addition for unexplained cash credit, condemning the use of arbitrary 50% estimations by tax authorities.
The Tribunal deleted the ₹10 lakh penalty, ruling that an estimated addition based on the non-genuineness of purchases does not constitute concealment or furnishing inaccurate particulars. The decision reaffirms the Supreme Court principle that making an unsustainable claim does not automatically attract a penalty.
The ITAT significantly reduced an unexplained cash credit addition from Rs. 32.86 lakh to a lump-sum of Rs.4 lakh, reasoning that a regular exporter with maintained books cannot have the entire demonetisation deposit treated as unexplained. Crucially, the Tribunal directed the tax to be computed at normal rates, holding that Section 115BBE (higher tax rate) does not apply to the financial year 2016-17.
The ITAT invalidated a reassessment order because the Assessing Officer (AO) failed to make any addition on the sole issue for which the reassessment was initiated (cash deposits). Citing binding precedent, the Tribunal ruled that once the reason to believe ground is not established, the AO loses jurisdiction to make additions on entirely new issues, quashing the entire assessment.
The ITAT deleted a penalty under Section 271(1)(c), ruling that once the capital gains deductions (Section 54EC/54F) are substantially allowed in the quantum appeal, there’s no concealment of income. The Tribunal emphasized that filing a belated return within Section 139(4) does not automatically invalidate a genuine deduction claim, making the penalty unsustainable.
The ITAT ruled that interest on enhanced compensation for the compulsory acquisition of agricultural land is fully exempt from income tax, citing Section 96 of the RFCTLARR Act, 2013. The Tribunal held that this special law overrides the general tax provisions (Sections 56 and 145A), deleting the entire Rs.97.44 lakh addition.
This Income Tax appeal addressed whether a 5% infrastructure fee should be deducted based on gross bills or actual cash receipts. The Bombay High Court upheld the lower authorities decision, emphasizing that the expenditures deduction must strictly follow the contractual clause, which explicitly linked the 5% payment to total receipts, thereby restricting the allowable deduction.
Hyderabad ITAT set aside a tax order dismissing an appeal for non-prosecution. Citing Bombay HC’s Premkumar Luthra ruling, the Tribunal held that the CIT(A) must adjudicate the merits under Section 250(6).
Charitable Trust Registration Rejected on Technicality? ITAT Agra rules CIT(E) must allow rectification for wrong clause application (12A) and restore for fresh merit-based review and hearing.
