ITAT allows section 80IE deduction where initial scrutiny verified new undertaking, no prior disallowance, and records prove eligibility conditions; decides merits on available materials despite lower ex parte order.

ORDER

PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)] dated 22.07.2025, DIN & order No. ITBA/NFAC/S/250/2025-26/ 1078777515(1) as per the grounds raised by the assessee after going through the grounds, the substantive grievance raised by the assessee is the deduction was not granted to the assessee by the revenue authorities u/s 80IE of the Act.

2. Briefly stated the facts of the case are that the assessee filed its ITR as per the provision of section of 139(1) of the Act on 16.10.2023 declaring total income at Rs. 3,69,890/-. The case was selected for scrutiny under CASS for the following reasons:

(i) High related party transactions and undertaking claiming deduction u/s 80IA/80IC etc.

3. Accordingly, notice was issued to the assessee. Subsequently, other statutory notices were issued to the assessee and assessee furnished reply in support of questionnaire issued by the AO. During the course of assessment proceedings, the AO obtained information after exercising power u/s 133(6) of the Act, certain purchase parties to verify the purchase claimed by the assessee of the relevant assessment year. Further, as per notice u/s 142(1) of the Act dated 22.02.2025, the assessee was asked to give justification so as to prove that it fulfils all the conditions given u/s 80IE of the Act and the assessee qualify for the said deduction along with supporting documentary evidences. However, the assessee did not provide to the following details and documents:

“3.4 Upon reviewing the submissions and documents provided by the assessee, the following variations are proposed based on the findings of the assessment:

a) Vide notice u/s. 142(1) of the I.T Act dated 22.02.2025, the assessee was asked to give justification so as to prove that it fulfils all the conditions given u/s 801E of the I.T Act and the assessee qualifies for the said deduction along with supporting documentary evidence. However, the assessee has not provided following details and/or documents.

i) The assessee has not submitted documentary evidence to prove that it produces or manufacture eligible articles/ or thing. IEM from DIPP do not show that your product is eligible for deduction u/s 801E

ii) The assessee has not given explanation and supporting documentary evidence to prove that the assessee fulfils the condition given u/s 801E(3) of the I.T Act.

iii) The assessee has also not given explanation/write-up/justification and supporting evidence to show that provisions u/s.801E(4) of the I.T Act do not hit its claim of deduction u/s 80IE of the 1.T Act.

iv) The assessee has also not given explanation/write-up/justification and supporting evidence to show that the provisions u/s 801E(5) of the IT Act do not hit its claim of deduction u/s, 801E of the I.T Act.

In view of the above, kindly explain as to why it should not be held that you do not fulfill all the conditions mentioned u/s.80IE of the I.T. Act and accordingly your claim of deduction u/s.801E of the I.T. Act amounting to Rs.6,35,35,087/- should not be rejected and brought to tax. Please ensure that your reply should be presented systematically and with supporting documentary evidence

b) The assessee has submitted statement of purchase and sale of goods to related parties in given format. However, the assessee has not submitted any justification to show that said transactions are comparable with s