Income Tax Annual Digest 2024: ITAT Cases [Part 23]

This annual round-up analytically summarizes all the Income Tax related Orders of the Income Tax Appellate Tribunal (ITAT) Benches of India reported at Taxscan.in during 2024.

Capital Gains Arising Out of Sale of Long-Term Capital Assets Shall Be Taxable at Rate of 20% u/s 112 Of Income Tax Act: ITAT [Read Order] SKF India Limited Mahatma Gandhi Memorial Building vs Dy. Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 1305

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that capital gains arising from the sale of long-term capital assets shall be taxable at a rate of 20% under Section 112 of the Income Tax Act,1961.

Ultimately, the ITAT ruled in favor of the assessee, affirming that capital gains arising from the sale of long-term capital assets should be taxable at the rate of 20% under Section 112 of the Act.

ITAT sets aside CIT(A) Order, Remands Case to AO for Fresh Adjudication due to Denial of Fair Hearing [Read Order] Sanjeev Mittal vs ACIT (Central Circle) CITATION:   2024 TAXSCAN (ITAT) 1303

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and remanded the case to the Assessing Officer ( AO ) for fresh adjudication, emphasizing the denial of a fair hearing.

The two member bench comprising Sudhir Pareek ( Judicial Member ) and S Rifaur Rahman ( Accountant Member ) set aside the CIT(A)’s order and remanded the case, noting that proper verification of the additions made was crucial. In conclusion the appeal was allowed for statistical purposes.

Purchase of One Residential House with Modifications of Two Adjacent Properties  Amounts to a Single Residential House: ITAT Allows S.54F Exemption Claim [Read Order] Nakul Aggarwal vs Assistant Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 1307

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) in Mumbai granted Section 54F exemption under the Income Tax Act 1961 ( ITA ) to an assessee/ appellant,  Mr. Nakul Aggarwal, recognizing that his purchase of one residential house with modifications of two adjacent properties amounts to a single residential house.

In result, in its decision, the ITAT instructed the ACIT to grant full exemption under section 54F of the tax statute, allowing the assessee’s appeal and dismissing the revenue’s cross-appeal.

Determinate Beneficiaries to be Taxed as “Individual”, Not as “Association Of Persons” at Marginal Rate: ITAT [Read Order] Executor to Estate of Amirali J. Dossa vs Income Tax Officer Mumbai CITATION:   2024 TAXSCAN (ITAT) 1306

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) “SMC” Bench in Mumbai, ruled that determinate beneficiaries should be taxed as “Individual” and not as “Association Of Persons” at a marginal rate.

Consequently, the ITAT directed the AO to apply individual tax rates for the estate of Mr. Dossa. The Tribunal pronounced its decision on October 14, 2024, in the open court, granting relief to the appellant and instructing that the excessive tax and interest charges be removed.

Eligibility Conditions are met by withholding of Tax by Source Country: ITAT allows FTC Claim under India-Japan DTAA [Read Order] Amarchand Mangaldas & Suresh A Shroff & Co vs Assistant Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 1308

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that eligibility conditions for claiming Foreign Tax Credit ( FTC ) under the India-Japan Double Taxation Avoidance Agreement ( DTAA ) were met by the withholding of tax by the source country, Japan.

The two member bench comprising Beena Pillai (Judicial Member) and Ratnesh Nandan Sahay (Accountant Member) held that the assessee was entitled to foreign tax credits ( FTC ) for taxes withheld in Japan and the other mentioned jurisdictions. Consequently, the assessee’s appeal was allowed.

Income from Sale of White Button Mushroom Cultivated Indoors is still “Agricultural Income”, not “Business Income”: ITAT [Read Order] Fresh Bowl Horticulture Pvt vs Income Tax Officer Mumbai CITATION:   2024 TAXSCAN (ITAT) 1310

The Income Tax Appellate Tribunal ( ITAT ) in Mumbai recently ruled that income from the sale of white button mushrooms cultivated indoors should be classified as “agricultural income” under Section 10(1) of the Income Tax Act ( ITA ), exempting it from income tax and not as “Business Income”.

Thus, the ITAT concluded that the assessee’s activities constituted agricultural operations, with income from the cultivation and sale of mushrooms qualifying as agricultural income. Accordingly, the income claimed under Section 10(1) of the tax statute was deemed exempt, and the appeal was allowed in the assessee’s favor.

AO made S.68 addition based on the Third Party Statement, Discrediting Evidence: ITAT deletes addition [Read Order] Konark Fixtures Ltd vs DCIT CITATION:   2024 TAXSCAN (ITAT) 1311

In a recent ruling, the Mumbai bench of the Income Tax Appellatte Tribunal ( ITAT ) allowed the appeal filed by the assessee and deleted the addition made by AO under Section 68 of the Income Tax Act 1961, as it was solely based on the third-party evidence, without considering the submissions made by the assessee.

The ITAT bench observed that AO has clearly ignored the information submitted by the assessee and unilaterally made an addition under Section 68 of the Income Tax Act, solely on the basis of a statement provided by a third party, discrediting the evidence furnished by the assessee. The bench was of the opinion that the statement of Shri Vipul Vidur Bhatt cannot be used as reliable evidence.  The bench, comprising Girish Agarwal ( Accountant Member ) and Pavan Kumar Gadale ( Judicial Member ) allowed the appeal filed by the assessee.

Failure to show Documentary Evidences on Source of Rs. 96L Cash Deposit: ITAT directs to submit relevant Financials, ITR and Bank Statements before AO [Read Order] Ms. Nipa Kashyap Patel vs Assistance Commissioner of Income Tax 25(3) CITATION:   2024 TAXSCAN (ITAT) 1309

In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ), directed the Assessing Officer ( AO ) to reassess cash deposits of almost Rs 1 crore.

The bench also directed the appellant to file all necessary documents explaining the source of cash deposits of Rs. 96,00,000 , including relevant financial statements, bank statements, ledger accounts, and ITR to substantiate the availability of cash in hand amounting to Rs. 52,47,711 as of 01-04-2015.

No Reason to Doubt Source of Funds as Loans in Bank Statement: ITAT dismisses Revenue’s Appeal [Read Order] Commissioner of Income Tax vs Ashok Jasraj Jain CITATION:   2024 TAXSCAN (ITAT) 1312

In a recent judgment, the Income Tax Appellate Tribunal ( ITAT ) in Mumbai ruled in favor of an assessee, Ashok Jasraj Jain, dismissing an appeal by the Revenue Department that questioned the legitimacy of loans the assessee received for a property purchase in the 2011-12 assessment year, observing  “no reason to doubt the source of funds”  the assessee had used as loans in bank statement.

Thus, the tribunal quashed the assessment, dismissing the Revenue’s appeal and allowing the assessee’s cross-objection, asserting that the reasons for reopening the case were based on “certain presumptions” without concrete material evidence.

Reliance Solely on Investigation Report: ITAT upholds Deletion of ₹1.5Cr Addition [Read Order] ACIT 321 vs Amal Corporation CITATION:   2024 TAXSCAN (ITAT) 1313

The Income Tax Appellate Tribunal ( ITAT ), Mumbai, recently in a judgment, upheld the deletion of a ₹1.5 crore addition initially imposed on one assessee/appellant, Amal Corporation, as it was observed that the addition was made with sole reliance on an investigative report without specific evidence to substantiate the claims against the assessee, and hence the addition could not be justified.

Upon further appeal by the Revenue, the ITAT reaffirmed the CIT(A)’s decision. The Tribunal bench of Mr Amit Shukla and Mr Renu Jauhri observed that while an investigation report might justify further inquiries, it cannot alone substantiate income additions without corresponding evidence implicating the taxpayer. The Tribunal noted that the AO failed to demonstrate that the assessee’s loans were fraudulent or that funds from the Jain group directly benefited the company. Since the assessee had fulfilled its evidentiary obligations and established the legitimacy of its financial sources, the ITAT ruled that the deletion of the addition was appropriate. In result, the Revenue’s  appeal was dismissed.

Substitution of Legally Sustainable View taken by AO u/s 263 Revision Proceedings Invalid: ITAT [Read Order] Kiri Industries Ltd. vs Principal Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 1314

In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) invalidated the action of the Principal Commissioner of Income Tax ( PCIT ) in initiating revisionary proceedings under Section 263 of the Income Tax Act, 1961, as the Assessing Officer ( AO ) had taken a legally plausible view.

The ITAT bench observed that the view taken by the AO was a legally plausible view, and thus the PCIT has erred in invoking revisionary jurisdiction under Section 263 of the Income Tax Act. The bench, comprising of Annapurna Gupta ( Accountant Memeber ) and Siddhartha Nautiyal ( Judicial Member), allowed the appeal filed by the assessee.

FDRs Created as Business Necessity Mandated by PNB for Infrastructure Project Financing: ITAT allows Deduction u/s 80-IA(4) [Read Order] Kalthia Infra-Con Pvt.Ltd vs The ITO Ward CITATION:   2024 TAXSCAN (ITAT) 1315

The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed a deduction under Section 80-IA(4) of the Income Tax Act, 1961, stating that the Fixed Deposit Receipts ( FDRs ) mandated by Punjab National Bank ( PNB ) as a financing requirement for an infrastructure project, were a business necessity.

The tribunal referenced the Gujarat High Court’s ruling in CIT v. Shah Alloys Ltd. and a similar ITAT decision in Aqualfil Polymers Co. Pvt. Ltd., where interest from FDRs linked to business loans was treated as business income. Therefore, the tribunal allowed the deduction under Section 80-IA(4) of the Income Tax Act. The assessee’s appeal was allowed.

Reassessment Notice sent to Tax Consultant’s email ID goes Uninformed to Taxpayer: ITAT remands Notice [Read Order] Joykutty Selistine Puthuvayal House Palliserrikal vs The ITO CITATION:   2024 TAXSCAN (ITAT) 1316

In a recent ruling, the Income Tax Appellate Tribunal remanded the Income Tax notice, which was sent to the Email ID of the tax consultant of the taxpayer, in which he failed to inform the assessee about the notices.

The ITAT bench, comprising of Suchitra Kamble ( Judicial Member ) and Makarand V. Mahadeokar ( Accountant Member ) allowed the appeal filed by the assessee for statistical purposes.

ITAT Restores Matter to AO for De Novo Adjudication on Alleged Bogus Purchases, Allowing Additional Evidence [Read Order] Income Tax Officer vs Greta Energy Limited CITATION:   2024 TAXSCAN (ITAT) 1317

The Chennai Bench Of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Assessing Officer ( AO ) for de novo adjudication concerning alleged bogus purchases by the assessee, allowing the consideration of additional evidence.

The two-member bench, consisting of Manu Kumar Giri (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member), restored the matter to the AO for de novo adjudication, which included evaluating the new evidence presented. The issue of deduction under Section 80-IA was also left open for reconsideration if needed. Consequently, the cross-appeals were allowed for statistical purposes.

Relief to ASAN Memorial Association: ITAT Approves Statutory Deduction Claim Despite Filing Error in Income Tax Return [Read Order] ASAN Memorial Association vs The Dy. Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 1318

The Chennai Bench of Income Tax Appellate Tribunal ITAT) granted relief to ASAN Memorial Association, allowing its statutory deduction claim under Section 11(1)(a) of Income Tax Act,1961  despite a filing error in the income tax return.

The two member bench comprising Mahavir Singh(Vice President) and Jagadish(Accountant Member) set aside the orders of the CIT(A) and CPC, instructing the Assessing Officer (AO) to allow the deduction under Section 11(1)(a). In conclusion,the appeal was subsequently allowed for statistical purposes.

ITAT allows Concessional Tax Rate u/s 115BAA, Citing Timely Submission of Form 10IC and CPC’s Acknowledgment [Read order] Chola Business Services Ltd vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1319

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the concessional tax rate under Section 115BAA of Income Tax Act,1961 for the assessee, on account of the timely submission of Form 10IC and the Centralized Processing Centre’s ( CPC ) acknowledgment of the election for the reduced rate.

The two member bench comprising Aby.T.Varkey(Judicial Member) and Jagadish(Accountant) determined that the CIT(A) was incorrect in stating that the assessee had not opted for the concessional rate and directed the Assessing Officer(AO) to compute the tax accordingly. In conclusion,the appeal was allowed.

ITAT remands Case to CIT(A) for Fresh Review, Citing Procedural Deficiencies in Assessment Order [Read Order] M/s. G.Sekar vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1320

The Chennai Bench Of Income Tax Appellate Tribunal ( ITAT ) remanded the case to the Commissioner of Income Tax (Appeals)[CIT(A)] for a fresh review, citing procedural deficiencies in the assessment order dated 16.03.2024 for the assessment year ( AY ) 2017-18.

The two member bench comprising Aby T Varkey ( Judicial Member ) and Amitabh Shukla ( Accountant Member ) remanded the case to the First Appellate Authority for fresh evaluation, allowing the appellant to submit necessary documents and comply with notices. Consequently, the appeal was allowed for statistical purposes.

Establishment of Nexus between Property Sale Advance and NHAI Bond Investment: ITAT allows Deduction Claim u/s 54EC [Read Order] Shital Piyushkumar Patel vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1322

In a recent ruling, the Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the declaimed by the assessee under Section 54EC of the Income Tax Act,1961 as the assessee was able to establish a nexus between property sale advance and the National Highway Authority of India ( NHAI ) bond investment.

The ITAT comprising Annapurna Gupta ( Accountant Member ) and Siddhartha Nautiyal ( Judicial Member ) held that the assessee is eligible to claim deduction under Section 54EC of the Income Tax Act,1961 since the assessee has been above to establish the direct nexus between the advance so received by the assessee towards the sale of property and the investment made by the assessee in NHAI Bonds.

ITAT upholds AO’s Acceptance of Bad Debt Write-off Claim, In absence of Error [Read Order] M/s.Heylands Exports Pvt. Ltd. vs The PCIT-1 CITATION:  2024 TAXSCAN (ITAT) 1324

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Assessing Officer’s ( AO ) acceptance of the assessee’s bad debt write-off claim, determining that there was no error in the AO’s assessment.

The two member bench comprising Aby T. Varkey ( Judicial Member ) and Manoj Kumar Aggarwal ( Accountant Member ) concluded that the AO had conducted adequate inquiries and had valid grounds for accepting the appellant-assessee’s claim for bad debts. As a result it  determined that the AO’s order was not erroneous and did not prejudice the Revenue’s interests. Consequently, the PCIT’s use of section 263 to question this aspect of the assessment was found to be unwarranted, and the tribunal ruled in favor of the assessee.

Income Tax Appeal filed on Paper dismissed w/o Hearing Opportunity: ITAT directs Re-Adjudication [Read Order] Mayursinh Jayandrasinh Jadeja vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1323

In a recent ruling, the Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) of  has directed a re-adjudication after dismissing an appeal filed offline without a hearing.

The ITAT bench, comprising Annapurna Gupta ( Accountant Member ) and Siddhartha Nautiyal ( Judicial Member ), set aside the CIT(A)’s order and directed a fresh hearing, allowing the assessee to rectify procedural defects and ensuring his appeal is heard based on its merits.

AO’s Income Tax Assessment has to be Erroneous and Prejudicial to Revenue to warrant S.263 Proceedings: ITAT [Read Order] Kool Home Builders vs Principal Commissioner of Income Tax CITATION:   2024 TAXSCAN (ITAT) 1326

The Cochin Bench of the Income Tax Appellate Tribunal ( ITAT ) while adjudging an Income Tax Appeal held that an Income Tax Assessment by the Assessing Officer (AO) has to be both, erroneous and prejudicial to the interest of the Revenue to warrant proceedings under Section 263 of the Income Tax Act, 1961.

However, the Bench observed that it has been proved that the Assessee has already capitalized the disputed expenses, the same being reflected in their books of accounts without claiming the benefit of deduction of the impugned expenses in their Profit and Loss (P&L) Account. In such an event, even if the Order by the AO is deemed erroneous, it cannot be held ‘Prejudicial to the Interest of the Revenue’.

No Disallowance for PF/ESI Contributions made before Return Filing Deadline: ITAT [Read Order] M/s.Heylands Exports Pvt. Ltd. vs The PCIT-1 CITATION:   2024 TAXSCAN (ITAT) 1324

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that no disallowance should be made for employee contributions to the Provident Fund ( PF ) and Employee State Insurance ( ESI ) if the contributions were remitted before the return filing deadline.

Consequently, the tribunal quashed the PCIT’s order, resulting in a favorable outcome for the assessee regarding the deduction for employee contributions to PF and ESI.

ITAT Rules Doctrine of Merger not applicable to Income Retained by CPC from Intimation u/s 143(1)(a) of Income Tax Act [Read Order] MSTC Ltd vs Jurisdictional Assessing Officer CITATION:   2024 TAXSCAN (ITAT) 1325

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that the doctrine of merger did not apply to the income retained by the CPC in its intimation under Section 143(1)(a) of the Income Tax Act,1961.

The two member bench comprising Sonjoy Sarma ( Judicial Member ) and Rakesh Mishra ( Accountant Member ) dismissed the appeal and stated that the assessee might pursue other avenues for relief regarding the addition made in the CPC intimation under section 143(1)(a). In conclusion, the appeal was dismissed.

ITAT upholds CIT(A)’s Deletion of Additions u/s  68, Citing Sufficient Cash Balance and Lack of Evidence for Accommodation Entries [Read Order] Income Tax Officer vs Genesis Computech Pvt. Ltd CITATION:   2024 TAXSCAN (ITAT) 1328

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals)[CIT(A)]’s decision to delete additions made under Section 68 of the Income Tax Act,1961 for the Assessment Year (AY) 2017-18, citing sufficient cash balance and lack of evidence for accommodation entries.

The two member bench comprising Sonjoy Sharma(Judicial Member) and Rakesh Mishra(Accountant Member)dismissed the Revenue’s appeal, affirming the CIT(A)’s order and confirming the deletion of the addition based on sufficient evidence provided by the assessee.

ITAT upholds Exemption u/s 10(23C)(iiiab) Despite Late Filing and Incorrect Form Submission [Read Order] Haringhata Mahavidyalay vs ITO CITATION:   2024 TAXSCAN (ITAT) 1327

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the exemption under section 10(23C)(iiiab) of the Income Tax Act,1961 despite late filing of the income tax return and the use of an incorrect form for submission.

The two member bench comprising Sanjay Garg ( Judicial Member ) and Rakesh Mishra ( Accountant Member ) determined that the lower authorities’ decision to deny the exemption was unjustified. It ruled in favor of the appellant, instructing the Assessing Officer ( AO ) to grant the exemption under section 10(23C)(iiiab) as claimed by the assessee, thereby allowing the appeal and reaffirming the assessee’s entitlement to the exemption. In conclusion,the appeal was allowed.

ITAT upholds Non-taxability of Google Ireland’s Ad Revenue in India: Payments not Classified as Royalty or FTS [Read Order] The Deputy Commissioner of Income Tax vs Google Ireland Ltd CITATION:   2024 TAXSCAN (ITAT) 1329

In a recent ruling, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the non-taxability of Google Ireland’s Ad revenue in India and held that the payments are not classified as royalty or fees for technical service ( FTS ).

The bench, following the decision of the tribunal, held that the payments made by GIL and other Indian customers to the assessee cannot be taxed in the hands of the assessee.

AO made S.69 Income Tax Addition based on Mere Suspicion: ITAT deletes Rs.2.25 Crore Addition [Read Order] Tirupati Jewels vs ITO Ward CITATION:   2024 TAXSCAN (ITAT) 1331

Recently, the Income Tax Appellate Tribunal ( ITAT ) recently set aside an addition of Rs. 2.25 crore made by the Assessing Officer ( AO ) against one assessee/appellant, Tirupati Jewels, New Delhi, for unexplained cash deposits, noting that the addition was based on the AO’s mere suspicion.

Thus the ITAT ruled that the assessee had sufficiently explained the source of the cash deposits through sales documentation and festival-specific sales trends. Consequently, the tribunal deleted the Rs. 2.25 crore addition.

ITAT Remands Dismissed Appeal For Non-Prosecution Simpliciter and Non-Condonation of Delay [Read Order] M/s. Medavakkam Vattara Nadargalikkiya Sangam vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1330

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) of Chennai remanded a dismissed appeal following the dismissal of the said appeal being due to both “non-prosecution simpliciter” and  non-condonation of delay.

Concluding that the CIT(A) lacked jurisdiction to dismiss the appeal solely on procedural grounds, the ITAT set aside the dismissal. The matter has now been remanded to the CIT(A) for a fresh adjudication, instructing the authority to consider the delay issue first and, if condoned, to address the merits of the case.

“Acceptance of Explanation for Delay should be the Rule and Refusal, An Exception”: ITAT Condones 236-Day Delay in Appeal Filing [Read Order] Sekhari Ganna Vikas Samiti Ltd vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1335

Recently, the Income Tax Appellate Tribunal ( ITAT ) in Delhi has allowed an appeal by an assessee condoning a delay of 236 days in filing the appeal in light of Supreme Court’s precedents, stressing that accepting delays in cases where a valid reason is provided should be the standard practice, while rejecting such explanations should only be an exception.

The Tribunal, aligning with this judicial philosophy, acknowledged the cooperative society’s explanations and opted to condone the 236-day delay. Consequently, it restored the case to the CIT(A) for a fresh assessment on its merits, granting the appellant the opportunity to present its case comprehensively.

ITAT deletes Rs. 6 lakh penalty u/s 271D due to bonafide claim of LTCG on part of assessee [Read Order] Sri Gangadhara Shetty 1614 vs ITO Ward-2(1) Mangalore CITATION:   2024 TAXSCAN (ITAT) 1332

The Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ) deletes Rs. 6 lakh penalty on the assessee over an alleged violation of Section 269SS of the Income Tax Act, 1961.

The ITAT bench further observed that this is a case where a claim has been made in an open and bona fide manner, and hence, in terms of provisions of Section 273B of the Income Tax Act, which specifically exclude the rigors of provisions of Section 271D of the Income Tax Act, and thus the penalty is not maintainable.

ITAT directs Reassessment of ₹10.3 Lakh Deposit after Original Appeal dismissed without full review [Read Order] Shiv Kumar vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1333

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) in Delhi directed a reassessment of a disputed ₹10.3 lakh deposit made during India’s 2016 demonetization period, following an appeal that was previously dismissed without a full review.

After considering the arguments from both sides, the ITAT found that the appeal had been dismissed without a thorough examination of the evidence. The tribunal concluded that a fresh review would be appropriate to ensure that all relevant details were fully assessed. Consequently, the ITAT set aside the earlier dismissal and instructed the AO to re-evaluate the case.

AO’s Notices were never served to Assessee: ITAT sets aside Ex-Parte Order [Read Order] Raj Rani vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1334

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) recently in a ruling  set aside an ex-parte assessment order as the notices from the  Assessing Officer ( AO ) was never served to the assessee/appellant, the taxpayer, Raj Rani, a resident of Village Lath, Gohana, Haryana, which resulted in non-compliance.

Recognizing the importance of due process, the ITAT ruled to set aside the previous orders and instructed the Assessing Officer to conduct a de novo assessment, providing a fair opportunity to the assessee to present the case. The ITAT also directed the assessee to provide a functional email address to ensure smooth communication for future proceedings.

ITAT deletes Addition made by AO for Unsecured Loans, affirming Validity of Sources [Read Order] Aravind Reddy Devagiri vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1336

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) ruled to delete the addition made by the Assessing Officer ( AO ) for unsecured loans, affirming the validity of the sources provided by the assessee.

The two member bench comprising Duvvuru RL Reddy(Judicial Member) and S.Balakrishnan(Accountant Member)concluded that the assessee adequately explained the source of the loans. Therefore, it allowed the appeal and deleted the addition made by the AO.

ITAT directs AO to delete Additions u/s68, confirming Source of Investment [Read Order] Aravind Reddy Devagiri vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1336

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer ( AO ) to delete the additions made under section 68 of the Income Tax Act,1961 confirming that the source of investment was adequately explained.

The two member bench comprising Duvvuru RL Reddy(Judicial Member) and S.Balakrishnan(Accountant Member) reviewed the evidence, including bank records and the sale certificate, and found that the funds were indeed transferred from M/s. A.R. Constructions for the cold storage purchases. Since the transactions were recorded both in the firm’s books and in the assessee’s capital accounts in the two firms, the tribunal concluded that the source of the investment was fully explained. Accordingly, the tribunal directed the AO to delete the addition under section 68, allowing the appeal in favor of the assessee.

Cooperative Society Eligible for Income Tax Deduction u/s 80P(2)(a)(i) on Bank Interest Income: ITAT [Read Order] Lankapalli PACS Ltd vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1337

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT )ruled that a cooperative society is eligible for an income tax deduction under Section 80P(2)(a)(i) for interest income derived from bank deposits.

A  single bench of Duvvuru RL Reddy(Judicial Member) found that the facts in the current appeal were distinguishable from prior rulings and supported the assessee’s claim for deduction under Section 80P for the interest earned on deposits.

ITAT upholds AO’s Addition of Rs. 9.65 Lakh u/s 56(2)(x) as Gift not Qualifying from a Relative [Read Order] Aravind Reddy Devagiri vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1336

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Assessing Officer’s ( AO ) addition of ₹9.65 lakh under section 56(2)(x), of Income Tax Act,1961 ruling that the gift received from the father’s Hindu Undivided Family ( HUF ) did not qualify as a relative under the Act and was therefore taxable.

The two member bench comprising Duvvuru RL Reddy ( Judicial Member ) and S.Balakrishnan ( Accountant Member ) after considering the arguments,acknowledged that the assessee received Rs. 9,65,000 from Shri Devagiri Lakshmi Narsimha Reddy HUF, with the assessee’s father acting as Kartha. The AO correctly noted that the gift was received without any consideration and did not meet the definition of a relative under the Act. Thus, the tribunal found no reason to interfere with the Revenue Authorities’ decision and upheld the addition made by the AO. The appeal was not allowed.

ITAT upholds AO’s Addition of Rs. 11.4 Lakhs for unexplained cash, citing Assessee’s insufficient explanation of Funds [Read Order] Aravind Reddy Devagiri vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1336

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the addition of Rs. 11.4 lakhs made by the Assessing Officer ( AO ) for unexplained cash, citing the assessee’s insufficient explanation regarding the source of these funds.

The two member bench comprising Duvvuru RL Reddy ( Judicial Member ) and S.Balakrishnan ( Accountant Member ) noted that the responsibility to clarify the source of capital investments lay with the assessee. Due to the insufficient explanation provided regarding the source of the investment, the tribunal found the DR’s arguments persuasive and decided to uphold the addition made by the AO.  As a result, the assessee’s request for deletion of the addition was denied.

ITAT Remands Case to CIT(A) for Fresh Hearing after Ex Parte Dismissal Due to Assessee’s Non-Compliance with Notices [Read Order] Kona Shanthi Kumari vs Assessment Unit CITATION:   2024 TAXSCAN (ITAT) 1338

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case of the assessee to the Commissioner of Income Tax (Appeals) [CIT(A)] for a fresh hearing following an ex parte dismissal due to the assessee’s non-compliance with notices.

The single member bench comprising Duvvuru RL Reddy ( Judicial Member ) directed the assessee to cooperate with the proceedings, and the CIT(A) may seek a remand report if needed. The grounds raised by the assessee were allowed for statistical purposes.

ITAT Overturns AO’s Addition of Rs. 1.4 Lakh  u/s 68, Validating Assessee’s Cash and Insurance Payment Accounting [Read Order] Aravind Reddy Devagiri vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1336

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) overturned the Assessing Officer ( AO )’s addition of Rs. 1.4 lakh under section 68 of the Income Tax Act,1961 validating the assessee’s accounting of cash and an insurance payment made on behalf of his partnership firm.

The two member bench comprising Duvvuru RL Reddy ( Judicial Member ) and S.Balakrishnan ( Accountant Member ) after reviewing the case, found that the AO did not provide sufficient justification for treating the Rs. 1,40,000 as unexplained.It determined that the assessee had properly accounted for the cash introduced and the insurance payment. Therefore, it directed the AO to remove the addition of Rs. 1,40,000, allowing the assessee’s appeal on this issue.

ITAT upholds Deletion of Penalty on Mother Theressa Educational Society for Misreported Depreciation, Highlighting Spending Compliance [Read Order] ACIT EXEMPTION CIRCLE vs Mother Theressa Educational Society CITATION:   2024 TAXSCAN (ITAT) 1340

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax(Appeals)[CIT(A)]’s deletion of a penalty imposed on the Mother Theressa Educational Society,the assessee, for misreported depreciation, emphasizing that the assessee had complied with the requirement of spending 85% of its revenue for charitable purposes.

The Division Bench of Duvvuru RL Reddy(Judicial member)  and S.Balakrishnan(Accountant Member) upheld the CIT(A)’s decision to delete the penalty, concluding that there were no infirmities in the lower authority’s ruling. Consequently, the appeal filed by the revenue was dismissed, affirming the CIT(A)’s decision in favor of the assessee.

ITAT quashes CIT(E) Order, upholds Nil Income for Mother Theresa Educational Society due to Proper Fund Application and Disallowed Depreciation [Read Order] ACIT EXEMPTION CIRCLE vs Mother Theressa Educational Society CITATION:   2024 TAXSCAN (ITAT) 1340

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the Commissioner of Income Tax (Exemption)[CIT(E)]’s order, upholding the nil income assessment for Mother Theresa Educational Society, on grounds that the assessee had properly applied its funds in compliance with the Income Tax Act,1961.

The Division Bench of Duvvuru RL Reddy(Judicial member)  and S.Balakrishnan(Accountant Member)found merit in the assessee’s arguments. It confirmed that the AO had properly disallowed the depreciation and assessed the income as nil. Therefore, the order of the CIT(E) was quashed, and the appeal by the assessee was allowed, reaffirming the correctness of the original assessment.

ITAT Remits Case to CIT(A) for Reassessment of Cash Deposits after Admission of Additional Evidence [Read Order] Janaki Ram Babji Rao Annam vs Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1344

The Visakhapatnam Bench of Income Tax Appellate Tribunal(ITAT) remitted the matter back to the Commissioner of Income Tax(Appeals)[CIT(A)] for reassessment of cash deposits made by the assessee, after recognizing the necessity to consider additional evidence that had been previously rejected.

Therefore, it remitted the matter back to the CIT(A) to admit the additional  evidence under Rule 46A and decide the case on its merits, ensuring the assessee had a fair chance to be heard. In conclusion,the appeal was allowed for statistical purposes.

PAN Error Linking to Partnership Firm leads to S. 69A Addition: ITAT rules FAA’s Order Cryptic, Directs Fresh Examination [Read Order] Ambasa Babansa Raibagi vs The Income Tax Officer CITATION:   2024 TAXSCAN (ITAT) 1341

In a recent ruling, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that an error in linking a PAN to a partnership firm resulted in an addition under Section 69A to the assessee and held that the order by the First Appellate Authority ( FAA ) to be unclear and has directed a fresh examination of the case.

The ITAT bench, comprising of Soundararrajan K ( Judicial Member ) and Laxmi Prasad Sahu ( Accountant Member ),  remitted the case to the AO for fresh consideration, directing the assessee to submit necessary documentation. The bench held that the assessee should also be given a reasonable opportunity to be heard and was expected to cooperate for a timely resolution.

Rs. 44.5 cr Addition made on Incorrect Reporting by Auditor: ITAT directs CIT(A) to condone delay of 484 days [Read Order] ABS Fujitsu General Pvt. Ltd vs DCIT CITATION:   2024 TAXSCAN (ITAT) 1343

In a recent ruling, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) held that the addition of 44.5 crores was made based on incorrect reporting by the auditor and directed the Commissioner of Income Tax (Appeals) [CIT(A)] to condone a delay of 484 days.

The bench clarified that this decision is specific to this case and cannot serve as a precedent. The ITAT allowed the appeal filed by the assessee for statistical purposes.

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