ITAT Weekly Round-Up [Feb 22nd-Feb 28th,2025]

This weekly round-up analytically summarises the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan during the previous week from February 22nd to February 28th 2025

Interest on Enhanced Compensation u/s 28 of Land Acquisition is Part of Total Compensation, Not Income: ITAT

Land Acquisition Officer vs DCIT (TDS) CITATION: 2025 TAXSCAN (ITAT) 451

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that interest on enhanced compensation awarded under Section 28 of the Land Acquisition Act is not taxable as income from other sources but is an integral part of the total compensation, thereby not attracting Tax Deducted at Source ( TDS ) under Section 194A of the Income Tax Act, 1961.

The Land Acquisition Officer ( LAO ), Gurgaon, the appellant in this case, was responsible for acquiring land under compulsory acquisition for public purposes under the Land Acquisition Act, 1984 on behalf of the Haryana Urban Development Authority ( HUDA ).

When Dept. is Custodian, It Cannot Blame Taxpayer for Not Filing Original S.12A Registration Certificate: ITAT

Lokmanya Shikshan Prasara K Mandal vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 452

The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the Department cannot blame the assessee for not filing the original certificate when the Department is the custodian of the documents. Lokmanya Shikshan Prasara K Mandal, a trust registered under the Bombay Public Trust Act, 1950, and Section 12A of the Income Tax Act, 1961, as of 19.02.1991, filed its return for A.Y. 2016-17 on 31.08.2018, claiming exemption under Section 11 of the Income Tax Act, 1961.

ITAT upholds TPO’s Rejection of RRB Energy Ltd. as Comparable Citing Negative Margins & Functional Differences

M/s. Leitwind Shriram Manufacturing Ltd., vs The Dy. Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 453

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Transfer Pricing Officer (TPO) to reject RRB Energy Ltd. as a comparable company in the transfer pricing assessment citing negative margins, functional differences, and location-specific operations.

Leitwind Shriram Manufacturing Ltd., assessee, a joint venture between Windfin BV (51%) and Shriram EPC (49%), is engaged in the manufacturing of MW-class wind turbine generators (WTC). The company had undertaken transactions with Associated Enterprises (AE) and third-party entities in India.

Failure to Serve Notices at Correct Address: ITAT orders Reassessment of Unexplained Deposits and Income

Badrinath Shreenivas vs The ITO CITATION: 2025 TAXSCAN (ITAT) 454

The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) recently set aside the assessment order against the assessee, citing violations of natural justice and failure to consider additional evidence. The assessee, Badrinath Shreenivas, a resident of Bangalore, had not filed his Income Tax Return in the Assessment Year ( AY ) 2011-12.

The Income Tax Department, based on information regarding bank deposits, initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961. The Assessing Officer ( AO ), upon obtaining approval, issued a notice under Section 148, alleging that the assessee made time deposits amounting to ₹ 9 lakhs with Indian Bank and received total credits of ₹15 Lakhs as reflected in Form 26AS.

Additions for Cash Deposits and Advances u/s 69A: ITAT Deletes Addition Based on Recorded Sales

Sri Mahasakthi Mills Limited vs ACIT CITATION: 2025 TAXSCAN (ITAT) 457

The Chennai Bench of Income Tax Appellate Tribunal (ITAT)deleted the addition made under Section 69A of Income Tax Act,1961 for cash deposits and advances, holding that the amounts were sourced from recorded sales.

Mahasakthi Mills Limited, the appellant-assessee, engaged in manufacturing cotton and synthetic yarn and cloth, reported a loss of Rs. 174.55 lakh for the relevant year. A survey conducted on March 23, 2017, revealed cash deposits of Rs. 800.05 lakh during the demonetization period and cash advances of Rs. 1267.55 lakh to sister concerns.

ITAT Directs Inclusion of Magma Advisory Services as Comparable, Rejects Exclusion Based on Negative Cash Flow

Honda R & D (India) P. Ltd. CITATION: 2025 TAXSCAN (ITAT) 458

The Delhi Bench of Income Tax Appellate Tribunal(ITAT) directed the inclusion of Magma Advisory Services Ltd. as a comparable, rejecting its exclusion based on negative cash flow. Honda R & D (India) P. Ltd., appellant-assessee,challenged the assessment order dated 30.04.2021 for the assessment year 2016-17. The key issue under consideration was the exclusion of Magma Advisory Services Ltd. from the list of comparables by the Transfer Pricing Officer (TPO).

ITAT Sets Aside PCIT’s Revision, Upholds Deduction u/s 10AA Due to Proper AO Review

Pinkcity Jewelhouse Pvt. Ltd. vs Principal Commissioner of Income Tax (Central) CITATION: 2025 TAXSCAN (ITAT) 459

The Jaipur Bench of Income Tax Appellate Tribunal(ITAT) set aside the revision order passed by the Principal Commissioner of Income Tax (PCIT) and upheld the deduction under section 10AA of Income Tax Act,1961 claimed by the assessee ruling that the Assessing Officer (AO) had properly examined the claim, including reviewing the inter-unit transfer pricing, after a detailed survey and reassessment proceedings.

Rejection of Form No.10AB for Incorrect Clause Selection: ITAT Orders CIT(E) to consider on Merits

Sri Ramajayam Educational Trust vs The Commissioner of Income Tax (Exemption) CITATION: 2025 TAXSCAN (ITAT) 460

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) directed the Commissioner of Income Tax(Exemption)[CIT(E)] to consider Form No. 10AB on merits after it was rejected due to an incorrect clause selection. Ramajayam Educational Trust,appellant-assessee, challenged the rejection of its Form No. 10AB application filed on January 2, 2024, for approval under Section 10(23C)(ii) of the Act. The order was issued on June 27, 2024.A 28-day delay was noted, and the assessee counsel sought condonation with an affidavit from the managing trustee. After review, the delay was condoned.

Compensation Paid for Project Delays in Real Estate Business is Deductible Expense: ITAT

Income Tax Officer 2(2)(1) vs Logical Properties Private Limited CITATION: 2025 TAXSCAN (ITAT) 461

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that compensation paid for project delays in the real estate business is a deductible expense as it was an expense incurred in the ordinary course of business.

Logical Properties Private Limited, the assessee, is a real estate development company engaged in land acquisition and plotting under its project ‘Clover Green Acres.’ In January 2013, the company received an advance of Rs. 1 crore from a prospective buyer for a plot of land.

Neither CIT(A) Nor AO Accurately Computed Taxpayer’s Income: ITAT Remands Matter

M/s. MBM Developers vs The Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 462

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter because neither the Assessing Officer (AO) nor the Commissioner of Income Tax (Appeals) [CIT(A)] had accurately computed the taxpayer’s income under the Percentage Completion Method (PCM). MBM Developers, the assessee, a real estate partnership firm, filed its income tax return for the Assessment Year 2018-19, declaring an income of Rs. 1,24,12,640. The case was selected for scrutiny due to the high closing stock in the real estate business.

ITAT allows Withdrawal of Appeal Due to Lack of Objection from Department

Morias Infrastructure Pvt. Ltd. vs PCIT(Central) CITATION: 2025 TAXSCAN (ITAT) 463

The Income Tax Appellate Tribunal (ITAT) Ranchi Bench has permitted the withdrawal of an appeal filed by Morias Infrastructure Pvt. Ltd. for the Assessment Year 2017-18. The decision was made after the Department expressed no objection to the withdrawal request submitted by the assessee.

No Interference with Trading Results and Gross Profits if Proof of Sales, Purchases, Quantity, Delivery, and Payment are Provided: ITAT

ACIT CC 7 2 Mumbai vs M/s Patodia Filaments Pvt Ltd CITATION: 2025 TAXSCAN (ITAT) 464

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) while adjudicating a issue pertaining to additions based on alleged bogus purchases ruled that the trading results and gross profits cannot be disturbed if an assessee provides adequate proof of sales, purchases, quantity, delivery, and payment. Reassessment proceedings were initiated by the Assessing Officer (AO) against the Assessee Patodia Filaments Pvt. Ltd. (Patodia Filaments) based on information supplied by the Deputy Director of Income Tax (Investigation), Mumbai that the Director of SVG Style & Textile Company Pvt. Ltd., had admitted in a statement recorded under Section 131 that his companies were not conducting any real business but were instead issuing bogus purchase bills and accommodation entries to various beneficiaries including the Assessee.

ITAT Sets Aside CIT(A) Order for Non-Consideration of Merits and Non-Exemption of Advance Tax Payment

Mohammad Amjad Ali Sahaji vs ITO CITATION: 2025 TAXSCAN (ITAT) 465

In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Kolkata Bench has set aside the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi, for failing to consider the merits of the case and not granting an exemption for advance tax payment under Section 249(4)(b) of the Income Tax Act, 1961. The case pertains to an appeal filed by Mohammad Amjad Ali Sahaji for the Assessment Year 2017-18.The appeal was against the order of the CIT(A) dated February 23, 2024, arising from an assessment order framed under Section 144 of the Act on December 10, 2019. The CIT(A) dismissed the appeal on the grounds that the assessee had not paid the applicable advance tax before filing the appeal, as mandated under Section 249(4)(b). The assessee contended that since his income was below the taxable limit, no advance tax was payable, and therefore, Section 249(4)(b) was not applicable to him.

ITAT Allows Assessee to Withdraw Appeal, with Option to Revoke if Vivad Se Vishwas Scheme is Unsuccessful

Ms. Ramrao Mannaji vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 466

The Income Tax Appellate Tribunal (ITAT) Bangalore SMC-‘C’ Bench has allowed the withdrawal of an appeal filed by appellant for the Assessment Year 2008-09. The tribunal permitted the withdrawal after the assessee opted for resolution under the Vivad Se Vishwas Scheme, 2024, while granting the liberty to reinstate the appeal if the scheme’s application is not accepted. Ramrao Mannaji Nandakumari, appellant-assessee had filed the appeal against the order passed by the Additional/Joint Commissioner of Income Tax (Appeals)-2, Gurugram, dated September 3, 2024, under Section 250 of the Income Tax Act, 1961.

Incorrect Section Code No Grounds for Rejection: Mumbai ITAT Orders CIT(E) to Grant Final Approval u/s 80G

Rotary Charity Trust vs Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 467

In a landmark ruling, the Income Tax Appellate Tribunal (ITAT) Mumbai Bench has directed the Commissioner of Income Tax (Exemption) CIT(E), to reconsider the application of a Trust for final registration under Section 80G of the Income-tax Act, 1961. The tribunal ruled that the rejection of the application based solely on an incorrect section code was unjustified and remanded the matter back to the CIT(E) for fresh adjudication. Rotary Charity Trust, a registered charitable trust incorporated in 1996, had applied for final approval under Section 80G after obtaining provisional registration in April 2022, which was valid until the assessment year 2024-25. The trust is engaged in various public charitable activities, including providing education to underprivileged and specially-abled children.

Demonetization Cash Deposits: ITAT directs Fresh Assessment, Gives Assessee Opportunity to Submit Relevant Documents

Ramesh Sreenivasalu vs The Dy. Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 468

In a significant ruling, the Income Tax Appellate Tribunal ( ITAT ) Chennai Bench has remanded the case of Ramesh Sreenivasalu for fresh assessment, directing the Assessing Officer (AO) to reconsider the matter after allowing the assessee to submit relevant documents. The case pertains to cash deposits made during the demonetization period, which were earlier held as unaccounted income under Section 69 of the Income Tax Act, 1961. The case was heard by a bench comprising Aby T. Varkey (Judicial Member) and Jagadish (Accountant Member). The appeal was filed against the order of the Commissioner of Income Tax (Appeals) CIT(A), which upheld the AO’s decision to add Rs. 22,94,500(Around 23 Lakh) as unexplained cash deposits and estimate additional income at 8% of cash deposits made outside the demonetization period.

₹51L Income Tax Addition u/s.56(2) by Arbitrary Rejection of Share Value Report to Tax Entire Share Premium and Capital: ITAT Orders Deletion

Patel Minerals Pvt. Ltd vs The ACIT CITATION: 2025 TAXSCAN (ITAT) 469

The Jodhpur Bench of the Income Tax Appellate Tribunal (ITAT) recently ordered the deletion of an income tax addition of ₹51,00,000/-, observing that the Assessing Officer (AO) had arbitrarily rejected the share valuation report of the concerned Company, leading to an unscrupulous assessment and subsequent taxation of the entire share premium and capital. The Appellant-Assessee Patel Minerals Pvt. Ltd. filed their returns of income on September 3, 2015, declaring a loss of ₹7,58,076. Initially, the matter was selected for limited scrutiny to verify share premium, but it was later converted into full scrutiny, leading to an assessment order dated December 8, 2017, wherein the AO made an addition of ₹51 lakh.

ITAT Sets Aside Order Passed by CIT(A) for Ignoring Assessee’s Consistent Business Practice: Directs Re-examination of TDS Claim

Mula Parisar Serva Seva Sangh vs Exemption CITATION: 2025 TAXSCAN (ITAT) 470

In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Pune Bench has set aside the order passed by the Commissioner of Income Tax (Appeals), CIT(A) and directed a fresh examination of the Tax Deducted at Source (TDS) claim made by the assessee. The tribunal found that the CIT(A) had failed to consider the consistent business practices of the assessee and the precedent set by previous assessment orders.

ITAT Deletes Addition of Rs 40 Lakhs, Holds Assessee’s Explanation on Cash Deposits as Sufficient

Mr.Rengasamy Asaithambi vs The ACIT CITATION: 2025 TAXSCAN (ITAT) 491

In a major relief to the assessee, the Income Tax Appellate Tribunal (ITAT) Chennai Bench has deleted an addition of Rs. 40 lakhs made under Section 69A of the Income Tax Act, 1961, holding that the cash deposits during the demonetization period were sufficiently explained. The Tribunal also set aside directions issued by the Commissioner of Income Tax (Appeals) CIT(A) regarding an additional amount of Rs. 1.35 crores, ruling that such directions violated the principles of natural justice.

Rengasamy Asaithambi, a wholesale vegetable merchant, had filed an appeal against the order of CIT(A), for the Assessment Year 2017-18. The dispute arose when the Assessing Officer (AO) noted that the assessee had deposited Rs. 2.40 crores in his bank account during the demonetization period (November 9, 2016 – December 31, 2016). Upon scrutiny, the AO accepted that Rs. 62.62 lakhs were Specified Bank Notes (SBNs) forming part of the closing cash balance as of November 8, 2016.

ITAT Bangalore Rules in Favor of Assessee, allows Deductions under Section 80JJAA and Additional Depreciation

Robert Bosch Engineering and Business Solutions Pvt. Ltd vs The Dy. Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 495

The Income Tax Appellate Tribunal ( ITAT ) Bangalore Bench ruled in favor of the assessee, allowing deductions under Section 80JJAA of the Income Tax Act, 1961, and additional depreciation under Section 32(1)(iia).

The tribunal found that the company met the eligibility criteria for these tax benefits and set aside the disallowances made by the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) CIT(A). Robert Bosch Engineering and Business Solutions Pvt. Ltd., a wholly-owned subsidiary of Robert Bosch GmbH, Germany. The company is engaged in software development, IT-enabled services, and embedded software development for automobile components. It had claimed a deduction of Rs.21.16 crore under Section 80JJAA for wages paid to new regular workmen and additional depreciation on computers used for software development.

ITAT Deletes Rs. 1 Crore Addition u/s 69A, Holds Bad Debt Recovery as Business Income

M/s. Overseas Beverages Pvt. Ltd vs ACIT Central Circle-1 CITATION: 2025 TAXSCAN (ITAT) 497

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of Rs. 1 crore made under Section 69A of the Income Tax Act, 1961, as the bench reached the conclusion that bad debt recovery comes under the purview of business income. The assessee has appealed against the order of the Commissioner of Income Tax Appeals [CIT(A)] for the assessment year 2017- 18.

Shareholder’s Account to be Taxed under Life Insurance Business Provisions: ITAT in Kotak Mahindra Life Insurance case

DCIT Circle 5(3) vs Kotak Mahindra Life Insurance Co. Ltd. CITATION: 2025 TAXSCAN (ITAT) 498

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) in the Kotak Mahindra Insurance case held that theshareholder’s account is to be taxed under life insurance business provisions. The revenue has appealed against the order of the Commissioner of Income Tax Appeals [CIT(A)] for the assessment year 2021-22.

Before the ITAT, the assessee’s counsel vehemently contended that all the 3 grounds which were raised in the assessee’s appeal were already covered in favor of the assessee by a previous order by the Mumbai ITAT. It was also contended by the counsel that the same issues were consistently ruled in the appellant’s favor from AY 2007-08 onwards. Copies of ITAT orders, including the latest for AY 2020-21 (ITA No. 2352/Mum/2024), were also submitted.

ITAT Remands matter for Fresh Assessment Over Delay in Filing Audit Report u/s Form 10BB

M/s. Pachiyamman Ethirajammal Rajam vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 499

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case back to the Assessing Officer (AO) for a fresh assessment concerning the delay in filing an audit report under Form 10BB by a public charitable trust running educational institutions. The trust, registered under sections 12AA and 10(23C)(vi) of the Income Tax Act, 1961, had filed its income tax returns for the assessment year (AY) 2017-18, declaring ‘NIL’ income. During the assessment, it was found that the trust had failed to file the required audit report in Form 10BB within the stipulated time.

AO not Legally Entitled to Calculates Sales on Hypothetical Basis ignoring Evidence: ITAT

Sumit Kesarwani vs ITO CITATION: 2025 TAXSCAN (ITAT) 500

The Income Tax Appellate Tribunal (ITAT), Lucknow Bench, has ruled that Assessing Officer (AO) is not legally entitled to estimate sales on a hypothetical basis while ignoring documentary evidence. The ruling came in the case of a Kanpur-based trader, where the tribunal set aside an arbitrary addition of ₹31,93,527 made under Section 68 of the Income Tax Act, 1961.

The assessee, proprietor of Shri Shyam Traders, Kanpur, engaged in the business of selling matchboxes, pan masala, cigarettes, and incense sticks, filed his Income Tax Return (ITR) for AY 2017-18, declaring an income of ₹2,36,130.

ITAT allows S.80G Deduction for donation out of CSR funds to PM National Relief Fund

M/s. Source Hov India Private Limited vs DCIT CITATION: 2025 TAXSCAN (ITAT) 501

The Income Tax Appellate Tribunal (ITAT), Chennai Bench, in a recent ruling, has allowed a deduction under Section 80G of the Income Tax Act for a donation made out of Corporate Social Responsibility (CSR) funds to the Prime Minister’s National Relief Fund (PMNRF). The case pertained to the company, which contributed ₹38.54 lakhs to the PMNRF during the Assessment Year (AY) 2018-19. The company initially claimed a 100% deduction under Section 80G for this donation, which was denied by the Assessing Officer (AO) and later upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the ITAT ruled in favor of the assessee, striking down the CIT(A) order.

ITAT Rejects DVO Valuations, Ensures Equal Treatment Among Co-owners

Rita Goel Godawari Estates vs ACIT Circle-4(2)(1) CITATION: 2025 TAXSCAN (ITAT) 502

In a recent ruling, the Bangalore Bench of the Income Tax Appellate Tribunal( ITAT) rejected DVO valuations and ensured equal treatment among co-owners. Rita Goel, the assessee, had filed her return of income for the assessment year 2017-18, declaring an income of ₹6.6 Crores. The assessee’s case was selected for scrutiny. During the examination, the assessing officer observed that she and her husband sold a property for ₹28 crore in the assessment year 2017-18. After considering the improvement costs, she received ₹14 crores as her share and reported a long-term capital gain (LTCG) of ₹6.45 crore.

ITAT sets aside 80G Registration Rejection Order, Cites Insufficient Time Given to Assessee

S K N N S M Society vs The Commissioner of Income Tax Exemptions CITATION: 2025 TAXSCAN (ITAT) 504

The Income Tax Appellate Tribunal (ITAT) Chennai Bench has set aside the order of the Commissioner of Income Tax (Exemptions) CIT(E) rejecting the 80G registration application of appellant. The tribunal ruled that the assessee was not provided sufficient time to submit the required details, which amounted to a violation of the principles of natural justice. S K N N S M Society, appellant-assessee had filed an application on March 13, 2024, in Form 10AB under Rule 17A of the Income Tax Rules, 1962, seeking approval under Section 80G(5)(iii) of the Income Tax Act, 1961. The CIT(E) issued a letter on June 6, 2024, asking the assessee to submit details of its activities, to which the assessee responded. However, on July 11, 2024, the CIT(E) issued another show-cause notice, requiring additional documents by July 16, 2024, allowing only five days for compliance. The assessee failed to respond within the given period, leading to rejection of the application by the CIT(E).

ITAT Upholds Denial of Exemption u/s 54, Citing Failure to Invest in New Asset Within Specified Timeframe

Smt. Sita Khandelwal vs A.C.I.T. CITATION: 2025 TAXSCAN (ITAT) 505

The Income Tax Appellate Tribunal (ITAT) Lucknow Bench has upheld the denial of exemption under Section 54 of the Income Tax Act, 1961, to the appellant for failing to invest in a new residential asset within the prescribed time-frame. The appeal was filed against the order of the Commissioner of Income Tax (Appeals) CIT(A), which confirmed the Assessing Officer’s (AO) decision to reject the exemption claim on the grounds that the investment was made beyond the due date specified under Section 139(1) of the Act. Sita Khandelwal, appellant-assessee had filed her income tax return for Assessment Year 2015-16, declaring a total income of Rs. 14,92,910.

ITAT Directs CIT(A) to Re-Adjudicate Appeal, Citing Failure to Address Key Grounds Relating to 115JB and MAT Credit

SJVN Limited vs The ACIT CITATION: 2025 TAXSCAN (ITAT) 506

The Income Tax Appellate Tribunal (ITAT) Chandigarh Bench has set aside an order by the Commissioner of Income Tax (Appeals) [CIT(A)] and directed fresh adjudication citing the failure to address key grounds related to the computation of deemed income under Section 115JB and MAT credit under Section 115JAA of the Income Tax Act, 1961. SJVN Limited, a public sector undertaking, filed its return of income for the Assessment Year 2020-21, declaring total income of Rs. 12,12,02,26,080 under normal provisions and book profit of Rs. 19,05,26,62,664 under Section 115JB. However, the Centralized Processing Center (CPC) adjusted the book profits by adding Rs. 201,15,58,023 on account of deferred tax provisions, enhancing the book profit to Rs. 21,06,42,20,687. Additionally, the MAT credit claimed by the assessee at Rs. 90,64,10,581 was reduced to Rs. 55,49,51,164 by the CPC.

Notice u/s 148 issued by AO beyond Stipulated period u/s 149(1)(a): ITAT dismisses Revenue Appeal

Income Tax Officer vs Nishan Govindbhai Thakkar CITATION: 2025 TAXSCAN (ITAT) 507

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) dismissed an appeal filed by the revenue by upholding the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] that a notice issued under Section 148 of the Income Tax Act was barred by limitation. The revenue has appealed against the order of the CIT(A) for the assessment year (AY)  2017-18.

ITAT allows Oxford University Press to withdraw Appeal as it Opts for Vivad Se Vishwas Scheme 2024

Oxford University Press vs DCIT CITATION: 2025 TAXSCAN (ITAT) 508

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) in Mumbai,  allowed Oxford University Press to withdraw its appeal as the company opts for the Vivad Se Vishwas Scheme (VSVS) 2024. The appeal was filed by Oxford University Press against the final assessment order dated October 31, 2023, which was passed by the Assessing Officer (AO) following directions from the Dispute Resolution Panel (DRP).

ITAT Grants Relief to Trust: Rules Against Excessive Surcharge Imposition by Centralized Processing Centre

Ria Zaveri Trust vs Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 509

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) recently ruled in favour of a trust in a dispute over applying an income tax surcharge. The case involved whether the trust was liable to pay a 37% surcharge as determined by the assessing authorities or the lower 10% surcharge it had applied in its tax return. The assessee, Ria Zaveri Trust, based in Ahmedabad, filed its income tax return for the Assessment Year (AY)2021-22, applying a 10% surcharge on its taxable income. The (CPC) applied a surcharge of 37%, increasing the trust’s tax liability.

‘When Cash is Sourced out of Recorded Debtors, S. 69A cannot be invoked’: ITAT deletes Addition of Rs. 21.5 Crores

M/s. Nethravathi Distilleries Pvt. Ltd. vs ACIT CITATION: 2025 TAXSCAN (ITAT) 510

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of Rs. 21.5 crores as the bench reached the conclusion that when cash is sourced out of recorded debtors, Section 69A cannot be invoked. The assessee has appealed against the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year (AY) 2017-18. The assessee was engaged in the manufacture of IMFL, and when an enquiry under Section 131(1A) of the Income Tax Act was conducted at the business premises of the assessment, it was revealed that the assessee deposited cash of Rs.29.50 crores in Specified Bank Notes (SBNs) in State Bank of Hyderabad during the demonetization period.

AI proposes, Tribunal Disposes! Bengaluru ITAT Bench in Soup after AI-generated Order cites non-existent Cases

Buckeye Trust vs PCIT-2 CITATION: 2025 TAXSCAN (ITAT) 511

In a shockingly interesting incident, the Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) was forced to withdraw a tax ruling after discovering that it was based on legal precedents that do not exist. The tribunal had issued an order in December 2024, ruling in favor of the tax department. However, it later emerged that the decision relied on fabricated Supreme Court and Madras High Court judgments that were seemingly generated through ChatGPT.

ITAT Deletes Penalty u/s 271D: Penalty Held Invalid as Section 153C Assessment Quashed due to Lack of Incriminating Material

Rudra Buildwell Projects P. Ltd. vs DCIT CITATION: 2025 TAXSCAN (ITAT) 512

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) set aside a penalty of ₹3,50,000 imposed under Section 271D of the Income Tax Act. The Deputy Commissioner of Income Tax (DCIT) initially levied the penalty for the alleged violation of Section 269SS, which prohibits cash transactions exceeding a prescribed limit. The assessing officer (AO) conducted a search and seizure proceeding under Section 153C on the assessee. It was found that Rudra Buildwell Projects Ltd had accepted a cash loan of ₹3,50,000. Holding this a violation of Section 269SS, the AO imposed a penalty of that amount under Section 271D.

Notice u/s 148 Invalid due to Expired Limitation Period: ITAT

ACIT vs M/s. Orbit Financial Capital CITATION: 2025 TAXSCAN (ITAT) 513

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT), held that the notice issued under Section 148 of the Income Tax Act, 1961, to the assessee for the assessment year (AY) 2015-16 was invalid due to the expiration of the limitation period.  Coming to the facts of this case, the revenue issued a notice under Section 148 of the Income Tax Act on 27-7-2022, seeking to reopen the assessment for AY 2015-16. The revenue had initially raised concerns about alleged fictitious losses claimed by the assessee through transactions with M/s. Goodluck Securities and M/s. APAR Finance Ltd., totaling Rs. 2,18,15,772. The revenue contended that these losses were artificially created through manipulated trades in equity derivatives, based on information received from the Investigation Wing. The Assessing Officer (AO) had disallowed these losses.

ITAT limits Disallowance in Circular Trading Case to 0.30%

The A.C.I.T vs Omshiv Fabricshub Pvt. Ltd CITATION: 2025 TAXSCAN (ITAT) 514

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has dismissed the revenue’s appeal and limited the disallowance in a circular trading case to 0.30% of the total transactions. In this case, the assessee, Omshiv Fabricshub Pvt. Ltd., was a company engaged in the trading of raw cotton. The Assessing Officer (AO) received information from the ADIT (Inv.) Unit-1(2) Ahmedabad, indicating that the assessee had taken accommodation entries totalling Rs. 88.83 crore from entities controlled by Sanjay Tibrewal, an alleged entry operator. The AO concluded that these transactions were non-genuine and added the entire amount as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The AO’s decision was based on the findings that the entities involved were paper concerns engaged in providing accommodation entries without any underlying business activity.

Addition of ₹70.25 Lakh as Unexplained Foreign Remittances: ITAT Remands Matter to CIT(A) for De Novo Disposal

Nadukkandi Kunhabdulla vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 515

The Cochin Bench of Income Tax Appellate Tribunal (ITAT) remanded the matter involving the addition of ₹70.25 lakh as unexplained foreign remittances to the Commissioner of Income Tax (Appeals) [CIT(A)] for de novo disposal.  Nadukkandi Kunhabdulla,appellant-assessee,filed the income tax return for AY 2014-15 on October 30, 2015, declaring an income of Rs. 4,28,640/-. The Assessing Officer (AO) assessed the total income at Rs. 75,59,703/-, adding Rs. 70,25,900/- from foreign remittances in Non-Resident Ordinary (NRO) and Non-Resident External (NRE) accounts. The AO rejected the claim that Rs. 35,73,006/- came from the “Tip Top Boutique” business, Rs. 8,88,655/- from selling a car in Bahrain, and Rs. 27,00,000/- from remittances sent by the assessee’s sons working in Bahrain.

ITAT Directs CIT(A) to Re-examine Gift from HUF Under Section 56(2)(vii) of Income Tax Act 1961

Sachi Desai vs Assistant Commissioner of Income tax CITATION: 2025 TAXSCAN (ITAT) 516

In a recent ruling, the Surat bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] and remanded the case for fresh adjudication. The assessee, Sachi Desai, received a gift from her HUF, of which she was a member. The Assessing Officer (AO), while conducting scrutiny under Section 143(3) read with Section 147, treated this gift as “income from other sources”, arguing that a HUF is not included in the definition of “relative” under the Income Tax Act.  The AO relied on the Ahmedabad ITAT’s decision in Gyanchand M. Bardiya v. ITO ( 2022 TAXSCAN (ITAT) 116 ) and added the gift amount to her taxable income.

Eligibility of Music Education Trust’s Exemption u/s 10(23C)(iiiad): ITAT allows Claim

Gandharva Mahavidhyalaya Trust vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 517

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) allowed the claim for exemption under Section 10(23C)(iiiad) of Income Tax Act,1961 for a music education trust. Gandharva Mahavidhyalaya Trust,appellant-assessee,a charitable trust registered under Section 12AA and engaged in music education, filed its return declaring a gross income of Rs. 82,20,640. It claimed Rs. 30,62,684 as expenses under Section 11 and Rs. 57,57,960 as exempt under Section 10(23C) of the Act.

ITAT Remands Matter for Fresh Hearing Due to CIT(A)’s Failure to Consider 30 Day Delay Explanation [Read Order]

Kalanad Service Co-op. Bank Ltd vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 518

The Cochin Bench of Income Tax Appellate Tribunal(ITAT) remanded the matter for a fresh hearing due to the Commissioner of Income Tax(Appeals)[CIT(A)]’s failure to consider the assessee’s explanation for a 30-day delay in filing the appeal. Kalanad Service Co-op. Bank Ltd,appellant-assessee,filed its income return for AY 2014-15 on 03.03.2016, declaring a Nil income after claiming a deduction of Rs. 28,39,995/- under section 80P of the Act. The AO completed the assessment on 27.12.2016, assessing the total income at Rs. 28,39,995/- after denying the claimed deduction.

CIT(A) Refuses to Admit Additional Evidence: ITAT Remands Matter for Fresh Adjudication

Abdulrahiman Abdulkadar 1/519 vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 519

The Cochin Bench of Income Tax Appellate Tribunal(ITAT) remanded the case for fresh adjudication after the Commissioner of Income Tax(Appeals)[CIT(A)] refused to admit additional evidence. Abdulrahiman Abdulkadar,appellant-assessee,engaged in the business of travel agency filed his income tax return for AY 2017-18 on 04.08.2017, declaring an income of Rs. 4,03,170/-. The AO completed the assessment on 04.10.2018, raising the total income to Rs. 7,11,170/-. The AO added Rs. 3,98,000 under section 69A for unexplained money.

Lack of Opportunity to Explain Cash Deposits: ITAT Remands Case to CIT(A) for Fresh Assessment

Baiju Kabeer vs Asst Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 520

The Cochin Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case to the Commissioner of Income Tax(Appeals)[CIT(A)] after noting that the appellant was not given a fair opportunity to explain cash deposits. Baiju Kabeer, appellant-assessee, did not file the income tax return for Assessment Year(AY) 2017-18. The Assessing Officer(AO), found that he had deposited Rs. 1,00,95,500/- in ICICI Bank and issued a notice under Section 148 on March 30, 2021. In response, the assessee filed the return on September 29, 2021, declaring an income of Rs. 7,74,559/-.

Quantity of Jewellery under Limit prescribed by Circular: ITAT directs Deletion of S.69B Income Tax Addition

The Dy. Commissioner of Income Tax vs Shri Suresh Kanaji CITATION: 2025 TAXSCAN (ITAT) 521

In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Bangalore bench, has directed the deletion of an addition made under Section 69B of the Income Tax Act concerning seized jewellery. The Tribunal held that gold jewellery found during a search at the residence of the taxpayer was within the permissible limits prescribed by CBDT Circular No. 1916, and therefore, could not be treated as an unexplained investment.  The case involved a Bangalore-based contractor, whose residence was searched by Income Tax authorities. During the search, officials discovered 1,724.82 grams of gold jewellery, out of which 612.86 grams were seized on the grounds that the taxpayer failed to explain its source satisfactorily. The Assessing Officer (AO) treated the seized jewellery as undisclosed income and made an addition of ₹16,15,611 under Section 69B.

Setback to Sony India as ITAT dismisses Low Tax Effect Plea in non-TDS/TCS Deduction in Double Taxation Matter

The Assistant Commissioner of Income Tax vs M/s. Sony India Software Centre Pvt. Ltd CITATION: 2025 TAXSCAN (ITAT) 522

The Income Tax Appellate Tribunal (ITAT), Bangalore bench, has recently dismissed Sony India Software Centre Pvt. Ltd.’s plea to quash a tax dispute based on low tax effect, ruling that the matter involves international taxation and the interpretation of the Double Taxation Avoidance Agreement (DTAA). The dispute arose from Assessment Year 2017-18, during which the Assistant Commissioner of Income Tax (ACIT), Circle 6(1)(1), Bangalore, made two significant additions to Sony India’s taxable income. The first concerned an addition of ₹1.44 crore under Section 28(iv) of the Income Tax Act, related to assets received free of cost from its Associated Enterprises (AEs). The second involved the disallowance of ₹9.59 lakh under Section 40(a)(i) for non-deduction of Tax Deducted at Source (TDS) on payments made to a Singapore-based training consultant.

ITAT Allows Deduction under Section 80P(2)(d) for Interest Income from Cooperative Banks

Shri Saikrupa Nagari Sahakari Patsanstha Maryadit Kolhapur VS ITO CITATION: 2025 TAXSCAN (ITAT) 523

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Pune Bench granted relief to Shri Saikrupa Nagari Sahakari Patsanstha Maryadit Kolhapur, a cooperative credit society, by allowing a deduction under Section 80P(2)(d) of the Income Tax Act, 1961, for interest income earned from investments with cooperative banks. The assessee, engaged in accepting deposits and providing credit facilities to its members, had declared a nil income for the Assessment Year 2018-19 after claiming deductions under Chapter VIA amounting to Rs.26,32,236.

ITAT dismisses Appeals, Sustains Additions for Unexplained items Found During Search, Citing Evidentiary Value

SHRI SAI OM INFRAVISION (P) LTD vs DCIT, CENTRAL CIRCLE-3 CITATION: 2025 TAXSCAN (ITAT) 524

The Income Tax Appellate Tribunal ( ITAT ) Delhi Bench has dismissed the appeals filed by two companies and upheld the additions made by the Assessing Officer ( AO ) under Section 153A of the Income Tax Act, 1961. The tribunal ruled that the seized documents found during the search had evidentiary value, making the additions legally valid. The case involved Shri Sai Om Infravision (P) Ltd. and Shri Om Sai Infrapromoters Pvt. Ltd., which were subjected to a search and seizure operation under Section 132 of the Income Tax Act. The search was conducted at the premises of Kaushalya Residency Girls Hostel, GNHIPL, where authorities discovered a diary containing financial transactions that were not recorded in the books of accounts.

No Trust towards Sports Trust on Foreign Expenditure: ITAT restores Registration Rejection

Sports Unlimited Foundation vs Commissioner of Income Tax (Exemption) CITATION: 2025 TAXSCAN (ITAT) 525

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) restored the registration of sports trusts to the file of CIT(E) for fresh decision and directed the assessee to amend the trusts objective with respect to foreign expenditure. The assessee has appealed against the order passed by the Commissioner of Income Tax (Exemption) that rejected  applications filed by the assessee seeking registration under Section 12AB and Section 80G of the Income Tax Income Act 1961.

77-Year-Old Farmer Misguided by Tax Consultant: ITAT Condones 162-Day Delay, Orders Fresh Assessment

Ishvarbhai Lallubhai Patel vs The Assessment Unit CITATION: 2025 TAXSCAN (ITAT) 526

The Surat Bench of the Income Tax Appellate Tribunal (ITAT) condoned a 162-day delay citing 77-year-old farmer was misguided by the tax consultant and directed a fresh assessment. Ishvarbhai Lallubhai Patel, the assessee, is a senior citizen engaged in agricultural activities who, along with five co-owners, sold an immovable property in Kosad, Surat, for a sale consideration of Rs. 1,71,72,500.

Barcode-Backed Tax Invoice Wrongly Treated as Bogus: ITAT upholds Order of CIT(A)

The Dy. Commissioner of Income Tax vs Aura Jewels CITATION: 2025 TAXSCAN (ITAT) 527

The Income Tax Appellate Tribunal’s (ITAT) Bangalore bench ruled that the Assessing Officer (AO) erroneously regarded sales as fraudulent transactions without checking to see if the invoices had barcodes. The appellant/assessee, Aura Jewels, is a partnership business that deals in jewels, gold, silver, and other ornaments at retail.  A notice was sent on September 24, 2018, in accordance with Section 143(2) of the Income Tax Act, after the assessee’s case for the assessment year in question was chosen for examination under CASS.

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