ITAT Weekly Round-Up [May 11th - May 18th]

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 May 11th to May 18th

CSR Donation to Gujarat CM Swachchta Nidhi Eligible for Section 80G Deduction: ITAT

Gujarat State Financial Services Limited vs Deputy Commissioner of Income Tax CITATION:2025 TAXSCAN (ITAT) 898

The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has held that Corporate Social Responsibility (CSR) donations made to the Mukhyamantri Shree Swachchta Nidhi, Gujarat are eligible for deduction under Section 80G Of the Income Tax Act, 1961. The decision was delivered in response to an appeal filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, pertaining to the Assessment Year 2020-21.

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Delayed Credit of ESI/EPF Amounts: ITAT deletes Penalty on Assessee for Technical Glitches

Tandem Data Processing Pvt. Ltd. vs ADIT CITATION: 2025 TAXSCAN (ITAT) 897

The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) recently quashed an income tax disallowance, on observing that a one-day delay in crediting employee contributions to the Employees’ Provident Fund (EPF) and Employees’ State Insurance Corporation (ESIC) accounts were caused by server errors and technical glitches. An income tax appeal was filed by Tandem Data Processing Pvt. Ltd. (Tandem) against the order passed by the Commissioner of Income Taxes (Appeals) ( CIT(A) ) arising from the finances of the Assessee during Assessment Year (A.Y.) 2018-19.

CIT(A) Mistakenly Treated Private Company as Cooperative Society u/s 80P: ITAT remands Case

Indian Chain Pvt. Ltd vs DCIT CITATION: 2025 TAXSCAN (ITAT) 899

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and directed a fresh examination, observing that Section 80P of the Income Tax Act, 1961, which is meant exclusively for cooperative societies, was mistakenly applied to a private limited company.

The assessee, Indian Chain Pvt. Ltd., had filed its return of income for the Assessment Year (AY) 2020-21. On 24.12.2021, an intimation under Section 143(1) of the Income Tax Act, 1961, was issued by the Deputy Commissioner of Income Tax (DCIT) to the assessee. The assessee, however, claimed that it did not receive this order either in physical form or by email.

Revised Disallowance Claim u/s 14A should be Backed by Revised Certificate by Auditor in Form 3CA: ITAT

Gujarat State Financial Services Limited vs Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 898

In a recent decision, the Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) has held that any revised disallowance claim under Section 14A of the Income Tax Act must be supported by a revised auditor’s certificate in Form 3CA, failing which the revised claim is liable to be rejected. The assessee company had filed its return of income declaring ₹493.41 crores and suo moto disallowed ₹14.31 crores under Section 14A read with Rule 8D, in relation to dividend income of ₹78.65 crores claimed exempt under Section 10(34). During assessment proceedings, the Assessing Officer initially proposed a further disallowance of ₹296.35 crores but later accepted the assessee’s original disallowance and passed the assessment order accordingly.

Capital Gain Exemption Documents Not Submitted During Initial Proceedings but Before Tribunal: ITAT Remands Case for Fresh Assessment

Syed Hussain Syed Asif vs The Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 903

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) recently remanded a case relating to a ₹2.75 crore capital gains exemption claimed where the assessee failed to submit the requisite documents during the initial proceedings, but did so before the appellate tribunal only. The decision was given against an Income Tax Appeal filed by Syed Hussain Syed Asif, proprietor of Alpha Medicals in Hosur. Syed had declared a total income of ₹14,63,060 and claimed an exemption of ₹2,54,57,551 after selling his 9,600 sq ft property for ₹2.75 crore.

ITAT Dismisses Income Tax Appeal After Opting for Vivad Se Vishwas Scheme

Shri Salman Abdulrazak Patel vs The Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 900

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) dismissed the assessee’s appeal as withdrawn following a formal opt-in to the Direct Tax Vivad Se Vishwas Scheme, 2024, with liberty to restore. The assessee, Salman Abdulrazak Patel, had filed an appeal challenging the appellate order dated 07.11.2023 for the Assessment Year (AY) 2010–11. During the proceedings before the Tribunal, the assessee submitted a written request to withdraw the appeal on the ground that he had opted for the Direct Tax Vivad Se Vishwas Scheme, 2024.

No Addition u/s 153A for Completed Assessments without Incriminating Material Found During Search: ITAT

Saurabh Agrotech Pvt. Ltd. vs DCIT CITATION: 2025 TAXSCAN (ITAT) 904

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) held that additions under Section 153A of the Income Tax Act, 1961 cannot be made in respect of completed assessments unless incriminating material is found during a search, and accordingly deleted the addition made to Saurabh Agrotech Pvt. Ltd.’s income on account of Dharmada (charity collections). Saurabh Agrotech Pvt. Ltd., the assessee, engaged in the business of oil manufacturing and trading, filed its return for Assessment Years 2010-11 and 2012-13, declaring income that was assessed under scrutiny proceedings. A search was later conducted on the Data Group, of which the assessee was a part, on 14.10.2015. Following the search, assessments were reopened under Section 153A and additions were made, including Rs. 6.52 lakh in AY 2010–11, treating Dharmada collections as part of the assessee’s taxable income.

Unexplained Cash Deposits during Demonetization: ITAT Directs AO to Verify Books of Accounts and Cash Sales of Diamond and Gold Dealer

M/s. V N Exports vs The ACIT CITATION: 2025 TAXSCAN (ITAT) 906

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) restored the matter to the Assessing Officer (AO) for fresh verification of books of accounts and cash sales of Diamond and Gold Dealer in the dispute involving cash deposit during demonetization. V.N. Exports (assessee), a dealer in diamond, gold jewellery, and bullion, filed its return of income for the Assessment Year 2017-2018 declaring a total income of Rs. 38,61,982. The AO observed during the demonetization period in November 2016, the assessee deposited Rs. 1.24 crore in cash in its bank account. The assessee submitted that the cash was from legitimate cash sales made on 8th November 2016, between 8:30 PM and midnight. The Assessing Officer treated the cash deposits as unexplained income under Section 69A of the Income Tax Act, 1961.

Reopening Based on Mere Change of Opinion Invalid: ITAT Quashes ₹4.96 Crore Income Tax Addition

GCK Stock Private Limited vs The ITO CITATION: 2025 TAXSCAN (ITAT) 908

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) quashed the reassessment proceedings, ruling that the reopening of assessment based on a mere change of opinion was invalid under the Income Tax Act, 1961. GCK Stock Private Limited, a securities trading company, had originally filed its return for the Assessment Year 2015-16, disclosing income of Rs. 3,77,390, which was accepted in a scrutiny assessment completed under Section 143(3) in December 2017. Based on information from SEBI and the Investigation Wing, the Assessing Officer (AO) reopened the case under Section 148A(d) in July 2022, alleging that the assessee had engaged in pre-arranged reversal trades in illiquid stock options, leading to an artificial loss of Rs. 4.96 crore.

Share Capital Received from Previous AY Cannot Be Taxable as Unexplained Cash Credit: ITAT Deletes Addition u/s 68

Jai Bhola Trading Co. Pvt. Ltd. vs IT Ward 9(3) CITATION:   2025 TAXSCAN (ITAT) 901

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) held that share capital received from previous Assessment Years could not be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The assessee, Jai Bhola Trading Co. Pvt. Ltd., issued shares during AY 2012–13 at ₹100 each, raising ₹1.43 crore. Of this, ₹1.33 crore was received in earlier AYs, and ₹10 lakh was received in AY 2012–13 from Para Bepar South Pvt. Ltd.

The case was selected for scrutiny under the Computer Assisted Scrutiny Selection (CASS) system. During the assessment, the Assessing Officer (AO) sent notices and issued summonses to the directors of the investing company under section 143 of the Income Tax Act, 1961. In response to the notices, the assessee clarified that ₹1.33 crore was not relevant to the year under consideration, having been received in prior years. For the ₹10 lakh received during AY 2012-13, the assessee furnished supporting documents including share application forms, ITRs, PANs, and bank statements.

Reopening u/s 147 Must Be Based on Specific and Clear Grounds, Not Borrowed Satisfaction: ITAT Quashes ₹68L Addition

ACIT vs M/s Delightful Estate Developers LLP

CITATION: 2025 TAXSCAN (ITAT) 902

The assessee, Delightful Estate Developers LLP, filed its return for the Annual Year  (AY) 2017-18, declaring nil income. Later, in May 2018, tax authorities conducted a search on the Banka Group. During this search, they discovered that Mukesh Banka and his companies were involved in providing accommodation entries. The tax department alleged that the assessee had received ₹68 lakh in such bogus loans from five shell companies linked to the Banka Group.

Top Stories Relief to Toyota Boshoku: ITAT Rules Royalty Payments to Parent Company Justified, Rejects Dept’s NIL Valuation Claim

Toyota Boshoku Automotive India Private Limited. vs The Dy. Commissioner of Income Tax CITATION:   2025 TAXSCAN (ITAT) 909

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) rejected the tax department’s adjustment that benchmarked royalty payments to NIL, ruling that Toyota Boshoku Automotive India’s payments to its parent company in Japan were justified and consistent with past assessments. Toyota Boshoku Automotive India Pvt. Ltd., the assessee, engaged in manufacturing automotive components, paid Rs. 29.43 crore in royalty to its Japanese parent, Toyota Boshoku Corporation, for the use of technical know-how. The Transfer Pricing Officer (TPO) disregarded the payment, stating that the assessee functioned as a contract manufacturer for Toyota Kirloskar Motors Ltd. (TKML), so it should not have incurred royalty costs, which were instead deemed more appropriately payable by TKML.

CA Misses 143(1) Intimation due to Engagement in Foreign Tax Filings: ITAT Condones 38-Day Delay in Income Tax Appeal

M/s. Saviynt India Pvt. Ltd vs The Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 905

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) condoned a 38-day delay in filing an appeal by Saviynt India Pvt. Ltd., holding that the delay was due to a genuine misapprehension by the company’s Chartered Accountant (CA) who was engaged in foreign tax filings and failed to recognize the finality of an intimation under Section 143(1) of the Income Tax Act, 1961. Saviynt India Pvt. Ltd., the assessee, filed its return of income for Assessment Year 2021–22, declaring a total income of Rs. 21.8 crores. The Centralized Processing Centre (CPC), Bangalore, issued an intimation under Section 143(1) proposing an adjustment of Rs. 5.43 crores, treating GST refunds as taxable income. The company submitted a response, stating that the GST refund was not claimed as an expense and hence was not taxable.

ITAT Allows Rs. 1.3 Crore LTCG Exemption to Husband-Wife Despite Sale of 2 Properties

Smt. Tejal Kaushal Shah vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 910

In a recent case, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the Long-Term Capital Gain (LTCG) tax exemption of Rs. 1.3 Crore granted to the husband and wife despite considering the sale of the 2 properties, which ultimately was  for the purchasing of joint property. Tejal Kaushal Shah, the appellant/assessee, is an individual who filed her income return, stating her complete income. After the assessee’s case was chosen for review, the assessee received the appropriate notices. After claiming the benefit of indexation, the assessee sold immovable property and showed a long-term capital gain (LTCG) of Rs. 1,30,30,729, according to the Assessing Officer. The assessee also claimed an exemption under section 54 of the Income Tax Act for the new property acquired through a deed of transfer.

Fruit Seller Delayed Filing Appeal Against Rs. 78 Lakh Addition Due to COVID-19: ITAT Remands Matter

Mohd. Farooque Mohd. Rafique vs ITO CITATION: 2025 TAXSCAN (ITAT) 907

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case involving a Rs. 78.39 lakh addition made to the income of a fruit seller, condoned a delay due to the severe impact of COVID-19 on the assessee and his family. Mohd. Farooque, (assessee) a fruit seller operating on a commission basis filed his income tax return for AY 2018-19, declaring an income of Rs. 8,21,210. The case was selected for limited scrutiny by the Assessing Officer (AO). The assessee did not respond to the notices or participate in the assessment proceedings. The AO observed that the assessee reported a commission income of Rs. 19,70,000 after deducting expenses of Rs. 11,48,790, resulting in a net profit of Rs. 8,21,210. However, based on Statement of Financial Transactions (SFT) data, the AO noted cash deposits aggregating to Rs. 9,79,93,295 in the assessee’s bank accounts.

Transfer Pricing adjustment unwarranted u/s 92BA If Deduction Not claimed u/s 80IA: ITAT Deletes Addition

Sanghi Industries Limited & DCIT CITATION: 2025 TAXSCAN (ITAT) 913

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that where no deduction is claimed under Section 80IA of the Income Tax Act, 1961, the transfer pricing adjustments under Section 92BA pertaining to specified domestic transactions are unwarranted. Sanghi Industries Limited (assessee), a major cement manufacturer, operates a captive power unit eligible for deduction under Section 80IA. The assessee transferred power from the eligible unit to its own cement unit and disclosed the transaction in Form 3CEB. However, the assessee did not claim deduction under Section 80IA due to business losses. The case was referred to the Transfer Pricing Officer (TPO), who held that the internal CUP method applied by the assessee was incorrect and proceeded to benchmark the transaction using average rates charged to third parties.

Mere Non-Appearance of Directors Cannot Justify Additions When Documentary Compliance is Complete: ITAT

Income Tax Officer vs Mandvi Salts & Logistics Pvt. Ltd. CITATION: 2025 TAXSCAN (ITAT) 911

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that mere non-appearance of directors does not justify additions under Section 68 of the Income Tax Act, 1961, when the assessee has furnished complete documentary evidence establishing the genuineness of the transactions.

Mandvi Salts & Logistics Pvt. Ltd., the assessee, had received Rs. 5 crores in share capital and premium from two private companies during the Assessment Year 2012–13. The AO treated the amount as unexplained income under Section 68, citing the absence of personal appearance of the directors of the investing companies, despite the assessee furnishing PAN details, share application forms, bank statements, audited financials, and confirmations from both subscribers.

Interest on Fixed Deposits Not Business Income: ITAT upholds 10AA Deduction Denial for SEZ unit

Excelra Knowledge Solutions (P) Ltd vs Dy. CIT Circle 8(1)CITATION: 2025 TAXSCAN (ITAT) 912

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the denial of deduction under Section 10AA to a Special Economic Zone (SEZ) unit, ruling that interest income earned from fixed deposits does not constitute business income eligible for exemption. Excelra Knowledge Solutions (P) Ltd (assessee) claimed deduction under Section 10AA for Assessment Year 2018-2019, including interest income earned from fixed deposits maintained with banks. The Assessing Officer (AO) denied the claim on the grounds that the interest income was not derived from the export of services and hence did not qualify as profits derived from the business under Section 10AA of the Income Tax Act.

AO shall not make Addition u/s 69A of Income Tax solely Relying on Whatsapp Image without any Corroborative Evidence: ITAT terms it ‘Dumb Document’

M/s. Rucha Consultancy LLP vs DCIT CITATION: 2025 TAXSCAN (ITAT) 914

The Income Tax Appellate Tribunal ( ITAT ) , Mumbai Bench, has held that an addition under Section 69A of the Income Tax Act, 1961 cannot be sustained solely on the basis of a WhatsApp image found on an employee’s mobile phone, without any corroborative evidence. The bench termed it as a ‘dumb document’. The assessee, Rucha Consultancy LLP had originally filed its return declaring an income of ₹24.87 crore. However, following a search under Section 132 of the Act, the AO completed the assessment by determining a total income of ₹47.75 crore. One of the key contentions of the assessee was the addition of ₹2.10 crore under Section 69A based on an image retrieved from the phone of Ashish Chhangani, a personal assistant of the group’s promoter, Prashant Nilawar.

Mere Non-Compliance of Summons u/s 131 Not Ground for Addition u/s 68 When Evidences Furnished before AO: ITAT

Andromeda Communications Pvt. Ltd vs I.T.O., Ward - 7(1)CITATION: 2025 TAXSCAN (ITAT) 915

The Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that in cases of unabated assessments, no addition can be sustained under Section 68 of the Income Tax Act, 1961, in the absence of any incriminating material found during a search under Section 132. The assessee, Andromeda Communications Pvt. Ltd., had issued equity shares at a high premium to certain shareholders who were relatives of the company’s directors. During the assessment proceedings for AY 2012-13, the Assessing Officer (AO) questioned the justification for such premium and made an addition of ₹1.65 crore under Section 68, citing unexplained cash credit. The AO primarily relied on the non-compliance with summons issued under Section 131 by the directors of the company.

Delay Should Be Viewed Pragmatically, Not Pedantically: ITAT Condones Up to 884 Days’ Delay for Co-op Society to File Appeal

Jagruti Nagri Sahakari Patsanstha Myt Parli Vaijnath vs ITO CITATION: 2025 TAXSCAN (ITAT) 917

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has condoned delays of up to 884 days in three appeals filed by a cooperative society, ruling that delay should be viewed pragmatically not pedantically for condonation of delay in filing appeal.  Jagruti Nagri Sahakari Patsanstha (assessee) is a cooperative society engaged in providing credit facilities to its members. The assessee filed a return declaring Nil income for Assessment Year (A.Y.) 2020-21 after claiming a deduction of Rs. 36,85,250 under Section 80P of the Income Tax Act, 1961. The case was selected for scrutiny due to high interest expenditure, huge advances, and high liabilities compared to low income. Due to non-compliance with statutory notices, the Assessing Officer (AO) completed the assessment ex-parte making additions totaling Rs. 90,33,320, including disallowance of the Section 80P deduction of the Income Tax Act.

Taxpayer Can Claim DTAA Exemption for Pre-April 2017 Gains and Still Carry Forward Post-April 2017 Losses Under Income Tax Act

TVF Fund Ltd vs Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 918

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that a taxpayer can avail capital gains exemption under the India-Mauritius Double Taxation Avoidance Agreement (DTAA) for shares acquired before April 1, 2017, and still carry forward capital losses under Indian domestic tax law for shares acquired thereafter. TVF Fund Ltd. (assessee), a company incorporated in Mauritius and registered with the Securities and Exchange Board of India (SEBI) as an FPI, filed its return of income for Assessment Year (AY) 2021–22. The assessee claimed exemption under Article 13(3) and 13(4) of the India-Mauritius DTAA, as they were taxable in Mauritius based on the assessee’s residency. The Assessing Officer (AO) set off brought forward short-term capital losses of Rs. 9.94 crore and long-term capital losses of Rs. 45.67 crore from AY 2020–21.

Levy of Late Fee u/s 234E for TDS Returns Filed Prior to June 2015 Unjustified: ITAT Rules Amendment is Prospective

Shrikrishna Laxminarayan Thakur vs ITO TDS Ward CITATION: 2025 TAXSCAN (ITAT) 919

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) ruled that late fees levied under Section 234E of the Income Tax Act, 1961, for delayed TDS returns processed prior to June 1, 2015, were unjustified and held that the amendment to Section 200A is prospective in nature. Shrikrishna Laxminarayan Thakur (assessee) filed TDS returns for various quarters across Assessment Years 2013-14, 2014-15, 2015-16, and 2016-17. These returns were filed belatedly, and the Central Processing Cell (CPC) processed them under Section 200A, imposing late fees under Section 234E for the delay. The assessee filed rectification applications before the CPC to remove the fees, which were rejected. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) dismissed the appeal and upheld the CPC’s order.

 5 Hearings Missed including one During Covid Period: ITAT Grants Another Chance, Restores Matter to CIT(A)

Chhaya Dhanraj Chaudhari vs ITO CITATION: 2025 TAXSCAN (ITAT) 920

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) granted relief to assessee who missed 5 hearings including one scheduled during covid period. The matter was restored to the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee, an individual taxpayer, had challenged an addition of ₹3,04,800 made under a reassessment order passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 for Assessment Year 2011-12.

Rejection of Additional Evidence on Transport Expenses u/s 40(a)(ia): ITAT Remits Matter to CIT(A)

Bala Filling Station Opp. GEB Substation vs The ACIT CITATION: 2025 TAXSCAN (ITAT) 923

The Surat Bench of  Income Tax Appellate Tribunal(ITAT) remanded the matter to the Commissioner of Income Tax(Appeals)[CIT(A)] for a fresh decision after rejecting the CIT(A)’s stance on the non-admission of additional evidence related to transport expenses under Section 40(a)(ia) of Income Tax Act,1961. Bala Filling Station,appellant-assessee,filed its return of income on 10.10.2017, declaring ₹58,98,190. Engaged in retail trade of petroleum products, the case was selected for scrutiny under Computer Assisted Scrutiny Selection(CASS).

During assessment, the Assessing Officer(AO) made additions of ₹10,47,297 as unexplained cash credit under Section 68, ₹4,26,950 disallowed under Section 40(a)(ia), ₹3,75,000 towards reconstitution fees, and ₹6,500 as interest income. The assessee, aggrieved by the AO’s order, appealed before the CIT(A), challenging three additions. The CIT(A) deleted the additions of ₹10,47,297 and ₹3,75,000, but upheld the disallowance of ₹4,26,950 under Section 40(a)(ia). The assessee had submitted a declaration from M/s Sonal Transport to show the transporter owned fewer than ten trucks and requested it be admitted as additional evidence under Rule 46A.

Disallowance for Contractual Penalties Deducted by Government Authorities: ITAT Allows Deduction as Business Expenditure u/s 37(1)

M/s G.L.Construction Pvt Ltd vs ACIT CITATION: 2025 TAXSCAN (ITAT) 922

The Mumbai Bench of Income Tax Appellate Tribunal(ITAT)allowed deduction of ₹42.44 lakh as business expenditure under Section 37(1) of Income Tax Act,1961 rejecting the disallowance for contractual penalties deducted by government authorities. G.L.Construction Pvt Ltd,appellant-assessee,was engaged in road construction for government bodies like MCGM, NMMC, and MMRDA. During project execution, these authorities deducted Rs.45,91,698/- from certified bills, citing delays, quality issues, lack of machinery, and other lapses as reasons for penalties. In some cases, the appellant recovered part of these amounts from engineers and project managers. The assessee argued that these deductions were part of routine business operations and not penalties for any offence under law, especially considering the large scale of projects ranging from Rs.100 to Rs.250 crores.

Cash Payments to Landlord, Students etc., Exceeds Threshold limit of Rs.10,000: ITAT Upholds Disallowance u/s 40A(3)

Devcare Solutions vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 924

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the disallowance of cash payments amounting to Rs. 66,61,467 for violating the threshold limit of Rs. 10000 prescribed under Section 40A(3) of the Income Tax Act, 1961. Devcare Solutions (assessee) who had observed by the Assessing Officer (AO) that the assessee  had withdrawn Rs. 80,14,000 in cash from its HDFC bank account.

 The AO observed cash expenses totaling Rs. 66,61,467, where individual payments exceeded the Rs. 10,000 threshold limit stipulated under Section 40A(3) of the Income Tax Act.  The AO issued a show-cause notice to the assessee. The assessee submitted a cash book but failed to provide adequate rebuttal or evidence to justify the cash payments. Aggrieved by the AO’s addition of Rs. 66,61,467, the assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee argued that the cash payments were made under compelling circumstances.

ITAT Deletes ₹9.9 Cr Income Tax Addition Over AO’s Profit Overestimation and Unsubstantiated Loans

Bhrugesh Dienshbhai Shah vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 925

The  Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) deletes a 9.9 crore tax addition made by the AO because of the overestimation of profit, misclassification of assets, and lack of evidence Ruchit Enterprise was run by the assessee, Bhrugesh Dineshbhai Shah, who dealt in chemical trading. In his 2017–18 tax return, he reported ₹6,92,020 in total income. During the scrutiny proceedings, the AO made several additions under Section 143(3) of the Income Tax Act, 1961. The adjustments included an estimate of 5% gross profit, disallowance of expenses, unexplained credits, and capital work-in-progress. The AO finally determined the total income at ₹9,99,73,873.

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