ITAT Weekly Round-Up [May 27th - 31st]

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 27th - 31st.

ITAT Deletes Rs.96.62 Lakh Penalty, Rules Section 271(1)(c) Not Applicable on Estimated Additions

Pawan Kumar Gupta vs ITO CITATION:   2025 TAXSCAN (ITAT) 961

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has deleted a penalty of Rs.96.62 lakh imposed on Delhi-based fabric trader Pawan Kumar Gupta, holding that concealment penalties under Section 271(1)(c) cannot be levied on income additions made purely on estimation basis. The decision came as relief for Gupta, who faced penalties for assessment years 2013-14 and 2014-15 related to his business M/s Garima Trading Co. The case originated from assessment proceedings where the tax department had estimated Gupta’s income at Rs.3.25 crore against his declared income of Rs.12.73 lakh for 2013-14. The additions included Rs.28.04 crore of alleged unexplained cash deposits in Jammu & Kashmir Bank and Rs.1.13 crore of other deposits, with the Assessing Officer imposing the maximum penalty citing concealment. Similar additions were made for 2014-15.

ITAT Dismisses Awadh Public School’s 9-Year Tax Appeal for ‘Unjustified Delay’

Awadh Public School Academy vs Income Tax Officer CITATION:   2025 TAXSCAN (ITAT) 963

The Income Tax Appellate Tribunal (ITAT), Lucknow Bench, has dismissed a tax appeal filed by Awadh Public School Academy, citing an “unjustified delay” of 3,299 days (approximately 9 years) in filing the appeal. The tribunal rejected the school’s plea for condonation of delay, emphasizing the lack of reasonable cause for such an inordinate lapse. The appellant, Awadh Public School Academy, had challenged an order dated June 26, 2003, passed by the Commissioner of Income Tax-II, Lucknow, which rejected its application for registration under Section 12AA of the Income Tax Act, 1961. The school sought to revive its appeal, which was earlier dismissed ex-parte by the tribunal in 2014. The case was later recalled in 2016, but the tribunal found no valid justification for the prolonged delay.

ITAT Dismisses Appeals as Withdrawn After Assessee Opts for DTVSV Scheme

Mohammad Parwaiz Alam vs NFAC CITATION:   2025 TAXSCAN (ITAT) 960

The Income Tax Appellate Tribunal (ITAT), Patna Bench, has dismissed two appeals filed by the assessee as withdrawn, following his decision to settle the disputes under the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024. The matter pertains to Assessment Year 2014–15 and relates to separate orders passed by the National Faceless Appeal Centre (CIT(A)) under Section 250 of the Income Tax Act. The appellant, Mohammad Parwaiz Alam, a resident of Araria, Bihar, had filed two appeals against the orders passed by the CIT(A). Though the appeals were filed with a delay of seven days, the Tribunal condoned the delay after finding reasonable cause as mentioned in the assessee’s application. Notices for hearing were issued on multiple dates, but no one appeared on behalf of the assessee during any of the scheduled hearings.

ITAT Quashes Assessment in Wave Industries Case, Cites ‘Mechanical Approval’ u/s 153D

Wave Industries Pvt. Ltd vs DCIT CITATION:   2025 TAXSCAN (ITAT) 959

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has quashed the assessment order against Wave Industries Pvt. Ltd., holding that the approval granted under Section 153D of the Income Tax Act, 1961, was “mechanical” and lacked proper application of mind. The bench allowed the company’s appeal, setting aside the additions made by the tax department. Wave Industries Pvt. Ltd., a Noida-based company, had challenged the assessment order dated March 27, 2014, passed under Section 153A of the Income Tax Act. The case stemmed from search proceedings, and the Assessing Officer had made additions to the company’s income. However, the tribunal found that the mandatory approval under Section 153D, required for such assessments, was granted without due consideration of the facts.

ITAT Quashes Tax Additions Against Couple, Rules Section 153C Satisfaction Invalid

Rachita Sahgal vs ACIT CITATION:   2025 TAXSCAN (ITAT) 964

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has overturned tax additions of Rs.42.94 lakh each against Gurgaon-based couple Rachita Sahgal and Vivek Sahgal, holding that the department incorrectly invoked Section 153C of the Income Tax Act. The bench ruled that the seized documents only “pertained to” rather than “belonged to” the assessees, making the assessment legally untenable. The case originated from a January 2018 search action against M/s Navneet Dawar group, where documents allegedly showing unaccounted property transactions were recovered. The tax department claimed these documents “belonged to” the Sahgals and made identical additions of Rs.42.94 lakh in their hands for assessment year 2018-19. The couple, though absent during hearings, contested the additions through written submissions.

Relief to Tata Chemicals: ITAT Allows Deduction of ₹156 crores Interest on Loan Utilized for Overseas Investment u/s 36 (1) (iii)

Tata Chemicals Limited vs PCIT-2 CITATION:   2025 TAXSCAN (ITAT) 967

The Mumbai bench of Income Tax Appellate Tribunal (ITAT) has set aside an order passed by the Principal Commissioner of Income Tax (PCIT) which disallowed the interest expenditure incurred by Tata Chemicals Ltd. on loan taken by it for investing in its overseas subsidiary company.

The return of income filed by the assessee was finally assessed and an order under Section 143(3) read with Section 144C(13) and 144B of the Income Tax Act, 1961 was passed on 28.01.2022 assessing the total income at ₹824,20,33,550. Subsequently, the Principal Commissioner of Income Tax (PCIT), Mumbai-2 noticed that the assessee company had claimed an interest expenditure of ₹276.66 crores out of which interest on loan utilized for investment in overseas subsidiaries was ₹156.12 crores. The assessee company had made investment in shares of the overseas subsidiary company and claimed deduction of interest expenditure of ₹156.12 under Section 36(1)(iii) of the Act, 1961.

Rental Income Offered for Taxation in One Assessment Year Cannot Taxed Again: ITAT Remits Matter to AO

Shree Kuberji Developers vs The ACIT CITATION:   2025 TAXSCAN (ITAT) 966

The Surat bench of Income Tax Appellate Tribunal (ITAT) has held that where a rental income is offered for taxation in one assessment year, the same shall be reduced by the Assessing Officer from the income of another Assessment year. The bench remitted the case to the file of the AO to verify the claim of the assessee.

The assessee filed a revised return of income declaring a total income of ₹1,09,93,760 which was selected for scrutiny under CASS. On perusal of 26AS and details filed by assessee, it was found by the Assessing Officer that there is a mismatch between the receipts as per 26AS and the return of income filed by the assessee.

ITAT Orders Fresh Appeal Hearing for Assessee, Cites Denial of Proper Opportunity by CIT(A)

Shankar Prasad vs Assessment Unit CITATION:   2025 TAXSCAN (ITAT) 965

In a recent order, the Income Tax Appellate Tribunal (ITAT), Patna Bench, has allowed a fresh appeal hearing for an assessee after observing that the Commissioner of Income Tax (Appeals) ,CIT(A) failed to provide a fair opportunity of being heard. Shankar Prasad, a resident of Bihar’s Nalanda district, had not filed his return of income for the relevant year. The Assessing Officer initiated proceedings under Section 147 read with Section 148A of the Income Tax Act after receiving information that the assessee had withdrawn cash amounting to Rs.1.37 crore from a current account held with Canara Bank.

ITAT Dismisses Revenue’s Appeal, Sides With Assessee in Time-Barred 153C Assessment Case

DCIT vs M/s Dharampal Premchand Ltd CITATION:   2025 TAXSCAN (ITAT) 968

The Income Tax Appellate Tribunal (ITAT) Delhi bench has quashed a Rs.13.12 crore tax assessment against Delhi-based Dharampal Premchand Ltd, ruling the order was time-barred. The tribunal dismissed the Revenue Department’s appeal while partly allowing the assessee’s cross-objection regarding the validity of the assessment under Section 153C of the Income Tax Act. The case involved Dharampal Premchand Ltd (formerly Affe Technologies Pvt Ltd), a Chandni Chowk-based software publishing firm. The dispute originated from a search operation conducted on November 27, 2014, targeting the Maconns, Meenu and Yadav Singh Group in Noida. The Assessing Officer (AO) had issued a notice under Section 153C on June 18, 2015, later passing an assessment order on August 28, 2017 that added Rs.13 crore as unexplained cash credit under Section 68, along with other disallowances totaling Rs.13.12 crore.

ITAT Sets Aside Additions, Asks AO to Re-examine Rs.2.5 Cr Loans & Rs.1.66 Cr Property Advances

Shri Hemant Kumar vs The I.T.O CITATION:   2025 TAXSCAN (ITAT) 969

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has directed a fresh assessment in the case of Shri Hemant Kumar, setting aside key additions made by the Assessing Officer for Assessment Years 2010–11 and 2011–12. The additions under scrutiny involved unsecured loans amounting to Rs.2.51 crore and property-related advances totalling Rs.1.66 crore. The appellant, Hemant Kumar, had challenged the orders of the Commissioner of Income Tax (Appeals)-1, Gurgaon dated 31 March 2016. The case involved two appeals – one each for A.Y. 2010–11 and A.Y. 2011–12 – which were heard together by the Tribunal owing to the similarity of issues.

ITAT Grants Relief to Charitable Trust, Orders Fresh Hearing on Registration After Trust Deed Modifications

Krishnavi Charitable Trust vs The C.I.T. CITATION:   2025 TAXSCAN (ITAT) 970

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Exemptions) rejecting the registration of Krishnavi Charitable Trust under Section 12A of the Income Tax Act, and directed a fresh hearing in light of the modifications initiated by the trust in its deed. The appellant in the case is Krishnavi Charitable Trust, which had filed an appeal against the order dated 27 March 2024 passed by the CIT (Exemptions), New Delhi. The trust’s application for registration under Section 12A(1)(ac)(iii) had been rejected on grounds including the alleged absence of an irrevocability clause and a dissolution clause in the trust deed, and the existence of a special clause that raised concerns with the CIT (E).

ITAT Orders Re-Examination of Rs.83 Lakh Dispute for Shipping Firm, Cites Contingent Liability Error

Howe Robinson Shipping India Pvt. Ltd. vs ACIT CITATION:   2025 TAXSCAN (ITAT) 971

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has directed a fresh verification in the case of Howe Robinson Shipping India Pvt. Ltd. regarding an addition of Rs.83,46,490, which had been treated as a disallowable contingent liability by the tax department under Section 143(1) of the Income Tax Act for the Assessment Year 2020–21. The appellant, Howe Robinson Shipping India Pvt. Ltd., engaged in the business of ship brokering, had filed its return of income at NIL. The return was processed under Section 143(1), where an adjustment was made disallowing an amount of Rs.83,46,490 on account of alleged contingent liability. Additionally, an amount of Rs.1,69,124 was disallowed for delayed deposit of employees’ contribution to the provident fund.

ITAT Orders Fresh Probe into Rs.50 Lakh Cash Robbery Case, Asks Department to Verify Farmers’ Claims

Kishan Lal vs The NFAC CITATION:   2025 TAXSCAN (ITAT) 972

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has sent back the case involving an addition of Rs.50 lakh under Section 69A of the Income Tax Act to the Assessing Officer for a fresh review. The Tribunal has directed the tax department to thoroughly examine claims that the cash, allegedly seized from the appellant Kishan Lal, did not belong to him but to a group of farmers. Kishan Lal, the appellant in the matter, had approached the Tribunal against the order of the Commissioner of Income Tax (Appeals) dated 23 November 2023, which had confirmed the addition of Rs.50 lakh as unexplained cash under Section 69A and also upheld the consequential tax charged under Section 115BBE and interest under Sections 234A and 234B.

ITAT Sets Aside Rs.1.25 Crore Penalty on UP State Bridge Corp, Orders Fresh Review Linked to Pending Quantum Appeal

ACIT vs M/s. UP State Bridge Corporation Ltd CITATION:   2025 TAXSCAN (ITAT) 973

The Lucknow Bench of the Income Tax Appellate Tribunal (ITAT) has set aside a penalty of Rs.1.25 crore imposed on UP State Bridge Corporation Ltd. under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal has directed a fresh adjudication of the penalty matter in connection with the pending outcome of the quantum appeal. The appellant in this case is the Assistant Commissioner of Income Tax, Range-1, Lucknow, who challenged the order of the Commissioner of Income Tax (Appeals)-I, Lucknow, dated 11.10.2006, which had cancelled the penalty originally imposed by the Assessing Officer. The penalty had been levied after a long history of assessment and reassessment proceedings relating to the assessment year 1990–91.

ITAT Dismisses Appeal of Urban Co-operative Credit Society for Improper Filing Against Penalty u/s 271D of Income Tax Act 1961

Shri Sant Gajanan Maharaj Urban Co–operative Credit Society vs Income Tax Officer CITATION:   2025 TAXSCAN (ITAT) 974

In a recent ruling, the Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal filed by Shri Sant Gajanan Maharaj Urban Co-operative Credit Society for the assessment year 2018–19, arising from the penalty imposed under Section 271D of the Income Tax Act, 1961. The appeal, which contested the levy of a penalty amounting to ₹63,52,742, was dismissed in limine as the assessee had sought withdrawal due to a filing before the wrong forum. During the hearing, the assessee’s Authorised Representative (AR) submitted a letter dated 20 January 2025, requesting permission to withdraw the appeal. It was submitted that the appeal before the ITAT had been filed mistakenly against the penalty order passed under Section 271D by the Joint Commissioner of Income Tax (JCIT). In contrast, a proper appeal against the said order had already been filed before the Commissioner of Income Tax (Appeals) in Form 35.

Non-Payment of Advance Tax Not Ground for Appeal Dismissal: ITAT Remands Case for Fresh Adjudication

Sahyogh Nagri Sahkari vs ITO CITATION:   2025 TAXSCAN (ITAT) 975

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case involving an addition of Rs. 1,45,39,000 back to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh adjudication, emphasizing that non-payment of advance tax cannot justify the dismissal of an appeal without considering its merits. Sahyogh Nagri Sahkari, (assessee) a co-operative credit society faced scrutiny for the Assessment Year (AY) 2014-15. The Income Tax Department identified cash deposits amounting to Rs. 1,45,39,000 in the society’s bank account with Chickly Urban Co-operative Bank Ltd.

Non Compliance to Income Tax Notices Due to working in Saudi Arabia: ITAT Remands Rs.1.90 Cr Matter for Fresh Adjudication

Mohammad Faheem vs The Income Tax Officer CITATION:   2025 TAXSCAN (ITAT) 980

The Lucknow Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case involving an addition of Rs. 1,90,90,465 back to the Assessing Officer (AO) for fresh adjudication, citing the assessee’s non-compliance to the Income Tax Notices due to he was working in Saudi Arabia. Mohammad Faheem (assessee), an individual operating as Shan Timber Broker & Supplier, faced scrutiny for the Assessment Year (AY) 2014-15. The Income Tax Department noted cash deposits amounting to Rs. 1,90,90,465 in the assessee’s bank account. The assessee had not filed an Income Tax Return (ITR) for AY 2014-15.

Hawala Transactions: ITAT Upholds Addition on Bogus Purchases Due to Absence of Evidence to Rebut

Vinod Omprakash Kainya vs Assistant Commissioner of Income Tax Circle CITATION:   28 May 2025

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT )  upheld the addition of Rs. 74,61,350 made by the Assessing Officer (AO) , being 25% of purchases treated as bogus due to hawala transactions, as the assessee failed to provide any evidence to rebut the findings. Vinod Omprakash Kainya, appellant-assessee, challenged the Commissioner of Income Tax (Appeals)[CIT(A)] order that confirmed an addition of Rs. 74,61,350 by the AO. This amount was 25% of total purchases booked through fake invoices. The case was reopened after information from DGIT (Inv), showed the appellant inflated purchases using hawala parties. During reassessment, it was found that the appellant had transactions with these hawala parties.

Exemption on Interest from Enhanced Compensation u/s 10(37): ITAT Rules It Taxable as Income from Other Sources

Kuljeet Singh vs ITO CITATION:   2025 TAXSCAN (ITAT) 986

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the claim for exemption on interest received from enhanced compensation for compulsory acquisition of agricultural land under section 10(37) of Income Tax Act,1961, holding that such interest is taxable as income from other sources. Kuljeet Singh,appellant-assessee,challenged the order dated 31.08.2023 passed by the Commissioner of Income Tax (Appeals)[CIT(A)], which arose from the assessment order dated 17.03.2021 under section 143(3) read with sections 143(3A) and 143(3B) of the Income Tax Act, issued by the National Assessment Centre, Delhi.

Unexplained Property Purchase of Rs. 58 Lakh Leads to Income Addition: ITAT Sets Aside CIT(A) Order

Ashok Tiwari vs Income Tax Officer CITATION:   2025 TAXSCAN (ITAT) 985

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Commissioner of Income Tax (Appeals)[CIT(A)] order and directed a fresh hearing after the assessee’s unexplained property purchase of Rs. 58 lakh was added to income. Ashok Tiwari,appellant-assessee,filed his return of income on 21.06.2013 for the assessment year 2012–13. Later, the ADIT (Investigation),informed the department that he had purchased an immovable property worth ₹58,30,786 from Shri Abhishek Kumar, which was not disclosed in the return.

ITAT Sets Aside S.263 Order Disallowing Goodwill Depreciation for AY 2016-17, Ruling IND AS 103 Not Applicable

M/s. Oriental Buildtech vs The Principal Commissioner of Income Tax CITATION:   2025 TAXSCAN (ITAT) 987

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) set aside the Section 263 of Income Tax Act,1961 order disallowing depreciation on goodwill for assessment year 2016-17, ruling that IND AS 103 was not applicable for that year. Oriental Buildtech Private Limited,appellant-assessee, filed its return of income for AY 2016–17 on 16.10.2016, declaring a loss of ₹4.18 crore. The assessment was completed under Section 143(3) on 22.12.2018, accepting the returned loss. Later, the Principal Commissioner of Income Tax(PCIT) invoked Section 263 on 31.03.2021, directing the Assessing Officer (AO) to verify the depreciation claimed on goodwill and pass a fresh order.

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