The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) Mumbai has struck down the 10% ad hoc transfer pricing (TP) adjustment made on Siemens AG’s technical service transactions with Indian associates. The Tribunal held that the Transfer Pricing Officer (TPO) failed to apply any of the prescribed methods under Section 92C of the Income Tax Act or Rule 10B of the Income Tax Rules.

Citing the principle that transfer pricing determinations must be based on prescribed methods and objective data, the bench, comprising Beena Pillai (Judicial Member) and Renu Jauhari (Accountant Member), held that the 10% markup was unsustainable.

The Tribunal deleted the entire addition, observing that the TPO’s approach violated both Section 92C and the arm’s length principle. The ruling reinforces that TP adjustments must rest on analysis, not assumption, particularly where the taxpayer has substantiated its methodology.

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has reaffirmed that Siemens Aktiengesellschaft (Siemens AG), a tax resident of Germany, is liable to tax on royalty and fees for technical services (FTS) in India only on a receipt basis, not on accrual.

The Bench, comprising Beena Pillai (Judicial Member) and Renu Jauhari (Accountant Member), emphasised the principle of judicial consistency, observing that once a view has been upheld by the High Court in the assessee’s own cases, the Department is bound to follow it in subsequent years unless reversed by a higher court. The Tribunal rejected the AO’s reliance on Standard Triumph Motors Ltd., observing that it had been distinguished by the Supreme Court in later decisions and that the factual context was different.

Concluding that there was no reason to deviate from established judicial precedent, the Tribunal held that the royalty and FTS income must be taxed only on a receipt basis, as per the DTAA, and that accrual-based taxation would contravene both treaty language and prior binding rulings. The additions made by the AO and confirmed by the DRP were therefore deleted in full.

S. 234E TDS Late Fee Levy Prospective: ITAT Restores Appeal for Fresh Adjudication Subject to Payment of 10k Cost

MLS Enterprises Private Limitedvs I.T.OCITATION : 2025 TAXSCAN (ITAT) 1994

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) restored the appeal for fresh adjudication by the Commissioner of Income Tax (Appeals) [CIT(A)] for TDS late fee issue subject to payment of 10k cost.

The tribunal directed the assessee to furnish the proof of payment before the CIT(A). The tribunal also directed the CIT(A) to proceed to hear the appeal on merits. In the result, the appeal filed by the assessee was allowed for statistical purposes.

The Chennai Bench of the Income Tax AppellateTribunal (ITAT) deleted a total addition of ₹5,99,66,944 made under Section 68 and ruled that Section 68 cannot be invoked for "trade payables" and "trade receivables" that are brought forward balances from earlier years, as they do not represent fresh credits in the relevant assessment year.

The tribunal deleted the additions of ₹20,84,201 (K.C. Food Grains Marketing) and ₹2,17,16,920 (Universal Enterprise). The tribunal observed that ₹20,84,201 was a continuing brought forward balance from the earlier year, making Section 68 inapplicable. In the result, the appeals filed by the assessee for AYs 2015-16 and 2016-17 were allowed.

The tribunal condoned the delay in filing the appeal before the CIT(A). The Tribunal, in the interest of justice and fair play, remitted the entire issue back to the file of the Assessing Officer for fresh consideration in accordance with law by relying that the assessee had not been heard on the merits of the case before either of the lower authorities.The tribunal directed the assessee to produce all necessary documents to substantiate her claim, with a clear warning that no further leniency would be granted in case of default. In the result, the appeal filed by the assessee was allowed for statistical purposes.

Since the precedent cited by the assessee had already been overruled, the tribunal found no merit in the argument and upheld the penalty. However, as the counsel could not confirm whether the legal representative had inherited any estate of the deceased and its extent, the tribunal restored the matter to the AO to determine the value of the estate, if any, available to meet the liability. The appeal was accordingly disposed of with these directions.

Addition for Unsecured Loans Without PAN: ITAT Grants Partial Relief and Remands Matter for Verification of Submitted Documents

Assistant Commissioner of Income Tax vs Jayantilal Babulal Shah CITATION : 2025 TAXSCAN (ITAT) 2002

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) granted partial relief and remanded the matter for verification of submitted documents for the issue of addition of unsecured loans without PAN.

The two-member bench comprising Dr. B.R.R.Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) granted immediate relief for specific loans where the assessee had furnished replies in response to Section 133(6) notices.In the interest of justice, the tribunal allowed the AO to verify the documents related to identity and creditworthiness that the assessee had failed to provide during the original assessment and appellate proceedings. The appeal of the assessee was partly allowed for statistical purposes.

Unexplained Cash Credit Addition of ₹1.77 Cr: ITAT Remands Matter for Verification of Agricultural Income and Submitted Evidence

Jigar Patel vs The Income Tax OfficerCITATION : 2025 TAXSCAN (ITAT) 2003

The Ahmedabad Bench of the Income Tax Appellate Tribunal Remanded the matter for verification of Agricultural Income and evidence submitted by the assessee in the case involving unexplained cash credit addition of ₹1.77 Crore.

The tribunal held that the issue required proper verification in light of the submitted evidence and the matter was consequently remanded back to the file of the Assessing Officer with a direction to grant the assessee a fresh opportunity of hearing. In the result, the appeal filed by the assessee was partly allowed for statistical purposes.

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) set aside the assessment order passed, and restored the matter to the file of the Assessing Officer (AO) for a detailed review on the merits of the case for the issue of unexplained cash deposits and status of resident.

The two-member bench, comprising Suchitra Kamble (Judicial Member) and Narendra Prasad Sinha (Accountant Member), observed that since the assessment was made ex-parte under Section 144 and the first appeal was also dismissed ex-parte, there appeared to be a genuine difficulty on the part of the assessee.

In the interest of justice and fair play, the Tribunal remanded the entire matter back to the file of the AO with a direction to grant the assessee a proper opportunity of hearing by following the principles of natural justice.

The Surat Bench of Income Tax Appellate Tribunal (ITAT), has reduced the tax amount by dropping an addition by Rs. 73.3 Lakhs, in a dispute regarding the sale of Agricultural land whereby the Road Distance Measurement Method was preferred over Aerial Method for the Assessment year 2012-13.

The Tribunal deemed the ground regarding penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 since only initiation had occurred. Therefore, the ground is premature and does not require adjudication.

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of ₹2,27,76,680 towards alleged unaccounted purchases made under Section 69C of the Income Tax Act, 1961 and affirmed that the transactions belonged to two separate recreation clubs and not the individual assessee.

The two-member bench, comprising Manu Kumar Giri (Judicial Member) and S. R. Raghunatha (Accountant Member), noted that the AO’s own findings in the remand report supported the assessee’s contention that the additions were based on a "mistaken identity of transactions belonging to separate legal entities."

The Tribunal held that since the purchases to the extent of ₹2.27 Crore were correctly shown as purchases by the two separate entities in their own Form 26AS, they could not be taxed in the assessee's hands. The appeal filed by the Revenue was accordingly dismissed.

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that Corporate Social Responsibility (CSR) expenditure is eligible for deduction under Section 80G of the Income Tax Act, 1961, provided the assessee furnishes valid donation receipts and 80G certificates from registered entities.

The ITAT remitted the issue to the Assessing Officer for verification of the requisite documents, directing that if the assessee produces valid donation receipts and 80G certificates issued by the donee entities, the deduction should be allowed in accordance with law. The Tribunal made it clear that CSR expenses cannot be disqualified from deduction solely because they are statutorily mandated, provided the donations fulfill the parameters of Section 80G.

The Jaipur Bench of Income Tax AppellateTribunal ( ITAT) remitted the matter to the Commissioner of Income Tax (Exemption) [CIT(E)] after finding that the rejection of approval under section 80G(5)(iii) of Income Tax Act,1961,was based on the expiry of the earlier provisional registration and non-commencement of activities.

The two member bench comprising Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) noted that the CIT(E) had not examined the assessee’s submissions or the CBDT Circulars dated 03.06.2022 and 24.05.2023 while deciding the application for approval under section 80G(5).

Considering this lapse, the tribunal found it appropriate to remit the matter to the CIT(E) for fresh adjudication in light of the said circulars and in accordance with law, after giving the assessee an opportunity of being heard.As for the issue of non-commencement of activities, the bench observed that the impugned order did not contain any detailed discussion on the matter.

The Jaipur Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals)[CIT(A)]’s decision restricting the addition to ₹5.48 lakh as brokerage income, holding that the seized records reflected mock trading and not unexplained income.

The bench found no error in the CIT(A)’s order, which restricted the addition to Rs. 5,48,526 as brokerage income from mock trading and deleted the remaining addition. Both appeals, filed by the assessee and the department, were dismissed.

NPCI is Charitable Entity for Advancing General Public Utility: ITAT Rejects Income Tax Revision by CIT(E)

National Payments Corporationof India vs CIT CITATION : 2025 TAXSCAN (ITAT) 2010

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT recently held that the National Payments Corporation of India (NPCI) qualifies as a charitable entity as it is engaged in the advancement of general public utility, while quashing a revisionary order passed by the Commissioner of Income Tax (Exemptions) ( CIT(E) ) under Section 263 of the Income Tax Act, 1961.

Furthermore, the Tribunal noted that the AO had adequately examined all relevant issues, including the applicability of the proviso to Section 2(15) during the assessment proceedings. Accordingly, ITAT noted that the CIT(E) could not substitute its opinion against that of the AO when inquiries were duly made and conclusions were drawn based on facts and law.Consequently, ITAT ruled that the assessment order was not prejudicial to the interests of the Revenue and quashed the revisionary order passed under Section 263 and restored the original assessment, thereby reaffirming NPCI’s charitable status under the Income Tax Act, 1961.

LTCG Addition for Sale of Immovable Property: ITAT Deletes addition Citing Taxpayer as Mere Power of Attorney Holder

Nitinbhai Ranchabhai Dhakecha vs The ITO CITATION : 2025 TAXSCAN (ITAT) 2011

The Rajkot Bench of Income Tax Appellate Tribunal (ITAT) has set aside an order confirming the addition of ₹16,99,579 as Long Term Capital Gain (LTCG) on the sale of an immovable property. remanded the matter back to the Assessing Officer (AO) finding that the assessee was merely a Power of Attorney (POA) holder and not the actual seller of the property.

The Tribunal remitted the entire matter back to the file of the AO for fresh adjudication on merit, directing the AO to give the assessee a due opportunity to present his case and file the additional evidence. In the result, the appeal filed by the assessee was allowed for statistical purposes.

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) granted partial relief to Warner Bros Distributing Inc. in a case concerning the taxability of its film distribution income and interest on income tax refund.

The two-member bench comprising Vikram Singh Yadav (Accountant Member) and Sandeep Singh Karhail (Judicial Member) relied on its earlier decision in the assessee’s own case for assessment year 2006-07 and explained that payments for film distribution are specifically excluded from the definition of royalty under section 9(1)(vi) of the Act. Hence, it held that such income could not be taxed as royalty either under the Act or the DTAA.

Carry Forward of STCL allowed Despite Treaty-Exempt Gains: ITAT Mumbai Rules in Favour of Goldman Sachs (Singapore) Pte

Goldman Sachs (Singapore) Pte vs ACIT CITATION : 2025 TAXSCAN (ITAT) 2013

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled in favour of Goldman Sachs (Singapore) Pte., allowing the carry forward of short-term capital losses (STCL) incurred in AY 2014-15 despite the company claiming capital gains as exempt under the India–Singapore Double Taxation Avoidance Agreement (DTAA) in later years.

The Tribunal observed that the AO’s attempt to set off past losses against exempt gains contradicted the intent and operation of Article 13 of the India–Singapore DTAA and judicial precedents.Consequently, the two-member bench comprising Amith Shukla (Judicial Member) and Padmavathy S (Accountant Member) held that the brought forward STCL of ₹37.55 crore from AY 2014-15 should be carried forward to subsequent years.The Tribunal allowed the assessee’s appeal for both AY 2016-17 and AY 2021-22, ruling that the AO and CIT(A) erred in denying the benefit of carry forward.

Delay in Filing Form 10B Cannot Justify Denial When Report Was Available Before CPC Order: ITAT

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) held that the denial of exemption under Section 11 and 12 of the Income Tax Act on the sole ground of delay in filing Form 10B was not justified, as the report was available with the CPC before the order was passed.

The Tribunal concluded that since the Form 10B was filed along with the return of income and within the due date of filing the return of income, the delay in filing the Form 10B cannot be a ground for denial of the exemptions under Sections 11 and 12 of the Income Tax Act, 1961. In the result, the appeal filed by the assessee challenging the denial of exemption was allowed.

No Duplication of Claim with S. 36(1)(viia) Provision: ITAT Upholds Deletion of Bad Debts Addition for SIDBI

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of an addition made by the Assessing Officer (AO) regarding the disallowance of bad debts under Section36(1)(vii) of the Income Tax Act, 1961.

The tribunal found no infirmity in the CIT(A)’s decision by observing that the table of bad debts and provisions across various AYs showed that there was no duplication of claim between the deduction under Section 36(1)(vii) and Section 36(1)(viia) of the Income Tax Act. The appeal filed by the revenue on this ground was dismissed.

Commissioner of Police Coimbatore City Tamilnadu Police Canteen vs ITO CITATION: 2025 TAXSCAN (ITAT) 2016

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that transactions of the Coimbatore City Police Canteen with its members are governed by the principle of mutuality and do not amount to “business activity” under the Income Tax Act, 1961. The canteen, established by the State Government to supply goods to police personnel at cost price, had filed a nil return, but the Assessing Officer imposed a ₹1.5 lakh penalty under Section 271B for non-filing of a tax audit report despite accepting that its income was exempt on mutuality.

The Tribunal, relying on judicial precedents including Joint Commercial Tax Officer v. Young Men’s Indian Association (SC) and Koramangala Club v. ITO (Karnataka HC), held that once mutuality is established, Section 44AB does not apply since there is no “business” or “profession.” Observing that all transactions were confined to members and lacked any profit motive, the ITAT set aside the orders of the AO and CIT(A) and directed deletion of the penalty.

Absence of Recorded Satisfaction Invalidates Disallowance u/s 14A: ITAT rules in Favour of SICPA India

Sicpa India Private Limited vs Asst. CIT CITATION : 2025 TAXSCAN (ITAT) 2017

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled in favour of SICPA India Private Limited, holding that a disallowance under Section 14A of the Income Tax Act, 1961 cannot be sustained in the absence of a recorded satisfaction by the Assessing Officer regarding the correctness of the assessee’s claim.

The Tribunal directed deletion of the disallowance of ₹25.56 lakh. It further held that initiation of penalty proceedings under Section 270A was premature and that interest under Section 234C, if any, was to be recomputed based on the returned income.

Netflix Entertainment Services India LLP vs Deputy Commissioner of IncomeTax CITATION: 2025 TAXSCAN (ITAT) 2018

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) deleted a ₹444.93 crore transfer pricing adjustment on Netflix Entertainment Services India LLP, holding that the company functioned only as a limited-risk distributor and not as a content or technology provider. The Transfer Pricing Officer had re-characterised Netflix India’s role, treating 57.12% of its revenue as royalty for use of content and technology, a view upheld by the Dispute Resolution Panel.

The ITAT found this re-characterisation contrary to the distribution agreement and lacking evidentiary support, noting that all intellectual property rights remained with Netflix’s parent entities. It held that the Transactional Net Margin Method (TNMM) adopted by the assessee was appropriate for its low-risk operations and that the “Other Method” applied by the TPO had no legal or economic basis. Accordingly, the Tribunal deleted the entire adjustment and partly allowed Netflix India’s appeal.

CA Mistakenly Identified Sale Agreement As Sale Deed: ITAT Condones 498-Day Delay, Remands Capital Gains Matter

Shri Shankar Rajashekar vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 2019

The Bangalore Bench of Income Tax AppellateTribunal ( ITAT ) condoned a delay of 498 days in filing an appeal and remanded a capital gains dispute for fresh verification, after finding that the taxpayer’s Chartered Accountant (CA) had mistakenly treated an agreement for sale as a sale deed.

The appellate tribunal therefore set aside the orders of the lower authorities and remitted the matter to the AO for de novo consideration. It directed the AO to verify the documents, and if no transfer was found, to delete the capital gains addition. The assessee was also directed to cooperate and submit all necessary evidence for early completion of the proceedings. Accordingly the appeal was allowed for statistical purposes.

Girish Vrajlal Soni vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 2020

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) held that a gold sale transaction of ₹11.27 lakh was genuine and not an accommodation entry under Section 69A of the Income Tax Act, 1961. The assessee, Girish Vrajlal Soni, engaged in gold trading, had sold 350 grams of gold to Viko Enterprise through RTGS, supported by invoice, bank statements, and stock records. Despite these documents, the Investigation Wing and the Assessing Officer treated the transaction as non-genuine, and the Commissioner of Income Tax (Appeals) [CIT(A)] upheld the addition.

The Tribunal, comprising Dr. B.R.R. Kumar (Vice President) and Suchitra Kamble (Judicial Member), found that the assessee had substantiated the transaction with proper evidence and that payments were made through banking channels. As no contrary proof was presented by the Department, the ITAT concluded that the addition under Section 69A was unwarranted and accordingly allowed the appeal, deleting the ₹11.27 lakh addition.

M/s Glued Entertainment Pvt. Ltd vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2021

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that Tax Deducted at Source (TDS) at 2% under Section 194C of the Income Tax Act, 1961, on Common Area Maintenance (CAM) charges was valid, as such payments were for maintenance services and not for the use of property. Glued Entertainment Pvt. Ltd., which had leased space in Logix City Centre Mall, paid rent with 10% TDS under Section 194-I and CAM charges with 2% TDS under Section 194C. The Assessing Officer treated CAM charges as part of rent and demanded higher TDS, a view upheld by the CIT(A).

The tribunal, relying on earlier rulings including Connaught Plaza Restaurants (P) Ltd. v. DCIT, observed that CAM charges relate to upkeep of shared facilities and not to rental payments. It concluded that TDS at 2% under Section 194C was correctly applied and directed that the order of the CIT(A) be set aside, allowing the assessee’s appeal.

M/s Friends Transport Carrier vs ITO CITATION: 2025 TAXSCAN (ITAT) 2022

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) directed the Assessing Officer to estimate income at 8% of total transport receipts under Section 44AD of the Income Tax Act, 1961, as the assessee failed to substantiate the expenses claimed. In the case of Friends Transport Carrier for AY 2020–21, the AO had made a best judgment assessment under Section 144, disallowing 75% of expenses due to lack of evidence and adding Rs. 60.11 lakhs to income, which was later upheld by the CIT(A).

Observing that the assessee had transport receipts of Rs. 81.89 lakhs but no supporting proof for expenses, the ITAT applied presumptive taxation principles and estimated income at 8% of receipts, amounting to Rs. 6.55 lakh. The two-member bench of Laliet Kumar (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) accordingly directed the AO to recompute the income and partly allowed the appeal.

Akshat Education and Charitable Trust vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2023

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) set aside the order of the CIT(A) and remanded the case of Akshat Education and Charitable Trust for fresh adjudication, where exemption under Section 10(23C) (via) of the Income Tax Act was denied due to a mismatch in registration details. The trust, engaged in educational activities, had filed its return declaring nil income, but the CPC, Bengaluru, processed it under Section 143(1) treating gross receipts as taxable. Despite the assessee’s rectification request highlighting a clerical error in the ITR, the CPC rejected it without proper consideration.

The Tribunal, comprising Dr. B.R.R. Kumar (Vice President) and Suchitra Kamble (Judicial Member), observed that the CIT(A) dismissed the appeal on an irrelevant ground related to Form 10B/10BB instead of addressing the core issue of registration mismatch. Holding that the matter was not properly examined, the ITAT remanded it to the CIT(A) for de novo adjudication, directing verification of the rectification request and reassessment of the exemption claim after giving the assessee a fair hearing. The appeal was thus allowed for statistical purposes.

Deputy Commissioner of Income Tax vs Tata Social Welfare Trust CITATION: 2025 TAXSCAN (ITAT) 2024

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) upheld Tata Social Welfare Trust’s claim for exemption under Section 11 of the Income Tax Act, rejecting the revenue’s contention that its holding of bonus shares in Tata Sons Ltd. violated Section 13(1)(d). The Assessing Officer had treated the investment as a prohibited mode of investment and denied the exemption, relying on the Supreme Court’s ruling in Bharat Diamond Bourse. However, the Trust argued that bonus shares were not new investments but mere accretions to existing holdings.

The Tribunal, comprising N.K. Billaiya (Accountant Member) and Saktijit Dey (Vice President), agreed with the CIT(A)’s finding that no new funds were deployed and that Section 13(1)(d) aims to prevent active diversion of trust funds, not passive accretions like bonus shares. Relying on earlier precedents, the ITAT held that the exemption under Section 11 could not be denied and dismissed the revenue’s appeal, reaffirming that bonus shares do not constitute prohibited investments under the Act.

Tata Education Trust vs Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2025

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that a charitable trust can carry forward and set off a deficit arising from spending more than its income on charitable activities against future years’ income. The case involved Tata Education Trust, where the Assessing Officer had disallowed the carry forward of the deficit, citing shortfall in the mandatory 85% fund application under Section 11 of the Income Tax Act. Both the AO and CIT(A) denied the claim, prompting the assessee to appeal before the ITAT.

Upholding the CIT(A)’s order, the ITAT noted that before A.Y. 2015–16, charitable entities could avail of such exemptions, and the subsequent amendment could not be applied to earlier years. The bench, comprising N.K. Billaiya (Accountant Member) and Saktijit Dey (Vice President), also observed that the trust’s registration under Section 12A remained valid during the relevant period, making the income eligible for exemption. Consequently, the revenue’s appeal was dismissed, affirming that procedural events like surrender of registration cannot override substantive exemption rights for pre-amendment years.

Deputy Commissioner of Income Tax (OSD)(TDS) vs Tata CommunicationsTransformation Services Limited CITATION: 2025 TAXSCAN (ITAT) 2026

The Mumbai Bench of the ITAT set aside the CIT(A)’s order in the case of Tata Communications Transformation Services Ltd. and remanded the matter to the Assessing Officer (AO) to verify compliance with Section 201 of the Income Tax Act regarding non-deduction of TDS on year-end provisions of ₹90.89 crore. The assessee had disallowed 30% of the amount under Section 40(a)(ia) but was still treated by the AO as an 'assessee-in-default' under Section 201(1) for not deducting TDS on the entire sum, resulting in a demand of ₹2.58 crore including interest. The CIT(A) had relied on Pfizer Ltd. v. ITO (TDS) to delete the demand, holding that once disallowance under Section 40(a)(ia) was made, a TDS default could not be levied again.

The Tribunal, however, held that the operation of Section 201 is independent of Section 40(a)(ia) and distinguished the case from Pfizer Ltd., since the assessee had disallowed only 30% of the provision and claimed deduction for the balance 70%. Observing that the assessee had not proved fulfillment of conditions under Section 201(1), the ITAT remanded the matter to the AO, granting the assessee an opportunity to furnish evidence of compliance. The Revenue’s appeal was thus allowed for statistical purposes.

Relief to NHAI: ITAT Quashes Income Tax Penalty beyond 6 Months as Time-Barred & Unsustainable after Deletion of Quantum Addition

National Highway Authority of India vs Addl. CIT (TDS) CITATION : 2025 TAXSCAN (ITAT) 2027

The Lucknow Bench “A” of the Income Tax Appellate Tribunal (ITAT) recently granted relief to the National Highways Authority of India (NHAI) by quashing a penalty of ₹10,61,318 imposed under Section 271C of the Income Tax Act, 1961, holding that the penalty order was time-barred as it was passed beyond the statutory six-month limitation under Section 275(1)(c), and was further unsustainable since the underlying quantum addition forming the basis of the penalty had been deleted in rectification proceedings.

The Tribunal further buttressed that as the quantum addition itself had been deleted by the AO in rectification, there remained no subsisting cause for the penalty to stand. The Revenue had not refuted the factual deletion of the addition, nor was any legal justification shown for sustaining the penalty. Holding that the penalty was both time-barred and rendered infructuous after deletion of the quantum addition, the ITAT set aside the penalty order and allowed the appeal in favour of NHAI.

Commission to Foreign Agents for Overseas Services Not Taxable in India: ITAT Rules TDS Not Applicable

M/s Orbit Resorts Limited vs The DCIT Circle CITATION : 2025 TAXSCAN (ITAT) 2028

The Chandigarh Bench of Income Tax Appellate Tribunal ( ITAT ) held that Tax Deducted at Source (TDS ) was not applicable on commission payments made to foreign agents for services rendered outside India.

The appellate tribunal stated that since the income was not taxable in India, there was no need to deduct TDS on such payments. It found the order of the CIT(A) on this issue unjustified and, after considering the case laws cited, held that TDS was not applicable on commission payments made to foreign agents for services rendered outside India. The appeal was therefore allowed in favour of the assessee.

Deputy commissioner of Income Tax Jaipur vs Samarth Lifestyle Retailing CITATION: 2025 TAXSCAN (ITAT) 2029

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)’s decision deleting an addition of ₹53,20,833 made under Section 68 and disallowance of interest under Section 36(1)(iii), holding that the assessee, Samarth Lifestyle Retailing Pvt. Ltd., had duly proved the identity, genuineness, and creditworthiness of the unsecured loan of ₹50,00,000 received from Survaas Homes Pvt. Ltd. The assessee had furnished the lender’s PAN, address, loan confirmation, and declared that the transaction was through banking channels, while the lender’s audited financials reflected substantial turnover and profit, demonstrating capacity to lend.

The Tribunal observed that the department could not show that the financial statements relied on by the CIT(A) were new or unavailable to the AO. Finding that the CIT(A)’s conclusion was based on verified audited data proving the lender’s financial strength, the ITAT found no reason to interfere and dismissed the department’s appeal, confirming the deletion of both the loan addition and related interest disallowance.

Deputy commissioner of Income Tax Jaipur vs Samarth Lifestyle RetailingPvt. Ltd. CITATION: 2025 TAXSCAN (ITAT) 2029

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) upheld the deletion of an addition made under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act for delayed deposit of ₹1,46,390 towards employees’ ESI contribution. The assessee, Samarth Lifestyle Retailing Pvt. Ltd., contended that though the payment was made after the statutory due date, it was deposited before the due date for filing the return under Section 139(1), relying on the ESI notification and judicial precedents supporting such allowance.

The Tribunal, comprising Gagan Goyal (Accountant Member) and Narinder Kumar (Judicial Member), upheld the CIT(A)’s finding that the contribution paid before the return filing due date is allowable as a deduction, consistent with settled legal precedents, including those of the jurisdictional High Court. Observing that the department failed to rebut the CIT(A)’s findings or substantiate the AO’s view, the ITAT dismissed the department’s appeal and confirmed the deletion of the disallowance.

Ordinary Dunnage is Revenue Expenditure: ITAT Follows Earlier Rulings to Delete ₹1.11 Cr Addition for Central Warehousing Corporation

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled in favour of the Central Warehousing Corporation (CWC), holding that expenditure incurred on ordinary dunnage used in warehousing operations constitutes revenue expenditure, not capital expenditure.

The Tribunal emphasised that the Revenue had accepted this accounting treatment consistently in prior assessments and had not pointed out any distinguishing facts in the present year. It was observed that the life expectancy of the material was the key factor determining the capital or revenue nature of expenditure.Relying on its earlier decisions and following the principle of consistency, the two-member bench comprising Avdhesh Kumar Mishra (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) directed the deletion of the ₹1.11 crore addition made by the AO and confirmed by the CIT(A). The appeal filed by the assessee was accordingly allowed.

DCIT vs The New India Assurance Co. Ltd. CITATION: 2025 TAXSCAN (ITAT) 2031

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal against the deletion of penalty under Section 271(1)(c) of the Income Tax Act imposed on The New India Assurance Co. Ltd. for AY 2004–05. The Assessing Officer had levied the penalty following disallowances made under Section 44 read with Rule 5 relating to pension, gratuity, and other income adjustments, alleging furnishing of inaccurate particulars. The insurer contended that all particulars were fully disclosed and the disallowances arose from a bona fide and debatable interpretation of special provisions governing insurance companies, noting that the Bombay High Court had already admitted a substantial question of law in the quantum appeal.

The Tribunal, comprising Amit Shukla (Judicial Member) and Padmavathy S (Accountant Member), held that the penalty was unjustified as there was no concealment or misrepresentation of income, and the additions arose solely from interpretational differences. Relying on Tata AIG General Insurance Co. Ltd. v. DCIT (2020), it observed that such disputes under Section 44 and Rule 5 are inherently debatable and that literal interpretation could lead to double taxation. The ITAT reiterated that Section 271(1)(c) applies only to deliberate concealment or false reporting, not to bona fide legal claims, and accordingly dismissed the Revenue’s appeal.

ACIT 16(1) vs Aishwarya Rai Bachchan CITATION: 2025 TAXSCAN (ITAT) 2032

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal against Aishwarya Rai Bachchan for the assessment year 2022-23, upholding the deletion of an additional disallowance of ₹4.11 crore under Section 14A of the Income Tax Act. The Assessing Officer had challenged her suo-moto disallowance of ₹49.08 lakh and, applying 1% on total investments, proposed a higher disallowance without establishing any nexus between the expenditure and exempt income.

The Tribunal affirmed the Commissioner of Income Tax (CIT(A))’s finding that the AO’s computation was arbitrary since her total actual expenses were only ₹2.48 crore. Citing Maxopp Investments Ltd. v. CIT (2018), the ITAT held that disallowance cannot exceed actual expenditure or include investments that yielded no exempt income. Consequently, the additional disallowance was found unsustainable and was deleted.

ACIT vs Barclays Execution Services Limited CITATION: 2025 TAXSCAN (ITAT) 2033

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) upheld the order of the CIT(A) quashing reassessment proceedings against Barclays Execution Services Ltd., holding that the Assessing Officer (AO) failed to obtain approval from the correct “specified authority” under Section 151(ii) of the Income Tax Act. The AO had initiated reassessment based on information about large remittances to non-residents without TDS and obtained approval from the Commissioner of Income Tax (CIT) before issuing notice under Section 148. The CIT(A) held that since the notice was issued after three years from the end of AY 2017–18, approval should have been obtained from the Principal Chief Commissioner or Chief Commissioner, not the CIT, rendering the proceedings void ab initio.

The Tribunal, comprising Amit Shukla (Judicial Member) and Prabhash Shankar (Accountant Member), affirmed that non-compliance with Section 151(ii) went to the root of jurisdiction. Relying on the Supreme Court’s ruling in Union of India v. Rajeev Bansal (2024) and the Bombay High Court’s decision in Holiday Developers (P) Ltd. v. ITO (2024), it held that the AO’s approval from the wrong authority invalidated the reassessment notice and subsequent order. Accordingly, the ITAT dismissed the Revenue’s appeal.

Nirmal Kumar Dugar vs The ITO CITATION: 2025 TAXSCAN (ITAT) 2034

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition related to a business loss claim from derivative trading, holding that a tax audit under Section 44AB was not applicable since the assessee’s turnover was below ₹60 lakh. In the case of Nirmal Kumar Dugar for AY 2016–17, the Assessing Officer had treated the claimed business loss of ₹18.39 lakh from derivative transactions as speculative under Section 43(5) and disallowed its set-off against income from house property and other sources. The CIT(A) upheld the disallowance, stating that the assessee had failed to get his accounts audited as required under Sections 44AB and 44AD.

The Tribunal, comprising Gagan Goyal (Accountant Member) and Narinder Kumar (Judicial Member), observed that the turnover was below the ₹60 lakh audit threshold applicable before the 2017 amendment and that no contrary claim was made by the department. Since the sole ground for disallowance was the absence of an audit, which was not mandatory, the ITAT held the business loss claim to be valid and allowed the assessee’s appeal.

Partial Relief for IIECL: ITAT Holds Only Profit Margin Taxable, Restricts Addition on ₹92.20 Lakh Bogus Purchases to 5%

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) held that only the profit margin was taxable and restricted the addition of ₹92.20 lakh bogus purchases to 5%, thereby granting partial relief to Indian Ion Exchange and Chemicals Limited (IIECL).

The tribunal noted that the assessee had matched the purchases with sales and submitted a reconciliation statement, which the department had not disputed. Since the sales were accepted, the bench held that the purchases were genuine but might have been made from different parties instead of M/s. Siddh Syndicate.Relying on Gujarat High Court rulings in Premkumar B. Rathi, Simit P. Sheth, Bholanath Poly Fab Pvt. Ltd., and Kesari Exports, the ITAT held that only the profit margin embedded in such purchases could be taxed. It directed the AO to compute the profit at 17.63%, i.e., 5% higher than the declared gross profit of 12.63%. Accordingly, the addition was restricted to 5% of Rs. 92,20,100, and the appeal was partly allowed.

Harshang Kaushikkumar Rami vs The Income Tax Officer, Ward – 1(2)(3) CITATION: 2025 TAXSCAN (ITAT) 2036

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) remanded a ₹5 crore addition made under Section 69A of the Income Tax Act, holding that cash deposits in a co-operative credit society account required proper verification before being treated as unexplained income. The case involved Harshang Kaushikkumar Rami, whose reassessment for AY 2017–18 was reopened after the Assessing Officer found cash deposits of ₹5 crore in his account with Renuka Mata Multi-State Urban Co-operative Credit Society Ltd. The AO completed the assessment ex parte, treating the entire amount as unexplained money, and the CIT(A) upheld the addition.

Before the Tribunal, the assessee claimed the deposits were part of business turnover from trading in brass and mobile products and argued that only the peak balance should be taxed. The Tribunal, comprising Annapurna Gupta (Accountant Member) and Suchithra Kamble (Judicial Member), found that while the assessee submitted some supporting records, they were not properly examined by the AO. Citing principles of natural justice, the ITAT set aside the orders and remanded the case for fresh verification of bank statements, affidavits, and supporting documents, allowing the appeal partly for statistical purposes.

Intas Biopharmaceuticals Ltd. vs The Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2037

The Ahmedabad Bench of the ITAT directed a fresh examination of Intas Biopharmaceuticals Ltd.’s R&D deductions claimed under Section 35(2AB) of the Income Tax Act. The company had claimed ₹3.37 crore under Section 35 and ₹87.66 lakh as weighted deduction for R&D expenses, which were partly disallowed by the AO on the ground that certain expenditures were not approved by the DSIR and that no reconciliation was provided for merger-related adjustments with Indus Biotherapeutics Ltd. The CIT(A) upheld the disallowance, citing lack of adequate documentation.

Before the Tribunal, the assessee argued that all expenses were incurred for approved R&D activities and that the DSIR approval was valid for the relevant year. Observing that both the AO and CIT(A) failed to verify key factual details, particularly reconciliation of R&D expenses post-merger and corresponding DSIR approvals, the Tribunal remanded the matter for fresh examination. It directed the AO to verify DSIR approvals and merger-linked records, holding that genuine R&D expenditure should not be disallowed merely for procedural lapses.

Intas Biopharmaceuticals Ltd vs The Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2037

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) remanded the case of Intas Biopharmaceuticals Ltd. for fresh verification of the ₹28.36 lakh disallowance made under Section 14A read with Rule 8D. During scrutiny, the AO observed that the company had ₹24.5 crore in investments but no expenditure was attributed to earning exempt income. While the assessee claimed the investments were made entirely from its ₹350 crore interest-free funds, it failed to produce supporting evidence such as fund-flow or bank statements. The CIT(A) upheld the disallowance, holding that Section 14A applies even if no exempt income is earned in a particular year.

Before the Tribunal, the assessee argued that the investments were strategic and funded from internal accruals, relying on various High Court rulings to contest the disallowance. However, the ITAT observed that neither the AO nor the CIT(A) had properly verified the source of funds. The Bench, comprising Suchithra Kamble (Judicial Member) and Makarand Vasant Mahadeokar (Accountant Member), directed the AO to re-examine the fund flow, nature of investments, and applicability of Rule 8D based on the evidence and judicial precedents. The appeal was partly allowed for statistical purposes.

DCIT vs PVR Ltd CITATION: 2025 TAXSCAN (ITAT) 2038

The Delhi Bench of the ITAT upheld the CIT(A)’s order deleting various additions made against PVR Ltd. for AYs 2011–12 and 2013–14, dismissing the Revenue’s appeals. The Tribunal affirmed that the entertainment tax subsidy constituted a capital receipt and that expenses on leasehold improvements were allowable, noting these issues were already settled in PVR’s favor by prior ITAT orders and the Delhi High Court. It also upheld the restriction of disallowance under Section 14A only to investments yielding exempt income, following Era Infrastructure (India) Ltd., and held that borrowed funds were not linked to current investments.

The Tribunal further rejected the Revenue’s appeal on disallowance of bank charges under Section 40(a)(ia), relying on CBDT Circular No. 56/2012 and the Delhi High Court’s ruling in Make My Trip India (P.) Ltd., holding that no TDS was deductible. Additions to book profit under Section 115JB for gratuity, leave encashment, and bonus were also deleted as they were ascertained liabilities, and the notional Section 14A disallowance for MAT was disallowed. Finding the CIT(A)’s order reasoned and supported by precedent, the ITAT dismissed all Revenue appeals and rendered the assessee’s cross-objections academic.

Chandra Prakash Vashistha vs The ITO CITATION: 2025 TAXSCAN (ITAT) 2039

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal of Chandra Prakash Vashistha, a retired State Bank of India employee, holding that the revised ₹25 lakh exemption limit for leave encashment under Section 10(10AA) of the Income Tax Act applies retrospectively as per the CBDT notification dated 24 May 2023. The assessee had received ₹13.05 lakh as leave encashment, but the Assessing Officer and CIT(A) denied full exemption. The Tribunal condoned a 959-day delay in filing the appeal, accepting the assessee’s explanation that the delay was due to consultations with multiple tax experts before proceeding legally.

The Bench comprising Dr. S. Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayanbhai (Accountant Member) observed that the CBDT notification clearly extended the benefit to non-government employees and was undisputed by the Department. Setting aside the orders of the lower authorities, the ITAT directed that the revised ₹25 lakh exemption limit be applied, granting full relief to the retired bank employee.

Maharishi Education Corporation P. Ltd vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2040

The Delhi Bench of the ITAT upheld that domestic companies opting for the concessional tax regime under Section 115BAA are liable to pay a uniform tax rate of 22% on their total income, including Long-Term Capital Gains (LTCG). Maharishi Education Corporation Pvt. Ltd. had argued that LTCG should be taxed separately at 20% under Section 112, but the Assessing Officer recomputed the tax at 22% in line with Section 115BAA, creating a demand of ₹59,973.

The Tribunal, led by Judicial Member Shri Vikas Awasthy, held that once a company exercises the option under Section 115BAA, the concessional rate applies to all income components, including LTCG. It affirmed that the AO’s computation was correct and in accordance with law, ruling that companies under Section 115BAA cannot claim the lower 20% rate under Section 112. The appeal was accordingly dismissed.

Sacred Heart Church vs ITO CITATION: 2025 TAXSCAN (ITAT) 2041

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) granted relief to Sacred Heart Church, holding that a short delay of 39 days in filing Form 10B cannot justify denial of exemption under Section 11 of the Income Tax Act. The trust, registered under the Maharashtra Public Trust Act and engaged in charitable and religious activities, had filed its return and audit report on 14 November 2024, beyond the due date of 7 October 2024. The CPC and CIT(A) had denied exemption under Section 11 citing the delay.

The Tribunal observed that the filing requirement for Form 10B is directory, not mandatory, and a minor delay should not defeat substantive exemption claims. Relying on similar judicial precedents, it held that the lapse was procedural and condonable, directing the Assessing Officer to verify the facts and grant relief under Section 11. The appeal was accordingly allowed for statistical purposes.

Mr. Kirtikumar Champaklal Bhimani vs Income Tax Officer, Ward 25(1)(1) CITATION: 2025 TAXSCAN (ITAT) 2042

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) condoned a delay of 972 days in filing an appeal by 71-year-old taxpayer Mr. Kirtikumar Champaklal Bhimani, holding that the delay was due to a bona fide belief and lack of technical knowledge about online procedures. The CIT(A) had earlier dismissed the appeal as time-barred against an intimation under Section 143(1) of the Income Tax Act, which added rental income twice, resulting in double taxation. The assessee explained that he had filed a disagreement response online, believed the issue was resolved upon receiving refunds for later years, and only discovered the pending demand in March 2025, after which he promptly filed an appeal.

The Tribunal, comprising Rahul Chaudhary (Judicial Member) and Vikram Singh Yadav (Accountant Member), accepted the explanation as reasonable, considering the assessee’s age and limited familiarity with electronic systems. It held that he was prevented by sufficient cause from filing the appeal on time and that the CIT(A) erred in dismissing it without granting a fair hearing. The ITAT accordingly condoned the delay, set aside the CIT(A)’s order, and directed that the appeal be adjudicated on merits after providing due opportunity of hearing.

Gurdev Singh vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2043

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal of Gurdev Singh, upholding the disallowance of ₹12.91 lakh under Section 36(1)(va) read with Section 43B of the Income Tax Act for delayed deposit of employee contributions to EPF and ESIC for AY 2020–21. The assessee argued that the payments, though made after the statutory due dates, were deposited before filing the return under Section 139(1) and thus should be deductible. He also contended that the disallowance was invalid under Section 143(1), as the Auditor’s Report had not recommended any such adjustment.

The Tribunal, however, held that the Supreme Court’s ruling in Checkmate Services Pvt. Ltd. vs. CIT applies universally, clarifying that employee contributions deposited after the due dates under the respective Acts are not deductible, irrespective of whether the assessment is under Section 143(1) or 143(3). Emphasizing strict adherence to statutory timelines, the ITAT found no merit in the assessee’s arguments and confirmed the disallowance made by the CPC.

Late Mr. Davinder Kumar vs Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2044

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed penalties imposed on Davinder Kumar under Section 271(1)(c) of the Income Tax Act for AYs 2008–09 to 2011–12, holding that the penalty notices were defective and invalid. The assessee argued that the notices under Section 274 were issued in a pre-printed omnibus format without specifying whether the penalty was for concealment of income or furnishing inaccurate particulars. The Tribunal admitted this additional legal ground, noting that the notices were vague and failed to meet statutory requirements.

Relying on the Mohd. Farhan A. Shaikh v. DCIT ruling, the Bench observed that such non-specific, pre-printed notices invalidate penalty proceedings. It further noted that even the assessment orders did not clarify the precise charge for which penalties were levied. Since the facts and defects in notices were identical across all four years, the Tribunal applied the same reasoning mutatis mutandis and quashed the penalties for AYs 2008–09 to 2011–12, holding that other grounds became academic.

Corteva Agriscience India Pvt. Ltd. vs DCIT CITATION: 2025 TAXSCAN (ITAT) 2045

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) granted major relief to Corteva Agriscience India Pvt. Ltd. by deleting a ₹28.74 crore transfer pricing adjustment on intra-group support services. The company had availed services such as marketing, accounting, HR, and logistics from its Associated Enterprises and benchmarked them using the Transactional Net Margin Method (TNMM). However, the Transfer Pricing Officer (TPO) rejected this approach, applied the Comparable Uncontrolled Price (CUP) method, and determined the Arm’s Length Price at nil, alleging lack of tangible benefits. The CIT(A) partly upheld the adjustment, disallowing 20% of the expenses as stewardship services.

On appeal, the ITAT found that Corteva had provided extensive evidence including cost-benefit analyses, billing agreements, and communications proving actual receipt and commercial benefit of services. It held that the TPO’s rejection of TNMM and fixation of ALP at nil was unjustified and contrary to law, emphasizing that tax authorities cannot disregard the taxpayer’s chosen method or substitute commercial judgment with subjective opinion. The Tribunal thus deleted the entire addition and upheld the payments for intra-group services as being at arm’s length.

3D Tradex P.Ltd vs ADIT CITATION: 2025 TAXSCAN (ITAT) 2046

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed reassessment proceedings initiated under Section 153C of the Income Tax Act against 3D Tradex Pvt. Ltd. for AYs 2010–11 to 2015–16, holding them barred by limitation and based on an invalid satisfaction note. The AO had issued notices for six preceding years based on a consolidated satisfaction note dated 23 March 2018, but the Tribunal held that the amendment extending the limitation period to ten years was prospective from AY 2018–19 and could not apply to earlier searches. Accordingly, the assessments for AYs 2010–11 and 2011–12 were declared time-barred.

For AYs 2012–13 to 2015–16, the Tribunal found that the satisfaction note was vague, failing to identify any incriminating material specific to each year, thus invalidating jurisdiction under Section 153C. Relying on precedents in Dev Technofab Ltd. and Sakham Commodities Ltd., the ITAT ruled that such generic satisfaction does not meet statutory requirements. As the foundational assessments were void, the related Revenue appeal against the deletion of ₹11.95 crore under Sections 68 and 69C for AY 2010–11 was dismissed. The Tribunal allowed all six appeals of the assessee and set aside the entire set of assessments as legally unsustainable.

Ekalavya Gift Gaileries Private Limited vs ITO CITATION: 2025 TAXSCAN (ITAT) 2047

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeals of Ekalavya Gift Galleries Pvt. Ltd. for AYs 2016–17 and 2017–18, deleting additions of ₹99 lakh and ₹45 lakh made under Section 68 of the Income Tax Act. The Assessing Officer had treated the share capital and premium received as unexplained cash credits, alleging failure to prove the identity, creditworthiness, and genuineness of investors. The assessee produced extensive documentation, including incorporation certificates, audited financials, bank statements, ITRs, confirmations, and a share valuation report under Rule 11UA. Despite this, the AO and CIT(A) upheld the additions due to the non-production of investors in person.

The Tribunal held that the additions were unjustified as the share application money of ₹18 lakh for AY 2016–17 was received in earlier years and could not be taxed again. For AY 2017–18, the ITAT found that the investor company, Acquatic Exim Pvt. Ltd., had sufficient financial strength, and the assessee had proved all three conditions under Section 68. Citing precedents such as PCIT v. Agson Global (P.) Ltd. and People Care Hospitals Pvt. Ltd., the Bench ruled that documentary evidence cannot be ignored based on mere suspicion. Accordingly, both additions were deleted, and the appeals were fully allowed.

Shri Kishan Kumar Gupta Vs. The I.T.O CITATION: 2025 TAXSCAN (ITAT) 2048

The Delhi Bench of the ITAT held that Section 68 of the Income Tax Act applies even when income is declared under the presumptive taxation scheme of Section 44AD, if the assessee maintains a cash book or other records. The assessee, a trader in vegetables and agro products, had declared ₹3.92 lakh under Section 44AD on turnover of ₹52.8 lakh but faced additions after the AO found unexplained cash deposits of ₹1.58 crore. Rejecting the assessee’s claim that Section 68 was inapplicable to presumptive income, the Tribunal noted that the assessee had voluntarily maintained a cash book and financial statements, making Section 68 applicable to any unexplained cash credits recorded therein.

On facts, the Tribunal found the assessee’s explanation for the ₹78 lakh deposit—purportedly from family savings, advances, and his late father’s funds—unsupported by evidence and sustained the addition as unexplained cash credit. However, it deleted the ad hoc profit addition of ₹2.25 lakh, considering the possibility that some deposits belonged to the assessee’s father. The appeal was thus partly allowed, with the main addition under Section 68 upheld.

Krishna Gopal Saraf vs The A.C.I.T CITATION: 2025 TAXSCAN (ITAT) 2049

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the presumption under Section 292C of the Income Tax Act regarding ownership and truth of documents found during a search is rebuttable and cannot, by itself, establish undisclosed income. The case involved Krishna Gopal Saraf, a salaried employee of Sarthak Vanijya India Ltd, whose premises were searched along with the Bindal Group. Additions were made for unexplained credit card payments and ₹18 lakh allegedly withdrawn based on a loose paper found during the search. The ITAT upheld the validity of the assessment process but found that the AO and CIT(A) failed to properly verify the explanations and supporting evidence regarding credit card payments.

Regarding the ₹18 lakh addition, the Tribunal observed that the AO relied solely on the presumption under Section 292C without corroborating evidence. Since the assessee denied authorship of the document and explained that it related to another employee, the burden shifted to the AO to verify this claim, which was not done. Holding that the presumption was effectively rebutted, the ITAT deleted the addition and remanded the credit card expenditure issue for fresh verification. Both appeals for AYs 2013–14 and 2014–15 were thus partly allowed.

Shri Divjot Singh Mainee vs DCIT CITATION: 2025 TAXSCAN (ITAT) 2050

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed assessments framed under Section 153A against Divjot Singh Mainee, holding that no addition can be made for concluded years without incriminating material found during the search. The AO had made additions of ₹10.13 lakh and ₹3.63 lakh for AYs 2013-14 and 2014-15 based on third-party statements and post-search inquiries, not on seized material from the assessee. Citing the Supreme Court’s ruling in Pr. CIT v. Abhisar Buildwell (P.) Ltd. and Delhi High Court precedents, the Tribunal reaffirmed that such additions in unabated assessments are impermissible unless supported by evidence discovered in the search itself.

The ITAT also found that the approval granted by the Additional CIT under Section 153D was mechanical, as it was issued in bulk within three days without independent verification. Referring to rulings such as PCIT v. Anuj Bansal and MDLR Hotels (P) Ltd., the Bench held that perfunctory approvals defeat the intent of supervisory oversight mandated under Section 153D. Finding both jurisdictional and procedural lapses, the Tribunal invalidated the search assessments and deleted all additions, fully allowing the assessee’s appeals for AYs 2013–14 and 2014–15.