Abdul Farooq vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2051

The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT) granted partial relief to Abdul Farooq, proprietor of Chowdhary Communications, by restricting the addition of cash deposits made during the demonetisation period to ₹6,000. The case arose from deposits of ₹15.59 lakh made in two bank accounts during November–December 2016, of which ₹4.94 lakh were in specified bank notes. The Assessing Officer had added ₹3.88 lakh as unexplained money under, which was upheld by the CIT(A).

On appeal, the ITAT noted that the Government’s Gazette Notifications allowed limited use of old currency only up to December 15, 2016, and that deposits verified till November 13, 2016, were within the permissible period. However, ₹6,000 deposited between December 17 and 21, 2016, fell outside this window. Holding that only those deposits were beyond the legal limit, the Tribunal restricted the addition to ₹6,000 and deleted the balance, granting consequential relief to the assessee.

Sher Singh vs The ITO CITATION: 2025 TAXSCAN (ITAT) 2052

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) partly allowed the appeal of Sher Singh, an agriculturist from Sangrur, by deleting ₹10,00,000 out of the total ₹12,25,600 addition made under Section 69A of the Income Tax Act. The Assessing Officer had treated ₹14,75,600 in cash deposits during FY 2016–17, including the demonetisation period, as unexplained money. The assessee explained that the deposits were sourced from agricultural and milk income and included funds belonging to his wife, supported by affidavits, bank statements, Jamabandi records, and a cash-flow statement. The CIT(A) granted partial relief of ₹2,50,000, which led to the present appeal.

The Tribunal observed that the assessee’s declared agricultural income of ₹7,00,000 and milk income of ₹2,47,700 reasonably aligned with the cash deposits, and the Revenue failed to produce evidence disproving the explanation. However, due to incomplete corroboration such as crop sale bills or livestock records, the ITAT held that not all deposits were fully substantiated. It, therefore, restricted the unexplained amount to ₹2,50,000 and deleted the balance addition of ₹10,00,000, partly allowing the appeal.

Nuvama Wealth Management Limited vs DCIT CITATION: 2025 TAXSCAN (ITAT) 2053

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) set aside the revisional order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, holding that the Assessing Officer (AO) had conducted a detailed inquiry before allowing Nuvama Wealth Management Ltd. (formerly Edelweiss Securities Ltd.) its claim of ESOP expenditure under Section 37(1). The Tribunal noted that the AO had issued multiple notices, examined supporting documents, and accepted the claim after due verification based on legal precedents, including Biocon Ltd. v. DCIT (2013).

The Bench comprising Amit Shukla (Judicial Member) and Padmavathy S (Accountant Member) observed that the PCIT’s assumption of “lack of enquiry” and allegation of ₹58.02 crore recovery were factually and legally misplaced, as the amount merely represented TDS funding from the holding company. Concluding that the assessment order reflected due application of mind and was neither erroneous nor prejudicial to Revenue’s interests, the Tribunal quashed the PCIT’s revisional order and restored the original assessment under Section 143(3) read with Section 144B.

Smt. Saroj Devi Haldiya vs The ITO CITATION: 2025 TAXSCAN (ITAT) 2054

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of ₹75,00,000 made under Section 56(2)(ix) of the Income Tax Act, holding that the assessee, Saroj Devi Haldiya, acted merely as a facilitator and not the beneficiary of the forfeited property advance. The assessee had paid ₹75,00,000 to Medical Design India Pvt. Ltd. on behalf of Dr. Anil Tambi to secure a disputed plot, which was later forfeited. She was subsequently reimbursed the same amount by Dr. Tambi’s company, Jagdish Health Care Pvt. Ltd.

The Tribunal observed that since the assessee neither owned the plot nor received the money as an advance for transfer of her own capital asset, the basic condition of Section 56(2)(ix) was not satisfied. It held that the forfeited sum, if taxable, should be considered in the hands of Medical Design India Pvt. Ltd., which actually retained the amount. Accordingly, the ITAT directed deletion of the ₹75,00,000 addition and allowed the assessee’s appeal.

Smt. Saroj Devi Haldiya vs The ITO CITATION: 2025 TAXSCAN (ITAT) 2054

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) allowed a deduction of ₹34,647 towards bank charges under Section 57 of the Income Tax Act, holding that such expenses were directly related to earning interest income. The assessee, Saroj Devi Haldiya, had declared interest income of ₹2,71,511 from savings accounts, FDRs, and RDs and claimed related bank transaction charges as deductions. The Assessing Officer and the CIT(A) disallowed the claim, citing lack of nexus and evidence.

The Tribunal, comprising Dr. S. Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member), observed that the expenses were incidental and necessary for maintaining the accounts that generated the taxable interest income. Since the expenditure was wholly and exclusively incurred for earning income chargeable under “Income from Other Sources,” the ITAT held the deduction allowable, overturned the lower authorities’ orders, and allowed the assessee’s appeal.

Bombay Tyres vs Income-tax Officer CITATION: 2025 TAXSCAN (ITAT) 2055

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) deleted additions made under Section 69A of the Income Tax Act against Bombay Tyres, holding that the assessment was wrongly initiated using a PAN belonging to a non-existent entity. The Assessing Officer (AO) treated cash deposits of ₹3.18 crore as unexplained and made further notional profit additions, despite the assessee’s clarification that all transactions were recorded in the audited books of the proprietorship and duly taxed under the correct PAN.

The Tribunal, comprising Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member), observed that the AO proceeded without verifying facts and ignored clear evidence showing that the deposits were already taxed in the assessee’s hands. It held that taxing the same income again under an incorrect PAN was unjustified. Relying on bank confirmations, reconciliations, and past assessments, the ITAT directed the deletion of all additions and allowed the assessee’s appeal.

Silver & Arts Palace vs ACIT CITATION: 2025 TAXSCAN (ITAT) 2057

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition of ₹8,87,104 made on account of an alleged mismatch of sales for A.Y. 2021-22, holding that the sales in question pertained to other assessment years and thus could not be taxed in the current year. During a search, the Assessing Officer (AO) found digital sheets indicating unrecorded cash sales and applied a gross profit rate of 30.90% on unmatched sales of ₹28,70,887, which the CIT(A) later confirmed.

On appeal, the ITAT observed that the differences arose only due to minor deductions (VAT/GST, bank charges) or slight delays in recording sales. Upon examining the records, the Tribunal found that the alleged sales related to years other than A.Y. 2021-22 and reiterated that each assessment year is independent. Accordingly, the addition was held untenable, and the assessee’s appeal was allowed.

Suresh Maheshwari vs The DCIT CITATION: 2025 TAXSCAN (ITAT) 2056

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that capital market transactions executed through registered intermediaries and verifiable banking channels cannot be treated as non-genuine merely based on a generic Investigation Wing report. The assessee, Suresh Maheshwari, a Chartered Accountant, had claimed exemption of ₹85.05 lakh as Long-Term Capital Gain under Section 10(38) from the sale of Pine Animation Ltd. shares. The AO denied the exemption citing the scrip’s classification as a penny stock, but the Tribunal noted that all transactions were duly supported by Demat statements, contract notes, and banking records.

The ITAT observed that no independent enquiry was conducted by the AO to link the assessee to any alleged price manipulation and that SEBI’s final order had cleared entities associated with the scrip of wrongdoing. Relying on ITO v. Manisha Narpatkumar Chopra (2024), the Bench held that documented, verifiable share transactions could not be discredited on suspicion alone. It, therefore, deleted the additions on both capital gains and commission, allowing the appeal in full.

Silver & Arts Palace vs ACIT CITATION: 2025 TAXSCAN (ITAT) 2057

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) deleted additions made by the Assessing Officer (AO) against Silver & Arts Palace, a partnership firm dealing in precious stones and jewelry, on account of alleged unaccounted cash commission expenditure. The AO had based the additions solely on digital data seized during a search under Section 132, interpreting entries in a digital sheet as evidence of cash commission payments. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the additions, prompting the assessee to approach the ITAT.

The Tribunal observed that the seized sheets were mere rough or “dumb” documents without names, payment details, or corroborative evidence linking them to actual transactions. It emphasized that loose papers or digital notings, without supporting material, cannot form the sole basis for income additions. Holding that the Revenue failed to substantiate its claims with independent evidence, the ITAT ruled that the additions were based on conjecture and directed the AO to delete them, allowing the assessee’s appeals.

Income Tax Officer vs Deepak Govindbhai Gangani CITATION: 2025 TAXSCAN (ITAT) 2058

The Income Tax Appellate Tribunal, Mumbai (ITAT) ruled that the deletion of the addition relating to alleged unexplained investment arising from penny stock transactions cannot be sustained, as the first appellate authority had admitted affidavits and other material without adhering to the mandatory procedure prescribed under Rule 46A of the Income Tax Rules, 1963.

The two-member bench comprising Rahul Chaudhary, Judicial Member and Vikram Singh Yadav, Accountant Member opined that the CIT(A) accepted additional evidence without complying with Rule 46A(2) of the Income Tax Rules, 1963, which mandates recording reasons in writing for admission of such evidence. The tribunal observed that the CIT(A) criticised the AO for not conducting enquiry but failed to carry out any independent verification while admitting and relying on affidavits. It was remarked that there is no clarity on enquiry in respect of the 81 persons named in the affidavit of Mr. Rathod and therefore, the decision of the CIT(A) suffered from procedural infirmity.

DCIT vs Indo Count Industries Ltd CITATION: 2025 TAXSCAN (ITAT) 2059

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled that in the absence of any evidence demonstrating unaccounted cash movement, the additions towards alleged bogus purchases cannot be made in a search-based assessment, particularly where transactions reflect circular trading.

The tribunal restricted the addition to the profit element embedded in the purchases rather than treating the entire value as unexplained.

The bench comprising Judicial Member, Sandeep Gosain and Accountant Member, Omkareshwar Chidara upheld the findings of the CIT(A), observing that the Revenue failed to produce any proof of cash payments or undue financial benefit to the assessee arising from the transactions in question. The tribunal held that once the existence of sales was accepted and the rotation of goods was established, denying the purchases altogether was untenable.

DCIT vs Indo Count Industries Ltd CITATION: 2025 TAXSCAN (ITAT) 2059

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ), held that a search-based assessment under Section 153A of the Income Tax Act, 1961 cannot sustain additions where no incriminating material is found to support the allegation of under-invoicing and receipt of unaccounted cash.

The bench of Judicial Member, Sandeep Gosain and Accountant Member, Omkareshwar Chidara observed that the search did not yield any incriminating evidence specifically relatable to the year under consideration. The statements relied upon were retracted soon after being recorded and no independent proof was produced by the Revenue to demonstrate that the assessee had earned cash income outside the books. Further, the tribunal noted that the pendrive-based Excel sheet did not, by itself, establish the charge of unrecorded cash receipts and no reference to cash was decipherable from the data entries. The tribunal held that retracted statements, without documentary corroboration, could not form the sole basis for additions.

Sameer Ramesh Vashi vs ThePrincipal Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2060

The bench of the Income Tax Appellate Tribunal, Mumbai, held that the revisionary jurisdiction invoked under Section 263 of the Income Tax Act, 1961, could not be sustained since the issues forming the basis of revision had already been duly examined and enquired into during the scrutiny assessment, and certain issues were outside the scope of limited scrutiny.

The bench of Judicial Member, Amit Shukla and Accountant Member, Girish Agrawal held that there was no lack of enquiry in respect of the issues covered under limited scrutiny. The Tribunal observed that the AO had specifically examined the claim of business loss and called for and reviewed relevant supporting evidence such as ledger extracts, bills, and vouchers. It was ruled that since the deemed rental income issue was not part of limited scrutiny and therefore the PCIT could not expand its scope through revision proceedings. The Tribunal reiterated that for invoking Section 263, the PCIT must clearly establish that the order is both erroneous and prejudicial to the interest of the Revenue, and cannot merely proceed based on disagreement with the AO’s plausible view.

Beneficiary Cannot Be Taxed Again when Trust already Paid Tax on Income: ITAT Deletes ₹1.24 Cr. Addition

Ajay Balvantray Parekh vs DCIT CITATION : 2025 TAXSCAN (ITAT) 2061

The Mumbai of the Income Tax Appellate Tribunal, examined whether income distributed to a beneficiary by a private discretionary trust that had already paid tax could once again be brought to tax in the hands of the beneficiary, ultimately ruling against the tax addition in a case concerning income tax liability.

The bench observed the CBDT Circular and the Karnataka High Court judgment cited by the appellant, holding that once the trust has paid tax on its income, taxing the same income again in the hands of the beneficiary is unjustified. Accordingly, the ITAT deleted the addition of Rs. 1.24 crore. With respect to the credit of taxes paid on regular assessment, the AO was directed to verify and allow such credit. Further, levy of interest under Section 234A and Section 234B was held to be consequential, directing the AO to take appropriate action while giving effect to the order. Therefore, the appeal was partly allowed.

Deb Prasanna Choudhury ADIT/DCIT(IT)-1(1) CITATION: 2025 TAXSCAN (ITAT) 2062

In a ruling in favour of the assessee, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) set aside the Commissioner of Income Tax (Appeals)'s order, holding that the addition of Rs. 80 lakhs received as a gift from a brother-in-law was erroneous as it falls under the 'relative' exemption of Section 56(2)(vii) of the Income Tax Act.

The ITAT noted that the exemption under Section 56 does not hinge upon the existence of a valid gift deed but solely on the fact that the sum was received from a relative as defined in the Act. The assessee had provided bank statements proving the receipt of funds from his brother-in-law's account through normal banking channels, which was sufficient to establish the relationship. The tribunal clarified that any query regarding the source of the funds would pertain to the donor (the brother-in-law) and could not be a basis to tax the recipient, as the specific exemption was applicable.

Tissue Culture Cannot Be Isolated from Nursery Activity: ITAT Treats Entire Nursery Receipts as Agricultural Income Exempt u/s 10(1)

The Income Tax Appellate Tribunal (ITAT), Bangalore, in a recent decision, has ruled that income from nursery operations involving tissue culture must be treated as agricultural income exempt under Section 10(1) of the Income Tax Act, 1961. The ruling clarifies that tissue culture, when used as part of plant propagation in nursery farming, cannot be taxed as business income merely because part of the process occurs outside the soil.

The Bench emphasised that the nursery’s end products, plants, flowers, and seedlings originated from basic agricultural operations involving soil and human labour on farmland. Hence, segregating a single stage of tissue culture for taxation was unwarranted.The tribunal directed the AO to treat the income as agricultural income exempt under Section 10(1), noting that activities like tissue culture, though technologically advanced, remain inseparable from agricultural propagation when integral to nursery cultivation.

ITAT Dismisses Rotary Club’s 12A Registration and 80G Approval Appeals Ex Parte for Non-Appearance

Suvarna vs ITO CITATION: 2025 TAXSCAN (ITAT) 2065

The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT) granted a final opportunity to a 71-year-old senior citizen who was unable to check his e-mails and access the Income Tax portal due to not being tech-savvy and condoned a 283-day delay.

The appeal arose from an assessment completed under Section 144, where the AO treated the total amount of ₹17,06,582, comprising both cash and bank transfers, as unexplained money. Referring to the Supreme Court’s ruling in Collector, Land Acquisition v. Mst. Katiji, the Bench reiterated that when substantial justice and technicalities conflict, the former must prevail. It emphasised that rejecting the condonation would amount to “legalising injustice on technical grounds” and highlighted that the Revenue cannot unjustly retain tax without proper legal authority.

Gujarat Energy DevelopmentAgency vs Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2066

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has deleted the penalty of ₹7.40 crore imposed on Gujarat Energy Development Agency under Section 270A, holding that the assessee did not misreport income.

Given the absence of misreporting and the plausible explanations provided by the assessee for the claimed deductions, the two-member bench of Sanjay Garg (Judicial Member) and Narendra Prasad Sinha (Accountant Member) held that the penalty imposed under Section 270A was legally unsustainable.

Gujarat Energy Development Agency vs Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2066

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) upheld the disallowance of ₹10.42 crore claimed by Gujarat Energy Development Agency on account of impairment of assets and abnormal loss. The tribunal held that these losses pertained to capital assets and, therefore, could not be claimed as revenue expenditure under Section 37.

The two-member bench of Sanjay Garg (Judicial Member) and Narendra Prasad Sinha (Accountant Member) examined the books, auditor notes, and statutory certificates. It concluded that the claimed amounts represented the written-down value of capital assets and related spares. As such, the disallowance by the Assessing Officer was upheld. The tribunal clarified that while the assessee could adjust the written-down value in the block of assets to claim appropriate depreciation going forward, the current claim as a revenue deduction was not permissible under the Income Tax Act.

Vasudev Chotabhai Patel vs TheITO CITATION: 2025 TAXSCAN (ITAT) 2067

The Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) has deleted an addition of ₹1.53 crore made under Section 69A in the case of a petrol pump owner for the Assessment Year 2017-18. The tribunal held that the cash deposits during the demonetization period were legitimate business receipts.

After examining the submissions and records, the two-member bench of Annapurna Gupta(Accountant Member) and Sanjay Garg (Judicial Member) concluded that there was no justification for the addition made by the lower authorities.

Sterling Holiday Resorts Ltd vsDCIT CITATION: 2025 TAXSCAN (ITAT) 2068

The Income Tax Appellate Tribunal ( ITAT ) Mumbai held that annual maintenance charges collected by Sterling Holiday Resorts Ltd. from its vacation plan members are not fully taxable in the year of receipt.

Upon reviewing the facts, the two-member bench comprising Amit Shukla (Judicial Member) and Padmavathy S (Accountant Member) found that the CIT(A) had correctly allowed partial relief. The Tribunal confirmed that the upfront collection of maintenance charges does not equate to immediate income for tax purposes. Instead, only the portion corresponding to the current year’s services can be treated as taxable, while the balance should be matched to the period when the facilities and services are actually provided.

Sterling Holiday Resorts Ltd vs DCIT CITATION: 2025 TAXSCAN (ITAT) 2068

In a recent ruling for the hospitality and vacation ownership sector, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) upheld Sterling Holiday Resorts Ltd.’s use of the Percentage Completion Method (POCM) for recognising income from vacation ownership plans.

The two-member bench comprising Amit Shukla (Judicial Member) and Padmavathy S (Accountant Member) clarified that the AO cannot reject an accounting method that presents a true and fair view without evidence of income distortion. Minor adjustments were remitted to the AO for verification, but the core principle of progressive revenue recognition was affirmed.

Business Expenses Incurred Wholly for Proprietorship and Partnership Activities cannot be Denied on Mere Presumption: ITAT deletes Addition u/s 37(1)

The Ahmedabad bench of Income Tax AppellateTribunal (ITAT), Ahmedabad, held that business expenses incurred wholly for proprietorship and partnership activities cannot be denied on a mere presumption and consequently deleted Rs 9.99 lakh addition under section 37(1) as the disallowance made by the AO was a proportionate disallowance on the assumption that the assessee was a working partner in only one firm.

The two-member bench comprising Suchitra Kamble (Judicial Member) and Vice-President Dr. B.R.R. Kumar ( Vice President) emphasised that statutory provisions allowing genuine business deductions cannot be overridden by erroneous assumptions regarding the assessee’s role in multiple firms.

Raj Kumar & Co vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2070

The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, in for the Assessment Year 2017-18, partly allowed the appeal of the assessee, a partnership firm engaged in trading alcoholic liquor for a single financial year (FY 2016-17).

The appeal challenged the CIT(A)’s order, which had upheld additions made by the AO under Section 68, despite reducing the estimated net profits from the business. Relying on comparable cases of similar liquor trading businesses in the state, the two-member bench comprising Manoj Kumar Aggarwal (Accountant Member) and Udayan Dasgupta (Judicial Member) held that a net profit rate of 2.5% of gross sales fairly reflected taxable business income.The AO was directed to recompute total income using this estimate.

Delta Air Lines, Inc. vs DCIT(International Taxation)- 2(1)(2) CITATION:2025 TAXSCAN (ITAT) 2071

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) granted Delta Air Lines Inc. tax exemption on the income earned through Code Sharing arrangements and use of third-party aircraft under Article 8 of the India-USA Double Taxation Avoidance Agreement (DTAA) for assessment years (A.Y.) 2007-08, 2011-12, 2012-13, and 2013-14.

The two-member bench comprising Pawan Singh, Judicial Member and Girish Agarwal, Accountant Member, carefully examined and reviewed the orders of the Lower authorities and relied on the order favour of the assessee against the revenue by a series of decisions of the Bench in the A.Y 2014-15 to 2016-17 and 2018-19. The Bench allowed the grounds of appeal raised by the assessee, considering the consistent decision of the co-ordinate bench of the Tribunal. The appeal of the assessee for A.Y. 2007-08 was allowed.

NMC Industries Private Limited vs Joint Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2072

The Mumbai bench of Income Tax Appellate Tribunal ( ITAT ) in a recent case has deleted ₹42.68 Lakh under section 271(1)(c) as the mere estimation of profit is not a ground for penalty.

Citing consistent judicial precedent, the two-member bench comprising Amit Shukla(Judicial Member) and Padmavathy S (Accountant Member) said that where income is determined on an estimated basis, a penalty under section 271(1)(c) cannot be imposed unless there is positive evidence of deliberate concealment. The assessee had produced primary evidence, including invoices and banking proofs, to substantiate purchases. The absence of transport or octroi documents alone could not render the transactions fictitious. Further, the AOr had accepted half of the purchases as genuine during remand proceedings.

DCIT vs Jyoti StructuresLimited CITATION: 2025 TAXSCAN (ITAT) 2073

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the deletion of the VAT ( Value Added Tax ) input tax credit addition of ₹96.21 lakh, ruling that it does not constitute income as it was not claimed as an expenditure in the Profit & Loss account.

The two-member bench comprising Saktijit Dey (Vice President) and Narendra Kumar Billaiya (Accountant Member) dismissed the revenue’s appeal, confirming the deletion of the VAT input credit addition and notional interest, while maintaining the restricted 1% ad hoc commission disallowance.

DSP Merrill Lynch Limited vs The Additional Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 2074

The Income Tax Appellate Tribunal ( ITAT ) Mumbai has held that software licence fees paid for the right to use MS Office constitute revenue expenditure and not a capital outlay, in a decision favouring DSP Merrill Lynch Ltd.

The two-member bench comprising Amith Shukla (Judicial Member) and Padmavathy S (Accountant Member), therefore applied the ratio of Raychem RPG Ltd. and directed the AO to delete the disallowance, treating the software licence fee as revenue expenditure.

It clarified that software with a short useful life and limited rights of usage does not qualify as a capital asset under the Income Tax Act.

Assessee’s POCM Accounting Complies with ICAI Guidance Note for Real Estate Projects: ITAT Deletes ₹47.26 Crore Addition

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that revenue recognition under the Percentage of Completion Method (POCM) must adhere to the ICAI Guidance Note on Real Estate Accounting, and cannot be altered based on ad hoc interpretations by assessing officers.

In conclusion, the two-member bench of Beena Pillai (Judicial Member) and Arun Khodpia (Accountant Member) directed the deletion of the entire ₹47.26 crore addition, holding that the assessee’s POCM-based revenue recognition was in line with ICAI’s prescribed accounting standards.

Reassessment Without Jurisdiction: ITAT Quashes ITO Order, Rs. 38.34 Lakh Addition Nullified

The Income Tax Appellate Tribunal (ITAT), Delhi, has quashed a reassessment order passed by the ITO, involving a registered society and madarsa, after finding serious jurisdictional lapses. The addition of Rs. 38.34 lakh on account of unexplained cash deposits was nullified, without the ITAT examining the merits of the addition itself.

The tribunal concluded that the reassessment proceedings were initiated and completed without proper jurisdiction, rendering the entire assessment invalid. Consequently, the addition of Rs. 38,34,097/- as unexplained cash deposits was nullified, as it was dependent on the reassessment order.The two-member bench comprising Madhumitha Roy (Judicial Member) and Naveen Chandra (Accountant Member) allowed all grounds of appeal filed by the assessee and quashed the reassessment order passed by the ITO, Ward-Exemption, Ghaziabad.

Headstrong Ventures vs Income Tax Office CITATION: 2025 TAXSCAN (ITAT) 2078

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) partly allowed the appeal of a partnership firm for AY 2017-18 by reducing the ad-hoc disallowance of expenses from 15% to 10% of turnover. The Tribunal held that while the AO and CIT(A) were justified in estimating expenses due to a lack of documentary evidence, their higher disallowances were excessive.

The single bench of Vikas Awasthy (Judicial Member) examined the matter and found that the CIT(A) had issued a notice on 15.03.2024, to which the assessee responded on 31.03.2024. The CIT(A) had considered the submissions and granted partial relief. Accordingly, the allegation of ex-parte disposal was dismissed. Regarding the ad-hoc disallowance, the Tribunal observed that since the assessee failed to produce relevant documents to substantiate claimed expenses, some estimation by the AO/CIT(A) was justified.

Income Tax Officer vs Neelam Shamsher Kashyap CITATION: 2025 TAXSCAN (ITAT) 2079

In a dispute over the quantum of deduction under Section 54 of the Income Tax Act, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal challenging the relief granted to the assessee on the ground that the joint purchase of property with son-in-law doesn't bar deduction under Section 54.

The two-member bench of Amit Shukla (Judicial Member) and Padmavathy S ( Accountant Member) found that the CIT(A) had correctly considered the amended rectification deed, verified valuation evidence, and the actual amount invested to allow the full deduction. The fair market value adopted by the assessee was consistent with the stamp duty authority certificate, and there was no violation of the proviso to Section 55(2)(b). The procedural objection regarding the remand report was also found to be without merit.

Nishita Vijay Mehta vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2080

The Income Tax Appellate Tribunal (ITAT) Mumbai has dismissed both the revenue and assessee appeals, upholding the CIT(A)’s approval of exemptions claimed under Sections 54F and 54EC of the Income Tax Act, 1961. The tribunal confirmed that the assessee was the sole beneficial owner of the shares and had fully complied with statutory provisions for claiming exemptions.

The two-member bench comprising Amit Shukla (Judicial Member) and Padmavathy S (Accountant Member) observed that the assessee had fully complied with statutory requirements for claiming exemptions and that treating a portion of the gains as other income would have resulted in an incorrect tax computation. Consequently, the Tribunal dismissed both the revenue and assessee appeals, upholding the CIT(A)’s order in its entirety.

Mr. Arpanbhai Virambhai Desai vs ITO CITATION: 2025 TAXSCAN (ITAT) 2081

In a consolidated decision covering AYs 2014-19, the Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) held that reassessment proceedings initiated against the assessee were vitiated as it was based on Anti Corruption Bureau’s (ACB) report alleging disproportionate assets (DA) held by the assessee and his family.

Relying on the Gujarat High Court’s decision in Kantibhai Dharamsinhbhai Narola v. ACIT, the Tribunal observed that reassessment requires the AO to form a reasonable belief based on his own application of mind. Borrowing satisfaction from external reports, without independent scrutiny, renders the assumption of jurisdiction invalid.

AMD India Private Limited vs DCIT CITATION: 2025 TAXSCAN (ITAT) 2082

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) deleted a ₹19.63 crore adjustment proposed by the Transfer Pricing Officer (TPO) against AMD India Pvt. Ltd., as comparables were functionally dissimilar and receivables were already subsumed in the working capital.

The two-member bench comprising Keshav Dubey (Judicial Member) and Waseem Ahamed (Accountant Member) rejected the Revenue’s argument for a separate notional interest adjustment, noting that such duplication would distort the arm’s length analysis. The Tribunal also dismissed the Revenue’s reliance on earlier ITAT rulings that downplayed turnover as a comparability factor. It held that scale and segmental clarity are critical under TNMM, especially for specialised service providers like AMD.

AMD India Private Limited vsDCIT CITATION: 2025 TAXSCAN (ITAT) 2082

The Bangalore bench of Income Tax Appellate Tribunal (ITAT) has ruled that testing equipment received free of cost by AMD India Pvt. Ltd. from its Associated Enterprises (AEs) does not constitute a taxable benefit under Section 28(iv) of the Income Tax Act.

The two-member bench comprising Keshav Dubey (Judicial Member) and Waseem Ahamed (Accountant Member) cited its own precedents in Samsung R&D Institute India and Tesco Bengaluru, where similar additions were struck down.

It stated that mere access to equipment does not constitute a taxable benefit unless it results in an irretrievable advantage to the assessee.

Prashant Prakash Nilawar vs ACIT CITATION: 2025 TAXSCAN (ITAT) 2083

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) deleted additions of Unexplained Gold jewellery belonging to the Assessee’s wife and mother, where the quantity was within the prescribed Central Board of Direct Taxes (CBDT) Guidelines.

After examining and reviewing all the submissions, the Tribunal upheld the order of CIT(A) deleting the additions under sections 69A, 69B and 69C and the grounds raised by the Revenue on these issues were dismissed. The Tribunal allowed assessee’s cross appeals in all entirety, deleting all the residual amount sustained. Thus, the appeal filed by Revenue failed on all grounds and stands to be dismissed.

Vinit Vishwasrao Hingankar vs ACIT CITATION: 2025 TAXSCAN (ITAT) 2084

The Nagpur bench of the Income Tax Appellate Tribunal (ITAT) has partially allowed a doctor’s appeal concerning interest disallowance under Section 40(a)(ia) for non-deduction of Tax Deducted at Source (TDS).

Accordingly, the single bench of Pavan Kumar Gadale (Judicial Member) directed the AO to recompute the disallowance at 30% of the interest paid to unsecured creditors, ensuring compliance with the amendment. The ruling highlights the significance of keeping pace with legislative changes when applying provisions relating to TDS defaults.

Vinit Vishwasrao Hingankar vs ACIT CITATION: 2025 TAXSCAN (ITAT) 2084

The Nagpur bench of the Income Tax Appellate Tribunal (ITAT) has held that interest-free loans to friends or relatives require the verification of the assessing officer (AO) before taxation.

In line with principles of natural justice, the single bench of Pavan Kumar Gadale ( Judicial Member) restored the matter to the AO for verification. The AO was directed to examine the confirmations, supporting documentation, and financial records before making any addition to taxable income. The Tribunal said that estimating notional interest on interest-free loans without verifying actual utilisation or receipts could lead to incorrect taxation.

Malwa Oxygen & Industrial Gases Private Ltd vs ITO, NFAC CITATION: 2025 TAXSCAN (ITAT) 2085

The Indore Bench of the Income Tax Appellate Tribunal (ITAT) held that non-filing of Form 3CL cannot be a ground to deny deduction under Section 35(2AB) when the assessee’s research activity is duly approved by the Department of Scientific and Industrial Research (DSIR) and is related to its business.

The Bench comprising B.M. Biyani (Accountant Member) and Paresh M. Joshi (Judicial Member) observed that the assessee was entitled to 100% deduction of revenue expenditure under Section 35(1)(i) and depreciation on capital expenditure under Section 32, even though the weighted deduction under Section 35(2AB) was not allowable for want of Form 3CL. However, since the factual verification of expenses was pending, the case was remanded to the Assessing Officer for examination and allowance of eligible claims. Accordingly, the Tribunal ruled that the disallowance solely for non-filing of Form 3CL was not sustainable, remanding the matter to the Assessing Officer to verify the evidence and grant admissible deductions.

Farida Aboushair vs ITO CITATION: 2025 TAXSCAN (ITAT) 2086

The Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the appeal, holding that the delay in filing her appeal was due to sufficient cause, namely her husband’s serious illness and subsequent death and that the Assessing Officer (AO) erred in completing the assessment ex parte after granting only one day to respond to the Show Cause Notice.

The Bench comprising Waseem Ahmed (Accountant Member) and Keshav Dubey (Judicial Member), observed that the assessee was denied reasonable opportunity before the AO, who issued the show-cause notice with only one day’s time to respond and proceeded to complete the assessment hastily. It was held that the explanation offered for the delay was plausible and supported by evidence, and that there was sufficient cause preventing timely filing of the appeal.

Shailendra Rameshchandra Rathi vs ACIT CITATION: 2025 TAXSCAN (ITAT) 2087

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that cash found in assessee’s locker during search belonged to the entire family residing together and not solely to the taxpayer and accordingly deleted the addition made under Section 69A of the Income Tax Act, 1961.

The Two-Member Bench comprising Amit Shukla, Judicial Member and Arun Khodpia, Accountant Member heard and reviewed the matter. After hearing and reviewing the submissions, the Tribunal found that CIT(A)’s conclusion regarding the father and wife of the assessee not filing income tax returns were factually incorrect as their income-tax returns for A.Ys. 2021-22 and 2022-23 along with balance sheets, profit and loss accounts, and cash books were on record, reflecting the claimed cash balances.

Promotional Expenses for Dealer Scheme Recognised as Liquor Business Expenditure: ITAT Deletes ₹16.22 Lakh Addition

The Nagpur bench of Income Tax Appellate Tribunal (ITAT) has allowed the appeal of the assessee for A.Y. 2014–15, holding that ₹16.22 lakh claimed as promotional expenses under a dealer scheme were genuine business expenditures.

The Tribunal observed that the AO did not dispute the fact that the expenditures were made, but only the timing of the debit in the accounts. Considering the evidence provided, including the paper book submitted by the assessee, the bench of Pavan Kumar Gadle (Judicial Member) concluded that the expenses were incurred wholly and exclusively for business purposes and were adequately substantiated. Accordingly, the disallowance was directed to be deleted. In view of the above facts and submissions, the Tribunal allowed the appeal. The disallowance of ₹16,22,425 on account of the dealer promotional expenses was deleted, thereby reducing the taxable income accordingly.

Mere Ownership of Agricultural Land Insufficient to Prove Agri Income: ITAT Upholds 50% Addition as Unexplained u/s 68

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) dismissed the appeals for Assessment Years (AY) 2018-19 and 2019-20, upholding the addition of 50% of the agricultural income as unexplained for failure to substantiate genuine agricultural activities.

The Tribunal found no infirmity in sustaining 50% of the agricultural income as unexplained. It accordingly dismissed both appeals, holding that the grounds raised by the assessee were devoid of merit. For the following year, AY 2019–20, where the assessee had declared ₹4,36,520 as agricultural income, the same reasoning was applied, and 50% was again upheld as unexplained. The ITAT thus affirmed the CIT(A)’s orders for both years, concluding that without documentary proof of cultivation or sale, agricultural income cannot be presumed merely on account of land ownership.The assessee was represented by Hitesh, along with D. Anand, while E.Pavuna Sundari appeared for the Revenue.

Reassessment in Wrong Year and Notice Beyond Limitation: ITAT Quashes ₹2.13 Cr Additions u/s 50C

In a recent ruling, the Indore bench of Income Tax Appellate Tribunal (ITAT) set aside reassessment proceedings initiated under Section 147 of the Income Tax Act, 1961, against the assessee for AY 2014–15, holding that the reassessment notice was issued beyond the permissible time limit and pertained to an incorrect assessment year.

The two-member bench comprising Paresh M Joshi (Judicial Member) and BM Biyani (Accountant Member) held that the execution date of the sale deed, not the registration date, determines the assessment year for capital gains. Since the AO had reopened AY 2014–15, the reassessment was held to be for the wrong year.Further, the Tribunal noted that the fresh notice dated 29.07.2022 was issued beyond the permissible time limit under the amended Section 149, rendering it invalid. The reassessment was thus vitiated on both jurisdictional and procedural grounds.As a result, the Tribunal quashed the reassessment order and deleted the entire addition of ₹2.13 crore.

Additions on Cash Deposits and Property Purchase Made Without Proper Appraisal of Evidence: ITAT Orders Fresh Verification

The Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) has set aside additions made under Sections 69A, 69C, and 56(2)(x) of the Income Tax Act against an individual taxpayer, holding that the department failed to review the evidence on the source of cash deposits submitted by the assessee.

The bench of Pavan Kumar Gadale (Judicial Member) observed that both the AO and the CIT(A) failed to consider the nexus between the withdrawals from the wife’s account and the corresponding deposits into the assessee’s account, which were crucial to determining the genuineness of the transactions. Taking note of these procedural deficiencies, the Tribunal held that the matter required fresh examination. Accordingly, it set aside the order of the CIT(A) and restored the matter to the file of the AO with directions to verify the evidence and decide the issues afresh on merits.

The Tribunal also held that the Commissioner (Appeals) had exceeded his jurisdiction by questioning the Chartered Accountant’s certificate, as this issue was never raised in the Department’s appeal. Holding that the refund was filed within time and that the amended definition of “specified services” applied retrospectively, the Tribunal set aside Order-in-Appeal No. 81/2016 dated 17.06.2016 and allowed the appeal with consequential relief.

Sunil Kumar Agarwal vs ACIT CITATION: 2025 TAXSCAN (ITAT) 2095

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition of ₹20,34,000 made on account of undisclosed interest income for the Assessment Year (A.Y.) 2020-21 by observing the AO’s failure to issue Show cause notice and denial of cross-examination opportunity.

The two-member bench comprising Dr. S. Seethalakshmi (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) observed that the AO's failure to call for a clear explanation on the interest income after the sales dispute was settled constituted a violation of the principles of natural justice. The Tribunal held that the AO had violated the principles of natural justice while making this addition merely based on the surmise and conjecture and that too without calling for the explanation of the assessee.

Sima Ravisingh Kachhawah vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 2096

The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, has set aside the ex parte order passed by the CIT(A) and remanded the matter to the AO for fresh adjudication on the ground that income from real estate plotting business was misclassified as long-term capital gains under Section 50C.

Considering the facts, submissions, and material on record, ITAT set aside the CIT(A) order and remanded the matter to the AO for fresh adjudication on merits. The Tribunal directed that the assessee should be provided an adequate opportunity to substantiate her claims regarding the business nature of income under Section 44AD and the deductions claimed under Section 80C.

Wrong Tax Advice Not a ‘Sufficient Cause’ for 1,370-Day Delay: ITAT Says Assessee Cannot Shift Entire Blame to Consultant

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has dismissed the appeal on grounds of an inordinate delay of 1,370 days in filing, holding that the assessee’s reliance on its tax consultant’s failure to advise remedial action does not constitute “sufficient cause” for condonation under Section 5 of the Limitation Act, 1963.

The Bench observed that “putting all the blame on the tax consultant would not absolve the assessee of its own responsibility,” stressing that each day of delay must be satisfactorily explained with concrete reasons. Finding no credible justification or supporting evidence, the Tribunal ruled that the delay was neither bona fide nor unavoidable. Accordingly, it refused to condone the delay and dismissed the appeal as time-barred without examining its merits.

Canon India Pvt Ltd vs The Dy. C.I.T CITATION: 2025 TAXSCAN (ITAT) 2098

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that Canon India Pvt. Ltd. is entitled to full foreign tax credit for taxes paid in Japan, even though its tax liability in India was nil due to Section 10A deduction and brought-forward losses.

The tribunal explained that once a jurisdictional High Court decision settles the issue, it must be followed. It pointed out that the Revenue’s arguments based on the Bank of India cannot override binding precedent. The tribunal further observed that Canon’s claim for interest under Section 244A, raised through a cross-objection for AY 2005-06, could not be allowed.

Tarun Nandkumar Seksaria vs DCIT, CC-8(1), Mumbai CITATION: 2025 TAXSCAN (ITAT) 2099

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted ₹35 Lakh addition under section 69A/69B for alleged unaccounted land investment for the assessment year (A.Y) 2016-17, holding that excel sheets seized during search were prepared by a Third-Party Land aggregator, not by the assessee being not credible in nature.

The Tribunal, in conclusion, held that the additions made under section 69A/69B on account of alleged cash investment in Dapoli and Dhokawade land stand deleted for want of evidence; the reassessment proceedings initiated under section 148 are quashed for lack of jurisdiction in terms of the Faceless Assessment Scheme. The Tribunal also held that reassessment proceedings initiated under section 148 by the jurisdictional Assessing Officer, in violation of the Faceless Scheme under section 151A stand vitiated in law.

ITO vs Mr. Mohammed Farooq Kanana CITATION: 2025 TAXSCAN (ITAT) 2100

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) deleted the addition after finding that the Assessing Officer (AO) did not examine the evidence placed on record and had relied only on estimates while questioning the assessee’s agricultural income.

The two-member bench comprising Laxmi Prasad Sahu (Accountant Member) and Soundararajan K. (Judicial Member) observed that the assessee had produced affidavits from all four contractors who purchased the mango crop, and the AO did not make any enquiry to disprove those affidavits. The tribunal observed that the AO did not call for confirmations, did not summon the contractors, and did not question the genuineness of the transactions. The Tribunal pointed out that the AO relied only on estimated figures and did not examine the actual facts already placed on record.