Half-Yearly Income Tax Case Digest: ITAT Decisions 2025 [Part I]

Stamp Duty Value Difference Leads to Addition of Rs.1.28Crore: ITAT Upholds CIT(A)’s Decision [Read Order]

Tejas C Joshi vsDy. Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 101

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal filed by the assessee regarding the addition of Rs. 1.28 crore under Section 56(2)(vii)(b)(ii) of Income Tax Act,1961 on account of stamp duty value difference in a property purchase.

Tejas C Joshi,appellant-assessee,filed his return of income for Assessment Year 2015-16 on 30.03.2016, declaring Rs.45,46,760/- as total income. His case was selected for limited scrutiny. During assessment, it was found that he bought a property for Rs.10,28,28,600/- on 10.03.2015. The appellant paid additional stamp duty after the Deputy Collector valued the property at Rs.12,79,67,530/-.

Disallowance of Rs.25.85 Lakh Purchases due to Lack of Documentation: ITAT reduces Addition to 12.5% [Read Order]

Shamkant GajmalDesale vs The ITO CITATION: 2025 TAXSCAN (ITAT) 102

The Surat Bench of Income Tax Appellate Tribunal(ITAT) reduced the disallowance of Rs. 25.85 lakh worth of purchases, originally made due to lack of documentation, to 12.5%. Shamkant Gajmal Desale,appellant-assessee,filed his return for the assessment year 2008-09, declaring an income of Rs. 1,05,387. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1), but the assessee did not respond.

A show cause notice was then issued, asking why the assessment should not be completed under section 144 and why the purchases should not be disallowed. Since the assessee failed to provide any details, the AO disallowed the total purchases of Rs. 25,85,747 and assessed the income at Rs. 26,91,130.

Disallowance of Rs.25.85 Lakh Purchases due to Lack of Documentation: ITAT reduces Addition to 12.5% [Read Order]

Shamkant GajmalDesale vs The ITO CITATION: 2025 TAXSCAN (ITAT) 102

The Surat Bench of Income Tax Appellate Tribunal(ITAT) reduced the disallowance of Rs. 25.85 lakh worth of purchases, originally made due to lack of documentation, to 12.5%.

Shamkant Gajmal Desale,appellant-assessee,filed his return for the assessment year 2008-09, declaring an income of Rs. 1,05,387. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1), but the assessee did not respond.

PCIT’s Rejection of Refund Claim and RectificationApplication: ITAT Dismisses Appeal [Read Order]

2025 TAXSCAN (ITAT) 103

The Surat Bench of Income Tax Appellate Tribunal(ITAT) dismissed the appeal filed by the assessee, challenging the Principal Commissioner of Income Tax (PCIT)’s rejection of the refund claim and rectification application, stating that the rejection was not an appealable order under Section 253 of the Income Tax Act,1961.

Shiraz Marazban Italia,appellant-assessee,filed an appeal challenging the rejection of a rectification application under Section 154 of the Act, for the assessment year 2015-16. The appeal arose from an order dated April 16, 2024, passed by the Commissioner of Income Tax (Appeals)[CIT(A)],National Faceless Appeal Centre (NFAC).

Time Gap between Cash Withdrawal and Deposit Insufficient to treat amount as Undisclosed Income u/s 69: ITAT [Read Order]

Mahendrakumar Prahladbhai Vs ITO CITATION: 2025 TAXSCAN (ITAT) 104

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT )ruled that the time gap between cash withdrawals and deposits was insufficient to treat the amount as undisclosed income under Section 69 of Income Tax Act,1961.

Mahendrakumar Prahladbhai Vaghela, appellant-assessee, was flagged by the Income Tax Department under the ‘Operation Clean Money’ initiative for depositing large sums of cash during demonetization (November 9, 2016, to December 30, 2016) without filing income tax returns for the 2017-18 assessment year.

AO adds Rs. 24 lakhs u/s 69A Income Tax Act: ITAT confirms Agriculture Income, reduces addition to Rs. 2 lakhs to prevent Revenue Loss [Read Order]

Jehan Percy Variava Vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 106

The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) held that the income obtained from agriculture and reduced additions made by the Assessing officer to 2 Lakhs in order to prevent revenue loss.

Jehan Percy Variava ( assessee ) engaged in agricultural activities and filed his income tax return declaring no income for the assessment year (AY) 2017-2018. However, the assessee declared that every income obtained by him would fall under the domain of agricultural income.

Interest on Compensation on Acquisition of Agricultural Land to be Treated as Income from Other Sources: ITAT [Read Order]

Vachaspati Sharma vs ITO CITATION: 2025 TAXSCAN (ITAT) 107

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has carefully examined the complex issue of taxability of interest received under Section 28 of the Land Acquisition Act, 1894, and held that interest on compensation on acquisition of agricultural land will be treated as Income from other sources.

The core dispute centers on whether the interest received on enhanced compensation during land acquisition is a capital receipt exempt under Section 10(37) or a revenue receipt taxable under “Income from Other Sources”. The assessee, Vachaspati Sharma, received Rs. 4,78,95,440 as enhanced compensation including interest, and claimed complete exemption.

ITAT quashes Disallowance of Interest on Credit already confirmed to be Genuine [Read Order]

Prarthana Gems vsThe DCIT CITATION: 2025 TAXSCAN (ITAT) 108

The Income Tax Appellate Tribunal ( ITAT ), Surat Bench, quashed the disallowance of interest on an unsecured loan, which had already been confirmed as genuine by the assessee.

In this case, the appellant, Prarthana Gems, had received an unsecured loan of Rs. 25,00,000 from the late Mr. Rafique Peer Mohammad, a well-known individual in the diamond industry. Despite initial scrutiny, the ITAT acknowledged that the identity, genuineness, and creditworthiness of the lender had been sufficiently demonstrated.

Nature and Source of Credit Satisfactorily Explained: ITAT directs AO to delete Additions u/s 68 [Read Order]

Prarthana Gems vsThe DCIT CITATION: 2025 TAXSCAN (ITAT) 108

The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) in Surat has directed the Assessing Officer ( AO ) to delete additions made under Section 68 of the Income Tax Act, 1961, in relation to a loan of Rs. 25,00,000 received by Prarthana Gems, a Surat-based firm.

The case pertains to the assessment year 2016-17, where the AO had made additions under Section 68, claiming that the creditworthiness of the lender had not been established.

ITAT remands case to Assessing Officer: Allows Assessee to furnish details for Unexplained Investment [Read Order]

MaheshbhaiNagjibhai Desai Vs Income-Tax Officer CITATION: 2025 TAXSCAN (ITAT) 109

The Income Tax Appellate Tribunal ( ITAT ), Ahmedabad bench, has remanded a case back to the Assessing Officer ( AO ) for further examination, allowing the assessee to furnish the necessary details regarding unexplained investments.

This decision came after the Tribunal found merit in the assessee’s request for another opportunity to submit supporting documents, which were not presented earlier. Maheshbhai Nagjibhai Desai, the appellant, a resident of Ahmedabad, had been subjected to an assessment by the Income Tax Officer ( ITO ) for the Assessment Year 2012-13.

CIT(A) Dismisses Appeal as Time-Barred Despite Extended Deadline: ITAT Orders Rehearing and ₹10,000 Cost on Revenue [Read Order]

Seema Ajay Rankavs Deputy Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 110

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) orders rehearing and imposed ₹10,000 on Revenue as Commissioner of Income Tax(Appeals)[CIT(A)] dismisses appeal as time-barred despite extended deadline.

Seema Ajay Ranka,appellant-assessee, challenged the order passed by CIT(A), National Faceless Assessment Centre ( NFAC ) dated 17.09.2023 for the Assessment Year 2013-14.This is the second appeal before the tribunal. In the first round, the CIT(A) passed an ex-parte order on 28-12-2016 due to no representation.

Interest Income classified as Business Income: ITAT grants allowance of Related Expenses [Read Order]

Samir Networks LLPVS The ACIT Circle-4(1)91) CITATION: 2025 TAXSCAN (ITAT) 112

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that interest income earned by the assessee should be classified as business income, granting the allowance of related expenses. Samir Networks LLP, appellant-assessee,reported interest income of Rs. 9,96,855 under “income from business and profession” and claimed expenses of Rs. 1,05,20,522, resulting in a net loss.

However, the Assessing Officer ( AO ) taxed the interest income under “income from other sources” and disallowed the expense claim, making the entire interest income of Rs. 9,96,855 taxable. The Commissioner of Income Tax ( Appeals ) [CIT(A)] upheld the AO’s decision.

CIT(E) Denies Registration to Trust Engaged in Fund-Raising Activities: ITAT sets aside Denial and directs Grant u/s 12AB [Read Order]

Rotary International District 3054 vs The CIT(Exemption) CITATION: 2025 TAXSCAN (ITAT) 113

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Commissioner of Income Tax (Exemptions)[CIT(E)]’s denial of registration to a trust engaged in fund-raising activities and granted registration under Section 12AB of Income Tax Act, 1961.

Rotary International District, appellant-assessee,was formed on 24-09-2020 and registered under the Bombay Public Trust Act, 1950. It received provisional registration from the CIT(E) on 27-05-2021 for the years 2020-21 to 2023-24. The trust applied for final registration under Section 12AB on 05-04-2023, but the CIT(E) rejected it.

ITAT Partly Allows Assessee’s Appeal, Directs Benefit of Rs.8 Lakhs for Unexplained Cash Deposits

Manan Kiritbhai Shahvs Income-Tax Officer CITATION: 2025 TAXSCAN (ITAT) 114

In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Ahmedabad, partly allowed the appeal filed by assessee, in relation to the unexplained cash deposits during the demonetization period for the Assessment Year (AY) 2017-18. Tribunal addressed a significant issue involving unexplained cash deposits under Section 69A of the Income-tax Act, 1961.

Manan Kiritbhai Shah,the appellant-assessee had challenged the decision made by the Commissioner of Income-tax (Appeals) under Section 250 of the Act, which had confirmed an addition of Rs. 10,21,000 as unexplained investment.

ITAT Directs Reconsideration of Deduction Claim u/s 36(1)(va) in Light of Supreme Court Decision

Ranjeet Kumar Budhiavs DCIT CPC CITATION: 2025 TAXSCAN (ITAT) 115

In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Ranchi Bench has directed the Commissioner of Income Tax (Appeals) (CIT(A)) to reconsider the deduction claim under Section 36(1)(va) of the Income Tax Act, 1961, in light of the Supreme Court’s recent judgment.

The Tribunal observed that the CIT(A) had overlooked the latest Supreme Court decision, which could potentially affect the case outcome. As a result, the ITAT remanded the matter back to the CIT(A) for reconsideration, with instructions to consider the Supreme Court’s decision in the Checkmate Services case and pass a fresh order accordingly.

ITAT Allows Assessee’s Appeal, Orders CIT(A) to Decide on Foreign Tax Credit Claim Along with Pending Appeal

Kamlesh D. Pate vs TheACIT CITATION: 2025 TAXSCAN (ITAT) 116

Recently, the Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT), allowed the appeal of a senior citizen from Telangana, challenging the denial of Foreign Tax Credit (FTC) for the Assessment Year 2019-20. The Tribunal set aside the order passed by the Commissioner of Income Tax (Appeals) (CIT(A)), directing the CIT(A) to reconsider the matter along with a pending appeal related to the same assessment year.

Kamlesh D Patel, the appellant, was denied of FTC due to the belated filing of Form No. 67, which is required for claiming the credit of taxes paid abroad under Section 90 of the Income Tax Act, 1961. Kamlesh Patel had filed his return declaring an income of Rs. 2.63 crore, including agriculture.

Ex-parte Dismissal and Addition of Rs.1.55 Crore as Unexplained Investment: ITAT Remands Case to AO

Dinesh Ramanbhai Patelvs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 117

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) remanded the case back to the Assessing Officer (AO) for a fresh review after addressing the ex-parte dismissal and the addition of Rs. 1.55 Crore as unexplained investment.

Dinesh Ramanbhai Patel,appellant-assessee, challenged the appeal dated 11.03.2024 for Assessment Year(AY) 2017-18 passed by the Commissioner of Income Tax(Appeals)[CIT(A)]. The two-member bench comprising Siddhartha Nautiyal(Judicial Member) and Annapurna Gupta(Accountant Member) directed the case back to the AO for a fresh review, allowing the assessee an opportunity to present their case. If the assessee does not comply with the notices, the AO may pass appropriate orders based on the available evidence.

Assessee Gets Partial Relief from ITAT as Tribunal Sets Aside Interest Expenses Addition and Partly Sustains Household Expenses Disallowance

Manish Chiranjilal Jainvs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 118

In a recent ruling by the Income Tax Appellate Tribunal (ITAT), Surat Bench, the assessee, Manish Chiranjilal Jain, received partial relief in his appeal concerning the assessment for the financial year 2018-19. The Tribunal set aside the addition made by the Assessing Officer (AO) on account of interest expenses and partly sustained the disallowance concerning household expenses.

The appeal was filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated August 2, 2022, which had confirmed the AO’s assessment order. The AO had made a disallowance of Rs. 1,10,895 under section 36(1)(iii) of the Income Tax Act, related to interest-free advances made by the assessee. Additionally, an addition of Rs. 4.20 lakh was made on account of low household expenses, estimated by the AO to be insufficient for the assessee’s family in Surat.

ITAT directs Reconsideration of LTCG Claim owing to New Evidence including Cheque Transactions

Naranbhai SamatbhaiBharwad vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 120

The Income Tax Appellate Tribunal (ITAT), Ranchi Bench, has set aside the order of the Commissioner of Income Tax (Appeals) (CIT(A)) and directed the reassessment of the long-term capital gain (LTCG) claim for the assessment year 2014-15. The tribunal’s decision came after it found that new evidence submitted by the assessee had not been considered during the earlier proceedings.

The appellant, Raj Kumar Gupta, a proprietor of Sitaram Jewellers, had earned LTCG of Rs.1,91,276 from the sale of shares worth Rs.74,30,512/. The assessee claimed this income as exempt under Section 10(38) of the Income Tax Act, 1961.

Assessee’s Lack of Diligence Delayed Proceedings: ITAT imposes Cost of Rs. 10k, remands Matter

Rajeshbhai MohanbhaiPrajapati vs The ITO CITATION: 2025 TAXSCAN (ITAT) 121

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has taken a stern stance against the lack of diligence by Rajeshbhai Mohanbhai Prajapati, an assessee whose negligence led to delayed income tax proceedings. The case pertains to unexplained cash credits totaling Rs. 107.8 crore (AY 2016-17) and Rs. 74.49 crore (AY 2017-18). The tribunal has imposed a cost of Rs. 10,000 and remanded the matter for fresh adjudication. The matter revolved around transactions with entities M/s Orange Tradex Pvt. Ltd. and M/s Krrish Enterprise, identified as shell companies providing accommodation entries.

These entities were flagged for non-genuine business activities, and their VAT registrations had been canceled by the Gujarat VAT Department. Consequently, the Assessing Officer (AO) treated the large sums credited to the assessee’s bank accounts as unexplained income under Section 68 of the Income Tax Act, 1961.

Agriculturist not Liable for Buyer’s non-response to Tax Notice: ITAT Confirms Cash Deposits as Agricultural Income with Sale Bills and Land Records

Dushyant M. Pandya VsThe DCIT CITATION: 2025 TAXSCAN (ITAT) 123

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) ruled an agriculturist could not be held liable for the non-response of a third party to a tax notice. The tribunal confirmed that the cash deposit during the demonetization period was agricultural income supported by sale bills and land records.

Dushyant M. Pandya, an agriculturist, explained that the cash deposited in his bank account was derived from the sale of agricultural produce. The AO disbelieved the explanation citing that New Surrod Ginning and Pressing Factory, the party to whom the agricultural produce was sold, failed to respond to a notice issued under Section 133 ( 6 ) of the Act.

ITAT Grants relief in Tax Appeals, Condones Procedural Lapses and Professional Negligence: Remands Case to CIT(A)

Smt. Santra vs ITO CITATION: 2025 TAXSCAN (ITAT) 124

The Jaipur bench of the Income Tax Appellate Tribunal ( ITAT ), in a recent case, remanded the case back to the Commissioner of Income Tax ( Appeals ) [CIT(A)], providing the assessee an opportunity to present her case on merit again.

The assessee, Smt. Santra, an illiterate housewife, appealed against an order passed by the CIT(A) under Section 250 of the Income Tax Act relating to the Assessment Year 2010-11, which initiated penalty proceedings against the assessee under Section 271 ( 1 ) ( c ) of the Income Tax Act for alleged concealment of Income or accounting of wrong income.

Setback to Titan as ITAT confirms Legality of Reopening Assessment u/s 147

Titan Company Limitedvs Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 125

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) delivered a setback to Titan and upheld the legality of reopening the assessment under Section 147 of the Income Tax Act, 1961.

In this case, the assessing officer ( AO ) reopened the assessment under Section 147 due to the omission of a Rs. 2.12 crore prior-year loss while computing a Rs. 3.72 crore deduction under Section 80IC of the Income Tax Act for assessing officer ( AY ) 2011-12 and a wrongful bad debts claim of Rs. 29.52 crore.

Disallowance Claim on Loans written Off to Titan International: ITAT remands matter for Consideration of additional Evidence brought by Assessee

Titan Company Limitedvs Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 125

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) remanded the matter to the AO for a fresh examination concerning the write-off of loans amounting to Rs. 29.52 crore advanced by the assessee to its overseas associated enterprise ( AE ), Titan International Holdings BV (TIHBV) due to additional evidence brought by the assessee.

There were 3 grounds raised by TIitan in this case and one of them was with regard to the denial of the assessee’s claim under Sections 37 and 28(i) of the Income Tax Act, 1961, for writing off these advances by the assessing officer ( AO ).

ITAT quashes Addition on Previous Year on Account of Seven Companies by finding Investment Transactions to be Genuine of two companies

Dy. Commissioner ofIncome Tax vs M/s. N. Kumar Construction Co. Pvt. Ltd CITATION: 2025 TAXSCAN (ITAT) 126

The Nagpur bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the addition of Rs. 6.58 crore for the previous year, finding the investment transactions of two out of seven companies to be genuine.

ITAT observed that no addition for that year can arise since the amount was not received in the previous year relevant to AY 2012–13 as an advance against property. The bench held that the share premiums were duly accounted for and made through proper banking channels, and thus the transactions were genuine. The ITAT, comprising V. Durga Rao ( Judicial Member ) and K.M. Roy ( Accountant Member ) dismissed the revenue’s appeal.

CIT(E) Rejects S. 12AB Claim Citing Related Party Transactions Without Considering Society’s Replies: ITAT Remands Matter for Proper Hearing

CONFEDERATION OFBAHADURGARH INDUSTRIES vs CIT EXEMPTIONS CITATION: 2025 TAXSCAN (ITAT) 127

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) remanded the matter concerning the rejection of a society’s application for registration under Section 12AB of the Income Tax Act, 1961 citing the Commissioner of Income Tax (Exemptions) [CIT(E)] did not consider the replies and directed a proper hearing to reassess the matter.

The Confederation of Bahadurgarh Industries, the assessee is a society established on 07.12.2021, filed its application for registration on 01.09.2023, accompanied by financial statements, bank records, a memorandum of association, and evidence of its activities. The society was to promote industrial development in the Jhajjar region.

Delay in Filing Appeal Due to Change of Address, Non-Receipt of Order: ITAT Remands Matter for Fresh Adjudication

Dubey Ravi Arunkumarvs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 128

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) remanded a matter for fresh adjudication concerning a delay in filing an appeal due to a change of address and non-receipt of an assessment order citing principles of natural justice.

Dubey Ravi Arunkumar, the assessee is a labor contractor filed his income tax return for the assessment year 2013-14. The assessment for the year 2013-14 was scrutinized and finalized under Section 143(3) of the Income Tax Act, 1961. The assessing officer (AO) issued notices to the assessee but he did not respond to scrutiny notices.

Survey Reveals Undisclosed Income: ITAT Demands Verification of Tax Applicability u/s 115BBE

Yuwam EducationPrivate Ltd vs The DCIT CITATION: 2025 TAXSCAN (ITAT) 129

In a recent ruling, the Jaipur bench of the Income Tax Appellate Tribunal (ITAT) remanded the case back to the assessing officer (AO), asserting the need for a detailed reassessment of income tax returns filed by the assessee. The assessee, Yuwam Education Pvt Ltd, a Jaipur-based coaching institute, faced scrutiny under Section 133A of the Income Tax Act.

The Survey revealed several unaccounted fee receipts and a total of ₹46.6 lakhs as unaccounted income. The AO observed that the assessee had furnished its ITR along with a profit and loss account in which the assessee had reported gross receipts from tuition and registration fees worth ₹3 Cr, on which the assessee had shown income of ₹52 Lakhs.

ITAT dismisses Appeal after Assessee Fails to rectify Filing Defects Despite Multiple Notices

Gautam Keshavrao Lohevs The PCIT CITATION: 2025 TAXSCAN (ITAT) 132

Gautam Keshavrao Lohe,appellant-assessee,filed an appeal on 23.04.2024 against the revision order dated 19.02.2024, issued by the Principal Commissioner of Income Tax ( PCIT ), Vadodara-1. The appeal pertained to an assessment order passed under Section 143(3) of the Act, for the Assessment Year 2018-19.

The repeated absence of the assessee and failure to comply with procedural requirements indicated a lack of interest in pursuing the appeal. The defects highlighted by the Registry remained unresolved, and no steps were taken by the assessee to address the reminders or comply with the tribunal’s directions. This inaction left the appeal in a non-maintainable state.

The two member bench comprising T.R.Senthil Kumar ( Judicial Member ) and Makarand V.Mahadeokar ( Accountant Member ) noted the assessee’s continued non-compliance and lack of response, suggesting the matter could not proceed further due to the assessee’s failure to rectify the identified issues or participate in the appeal process.

ITAT Quashes Penalty under Section 271(1)(c), Directs AO to Reconsider Quantum Addition

Chandra Bali Singh vsIncome Tax Officer-3(1) CITATION: 2025 TAXSCAN (ITAT) 134

The Income Tax Appellate Tribunal (ITAT), Allahabad Bench, quashed a penalty under Section 271(1)(c) of the Income Tax Act, 1961, and remanded the quantum addition case back to the Assessing Officer (AO) for fresh consideration.

Chandra Bali Singh, appellant-assessee challenged the addition of ₹11,08,130, which was treated as unexplained cash deposits by the AO. The second appeal challenged the penalty imposed under Section 271(1)(c) on the same addition. The AO passed the assessment order on June 28, 2016, in an ex-parte manner, citing non-compliance with notices issued under Sections 148 and 142(1).

Tax Liability of Charitable Trust Dismissed: ITAT Remands Matter back to CIT(A) for Reconsideration of Expenditure Claims

Ariana CharitableTrust vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 136

In a recent order, the Allahabad Bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the tax liability imposed for the Assessment Year (A.Y.) 2018-19. The Tribunal remanded the matter back to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh adjudication, emphasizing the importance of substantive justice.

The case stemmed from the denial of expenditure claims by the Assessing Officer ( AO ) under Section 143(1) of the Income Tax Act, 1961. Ariana Charitable Trust, assessee, running a school up to the 8th standard, reported total receipts of Rs.41,68,597 against an expenditure of Rs.48,07,340. However, the AO treated the entire receipt as taxable income, disregarding the expenditure claims.

ITAT Confirms Taxability of Trust Receipts u/s 56(2)(x) of Income Tax Act citing Inclusion of Non-Relatives as Beneficiaries

Buckeye Trust vsPCIT-2 CITATION: 2025 TAXSCAN (ITAT) 137

The Bangalore Bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed an appeal filed by the assessee, upholding the Principal Commissioner of Income Tax ( PCIT )’s order under Section 263 of the Income Tax Act 1961.

The assessee, Buckeye Trust, is a private discretionary trust established under the Indian Trust Act of 1882. It received substantial investments amounting to ₹669 crore from its settler, Mr Anand Nadathur. These included interests in partnership firms and shares of private companies. In the Income Tax Return ( ITR ), the assessee declared its income as nil, claiming that the funds were received in a fiduciary capacity and for the benefit of family members who qualify as relatives under the Act.

AO Correctly allows Deduction u/s 80IA even Depreciation claimed less than limit: ITAT quashes PCIT’s Revision Order

M/s. Madurai PowerCorporation Pvt. Ltd vs The PCIT CITATION: 2025 TAXSCAN (ITAT) 196

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) quashed the order of the Principal Commissioner of Income Tax, stating that the Assessing Officer (AO) correctly allowed deduction under section 80IA of the act.

Madurai Power Corporation (assessee) is a corporation that filed an Income Tax Return (ITR) declaring Rs. 9.95 Crores after claiming a deduction under section 80IA of Rs. 41.21 Crores. The AO disallowed the amount of Rs. 53.24 Lakhs and issued a notice to re-open the assessment.

ITAT Grants Exemption u/s 10(10B) for VRS Compensation Citing Central Government-Approved Scheme Benefiting Employees

Dayal Singh vs The ITO CITATION: 2025 TAXSCAN (ITAT) 197

The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) granted an exemption under section 10(10B) for Voluntary Retirement Scheme (VRS) compensation citing that the Central-Government approved schemes that benefited Employees.

Dayal Singh (assessee) filed his Income Tax Return and offered Rs. 19,98,055 on account of VRS compensation. The VRS compensation was received from HMT Ltd (Tractor Division). Later, the assessee came to know that the amounts received under VRS were exempted under section 10(10B) of the Act.

Unsubstantiated Income shown in ITR: ITAT upholds Estimation of Income at 8% of Gross Receipts by AO

Suresh vs The IncomeTax Officer CITATION: 2025 TAXSCAN (ITAT) 198

In a notable ruling, the Income Tax Appellate Tribunal ( ITAT ), Chennai Bench, upheld the assessment by the Income Tax Officer ( ITO ) estimating an income of 8% on gross receipts deposited in the savings bank account of the assessee under Section 44AD of the Income Tax Act, 1961.

The case pertains to Assessment Year 2013-14, where the assessee, a Branch Manager of CISB Facility Services Pvt. Ltd., had deposited ₹1.99 crore in cash into his Axis Bank savings account but failed to file an income tax return initially.

ITAT Remands Case Back to CIT(A) Over Assessee’s Failure to Disclose Multiple PANs

Bundelkhand IspatMelting vs Income-tax Officer CITATION: 2025 TAXSCAN (ITAT) 199

The Income Tax Appellate Tribunal (ITAT) has remanded a case back to the Commissioner of Income Tax (Appeals) (CIT(A)) for fresh adjudication after noting that the assessee failed to disclose the possession of multiple PANs, which led to confusion during appeal proceedings.

The case involves Bundelkhand Ispat Melting Pvt. Ltd.,the assessee,which had its reassessment proceedings scrutinized for multiple issues, including the alleged receipt of an unsecured loan and commission payments under false pretenses.

Cold Storage Company Gets Relief from ITAT as Tribunal Upholds Legitimacy of Interest-Free Advances to Farmers

Girraj Cold StoragePvt. Ltd vs Income-tax Officer CITATION: 2025 TAXSCAN (ITAT) 200

In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Agra Bench, has granted relief to a cold storage company, affirming that giving interest-free advances to farmers was a legitimate business strategy.

The case concerned Girraj Cold Storage Pvt. Ltd., a company based in Shikohabad, which operates cold storage facilities for potato growers. During the assessment for the year 2011-12, the Income Tax Officer (ITO) had disallowed the company’s interest expenses amounting to Rs. 10,33,374. The disallowance was based on the claim that the company had extended interest-free advances to potato farmers while simultaneously raising interest-bearing loans from banks. The Assessing Officer argued that this practice was inconsistent with the principles of business expediency.

Absence of mentioning Specific Charge u/s 274 by AO Renders Penalty Levied Unsustainable: ITAT

Aahvan AgenciesLimited VS Deputy Commissioner of Income-tax CITATION: 2025 TAXSCAN (ITAT) 201

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) rendered the penalty levied against the assessee as unsustainable due to the absence of mentioning a specific charge under Section 274 of the Income Tax Act, 1961 by the assessing officer ( AO ).

The assessee has appealed against the order passed under Section 250 of the Income Tax Act, 1961, by the Commissioner of Income Tax ( Appeals ) [ CIT( A ) ] for the Assessment Year ( AY ) 2015-16.

Denial of Hearing: ITAT directs Fresh Adjudication of Addition at 8% of the Gross Profit

Vinodchandra DahyabhaiDarji vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 202

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) directed Fresh Adjudication of Addition at 8% of the Gross Profit due to denial of hearing to the assessee.

The assessee, Vinodchandra Dahyabhai Darji, had appealed against the order passed by the Commissioner of Income Tax (Appeals), [CIT(A)] passed under Section 250 of the Income-tax Act, 1961, for Assessment Year ( AY ) 2017-18.

ITAT Sets Aside Ex-Parte Order, Directs Fresh Hearing for Trust’s 12AB Registration

Shree SharvashramJagruti Sansthan Trust vs CIT(Exemption) CITATION: 2025 TAXSCAN (ITAT) 203

In a recent ruling, the Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the ex-parte order due to a lack of fair opportunity provided to the Trust to present its case and directed the Commissioner of Income Tax ( Exemption ) [ CIT(E) ] to conduct a fresh hearing.

The assessee, Shree Sharvashram Jagruti Sansthan Trust’s application for provisional registration under Section 12AB of the Income Tax Act, 1961, was rejected by the CIT(E) by noting that the trust failed to submit complete documents to establish the genuineness of its activities, their alignment with its stated objectives, and compliance with relevant laws.

ITAT Quashes Assessment for Failure to Issue Notice u/s 143(2) and Unjustified Additions

Jivarajbhai RamabhaiChaudhary Patel Vas vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 204

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) quashed the assessment for failure to issue the required notice under Section 143(2)of the Income Tax Act,1961 and unjustified additions.

Jivarajbhai Ramabhai Chaudhary,appellant-assessee, filed the appeal 63 days late due to an oversight by the Chartered Accountant. The delay was explained and not opposed by the revenue counsel. The delay was condoned, and the appeal was heard on its merits.

Disallowance of Sales Promotion Expense u/s 37(1): ITAT Allows Deduction Based on Evidence Provided

YG Capital Ltd vs DCIT CITATION: 2025 TAXSCAN (ITAT) 206

The Kolkata Bench of Income Tax Appellate Tribunal(ITAT)allowed the deduction of Rs. 4,81,477 as sales promotion expenses under section 37(1) of Income Tax Act,1961 after the assessee provided additional evidence, including a balance sheet and acquisition agreement, supporting the claim that the expenses were legitimate business expenditures.

YG Capital Ltd.,appellant-assessee,filed an appeal that was delayed by 860 days. The appeal was first filed on time with the Pune ITAT, but was dismissed due to jurisdiction issues, as it should have been filed with the Kolkata ITAT. The order was received on 03-05-2024, and the appeal was filed online on 09-05-2024. The assessee requested the delay be excused, and the tribunal agreed, admitting the appeal for further review.

Credit Card Misuse by Friend Not Attributable as Personal Expenditure: ITAT

AbdulmannanMohammedkasad Bastawala vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 205

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ), held that the misuse of credit cards by a friend cannot be treated as personal expenditure. The assessee, Abdulmannan Mohammedkasad Bastawala, was a salaried employee.

The assessing officer ( AO ) observed that the assessee had only mentioned about salary from M/s Blue Dart Express Ltd. in the Income Tax Returns ( ITR ) and did not mention anything regarding credit card payments made by the assessee amounting to Rs. 19,96,363. The assessee was asked by the AO to explain these transactions through notices issued under Section 142( 1 ) of the Income Tax Act,1961.

ITAT Condones Delay Due to Bona Fide Reasons Based on Affidavit and Remands Case to CIT(A) for Fresh Hearing

M/s Manali Properties& Finance Pvt. Ltd vs DCIT CITATION: 2025 TAXSCAN (ITAT) 207

The Kolkata Bench of Income Tax Appellate Tribunal(ITAT) condoned the delay in filing an appeal by the assessee based on bona fide reasons outlined in an affidavit including financial difficulties during the COVID-19 pandemic, absence of legal counsel, and issues with communication regarding the assessment order and remanded the matter to Commissioner of Income Tax(Appeals)[CIT(A)] for fresh hearing.

M/s Manali Properties & Finance Pvt. Ltd.,appellant-assessee, was involved in the business of trading, dealing, and investing in shares and securities. The case was selected for scrutiny by the AO, who added Rs. 6,14,83,565/- to the assessee’s income as income from other sources.

Commission Paid to Non-Residents for Services Rendered Outside India Not Taxable Without PE: ITAT

DCIT vs M/s. AllsecTechnologies Limited

CITATION: 2025 TAXSCAN (ITAT) 208

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that commission payments made to non-residents for services rendered outside India are not taxable under the Income Tax Act, 1961, in the absence of a Permanent Establishment (PE) or business connection in India.

Allsec Technologies Limited, the assessee, paid selling commissions of Rs. 197.18 Lakhs to Allsechtech, USA. TDS was deducted for Rs. 99.55 Lakhs. Still, not for the remaining amount, as the assessee argued that the recipient had no business connection or Permanent Establishment (PE) in India. So, the payments were not chargeable to tax under Section 195 of the Income Tax Act, 1961.

ITAT Orders Verification of TDS Deposits, Grants Relief to Assessee

PNC SPSCPL (JV) vsDCIT (TDS) CITATION: 2025 TAXSCAN (ITAT) 209

In a recent decision, the Income Tax Appellate Tribunal ( ITAT ) has allowed the appeal of an assessee, directing the Assessing Officer ( AO ) to verify the documents related to Tax Deducted at Source (TDS) deposits.

The assessee, PNC SPSCPL (JV), filed an appeal against the order of the Commissioner of Income Tax (Appeals), which had upheld the AO’s decision treating the assessee as an assessee-in-default for non-compliance of TDS provisions.

Discrepancy in FMV: ITAT Directs AO to Determine by Conducting Thorough Fact-Finding Process, Applying Explanation u/s 56(2)(viib)

ITO vs M/s. PriyaEstate Developers Private Ltd CITATION: 2025 TAXSCAN (ITAT) 210

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) directed the Assessing Officer (AO) to Determine the Fair Market Value (FMV) of Shares by conducting a thorough Fact-Finding Process and by applying an Explanation under Section 56(2)(viib) of the Income Tax Act, 1961. Priya Estate Developers Private Ltd., the assessee, is a real estate developer.

During the assessment year 2016–17, the assessee issued 10,060 equity shares at a premium of Rs. 36,990 per share to one of its promoters, Sasikala Raghupati. The shares were issued by converting loans provided by the promoter into equity share capital supported by a valuation report from Raghu & Gopal Chartered Accountants.

ITAT Intervenes: Orders CIT(A) to Admit Appeal, Citing ‘Good and Sufficient Reasons’

Ritika Jain vsIncome-tax Officer CITATION: 2025 TAXSCAN (ITAT) 211

In a significant ruling, the Income Tax Appellate Tribunal ( ITAT ), Agra Bench, has intervened and directed the Commissioner of Income-tax (Appeals) [CIT(A)] to admit her appeal. This order comes in the backdrop of a contentious issue regarding the taxability of cash deposits made in her bank account during the demonetization period.

The case relates to the assessment year 2017-18, where Ritika Jain,the appellant-assessee who had migrated to the USA in 2014, did not file her income tax return, claiming that her income during the year was below the taxable threshold. The Assessing Officer ( AO ) had initiated proceedings and levied an addition of Rs. 16,24,600 under Section 69A of the Income Tax Act, citing unexplained cash deposits during demonetization.

ITAT Sets Aside CIT(A) Order, Citing Breach of Natural Justice and Violation of Section 250(6)

Jain Steel Corporationvs Income-tax Officer CITATION: 2025 TAXSCAN (ITAT) 212

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ), Agra Bench, has set aside the order of the Commissioner of Income Tax (Appeals) [ CIT(A) ] and directed the case to be reconsidered on merits.

The decision was made in the case of Jain Steel Corporation for the Assessment Year 2016-17, wherein the ITAT found that the CIT(A) had violated the principles of natural justice by dismissing the appeal ex-parte without addressing the substantive issues raised by the assessee.

AO Adds based on Mobile Phone Image Indicating Higher Sale Consideration: ITAT Deletes due to Absence of Corroborative Evidence

ACIT vs ShriChandrasekaran Joseph Vija CITATION: 2025 TAXSCAN (ITAT) 213

The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the deletion of additions made by the Assessing Officer ( AO ), based on a non-editable mobile phone image allegedly showing higher sale consideration for certain properties citing the absence of corroborative evidence.

Chandrasekaran Joseph Vijay, the assessee was subjected to a search operation on February 5, 2020, which led to the seizure of an image extracted from his mobile phone. This allegedly non-editable image contained details of properties and associated investment amounts forming the basis for the AO’s additions as unexplained investments.

Loans from IPO Proceeds, Not Borrowed Funds: ITAT directs AO to recompute Interest Disallowance

M/s. RavikumarDistilleries Limited vs DCIT CITATION: 2025 TAXSCAN (ITAT) 214

The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer ( AO ) to recompute the disallowance of interest expenses confirming that the loans advanced by the assessee were funded through proceeds from an Initial Public Offering ( IPO ) held in an escrow account and not borrowings funds.

Ravikumar Distilleries Limited, the assessee, advanced loans of Rs. 2910.02 lakhs which the AO alleged were funded using interest-bearing borrowings. Based on this assumption, the AO disallowed interest expenses of Rs. 413.22 lakh and computed at 14.2%.

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