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

This half-yearly round-up analytically summarizes the key Direct Tax-Income Tax rulings of the Income Tax Appellate Tribunal (ITAT) reported at Taxscan.in during the first half of 2025.

S.11 & 12 Exemption Cannot Be Denied Merely Due to Delayed Registration of Trust: ITAT

Shree Koteshwar Mahadev Public vs DCIT CITATION: 2025 TAXSCAN (ITAT) 1125

The Surat Bench of the Income Tax Appellate Tribunal (ITAT) remanded the case concerning the denial of exemption under Sections 11 and 12 of the Income Tax Act, 1961 to Shree Koteshwar Mahadev Public Trust, observing that the lower authorities had not properly evaluated the trust's eligibility post-registration and did not provide adequate opportunity for hearing.

The Surat Bench of the Income Tax Appellate Tribunal (ITAT) remanded the case concerning the denial of exemption under Sections 11 and 12 of the Income Tax Act, 1961 to Shree Koteshwar Mahadev Public Trust, observing that the lower authorities had not properly evaluated the trust's eligibility post-registration and did not provide adequate opportunity for hearing.

ITAT sets aside Income Tax Penalty on Fruit Dealer for Misreporting, Directs CIT(A) to Reconsider Immunity Despite Form 68 Lapse

Terai Fruits Company vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1126

The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) has set aside a penalty imposed for misreporting of income while directing the Commissioner of Income Tax (Appeals) ( CIT(A) ) to re-examine the firm’s claim for immunity, observing that a procedural lapse in form submission alone should not override the assessee’s substantive requirements.

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The ITAT bench of Pradip Kumar Choubey (Judicial Member) and Rakesh Mishra (Accountant Member) noticed that despite the assessee having failed to submit Form 68, had made all substantive compliance under Section270AA of the Income Tax Act, 1961. The bench citing the Supreme Court’s decision in Mangalore Chemicals & Fertilizers Ltd. (1992), the Tribunal reiterated that procedural lapses should not defeat legitimate and bona fide claims when the substantive intention of the law has been met.

ITAT Upholds CIT(A) Order: No Addition u/s 68 for Share Capital and Unsecured Loans as Assessee Proves Identity, Creditworthiness, and Genuineness

ACIT vs Signature Global (India) Pvt. Ltd CITATION : 2025 TAXSCAN (ITAT) 1127

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has dismissed an appeal filed by the Revenue against Signature Global (India) Pvt. Ltd., ruling in favor of the assessee on issues related to share capital, unsecured loans, and disallowance under Section 14A of the Income Tax Act, 1961. The bench comprised Sudhir Pareek (Judicial Member) and S. Rifaur Rahman(Accountant Member).

The Revenue’s argument that the CIT(A) admitted additional evidence without a remand report was also rejected. The ITAT noted that the CIT(A) had the authority under Section 250(4) to conduct independent inquiries, as affirmed by the Delhi High Court in CIT vs. Manish Buildwell Pvt. Ltd. (2011). In conclusion, the ITAT dismissed all grounds raised by the Revenue, upholding the CIT(A)’s order.

ITAT Deletes Addition u/s 68, Rules Assessee Proved Source of Funds for Land Purchases in Earlier Years

Raksha Buildtech Private Limited vs ITO CITATION : 2025 TAXSCAN (ITAT) 1128

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has deleted an addition of Rs. 3.12 crore made under Section 68 of the Income Tax Act, 1961, holding that Raksha Buildtech Private Limited had sufficiently demonstrated the source of funds for land purchases made in earlier years. The bench comprised Judicial Member Sudhir Kumar and Accountant Member S. Rifaur Rahman.

The ITAT deleted the Rs. 3.12 crore addition, concluding that the assessee had discharged its burden of proving the identity, creditworthiness, and genuineness of the transactions.

ITAT Allows Foreign Tax Credit Despite Delay in Filing Form 67, Says Compliance is Directory and Not Mandatory

Timirbaran Mazumder vs D.C.I.T./A.C.I.T CITATION: 2025 TAXSCAN (ITAT) 1129

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has recently allowed a Foreign Tax Credit (FTC) to an assessee, despite a delay in filing Form 67, holding that procedural lapses cannot extinguish substantive rights.

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The Tribunal referred to various ITAT and High Court rulings, like Duraiswamy Kumaraswamy v. PCIT. It concluded that procedural compliance should not hinder tax justice when the substantive entitlement is unambiguous. The Tribunal directed the Assessing Officer to allow the FTC by law and the DTAA between India and the USA. Grounds 1 to 3 were allowed, and the remaining grounds, being general or consequential, were not separately adjudicated. As a result, the assessee's appeal was allowed.

ITAT quashes ₹1.26Cr Addition: No Need to Prove ‘Source of Source’ for Pre-2013 Loans

Pooja Equiresearch Pvt. Ltd vs DCIT CITATION: 2025 TAXSCAN (ITAT) 1130

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has set aside an addition of ₹1.26 crore made under Section 68 of the Income Tax Act against the appellant holding that for assessment years prior to 2013-14, an assessee is not required to prove the “source of the source” of loans or credits reflected in its books.

The ITAT allowed the appeal of Pooja Equiresearch Pvt. Ltd. and direc2025 TAXSCAN (ITAT) 1130ted that the addition made under Section 68 be deleted. This order reaffirms that for loans or credits received prior to assessment year 2013-14, the assessee’s obligation is limited to proving the identity, creditworthiness, and genuineness of the transaction, and not the source of the transaction.

Accountant’s Negligence: Uneducated Taxpayer wins Second Chance, ITAT condones 87-Day Delay

Amol Babanrav Kolakar vs Addl./Jt./Dy./Asstt./ITO CITATION: 2025 TAXSCAN (ITAT) 1131

The Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) has condoned a delay of 87 days in filing an appeal, granting relief to a taxpayer who claimed ignorance of proceedings due to negligence by his part-time accountant.

The bench comprising V Durga Rao (Judicial Member), noted that the taxpayer had shown a consistent pattern of non-compliance, failing to respond to notices issued on four separate occasions during the appellate proceedings and filing the first appeal itself with a 59-day delay. It termed his approach as “lackadaisical” (carelessly lazy) but chose to give him another opportunity in the interest of natural justice. The ex-parte order passed by the CIT(A) was set aside, and the matter remanded back for fresh adjudication. The assessee was directed to submit a properly supported condonation application before the CIT(A), who shall exercise discretion to decide it on merits before proceeding with the appeal.

ITAT Sets Aside Ex-Parte CIT(A) Order, Slaps ₹10k Cost on Assessee for Chronic Delays

Ashish Keshav Ukey vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 1132

The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, has set aside an ex-parte order issued by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, and remanded the matter for fresh adjudication after observing multiple procedural lapses and non-appearance during hearings.

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Taking note of the persistent non-compliance and delays, the Bench Comprising V. Durga Rao (Judicial Member) and K M Roy (Accountant Member) imposed a cost of ₹5,000 per appeal totalling ₹10,000, to be paid to the Maharashtra State Legal Services Authority. Proof of payment must be submitted before the CIT(A) during further proceedings.

ITAT gives Taxpayer Second Chance: Ex-Parte CIT(A) Order Set Aside for Natural Justice

Abhishek Golecha vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 1133

The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, has set aside an ex-parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] and granted the taxpayer a fresh opportunity to present his case. The ruling emphasizes the importance of adhering to the principles of natural justice in tax proceedings.

Durga Rao (Judicial Member) observed that while the CIT(A) had followed due process by issuing notices, the final order was passed ex-parte, leaving the assessee without a fair hearing. Citing the principle of natural justice, the ITAT held that Golecha deserved one more opportunity to substantiate his claims.

Co-op Society wins ₹10.14L Tax Relief: ITAT rules FDR Interest Eligible for 80P Deduction

Aditya Urban Co–operative vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 1134

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has granted substantial tax relief to a cooperative credit society, holding that interest earned on fixed deposits (FDRs) with cooperative banks qualifies for deduction under Section 80P(2)(d) of the Income Tax Act.

The Tribunal held that the assessee had earned interest from FDRs maintained with cooperative banks, which are registered cooperative societies, and hence, the interest qualifies for deduction under Section 80P(2)(d). The Tribunal observed that the authorities below had erred in disallowing the claim merely based on the source of the income without examining the nature of the investment.

ITAT upholds PCIT Order on Depreciation Disallowance, holds AO Ignored Rental Terms and Asset Usage Facts

Shreeji Associates vs Principal Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 1135

The ITAT Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has upheld the revisionary order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961. The Tribunal held that the Assessing Officer (AO) had disallowed depreciation based on an incomplete understanding of the property usage and rental terms, thereby warranting action from the PCIT.

The Tribunal bench comprising Dr. B.R.R. Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) held that the AO’s basis for disallowing depreciation was incorrect and not connected with the contents of the rent agreement.

Failure to Prove Assessee's Share Ownership: ITAT deletes ₹2.53 Lakh Income Tax Addition u/s 68 in Client Code Modification Case

Sahil Satishbhai Shah vs Income-Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1136

In a notable ruling reaffirming the necessity for concrete evidence in income tax assessments, the Income Tax Appellate Tribunal (ITAT) Ahmedabad has deleted an addition of ₹2.53 lakh made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, in a case involving alleged client code modification (CCM).

The ITAT found merit in the assessee’s contention. The tribunal noted that the Revenue failed to produce any concrete evidence proving that Shah held or transacted in the said shares. There was no demat account statement, broker ledger, or other documentation showing his involvement in the transaction. Moreover, the Revenue could not demonstrate any financial relationship between the assessee and the broker in question.

ITAT quashes PCIT Directions on TDS under Section 194J and Closing Stock Valuation

Shree Hari Enterprise vs The Pr.CIT-1 CITATION: 2025 TAXSCAN (ITAT) 1137

In partial relief to an assessee, the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has quashed two major directions issued by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act.

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The ITAT found that the PCIT had failed to counter or analyze the explanation offered by the assessee and did not substantiate how the valuation method violated ICDS. In the absence of demonstrated error, the Tribunal concluded that the PCIT’s directions were unsustainable in law.

Disclosure alone Insufficient to Escape Applicability of Section 69A: ITAT

M/s. Shreeji Infratech vs PCIT CITATION: 2025 TAXSCAN (ITAT) 1138

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has held that mere disclosure of undisclosed income in tax returns is not sufficient to shield an assessee from the provisions of Section 69A of the Income Tax Act, 1961. The Tribunal upheld the revisionary action taken by the Principal Commissioner of Income Tax (PCIT) under Section 263 in the case of M/s. Shreeji Infratech and M/s. Shreeji Infra for the Assessment Year 2017–18.

The Tribunal concluded that the PCIT acted within his jurisdiction and upheld the revisionary order, thereby dismissing the appeals filed by both Shreeji entities.

Inadvertent Email Oversight: ITAT remits Appeal to CIT(A) for Adjudication on Merits with ₹15,000 Cost on Assessee

Pankajbhai Devrajbhai Soliya vs NFAC CITATION: 2025 TAXSCAN (ITAT) 1139

The Income Tax Appellate Tribunal (ITAT), Surat Bench, has remanded a delayed income tax appeal back to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh adjudication on merits. The relief was granted to the appellant-assessee, subject to payment of ₹15,000 as cost, after it was found that the delay in filing the appeal stemmed from the taxpayer’s failure to check his registered email regularly.

The ITAT directed Soliya to pay ₹15,000 to the Income Tax Appellate Tribunal Bar Association, Surat Bench, within two weeks as a condition for the appeal’s restoration.The Tribunal also issued a cautionary note, urging the assessee to exercise greater vigilance and cooperate fully during the appellate process. The appeal was allowed for statistical purposes.

ITAT upholds Revision on AO's Lapses in Verifying TDS on Rent and Unsecured Loans

Shree Hari Enterprise vs The Pr.CIT-1 CITATION: 2025 TAXSCAN (ITAT) 1140

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has upheld the Principal Commissioner of Income Tax’s (PCIT) revisionary action under Section 263 of the Income Tax Act, 1961, against the assessee, citing critical lapses by the Assessing Officer (AO) in verifying TDS compliance and unsecured loan transactions during assessment.

In a partial relief to the assessee, the Tribunal set aside the PCIT’s findings regarding TDS on professional services and valuation of closing stock, citing lack of conclusive error in the assessment. The appeal was thus partly allowed, with key elements of the PCIT’s revisionary order sustained.

Senior Citizen Not Familiar with Online Systems: ITAT Remands Section 12AB and 80G Matter for Reconsideration

Lothada-Piplana-Padavala vs The Commissioner of Income Tax(Exemptions) CITATION: 2025 TAXSCAN (ITAT) 1141

The Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the orders of the Commissioner of Income Tax (Exemptions) [CIT(E)] which rejected the application for registration under Section 12AB and approval under Section 80G and remanded the matters for fresh consideration.

The two-member bench comprising Dr. Arjun Lal Saini (Accountant Member) and Dinesh Mohan Sinha (Judicial Member) observed the assessee’s reasons for delay, including the director’s age, lack of education, and dependence on an uncooperative accountant. The tribunal further observed that the CIT(E) rejected the applications due to the assessee’s failure to submit documents, but the assessee’s lack of familiarity with online systems contributed to the non-compliance.

Non-Compliance to Income Tax Notice Not Deliberate: ITAT Remands Matter to CIT(A)

Maa Harsiddhi Infra Developers Private Limited vs TheDeputy Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1142

The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the ex-parte order of the Commissioner of Income Tax (Appeals) [CIT(A)] which dismissed the appeal for non-compliance with notices citing it was not deliberate and remanded the matter for fresh adjudication.

The tribunal held that the assessee deserved one final opportunity to present the case on merits. The tribunal set aside the CIT(A)’s order and remanded the matter to the CIT(A) with directions to adjudicate the appeal fresh, ensuring a reasonable opportunity of being heard for the assessee.

Technical Error in Charitable Institution Registration Application: ITAT Set Asides 3-Year Gap Cancellation Order, Remands Matter

Karnataka State Diploma in Nursing Examination Board vsCIT (Exemptions) Bangalore CITATION : 2025 TAXSCAN (ITAT) 1143

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Exemptions) [CIT(E)] which cancelled the registration granted under Section 12AB of the Income Tax Act, 1961 citing technical error in charitable institution registration application.

The tribunal set aside the CIT(E)’s order and remanded the matter back to the CIT(E) with directions to treat the assessee’s original application as filed under Section 12A(1)(ac)(ii) and to decide the issue afresh.

Failure to Consider Submitted Documents for Trust Registration: ITAT Remands with One More Opportunity

Kodavaame vs CIT (Exemptions) CITATION : 2025 TAXSCAN (ITAT) 1144

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Exemptions) [CIT(E)], which cancelled the registration under Section 12AB of the Income Tax Act, 1961, and remanded the matter for fresh adjudication.

The tribunal remanded the matter to the CIT(E) for fresh consideration and also directed that a reasonable opportunity of being heard be granted to the assessee. The tribunal also instructed the assessee to submit all necessary documents, financials, and reports promptly and avoid unnecessary adjournments.

Employee Fails to Respond to Income Tax Email: ITAT Condones 510-Day Appeal Delay Finding Grounds Genuine

Purshottam Narayanrao Jadhao vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 1145

The Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) has condoned a delay of 510 days in filing an Income Tax appeal and set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and directed fresh adjudication on the merits.

The Tribunal directed the CIT(A) to condone the 510-day delay, adjudicate the appeal on its merits, and pass a speaking order under Section 250(6) of the Income Tax Act, 1961. The appeal of the assessee was allowed for statistical purposes.

Relief for Mahindra University: ITAT Quashes Rejection of 80G Approval, Orders Fresh Review by CIT(E)

MAHINDRA UNIVERSITY vs Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 1146

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Exemption) [CIT(E)] which rejected the application for approval under Section 80G of the Income Tax Act, 1961 and directed the CIT(E) to reconsider the application after thorough verification of the university’s charitable educational activities.

The tribunal set aside the CIT(E)’s order and remanded the matter for fresh adjudication. The tribunal directed the CIT(E) was directed to verify all relevant facts, including the university’s records and prior approval under Section 10(23C)(vi), while providing the assessee a fair opportunity to be heard.

ITAT Condones 224-Day Delay: Remands Modi Charitable Trust’s 12A & 80G Applications Over Unfamiliarity with E-Notices

Modi Charitable Trust vs The CIT(Exemption) CITATION: 2025 TAXSCAN (ITAT) 1147

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) in its recent ruling condoned a delay of 224 days in filing appeals and remanded back the matter upon being certain that the appellant was unfamiliar with income tax proceedings and did not regularly check the e-filing portal or emails due to lack of prior litigation experience.

TAT set aside the orders of the CIT(E) and both matters were remanded for fresh adjudication before CIT(E) while advising that the assessee be provided due opportunity of hearing prior to the passing of any decision. Accordingly, the appeal was allowed.

ITAT Condones 873 Day Delay in Filing Appeal due to COVID-19, Remands Matter to CIT(A) for Fresh Adjudication

Oxford Shiksha Samiti vs Income-tax Officer CITATION : 2025 TAXSCAN (ITAT) 1148

The Agra Bench of the Income Tax Appellate Tribunal (ITAT), in its recent ruling condoned delay in filing appeals that had previously been dismissed as time-barred by the Commissioner of Income-tax (Appeals) ( CIT (A) ) by relying on the Supreme Court’s directions to exclude the COVID-19 pandemic period for the purpose of computing limitation.

The bench comprising of Sunil Kumar Singh (Judicial Member) and Manish Agarwal (Accountant Member) finding merit in the appellant's submission condoned the delay in filing the first appeal and remanded the same back to CIT(A) to decide the matter fresh on merit in accordance with the law.

Claim of LTCG Exemption from Penny Stock Transactions Found Bogus: ITAT Upholds Disallowance

Chimanbhai Chhaganbhai vs Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 1149

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the disallowance of ₹55.52 lakh claimed as Long Term Capital Gains (LTCG) exemption by the assessee, after finding the transaction to be part of a bogus penny stock scheme.

The ITAT held that the assessee had claimed bogus LTCG and upheld the order of the CIT(A). Therefore,the appeal was dismissed.

ITAT Quashes Cancellation of Trust Registration Over Jurisdictional and Procedural Lapses, Rules Specified Violation Clause u/s 12AB(4) Not Applicable Retrospectively

Hemkunt Foundations vs Principal Commissioner Income Tax CITATION: 2025 TAXSCAN (ITAT) 1150

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the cancellation of registration under Section 12AB of the Income Tax Act, 1961 and ruled that the Principal Commissioner of Income Tax (PCIT) lacked jurisdiction and that the "specified violation" clause under Section 12AB(4) was inapplicable for the financial years in question.

The tribunal ruled that the "specified violation" clause under Section 12AB(4), effective from 01.04.2022, could not be applied to FY 2020-21 or FY 2021-22, therefore, the cancellation order was legally unsustainable.

No Error in AO’s Order, Interest Deduction u/s 24(b) on Property Loan Valid: ITAT overturns PCIT’s Order

Raghav Bahl vs DCIT CITATION: 2025 TAXSCAN (ITAT) 1151

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the revisionary order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, allowing the interest deduction claimed under Section 24B for Assessment Year (AY) 2013-14 to 2019-20.

The tribunal held that the assessment was neither erroneous nor prejudicial to revenue interests. The tribunal relied on the Delhi High Court’s decisions in PCIT v. Clix Finance India (P) Ltd. 2024, which stated that a plausible view taken by the AO cannot be revised under Section 263 unless it was unsustainable in law.

Notice Erroneously Issued in name of Bangalore Medical College Instead of Bangalore Medical College Alumni Association: ITAT Remands Matter

Bangalore Medical College Alumni Association vs CIT(Exemptions) Bangalore CITATION: 2025 TAXSCAN (ITAT) 1152

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Exemptions) [CIT(E)], which rejected the application for approval under Section 80G of the Income Tax Act, 1961, and remanded the matter for fresh consideration.

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The tribunal remanded the matter to the CIT(E) for fresh adjudication, directing that a reasonable opportunity of being heard be granted to the assessee. The tribunal also directed the assessee to submit all necessary documents, financials, and reports promptly to support its claim. The appeal of the assessee was partly allowed for statistical purposes.

Relief to Muthoot Bankers: ITAT Allows ₹5L Interest Deduction u/s 40(b) as Payment was within 12% Limit and Authorized by Partnership Deed

Muthoot Bankers vs ITO CITATION: 2025 TAXSCAN (ITAT) 1153

The Cochin Bench of the Income Tax Appellate Tribunal (ITAT) in its recent ruling granted relief to Muthoot Bankers by allowing a deduction of ₹5,00,000 paid as interest to partner, as the payment was within the 12 percent limit and duly authorized by the partnership deed.

The bench comprising Inturi Rama Rao (Accountant Member) and Sonjoy Sarma (Judicial Member) set aside the order of the CIT(A) and held that the reasoning adopted by the lower authorities in disallowing interest paid to the partners solely on the ground of business activity was not sustainable in the eyes of law.

Ex-Parte Order Passed without Adjudicating Issue On Merits: ITAT Remits Rs. 3 Cr Sales and Purchases Matter to CIT(A)

Sh. Jagmohan Garg vs The DCIT CITATION: 2025 TAXSCAN (ITAT) 1154

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the ex-parte order of the Commissioner of Income Tax (Appeals) [CIT(A)] citing the failure to adjudicate the issue on merits and remanded the matter for fresh adjudication.

The tribunal held that in the interest of justice the assessee deserved a proper opportunity to present the case. The tribunal set aside the CIT(A)’s order and remanded the matter to the CIT(A) with directions to adjudicate the appeal afresh on merits, ensuring a reasonable opportunity of being heard for the assessee.

Past Assessment History Relevant When no Comparables Available: ITAT

M/s Deora Electric Works vs The JCIT CITATION: 2025 TAXSCAN (ITAT) 1155

The Allahabad Bench of the Income Tax Appellate Tribunal ( ITAT ) has partly allowed the appeal of M/s Deora Electric Works, modifying the estimation of profits made by the Assessing Officer (AO) after rejecting the firm’s books under Section 145(3) of the Income Tax Act, 1961.

The Tribunal, comprising Sudhanshu Srivastava (Judicial Member) and Nikhil Choudhary (Accountant Member), addressed the matter by segregating two key issues: (i) suppression of receipts and (ii) profit estimation after book rejection. The ITAT found that the addition of ₹56.69 lakh was unsustainable because the assessee failed to match the tender values with the reported income, necessitating thorough verification. The Tribunal noted that ₹34.64 lakh was reflected as sundry debtors and ₹9.39 lakh related to projects with reduced scope of work, and the revenue had not conclusively disproved these claims.

Disallowance of Related Party Payments u/s 40A(2)(b): ITAT Deletes Additions for AO’s Failure to Prove Excessiveness

Virbala Kiritkumar Patel vs Deputy Commissioner of IncomeTax CITATION: 2025 TAXSCAN (ITAT) 1156

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted disallowances made under Section 40A(2)(b) for payments to related parties, holding that the Assessing Officer (AO) failed to justify the excessiveness of the amounts.

The two member bench comprising Dr.BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member observed that in the present case, the AO had placed the entire burden of proving the reasonableness of the payments on the assessee. It noted that the officer failed to bring on record any comparable cases or evidence to show that the payments made were excessive in light of the fair market value of the services received.

Claim for deduction u/s. 80P(2)(a)(i) of Income Tax Act cannot be disallowed solely on ground of lending money to non-members : ITAT Allows Appeal of Cooperative society

Chittur Service Co-op. Bank Ltd vs The Income TaxOfficer-1 & TPS CITATION : 2025 TAXSCAN (ITAT) 1157

In a recent ruling the ITAT Cochin bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeal of cooperative society by holding that the claim for deduction under section 80P(2)(a)(i) of Income Tax Act, 1961 cannot be disallowed solely on ground of lending money to non-members

A two member bench of Inturi Rama Rao, AM and Prakash Chand Yadav, JM found that the Full Bench judgement of the High Court in the case Mavilayi Service Co-operative Bank Ltd. v. CIT [2019] was overruled by the Supreme Court in the case of 431 ITR 1 (SC). In the light of the judgement of the Supreme Court, the tribunal ruled that the appellant society is entitled for deduction u/s. 80P(2)(i)(a) of the Act.

MoU and Bank Records Support Loan Deal and Repayment: ITAT Flags Gaps in AO’s Unexplained Income Investigation

Uday Vithal Nagpure vs Income Tax Officer 15(1)(2) CITATION: 2025 TAXSCAN (ITAT) 1158

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the assessment order passed by the Assessing Officer (AO), which made additions totaling Rs. 2,23,53,793 under Section 68, and remanded the matter to the AO for fresh consideration.

The tribunal set aside the additions and remanded the matter to the AO for fresh adjudication. The tribunal directed the AO to conduct inquiries and consider all submitted documents. The tribunal clarified that no addition should be made solely due to the assessee’s failure to produce Akerkar. The appeal of the assessee was allowed for statistical purposes.

Relief for Philips India: ITAT Upholds 30% Depreciation on Moulds Used by Exclusive Vendors

D.C.I.T vs Philips India Limited CITATION: 2025 TAXSCAN (ITAT) 1159

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) upheld 30% depreciation on moulds used by third-party vendors exclusively manufacturing for Philips India. The Revenue-appellant appealed against the order passed by the Commissioner of Income Tax(Appeals)[CIT(A)] for the Assessment Year 2012-13. The assessment was completed under Section 143(3) r.w.s. 144C on 27.02.2017. On appeal, the ITAT Kolkata set aside the order on 07.02.2018 for fresh adjudication.

The two member bench comprising George Mathan ( Judicial Member) and Rakesh Mishra( Accountant Member) noted that the CIT(A) had followed its earlier decision in the assessee’s case for AY 2009-10. Since the facts were the same, the tribunal held that the assessee was eligible for 30% depreciation and found no reason to interfere with the CIT(A)’s order. The Revenue’s appeal for AY 2012-13 was dismissed.

Superannuation Contribution Allowable if Paid Before Return Due Date and Fund Is Approved

Adani Infrastructure Management Services Ltd vs DeputyCommissioner of Income-tax CITATION: 2025 TAXSCAN (ITAT) 1160

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that superannuation fund contribution is allowable as a deduction if paid before the due date of filing the return and the fund is approved.

The two member bench comprising of Dr.BRR Kumar (Vice-President) and T.R.Senthil Kumar ( Judicial Member) noted that the main issue was whether the contribution of ₹1,99,992 to the Employees’ Superannuation Fund was eligible for deduction, as it was paid after the due date under the scheme but before the due date for filing the return under Section 139(1) of the Act.

Profits from Kuri Business Held Under Trust Eligible for Exemption u/s 11 of ITA: ITAT

Sree Narayana Dharma Paripalana Youvajana Samithi vs TheIncome Tax Officer (Exemption) CITATION : 2025 TAXSCAN (ITAT) 1161

The Cochin Bench of Income Tax Appellate Tribunal ( ITAT ) held that profits earned from the Kuri business run by a registered charitable trust were eligible for exemption under Section 11 of the Income Tax Act,1961.

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A Single member bench of Inturi Rama Rao (Accountant Member) reviewed the submissions and records, and noted that the assessee trust was running a Kuri business. The profits were used to achieve the trust’s objectives.

Accommodation Entries Received in Guise of Unsecured Loan from Shell Companies: ITAT Directs Revenue to Examine Tax Evasion

Dipak Raheja vs The Assistant Commissioner of Income Tax CITATION: 2025 TAXSCAN (ITAT) 1162

The Raipur Bench of Income Tax Appellate Tribunal ( ITAT ) directed the Revenue to examine tax evasion involving accommodation entries received in the guise of unsecured loans from shell companies.

The two member bench comprising Partha Sarathi Chaudhury (Judicial Member) and Arun Khodpia (Accountant Member) held that while natural justice warranted one more chance to explain the case, the CIT(A) must thoroughly examine whether any fraud had been committed and whether taxes were evaded.

Bogus Transaction Addition: ITAT Says Duty Lies on Revenue to Ascertain Whether Bogus Deals Are Genuine Tax Planning or Evasion

Hanumant Ingots Pvt. Ltd vs Assistant Commissioner ofIncome Tax CITATION: 2025 TAXSCAN (ITAT) 1163

The Raipur Bench of Income Tax Appellate Tribunal ( ITAT ) dealt with additions made on account of alleged bogus transactions, observing that it is the responsibility of the tax authorities to examine whether such transactions constitute genuine tax planning or tax evasion.

The appellate tribunal set aside the CIT(A)’s ex-parte order and restored the matter for fresh adjudication. The CIT(A) was directed to give the assessee a final opportunity to submit evidence and prove the genuineness of the transactions. If the assessee failed to cooperate, the CIT(A) was free to decide the matter as per law within three months.

Ownership of Property in Individual Capacity of Partners Cannot Be Considered For LTCG To Their Partnership Firm: ITAT

Dy.CIT – Central Circle – 2(1) vs M/s. Aakar Hotels CITATION : 2025 TAXSCAN (ITAT) 1164

The Nagpur Bench of Income Tax Appellate Tribunal ( ITAT ) held that ownership of property in individual capacity of partners cannot be considered for Long TermCapital Gains ( LTCG )for taxing their partnership firm. The assessee, a partnership firm, was subjected to a search and seizure operation involving its partners, Atul Yamsanwar and others. The Assessing Officer (AO) reopened the case under Section 147 of the Income Tax Act and alleged that income from the transfer of a hotel property had escaped assessment.

The Tribunal held that the partnership firm and its partners are distinct entities under the Income Tax Act, 1961, and the firm could not be considered the owner of the capital asset for LTCG taxation.

Only Registered Sale Agreements Eligible of Capital Gain Exemption u/s 54: ITAT says Unregistered Agreement Lacks Evidentiary Value

Anand Boddapaty vs The PCIT CITATION : 2025 TAXSCAN (ITAT) 1165

The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that purchase of property via unregistered sale agreement is not a valid transfer to claim exemption under Section 54 of the Income Tax Act, 1961. The assessee filed his income tax return for the assessment year 2021-22, declaring a total income of Rs. 2,07,55,350. The case was selected for scrutiny under CASS, and the AO issued notices to verify the large capital gains exemption claimed under Section 54 of the Act.

The two-member bench, comprising Vijay Pal Rao (Vice President) and Manjunatha G (Accountant Member) observed that the AO’s failure to verify the unregistered agreement with a related party that was assessee’s wife in light of relevant provisions constituted an error.

Rental Income Not Taxed: Taxpayer Claims to Be Mere Rent Collector, ITAT Permits Fresh Hearing Conditionally

Wavoo Real Estate Corporation vs The DCIT CITATION: 2025 TAXSCAN (ITAT) 1166

The Income Tax Appellate Tribunal ( ITAT ), Chennai Bench, granted a fresh opportunity of hearing, which had failed to offer rental income to tax. The assessee submitted that it was merely a rent collection agent for 32 individual co-owners of a property known as "Wavoo Mansion" and not the owner of the premises.

This relief was granted conditionally. The bench of S. R. Raghunatha and S.S. Viswanethra Ravi directed the assessee to pay a cost of ₹10,000 to the State Legal Aid Authority, Madras High Court, within 30 days and to produce proof of such payment before the Assessing Officer. Similar directions were issued for related assessment years 2014-15 and 2016-17.

Taxpayer's Statement Validates Dumb Document Found During Search: ITAT Upholds Unexplained Investment Addition

Devaram Srinivasa Reddy vs The DCIT CITATION: 2025 TAXSCAN (ITAT) 1167

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) upheld the addition of Rs. 25 lakhs as unexplained investment based on the document found during search and rejected the claim of dumb document as the assessee himself admitted on his sworn statement.The assessee proprietor of M/s. Srinivasa Infrastructures, and his wife, Smt. Krishna Veni Kandala, were subjected to a search and seizure operation on 06.02.2020 at their business premises.

The tribunal rejected the assessee’s claim that the cash was sourced from partnership firm withdrawals, as the CIT(A) found that the withdrawals were accounted for other purposes. The tribunal concluded that the assessees failed to prove the source of the Rs. 50 lakhs cash payment.

Delay in Filing Income Tax Appeal Due to Assessment Order passed on Surrendered PAN: ITAT Condones 607-Day, Rules Justifiable Cause

Astavinayak Gramin Bigar Sheti vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1168

The Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and condoned a 607-day delay in filing an appeal due to assessment order being passed on the surrendered pan.

The two-member bench comprising V. Durga Rao (Judicial Member) and K.M. Roy (Accountant Member), observed that the assessee had a justifiable cause for the delay, as the assessment order was passed on a surrendered PAN. The tribunal also observed that the surrendered PAN was no longer actively monitored. The tribunal held that the delay was unintentional and without mala fide intent. The tribunal observed that the assessee’s explanation was sufficient for condonation of delay.

Bank Passbook Not Regarded as 'Books of Account’: ITAT Rejects S. 68 Addition Made Without Assessee's Books

Rahul Goel vs ITO CITATION: 2025 TAXSCAN (ITAT) 1169

The Income Tax Appellate Tribunal, Delhi Bench held that a bank passbook cannot be treated as ‘books of account’ for the purpose of invoking Section 68 of theIncome Tax Act, 1961.The assessee, Rahul Goel, a small commission agent dealing in plastic scrap, was subjected to an addition of ₹88.91 lakh under Section 68 by the Assessing Officer, who treated cash and cheque deposits in the assessee’s bank accounts as unexplained cash credits.

The Tribunal concluded that the very basis for applying Section 68 in this instance was lacking, while finding validity in the assessee's reasoning.

CSR Contributions Eligible For Deduction as Donations If Conditions Satisfied u/s 80G: ITAT Accepts 50% of Total Donation

The Ruby Mills Limited vs Pr. Commissioner of IncomeTax CITATION: 2025 TAXSCAN (ITAT) 1170

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) held that Corporate Social Responsibility (CSR) contributions can qualify for deductions under Section 80G of the Income Tax Act, 1961 if the donations are made to institutions registered under Section 80G and comply with the section’s requirements.

The bench relied on the decisions from the Mumbai Tribunal, including DCIT vs. Gabriel India Ltd. and Dalal and Broacha Stock Broking Pvt. Ltd. vs. PCIT, which held that CSR donations are eligible for 50% deduction under Section 80G if the recipient institutions are registered under the section and other conditions are met.

Loss on Abandoned Real Estate Project Allowable as Revenue Deduction: ITAT Overturns ₹64.72 Cr Disallowance

Sourya Towers Pvt. Ltd vs DCIT CITATION: 2025 TAXSCAN (ITAT) 1171

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the loss of Rs. 64,72,52,645/- on abandoned Amritsar real estate project is an allowable revenue deduction under the Income Tax Act, 1961.

The Tribunal further held that the loss was revenue in nature, as it was incurred in the ordinary course of business and allowed its recognition in the Assessment Year 2012-13 due to events after the balance sheet date.

Taxpayer Unable to Sign Appeal Does Not Constitute Reasonable Cause : ITAT Refuses to Condone 1,233 Days Delay

Saida, Saida Trading Co. vs The Income Tax Officer CITATION: 2025 TAXSCAN (ITAT) 1172

The Cochin Bench of the Income Tax Appellate Tribunal (ITAT) refused to condone the delay, and held that the unavailability of the taxpayer to sign appeal documents due to absence from station was insufficient to constitute a "reasonable cause."

The Tribunal held that the power to condone delay cannot be exercised in the absence of a reasonable cause. It dismissed the appeal as it was barred by the limitation. The appeal of the assessee was dismissed.

ITAT Upholds ₹2.93 Cr Interest and ₹4.01 Cr Management Expenses Deduction Citing Business Purpose u/s 36(1)(iii) and 37(1)

The A.C.I.T vs M/s PGF Ltd CITATION : 2025 TAXSCAN (ITAT) 1173

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals) [ CIT(A) ] order that allowed deductions of Rs. 2.93 crore in interest expenses and Rs. 4.01 crore in management expenses as they were incurred for business purposes under Sections 36(1)(iii) and 37(1) of the Income Tax Act, 1961.

The Tribunal bench observed that the assessee had incurred Rs. 28.59 crore in management and other expenses, and the CIT(A) had correctly verified that the disallowed Rs.4.01 crore was genuine and related to new business activities. It upheld the deduction under section 37(1) of the Income Tax Act.

Invalid Service of Notice as Opted No For Email in Form-35: ITAT Overturns Ex Parte Dismissal, Remands Matter

Ram Bishal Sharma vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1174

The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) overturned an ex-parte dismissal by the Commissioner of Income Tax (Appeals) [ CIT(A) ] citing invalid service of notices, as the assessee had chosen not to receive communications via email in Form 35.

The Tribunal referred to a prior ITAT Raipur decision in Brajesh Singh Bhadoria Vs. Dy./ACIT which addressed a similar issue of an ex-parte dismissal by the CIT(A)/NFAC. It also cited Supreme Court rulings, including Delhi Transport Corporation vs. DTC Mazdoor Union and Commissioner of Income Tax Madras v. Chenniyappa Mudiliar, citing that the right to be heard under Article 14 of the Constitution is fundamental, and appellate authorities must adjudicate appeals on merits.

Source of Fund of Joint Purchase of Property by Mother and Son Sufficiently Explained: ITAT Deletes ₹1.36 Cr Addition

Mrs. Roma Prakash Chhugani vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1175

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted an addition of Rs. 1.36 crore made by the Assessing Officer ( AO ) as unexplained investment under Section 69 of the Income Tax Act, 1961 citing substantiated source of investment for a property purchased in joint ownership with her son.

The two-member bench, comprising Pawan Singh (Judicial Member) and Prabhash Shankar (Accountant Member), observed that the assessee sufficiently explained her non-appearance due to a change in address. The Tribunal observed that the assessee substantiated the entire Rs. 1.43 crore investment through documented sources: Rs. 20,27,300 from the joint account, Rs. 21,60,527 from her son’s account, Rs. 37,61,175 from her husband’s account, and Rs. 63,94,498 from the HDFC loan.

NRI’s Property Investment Explained with Bank Statements and Agreements: ITAT Quashes Addition Due to Jurisdictional Error

Mr. SanandSankardas vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1176

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has set aside an assessment order adding Rs. 69.99 lakh as unexplained investment under Section 69 of the Income Tax Act, 1961 as the notice issued by the Assessing Officer ( AO ) was invalid due to lack of jurisdiction.

The two-member bench comprising Ms. Padmavathy S (Accountant Member) and Raj Kumar Chauhan (Judicial Member), observed that the AO was aware of the assessee’s NRI status, as acknowledged in the order under Section 148A(d) dated 20.04.2022. The Tribunal held that the notice was issued by an officer lacking jurisdiction, rendering the assessment proceedings void. It further noted that the assessee had provided sufficient evidence, including bank statements and property purchase agreements, to explain the source of funds.

No Bar on Claiming S.80P Deduction via ITR Filed u/s 142(1): ITAT Sets Aside Denial over e-Verification Delay

Kasma PrathmikShishak Sahakari vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1177

The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT) has held that the benefit of deduction under Section 80P of the Income Tax Act, 1961 cannot be denied merely on technical grounds such as a delayed e-verification, if the return was otherwise filed in response to a valid statutory notice under Section 142(1) and the claim was properly made.

The bench of Manish Borad pointed out that filing the return under Section 139(1) alone is not required by any of the preconditions under Section 80A(5). Additionally, it determined that the assessee's uncontested entitlement for deduction and compliance evidenced by a proper return under Section 142(1) deserved relief.

Advocate Suffers from Depression/Memory Loss, Fails to Defend Appeal resulting Ex-parte Order: ITAT Remands for Fresh Adjudication

DTC Trading COvs The ITO CITATION : 2025 TAXSCAN (ITAT) 1178

The Chandigarh Bench of the Income Tax Appellate Tribunal ( ITAT ) has set aside an ex-parte appellate order passed by the CIT(A)/NFAC after noting that the assessee’s counsel was suffering from depression and memory loss, which prevented him from properly defending the case.

The ITAT remanded the case back to the Assessing Officer with directions to provide a reasonable opportunity to the assessee to present his case afresh, while also placing an obligation on the assessee to cooperate fully with the proceedings.

Delay Should Not Defeat Meritorious Case: ITAT Condones 221-Days Delayed Appeal of Senior Citizen

Ravindra JomaBhagat vs ITO CITATION : 2025 TAXSCAN (ITAT) 1179

The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) has observed that mere procedural delays should not be allowed to defeat a meritorious case, especially when the taxpayer is a senior citizen facing genuine hardships.

The bench of Astha Chandra (Judicial Member) and R K Panda (Vice President) condoned the delay and restored all six appeals to the CIT(A)/NFAC for fresh adjudication on merits by a speaking order, as mandated by Section 250(6) of the Income Tax Act. However, the Tribunal also imposed a cost of ₹30,000 for non-cooperation before the CIT(A), to be deposited before final disposal of the appeals.

No Proof from Assessee, No Comparables from Income Tax Dept: ITAT cuts Ad Hoc Disallowance to 4% from 10%, Says Not to be treated as Precedent

Biolife MedicalPvt. Ltd vs ACIT, Circle CITATION : 2025 TAXSCAN (ITAT) 1180

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has scaled down an ad hoc disallowance made by the Assessing Officer ( AO ) on various business expenses, citing lack of proper evidence from both sides.

The bench of Amitabh Shukla (Accountant member) and Mahavir Singh (Vice President) deemed it appropriate to reduce the disallowance to 4% of the total disputed expenses instead of 10%. The Tribunal clarified that this reduction was made only to resolve the dispute in the larger interest of justice and should not be treated as a binding precedent for future cases.

Adhoc Disallowance Without Complete Verification Unsustainable: ITAT Deletes ₹22 Lakh Addition for Cash Purchases from URD

G. N. AdgaonkarJewels vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1181

In a matter of jewellers and traders dealing with unregistered vendors, the Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that an adhoc disallowance of purchases without complete verification is unsustainable in law.

The ITAT held that there was no flaw in the books of accounts or the quantitative records, which were properly audited and approved year after year, noting the fact that the simple lack of response from a few minor suppliers does not automatically make the entire purchase unverifiable. The AO's ad hoc disallowance, which the CIT(A) confirmed, was seen to be unwarranted in the absence of any proof of fraudulent purchases or inexplicable expenditure.

No Bar on Retaining Cash for Reasonable Period if Source Traceable: ITAT Quashes Cash Deposit Addition During Demonetisation in absence of Corroborative Evidence

GanapathyPanneerselvam vs The Income Tax Office CITATION : 2025 TAXSCAN (ITAT) 1182

The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that there is no legal bar on an assessee retaining cash for a reasonable period if the source of the funds is traceable and explained.

The Tribunal held that merely because there was a gap between withdrawal and redeposit, it could not be presumed that the funds had vanished or were spent otherwise, especially when no evidence to the contrary was produced.

Technical Dismissal Without Going into Merits Unsustainable: ITAT Restores back Case to Decide ₹52 Lakh Capital Loss Adjustment with Proper Reasoning

VardhamanVasundhara Family Trust vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1183

The Income Tax Appellate Tribunal ( ITAT ) Pune Bench has held that an appeal cannot be disposed of merely on a technical ground without adjudicating the substantive issue on merits, especially when the assessee’s claim involves an apparent arithmetical adjustment relating to set-off of brought forward capital loss amounting to ₹52,20,899.

The bench directed the Commissioner (Appeals) to decide the issue of the capital loss set-off after providing a reasonable opportunity of hearing to the assessee, in accordance with law. It also directed the assessee to cooperate fully by filing all necessary documents and not seek adjournments without sufficient cause.

Invoking S. 263 on Interest on Loan Disallowance While such Loan Addition Pending Before CIT(A) Invalid: ITAT

M/s. CorporateInternational Financial Services Ltd vs PCIT (central) CITATION : 2025 TAXSCAN (ITAT) 1184

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that a Principal Commissioner of Income Tax ( PCIT ) cannot invoke revisionary jurisdiction under Section 263 to disallow interest on loans when the core issue of the underlying loan’s genuineness is already pending before the CIT(A) in appeal.

The bench of Yogesh Kumar (Accountant member) and M. Balaganesh (judicial member) decided that if an issue is already pending before the CIT(A), it cannot be reopened under Section 263 or any aspect that flows immediately from it. This ruling was based on the Madras High Court's ruling in Smt. Renuka Philip v. ITO [409 ITR 567].

Additions Without Concrete Evidence and Show Cause Notice Violates Natural Justice: ITAT deletes all Additions, Dismisses Revenue’s Appeal

ITO vs BhuvanSharma CITATION : 2025 TAXSCAN (ITAT) 1185

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of multiple additions made purely on estimates and without issuing a proper show cause notice, holding that such additions violate the principles of natural justice.

The bench completely rejected the Revenue's grounds of appeal, citing precedents such as Prashant Pratap Ahir vs. ACIT (ITAT Pune) and the Supreme Court's established rule that additions cannot be upheld based solely on suspicion. The ITAT denied the Revenue's appeal, upholding the CIT(A)'s ruling to remove all of the contested additions.

Capital Creditors reflected in FY 2015-16 Mistakenly Shown as Trade Payables in FY 2016-17: ITAT upholds Deletion

Income TaxOfficer vs Bhopal Sanchi Highways P. Ltd. CITATION : 2025 TAXSCAN (ITAT) 1186

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of an addition exceeding ₹11 crore made by the Assessing Officer (AO) towards alleged unexplained trade payables.

The tribunal held that since the sum in question pertained to an earlier year’s capital expenditure already recorded in the books, it could not be treated as unexplained trade credit for the subsequent year merely because of an inadvertent misstatement in the return. The ITAT rejected the Revenue's appeal as it was not able to contradict findings of the CIT(A).

Paper books Proving Genuineness of Unsecured Loan and Movt of Funds: ITAT grants one Last Opportunity to Contest

Mrs. Asha Guptavs ACIT CITATION : 2025 TAXSCAN (ITAT) 1187

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has remanded back an addition of ₹40 lakh made under Section68 of the income tax act, 1961, directing the Assessing Officer (AO) to re-examine the matter afresh after giving the assessee one final chance to substantiate the genuineness of the unsecured loan and the movement of funds.

The Tribunal stated that the assessee's failure to reply to the AO's notices could be interpreted negatively and that this would be the last opportunity to provide a complete explanation of the funding source.

Section 115BBE of Income Tax Act would be Applicable for Transactions Undertaken w.e.f. 1/4/2017, Not of Earlier Period, Rules ITAT

Babu RamAggarwal vs ITO CITATION : 2025 TAXSCAN (ITAT) 1188

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the higher tax rate under this provision cannot be invoked for transactions undertaken prior to 1 April 2017.

The case arose from an appeal by the Revenue challenging the deletion of an addition made under Section 69C, where the Assessing Officer (AO) had sought to apply the enhanced tax rate under Section 115BBE for an unexplained expenditure of ₹3.61 lakh related to Assessment Year 2012-13.

The ITAT directed the AO to recompute the tax liability without applying the enhanced rate under Section 115BBE and instead apply the applicable rate as it stood before the amendment, which was 30%.

AO Cannot Travel Beyond Limited Scrutiny Without Pr. CIT’s Consent: ITAT reiterates CBDT Instruction, Deletes Addition u/s 36(1)(iii)

ACIT vs B. K.Sales Corporation CITATION : 2025 TAXSCAN (ITAT) 1189

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed an addition of over ₹3.83 crore made by the Assessing Officer ( AO ) under Section 36(1)(iii), holding that the AO exceeded his jurisdiction by going beyond the scope of issues for which the case was originally selected.

The bench of Mahavir Singh (Judicial member) and Amitabh Shukla (Accountant member) stressed that CBDT directives have statutory force and bind assessing authorities, citing well-established precedents from the jurisdictional High Court in Best Plastics Pvt. Ltd. as well as comparable decisions from the Punjab & Haryana and Calcutta High Courts. It referenced the vigilance guidelines issued by CBDT, which caution AOs against going beyond their mandate without the necessary approval and documentation.

Reassessment u/s 148 Without Approval from Competent Authority u/s 151 is Void ab Initio: ITAT

ARPIT GOEL vsITO CITATION : 2025 TAXSCAN (ITAT) 1190

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment orders for three consecutive years after finding that the Assessing Officer (AO) initiated reassessment proceedings under Section 148 of Income tax act, 1961 without obtaining the mandatory prior approval from the competent authority under Section 151.

The bench of M Balaganesh ( Accountant members) and C.N. Prasad (Judicial member) ruled clearly that the reassessment procedures for all three years were unlawful ab initio and should be quashed outright since there was no evidence that the AO had obtained the necessary consent prior to sending out the letters under Section 148.

Accounts Dept fails to Communicate CIT(E) Notices to Top Management: ITAT ITAT grants one more Opportunity to Submit Documents

ANTARFOUNDATION vs INCOME TAX OFFICER CITATION : 2025 TAXSCAN (ITAT) 1191

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has set aside an order denying registration under Section 12A and remanded the matter back to the CIT(Exemptions) for fresh adjudication, granting the assessee a final opportunity to furnish the required details.

The bench of M. Balaganesh (Accountant member) and C.N. Prasad (Judicial member) instructed the CIT(E) to decide the registration application again after providing the assessee with a sufficient opportunity to submit all necessary documents and explanations, pointing out that denying a legitimate charitable organization a chance to defend itself because of an internal error would go against the principles of natural justice.

ITAT Denies 80G Exemption as Educational Trust Fails to Justify Donations to Other Trusts

ShreeSaurashtra Patel Seva Mandal Education vs The CIT(Exemption) CITATION : 2025 TAXSCAN (ITAT) 1192

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Exemptions) to deny Section 80G registration after finding that the trust failed to justify large donations made to other charitable trusts that were not directly linked to its core educational activities.

The ITAT bench of Vice President Dr. BRR Kumar and Judicial Member T.R. SenthilKumar concluded that the trust’s failure to substantiate how the donated funds supported its educational mission justified the rejection of the Section 80G application.

Inadvertent Mutual Fund Investment on Different PAN Explained: ITAT finds No Misreporting or Under reporting, Directs AO to verify both PANs

AQUAKIOSK INDIAPRIVATE LIMITED vs ITO, WARD 3(1) CITATION : 2025 TAXSCAN (ITAT) 1193

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed an addition of over ₹14 lakh under Section 69B of the income tax act, 1961, holding that the investment was inadvertently made using a different PAN but was duly disclosed in the company’s financial statements filed under its main PAN.

The ITAT allowed the assessee’s appeal, directed the deletion of the addition, and instructed the AO to update the department’s records by verifying both PANs and ensuring that the correct one is used for future compliance. At the same time, the Tribunal reminded the assessee to avoid such administrative lapses going forward to prevent unnecessary reassessment controversies.

ITAT Faults CIT(E) for Dismissing Fresh Applications on Procedural Grounds, Directs applications Filed Within CBDT Deadline to be Considered on Merits

Shree KadavaPatel Gau Seva vs The CIT CITATION : 2025 TAXSCAN (ITAT) 1194

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has set aside the orders of the Commissioner of Income Tax (Exemption) [CIT(E)] for rejecting fresh applications filed by the assessee on procedural grounds. The ITAT directed the CIT(E) to treat the applications as valid and adjudicate them on merits.

The bench set aside the CIT(E)’s orders and restored the matter. The ITAT, comprising Sanjay Garg (Judicial Member) and Makarand V. Mahadeokar (Accountant Member), directed the assessee to furnish all requisite information and documents and to cooperate fully with the proceedings. The appeal was allowed for statistical purposes.

ITAT Holds Share Transfer as Genuine Despite ROC Discrepancies, Accepts Oral Family Arrangement and Book Entry as Valid Evidence

Saumya Mittalvs ACIT-1 CITATION : 2025 TAXSCAN (ITAT) 1195

The assessing officer (AO) had disallowed a short-term capital loss of Rs. 61,13,842 claimed by the assessee, Saumya Mittal, Managing Director of Eurobearings India Pvt. Limited (EUBI) for the assessment year 2018-19. The assessee had sold 1,35,86,332 shares of EUBI to his father for Rs. 74,72,480, which were originally acquired for Rs. 1,35,86,332 in February-March 2017.

The bench held that oral arrangements among family members could be legally valid if supported by conduct and documentation. The ITAT noted that the burden of proving a transaction as a sham lies with the Revenue, not the taxpayer.

ITAT Condones 66-day Delay in Filing Appeal due to COVID Lockdown and CA's Preoccupation

Smt. Shobha vsThe Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1196

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT), condoned a 66-day delay in filing an appeal, noting the COVID-19 lockdown and the preoccupation of the assessee’s Chartered Accountant (CA) as sufficient cause for the delay.

The bench observed that the CIT(A) had failed to verify the service date mentioned in Form 35 and erroneously dismissed the appeal. The tribunal directed the CIT(A) to re-examine the merits of the case, particularly the addition of Rs. 5,70,000 under Section 69A of the Income Tax Act, after granting the assessee a fair hearing.

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