ITAT Weekly Round-up

The Tribunal concluded that since insolvency proceedings had been initiated and the Resolution Plan had been approved, the Revenue’s appeals could not survive and the income tax proceedings could no longer continue.

NBFC submits PAN of Parties from whom it claimed Bad Debts: ITAT upholds Income Tax Deduction

Assistant Commissioner of Income Tax vs The Index Securities &Research Pvt. Ltd. CITATION: 2026 TAXSCAN (ITAT) 145

In a recent ruling, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the income tax deduction on bad debts of a registered NBFC, after it furnished PAN and supporting details of the parties involved.

The Division Bench comprising Shri S. Rifaur Rahman (Accountant Member) and Shri Vimal Kumar (Judicial Member) upheld the order of the CIT(A), and at the end, an appeal filed by the department revenue was dismissed entirely.

The Tribunal accepted the finding of the CIT(A) that the assessee had furnished necessary details such as PAN, addresses, and supporting documents of the debtors, and that the write-off was duly reflected in the books of account.

No Capital Gain Tax in JDA Execution Year without Consideration & with Limited Possession: ITAT

Shri Sahodhar Reddy Muddasani vs Dy.CIT CITATION: 2026 TAXSCAN (ITAT) 146

‘Where no consideration is received and possession is handed over only for limited purpose of development, no capital gains can be said to have accrued in the year of execution of the JDA’, held the Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ).

Vijay Pal Rao ( Vice President) and Madhusudan Sawdia (Accountant member) noted the ruling of Telangana High Court in Smt. Santha Vidyasagar Annam v. ITO, where it was held that if the possession given by the landowners to the developer was only for the limited purpose of development and that no consideration had been received during the year of execution of the JDA, no taxable capital gains arose under section 45(1) of the Act in that year.

Accordingly, the Tribunal directed the AO to delete the addition of ₹3,65,904. The appeal was allowed accordingly.

AO's Erroneous Assumption of Land Cost as Part of Construction Cost: ITAT Remands LTCG Matter for fresh consideration

Balaji Finance vs Income Tax Officer CITATION: 2026 TAXSCAN (ITAT) 149

In a recent ruling, the Income Tax Appellate Tribunal(ITAT), Hyderabad Bench, remanded the matter back to the Assessing Officer (AO) after observing that the AO had disallowed the claim for the indexed cost of the land on the assumption that the land cost was already included in the construction expenses.

The bench, Mr Vijat Pal Rao (vice president), Mr Madhusudan Sawdia(account member), set aside the issue and restored the matter to the file of the Assessing Officer with a direction that if, upon verification, the cost of land was found to be separate, the indexed cost of acquisition must be allowed while computing long-term capital gains, in accordance with law.

Whatsapp Chat confirms Counsel’s Negligence Caused Delay in Filing Income tax Appeal: ITAT Restores matter to CIT(A)

Kalpana Narware vs ITO CITATION: 2026 TAXSCAN (ITAT) 150

The Indore Bench of the Income Tax Appellate Tribunal ( ITAT ) held that delay in filing income tax appeal was due to the negligence of the counsel. The tribunal accepted the proof of whatsapp chat submitted.

The bench of Paresh M. Joshi and B.M. Biyani observed that the Whatsapp chats prima facie shows that the assessee had acted diligently, and the delay occurred due to negligence on the part of the counsel, with no contrary material produced by the Revenue to rebut the claim.

Therefore, the matter was restored for fresh adjudication to the AO despite the delays in filing appeal.

Rebate u/s 87A allowable to STCG and LTCG Taxed under New Regime, Not Applicable on VDA Transfers: ITAT

Kanhaiya Lal Panchal vs BPL-W-(91)(95) CITATION: 2026 TAXSCAN (ITAT) 151

The Indore Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that rebate under Section 87A is allowable against tax payable on Short-Term Capital Gains ( STCG ) under Section 111A and Long-Term Capital Gains ( LTCG ) under Section 112 under the new regime of Income Tax Act, 1961.

However, the tribunal clarified that rebate cannot be claimed against tax payable on income from transfer of Virtual Digital Assets (VDA) taxable. It rejected the claim of assessee.

Before the tribunal, the assessee submitted the tax break up, where the total income was below Rs. 7 lakhs threshold, contending eligibility for the rebate.

Taxpayer cannot be Penalised for Mistake of Previous Tax Consultant: ITAT Grants Relief

Jignesh Narendrabhai Mandaliya vs Income Tax Officer CITATION: 2026 TAXSCAN (ITAT) 152

The Income Tax Appellate Tribunal ( ITAT ), Rajkot has held that a taxpayer should not be penalised for the mistake of a previous tax consultant. The tribunal also condoned a 104-day delay noting that the consultant failed to communicate the appellate notices served on the consultant’s email.

The bench of Dr. Arjun Lal Saini ( Accountant member) noted that the impugned order was an ex-parte and non-speaking order. It further observed that the CIT(A) had not decided the issues as per Section 250(6). Accordingly the order of CIT(A) was set aside and remitted.

Income Tax order passed against Struck off Company despite being Informed: ITAT quashes Notice and Order

Flightpath Aviation Institute Pvt Ltd vs ITO Ward-6(4) CITATION: 2026 TAXSCAN (ITAT) 153

The income tax order passed against a struck off company was quashed by the Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ). It was ruled that proceedings against a struck off company is invalid in law.

The bench of George Mathan (Judicial member) held that “the notice u/s.148 of the Act has been issued on stuck off company. The notice is found to be invalid and consequently quashed.”

According to the assessee, the reassessment proceedings were initiated by issuance of notice under Section 148 dated 29.03.2017, even though the ROC had struck off the company from its register through an order dated 29.08.2016.

No Separate Rent provided by Co-tenants: ITAT Grants relief to Landlord based on Tenant’s Bank Records

Rajesh Kumar Mangla vs Dy. CIT CITATION: 2026 TAXSCAN (ITAT) 154

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has granted relief to a landlord after holding that the Assessing Officer (AO) wrongly assumed that separate rent was being paid by two co-tenants.

The bench of Satbeer Singn Godara (Judicial member) and Manish Agarwal (Accountant member) found that the assessee had submitted documents, including confirmations from both tenants, the same rent agreement, and the tenants’ bank statements showing rent payments.

Therefore, the Tribunal held that the assessee proved that the actual rent received during the year was ₹9 lakh as declared, and the allegation that the assessee received additional rent of ₹8.20 lakh in cash was incorrect.

Invoices, E-Way Bills and Bank Payments Prove Purchases: ITAT deletes 100% Disallowance on alleged Bogus Purchase, Limits to 10%

NITIN KAHER vs AO CITATION: 2026 TAXSCAN (ITAT) 155

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted 100% disallowance on alleged bogus purchases stating that the purchases were supported by tax invoices, e-way bills, GST returns and payments through banking channels.

The tribunal found that the Assessing Officer ( AO ) failed to examine the detailed documents furnished by the assessee, Nitin Kaher. It limited the disallowance to 10%.

The bench of Renu Jauhri (Accountant member) and Mahavir Singn ( Vice president) noted that the assessee had made total purchases of ₹3.53 crore, and the disputed purchases from Shree Govinda Enterprises formed only a small portion.

AO fails to Conduct Independent Enquiry after Onus Shift: ITAT Upholds Deletion of ₹15 Cr Share Application Money u/s 68

ACIT, Central Circle vs AL-Arsh Exports Pvt Ltd CITATION: 2026 TAXSCAN (ITAT) 156

The Income Tax Appellate Tribunal (ITAT), Delhi bench, has dismissed the appeal filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting an addition of ₹15 crore made under Section 68 of the Income TaxAct, 1961 holding that the AO had failed to conduct independent enquiry after the onus was shifted onto him.

The two-member bench comprising Amitabh Shukla ( Accountant Member) and AnubhavSharma (Judicial Member) observed that from para-4.1 on page-21 of the order of the CIT(A) had solicited a remand report from the AO, and examining the same, it was found that the AO merely reiterated the arguments taken in the assessment order. It was further observed that there was nothing on record to suggest that any enquiries were conducted by the AO during the remand proceedings.

Thus, the tribunal confirmed the appellate order and dismissed all the grounds of appeal raised by the appellant Revenue.

Bona Fide Lease Rental Claim based on AS-19 No Ground for Penalty: ITAT Quashes ₹30 Cr Levy on Axis Bank

Axis Bank Limited vs Assistant Commissioner of Income Tax CITATION: 2026 TAXSCAN (ITAT) 157

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, quashed the penalty imposed on Axis Bank under section 271(1)(c) of the Income Tax Act, 1961, for furnishing inaccurate particulars of income, after noting that rental-deduction was based on Accounting Standard-19.

Suchitra Raghunath Kamble, judicial member and Narendra Prasad Sinha, accountant member, noted that the claim made by the assessee cannot be held to be inaccurate particulars of the income.

From various precedents, the tribunal observed that rejection of claim by the revenue itself cannot attract the penalty under section 271(1)(c) of the act. The appellant has furnished a plausible explanation for the claim made by them and the said explanation is not false. Therefore, the appellant had not disclosed any inaccurate figure or not acted in a bona fide manner. Accordingly, the tribunal quashed the penalty order passed under section 271(1)(c) of the Income Tax Act.