ITAT Weekly Round-Up (14th September- 20th September)

This weekly round-up analytically summarises the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan during the previous week, from 14th September 2025 to 20th September 2025.

Alleged Bogus Sales and Commission Addition u/s 68 & 69C: ITAT Upholds CIT(A) Deletion after Assessing Evidence

ITO vs MAA Vaishno Fuels Pvt. Ltd. CITATION : 2025 TAXSCAN (ITAT) 1644

The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) upheld the deletion of alleged bogus sales and commission additions under section 68 and 69C of Income Tax Act,1961 by the Commissioner of Income Tax (Appeals)[CIT(A)] after assessing evidence submitted by the assessee.

The two member bench comprising Pradip Kumar Choubey (Judicial Member) and Rajesh Kumar (Accountant Member) noted that a search was conducted on M/s Maharaja Shree Agrasen Jee Aapno Ghar Pvt. Ltd. group of cases on 16.11.2017, which included Shri Rohit Sharma.

₹3.80 Lakh Leave Encashment Disallowed u/s 43B:ITAT Rules CPC Had No Jurisdiction and Deletes Addition

Clinisys (India) Private Limited vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1645

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) held that the Centralized Processing Centre (CPC) had no jurisdiction to disallow a genuine payment of ₹3.80 lakh towards leave encashment under Section 43B of Income Tax Act,1961.

The two member bench comprising Pradip Kumar Choubey (Judicial Member) and Rajeh Kumar (Accountant Member) after considering the submissions and examining the record, noted that out of the total provision of ₹32,98,103 created during the year, the assessee had adjusted ₹3,80,401 towards payment of leave encashment pertaining to earlier years. It held that such actual payment could not be disallowed by the AO/CPC.

₹5.28 Lakh Penalty u/s 271(1)(c) on One-Time Settlement: ITAT Deletes, Holds It Capital in Nature and Fully Disclosed

Kushal Sengupta vs Income Tax officer CITATION : 2025 TAXSCAN (ITAT) 1646

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) held a one-time settlement from Kotak Mahindra Old Life Insurance as capital in nature and fully disclosed, and deleted a penalty of ₹5.28 lakh imposed under section 271(1)(c) of Income TaxAct,1961.

The two member bench comprising Pradip Kumar Choubey (Judicial Member) and Rajesh Kumar (Accountant Member) noted that the assessee, employed with Kotak Mahindra Old Life Insurance, received a one-time settlement as compensation for loss of income. He disclosed the amount in his return, claiming it as a capital receipt.

ITAT refuses Estimation of GP Enhancement made by AO without Considering comparable case

Hitesh Trading Compnay vs ITO Ward 34(3) CITATION : 2025 TAXSCAN (ITAT) 1647

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) refused the estimation of Gross Profit (GP) enhancement made by the Assessing Officer (AO) without considering any comparable case.

The two member bench comprising Sonjoy Sarma (Judicial Member) and Sanjay Awasthi (Accountant Member) considered the submissions and records and held that the AO’s action could not be sustained since the books were not questioned. It noted that the AO had not doubted the sales or purchases and had not used comparable cases to justify a higher GP rate.

Depreciation on Goodwill Arising from Amalgamation Allowed in Book Profits: ITAT Rules in Favour of S.C. Johnson Pvt. Ltd.

S. C. Johnson Pvt. Ltd vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1648

The Income Tax Appellate Tribunal (ITAT), Delhi, has upheld a corporate taxpayer’s accounting treatment of goodwill arising out of amalgamation, ruling that amortization of goodwill is allowed while computing book profits under Section115JB of the Income Tax Act, 1961.

The bench of Judicial Member, Anubhav Sharma and Accountant Member, Manish Agarwal ruled in favour of the assessee. The Tribunal observed that under either accounting method, the ultimate financial results would be similar, and hence the assessee’s claim could not be disallowed.

Depreciation on Goodwill Arising from Amalgamation Valid: ITAT Clarifies Prospective Effect of Finance Act Amendments

Nirma Limited vs The Deputy Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1649

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has ruled in favor of the assessee on the issue of depreciation on goodwill, holding that depreciation is allowable on goodwill arising from amalgamation for the assessment years under dispute. The Bench also clarified that the Finance Act, 2021 amendment excluding goodwill from the ambit of depreciation under Section 32 applies prospectively and does not affect earlier years.

The Bench further emphasized that once depreciation is granted in earlier years, the written down value of the block of assets becomes final and carries statutory protection under section 43(6) of the Act. The AO cannot reopen or tamper with the block of assets by re-examining earlier claims already accepted.

Agricultural Receipts Treated as Unexplained Income u/s 68: ITAT Grants Opportunity to Substantiate Claim

Mohammed Azhar vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1650

The Hyderabad Bench of Income Tax Appellate Tribunal ( ITAT ) grants an opportunity to substantiate claim on agricultural receipts treated as unexplained income under section 68 of Income Tax Act,1961.

The two member bench comprising Vijay Pal Rao (Vice President) and Madhusudan Sawdia (Accountant Member) noted that the assessee had not complied before the AO or the CIT(A) but had later produced documents showing ownership of 36 acres of agricultural land. It held that the claim of agricultural income could not be rejected without verification.

Partner Remuneration To Be Calculated On Book Profit After Adding Back Survey Income And Disallowances: ITAT

Bharat Associates vs ACIT (OSD) CITATION : 2025 TAXSCAN (ITAT) 1651

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) ruled on the issue of remuneration to partners under Section 40(b) of the Income Tax Act, 1961 and directed that the computation must be based on book profit after adding back survey income and disallowances.

The two-member bench comprising Gagan Goyal (Accountant Member) and Narinder Kumar (Judicial Member) observed that the Assessing Officer and the CIT(A) erred in disallowing the remuneration claim without considering the proper computation mechanism under Section 40(b).

Notice u/s 148 Held Time-Barred: ITAT quashes Income Tax Reassessment Proceedings as Void

Harish Kumar vs NFAC CITATION : 2025 TAXSCAN (ITAT) 1652

The Income Tax Appellate Tribunal (ITAT), Delhi has held that a reassessment notice issued under Section 148 of the Income Tax Act, 1961, beyond the statutory limitation period is unsustainable. Accordingly, the Tribunal quashed a July 29, 2022 notice for Assessment Year 2015–16 and held the resulting reassessment proceedings to be void ab initio.

The Bench comprising of Mahavir Singh, Vice President and Manish Agarwal, Accountant Member observed that the limitation period had expired on March 31, 2022, and that the subsequent issuance of notice on July 29, 2022, was clearly beyond the permissible timeframe under Section 149 of the Act.

Addition of Rs. 4.66 Crore u/s 69A in Individual PAN: ITAT upholds Deletion noting Disclosure in HUF Return

The Income Tax Officer vs A. Kulanthaivel CITATION : 2025 TAXSCAN (ITAT) 1653

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the revenue’s appeal and upheld the deletion of Rs. 4.66 crore added under Section 69A of Income Tax Act,1961 by the Commissioner of Income Tax(Appeals) [CIT(A)] in the assessee’s individual Permanent Account Number (PAN), noting that all income and bank accounts were properly disclosed in the HUF return.

The two member bench comprising Manu Kumar Giri (Judicial Member) and S.R.Raghunatha (Accountant Member) reviewed the submissions, records, and lower authorities’ orders and noted that the assessee had mistakenly used his individual PAN instead of the HUF PAN for opening bank accounts for the business. It observed that the assessee had no individual income and all business income belonged to the HUF.

Short Grant of Income Tax TDS Credit on Property Sale: ITAT Orders Refund of ₹37.88 Lakh Within One Month

Shri Amardeep Sandhu vs The ITO CITATION : 2025 TAXSCAN (ITAT) 1654

The Chandigarh Bench of Income Tax Appellate Tribunal ( ITAT ) ordered a refund of ₹37.88 lakh within one month, holding that there was a short grant of Tax Deducted at Source (TDS) credit on a property sale under section 143(1) of Income Tax Act,1961.

The two member bench comprising Rajpal Yadav (Vice President) and Krinwant Sahay (Accountant Member) found this reasoning vague, as it did not explain how another person’s name appeared in the TDS credit or why the explanation given was not acceptable. It observed that the CIT(A) ought to have verified the complete record before deciding the matter.

Cash Withdrawals During Demonetisation Taxed u/s 68: ITAT Deletes ₹62 Lakh Addition treating them as Business Turnover

Bhai Bhai Co vs ITO CITATION : 2025 TAXSCAN (ITAT) 1655

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) deleted ₹62 lakh addition under section 68 of Income Tax Act,1961, holding that cash withdrawals during demonetisation formed part of business turnover.

The two member bench comprising George Mathan(Judicial Member) and Sanjay Awasthi (Accountant Member) reviewed the submissions and records, including the paper book filed by the assessee counsel.

ITAT Deletes Cash Deposit Addition of ₹25.25 Lakh for Illiterate Agriculturist accepting Them as Own Account Redeposits

Labh Singh vs ITO CITATION : 2025 TAXSCAN (ITAT) 1656

The Chandigarh Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the cash deposit addition of ₹25.25 lakh for an illiterate agriculturist, accepting the deposits as redeposits from his own accounts.

A single member bench of Laliet Kumar (Judicial Member) reviewed the submissions and records. It found that Rs. 36,38,041 was credited to the assessee’s account on FDR maturity, and withdrawals and subsequent deposits into Sarva Haryana Gramin Bank were clearly shown in the bank statements.

ITAT Dismisses Cooperative Society Appeal as Withdrawn, Grants Liberty to File Fresh Appeal if S.119(2)(b) Petition is Rejected

Pandaveswar Colliery Employees Cooperative Credit Society Ltd vs ITO CITATION : 2025 TAXSCAN (ITAT) 1657

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) dismisses the appeal of the assessee as withdrawn and grants liberty to file a fresh appeal if the section 119(2)(b) of Income Tax Act,1961 petition is not accepted.

The two member bench comprising Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member) heard both parties, reviewed the record, and considered the submissions of the assessee counsel. It dismissed the appeal as withdrawn and granted liberty to the appellant to file a fresh appeal before the competent authority if the section 119(2)(b) petition was not accepted.

Late Filing causes Disallowance of Section 80P Deduction: ITAT directs Taxation on Net Profit After Verification

Prathamika Krishi Pattina Sahakara Sangha Ltd vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1658

The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) directs taxation on the net profit after verification, while noting that late filing disallowed the deduction under section 80P of Income Tax Act,1961.

The two member bench comprising Keshav Dubey (Judicial Member) and Waseem Ahmed (Accountant Member) heard the contentions of both parties and examined the record. The AO had held that, due to late filing, the assessee was not eligible for deduction under section 80P. While the assessee was indeed ineligible for the deduction, the tribunal observed that income should be taxed on the net profit after allowing all related expenses.

ITAT Reduces Addition on Unexplained Investment to ₹1.32 Lakh, Grants ₹6.5 Lakh Relief Considering Socio-Economic Status

Mohd. Husain vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1660

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal of the assessee for Assessment Year 2012-13, reducing the addition on unexplained investment to Rs. 1,32,000 and granting relief of Rs. 6,50,000, considering his socio-economic status.

The two member bench comprising Satbeer Singh Godara (Judicial Member) and S.Rifaur Rahman (Accountant Member) considered the assessee’s submissions and the departmental arguments and found that the full addition could not be sustained. It observed that the lower authorities had overlooked the assessee’s socio-economic status and his family’s past savings, which could have contributed to the investment.

Lack of Verification: ITAT sets aside Service Tax Disallowance Order u/s 43B and directs Fresh Adjudication

Deputy Commissioner of Income Tax vs Seven Hills Project Private Limited

CITATION : 2025 TAXSCAN (ITAT) 1661

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Commissioner of Income Tax (Appeals)[CIT(A)] order and remanded the matter for fresh adjudication in a case concerning service tax disallowance under section 43B of Income Tax Act,1961,for lack of verification.

The two member bench comprising Pradip Kumar Choubey (Judicial Member) and Rakesh Mishra (Accountant Member) considered the rival submissions and noted that the AO had added the difference between the service tax outstanding and the amount already added in the earlier year.

Once Income Tax Form 10EE Furnished, it applies Automatically to Subsequent Years: ITAT allows Section 89A Benefit

Jignesh Naresh Jariwala vs Deputy Director of Income-tax CITATION : 2025 TAXSCAN (ITAT) 1662

The Income Tax Appellate Tribunal ( ITAT ), Mumbai Bench, has held that once a taxpayer exercises the option under Section 89A of the Income Tax Act, 1961 by furnishing Form 10EE, there is no requirement to furnish the form afresh in subsequent years.

The bench of Narendra Kumar Billaiya and Anikesh Banerjee, after examining the rules, agreed with the assessee. It observed that Form 10EE is only a procedural requirement, and once exercised, the option continues for subsequent years unless the assessee becomes a non-resident, in which case special rules apply.

HRA Claim Restricted to 50% as Rent Agreement in Joint Name with Brother, rules ITAT Despite Assessee Bearing Entire Rent

Pavan Gopal Chotiya vs ITO CITATION : 2025 TAXSCAN (ITAT) 1663

In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Pune Bench, held that an assessee is entitled to claim only 50% deduction of House Rent Allowance (HRA) where the rent agreement stands jointly in the names of the assessee and his brother, particularly when the assessee fails to substantiate having borne the entire rent payment by producing supporting evidence such as Form 16.

Accountant Member Dr. Manish Borad partly allowed the assessee’s appeal by sustaining the disallowance of ₹66,516 towards HRA, restricting the deduction to 50% on account of the joint rent agreement with his brother.

Income Tax Assessment Made Under Old ‘Firm’ PAN instead of New ‘Company’ PAN: ITAT directs CIT(A) to verify Transactions in Books of Accounts

Lova Impex Private Limited vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1664

The Income Tax Appellate Tribunal (ITAT), Hyderabad recently held that income tax assessments wrongly made under an old ‘Firm’ Permanent Account Number (PAN) owned by an assessee instead of their new and actual ‘Company’ PAN was required to be reassessed.

The Bench consisting of Vice President, Vijay Pal Rao and Accountant Member, Manjunatha G, directed the AO to verify whether transactions reported under the old PAN are reflected in the company’s official accounts under the new PAN, as per the Income Tax Act, 1961.

Setting-Off Short-Term Capital Loss in Shares where Securities Transaction Tax Paid: ITAT deletes iShares MSCI India’s ₹270 Cr Income Addition

Schwab Emerging Markets Equity ETF vs DCIT (International Taxation) CITATION : 2025 TAXSCAN (ITAT) 1665

The Income Tax Appellate Tribunal (ITAT), Mumbai, has held that short-term capitalloss incurred on transactions where Securities Transaction Tax (STT) was paid can be set off against short-term capital gains from transactions where STT was not paid.

The Bench comprising Judicial Member Sandeep Singh Karhail and Accountant Member Vikram Singh Yadav, observed that Section 70(2) of the Act merely refers to “similar computation” of income and does not carve out any distinction between STT-paid and non-STT transactions. It was noted that the appellant’s method of set-off was in line with established judicial precedents, holding that the AO’s restrictive interpretation was unsustainable.

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