ITAT Weekly Round-Up (21st September- 27th 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 21st September 2025 to 27th September 2025.

Unexplained Investment of ₹10.33 lakh in Immovable Property u/s 69: ITAT Deletes Addition considering Retirement benefits and Loan support

Somabhai Mohandas Patel vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1666

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted an addition of ₹10.33 lakh under section 69 of IncomeTax Act,1961 for unexplained investment in immovable property, considering the assessee’s retirement benefits and loan support.

The two member bench Dr.BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) reviewed the assessment order, the CIT(A) order, and the assessee’s submissions and concluded that the addition of ₹10,33,012/- under section 69 for unexplained investment in immovable property was unjustified.

Disallowance of Rs.10.28 Lakh Interest on Loan by Charitable Trust as Application of Income: ITAT Sets Aside CIT(A) Order

Zenith Public School vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1667

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Commissioner of Income Tax (Appeals)[CIT(A)] order in the case concerning the disallowance of Rs.10.28 lakh interest on loan by a charitable trust as application of income and directed the Assessing Officer (AO) to delete the same.

The two member bench comprising Manu Kumar Giri (Judicial Member) and S.R.Raghunatha (Accountant Member) examined the submissions and records. During FY 2021-22, the assessee claimed loan repayment and interest payments totaling Rs.75,14,899/- as application of income. The assessee had submitted a letter on 18.04.2023 stating that it paid interest on loans taken from Mr. P. Shanmugam along with the principal amount.

Disallowance of Rs.6.78 Lakh Cash Deposits as Unexplained Investment: ITAT Allows Claim Based on Agricultural, Transportation, and Family Income

Salvantsingh Swarupsingh Palluvs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1668

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) allowed an appeal against the disallowance of Rs.6.78 lakh cash deposits under section 69 of Income Tax Act,1961 as unexplained investment, based on agricultural, transportation, and family income.

The two member bench comprising Dr.B.R.R Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) heard the parties and reviewed the records. It noted that the lower authorities had accepted part of the assessee’s claims and allowed Rs.5,00,000/- based on evidence showing that the deposits came from the assessee’s agricultural and transportation income, his wife’s dairy income, and his son’s savings.

Disallowance of ₹16.28 Lakh Bogus Purchase without Rejection of Books: ITAT Restricts Addition to ₹1.29 Lakh Applying GP Rate

Indra Trading Corporation vsDCIT CITATION : 2025 TAXSCAN (ITAT) 1669

The Ranchi Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal and restricted the addition of ₹16.28 lakh for alleged bogus purchases to ₹1.29 lakh by applying a 7.92% gross profit (GP ) rate, holding that the disallowance was not valid as the books of accounts were not rejected

The two member bench comprising Sonjoy Sarma (Judicial Member) and Ratnesh Nandan Sahay (Accountant Member) held that the addition of ₹16,28,109 for alleged bogus purchases was not valid since the books were not rejected and sales were accepted.

Disallowance of ₹2.26 Lakh Bonus as Dividend Due to Audit Report Error: ITAT Deletes Addition Based on CA’s Certificate

Ponnusamy Raja vs The Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1670

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of ₹2.26 lakh made by the Assessing Officer (AO ), based on the Chartered Accountant’s (CA) corrective certificate, where bonus paid to employees had been wrongly reported as dividend in the tax audit report.

The two member bench comprising S.S Viswanethra Ravi (Judicial Member) and S.R.Raghunatha (Accountant Member) heard both sides and reviewed the records. It noted that the Assessing Officer had disallowed ₹2,26,000 as bonus, treating it as profit or dividend, since the tax audit report had wrongly reported the amount and no supporting evidence was filed during assessment. The CIT(A) had also confirmed the disallowance.

ITAT Deletes ₹10.42 Lakh Addition u/s 69A as Cash Deposits during Demonetization Explained by Withdrawals

Anubhav Kumar vs ITO CITATION : 2025 TAXSCAN (ITAT) 1671

The Ranchi Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of ₹10.42 lakh under section 69A of Income Tax Act,1961, holding that cash deposits made during the demonetization period were fully explained by prior withdrawals

The two member bench comprising Sonjoy Sarma (Judicial Member) and Ratnesh Nandan Sahay(Accountant Member) after examining the submissions and records, noted that the assessee had withdrawn Rs.14,50,800/- during the year and deposited Rs.10,42,000/- in various bank accounts. Management of cash and bank deposits was solely at the discretion of the assessee.

Loans from Sister Concern Treated as Deemed Dividend u/s 2(22)(e): ITAT Deletes Addition, Treating It as Business Current Account with Interest Repayment

Bees Infracon Private Ltd vs TheITO CITATION : 2025 TAXSCAN (ITAT) 1672

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of deemed dividend under section 2(22)(e) of Income Tax Act,1961, on loans received from a sister concern, treating the transaction as a business current account with part repayment of interest.

The two member bench comprising Dr.BRR Kumar (Vice President) and T.R.Senthil Kumar ( Judicial Member) considered the submissions and records, including case laws cited by the assessee. It found that the loan received from its sister concern, Sunburg Tradelink Pvt. Ltd., was a current account transaction for business purposes, part of which was repaid with interest after deducting TDS.

Applicability of 10% tolerance u/s 43CA: ITAT allows Retrospective Benefit, Sets Aside S.263 order

Sai Essen Developers vs PCIT CITATION : 2025 TAXSCAN (ITAT) 1673

The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) allowed retrospective benefit of 10% tolerance under section 43CA of Income Tax Act,1961 and set aside the section 263 order.

The two member bench comprising Vinay Bhamore (Judicial Member) and Manish Borad (Accountant Member) heard arguments from both sides and reviewed the records, including the paper book and case law submissions. It noted that the assessee was engaged in real estate development and construction and sold residential flats as stock-in-trade.

Directors’ Commission of Rs.11.36 Lakh Wrongly Reported as Profits/Dividends: ITAT Remands Issue to AO for Fresh Examination

Pravin Engineering Pvt. Ltd vsACIT National E-Assessment Centre CITATION : 2025 TAXSCAN (ITAT) 1674

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) noted that Rs.11.36 lakh paid as directors’ commission was wrongly reported in Form 3CD as profits or dividends and remanded the issue to the Assessing Officer( AO) for fresh examination.

The two member bench comprising Sonjoy Sarma ( Judicial Member) and Ratnesh Nandan Sahay (Accountant Member) at the assessee had clarified that Rs.11,36,000/- paid as directors’ commission was wrongly reported in Form 3CD as bonus or commission to employees. The amount was otherwise payable as profits or dividends under section 36(1)(ii) and did not form part of profits or dividends under that section.

Rs. 1.10 Crore Property Investment Treated as Unexplained Due to Unverified Sources: ITAT Sets Aside CIT(A) Order

Rajesh Laxmichand Jain vs IncomeTax Office CITATION : 2025 TAXSCAN (ITAT) 1675

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Commissioner of Income Tax (Appeals)[CIT(A)] order in a case where a property investment of Rs. 1.10 crore was treated as unexplained under section 69 of Income Tax Act,1961 due to unverified sources.

The two member bench comprising Beena Pillai (Judicial Member) and Arun Khodpia (Accountant Member) observed that for co-purchasers, the addition could not exceed the individual share of the assessee. It noted that the authorities had rejected the assessee’s documents without independent verification. To ensure justice, the tribunal set aside the CIT(A)’s order and sent the case back to the AO to verify the source of investment and decide the matter afresh.

Disallowance of Rs. 2.3 Lakh Paid as Compensation to Workers During Strike Period: ITAT Allows Claim and Deletes Addition

Engineering Mazdoor Sabha vsACIT CITATION : 2025 TAXSCAN (ITAT) 1676

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition and allowed the claim of Rs. 2.3 lakh paid as compensation to workers during the strike period.

A single member bench comprising Pawan Singh (Judicial Member) examined the submissions and records and noted that the assessee was a registered trade union. It had paid Rs. 15,000/- each to eight workers and Rs. 10,000/- each to eleven workers during the strike period to support them when wages were not paid. The details of workers, their employers, vouchers, and affidavits of the General Secretary and Treasurer were furnished.

AO cannot Issue Notice to Reopen Income Tax Assessment after 3 Years Without Pr. CCIT Approval: ITAT Quashes Notice against Saif Ali Khan

Saif Ali Mansoor Ali KhanPataudi vs CIT(A) CITATION : 2025 TAXSCAN (ITAT) 1677

The Income Tax Appellate Tribunal (ITAT), Mumbai, has held that a reassessment notice issued under Section 148 of the Income Tax Act, 1961, without valid approval under Section 151, is void ab initio. The Tribunal ruled that since the reopening pertained to an assessment year beyond three years, the mandatory approval of the Principal Chief Commissioner of Income Tax (PCIT) was not obtained, rendering the proceedings invalid.

The Bench comprising of Judicial Member, Pawan Singh and Accountant Member, Renu Jauhri held that since more than three years had elapsed from the end of the relevant assessment year, approval was mandatorily required from the PCCIT under Section 151. As this statutory requirement was not met, the notice under Section 148 was invalid, and the entire reassessment proceedings stood quashed.

Cash Deposit of Rs. 8 Lakh from Sale of Casuarina Trees Treated as ‘Income from Other Sources’: ITAT Deletes Addition

Shri T. Radhakrishnan vs TheIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1678

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted an addition of Rs. 8,00,000 made by the Assessing Officer (AO), which was treated as ‘income from other sources’ despite being a cash deposit from the sale of casuarina trees.

A single member bench of George George K( Vice President) reviewed the case and material on record. The assessee owned 23 acres of agricultural land in Tamil Nadu and had disclosed Rs.8,00,000/- as agricultural income from the sale of casuarina trees for the assessment year 2015-16. On 03.07.2014, a cash deposit of Rs.8,00,000/- was made in his bank account, which the AO disbelieved and added to income as ‘income from other sources’.

Trust’s 12A Registration Cancelled for Absence of RPT Act Certificate: ITAT Directs CIT(E) to Grant Registration After Verification

Shree JainSwetamberTeerapanthMahila Mandal vs CIT (Exemption) CITATION : 2025 TAXSCAN (ITAT) 1679

The Jodhpur Bench of Income Tax Appellate Tribunal ( ITAT ) directed Commissioner of Income Tax(Exemption)[CIT(E)] to grant registration after verifying the trust’s 12A registration under Income Tax Act,1961, which was earlier cancelled for absence of a Rajasthan Public Trust Act (RPT) certificate.

The two member bench comprising Anikesh Banerjee(Judicial Member) and Dr.Mitha Lal Meena (Accountant Member) observed that the assessee’s application under section 12A(1)(ac)(iii) and the cancellation of provisional registration under section 12A(1)(ac)(vi) had arisen due to the absence of the required registration certificate.

Cash Deposits of ₹1.31 Lakh During Demonetisation Treated as Unexplained Income: ITAT Deletes Addition, Accepts as Rent Received in Cash

Bibhu Prasad Sahoo vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1680

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) deleted an addition of ₹1.31 lakh treated as unexplained income under section 69A of Income TaxAct,1961 during the demonetisation period and accepted it as rent received in cash.

The two member bench comprising Sonjoy Sarma (Judicial Member) and Rakesh Mishra ( Accountant Member) reviewed the submissions, facts, and CIT(A)’s order. The AO had noted that the assessee submitted income computation and deeds but did not explain cash deposits in three Axis Bank accounts. Deposits in two accounts totaling ₹48,78,233 were accepted, but ₹1,31,465 in the third account was added to income.

Relief for Goldman Sachs: ITAT Sets Aside Disallowance of Rs. 1.87 Crore Occupancy Expenses, Directs AO to Verify Claim Afresh

Goldman Sachs (India) FinancePvt. Ltd vs Assessment Unit, Income-tax Department

CITATION : 2025 TAXSCAN (ITAT) 1681

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to Goldman Sachs (India) Finance Pvt. Ltd., setting aside the disallowance of Rs. 1.87 crore claimed as Occupancy Expenses and directing the Assessing Officer(AO) to verify the claim afresh for Assessment Year (AY) 2020-21

The two member bench comprising Saktijit Dey (Vice President) and Padmavathy S (Accountant Member) heard the parties and reviewed the records. The CIT(A) noted that the assessee claimed Occupancy Expenses of Rs. 1.87 crore, including depreciation, for space rented from group entity GSISPL under a cost allocation agreement. The AO had disallowed the full amount in AY 2022-23 as the assessee did not provide supporting documents.

Assessee’s Failure to Substantiate Details: ITAT deletes Share Application Money Addition on 4 Identifiable Investors, Retains Addition on 9 others

M/s Pato Builders Pvt. Ltd. vsA.C.I.T. CITATION : 2025 TAXSCAN (ITAT) 1682

The Income Tax Appellate Tribunal (ITAT), Ranchi, held that additions made on account of unexplained share application money could not be sustained in respect of identified investors where sufficient details were furnished. The Tribunal further directed that the disallowance of large expenses be restricted to 2.5 percent instead of 10 percent, thereby partly allowing the appeal concerning income tax liability.

The Bench comprising Judicial Member, George Mathan and Accountant Member, Ratnesh Nandan Sahay, held that the share application money received from four identifiable investors could not be added back to the assessee’s income, but sustained the addition for the nine unexplained investors.

Reassessment Beyond Six-Year Limit for Income Under ₹50 Lakh: ITAT Quashes Notice and Reassessment Order

Amiya Shankar Ghar vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1683

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT) quashed the notice and reassessment order, holding that the reassessment beyond six-year limit for income under ₹50 lakh was invalid.

A single member bench comprising Rajesh Kumar ( Accountant Member) after reviewing the submissions and the record, including the section 148 notice dated 27.7.2022, observed that the reassessment was initiated more than six years after the end of the relevant assessment year, violating section 149(1)(b) of the Act.

Co-Op Society cannot Claim Income Tax Deduction on Interest from Regional Rural Bank Deposits: ITAT

Shri Vidhyut Board Credit &Consumers Co-operative Society Limited vs Assistant Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1684

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has ruled that interest earned from deposits with Regional Rural Banks (RRBs) is not eligible for deduction under Section 80P of the Income Tax Act, 1961. However, the Tribunal remanded the second issue of proportionate administrative expenses incurred on deposits with the State Bank of India (SBI) back to the Assessing Officer (AO) for fresh adjudication.

The Judicial Member, Suchitra Kamble dismissed the appellant’s claim for deduction on interest earned from Saurashtra Gramin Bank, holding that reliance on the withdrawn Circular No. 319 was misplaced. The Tribunal held that interest from Regional Rural Banks cannot qualify for deduction under Section 80P of the Income Tax Act.

ITAT Sets Aside Deletion of ₹1.43 Crore Unexplained Cash Deposits in Income Tax Dispute due to Absence of Critical Supporting Evidence

The DCIT vs IngenericTechnologies Solutions Private Limited CITATION : 2025 TAXSCAN (ITAT) 1685

The Income Tax Appellate Tribunal (ITAT), Hyderabad bench has set aside the deletion of income tax additions made towards unexplained cash deposits and alleged cash payments by Ingeneric Technologies Solutions Private Limited and remanded the matter to the Assessing Officer for fresh verification under the Income Tax Act, 1961.

The Bench comprising Vice President, Vijay Pal Rao and Accountant Member, Manjunatha G observed the absence of critical supporting evidence and the failure of the appellant to demonstrate compliance with statutory requirements for tax collected at source and proper documentation.

Foreign Currency Derivative Losses Allowed as Business Expenditure: ITAT quashes Revisionary Income Tax Order

Vardhman Stampings P.Ltd vsPr.Commission CITATION : 2025 TAXSCAN (ITAT) 1686

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has quashed a revisionary order passed under Section 263 of the Income Tax Act, 1961, by the Principal Commissioner of Income Tax. The Tribunal held that losses arising from foreign currency derivative transactions and exchange rate differences were not speculative in nature but allowable as business expenditure.

The Bench comprising of Accountant Member, Annapurna Gupta and Judicial Member, T.R. Senthil Kumar held that the PCIT’s findings were based on an incorrect appreciation of facts and law. It was observed that the exchange rate difference loss was merely a restatement of creditors’ balances under AS-11 and had been consistently held allowable by the Supreme Court.

Improper Email Service and CA’s Demise is Valid Cause for Non-Compliance: ITAT restores Income Tax Appeal for Fresh Hearing

Sri Guru ThipperudraswamyDevasthana vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1687

The Income Tax Appellate Tribunal (ITAT), Bangalore, has restored an appeal for fresh adjudication after finding that appellate notices were largely issued to incorrect email addresses and that the demise of the appellant’s Chartered Accountant constituted a reasonable cause for non-compliance.

The Bench consisting of Judicial Member, Keshav Dubey and Vice President, Prashant Maharishi, examined the records and noted discrepancies in the email communication for the notices. The Tribunal held that except for one notice, the appellate notices were not served to the correct email ID provided by the appellant in its Form 35. Moreover, the demise of the appellant's chartered accountant was a genuine cause for non-compliance.

Penalty u/s 271(1)(c) of the Income Tax Act Requires Verification of Loss: ITAT Orders Re-Examination

Kaycee Finstock Pvt Ltd vsDeputy Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1688

The Income Tax Appellate Tribunal (ITAT), Mumbai, has remanded a penalty dispute involving concealment of income and inaccurate particulars under Section 271(1)(c) of the Income Tax Act, 1961, for fresh adjudication after finding that the penalty could not be sustained without verification of the appellant’s continuous loss position.

The Tribunal, comprising Anikesh Banerjee, Judicial Member and Om Prakash Kant, Accountant Member, ruled that while the appellant had accepted and rectified the mistake during assessment proceedings, the question of real tax advantage due to continuous losses and the impact on carry-forward loss needed factual verification.

Unsigned Draft Agreement has No Evidentiary Value Without Independent Inquiry by AO: ITAT Deletes ₹13 Lakh Addition

Balwant Singh vs The DCIT ACIT CITATION : 2025 TAXSCAN (ITAT) 1689

The Chandigarh Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that an unsigned and unregistered agreement to sell has no evidentiary value unless corroborated through an independent inquiry by the Assessing Officer (AO).

The bench of Rajpal Yadav and Krinwant Sahay observed that an unsigned, unexecuted document cannot, by itself, establish ownership or investment. It said that the AO did not produce corroborative evidence of payment or transfer of property and ignored the fact that ownership remained with the seller.

Bright Line Test not Applicable for TP Adjustments on Jewellery, Textiles and Gift Exports: ITAT Remands Joy Alukkas’ Income Tax Case for Fresh Benchmarking

M/s. Joyalukkas (India)Pvt. Ltd.vs Asst. Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1690

The Income Tax Appellate Tribunal (ITAT), Cochin bench, directed the remand of transfer pricing adjustments relating to benchmarking of exports, treatment of Associated Enterprise, and advertisement expenses to the Assessing Officer/Transfer Pricing Officer for fresh adjudication after noting that the adopting bright line method adopted by the Dispute Resolution Panel-2, Bangalore (DRP) is not an approved method for benchmarking the transaction of advertisement expenditure.

The Bench consisting of Rahul Chaudhary, Judicial Member & Inturi Rama Rao, Accountant Member, held that the submissions made by the appellant went to the root of the computation of arm’s length price and benchmarking. It found merit in the contention that Bright Line Test is not an approved method and that advertisement expenditure may not by itself constitute an international transaction.

Allegation of Suppressed Turnover and Bogus Discounts: ITAT accepts HP India Sales’ Evidence as Genuine Business Practice

HP India Sales Pvt. Ltd. vs TheJoint Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1691

The Income Tax Appellate Tribunal (ITAT), Bangalore, overturned the Assessing Officer’s allegation of suppressed turnover and bogus discounts, accepting the company’s evidence, including reconciliations, customer ledgers, and program policy documents. The Tribunal upheld the Commissioner of Income Tax(Appeals)’s [CITA(A)] decision that trade discounts and sales adjustments were genuine business practices under the Income Tax Act, 1961.

The Bench of Prashant Maharishi, Vice President and Keshav Dubey, Judicial Member, ruled that the company’s accounting for discounts and recognition of expenses follows established mercantile principles. It was found that the AO did not bring any evidence demonstrating the discounts or expenses were bogus or fraudulent.

Delay of 38 Days in Filing Income Tax Appeal Condoned: ITAT Finds Spam Folder Issue a Sufficient Cause

Shri Devi Dayal vs The ITO CITATION : 2025 TAXSCAN (ITAT) 1692

The Income Tax Appellate Tribunal (ITAT), Chandigarh, condoned a delay of 38 days in filing an appeal, ruling that the appellant’s explanation of the order being misplaced in the spam folder of his email constituted a sufficient cause under Section 253(5) of the Income Tax Act, 1961.

The Bench comprising of Vice President, Rajpal Yadav and Accountant Member, Krinwant Sahay, examined Section 253(5) of the Income Tax Act, 1961, which empowers the tribunal to admit an appeal after the expiry of the prescribed period if it is satisfied that there was sufficient cause for not presenting it within that period.

Rs. 80 lakh Cash Payment for Flat Treated as Unexplained Investment: ITAT Upholds CIT(A) Deletion as No Payment or Allotment Exists

DCIT vs Sudipta AjoykumarMukherjee CITATION : 2025 TAXSCAN (ITAT) 1693

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax( Appeals) [CIT(A)] deletion of Rs. 80 lakh treated as unexplained income for a flat, as no payment was made and no allotment existed.

The two member bench comprising Sandeep Singh Karhail (Judicial Member) and Narendra Kumar Billaiya (Accountant Member) reviewed the orders of the lower authorities and noted that, although the assessee was offered a flat in the Society, she never made the initial 25% payment. The AO did not produce any evidence showing that the assessee had paid any amount, in cash or cheque, or that a flat was actually allotted to her.

Entire Business Expenses Disallowed Despite Active Painting Business: ITAT Restricts Disallowance to 20%, Partly Allowing Appeal

Ishvatham vs ITO CITATION : 2025 TAXSCAN (ITAT) 1694

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal and restricted the disallowance to 20% in a case where entire business expenses were disallowed despite the assessee being actively engaged in the painting business.

A single member bench of Rajesh Kumar (Accountant Member) after considering the rival submissions and reviewing the record, observed that the assessee was engaged in the business of painting. During the year under review, the assessee had earned commission income of Rs. 1,23,125 and had incurred various expenses under multiple heads, which were claimed in the profit and loss account.

70-Year-Old Depositor’s Rs. 2,50,000 Demonetization Cash Treated as Unexplained: ITAT Deletes Addition citing CBDT Exemption Limit

SavitabenNathalal Vadi vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1695

The Rajkot Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 2,50,000 cash, which had been treated as unexplained, for a 70-year-old depositor, citing the Central Board of Direct Taxes (CBDT) exemption limit during demonetization.

A single member bench of Dr.Arjunlal Saini (Accountant Member) noted that the CBDT had issued instructions and a press release stating that small depositors, including artisans, workers, housewives, and other small taxpayers, would not be questioned for cash deposits up to Rs. 2,50,000 per person during the demonetization period.

Clerical Error in Asset Balances Leads to Increased Capital Gain: ITAT Condones Delay and Restores Matter to CIT(A)

Eagle Fashions Private Limitedvs The Deputy Director of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1696

The Surat Bench of Income Tax Appellate Tribunal ( ITAT ) condoned the delay and restored the matter to the Commissioner of Income Tax (Appeals)[CIT(A)] in a case where a clerical error in carrying forward opening balances of land, building, and furniture led to an inflated capital gain of Rs.21,14,028/-.

The two member bench comprising Sanjay Garg (Judicial Member) and Bijayananda Pruseth (Accountant Member) considered the rival submissions and noted that the assessee was genuinely contesting the addition of Rs.21,14,028/- as capital gain.

No Income Tax Notices received due to Inactive Email & Covid issues, Order Passed Ex parte: ITAT remands 6 Appeals for Fresh Adjudication

Rajyeshwar Retail Trade SystemsPvt. Ltd. vs ACIT CITATION : 2025 TAXSCAN (ITAT) 1697

The Indore bench of the Income Tax Appellate Tribunal ( ITAT ) has remanded six appeals for fresh adjudication as the assessee failed to receive income tax notices due to COVID-19 constraints and an inactive Email.

The two-member bench of Paresh M. Joshi (Judicial Member) and B.M. Biyani (Accountant Member) held that, considering the principles of natural justice and without causing prejudice to the revenue, these matters should be remanded for adjudication afresh, at the risk and responsibility of the assessee.

Relief for Maxxis Rubber as ITAT Rejects PCIT’s Interpretation of Depreciation u/S. 263

Maxxis Rubber India Pvt. Ltd vsPrincipal Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1698

The Income Tax Appellate Tribunal (ITAT), Ahmedabad has granted relief to Maxxis Rubber India Pvt. Ltd. by quashing a revisionary order issued under Section 263of the Income Tax Act, 1961. The Tribunal observed that the Principal Commissioner of Income Tax (PCIT) erred in treating the company’s depreciation claim as excessive, holding that there is no legal requirement to adjust carried forward additional depreciation against the opening written down value of assets.

The Bench comprising Judicial Member, T.R. Senthil Kumar and Accountant Member, Annapurna Gupta, held that there was no error in the assessment order. The Tribunal observed that Section 32(1)(ii) and Section 43(6)(c) of the Income Tax Act, 1961 do not provide for any adjustment of carried forward additional depreciation against the opening written down value.

Excessive Suo-Motu Disallowance u/s 14A Restricted: ITAT Grants Relief to Hero Cycles Ltd. in Income Tax Appeal

The DCIT vs M/s Hero Cycles Ltd CITATION : 2025 TAXSCAN (ITAT) 1699

The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, considered the appeal of an assessee regarding its own disallowance under Section 14A of the Income Tax Act, 1961, reiterated that where interest free funds are available in excess of investments, no disallowance under Section 14A can be sustained.

The Bench comprising of Vice President, Rajpal Yadav and Accountant Member, Krinwant Sahay examined the assessee’s claim that its suo moto disallowance was excessive. On the issue of interest disallowance under Rule 8D(2)(ii), the Tribunal observed that Hero Cycles had ample own funds in the form of share capital and reserves, which were far greater than the value of its investments.

Credit Card Payments from Agricultural Income treated as Unexplained u/s 69C, Made Addition Based on Suspicion: ITAT Deletes Addition

Venkateswarlu Chandu vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1700

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 9.99 lakh made under Section 69C of Income Tax Act, 1961, where cash payments toward credit card bills from agricultural income were treated as unexplained.

A single member bench of Mahavir Singh ( Vice President) observed that the addition of Rs. 9,99,000/- was made solely based on doubt and suspicion, as the explanation for the source of cash payments toward the credit card was rejected without any concrete evidence.

Relief for BMW: ITAT sets aside Final Assessment Order as Time-Barred u/s 144C(13) for Delay in Giving Effect to DRP Directions

BMW India Pvt. Ltd. vs AssistantCommissioner of income Tax CITATION : 2025 TAXSCAN (ITAT) 1701

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to BMW India Pvt. Ltd. by setting aside the Final Assessment Order for Assessment Year 2011-12 as time-barred under section 144C(13) of Income Tax Act,1961 due to delay in giving effect to Dispute Resolution Panel ( DRP) directions.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and S.Rifaur Rahman (Accountant Member) after hearing the parties and examining the record, noted that following its earlier order dated 25/01/2019, the TPO passed an order on 31/01/2021, and the AO issued a Draft Assessment Order on 15/07/2021.

Agricultural Land Classified as Residential by SVA: ITAT Directs Fresh Verification by CIT(A) on Addition u/s 56(2)(x)(b)

Silverton Pulp and papersPrivate Limited vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1702

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) directed fresh verification by the Commissioner of Income Tax (Appeals)[CIT(A)] on the addition under section 56(2)(x)(b) of Income Tax Act,1961, where agricultural land purchased by the assessee was wrongly classified as residential by the Stamp Valuation Authority (SVA).

The two member bench Yogesh Kumar U.S (Judicial Member) and Manish Agarwal (Accountant Member) reviewed the record and heard the parties. The assessee contended that the agricultural land purchased was wrongly treated as residential, resulting in higher stamp duty, and that section 56(2)(x)(b) did not apply.

Rectification Order by AO Neither Erroneous Nor Prejudicial, Revisionary Powers Misapplied on Rental Income Issue: ITAT quashes PCIT's Order

M/s. Chennai Business Tower vsPCIT-4 CITATION : 2025 TAXSCAN (ITAT) 1703

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has quashed the PCIT's order on the ground that it exceeded the revisionary powers vested in it under Section 263 of the Act. The tribunal held that the rectification order by the AO is neither erroneous nor prejudicial.

The two-member bench ABY T Varkey (Judicial Member) and S. R. Raghunatha (Accountant Member) observed that the present facts and circumstances of the case were identical to the assessee’s own case decided by the coordinate bench of the Tribunal in the A.Y.2009-10. So following the same, the bench held that the PCIT has exceeded the revisionary powers and quashed the order of the PCIT under Section 263 of the Act by allowing the grounds of appeal of the assessee.

Service Tax Disallowed u/s 43B from Existing Tax Audit Report Without Fresh Material: ITAT quashes Erroneous Reassessment by AO

RNG Construction Co. vs Addl.Jt. Dy. Asstt. ITO CITATION : 2025 TAXSCAN (ITAT) 1704

The Indore bench of Income Tax Appellate Tribunal (ITAT) quashed the reassessment by the Assessing Officer (AO), holding that no new facts surfaced regarding the Service Tax disallowance under Section 43B of the Income Tax Act, 1961, as these facts were already fully disclosed and were available on the record of the department in the Tax Audit Report.

A two-member bench of Paresh M. Joshi ( judicial member) and B.M. Biyani (accountant member) concluded that these facts of the assessee’s case are identical to the case of Kelvinator decided by the Delhi High Court in favour of the assessee and against the revenue.

ITAT Dismisses Revenue’s Appeal on Business Loss, Rules CBDT Exception for Bogus LTCG/STCL from Penny Stocks Inapplicable

Deputy Commissioner of IncomeTax vs Satya Prakash Gupta CITATION : 2025 TAXSCAN (ITAT) 1705

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) dismissed the Revenue’s appeal for the Assessment Year 2013-14, holding that the loss from share trading was a business loss and that the Central Board of Direct Taxes (CBDT) exception for bogus Long Term Capital Gain / Short Term Capital Loss ( LTCG/STCL ) from penny stocks was not applicable.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and Manish Agarwal (Accountant Member) heard both parties and noted that the assessee declared business loss from share trading through his proprietary concern, M/s Sterling Security Systems, and did not claim any short-term capital loss. The tax effect of the Revenue’s appeal was ₹49,88,400/-, below the limit for filing an appeal before the tribunal as per CBDT Circular No. 09 of 2024.

80G Approval Rejected over Religious Object: ITAT Directs CIT(E) to Verify 5% Spending Limit

Shree Hanumant PakshigharCharitable Trust vs Commissioner of Income Tax

CITATION : 2025 TAXSCAN (ITAT) 1706

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) directed Commissioner of Income Tax(Exemption)[CIT(E)] to verify whether the assessee had exceeded the 5% limit of income spent on religious activities before rejecting its application for approval under Section 80G(5) of Income Tax Act,1961.

The two member bench comprising Sanjay Garg (Judicial Member) and Narendra Prasad Sinha (Accountant Member) reviewed the contentions and the order of the CIT(E). Section 80G of the Act defines “charitable purpose” and excludes purposes that are wholly or substantially religious.

Trust Income to be Taxed at Normal Rate as Sole Beneficiary had No Taxable Income: ITAT

Lipi Jain Family Trust vs ITO CITATION : 2025 TAXSCAN (ITAT) 1707

The Agra Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that the income of the trust should be taxed at the normal rate instead of the maximum marginal rate, as the sole beneficiary had no taxable income.

A single member bench M Balaganesh (Accountant Member) observed that the issue had already been decided in the assessee’s case for AY 2016-17, where the appeal was allowed, and therefore, the assessee’s grounds for AY 2015-16 were also allowed.

Rs. 3.5 Lakh Gift from Daughter Treated as Unexplained Cash by AO: ITAT Deletes Addition, Accepts Source as Genuine

RUPAM DUBEY vs ITO-3(3) CITATION : 2025 TAXSCAN (ITAT) 1708

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the Assessing Officer (AO)’s addition of Rs. 3.5 lakh, holding that the amount received as a gift from the assessee’s daughter was genuine and not unexplained cash under section 68 of Income Tax Act,1961.

A single member bench of Mahavir Singh (Vice President) held that the assessee had satisfactorily explained that the amount in question was a gift from her daughter out of love and affection, and that the daughter had sufficient funds in her account at the time of the gift. Accordingly, the addition made by the lower authorities was not justified. The tribunal deleted the addition and set aside their orders.

Addition of Rs. 1,17,538/- u/s 68 for Penny Stock Transactions: ITAT Deletes Addition as Assessee Incurred Short-Term Capital Loss, Not LTCG

Income Tax Officer vs HarinYogeshkumar Shah CITATION : 2025 TAXSCAN (ITAT) 1709

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of Rs. 1,17,538/- under Section 68 of Income Tax Act,1961,for penny stock transactions as the assessee incurred a short-term capital loss, not Long Term Capital Gain (LTCG).

The two member bench comprising Siddhartha Nautiyal ( Judicial Member) and Narendra Prasad Sinha (Accountant Member) reviewed the submissions of the Departmental Representative and the records. The AO initially noted that the assessee earned capital gains of Rs. 1,17,538/- from penny stock scrips of VMS Industries Limited and claimed exemption under Section 10(38) of the Act.

No Disallowance u/s. 40(a)(ia) where TDS on Buyback of Shares Paid Not Claimed in P&L but Adjusted Against Reserves: ITAT upholds CIT(A) Order

ACIT vs M/s. Nuwave E Solutions CITATION : 2025 TAXSCAN (ITAT) 1710

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal of the revenue and upheld the CIT(A) order.

The two-member bench of Sudhir Kumar (Judicial Member) and Manish Agarwal (Accountant Member) held that the provision of Section 40(a)(ia) of the Income Tax Act could not be invoked for making disallowances where even a short deduction is made. Accordingly, the appeal raised by the Revenue was dismissed.

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