ITAT Weekly Round-Up (28th September- 4th October)

Advance Income from AMC Contracts not Taxable Entirely on Invoicing: ITAT grants Relief to HP India Confirming Consistent Accounting Method, allows Proportionate TDS Credit

HP India Sales Pvt. Ltd. vs TheJoint Commissioner of Income Tax, LTU, CITATION : 2025 TAXSCAN (ITAT) 1711

The Income Tax Appellate Tribunal (ITAT), Bangalore bench, ruled that income received in advance from annual maintenance contracts (AMC) should be recognized over the contract period in accordance with the mercantile system of accounting consistently followed by the assessee. The tribunal also directed that Tax Deducted at Source (TDS) credit must be allowed proportionately with the income recognized.

The Bench consisting of Vice President, Prashant Maharishi and Judicial Member, Keshav Dubey, held that income accrues with the rendering of services under AMC, not merely on invoicing.The Tribunal the assessee had consistently followed this method, no addition could be sustained.

Software Exports and Foreign Exchange Fluctuation Gains: ITAT upholds Section 10A Income Tax Exemption

ACIT vs M/s. Nuwave E Solutions CITATION : 2025 TAXSCAN (ITAT) 1712

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal of the revenue and upheld the CIT(A) order. The tribunal upheld the exemption under section 10A on software exports and foreign exchangefluctuation gains.

The two-member bench of Sudhir Kumar (Judicial Member) and Manish Agarwal (Accountant Member) upheld that the CIT(A) had rightly held the foreign exchange fluctuation gain as income derived from the export of software. And also the AO’s contradictory approach in treating the same turnover differently was noted as biased.

ITAT Directs AO to Grant TDS Credit of Rs. 9.04 Lakh, Finds No Mismatch With Form 26AS

Liebherr Werk Nenzing vs TheAssistant Commissioner of Income-tax CITATION : 2025 TAXSCAN (ITAT) 1713

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer (AO) to grant Tax Deducted at Source (TDS) credit of Rs. 9.04 lakh after finding no mismatch with Form 26AS.

The two member bench comprising Raj Kumar Chauhan (Judicial Member) and Vikram Sinngh Yadav (Accountant Member) reviewed the rival contentions and the record. It observed that TDS entries for Adani Petronet Port Ltd. (Rs. 8,86,944), Karaikal Port Pvt. Ltd. (Rs. 3,76,062), and Starlift Services Pvt. Ltd. (Rs. 85,985) were correctly reflected in Form 26AS, matching the amounts claimed by the assessee in its return of income.

Clerical Error Can't Sink Charity Application, ITAT Sides with Trust in Registration Row

Emergency Charitable Trust vsCIT (Exemption) CITATION : 2025 TAXSCAN (ITAT) 1714

The Income Tax Appellate Tribunal (Agara Bench) held that a mere clerical error in quoting an incorrect section of the Income Tax Act cannot be grounds for the rejection of a trust’s application for registration. The Tribunal emphasized that a rightful claim cannot be denied due to a technical oversight, setting aside the order of the Commissioner of Income-Tax(Exemption).

The Tribunal, comprising Judicial Member Sunil Kumar Singh and Accountant Member Brajesh Kumar Singh, found merit in the trust’s arguments. The bench referred to settled law that a mistake in stating the correct legal position should not lead to the rejection of an application.

ITAT Grants Lifeline to Absentee Assessee, Slams CIT(A) for "No-Reason" Ex-Parte Order

Ashok Kumar Goyal vs JCIT/Addl.CIT CITATION : 2025 TAXSCAN (ITAT) 1715

The Income Tax Appellate Tribunal (ITAT), Agra Bench, has set aside an ex-parte order that confirmed a major addition against an assessee, criticizing the complete absence of any reasoning in the decision. The Tribunal granted a final opportunity for the case to be heard on its actual merits.

The ITAT Bench comprising Sunil Kumar Singh (Judicial Member) and Brajesh Kumar (Accountant Member) ruled that the failure to provide any reasoning was a fundamental violation of the principles of natural justice. In the interest of fairness, it set aside the CIT(A)’s order and remanded the matter for a fresh hearing.

ITAT Delivers Twin Blow to Revenue; Upholds 80-IA on Amalgamated Units, Caps 14A at Actual Exempt Income

The DCIT vs Chiripal IndustriesLtd CITATION : 2025 TAXSCAN (ITAT) 1716

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has dismissed the Revenue’s appeal and allowed the Cross Objection providing a dual relief to the taxpayer. The Tribunal upheld the deletion of a disallowance of over ₹4.82 crore under Section 80-IA of the Income Tax Act, 1961, and also confirmed that disallowance under Section 14A cannot exceed the actual exempt income earned during the year.

The Tribunal, comprising Judicial Member T.R. Senthil Kumar and Accountant Member Annapurna Gupta, affirmed the CIT(A)’s decision. On the Section 80-IA issue, the Tribunal relied on its own earlier orders in the assessee’s own cases for AYs 2014-15 and 2016-17. It held that since the power plant was transferred as part of a court-approved amalgamation, the assessee was entitled to “step into the shoes” of the amalgamating company and claim the deduction.

ITAT Overrules CIT(A), Condones 9-Day Delay: "Substantial Justice Over Technicalities"

Gandharv Singh vs Income-taxOfficer CITATION : 2025 TAXSCAN (ITAT) 1717

The Income Tax Appellate Tribunal (ITAT), Agra Bench, has set aside an ex-parte order passed by the Commissioner of Income Tax (Appeals) and condoned a mere nine-day delay in filing an appeal. The Tribunal remanded the matter back to the CIT(A) for a fresh hearing on the merits of the case.

The ruling underscores the judiciary's consistent stance that technicalities should not overshadow the need to deliver substantial justice, especially when the delay is minimal and sufficiently explained. The order was pronounced by a bench comprising Sunil Kumar Singh (Judicial Member) and Brajesh Kumar Singh (Accountant Member) .

Accommodation Entry Share Sale Treated as Unexplained Income u/s 69: ITAT Deletes Addition, Finds Actual Profit Only Rs. 842

Mr. Bhivraj Mohanlal Jain vsCommissioner of Income Tax (Appeals) CITATION : 2025 TAXSCAN (ITAT) 1718

The Nagpur Bench of Income Tax AppellateTribunal ( ITAT ) deleted an addition under section 69 of Income Tax Act,1961 in an alleged accommodation entry share sale, finding that the actual profit was only Rs. 842.

A single member bench of Narendra Kumar Choudhry (Judicial Member) considered the facts of the case and the arguments of both parties. It noted that a search had been conducted on Shri Rajkumar Modi, Director of M/s. Fincop Group, on 11.10.2018.

Debatable Warranty Provision Disallowance u/s 37(1) Falls Outside Section 154 Scope: ITAT

QLAR India Private Limited vsThe DCIT CITATION : 2025 TAXSCAN (ITAT) 1719

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that the disallowance of warranty provisions under section 37(1) of Income Tax Act,1961, was a debatable issue and could not be made through a rectification order under section 154, which applies only to clear and obvious mistakes.

The two member bench comprising Pradip Kumar Choubey (Judicial Member) and Rajesh Kumar (Accountant Member) after considering the submissions and reviewing the record, concluded that the allowability of warranty provisions was a debatable issue and fell outside the scope of section 154 of the Act. It noted that section 154 applies only to clear and obvious mistakes, not issues where two opinions are possible or which require detailed reasoning.

Final Income Tax Assessment Order Held Time-Barred u/s 144C(13): ITAT quashes ₹549 Cr Demand on Microsoft India

Microsoft Corporation (India) P.Ltd. vs Deputy Commissioner of Income-Tax

CITATION : 2025 TAXSCAN (ITAT) 1720

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) quashed Rs 549 crore tax demand made on Microsoft India. The income tax assessment order was held invalid due to a breach of the statutory timeline for passing the final order as mentioned under section 144C(13) of the Income Tax Act.

The two-membered bench of Vikas Awasthy ( Judicial Member) and Brajesh Kumar Singh (Accountant Member) had a difference of opinion in the matter as to whether to allow the appeal or not. After hearing the appeal, the Judicial Member allowed the legal issue raised in the appeal and consequently upheld the order of CIT(A). The Accountant Member opined otherwise and wrote a separate order dismissing the appeal of the assessee.

Relief to Zydus Head Diabetologist: ITAT quashes Revision u/s 263 on Income Tax Deduction for Political Donation, says AO Conducted Due Enquiry

Vitthaldas Nathubhai Shah vs ThePr.CIT-3 CITATION : 2025 TAXSCAN (ITAT) 1721

The Income Tax Appellate Tribunal ( ITAT ), Ahmedabad Bench, has quashed 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 AO had issued detailed notice, obtained replies, and verified supporting documents before accepting the claim under section 80GGC. Importantly, no specific material from the search connected the assessee’s donation to the alleged racket. The Tribunal distinguished cases cited by the PCIT, noting that in those matters, incriminating material or anomalies in donation records existed, unlike the present case.

ITAT allows ₹5 Cr Bad Debt Claim on Irrecoverable Loan to Ramalinga Raju

DSP Adiko Holdings Pvt. Ltd. vsDy. CIT-Circle 2(1)(1) CITATION : 2025 TAXSCAN (ITAT) 1722

The Income Tax Appellate Tribunal (ITAT), Mumbai, has ruled in favour of DSP Adiko Holdings Pvt. Ltd. by allowing a deduction of ₹5 crore as bad debt or business loss on account of an irrecoverable loan advanced to Shri Ramalinga Raju.

The Income Tax Appellate Tribunal Bench, comprising Judicial Member Shri Amit Shukla and Accountant Member Ms. Padmavathy S, accepted the assessee’s contention. It held that once a loan has been advanced during the course of business and is subsequently found to be partly irrecoverable under a court decree, the balance must be treated as a bad debt or business loss.

ITAT treats 0.7% Margin on E-top-up Receipts routed to Vodafone as Taxable Income, dismisses Income Tax Dept’s Appeal

Income Tax Officer vsMahipalsinh Manharsinh Gohil CITATION : 2025 TAXSCAN (ITAT) 1723

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has dismissed the Revenue’s appeal and upheld the Commissioner (Appeals) finding that 0.7% of bank deposits transferred to Vodafone West Ltd. represented the assessee’s taxable commission income, while the balance deposits were not treated as unexplained after remand examination.

The tribunal accepted the Vodafone letter and the remand officer’s factual analysis that the assessee operated in e-top-up distribution with a 0.7% commission. In the absence of contradictory material the Bench declined to overturn the CIT(A)’s computation. The Tribunal emphasized that the AO’s original omnibus addition without such inquiry was inappropriate.

Serious Illness of Grandson: ITAT remands Section 54F Income Tax Exemption Claim to AO

Janak Sureshbhai Patel vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1724

The Income Tax Appellate Tribunal, Ahmedabad Bench, has directed the Assessing Officer to re-examine the assessee’s claim of exemption under Section 54F for AY 2012-13 after giving a fresh opportunity of hearing, holding that exceptional personal circumstances justified a reconsideration of evidence. The appeal was allowed for statistical purposes.

The Appellate Tribunal recorded the factual narrative contained in the CIT(A) order, which acknowledged that the assessee and her family were severely distressed because the 14-year-old grandson was diagnosed with malignant brain tumours and undergoing treatment. The Bench accepted that these were exceptional and compelling reasons for non-compliance in the earlier proceedings.

ITAT allows Reconciliation with GST Records, deletes Addition on Alleged Unaccounted Gold Stock

P. Maneklal and Co. vs The DCIT CITATION : 2025 TAXSCAN (ITAT) 1725

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has deleted an addition of ₹4,78,500 made under Section 69A of the Income Tax Act, 1961, on alleged unaccounted gold stock. The Tribunal accepted the assessee’s reconciliation supported by invoices and GST data, holding that the excess stock found during a survey was duly explained.

The Bench of Dr. B.R.R. Kumar (Vice President) and Shri Siddhartha Nautiyal (Judicial Member) observed that the invoices and payments were made before the survey date and reflected in GST data filed in August 2018 and February 2019. The omission in the stock register was a clerical oversight, not an undisclosed transaction.

Natural Justice Violations: ITAT restores Foundation’s Applications for Income Tax Section 12AB and 80G Registration

Shree Gopinathji JyotipithFoundation vs The Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1726

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has set aside orders of the Commissioner of Income Tax (Exemptions) [CIT(E)], which had rejected Shree Gopinathji Jyotipith Foundation’s applications for registration under Section 12AB and approval under Section 80G(5) of the Income Tax Act, 1961.

The Tribunal observed that the CIT(E) summarily dismissed the applications on account of non-compliance without considering that the trust could not respond due to the absence of its consultant.

“Commercial Activity”: ITAT denies Section 10(23C) Exemption to Trust Running Hostels for Non-Students

Deputy Commissioner ofIncome-tax vs Shree Vallabh Seva Kendra CITATION : 2025 TAXSCAN (ITAT) 1727

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has ruled that Shree Vallabh Seva Kendra, a charitable trust, is not eligible for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961, for the assessment year 2018–19.

The ITAT Bench comprised Dr. B.R.R. Kumar, Vice-President, and Ms. Suchitra Kamble, Judicial Member, allowed the Revenue’s appeal, upholding the denial of exemption under Section 10(23C)(vi) of the Income Tax Act to Shree Vallabh Seva Kendra.

Trucks Registered in Partners’ Names Still Eligible for Depreciation: ITAT Upholds Relief to Surat Road King in Income Tax Appeal

Deputy Commissioner of IncomeTax vs Surat Road King CITATION : 2025 TAXSCAN (ITAT) 1728

The bench of the Income Tax Appellate Tribunal, Mumbai, held that depreciation on trucks registered in the names of partners but purchased and used by the partnership firm is allowable, thereby upholding the relief granted to Surat Road King by the Commissioner of Income Tax (Appeals) [CIT(A)] in an income tax assessment dispute.

The Bench comprising of Vice President, Saktijit Dey and Accountant Member, Narendra Kumar Billaiya upheld the Commissioner’s order, holding that ownership for depreciation under Section 32(1) of the Income Tax Act, 1961 extends to those who have invested in and used the asset, regardless of registration.

ITAT grants Relief to Wadhwagroup Holdings Deleting Disallowances Amounting ₹213.04 crore

Wadhwagroup Holdings PrivateLimited vs ACIT CITATION : 2025 TAXSCAN (ITAT) 1729

The Mumbai Bench of the Income Tax Appellate Tribunal, in a common order for cross appeals concerning Assessment Year 2020-21, granted substantial relief to Wadhwagroup Holdings by deleting tax disallowances aggregating ₹2,13,03,85,960. The Tribunal dealt with issues relating to subleasing expenses, reversal of flat sales, project construction costs, interest expenditure, classification of common area maintenance (CAM) charges, and deemed rental income under the Income Tax Act, 1961, and ruled largely in favour of the assessee.

The Bench comprising VicePresident, Saktiijit Dey and Accountant Member, Narendra Kumar Billaiya on the issue of subleasing expenses,held that the assessee’s arrangement of leasing small units collectively to large tenants was a prudent commercial decision taken to keep Raghuleela Mall operational. It observed that commercial expediency of a businessman cannot be questioned by the revenue, and accordingly upheld the deletion of the disallowance of ₹1,67,71,848 made under Section 57(iii).

Net Taxable Interest Higher Than Expense Bars Disallowance u/s. 14A: ITAT

Shringar Developers PrivateLimited vs ITO CITATION : 2025 TAXSCAN (ITAT) 1730

The bench of the Income Tax Appellate Tribunal, Mumbai, has ruled that no disallowance under Section 14A of the Income Tax Act, 1961 can be made when net taxable interest income exceeds the interest expenditure, and further held that interest on borrowed capital invested in a partnership firm must be allowed as business expenditure.

The Bench comprising Vice President, Saktijit Dey and Accountant Member, Narendra Kumar Billaiya observed that the assessee had paid interest of ₹41,04,638 while earning taxable interest of ₹48,53,903, thereby resulting in positive net taxable income.

Absence of PAN Alone Doesn’t Make Sales Unexplained if RTO Records Prove Transfer: ITAT Deletes Addition u/s. 68

Spectra Motors Limited vs ACIT CITATION : 2025 TAXSCAN (ITAT) 1731

The Income Tax Appellate Tribunal (ITAT), Mumbai bench has set aside an addition under Section 68 of the Income Tax Act, 1961, related to the sale of old cars. The bench ruled that proper transfer of ownership documents and verification by the RTO further confirmed the genuineness of the transactions, justifying the deletion of the addition.

The Bench comprising of Saktijit Dey, Vice President and Narendra Kumar Billaiya, Accountant Member observed that once the AO accepted the sales, treating a part of it as unexplained cash credit was not justified. The bench noted that the sale of old cars in exchange for new ones, along with proper transfer of ownership documents, established the genuineness of transactions.

Compounding Fees from Illegal Mining Treated as ‘Transfer of Rights’: ITAT confirms TCS Liability u/s 206C(1C) of Income Tax Act Against Mining Officer

Mining Officer vs The DeputyCommissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1732

The Raipur bench of the Income Tax Appellate Tribunal, has ruled that compounding fees collected from illegal mining, transportation, and storage of minerals constitute a ‘transfer of rights’ and consequently attract Tax Collection atSource (TCS) under Section 206C(1C) of the Income Tax Act, 1961.

The Bench comprising Judicial Member, Ravish Sood and Accountant Member, Arun Khodpia observed that the appeals were squarely covered by its earlier judgment in District Mining Officer, Bemetara v. DCIT (TDS), Raipur (supra). Relying on that precedent, the bench held that compounding fees collected from illegal miners and transporters are calculated as multiples of royalty, clearly falling within the ambit of “transfer of rights” envisaged under Section 206C(1C) of the Income Tax Act.

Delay in Issuing S.143(2) Notice: ITAT quashes Income Tax Reassessment Order

Deputy Commissioner of IncomeTax vs Peyusha Shukla CITATION : 2025 TAXSCAN (ITAT) 1733

The bench of the Income Tax Appellate Tribunal, Raipur, quashed the reassessment order on procedural grounds, holding that the notice under Section 143(2) of the Income Tax Act, 1961 was issued beyond the prescribed time limit.

The Bench comprising of Judicial Member, Ravish Sood and Accountant Member, Arun Khodpia held that issuance of a valid and timely notice under Section 143(2) is a sine qua non for a valid reassessment. Since the notice in this case was issued on 20 November 2021, beyond the statutory cut-off of 30 June 2021, the assessment order dated 30 March 2022 stood vitiated.

Interest on Enhanced Compensation forms Part of Compensation, Exempted from Income Tax u/s 10(37) and RFCTLARR Act: ITAT

Shri Veeraswamy Jotheeswaran vsThe Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1734

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) ruled that interest on enhanced compensation can be considered as part of compensation.

The single-member bench of George George K (Vice-President), based on the judicial pronouncements, held that interest received on enhanced compensation partakes the character of compensation, which is entitled to exemption under Section 10(37) of the Income Tax Act as well as the RFCTLARR Act.

Advance Tax Liability arises Only with Taxable Income, Not Otherwise: ITAT remands Matter to CIT(A)

Lakhmi Chand Khushiramani vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1735

The Agra bench of Income Tax Appellate Tribunal (ITAT) remanded the matter to CIT(A) based on the ruling that liability under Section 249(4)(b) depends on the assessee’s own Income, not assessed Income.

The two-member Bench of Sunil Kumar Singh (Judicial Member) and Brajesh Kumar Singh (Accountant Member) held that the CIT(A) erred in dismissing the appeal of the assessee, on the ground that the assessee had failed to fulfil the mandatory and essential conditions by not paying the advance tax, which was payable by him, if no return of income was filed by the assessee for admission of appeal before the CIT(A) as per section 249(4)(b) of the Income Tax Act.

Revenue Wrongly Treated Assessee’s Immovable Property Sale as Purchase: ITAT Deletes Addition, Criticises AO and CIT(A)

Shri Hamid Khan vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1736

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has strongly criticised the Assessing Officer and Commissioner of Income Tax (Appeals) [CIT(A)] for erroneously treating an assessee’s sale of immovable property as if it were a purchase transaction. It deleted the addition of Rs. 40 lakhs.

The bench of Mahavir Singh (Vice President) deleted the addition in entirety. It further criticised the approach of the Revenue authorities, observing that mechanical confirmation of additions without fact-based analysis undermines the fairness of assessment proceedings.

Mere Audit Report Omission of Transaction alone Cannot Support Addition when Books are Proper and AO Fails to Prove Undisclosed Source: ITAT Deletes Addition

Mrs. Nidhika Rehani vs ACIT CITATION : 2025 TAXSCAN (ITAT) 1737

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that mere omission of a transaction in the Tax Audit Report cannot justify an addition when the assessee’s books of account are properly maintained and the Assessing Officer (AO) fails to demonstrate any undisclosed source of funds.

The Tribunal partly sustained additions relating to cash deposits during demonetization, observing that while ₹25.5 lakh was supported by contemporaneous cash book balances, ₹2.5 lakh remained unexplained due to inconsistencies with available denominations.

AO Erred in Disallowing ₹1.89 Cr Penalty & Other Expenses: ITAT remands ₹73.26 Lakh UIL Penny-Stock Loss for Fresh Examination

Shyam Metalics And Engery Ltd vsDCIT CITATION : 2025 TAXSCAN (ITAT) 1738

The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) held that the AO erred in disallowing ₹1.89 Cr penalty and other expenses. The bench remanded ₹73.26 Lakh UIL penny-stock loss for fresh examination.

The two member bench of Pradip Kumar Choubey ( Judicial Member) and Rajesh Kumar (Accountant Member) held that there was prima facie merit in the assessee’s plea that the correct quantum of loss incurred on sale of shares of UIL was Rs.73,26,040/- and the lower authorities had grossly erred in disallowing the entire gross short term capital loss of Rs.1,89,53,757/-. The AO was directed to delete the excess loss of Rs. 1,16,27,717/- incorrectly disallowed.

Alleged Shell Company Transactions: ITAT deletes ₹15 Lakh Addition u/s 68

Winner Tradecom Pvt. Limited vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1739

The bench of the Income Tax Appellate Tribunal, Kolkata, set aside the addition of ₹15,00,000 made under Section 68 of the Income Tax Act, 1961, holding that the Assessing Officer (AO) failed to discharge the initial burden of proving the alleged unexplained credit and that the reassessment proceedings were invalid.

The Bench of Vice-President (KZ), Duvvuru RL Reddy, held that the AO had not discharged the initial burden of establishing the existence of the transaction between the assessee and M/s Sankalp Vincom Pvt. Limited. NO supporting material was provided to substantiate the allegation.

ITAT Orders Fresh Probe into ₹3.17 Crore Cash Deposits in Egg Trade

Income Tax Officer vsZaiullabddin Gousaheb Kochargi CITATION : 2025 TAXSCAN (ITAT) 1740

The bench of the Income Tax Appellate Tribunal, Mumbai , has set aside an appeal involving unexplained cash deposits and remanded the matter back to the Assessing Officer for fresh adjudication. The dispute pertained to additions under the Income Tax Act, 1961 arising from cash deposits linked to the assessee’s egg trading business.

The Bench comprising Accountant Member, Narendra Kumar Billaiya and Judicial Member, Sunil Kumar Singh observed that while the assessee had not fully complied during the assessment stage, the CITA(A) also did not verify the genuineness of the suppliers’ details nor ensured a remand report was obtained from the AO.

Time-Barred Income Tax Notice u/s 148 over Investment Scheme: ITAT quashes Reassessment

Yogesh Ashok Mundade vs NationalFaceless Appeal Centre CITATION : 2025 TAXSCAN (ITAT) 1741

The bench of the Income Tax Appellate Tribunal, Mumbai, has held that the reassessment notice issued under Section 148 of the Income Tax Act, 1961 beyond the permissible period of limitation was void ab-inito. The Tribunal quashed the notice and set aside the consequential reassessment proceedings, providing relief to the assessee in an income tax dispute linked to the Kartick Mohan Prasad investment scheme.

The Bench comprising Judicial Member, Sandeep Singh Karhail and Accountant Member, Narendra Kumar Billaiya observed that the time limit for reopening the assessment for AY 2014–15 expired on 31 March 2021, and under TOLA, the outer limit extended only till 30 June 2021. Any notice issued beyond this date was barred and relied on the recent Supreme Court ruling in Union of India v. Rajeev Bansal (2024).

ITAT Quashes Income Tax Assessment Against Vipul Mittal Over Pecuniary Jurisdiction

Vipul Mittal vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1742

The bench of the Income Tax Appellate Tribunal, Delhi, quashed the assessment framed against the assessee after holding that the scrutiny notice under Section 143(2) of the Income Tax Act, 1961, had been issued without jurisdiction. The Tribunal held that the defect was incurable, thereby setting aside the assessment proceedings in a dispute involving long-term capital gain taxation.

The bench comprising of Judicial Member, Sudhir Kumar and Accountant Member, S. Rifaur Rahman admitted the additional grounds on jurisdiction and ruled in favour of the assessee. The Tribunal observed that under CBDT Instruction No. 01/2011, the jurisdiction in this case lay with the Deputy Commissioner since the declared income exceeded Rs. 20 lakh. However, the notice under Section 143(2) was issued by the ITO, who lacked jurisdiction.

ESOP Allowance by AO Not Erroneous, CSR Deduction u/s 80G not Subject to PCIT Revision: ITAT rules in Favour of Booking.com

Booking.Com India Support & MarketingServices Private Limited vs Principal Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1743

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the ESOP allowance by the AO is not erroneous and the CSR deduction under Section 80G is beyond the revisionary powers of the PCIT.

The two-member Bench of Sandeep Singh Karhail (Judicial Member) and Narendra Kumar Billaiya (Accountant Member) held that the above-mentioned binding observations of the Jurisdictional High Court are sufficient for not sending the matter back to the file of the AO for verification, as it would be a futile exercise, as the issue has already been decided in several judicial decisions by the Co-ordinate Benches in favour of the assessee and against the revenue.

Fully Verifiable Business Transactions: ITAT quashes Higher Income Tax Imposition u/s 115BBE

Sh. Mahendra Singh Ratnawat vsDy. Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1744

The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) quashed the 60% tax rate u/s 115BBE, holding that the cash represented fully verifiable business.

The two-member Bench of Gagan Goyal (Accountant Member) and Dr S. Seethalakshmi (Judicial Member) held that the search is completely verifiable from the audited books of accounts regularly maintained and deleted the addition. Also, the assessee on its own had disallowed a sum of Rs. 1,80,00,000/-, considering the same to be incurred for non-business purposes. Hence, held the disallowance of interest of Rs. 1,27,33,677/- is not sustainable.

₹1.30 Cr Cash Deposits Not ‘Unexplained’ u/s 68: ITAT Relies on Books of Account to Reject Survey-Based Income Tax Addition

Ashok Nariyani vs The ACIT CITATION : 2025 TAXSCAN (ITAT) 1745

The Jaipur bench of Income Tax Appellate Tribunal (ITAT) held that when the cash sales were duly recorded in the books of account, they could not be treated as unexplained under Section 68 and rejected the survey-based income tax addition.

The two-member Bench of Dr. M.L. Meena (Accountant Member) and Dr. S. Seethalakshmi (Judicial Member) observed that when the cash sales were duly recorded in the books of account and even part of the sales in new currency notes were already considered and part was not considered only due to the fact that in the survey statement, assessee has surrendered 60% of cash deposits as unrecorded sales. The Tribunal further observed that in support of the sales the assessee had submitted extensive details of cash, stock, vat returns etc. The Tribunal held that there was no reason to sustain the addition of the amount recorded as sales i.e., for an amount of Rs. 1,30,82,000/- as “unexplained cash deposits”.

ITAT rejects Assessee’s Claim of Lawyer’s Negligence, refuses to Condone 3-Year Delay in filing Income Tax Appeal

Gonemmanvara Narappa vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1746

The Bangalore bench of Income Tax Appellate Tribunal (ITAT) rejected the assessee's claim of lawyers' negligence and refused to condone a delay of 1265 days in filing the income tax appeal.

The Tribunal opined that under Section 253(5) of the Income Tax Act, the Tribunal may admit the delay filed beyond the period of limitation where it is established that there exists a “sufficient cause” on the part of the assessee for not presenting the appeal within the prescribed time. The explanation, therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on the part of the assessee in not filing the appeal within the prescribed time.

ITAT Deletes Capital Gains Addition of Rs.55 Lakh from Noida Property, Allows S.54 Deduction After Substantiation

Shri Pushpinder Oberai vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1747

The Chandigarh Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the capital gains addition of Rs.55 lakh from the sale of a Noida property and allowed the deduction under section 54 of Income Tax Act,1961 after the source of funds was substantiated.

The two member bench comprising Rajpal Yadav (Vice President) and Manoj Kumar Aggarwal ( Accountant Member) noted that Smt. Sushila Kumaran had sold the property to another buyer through a sale agreement dated 04-01-2010 and received the sale consideration, with the assessee acting only as a confirming party.

Addition of Rs.1,26,453 as Anonymous Donations: ITAT Grants One More Opportunity to Furnish Complete Donor Details

M/s. Shree Jain Swethambar MurtiPujak Sangh vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1748

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) granted the assessee one more opportunity to furnish complete donor details for the addition of Rs.1,26,453 treated as anonymous donations.

The two member bench comprising George George K(Vice President) and S.R.Raghunatha (Accountant Member) considered the submissions and examined the record. It observed that the assessee had only produced an unsigned and uncertified list of donor names and addresses before the First Appellate Authority, which was found unreliable.

ITAT Upholds CIT(A)’s Deletion of Rs. 318.40 Lakh Disallowance u/s 40A(3) for Land Cash Payment as Business Expediency

ITO Ward Rajpura vs M/s RajpuraProperties CITATION : 2025 TAXSCAN (ITAT) 1749

The Chandigarh Bench of Income Tax Appellate Tribunal ( ITAT )upheld the Commissioner of Income Tax (Appeals)[CIT(A)]’s deletion of a Rs. 318.40 lakh disallowance under section 40A(3) of Income Tax Act,1961,for a cash payment made during a land purchase as business expediency.

The two member bench comprising Rajpal Yadav (Vice President) and Manoj Kumar Aggarwal (Accountant Member) found that the cash payment was justified and fully supported by the registered sale deed. The genuineness of the transaction and the identity of the seller could not be questioned.

Tax Authorities Disallow Set-Off of Business Losses Against Capital Gains: ITAT Sets Aside Order and Remands for Verification

Kamal Kant vs Income Tax officerward CITATION : 2025 TAXSCAN (ITAT) 1750

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the set-off of business losses against capital gains and remanded the matter for verification after setting aside the orders of the tax authorities.

The two member bench comprising Sudhir Kumar (Judicial Member) and Manish Agarwal (Accountant Member) considered the rival contentions and reviewed the record. It noted that the co-ordinate bench had held that non-speculative business losses from F&O derivative trading could be set off against capital gains and other income, except salary.

Income Tax Additions Not Valid Without Incriminating Material Found During Search: ITAT

Akshaya Vinimay Pvt. Ltd. vsACIT CITATION : 2025 TAXSCAN (ITAT) 1751

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) held that income tax additions are not valid without incriminating material found during a search.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and S.Rifaur Rahman (Accountant Member) heard both sides and reviewed the record. On the date of search, 06/01/2021, no assessment proceedings were pending for the year.

Addition of Rs.6.48 Lakh as Unexplained SBN Deposits During Demonetization: ITAT Deletes Addition, Accepting Past Savings and Bank Withdrawals

Anandi vs ITO CITATION : 2025 TAXSCAN (ITAT) 1752

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT) deleted the addition of Rs.6.48 lakh treated as unexplained Specified Bank Notes (SBN) deposits during demonetization, accepting that the amount represented the assessee’s past savings and prior bank withdrawals.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and Manish Agarwal (Accountant Member) considered the submissions and records. The assessee had consistently maintained that the cash deposited during demonetization was from bank withdrawals on various dates, along with past savings and cash received on different occasions.

Disallowance of ₹7,24,937 Deferred Interest u/s 40(a)(ia) for TDS Non-Deduction: ITAT Deletes Addition on Payee’s Tax Certificate

Rajsila Stone Crusher vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1753

The Jabalpur Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition of ₹7,24,937 deferred interest under section 40(a)(ia) of Income Tax Act,1961, for Tax Deducted at Source (TDS) non-deduction on submission of the payee’s tax certificate.

A single member bench of Kul Bharat (Vice President) heard both parties and reviewed the records. The AO had added Rs. 7,24,937/- under section 40(a)(ia) for non-deduction of tax at source on interest paid to M/s Tata Motor Finance Ltd. He noted that the assessee could have submitted the accountant’s certificate during assessment, so the additional evidence filed before the CIT(A) was initially considered beyond Rule 46A.

Interior Decorator’s Rs. 11 Lakh Added as Unexplained Money u/s 69A: ITAT Deletes Addition as Income was Offered to Tax

Partha Sarkar vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1754

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the appeal of an interior decorator and deleted the addition of Rs. 11 lakh as unexplained money under section 69A of Income Tax Act,1961,noting that the amount was already offered to tax.

A single member bench of Rajesh Kumar (Accountant Member) after reviewing the submissions and the orders of the lower authorities, observed that the issue in the appeal was minor and did not require restoration to the AO. It noted that the assessee, an interior decorator, had received the amount for services rendered and had included it in income for tax purposes.

Client Code Modification Misuse: ITAT Upholds CIT(A)’s Restriction of Additions to 1% as Assessee Acted Only as Broker

ITO vs Lalkar Commodities PvtLtd CITATION : 2025 TAXSCAN (ITAT) 1755

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax(Appeals)[CIT(A)]’s restriction of additions to 1% in a client code modification case, noting that the assessee acted only as a broker and did not benefit from any alleged misuse.

A single member bench of Sandeep Gosain (Judicial Member) agreed with the CIT(A) that the additions were properly restricted to 1% and found no reason to interfere. The revenue’s grounds were therefore dismissed, with no order as to costs.

Unexplained Cash Deposits in Bank: ITAT Restricts Addition to 12% as Interest on Short-Term Loans

Dayanand Paryani vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1756

The Jabalpur Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal, restricting the addition of unexplained cash deposits in bank to 12% of the total deposits as interest on short-term loans.

A single member bench of kul Bharat (Vice President) noted that the AO added the entire credits in the assessee’s bank account without allowing set-off for withdrawals. It observed that the AO should have considered the appellant’s explanation of running a money-lending business and computed the addition based on peak credit.

Disallowance for Delayed Employee Contribution Deposits Cannot Be Made Through Section 154 Rectification: ITAT

Climax Overseas Pvt. Ltd vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1757

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) held that disallowance for delayed employee contribution deposits, including Employees’ State Insurance (ESI) and Provident Fund, could not be made through rectification under section 154 of the Income Tax Act,1961.

The two member bench comprising Anubhav Sharma (Judicial Member) and S.Rifaur Rahman (Accountant Member) held that the disallowance for delayed employee contribution deposits could not be made through rectification under section 154 of the Act. The ground was upheld, and the appeal was allowed.

₹40.8 Lakh Property Investment from Agricultural Savings, No Unexplained Income: ITAT orders Fresh Adjudication, Imposes Rs. 5k cost on Farmer

Chandrakant Atmaram Acharya vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1758

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) remanded the unexplained investment under Section 69 for fresh adjudication, as the farmer-assessee claimed that the investment treated as unexplained by the Department was made out of his life savings from agricultural income.

The two-member bench of Narendra P. Sinha(accountant member) and Siddhartha Nautiyal (judicial member) held that the file be restored to the AO for fresh consideration. Since there was a complete failure on the part of the assessee to respond during both the assessment and appellate proceedings, a cost of ₹5,000/- was imposed on the assessee.

Income from Seismic Vessels Taxed Under Article 21(4) of India-Norway DTAA as Assessee Not Engaged in Seabed Exploration: ITAT

M/s. Sanco Holding vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1759

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) held that income from seismic vessels provided on bareboat charter by a Norwegian company falls under Article 21(4) of the India-Norway Double Taxation Avoidance Agreement (DTAA), as the assessee was not engaged in seabed exploration or exploitation.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and Manish Agarwal (Accountant Member) heard both parties and perused the record. It noted that Article 21 of the India-Norway DTAA provided that paras 2 and 3 applied to enterprises engaged in offshore exploration or exploitation of seabed, subsoil, or natural resources.

Lack of Valid Approval under Section 153D: ITAT quashes Income Tax Assessment

Paramasivam Mahalingam vs vACIT CITATION : 2025 TAXSCAN (ITAT) 1760

The Income Tax Appellate Tribunal (ITAT), Delhi Bench has quashed an assessment order passed against assessee Paramasivam Mahalingam for the Assessment Year (AY) 2014-15, holding that the assessment was invalid as the mandatory approval under Section 153D of the Income Tax Act, 1961, was not produced by the Revenue.

The Bench comprising Shri Pradip Kumar Kedia (Accountant Member) and Shri Vimal Kumar (Judicial Member) noted that despite specific directions issued on 10 October 2024, the Revenue failed to furnish the approval papers under Section 153D of the Income Tax Act.

Alleged Failure to Deduct TDS on Salary: ITAT quashes Time-Barred Income Tax Penalty u/s 271C

ITO, TDS vs M/s. Kushal InfraProject Industries India Ltd. CITATION : 2025 TAXSCAN (ITAT) 1761

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench, has held that a penalty order under Section 271C of the Income Tax Act, 1961 was time-barred under Section 275(1)(c) of the Income Tax Act, thereby dismissing the Revenue’s appeal.

The Bench comprising Shri Vimal Kumar (Judicial Member) and Shri Naveen Chandra (Accountant Member) examined the record and cited rulings reported by Taxscan in Mahesh Wood Products Pvt. Ltd. and JKD Capital & Finlease Ltd., where it was held that limitation under Section 275(1)(c) begins from the initiation of penalty proceedings by the AO.

Wrong Sub-Clause Selected in Form 10AB u/s 80G(5): ITAT Restores Matter to CIT(E) for Fresh Consideration

Conwest and Manjula S BadaniJain vs CIT CITATION : 2025 TAXSCAN (ITAT) 1762

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) restored matter to the Commissioner of Income Tax (Exemption)[CIT(E)] after finding that the rejection of a fund approval application under section 80G(5) of Income Tax Act,1961, was solely due to selection of the wrong sub-clause in Form 10AB.

The two member bench comprising Pawan Singh ( Judicial Member) and Arun Khodpia (Accountant Member) considered the submissions and the order of the CIT(E). It noted that the main issue was the assessee’s selection of sub-clause (ii) instead of sub-clause (iii) while filing Form 10AB under section 80G(5).

Pattern Transactions Categorise ₹1.77 Cr Unsecured Loan as Unexplained Cash Credit: ITAT upholds Addition u/s 68

Samkeet Arya Homes LLP vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1763

The bench of the Income Tax Appellate Tribunal, Ahmedabad, has upheld the addition of ₹1,77,24,909/- towards unexplained cash credits under Section 68 of the Income Tax Act, 1961, observing that the unsecured loans received by the assessee lacked credibility as the banking pattern revealed abrupt deposits followed by immediate outflows to the assessee, and the financial capacity of the creditors remained unproven.

The Bench comprising Dr. B.R.R. Kumar, Vice President, and Siddhartha Nautiyal, Judicial Member upheld the addition. It was noted that the assessee failed to establish the creditworthiness of the lenders, noting that their meagre incomes and sudden, unexplained deposits were inconsistent with their capacity to provide large loans.

Genuineness of Transaction Warrants Deletion of ₹3.55 Cr Income Tax Addition: ITAT Upholds Relief in Accommodation Entry Dispute

The DCIT vs Piyush SubodhbhaiJhaveri CITATION : 2025 TAXSCAN (ITAT) 1764

The bench of the Income Tax Appellate Tribunal, Ahmedabad, dismissed the Revenue’s appeals against the deletion of additions made under Section 68 of the Income Tax Act, 1961, in connection with alleged accommodation entries. The Tribunal upheld the findings of the Commissioner of Income Tax (Appeals) [CIT(A)], observing that the transactions were genuine.

The Bench comprising T.R. Senthil Kumar, Judicial Member, and Narendra Prasad Sinha, Accountant Member upheld the orders of the CIT(A). It was observed that the assessee had furnished complete evidence to establish the identity, genuineness, and creditworthiness of the lender, including repayment details through cheques.

Procedural Default Cannot Attract Penalty: ITAT Sets Aside S.271BA Levy in Transfer Pricing Case

Priya Blue Industries Pvt. Ltdvs The Deputy Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1765

The bench of the Income Tax Appellate Tribunal, Ahmedabad, has set aside the penalty imposed under Section 271BA of the Income Tax Act, 1961, ruling that the assessee had not deliberately defaulted in furnishing the requisite transfer pricing report, which is procedural in nature. Thus, cannot attract charges.

The Bench comprising of Judicial Member, Suchitra Kamble and Accountant Member, Narendra Prasad Sinha observed that Form 3CEB had indeed been prepared by the assessee well before the search proceedings and was furnished physically before the Transfer Pricing Officer.

ITAT quashes Ex-Parte Order in Real Estate Cash Deposit Case Directing Fresh Hearing on Income Tax Additions

Ghanshyambhai Nanalal Charandasvs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1766

The bench of the Income Tax Appellate Tribunal, Ahmedabad, has set aside an ex-parte order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)], and remanded the matter for fresh consideration. The Tribunal held that the principles of natural justice were violated as the assessee’s submissions without due consideration of the remand report.

The Bench of comprising Judicial Member, T.R. Senthil Kumar and Accountant Member,Narendra Prasad Sinha observed that the CIT(A), had dismissed the appeal without considering either the assessee’s written submissions or the remand report filed by the AO. Thus, the Tribunal held, amounted to a violation of the principle of natural justice.

ITAT quashes Additions made by CIT(A) against Real Estate Developer under PoCM Method without Due Notice

Colourful Estates Pvt.Ltd. vsDCIT CITATION : 2025 TAXSCAN (ITAT) 1767

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside additions and enhancements made against a Real Estate Developer ruling that both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] acted without proper legal foundation in computing income from the company’s real estate project.

On the issue of revenue recognition, the Tribunal held that the AO’s method of estimating 20 percent of customer advances as income was arbitrary and without basis. It observed that the assessee had already recognized revenue in accordance with PoCM from AY 2013-14 onwards and that the exercise was revenue-neutral over the life of the project. Further, the enhancements made by the CIT(A) were found to be unlawful since they were carried out without issuing a show-cause notice, a clear violation of Section 251(2).

Rs. 6.37 Crore Cash Deposits in Buffalo Mandi Commission Agent Business Treated as Unexplained: ITAT Restores Matter to AO for De Novo Adjudication

Subbarao Jaladi vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1768

The Visakhapatnam Bench of Income Tax Appellate Tribunal ( ITAT ) restored the matter to the Assessing Officer (AO) for de novo adjudication in a case where Rs. 6.37 crore cash deposits in a Buffalo Mandi Commission Agent business were treated as unexplained under section 69 of Income Tax Act,1961.

The two member bench comprising Sandeep Singh Karhail (Judicial Member) and S.Balakrishnan (Accountant Member) noted that the addition of Rs. 6,37,16,100/- under section 69 was based on cash deposits in the Union Bank of India account, which the assessee had not substantiated before the lower authorities.

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