ITAT WEEKLY ROUND-UP [August 17th - August 23rd]

Only Profit Element Taxable as Sales and Manufacturing Activity is Not Disputed: ITAT upholds Restriction of Disallowance to 12.5% on Bogus Purchases

ITO – 41(1)(3) vs Pravin ManilalPanchal CITATION : 2025 TAXSCAN (ITAT) 1490

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the order of the Commissioner of Income Tax (Appeals) ( CIT(A) ) restricting disallowance on alleged bogus purchases to 12.5% and held that only the profit element embedded in such transactions is taxable when sales and manufacturing activity are not disputed.

The Single bench comprising Pawan Singh (Judicial Member), reiterated that in cases where the sales are accepted and the manufacturing activity is not in dispute, only the profit element embedded in the alleged bogus purchases can be brought to tax.

ITAT Grants Relief to Assessee, Orders Fresh Hearing as CIT(A) Failed to Discuss Case Merits

Manoj Jairamdas Bhojwani vsIncome-tax Officer CITATION : 2025 TAXSCAN (ITAT) 1491

The Income Tax Appellate Tribunal (ITAT), Agra Bench, has set aside an ex-parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] and directed a fresh hearing, noting that the CIT(A) failed to discuss the merits of the case. The bench pitched the importance of adhering to the principles of natural justice and providing a fair opportunity to the assessee.

The ITAT bench, comprising Judicial Member Sunil Kumar Singh and Accountant Member Brajesh Kumar Singh, observed that while the assessee had been unresponsive to multiple notices issued by the CIT(A), the appellate authority was still required to evaluate the case on its merits. The tribunal noted that the CIT(A)’s order lacked any substantive discussion or reasoning, which rendered it unsustainable in law.

Night-Time Notice, 1-Day Deadline? ITAT Calls Out Income Tax Dept's Rush, Grants Relief in TDS Dispute

HMA Agro Industries Limited vsDCIT Central Circle CITATION : 2025 TAXSCAN (ITAT) 1492

The Income Tax Appellate Tribunal (ITAT), Agra Bench, has slammed the tax department for issuing a show-cause notice late at night and giving just one day to respond, calling the rushed process unfair and against natural justice.

The tribunal set aside an order holding HMA Agro Industries Limited as an "assessee in default" for alleged TDS lapses and directed a fresh hearing, emphasizing that taxpayers must get reasonable time to defend their case.

Mere Disallowance of Capitalized Interest Not Misreporting: ITAT deletes Income Tax Penalty u/s 270A

Urmila Rajendra Mundra vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1493

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the penalty imposed under section 270A of the Income Tax Act, 1961, and held that mere disallowance of the capitalized interest does not amount to misreporting of income, but amounts to only ‘under-reporting’.

The Bench comprising Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) observed that there was no finding by the AO or the CIT(A) to establish that the assessee had concealed income or furnished inaccurate particulars with the intent to mislead. The Tribunal noted that all material facts were on record and the disallowance arose from a legal interpretation, not from suppression or falsification of facts.

ITAT imposes ₹2k cost for unexplained delay in filing appeal and remands matter to AO for fresh adjudication of disallowance issue

M/s. Udai Lal Mahabir Prasad vsThe ITO CITATION : 2025 TAXSCAN (ITAT) 1494

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has imposed a cost of ₹2,000 on M/s. Udai Lal Mahabir Prasad for failing to explain the delay in filing its appeal and remanded the disallowance issue to the Assessing Officer (AO) for fresh adjudication.

The bench comprising Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) noted that there was no convincing explanation or supporting evidence for the delay, and therefore agreed that the delay was unexplained.

No TDS on Franchise Payments u/s 194J: ITAT upholds Deletion of ₹59.11 Lakh Income Tax Demand

Income Tax Officer vs Alwar Maltand Agro Foods CITATION : 2025 TAXSCAN (ITAT) 1495

The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has held that payments made by a liquor manufacturing company to brand owners under the head “Franchise Expenses” do not constitute “fees for technical services” or “royalty” under Section 194J of the Income Tax Act, 1961, and therefore do not attract tax deduction at source (TDS) provisions.

The Tribunal found that the nature of payments, supported by separate profit and loss accounts for each brand, reflected profit-sharing arrangements under business contracts rather than technical or managerial service fees. It noted that scrutiny assessments under S.143(3) for AYs 2013–14 and 2014–15 had accepted the claim, and the Revenue had not disputed earlier relief granted to the assessee.

ITAT remands Matter back to AO for Determination Fair Market Value Valuation in Distress Sale

Satya Pal Khurana vs ACIT CITATION : 2025 TAXSCAN (ITAT) 1496

The Income Tax Appellate Tribunal (ITAT), Delhi Bench has set aside the assessment for Satya Pal Khurana, directing the Assessing Officer (AO) to re-evaluate the fair market value of a shop sold under distress circumstances for capital gains calculation.

The appeal was partly allowed for statistical purposes, with the matter remanded for fresh adjudication. Tax professionals note this decision as an important clarification: when a property’s sale is forced under exceptional conditions, standard stamp duty valuations may not apply, and actual market realities must be considered in capital gains calculations.

ITAT directs to delete Income Tax Additions based on Interest Paid on Cash Loans

M/s Shagun Jewellers (P) Ltd vsDy. CIT CITATION : 2025 TAXSCAN (ITAT) 1497

The Income Tax Appellate Tribunal ( ITAT ), Delhi Bench has directed deletion of income taxadditions made on account of alleged interest payments connected with supposed cash loans.

Taking cognizance of this precedent, the present Bench found that circumstances in the years under appeal were identical. It held that additions could not survive in the absence of concrete material linking the assessee with cash-based interest payments. Respectfully following its earlier ruling in the assessee’s own case, the Tribunal directed deletion of the impugned additions across all three assessment years.

Retd IAS officer’s Demonetization Cash Deposit Addition of ₹23.33 Lakh Cut to 50%: ITAT applies 30% Tax u/s 115BBE

Ms.Comal Ramachandran Gayathrivs The Deputy Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1498

The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) has allowed the appeal by the assessee by restricting the addition of demonetization cash deposits to 50% and held that the applicable rate of tax is 30% under section 115BBE of the Income Tax Act, 1961, not 60%.

The Bench comprising George George K(Vice President) and Padmavathy S (Accountant Member) noted that the assessee could not substantiate the entire claim with evidence, but some part of the business was acknowledged.

Search Assessments Valid as Approved by JCIT: ITAT says Additions were made Based on Incriminating Materials

M/s. K.K. Tourist Home vs Dy.Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1499

The Cochin Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the search assessments search assessments framed under section 153A of the Income Tax Act, 1961 and dismissed the assessee’s appeals challenging the validity of the proceedings, the approval of the Joint Commissioner of Income Tax (JCIT), and additions linked to incriminating material seized during the search operations.

The Bench, comprising Sonjoy Sarma (Judicial Member) and Inturi Rama Rao (Accountant Member), observed that the search assessments were legally valid, the JCIT had granted proper approval after due consideration, and the additions were based on incriminating material found during the search.

ITAT Holds Scrap Sales Taxable as Operating Income: ₹26.18 Lakh Treated from Packing Material

The Joint Commissioner of IncomeTax vs ZF Wind Power Coimbatore Pvt CITATION : 2025 TAXSCAN (ITAT) 1500

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has held that receipts from scrap sales, when linked to regular manufacturing activity, are to be treated as operating income for transfer pricing purposes. The Tribunal upheld the order of the Commissioner of Income Tax (Appeals) (CIT(A)), treating ₹26,18,539 earned from the sale of packing material as income from an operating nature.

The Bench comprising George George K (Vice President) and S.R. Raghunatha (Accountant Member) observed that scrap sales arising from the course of manufacturing are part of operational activity and cannot be excluded for computing margins under transfer pricing. The Tribunal found that the CIT(A) was justified in treating the scrap sale receipts as operating income.

PCIT Orders Reassessment of Investments and FDs u/s 263: ITAT Sets Aside Order, Holds AO Properly Verified Details

Subramaniam Mohan Sundaram vsPCIT (Central)-2 CITATION : 2025 TAXSCAN (ITAT) 1501

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) sets aside Principal Commissioner of Income Tax (PCIT) order directing reassessment of investments and fixed deposits under Section 263 of Income Tax Act,1961, holding that the Assessing Officer (AO) had properly verified details and the order was not erroneous or prejudicial to revenue.

Relying on judicial precedents, the tribunal observed that Section 263 can be invoked only if the AO’s order is both erroneous and prejudicial to revenue. In this case, both conditions were not met. The bench held that the PCIT wrongly invoked Section 263, and therefore, the order under Section 263 was set aside.

AO Disallows Deemed Application of Income for Non-Filing of Form 10 Electronically: ITAT allows Claims

Institute of Driving &Traffic Research vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1502

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) deleted the addition of ₹25.50 lakh made for non-electronic filing of Form 10 and directed the Assessing Officer (AO ) to allow the deemed application of income.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and S.Rifaur Rahman (Accountant Member) heard both sides and noted that in its earlier order dated 03.01.2023, it had directed the AO to consider both the manually filed Form No. 10, which was submitted on time, and the electronically filed form, and decide the matter as per law. That order had become final as the Department had not challenged it.

Relief for Asianet: ITAT allows Deduction of Interest on Delayed Statutory Payments as Business Expenditure

Asianet Satellite CommunicationsLtd vs Asst. Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1503

The Cochin Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to Asianet Satellite Communications Ltd., allowing deduction of interest on delayed statutory payments, including Tax Deducted at Source (TDS), service tax, and entertainment tax, as a business expenditure.

The two member bench comprising Soundararajan K (Judicial Member) and Inturi Rama Rao (Accountant Member) considered whether interest paid on belated payment of entertainment tax, service tax, and TDS was a business expense. It noted that the Supreme Court in Mahalakshmi Sugar Mills held that interest or statutory charges paid in a compensatory nature were allowable under Section 37(1).

Disallowance of INR 17.95 Lakh Royalty Expenses: ITAT Deletes Addition Applying Consistency Principle

Travel Food Services DelhiTerminal 3 Pvt.Ltd. vs ACIT CITATION : 2025 TAXSCAN (ITAT) 1504

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) applying the consistency principle, deleted the disallowance of INR 17.95 lakh royalty expenses made by the Assessing Officer (AO).

The two member bench comprising Mahavir Singh (Vice President) and Manish Agarwal (Accountant Member) heard both parties and reviewed the record. It noted that in AYs 2012-13 to 2015-16, the CIT(A) had deleted similar disallowances after holding that the Southern Switchgear Ltd. case did not apply and that the facts were closer to the Delhi High Court ruling in Sharda Motor Industrial Ltd., where royalty payments were treated as revenue expenditure.

ITAT Gives Taxpayer Second Chance to Prove ₹50 Lakh Property Purchase Source

Miteshkumar Dhanjibhai Patel vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1505

The Income Tax Appellate Tribunal (ITAT) Ahmedabad has granted a taxpayer another opportunity to explain the source of funds for a ₹50 lakh property purchase made back in 2011. The tribunal set aside earlier tax orders and directed the Assessing Officer to re-examine fresh evidence about the funding arrangement.

Judicial Member Suchitra Kamble and Accountant Member Narendra Prasad Sinha found this approach flawed. They noted that while Miteshkumar failed to explain the source during initial assessment, the appellate authority should have properly examined the fresh evidence instead of summarily dismissing it. The father-in-law's disclosed income appeared sufficient to explain the ₹49 lakh transfer, meriting proper verification.

ITAT Slams CIT(A) for Skipping Remand Report, Orders Re-Hearing in Rs. 99.5 Lakh Cash Deposit Case

Income Tax Officer vs S3Tradecom Pvt. Ltd CITATION : 2025 TAXSCAN (ITAT) 1506

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has set aside an order by the Commissioner of Income Tax (Appeals) for failing to call for a remand report in a case involving unexplained cash deposits of Rs. 99.5 lakh during the demonetisation period. The tribunal directed a fresh hearing, emphasizing the need for a proper fact-finding process.

Judicial Member Siddhartha Nautiyal and Accountant Member Annapurna Gupta presided over the case. They ruled that the CIT(A)’s order could not be sustained and restored the matter for a fresh hearing. The tribunal directed the CIT(A) to reconsider the case after examining the remand report and the pending bank information.

ITAT Gives Rural Trust Second Shot at 80G Tax Benefits After Portal Confusion

Gram Seva Samaj Vankal vsCommissioner of Income Tax (Exemption) CITATION : 2025 TAXSCAN (ITAT) 1507

The Income Tax Appellate Tribunal (ITAT) Ahmedabad has granted a small rural trust from Surat district, another chance to secure crucial 80G tax-exempt status after its initial application was rejected due to procedural misunderstandings. The tribunal set aside the Commissioner of Income Tax (Exemption)'s rejection order, noting the trust's genuine difficulties in navigating digital tax processes.

The ITAT order directs the CIT(E) to freshly consider the application, this time accounting for the existing 12A approval and giving the trust proper hearing opportunities. The tribunal made clear this wasn't a judgment on the trust's merits but about ensuring fair process. Gram Seva Samaj must now actively participate in the new proceedings and submit all pending documentation.

ITAT Grants Second Chance; Trust's 12AB & 80G Registration Denial Set Aside for Fresh Hearing

Stellin Foundation vs The CIT CITATION : 2025 TAXSCAN (ITAT) 1508

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has given a trust, another opportunity to secure tax-exempt registrations under Sections 12AB and 80G(5) of the Income Tax Act. The tribunal set aside earlier rejection orders by the Commissioner of Income Tax (Exemption) and directed a fresh hearing, citing the trust’s undertaking to submit pending documents.

Dr. BRR Kumar and T.R. Senthil Kumar pronounced the order, allowing the appeals for statistical purposes. The trust must now act swiftly to comply with documentation requirements during the fresh hearing to avoid another rejection.

Receiving Gifts Before Wedding Date Cannot Be Treated as Ungenuine Without Proof: ITAT Deletes ₹4.31 Lakh Unexplained Cash Deposit Addition

Manubhai Dahyabhai Bhoi vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1509

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) deleted an addition made by the Assessing Officer (AO), holding that gifts received before a wedding date cannot be treated as ungenuine without contrary evidence.

The two-member bench comprising Dr. BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) considered the rival submissions and the record. The tribunal observed that a complete list of donors for the wedding gifts was furnished and no defect was pointed out by the AO.

ITAT Gives Taxpayer Second Chance to Prove ₹50 Lakh Property Purchase Source

Miteshkumar Dhanjibhai Patel vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1510

The Income Tax Appellate Tribunal (ITAT) Ahmedabad has granted a taxpayer another opportunity to explain the source of funds for a ₹50 lakh property purchase made back in 2011. The tribunal set aside earlier tax orders and directed the Assessing Officer to re-examine fresh evidence about the funding arrangement.

Judicial Member Suchitra Kamble and Accountant Member Narendra Prasad Sinha found this approach flawed. They noted that while Miteshkumar failed to explain the source during initial assessment, the appellate authority should have properly examined the fresh evidence instead of summarily dismissing it. The father-in-law's disclosed income appeared sufficient to explain the ₹49 lakh transfer, meriting proper verification.

ITAT Reduces Disallowance of Foreign Travel Expenses to 25% Due to Partial Documentation

Archi Exim P.Ltd vs The ITO CITATION : 2025 TAXSCAN (ITAT) 1511

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal of the assessee reducing the disallowance of foreign travel expenses to 25% due to partial documentation.

The two member bench comprising Suchitra R. Kamble (Judicial Member) and Makarand V.Mahadeokar (Accountant Member) reviewed the submissions and records and noted that the AO had disallowed Rs.11,10,110/-, which was 50% of the total travelling and boarding expenses of Rs.22,20,220/-, claiming that the Director’s foreign travel to Iran under the CII Business Delegation was not fully supported by documentation.

Non-Issuance of Income Tax Notice u/s 143(2) cannot be Cured u/s 292BB: ITAT

KVRECPL – IRPINFRATECH vs TheAssistant Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1512

The Visakhapatnam Bench of the Income Tax Appellate Tribunal (ITAT) examined whether an assessment finalized under Section 144 of the Income Tax Act, 1961 (Act), without issuance of a mandatory notice under Section 143(2) of the Act, can be upheld or subsequently cured under Section 292BB of the Act, 1961.

The Tribunal Bench comprising Judicial Member Ravish Sood and Accountant Member S. Balakrishnan held that once the assessee had filed a return of income in response to a notice under Section 142(1), the Assessing Officer cannot disregard it.

‘Act of God’ Beats ‘Act of Law’: ITAT Cites Kerala Floods as Valid Reason for Belated ITR, Kozhikode Co-op Society Wins 80P Deduction

Nellikkaparamba Agricultural andWorkers Welfare Co-op. Society Ltd. vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1513

In a ruling that prioritizes empathy over rigid procedural compliance, the Income Tax Appellate Tribunal ( ITAT ), Cochin Bench has allowed a co-operative society to claim an important tax deduction after accepting that the devastating Kerala floods of 2018 were a valid cause for its late income tax filing.

The bench directed the processing centre to amend its earlier rectification order and allow the Section 80P deduction, taking into account the CBDT’s instruction that granted an automatic extension due to the natural disaster.

KSEB is "State": ITAT Rules Cash Payments to Govt. utilities Fall u/s 40A(3) Exception, Deletes Disallowance

Mina Wood Industries vs TheIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1514

The Income Tax Appellate Tribunal ( ITAT ), Cochin Bench has deleted a disallowance made against a business for paying its electricity bill in cash. The tribunal ruled that the Kerala State Electricity Board (KSEB) qualifies as ‘State’ and thus, payments made to it are exempt from the restrictions that normally apply to large cash expenditures under the Income Tax Act.

The bench, comprising Judicial Member Keshav Dubey and Accountant Member Inturi Rama Rao, delved into the provisions of Rule 6DD of the Income Tax Rules, which lists exceptions to the cash payment disallowance. They focused on clause (b) of the rule, which explicitly states that no disallowance shall be made for any payment made to the government. The key question was whether KSEB, a state government undertaking, could be considered ‘government’ for this purpose.

ITAT Rebukes CIT(A) for "Lazy" Dismissal, Orders Fresh Hearing on Demonetization Cash Deposits

Prabheesh Nair vs The Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1515

In a sharp critique of appellate procedure, the Income Tax Appellate Tribunal (ITAT), Cochin Bench has set aside an order that dismissed a taxpayer’s appeal without examining the merits of a significant addition related to demonetization cash deposits. The tribunal strongly emphasized that a first appellate authority cannot dismiss an appeal for non-prosecution without first making a genuine attempt to decide the case on its substantive legal grounds.

The ITAT’s order pointed to Section 250(6) of the Income Tax Act, which mandates that the CIT(A) must frame points for determination and provide a detailed discussion in the order. The bench observed that this duty to decide on merits persists even when an appeal is disposed of ex-parte. The tribunal cited a relevant decision from the Hon'ble Bombay High Court to reinforce this legal principle, noting that the first appellate authority is not permitted to take a "lazy" approach by dismissing matters for non-prosecution without a substantive review.

Chit Fund Company's Appeal Dismissed: ITAT Upholds 90% Disallowance for Lack of Evidence on Commission Payments

Notional Chits & Loans Pvt.Ltd. vs Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1516

The Income Tax Appellate Tribunal (ITAT), Cochin Bench has dismissed an appeal filed by a Thrissur-based chit fund company. The tribunal upheld the tax authorities' decision to disallow ninety percent of a massive commission expenditure claim, citing a complete failure by the company to provide any evidence proving the payments were genuine or for business purposes.

Single Member Bench of Inturi Rama Rao (Accountant Member) found the CIT(A)'s order to be well-reasoned and appropriate, concluding that allowing even ten percent of the claim was a reasonable concession under the circumstances.

Not Business Income, But Still Deductible; ITAT Sides with Kerala Co-op Bank, Quashes Tax Demand

Nallepilly Service Co-op. BankLtd vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1517

The Income Tax Appellate Tribunal (ITAT), Cochin Bench has quashed a tax demand levied on a primary agricultural credit co-operative society, holding that interest income it earned from a district co-operative bank is eligible for deduction under the Income Tax Act. The order provides crucial clarity on the nature of such income for co-operative societies.

Accountant Member Inturi Rama Rao, who authored the order, based the decision squarely on a binding precedent set by the jurisdictional Kerala High Court. The tribunal found that the issue was directly covered by the High Court's decision in the case of PCIT v. Peroorkada Service Co-op. Bank Ltd. (2022). In that judgment, the High Court had clearly distinguished the treatment of such interest income. It held that while this interest does not fall under the category of business income eligible for deduction under Section 80P(2)(a)(i), it is nevertheless deductible under a different clause.

ITAT Deletes Disallowances of Public Relations, Shared Services, and Product Registration of BASF India, Citing No Change in Facts or Law

DCIT, 14(1)(1) vs M/s. BASFIndia Limited CITATION : 2025 TAXSCAN (ITAT) 1518

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal by revenue regarding the disallowances of ₹55,00,000 on Public Relations expenses, Shared Service (Malaysia), and Product Registration expenses claimed by the assessee for the Assessment Years (AYs) 2014-15 and 2015-16.

The ITAT Bench comprising Sandeep Singh Karhail (Judicial Member) and Girish Agrawal (Accountant Member observed that the facts and the agreement, as well as the nature of expenses, are identical for the year under consideration as they were in earlier years. There is no change in the facts or law, and no new material has been placed before the tribunal.

ITAT Sets Aside Additions on ₹1.46 Cr Demonetisation Cash Deposits and Derivative Losses, Remands for Fresh Adjudication

APR Jewellers (P) Ltd vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1519

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the additions made on account of cash deposits during the demonetisation period and disallowance of loss on the derivative transactions, and remanded the matter for fresh adjudication after the verification of sales records and transaction nature.

The Bench comprising Vijay Pal Rao (Vice President) and G. Manjunatha (Accountant Member) observed that the authorities below failed to properly verify bills, vouchers, and sales records, and also mischaracterised derivative transactions as share dealings.

Disallowance of Excess Deductions and House Property Loss in Revised Returns: ITAT Sets Aside Order FAA’s Order

Shri Gunapalan Mallinathan vsThe Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1520

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the order of the First Appellate Authority (FAA) and directed the Assessing Officer (AO) to consider the original return while deciding the case involving disallowance of excess deductions and house property loss claimed in revised returns for Assessment Year (AY) 2020-21.

The two member bench comprising George George K (Vice President ) and Amitabh Shukla (Accountant Member) heard both sides and reviewed the records. It noted that the assessee, an ex-employee of BHEL, had filed the original return based on Form 16 but later filed revised returns on wrong advice, increasing deductions and house property loss.

Genuineness of Penny Stocks Share Sale: ITAT Upholds ₹21.72 Lakh Addition as Sham Transaction

Krutik Ashokkumar Parikh-HUF vsIncome Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1521

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT )upheld the addition of ₹21.72 lakh, treating the sale of Karma ISP penny stock shares as a sham transaction.

The two member bench comprising Dr.BRR Kumar (Vice President) and Siddhartha Nautiyal (Judicial Member) reviewed the case and noted several issues with the transaction. The assessee bought Karma ISP shares in April 2010 but paid for them almost eleven months later without any explanation. Karma ISP was known from investigations as a penny stock often used to generate fake long-term capital gains.

90-Day Delay in Filing Form 10AB for S.80G Approval: ITAT Restores Matter to CIT(E) Pending CBDT’s Decision on Condonation

M/s. Unico Charitable Trust vsThe Commissioner of Income Tax (Exemptions) CITATION : 2025 TAXSCAN (ITAT) 1522

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) restores matter to the Commissioner of Income Tax (Exemption) [CIT(E)] pending Central Board of Direct Taxes (CBDT)’s decision on condonation in the case of trust, which faced a 90-day delay in filing Form 10AB for Section 80G of Income Tax Act,1961, approval.

The two member bench comprising George George K (Vice President) and Amitabh Shukla (Accountant Member) heard both sides and noted that the assessee had applied to the competent authority under section 119(2)(b) for condonation of delay in filing Form 10AB.

Book profit to be increased by Expenses debited to P&L w.r.t. exempt income, not Disallowance u/s 14A: ITAT

Bombay Oxygen Investments Ltd vsCommissioner of Income-tax CITATION : 2025 TAXSCAN (ITAT) 1523

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has clarified that while computing book profits under Section 115JB of the Income Tax Act (MAT provisions), only the actual expenditure debited to the profit and loss (P&L) account in relation to exempt income can be added back. The disallowance determined under Section 14A read with Rule 8D of the Income Tax Rules cannot be considered for such adjustments.

The tribunal bench of Saktijit Dey, Vice President and Girish Agrawal, Accountant Member allowed the appeal, directing that book profit should only be increased by ₹17.21 lakh, the actual expenditure debited to P&L and not by any disallowance computed under section 14A.

Name of Assessee not Mentioned in Seized Documents: ITAT deletes Income Tax Additions

Mahesh Narayan Joglekar vs DCITCC CITATION : 2025 TAXSCAN (ITAT) 1524

The Income Tax Appellate Tribunal ( ITAT ) Mumbai Bench has set aside a series of additions made against assessee Mahesh Narayan Joglekar for Assessment Years (AYs) 2011-12 to 2018-19, ruling that proceedings initiated on the basis of seized documents which did not mention the assessee’s name were unsustainable.

The two-member bench comprising Judicial Member Amit Shukla and Accountant Member Girish Agrawal passed the order in multiple appeals filed by Joglekar challenging reassessment and search assessments framed under sections 147 and 153A of the Income Tax Act, 1961.

Income Tax Assessment framed in Name of Non-Existent Entity is Void Ab Initio: ITAT

M/s. Software ONE India Pvt. Ltdvs ACIT CITATION : 2025 TAXSCAN (ITAT) 1525

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) held that an income tax assessment framed in the name of a non-existent entity is void ab initio.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and M.Balaganesh (Accountant Member) noted that this question had been settled by the Supreme Court in PCIT vs Maruti Suzuki India Limited, where it was held that issuing a notice in the name of an entity that ceased to exist under a sanctioned amalgamation scheme was invalid and could not be cured by participation.

ITAT Quashes CIT(A) Order for Incorrect Surcharge as CPC Corrects Dividend Tax to 15%

M/s Srijan Family Trust vsIncome Tax officer CITATION : 2025 TAXSCAN (ITAT) 1526

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) allowed the appeal and quashed the Commissioner of Income Tax (Appeals)[CIT(A)] order after noting that the Centralized Processing Center (CPC) had corrected the surcharge on dividend income from 37% to the proper 15% under section 154 of Income Tax Act,1961.

The two member bench comprising Yogesh Kumar U.S (Judicial Member) and Manish Agarwal (Accountant Member) reviewed the submissions and the records. It noted that the assessee had filed an application under section 154 of the Act against the original intimation dated 18/12/2023 for AY 2023-24.

ITAT Deletes IGST Refund Addition Holding Refundable Advance Not Taxable u/s 43B

Ecoenergy Insights Limited, vsACIT CITATION : 2025 TAXSCAN (ITAT) 1527

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the Integrated Goods and Service Tax (IGST) refund addition, holding that the refundable advance of INR 7,36,09,571 was not taxable under section 43B of Income TaxAct,1961.

The two member bench comprising Satbeer Singh Godara (Judicial Member) and Manish Agarwal (Accountant Member) noted that the assessee had not claimed IGST paid on export of services as an expense, as it was an advance payment refundable after submission of export documents.

ITAT Restricts Addition to 5% Profit on Alleged ₹13.80 Crore Bogus Purchases as Sales Accepted and Books Not Rejected

DCIT vs Metarolls Ispat Pvt. LtdCITATION : 2025 TAXSCAN (ITAT) 1528

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that only the profit element of 5% should be added on alleged bogus purchases of ₹13,80,63,994 made by the assessee and observed that the assessee’s sales were not doubted and its books of account had not been rejected.

The Bench comprising R.K. Panda (Vice President) and Astha Chandra (Judicial Member) noted that in the assessee’s case for Assessment Years 2016-17 to 2019-20, the AO had consistently estimated only 5% profit on such alleged bogus purchases rather than disallowing the entire purchase amount.

Taxability of Industrial promotional subsidy received by Mahindra & Mahindra Limited: ITAT directs de novo Adjudication.

Mahindra & Mahindra Limitedvs Assistant Commissioner of Income tax CITATION : 2025 TAXSCAN (ITAT) 1529

In a recent case, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has directed the denovo adjudication regarding the taxability of the claim of disallowance of industrial promotional subsidy received by Mahindra & Mahindra Limited from the government the State Government of Maharashtra under the package scheme of incentives, 2007, to be treated as capital receipt.

The Shri Amit Shukla, Judicial Member and Shri Girish Agrawal, Accountant Member observed that the claim of the assessee is more in respect of the amended definition whereby it has attempted to justify the claim even within the amended definition of income, effective from Assessment Year 2016-17 which has not been elaborately discussed and dealt with by CIT(A) while adjudicating on the issue. The CIT(A) has made observations in respect of certain documents and details which assessee could not furnish and therefore, the matter could not be taken up holistically in absence of such details and documents.

No records to Show Misuse of Activities Inconsistent with Objects: ITAT restores Trust’s Application for Permanent Registration

Bethany Chapel vs The Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1530

The Income Tax Appellate Tribunal (ITAT), Visakhapatnam Bench, comprising Judicial Member Ravish Sood and Accountant Member S. Balakrishnan, dealt with the issue of rejection of a trust’s application for permanent registration under Section 12AB of the Income Tax Act, 1961, on the ground that its activities were allegedly inconsistent with its stated objects.

The Tribunal bench comprising Ravish Sood, Judicial Member, and Balakrishnan S, Accountant Member, observed that the order was cryptic and non-speaking. It noted that there was no analysis on record to substantiate how the activities of the trust were inconsistent with its objects or what information had not been furnished.

Relief to Axis Finance Ltd: ITAT Allows Club Membership Fees for Employees incurred as Business Expense

Axis Finance Limited vs DeputyCommissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1531

In a ruling of the Mumbai bench of the Income Tax Appellate Tribunal (ITAT), which partly allowed the claim of Axis Finance Ltd, it was held that club membership fees for employees incurred by the company amount to business expenses under section 37 of the Income Tax Act, 1961.

The two member bench of Shri Amit Shukla, Judicial Member and Shri Girish Agrawal, Accountant Member relied in the Supreme Court ruling in the case of CIT vs. United Glass Manufacturing Co. Ltd. [2012] and observed that club membership fees for employees incurred by the assessee is business expense under section 37 of the Act.

Factory Land not Exempted from TDS u/s 194IA: ITAT upholds Income Tax Demand u/s 201 and 201(1A)

Kushalava Spinners & GinnersPrivate Limited vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1532

The Income Tax Appellate Tribunal ( ITAT ), Visakhapatnam, while upholding the demand under Section 201(1) and 201(1A) of the Income Tax Act, 1961 for failing to deduct 1% TDS (Tax Deducted at Source). It ruled that the factory land is exempted from TDS under Section 194IA.

The Tribunal bench comprising Ravish Sood, Judicial Member and Balakrishnan S, Accountant Member condoned the delay, holding that it had arisen on account of lapses by the assessee’s earlier counsel. The Tribunal also admitted the additional documents, which included the Land Sale Deed, a Tripartite Agreement, and an Original Purchase Document.

Indusind Bank Share Transactions Explained, No Unexplained Cash Deposits: ITAT Quashes PCIT’s Revision u/s 263

Teena Garg vs PCIT CITATION : 2025 TAXSCAN (ITAT) 1533

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has held that the share transactions of the assessee were genuine and not bogus long term capital gains (LTCG), and deleted the Principal Commissioner of Income Tax’s (PCIT) revisionary order passed under section 263 of the Income Tax Act, 1961, which had treated the cash deposits and property purchases as unexplained.

The Bench comprising Vikram Singh Yadav (Accountant Member) and Paresh M. Joshi (Judicial Member) observed that the AO had raised specific queries regarding the alleged bogus LTCG and property transactions, and after considering the assessee’s replies and evidence, consciously accepted her claim. It held that an inadequate inquiry does not empower the PCIT to invoke revision under section 263.

Assessment Beyond Limitation Period Barred u/s 153(2): ITAT Quashes Reassessment and Penalty Against Non-Resident

Smt. Maliha Syeda vs The IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1534

The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that where reassessment is not completed within the statutory time limit prescribed under section 153(2) of the Income Tax Act, 1961, the order passed is barred by limitation and quashed the reassessment framed under section 147 and the penalty levied under section 271(1)(c) against the assessee.

The Bench comprising Vijay Pal Rao (Vice President) and G. Manjunatha (Accountant Member) considered the submissions and the material on record and observed that he provision of section 153(2) is clear and categorical, and that once the statutory time prescribed has expired, then the Assessing Officer loses the jurisdiction to pass the reassessment order.

Senior Citizen’s Demonetization ₹10.46L Deposits Explained as Prior Withdrawals: ITAT Sets Aside Cash Deposit Addition u/s 69A

Malti Garg vs The ITO CITATION : 2025 TAXSCAN (ITAT) 1535

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has held that cash deposits made by the assessee during the demonetization period were explained as being sourced from earlier withdrawals and household savings, and deleted the addition of ₹10,46,500 made under section 69A of the Income Tax Act, 1961.

The Bench comprising Vikram Singh Yadav (Accountant Member) and Paresh M. Joshi (Judicial Member) observed that the AO had ignored the pattern of earlier withdrawals, which showed that an adequate cash balance was available with the assessee at the time of deposit. The Tribunal held that the assessee had explained the source through banking records and the explanation was reasonable. Therefore, the deposits could not be treated as unexplained under section 69A.

Failure to file Mandatory Form 10 B by GUSEC due to Management Change: ITAT remands matter

Gujarat University Startup andEntrepreneurship Council GUSEC vs The ITO CITATION : 2025 TAXSCAN (ITAT) 1536

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has remanded the matter to consider the Form 10 B filed belatedly by Gujarat University Startup and Entrepreneurship Council (GUSEC), on finding that the delay and failure in filing occurred due to the change in management.

The two member bench of Dr. BRR Kumar, Vice President and Ms. Suchitra Kamble, Judicial Member viewed that the assessee counsel submitted that there was a change in the management in 2023 (F.Y. 2023-24) and therefore the statutory Form 10B could not be filed within the stipulated date as well as with the return of income. Therefore, the delay was not deliberate or intentional and hence Form 10B should have been taken on record.

ITAT Gives Taxpayer a Costly Second Chance; Rs.10,000 Fine for Negligence, Orders Fresh Hearing on Unexplained Cash Deposits

Gauravkumar Manilal Patel vs TheITO CITATION : 2025 TAXSCAN (ITAT) 1537

The Income Tax Appellate Tribunal ( ITAT ) Surat has granted a fresh assessment opportunity to an individual while imposing a cost of Rs. 10,000 for his non-cooperation with the income tax authorities.

The bench set aside the CIT(A)'s order on the additions and remanded the matter back to the AO for a fresh assessment. The assessee was directed to pay a cost of Rs. 10,000 to the ‘District Legal Services Authority, Surat’ within three weeks and to cooperate fully with the new proceedings.

"Missed Email" Costs Trust Registration, But ITAT Steps In to Ensure Fair Hearing

Shah Manilal Motilal KhadaytaChhatralay and Bhuvan Mandal Gurjar Faliya CITATION : 2025 TAXSCAN (ITAT) 1538

The Income Tax Appellate Tribunal (ITAT) Surat has come to the aid of a trust whose application for registration was rejected after its managing trustee missed critical emails from the tax department. The tribunal set aside the denial, emphasizing that the principles of natural justice must be upheld.

The ITAT set aside the order of the CIT(E) and remanded the matter back to the commissioner. The CIT(E) has been directed to pass a fresh order in accordance with the law after granting the trust a reasonable opportunity of hearing. The tribunal also directed the trust to be more vigilant and to furnish all required details without seeking unnecessary adjournments.

ITAT rules PAN Not Mandatory to Prove Cash Sales, orders Fresh Look at Aadhaar Details

Vijaykumar Jagannath Agarwal vsThe Income Tax Office CITATION : 2025 TAXSCAN (ITAT) 1539

The Income Tax Appellate Tribunal (ITAT) Ahmedabad bench has held that the absence of PAN card details of customers cannot be the sole basis for treating cash sales as unexplained income under Section 69A of the Income Tax Act. The tribunal emphasized that Aadhaar details can serve as valid proof for establishing the genuineness of transactions and directed the Assessing Officer to conduct a fresh verification.

The ITAT restored the matter to the file of the Assessing Officer. It directed the AO to verify the genuineness of the parties using the Aadhaar details provided and to conduct independent inquiries, including issuing notices under Section 133(6), instead of dismissing the evidence outright.

Brought Forward Business Loss Cannot Be Set Off Against Short-Term Capital Gains u/s 50 of Income Tax Act: ITAT

Sabeena Silk Mills vs Income-taxOfficer CITATION : 2025 TAXSCAN (ITAT) 1540

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that brought forward business loss could not be set off against short-term capital gains from the sale of depreciated assets under Section 50 of Income Tax Act,1961.

The bench, after examining the facts and relying on the binding ratio laid down by the co-ordinate bench in Everest Kanto Cylinders Ltd. (supra), concluded that the brought forward business loss could not be set off against short-term capital gains computed under Section 50.

Relief for MRF: ITAT Upholds CIT(A) Order Allowing Depreciation and Expenses on Retention Money, Dismisses Revenue’s Appeal

The DCIT vs M/s. MRF Ltd CITATION : 2025 TAXSCAN (ITAT) 1541

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals)[CIT(A)] order allowing MRF Ltd. to claim depreciation on retention money for capital assets and expenses on retention money withheld on revenue account, and dismissed the Revenue’s appeal for AYs 2013-14, 2015-16, and 2016-17

The appellate tribunal confirmed the CIT(A)’s direction to allow depreciation on retention money for capital assets and retention money withheld on revenue account, and dismissed the Revenue’s grounds of appeal.

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