ITAT Weekly Round-Up [September 7th to September 16]

AO’s Comprehensive Scrutiny Nullifies Alleged Lack of Inquiry u/s. 263: ITAT Sets Aside PCIT Order

Sevugan Pethaperumal vsPrincipal Commissioner of Income Tax  CITATION : 2025 TAXSCAN (ITAT) 1608

The Income Tax Appellate Tribunal (ITAT), Chennai, dealt with the core issue of whether the Principal Commissioner of Income Tax, Madurai (PCIT), was justified in invoking revisionary jurisdiction under Section 263 of the Income Tax Act,1961, in relation to the assessment of rental income disclosed under the head “income from other sources.”

The Bench comprising of George George K Vice President and Amitabh Shukla, Accountant Member, observed that the AO had indeed carried out sufficient enquiries during the limited scrutiny proceedings and had accepted the appellant’s position after due consideration. The Bench held that the distinction between inadequate enquiry and lack of enquiry was vital, and in this case, it was not a matter of no inquiry.

Revisional Powers Justified where AO Accepted Returned Income without Verification: ITAT Orders Fresh Assessment allowing Proof

M/s. Priya Construction vs TheDeputy Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1609

The Income Tax Appellate Tribunal, Chennai, held that revisional powers under Section 263 are justified where the Assessing Officer (AO) accepted the returned income without proper verification.

The Bench comprising of Vice President, George George K and Accountant Member, Amitabh Shukla, upheld the PCIT’s order. The Tribunal observed that while a statement under Section 133A alone cannot form the basis of an addition, in this case, it supplemented tangible findings during survey revealing inflated unsubstantiated expenses.

Addition of ₹6 Crores Based on Director’s Statement During Search: ITAT Upholds CIT(A) Deletion

Asst. Commissioner of Income Taxvs M/s. Hallmark Suppliers Pvt Ltd  CITATION : 2025 TAXSCAN (ITAT) 1610

The Ranchi Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals)[ CIT(A)]’s deletion of a ₹6 crore addition based on the director’s statement during a search for AY 2014-15.

The two member bench comprising George Mathan (Judicial Member) and Ratnesh Nandan Sahay (Accountant Member) considered the rival submissions and reviewed the assessment order. It observed that the AO had relied only on the director’s statement, in which the assessee offered ₹6 crores as additional income for the assessment year 2014-15.

100 bed Requirement for Hospital’s Claim u/s 35AD(8): ITAT allows Deduction after Accepting Medical Director’s Certificate

The Dy. Commissioner of IncomeTax vs Kalpana CITATION : 2025 TAXSCAN (ITAT) 1611

The Income Tax Appellate Tribunal ( ITAT ), Chennai Bench, has upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] allowing a substantial deduction claimed by a hospital under Section 35AD of the Income Tax Act, 1961, after accepting credible documentary evidence establishing that the facility was a 100-bed hospital.

The Tribunal, comprising Aby T. Varkey (Judicial Member) and Jagadish (Accountant Member), rejected the Revenue’s objections, holding that the evidence clearly established the hospital’s 100-bed status.

Cash Withdrawal from NRE A/c of Son-in Law deposited during Demonetization Period Sufficiently Explained: ITAT deletes Addition of Rs. 12L

Sicily Paul vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1612

The Cochin Bench of the Income Tax Appellate Tribunal (ITAT) has provided major relief to an individual taxpayer by holding that cash deposits made during the demonetization period, sourced from withdrawals from the Non-Resident External (NRE) account of her son-in-law, could not be taxed as unexplained money under Section 69A of the Income Tax Act, 1961.

The bench of Inturi Rama Rao (Accountant member) directed deletion of an addition of ₹12,29,365, observing that the explanation offered was reasonable, supported by evidence, and not rebutted by the Revenue.

Interest Paid to HUDA on Delayed External Development Charges Not Penal, Deductible as Revenue Expenditure: ITAT

The ACIT, Circle vs MaximalInfrastructure Private Limited CITATION : 2025 TAXSCAN (ITAT) 1613

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that interest paid to the Haryana Urban Development Authority (HUDA) on delayed payment of External Development Charges (EDC) is not penal in nature and is allowable as revenue expenditure.

The bench of Manish Agarwal and Madhumita Roy dismissed the Revenue’s appeal and upheld the order allowing the deduction holding that interest paid to HUDA on delayed EDC payments is deductible.

AO shall not Proceed with Income Tax Assessment Proceedings within Four Weeks if AO Rejects Taxpayer's Objections: ITAT

Pramod Manikchand Dugad vs ITO CITATION : 2025 TAXSCAN (ITAT) 1614

The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed an assessment order framed within four weeks if the assessing officer rejected the assessee’s objections. The officer has to give a cooling period before passing the final order or further proceeding with the matter.

The bench noted the Bombay High Court ruling which held that “if the Assessing Officer does not accept the objections so filed, he shall not proceed further in the matter within a period of four weeks from the date of receipt of service of the said order on objections, on the assessee. Accordingly rule is made absolute”.

Joint Property owned by Husband and Wife Purchased is Entirely Husband's Investment: ITAT deletes Addition made in Wife’s Hands

Smt. Mita Chatterjee vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1615

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted an addition of ₹70,46,028 made in the hands of the wife, holding that the investment in a jointly owned property was entirely made by her husband and not by her.

The bench of Madhumita Roy (JM) and Manish Agarwal (AM) held that the addition in the hands of the assessee was unsustainable since she was only a joint holder in name and not contributor to the purchase. Therefore, the bench deleted the addition of ₹70,46,028.

Conclusion without Reasoning Opens for Arbitrariness: ITAT deletes ₹1.06 Cr Disallowance of Repairs & Sundry Expenses in Pyung HWA India Case

Pyung HWA India Private Limitedvs DCIT CITATION : 2025 TAXSCAN (ITAT) 1616

The Income Tax Appellate Tribunal (ITAT), Chennai bench, has ruled that suspicion unsupported by evidence cannot be a valid ground for disallowance of business expenditure.

The Bench comprising of George George K, Vice President, and S.R. Raghunatha, Accountant Member, ruled in favor of the appellant. The Tribunal observed that neither the AO nor the CIT(A) had rejected the books of accounts or demonstrated that the expenses were not genuine.

Cash Deposits during Demonetization Period Explained by Bank Withdrawals and “Pin Money” Household Savings: ITAT deletes Addition

Kalyanasundaravalli Premanandhanvs The ITO CITATION : 2025 TAXSCAN (ITAT) 1617

The Income Tax Appellate Tribunal (ITAT), Chennai Bench, allowed the appeal by holding that cash deposits made during demonetization could not be taxed as unexplained money under Section 69A of the Income Tax Act, 1961, when backed by bank records and the recognized concept of household “pin money” savings. The Tribunal found the explanation credible and directed deletion of the addition.

The Bench comprising of Manu Kumar Giri, Judicial Member and S.R. Raghunatha, Accountant Member observed that the assessee had furnished a credible explanation backed by documentary evidence, including bank statements and cash flow records.

Number of Associate Members of Cooperative Society continued to be more than 15% of Total membership of Society is violative of Income Tax Act: ITAT directs to verify matter

The Jamboti MultipurposeCo-operative Society Ltd vs Pr.CIT CITATION : 2025 TAXSCAN (ITAT) 1618

The Income Tax Appellate Tribunal (ITAT) Panaji Bench has directed to verify matters on the issue of number of associate members of cooperative society being violative of Income Tax Act, 1961.

The two member bench of Pavan Kumar Gadale, Judicial Member & G D Padmahshali Accountant Member remitted the matter needs to be verified and reasons for claim should be justified and the assessing officer shall adjudicate a fresh on merits on the disputed issue and shall provide adequate opportunity of hearing to the assessee and the assessee should also cooperate in submitting the information.

AO rejects books of account u/s 145(3) of the Income Tax Act in absence of documents: ITAT directs CIT(A) decide afresh

Chinmastika Sidhartha vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1619

In a recent case, the Kolkata bench of the Income Tax Appellate Tribunal (ITAT) directed the Commissioner of Income Tax Appeal (CIT(A)) to decide afresh on the issue of rejection of books of account under section 145 (3) of the Income Tax Act, 1961, in the absence of documents.

The single bench of Duvvuru RL Reddy, Vice-President (KZ) remitted the matter back to the file of Assessing Officer with a direction to dispose of the appeal without any inference on the observations of earlier order passed by him.

Disallowance of 25% Purchases for Non-Filer Suppliers : ITAT Deletes Addition Based on Proof of Genuineness

Workenstein Collaborative SpacesPvt. Ltd vs The Dy. Commissioner of Income Tax

CITATION : 2025 TAXSCAN (ITAT) 1620

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted a 25% disallowance on purchases made from non-filer suppliers after the assessee furnished sufficient evidence to prove the genuineness of the transactions.

The two member bench comprising George George K (Vice President) and Jagadish (Accountant Member) heard both sides and reviewed the records. It noted that the AO had disallowed 25% of the purchases because the suppliers were non-filers and did not respond to notices under Section 133(6) of the Act.

Cash Deposit of ₹10 Lakh Claimed as Gift from Deceased Grandmother Lacked Evidence: ITAT Grants Partial Relief by Deleting ₹5 Lakh

Vikram Narendra Patil vs ITO CITATION : 2025 TAXSCAN (ITAT) 1621

The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal of the assessee, noting that the ₹10 lakh cash deposit claimed as a gift from his deceased grandmother lacked sufficient evidence, and granted relief by deleting ₹5 lakh.

A single member bench of Manish Borad (Accountant Member) heard both parties and reviewed the records. The assessee had challenged the addition of ₹10 lakh sustained by the CIT(A) out of the total ₹14.50 lakh added by the AO as unexplained cash deposits.

Minor Daughter’s Share Deposited as per Court’s Order cannot be Clubbed with Father’s Income : ITAT

Pradeep Jeyavelu vs The IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1622

The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that the minor daughter’s share deposited as per court order cannot be clubbed with the father’s income.

Since the amount was deposited under court directions and the assessee had no control over its utilization, the tribunal held that it could not be taxed in his hands.

Income Assessed in Proprietor’s Hands cannot Be Assessed again in Dissolved Partnership : ITAT

Income Tax Officer vs M/sChaukers CITATION : 2025 TAXSCAN (ITAT) 1623

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that income assessed in the proprietor's hand cannot be assessed again in dissolved partnership.

The two member bench comprising Satbeer Singh Godara (Judicial Member) and Manish Agarwal (Accountant Member) heard both parties, perused the lower authorities’ orders, and examined the materials on record. It was noted that the assessee had not filed a return of income for the year under appeal because the firm ceased to exist after the death of one partner in 2011.

ITAT Upholds CIT(A) Deletion of ₹4.98 Crore Addition for Non-Filing Suppliers as Assessee Furnished Complete Evidence

DCIT vs Sincon InfrastructurePrivate Ltd CITATION : 2025 TAXSCAN (ITAT) 1624

The Patna Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the Commissioner of Income Tax (Appeals) [CIT(A)] order deleting an addition of ₹4.98 crore for purchases from non-filing suppliers, as the assessee furnished complete evidence.

The two member bench comprising Pradip Kumar Choubey (Judicial Member) and Rajesh Kumar (Accountant Member) noted that the assessee had made purchases totaling ₹4,98,11,922/- from seven parties, which the AO claimed had not filed income-tax returns and had mostly not responded to notices under section 133(6).

Relief for Nippon India: ITAT Rules S.14A read with rule 8D Disallowance Applies Only to Investments Yielding Exempt Income

Commissioner of Income Tax vsNippon Life India Asset Management Limited

CITATION : 2025 TAXSCAN (ITAT) 1625

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) granted relief to Nippon Life India Asset Management Limited by holding that disallowance under Section 14A read with Rule 8D of Income Tax Act,1961 should be restricted only to investments that actually yielded exempt income.

The two member bench comprising Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member) reviewed the submissions, record, and law, and noted that disallowance under section 14A read with Rule 8D should be limited to investments that actually generated exempt income during the year.

No Prejudice to Revenue as TDS Paid with Interest and Quarterly Returns Filed before 4th Quarter: ITAT finds Medical Grounds genuine, Waives Late Fee

Supujita Adivsory andConsultancy vs The DCIT CITATION : 2025 TAXSCAN (ITAT) 1626

The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) has waived late fees levied under Section 234E of the Income Tax Act, 1961, for delayed filing of quarterly TDS ( Tax Deducted at Source) returns.

The Tribunal observed that while Section 234E prescribes a fee for delayed filing, the peculiar facts of the case merited relief. It noted that the assessee had substantiated the medical reasons behind the delay and had fully discharged its liability by paying TDS along with interest. Since the returns were filed before the fourth quarter’s due date, the Department suffered no inconvenience, nor were deductees deprived of credit.

STCG Claim on Shares Genuine as Purchase through Recognised Stock Exchange, Banking Channel, and Demat Proof Confirm Authenticity: ITAT deletes Addition

Sonal Ashish Shah vs ITO CITATION : 2025 TAXSCAN (ITAT) 1627

The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) has upheld the genuineness of short-term capital gain (STCG) claimed by an assessee on the sale of shares, holding that when the transactions are routed through recognised stock exchange, registered broker, banking channel, and duly reflected in the Demat account, the Revenue cannot treat such income as unexplained or bogus merely on suspicion.

It was held by the bench that when the source of purchase is undisputed and transactions are transparent, deduction for cost of acquisition must be allowed, and the resultant gain cannot be treated as unexplained income.

Once Corporate Debtor is Sold as Going Concern, Only Claims Filed before Liquidator Survive: ITAT directs AO Re-examine Matter in Light of SC Ruling

DCIT vs M/s. RVR Enterprises CITATION : 2025 TAXSCAN (ITAT) 1628

The Hyderabad bench of Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer to re-examine the issue of outstanding tax claims of the income tax department against a corporate debtor sold as a going concern, in light of the principles laid down by the Supreme Court rulings.

The bench of Vijay Pal Rao and Manjunatha G. observed that while the assessee had produced an intimation issued by the liquidator and a claims chart showing no claim filed by the Income Tax Department, there was no clear reference in the NCLT’s order or the liquidator’s sale certificate to specific claims lodged by various stakeholders, including the tax authorities.

Shares Held for 33 Months, Sold on Recognized Exchange, and STT Duly Paid: ITAT Rejects Revenue’s Allegation of Bogus LTCG u/s 68

Shri JigneshRamjibhai Patel vsThe Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1629

The Income Tax Appellate Tribunal ( ITAT ), Ahmedabad held the treatment of the long-term capital gain (LTCG) from sale of shares by revenue as unexplained cash credit was unjustified as it failed to establish any evidence of the involvement in manipulation or collusion with entry operators.

The bench of Narendra Prasad Sinha and Suchitra Kamble noted that the assessees had provided all necessary documents to substantiate their transactions. The purchase was made through banking channels, the shares were dematerialized, held for over 33 months, and sold through a recognized stock exchange with STT duly paid.

Deduction u/s 80P(2)(d) Confined to Co-operative Bank Deposits, RRB Interest Treated Separately with Expense Adjustment u/s 57(iii): ITAT

Ashapura Co-op. Credit SocietyLtd vs The Deputy Commissioner of Income Tax

CITATION : 2025 TAXSCAN (ITAT) 1630

The Income Tax Appellate Tribunal (ITAT), Ahmedabad has ruled on the eligibility of deductions claimed by a co-operative credit society in respect of interest earned from deposits with co-operative banks and a regional rural bank.

The Bench comprising Suchitra Kamble, Judicial Member and Makarand V. Mahadeokar, Accountant Member held that interest earned from deposits with co-operative banks is eligible for deduction under Section 80P(2)(d) of the Act in view of binding precedents of the Gujarat High Court.

Belated Return Not a Bar on Carry Forward of Depreciation: ITAT Confirms Rs. 2.38 Crore as Unabsorbed Depreciation

ACIT vs Elecon EngineeringCompany Ltd CITATION : 2025 TAXSCAN (ITAT) 1631

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has held that a belated return does not restrict the carry forward of unabsorbed depreciation.

The Bench consisting of Judicial Member, Sanjay Garg and Accountant Member, Annapurna Gupta upheld the findings of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre.

Income Tax Penalty cannot be levied on Addition based on Estimation: “Unsustainable”, says ITAT

Ram Lakhan vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1632

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the penalty under Section 270A of the Income Tax Act, 1961, cannot be levied when the underlying addition is based purely on estimation of income.

The bench of Khettra Mohan Roy and Madhumita Roy observed that the penalty order was entirely based on an estimated addition. Since estimation, by its nature, lacks concrete evidence of concealment or misreporting, penalty provisions cannot be invoked.

Application of S. 115BBE without Linking to Proper Charging Provision u/s 68-69D is Not Valid: ITAT deletes Rs. 1cr Addition

Shri Pradeep Tyagi HUF vs IncomeTax Officer CITATION : 2025 TAXSCAN (ITAT) 1633

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has struck down an addition of ₹1 crore made under Section 115BBE of the Income Tax Act, 1961, holding that the Assessing Officer (AO) erred in directly invoking the special tax provision without first identifying the proper charging section, such as Sections 68 to 69D.

The Bench of Judicial Member Madhumita Roy and Accountant Member Khettra Mohan Roy, observed that the AO had “fallen into palpable error” in jumping straight to Section 115BBE without fixing the addition under a charging section.

S. 54F Exemption cannot Be Denied for Non-Deposit in Capital Gain Account if Entire Sale Consideration already Invested in Plot: ITAT

Prem Raj singh vs Income TaxOfficer CITATION : 2025 TAXSCAN (ITAT) 1634

The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that exemption under Section 54F of the Income Tax Act, 1961, cannot be denied merely because the assessee did not deposit the sale proceeds in the Capital Gain Account Scheme (CGAS), if the entire sale consideration had already been invested in the purchase of a plot.

The bench of Khettra Mohan Roy and Madhumita Roy noted that the AO made modifications in the computation of capital gain and directed the AO to recompute the capital gains correctly after considering the assessee’s submissions and evidence, making it clear that the assessee must be given a proper opportunity of hearing.

Disclosure of Additional Income in S. 153C Proceedings Does Not Automatically Prove Guilty of Concealment of Income: ITAT

Puthan Purayil Abdurahiman vsThe Assistant Commissioner CITATION : 2025 TAXSCAN (ITAT) 1635

The Cochin Bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that disclosure of additional income in response to a notice issued under Section 153C of the Income Tax Act, 1961, cannot automatically lead to the conclusion that the assessee is guilty of concealing particulars of income.

The bench noted that disclosure of additional income under Section 153C, by itself, cannot establish concealment of income unless the Revenue proves a clear nexus between seized materials and the assessee’s undisclosed income.

AO's Estimation Approach Invalid When Books Accepted: ITAT Deletes Ad Hoc Income Tax Additions on Purchases and Expenses

West Coast Fine Foods (India)Pvt Ltd vs DCIT CITATION : 2025 TAXSCAN (ITAT) 1636

The Income Tax Appellate Tribunal (ITAT), Mumbai, held that ad hoc income tax additions made on purchases and expenses cannot be sustained in the absence of any defects in the assessee’s audited books of accounts. Deleting additions exceeding ₹9.5 crore, the Tribunal ruled that the Assessing Officer’s (AO) estimation at five percent was contrary to law since the books were neither rejected nor found unreliable.

The Bench comprising Beena Pillai, Judicial Member and Girish Agrawal, Accountant Member held that ad hoc disallowances could not be sustained when the assessee’s books of accounts were neither rejected nor found defective. It observed that the AO had not disputed the genuineness of purchases or expenses and failed to invoke Section 145(3) before resorting to estimation under Section 144 of the Act.

Income Tax Assessments on Basis of Consolidated Approval u/s 153D is Void Ab Initio: ITAT

Shakuntalam Investment andLeasing Limited vs ACIT CITATION : 2025 TAXSCAN (ITAT) 1637

The Income Tax Appellate Tribunal (ITAT), Delhi, ruled that income tax assessments framed pursuant to search proceedings were void ab initio as they were based on a consolidated approval under Section 153D of the Income Tax Act, 1961. The Tribunal observed that such consolidated approvals were mechanical in nature and contrary to the statutory mandate requiring independent consideration for each assessment year.

The Bench comprising of Judicial Member, Anubhav Sharma and Accountant Member, Krinwant Sahay held that the consolidated approval granted for multiple assessment years by one letter did not meet the statutory requirement of Section 153D.

S.153D Approval Granted Without Application of Mind Voids Income Tax Assessment: ITAT

ACIT vs Shri Vipin Kapur CITATION : 2025 TAXSCAN (ITAT) 1638

The Income Tax Appellate Tribunal (ITAT), Delhi bench held that an assessment framed under Section 144 of the Income Tax Act, 1961, was invalid as the mandatory approval under Section 153D of the Act had been granted mechanically. The Tribunal annulled the assessment, ruling in favour of the assessee and against the Revenue.

The Bench composed of Judicial Member, Anubhav Sharma and Accountant Member, Krinwant Sahay examined the approval letter and noted that it lacked any indication of independent application of mind. Citing binding precedents, including the decision of the Delhi High Court in PCIT v. Shiv Kumar Nayyar (2024) and of the Orissa High Court in Asst. CIT v. Serajjudin & Co. (2023), the Bench held that approvals under Section 153D cannot be a mere ritualistic formality or rubber-stamping exercise.

CIT(A) Holds Property Sale to Partner’s Son Genuine but Disallowed Indexed Interest Claim: ITAT sets aside Order for Verification

M/s S.I. MEDIA LLP vs The Dy.Commissioner of Income Tax CITATION : 2025 TAXSCAN (ITAT) 1639

The Income Tax Appellate Tribunal ( ITAT ), Bangalore Bench, sets aside an order to the income tax department’s Assessing officer for verification of the issue of disallowance of indexed interest cost claimed by the assessee in computing capital gains.

The bench of Soundarajan K and Waseem Ahmed set aside the matter to the Assessing Officer to verify whether the assessee had already claimed deduction for the interest under another head of income. If not, the indexed interest cost could be considered as part of the cost of acquisition while computing capital gains; otherwise, it must be disallowed.

Eligibility for S. 80P Deduction Depends on Primary Business of Cooperative Society, Not Incidental Dealings with Non-Members: ITAT

Siddhartha Pattina SahakariSangha Niyamita vs The Income Tax Officer CITATION : 2025 TAXSCAN (ITAT) 1640

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) held that the eligibility for deduction under Section 80P must be determined with reference to the primary business activity of the cooperative society and not disqualified merely due to incidental dealings with non-members.

The ITAT directed the AO to verify the statutory requirement of deposits and allow the deduction. It clarified that the assessee’s eligibility for Section 80P relief cannot be denied simply because of incidental transactions with non-members or statutory deposits yielding interest.

Subsequent Conversion by Purchaser Does Not Change Character of Agricultural Land Sold by Assessee: ITAT says No Capital Gain Tax Attracted

The Deputy Commissioner ofIncome Tax vs Vedprakash Devkinandan Chiripal CITATION : 2025 TAXSCAN (ITAT) 1642

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, dismissed Revenue’s appeal ruling that subsequent conversion by the purchaser does not change the character of the agricultural land sold by the assessee.

The bench of Sidhartha Nautiyal and Dr. B.R.R. Kumar said that any subsequent conversion to non-agricultural use was the sole responsibility of the purchaser under law and not that of the seller.

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Share Capital from Alleged Shell Companies Accepted as Genuine: ITAT quashes Income Tax Revision u/s 263

Surya Roshni Limited vs Pr.CIT-7 CITATION : 2025 TAXSCAN (ITAT) 1643

The Income Tax Appellate Tribunal (ITAT), Delhi bench, set aside the order of the Principal Commissioner of Income Tax (Pr. CIT) passed under Section 263 of theIncome Tax Act, 1961, holding that the re-assessment order accepting share capital and premium could not be considered erroneous or prejudicial to the Revenue.

The Bench comprising Manish Agarwal, Accountant Member and Anubhav Sharma, Judicial Member observed that inquiries were made on three separate occasions and that the assessee had provided comprehensive evidence establishing the genuineness of the transactions. The Tribunal held that inadequate inquiry cannot be equated with lack of inquiry, and since the AO had formed a possible view, the Pr. CIT could not substitute it.

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