ITAT Weekly Roundup

This weekly round-up encapsulates the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan, from February 23, 2026 to February 28, 2026.

ITAT Rules Startups Cannot Be Denied Deduction u/s 80‑IAC for Technical Error; Remits Case for Verification

Eradicatus Infectus Pvt. Ltd vs DCIT

CITATION : 2026 TAXSCAN (ITAT) 251

In a recent ruling The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has clarified that the non‑filing of Form 10CCB is a procedural lapse and cannot by itself justify the denial of a deduction under Section 80‑IAC. Also remitted the matter back to the assessing officer with directions to obtain the form during regular assessment and allow the deduction if the claim is genuine.

The appellate tribunal observed that the assessee, a recognised startup, had duly audited accounts and was otherwise eligible for deduction under Section 80‑IAC. It was also noted that while Section 80‑IA(7) requires filing of Form 10CCB, courts have consistently held that such filing is directory in nature and not mandatory.

Multiple Floors in Same Redeveloped Building Qualify as ‘One Residential House’ for Section 54 : ITAT

Seeta Nayyar vs Asstt.Commissioner of Income Tax

CITATION : 2026 TAXSCAN (ITAT) 252

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that multiple floors received by an assessee in a single redeveloped building would qualify as “one residential house” for the purpose of deduction under Section 54 of the Income Tax Act, 1961.

According to the tribunal, “fact remains that except one floor given to the builder, rest of the building remained in the possession of assessee and her husband. It is not a case where the builder was given the authority and freedom to develop the property for sale to outsiders. Therefore, two floors given to the assessee are part of one residential house and cannot be considered as more than one in number.”

ITAT Cannot Grant S. 12A Registration Based Solely on Oral Submissions Without Evidence: Punjab & Haryana HC

Commissioner of Income Tax vsM/s Society for the Study of Liver Diseases

CITATION : 2026 TAXSCAN (ITAT) 253

In a recent ruling, the Punjab and Haryana High Court held that the Income Tax Appellate Tribunal cannot grant registration under Section 12A of the Income Tax Act only based on oral submissions which are not supported by pleadings or evidence.

The court set aside the order of the Tribunal and also the order of the Commissioner and sent the matter back to the Commissioner of Income Tax (Exemptions) for fresh decision. The Court directed that the matter should be decided again after considering the evidence already on record.

Defective Satisfaction Note Vitiates Income Tax Assessment u/s 153C: ITAT Quashes ₹4.89 Crore Additions

Vinay Homes Pvt. Ltd. vs DCITCentral Circle-6 New Delhi

CITATION : 2026 TAXSCAN (ITAT) 254

In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, quashed an addition of ₹4.89 crore as unexplained credits and expenditure, holding that the Assessing Officer (AO) assumed jurisdiction under Section 153C of the Income Tax Act, 1961, based on an invalid and defective satisfaction note.

The bench of Anubhav Sharma ( Judicial member ), Manish Agrawal ( Account member ) ruled that the AO has assumed the jurisdiction in the case of the assessee based on an invalid and defective satisfaction note, and, therefore, the proceedings initiated based on such defective satisfaction note and consequent order passed are invalid and thus quashed.

“Minuscule” Stock Gap No Defence: ITAT Sustains Section 69A Addition for Gold, Silver, Diamond Stock Discrepancy

Parekh Ornaments LLP vsAssistant Commissioner of Income Tax

CITATION : 2026 TAXSCAN (ITAT) 255

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that a “minuscule” difference in stock of gold, silver, diamond..etc cannot be used as defence to avoid addition under Section 69A.

In the present case, the assessee was found to be the owner of excess bullion and jewellery not reflected in the books, and it failed to provide a satisfactory explanation. Therefore, the conditions of Section 69A stood fulfilled, held by the appellate tribunal.

Scrap Dealing is a Peculiar Business, Books of Account not Required: ITAT Allows Appeal, Notes Declared Income u/s 44AD

Anand Kumar Jain vs Income-taxOfficer

CITATION : 2026 TAXSCAN (ITAT) 256

The Income Tax Appellate Tribunal (ITAT), Agra Bench, held that books of accounts are not required in peculiar businesses like scrap dealing due to their unpredictable market. The tribunal allowed the appeal filed before it and noted declared income under Section 44AD of the Income Tax Act, 1961.

The tribunal observed that the assessee has been in the scrap business for the last 3 years and has declared income under Section 44AD. ITAT also noted that there is no requirement to maintain any books of account. The tribunal comprising S. Rifaur Rahman (Accountant Member) deleted the additions made by the AO and allowed the grounds raised by the assessee.

ITAT Allows Final Opportunity to Explain Non-filing of Return on Payment of ₹5k Cost, Remands Matter to JAO

Shantaben Joitaram Patel vs TheITO

CITATION : 2026 TAXSCAN (ITAT) 257

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, allowed one final opportunity to explain non-filing of return of income to the assessee-appellant. The tribunal added a fine of INR 5,000 and remanded the matter to the Jurisdictional Assessing Officer (JAO).

The ITAT imposed a INR 5,000/- fine and set aside the orders passed by the lower authorities. The matter was remanded to the JAO to consider the merits in the assessee’s final opportunity to cooperate. The appeal was allowed for statistical purposes.

PCIT Cannot Rely on AI Overview on London Rental Yields to Revise ALV: ITAT quashes Income Tax Revision Against Senior Advocate Mukul Rohatgi

Mukul rohatgi vs principalcommissioner of income tax

CITATION : 2026 TAXSCAN (ITAT) 258

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that the PCIT cannot rely on an AI overview of London rental yields to revise the Annual Letting Value (ALV) under Section 263. The Tribunal quashed the revision order passed against Senior Advocate Shri Mukul Rohatgi and held that the assessment order was not erroneous or prejudicial to the Revenue.

The tribunal reiterated that for revision under Section 263, the order must be both erroneous and prejudicial to the interest of the Revenue, and such conclusion must be supported by material on record.

Assessee made aware of Income Tax Demand only after SMS/Call from Dept.: ITAT condones 223 Day Delay

Agrawal Rajeshkumar vs The Dy.CIT

CITATION : 2026 TAXSCAN (ITAT) 259

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, condoned a delay for filing an appeal by Agarwal Rajeshkumar Babulal HUF and Dahyabhai Ganeshbhai Kugasiya after noting that the appellant became aware of the order passed by CIT(A) only upon SMS/Call from the Revenue Department for payment of income tax demand.

In light of facts and circumstances, the tribunal set aside the order passed by CIT(A) and restored the file to the CIT(A) with a direction to decide the appeals with the opportunity of being heard, subject to payment of costs amounting to ₹5000.

Trust Expenditure to not Exceed 5% of Income for Religious Purposes: ITAT Remands Matter to CIT(E)

Shree Modeshwari Devsthan TrustAhmedabad vs The Commissioner of Income Tax (Exemption )

CITATION : 2026 TAXSCAN (ITAT) 260

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, remanded the matter to the Commissioner of Income Tax (Exemption) [CIT(E)] to verify whether trust expenditure has exceeded the 5% of income limit for religious purposes.

The appeal was allowed by Suchitra Kamble (Judicial Member) and Dr. B.R.R. Kumar (Vice President) for statistical purposes.

Demolition Costs to be Included in LTCG, if Occurred: ITAT Remands Issue to AO to Determine Pre-Existence of Structure

Yerragudi Venkata Siva Reddy vsThe ACIT,Circle-1

CITATION : 2026 TAXSCAN (ITAT) 261

The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, remanded the issue to the Assessing Officer (AO) to determine there was a structure that had been demolished on the immovable property. The tribunal ruled that demolition costs should be included in the Long Term Capital Gains (LTCG) if done before the acquisition.

The appeal was allowed for statistical purposes by the bench of Manjunatha G (Accountant Member) and Vijay Pal Rao (Vice President).

Balance Sheet Sufficient for Income Tax Assessment for S.69, No Supporting Evidence for S.80 Deduction: ITAT Partly Allows Appeal

Dakappagari Naveen Kumar vs TheIncome Tax Officer, Ward-1, SANGAREDDY

CITATION : 2026 TAXSCAN (ITAT) 262

The Income Tax Appellate Tribunal (ITAT),Hyderabad Bench, held that a balance sheet is sufficient for assessment under Section 69. However, there had been no supporting evidence to claim deduction under Section 80 of the Income Tax Act, 1961.

The bench, comprising Manjunatha G (Accountant Member) and Vijay Pal Rao (Vice President) deletes the additions made. However, in absence of any documentary evidence in support of the claim of deduction under Section 80C, the tribunal dismissed the ground raised. Conclusively, the appeal is partly allowed.

₹8.80 Cr Addition cannot be made Solely on Estimation and Extrapolation Without Corroborative Evidence: ITAT sets aside Addition

DCIT vs M/s. Shree SaiProperties

CITATION : 2026 TAXSCAN (ITAT) 263

The Income Tax Appellate Tribunal (ITAT), Pune Bench, held that the Assessing Officer (AO) has erred in making the addition amounting to ₹8,80,26,071 solely on estimation and extrapolation without any corroborative evidence and in the absence of the assessee’s name in the incriminating documents found during the search and seizure of a third party.

Tribunal also held that the AO grossly erred in extrapolating the figures of the alleged on money in the absence of any corroborative incriminating material or any other information procured through independent examination of the facts and addition has been made without any tangible evidence and solely on estimations and extrapolation.

Mere Acceptance of SBN During Demonetization cannot be Treated as Unexplained Cash Credit when Cooperative Society Acts as Intermediary: ITAT

The Income Tax Officer vsChikhodara Sewa Sahakari Mandal i Ltd

CITATION : 2026 TAXSCAN (ITAT) 264

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, held that cooperative societies accepting the Specified Bank Notes (SBNs) during the demonetization period cannot be treated as unexplained cash credit when the society acts as an intermediary.

It was held by the tribunal that once the assessee has furnished complete details, the burden shifts to the Assessing Officer, and mere SBNs accepted during the demonetization period cannot be treated as unexplained income of the assessee when the source, purpose, and recipients are fully explained.

Change in Opinion Insufficient for Reassessment: ITAT highlights Validity of Notice u/s 148 in Vedanta Limited Case

Vedanta Limited vs AssistantCommissioner of Income Tax

CITATION : 2026 TAXSCAN (ITAT) 265

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, observed the validity of a notice issued under Section 148 of the Income Tax Act, 1961 and held that a change in opinion was not sufficient enough for reassessment in an appeal filed by Vedanta Limited.

The two member bench of Pawan Singh (Judicial Member) and Brajesh Kumar Singh (Accountant Member) relied on CIT v. Kelvinator of India Ltd which held that assessment cannot be reopened based on change of opinion. Since the reassessment was deemed improper, the rejection was also held to be improper. Accordingly, CESTAT ruled in favour of the assessee.

Assessee not Required to Prove Source of Source when Loan Repaid via Bank: ITAT Deletes Unsecured Loan Addition

M/s. Kalptaru Cotton Industriesvs Income Tax Officer, Patan

CITATION : 2026 TAXSCAN (ITAT) 266

The Income Tax Appellate Tribunal ( ITAT ),Ahmedabad Bench, held that the assessee, Kalptaru Cotton Industries, cannot be required to prove the source of source once the identity and genuineness of the transaction are established and the loan is repaid through banking channels.

The tribunal observed that in the case of Shree Samruddhi Overseas Trading Co. vs. DCIT (2018), the Coordinate bench of the tribunal held that repayment of loan through banking channels transcends all considerations and sufficiently discharges the onus cast under sections 68 of the Act.

Excel Sheet Not Sufficient Proof of Transaction with Developer: ITAT Allows Appeal

Chandra Khilwani vs The ITO

CITATION : 2026 TAXSCAN (ITAT) 268

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, held that an excel sheet is not sufficient proof of transaction with a third-party, in this case, developer. ITAT allowed the appeal ultimately.

The ITAT made a reference to the case of PCIT, Central v. Kaushik Nanubhai Majithia (2024) wherein it was held that excel sheet found and seized during course of survey is not sufficient proof of transaction between the assessee and the developer.

Notice Issued Post 01.04.2021 for AY 2015-16 is Barred by Limitation: ITAT Quashes Reassessment Order u/s 147

Elegance Reality vs ACIT

CITATION : 2026 TAXSCAN (ITAT) 269

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, held that notice issued by the Assessing Officer (AO) after 1.04.2021 for Assessment Year (AY) 2015-16 was barred by limitation under amended section 149 of the Income Tax act, 1961 and quashed the reassessment order passed under Section 147 of the Income Tax Act.

Sanjay Garg, Judicial Member and Annapurna Gupta, Accountant member, observed that the issue was covered in favour of the appellant by the decision of the ITAT in case of Hindva Builders. As the notice issued under section 148 was barred by limitation, the reassessment proceedings were held to be invalid.

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