ITAT Weekly Roundup

This weekly round-up encapsulates the key stories related to the Income Tax Appellate Tribunal(ITAT)

reported at Taxscan, from March 9, 2026 to March 14, 2026.

Technical Error in Application Cannot Be Ground To Reject Registration: ITAT Directs Reconsideration Of Trust Registration Applications Madhya Pradesh Industrial vs CIT(Exemption) Bhopal CITATION : 2026 TAXSCAN (ITAT) 282

The Income Tax Appellate Tribunal has directed the reconsideration of the registration applications of the trust,it held that the mere technical error of choosing the wrong section code cannot be a ground for rejecting registration.

The Tribunal has set aside the orders passed by the CIT (Exemptions) and has remanded the case for fresh consideration allowing the authority to permit the assessee to rectify the mistake in the application and then decide the case on merit by giving an opportunity of hearing.

Exemption Cannot Be Denied For Non Filing of Form 10B: ITAT Allows ₹1.21 Crore Relief Claim Of IAPPD Indian Association ofParlimentarians vs Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 283

The Income Tax Appellate Tribunal granted relief of ₹1.21 crore,holding that exemption cannot be denied merely for alleged non-filing of Form 10B when the assessee was actually required to furnish Form 10BB.

Ignoring the instructions of the lower authorities, the Tribunal directed the Assessing Officer to allow the exemption claim of ₹1,21,56,852, observing that denial of the same on the sole ground that the form 10B had not been filed was not justified in the facts of the case.

Salary Earned Outside India Not Taxable as Deposit in NRE Account Does Not Amount to Receipt of Salary in India: ITAT Kaushal Ganpatbhai Patel vsIncome Tax Officer CITATION : 2026 TAXSCAN (ITAT) 284

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, held that salary earned outside India by a non-resident is not taxable in India because it is credited to a Non-Resident External (NRE) account in India, observing that such deposit does not constitute receipt of salary in India.

The Tribunal further directed deletion of additions relating to purchase of foreign currency amounting to ₹42,81,762 and deposits in bank account amounting to ₹1,00,34,419 since these additions were primarily made on the basis of treating the salary as taxable income.

ITAT Upholds Deletion of ₹1.73 Cr Labour Income Addition as Assessee Had Already Disclosed Income in Return and Form 26AS The ITO Ward 7.2.1 PrahladnagarRoad Ahmedabad-380 015 vs Raghavbhai Gordhanbhai Narola CITATION : 2026 TAXSCAN (ITAT) 285

The Income Tax Appellate Tribunal(ITAT), Ahmedabad Bench, upheld the deletion of ₹1,73,94,080 addition towards labour income after observing that the appellant had already disclosed the income in the return of income and it was reflected in Form 26AS.

The Tribunal dismissed the Revenue’s appeal and upheld the order of the CIT(A) deleting the addition of ₹1.73 crore made towards labour income.

Addition u/s 68 Unsustainable Where Loan Transactions Made Through Banking Channels: ITAT Deletes ₹3.30 Cr Unsecured Loan Addition Supra Financial Services Limitedvs Income Tax Officer, Ward 24(1), New Delhi CITATION : 2026 TAXSCAN (ITAT) 286

The Income Tax Appellate Tribunal (ITAT),Delhi Bench, has held that the addition under Section 68 of the Income Tax Act,1961 cannot be made solely based on the investigation report for accommodation entries, where the genuineness of the transactions has been substantiated by the assess

The Bench comprising Sudhir Kumar, [Judicial Member] and S. Rifaur Rahman [Accountant Member] held that merely because these lending companies are alleged to be linked with entry operators these transactions cannot be treated as bogus without any confirmation.Therefore, the addition under Section 68 was deleted by the Tribunal.

Penalty for Non-Compliance of Notices not Leviable where Assessment Completed u/s 143 based on Information Furnished: ITAT Ujjain Dugdh Sangh vs DCIT CITATION : 2026 TAXSCAN (ITAT) 287

The Income Tax Appellate Tribunal (ITAT), Indore Bench held that the penalty imposed for the alleged non-compliance of the statutory notices cannot be sustained if the assessee complies with the same and the assessment is completed under Section 143(3) of the Income Tax Act, 1961.

It was held by the Tribunal that the penalty levied under Section 272A(1)(d) was not justified and it was directed that it should be deleted.

CIT(A) Order Based on Presumption Without Verification of Charitable Trust’s Exemption Claim: ITAT Directs Fresh Assessment Sant Shree Asharamji MahilaUtthan Ashram, Sant Asharmji Ashram vs Deputy Director of Income Tax CITATION : 2026 TAXSCAN (ITAT) 288

The Income Tax Appellate Tribunal(ITAT), Ahmedabad Bench, directed the Assessing Officer(AO) to conduct a fresh assessment after observing that the order passed by the Commissioner of IncomeTax (Appeals) (CIT(A)) was based on presumption without verifying the exemption claim made by a charitable trust.

The Tribunal held that since the assessment order was set aside for fresh adjudication, the penalty imposed under Section 271(1)(c) of the Act could not survive and accordingly cancelled the penalty.

AMP Adjustment of ₹4.32 Cr Based on Bright Line Test Unsustainable: ITAT Grants Partial Relief to Callaway Golf India M/s. CALLAWAY GOLF INDIA PRIVATELIMITED vs Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 289

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has provided some relief holding that the Bright Line Test (BLT) cannot be applied for determining the Arm’s Length Price (ALP) of Advertisement, Marketing, and Promotion (AMP) expenditure under the transfer pricing provisions.

In rejecting the BLT-based adjustment method and the application of the Cost Plus Method it was held by the Tribunal that benchmarking shall be performed on an aggregate basis by the Transactional Net Margin Method (TNMM).

Income Tax Search Assessment Invalid Where Approval u/s 153D Granted Without Application of Mind: ITAT M/s. Periwal Polymers Pvt. Ltdvs DCIT CITATION : 2026 TAXSCAN (ITAT) 290

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, that the search assessments cannot be sustained if the mandatory approval under Section 153D of the Income Tax Act, 1961, is granted without application of mind by the approving authority.

The tribunal highlighted the fact that the approving authority must apply its mind separately for each assessment year before granting the approval. Further,it observed that the approval in the present case was granted in a consolidated manner and that the requirement of the law under Section 153D was not satisfied.

Failure to E-File Form 10 Results in Denial of Income Accumulation Claim: ITAT Restores Matter to Seek Condonation M/s Punjab MunicipalInfrastructure Development Company vs DCIT Exemption CITATION : 2026 TAXSCAN (ITAT) 291

The Income Tax Appellate Tribunal ( ITAT ) Chandigarh Bench in its recent order has restored the case and enabled the assessee to seek condonation of delay in electronically filing Form 10 to claim accumulation of income under the Income Tax Act, 1961.

The Tribunal bench comprising Lalit Kumar [Judicial Member], and Manoj Kumar Aggarwal [Accountant Member] that the matter be restored to the Commissioner of Appeals for consideration after the outcome of the condoning of delay, if any, is decided by the assessee.

TDS on Foreign Travel LTC Not Deducted: ITAT Confirms ₹17.2 Lakhs Penalty on SBI State Bank of India Local HeadOffice Chandigarh vs The Addl. CIT(TDS) Chandigarh CITATION : 2026 TAXSCAN (ITAT) 292

The Income Tax Appellate Tribunal (ITAT) Chandigarh Bench has upheld a penalty of ₹17,23,630 for failing to deduct Tax Deducted at Source (TDS) on Leave Travel Concession (LTC) reimbursements involving foreign travel. The Tribunal reiterated that the exemption in this regard is strictly confined to travel within India for LTC is strictly confined to travel within India.

ITAT observed that the bank had failed to establish reasonable cause for waiver of penalty under Section 273B. Thus, there was no infirmity in the order of the CIT(A), and the appeal was dismissed.

Ex-Parte Dismissal of Income Tax Appeal without Adjudication Unsustainable: ITAT Directs Reconsideration of ₹2.32 Cr Addition V Y Institute of Medical SciencePrivate Limited vs Assistant Commissioner of Income Tax, Circle -1(1) CITATION : 2026 TAXSCAN (ITAT) 293

The Income Tax Appellate Tribunal (ITAT) has held that the Commissioner of Income Tax (Appeals) [CIT(A)] does not possess jurisdiction to dismiss an appeal for non-prosecution of appeal. The Tribunal observed that appellate authorities are under a statutory mandate to decide appeals on merit in well-reasoned speaking orders.

The ITAT has condoned the 397 day delay in the interest of substantial justice and has directed the matter to be remitted back to the CIT(A) for afresh adjudication.

Arbitrary Disallowance of Business Expenditure without Evidence of Discrepancy Unsustainable: ITAT sets aside Addition Theon Pharmaceuticals Limited vsDCIT Circle-1(1) CITATION : 2026 TAXSCAN (ITAT) 294

The Income Tax Appellate Tribunal (ITAT) has deleted the addition of ₹3.45 Crores holding that arbitrary disallowances of business expenditure on the basis of percentages without any evidence of discrepancies are not legally valid.

The Bench stated that it was not necessary to provide vehicle numbers pertaining to transportation expenses as it was not necessary while dealing with expenses pertaining to sales discounts and commissions. The ITAT dismissed the Revenue’s appeal as it was obvious that the expenditure had been incurred for business purposes.

Expenditure on Sales Promotion allowable as Business Deduction: ITAT Grants ₹2.4Cr Relief to Havells India DCIT vs Havells India Ltd CITATION : 2026 TAXSCAN (ITAT) 295

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has removed a disallowance of around ₹2.47 crore in sales incentives, agreeing that provisions made are a deductible contractual liability and not a contingent one.

The ITAT rejected all grounds raised by the revenue department which included disputes on Corporate Guarantee Fee rates at 0.5% and Section 80IC claims on interest income.

Reassessment Invalid after Approval Of CIRP Resolution: ITAT upholds Deletion of ₹6.41 Cr Addition on Undisclosed Income ACIT, CIRCLE 7(1) vs DELHICONTROL DEVICES PRIVATE LIMITED CITATION : 2026 TAXSCAN (ITAT) 296

The Income Tax Appellate Tribunal (ITAT) upheld deleting the addition of ₹6.41 crore on the basis of the undisclosed income was upheld by the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) which observed that the reassessment proceedings cannot be sustained if the resolution plan under the IBC has been approved by the National Company Law Tribunal (NCLT).

Relying on judicial precedents in the cases of M Tech Developers Pvt. Ltd., Asian Colour Coated Ispat Ltd., and Patanjali Foods Ltd., the Tribunal stated that the demand for the proceedings initiated prior to the approval of the resolution plan would not be sustained.

No Incriminating Evidence Found during Search: ITAT deletes Rs. 58.73 cr Addition on Dalmia Family Trust DCIT vs DALMIA FAMILY OFFICETRUST CITATION : 2026 TAXSCAN (ITAT) 297

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has upheld the order of the Commissioner of Income Tax who deleted the addition of ₹58.73 crore observing that additions under Section 153A of the Income Tax Act 1961 would not be valid in the absence of search based or seized evidence.

The Tribunal comprising Sudhir Kumar [Judicial Member] and Manish Agarwal [Accountant Member] observed that the additions were not supported by such evidence and the reassessment was liable to be quashed and the appeals filed by the Revenue for the relevant assessment years were dismissed.

ITAT Grants Major Relief to Oriental Bank Employees Welfare Society, allows Adjustment Of ₹3.35 Cr Welfare Payments against Interest on Bank Deposits All India Oriental Bank ofEmployees Welfare Society vs ITO (Exemption) Ward-1(1) CITATION : 2026 TAXSCAN (ITAT) 298

The Income Tax Appellate Tribunal [ITAT] Delhi Bench has granted significant relief by holding that the payment can be set off against the interest income earned from the bank fixed deposits while determining the income to be taxed.

The Tribunal comprising Anubhav Sharma [Judicial Member] and Manish Agarwal [Accountant Member]directed the Assessing Officer to allow the set-off of the payments received for the welfare of the members against the taxable income.

Chennai Metro Rail Missed Income Tax Notices on Gratuity Disallowance: ITAT Directs De Novo Adjudication Chennai Metro Rail Limited vsDCIT CITATION : 2026 TAXSCAN (ITAT) 300

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has granted relief to Chennai Metro Rail Limited (CMRL) by setting aside the orders of lower tax authorities and directing a fresh adjudication regarding disputes over gratuity disallowance and income mismatch.

The bench of Inturi Rama Rao ( Accountant member) and Manu Kumar Giri (Judicial member) observed that resolving the gratuity and Form 26AS mismatch issues inherently required a detailed verification of factual evidence and supporting documentation.

ITAT Upholds PCIT Revision u/s 263 as AO Failed to Enquire into Excess Diesel Shortage Claimed by Assessee Smt. Anita Banodha alias AnitaKathgar vs The Pr. Commissioner of Income Tax CITATION : 2026 TAXSCAN (ITAT) 301

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, upheld the revision order passed by the Principal Commissioner ofIncome Tax (PCIT) under Section 263 of the Income Tax Act, 1961 holding that the Assessing Officer (AO) failed to properly enquire into the assessee’s excess diesel shortage claim.

It was observed by the Tribunal that the enquiry conducted by the AO related only to shortage of petrol and not to the shortage of diesel claimed by the assessee. The Tribunal further observed that failure on the part of the AO to conduct proper enquiry regarding the excess diesel shortage resulted in the assessment order being erroneous and prejudicial to the interests of the Revenue.

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