ITAT Weekly Roundup

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

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

Income Tax Addition Based Solely on Third Party Digital Evidence without any Corroborating Evidence Unsustainable: ITAT Home Construction Co. vs The DCIT Central Circle, Ludhiana CITATION : 2026 TAXSCAN (ITAT) 302

The Income Tax AppellateTribunal (ITAT) Chandigarh Bench has deleted a substantial addition to the Income of the assessee, amounting to ₹1.7 Cr and held that the legal proposition that the digital evidence seized from a third party cannot be used to impose a penalty on the assessee without any corroborative evidence.

The tribunal observed that the AO failed to prove the authenticity of the transactions by any secondary evidence or by the statement of the assessee hence,the ITAT held that additions based on third party evidence alone are not legally sustainable since the department failed to close the gap between seized data and actual income of the assessee therefore the addition must be deleted.

ITAT Upholds Reliefs for Reliance Retail, AJIO Marketing Expense Allowed as Revenue Reliance Retail Limited vs ACIT Circle8(1)(1) CITATION : 2026 TAXSCAN (ITAT) 303

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Mumbai has upheld key reliefs granted to Reliance Retail Limited in its cross appeals for Assessment Year 2019‑20, ruling that promotional expenditure incurred on the AJIO e‑commerce platform qualifies as revenue expenditure.

The bench includes ShriSaktijit Dey (Vice President) and Shri Makarand Vasant Mahadeokar (Accountant Member), noted that Reliance Retail had raised legal grounds challenging the validity of the assessment order, but since relief had already been granted on substantive issues, adjudicating those legal grounds would be purely academic.

No Evidence for HRA Claim and Full School Fee Payment: ITAT rejects Claims u/s 10(13A) and 80C Veera Reddy Posham vs The ACIT CITATION : 2026 TAXSCAN (ITAT) 304

The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeals of a taxpayer who failed to furnish evidence for House Rent Allowance (HRA) exemption claim and Section 80C deductions of Income Tax Act, 1961. The ITAT upheld the disallowances of ₹35,000 under Section 80C and ₹1.08 lakh under Section 10(13A).

AO adds 100% of Freight, Legal Professional Expenses u/s 40(a)(i): ITAT orders Reconsideration after Hearing Kyori Oremin Limited vs The DCIT CITATION : 2026 TAXSCAN (ITAT) 305

The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) has ordered reconsideration of addition of 100% of freight, legal profession and interest expenses underSection 40(a)(i) of Income Tax Act, 1961 after providing hearing. The tribunal condoned a delay of 42 days.

The ITAT set aside the previous order and sent the case back to the CIT(A) for a fresh look. The appellate authority has directed to examine the case on its actual merits and provide the taxpayer a proper opportunity to explain the freight and professional expenses.

No Double-Deduction of Bad and Doubtful Debts in Cooperative Bank’s Income Tax Return: ITAT Upholds Deletion of ₹17 Cr Addition Deputy Commissioner of Income tax vs Jila Sahakari Kendriya BankMaryadit CITATION : 2026 TAXSCAN (ITAT) 306

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, dismissed the appeal filed by the Deputy Commissioner of Income Tax (DCIT) and upheld the deletion of ₹17,00,00,000 addition made towards double deduction of provision for bad and doubtful debts claimed by Jila Sahakari Kendriya Bank Maryadit.

The Tribunal found no infirmity in the order of the CIT(A) deleting the addition and dismissed the Revenue’s appeal.

Relief to Real Estate Company: ITAT Holds Compensation Received for Compulsory Land Acquisition by NHAI Not Taxable Raipur Realty Pvt. Ltd vs The Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 307

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, held that compensation received for compulsory acquisition of land by the National Highways Authority of India (NHAI) is not liable to income tax in view of the exemption provided under Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013. The Tribunal allowed the appeal of the appellant and directed the AO to pass a consequential order granting relief.

No Loss in Collection of Taxes, Recorded Sale Transaction in Return of Income: ITAT Notes Sale of Car Already Taxed Dinesh Kumar Tiwari vs The Income Tax Officer CITATION : 2026 TAXSCAN (ITAT) 308

The Income Tax Appellate Tribunal (ITAT), Raipur Bench, noted that the sale transaction of the car in the present case has already been taxed and there was no loss in collection of taxes, accordingly. The sale transaction was reflected in the return of income. The tribunal set aside the order of the CIT(A) and directed the AO to delete the additions. Partha Sarathi Chaudhury (Judicial Member) from the ITAT allowed the appeal on 12.03.2026.

Clerical Error in Partnership Deed Not a Ground to Disallow Partner’s Remuneration: ITAT Sets Aside ₹31.30 Lakh Disallowance Bharat Paper Mart vs Assistant Commissioner of income tax CITATION : 2026 TAXSCAN (ITAT) 309

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench held that a mere clerical error or an inadvertent mistake in incorporating the updated limits of Section 40(b) in the partnership deed cannot be used to deny the legitimate partner’s remuneration.

The ITAT held that since the deed had authorized the remuneration and related it to the applicable statutory provisions the error in recording incorrect limits was not fatal to the claim. Since the payment made was within the limits prescribed under the Act the addition made by the AO was deleted.

Demonetisation Period Cash Deposits From Recorded Sales Cannot Be Treated as Unexplained Income: ITAT P.V. Media Vision Pvt. Ltd. vs ACIT CITATION : 2026 TAXSCAN (ITAT) 311

The Income Tax AppellateTribunal (ITAT) Mumbai Bench has held that the cash deposits made during the demonetisation period cannot be held to be unexplained money under Section 68 of the Income Tax Act, 1961 if they are supported by audited books of accounts and business activities.

The ITAT deleted the remaining addition of Rs. 68,61,386 allowing the assessee's appeal and rejecting the Revenue's claims.

Issue of Non-Service of Notice u/s Sec 143 Requires New Examination: ITAT Remands ₹53 Lakh Addition To AO For Fresh Adjudication Nova Elevators Private Limited vs ITO -13(1)(1), Mumbai CITATION : 2026 TAXSCAN (ITAT) 312

The Income Tax AppellateTribunal (ITAT) Mumbai Bench has set aside an earlier order of appeal and held that the lower authorities had failed to consider any jurisdictional issues and had denied a fair opportunity to the assessee to put forth their case particularly in relation to an addition of ₹53,00,000 under Section 68 of the Income TaxAct.

The Tribunal held that the revenue department had failed to provide adequate facts to decline these allegations.The ITAT allowed the additional grounds of appeal and restored the entire case to the file of the Assessing Officer. The AO has been asked to pass a speaking order after giving the assessee a reasonable opportunity to be heard and to produce evidence.Accordingly, the appeal was allowed.

No Income Tax Addition u/s 68 Based On Mistaken Identity and Third Party Confirmation: ITAT Sets Aside ₹20 L Addition Against Finance Co. Blue Chip Financial Services Private Limited vs Income Tax CITATION : 2026 TAXSCAN (ITAT) 313

The Income Tax Appellate Tribunal (ITAT) Mumbai Bench recently held that an addition based upon a third party confirmation in a case of mistaken identity cannot be sustained and proceeded to delete an addition of ₹20 lakh made under Section 68 of the Income Tax Act, 1961.

The ITAT found that the addition had taken place due to a fundamental mistake where the AO had confused the assessee with another entity that had a similar name. They held that when the assessee had produced corroborative documentary evidence to prove that the bank entry did not belong to them the burden of proof had shifted.

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