ITAT Weekly Roundup

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

) reported at Taxscan, from April 5, 2026 to April 11, 2026.

Section 68 Addition Unsustainable Without Rebuttal of NBFC Genuineness or Tracing Money Trail: ITAT Deletes ₹25 Cr Bogus Share Application Money

Ms. Bestech Hospitalities Pvt.Ltd. vs DCIT

CITATION : 2026 TAXSCAN (ITAT) 364

The Delhi Bench of theIncome Tax Appellate Tribunal (ITAT) held that an addition under Section 68 cannot be sustained where the assessee has established the genuineness of a Non-banking financial company (NBFC) investor, and the Assessing Officer (AO) fails to rebut such evidence or trace any money trail linking the assessee to the invested funds.

The Bench observed that no incriminating documents or money trail was discovered linking the assessee's funds to the NBFC. The NBFC had duly responded to notices issued under sections 133(6) and 131, and its directors had appeared before the AO, thereby prima facie establishing the identity, creditworthiness, and genuineness of the transaction.

S. 153C Proceedings Unsustainable Due to Lack of Inadequate Satisfaction Recording of Income: ITAT

M/s. Atoll Vyapaar (P) Ltd vsDCIT

CITATION : 2026 TAXSCAN (ITAT) 365

The Income Tax Appellate Tribunal (ITAT) DelhiBench has set aside various assessment orders framed under Section 153C of theIncome tax Act 1961 held that “without proper satisfaction regarding the nexus of seized material and income of the assessee,”assessment orders framed under 153C cannot stand.

The Tribunal negated the claim of the Revenue and relied on the Delhi High Court judgment in Saksham Commodities Ltd. vs. ITO (2024) which mandates that there should be a clear nexus between the seized material and the determination of income which should have been reflected in the note of satisfaction.

Addition Upon Unexplained Cash Deposits Partly Sustained: ITAT Restricts ₹78.29 Lakh Addition to Peak Balance

Kanubhai Ambalal Patel vs IncomeTax Officer

CITATION : 2026 TAXSCAN (ITAT) 366

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has held that while addition on account of unexplained cash deposits is sustainable in principle, taxing the entire amount would be excessive, and accordingly directed the Assessing Officer to restrict the addition to the peak balance.

The Tribunal comprising Siddhartha Nautiyal (Judicial Member) and Narendra Prasad Sinha (Accountant Member) found that there was no evidence provided by the assessee to support his claim of acting as a conduit as there was no evidence provided regarding the identity of the parties involved in this transaction. However, in view of the pattern of deposits and withdrawals.

Penalty u/s 271 Valid Where Claims Lack Substantiation: ITAT Upholds ₹1.38 Cr Penalty on Multiple Additions

Soma Textiles & IndustriesLtd vs Deputy Commissioner of Income Tax

CITATION : 2026 TAXSCAN (ITAT) 367

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has upheld penalty on an assessee’s account under Section 271(1)(c) of the Income Tax Act 1961,reaffirming that claims not backed by any substantiation or bona fide explanation attract penalty.However, in partial granting relief to the assessee the ITAT set aside penalty on an issue in favour of the assessee in quantum proceedings.

The Bench held that the disallowance of expenses on GDR had also not been in accordance with settled law and this negated the claim of the assessee.Therefore,the penalty on miscellaneous expenses had also been upheld as there was no evidence to support the claim.

ITAT Grants Final Opportunity for Personal Hearing on Addition of Bank Credit Entries Despite Earlier Non-Cooperation on Costs

Dharmeshkumar Ishwarbhai patelvs incom Tax Officer

CITATION : 2026 TAXSCAN (ITAT) 368

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench set aside the addition of ₹1.61 crore on the ground of bank credit entries. It was held the addition was unsustainable in the absence of adequate opportunity to the assessee to be heard.

The Tribunal comprising Dr. B.R.R. Kumar [Vice President] and T.R. Senthil Kumar [Judicial Member] observed that although the assessee did not cooperate in the earlier stages, the principles of natural justice demanded a final opportunity. The Tribunal held that the addition of the entire bank credits without proper examination could not be sustained.

ITAT Reopens Canara Bank ₹69.8 Lakh TDS Demand u/s 201(1) & 201(1A) for Fresh Review

Canara Bank vs JCIT-TDS

CITATION : 2026 TAXSCAN (ITAT) 369

In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Panaji Bench has reopened Canara Bank’s appeal against a ₹69.8 lakh demand raised under Sections 201(1) and 201(1A) of the Income Tax Act, 1961 for alleged lapses in Tax Deducted at Source(TDS) compliance and remanded the matter to the Commissioner of Income Tax (Appeals) for fresh adjudication.

The bench of Pavan Kumar Gadale (Judicial Member )and GD Padmahshali(Accountant Member) condoned the delay and set aside the order of the CIT(A). It remitted the matter back to the CIT(A) with directions to provide Canara Bank a fresh opportunity to present its case and submit relevant documents.

ITAT Rules ESOP Costs Constitute Employee Remuneration under Sec. 37(1): IBM’s ₹903 Crore Income Tax Deduction Upheld

Deputy Commissioner of IncomeTax Circle-3(1)(1) vs IBM India Private Limited

CITATION : 2026 TAXSCAN (ITAT) 370

In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Bangalore Bench, dismissed the Revenue’s appeal against IBM India Pvt. Ltd., affirming that Employee Stock Option Plan (ESOP) costs constitute employee remuneration deductible under Section 37(1) of the Income Tax Act, 1961 and upheld the ₹903 crore income tax deduction.

After hearing the submissions, the tribunal observed that both parties acknowledged the Karnataka High Court had already upheld ESOP deductions in IBM’s own case. While the Revenue pointed to the pending Supreme Court matter, the Tribunal noted that the High Court’s ruling is binding and final for the assessee.

No Evidence to Prove Non-Genuine Activities or Community Bias: ITAT Grants S.12 AB & S. 80G Registration

Social Educational and WelfareAssociation vs CIT (Exemptions)

CITATION : 2026 TAXSCAN (ITAT) 371

The Income Tax Appellate Tribunal ( ITAT ), Nagpur Bench, set aside the rejection of the trust's registration on the ground that mere technical non-compliance or unsubstantiated allegations cannot be grounds to deny registration.

The tribunal held that in the absence of evidence of non-genuine activities or community bias, mere technical defects or unsubstantiated allegations cannot be an infallible ground to deny registration.

S. 54F Claim on 50% Share of Sale of Co-owned Property Denied for No Proof: ITAT Remands for Examining ITR based Evidence

Shri Nalwad PrabhuSomashekharappa, M/s. S.M. Nalwad & Co, Bhishma Tank Road vs The Income TaxOfficer

CITATION : 2026 TAXSCAN (ITAT) 372

In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has remanded a Section 54F deduction claim under Income Tax Act, 1961 arising from the sale of a co-owned property for fresh examination after noting that the assessee was prevented by sufficient cause from furnishing complete details during the assessment proceedings.

The ITAT remanded the issue to the Assessing Officer with directions to examine the claim afresh and grant deduction under Section 54F if the conditions are satisfied, after providing adequate opportunity of hearing. The appeal was thus allowed for statistical purposes.

Co-ownership of Property with Parents without Investment: ITAT Orders Fresh Examination of S. 69 Addition

Parveen Parvez Motlekar vsAssessment Unit- Income Tax Department

CITATION : 2026 TAXSCAN (ITAT) 374

In a recent ruling, the Income TaxAppellate Tribunal (ITAT), Mumbai Bench, has remanded the addition under Section 69 in a matter involving co-ownership of property with parents, observing that mere inclusion of a name in the purchase document does not, by itself, establish investment.

The ITAT set aside the orders of the lower authorities and directed fresh examination by the Assessing Officer after verifying the source of funds and granting adequate opportunity of hearing.

Income tax Dept couldn't Dismantle Claim of Excess Stock as Business Income : ITAT deletes Addition u/s 69

M/s SADANAND BHAVAN vs THEINCOME TAX

CITATION : 2026 TAXSCAN (ITAT) 375

In a recent ruling the Income Tax Appellate Tribunal (ITAT), Panaji Bench, held that excess stock found during survey cannot be treated as unexplained investment where it is linked to regular business activity.The Tribunal noted that in the absence of any material to contradict or counter the assessee’s explanation, addition under Section 69 is not sustainable.

The two-member bench comprising Pavan Kumar Gadale (Judicial Member) and GD Padmashali (Accountant Member) noted that the assessee had disclosed sales and stock in its financial statements and that the Revenue had not brought any contrary material on record nor rebutted or dismantled the assessee’s claim.

Transfer of PI to Vodafone Infrastructure is a 'Gift' Eligible for Sec 47(iii) Exemption: ITAT rules in favour of Vodafone Idea

DCIT Circle -4(1)(2) vs VodafoneIdea Limited

CITATION : 2026 TAXSCAN (ITAT) 377

In a major relief to Vodafone Idea Limited (formerly Vodafone West Limited), the Income Tax Appellate Tribunal (ITAT), Mumbai Bench, while deciding cross-appeals for AY 2011-12, ruled that the transfer of passive infrastructure (PI) assets under a court-approved scheme of demerger without consideration qualifies as a 'gift' under Section 47(iii) of the Income Tax Act, thereby legitimizing the claim of depreciation on such assets.

The ITAT deleted the depreciation disallowance on PI assets, the Section 14A disallowance, the roaming charges disallowance, the TP adjustment on ECB interest, and allowed the Section 80IA deductions on incidental incomes, while restoring the network site rental and license fee issues to the AO's file for de novo adjudication.

Design & Commissioning of Rail Signalling Systems is Developer Activity under Income Tax Act, Not Works Contract: ITAT rules in favour of Bharat Rail Automation

ACIT, Amravati Circle, Amravarivs Bharat Rail Automations Pvt.Ltd

CITATION : 2026 TAXSCAN (ITAT) 378

The Income Tax Appellate Tribunal (ITAT), Nagpur Bench in a ruling in favour of Bharat Rail Automations Pvt. Ltd. , the assessee dismissed the appeal filed by the Revenue and held that the activity of designing and commissioning railway signaling systems qualifies as a "developer activity" under Section 80IA(4) of theIncome Tax Act, 1961, and cannot be treated merely as a "works contract".

Applying the principle of judicial consistency under identical facts, the Tribunal held that the CIT(A) was correct in allowing the deduction and dismissed the Revenue's appeal.

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