ITAT Weekly Roundup
The Round-up of the Income Tax Appellate Tribunal (ITAT) Cases Reported at Taxscan from 31 May 2026 to 6 June 2026. This weekly round-up encapsulates the key stories related to the Income Tax Appellate Tribunal (ITAT) reported at Taxscan, from May 31, 2026 to June 6, 2026. Only Grants Received During Relevant Year Can Be Considered for S.10(23C)(iiiab)...
The Round-up of the Income Tax Appellate Tribunal (ITAT) Cases Reported at Taxscan
from 31 May 2026 to 6 June 2026.
This weekly round-up encapsulates the key stories related to the Income Tax Appellate Tribunal
(ITAT) reported at Taxscan, from May 31, 2026 to June 6, 2026.
Only Grants Received During Relevant Year Can Be Considered for S.10(23C)(iiiab) Exemption: ITAT
Hidayatullah National Law University vs The Assistant Commissioner of Income Tax
CITATION : 2026 TAXSCAN (ITAT) 642
The Income Tax Appellate Tribunal (ITAT), Raipur Bench, upheld denial of exemption under Section 10(23C)(iiiab) of the Income Tax Act after observing that the assessee did not satisfy the requirement of being substantially financed by the Government under Rule 2BBB of the Income Tax Rules, 1962.
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The Tribunal comprising Partha Sarathi Chaudhury (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) observed that an institution would be regarded as substantially financed by the Government only where Government grants exceeded 50% of total receipts during the relevant previous year.
SEBI Reports and Human Probability Theory Alone Cannot Deny Genuine LTCG Claim: ITAT Deletes ₹10.78 Cr Addition
CITATION : 2026 TAXSCAN (ITAT) 643
The Income Tax Appellate Tribunal (ITAT) Delhi Bench deleted an addition of ₹10.78 crore made towards alleged bogus Long TermCapital Gain (LTCG) holding that mere reliance on SEBI reports, surrounding circumstances and the theory of human probabilities cannot override direct documentary evidence establishing genuine share transactions.
The Tribunal held that the assessee had successfully discharged the burden of proving the genuineness of the LTCG claim and accordingly deleted both the addition under Section 68 and the alleged commission addition under Section 69C.
Repayment of Loans via Banking Channels & Failure to Prove Cash Exchange Invalidates Accommodation Entry Allegation: ITAT Deletes ₹1.26 Cr Addition
Prolife Industries Ltd. vs TheITO Ward-3(1)(1)
CITATION : 2026 TAXSCAN (ITAT) 644
The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has deleted an addition of ₹1.26 crore made under Section 68 of the Income Tax Act and held that repayment of loans through banking channels and absence of evidence showing cash exchange rendered the accommodation entry allegation unsustainable.
The two-member bench comprising Dr. BRR Kumar and T.R. Senthil Kumar observed that the Revenue had not produced any direct or circumstantial evidence demonstrating that the assessee’s own unaccounted money had been routed back in the guise of loans. The bench noted that all transactions were carried out through banking channels and that the assessee had regularly paid interest after deducting TDS.
Investment in Shares Reflected as Capital Asset Cannot be Treated as Excessive Expenditure u/s 40A: ITAT Sets Aside Addition
Ameya Perfomatt Finserv PrivateLimited vs The Dy. Commissioner of Income-tax
CITATION : 2026 TAXSCAN (ITAT) 645
The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has held that investment in shares reflected as a capital asset in the balance sheet cannot automatically be treated as excessive expenditure under Section 40A(2)(a) of the Income Tax Act, 1961. The Tribunal consequently set aside the addition of ₹1.14 crore made against the assessee.
The Bench noted that the shares were consistently reflected as investments and continued to remain unsold during the relevant year.The Tribunal further found that the Assessing Officer had mechanically treated the face value as fair market value without any supporting valuation material and held that the matter required fresh examination.
FTC Cannot be Denied Merely Due to Delay in Filing Form 67: ITAT Grants Relief of ₹10.06 Lakh
Kamleshkumar Rameshbhai Gandhivs The DCIT Circle-1(3)
CITATION : 2026 TAXSCAN (ITAT) 646
The Income Tax Appellate Tribunal (ITAT) Surat Bench has held that delay in filing Form No. 67 is merely a procedural lapse and cannot be used to deny Foreign Tax Credit (FTC) available under the DoubleTaxation Avoidance Agreement (DTAA). The Tribunal consequently granted relief of ₹10.06 lakh to the assessee.
The Bench comprising Annapurna Gupta and T.R. Senthil Kumar further noted that filing Form No. 67 is a directory requirement and not a mandatory condition extinguishing substantive rights. Referring to Supreme Court rulings on procedural compliance, the Tribunal held that procedural law should aid justice rather than defeat legitimate claims.
ITAT Allows Deduction Claim on Interest from Security Deposits for Availing Loan to Andhra Bank Farmers Service Co-op Society
The Andhra Bank Farmers ServiceCooperative Society Limited vs The Income Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 648
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, allowed the appeal in the Andhra Bank case and held that claim of deduction towards interest earned on security deposits made for availing loan was allowed.
The tribunal allowed the claim of deduction under Section 80P(2)(a)(i) in respect of the interest earned on the security deposit made for availing loan for business purpose. The bench of Madhusudan Sawdia (Accountant Member) and Vijay Pal Rao (Vice President) allowed the appeal, emphasizing that once deposits are not made as an investment but are required to be made for the business activity of the assessee then, the interest is incidental and attributable to the business activity of the assessee.
AO to verify whether Double Addition has been made in Hyundai Motor Income Assessment case: ITAT
Hyundai Motor vs Dy. CIT Circle2(1)
CITATION : 2026 TAXSCAN (ITAT) 648
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, remanded a matter and directed the Assessing Officer (AO) to verify whether there has been a double addition made to the income while assessing income in a Hyundai Motors case.
The ITAT also credited the contention that the amount of INR 23,972/- has been added twice and is liable to be set aside, the tribunal directed deletion of the duplicate addition if double addition was verified. The bench of Ravish Sood (Judicial Member) and Madhusudan Sawdia (Accountant Member) therefore allowed the appeal for statistical purposes.
Addition on Bogus Purchases and Labour‑Charge Disallowance Sustained Where Transactions Found Unverified: ITAT Rejected Evidence Under Rule 46A
Globe Infraconstructions PvtLtd. vs Deputy Commissioner of Income Tax
CITATION : 2026 TAXSCAN (ITAT) 649
In a recent ruling, the Income Tax Appellate Tribunal (ITAT) upheld additions on bogus purchases amounting to ₹11.14 crore and sustained a 50% disallowance of labour charges, holding that the transactions were found unverified and lacked credible supporting evidence.
On the issue of labour charges, the bench, comprising Judicial Member Shri Ravish Sood and Accountant Member Shri Omkareshwar Chidara, agreed with the lower authorities that payments made in cash to daily‑wage workers without muster rolls, attendance registers, or PF/ESI records were unverifiable. The 50 per cent disallowance of ₹16.76 lakh was deemed a reasonable estimate.
ITAT Rules Honda’s Seconded Staff Salary Reimbursement Exempt From FTS Tax
Honda R&D Company Limited vsAssistant Commissioner of Income Tax
CITATION : 2026 TAXSCAN (ITAT) 650
In a significant ruling, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that reimbursement of salary costs of seconded employees received by a foreign entity on a cost-to-cost basis cannot be taxed as 'Fee for Technical Services' (FTS), distinguishing the arrangement from typical technical service contracts due to the existence of an employer-employee relationship with the Indian entity.
Distinguishing the facts from Centrica India Offshore, the Tribunal noted that unlike in Centrica, where employees were not specifically taken into employment by the Indian company, the Honda entities had established a clear employer-employee relationship. Relying on the decision in Advics Co. Ltd. Vs. ACIT, the Tribunal held that once it is established that payments are made as salary for services rendered in India, such payments fall outside the purview of Article 12(4) of the India-Japan DTAA (definition of FTS). Consequently, the Tribunal allowed the appeals and directed the deletion of the addition.
Rental Income Already Offered to Tax under Business Head Cannot Be Added Again as ‘House Property Income’: ITAT
M/s. Barons Inn vs The IncomeTax Officer
CITATION : 2026 TAXSCAN (ITAT) 651
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) recently held that income already offered to tax as business income cannot simultaneously be added as income from house property without reducing it from the offered business income; the Tribunal accordingly directed reassessment and fresh adjudication by the Commissioner of Income Tax (Appeals).
On the substantive question, the Tribunal observed that where income has already been offered under the head of business income, an addition under the head of house property cannot be sustained without a corresponding reduction from business income, as both cannot co-exist in the same assessment.
Income Tax Assessment Order Signed Within Time but Communicated After Statutory Deadline Held Time-Barred: ITAT
M/s Versuni India Home SolutionsLtd vs DCIT
CITATION : 2026 TAXSCAN (ITAT) 652
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, quashed the final assessment order passed under Section 143(3) read with Section 144C(13) of the Income Tax Act after holding that the order had been served upon the assessee beyond the period prescribed under the Act.
The Tribunal comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member) observed that under the E-Assessment Scheme, an assessment order attains legal effect only upon communication to the assessee and not merely upon being signed by the Assessing Officer.
No FTS Clause Under India-UAE DTAA: ITAT Holds UAE Consultancy Payments Taxable Only If PE Exists
Chowringhee Residency Pvt. ltdvs ITO
CITATION : 2026 TAXSCAN (ITAT) 653
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, deleted demand raised under Sections 201(1) and 201(1A) of the Income Tax Act after holding that tax was not deductible on consultancy payments made to a UAE company.
The Tribunal comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member) observed that the services rendered by the UAE company were confined to advisory and consultative functions and did not result in any transfer of technical knowledge or skill capable of being independently applied by the assessee in future.
No Income Tax Penalty u/s 271(1)(c) for Bona Fide Tax Computation Error Despite Full Disclosure: ITAT
Klin Industries vs AssistantCommissioner of Income Tax NFAC
CITATION : 2026 TAXSCAN (ITAT) 654
The Income Tax Appellate Tribunal (ITAT), Rajkot Bench, deleted penalties imposed under Section 271(1)(c) of the IncomeTax Act after observing that the case involved a bona fide tax computation error and not conscious concealment of income.
Relying on the decisions in Indian Chronicle Ltd. v. ITO (2024), CIT v. Reliance Petroproducts Pvt. Ltd. (2010) and Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012), the Tribunal observed that every disallowance or computational error could not automatically result in levy of penalty under Section 271(1)(c) of the Act.
BSNL VRS Compensation Qualifies as Retrenchment Compensation, Eligible for Income Tax Exemption u/s 10(10B): ITAT
CITATION : 2026 TAXSCAN (ITAT) 655
The Income Tax Appellate Tribunal (ITAT), Pune Bench, allowed the appeals filed by various former BSNL employees after holding that the amounts received under BSNL Voluntary Retirement Scheme, 2019 were eligible for exemption under Section 10(10B) of the Act.
The Tribunal comprising Manish Borad (Accountant Member) and Pavan Kumar Gadale (Judicial Member) observed that the issue was squarely covered by the aforesaid decision. It further noted that similar views had been taken in Harish Kumar v. ITO (2025) and Jayesh Kumar Tulsidas Sutaria v. ITO (2026).
Bad Debt Claim cannot be Rejected Solely Due to Common Director Between Lender & Borrower: ITAT Deletes Addition
CITATION : 2026 TAXSCAN (ITAT) 656
The Income Tax Appellate Tribunal (ITAT) Delhi Bench has deleted a disallowance of ₹53.11 lakh towards bad debts claimed by Instronics Limited and held that the mere existence of a common director between the lender and borrower companies cannot be a valid ground to reject a genuine bad debt claim.
The Tribunal noted that both companies were separate legal entities and that the existence of a common director did not alter their independent corporate status. It further found that both entities had written off the outstanding loan in their respective books.
Capital Gain Addition Cannot made be Solely on Unverified Entries in Third-Party Seized Diary: ITAT Deletes ₹39.32 Lakh Addition
CITATION : 2026 TAXSCAN (ITAT) 657
The Income Tax Appellate Tribunal (ITAT) Delhi Bench has held that an addition towards long-term capital gains cannot be sustained merely on the basis of unverified entries found in a third-party seized diary without any independent corroborative evidence. The Tribunal accordingly deleted an addition of ₹39.32 lakh made in the hands of Ramesh Rajpal HUF for the Assessment Year 1994-95.
The Tribunal held that the orders of the Assessing Officer and the Commissioner (Appeals) were unsustainable in law. Accordingly, the appeal was allowed and the addition of ₹39.32 lakh was deleted.
Income Tax Deduction on Consultancy Fee cannot be Disallowed Merely because Payee is Related Party: ITAT notes Trademark Use Proves Services Rendered
M/s. Fyers Securities PrivateLimited vs The Deputy Commissioner of Income Tax,
CITATION : 2026 TAXSCAN (ITAT) 658
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) recently held that a consultancy fee paid to a related party cannot be disallowed merely on account of the relationship between the payer and the payee, particularly where there is material to demonstrate that services were actually rendered.
Noting that the newly produced additional evidence had not been available before the lower authorities, ITAT restored the matter to the AO for fresh examination in light of its observations.
Disallowance for Exempt Income Cannot Exceed Actual Exempt Earnings: ITAT Restricts Addition to ₹2.63 Lakh
Pragati Automotive EngineersPrivate Limited, vs Income Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 659
The Income Tax Appellate Tribunal (ITAT) Delhi Bench has held that disallowance made under Section 14A of the Income Tax Act 1961 cannot exceed the amount of exempt income earned by the assessee during the relevant assessment year. The Tribunal accordingly restricted the addition to ₹2.63 lakh as against the ₹7.54 lakh sustained by the lower authorities.
The Bench comprising Ramit Kochar observed that the exempt income earned by the assessee was only ₹2,63,115 and therefore the disallowance could not surpass that amount. The Tribunal also held that the Explanation inserted in Section 14A by the Finance Act, 2022 operates prospectively.
Non Appearance of Investors Cannot Defeat Verified PAN, ITRs and Banking Trail: ITAT Deletes ₹12.53 Cr Addition
Binapani Sales Private Limitedvs ITO
CITATION : 2026 TAXSCAN (ITAT) 660
The Income Tax Appellate Tribunal (ITAT) Kolkata Bench deleted an addition of ₹12.53 crore made under Section 68 of the Income Tax Act 1961 held that mere non-appearance of directors of investor companies cannot invalidate duly supported share capital transactions backed by PAN, income tax returns, audited financial statements and banking records.
The Tribunal held that suspicion cannot replace evidence and that non-appearance of directors alone cannot justify an adverse inference when transactions are otherwise traceable through banking channels.
Delayed Employees’ PF & ESIC Payments Not Deductible u/s 36: ITAT Upholds ₹14.98 Lakh Disallowance
Swiss Pharma Pvt. Ltd vs TheIncome Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 661
The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has upheld the disallowance of ₹14.98 lakh towards delayed deposit of employees’ contribution to Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC) held that such payments are not allowable as deduction under Section 36(1)(va) of the Income Tax Act 1961 if deposited beyond the due dates prescribed under the respective welfare statutes.
The Bench comprising Judicial Member Ms. Suchitra Kamble passed the order while partly allowing the appeal and dismissed the assessee’s ground challenging the disallowance under Section 36(1)(va). However, with regard to the refund claim the Tribunal directed the Assessing Officer to verify the entitlement of the assessee and grant the refund if found due.
Unsigned Property Agreement and Unverified Search Documents Insufficient for On-Money Addition: ITAT Grants ₹90 Lakh Relief
Ranjana Kumari / Kalta vsDCIT/ACIT
CITATION : 2026 TAXSCAN (ITAT) 662
The Income Tax Appellate Tribunal (ITAT) Chandigarh Bench deleted a ₹90 lakh addition made towards alleged on-money payment for the purchase of a residential property and held that an unsigned property agreement and unverified third-party search material could not constitute sufficient evidence for making additions under the Income Tax Act1961.
The Tribunal held that additions cannot be sustained on the basis of presumptions, assumptions and uncorroborated third-party material. In the absence of independent evidence establishing actual cash payment, the burden cast upon the Revenue remained undischarged.The ITAT deleted the ₹90 lakh addition made under Section 69A and held that the allegation of on-money payment lacked corroborative evidence and was therefore unsustainable in law.
Cash Payments for Purchase of Agricultural Produce Through Kaccha Arahtias Protected By Statutory Exceptions u/s 40: ITAT Deletes ₹14 Cr Disallowance
CITATION : 2026 TAXSCAN (ITAT) 663
The Income Tax Appellate Tribunal (ITAT) Kolkata Bench deleted a disallowance of ₹14.08 crore made under Section 40A(3) of the Income Tax Act 1961 held that cash payments made through Kaccha Arahtias for procurement of agricultural produce are protected under the statutory exceptions provided in the Act and Rules.
The bench set aside the CIT(A) order and directed deletion of the entire addition of ₹14.08 crore and allowed the appeal of the assessee.
Penny Stock LTCG Addition Unsustainable Without Evidence Linking Investor to Price Manipulation: ITAT Deletes ₹33.97 Lakh Addition
Bhawna Kapoor Prop M/s ManishHandicraft 1196 vs ACIT Circle 62(1) Delhi
CITATION : 2026 TAXSCAN (ITAT) 664
The Income Tax Appellate Tribunal (ITAT) Delhi Bench has deleted an addition of ₹33.97 lakh made towards alleged bogus Long-Term Capital Gains (LTCG) arising from the sale of shares of Cressanda Solutions Ltd., holding that the Revenue failed to produce any material linking the assessee to price rigging, entry operators or accommodation entry transactions.
The Bench comprising S. Rifaur Rahman (Accountant Member) and Vimal Kumar (Judicial Member) noted that the assessee had completed the purchase and sale of shares through recognized channels with payments made and received through banking systems and shares held in dematerialized form.
Exercise of Concessional Tax Regime Option Cannot Be Rejected for Mere Procedural Non-Compliance: ITAT Directs Grant of Lower Tax Rate Benefit
Welkin Industries PrivateLimited vs ITO Ward 27
CITATION : 2026 TAXSCAN (ITAT) 665
The of the Income Tax Appellate Tribunal (ITAT) Delhi Bench has held that an assessee cannot be deprived of the benefit of a concessional tax regime merely due to a procedural lapse in filing the prescribed form directing the Revenue to grant the lower tax rate benefit available under the Income Tax Act 1961.The Tribunal allowed the assessee’s appeal and directed the Assessing Officer to compute tax at the concessional rate after finding that the delay in filing Form 10-IC was only a procedural defect.
The Bench comprising Sudhir Kumar (Judicial Member) and S. Rifaur Rahman (Accountant Member) held that procedural requirements should not override substantive rights. The Bench held that a technical lapse in filing the form within time could not defeat a legitimate statutory benefit.
Telescoping Benefit Available Against Demonetisation Cash Deposits Supported by Proven On-Money Receipts: ITAT Grants ₹24.65 Cr Relief
Shalimar Corp Ltd vs The Dy.C.I.T
CITATION : 2026 TAXSCAN (ITAT) 666
The Income Tax Appellate Tribunal (ITAT) Delhi Bench has held that telescoping benefits can be granted against cash deposits made during the demonetisation period where the existence of undisclosed on-money receipts had already been established through search proceedings. The Tribunal accordingly directed deletion of ₹24.65 crore, being 50% of the addition made under Section 68 of the Income Tax Act, 1961.
The Bench comprising Ms. Madhumita Roy (Judicial Member) and Naveen Chandra (Accountant Member) partly allowed the appeal and held that although the assessee failed to conclusively establish the entire availability of cash, the claim for telescoping possessed substantial merit. Accordingly, it granted telescoping benefit to the extent of 50% of the cash deposits and directed deletion of ₹24.65 crore out of the addition of ₹49.30 crore.
DVO's Property Valuation Report in Co-Seller's Case to Govern Capital Gains Computation for Joint Seller: ITAT
Baby Bajal Pakkaladka vs IncomeTax Officer
CITATION : 2026 TAXSCAN (ITAT) 667
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) recently held that when the fair market value of a property has been determined by the District Valuation Officer (DVO) in proceedings initiated in a co-seller's case, that particular valuation was to be adopted for computing capital gains for all joint sellers of the same property for the purposes of Section 50C of the Income Tax Act, 1961.
Vice-President Prashant Maharishi accepted the assessee's contention that the property value was to be determined as ₹2,15,03,000 for computing capital gains as established by the DVO report in the co-seller's proceedings, and not the stamp duty figure applied by the AO.
Section 54F Relief Available Despite Procedural Delay in Construction: ITAT Grants ₹1.73 Cr Deduction on Residential Plot Purchase and Habitable House
Narayan Swaroop Garg vsDCIT/ACIT
CITATION : 2026 TAXSCAN (ITAT) 668
In a recent ruling, the Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has allowed a deduction of ₹1.73 crore under Section 54F of the Income TaxAct, 1961, holding that minor procedural delays in construction approval cannot defeat an otherwise valid claim when the assessee has substantially complied with the conditions for building a residential house.
The bench mainly observed that “Moreover, the major amount was incurred for the purchase of plot whereupon the residential house was constructed and only the small amount of Rs.20 lakhs has been claimed towards construction cost. Therefore, considering the overall facts and circumstances of the case, we find it fit a case for grant of deduction u/s 54F of the Act.”
Transactions Conducted on Behalf of Bank by Business Correspondent Cannot Be Treated as Unexplained Money u/s 69A: ITAT
CITATION : 2026 TAXSCAN (ITAT) 669
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, deleted an addition of Rs.2.31 crore made under Section 69A ofthe Income Tax Act after finding that the deposits and withdrawals reflected in the assessee's bank account were undertaken in his capacity as a business correspondent of Bank of India.
The Tribunal noted that the transactions carried out by the assessee were on behalf of Bank of India. Therefore, the action of the AO in treating the same as unexplained money under Section 69A was incorrect and could not be sustained.
Income Tax Deduction Cannot Be Denied Merely Due to Incorrect Expense Head Where Business Purpose is Established: ITAT
Bengal Peerless HousingDevelopment Company Ltd vs DCIT
CITATION : 2026 TAXSCAN (ITAT) 670
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, deleted a disallowance of Rs.7.18 lakh after observing that a difference of opinion regarding the head of expenditure or nomenclature could not justify denial of deduction where the expenses were incurred in connection with the assessee's business.
The Tribunal comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member) observed that the expenses had been incurred by way of monthly retainership charges. It further observed that such retainership arrangements were very common and usual in business where persons were retained on a monthly basis.
S.68 Addition Based on AO's 'Imagination' of Share Capital Receipt Unsustainable Under Income Tax Act: ITAT
EPS Financial Services Pvt. ltdvs Income Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 671
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, deleted an addition of Rs.2.25 crore made under Section 68 of the Income Tax Act after observing that there was no change in the assessee's share capital during the relevant year and that the addition was based on the AO's imagination.
The Tribunal comprising Rajesh Kumar (Accountant Member) and Pradip Kumar Choubey (Judicial Member) observed that the share capital as on 31.03.2015 and 31.03.2016 remained unchanged at Rs.4.94 crore. The Tribunal also noted that there was no change in the current liabilities during the year.
AO Cannot Examine Issues Beyond Scope of Limited Scrutiny Without Valid Conversion to Complete Scrutiny: ITAT
Chatterjee Asset Holdings Pvt.Ltd vs ACIT
CITATION : 2026 TAXSCAN (ITAT) 672
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, deleted a disallowance made under Section 36(1)(iii) of theIncome Tax Act after holding that the Assessing Officer had exceeded his jurisdiction by examining an issue outside the scope of limited scrutiny without following the prescribed procedure for conversion into complete scrutiny.
The Tribunal held that the Assessing Officer had exceeded his jurisdiction and that the assessment, to that extent, was bad in law.
No TP Adjustment Where Foreign LLC's Income is Already Taxed in India: ITAT
Elofic Industries Limited vsACIT, Circle 7 (1),Delhi
CITATION : 2026 TAXSCAN (ITAT) 673
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, deleted transfer pricing adjustment of Rs.2.84 crore made in respect of transactions between the assessee and its wholly owned US LLC after holding that the profits of the LLC were already taxed in the hands of the assessee in India.
The Tribunal comprising S. Rifaur Rahman (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) observed that there was no dispute that the assessee was the sole owner of the LLC and that the entire income earned by the LLC had been offered to tax in India.
Dual PAN confusion delayed Income Tax appeal Filing: ITAT condones Delay, Restores Case for Fresh Hearing
Hunnur Souhard Credit SahakariSangh Niyamit Hunnur vs The Income Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 674
The Income Tax Appellate Tribunal ( ITAT ) Bangalore ‘A’ Bench has condoned the delay in filing income tax appeals by the appellant, observing that the assessee’s confusion arising from possession of two PANs constituted a sufficient cause for the delay.
The Tribunal noted that the assessee should have sought cancellation of the earlier PAN to avoid duplication, but accepted that the delay was bona fide.
Gift from Father Cannot be Taxed Without Merits Review: ITAT Restores Appeal Holding Medical Grounds and Technical Lapse as Sufficient Cause u/s 68
Nagalinga Reddy Anil vs TheIncome Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 675
The Income Tax Appellate Tribunal (ITAT) Bangalore Bench has restored the appeal after condoning a 140‑day delay in filing, holding that medical grounds and expiry of the assessee’s digital signature constituted sufficient cause under Section 68 of the Income Tax Act, 1961. The Tribunal observed that the assessee’s claim of receiving a gift from his father required examination on merits and could not be dismissed on technical grounds.
Holding that the reasons for delay were valid, the ITAT condoned the 140‑day delay, set aside the NFAC’s order, and directed the CIT(A) to hear the appeal afresh after granting due opportunity to the assessee.
Additions u/s 69 cannot be made if Books of Account reflect the Investments: ITAT
Income Tax Officer9(2)(1) vsBluepearl Trading Company Private Limited
CITATION : 2026 TAXSCAN (ITAT) 676
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, held that additions under Section 69 of the Income Tax Act, 1961 cannot be made if the books of account reflect the investments under scanner.
The bench of Prabhash Shankar (Accountant Member) and Amit Shukla (Judicial Member) dismissed the grounds raised by the Revenue department and rejected the appeal.
Rectification Order u/s 154 cannot exceed Jurisdiction and alter Misconceived Allegation u/s 69: ITAT
The Nilgiri Dairy Farm PrivateLimited vs DCIT-CC-3(3)(1)
CITATION : 2026 TAXSCAN (ITAT) 677
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, held that a rectification order under Section 154 of the Income Tax Act, 1961 cannot exceed jurisdiction and alter a misconceived allegation under Section 69.
The bench of Prabhash Shankar (Accountant Member) and Amit Shukla (Judicial Member) held that the rectification order is unsustainable in law and are hereby quashed. The appeal was allowed.
Sale of Infosys Bonus Shares Amounting to ₹3.55 Crore Treated as LTCG, Not Business Income: ITAT
The Income Tax Officer vs M/s.Goldflag Holdings Private Limited
CITATION : 2026 TAXSCAN (ITAT) 678
In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Bangalore Bench ‘ A’, has upheld the exemption claimed by the assessee on ₹3.55 crore earned from the sale of Infosys Limited bonus shares, affirming that the gains constitute long‑term capital gains and not business income.
The Tribunal, comprising Vice‑President Prashant Maharishi and Judicial Member Soundararajan K, observed that the CBDT circular binds the tax authorities and clearly directs that listed shares held for more than twelve months and treated as capital assets by the assessee should not be disputed.
Agency‑Handled Demonetisation Cash Deposits Not Taxpayer’s Unexplained Money: ITAT Recomputes Commission at 1% on ₹3.69Cr Receipts
CITATION : 2026 TAXSCAN (ITAT) 679
The Delhi Bench of the Income Tax AppellateTribunal (ITAT) has held that cash deposits made in specified bank notes (SBN) during the demonetisation period cannot be treated as unexplained money when such funds belong to principal payment service companies.
The bench comprising Manish Agarwal (Accountant Member) and Yogesh Kumar U.S (Judicial Member) accepted the explanation, noting that the funds were traceable to the principals and duly remitted.
Chinese Mobile Phone Trade Backed by IEC Certificate Shields Demonetisation Cash Deposits: ITAT Cuts ₹11.5 Cr Addition to 1% Profit Margin
CITATION : 2026 TAXSCAN (ITAT) 680
In a recent ruling, the Income Tax Appellate Tribunal (ITAT) Delhi Bench has curtailed a massive addition of ₹11.52 crore made on account of cash deposits, holding that the deposits were linked to genuine business turnover from the import and sale of Chinese mobile phones.
To address this, the bench comprising judicial member Yogesh Kumar U.S. and account member Manish Agarwal applied a 1% gross‑profit rate on the turnover, instead of the declared 0.7%, and reduced the ₹11.52 crore addition accordingly.
ALP of Intra-group Services cannot be Determined at 'Nil' Merely on Subjective Perception of Benefit: ITAT rules in favour of Roquette India Pvt. Ltd
Roquette India Pvt. Ltd vsAssistant Commissioner of Income-Tax
CITATION : 2026 TAXSCAN (ITAT) 681
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, ruled in favor of Roquette India Pvt. Ltd., deleting a substantial transfer pricing adjustment of approximately Rs. 24.37 crores for AY 2017-18 (and a similar amount for AY 2018-19). The Tribunal held that the Transfer Pricing Officer (TPO) was not justified in determining the Arm's Length Price (ALP) of intra-group services at 'Nil' despite the assessee providing detailed agreements and contemporaneous documentation.
The Coram, comprising Dr. B.R.R. Kumar, Vice-President, and T.R. Senthil Kumar, Judicial Member, observed that the assessee had placed on record comprehensive documentation, including service agreements, allocation keys, cost pool workings, emails, presentations, and independent audit certificates spanning over hundreds of pages in the paper book.
Retail Trade and After-Sales Businesses Not Comparable with Wholesale OEM Supplier for TP Analysis: ITAT
Astemo India Private Limited vsAddl. CIT
CITATION : 2026 TAXSCAN (ITAT) 682
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, deleted transfer pricing adjustments after holding that entities engaged in retail trade and after-sales business were not functionally comparable with an assessee engaged in wholesale trading of auto components supplied to original equipment manufacturers (OEMs).
Referring to Rule 10B(2) of the Income Tax Rules, the Tribunal held that companies operating in retail and after-sales market segments were not appropriate comparables for benchmarking the assessee's transactions.
ITAT Remands Sec. 40(a)(ia) Disallowance for Verification of TDS Exemption Claim u/s 194C(6)
Astemo India Private Limited vsAddl. CIT
CITATION : 2026 TAXSCAN (ITAT) 682
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, remanded the issue relating to disallowance under Section 40(a)(ia) of the Income Tax Act,1961 to the Assessing Officer (AO) for fresh verification of the assessee's claim regarding non-deduction of tax at source on transport payments.
The Bench comprising S. Rifaur Rahman (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) observed that the assessee's claim regarding eligibility for benefit under Section 194C(6) required verification. It noted that the issue was factual in nature and required examination of the material relied upon by the assessee.
Material Cost Not Liable for TDS u/s 194C: ITAT Restricts Sec. 40(a)(ia) Disallowance to 30% of Defaulted Amount
Aircon India Incorporated vsDCIT, Circle 29
CITATION : 2026 TAXSCAN (ITAT) 683
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, partly allowed the assessee's appeal and directed the AO to restrict disallowance under Section 40(a)(ia) after holding that material purchased for installation purposes was not liable for TDS under Section 194Cof the Income Tax Act.
Relying on Dipak Arui v. ITO and Shri Rajendra Yadav v. ITO, the Tribunal held that disallowance under Section 40(a)(ia) was liable to be restricted to 30% of the defaulted amount.
Consequential Benefits of 12AB and 80G Registration Cannot Be Kept in Suspended or Conditional State: ITAT
ILLA Rajesh Foundation vs CIT(Exemptions)
CITATION : 2026 TAXSCAN (ITAT) 684
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, directed the CIT(E) to delete conditions imposed on registration under Section 12AB and approval under Section 80G after holding that the consequential benefits could not be made subject to the outcome of a proposed Special Leave Petition before the Supreme Court.
The Tribunal comprising Anikesh Banerjee (Judicial Member) and Makarand Vasant Mahadeokar (Accountant Member) observed that Section 12AB did not confer any express power upon the CIT(E) to impose independent conditions while granting registration, except to the extent specifically contemplated under the Act. It further observed that cancellation or withdrawal of registration was separately governed by Sections 12AB(4) and 12AB(5) of the Act.
Addition Towards WIP Difference Unsustainable Where Amount Represents Opening WIP Brought Forward: ITAT
Greentime Projects PrivateLimited vs The Income Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 685
The Income Tax Appellate Tribunal (ITAT), Hyderabad Bench, directed the deletion of an addition of Rs. 36.50 lakh made towards difference in stock-in-trade after finding that the discrepancy represented opening work-in-progress brought forward from the preceding year.
Holding that the addition towards difference in stock-in-trade could not be sustained, the Tribunal directed the AO to delete the addition.
YEIDA payments explained via third-party borrowings under RBI-regulated NBFCs: ITAT deletes ₹22.47 crore S. 69 additions
Income Tax Officer vs AnovaInfracon Pvt. Ltd
CITATION : 2026 TAXSCAN (ITAT) 686
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of ₹22.47 crore additions made under Section 69 of the Income Tax Act, holding that payments to the Yamuna Expressway Industrial Development Authority (YEIDA) were fully explained through third‑party borrowings from RBI‑regulated non‑banking financial companies (NBFCs).
The bench, comprising Judicial Member Raj Kumar Chauhan and Accountant Member Brajesh Kumar Singh, observed that the CIT(A) had lawfully admitted additional evidence, carefully analysed the facts, and found the transactions genuine. Concluding that the CIT(A)’s findings were accurate and well‑reasoned, the Tribunal held there was no justification to interfere.
ITAT allows Section 54F Deduction on 50 Flats Received Under JDA for Pre-2015 Assessment Year
Smt. Anuradha Chennu vs Dy. CIT
CITATION : 2026 TAXSCAN (ITAT) 687
The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) has held that an assessee is entitled to claim deduction under Section 54F of the Income TaxAct, 1961 on all 50 residential flats received under a Joint Development Agreement (JDA) for Assessment Year 2013-14.
Before the amendment, courts had consistently interpreted the term "a residential house" to include multiple residential units arising from a single development agreement or situated in the same residential complex, according to the Bench of Vice President Vijay Pal Rao and Accountant Member Madhusudan Swadia.
ITAT Accepts Savings Accumulated for Cancer Treatment of Wife, Sustains only ₹7.79L Addition out of ₹19.79 Lakh
Abdul Muqeet Mohammed vs Dy. CITCentral Circle
CITATION : 2026 TAXSCAN (ITAT) 688
The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ), accepted cash found in his possession was partly accumulated savings kept aside for the cancer treatment of his wife and limited the addition only to Rs. 7.79L out of the total addition of Rs.19.79 lakh.
The bench of Vijay Pal Rao (Vice president) and Madhusudan Swadia (Accountant member) held that “Considering the overall facts and circumstances of the case, the returned income of the assessee and his sons, the medical condition of the wife of the assessee and applying the test of human probabilities, we are of the considered opinion that accumulation/savings of Rs.3 lakhs per person can reasonably be accepted in the present case. Therefore, out of the total cash of Rs.19,79,950/-, accumulation/savings to the extent of Rs.12 lakhs in the hands of the assessee and his three sons is accepted as explained source.”
Non-Realization of Part of Sale Consideration cannot defer Chargeability of Capital Gains to Tax: ITAT
Mehboob Jabir Patel vs IncomeTax Officer
CITATION : 2026 TAXSCAN (ITAT) 689
The Ahmedabad Bench of the Income Tax Appellate Tribunal held that non realization of sale consideration does not defer chargeability of capital gains unless the transaction itself is cancelled or legally rescinded.
The Tribunal found no infirmity in the orders passed by the Assessing Officer and the CIT(A) and upheld the addition, holding that the transfer had taken place during Financial Year 2013-14 relevant to Assessment Year 2014-15.
No Presumptive Taxation u/s 44BB for Offshore Supply Receipts without Established PE in India: ITAT
Baker Hughes Energy TechnologyUK Ltd vs ACIT
CITATION : 2026 TAXSCAN (ITAT) 690
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that Section 44BB of the Income Tax Act, 1961 cannot be invoked to tax receipts arising from offshore supply of goods on a presumptive basis where the Revenue has failed to establish the existence of a Permanent Establishment (PE) of the assessee in India.
The bench comprising Vikas Awasthy, Judicial Member, and Renu Jauhri, Accountant Member, observed that the issue had already been adjudicated in favour of the assessee by the co-ordinate bench for AY 2021-22. Following the earlier decision, the Tribunal held that the Revenue had failed to establish the existence of a Permanent Establishment of the assessee in India. Consequently, the provisions of Section 44BB of the Income Tax Act could not be applied to tax the receipts from offshore supply on a presumptive basis.
Approval u/s 153D involving Mechanical Exercise of multiple Assessees is Non-Est: ITAT
CITATION : 2026 TAXSCAN (ITAT) 691
The Dehradun Bench of the Income Tax Appellate Tribunal (ITAT) has held that an approval granted under Section 153D of the Income Tax Act, 1961 through a mere mechanical exercise covering multiple assessees is non est in the eyes of law and renders the consequent assessment unsustainable.
Following the ratio laid down in the aforesaid decisions, the Tribunal held that a common approval granted through a mechanical exercise involving multiple assessees and assessment years does not satisfy the statutory requirement of independent application of mind under Section 153D of the Income Tax Act and is, therefore, non est in law.
Reopening of Assessment u/s 147 cannot be based on Borrowed Satisfaction: ITAT
Rajvi Shah vs Income Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 692
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) held that reopening under Section 147 of the Income Tax Act, 1961 cannot be based merely on borrowed satisfaction. The Assessing Officer must independently apply his mind to the material available before assuming jurisdiction under Section 147 of the Income Tax Act, 1961.
A two-member bench of Dr. B.R.R. Kumar, Vice-President T.R. Senthil Kumar, Judicial Member held that “From a plain reading of the reasons recorded, it is evident that the reopening has been initiated solely on the basis of information received from the Insight Portal/Investigation Wing. No independent enquiry or verification has been conducted by the Assessing Officer before recording satisfaction for reopening the assessment. It is well settled law that reopening under Section 147 cannot be based merely on borrowed satisfaction. The Assessing Officer must independently apply his mind to the material available before assuming jurisdiction under Section 147 of the Act.”
Revenue Authorities cannot sit in Armchair of Businessman and Dictate: ITAT rules Ad Hoc Disallowance for Incomplete Vouchers Unsustainable
A Kishore Rao and Others vs TheDy. Commissioner of Income Tax
CITATION : 2026 TAXSCAN (ITAT) 693
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has held that an ad hoc disallowance of business expenditure merely on account of incomplete vouchers is unsustainable, observing that the Revenue authorities cannot sit in the armchair of a businessman and dictate the manner in which business operations should be conducted.
Taking note of the nature of the assessee's business, the consistent accounting practices followed over the years, the stable and improved net profit ratio during the relevant assessment year, reimbursement of expenses through banking channels, and the absence of any finding that the amounts had been routed back to the assessee, the Tribunal held that the authorities below were not justified in sustaining an ad hoc disallowance.
Monetary Jurisdiction as per CBDT exceeded by ACIT as Return of Income from Corporate Entity was less than Rs.30 L: ITAT
Sperry International Pvt. Ltd vsDCIT
CITATION : 2026 TAXSCAN (ITAT) 694
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that the monetary jurisdiction as per CBDT was exceeded by the Assistant Commissioner of Income Tax as return of income filed by the corporate entity was less than INR 30,00,000/-.
The Tribunal found merits in the contention raised by the counsel of the assessee and allowed the appeal. The bench of Sudhir Kumar (Judicial Member) and Manish Agarwal (Accountant Member) therefore set aside the order confirmed by the CIT(A) on 27.05.2026.
Quantum of Escaped Income to be more than Rs. 50 L for Reopening Assessment after 3 Years: ITAT allows appeal
Rohit Premji Chheda vs IncomeTax Officer 27(3)(1)
CITATION : 2026 TAXSCAN (ITAT) 695
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, allowed an appeal and held that the quantum of escaped income is to be more than Rs. 50 Lakhs for reopening assessment after three years.
A plethora of case laws including Bhavesh Maganlal Dharod v. ITO (2023) were relied upon to this contention, the proceedings were found to be invalid and liable to be quashed by the Tribunal. The bench of Beena Pillai (Judicial Member) and Arun Khodpia (Accountant Member) allowed the appeal and held that the order of the CIT(A) is liable to be set aside.
No disallowance u/s 43B of Income Tax Act allowable for unpaid GST: ITAT
KBH Energy and Infra ServicesPvt vs Centralized Processing Centre (CPC)
CITATION : 2026 TAXSCAN (ITAT) 696
The Income Tax Appellate Tribunal (ITAT), New Delhi bench has held that no disallowance can be made under Section 43B of the Income Tax Act, 1961 in respect of unpaid Goodsand Services Tax (GST) where the GST liability has neither been claimed as an expenditure nor routed through the profit and loss account.
The Bench relied upon the decisions in Dalip Singh Rathore and Munjal Auto Industries Ltd. wherein held that unpaid GST cannot be disallowed under Section 43B of the Income TaxAct where it has not been claimed as a deduction in computing taxable income. Accordingly, the Tribunal deleted the disallowance of ₹45.62 lakhs made on account of unpaid GST and allowed the assessee’s appeal on this issue.
Deduction u/s 80G of Income Tax Act cannot be denied for Payment made for CSR Obligations: ITAT
Milacron India Private Limitedvs Deputy Commissioner of Income-tax
CITATION : 2026 TAXSCAN (ITAT) 697
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that a deduction under Section 80G of the Income Tax Act, 1961 cannot be denied solely on the ground that the contribution was made in discharge of Corporate Social Responsibility (CSR) obligations, provided the donation otherwise fulfils the statutory requirements of Section 80G of the Income Tax Act, 1961.
Emphasising that the nature of CSR expenditure by itself cannot be a ground for disallowance, the Tribunal held that deduction under Section 80G of the Income Tax Act cannot be denied merely because the payment was made in fulfilment of CSR obligations, so long as the contribution otherwise qualifies under the provisions of Section 80G of the Income Tax Act.
Absence of Formal Gift Deed does not render Transaction Unexplained u/s 69 of Income Tax Act: ITAT
Sameena Shamsuddin Sayed vsIncome Tax Officer
CITATION : 2026 TAXSCAN (ITAT) 698
A Division Bench of the Income Tax Appellate Tribunal (ITAT), Mumbai, has held that the absence of a formal gift deed cannot, by itself, render a transaction unexplained under Section 69 of the Income Tax Act, 1961, when the source of funds is duly established through documentary evidence and banking records.
The Bench comprising Amit Shukla, Judicial Member and Prabhash Shankar, Accountant Member observed "Here, the transaction is fully corroborated by banking records, direct transfer of funds to the seller and documentary evidence placed before the Assessing Officer himself. Once the payment trail stood duly established and the source of payment was identified, then absence of a formal gift deed by itself could not render the transaction unexplained or ingenuine. The entire addition, therefore, has been made merely on surmises and presumptions without any legally sustainable basis."
ITAT deletes Penalty as no Satisfaction Recorded by the AO u/s 271D of Income Tax Act
CITATION : 2026 TAXSCAN (ITAT) 699
The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) deleted the penalty as no satisfaction was recorded by the Assessing Officer under Section 271D of the Income Tax Act, 1961.
Deleting the penalty imposed, the Bench comprising Satbeer Singh Godara, Judicial Member and Naveen Chandra, Accountant Member noted that “We find that it is an admitted fact that no assessment was made in the case of the assessee for AY 2016-17 and consequently no satisfaction has been recorded by the AO for initiating the penalty proceedings under section 271D of the Income Tax Act.”
Income Tax Addition Based on Suspicion Alone Invalid: ITAT Allows Claim on Preferential Share Sale
INCOME TAX OFFICER 19(2)(4) vsNEELAM MOR
CITATION : 2026 TAXSCAN (ITAT) 700
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has reiterated that suspicion, however strong, cannot take the place of legal evidence while allowing an assessee's claim of long-term capital gains (LTCG) arising from the sale of preferential shares.
The Tribunal held "Since the transactions took place through registered brokers on the online platform of the stock exchange, neither the buyer nor the seller could have known each other, nor their respective brokers. In such circumstances, it cannot be presumed that there was any transfer of cash between the buyer and seller for converting unaccounted money of the beneficiary, as alleged by the AO. It is a settled proposition of law that suspicion, howsoever strong, cannot take the place of legal evidence."
Creditworthiness of Creditors cannot be established by Furnishing Loan Confirmations: ITAT
Baby Naz Shoukat Shaikh A-502 vsNational Faceless Assessment Centre
CITATION : 2026 TAXSCAN (ITAT) 701
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that merely furnishing loan confirmation letters is not sufficient to establish the creditworthiness of creditors or the genuineness of loan transactions. The Tribunal observed that proper enquiry and verification are necessary before accepting an assessee's claim regarding unsecured loans.
The Tribunal Bench comprising Saktijit Dey, Vice President and Prabhash Shankar, Accountant Member observed: “By simply furnishing loan confirmations, the creditworthiness of the creditors and genuineness of the loan transaction cannot be established. There is nothing on record to suggest that any enquiry with regard to the loan transactions were undertaken at the first appellate stage. Thus, without conducting a thorough enquiry with regard to assessee’s claim of availability of unsecured loans, no logical conclusion can be reached.”
No Assessment Proceedings to be initiated during Operation of Moratorium upon order of NCLT: ITAT
SUCHI PAPER MILLS LIMITED vsDCIT
CITATION : 2026 TAXSCAN (ITAT) 702
In a recent decision, the New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that assessment proceedings cannot be initiated during operation of moratorium by order of the National Company Law Appellate Tribunal (NCLT).
The Tribunal of Vikas Awasthy, Judicial Member observed that “The NCLT in proceedings under the Insolvency and Bankruptcy Code, 2016 has declared moratorium under Section 14 of the IBC. Consequent to the moratorium, proceedings against the assessee company could not have been initiated. It is also an undisputed fact that public notice was published in the newspaper. Once public notice had been given there was no requirement for any separate intimation to the AO regarding such proceedings.”
Disallowance of Interest Expenses Requires Proof of Diversion of Interest-Bearing Funds for Non-Business Purposes: ITAT
Jaiswal Rice Mill vs Income Tax Officer-3(4)
CITATION : 2026 TAXSCAN (ITAT) 703
The Income Tax Appellate Tribunal (ITAT), Lucknow Bench, restored the matter to the Assessing Officer for fresh examination after observing that there was no material on record to establish diversion of interest-bearing funds for non-business purposes.
The matter was restored to the file of the AO for passing a fresh order after due verification and after providing reasonable opportunity to the assessee.
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