Addition under section 69A deleted as based solely on third-party information without independent enquiry or corroborative evidence.

Issue: The issue in this case was whether the addition of Rs. 31,35,185/- made by the Assessing Officer under section 69A of the Income Tax Act, on account of alleged inflated purchases, was justified when it was based solely on third-party information without any independent verification or incriminating material against the assessee.

Facts: The assessee, a partnership firm engaged in manufacturing automobile components, filed its return declaring income of Rs. 15,34,910/- for A.Y. 2020-21. Based on information received from a search conducted on M/s Bharat Seats Ltd. and others, the AO alleged that the assessee was involved in inflated purchases of Rs. 31,35,185/-. The AO made an addition under section 69A treating the said amount as unexplained money. The CIT(A) upheld the addition, holding that the information received was sufficient evidence. The assessee contended that the entire addition was made without any independent enquiry, without providing copies of documents relied upon, and based only on third-party findings, violating the principles of natural justice.

Held: The Tribunal held that the addition made by the AO was based purely on third-party information and no independent enquiry or corroboration was conducted to link the alleged inflated purchases with the assessee. Further, no incriminating material or supporting evidence was provided to the assessee despite repeated requests. It was held that additions based on conjectures and unverified third-party data cannot be sustained. Accordingly, the addition of Rs. 31,35,185/- made under section 69A was deleted, and the appeal of the assessee was allowed.

The Tribunal allows deduction u/s 11(1)(a) and deemed application u/s 11(1) by condoning delay in filing Forms 10B and 9A for A.Y. 2016-17 in favour of the assessee trust.

Issue: The main issues were (i) denial of deduction of Rs.4,82,850 under section 11(1)(a) for non-submission of Audit Report in Form 10B, and (ii) denial of deemed application of Rs.8,09,074 under clause 2 of Explanation to section 11(1) for non-filing of Form 9A within due date.

Facts: The assessee, a charitable trust, filed its return for A.Y. 2016-17 declaring income after claiming application and deemed application of income. The Assessing Officer denied deduction u/s 11(1)(a) on the ground that Form 10B audit report was not furnished before the due date u/s 139(1), and disallowed deemed application as Form 9A was not found uploaded on the e-filing portal, though assessee claimed to have filed it online. CIT(A) confirmed the additions.

Held: The Tribunal held that the requirement of furnishing the audit report in Form 10B is directory and not mandatory. Since the assessee had filed Form 10B on 29.10.2016, before completion of assessment, the deduction u/s 11(1)(a) of Rs.4,82,850 was allowed, following the Gujarat High Court decision in Sarvodaya Charitable Trust v. ITO [(2021) 133 taxmann.com 43].

Regarding Form 9A, the Tribunal noted that delay occurred due to technical issues during the first year of mandatory e-filing and relied on CBDT Circular No.07/2018 dated 20.12.2018, which permitted condonation of such delays u/s 119(2)(b). Observing that Form 9A was subsequently filed on 15.01.2019 before appellate proceedings concluded, the delay was condoned and deemed application of Rs.8,09,074 allowed.

Appeal allowed. Deduction u/s 11(1)(a) and deemed application u/s 11(1) both granted in favour of the assessee.

TDS on Lease Rent Paid to NOIDA Not Applicable for Payments Made Before 16.02.2017; Assessee Not in Default Under Sections 201(1) and 201(1A).

Issue: Whether the Assessee, a real estate developer, was liable to deduct tax at source (TDS) under Section 194-I of the Income Tax Act on lease rent payments made to the New Okhla Industrial Development Authority (NOIDA) during the financial year 2011–12. The Assessing Officer treated the Assessee as an “assessee in default” under Sections 201(1) and 201(1A) for failure to deduct TDS and levied tax and interest.

Fact: The Assessee paid lease rent of Rs. 42,67,989 to NOIDA without deducting TDS, as NOIDA refused to accept payments after TDS deduction, claiming exemption. The Assessing Officer passed an order dated 28.03.2014 treating the Assessee as in default, which was upheld by the CIT(A) on 20.02.2017. The Assessee appealed, relying on the Delhi High Court ruling in Rajesh Projects (India) Pvt. Ltd. v. CIT (2017), later affirmed by the Supreme Court in M/s NOIDA & Greater NOIDA v. CIT (2018), which held that TDS under Section 194-I applies prospectively from 16.02.2017.

Held: The Tribunal held that since the lease payments were made during FY 2011–12 (prior to 16.02.2017), the Assessee was not required to deduct TDS under Section 194-I. The authorities erred in treating the Assessee as in default. Accordingly, the orders under Sections 201(1)/201(1A) dated 28.03.2014 and the CIT(A)’s order dated 20.02.2017 were set aside. The Assessee’s appeal was allowed.

Tribunal Remands Appeal for Consideration of Additional Documents Not Filed in Compliance with Rule 46A of Income Tax Rules.

Issue: The main issue in this case is whether the additional documents submitted by the Assessee before the Ld. CIT(A) were properly considered, given that these were not submitted in compliance with Rule 46A of the Income Tax Rules, 1962, which governs the filing of additional evidence in first appeals.

Fact: The Assessee had filed an appeal against the assessment order under Section 143(3) and Section 147 of the Income Tax Act, 1961, where the income was assessed at Rs. 1,50,57,900/- compared to the returned income of Rs. 6,45,330/-. The Ld. CIT(A) dismissed the appeal after not considering the additional documents provided by the Assessee, as they were not accompanied by an application under Rule 46A. The Assessee then filed the present appeal challenging the order of the Ld. CIT(A).

Held: The Tribunal acknowledged that the Assessee had submitted additional documents for the first time before the Ld. CIT(A), but failed to comply with Rule 46A, which requires an application for the admission of additional evidence. As the documents were not admitted according to the prescribed procedure, the Ld. CIT(A) rightly did not consider them. In the interest of natural justice, the Tribunal remanded the matter back to the Ld. CIT(A), granting the Assessee the opportunity to submit a proper application under Rule 46A for the admission of additional evidence. The Ld. CIT(A) is directed to consider the documents and decide the appeal accordingly. If no application is filed within a reasonable time, the appeal can be decided without the additional documents. The appeal was partly allowed for statistical purposes.

Reassessment Notice Issued in the Name of Deceased Person Held Void Ab Initio and Proceedings Quashed

Issue: The issue in this case was whether the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, against a deceased person are valid in law.

Fact: The assessee, Shri Champat Singh, passed away on 16.04.2018. Despite this, the Assessing Officer issued a notice under Section 148 on 26.03.2019 in the name of the deceased and subsequently completed the assessment under Sections 147 r.w.s. 144 on 09.12.2019. The legal heirs were not issued any notice nor brought on record before passing the assessment order.

Held: The Tribunal held that a notice issued under Section 148 in the name of a deceased person is void ab initio, as proceedings cannot be initiated against a person who no longer exists in the eyes of law. Relying on several Delhi High Court and Tribunal decisions, it was held that such initiation of reassessment constitutes a substantive illegality. Accordingly, the notice and entire reassessment proceedings were quashed. The appeal of the assessee was allowed, and other grounds were rendered academic.

Revision under Section 263 invalid as PCIT failed to show any error or lack of inquiry by AO regarding alleged bogus loan from M/s. Prerna Infrabuild Ltd.

Issue: The issue in this case was whether the order passed by the Assessing Officer (AO) under Section 147 for A.Y. 2018-19, accepting the returned income without making any addition for alleged bogus accommodation entry of Rs.33,94,991 received from M/s. Prerna Infrabuild Ltd., was erroneous and prejudicial to the interest of the Revenue, justifying revision under Section 263 of the Act by the PCIT.

Fact: The case was reopened under Section 147 based on information that the assessee had received a fictitious loan from M/s. Prerna Infrabuild Ltd., an entity managed by Shri Jignesh Shah, an alleged accommodation entry operator. However, the AO, after reopening, accepted the income returned by the assessee without making any addition. The PCIT invoked Section 263, stating that the AO failed to verify the genuineness of the loan and that the assessment was erroneous and prejudicial to the Revenue. The assessee contended that the PCIT had not shown any specific error or lack of inquiry in the assessment order.

Held: The Tribunal held that the PCIT’s order under Section 263 was unsustainable as it failed to demonstrate how the AO had not made proper inquiries or how the assessment order was erroneous. The PCIT merely relied on general information regarding Shri Jignesh Shah without establishing any deficiency in the AO’s examination of the issue. Since there was no specific finding of error or lack of inquiry by the AO, the revision under Section 263 was invalid. Accordingly, the appeal of the assessee was allowed.

Reassessment Notice under Section 148 Held Time-Barred and Entire Assessment Quashed Following Supreme Court’s Ruling in Rajiv Bansal Case

Issue: The issue in this case was whether the reassessment notice issued under Section 148 of the Income Tax Act on 25.07.2022 was barred by limitation and therefore invalid in law.

Fact: The assessee challenged the validity of the reassessment proceedings on the ground that the notice under Section 148 was issued beyond the permissible time limit. The assessee had furnished its reply to the notice under Section 148A(b) on 24.06.2022. As per the Supreme Court’s decision in Union of India & Ors. Vs. Rajiv Bansal (2024) 134 TLC 004, the time limit for issuance of notice under the new regime ended on 01.07.2022 (seven days after the reply). However, the notice in this case was issued on 25.07.2022, i.e. after the expiry of the limitation period. The Revenue failed to counter this contention and submitted only on the merits of the case.

Held: The Tribunal held that the notice issued under Section 148 on 25.07.2022 was beyond the prescribed limitation period and therefore invalid. Following the Supreme Court’s guidelines in Rajiv Bansal (supra), the reassessment proceedings were quashed as time-barred. Consequently, the entire assessment order was set aside. Since the Cross Objection of the assessee was allowed on the jurisdictional issue, the Revenue’s appeal was dismissed as infructuous.

Addition for alleged suppressed receipts based on Form 26AS deleted as Tribunal accepts reversal of entries and bona fide write-off under Section 36(1)(vii).

Issue: The issue before the Tribunal was whether the addition of Rs.1,13,53,979/- made by the Assessing Officer as suppressed receipts based on Form 26AS was justified when the assessee had reversed the corresponding entries due to non-receipt from the party, M/s Vanshika Sugar and Power Industries Ltd.

Fact: The assessee, engaged in the business of erection and commissioning of industrial plants, declared income of Rs.14,44,400/-. The AO noticed a mismatch between the receipts as per Form 26AS and those recorded in the Profit and Loss Account, leading to an addition of Rs.1,13,53,979/- as suppressed receipts. The assessee explained that the amount was duly recorded and reversed on 31.03.2015 due to non-recovery, even though TDS of Rs.2,27,080/- was reflected in Form 26AS. The CIT(A) upheld the addition, holding that the assessee failed to substantiate its claim with proper evidence.

Held: The Tribunal held that the addition was unjustified as the assessee had followed the mercantile system and had duly recorded the income and reversal as per accounting principles. Relying on the decisions of the Hon’ble Supreme Court in TRF Ltd. v. CIT (323 ITR 397) and jurisdictional precedents, it was observed that once a debt is written off as irrecoverable in the books, it is allowable under Section 36(1)(vii). The Tribunal found that no actual receipt was made from Vanshika Sugar and Power Industries Ltd., and the write-off was bona fide. Accordingly, the addition of Rs.1,13,53,979/- was directed to be deleted, and the assessee’s appeal was allowed.

The Tribunal Allows Deduction Under Section 80P(2)(a)(i) to Co-operative Society Relying on Supreme Court Ruling in Mavilayi Service Co-operative Bank Ltd. v. CIT

Issue: The issue in these two appeals was whether the assessee, Yedapadavu Vyvasaya Sahakara Sangha Niyamitha, a co-operative society, was entitled to deduction under Section 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act for AY 2018-19 and AY 2020-21. The Assessing Officer had denied the claim on the ground that the profits and interest income earned were not derived from the business of providing credit facilities to members and that the income from investments with co-operative banks was taxable as “income from other sources.”

Facts: For AY 2018-19, the assessee filed its return showing income of Rs.36,73,878 and claimed the same as deduction under Section 80P. The AO disallowed the deduction holding that the assessee violated the principle of mutuality and that the interest income of Rs.31,99,604 from a co-operative bank was taxable, relying on the Karnataka High Court decision in PCIT v. Totagars Co-operative Sale Society (2017) 395 ITR 611. The CIT(A) upheld this view and dismissed the appeal.
For AY 2020-21, the assessee claimed deduction of Rs.40,20,722 under Section 80P. The AO disallowed Rs.30,62,453, holding that the interest and dividend income from co-operative and commercial banks was not eligible for deduction. The CIT(A) again confirmed the disallowance.

Held: The Tribunal observed that the assessee is a co-operative society engaged solely in providing credit facilities to its members, both nominal and regular, and had not transacted with non-members. Relying on the Supreme Court decision in Mavilayi Service Co-operative Bank Ltd. v. CIT (2021) 431 ITR 1, it was held that Section 80P is a benevolent provision and must be interpreted liberally in favour of the assessee. The Court in Mavilayi clarified that nominal members are also members, and Section 80P(4) excludes only co-operative banks licensed by the RBI, not other co-operative societies. Therefore, the decision of the Karnataka High Court in Totagars Co-op. Sale Society stood overruled to the extent inconsistent with the Supreme Court’s ruling.
Following the three-judge bench decision of the Supreme Court, the Tribunal held that the assessee was entitled to deduction under Section 80P(2)(a)(i) and directed deletion of the disallowance for both years.

Addition under Section 69 for alleged unexplained investment deleted as property purchase was funded by assessee’s husband and not by the assessee.

Issue: The issue involved was whether the addition of Rs.51,92,550 made under Section 69 of the Income Tax Act towards alleged unexplained investment in an immovable property was justified, when the investment was claimed to have been made by the assessee’s husband and not by the assessee herself.

Fact: The assessment was reopened under Section 148 based on information from the Registrar’s office that the assessee had purchased a property worth Rs.51.92 lakhs. Both the assessment and CIT(A) orders were passed ex parte. The sale deed, however, clearly showed that the property was jointly purchased by the assessee and her husband, and all payments were made by cheques from the husband’s bank account in the preceding year. Copies of the sale deed and bank statements were submitted before the CIT(A), establishing that the husband had made the entire payment.

Held: The Tribunal held that even in the absence of representation, the authorities were duty-bound to consider facts available on record. Since the documents clearly showed that the payments were made by the husband and not by the assessee, and the investment did not pertain to the relevant assessment year, the addition under Section 69 was unjustified. Accordingly, the Tribunal directed deletion of the addition of Rs.51,92,550, and allowed the assessee’s appeal.

Penalty under Section 270A for disallowance of sundry creditors remanded to CIT(A) for fresh examination on merits.

Issue: The issue was whether penalty under Section 270A of the Income Tax Act was justified for misreporting of income arising from disallowance of sundry creditors amounting to Rs.6,85,247/-.

Fact: The assessee declared income of Rs.1,37,72,800/-. During scrutiny, the AO disallowed sundry creditors of Rs.6,85,247/- for want of confirmation and treated it as misreporting of income, initiating penalty proceedings under Section 270A. The assessee did not contest the quantum addition but challenged only the penalty. The CIT(A), NFAC, upheld the penalty, noting the assessee’s non-compliance and absence for several years.

Held: The Tribunal observed that the NFAC had not examined the merits of the case or determined whether the disallowance of sundry creditors actually warranted penalty under Section 270A. It, therefore, set aside the impugned order and remanded the matter to the CIT(A) for fresh adjudication on merits. The appeal was allowed for statistical purposes.

FAO Held Time-Barred as Limitation Begins from DRP Order Upload Date on ITBA Portal

Issue: The key issue before the Delhi High Court in Commissioner of Income Tax (International Taxation)-2, New Delhi v. Hyundai Rotem Company (ITA 304/2025) was whether the Final Assessment Order (FAO) dated 01.07.2022 was barred by limitation under Section 144C(13) of the Income Tax Act, 1961, considering that the Dispute Resolution Panel (DRP) directions were uploaded on the Income Tax Business Application (ITBA) portal on 26.05.2022.

Facts: The respondent, Hyundai Rotem Company, a Korean entity, filed its return of income for AY 2018–19. After the Transfer Pricing Officer proposed an adjustment, the Assessing Officer (AO) passed a Draft Assessment Order. The DRP issued its directions on 24.05.2022, which were uploaded on the ITBA portal on 26.05.2022. The AO passed the FAO on 01.07.2022. The assessee contended before the ITAT that the FAO was time-barred since it was not completed within one month from the end of May 2022. The ITAT accepted this contention and set aside the assessment order as barred by limitation. The Revenue appealed, arguing that limitation should start from 01.06.2022, when the DRP order was physically received by the AO.

Held: The Delhi High Court dismissed the Revenue’s appeal, affirming the ITAT’s order. The Court held that the limitation period under Section 144C(13) begins from the date the DRP directions are uploaded on the ITBA portal, as that constitutes valid electronic receipt. Relying on Louis Dreyfus Company India Pvt. Ltd., Vodafone Idea Ltd., and Rapiscan Systems Pvt. Ltd., the Court ruled that uploading on the portal is sufficient service, as the DRP loses control once the order enters the electronic system. Since the DRP directions were uploaded on 26.05.2022, the AO had to complete the assessment by 30.06.2022; passing the order on 01.07.2022 rendered it time-barred, null, and void.

The Tribunal Restores Assessee’s 12A and 80G Applications to CIT(E) for Fresh Consideration After Denial of Fair Opportunity

Issue: The issue in both appeals was whether the Commissioner of Income Tax (Exemption), Pune, was justified in rejecting the assessee’s application for registration under section 12A and for approval under section 80G of the Income Tax Act, and in cancelling the provisional registration already granted.

Fact: The assessee trust had applied in Form No.10AB for registration under section 12A(1)(ac)(iii) and for approval under section 80G of the Act. The CIT(E) issued notices seeking clarification and supporting evidence regarding the genuineness of the trust’s activities, including proof of charitable activities and bank statements. As the assessee failed to respond adequately and did not rectify discrepancies pointed out in the notices, the CIT(E) rejected both applications and cancelled the provisional registration. The assessee contended that the non-compliance was due to a mistake by its tax consultant and not intentional, seeking one more opportunity to submit the required documents.

Held: The Tribunal held that the delay in filing the appeal was caused by sufficient reason and condoned it. On merits, it observed that the assessee had not been provided with a fair opportunity to present its case fully before the CIT(E). In the interest of justice, the Tribunal set aside the impugned orders and restored the matters to the file of the CIT(E) with directions to grant one final opportunity to the assessee to substantiate its claim by producing requisite documents and evidence. The appeals were allowed for statistical purposes.

Addition under Section 68 on Alleged Bogus LTCG from Penny Stock Held Unsustainable in Absence of Evidence Linking Assessee to Price Manipulation

Issue: whether the AO was justified in treating the Assessee’s LTCG from the sale of shares of M/s Goenka Business and Finance Ltd. as bogus and making an addition of Rs.47,22,700/- under Section 68 of the Income Tax Act, 1961, on the allegation that the transaction represented accommodation entries from penny stock trading.

Facts: The Assessee filed a return of income of Rs.55,22,740/- which was processed under Section 143(1). Subsequently, based on information from the Investigation Wing, Mumbai regarding bogus LTCG from penny stocks, the AO reopened the assessment under Section 147. It was alleged that the Assessee was a beneficiary of accommodation entries through sale of shares of M/s Goenka Business and Finance Ltd. The AO made an addition of Rs.47,22,700/- under Section 68, which was confirmed by the CIT(A). The Assessee appealed before the Tribunal, contending that the issue was already decided in its favour in earlier years (A.Y. 2012-13 and 2013-14) by the Tribunal.

Held: The Tribunal observed that identical issues in the Assessee’s own cases for A.Y. 2012-13 and 2013-14 had been decided in favour of the Assessee, wherein it was held that mere high profit or unusual price movements cannot render a scrip as a “penny stock” in absence of concrete evidence linking the assessee to price manipulation or entry operations. Relying on the judgments of Pr. CIT v. Ziauddin A. Siddique (Bom HC) and Pr. CIT v. Smt. Krishna Devi (Del HC), the Tribunal reiterated that suspicion or human probability cannot replace evidence. Since no material was brought on record to show that the Assessee was involved in any bogus transaction, the addition under Section 68 was unsustainable. Accordingly, following its own earlier decision and judicial precedents, the Tribunal allowed the appeal of the Assessee.

Agricultural Income Partly Accepted — Tribunal Sets Aside Additions and Directs AO to Verify Revenue Records for Proportionate Allowance

Issue: The issue involved in this appeal is whether the agricultural income of Rs.11,58,358/- declared by the assessee should be accepted as genuine agricultural income or treated as income from other sources, as held by the Assessing Officer.

Fact: The assessee, an individual, filed his return declaring total income of Rs.2,57,150/- along with agricultural income of Rs.11,58,358/-. The Assessing Officer, upon failure of the assessee to furnish adequate evidence to substantiate agricultural income, treated it as income from other sources and assessed total income at Rs.14,15,510/- under section 147 read with section 143(3) of the Income Tax Act, 1961. The CIT(A) upheld this addition, observing that the assessee failed to produce sufficient proof of cultivation, yield, or sale of crops. On further appeal, the assessee contended that he owned and cultivated about 14 acres of agricultural land, some of which was ancestral and some jointly owned with family members.

Held: The Tribunal observed that the assessee had been consistently showing agricultural income in earlier years and that revenue records supported ownership of around 14 acres of agricultural land, both individually and jointly with family. The mere fact that part of the land was not in his individual name could not justify treating the entire agricultural income as unexplained. The Tribunal, therefore, set aside the orders of the lower authorities and directed the Assessing Officer to verify the revenue records and proportionately allow the agricultural income claim. The appeal was partly allowed for statistical purposes.

The Tribunal Restores Matter to AO as CIT(A) Deleted Additions Without Proper Verification or Reasoned Order

Issue: The issue before the Tribunal was whether the Ld. CIT(A)-3, Noida was justified in deleting multiple additions made by the Assessing Officer under Section 68 and other provisions of the Income-tax Act, 1961, without proper verification of evidence and without a well-reasoned order for A.Y. 2018-19.

Fact: The assessee, engaged in real estate business, filed a return declaring a loss of Rs. 6,92,36,830. During scrutiny assessment, the AO made various additions including Rs. 6,00,000 for unsecured loans, Rs. 71,00,000 for unexplained advances, Rs. 80,00,000 and Rs. 14,95,155 for disallowed penalty expenses, Rs. 23,774 for interest disallowance, Rs. 1,27,10,002 for unexplained sundry creditors, and Rs. 10,26,067 for unverifiable professional expenses. The AO assessed total income at Rs. 2,04,10,602. On appeal, the Ld. CIT(A) deleted all additions based on additional evidences without proper verification or reasoned discussion, even though the AO in the remand report rejected the evidences as not acceptable.

Held: The Tribunal observed that the Ld. CIT(A) failed to obtain proper verification or comments from the AO on the additional evidences and did not provide a well-reasoned order. Therefore, in the interest of justice, the Tribunal restored all issues to the file of the AO to verify the evidences and decide the matter afresh after giving due opportunity to the assessee. The appeal of the Revenue was allowed for statistical purposes.

Penalty u/s 272A(1)(d) deleted as notice u/s 142(1) was not duly served on Non-Resident assessee.

Issue: The issue involved was whether the penalty imposed under section 272A(1)(d) of the Income Tax Act for non-compliance of notice issued under section 142(1) was justified when the assessee, a Non-Resident, claimed that no such notice was ever served upon him.

Fact: The assessee, a Non-Resident residing in the United Kingdom, did not file a return for AY 2018-19 as he had no source of income in India. The Assessing Officer levied a penalty of Rs.10,000 under section 272A(1)(d) for failure to comply with notice under section 142(1). The assessee contended before the CIT(A) that he was unaware of the proceedings as the notice was never served. The CIT(A), however, confirmed the penalty.

Held: The Tribunal observed that the record did not establish service of notice under section 142(1) on the assessee. Mere issuance of notice without proper service does not satisfy the requirement of law. Since the assessment itself was framed ex-parte, it indicated that the assessee was unaware of the proceedings. Hence, the Tribunal held that the penalty levied under section 272A(1)(d) was not sustainable and directed its deletion. The appeal of the assessee was accordingly allowed.

Protective Addition and Transfer Pricing Adjustment Deleted—Revenue’s Appeal Dismissed by ITAT

Issue: The main issue in this appeal was whether the Commissioner of Income Tax (Appeals) [CIT(A)] was correct in deleting (i) the protective addition of Rs.50 Crores made under Section 56(2)(vii)(b) of the Income Tax Act, 1961, and (ii) the transfer pricing adjustment of Rs.2.83 Crores made on account of reimbursement of expenses treated as Specified Domestic Transaction (SDT) under Section 92BA.

Facts: The assessee received Rs.62.50 Crores as share application money in A.Y. 2014–15 against shares issued in the next year at a premium of Rs.40 per share. The Assessing Officer (AO) held that the assessee failed to justify the premium and made a protective addition of Rs.50 Crores under Section 56(2)(vii)(b), as the substantive addition was made in the succeeding year. The CIT(A) deleted the protective addition since the ITAT had already deleted the substantive addition in the following year. The second dispute related to a transfer pricing adjustment of Rs.2.83 Crores made by the AO/TPO on account of reimbursement of expenses to its associated enterprise, Mytrah Energy (India) Pvt. Ltd. (MEIPL). The AO treated the transaction as SDT under Section 92BA and determined its arm’s length price at Nil, stating that the assessee derived no benefit. The CIT(A) held that the AO/TPO made the adjustment without finding any defect in the expense calculation or allocation method and that the amount was capitalized as capital work-in-progress, not debited to the P&L account.

Held: The Tribunal held that since the substantive addition under Section 56(2)(vii)(b) was deleted in the subsequent year, no protective addition could survive in the present year. Regarding the transfer pricing issue, it held that the transaction did not qualify as a Specified Domestic Transaction under Section 92BA, as the AO himself failed to establish that the arrangement resulted in more than ordinary profits under Section 80IA(10). The adjustment made by treating the reimbursement as SDT was therefore unjustified. Accordingly, both additions were rightly deleted by the CIT(A), and the Revenue’s appeal was dismissed.

The Tribunal restores case to AO to re-examine deduction under Section 80P, holding it cannot exceed Gross Total Income as per Section 80A(2); condones 344-day delay.

Issue: The issue in this appeal was whether the authorities were justified in disallowing the deduction claimed under Section 80P(2)(a)(i) of the Income Tax Act amounting to Rs. 34,49,015/- when the assessee’s Gross Total Income was only Rs. 21,479/-, and whether the deduction could exceed the Gross Total Income in view of Section 80A(2).

Fact: The assessee, a cooperative society from Palas, Rajasthan, filed its return of income for AY 2020-21 declaring total income at Rs. Nil after claiming deduction of Rs. 34,49,015/- under Section 80P(2)(a)(i). The case was selected for limited scrutiny to verify the deduction under Chapter VI-A. As the assessee failed to respond to the notices, the AO completed assessment under Section 144 and disallowed the entire deduction. The CIT(A) confirmed the disallowance ex parte without adjudicating the legal limitation under Section 80A(2). There was a delay of 344 days in filing the appeal before ITAT, which the assessee explained was due to lack of professional guidance in its remote village location.

Held: The Tribunal condoned the delay of 344 days following the Supreme Court’s liberal view in Collector, Land Acquisition v. Mst. Katiji (167 ITR 471). On merits, the ITAT observed that the deduction under Section 80P cannot exceed the Gross Total Income as per Section 80A(2). It found that the authorities had not examined this legal aspect and that the assessee’s consultant’s failure led to the default. Considering that the matter deserved decision on merits, the Tribunal restored the case to the file of the AO for fresh adjudication after granting due opportunity to the assessee. The appeal was thus allowed for statistical purposes.

Assessment under Section 153C for AY 2014-15 held invalid as it falls beyond six assessment years from the deemed search year; Revenue’s appeal dismissed.

Issue: The issue before the Tribunal was whether the assessment made under Section 153C for Assessment Year (AY) 2014-15 was valid when the year did not fall within the block of six assessment years as per the provisions of Section 153C of the Income Tax Act.

Facts: A search under Section 132 was conducted on the Net Ram Group from 12.03.2019 to 13.03.2019. During the search, certain documents were found allegedly belonging to the assessee. Based on this, a satisfaction note was recorded, and notice under Section 153C was issued to the assessee on 26.07.2021. The Assessing Officer made additions for AY 2014-15. The Ld. CIT(A) deleted the additions holding that since satisfaction was recorded in FY 2021-22, the deemed search year was AY 2022-23. Therefore, the six relevant assessment years would be AYs 2016-17 to 2021-22, and AY 2014-15 fell beyond this period. Reliance was placed on CIT v. RRJ Securities Pvt. Ltd. and CIT v. Jasjit Singh, where it was held that the six-year period under Section 153C must be reckoned from the date of recording of satisfaction, not the date of the original search.

Held: The Tribunal upheld the order of the Ld. CIT(A) and held that AY 2014-15 was beyond the block of six years from the deemed search year. The assessment under Section 153C was, therefore, barred by limitation and without jurisdiction. Consequently, the Revenue’s appeal was dismissed, and the cross objection filed by the assessee was dismissed as not pressed.

Addition under Section 69A deleted as Tribunal held that cash deposits represented client funds in sub-broking business and not assessee’s unexplained money.

Issue: The issue before the Tribunal was whether the addition of Rs. 61,00,086 made under Section 69A of the Income Tax Act, 1961, as unexplained money, was justified when the assessee claimed the transactions represented client funds in sub-broking activity and not his own unexplained income.

Facts: The assessee, an individual engaged as a sub-share broker, filed his return declaring income of Rs. 3,01,200. The case was selected for scrutiny, and during assessment, the assessee submitted bank statements, ledgers of Angel Broking and Sunflower Broking, a SEBI registration certificate, affidavits, and confirmations to explain the source of funds. The AO rejected the explanation and made an addition of Rs. 61,00,086 under Section 69A, treating it as unexplained money. The CIT(A) upheld the addition, observing that the assessee failed to prove the genuineness of the transactions and the creditworthiness of lenders. The assessee’s appeal to the Tribunal was delayed by 178 days, which the Tribunal condoned, accepting that the delay was due to lack of communication and not intentional.

Held: The Tribunal noted that in the assessee’s own earlier case (ITA No. 190/RJT/2019), he was held to be a commission agent and not the owner of funds involved in client transactions. It was established that the deposits represented client funds used for trading in options and derivatives, with the assessee earning only commission income. The addition under Section 69A could be made only when the assessee was found to be the owner of unexplained money, which was not the case here. Therefore, the addition made by the AO and confirmed by the CIT(A) fell outside the scope of Section 69A. The Tribunal deleted the addition of Rs. 61,00,086 and allowed the assessee’s appeal.

The Tribunal Condones 170-Day Delay and Restores Matter to AO on Payment of Rs. 10,000/- Cost in Interest of Natural Justice

Issue: The issue in this case was whether the assessee’s appeal, which was delayed by 170 days and decided ex-parte by both the Assessing Officer (AO) and the CIT(A), could be admitted and remanded for fresh consideration.

Fact: The assessee filed an appeal against the order of the NFAC, Delhi, for A.Y. 2009-10. The delay of 170 days in filing the appeal was explained by the assessee, and it was pleaded that the earlier non-appearance was due to negligence of the previous authorised representative. The assessee submitted a petition dated 27.10.2025 expressing willingness to pay a cost of Rs. 10,000/- for non-appearance before both the lower authorities.

Held: The Tribunal observed that the assessee was given adequate opportunities before the lower authorities but failed to appear. However, considering the principles of natural justice, the Tribunal condoned the delay and restored the matter to the file of the AO for fresh adjudication, subject to payment of Rs. 10,000/- to the Legal Aid Services, High Court, Calcutta, within sixty days. Failure to pay within the stipulated time would result in confirmation of the CIT(A)’s order. The appeal was thus partly allowed for statistical purposes.

The Tribunal remands case to CIT(A) for fresh adjudication after finding that addition of Rs.3.24 crore under Section 69A was sustained without adequate opportunity to the co-operative society to produce supporting evidence.

Issue: The issue before the Tribunal was whether the Ld. CIT(A), NFAC, Delhi, was justified in sustaining the addition of Rs.3,24,13,000/- under Section 69A of the Income Tax Act, 1961, treating the cash deposits in the assessee’s bank account as unexplained, without properly considering the cooperative nature of the assessee’s activities and without affording adequate opportunity to produce supporting evidence.

Fact: The assessee, a registered Primary Agricultural Credit Society under the Kerala Co-operative Societies Act, 1969, engaged in accepting deposits and granting loans to its members, did not file a return for AY 2013-14. Based on cash deposits in its bank accounts, the case was reopened under Section 147, and an addition of Rs.3.24 crore was made under Section 69A as unexplained money. The assessee explained that actual deposits were Rs.2.71 crore, sourced from routine cooperative operations such as member deposits, loan repayments, and income from its Neethi medical store. However, both the Assessing Officer and the CIT(A) sustained the addition due to lack of documentary evidence and non-production of books of accounts.

Held: The Tribunal observed that although several opportunities were granted, the assessee could not furnish records due to practical difficulties and voluminous physical data. Considering the assessee’s readiness to now produce all supporting documents, the Tribunal found it appropriate, in the interest of justice, to grant one more opportunity. Accordingly, the order of the CIT(A) dated 23/05/2025 was set aside, and the matter was remanded back to the CIT(A) for fresh adjudication after giving the assessee reasonable opportunity to present evidence. The appeal was thus partly allowed for statistical purposes.

Assessment under Section 144 and Additions for Low Profit and Cash Deposits Remitted to AO Due to Assessee’s Personal Hardships

Issue: The issue in this case is whether the assessment completed under section 144 of the Income Tax Act and the additions made by the AO towards low net profit and unexplained cash deposits during the demonetisation period were justified when the assessee failed to respond to notices due to personal hardships.

Facts: The assessee, proprietor of KVG Petroleums, filed a return declaring income of Rs.5,71,310 on a gross turnover of Rs.13.48 crore. The AO observed that the declared profit rate of 0.42% was lower than 1.2% declared earlier. As the assessee failed to furnish expense details, the AO estimated income at Rs.13,48,977 and further added Rs.20,15,430 for unexplained cash deposits during demonetisation. The total income was assessed at Rs.30,99,407 under section 144. The CIT(A) issued multiple notices which were not complied with and dismissed the appeal. Before the Tribunal, the assessee explained that due to the death of his son and his own ill health, he could not respond to the notices. He produced an affidavit and death certificate, claiming that the books were audited and the cash deposits were from recorded sales.

Held: The Tribunal observed that the assessee’s books were audited and no defects were pointed out by the AO. A lower net profit rate alone cannot justify an addition unless the books are found defective. Similarly, cash deposits explained as arising from regular sales cannot be treated as unexplained unless proved otherwise. Considering the adverse personal circumstances and in the interest of justice, the Tribunal remitted the matter to the AO to re-examine the books and verify the cash deposits afresh after giving the assessee due opportunity. The appeal was allowed for statistical purposes.

Disallowance of Transport Expenses under Section 69C on Adhoc Basis Unjustified; ITAT Restricts Addition to 2% of Total Expenses

Issue: The issue involved was whether the disallowance of Rs. 4,75,92,207/- made by the Assessing Officer under Section 69C of the Income Tax Act towards transport expenses on adhoc estimation basis @88% of total expense claimed of Rs. 5,40,82,053/- was justified, and whether the alternative disallowance made under Section 40(a)(ia) for non-deduction of TDS under Section 194C was valid.

Facts: The assessee, engaged in the business of transportation of goods from railway racks to PDS centres, filed its return declaring income of Rs. 1,29,120/-. During scrutiny, the AO noted that certain truck numbers used for transportation were not appearing on the ‘VAHAN’ portal and some numbers were repeated or incorrect. Without rejecting the books of account, the AO disallowed 88% of transport expenses as unexplained expenditure under Section 69C. The CIT(A) confirmed the addition and alternatively upheld disallowance under Section 40(a)(ia) for non-deduction of TDS. The assessee contended that it hired trucks through truck unions, produced confirmations and payment proofs, and that absence of certain vehicle details on the VAHAN portal was due to non-digitization of old vehicles.

Held: The Tribunal observed that the AO made the disallowance solely on the basis of non-appearance of vehicle numbers on the VAHAN portal without rejecting the books of account or conducting any independent inquiry. The assessee had furnished adequate evidence like transport receipts, confirmations, and certificates from truck unions establishing genuineness of expenses. The Tribunal held that non-appearance of vehicle numbers in the VAHAN portal could not justify disallowance. The CIT(A) also erred in invoking Section 40(a)(ia) when the original addition was based on estimation. Considering precedents, the Tribunal directed that only 2% of total transport expenses be disallowed towards possible discrepancies, amounting to Rs. 11,01,641/-, and the balance Rs. 4,64,90,566/- be deleted.

Held: Appeal partly allowed. Addition restricted to Rs. 11,01,641/- and balance disallowance deleted.