Income Tax Appellate Tribunal judgments

ITAT Delhi ruled that merely reclassifying family loans into a capital account does not trigger taxable income under Section 41(1) unless the taxpayer has ceased to be liable for repayment. This protects legitimate inter-family financial arrangements from being wrongly treated as undisclosed business income, clarifying a key boundary for small business owners with informal funding structures.

The ITAT Kolkata has ruled that a six-day filing delay caused by a stenographer’s sudden illness, even without a formal medical certificate, constitutes a plausible justification under natural justice. This reinforces that minor, bona fide procedural lapses in tax appeals must not result in dismissal, especially when the delay does not prejudice the department or undermine the fairness of proceedings.

ITAT Delhi rules that share capital received from a non-resident holding company cannot be taxed under Section 68 of the Income Tax Act if the assessee establishes the investor's identity, creditworthiness, and the transaction's genuineness through bank records and FIRC. This sets a precedent for protecting foreign investments from arbitrary additions where documentation is robust.

ITAT Delhi rules that assessments under Section 153C for assessment years beyond 10 years from the search date are invalid unless the undisclosed income exceeds Rs 50 lakhs for years 7-10. The decision reinforces jurisdictional limits on tax authorities, impacting search-and-seizure assessments.

ITAT Delhi rules that any assessment order passed under the Faceless Assessment Scheme 2019 without issuing a show cause notice violates principles of natural justice, rendering the order void. The ruling sets a precedent that additions or disallowances cannot be sustained without affording the assessee an opportunity to be heard, impacting all faceless assessments under the Income Tax Act.

ITAT Delhi rules that additions under Section 69A for unexplained investments cannot rely solely on retracted statements of third parties without independent evidence. The tribunal emphasizes the need for corroborative proof to uphold tax additions, setting a precedent for burden of proof in search and seizure cases.

ITAT Ahmedabad rules that reassessment notices under Section 148 of the Income Tax Act issued after 01.04.2021 for AY 2015-16 are time-barred and void ab initio, reinforcing the Supreme Court's Rajeev Bansal precedent. The decision shields taxpayers from belated scrutiny and underscores strict adherence to limitation periods in tax reassessment proceedings.

ITAT Delhi sets aside income additions under Section 69A where the Assessing Officer relied solely on presumptions from third-party seized documents and WhatsApp messages, without independent corroborative evidence. The ruling reinforces the need for procedural fairness and direct proof in unexplained income cases, impacting tax assessments post-search proceedings.

ITAT Kolkata reinforces that assessees must deposit at least 20% of the disputed tax demand to secure a stay under Section 254(2A) of the Income Tax Act, unless they can prove undue financial hardship. The ruling clarifies procedural compliance requirements for taxpayers seeking interim relief during appeals, impacting all direct tax litigation involving stay applications.

ITAT Delhi rules that gold jewellery owned by a married daughter residing abroad, supported by an affidavit, cannot be treated as unexplained income under Section 69 merely on presumptive grounds. The ruling emphasizes that CBDT guidelines on permissible jewellery limits do not override documented ownership, reinforcing natural justice in tax assessments.

ITAT Mumbai rules that reassessment notices under Section 148 of the Income Tax Act must exclude periods of stay and assessee response time when computing limitation. The tribunal quashed a notice issued beyond the prescribed period, reinforcing the Supreme Court's precedent in Rajeev Bansal, ensuring procedural fairness in tax reassessment proceedings.

ITAT Kolkata rules that presumptive taxation under Section 44AD of the Income Tax Act does not apply to businesses with turnover exceeding ₹2 crore, invalidating the 8% addition imposed by the AO. The tribunal reduced the addition to 4% of turnover, setting a precedent for taxpayers in similar disputes.

ITAT Mumbai quashes a penalty under Section 271(1)(c) for procedural unfairness, holding that adjudicating an assessee's case based on another taxpayer's facts violates principles of natural justice. The ruling reinforces mandatory case-specific scrutiny in tax penalty proceedings.

ITAT Agra rules that the Commissioner of Income Tax (Appeals) must pass a reasoned speaking order under Section 250(6) of the Income Tax Act, even in ex parte appeals, to ensure compliance with principles of natural justice. The tribunal emphasized that mere procedural compliance without adjudication on merits violates fair hearing rights, setting a precedent for taxpayers facing ex parte appellate orders.

ITAT Delhi rules that reassessment notices issued under the pre-amendment Section 148 of the Income Tax Act after 01.04.2021 are invalid due to procedural non-compliance. The tribunal relies on the precedent in Sumanjeet Aggarwal v. ITO, emphasizing that the new scheme under Section 148A must be strictly followed. This decision impacts taxpayers facing reassessment proceedings initiated under the old regime post-amendment.

ITAT Delhi rules that TDS under Section 194-IA applies only to an individual buyer’s share in a joint property purchase, not the total transaction value, if the share is below Rs. 50 lakhs. This landmark clarification protects co-buyers from undue TDS liability and simplifies compliance for joint property transactions.

ITAT Mumbai held that payments for offshore software supply do not constitute 'royalty' under the India-Germany DTAA, shielding foreign entities from Indian tax liability. The tribunal also ruled that consortium contracts between foreign companies do not form an 'Association of Persons' (AOP), ensuring taxation on a receipt basis per treaty provisions rather than aggregate income.

ITAT Delhi rules that assessments under Section 153C of the Income Tax Act are invalid if the deemed search date falls on or after 01.04.2021, due to the Finance Act 2021 amendment. The tribunal quashed assessments for AY 2014-15 to 2016-17, setting a precedent that bars proceedings initiated beyond the cut-off date, impacting tax authorities and assessees alike.

ITAT Delhi quashes reassessment proceedings where the Section 148 notice was generated on the ITBA portal before 31.03.2021 but dispatched post-deadline, reinforcing that mere portal generation is insufficient without actual dispatch. The ruling sets a critical precedent for procedural compliance in reassessment cases under the pre-2021 regime, impacting taxpayers and revenue authorities alike.

ITAT Mumbai upholds the addition of only 12.5% of alleged bogus purchases, relying on Bombay and Gujarat High Court rulings that limit tax liability to the profit element. The ruling dismisses the Revenue’s appeal for lack of material contradiction, reinforcing a standardized approach for hawala transaction cases under the Income Tax Act.

ITAT Delhi quashes reassessment proceedings initiated beyond four years under Section 147 of the Income Tax Act, holding that mere change of opinion by the Assessing Officer does not justify reopening without evidence of the assessee’s failure to disclose material facts. The ruling reinforces taxpayer protection against arbitrary reassessments, particularly in cases involving bad debts disallowance.

ITAT Delhi rules that delayed filing of Form 10 for income accumulation under Section 11(2) of the Income Tax Act does not invalidate the claim if submitted before assessment completion, provided substantive conditions are met. The decision clarifies that procedural compliance, when fulfilled before final assessment, suffices for tax exemption eligibility, offering relief to charitable trusts facing similar timelines.

ITAT Bangalore mandates turnover-based filters and netting of receivables/payables with the same Associated Enterprise (AE) in transfer pricing comparability analysis. The ruling reinforces the arm’s length principle by preventing artificial adjustments, impacting multinational enterprises and tax professionals in benchmarking international transactions.

ITAT Delhi rules that the 10-year block period for assessments under Section 153C of the Income Tax Act commences from the date of the satisfaction note recording incriminating material against the assessee, not the original search date. This holding invalidates assessments for AYs 2010-11 to 2013-14, reinforcing the jurisdictional High Court precedent in PCIT Vs. Ojjus Medicare Pvt. Ltd. and clarifying the limitation framework for search-based assessments.