Income Tax Appellate Tribunal judgments

ITAT Delhi holds that under Section 68 of the Income Tax Act, the assessee must establish the identity, creditworthiness, and genuineness of creditors to avoid additions. The Tribunal deleted a Rs. 1.75 crore addition after the assessee proved a collaboration agreement and refund, setting a precedent for reassessment proceedings involving shell companies and unexplained credits.

ITAT Bangalore ruled that delayed trade receivables from associated enterprises constitute an international transaction under Section 92B, warranting notional interest adjustment. However, it reduced the applicable rate from LIBOR+450 to LIBOR+200 basis points, setting a precedent for transfer pricing disputes involving deferred payments.

ITAT Delhi quashed a reassessment under Section 147 where the Assessing Officer deviated from the recorded reasons for reopening, failing to make additions on that basis. The ruling reinforces that reassessment proceedings must strictly align with the grounds cited for reopening, or risk invalidation.

ITAT Bangalore rules that charitable trusts remain entitled to Section 11 deductions despite delayed filing of Form 10B audit reports, provided the delay is bona fide. The tribunal directed the Assessing Officer to compute net income after allowing admissible expenditure, reinforcing that procedural lapses alone cannot deny substantive tax benefits to trusts.

ITAT Delhi sets a critical precedent: unexplained expenditure under Section 69C cannot be added solely based on seized documents if the assessee proves transactions through banking channels. The ruling mandates direct evidence linking cash payments to unexplained income, offering relief to taxpayers facing arbitrary additions during search and seizure assessments.

ITAT Delhi rules that statutory development authorities like Aligarh Development Authority qualify as charitable entities under Section 2(15) of the Income Tax Act. Funds earmarked for infrastructure development under state directives are not taxable income if utilized for statutory public purposes, reinforcing the principle of diversion of income by overriding control.

ITAT Jodhpur rules that cash deposits during demonetization under Section 69A of the Income Tax Act demand rigorous documentary proof of source. The Tribunal remanded the case for fresh assessment, emphasizing procedural compliance and the assessee’s burden to substantiate transactions with valid evidence, impacting tax litigation and banking law.

ITAT Delhi holds that reassessment proceedings under Section 147/148 of the Income Tax Act are vitiated if the approval under Section 151 is granted mechanically without independent application of mind. The ruling mandates that authorities must record reasoned approval, impacting all pending and future reassessment cases.

ITAT Mumbai ruled that donations to political parties under Section 80-GGC are ineligible for tax deductions if linked to circuitous cash-return schemes, reinforcing strict scrutiny of political funding legitimacy. The decision impacts taxpayers claiming deductions for donations where the recipient party is involved in fraudulent financial practices.

ITAT Mumbai overturns Rs.6.75 crore disallowance, ruling that professional fees paid to facilitate payments to OFAC-sanctioned entities qualify as deductible business expenditure under Section 37(1) IT Act. The tribunal emphasizes that commercial expediency, not revenue assumptions, determines allowability of such expenses.

ITAT Mumbai rules that additions under Section 69 of the Income-tax Act for unexplained investments require substantive evidence beyond third-party statements or Excel data from search proceedings. The assessee must be afforded an opportunity for cross-examination to uphold natural justice principles, invalidating additions made without such corroboration.

ITAT Bangalore set aside a penalty under Section 270A of the Income Tax Act, ruling that a show-cause notice must explicitly specify the limb of misreporting to sustain the penalty. The tribunal held that bonafide reliance on Form 16 constitutes valid disclosure under Section 270A(6)(a), protecting assessees from arbitrary penalties.

ITAT Mumbai rules that Form 3CL issued by DSIR and already part of the Assessing Officer’s record cannot be dismissed as additional evidence in rectification proceedings under Section 154. The ruling mandates consideration of pre-existing documents for income tax deductions, impacting taxpayers relying on DSIR approvals.

ITAT Lucknow rules that disallowance of cash payments under Section 40A(3) of the Income Tax Act is unsustainable without examining Rule 6DD exemptions. The tribunal mandates a fresh assessment, ensuring taxpayers can prove the legitimacy of cash transactions, reinforcing natural justice in tax proceedings.

ITAT Bangalore rules that cash deposits from demonetization-era sales, backed by audited books and VAT returns, cannot be taxed as unexplained income under Section 68, even if payments were made in Specified Bank Notes (SBNs). The ruling clarifies that RBI guidelines on SBNs do not override statutory provisions of the Income Tax Act, reinforcing the primacy of documented business receipts over procedural currency norms.

ITAT Ahmedabad sets aside a 200% penalty under Section 270A, holding that a mere arithmetical omission in capital loss adjustment-without intent to suppress income-does not constitute misreporting. The ruling clarifies that penalties under Section 270A require proof of willful misreporting, not inadvertent errors, impacting tax consultants and assessees facing similar scrutiny.

ITAT Bangalore rules that interest earned on statutorily mandated deposits by cooperative societies is attributable to their business and qualifies for deduction under Section 80P(2)(a)(i). This clarifies that such income is not taxable as 'other income' but as part of the society's core operations, impacting cooperative societies' tax liability.

ITAT Mumbai condoned a 124-day delay in filing an appeal, holding that honest dependence on a tax consultant - not mere negligence - qualifies as sufficient cause under Section 250. This reinforces that statutory appeal rights must not be defeated by hyper-technical interpretations, especially when the taxpayer acted in good faith and provided credible evidence of the delay’s origin.

The ITAT Delhi has ruled that an NGO earning fees for delivering environmental curricula to schools remains eligible for charitable registration under the fifth limb of Section 2(15), as long as its primary objective is public benefit, not profit. This clarifies that commercial receipts alone do not disqualify charitable status - a critical precedent for education and environmental nonprofits relying on sustainable funding models.

ITAT Kolkata has ruled that delays in filing income tax appeals caused by a tax consultant’s illness and administrative oversight qualify as sufficient cause under Section 249(2), setting aside the CIT(A)’s dismissal and remanding for merits. This clarifies that professional negligence by third-party advisors, when documented and bona fide, can justify condonation - a critical precedent for taxpayers relying on chartered accountants.

The ITAT Bangalore has ruled that for Joint Development Agreements executed before April 1, 2018, capital gains arise in the year the land is transferred to the developer-not when the occupancy certificate is issued. This clarifies a long-standing ambiguity for developers and landowners, ensuring tax liability aligns with the actual transfer of control, not delayed completion milestones.

ITAT Mumbai rules that imposing a 90% penalty under Section 271AAB without demonstrating extraordinary circumstances is arbitrary. The Tribunal mandates a minimum 30% penalty where undisclosed income is admitted and declared, ensuring proportionality in tax penalties.

ITAT Mumbai rules that delays in filing Form 10AB for Section 12AB registration can be condoned if a reasonable cause is demonstrated, reinforcing natural justice principles. The decision underscores that procedural lapses alone cannot justify rejection of charitable trust registrations without affording an opportunity to rectify defects.

ITAT Bangalore nullified a reassessment order for failure to obtain mandatory approval from the Principal Chief Commissioner under Section 151(2) for notices issued beyond three years. The ruling reinforces strict procedural compliance in income tax reassessment proceedings, impacting taxpayers and revenue authorities alike.