Income Tax Appellate Tribunal judgments

ITAT Delhi rules that delivery order charges received by Turkish Airlines are integral to international air transport profits under Article 8 of the India-Turkey DTAA, making them taxable only in Turkey. The decision clarifies that ancillary charges directly connected to air cargo operations fall within the scope of 'international traffic' and are exempt from Indian taxation.

ITAT Mumbai rules that surrendering rights in a capital asset (via allotment letter) constitutes a 'transfer' under Section 2(47), making capital gains taxable under Section 45. This disqualifies additions under Section 69A for unexplained income and preserves Section 54 exemption eligibility for assessees.

ITAT Mumbai rules that additions under Section 69 of the Income Tax Act cannot be justified based solely on third-party electronic data (e.g., Excel files from a search) unless the assessee is confronted with the evidence and given an opportunity for cross-examination. The tribunal emphasized that unauthenticated digital documents lack evidentiary value under the Indian Evidence Act, reinforcing natural justice principles in tax proceedings.

ITAT Delhi condones a 3-year delay in filing an appeal against a penalty under Section 271(1)(c) IT Act, ruling that lack of legal awareness and procedural confusion constitute 'sufficient cause'. The decision underscores that assessees without professional assistance may seek relief from strict timelines where genuine ignorance is proven.

ITAT Delhi rules that reassessment proceedings triggered by evidence from a search under Section 132 must strictly follow Section 153C of the Income Tax Act. Reassessment under Section 147 is invalid if it relies on search materials, reinforcing jurisdictional exclusivity for such cases. This precedent binds tax authorities to adhere to the prescribed procedure, impacting all reassessment cases involving search-derived evidence.

ITAT Mumbai reiterated that under Section 68 of the Income Tax Act, the assessee must establish the lender's identity, genuineness of the transaction, and creditworthiness. Failure to prove any of these three cumulative conditions justifies addition to income, setting aside the CIT(A)'s order that overlooked proper verification of the lender's financial capacity.

ITAT Pune rules that a consolidated satisfaction note covering multiple assessment years under Section 153C of the Income Tax Act is invalid. The Tribunal emphasizes that the Assessing Officer must record separate, year-specific satisfaction for each assessment year to uphold the legality of search and seizure proceedings, impacting tax assessments nationwide.

ITAT Mumbai rules that charitable trusts can claim exemption under Section 11(2) of the Income Tax Act even if Form-10 is filed during assessment proceedings, provided the accumulated funds are utilized as intended. The ruling clarifies that procedural delays do not invalidate the exemption if substantive compliance is met.

ITAT Delhi rules that the absence of a draft assessment order under Section 144C(1) of the Income Tax Act vitiates the final assessment, even in remand proceedings. The decision reinforces strict procedural compliance for transfer pricing cases, impacting tax authorities and assessees alike.

ITAT Delhi rules that cash deposits by regular taxpayers in cash-based businesses during demonetization may be treated as business income without strict reconciliation, reducing the burden of proof. The tribunal limited additions to 10% of deposits, excluding Section 115BBE applicability for transactions pre-April 2017, offering relief to small businesses.

ITAT Delhi rules that contract expenses incurred through a legitimate subcontracting chain are allowable under Section 37(1) of the Income Tax Act if supported by documentary proof. The ruling clarifies that disallowance cannot be based on mere suspicion of circular transactions, reinforcing the burden of proof on tax authorities to disprove genuineness.

ITAT Mumbai rules that a charitable trust's incidental income from agro, gaushala, and rental activities does not defeat its charitable purpose under Section 2(15) of the Income Tax Act if it remains below the 20% threshold. The decision reinforces that registration under Section 12AB cannot be denied solely on grounds of minor commercial income aligned with the trust's objects.

ITAT Bangalore rules that condonation of delay in filing income tax appeals before CIT(A) does not require a statutory affidavit or medical certificate. The Tribunal remanded the case for merits-based adjudication, emphasizing procedural fairness over rigid documentary requirements.

ITAT Delhi rules that government grants earmarked for targeted welfare projects-such as the rehabilitation of female sex workers-do not constitute taxable income under Section 2(24) of the Income Tax Act. The ruling reinforces that conditional grants for non-profit objectives are exempt, provided the purpose and conditions are clearly documented and unchallenged by revenue authorities.

ITAT Mumbai quashed an assessment order, ruling that an Income Tax Officer lacks jurisdiction to issue a notice under Section 143(2) of the Income Tax Act if the assessee's declared income exceeds ₹20 lakhs, as per CBDT Instruction No.1/2011. The tribunal held that such notices must be issued by a Deputy/Assistant Commissioner, making the assessment proceedings void ab initio.

ITAT Mumbai has ruled that a genuine, inadvertent misstatement of a foreign bank account number in Schedule FA does not attract penalty under Section 43 of the Black Money Act, provided all transaction details are fully disclosed and the account is otherwise reported. This sets a critical precedent for taxpayers who make clerical errors while acting in good faith, reinforcing that intent and completeness of disclosure outweigh technical inaccuracies.

ITAT Delhi ruled that ex-parte assessment orders under Section 144 of the Income Tax Act violate natural justice principles, requiring a fresh hearing. The tribunal directed the Assessing Officer to provide the assessee a fair opportunity to present their case, setting a precedent for procedural fairness in tax appeals.

ITAT Delhi rules that failure to serve notice under Section 143(2) of the Income Tax Act renders the assessment void ab initio, emphasizing strict procedural compliance. The tribunal rejected revenue's claim of electronic service, underscoring that jurisdictional defects cannot be cured by ITBA portal records alone, impacting all income tax assessments reliant on notice-based proceedings.

ITAT Bangalore rules that a senior citizen's delayed access to the e-filing portal, coupled with their tax consultant's overseas absence, qualifies as 'sufficient cause' under Section 268 of the Income Tax Act for condonation of a 122-day delay in filing an appeal. The decision underscores the tribunal's flexibility in accommodating practical difficulties faced by elderly taxpayers in digital compliance.

ITAT Delhi rules that payment of tax on undisclosed cash receipts to preempt litigation does not constitute an admission of violation under Section 271DA. The tribunal deleted the penalty, reinforcing that tax compliance alone cannot be construed as acknowledgment of wrongdoing, impacting taxpayers facing similar disputes.

The ITAT Pune has ruled that penalty under Section 271(1)(c) cannot be imposed when an assessee voluntarily discloses undisclosed income in response to a notice under Section 153A, provided no incriminating material was found during the search. This affirms that disclosure in compliance with statutory procedure negates the presumption of concealment, offering critical relief to taxpayers who cooperate post-search.

ITAT Bangalore rules that ESOP cross-charges from a foreign parent to its Indian subsidiary qualify as revenue expenditure under Section 37, overturning the disallowance of ₹721 crore. The decision clarifies that employee compensation costs, even when recharged, are deductible if incurred wholly for business purposes, impacting multinational tax structures.

ITAT Surat rules that unsecured loans cannot be treated as unexplained cash credits under Section 68 merely due to the donor's fund source, unless directly linked to the assessee. The tribunal deleted a Rs. 30 lakh addition, emphasizing that creditworthiness is established through identity, genuineness, and bank transactions, not the origin of the donor's funds.

ITAT Delhi sets aside seven assessments under Section 153C, ruling that the satisfaction note must clearly establish how seized material relates to the assessee’s total income. The Tribunal affirmed that procedural compliance requires explicit linkage, failing which assessments are invalid.