Income Tax Appellate Tribunal judgments

ITAT Delhi rules that a notice under Section 148 issued to a deceased assessee is void from the outset, and legal heirs bear no duty to inform the tax department of the death. The tribunal quashed the assessment order, reinforcing that jurisdictional defects cannot be cured by subsequent compliance from legal representatives.

ITAT Mumbai rules that selling shareholders can claim proportionate IPO expenses as deductible under Section 48 of the Income Tax Act, provided the expenses are incurred wholly and exclusively for the share transfer. This clarifies the tax treatment of Offer for Sale (OFS) costs, impacting shareholders and tax practitioners dealing with capital gains computations.

ITAT Bangalore rules that a single satisfaction note under Section 153C for multiple assessment years is invalid. Each year requires independent documentation linking seized materials to the assessee, ensuring procedural compliance in search and seizure cases. Tax authorities must now issue distinct satisfaction notes for every assessment year to avoid legal challenges.

ITAT Mumbai rules that redeemable preference shares without dividend payments cannot be reclassified as loans under transfer pricing provisions unless exceptional evidence proves otherwise. The tribunal also upheld the presumption that own funds are used for advances, rejecting disallowance under Section 36(1)(iii) where assessee's funds were already invested in fixed assets.

ITAT Ahmedabad rules that investment in an under-construction residential property within the prescribed time limits under Section 54F qualifies for capital gains exemption, even if the payment was made prior to the sale of the original asset. This holding clarifies that the timing of possession or execution of the sale deed is not the sole determinant, provided the investment meets the statutory timeline.

ITAT Pune holds that deductions under Section 35(1)(iv) of the Income Tax Act for capital expenditure on scientific research are allowable only after the assessee's business has commenced. The ruling clarifies that pre-commencement R&D expenses, even if substantial, do not qualify for tax relief, impacting biotech and pharmaceutical startups.

ITAT Delhi rules that failure to consider assessee's documentary evidence in income tax assessments violates principles of natural justice, setting a critical precedent for Section 68 appeals. The tribunal emphasized that reliance solely on departmental reports without evaluating assessee submissions renders the order unsustainable in law, impacting tax practitioners and appellants facing similar additions.

ITAT Ahmedabad rules that cash deposits during demonetisation cannot be automatically treated as unexplained income under Section 69A without evaluating prior sales trends and legitimate income estimates. The ruling mandates a contextual assessment, shifting the burden from presumptive addition to evidence-based scrutiny, impacting tax assessments for businesses and individuals.

ITAT Ahmedabad rules that a penalty under Section 271(1)(c) cannot be imposed for 'concealment' if the show-cause notice alleges only 'inaccurate particulars'. The tribunal sets a strict standard for procedural compliance, holding that the default type must be clearly specified in the notice to sustain the penalty.

ITAT Mumbai rules that CSR donations, even if mandated under the Companies Act, qualify for deduction under Section 80G if made to eligible entities. The tribunal rejects the double disallowance argument, clarifying that statutory obligations do not negate tax benefits for compliant contributions. This ruling impacts corporate tax planning and CSR compliance strategies.

ITAT Delhi rules that notice under Section 143(2) of the Income Tax Act is mandatory for all returns filed in response to Section 148 notices, regardless of e-verification status or procedural defects. The tribunal sets a precedent that cognizance of a return by the Assessing Officer triggers the obligation to issue the notice, impacting reassessment proceedings nationwide.

ITAT Pune held that severe medical conditions (leprosy) and national emergencies (COVID-19 lockdown) constitute 'reasonable cause' under Section 253 of the Income Tax Act, justifying condonation of a 3-year delay in filing an appeal. This ruling sets a precedent for taxpayers facing genuine health crises or force majeure events, ensuring procedural justice in tax litigation.

ITAT Delhi quashes reassessment proceedings where the Assessing Officer introduced fresh grounds in the 148A(d) order that were absent in the original notice under Section 148A(b). The ruling reinforces that reassessment cannot be a fishing expedition and must strictly comply with statutory procedure to uphold natural justice for taxpayers.

ITAT Pune rules that CSR contributions to funds like the PM Relief Fund are eligible for deduction under Section 80G of the Income Tax Act, unless specifically barred by statute. The ruling clarifies that the burden of proof lies on the revenue to demonstrate exclusion, impacting corporate tax planning and compliance for CSR expenditures.

ITAT Ahmedabad rules that reassessment notices issued under Section 148 of the Income Tax Act beyond the prescribed limitation period are jurisdictionally defective and void. The decision reinforces strict compliance with procedural timelines, protecting assessees from belated tax scrutiny without valid grounds.

ITAT Ahmedabad rules that warranty provisions calculated through past experience and scientific estimation qualify as ascertained liabilities under Section 115JB, barring their addition to book profits. This clarifies the tax treatment of contingent liabilities for corporate taxpayers, ensuring compliance with accounting standards while preventing double taxation.

ITAT Pune rules that taxing entire bank deposits as unexplained income under Section 69A without allowing set-off for verified purchase expenses violates natural justice. The Tribunal mandates a reasonable profit estimation based on turnover, ensuring fair assessment for taxpayers.

ITAT Pune rules that the Commissioner's revisionary powers under Section 263 IT Act cannot be invoked to reassess depreciation on goodwill or warranty provisions already correctly allowed by the Assessing Officer. The ruling underscores that revisionary jurisdiction requires evidence of erroneous or prejudicial orders, not mere re-examination of settled claims.

ITAT Pune rules that unsecured loans from family members under Section 68 of the Income Tax Act are valid if identity, genuineness, and creditworthiness up to ₹2.5 lakh are established through bank statements and affidavits. This sets a precedent for taxpayers to defend cash credits from close relatives without tax additions, provided documentary evidence is furnished.

ITAT Pune condones a 10-month delay in filing an income tax appeal, holding that the assessee’s bona fide reliance on a deceased consultant and lack of deliberate negligence outweigh procedural timelines. The ruling reinforces that substantial justice prevails over technicalities, particularly where delay stems from unforeseen circumstances like the consultant’s death.

ITAT Pune condones 300-day delay in filing appeal due to husband's violent attack and lack of digital literacy, affirming that substantial justice overrides technical defaults.

ITAT Mumbai holds that penalty under Section 271(1)(c) is unsustainable when additions are based solely on estimates without concrete evidence of concealment.

ITAT Pune holds that full investment in residential property within stipulated period entitles deduction under Section 54F, even without full deposit in capital gains account scheme.

ITAT Pune holds that loan source credibility cannot be rejected solely on declared income; bank statements and consistent filing establish legitimacy under Section 69A.