Topic
The Income Tax Appellate Tribunal (ITAT) Kolkata is a quasi-judicial body that hears appeals against orders of the Income Tax Department under the Income-tax Act, 1961, specifically for cases arising in West Bengal and eastern India.
ITAT Kolkata set aside ₹13.5 lakh addition under Section 68 for unexplained share capital after the assessee furnished investor details, PANs, and source of funds. The ruling clarifies the evidentiary burden required to rebut Section 68 presumptions in share premium cases.
ITAT Kolkata rules that repayment of loans in subsequent years discharges the assessee's burden under Section 68 of the Income Tax Act, setting aside an unexplained cash credit addition of ₹1.4 crore. The ruling clarifies that delayed repayments do not automatically trigger Section 68 additions, providing relief to taxpayers facing shell company allegations.
The ITAT Kolkata has ruled that a taxpayer claiming weighted deduction under Section 35(1)(ii) for scientific research may offset the full Rs. 1.57 crore claim against income from other sources if business income is inadequate to absorb the deduction. This clarifies that the deduction is not capped by business profits, significantly benefiting R&D investors with diversified income streams and aligning with the legislative intent to incentivize innovation.
ITAT Kolkata rules that disallowance of brokerage expenses under Section 37(1) of the Income Tax Act requires concrete evidence of non-service, not mere suspicion. TDS compliance and books of accounts are sufficient to substantiate claims, shifting the burden of proof to the revenue authorities.
The ITAT Kolkata has ruled that a faceless assessment under Section 151A is jurisdictionally void if the statutory notification empowering the National Faceless Assessment Centre was issued only after the assessment order was framed. This sets a critical precedent: procedural compliance with notification timelines is not optional but foundational to the validity of faceless assessments, affecting all taxpayers subject to centralized scrutiny under the Income Tax Act.
The ITAT Kolkata has ruled that the Centralized Processing Centre cannot make tax adjustments under Section 143(1) without first issuing a show-cause notice to the assessee, violating the foundational principle of natural justice. This sets a critical precedent for all taxpayers whose returns are processed automatically, ensuring procedural fairness in AI-driven tax assessments.
ITAT Kolkata rules that when a donee institution’s approval under Section 35(1)(ii) is cancelled retrospectively, donations made by taxpayers while the approval was active and in good faith remain deductible. This protects legitimate claimants from being penalized for administrative actions taken after the fact, reinforcing legal certainty for corporate philanthropy in scientific research.
ITAT Kolkata has ruled that once cash deposits are accepted as part of business turnover, they cannot be doubly taxed under Section 68 as unexplained income. This ensures consistent profit computation and prevents arbitrary double assessment, directly benefiting small businesses and traders who rely on cash-based accounting. The decision reinforces the principle that tax treatment must align with the nature of income already disclosed and verified.
The ITAT Kolkata has ruled that failure to issue a Section 143(2) notice at all renders reassessment proceedings null and void, and the curative provision under Section 292BB does not apply to complete non-issuance - only defective service. This clarifies a critical jurisdictional safeguard for assessees, reinforcing that procedural compliance is non-negotiable in tax reassessments.
The ITAT Kolkata has ruled that the death of a taxpayer’s appointed tax consultant, leading to delayed filing of an appeal, qualifies as a reasonable cause for condonation under Section 250 of the Income Tax Act. This sets a critical precedent for taxpayers relying on professional representatives, affirming that administrative failures by third-party agents, beyond the assessee’s control, cannot be penalized as negligence.
ITAT Kolkata has ruled that errors in an income tax return - such as incorrect LTCG computation - can be corrected under Section 154 if apparent from the record, regardless of whether the rectification changes the total income. This affirms that the scope of rectification extends to the return itself, not just assessment orders, reinforcing natural justice and the tax officer’s duty to ensure accurate computation under CBDT Circular 14/1955.
The ITAT Kolkata ruled that a charitable trust’s registration under Sections 12AB and 80G cannot be denied solely because its trust deed lacks the word 'irrevocable', provided the intent and structure demonstrate permanent dedication to charitable purposes. This clarifies a critical compliance ambiguity for NGOs and trusts navigating post-2020 registration reforms under the Income Tax Act.
ITAT Kolkata has ruled that under Section 14A read with Rule 8D, the disallowance of expenditure attributable to exempt income cannot exceed the actual amount of exempt income earned, aligning with the Supreme Court’s Maxopp Investment precedent. This sets a critical cap on revenue department adjustments, protecting taxpayers whose exempt income is lower than claimed expenditures, especially in cases involving mixed income streams.
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 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.