#ITAT Rulings

The ITAT Delhi has held that an Assessing Officer cannot substitute a registered valuer’s report with an arbitrary, unsupported methodology to compute indexed cost of acquisition under Section 48. This reinforces the legal primacy of expert valuation in capital gains assessments and protects taxpayers from speculative adjustments by revenue authorities.

ITAT Surat holds that reassessment proceedings under Section 147 of the Income Tax Act beyond four years from the end of the assessment year are invalid unless new tangible material justifying escapement of income is discovered. The ruling quashes reassessment orders for AY 2011-12 and 2014-15, reinforcing the limitation period for tax authorities and protecting assessees from arbitrary reopening of cases.

The ITAT Delhi has ruled that a penalty under Section 270A cannot be sustained if the show cause notice fails to clearly distinguish whether the assessee under-reported or misreported income. This upholds natural justice by requiring precise allegations before imposing financial penalties, directly impacting all taxpayers facing scrutiny for income disclosure discrepancies.

ITAT Delhi has sanctioned a 5% disallowance of Rs.31 lakh in alleged bogus purchases under Section 69C, treating it as a fair, non-precedential middle ground where full disallowance lacks evidentiary support but complete acceptance is untenable. This nuanced approach affects exporters and cash-intensive businesses facing disputed purchase trails, offering a new benchmark for adjudicating borderline cases without setting binding precedent.

ITAT Delhi sets aside a ₹40,000 penalty under Section 272A(1)(d) for non-compliance with notices u/s 142(1) and 143(2), ruling that penalties are unwarranted if no revenue prejudice is established. The decision reinforces that procedural lapses alone cannot justify penalties absent demonstrable harm to tax authorities.

ITAT Bangalore holds that a delayed Form 67 submission does not automatically disqualify a taxpayer from claiming foreign tax credit under Section 90, provided the credit was claimed in the return. The ruling clarifies that procedural delays in filing Form 67 should not override substantive entitlement to relief under Double Taxation Avoidance Agreements.

ITAT Bangalore holds that claiming exemption under Section 54F does not require unutilized capital gains to be deposited in the Capital Gains Account Scheme if the new residential house is fully constructed within three years of sale, even if construction costs were incurred after the return filing deadline. This clarifies that actual completion, not mere deposit, is the decisive factor - benefiting taxpayers who reinvest gains in self-built homes with staggered payments.

ITAT Ahmedabad clarifies that capital gains tax under Section 45 of the Income Tax Act applies only to the amount actually received by a confirming party, not the entire sale consideration. The ruling underscores the need for tax authorities to assess liability based on real receipts, offering relief to taxpayers involved in joint property transactions where proceeds are shared.

ITAT Ahmedabad overturned the rejection of a charitable trust's registration under Section 12A(1)(ac)(ii), ruling that procedural lapses cannot override substantive compliance with trust objectives. The tribunal emphasized that all mandatory documents were already submitted, reinforcing natural justice over technicalities.

ITAT Agra rules that the Assessing Officer must record objective dissatisfaction under Section 14A(2) of the Income Tax Act before invoking Rule 8D for disallowing expenses related to exempt income like dividends. The Tribunal emphasized that mechanical application of Rule 8D without identifying expenditure relatable to exempt income is invalid, reinforcing procedural safeguards for taxpayers.

ITAT Delhi holds that charitable trusts not availing exemption under Section 11 of the Income Tax Act must be taxed at individual slab rates, not as Associations of Persons (AOPs) under Section 167A. The ruling clarifies that trusts without defined beneficiaries or members are not AOPs, impacting tax liability calculations for non-exempt charitable entities.