ACIT-15(3)(1), MUMBAI, MUMBAI vs. WELLNESS FOREVER HEALTHTECH PRIVATE LIMITED, MUMBAI

ITA 1971/MUM/2026Status: DisposedITAT Mumbai29 September 2026AY 2022-2312 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, Wellness Forever Healthtech Private Limited, filed its return of income for Assessment Year 2022-2023 declaring a total loss of Rs. 12,24,28,896. The case was selected for scrutiny. The Assessing Officer (AO) issued a show cause notice proposing a disallowance of Rs. 1,04,83,000. However, the AO subsequently disallowed the entire loss of Rs. 12,24,28,896 in the assessment order. The assessee claimed that a business transfer arrangement qualified as a common control transaction under Ind AS 103, requiring assets to be recorded at historical cost, which artificially increased book profit by recognizing unrealised income and fair value adjustments. The assessee made an adjustment of Rs. 1,26,05,962 to determine total income as per Income Tax provisions. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the disallowance to the extent of Rs. 10,98,22,934. The Revenue appealed against this deletion, and the Assessee appealed against the denial/restriction of carried forward losses.

What did the Tribunal hold?

The Tribunal held that the adjustment amount of Rs. 1,26,05,962/- requires verification with reference to the business transfer arrangement and the accounting treatment under Appendix C to Ind AS 103. The Tribunal noted that the Assessing Officer had not afforded sufficient time to the Assessee for substantiation, and the detailed working was not examined by the CIT(A). Therefore, the Tribunal restored this limited issue to the file of the jurisdictional Assessing Officer for the purpose of verification of the correctness and quantification of the adjustment. The Assessee is to furnish complete working, reconciliation, and supporting documents, and the AO is to verify the same after affording a reasonable opportunity of being heard. This remand is confined to the verification of the adjustment and does not reopen any other concluded issue. Consequently, grounds 1 to 5 of the Assessee's appeal relating to this disallowance are restored to the AO. Ground 6 of the Assessee's appeal regarding penalty proceedings under Section 270A is consequential and does not require separate adjudication at this stage. The Tribunal dismissed the Revenue's appeal and partly allowed the Assessee's appeal for the limited purpose of verification.

What were the issues?

1. Whether the Ld. CIT(A) erred in deleting the disallowance of Rs. 10,98,22,934/- without appreciating that the assessee failed to discharge its primary onus of providing complete and verifiable documentary evidence in support of the ICDS adjustments claimed in the Return of Income, as argued by the Revenue. 2. Whether the Ld. CIT(A) erred in upholding the Assessing Officer's (AO's) order in denying/restricting the carried forward business/depreciation losses to the extent of Rs. 1,26,05,962/-, as argued by the Assessee. Revenue's Contentions: The Revenue argued that the assessee failed to provide complete and verifiable documentary evidence for ICDS adjustments. It contended that the CIT(A) granted relief despite the assessee failing to furnish detailed workings and documentary evidence even during appellate proceedings. The Revenue also argued that compliance with ICDS is mandatory and that the CIT(A) erred in accepting self-serving claims of loss without proper reconciliation. Furthermore, the Revenue argued that adjustments arising from Business Transfer Arrangement (Ind AS 103) are not automatically tax-deductible unless permitted by the Income Tax Act, and the CIT(A) failed to verify the underlying agreement and valuation reports. The Revenue also argued that the AO is duty-bound to assess the 'true income/loss' and a technical omission in an interim notice does not bar disallowance of unsubstantiated claims. Finally, the Revenue argued that allowing carry forward of loss without establishing its correctness against statutory standards of ICDS is prejudicial to revenue. Assessee's Contentions: The Assessee contended that the CIT(A) erred in upholding the AO's order in denying/restricting carried forward losses. It argued a violation of principles of natural justice by the AO who allowed less than two days to reply to a show cause notice with complex details. The Assessee also argued that the disallowance of Rs. 1,26,05,962/- was made without pinpointing any specific defect, despite the adjustments being legally allowed as per AS 103 and ICDS, and disclosed in the Tax Audit Report. The Assessee further argued that the AO accepted the books of account and the company's audit report, and therefore, the disallowance was incorrect. The Assessee also contended that the CIT(A) relied on AO's presumptions and rejected documentary evidence. Lastly, the Assessee argued that penalty proceedings under Section 270A and 272A(1)(d) should be dropped as there was no underreporting or misreporting of income and the issue was only about determining correct losses.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 145(2),Section 250,Section 154,Section 270A,Section 272A(1)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI RAKESH KUMAR LODHA

For Appellant: Shri Bhupendra Shah, Ld. AR
For Respondent: Shri Basavaraj Hiremath – CIT, DR a/w Shri Rajgopal
Hearing: 10.08.2026Pronounced: 29.09.2026

PER : Shri Rakesh Kumar Lodha, Accountant Member:

These appeals have been filed by the Revenue and the Assessee against the common order dated 25/03/2024 p

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 145(2)

All 252 judgments and leading authorities on Section 145(2) →

Recent GST High Court judgments

Search GST case law →