ITAT Ahmedabad Judgments — January 2026

The Tribunal condoned the delay in filing the appeal. It set aside the CIT(A)'s order and remitted the matter back to the CIT(A) for fresh adjudication. This decision was based on the finding that the assessee was not afforded a proper opportunity to present their case before the CIT(A) due to technical glitches in the faceless e-proceedings, thereby violating principles of natural justice.

The Tribunal found that the assessee successfully demonstrated that the investment amount was sourced from income earned in Dubai, which was subsequently transferred to India. Therefore, the Tribunal concluded that the addition for unexplained investment made by the lower authorities was not justified and ordered its deletion.

The Tribunal deleted the entire addition of Rs. 1,34,20,228/- related to cash deposits, accepting the assessee's explanation that the cash originated from normal cash sales and was deposited due to demonetization. It also affirmed the CIT(A)'s deletion of Rs. 4,16,98,589/- for unexplained capital accretion, holding that such additions cannot be made in the hands of the firm but only in the hands of the individual partners. The AO is at liberty to proceed against partners.

The Tribunal held that the Assessing Officer had conducted proper enquiries and considered the evidence, including affidavits and disclosures by Shri Sanjay Shah taking ownership of the transactions, before making a conscious decision. The mere fact that the AO did not make an addition or elaborately discuss the issue in the assessment order does not render it erroneous or prejudicial to the revenue, provided due application of mind is demonstrated. Thus, the PCIT's revisionary order u/s 263 was not justified.

The Tribunal dismissed the Revenue's appeal, relying on previous coordinate bench orders for the same transaction involving joint-owners, which had held the land to be agricultural land and not a capital asset under Section 2(14). The Tribunal affirmed that there was no merit in interfering with the CIT(A)'s order. The assessee's Cross Objections regarding the validity of the assessment reopening were dismissed as not pressed.

The Tribunal held that the denial of exemption under sections 11 and 12 was not justified, as Form 10B was already on record when the return was processed under section 143(1). It affirmed that delayed filing of Form 10B is a curable procedural defect and exemption cannot be denied on such technical grounds, citing various High Court and Tribunal precedents. The Tribunal found that the CIT(A) erred in dismissing the appeal on limitation without addressing the merits, as the underlying adjustment was contrary to settled law.

The Tribunal directed the CIT(E) to treat the provisional registration (Form 10AC) as a regular registration (Form 10AB), valid for five years from 01/04/2021, acknowledging the prevailing confusion. Consequently, the rejection of the 80G approval was also set aside.

The Tribunal set aside the CIT(A)'s order and remanded the matter back to the CIT(A) for a fresh decision on merits. This restoration was conditional on the assessee depositing Rs. 10,000/- to the Prime Minister's National Relief Fund within a stipulated time. The CIT(A) was directed to provide adequate opportunity to the assessee irrespective of any delay.

The ITAT held that the entire addition of Rs. 26,93,360/- for unexplained cash deposits was unjustified and directed its full deletion, finding the assessee's explanations and evidences sufficient. The ITAT upheld the CIT(A)'s deletion of additions related to unexplained cheque credits (Rs. 51,00,241/-) and unexplained import payments/customs duty (Rs. 42,35,881/-), as the AO failed to provide contrary evidence. Regarding the business loss, as all additions were deleted, the returned loss remained, rendering the Revenue's appeal on this point dismissed, and the CIT(A)'s decision not to allow carry-forward was unchallenged.

The Tribunal deleted the entire addition of Rs. 1,34,20,228/- related to cash deposits, accepting the assessee's explanation that the cash came from normal business sales and was deposited due to demonetization. The Tribunal also affirmed the CIT(A)'s decision to delete the addition of Rs. 4,16,98,589/- for unexplained capital accretion, holding that such an addition cannot be made in the hands of the partnership firm but only in the hands of individual partners.

The Tribunal noted the confusion regarding new registration rules and forms, directing the CIT(E) to substitute the provisional registration issued in Form 10AC with a regular registration in Form 10AB. This regular registration is to be valid for five years with retrospective effect from 01/04/2021, ensuring no gap in registration. Consequently, the rejection of the 80G application, being dependent on the 12A registration, was also set aside.

The Tribunal fully deleted the addition of Rs.26,93,360/- for unexplained cash deposits under Section 68. It upheld the CIT(A)'s deletion of additions for unexplained cheque credits (Rs.51,00,241/-) under Section 68 and unexplained import payments/customs duties (Rs.42,35,881/-) under Section 69, finding the assessee's explanations and documentation sufficient. The Tribunal also dismissed the Revenue's challenge against allowing the set-off of the business loss, confirming the CIT(A)'s view that the loss was genuine and book-supported, while noting the denial of carry-forward due to belated return filing was correct.

The Tribunal condoned a 57-day delay in filing the appeals, noting the assessee's lack of legal knowledge. All eight identical appeals were remanded back to the Assessing Officer for proper adjudication, verification, and a fresh opportunity of hearing based on natural justice, with a direction for the assessee to cooperate and pay a cost of Rs. 2,000/- to the Prime Minister's Relief Fund.

The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's lack of legal understanding and previous non-cooperation. It remanded all eight appeals back to the Assessing Officer for fresh adjudication, directing the assessee to pay a cost of Rs. 2,000/- to the Prime Minister's Relief Fund and to fully cooperate with the proceedings, ensuring adherence to principles of natural justice.

The Tribunal condoned the delay in filing the appeal, acknowledging the institutional nature of the assessee and bona fide reasons for the delay. On merits, the Tribunal ruled that the interest income earned on government grants, being mandatorily refundable to the Government, could not be treated as the assessee's independent income. Therefore, the assessee was held to be entitled to exemption under section 10(23C)(iiiab) of the Act, and the reliance on the precedent of *Visvesvaraya Technological University* was deemed misplaced.

The tribunal upheld the Principal CIT's order, confirming that the Assessing Officer's failure to properly verify the genuineness of the political donations and the eligibility of donee entities rendered the assessment order erroneous and prejudicial to the interests of the Revenue. The tribunal noted factual discrepancies in donation receipts and distinguished the case from prior precedents cited by the assessee, concluding that the PCIT was justified in invoking Section 263.

The Tribunal held that the DDT rate should be restricted to 10% as per Article 11 of the India-UK DTAA, directing a refund of the excess DDT. It also ruled that the levy of interest under sections 234B and 234C on additional income agreed via APA is illegal, instructing the AO to delete such interest. Further, the AO was directed to verify and grant the claimed TDS credit. The ground regarding the validity of the CIT(A)'s order was dismissed as consequential.

The Tribunal deleted the Transfer Pricing adjustments for corporate guarantee, convertible loans, and reimbursement of expenses, finding these issues consistently decided in the assessee's favor in prior years. The adjustment related to the sale of goods to Zydus USA was also deleted after holding the assessee's selected comparables valid. However, the issue of comparables for sales to Zydus France was remanded to the TPO for re-evaluation. The claim for weighted R&D deduction under Section 35(2AB) was upheld to the extent approved by DSIR, but the AO was directed to consider alternative deduction claims under Section 35(1)(i) & 35(1)(iv) if eligible.

The Tribunal noted the assessee's inability to properly represent the case and decided to remand all identical appeals back to the Assessing Officer for fresh adjudication and verification. The assessee is directed to pay Rs. 2,000/- to the Prime Minister's Relief Fund and cooperate fully with the re-assessment proceedings.

The Tribunal held that the reopening of the assessment was not justified because the addition of Rs. 82,67,778/- made by the AO was not based on the initial reasons recorded for reopening the assessment. Citing a Gujarat High Court decision, the Tribunal stated that an addition cannot be made merely on suspicion without proper reasons. As the assessment itself became invalid due to this discrepancy, the Tribunal allowed the appeal.

The Tribunal condoned the delay in filing the appeal, noting the assessee's lack of legal acumen. It remanded the case back to the Assessing Officer for fresh adjudication, ensuring compliance with natural justice principles, and directed the assessee to cooperate and pay Rs. 2,000/- to the Prime Minister's Relief Fund.

The Tribunal condoned the delay in filing the appeals and, noting the assessee's lack of legal expertise and the violation of natural justice due to ex parte orders, remanded all eight cases back to the Assessing Officer. The AO is directed to re-adjudicate the matters after providing the assessee a proper opportunity of hearing, with a cost of Rs. 2,000/- imposed on the assessee.

The ITAT determined that the core dispute regarding the nature of income (business vs. other sources) and the accurate computation of net interest income required further investigation. The matter was remitted to the Assessing Officer for de-novo consideration. The AO is directed to re-examine the issues, reconcile interest income and expenditure, and determine the correct taxable income after affording the assessee due opportunity of being heard.

The Tribunal upheld the CIT(A)'s decision, finding no infirmity. It ruled that the assessee's objects and activities were charitable in nature, falling under 'preservation of environment,' and thus eligible for exemption under Section 11. The Tribunal noted that the proviso to Section 2(15) was not applicable, and income applied wholly for charitable purposes does not lose its charitable character merely due to its contractual origin.

The Tribunal condoned a 57-day delay and, considering the assessee's lack of legal knowledge and prior non-cooperation, remanded all 8 appeals back to the Assessing Officer for fresh adjudication. The AO is directed to provide a hearing opportunity based on natural justice, with the assessee mandated to cooperate and pay Rs. 2,000/- to the Prime Minister's Relief Fund.

The Tribunal condoned the delay in filing the appeals, noting the assessee's lack of legal knowledge and failure to present the case properly. All eight appeals were remanded back to the Assessing Officer for fresh adjudication and verification, providing the assessee an opportunity to be heard, subject to payment of Rs. 2,000/- to the Prime Minister's Relief Fund and cooperation with the proceedings.

The Tribunal ruled that the addition of cash deposits under section 68 was unsustainable as they were recorded sales in audited books which were not rejected by the AO, thus preventing double taxation. It also deleted the disallowance of commission expenses, finding them to be genuine business expenditure made through banking channels with TDS. Consequently, the applicability of section 115BBE and penalty under section 271AAC related to these additions were also set aside.

The Tribunal condoned the delay in filing appeals and noted that the assessee, not well-versed in law, failed to submit details to lower authorities. The matter is remanded back to the Assessing Officer for proper adjudication, with directions for the assessee to cooperate and be granted a hearing. The assessee is also directed to pay a cost of Rs. 2,000/- to the Prime Minister's Relief Fund.

The Tribunal condoned the 66-day delay in filing the appeal, imposing a cost of Rs. 5,000/- on the assessee. It directed the CIT (Exemption) to provide another opportunity of hearing to the assessee and decide the matter afresh in accordance with the law, upon production of the cost payment challan.

The Tribunal concurred with the lower authorities, finding the assessee failed to provide a convincing reason for accumulating and re-depositing such large cash amounts, especially when further withdrawals were made. It emphasized that mere prior withdrawals are insufficient; the assessee must prove the cash remained unutilized, and their explanation did not meet the test of human probabilities as held by the Supreme Court in CIT v. P. Mohanakala.

The Tribunal, recognizing the exceptional circumstances of the manager's fraud, condoned the delay in filing the present appeal and the earlier appeal before the CIT(A). It set aside the CIT(A)'s order and directed the CIT(A) to consider and decide the assessee's appeal on its merits, without prejudice to the delay in filing.

The Tribunal held that the unutilized IDI and interest earned thereon could not be treated as taxable income, as it remained an 'advance' from the government for project execution, not a subsidy or grant falling under Section 2(24)(xviii). For the penalty appeal, the Tribunal found that the assessee had indeed complied by uploading replies to the ITD Portal and deleted the penalty.

The Tribunal observed that the CIT(A) dismissed the appeal due to a 1640-day delay and noted the assessee's non-cooperation during assessment proceedings. In the interest of justice, the Tribunal set aside both the quantum and penalty orders, remanding the quantum assessment to the AO for a de novo adjudication with a fresh opportunity for the assessee. A cost of Rs. 5,000/- was imposed on the assessee for non-cooperation, to be deposited in the Prime Minister's Relief Fund.

The Tribunal set aside the CIT(A)'s order and restored the quantum assessment matter to the Assessing Officer for de novo adjudication, granting the assessee an opportunity to be heard. Given the assessee's lack of cooperation during initial proceedings, the Tribunal imposed a cost of Rs. 5,000/-. The penalty levied under Section 271(1)(b) was also restored to the Assessing Officer for fresh consideration after the completion of the assessment proceedings.

The Tribunal noted the assessee's inability to furnish full details due to the COVID-19 pandemic, lockdown restrictions, and the fact that the creditor company had closed down and was untraceable. Observing that partial details were submitted earlier but not fully considered, and in adherence to natural justice, the Tribunal decided to restore the matter to the file of the Assessing Officer for de-novo consideration, granting the assessee another opportunity to present all relevant material.

The Tribunal ruled that the assessee, being an old trust, is not subject to the 'commencement of activities' limb of section 12A(1)(ac)(iii). It noted that the application was filed within six months of provisional registration. The tribunal set aside the CIT(E)'s order and remitted the matter back for a decision on merits, granting the assessee a reasonable opportunity of hearing.

The Tribunal found that the assessee inadvertently selected the wrong section code in Form 10AB and was not given an opportunity of being heard. Citing precedents, the Tribunal held that wrong quoting of the clause is not fatal. The impugned rejection order was set aside, and the matter was remitted back to the CIT(E) to consider the rectified application and grant approval after providing an opportunity of hearing to the assessee.

The Tribunal condoned the delay in filing the appeal, accepting the assessee's explanation regarding the improper service of hearing notices by the CIT(A). The matter was set aside and remitted back to the CIT(A) to decide the case on merits after providing the assessee a proper opportunity of hearing via the correct email ID.

The Tribunal restored the matter to the Assessing Officer for de novo adjudication, allowing the assessee a final opportunity to present all necessary documents and explanations. A cost of Rs.10,000/- was imposed on the assessee for repeated non-compliance, to be deposited in the "Prime Minister's Relief Fund".

The Tribunal relied on the SEBI finding that SMSTL allotted shares without receiving actual consideration, which demonstrated that the assessee had not made any investment of its own. Citing precedents where the CIT(A) deleted similar additions in identical circumstances, the Tribunal concluded that the impugned addition was not sustainable and ordered its deletion.

The Tribunal condoned the 14-day delay in filing the appeal. The matter was restored to the CIT(A) for a fresh decision on merits, with instructions for the CIT(A) to provide a due hearing and for the assessee to participate promptly without causing further delays.

The Tribunal, relying on Supreme Court judgments, held that merely making an incorrect claim, especially when all details are disclosed, does not amount to furnishing inaccurate particulars of income warranting a penalty under section 271(1)(c). The assessee was in bona fide belief that the interest was revenue expenditure and had disclosed all necessary particulars.

The Tribunal, to meet the ends of justice, granted the assessee one final opportunity to present its case on merits before the CIT(A), NFAC. This was conditional on the assessee paying a cost of Rs. 10,000/- to the Income Tax Department within two weeks and producing the challan to the CIT(A).

The Tribunal acknowledged the assessee's non-compliance but, considering the serious consequences, granted one more opportunity. It set aside the CIT(Exemptions)'s order and restored the matter for de-novo consideration, subject to the assessee paying a cost of Rs. 5,000/- to the Prime Minister's Relief Fund and fully cooperating.

Given that the CIT(A) had already allowed the appeal against the 143(1) intimation on the denial of exemption, the assessee requested to withdraw the present appeal against the 143(3) order, stating it had become infructuous. The Revenue had no objection, and the Tribunal accordingly dismissed the appeal as withdrawn.

For both grounds of appeal, the Tribunal remanded the matter to the Assessing Officer (AO). The AO was directed to verify the assessee's separate accounts/computation and the DR's contention regarding the expenses. For the bad debts provision, the AO was directed to verify the claim and allow it if the assessee is entitled under Section 36(1)(viia) of the Act.