ITAT Bangalore Judgments — October 2025

The Tribunal partly allowed the appeal concerning the cost of acquisition of Rs. 11,35,023, allowing it as part of the cost of acquisition. However, the Tribunal disallowed the expenses claimed for travel and courier (Rs. 4,99,000) as not being wholly and exclusively for the transfer of property. For cost of improvement, a portion was allowed, and a portion was disallowed as personal effects.

The Tribunal allowed a portion of the expenses claimed as cost of acquisition, finding the evidence sufficient. It allowed part of the expenses claimed as cost of improvement, distinguishing between permanent fixtures and personal effects. The travel and courier expenses were disallowed as not being incurred wholly and exclusively for the transfer.

The Tribunal held that the Hon'ble High Court of Karnataka had ruled that there was no provision to levy fees under Section 234E for the period in question. Therefore, the demands raised were unnecessary and the CIT(A)'s dismissal of the appeal for delay was unjust.

The Tribunal held that the disallowance of depreciation on goodwill and the consequential assessment for subsequent Assessment Years are not justified. It was decided that the assessee is eligible for depreciation on goodwill for the impugned Assessment Years.

The Tribunal held that the CIT(A) wrongly dismissed the appeal as the issue regarding the levy of fees under Section 234E for the period in question was covered in favour of the assessee by a jurisdictional High Court judgment. Therefore, the delay was condoned and the appeal was allowed.

The Tribunal held that the disallowance of depreciation on goodwill claimed by the assessee was not justified. The Tribunal noted that the consideration paid for the intangible assets was part of a slump sale agreement, which should be accepted in its totality. The Tribunal also held that for unabated assessment years, additions can only be made based on incriminating material found during search, which was not the case for the disallowance of depreciation on goodwill.

The Tribunal, following the Supreme Court's decision in Pr. CIT Vs. Abhisar Buildwell (P.) Ltd., held that the disallowance of depreciation on goodwill for unabated assessment years was not justified. It ruled that the assessee is eligible for depreciation on goodwill for all impugned assessment years. The additional grounds challenging the validity of the search under Section 153A were rejected, as incriminating material related to bogus expenditure was found during the search, and the assessee had accepted and offered this income.

The Tribunal held that the ex-parte order by the CIT(A) did not go into the merits of the case. Considering the materials available, no further investigation was required, and the addition made by the AO was not justified as it pertained to a different financial year.

For ITA No. 814/Bang/2025, the Tribunal remitted the issue of opening balance to the AO for fresh verification with an opportunity to the assessee. For ITA No. 815/Bang/2025, the assessee was permitted to withdraw the appeal with liberty to approach the Tribunal later if the relief given was challenged by the Revenue. Consequently, this appeal was dismissed as withdrawn.

The Tribunal found substance in the assessee's arguments and remitted the issue back to the CIT(E) for fresh consideration, allowing the assessee a reasonable opportunity to be heard and to substantiate its case.

The Tribunal held that the levy of fees under Section 234E of the Act was not applicable for the period in question, based on a jurisdictional High Court ruling. The CIT(A)'s dismissal of the appeal and refusal to condone the delay was considered unjust.

The Tribunal held that the filing of the audit report (Form 10CCB) is a procedural requirement and substantial compliance is sufficient. The assessee had filed the report and the revised return within the prescribed time, and the ratio of the Wipro Ltd. case was not applicable here.

The Tribunal held that while filing Form 10B within the due date is mandatory for claiming exemption under sections 11 and 12 of the Income Tax Act, the CPC incorrectly computed the real income by not allowing benefits of expenditure incurred by the assessee.

For ITA No.814/Bang/2025, the Tribunal decided to remit the issue of opening balance back to the AO for verification, allowing the appeal for statistical purposes. For ITA No.815/Bang/2025, the assessee was permitted to withdraw the appeal with liberty to approach the Tribunal later if the relief granted was challenged by the Revenue, and the appeal was dismissed as withdrawn.

The Tribunal condoned the delay in filing the appeal due to sufficient reasons. The Tribunal found that certain amounts claimed by the assessee as income from accumulated savings, loan from a tenant, and loan from her son were not properly considered. The Tribunal directed the deletion of additions made on these grounds.

The Tribunal held that the assessee had discharged their primary onus by submitting affidavits from contractors and other supporting documents. The AO failed to disprove these submissions or conduct further inquiries, and relied on superficial local inquiries and internet data. The Tribunal upheld the CIT(A)'s decision to delete the addition, stating that additions based on suspicion and conjecture are not sustainable.

The Tribunal held that the appeal was not maintainable as it was not pursued by the appointed liquidator and no amended Form 36B was filed. The Managing Director becomes functus officio upon liquidation, and only the liquidator can pursue the appeal.

The Tribunal held that the assessee, being a co-operative society engaged in borrowing and lending with its members, is entitled to deduction under Section 80P(2)(a)(i) of the Act. Relying on the Supreme Court decision in Mavilayi Service Co-op. Bank Ltd., the Tribunal found that Section 80P(4) does not apply to the assessee as it is not a co-operative bank licensed by the RBI.

The Tribunal noted that the assessment was completed under section 144 and penalty proceedings were initiated under section 272A(1)(d). Since the basis for the penalty initiation was remitted to the AO for fresh consideration concerning the quantum addition, the penalty appeal was also to be remitted for a fresh consideration.

The Tribunal found that the delay in filing the appeals for AYs 2013-14 to 2018-19 was for sufficient reason due to the assessee's ill-health and subsequent hospitalization, including heart surgery. The appeals for AY 2019-20 and AY 2011-12 were found to be filed in time. The Tribunal set aside the CIT(A)'s order and remanded the matter to the CIT(A) to reconsider the delay based on the complete medical records and decide the appeals on merits.

The Tribunal held that the assessee's financial statements did not show a double credit entry for the said amount. The double mention was only in the income tax return due to an inadvertent error. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted.

The Tribunal noted that the assessee failed to provide substantiating documents to the lower authorities. However, in the interest of justice, the Tribunal decided to remit the issue back to the Assessing Officer for fresh consideration.

The Tribunal restored the grounds related to transfer pricing adjustments to the AO for fresh examination of FAR comparability between AE and non-AE transactions. The issue of interest on overdue receivables was confirmed as a separate international transaction, but the adjustment for interest will be subsumed if a working capital adjustment is granted. The interest on unbilled revenue was restored to the TPO for fresh adjudication.

The Tribunal held that the bank accounts, although in the assessee's name, were operated, used, and owned by the partnership firm. Since the funds originated from the firm's regular income and were reflected in its accounts, the addition of Rs. 9.50 lakhs as unexplained cash credit in the hands of the assessee was unjustified.

The Tribunal condoned the delay in filing the appeal on payment of costs. Following its own previous order for the A.Y. 2017-18 concerning the same property, the Tribunal deleted the addition made by the AO, stating that the investigation report was not confronted and the basis for estimation was not brought out by the AO.

The Tribunal noted that the CIT(A)'s order was ex-parte and not on merits. Therefore, the Tribunal set aside the CIT(A)'s order and remitted the issue back to the CIT(A) for adjudication on merits.

The Tribunal condoned the delay in filing the appeal, considering the assessee's socio-economic background. It admitted additional evidence, including sale deeds and bank statements, which indicated the cash deposits originated from the sale of family property. The matter was remanded back to the Assessing Officer for a fresh examination of the additional evidence and a decision in accordance with the law.

The Tribunal held that the cash deposits of Rs. 7,46,500 were accounted for as sales in the audited books and could not be treated as unaccounted income. Regarding the lorry purchase, the Tribunal found no inflation of asset cost or unaccounted income, and the cash payment was duly accounted for and returned.

The Tribunal held that the delay in filing the appeal before the CIT(A) was for sufficient reason. The assessee's circumstances, including being a driver unaware of tax proceedings and issues with receiving notices, were considered. The Tribunal restored the appeal to the AO for fresh assessment.

The Tribunal held that the Ld.CIT(A) had failed to adjudicate the legal grounds raised by the assessee concerning the search and assessment proceedings, deeming them general in nature. This non-adjudication was considered fatal to the order.

The Tribunal noted that the assessee faced adverse personal circumstances, including the death of his son and deteriorating health, which affected his ability to respond to notices and appear before the lower authorities. The Tribunal observed that the books of account were audited and no defects were pointed out.

The Tribunal held that interest income earned by the assessee from other cooperative banks and its own reserve fund is eligible for deduction under Section 80P(2)(a)(i). Regarding the profit from fertilizer and PDS sales, the Tribunal directed the AO to ascertain the actual profit after considering the expenses to determine the eligible deduction.

The ITAT condoned the delay in filing the appeal before them, finding it nominal and for a sufficient cause. The Tribunal directed the assessee to file an application for condonation of delay before the CIT(A) to decide the issue in accordance with the law.

The Tribunal held that the delay in filing the appeal was due to sufficient cause as notices from the CIT(A) were sent to an incorrect email address. The Tribunal restored the appeal to the CIT(A) for a fresh decision after hearing the assessee.

The Tribunal held that the CIT(A) erred in not condoning the delay, stating that the assessee had sufficient cause due to the use of an inactive email and that the assessee was not negligent. The matter was restored to the AO for a fresh decision on merits.

The Tribunal noted inconsistencies regarding the dates of issuance and service of the notice under Section 148, as well as the date of the assessment order. Due to these discrepancies and the fact that the assessment order was passed ex-parte under Section 144, the Tribunal set aside the orders of the AO and CIT(A).

The Tribunal held that the CIT(A)'s dismissal of the appeal for non-payment of advance tax was incorrect, as the assessee claimed no income and thus no advance tax was payable. The Tribunal also noted that the assessment order was passed u/s 144 without hearing the assessee and decided to restore the appeal to the AO for fresh assessment after giving the assessee an opportunity to be heard.