ITAT Bangalore Judgments — November 2025

The Tribunal condoned the 52-day delay in filing the appeal, considering the assessee's ill health. It was held that since both the assessment order and the CIT(A)'s order were ex-parte, and considering the need for substantial justice, one more opportunity should be granted to the assessee.

The Tribunal held that the reassessment proceedings were bad in law and liable to be quashed because a notice under section 143(2) was not issued, which is mandatory even when a return is filed in response to a section 148 notice. The assessment order passed under section 144 r.w.s. 147 was deemed null and void.

The Tribunal held that interest earned on surplus funds invested, which were not immediately required for the society's core business of providing credit facilities, should be treated as income from other sources and not eligible for deduction under Section 80P(2)(a)(i).

The Tribunal held that the Assessing Officer erred in discarding the DCF method of valuation adopted by the assessee. The Tribunal followed the jurisdictional High Court's decision which confirmed the Tribunal's order in a similar case, stating that the AO cannot change the method of valuation chosen by the assessee.

The Tribunal held that the reopening of assessment was beyond the period of 4 years and lacked tangible material, constituting a mere change of opinion. The CIT(A) had correctly allowed the assessee's appeal on these grounds.

The Tribunal held that the Hon'ble High Court had restored the issue to be decided on the merits of the case. However, the Tribunal found no grounds raised before it that challenged the merits of any allowance or disallowance. The earlier appeal before the ITAT was only on the issue of the validity of the revisionary order passed under Section 263. The PCIT had directed the AO to examine the allowance of commission on sales and consider disallowance under Section 40(a)(ia). The Tribunal noted that if it proceeded to decide the issue of disallowance of sales commission, it would run contrary to the High Court's decision upholding the PCIT's order. Since both parties confirmed the absence of grounds to decide the allowability of sales commission expenditure, the Tribunal dismissed the assessee's appeal. Liberty was granted to reinstate the appeal if the Hon'ble High Court directed otherwise in the Review Petition.

The Tribunal noted that the issues in appeal were resolved under the MAP. Consequently, the assessee sought withdrawal of the appeal. The appeal was accordingly dismissed as withdrawn.

The Tribunal condoned the delay in filing the appeals and considered the merits. Citing the Hon'ble Apex Court decision in Checkmate Services P. Ltd. vs. CIT and other High Court judgments, the Tribunal noted that the issue of disallowance for delayed remittance of employee contributions to PF/ESI has been settled in favor of the revenue.

The Tribunal found that the CIT(A) had not properly examined the details of cash payments and the assessee's claim that individual payments were below Rs. 20,000. Therefore, the issue of cash payments was remitted back to the AO for verification.

The Tribunal condoned the delay in filing the appeals and considered the merits. Citing the Hon'ble Apex Court decision in Checkmate Services P. Ltd. vs. CIT and other High Court judgments, the Tribunal noted that the issue of disallowance for delayed remittance of employee contributions to PF/ESI has been settled in favor of the revenue.

The Tribunal found that the assessee had submitted details of cash payments, and most individual payments were below Rs. 20,000. The issue of cash payments exceeding Rs. 20,000 was remitted back to the AO for verification. The Tribunal also addressed other grounds related to bogus expenditure and cash payments.

The Tribunal condoned the delay in filing the appeals and considered the merits. Citing the Hon'ble Apex Court decision in Checkmate Services P. Ltd. vs. CIT and other High Court judgments, the Tribunal noted that the issue of disallowance for delayed remittance of employee contributions to PF/ESI has been settled in favor of the revenue.

The Tribunal rejected the assessee's arguments for including certain comparables and for netting receivables against payables for interest calculation. The Tribunal upheld the TPO's adjustments for the distribution segment and interest on overdue receivables.

The Tribunal held that co-operative societies registered under the Karnataka Souharda Sahakari Act, 1997, are entitled to the benefit of Section 80P. It further held that interest earned on deposits is attributable to the business of providing credit facilities and thus eligible for deduction.

The Tribunal held that a society registered under the Karnataka Souharda Sahkari Act, 1997, is a co-operative society entitled to Section 80P benefits. It further held that interest earned on deposits is attributable to the business of providing credit facilities and thus eligible for deduction.

The Tribunal condoned the delay of 146 days in filing the appeal, finding sufficient cause that prevented the assessee from filing within the prescribed period. Regarding the grounds raised, the Tribunal noted that the CIT(E) rejected the application due to non-compliance with notices. The assessee's plea was that its accountant, entrusted with tax matters, failed to act. In the interest of justice, the Tribunal decided to grant the assessee one more opportunity. The application in Form 10AB was restored to the file of the learned CIT(E) for de novo adjudication after providing a reasonable and adequate opportunity of hearing. The assessee was directed to furnish all requested information. The impugned order was set aside, and the grounds raised by the assessee were allowed for statistical purposes. No issue was expressly left undecided.

The Tribunal noted that the learned CIT(A) passed the order ex parte due to the assessee's non-appearance, and similarly, the assessee failed to produce documents before the AO, leading to a best judgment assessment. The assessee also did not submit details before the CIT(A). However, in the present appeal, the assessee was represented and wished to pursue the case on merits. Considering the interest of justice and fair play, the Tribunal decided to grant the assessee one more opportunity to represent their case. Therefore, the matter was restored to the file of the jurisdictional AO for de novo adjudication on merits. The assessee was directed to cooperate, furnish details, and raise all contentions. The AO was directed to consider all details and submissions and provide a due opportunity of hearing. As the matter was restored to the AO, other grievances raised by the assessee were not adjudicated at this stage. The impugned order was set aside, and the grounds raised were allowed for statistical purposes.

The Tribunal allowed the provision for obsolete/slow-moving inventory for the LVCE division, finding the assessee's reasoning consistent with judicial precedents. It also held that the CIT(A) lacked jurisdiction to suo motu disallow the provision for the wind energy division for the first time in the second round of litigation.

The Tribunal dismissed the Revenue's appeal, holding that the cooperative society was eligible for the deduction under section 80P(2)(a)(i). The Tribunal noted that the nominal members were minimal and the society's objectives aligned with the spirit of cooperative principles.

The Tribunal held that co-operative societies registered under the Karnataka Souharda Sahakari Act, 1997, are entitled to the benefit of Section 80P. It further held that interest earned on deposits is attributable to the business of providing credit facilities and thus eligible for deduction.

The Tribunal held that compounding fees paid for infractions of law are in the nature of a penalty and not a deductible business expense. Following jurisdictional High Court decisions, the disallowance was upheld.

The Tribunal held that the properties could not be let out due to peculiar circumstances and the demand for rent was negligible. Therefore, the notional rental value estimated by the AO was incorrect, and the principles of Section 23(1)(c) of the Income Tax Act should apply.

The Tribunal held that the assessee, registered under the Karnataka State Souharda Sahakari Act, 1997, is eligible for deduction under Section 80P(2)(a)(i) as nominal members are included in the definition of 'member'. The Tribunal also noted that interest income from investments with banks and institutions not members of the society is not eligible for deduction.

The Tribunal held that the assessee is entitled to a refund of the TDS amount of Rs. 14,76,398/-. The Tribunal noted that the interest income earned by the assessee on her NRE account deposits in bonds was exempt from tax under Section 10(4) of the Act. Consequently, the TDS provisions under Section 195(2) were not applicable. The banks had mechanically deducted the TDS amount due to a misconception of the provisions. The Tribunal found that the AO and DRP had erred in rejecting the refund claim solely on the basis that the return was filed under Section 148 and not Section 139. The Tribunal relied on the judgment of the Hon'ble Jurisdictional High Court in Karnataka State Co-operative Apex Bank Ltd. vs. DCIT, which distinguished the Supreme Court's decision in CIT vs. M/s. Sun Engineering Works (P.) Ltd. The Tribunal reasoned that proceedings under Section 148 were the first assessment in this case, and all claims should have been considered. The retention of the wrongly deducted TDS amount by the department would amount to unjust enrichment. Therefore, the Tribunal allowed the appeal and directed the AO to refund the TDS amount without delay.

The Tribunal held that the properties could not be let out due to peculiar circumstances and the demand for rent was negligible. Therefore, the notional rental value estimated by the AO was incorrect, and the principles of Section 23(1)(c) of the Income Tax Act should apply.

The Tribunal noted that the assessee did not appear before the Ld.CIT(A) and failed to file submissions and documents, leading to an ex-parte order. The Tribunal granted one more opportunity to the assessee.

The Tribunal held that the conditions for imposing penalty under section 271AAB were satisfied, following the Apex Court's decision in Sandeep Chandak. The assessee's admission of undisclosed income during the search and the manner of derivation were considered sufficient.

The Tribunal held that the assessee had satisfactorily demonstrated the genuineness of the purchases, especially considering payments were made via cheque. Furthermore, for unabated assessment years, additions under section 153A require incriminating material, which was absent here.

The Tribunal held that the assessee had discharged its onus by proving the identity, creditworthiness, and genuineness of the lenders and investors through confirmations, banking transactions, and long-standing shareholding. The addition was not sustainable based on general investigation reports and suspicion alone.

The Tribunal admitted additional evidence filed by the assessee, noting that the initial Paper Books were uncertified. The Tribunal found that the assessee incurred expenses for student benefit and charitable activities, but also noted the lack of clarity on student selection, purpose of visits, and installation of leased line connection.

The Tribunal held that the assessee had discharged its onus by proving the identity, creditworthiness, and genuineness of the lenders and investors through confirmations, banking transactions, and long-standing shareholding. The addition was not sustainable based on general investigation reports and suspicion alone.

The Tribunal admitted additional evidence filed by the assessee, noting that the initial Paper Books were uncertified. The Tribunal found that the assessee incurred expenses for student benefit and charitable activities, but also noted the lack of clarity on student selection, purpose of visits, and installation of leased line connection.

The Tribunal set aside the ex-parte order of the CIT(A) and restored the matter to the file of the CIT(A) for de novo adjudication on merits. The assessee was granted another opportunity to present its case, and was directed to provide an updated email address for future notices.

The Tribunal held that disallowance under Section 40A(3) should not be made if the genuineness of the transaction is established and exceptions under Rule 6DD are met, such as payments made on bank holidays or to individual labourers whose payments do not exceed Rs. 20,000. The case was remanded for fresh adjudication.

The Tribunal held that the assessee failed to prove that payments were made on banking holidays as per Rule 6DD(j) for most of the disputed amounts. For a specific labour development cess payment, the matter was remanded for verification.

The Tribunal held that the assessment orders for AY 2020-21 and AY 2021-22 were not barred by limitation. The key issue was the date of conclusion of the search for computing the limitation period under section 153B. The Tribunal noted that section 153B(2) clearly states that an authorization is deemed executed on the conclusion of the search as recorded in the last panchnama. In this case, the initial search operations occurred on February 19-20, 2021, but prohibitory orders under section 132(3) were issued. These orders were revoked on April 20, 2021, and a final panchnama was drawn on that date. The Tribunal found that the conclusion of the search, as per the statutory provision, is tied to the drawing of the last panchnama. Therefore, the search was concluded on April 20, 2021. The Tribunal rejected the assessee's argument that the search concluded when the search party left the premises, as prohibitory orders effectively kept the proceedings alive. The Tribunal also addressed the other limbs of the assessee's argument concerning the validity of prohibitory orders and CBDT instructions, finding them not applicable or not overriding the statutory provisions. Consequently, the limitation period was correctly computed by the Assessing Officer based on the conclusion of the search on April 20, 2021. The Tribunal also dealt with the issue of disallowance of COVID expenses, holding that the outright disallowance was excessive given the circumstances and the fact that the trust's accounts were audited. It directed the AO to delete the disallowance. Regarding renovation expenses, the Tribunal found that the amount was adjusted against an unsecured loan and was never claimed as an expense, thus the disallowance under section 37(1) was not sustainable.

The Tribunal held that the assessment orders for AY 2020-21 and AY 2021-22 were barred by limitation under section 153B of the Income Tax Act. The Tribunal's reasoning focused on the interpretation of when a search is deemed to have concluded for limitation purposes. It found that the crucial event for determining the limitation period is the drawing of the last panchnama evidencing the conclusion of the search, as stipulated in section 153B(2). In this case, the search operations were initially carried out in February 2021, but prohibitory orders under section 132(3) were issued. These orders were revoked on April 20, 2021, and a final panchnama was drawn on that date. The Tribunal held that the search was concluded on April 20, 2021, not February 20, 2021, as contended by the assessee. This conclusion was supported by the Supreme Court's judgments in VLS Finance Ltd. vs. CIT and Shri Anil Minda vs. CIT, which held that the limitation period for block assessments (pari materia with section 153B) is reckoned from the date of the last panchnama, and that prohibitory orders keep the search proceedings alive. The Tribunal also addressed the assessee's arguments regarding the validity of prohibitory orders and CBDT instructions, finding them unconvincing in light of the statutory provisions and binding judicial precedents. Consequently, the Tribunal ruled that the assessments completed on November 24, 2023, and November 28, 2023, were beyond the prescribed time limit. The Tribunal did not decide on the merits of the additions made, as the primary issue was limitation.

The Tribunal noted that both the assessment order and the CIT(A)'s order were ex-parte and not on merits. Given the assessee's status and potential explanations for the deposits, the Tribunal decided to grant one more opportunity.

The Tribunal, acknowledging the assessee's failure to appear before the CIT(A) due to carelessness, granted a chance for denovo consideration by setting aside the CIT(A)'s order. A cost of Rs. 10,000 was imposed.

The Tribunal acknowledged the assessee's lack of education and technical knowledge, and the circumstances leading to non-appearance. The Tribunal set aside the orders of the lower authorities and remitted the issue to the AO for denovo consideration, granting an opportunity to the assessee to appear.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause for the delay. On the merits, the Tribunal held that the addition made by the Assessing Officer under Section 68 of the Act was not justified. The AO had increased the assessee's turnover by 41% but allowed only 30% of this increase, treating the remaining 11% as unsubstantiated turnover and making an addition. The Tribunal noted that the AO did not dispute the factual evidence furnished by the assessee, including VAT returns and sample purchase and sale bills. Furthermore, the assessee provided a Tax Audit Report and financials showing that while turnover increased by 41%, the gross profit increased only marginally from 7.39% to 8.04%, and the net profit decreased from 3.55% to 3.17% compared to the preceding year. The Tribunal found no merit in the ad-hoc addition made by accepting partial turnover. Therefore, the impugned addition under Section 68 was deleted, and the grounds raised by the assessee on merits were allowed. The appeal was allowed.

The Tribunal found that the assessee failed to provide sufficient documentation to substantiate the claim for advisory and legal fees. Consequently, the Tribunal remanded the issue back to the Commissioner for a fresh decision, allowing the assessee an opportunity to produce relevant documents.

The Tribunal set aside the CIT(A) order and remitted the issue back for fresh adjudication, granting the assessee an opportunity to appear and submit documents, subject to payment of costs.

The Tribunal held that the assessee could not represent her case properly before the lower authorities and that the principles of natural justice were violated. Therefore, the issue was remitted back to the Assessing Officer for a fresh decision.

The Tribunal held that the transfer pricing additions made on a protective basis in the hands of the assessee should be deleted if the substantive addition in the hands of the foreign holding company has been settled under the VSV scheme 2020. The Tribunal directed the Assessing Officer to verify if the dispute is covered by the VSV scheme 2020, and if so, the addition deserves to be deleted, allowing the assessee's ground. The appeal by the revenue against the working capital adjustment was allowed and restored to the Assessing Officer to decide in consequence of his decision on the assessee's appeal. Regarding the waiver of loan, the Tribunal held that it is not taxable under Section 41(1) as no allowance or deduction was claimed in earlier years. Respectfully following the decision of the Karnataka High Court in IG Petrochemicals Ltd., the Tribunal allowed the assessee's ground concerning the loan waiver. The Tribunal noted that grounds 1, 2, and 12 of the assessee's appeal were not pressed and were dismissed. The appeals for both assessment years were allowed for statistical purposes.

The Tribunal held that companies not found in the TPO's search matrix should not be included as comparables, rejecting the assessee's claims for certain companies. However, it directed the AO to re-examine the inclusion of R Systems International Limited and the application of the related party transaction filter for Saatchi & Saatchi Private Limited.

The Tribunal held that the transfer pricing additions made on a protective basis in the hands of the assessee should be deleted if the substantive addition in the hands of the foreign holding company has been settled under the VSV scheme 2020. The Tribunal directed the Assessing Officer to verify if the dispute is covered by the VSV scheme 2020, and if so, the addition deserves to be deleted, allowing the assessee's ground. The appeal by the revenue against the working capital adjustment was allowed and restored to the Assessing Officer to decide in consequence of his decision on the assessee's appeal. Regarding the waiver of loan, the Tribunal held that it is not taxable under Section 41(1) as no allowance or deduction was claimed in earlier years. Respectfully following the decision of the Karnataka High Court in IG Petrochemicals Ltd., the Tribunal allowed the assessee's ground concerning the loan waiver. The Tribunal noted that grounds 1, 2, and 12 of the assessee's appeal were not pressed and were dismissed. The appeals for both assessment years were allowed for statistical purposes.

The Tribunal held that the transfer pricing additions made on a protective basis in the hands of the assessee should be deleted if the substantive addition in the hands of the foreign holding company has been settled under the VSV scheme 2020. The Tribunal directed the Assessing Officer to verify if the dispute is covered by the VSV scheme 2020, and if so, the addition deserves to be deleted, allowing the assessee's ground. The appeal by the revenue against the working capital adjustment was allowed and restored to the Assessing Officer to decide in consequence of his decision on the assessee's appeal. Regarding the waiver of loan, the Tribunal held that it is not taxable under Section 41(1) as no allowance or deduction was claimed in earlier years. Respectfully following the decision of the Karnataka High Court in IG Petrochemicals Ltd., the Tribunal allowed the assessee's ground concerning the loan waiver. The Tribunal noted that grounds 1, 2, and 12 of the assessee's appeal were not pressed and were dismissed. The appeals for both assessment years were allowed for statistical purposes.