ITAT Bangalore Judgments — February 2026

The Tribunal found it an undisputed fact that the assessee could not represent its case before the CIT(A)/NFAC. The assessee's AR undertook to submit all necessary documents and requested a remand. In the interest of justice, the Tribunal decided to remit the entire issue back to the CIT(A)/NFAC for fresh adjudication.

The Tribunal held that the PCIT was justified in invoking Section 263 because the allowability of deduction for delayed deposit of employee contributions to PF & ESI changed based on a Supreme Court decision post-assessment order, making the AO's order erroneous at the time of PCIT's examination. The Tribunal also upheld the PCIT's direction regarding interest on delayed filing of excise returns.

The assessee filed an appeal before the CIT(A) with a considerable delay, which was not condoned, leading to the dismissal of the appeal on the grounds of limitation. The assessee argued that the delay was due to a mistake in furnishing the reasons in the grounds of appeal instead of the designated column in Form 35.

The Tribunal held that the notice issued u/s 148A(b) was illegal because the AO failed to provide the statutory minimum period of 7 days for the assessee to respond. Consequently, all subsequent proceedings, including the order u/s 148A(d) and the assessment order, were also rendered invalid.

The Tribunal held that the CIT(A) confirmed the addition primarily on the reasoning that no documentary evidence was furnished other than an affidavit and that it was not produced before the AO. However, the records showed that supporting documents like balance sheets, loan documents, and sale deeds were furnished. The Tribunal found that the CIT(A)'s order did not reflect a discussion or analysis of these documents.

The Tribunal held that the CIT(E) erred in denying the 80G approval solely based on fee receipts from educational activities, especially since the assessee had separate accounting for fees and donations. The Tribunal noted that the assessee already had 12A registration, indicating its charitable nature, and there was no allegation of misuse of funds. The denial of approval was considered not well-reasoned.

The Tribunal condoned the delay of 41 days in filing the appeal, finding the assessee's reason to be bonafide. The Tribunal restored the appeal to the Assessing Officer (AO) directing the assessee to substantiate the identity, creditworthiness, and genuineness of three companies from whom Rs.3.56 Crores were received. The AO was instructed to examine the source of funds and pass a fresh order, allowing the assessee an opportunity of hearing.

The Tribunal noted that the assessee's application for immunity was filed belatedly by 8 days due to technical glitches and that the AO did not provide an opportunity for a hearing before rejecting the immunity claim. It was also observed that the penalty was levied without following principles of natural justice.

The Tribunal condoned the delay in filing the appeal, stating that the assessee's ignorance of the changed provisions and the tax advisory, coupled with their prompt action upon receiving correct advice, constituted sufficient cause for the delay. The Tribunal also noted that the order passed by the CIT(E) violated the principles of natural justice as the assessee was not afforded a proper opportunity of being heard.

The Tribunal held that the construction cost could not be denied entirely as the fact of construction was established by the sale deeds. The valuation report, although not supported by primary documents like bills, should be considered. The matter was remitted to the AO for fresh consideration.

The Tribunal held that the disallowance under Section 14A was not sustainable as the AO failed to record proper satisfaction and identify specific expenditures related to exempt income. Regarding the slump sale addition, the Tribunal found that the AO incorrectly considered the stamp duty value as the sale consideration, while the actual consideration received by the assessee was lower and confirmed by the buyer.

The Tribunal held that the notice issued under section 148 of the Act was invalid as it was served on a deceased person. The subsequent assessment proceedings and order were therefore null and void. The Tribunal noted that section 159(2)(b) of the Act requires a separate notice to be issued to the legal representative for proceedings that could have been taken against the deceased. The issuance of a notice to a dead person cannot be saved by Section 292B or 292BB of the Act.

The Tribunal held that the disallowance under Section 14A was not sustainable as the Assessing Officer (AO) failed to record the necessary satisfaction regarding the assessee's claim of not incurring expenditure for earning exempt income, and the subsequent addition made by the AO on account of slump sale consideration was also deleted as it was based on the stamp duty value and not the actual consideration received.

The Tribunal deleted all additions, ruling that for an assessee under section 44AD, accepted business turnover explained cash deposits, and property investment was substantiated by documented sources. It further held that additions based solely on survey statements or extrapolations, lacking corroborative evidence, are unsustainable when the declared turnover is accepted under the presumptive scheme.

The Competent Authorities of India and USA arrived at a resolution regarding the assessment of the appellant's income. As per the MAP resolution, the appellant was required to withdraw the pending appeal before the ITAT.

The Tribunal held that short-term capital loss can be set off against long-term capital gains irrespective of different tax rates, as per Section 70 of the Income Tax Act. It also held that TDS credit should be allowed to the beneficiary when the income is assessed in their hands, even if there is a procedural mismatch in Form 26AS.

The Tribunal condoned the delay of 30 days, noting it was marginal and without mala fides, and admitted the appeal. The Tribunal found that the CIT(A) order was passed in haste without adequately appreciating the assessee's submissions and evidence.

The Tribunal deleted all additions across the three assessment years. For A.Y. 2015-16, cash deposits were explained by accepted business turnover and investment by documented sources. For A.Y. 2017-18, income admitted during survey and cash deposits were held to be part of declared turnover under Section 44AD. For A.Y. 2018-19, the addition based on extrapolated sales from a survey statement was rejected as lacking corroborative evidence, emphasizing that a survey statement alone without supporting material cannot be the sole basis for additions, especially when the assessee is under a presumptive taxation regime.

The Tribunal noted that the assessee was running a school for educational purposes and its income was indeed exempt. The assessee acted under a bonafide impression of not needing to file the return. The AO accepted the return filed later and determined NIL income. The word 'may' in Section 271F indicates discretionary power, and considering the circumstances, a lenient view is warranted.

The Tribunal held that the assessee was entitled to set off STT-paid short-term capital loss against long-term capital gains under Section 70, irrespective of different tax rates, deeming the CPC's adjustment erroneous. It also ruled that the TDS credit for dividend income from the revocable trust, assessed in the beneficiary's hands, must be allowed, as procedural requirements should not override the substantive right to credit when tax is already deposited.

The Tribunal held that the assessee has been consistently treated as a public charitable trust for over 50 years, running educational institutions, and its application clearly stated it was an educational trust. The CIT(E) did not provide any material or reasoning to classify it as a religious trust and reject the 80G approval.

The Income Tax Appellate Tribunal (ITAT) deleted all impugned additions across the three assessment years. For AY 2015-16, it held that cash deposits were explained by accepted business turnover under Section 44AD and the investment in shops was supported by documentary evidence. For AY 2017-18, the ITAT found that the income admitted during survey was part of the declared turnover under Section 44AD and cash deposits were from business sales. For AY 2018-19, the ITAT ruled that additions based solely on extrapolated sales from survey statements without corroborative material are unsustainable, especially in a presumptive taxation regime.

The Tribunal ruled that high-turnover companies cannot be considered valid comparables for the SWD segment, aligning with Karnataka High Court decisions. For the SDS segment, specific comparables (Innovana Thinklabs Ltd., Quick Heal Technologies Ltd., and Tally Solutions Pvt Ltd.) were excluded due to functional dissimilarities. Regarding delayed receivables, the Tribunal upheld it as a separate international transaction but directed recomputation of interest using LIBOR plus 200 basis points for foreign currency invoices, limiting it to the actual delay period.

The Tribunal noted that the assessee had been functioning as a public charitable trust for over 50 years, running educational institutions. The CIT(Exemption) had classified it as a religious trust without sufficient material or proper inquiry, leading to the denial of 80G benefits. The Tribunal found that the delay in filing the appeal was due to the assessee coming to know about the classification and its consequences. The Tribunal restored both appeals to the file of the CIT(Exemption) for a fresh examination.

The Tribunal held that the assessee had failed to demonstrate a sufficient cause for the inordinate delay of 840 days in filing the appeal. The explanation provided, attributing the delay to the Chartered Accountant, was considered a plea to shift blame and not a genuine reason. The Tribunal emphasized the principle that litigants have a duty to be vigilant of their rights.

The Tribunal noted the substantial delay in filing the appeals, with one appeal having a delay of 1780 days. The CIT(A) dismissed the appeals on grounds of limitation due to lack of valid explanations or applications for condonation. The assessee's representative requested an opportunity to file detailed delay condonation applications and supporting documents.

The Tribunal noted the substantial delays and the assessee's lack of proper explanation for not filing delay condonation applications. However, considering that the appeals were not decided on merits by the CIT(A), the Tribunal decided to grant one more opportunity to the assessee.

The Tribunal held that the Assessing Officer (AO) failed to provide the assessee an opportunity of hearing before rejecting the immunity application, which is a violation of natural justice principles and Section 270AA(4) of the Act. The AO also did not properly address the assessee's rectification application.

The Tribunal held that TDS provisions are triggered for amounts credited to 'Provision for expenses account' even if not credited to the vendor's account, as per specific provisions in TDS sections. The assessee is liable to deduct TDS on year-end provisions. However, if the assessee subsequently deducts and deposits TDS before payment or at the time of payment in the succeeding year, the demand under section 201(1) may be cancelled, but interest under section 201(1A) may still be applicable due to the delay.

The Tribunal found merit in the Assessee's contention that the TPO incorrectly handled the benchmarking for ECB1, particularly concerning the change in lender jurisdiction and other economic conditions. The Tribunal restored the issue of determining the Arm's Length Price (ALP) for ECB1 to the TPO/Assessing Officer for fresh adjudication. For ECB2, the Tribunal agreed that the TPO incorrectly used floating interest rates and the wrong financial year for benchmarking, directing the Assessing Officer/TPO to conduct a revised analysis.

The Tribunal found that the unsecured loans were mostly opening balances from relatives and sister concerns, with supporting documentation like confirmations and affidavits provided. The interest expenditure on MSME and gold loans was for business purposes, and the salary expenditure was substantiated with bills, labour registration, and TDS certificates. The CIT(A) order was quashed for not considering the evidence.

The Tribunal held that the assessee's statement under Section 132(4), made in possession of incriminating documents that he attempted to destroy, carried significant evidentiary value. The subsequent retraction was not substantiated with credible evidence, and Mr. Vasudev's denial did not outweigh the initial admission and the seized material.

The Tribunal held that the dividend income received by the assessee from mutual funds and shares was fully exempt under Sections 10(34) and 10(35) of the Income Tax Act. Therefore, the addition made by the AO and confirmed by the CIT(A) was incorrect, and the deduction under Section 115BBDA was not applicable as the dividend income was not chargeable to tax.

The Tribunal condoned the delay in filing the appeal after considering the assessee's medical issues and the non-communication from the previous consultant. The Tribunal set aside the order of the Ld.CIT(A) and remitted the issue back for fresh adjudication on merits, considering all documents.

The Tribunal condoned the delay in filing the appeal before the CIT(A), set aside the order of the CIT(A) and the AO, and remitted the issue back to the AO for a fresh assessment after considering the documents filed by the assessee.

The Income Tax Appellate Tribunal (ITAT) allowed the appeal on merits, noting the appellant's genuine grievances and practical difficulties in complying with the SFT requirements. The Tribunal held that the penalty under Section 271FAA, being discretionary (indicated by the word 'may'), should not have been imposed given the circumstances. It set aside the penalty order, granting leniency to the appellant.

The Tribunal condoned the 56-day delay in filing the appeal, finding sufficient cause. On merits, the Tribunal noted that the Hon'ble Karnataka High Court had allowed the assessee's petition, condoning a delay in filing the return of income. Consequently, the assessee was entitled to the deduction under Section 80IA, and thus the addition and the penalty were deleted.

The Tribunal held that the assessee had offered the gains as short-term capital gains and had provided supporting documents. The AO's reasons for reopening were based on a misunderstanding of the transaction, as the assessee did not claim any long-term capital gain exemption. The addition made by the AO was found to be a duplicate.

The Tribunal condoned the delay, considering the assessees' reasons as reasonable. It was noted that the assessees are old charitable organizations and to render substantial justice, an opportunity was granted to re-appear before the Ld.CIT(E) and produce necessary documents. The order of the Ld.CIT(E) was set aside.

The Tribunal condoned the delay in filing the appeals and the reasons for non-appearance. Considering the assessees are old charitable organizations registered since 1985, the Tribunal decided to grant them one more opportunity to appear before the CIT(E) and produce necessary documents.

The Tribunal noted that notices were sent to an incorrect email ID belonging to the auditor, which the assessee was unaware of, leading to ex-parte proceedings at both the AO and CIT(A) levels. The CIT(A) erred in dismissing the appeal without verifying if notices were reaching the assessee.

The Tribunal noted that the assessee purchased a property and constructed on it, selling it later for a higher price. While the assessee claimed construction costs and selling expenses, they failed to provide sufficient documentary evidence to the lower authorities. The Tribunal restored the issue to the Assessing Officer for verification of the provided details and determination of the cost of construction.

The Tribunal noted that the AO had not allowed the excess interest paid as it was not correlated with earning income. While acknowledging the ex-parte order of the CIT(A), the Tribunal decided to remit the issue to the AO for fresh adjudication.

The Tribunal noted that the assessee was staying abroad and was dependent on her father for tax matters, which led to her not receiving or responding to notices. Therefore, there was a reasonable cause for not responding and remaining unrepresented.

The Tribunal held that the assessment order passed under section 143(3) was without jurisdiction, as it should have been passed under section 153C, given the circumstances of the search and seized documents pertaining to the assessee. The additional ground raised by the assessee was admitted as it was jurisdictional in nature.

The Tribunal noted that the assessee's General Manager was unwell, leading to non-appearance before the CIT(A). Considering this and other evidence, including a similar order for AY 2019-20, the Tribunal decided to grant an opportunity to the assessee.

The Tribunal held that the notice issued under section 148 on April 29, 2022, for AY 2015-16 was invalid and barred by time. The six-year limitation period under the old regime expired on March 31, 2022, and the first proviso to the substituted Section 149(1) acts as a statutory bar.

The Tribunal held that the reassessment notice issued under Section 148 on April 08, 2022, for AY 2015-16, was invalid and time-barred. It emphasized that the six-year limitation period under the old regime for AY 2015-16 expired on March 31, 2022. The Tribunal clarified that the first proviso to the substituted Section 149(1) acts as a statutory bar, which cannot be overridden by procedural compliance with Section 148A or time exclusions under other provisos, citing the Apex Court's ruling in Union of India v. Rajeev Bansal.