ITAT Bangalore Judgments — October 2026

The Tribunal held that the non-payment of GST, while collected, would not automatically be treated as underreporting or misreporting of income under Section 270A. The Tribunal also found that the AO had failed to specify the limb under which the penalty was being imposed in the penalty notice. The assessment order and penalty notice did not mention the specific limb of violation. Although the penalty order eventually stated the penalty was levied under Section 270A(8) for underreporting in consequence of misreporting, the initial notice was deficient. The Tribunal noted that penalty proceedings are quasi-criminal in nature, requiring the AO to specify the limb in the notice to provide an effective opportunity to the assessee. Relying on coordinate bench decisions, the Tribunal set aside the penalty order on this legal ground, without adjudicating the other grounds. The ratio decidendi is that a penalty under Section 270A cannot be sustained if the penalty notice fails to specify the limb of violation, thus denying the assessee an effective opportunity to defend themselves.

The Tribunal held that the orders of the CIT(E) rejecting the applications for registration under Section 12AB and approval under Section 80G were not in accordance with the provisions of the Act and were against the principles of natural justice. The Tribunal observed that the assessee had conducted various activities towards its objects, supported by financial statements and photographs. The CIT(E)'s conclusion that activities had not commenced was not supported by evidence. The Tribunal agreed with the assessee that the quantum of expenditure is a matter for the AO at the assessment stage, not for the CIT(E) during registration. Furthermore, the CIT(E) had not provided a show cause notice or a personal hearing before passing adverse orders, violating natural justice. Citing judgments from the Supreme Court and the Jurisdictional High Court, and orders of coordinate benches, the Tribunal found that the manner of application of funds and the quantum of expenditure are issues to be examined by the AO. Consequently, the Tribunal set aside the orders of the CIT(E) and restored the issues to the file of the CIT(E) for fresh consideration in accordance with law. The CIT(E) was directed to consider the applications afresh, allowing the assessee to furnish necessary documents. The cancellation of provisional registration and 80G approval was also deemed not in order.

The Tribunal held that the orders of the CIT(E) rejecting the applications for registration under Section 12AB and approval under Section 80G were not in accordance with the provisions of the Act and were against the principles of natural justice. The Tribunal observed that the assessee had conducted various activities towards its objects, supported by financial statements and photographs. The CIT(E)'s conclusion that activities had not commenced was not supported by evidence. The Tribunal agreed with the assessee that the quantum of expenditure is a matter for the AO at the assessment stage, not for the CIT(E) during registration. Furthermore, the CIT(E) had not provided a show cause notice or a personal hearing before passing adverse orders, violating natural justice. Citing judgments from the Supreme Court and the Jurisdictional High Court, and orders of coordinate benches, the Tribunal found that the manner of application of funds and the quantum of expenditure are issues to be examined by the AO. Consequently, the Tribunal set aside the orders of the CIT(E) and restored the issues to the file of the CIT(E) for fresh consideration in accordance with law. The CIT(E) was directed to consider the applications afresh, allowing the assessee to furnish necessary documents. The cancellation of provisional registration and 80G approval was also deemed not in order.

The Tribunal held that Section 271(1)(c) of the Income Tax Act, 1961, has two distinct limbs: furnishing inaccurate particulars and concealment of income. In this case, the AO issued the penalty notice alleging furnishing of inaccurate particulars but imposed the penalty on the ground of concealment of income. This shift in the basis for penalty, without affording the assessee an opportunity to rebut the grounds of concealment, violates the principles of natural justice. The Tribunal relied on the jurisdictional High Court's judgment in CIT vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar) and CIT vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 241 (Kar), affirmed by the Supreme Court, which held that penalty proceedings initiated on one ground cannot be sustained if the penalty is imposed on another ground. Therefore, the penalty imposed under Section 271(1)(c) was set aside.

The Tribunal condoned the delay in filing the appeal before the learned CIT(A), finding that the assessee's reasons for delay fell within the parameters laid down by the Supreme Court in "Collector Land Acquisition, Anantnag vs. MST Katiji and others." The Tribunal held that procedural rules are subservient to substantial justice and that the assessee did not benefit from the delay. The CIT(A) was not justified in dismissing the appeal on delay without adjudicating on merits. The Tribunal also noted the assessee's unfamiliarity with e-proceedings, the circumstances of the revised return filing, and the claim of possessing supporting documents. In the interest of substantial justice, the Tribunal restored the matter to the AO for de novo assessment, granting the assessee a final opportunity to substantiate his case. The assessee was directed to cooperate fully and file all documents without seeking unnecessary adjournments. A cost of Rs. 5,000/- was imposed on the assessee. The quantum and penalty proceedings were set aside and restored to the AO for fresh adjudication. No issue was expressly left undecided.

The Tribunal held that the addition made by the AO was unsustainable. It noted that the physical inventory of sugar and molasses tallied with the books of account. The difference arose solely from the valuation of stock on different dates (27.07.2016 versus 31.03.2016), which is a marketable commodity whose price fluctuates. The Managing Director's explanation for this valuation difference was accepted. Furthermore, the Tribunal found it significant that the AO, in its remand report after considering the ITSC order and additional evidence, agreed to allow the benefit of telescoping. Once the AO conceded to this position, the Revenue could not challenge it. Therefore, the grounds raised by the Revenue were dismissed. The deletion of the addition by the CIT(A) was upheld.

The Tribunal held that the issue regarding the validity of the notice under Section 148 was not pressed by the assessee and therefore dismissed as withdrawn. Regarding the salary income, the Tribunal noted that the assessee had not pressed for admission of additional evidence (bank statements) and had failed to discharge the onus of proof by not producing corroborative evidence. The CIT(A)'s finding that the claim of Rs. 3,20,000 as salary remained unsubstantiated was upheld. Consequently, the addition of Rs. 10,26,000 as salary income was sustained. On the issue of remuneration from Ernst & Young LLP, the Tribunal clarified that salary or remuneration received by a partner from a firm/LLP is chargeable to tax under Section 28(v) of the Act, not under the head 'Salaries'. It reasoned that such income is not the partner's own turnover or gross receipt, and the presumptive scheme under Section 44ADA applies to persons carrying on their own profession. Therefore, the entire remuneration of Rs. 24,00,000 received from the LLP is chargeable to tax under Section 28(v). However, the Tribunal observed that Ernst & Young LLP's confirmation letter mentioned an exempt/non-taxable amount of Rs. 23,85,000 towards discretionary additional remuneration, which was claimed as non-taxable in terms of the proviso to Section 28(v). This aspect required further verification by the AO. Accordingly, the Tribunal remitted this issue to the AO for re-computation of the correct income, granting the assessee a reasonable opportunity of being heard. The appeal was partly allowed for statistical purposes.

The Tribunal held that the ex-gratia compensation received by the assessees under the BSNL VRS Scheme, 2019, is eligible for full exemption under Section 10(10B) of the Income Tax Act, 1961. The reasoning was that the scheme was an integral part of a government-approved revival and restructuring plan for BSNL, involving government-directed manpower reduction to restore financial viability. The scheme was operated through a DOT office memorandum and funded by the Central Government. The Tribunal noted that coordinate benches of the ITAT in Ahmedabad, Indore, and Mumbai had categorically held this issue in favor of the assessees. The Tribunal also addressed the issue of whether the assessees were 'workmen,' referencing the decision in Shraddha Pralhad Arote (supra) which had considered and rejected this argument. Consequently, the Assessing Officer was directed to grant full exemption under Section 10(10B). Regarding the delayed appeals of Anand Chipalkatti, the Tribunal found the explanation for the delay plausible and sufficient, condoning the delay and admitting the appeals on merits. The findings in ITA No. 623/Bang/2026 were applied mutatis mutandis to these appeals.

The Tribunal condoned the delay in filing the appeal before the learned CIT(A), finding that the assessee's reasons for delay fell within the parameters laid down by the Supreme Court in "Collector Land Acquisition, Anantnag vs. MST Katiji and others." The Tribunal held that procedural rules are subservient to substantial justice and that the assessee did not benefit from the delay. The CIT(A) was not justified in dismissing the appeal on delay without adjudicating on merits. The Tribunal also noted the assessee's unfamiliarity with e-proceedings, the circumstances of the revised return filing, and the claim of possessing supporting documents. In the interest of substantial justice, the Tribunal restored the matter to the AO for de novo assessment, granting the assessee a final opportunity to substantiate his case. The assessee was directed to cooperate fully and file all documents without seeking unnecessary adjournments. A cost of Rs. 5,000/- was imposed on the assessee. The quantum and penalty proceedings were set aside and restored to the AO for fresh adjudication. No issue was expressly left undecided.

The Tribunal dismissed Ground No. 2 regarding the assumption of jurisdiction, referencing a recent amendment by the Finance Act, 2026, inserting section 147A retrospectively from 01/04/2021. For Grounds No. 3 and 4, concerning the disallowance of deduction under section 80P, the Tribunal noted that it is undisputed that the assessee did not file its return under section 139(1). Section 80AC mandates that for deductions under Chapter VI (including section 80P) to be allowed, the return must be furnished on or before the due date specified under section 139(1). The assessee filed its return only in response to a section 148 notice, after the due date. The Tribunal relied on the Kerala High Court's decision in Nileshwar Range Kallu Chethu Vyavasaya Thozhilali Sahakarana Sangham v/s CIT, which held that after 01/04/2018, a deduction under section 80P is only permissible if the return is filed by the due date under section 139(1), even if filed in response to notices under sections 139(4), 142(1), or 148. The Tribunal acknowledged the assessee's application for condonation of delay filed under CBDT Circular No. 13 of 2023, which was pending when the AO passed the order. Therefore, in the interest of justice, the matter was restored to the AO to decide afresh after considering the outcome of the condonation application. If the delay is condoned, the 80P deduction is to be considered on merits. If rejected, the disallowance is sustained. Grounds 3 and 4 were allowed for statistical purposes.

The Tribunal held that the learned CIT(E) rejected the application without issuing a notice to the assessee, providing an opportunity to be heard or to submit the required documents. The Tribunal found merit in the assessee's argument that an opportunity should be provided, especially for a charitable institution, in the interest of substantial justice. Following the principles of natural justice, the Tribunal remitted the matter back to the learned CIT(E) for fresh consideration of the application. The assessee was directed to submit the relevant documents without seeking unnecessary adjournments. The appeal was allowed for statistical purposes.

The Tribunal held that the reason advanced by the assessee for the delay in filing the appeal does not constitute sufficient cause. The Tribunal perused the material on record and heard the rival contentions. It was of the opinion that the delay should not be condoned. Consequently, the Tribunal dismissed the appeal of the assessee. The operative direction is the dismissal of the appeal. No issue was expressly left undecided, as the primary issue of condonation of delay was decided against the assessee, leading to the dismissal of the appeal on procedural grounds.

The Tribunal found that the initial scrutiny assessment was completed by accepting the returned income without any categorical findings or a speaking order from the AO, suggesting a lack of application of mind. Therefore, the reopening of the assessment under section 148 was considered justifiable. Regarding the addition of Rs. 2,88,53,733, the Tribunal noted that the CIT(A) deleted the addition solely based on the profit ratio provided by the assessee, accepting the assessee's claim of selling below cost as a startup strategy. The Tribunal disagreed with this reasoning, stating that a pharmaceutical manufacturer selling below cost is not acceptable and that the CIT(A) did not pass a speaking order. Consequently, the Tribunal set aside the CIT(A)'s order on this issue. Concerning the addition of Rs. 42,48,416 under section 69C, the Tribunal observed that the CIT(A) made a casual observation without elaborate findings or examining evidence, stating the expenditure was misplaced and untenable. The Tribunal noted that no proper reconciliation was provided, and the ledger accounts did not contain sales entries. Finding no proper documentary evidence produced, the Tribunal set aside the CIT(A)'s order on this issue, upholding the AO's order. The assessee's cross-objections were dismissed as already adjudicated.

The Tribunal allowed the appeal on legal grounds. It held that the AO failed to comply with the mandatory procedures under Section 148A of the Act. Specifically, the notice under Section 148A(b) was issued on a wrong premise that the assessee had not filed its return, which could have been verified through inquiry. The AO also failed to properly consider the assessee's objections and documents before passing the order under Section 148A(d), merely stating they needed to be examined. This failure to apply his mind and pass a speaking order meant the Section 148A(d) order was bad in law. Consequently, the consequential notice under Section 148 and the assessment proceedings under Section 147 were also deemed bad in law, rendering the AO without jurisdiction. The Tribunal also found that the disallowance of interest under Section 24(1)(b) was made without putting the assessee on notice during the Section 148A proceedings, and therefore, this addition was deleted. The Tribunal relied on the Bombay High Court's decision in Narendra Kumar Shah vs. ACIT.

The Tribunal held that the interest income earned from mandatory deposits with the District Central Co-operative Bank is indeed attributable to the business activities of the assessee and eligible for deduction under Section 80P(2)(a)(i). The Tribunal noted that the assessee is a primary agricultural co-operative society facilitating NABARD funds to farmers, making such deposits a statutory and mandatory requirement. Failure to do so would impede the society's ability to distribute funds to farmers and effectively shut down its business. Therefore, the incidental interest income cannot be treated as income from other sources. The Tribunal relied on the jurisdictional High Court's decision in *Tumkur Merchants Souharda Credit Co-operative Ltd. vs. ITO*, which held that interest income from deposits is attributable to the profits and gains of the business of providing credit facilities. The Tribunal also referred to a coordinate bench's reliance on the Supreme Court's decision in *CIT vs. Karnataka State Co-operative Apex Bank*, which held that income derived from funds placed mandatorily for carrying on banking business is income from the assessee's business. Similarly, the dividend income received from investments in shares of a co-operative institution was also held to be eligible for deduction under Section 80P(2)(a)(i) as it is almost a statutory requirement and attributable to the business activities. Consequently, the Tribunal deleted both additions made by the AO and confirmed by the CIT(A).

The Tribunal held that the ex-gratia compensation received by the assessees under the BSNL VRS Scheme, 2019, is eligible for full exemption under Section 10(10B) of the Income Tax Act, 1961. The reasoning was that the scheme was an integral part of a government-approved revival and restructuring plan for BSNL, involving government-directed manpower reduction to restore financial viability. The scheme was operated through a DOT office memorandum and funded by the Central Government. The Tribunal noted that coordinate benches of the ITAT in Ahmedabad, Indore, and Mumbai had categorically held this issue in favor of the assessees. The Tribunal also addressed the issue of whether the assessees were 'workmen,' referencing the decision in Shraddha Pralhad Arote (supra) which had considered and rejected this argument. Consequently, the Assessing Officer was directed to grant full exemption under Section 10(10B). Regarding the delayed appeals of Anand Chipalkatti, the Tribunal found the explanation for the delay plausible and sufficient, condoning the delay and admitting the appeals on merits. The findings in ITA No. 623/Bang/2026 were applied mutatis mutandis to these appeals.

The Tribunal held that the ex-gratia compensation received by the assessees under the BSNL VRS Scheme, 2019, is eligible for full exemption under Section 10(10B) of the Income Tax Act, 1961. The reasoning was that the scheme was an integral part of a government-approved revival and restructuring plan for BSNL, involving government-directed manpower reduction to restore financial viability. The scheme was operated through a DOT office memorandum and funded by the Central Government. The Tribunal noted that coordinate benches of the ITAT in Ahmedabad, Indore, and Mumbai had categorically held this issue in favor of the assessees. The Tribunal also addressed the issue of whether the assessees were 'workmen,' referencing the decision in Shraddha Pralhad Arote (supra) which had considered and rejected this argument. Consequently, the Assessing Officer was directed to grant full exemption under Section 10(10B). Regarding the delayed appeals of Anand Chipalkatti, the Tribunal found the explanation for the delay plausible and sufficient, condoning the delay and admitting the appeals on merits. The findings in ITA No. 623/Bang/2026 were applied mutatis mutandis to these appeals.

The Tribunal condoned the delay of 643 days in filing the appeal, finding that the assessee had provided sufficient cause due to the CEO's incapacitation and the resulting inability to access the IT portal. The Tribunal also found merit in the assessee's plea for another opportunity, considering the submission that notices were not received on their active email ID, leading to non-participation. In the interest of substantial justice, the Tribunal decided to remit the matter back to the Assessing Officer (AO). The AO was directed to provide an opportunity of being heard to the assessee. Simultaneously, the assessee was directed to participate in the remand proceedings without unnecessary adjournments. The Tribunal noted that if the assessee failed to comply, the AO would be at liberty to frame the assessment based on the material available on record. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal condoned the delay in filing the appeal before the learned CIT(A), finding that the assessee's reasons for delay fell within the parameters laid down by the Supreme Court in "Collector Land Acquisition, Anantnag vs. MST Katiji and others." The Tribunal held that procedural rules are subservient to substantial justice and that the assessee did not benefit from the delay. The CIT(A) was not justified in dismissing the appeal on delay without adjudicating on merits. The Tribunal also noted the assessee's unfamiliarity with e-proceedings, the circumstances of the revised return filing, and the claim of possessing supporting documents. In the interest of substantial justice, the Tribunal restored the matter to the AO for de novo assessment, granting the assessee a final opportunity to substantiate his case. The assessee was directed to cooperate fully and file all documents without seeking unnecessary adjournments. A cost of Rs. 5,000/- was imposed on the assessee. The quantum and penalty proceedings were set aside and restored to the AO for fresh adjudication. No issue was expressly left undecided.

The Tribunal condoned the delay in filing the appeal before the learned CIT(A), finding that the assessee's reasons for delay fell within the parameters laid down by the Supreme Court in "Collector Land Acquisition, Anantnag vs. MST Katiji and others." The Tribunal held that procedural rules are subservient to substantial justice and that the assessee did not benefit from the delay. The CIT(A) was not justified in dismissing the appeal on delay without adjudicating on merits. The Tribunal also noted the assessee's unfamiliarity with e-proceedings, the circumstances of the revised return filing, and the claim of possessing supporting documents. In the interest of substantial justice, the Tribunal restored the matter to the AO for de novo assessment, granting the assessee a final opportunity to substantiate his case. The assessee was directed to cooperate fully and file all documents without seeking unnecessary adjournments. A cost of Rs. 5,000/- was imposed on the assessee. The quantum and penalty proceedings were set aside and restored to the AO for fresh adjudication. No issue was expressly left undecided.

The Tribunal condoned the delay in filing the appeal before the learned CIT(A), finding that the assessee's reasons for delay fell within the parameters laid down by the Supreme Court in "Collector Land Acquisition, Anantnag vs. MST Katiji and others." The Tribunal held that procedural rules are subservient to substantial justice and that the assessee did not benefit from the delay. The CIT(A) was not justified in dismissing the appeal on delay without adjudicating on merits. The Tribunal also noted the assessee's unfamiliarity with e-proceedings, the circumstances of the revised return filing, and the claim of possessing supporting documents. In the interest of substantial justice, the Tribunal restored the matter to the AO for de novo assessment, granting the assessee a final opportunity to substantiate his case. The assessee was directed to cooperate fully and file all documents without seeking unnecessary adjournments. A cost of Rs. 5,000/- was imposed on the assessee. The quantum and penalty proceedings were set aside and restored to the AO for fresh adjudication. No issue was expressly left undecided.

The Tribunal held that the delay in filing the appeal against the penalty order should be condoned. The reasoning was based on the fact that the Tribunal, in its earlier order in ITA No. 869/Bang/2026 dated 30/07/2026, had condoned the delay in filing the appeal against the quantum assessment order and remitted the said issue to the AO for fresh consideration. Consequently, as on the date of the present hearing, the quantum demand was not in existence. Considering this fact and that the present appeal pertains to penalty proceedings, the Tribunal was inclined to condone the delay in filing the appeal before the NFAC and remit this issue also to the AO for consideration along with the quantum issue. The Tribunal stated that other directions given in the quantum appeal would equally apply to the present case. The appeal was allowed for statistical purposes.

The Tribunal condoned the delay of 190 days in filing the appeal, finding that the reasons provided by the assessee for the delay were sufficient and fell within the parameters laid down by the Supreme Court in Collector Land Acquisition, Anantnag vs. MST Katiji and others. The Tribunal emphasized that procedural rules are meant to aid justice and that substantial justice should be preferred over technical considerations. The Tribunal noted that the learned CIT(A) had passed an ex parte order due to the assessee's non-compliance with hearing notices. However, since the assessee was now represented and wished to pursue the litigation, the Tribunal decided to restore the matter to the file of the learned CIT(A) for de novo adjudication. The assessee was directed to provide all necessary documents and cooperate fully in the proceedings. A cost of Rs. 5,000/- was imposed on the assessee, payable to the Prime Minister’s National Relief Fund, for not appearing before the CIT(A) without reasonable cause despite multiple opportunities. The impugned order of the CIT(A) was set aside, and the appeal was allowed for statistical purposes. The Tribunal also directed the assessee to provide an operational email address to the CIT(A) for future communication.

The Tribunal condoned the delay of 131 days in filing the appeal, accepting the assessee's submission regarding the incorrect email ID and the late receipt of the Department Valuation Report. The Tribunal noted that the AO had requested a valuation report from the Department Valuation Officer on 08/01/2025, but it was only ready on 29/07/2025, after the assessment was completed on 24/03/2025. The assessee had now produced this report in the paper book. Since this report was not considered by the AO or the CIT(A) (due to the dismissal for non-prosecution), the Tribunal set aside the orders of the lower authorities. The issue of cost of construction was remitted back to the file of the AO for fresh consideration in light of the Department Valuation Report dated 29/07/2025, with an opportunity of being heard granted to the assessee. The appeal was allowed for statistical purposes.

The Tribunal held that the interest income earned by the assessee is eligible for deduction under Section 80P(2)(a)(vii) of the Income Tax Act, 1961. The Tribunal noted that the assessee is a co-operative society established for the benefit of fishermen, and it deposited a part of its profits in banks, including co-operative and scheduled banks, pursuant to statutory requirements under the Karnataka Co-operative Societies Act. The Tribunal found that maintaining accounts with these banks is necessary for the society's day-to-day business activities. Applying the principle laid down by the jurisdictional High Court in the *Tumkur Merchants Souharda Credit Co-operative Ltd.* case, which held that interest earned from deposits is attributable to the profits and gains of the business of providing credit facilities and thus eligible for deduction under Section 80P(2)(a)(i), the Tribunal concluded that the interest income earned by the assessee is attributable to its business. The Tribunal also noted that the jurisdictional High Court in that case had differentiated the Supreme Court's judgment in *Totgars Co-operative Sales Society Ltd.*. The Tribunal further relied on a Coordinate Bench order in *Sree Cauvery Souharda Credit Sahakari Sangha Niyamitha* which followed the *Tumkur Merchants* principle. Therefore, the assessee is entitled to claim deduction under Section 80P(2)(a)(vii). The appeal is allowed.

The Tribunal decided to condone the delay of 756 days in filing the appeal before the learned CIT(A). While acknowledging the lack of contemporaneous medical evidence, the Tribunal found that refusing to condone the delay could lead to a meritorious case being dismissed prematurely. Given the assessee's contention of a potential double addition (transactions already processed under the new PAN), the Tribunal felt that substantial justice would be served by hearing the case on merits. On the merits of the case, the Tribunal noted that a new PAN was allotted in 2014, and the return for the year under consideration was filed under this new PAN. The Tribunal also observed that for assessment year 2016-17, similar reassessment proceedings initiated under the old PAN were dropped after the assessee's submission that the transactions were accounted for and declared under the new PAN. Therefore, the Tribunal restored the matter to the Jurisdictional Assessing Officer (AO) for de novo assessment. The AO was directed to examine the assessee's contention regarding the disclosure of impugned deposits under the new PAN. If found correct, the AO was directed to delete the additions, as double addition is not permissible. The penalty proceedings were also restored to the AO for fresh consideration. The impugned orders in quantum and penalty proceedings were set aside.

The Tribunal decided to condone the delay of 756 days in filing the appeal before the learned CIT(A). While acknowledging the lack of contemporaneous medical evidence, the Tribunal found that refusing to condone the delay could lead to a meritorious case being dismissed prematurely. Given the assessee's contention of a potential double addition (transactions already processed under the new PAN), the Tribunal felt that substantial justice would be served by hearing the case on merits. On the merits of the case, the Tribunal noted that a new PAN was allotted in 2014, and the return for the year under consideration was filed under this new PAN. The Tribunal also observed that for assessment year 2016-17, similar reassessment proceedings initiated under the old PAN were dropped after the assessee's submission that the transactions were accounted for and declared under the new PAN. Therefore, the Tribunal restored the matter to the Jurisdictional Assessing Officer (AO) for de novo assessment. The AO was directed to examine the assessee's contention regarding the disclosure of impugned deposits under the new PAN. If found correct, the AO was directed to delete the additions, as double addition is not permissible. The penalty proceedings were also restored to the AO for fresh consideration. The impugned orders in quantum and penalty proceedings were set aside.

The Tribunal decided to condone the delay of 756 days in filing the appeal before the learned CIT(A). While acknowledging the lack of contemporaneous medical evidence, the Tribunal found that refusing to condone the delay could lead to a meritorious case being dismissed prematurely. Given the assessee's contention of a potential double addition (transactions already processed under the new PAN), the Tribunal felt that substantial justice would be served by hearing the case on merits. On the merits of the case, the Tribunal noted that a new PAN was allotted in 2014, and the return for the year under consideration was filed under this new PAN. The Tribunal also observed that for assessment year 2016-17, similar reassessment proceedings initiated under the old PAN were dropped after the assessee's submission that the transactions were accounted for and declared under the new PAN. Therefore, the Tribunal restored the matter to the Jurisdictional Assessing Officer (AO) for de novo assessment. The AO was directed to examine the assessee's contention regarding the disclosure of impugned deposits under the new PAN. If found correct, the AO was directed to delete the additions, as double addition is not permissible. The penalty proceedings were also restored to the AO for fresh consideration. The impugned orders in quantum and penalty proceedings were set aside.

The Tribunal decided to condone the delay of 756 days in filing the appeal before the learned CIT(A). While acknowledging the lack of contemporaneous medical evidence, the Tribunal found that refusing to condone the delay could lead to a meritorious case being dismissed prematurely. Given the assessee's contention of a potential double addition (transactions already processed under the new PAN), the Tribunal felt that substantial justice would be served by hearing the case on merits. On the merits of the case, the Tribunal noted that a new PAN was allotted in 2014, and the return for the year under consideration was filed under this new PAN. The Tribunal also observed that for assessment year 2016-17, similar reassessment proceedings initiated under the old PAN were dropped after the assessee's submission that the transactions were accounted for and declared under the new PAN. Therefore, the Tribunal restored the matter to the Jurisdictional Assessing Officer (AO) for de novo assessment. The AO was directed to examine the assessee's contention regarding the disclosure of impugned deposits under the new PAN. If found correct, the AO was directed to delete the additions, as double addition is not permissible. The penalty proceedings were also restored to the AO for fresh consideration. The impugned orders in quantum and penalty proceedings were set aside.

The Tribunal held that the notice issued under section 148A(d) and the consequential notice issued under section 148 of the Act, both dated 28.04.2022, were bad in law for being violative of the provisions of section 151(ii) of the Act. The Tribunal noted that more than three years had elapsed from the end of the relevant assessment year (2018-19), and therefore, the approval for reopening should have been obtained from the Principal Chief Commissioner or Principal Director General, or in their absence, the Chief Commissioner or Director General. The approval obtained from the PCIT, Bangalore-2 on 28.04.2022 was invalid. Consequently, the reassessment order dated 10.01.2024 passed under section 147 read with sections 144 and 144B of the Act was also set aside and quashed. Since a legal ground was decided in favour of the assessee, other grounds raised by the assessee were rendered academic. The appeal filed by the assessee was allowed.

The Tribunal held that the additional evidence filed by the assessee deserves to be admitted and considered. The Tribunal found merit in the assessee's explanation regarding the limited time to respond to the show cause notice during the Covid-19 pandemic. It was noted that the assessee had provided some details during assessment, and the failure to furnish complete evidence within a short period should not prevent consideration at the appellate stage. Crucially, the Tribunal observed that the remand report, containing adverse observations, was not confronted to the assessee, denying them an opportunity to explain discrepancies. Since the evidence goes to the root of the addition under Section 68, and further evidence has been filed before the Tribunal, the matter was restored to the CIT(A) for fresh adjudication. The CIT(A) is to consider all evidence, obtain a fresh remand report if necessary, confront any adverse material to the assessee, and provide a reasonable opportunity for explanation. The Tribunal explicitly stated it had not expressed any opinion on the merits of the addition, keeping all contentions open. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal condoned the delay of 843 days in filing the appeal. While acknowledging the substantial delay and that the assessee's explanation might not fully account for the entire period, the Tribunal applied the principles laid down by the Supreme Court in cases like Collector, Land Acquisition v. Mst. Katiji & Others and N. Balakrishnan v. M. Krishnamurthy. The Tribunal emphasized that the expression 'sufficient cause' should be interpreted liberally to advance substantial justice, and that refusing to condone delay could result in a meritorious matter being thrown out. The Tribunal noted that the assessee had pursued the matter before lower authorities and the issues raised were arguable. The ratio is that substantial delay alone is not an absolute bar to condonation if the facts and circumstances justify adjudication on merits, and a hyper-technical approach should be avoided where arguable questions of law or fact are involved. The Tribunal then proceeded to decide the appeal on merits, setting aside the addition made by the Assessing Officer under Section 69A of the Act. The addition of Rs. 12,00,000/- was deleted as the assessee had provided a specific explanation supported by a cash book showing sufficient cash balance generated from business transactions before demonetisation, and the Revenue had not brought any positive material to disprove this explanation. The grounds of appeal were allowed.

The Tribunal held that the sale of shares and the purchase of the residential property were independent transactions and not an exchange. The AO's disallowance was based on a valuation report reflecting a Nil value for the shares, which was based on book value. However, if the land bank held by NAM Estates was valued at market rates, the share value would be higher. The consideration for the shares was paid by account payee cheque and used to purchase the villa. The Tribunal found that merely because the purchaser of shares and the seller of the villa were the same entity (Embassy) did not render the arrangement a sham. The AO had not disputed the market price of the property. The Tribunal noted that the AO accepted the long-term capital gain but disallowed the section 54F deduction. Following a coordinate bench decision in ACIT Vs. Hirehal Jairaj Balram (ITA No.1961/Bang/2025), the Tribunal held that the assessee had produced substantial evidence showing shares were sold at market value, which was not controverted. Therefore, the assessee was entitled to claim deduction under section 54F. The grounds raised by the Revenue were dismissed.

The Tribunal condoned the 57-day delay in filing the appeal. It reasoned that the assessee's explanation for the delay was bona fide and supported by an affidavit, citing Supreme Court judgments that emphasize liberal interpretation of 'sufficient cause' and preferring substantial justice over technicalities. The delay was not inordinate or deliberate, and no prejudice would be caused to the Revenue by condoning it. Regarding the addition, the Tribunal held that a statement recorded during survey proceedings cannot be the sole basis for an addition without independent or corroborative material. The Revenue failed to establish the actual incurring of the alleged unexplained expenditure, identify the recipients, dates, mode of payment, or precise nature of the expenditure. Relying on Madras High Court decisions in Commissioner of Income-tax, Trichy vs. P. Balasubramanian, the Tribunal stated that while a survey statement is relevant, it requires substantiation. The mere presence of vouchers and a partner's statement were insufficient. The Tribunal also noted the accounting treatment where the declared amount was not included in the total income. Consequently, the addition of Rs. 47,47,300/- was deleted. The grounds raised by the assessee on this issue were allowed.

The Tribunal held that the issue is squarely covered in favour of the assessee by the decision of a Coordinate Bench in ITA Nos. 2889 & 2890/Bang/2025 for AYs 2023-24 and 2024-25. In that case, on an identical issue, the Coordinate Bench held that if the GST element is not routed through the profit and loss account by consistently following the exclusion method, then the question of taxing the GST refunds does not arise. The Tribunal found that the assessee consistently followed the exclusion method of accounting for GST, where purchases, sales, and inventories are recorded at their net value, excluding the tax component. The GST paid on inputs was debited to a separate "Input GST" account, and GST collected on sales was credited to an "Output GST" account as a liability. Since the GST element was not routed through the profit and loss account, the refund of GST cannot be taxed. The Tribunal noted that the revenue had not brought any material suggesting distinguishing facts or that the Coordinate Bench's decision was reversed. Therefore, the addition of Rs. 3,12,38,062 on account of GST refund was set aside, and the AO was directed to delete the addition. The grounds raised by the assessee were allowed.

The Tribunal held that the Ld. CIT(E) had erred by conflating the requirements of clause (i) and clause (ii) of the first proviso to Section 80G(5) of the Act. Clause (i) pertains to institutions approved before 01.04.2021, whereas clause (ii) specifically addresses institutions whose existing approval is expiring and are seeking continuation. The assessee's application clearly fell under clause (ii). Therefore, possessing a valid existing approval under Section 80G for A.Ys. 2022-23 to 2026-27 and filing the continuation application within the prescribed period meant that the absence of an approval prior to 01.04.2021 could not be a sole ground for rejection. The Tribunal found no adverse findings regarding the assessee's charitable objects or the genuineness of its activities, especially since its Section 12A application was approved on the same date. Consequently, the Tribunal set aside the CIT(E)'s order and restored the application to the CIT(E) for fresh consideration under the provisions applicable to continuation of an existing approval under Section 80G(5)(ii), without insisting on prior approval before 01.04.2021. The application is to be decided on merits after affording the assessee a reasonable opportunity of hearing. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the CIT(A) erred in dismissing the appeal without adjudicating the issues on merits, solely on the ground of alleged non-response to hearing notices. The Tribunal noted that the assessee had provided an updated email ID during assessment proceedings, but notices were sent to the old one. The Tribunal identified three core issues that the AO had decided on merits: (a) whether the land transferred was a capital asset or rural agricultural land, (b) the year of transfer for taxation, and (c) the value of consideration for capital gain computation, including the applicability of Section 50C. The Tribunal found that the CIT(A) had not performed the statutory appellate function of examining the AO's findings. Restoring the matter to the AO was deemed inappropriate as adjudication had already occurred. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter to the CIT(A)'s file for fresh adjudication on merits. The CIT(A) was directed to decide the issues in a logical sequence: first, whether the land is a capital asset; second, the correct year of transfer and taxability; and third, if capital gain computation survives, the issue relating to Section 50C, including a reference to the DVO if conditions are met. The assessee was directed to cooperate. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the penalty levied under section 271C of the Act is not sustainable. The Tribunal found merit in the assessee's plea that there was sufficient cause, in terms of section 273B of the Act, for the non-deduction of tax at source on reimbursement of LTC to employees. The reasoning was based on the interim directions of the Hon'ble Madras High Court dated 16.02.2015, which the assessee followed for the financial year 2015-16, to avoid contempt proceedings. The Tribunal noted that the Hon'ble Kerala High Court, in its decision dated 18.11.2025, had specifically considered the Madras High Court's interim directions and the Supreme Court's decision, holding that for FY 2015-16, the assessee was bound by the interim directions and could not have deducted tax. The Tribunal also observed that the Supreme Court's decision was applicable to AY 2013-14 and not FY 2015-16. Furthermore, a Coordinate Bench of the Tribunal had followed the Kerala High Court's decision. The Tribunal concluded that the issue of TDS deduction on LTC reimbursement for FY 2015-16 was debatable, and no penalty can be levied on a debatable issue. Accordingly, the penalty under section 271C was quashed. The operative direction was the quashing of the penalty, and the grounds raised by the assessee were allowed.

The Tribunal noted that the assessee had declared income under Section 44AD, exempting him from maintaining books of accounts. While the assessee provided details of buyers from whom cash was allegedly received, the AO had not conducted further enquiries with these buyers. The assessee presented confirmation letters from these buyers for the first time before the Tribunal. Considering these circumstances, the Tribunal decided to set aside the orders of the lower authorities and remand the issue back to the AO. The AO is directed to decide the issue afresh after considering the confirmation letters from the buyers and granting an opportunity of being heard to the assessee. Since the merits of the case were remanded, other grounds, including legal grounds, were not adjudicated. The appeal was allowed for statistical purposes.

The Tribunal held that the filing of Form 10DA is a directory requirement and not a mandatory one that would deter the claim of deduction under Section 80JJAA. The Tribunal noted that the assessee filed Form 10DA on December 30, 2023, and the intimation under Section 143(1) was generated on March 14, 2024. Therefore, on the date of intimation generation, Form 10DA was available in the ITBA portal, and the CPC ought to have considered it. The Tribunal also referred to Section 80JJAA(2)(c) and Rule 19AB of the Income Tax Rules, 1962, acknowledging that the rule mandates furnishing the report along with the return. However, it emphasized that in case of inconsistency between the Act and Rules, the Act prevails. Following the co-ordinate bench decisions in Sai Computers Ltd. v. Asstt. DIT, CPC and IIFL Samasta Finance Ltd. v. DCIT, and the Supreme Court's decision in CIT v. G. M. Knitting Industries (P.) Ltd., the Tribunal concluded that denial of deduction solely on the ground of belated filing of the prescribed form is not justified, especially when the form was available before the processing of the return. The issue was remitted to the AO for verification of the quantification of the allowable deduction under Section 80JJAA.

The Tribunal noted that the assessee declared a turnover of Rs. 31,17,26,781/- as against Rs. 33,45,03,286/- reported in Form 26AS, a difference of Rs. 2,27,76,505/-. The AO had estimated 10% of this difference as income. The assessee submitted additional evidence under Rule 29 of the Income Tax Rules, 1963, including computation of income for AY 2024-25, stating that the difference amount was declared and TDS carried forward to the subsequent year. The Tribunal found merit in the assessee's argument that this additional evidence goes to the root of the matter and needs examination by the lower authorities. Therefore, the matter was remitted back to the file of the CIT(A) to consider the additional evidence and adjudicate the appeal afresh. The order of the CIT(A) was set aside on this issue. The other grounds were not adjudicated as the issue was remitted.

The Tribunal held that the constructed area received by the assessee under the JDA cannot be treated as acquired without any cost, as the assessee parted with valuable rights in the land. The flat sold by the assessee came into existence pursuant to the JDA, and therefore, the cost attributable to the constructed portion cannot be ignored while computing capital gains. The AO should not have treated the construction cost as nil merely because the assessee did not directly make payment to the developer. The Tribunal found support from the decision of the Hon'ble Delhi High Court in CIT v. Vasavi Pratap Chand, which held that in a development arrangement, the cost attributable to the construction of flats received by the landowner forms part of the cost for computing capital gains on their subsequent transfer. The Tribunal accepted the guidance value fixed by the Government of Karnataka for the super built-up area, which amounted to Rs. 40,82,400/-, as the cost of the constructed portion. Consequently, the corresponding indexed cost of Rs. 43,09,643/- was allowed. The AO was directed to allow the claim, and the addition of Rs. 43,09,643/- was deleted. The ground raised by the assessee was allowed.

The Tribunal held that the rejection of books of account under Section 145(3) was not justified. The AO's primary concern was with cash balances and deposits during demonetisation, not with the disclosed turnover or trading results. No defects were pointed out in sales, purchases, or stock records. The Tribunal found a material inconsistency in the CIT(A)'s reasoning, which accepted the turnover as unreliable for proving trading results but used the same turnover for estimation. Furthermore, the estimation of income at 3% was found to be arbitrary, lacking any objective basis such as past accepted results, comparable cases, or industry profit rates. The decisions relied upon by the CIT(A) do not dispense with the requirement of defects relevant to determining business results and a rational basis for estimation. Consequently, the Tribunal quashed the rejection of books and the consequent estimation, directing the AO to accept the business income as disclosed by the assessee. The addition was deleted, and the grounds were allowed.

The Tribunal condoned the delay of 83 days in filing the appeal, finding that the reasons provided by the assessee, including the demise of his Chartered Accountant and his unfamiliarity with online proceedings, fell within the parameters for condonation as laid down by the Hon'ble Supreme Court in Collector Land Acquisition, Anantnag vs. MST Katiji and others. The Tribunal reasoned that procedural rules are meant to aid justice and that substantial justice should be preferred over technical considerations, especially when the assessee does not stand to benefit from the delay. Regarding the merits, the Tribunal, considering the totality of facts including the demise of the CA, the assessee's age, and the claim of possessing new evidence, deemed it appropriate in the interest of substantial justice to grant one final opportunity. The matter was restored to the file of the AO for de novo assessment, with a direction to the assessee to cooperate fully. A cost of Rs. 5,000/- was imposed on the assessee, payable to the Prime Minister's National Relief Fund. The impugned order was set aside subject to payment of cost.

The Tribunal held that the addition of Rs. 23 lakhs made by the AO was purely based on assumptions and surmises, relying solely on the statement of Mr. Nagaraj Eti without any corroborative evidence. The Tribunal noted that Mr. Nagaraj Eti's recollection of amounts received from miners was approximate and based on memory. The Revenue failed to conduct further inquiries by examining the entities from whom cash was allegedly received. The Tribunal found that the Revenue had not substantiated the amounts received from miners with any tangible material. Consequently, the Tribunal directed the AO to delete the addition made on a notional basis without cogent evidence. As the quantum additions were deleted, the penalty appeals were rendered infructuous and did not survive. The grounds raised by the assessee were allowed.

The Tribunal held that the addition of Rs. 23 lakhs made by the AO was purely based on assumptions and surmises, relying solely on the statement of Mr. Nagaraj Eti without any corroborative evidence. The Tribunal noted that Mr. Nagaraj Eti's recollection of amounts received from miners was approximate and based on memory. The Revenue failed to conduct further inquiries by examining the entities from whom cash was allegedly received. The Tribunal found that the Revenue had not substantiated the amounts received from miners with any tangible material. Consequently, the Tribunal directed the AO to delete the addition made on a notional basis without cogent evidence. As the quantum additions were deleted, the penalty appeals were rendered infructuous and did not survive. The grounds raised by the assessee were allowed.

The Tribunal held that the penalty levied under section 270A of the Income Tax Act, 1961, cannot be sustained. The Tribunal noted that section 270A(2) and 270A(9) provide for various distinct circumstances constituting under-reporting and misreporting of income. The notices issued by the AO, which merely stated 'under-reporting/misreporting of income' without specifying the particular clause invoked (e.g., section 270A(9)(d)), were found to be vague and defective. This failure to communicate the specific charge at the stage of notice issuance violates the principles of natural justice and the requirement for the assessee to be informed of the precise case it needs to meet. The Tribunal relied on decisions of coordinate benches, including Ishwar Chand Agro (P.) Ltd. and Mr. Nateshan Sampath, which held that such lack of specificity renders penalty proceedings unsustainable. The Tribunal concluded that the subsequent mention of section 270A(9)(d) in the penalty order could not cure the defect in the initial notice. Therefore, the order of the CIT(A) was set aside, and the AO was directed to delete the penalty.

The ITAT held that the CIT(A) was not justified in refusing to condone the delay of 711 days. The Tribunal found that the assessee's explanation, supported by the FIR dated January 18, 2022, regarding the fraud by the former manager and the subsequent disruption in the society's affairs, was credible. The Tribunal noted that the non-filing of the Return of Income and non-compliance with notices during the reassessment proceedings lent support to the claim that the new management was not aware of the pending income tax matters. The ITAT emphasized that while the delay was substantial, the surrounding circumstances and the assessee's conduct should be considered holistically to advance substantial justice. Consequently, the ITAT condoned the delay and set aside the CIT(A)'s order dismissing the appeal in limine. Further, considering that the assessment order was passed ex parte, the ITAT restored the entire matter to the file of the AO for a de novo assessment, providing the assessee an opportunity to present its case. A cost of Rs. 5,000 was imposed on the assessee payable to the Income Tax Department.

The Tribunal held that the assessee is entitled to the rebate under Section 87A on the tax payable on short-term capital gains. The Tribunal noted that Section 87A does not prohibit the benefit for income taxed at special rates, provided the total income does not exceed Rs. 7 Lakhs, which was the case for the assessee. The Tribunal relied on the decision of a Coordinate Bench in Basty Keshava Shenoy vs. ITO (ITA No. 3134/Bang/2025) and the Ahmedabad Bench in Jayshreeben Jayantibhai Palsana vs. Income-tax Officer ([2025] 177 taxmann.com 411). These decisions held that Section 87A rebate is available on tax payable under Section 111A (short-term capital gains) in the absence of an express statutory prohibition. The Tribunal found that while Section 112A(6) contains an express restriction, no such restriction existed for Section 111A during the relevant assessment year. The Tribunal concluded that the demand raised by the CPC was not sustainable and set aside the order of the CIT(A), directing the AO/CPC to grant the rebate and delete the consequential demand.

The Tribunal held that the addition of Rs. 23 lakhs made by the AO was purely based on assumptions and surmises, relying solely on the statement of Mr. Nagaraj Eti without any corroborative evidence. The Tribunal noted that Mr. Nagaraj Eti's recollection of amounts received from miners was approximate and based on memory. The Revenue failed to conduct further inquiries by examining the entities from whom cash was allegedly received. The Tribunal found that the Revenue had not substantiated the amounts received from miners with any tangible material. Consequently, the Tribunal directed the AO to delete the addition made on a notional basis without cogent evidence. As the quantum additions were deleted, the penalty appeals were rendered infructuous and did not survive. The grounds raised by the assessee were allowed.