ITAT Chennai Judgments — January 2026

The Tribunal held that the AO did not conduct an independent examination of the donations to ascertain if they were capitation fees. The CIT(A) also erred by merely following a previous High Court judgment that was under stay by the Supreme Court. The Tribunal found that the AO should have called for a remand report and given the assessee an opportunity to be heard.

The tribunal held that the notice issued under Section 148 of the Act was beyond three years and the approval obtained from the PCIT, instead of the PCCIT as required by Section 151(ii), rendered the notice invalid. Therefore, the re-assessment proceedings initiated and completed based on this invalid notice are liable to be quashed.

The Tribunal held that assessment proceedings completed after the death of the assessee without issuing notice to the legal representative are not valid. The Tribunal relied on the decision of the Hon'ble Kerala High Court in the case of Shini Shajan vs. PCIT.

The Tribunal held that the delay in filing the audit report was due to reasonable cause, considering the circumstances of the legal heir. The penalty imposed under Section 271B was deleted as it was a technical and venial breach without any loss to the exchequer, especially since the additions made in the assessment order were set aside.

The Tribunal held that the assessee cannot be denied TDS credit because the deductor's failure to remit the tax does not affect the assessee's right to claim credit. Section 205 of the Act bars direct demand from the assessee.

The Tribunal held that while the peak credit theory is applicable in certain cases for estimating unexplained income, it requires a certain level of disclosure and evidence of fund rotation, which was absent here as the accounts were not disclosed. However, considering the facts, the Tribunal directed the addition to be restricted to the peak credit amount.

The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's senior citizen status and the unfortunate demise of his son as reasonable causes. The Tribunal also noted that the assessee could not respond to notices due to these circumstances. Therefore, in the interest of natural justice, the appeals for both AY 2013-14 and AY 2017-18 were remitted back to the AO for fresh consideration on merits.

The Tribunal condoned the delay of 556 days in filing the appeal, citing the assessee's senior citizen status and the recent demise of his son, who managed his tax matters. The Tribunal also noted that the facts for AY 2017-18 were identical to AY 2013-14.

The Tribunal condoned the delay as there was sufficient cause for the belated filing, attributing no latches to the assessee. The Tribunal also noted that the First Appellate Authority's order was ex-parte due to non-compliance with notices.

The Tribunal held that the AO had not conducted an independent investigation into whether the donations were capitation fees for the relevant assessment years. The CIT(A) also erred in not seeking a remand report despite acknowledging that donor details were furnished.

The Tribunal held that there was no independent investigation or examination by the AO regarding whether the donations were capitation fees. The CIT(A) also failed to call for a remand report to allow the AO to examine the donor details. Therefore, the issue is restored to the AO for fresh examination.

The Tribunal held that the notices issued under Section 153C were invalid because the satisfaction note for initiating proceedings was recorded on or after April 1, 2021. Citing the jurisdictional High Court's judgment in 'Hari Govind vs. ACIT', it was determined that if the search initiation or satisfaction note falls on or after April 1, 2021, Section 153C proceedings cannot be initiated. The date of handing over seized materials was considered the date of initiation of search.

The Tribunal held that the notice under Section 148 of the Act, issued beyond three years from the end of the relevant assessment year with the approval of PCIT instead of PCCIT, is invalid as per Section 151(ii) of the Act. The amendments brought by the Finance Act, 2023, are not retrospective. Therefore, the reassessment proceedings initiated and completed based on this invalid notice are vitiated.

The Tribunal held that there was a reasonable cause for the delay in filing the appeal before the CIT(A), citing the assessee's lack of computer knowledge and her mother's ill-health. The Tribunal directed the CIT(A) to condone the delay. Furthermore, since the additions were made without considering the merits, the Tribunal remitted the appeal back to the AO for reconsideration.

The Tribunal found that the notice under Section 148 was issued by the JAO and not the NFAC, which is contrary to the CBDT's e-assessment scheme of 2022. Following various High Court judgments, the Tribunal set aside the impugned notice and consequential orders.

The Tribunal held that the issuance of notice under Section 153C of the Act is invalid if the search or seizure was initiated on or after April 1, 2021. The satisfaction note recorded by the AO on March 15, 2023, was considered the date of search for the assessee. Since this date is after April 1, 2021, the notices issued under Section 153C were quashed.

The Tribunal, following the judgment of the Hon'ble Madras High Court in the case of Harigovind vs. ACIT, held that the date of handing over of seized materials is to be considered the date of initiation of search. Since the satisfaction note and the issuance of notices under Section 153C were dated after April 1, 2021, the notices were issued without authority and were liable to be quashed.

The Tribunal noted that the CIT(E) denied registration on the grounds that the assessee failed to furnish documents and did not allow adjournment as the application was time-barred. Considering the peculiar facts, the Tribunal decided to give the assessee one more opportunity.

The Tribunal condoned the delay of 194 days in filing the appeal, finding a reasonable cause. The Tribunal observed that notices from the CIT(A) were sent to an incorrect email address. To provide an opportunity for a fair hearing, the appeal was remitted back to the AO for consideration on merits.

The Tribunal held that the notice under Section 148 of the Act was issued by the JAO, not the FAO, which is contrary to the CBDT notification and therefore invalid. Consequently, the reassessment order and the subsequent penalty order stemming from it are also invalid.

The Tribunal held that the incorrect mention of the sub-clause was a curable defect and not an illegality. Furthermore, considering the amendment to Section 80G(5) by the Finance Act, 2024, which came into effect from 01.10.2024, the application filed on 06.03.2025 should be examined under clause (iv)(B) of the first proviso.

The Tribunal held that as per Section 153C(3) of the Act, no proceedings can be initiated under Section 153C if the search was initiated on or after 01.04.2021. Following the judgment of the Hon'ble Madras High Court in the case of Harigovind vs. ACIT, the Tribunal noted that the date of satisfaction note is to be considered the date of initiation of search for the other person. Since the satisfaction note was dated 15.03.2023, which is after 01.04.2021, the notices issued under Section 153C were considered invalid.

The Tribunal observed that the CIT(E) denied the application without allowing an adjournment and on grounds that were not entirely applicable due to recent amendments to Section 80G(5). The Tribunal held that the assessee should be given another opportunity to present their case and that the application should be considered under the amended provisions.

The Tribunal found that the CIT(A) erred in refusing to admit additional evidence based on a strict interpretation of Rule 46A, without fully considering the assessee's submissions regarding health conditions and the lack of opportunity to present evidence. The Tribunal held that the assessee should be given another opportunity for natural justice.

The Tribunal found that the assessee's delay in filing the appeal before the CIT(A) was due to medical ailments and reliance on auditors, constituting a reasonable cause. The Tribunal directed the CIT(A) to condone the delay and remitted the appeal back to the AO for a decision on merits.

The Tribunal held that the assessee's application should have been examined in light of clause (iv)(B) of the first proviso to Section 80G(5) of the Act, which allows application at any time after commencement of activities. This provision was introduced by the Finance Act, 2024, effective from 01.10.2024.

The Tribunal held that the credit card payments are debits and cannot be taxed as unexplained cash credits under Section 68, which applies only to sums credited in books. The Tribunal also noted that the AO did not properly examine the evidence furnished by the assessee.

The Tribunal held that a new clause (iv) was inserted into the first proviso to Section 80G(5) effective from 01.10.2024, which allows trusts to apply for approval at any time after commencing activities. Since the CIT(E) rejected the application after this amendment took effect, the rejection was deemed incorrect.

The Tribunal, following the judgment of the Hon'ble Madras High Court in Hari Govind vs. ACIT and a coordinate bench decision, held that the date of handing over of seized materials to the Assessing Officer is considered the date of initiation of search. Since the satisfaction note for initiating proceedings under Section 153C was recorded after April 1, 2021, the notices issued under Section 153C were deemed invalid and liable to be quashed.

The Tribunal condoned the delay in filing the appeal before it, citing reasonable cause. The Tribunal also found reasonable cause for the delay before the CIT(A) during the Covid period. The quantum appeal was remitted back to the CIT(A) for de novo consideration, and the penalty appeal was allowed.

The Tribunal held that the deduction under Section 36(1)(viia) is limited to the actual provision for bad and doubtful debts made in the books of account, subject to the statutory ceiling. This decision followed binding High Court judgments and a co-ordinate bench ruling in the assessee's own case.

The Tribunal held that the deduction under Section 36(1)(viia) is strictly limited to the actual provision made for bad and doubtful debts in the assessee's books of account. This is a mandatory condition precedent for claiming the deduction, irrespective of the statutory ceiling or the intention behind the provision. The clear and unambiguous language of the section dictates this.

The Tribunal held that procedural irregularities should not defeat substantive rights, citing Supreme Court decisions. The Tribunal directed the CIT(E) to treat the applications as if filed correctly and to process them accordingly.

The Tribunal held that the notice under Section 148 was issued after the expiry of three years from the end of the relevant assessment year. As per Section 151(ii) of the Act, approval should have been obtained from the Principal Chief Commissioner or Principal Director General, but approval was obtained from the Principal Commissioner (PCIT). This invalid sanction vitiates the entire reassessment proceedings.

The Tribunal condoned the delay in filing the appeals, noting the assessee's illiteracy, health issues, and reliance on a negligent tax consultant. The Tribunal remitted the quantum appeal to the CIT(A) for de novo consideration and allowed the penalty appeal as consequential.

The Tribunal held that the assessee had provided sufficient evidence, including ITRs, financial statements, and cash books, demonstrating that the SBN deposits were from genuine sundry debtors and current year earnings. The AO and CIT(A) erred in not accepting the explanation and making additions.

The Tribunal noted that procedural irregularities, especially those that are curable and do not defeat substantive rights, should not lead to the rejection of an application. Relying on Supreme Court judgments, the Tribunal held that rules of procedure are meant to facilitate justice and not to obstruct it. The inadvertent error in selecting the sub-clause should not penalize the assessee.

The assessee had also filed a letter seeking withdrawal of the appeal. In light of the above, the Tribunal dismissed the appeal as withdrawn.

The Tribunal, following various High Court decisions, including the Hon'ble jurisdictional High Court in the case of TVS Credit Services Ltd., held that the issuance of the notice under Section 148A by the Jurisdictional Assessing Officer (JAO) instead of the FAO was mandatory and rendered the notice invalid. The e-assessment scheme requires such notices to be issued in a faceless manner.

The Tribunal held that once a liquidation order is passed, no legal proceedings can be instituted against the corporate debtor. Therefore, the CIT(A)'s order passed after the liquidation was void and non-enforceable.

The Tribunal noted that the assessee missed the FAA notices due to an error in filing Form 35 (TAN instead of PAN). The Tribunal, considering the circumstances and in the interest of justice, decided to give the assessee another opportunity to present their case before the FAA.

The Tribunal found that the amendment to the trust deed, which replaced Clause 5.2, was valid and did not violate any restrictions. The substituted clause ensured the trust was for the exclusive benefit of the relatives. Therefore, the addition made by the AO was unjustified. Additionally, the Tribunal held that an advance tax payment of Rs. 12 crores, erroneously deposited by the settlor, was a loan and not taxable income, directing its deletion.

The Tribunal noted that a significant portion of the deposit (Rs. 2.84 Crores) was from Mr. S. Mukeshkumar, and Mr. Mukeshkumar's own appeal concerning this amount was pending. The Tribunal found that this amount was being taxed in both hands, leading to double taxation. Therefore, to avoid double taxation and for natural justice, the issue was set aside to the file of the Ld.CIT(A) to be decided along with Mr. S. Mukeshkumar's appeal.

The Tribunal condoned the delay in filing the appeal. Considering the assessee is a senior citizen and for the interest of natural justice, the Tribunal remitted the appeal back to the A.O. for fresh consideration of the impugned issue after calling for relevant details.

The Tribunal condoned the delay of 384 days in filing the appeal before it, citing reasonable cause, and admitted the appeal for adjudication. The Tribunal noted that the CIT(A) dismissed the appeal in limine without considering the reasons submitted by the assessee. Therefore, the appeal was sent back to the CIT(A) for fresh consideration.

The Tribunal noted that the appeal was dismissed by the CIT(A) due to non-compliance by the assessee. Therefore, the Tribunal decided to remand the matter back to the CIT(A) to consider all issues, including legal grounds.

The Tribunal, considering the submissions and the interest of justice, decided to remand the matters back to the CIT(E). The assessee was granted one more opportunity to furnish the required details.

The Tribunal held that when income is assessed under section 148, penalty under section 271(1)(C) is automatic. The proposition that no penalty is leviable for income assessed on an estimate basis is not applicable in cases assessed under section 148. The assessee is deemed to have concealed particulars of income or furnished inaccurate particulars.

The Tribunal noted that a CBDT Notification dated 29.03.2022 formulated the e-assessment scheme, which mandates automated allocation and issuance of notices under Section 148 in a faceless manner. Multiple High Court judgments have affirmed that only the FAO has the jurisdiction to issue such notices. The Tribunal followed the jurisdictional High Court's decision in TVS Credit Services Ltd. v. DCIT, which held that notices issued by JAO are invalid.

The Tribunal held that the notice under Section 148 was issued by the JAO, not the NFAC, which is not in accordance with the e-assessment Scheme, 2022. Following the jurisdictional High Court's decision in TVS Credit Services Ltd. v. DCIT, the Tribunal found it mandatory for the FAO to issue such notices and that issuance by JAO invalidates the notice.