ITAT Chennai Judgments — July 2026

The Tribunal held that the penalty notice issued by the AO was vague and therefore bad in law. Additionally, the Tribunal found that the assessee had shown reasonable cause for the delay in filing the TAR due to medical reasons.

The Tribunal decided the issues as follows: Regarding the rejection of segmental financials and the computation of ALP based on segmentation, the Tribunal noted that the lower authorities had not examined the segmentation exercise on merits. Since additional evidence was submitted and the assessee's segmentation methodology was accepted under safe harbour rules in subsequent assessment years, the Tribunal remitted this issue back to the AO/TPO. The AO/TPO was directed to consider the additional evidence and the fact that the segmentation was accepted in subsequent years, while giving the assessee a reasonable opportunity of being heard. The Tribunal expressly left undecided the specific quantum of adjustment related to segmentation, pending factual verification. Regarding the upward adjustment towards interest on outstanding receivables, the Tribunal noted the ratio laid down in the case of M/s. Gimpex Pvt. Ltd. vs. ACIT, which held that if the assessee does not charge interest on delayed receivables from non-AEs, then selective charging of notional interest on AE receivables is not warranted and overlooks commercial realities. The Tribunal observed that the average realization period of outstanding receivables from AEs was 26 days, which was less than the 30-day credit period allowed by the TPO. Considering this and the fact that the assessee did not charge notional interest on non-AE receivables, the Tribunal held that charging notional interest from AE receivables was not warranted and directed the AO/TPO to delete the adjustment made in this regard. The Tribunal did not make any specific findings on the arithmetical error in total income computation, as the primary issues revolved around transfer pricing adjustments.

The Tribunal held that the notice issued under Section 148 was barred by limitation as it was issued more than three years after the end of the relevant assessment year, and the escaped income was less than ₹50 lakhs.

The Tribunal condoned the delay in filing the appeal before the CIT(A) subject to a cost payment. The assessment order was set aside and restored to the AO for de-novo assessment.

The Tribunal held that the notice issued under section 148 of the Act on 04.04.2022 was barred by limitation as it was issued beyond six years from the end of the relevant assessment year. Consequently, the reassessment proceedings were quashed.

The Tribunal held that the notice issued under Section 148 was invalid because the approval was obtained from the PCIT instead of the PCCIT, which is the competent authority for reopening beyond three years. Consequently, the assessment order and the penalty levied were quashed.

The Tribunal found that the CIT(A) should have called for supporting documents before refusing to condone the delay, as this omission violated natural justice. The matter was restored to the CIT(A) for fresh consideration.

The tribunal held that the CIT(A)'s refusal to condone the delay, especially with supporting medical documents, was not sustainable. The tribunal also noted the AO's failure to provide a proper opportunity to the assessee.

The Tribunal held that the penalty notice issued by the AO was defective as it did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. Relying on the jurisdictional High Court's decision in Babuji Jacob, the Tribunal found the notice to be bad in law.

The Tribunal condoned the delay in filing the appeal before the CIT(A) based on medical documents provided. The Tribunal also noted that the AO did not grant a proper opportunity to the assessee during the assessment stage.

The Tribunal found the reasons for the delay to be justified and condoned it. The case was restored to the CIT(A) for a decision on merits.

The Tribunal held that the penalty notice issued by the AO was vague and therefore bad in law. Additionally, the Tribunal found that the assessee had shown reasonable cause for the delay in filing the TAR due to medical reasons.

The Tribunal condoned the delay in filing the appeal. It held that the notice issued under Section 148 was bad in law because the approval for reopening the assessment, which was initiated after three years from the end of the assessment year, was obtained from an authority not specified under the amended Section 151.

The Tribunal held that the assessee did not borrow money and the consideration received was for the sale/assignment of rent receivables, not interest. Therefore, the AO wrongly applied the provisions for TDS on interest.

The Tribunal held that the compensation received under BSNL VRS-2019 is in the nature of retrenchment compensation and eligible for exemption under Section 10(10B). The assessee's designation as Divisional Engineer does not disqualify them from this exemption, as the nature of the scheme and compensation is key.

The Tribunal condoned the delay in filing the appeal before the CIT(A) as there was sufficient cause. The matter was restored to the file of the CIT(A) for adjudication on merits.

The Tribunal held that the CIT(A) failed to provide a proper opportunity of hearing and did not adjudicate the issues on merits. The matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the enhancement of the exemption limit under Section 10(10AA) is a beneficial and curative measure. Following Supreme Court precedents and other Tribunal decisions, the enhanced limit was extended to the current assessment year.

The Tribunal held that the Final Assessment Order (FAO) was not in conformity with the directions of the Dispute Resolution Panel (DRP), particularly concerning the exclusion of Merger and Acquisition (M&A) expenses. The Tribunal directed the TPO to exclude M&A expenses of Rs. 3,19,12,201/- from the operating expenses while computing the assessee's margins, allowing grounds of appeal 11 & 12. Regarding internal TNMM (Ground 13), the Tribunal agreed with the revenue that it could not be adopted as the Non-AE segment caters to the domestic market, unlike the AE segment which is export-oriented. However, the Tribunal found that Product Development and M&A expenses were not related to the sales in either segment for the subject AY, thus not requiring allocation to the AE segment. The Tribunal concluded that even if the whole entity approach was considered (as done by the TPO) or the AE segmental margin was considered, the assessee's margins were at arm's length. Consequently, the TP adjustment was deleted. The Tribunal left grounds of appeal 1 to 9 and 14 to 16 undecided on merits, as the primary issue was decided in favour of the assessee.

The Tribunal held that the jurisdiction to issue notice under Section 148 was a key issue, referencing recent Supreme Court and High Court decisions. The matter was remitted back to the CIT(A) for fresh consideration.

The Tribunal held that the reclassification of income was incorrect and the assessee was entitled to depreciation. The addition for the motor car was deleted as the source was substantiated by a gift. The exemption under Section 54F was allowed, and the addition for the gift from the mother was also deleted.

The Tribunal held that the assessee did not borrow money and the consideration received was for the sale/assignment of rent receivables, not interest. Therefore, the AO wrongly applied the provisions for TDS on interest.

The Tribunal held that the reclassification of income was incorrect and the assessee was entitled to depreciation. The addition for the motor car was deleted as the source was substantiated by a gift. The exemption under Section 54F was allowed, and the addition for the gift from the mother was also deleted.

The Tribunal held that interest income earned from co-operative banks is allowable as a deduction under Section 80P(2)(d), and interest from an SBI savings account is allowable under Section 80P(2)(a)(ii) as it is attributable to the society's business activities.

The Tribunal held that the CIT(A)'s order was passed in violation of natural justice as the assessee was not afforded an effective opportunity of being heard. The appellate order was set aside, and the matter was restored to the CIT(A) for fresh adjudication.

The ITAT found that the CIT(A) order was passed without adjudicating the issues on merits and that the assessee may not have received proper notice. Therefore, the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal condoned the delay in filing the appeal and restored the matter to the CIT(A) for fresh adjudication. This was done to provide the assessee with an opportunity to present its explanation and evidence regarding the cash deposits, adhering to principles of natural justice.

The Tribunal held that the assessee did not borrow money and the consideration received was for the sale/assignment of rent receivables, not interest. Therefore, the AO wrongly applied the provisions for TDS on interest.

The Tribunal held that the assessee did not borrow money and the consideration received was for the sale/assignment of rent receivables, not interest. Therefore, the AO wrongly applied the provisions for TDS on interest.

The Tribunal held that the assessee did not borrow money and the consideration received was for the sale/assignment of rent receivables, not interest. Therefore, the AO wrongly applied the provisions for TDS on interest.

The Tribunal held that the assessee did not borrow money and the consideration received was for the sale/assignment of rent receivables, not interest. Therefore, the AO wrongly applied the provisions for TDS on interest.

The Tribunal held that the assessee did not borrow money and the consideration received was for the sale/assignment of rent receivables, not interest. Therefore, the AO wrongly applied the provisions for TDS on interest.

The Tribunal held that the compensation received under BSNL VRS-2019 is in the nature of retrenchment compensation and eligible for exemption under Section 10(10B). The assessee's designation as Divisional Engineer does not disqualify them from this exemption, as the nature of the scheme and compensation is key.

The Tribunal held that electronic evidence seized during search, corroborated by statements recorded under Section 132(4), constitutes reliable evidence. A belated retraction of a statement, without cogent evidence, does not diminish its evidentiary value.

The ITAT held that the CIT(A) has a statutory obligation to pass a speaking and reasoned order, even if the appellant fails to appear. Dismissing an appeal for non-prosecution without adjudicating on merits is not in accordance with law.

The Tribunal held that the activity of imparting instruction in Agama/Vedic scriptures through the Patashala run by the assessee-trust constitutes "education" and falls within the ambit of "charitable purpose" under Section 2(15) of the Act, and cannot be regarded as religious. The Tribunal reasoned that the Vedas encompass knowledge relating to science, astrology, medicine, and pedagogy, and their dissemination is not per se attributable to any particular religion. Teaching Vedic texts, being recitation and structured learning of Sanskrit compositions, does not amount to worship or religious observance. The restrictive approach of the CIT(E) was found to be contrary to settled legal position. The Tribunal also found no material to indicate that the trust exists for the benefit of any particular religious community or that its objects are wholly or substantially religious. The principle of "substance over form" was applied, leading to the conclusion that the activities are charitable. Regarding limitation, the Tribunal held that the application filed on 26.03.2025, after 01.10.2024, should be considered under clause (iv)(B) of the first proviso to Section 80G(5), which allows existing institutions to apply for approval at any time after commencement. The Tribunal set aside the impugned order and directed the CIT(E) to grant approval under Section 80G with effect from 26.03.2025.

The Tribunal held that the CIT(A) order was passed without providing an effective opportunity of hearing. Therefore, the order was set aside and the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the rectification order under section 154 was only for correcting a calculation mistake and did not involve any fresh additions. Therefore, the assessee could not challenge the original addition made under section 147 in an appeal against the rectification order.

The Tribunal held that an amount already offered as income under 'Income from other sources' cannot be assessed again as unexplained cash credit. However, the disallowance of interest expenditure was upheld due to lack of evidence of business utilization of borrowed funds.

The Tribunal noted that the CIT(A) passed a cryptic order without properly considering the assessee's submissions. The Tribunal, with no serious objection from the revenue, decided to remand the matter back to the Assessing Officer for a fresh denovo assessment.

The Tribunal decided to give the assessee one more opportunity to present her case. The matter was remanded to the CIT(A) to consider the delay condonation petition and adjudicate the issues on merits.

The Tribunal noted that no submissions were made before the CIT(E) and decided to remand the matter back for fresh consideration. The assessee was directed to represent their case and submit evidence.

The Tribunal held that the notice issued under Section 148 for AY 2015-16 on 22.04.2022 was barred by limitation as it was issued beyond six years from the end of the assessment year. Consequently, the reassessment proceedings and the penalty levied were quashed.

The Tribunal held that the notice issued under Section 148 for AY 2015-16, dated 13.04.2022, was barred by limitation as per the first proviso to Section 149 of the Act. Consequently, the reassessment proceedings and order were quashed.

The Tribunal condoned the delay, noting that a bona fide misunderstanding of new procedural timelines can be a reasonable cause. The matter was restored to the CIT(E) to consider the condonation petition.

The Tribunal set aside the FAA's order and restored the matter for fresh adjudication. The FAA was directed to consider the assessee's submissions and provide a reasonable opportunity of being heard.

The Tribunal held that mere TDS deduction does not automatically imply income accrual. The assessee's bank statements showed no receipt of funds from Aircel Ltd. Therefore, the addition was not justified.

The Tribunal held that an amount already offered as income under 'Income from other sources' cannot be assessed again as unexplained cash credit. However, the disallowance of interest expenditure was upheld due to lack of evidence of business utilization of borrowed funds.

The Tribunal held that the notice issued under Section 148 for AY 2015-16 on 22.04.2022 was barred by limitation as it was issued beyond six years from the end of the assessment year. Consequently, the reassessment proceedings and the penalty levied were quashed.

The Tribunal held that mere TDS deduction does not automatically imply income accrual. The assessee's bank statements showed no receipt of funds from Aircel Ltd. Therefore, the addition was not justified.