ITAT Delhi Judgments — July 2025

The Tribunal directed the deletion of the Rs.101 crores on-money addition made by the AO over and above the special auditor's quantification to avoid double addition. It ruled that the profit rate on on-money, unexplained cash credits, loans, and investments should be assessed at a lumpsum 20% or the declared book results, whichever is higher, except for AY 2012-13. Disallowances under Section 40(a)(ia) and Section 40A(3) were deleted, and unexplained expenditures were also deleted as being covered by the allowed expenditure. The Revenue's appeals against the deletion of Section 68 additions and allowance of telescoping benefit were dismissed.

The Tribunal held that the addition of Rs.101 crores, which was already part of the Special Auditor's quantification, constituted double addition and was therefore deleted. For on-money and other additions, the Tribunal directed assessment as business turnover at 20% or the assessee's declared profit rate, whichever is higher, while also directing deletion of certain disallowances.

The Tribunal held that the initiation and conduct of a search are distinct. Even if a warrant is issued in the assessee's name, if the search is not conducted at the assessee's premises or where it is not represented, it does not validate the search. The proceedings under Section 153A are therefore baseless.

The Tribunal held that the addition of Rs.101 crores by the Assessing Officer over and above the special auditor's quantification was erroneous, as it amounted to double addition. It also directed that on-money and related additions should be assessed as business turnover at a rate of 20% or the declared book rate, whichever is higher, and that certain disallowances were not sustainable.

The Tribunal held that the addition of Rs.101 crores on account of on-money over and above the Special Auditor's quantification was erroneous and led to double addition. The Tribunal also directed that profit element in on-money collection and other additions should be assessed at 20% or the rate declared in the assessee's books, whichever is higher.

The Tribunal found that while notices were mentioned in the Ld. CIT(A)'s order, the mode of service and the ends of justice require an opportunity for the assessee to contest on merits and legal issues. Therefore, the issues were restored to the Ld. CIT(A).

The Tribunal held that although the search warrant was prepared in the assessee's name, there was no commencement or initiation of search at the assessee's premises. Therefore, the invocation of Section 153A of the Income Tax Act was baseless, rendering the assessment proceedings null and void.

The Tribunal held that for Section 153A proceedings to be valid, a proper search under Section 132 must have been initiated and conducted. In this case, the search warrant was executed at premises not belonging to the assessee, and no link was established. Therefore, the initiation of proceedings under Section 153A was baseless.

The Tribunal noted that the proceeding initiated under Section 271(1)(c) of the Act culminated in an order of penalty that had become infructuous. Therefore, the appeal was dismissed as infructuous.

The Tribunal held that the enhancement of on-money component by the Assessing Officer over the special auditor's quantification was erroneous. It also addressed issues of profit estimation on on-money collections, unexplained cash credits, and various disallowances. Specific directions were given for re-computation by the Assessing Officer.

The Tribunal held that CSR expenses incurred before April 1, 2015, are allowable as Explanation 2 to Section 37(1) was prospective. Prior period expenses, if crystallized and not claimed earlier, were allowed. Foreign exchange fluctuation losses were allowed based on Supreme Court decisions. Disallowances under Section 14A were restricted to the extent of exempt income. Certain grounds were allowed, dismissed, or remanded for fresh adjudication.

The Tribunal held that since the quantum appeals against additions were already dismissed by a Co-ordinate Bench, there was no concealed income on which penalty could be levied. Therefore, the deletion of penalty by the Ld. CIT(A) was upheld.

The Tribunal held that the approval granted under Section 153D of the Income Tax Act was invalid as it was issued mechanically without independent application of mind and not for each assessment year separately. Consequently, the assessment orders passed based on this invalid approval are vitiated.

The Tribunal found that the assessee intended to raise questions regarding electronic evidence, which could not be raised earlier. The Tribunal restored the issues on merits and legal issues to the file of the Ld. CIT(A) to provide a reasonable opportunity of hearing.

The Tribunal held that the appeals against the quantum additions in the assessee's own case for the relevant assessment years were dismissed by a Co-ordinate Bench. As there were no concealed income additions, the penalty under Section 271(1)(c) was not sustainable. Therefore, the deletion of penalty by the Ld. CIT(A) was upheld.

The Tribunal accepted the assessee's contention that if no interest is charged from Non-Associated Enterprises, no interest addition should be made on receivables from Associated Enterprises, but restored the issue to the TPO for detailed examination. The disallowance for warranty provision was restored to the AO for fresh examination. The disallowance under Section 14A was restricted to the quantum of exempt income. Listing fees related to Non-Convertible Debentures were held allowable. The disallowance under Section 36(1)(iii) was restored to the AO for fresh examination. A disallowance under Section 40(a)(ia) was sustained.

The Tribunal accepted the Ld. AR's contention that the actual tax effect of the CIT(A)'s order was Rs. 50,52,498/-, which is below the prescribed monetary limit of Rs. 60 lakhs for filing appeals before the Hon'ble ITAT, as per CBDT Circulars. Therefore, the Revenue's appeal was dismissed as not maintainable.

The Tribunal held that the secondment agreement and the actual working conditions did not establish an employer-employee relationship between the assessee and the seconded employees. The Indian subsidiary, MKCI, maintained sole control over the seconded employees and its operations.

The Tribunal held that since the appeals against the substantive additions were dismissed, there was no concealed income on which penalty could be levied. The appeals were dismissed as the penalty deletion by the Ld. CIT(A) was upheld.

The Tribunal held that the enhancement of on-money component by the AO over the special auditor's quantification was erroneous and would lead to double addition. For profit estimation, a lumpsum rate of 20% or the declared book rate, whichever is higher, was deemed appropriate. Various additions, including those under Section 68, 40(a)(ia), and 40A(3), were dealt with by either directing fresh computation, assessing as business turnover at 20% GP, or deleting the additions.

The Tribunal held that the addition of Rs.101 crores based on the search statement, over and above the special auditor's quantification, was erroneous and led to double addition. The profit element in on-money collections was to be assessed at 20% or the declared book rate, whichever was higher. Certain disallowances under Section 40(a)(ia) and 40A(3) were deleted, and other additions were to be treated as business turnover. The Revenue's appeals were largely dismissed.

The Tribunal noted that the assessee was absent for the hearing and proceeded ex-parte. The explanation provided by the assessee for the delay in filing the appeals was not found acceptable by the Tribunal.

The Tribunal held that for AY 2012-13, provisions of Section 92B regarding notional interest on receivables were not applicable. It further held that since no interest was charged on delayed payments from non-AEs, no notional interest adjustment could be made for AEs. For corporate guarantee commission, it directed the AO to apply a 1% rate.

The Tribunal decided on multiple grounds. CSR expenses incurred prior to 01.04.2015 were allowed, following judicial precedents. Prior period expenses were allowed after verification by the AO. 'Marked to market' loss was dismissed as notional. Disallowances under Section 14A were restricted to the extent of exempt income earned. The allowability of interest income on FDRs and bonds was linked to the business activity of the assessee and allowed. Some grounds were restored to the AO for fresh adjudication.

The Tribunal found that the Ld. CIT(A) decided the appeals ex-parte without giving adequate opportunity for hearing. Therefore, to ensure ends of justice, the matter was restored back to the Ld. CIT(A) for a fresh decision on merits and legal issues after providing a reasonable opportunity of hearing.

The Tribunal found that while notices were issued, the mode of service led to a situation where the assessee was not given a proper opportunity to contest on merits and legal issues. Therefore, the issues were restored to the Ld. CIT(A).

The Tribunal noted that the assessee intended to raise questions regarding electronic evidence. While notices were mentioned in the Ld. CIT(A)'s order, the Tribunal found that justice requires an opportunity for the assessee to contest on merits and legal issues.

The Tribunal held that the approval granted under Section 153D of the Income Tax Act was invalid as it was done mechanically without independent application of mind and for multiple assessment years in a single order. Consequently, the assessment orders passed based on such invalid approval were vitiated.

The Tribunal held that the assessee consistently followed its accounting method and incurred the expenditure wholly and exclusively for business purposes. The Assessing Officer's ad-hoc disallowance of 90% of the expenditure was considered arbitrary, especially since he himself allowed 10%.

The Tribunal held that the approval granted u/s 153D of the Act was invalid because it was granted mechanically without proper application of mind for each assessment year and each assessee separately. Consequently, the assessment orders passed based on such invalid approval are vitiated.

The Tribunal held that for AY 2012-13, the amendment to Section 92B is not applicable, hence no adjustment for outstanding receivables. For AY 2014-15 and 2016-17, since no interest was charged from non-AEs on delayed payments, no notional interest can be added for AEs. For corporate guarantee, the Tribunal directed the AO to apply a 1% rate.

The Tribunal held that the approval granted under Section 153D of the Income Tax Act must be done with independent application of mind for each assessment year and for each assessee separately. Granting approval mechanically for multiple cases and years in a single day renders the approval invalid.

The Tribunal held that the approval granted under Section 153D of the Act was invalid as it was accorded mechanically for multiple assessment years in a single day without independent application of mind. Consequently, the assessment orders passed based on such invalid approval were vitiated.

The Tribunal held that for reassessment notices issued after three years from the end of the relevant assessment year, the approval must be obtained from the Principal Chief Commissioner or equivalent authority as per Section 151(ii) of the Act. Since the approval was obtained from a Principal CIT in this case, which was not the prescribed authority, the notices were deemed invalid.

The Tribunal, following its co-ordinate bench's decisions in similar cases concerning the assessee, held that cost-to-cost reimbursement for seconded employees is not taxable as income. Furthermore, the services rendered were not considered 'Fees for Included Services' (FIS) under Article 12(4)(b) of the India-US DTAA because the 'make available' criterion was not satisfied.

The Tribunal held that for notices issued under Section 148 beyond three years, approval must be obtained from the Principal Chief Commissioner (Pr. CCIT) as per Section 151(ii). Since the approval for the AY 2016-17 notice was obtained from the Pr. CIT, it was deemed an unauthorized approval, rendering the notice and subsequent assessment order invalid. The same reasoning was applied to AY 2017-18.

The Tribunal held that cost-to-cost reimbursement for seconded employees is not taxable as fees for included services. It also ruled that professional services rendered by the assessee fall under Article 15 of the DTAA and the 'make available' test for FIS is not satisfied.

The Tribunal held that since the basis of the penalty levy under Section 271(1)(c) is under settlement, it is expedient to delete the penalty. The appeal is allowed subject to conditions related to the settlement of the main dispute.

The Tribunal held that the approval granted under Section 153D of the Income Tax Act was invalid because it was granted mechanically for multiple assessment years and assessees in a single day without independent application of mind. Consequently, the assessment orders passed based on this invalid approval were vitiated.

The Tribunal heard the Ld. DR and perused the explanation of the assessee for the delay. The Tribunal found the explanation unacceptable and dismissed all the appeals as barred by limitation.

The Tribunal held that for Assessment Year 2012-13, provisions of Section 92B are not applicable to outstanding receivables. For all three years, if no interest was charged on delayed payments from non-AEs, no notional interest can be added for AEs. For corporate guarantee, the Tribunal directed AO to apply 1% rate.

The Tribunal noted that the assessee's explanation for the delay in filing the appeals was not acceptable. Consequently, the Tribunal dismissed all the appeals filed by the assessee as barred by limitation.

The Tribunal, proceeding ex-parte due to the assessee's repeated adjournments and non-appearance, found the explanation for the 157-day delay in filing the appeals to be unacceptable. Consequently, all appeals preferred by the assessee were dismissed as being barred by limitation.

The Tribunal held that the approval granted under Section 153D of the Act must be for each assessment year and requires an independent application of mind by the approving authority. Approving multiple assessment years in a single order, especially in a large number of cases on the same day, indicates a mechanical process and invalidates the assessment orders.

The Tribunal held that the approval granted by the Additional Commissioner of Income Tax was invalid because it was issued mechanically without independent application of mind, as required by Section 153D for each assessment year. Consequently, the assessment orders based on this invalid approval were vitiated.

The Tribunal held that the reassessment order was passed in violation of mandatory provisions of law, specifically the non-issuance of a notice under Section 143(2) after filing of the return in response to a notice under Section 148. Following the Supreme Court's decision in Hotel Blue Moon, the reassessment order was deemed a nullity.

The Tribunal held that a notice issued to a dead person is void ab initio and does not confer jurisdiction. The proceedings initiated based on such a notice are invalid and liable to be quashed. The assessee's legal heir had also raised this objection.