ITAT Delhi Judgments — February 2026

The Tribunal held that a consolidated satisfaction note recorded for multiple assessment years is bad in law and void ab initio, leading to a fundamentally flawed assumption of jurisdiction. Consequently, the assessment framed based on such a note is also invalid.

The Tribunal held that the reassessment proceedings were invalid and without jurisdiction because the AO's belief that income had escaped assessment was based on factually incorrect assumptions, specifically regarding the non-filing of the income tax return. Relying on several precedents, the Tribunal found that the AO's 'reasons to believe' constituted 'reasons to suspect' and lacked independent application of mind, leading to the quashing of the reassessment order.

The Tribunal noted that the assessee did not appear and the matter proceeded ex-parte. Considering the possibility of communication gaps, the Tribunal restored the appeal to the CIT(E) for a fresh adjudication. The assessee is given three opportunities to plead and prove its case.

The Tribunal noted that the appeal was dismissed for non-prosecution without deciding the grounds on merits. The DR did not object to restoring the appeal. Therefore, the appeal was restored to the file of the Addl/JCIT(A)-2, Delhi for fresh adjudication.

The Tribunal held that after the amendment effective from 01.04.1989, an assessee only needs to prove that bad debts were written off as irrecoverable in the books of account and that the income was offered to tax. These conditions were satisfied in this case, as acknowledged by the AO.

The Tribunal noted that the delay in filing Form-10B was condoned by the Ld. CIT(E). Therefore, the AO should have considered the claim for exemption under section 11. The appeal is restored to the file of the AO with a direction to examine the claim in accordance with law.

The Tribunal held that CAM charges are not in the nature of rent but are contractual payments for services rendered. Therefore, TDS on such charges is deductible under Section 194C of the Income Tax Act at 2%, not under Section 194-I at 10%. The Tribunal relied on its previous decisions in similar cases.

The ITAT admitted additional evidence furnished by the assessee and deemed it crucial for adjudication. The Tribunal found that these additional evidences require factual verification by the AO.

The Tribunal held that the assessee received ₹1.18 crores in cash as an advance for the sale of agricultural land, which was confirmed by the sale deed. The assessee had sufficient cash balance to explain the cash deposit in the bank account. Therefore, the addition made by the AO was not justified.

The Tribunal held that the delay in filing the appeal before the CIT(A) was within the condonable period as per the Supreme Court's directions. Therefore, the CIT(A) erred in dismissing the appeal solely on the ground of delay.

The Tribunal held that the assessee had sufficiently explained the source of the cash deposits, which were traced back to compensation for land acquisition. The explanation of withdrawals from one bank and subsequent deposits into another was also deemed satisfactory.

The Tribunal observed that the assessee's addition was on a protective basis, while Mr. Rajan's appeal involved a substantive addition. Both appeals should be heard together. Therefore, the appeal was restored back to the Ld. CIT(A)/NFAC for a joint hearing with Mr. Rajan's appeal.

The Tribunal found that the assessee had discharged its primary onus under Section 68 by providing extensive documentary evidence for the identity of the investor, its creditworthiness, and the genuineness of the transaction. The AO's reliance on ED action against the investor's director, without further inquiry or evidence proving the specific transactions with the assessee were non-genuine, was insufficient to sustain the addition. Thus, the addition of Rs. 1.15 crore was held to be unjustified and deleted.

The assessee explained that his non-appearance before the CIT(A) was due to his father's critical illness. The Tribunal found merit in this explanation and decided to grant the assessee another opportunity.

The Tribunal held that the approval granted under section 151 of the Act by both the ACIT and PCIT was not in accordance with the provisions. Consequently, the notice issued under section 148 and the assessment framed based on it are invalid, bad in law, and void ab initio.

The Tribunal noted that the CIT(A) had disposed of the appeal ex-parte without going into the merits. Considering the facts and the undertaking provided by the assessee to cooperate and comply with future notices, the Tribunal decided to restore the appeal to the file of the AO for a fresh assessment.

The Tribunal held that the addition was made solely based on a photocopy of an agreement to sell not signed by the buyer, and that the actual sale was through a registered sale deed for a different amount. The Tribunal also noted that other proceedings (IBS) did not add the amount to the buyer's income, and the advance payment was refunded.

The Tribunal found that the diary entry mentioning Rs. 5 lakhs with alphabet 'C' indicated a cheque transaction, not cash. The assessee provided bank statements showing no such receipt and explained the entry related to a different entity named 'Automation'.

Based on the Department's application for withdrawal, acknowledging the appeal as a duplicate, the Income Tax Appellate Tribunal dismissed the appeal as withdrawn. The tribunal noted that the original appeal would proceed as scheduled.

The Tribunal observed that the Ld. CIT(A) did not admit additional evidence and did not discuss it in the order. Therefore, considering the totality of facts and circumstances, the Tribunal decided to restore the issue to the file of the Ld. CIT(A) for fresh decision after providing adequate opportunity to the assessee.

The Tribunal noted that the assessee had discharged its onus of establishing the identity, creditworthiness, and genuineness of the lenders. The CIT(A) had passed a speaking order and rightly deleted the addition under section 68. Regarding the disallowance under section 14A, the Tribunal agreed with the CIT(A) that the AO's disallowance of Rs. 15,58,474/- over and above the assessee's suo motu disallowance was incorrect and rightly deleted.

The Tribunal condoned the delay of 32 days, acknowledging it was not intentional. The Tribunal noted that while the assessee was not registered under Section 12A for the assessment year in question, it was eligible for exemption under Section 10(23C)(iiiad). The procedural defect of filing in ITR-5 instead of ITR-7 was considered a minor issue.

The Tribunal noted that the diary entry for Rs. 5 lakhs was marked with 'C', indicating a cheque transaction as per the statement of Shri Sukumar Poria, which was accepted by the revenue. The assessee provided bank statements showing no such receipt, making the explanation plausible. The Tribunal concluded that the Rs. 5 lakhs was not a cash transaction and therefore, the addition made by the AO was incorrect.

The Tribunal, following its earlier decisions for AY 2016-17 and 2018-19, allowed the assessee's appeal and dismissed the Revenue's appeal. It confirmed the deletion of disallowance for power and fuel expenses and technical service fees, holding them as legitimate business expenditures under section 37(1). The Tribunal also upheld the restriction of section 14A disallowance to the extent of actual exempt income, ruling that the disallowance cannot exceed the exempt income and rejecting reliance on CBDT Circulars and retrospective application of Finance Act 2022 amendments.

The Tribunal held that the donation claimed under Section 35(1)(ii) was not allowable as the donee institution was found to be involved in issuing bogus donation certificates and the assessee was found to be a beneficiary in a broker-wise ledger. For festival and other expenses, the Tribunal partly allowed the appeal, sustaining a lesser addition than what was disallowed by the lower authorities.

The Tribunal upheld the rejection of books of accounts and disallowances made by the AO, but restricted the quantum of disallowance to 10% of the turnover, considering the nature of the business and previous orders. The Tribunal also directed that interest income from fixed deposits should be treated as integral to business receipts.

The Tribunal held that the approval granted under Section 153D was mechanical and lacked independent application of mind, violating the principles of natural justice and established legal precedents. The approval was granted for multiple assessment years in a single order, which is contrary to the law.

The Tribunal held that the AO had relied on investigation reports and statements of third parties without providing the assessee with an opportunity to cross-examine them, violating principles of natural justice. The SEBI had also provided a clean chit to the assessee. The documentation supporting the share transactions was found to be in order.

The Tribunal held that the approval granted by the Addl. CIT under section 153D of the Act was mechanical and lacked independent application of mind. The approval was given for multiple assessment years in a single order, contrary to the requirement of granting approval for each assessment year separately. Relying on various High Court and Tribunal decisions, the Tribunal found that such mechanical approval vitiates the assessment order.

The Tribunal noted that the CIT(A) had not made a clear finding on whether the additions were based on specific seized material. Consequently, the Tribunal restored the assessee's appeals (ITA Nos. 479 & 480/Del/2017 and ITA Nos. 6358 & 6365/Del/2019) to the CIT(A) for fresh adjudication. The Revenue's appeals (ITA Nos. 1154 & 1156/Del/2017) were dismissed as the CIT(A) had deleted penalties based on reversed quantum additions.

The Tribunal noted that the CIT(A) had not clearly determined whether the additions were based on specific seized material. Therefore, the assessee's appeals ITA Nos. 479 & 480/Del/2017 and the consequential penalty cases ITA Nos. 6358 & 6365/Del/2019 were restored to the CIT(A) for fresh adjudication. The Revenue's appeals were dismissed, and the assessee's cross-objection was dismissed as infructuous.

The Tribunal held that CSR expenditure, being a mandatory statutory obligation, cannot be treated as a voluntary donation for the purpose of Section 80G. Furthermore, contributions made from CSR funds towards scientific research do not qualify for weighted deduction under Section 35(2AA) if they are not made voluntarily and with the primary intent of furthering research, but rather as part of a CSR obligation. The Tribunal dismissed the assessee's appeals.

The Tribunal noted the delay in filing and condoned it after hearing both sides. Finding merit in the assessee's argument regarding incomplete consideration by the CIT(E), the Tribunal decided to remit the issues back.

The Tribunal held that the assessment order passed under Section 153C r.w.s. 144 of the Act was barred by limitation. The limitation period for assessment u/s 153C, in this case, should be reckoned from 14.02.2022, making the assessment order dated 16.03.2024 time-barred.

The Tribunal noted that the CIT(A) had not made a clear finding on whether additions were based on specific seized material. Consequently, the assessee's appeals for assessment years 2006-07 and 2007-08, along with related penalty cases, were restored to the CIT(A) for fresh adjudication. The Revenue's appeals concerning penalty proceedings were dismissed.

The Tribunal noted that both the NFAC and the AO had passed ex-parte orders without adjudicating the issues on merits. For the sake of justice and fair play, the Tribunal deemed it fit to restore the appeals to the file of the AO for de novo adjudication, directing that the assessee be given a reasonable opportunity of being heard.

The Tribunal found that the AO had not been able to substantiate the information and its linkage with the appellant, noting that the PAN mentioned was not that of the appellant and the information pertained to export bills, while the appellant had no export turnover. The Revenue failed to controvert the CIT(A)'s findings.

The Tribunal acknowledged the delay but condoned it in the interest of justice, subject to the assessee depositing Rs. 10,000/- as cost. The Tribunal noted that the CIT(A) had dismissed the appeal due to non-compliance without deciding on merits, issuing a non-speaking order.

The Tribunal found that the NFAC decided the issue ex-parte without adjudicating on merits, and similarly, the assessment orders were framed ex-parte. Therefore, to ensure justice and fair play, the appeals were restored to the file of the AO for de novo adjudication.

The CIT(A) erred in restoring the addition on merits to the AO without deciding the jurisdictional issues. It is mandatory to adjudicate jurisdictional issues before proceeding to decide on merits.

The Tribunal restored the assessee's appeals concerning assessments for AY 2006-07 and 2007-08 back to the CIT(A) for fresh adjudication, as the original orders lacked clear findings on the basis of additions. The Revenue's appeals were dismissed as the CIT(A) had deleted penalties based on reversed additions.

The Tribunal held that the assessee's books of accounts were unreliable due to issues with sundry creditors and violations of Section 40A(3). While upholding the disallowance of bogus purchases and cash expenses, the quantum was restricted. The net profit was to be estimated at 10% of the turnover, and interest income from fixed deposits was to be treated as part of business receipts.

The Tribunal condoned the delay after finding a reasonable cause. The Tribunal noted that the CIT(E) had not considered the full facts and evidence presented by the assessee.

The Tribunal found that the NFAC decided the issue ex parte without adjudicating on merits, and similarly, the assessment orders were also framed ex parte. Therefore, in the interest of justice, the appeals were restored to the AO for de novo adjudication.

The tribunal noted that the CIT(A) did not make a clear finding on whether the additions were based on specific seized material. Therefore, the assessee's appeals (ITA Nos. 479 & 480/Del/2017 and related penalty appeals) were restored to the CIT(A) for fresh adjudication. The Revenue's appeals concerning penalty proceedings were dismissed.

The Tribunal held that brought forward business losses must be set off against business income before unabsorbed depreciation, as per Sections 32(2) and 72 of the Act. It also found that the CIT(A)'s invocation of Section 79 was invalid due to lack of notice and without any grounds raised by the assessee. Furthermore, the additions under Section 41(1) were not sustainable as the amounts written back were either previously disallowed or related to capital creditors for which no deduction was claimed.

The Tribunal held that the PCIT's revision order lacked sufficient material and justification. For the funds, the Tribunal found them to be equity-oriented and correctly taxed as long-term capital gains. Regarding ALV, the Tribunal noted that the Assessing Officer had made inquiries and accepted the assessee's position in most cases, and the PCIT did not provide adequate reasons for disagreement. For penalty proceedings, the Tribunal relied on High Court precedents stating that the Commissioner cannot direct the initiation of penalty proceedings under Section 263 if they were not initiated at the time of assessment.

The Tribunal noted that the CIT(A) had not made a clear finding on whether additions were based on specific seized material for the assessee's appeals. Therefore, these appeals were restored to the CIT(A) for fresh adjudication. For the Revenue's appeals and the assessee's cross-objection, the Tribunal found no reason to interfere with the CIT(A)'s findings.

The Tribunal relied on a coordinate bench's decision regarding the validity of the satisfaction note recorded for initiating Section 153C proceedings. The Tribunal found that the Assessing Officer had used statutory expressions interchangeably, which is not in accordance with a stricter interpretation of the law.