ITAT Delhi Judgments — February 2026

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 held that the tax authorities erred in treating the LTCG as bogus. It noted that the assessee provided substantial documentary evidence and that SEBI had exonerated the assessee in related proceedings. The Tribunal deleted the addition made by the AO.

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 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 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 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.

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 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 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 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 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 held that the estimation of profit by the CIT(A) at 10% was justified given the circumstances. However, interest income from fixed deposits, integral to the business's working capital, should be treated as part of business receipts and subjected to the same estimation rate.

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 Tribunal held that the assessee failed to discharge its onus to prove the genuineness of the donation, especially after being confronted with evidence of a bogus donation scam. For other expenses, the Tribunal allowed a partial addition, considering the ad-hoc nature of the disallowance by the AO.

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 the interest earned on unutilized borrowed funds, temporarily invested in FDRs, is not inextricably linked to the construction of the project. Relying on the Supreme Court decision in Tuticorin Alkali Chemicals & Fertilizers Ltd., the interest income is to be assessed as 'Income from other sources'.

The Tribunal held that the notice issued u/s 148 of the Act on 29-07-2022 was beyond the period of limitation. Following the Supreme Court's decision in Union of India vs. Ashish Agarwal, the reassessment proceedings were quashed.

The Tribunal held that the assessee failed to establish the identity, genuineness, and creditworthiness of the companies from which it received funds. Consequently, the additions made by the Assessing Officer and confirmed by the CIT(A) were deemed just and proper.

The Tribunal held that the assessee had discharged its burden by providing details of share sales, including buyer identities and financial statements. The lower authorities wrongly treated sale consideration as unexplained cash credit instead of sale of investment.

The Tribunal held that the AO could not make additions on issues not forming part of the reasons recorded for reopening. For AY 2017-18, the Tribunal found that the identity and creditworthiness of the buyer were established, and the sale price was higher than the fair market value, thus deleting the addition.

The Tribunal held that the notice issued under Section 148 of the Act dated 28.07.2022 was barred by limitation. Relying on the Supreme Court's decision in Rajeev Bansal and the undertaking given by the ASG, it was concluded that TOLA is not applicable for AY 2015-16, and even under the old provisions, the notice was time-barred.

The Competent Authorities agreed on a 15% withholding tax for the alleged Permanent Establishment and a 2% royalty rate for AY 2012-13, subject to a 15% withholding tax under the treaty. The assessee's returned position was accepted, and the Assessing Officer's additions were dropped.

The Tribunal noted that the penalty notices issued by the AO did not specify whether the penalty was for concealment of income or for furnishing inaccurate particulars, rendering them invalid. Relying on jurisdictional High Court decisions, the Tribunal quashed the penalty.

The Tribunal held that the AO could not make additions on issues not forming part of the reasons recorded for reopening. For AY 2017-18, the Tribunal found that the identity and creditworthiness of the buyer were established, and the sale price was higher than the fair market value, thus deleting the addition.

The Tribunal held that since the Income Tax Department failed to file any claim in the insolvency proceedings, their claim becomes redundant and unenforceable. The discharge orders attained finality, extinguishing any claims not part of the approved repayment plan.

The assessee had filed an application under the MAP provisions, and the Competent Authorities of India and the US had resolved the case, providing relief to the assessee. Consequently, the assessee sought to withdraw all grounds of appeal, including those related to penalty.

The Tribunal considered the assessee's submissions and the pending application for condonation of delay. Relying on a Gujarat High Court judgment, the Tribunal directed the PCIT to condone the delay in filing Form 10IC and allow the assessee to avail the benefit of the new tax regime.

The Tribunal noted that the assessee failed to make any representation before the Ld. CIT(A). However, since an appeal was filed before the Tribunal, it was deemed appropriate in the interest of justice to set aside the order of the Ld. CIT(A) and restore the matter for fresh adjudication.

The Tribunal held that since the Income Tax Department failed to file any claim in the insolvency proceedings, their claim becomes redundant and unenforceable. The discharge orders attained finality, extinguishing any claims not part of the approved repayment plan.

The Competent Authorities agreed on a 15% withholding tax for the alleged Permanent Establishment and a 2% royalty rate for AY 2012-13, subject to a 15% withholding tax under the treaty. The assessee's returned position was accepted, and the Assessing Officer's additions were dropped.

The Tribunal found that the instant appeal was indeed a duplicate of a previously filed appeal for the same assessment year. The department had inadvertently filed a fresh appeal instead of revising grounds as directed.

The Tribunal condoned the delay in filing the appeal after the assessee showed sufficient cause for not filing it within the time limit. The Tribunal noted that the CIT(A) had dismissed the appeal ex-parte without providing a fair opportunity to the assessee.

The tribunal held that the AO and CIT(A) misunderstood the explanation regarding the FDR maturity proceeds, remitting the issue for verification. Regarding the share valuation, the tribunal found the AO exceeded jurisdiction and directed the addition to be deleted. For brokerage charges, the tribunal found no basis for restricting it to 0.5% and allowed the assessee's claim of 1%.

The Tribunal held that the CIT(A) violated the principles of natural justice by confirming the addition based on a remand report without confronting it to the assessee. The matter was restored to the CIT(A) for de novo adjudication.

The Tribunal held that the notice issued under Section 148 of the Act, dated 29.07.2022, was indeed barred by limitation, following the Supreme Court's decision in UOI vs. Rajeev Bansal. Consequently, the assessment order was quashed.

The Competent Authorities agreed on a 15% withholding tax for the alleged Permanent Establishment and a 2% royalty rate for AY 2012-13, subject to a 15% withholding tax under the treaty. The assessee's returned position was accepted, and the Assessing Officer's additions were dropped.

The Tribunal noted that the notices were sent to an email ID not belonging to the assessee. Considering the assessee's illiteracy and lack of online presence, the Tribunal directed the AO to delete the penalty of Rs. 10,000/- for non-compliance with notices under section 142(1).

The Tribunal noted that the quantum appeal filed by the assessee had already been restored to the NFAC. Consequently, the Tribunal found it appropriate to restore the penalty appeal as well. The Tribunal held that the appeal of the assessee is allowed and restored to the file of the NFAC to decide afresh after giving the assessee an opportunity of being heard. The reasoning is based on the principle of consequential relief and the need for a fresh adjudication of the penalty in light of the restored quantum appeal. The ratio decidendi is that if the primary assessment order is set aside or restored for fresh consideration, consequential penalty proceedings should also be re-examined. The operative direction is to restore the appeal to the NFAC for fresh adjudication.

The Tribunal noted that the fact of the partnership firm's dissolution was communicated to the income tax authorities prior to the issuance of the notice. Therefore, the notice under section 148 issued in the name of the dissolved firm was considered bad in law.

The Tribunal held that the notice issued under Section 148 of the Act dated 28.07.2022 was barred by limitation. Relying on the Supreme Court's decision in Rajeev Bansal and the undertaking given by the ASG, it was concluded that TOLA is not applicable for AY 2015-16, and even under the old provisions, the notice was time-barred.

The Tribunal, through the majority opinion of the Judicial Member and the Third Member, held that the assessee is entitled to the claim of deduction under Section 54B of the Act. The Tribunal found that the character of the land sold by the assessee on December 7, 2015, was agricultural land, as supported by revenue records and consistent declaration of agricultural income for at least 10 years. The Tribunal also noted that the lands purchased by the assessee were also agricultural lands as per revenue records and sale deeds, and agricultural income was declared from these purchased lands in subsequent assessment years. The Tribunal disregarded the Inspector's report and photographs as they were dated three years after the transfer of land and were collected without informing the assessee. The Tribunal concluded that the Revenue had not discharged its onus of disproving the agricultural nature and use of the land. Therefore, the order of the CIT(A) deleting the disallowance was confirmed. The appeal of the Revenue was dismissed.

The Tribunal held that if an appeal is dismissed for non-prosecution due to the assessee's non-compliance, the Ld. CIT(A) should not decide the appeal on merits. The Tribunal set aside the order and remanded the matter back to the Ld. CIT(A) for a fresh decision after giving the assessee a reasonable opportunity of hearing.

The Tribunal held that the assessee, being a partnership firm, had discharged its onus under Section 68 by establishing the identity, creditworthiness, and genuineness of the capital transactions with its partners. The Tribunal noted that the second proviso to Section 68, requiring explanation of 'source of source', is applicable to companies, not partnership firms.

The Tribunal held that processing fees and upfront charges received by the assessee engaged in long-term finance business have a direct nexus with that business and are eligible for deduction under Section 36(1)(viii). The court referenced High Court and AAR rulings supporting this view.

The CIT(A) allowed the assessee to submit additional evidence, finding that the assessee was prevented by sufficient cause from producing them earlier. The CIT(A) then adjudicated the appeal on merits, deleting the ad-hoc disallowance of warranty provisions.

The Tribunal held that processing fees and upfront charges received by the assessee have a direct nexus with their business of providing long-term finance. Therefore, these incomes are eligible for deduction under Section 36(1)(viii) of the Act, as supported by various judicial precedents.

The Tribunal held that the addition on account of exchange of land was not justified as the assessee had not received any monetary consideration. However, the penalty levied under Section 271(1)(c) was quashed due to a defective show-cause notice.

The Tribunal found that the approval under section 153D was granted mechanically and not with due application of mind, citing decisions of the jurisdictional High Courts. The satisfaction recorded by the Assessing Officer under section 153C was also found to be lacking specificity regarding the seized material's relevance to the assessee's income.

The Tribunal held that processing fees, upfront charges, and similar incidental income have a direct nexus with the business of providing long-term finance. Therefore, such income is eligible for deduction under Section 36(1)(viii) of the Act.

The Tribunal held that processing fees and prepayment premiums received by the assessee engaged in long-term finance business have a direct nexus with that business. Therefore, such income is eligible for deduction under Section 36(1)(viii) of the Act.