ITAT Kolkata Judgments — August 2025

The Tribunal held that the amendment to Section 14A by Finance Act, 2022, which broadened the scope of disallowance, is prospective and not applicable for AY 2017-18. It was decided that disallowance under Section 14A read with Rule 8D for the relevant assessment year must be restricted only to investments that yielded exempt dividend income. Consequently, the Tribunal directed the Assessing Officer to delete the additional disallowance made on non-dividend yielding investments.

The Tribunal dismissed the Revenue's appeal, finding it non-maintainable as the tax effect (Rs. 52,91,625/-) was below the monetary limit of Rs. 60 lakhs as per CBDT Circular No. 9 of 2024. The assessee's Cross Objections were also dismissed as withdrawn.

The Tribunal, relying on a precedent set by a Coordinate Bench, held that the signing of an assessment order is a mandatory requirement, not merely a procedural formality. It clarified that while electronic communications are deemed authenticated if containing the name and office of the authority (per Section 282A and Rule 127A), the requirement for a signature (physical or digital) remains paramount. Finding the assessment order to be unsigned, the Tribunal declared it invalid and a nullity, consequently quashing it.

The Tribunal upheld the CIT(A)'s decision regarding additional depreciation, stating that the issue is settled law allowing the claim in the subsequent year. For the transfer pricing adjustment, the Tribunal found the revenue's grounds to be academic and infructuous, as the assessee had no taxable income and claimed no deduction under Section 80-IA, making the adjustment have no tax consequence.

The Tribunal condoned the 251-day delay in filing the appeal, recognizing that the CIT(A) had dismissed the appeal ex-parte without addressing its merits. To ensure natural justice, the matter was remitted back to the CIT(A) for fresh adjudication on merits, with a caution for the assessee to cooperate.

The Tribunal upheld the CIT(A)'s deletion of the addition, confirming that the identity, creditworthiness, and genuineness of the loan transactions were established, as evidenced by banking channel transfers and the completion of the lenders' assessments under Section 143(3) without adverse findings. The revenue's appeal was dismissed, and the assessee's cross-objection was also dismissed as withdrawn.

The Tribunal considered the assessee's request and allowed the appeal to be withdrawn. Consequently, the appeal was treated as dismissed, having been withdrawn by the assessee.

The Tribunal observed that the CIT(Appeals) dismissed the appeal ex-parte without considering the assessee's submissions and documentary evidence. Therefore, the Tribunal set aside the CIT(Appeals)' order and remitted the matter back to the CIT(Appeals) for fresh examination of documents after providing another opportunity to the assessee, with a caution for the assessee to cooperate.

The Tribunal observed that the assessee, while failing to provide all confirmations to lower authorities, had now filed them. In the interest of justice, the Tribunal set aside the orders of the lower authorities and remitted the matter back to the Assessing Officer to examine the fresh documents and provide another opportunity to the assessee for hearing.

The Tribunal held that the reopening of the assessment by the AO on the same issue that was previously examined and dropped by the Pr. CIT under section 263 is invalid and cannot be sustained. The Tribunal relied on a previous decision of a Coordinate Bench and the High Court's ruling that an AO lacks jurisdiction to reopen an assessment under section 147 to circumvent an order passed under section 263 which has become final.

The Tribunal noted that the Ld. CIT(A) had passed a non-speaking order, failing to consider the assessee's submissions and evidence. The Tribunal found that the reopening proceedings were initiated based on "borrowed satisfaction" and that the additions were made for different reasons than initially stated in the reasons for reopening. The Tribunal also observed discrepancies in the amounts and the basis of additions made by the AO. Therefore, the issues were restored to the file of the Ld. CIT(A) for re-adjudication.

The Tribunal noted that the Ld. CIT(A) did not record the assessee's submissions and relied on an inadequate remand report. Consequently, the matter was restored to the Assessing Officer for re-adjudication, granting the assessee a fresh opportunity to produce evidence and witnesses to substantiate the share application money, clarifying the AO's role in examining such witnesses.

The Tribunal found that the assessee had explained the source of funds for the property purchase and registration charges from her salary account, supported by bank statements and details of payments through banking channels. Concluding that the source of investment was established, the Tribunal directed the deletion of both additions made by the lower authorities.

During the Tribunal proceedings, the CPC rectified its intimation u/s 154, applying the tax rates specified in Section 115BAA, thereby resolving the primary dispute. Consequently, the assessee requested to withdraw the appeal, and the Tribunal dismissed it as withdrawn, noting that other grounds were also not pressed.

The Tribunal observed that the impugned order was passed ex-parte. In the interest of substantive justice, the Tribunal set aside the order and remanded the matter back to the Assessing Officer for fresh assessment.

The Tribunal admitted the additional legal ground, finding it to be a pure question of law requiring no fresh factual verification, and relying on Apex Court and High Court precedents. It held that the Section 143(2) notice, not conforming to the mandatory CBDT instruction F.No. 225/157/2017/ITA-II, was invalid. Consequently, the assessment framed based on this invalid notice was quashed.

The Tribunal found that the assessee had already adjusted the ₹3,80,401/- paid towards prior years' leave encashment in its computation of income. It held that the AO (CPC) had no jurisdiction to disallow an actual payment made against leave encashment for prior years. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition.

The Tribunal held that since the assessee had shown the share sale proceeds in their profit and loss account and no defects were pointed out in the evidences submitted, merely relying on the Investigation Wing's report was insufficient. Therefore, the addition made under Section 68 was unsustainable, and the order of the Ld. CIT(A) was set aside.

The Tribunal admitted the additional evidences, acknowledging their importance for proper adjudication. Consequently, the appeal was restored to the file of the Assessing Officer for fresh adjudication, ensuring the assessee a reasonable opportunity of hearing.

The Tribunal held that the belated filing of Form 10CCB before the order under Section 143(1) is a curable procedural defect and constitutes sufficient compliance, thus entitling the assessee to the deduction. It relied on Supreme Court and Kolkata High Court precedents, directing the AO to allow the claim.

The Tribunal held that the Assessing Officer made additions based solely on a statement without corroborative material. The assessee provided sufficient documentary evidence to support the genuineness of the sales. The Assessing Officer also failed to dispute the evidence provided by the assessee.

The Income Tax Appellate Tribunal (ITAT) dismissed the assessee's appeal, upholding the CIT(A)'s order to remand the case for fresh assessment. The Tribunal found that the AO made substantial efforts to serve notices, and the assessee's claim of invalid proceedings due to non-service was not valid, as there was substantial compliance with Section 282 of the Act.

The CIT(A) allowed the assessee's appeal, deleting the addition. The CIT(A) observed that the AO failed to conduct proper inquiry and did not independently apply his mind. The CIT(A) also noted that Section 69A is not applicable as the sale consideration was recorded in the assessee's books.

The Tribunal upheld the Ld. CIT(A)'s order, deeming it reasoned and speaking, and affirmed that a Gross Profit rate, not a net profit rate, should be applied to undisclosed transactions. Consequently, both the revenue's appeal and the assessee's cross-objection were dismissed.

The Tribunal held that the PCIT's revisionary jurisdiction under Section 263 was invalid as it was invoked solely on the AO's proposal without the PCIT recording independent satisfaction regarding the erroneous and prejudicial nature of the assessment. Citing judicial precedents, the Tribunal emphasized that the PCIT must provide objective findings to justify invoking Section 263, which was absent in this case. Consequently, the PCIT's order was quashed.

The Tribunal restored the appeal to the file of the Ld. AO, directing a fresh examination of the share application money addition, specifically concerning the correct assessment year of receipt, after providing the assessee a reasonable opportunity of being heard. The Tribunal's decision effectively allowed the appeal for statistical purposes.

The Tribunal found that the issues required verification by the Assessing Officer. Therefore, in the interest of justice, the matter was restored to the Assessing Officer to decide afresh after providing the assessee with an opportunity to furnish the relevant documents.

The Tribunal noted the assessee's poor representation before lower authorities. It set aside the impugned order and remanded the matter to the AO to re-verify cash receipts against vouchers, compare deposits during demonetisation versus other periods, and ascertain if cash receipts were part of business turnover for gross profit calculation.

The Tribunal ruled that the reassessment notice issued under Section 148 was invalid because the required approval under Section 151 for reopening after three years was obtained from the Pr.CIT instead of the Pr.CCIT, as mandated by law and Supreme Court precedents. Consequently, the entire reassessment proceeding was quashed.

The ITAT condoned the delay in filing the appeal. It held that the assessee's cash deposits represented accounted professional fees, with the cash receipts and bank deposits properly explained. Therefore, the provisions of Section 115BBE of the Act were not applicable, and the additions made by the AO and confirmed by the Ld. CIT(A) were set aside. A duplicate appeal was dismissed as not maintainable.

The Tribunal held that the issue of invalid approval for the reopening notice u/s Section 148 is a legal issue that can be raised for the first time. Since the reassessment was initiated beyond three years, the approval should have been obtained from the Ld. Pr.CCIT u/s Section 151, not the Ld. Pr.CIT. Consequently, the notice u/s Section 148 and the subsequent reassessment proceedings were declared invalid and quashed.

The Tribunal held that the matter should be re-examined by the Assessing Officer, who must consider the Departmental Valuation Officer's (DVO) report and any valuation report submitted by the assessee. The assessee is to be given a sufficient opportunity of being heard during this fresh examination.

The Income Tax Appellate Tribunal observed that the justification of cash deposits is a factual issue that was not properly investigated by the lower authorities. Consequently, the Tribunal remanded the case back to the Assessing Officer for a fresh assessment, instructing the AO to provide the assessee a proper opportunity to present evidence and then pass a speaking order.

The tribunal held that the penalty notice issued under Section 274 was vague as it mechanically included both limbs of Section 271(1)(c) without striking off the irrelevant one or specifying the exact charge. Following jurisdictional High Court precedents, the tribunal concluded that such a vague notice rendered the penalty proceedings null and void, thereby quashing the penalty.

The Tribunal upheld the Ld. CIT(A)'s order, ruling that Section 68 is not applicable when the assessee provides sufficient evidence establishing the identity and creditworthiness of the lenders and the genuineness of the loan transactions, especially when the loans are repaid. The tribunal found no infirmity in the CIT(A)'s detailed order.

The Tribunal held that the CIT(A)'s action was incorrect. The assessee had explained the cash deposits as her accounted money from professional fees, which were deposited in the bank. Therefore, Section 115BBE was not applicable.

The Tribunal held that the Ld. AO's rejection of the books of account under Section 145(3) was invalid as no specific defects were recorded and findings were contradictory. It further ruled that the addition of ₹1,42,72,500/- as unexplained cash credit under Section 68 was improper, following judicial precedents that discourage additions based on conjecture when sales are duly recorded in books. Grounds 2 and 3 of the assessee's appeal were allowed.

The Tribunal dismissed all appeals by the Revenue. For the transfer pricing issue, it upheld the CIT(A)'s decision, affirming that the market value for captive power should be based on the rate at which the State Electricity Board supplies power to consumers, relying on the Supreme Court's decision in Jindal Steel. Regarding Section 14A, the Tribunal confirmed that no disallowance is warranted if no exempt income is earned, and the Finance Act 2022 amendment has prospective application. For CSR expenses, the Tribunal allowed Section 80G deduction for donations to eligible institutions, distinguishing them from disallowable business expenditures under Section 37.

The Tribunal found that both the AO/CPC and CIT(A) erred by overlooking the assessee's provisional registration under Section 12A of the Act. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO/CPC to re-examine the issue afresh, duly considering the assessee's registration under Section 12AA of the Act.

The Tribunal held that the AO's action was not sustainable as he neither doubted the book results (sales and purchases) nor relied on comparable cases for the GP rate enhancement. It was emphasized that an addition based on GP enhancement without rejecting the books of accounts under Section 145 lacked legal validity.

The Tribunal ruled that the one-time settlement received by the assessee for loss of source of income was a capital receipt, not a revenue receipt, citing Supreme Court decisions. It further held that since the assessee had fully disclosed the particulars of the settlement in the return of income, no penalty under Section 271(1)(c) was imposable, even if the revenue disagreed with the tax treatment.

The Tribunal dismissed the revenue's appeal as not maintainable, citing CBDT Instruction No. 9 of 2024, which sets a monetary threshold of Rs. 60,00,000/- for challenging CIT(A) orders before the Tribunal. Since the appeal did not fall under any specified exceptions, it was dismissed for low tax effect, with liberty for the revenue to file a Miscellaneous Application for revival if facts change.

The Tribunal, following its previous decisions in the assessee's own case for AY 2020-21 and 2021-22, held that the issue was squarely covered. It ruled that since the interest income on tax refund had already been assessed in the hands of the Netherlands entity and the assessment had attained finality, taxing it again in the assessee's hands would amount to impermissible double taxation. Consequently, the Tribunal quashed the revisional order passed by the Ld. PCIT.

The Tribunal noted that the CIT(Exemption) rejected the 80G application citing lack of Form-10AC, overlooking the assessee's provisional registration under Section 12AB(1)(b) for the relevant period. Consequently, the case was restored to the CIT(Exemption) for re-adjudication of the Section 80G(5)(iii) exemption in light of the already granted provisional registration. The appeal was allowed for statistical purposes.

The Tribunal condoned the delay in filing the appeal, accepting the reasons for the delay as bonafide due to company merger and employee changes. It then quashed the reopening of assessment, holding that the reasons recorded under Section 148(2) were vague, scanty, and ambiguous, and the approval granted by the PCIT under Section 151 was mechanical, without proper application of mind.

The Tribunal held that the CIT(A)'s order was well-reasoned, considering the director's retracted statement indicating commission earned was in the range of 0.05% to 0.15%. Relying on a previous similar case, the Tribunal upheld the CIT(A)'s decision to restrict the addition to 0.10% of the total turnover.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision to delete the additions. The ITAT noted that the assessee had provided extensive documentary evidence (ledger, invoices, bank statements, e-way bills, VAT returns) demonstrating genuine transactions, which the AO had not disputed. The ITAT found that the AO's addition was based solely on an uncorroborated third-party statement without substantive material.

The Tribunal held that since the assessment was reopened beyond three years, the sanction for issuing a notice under Section 148 of the Act must be obtained from the Pr.CCIT, as per Section 151 and the Supreme Court's decision in Rajeev Bansal. As the approval was incorrectly obtained from the Pr.CIT, the notice issued under Section 148 and the subsequent reassessment proceedings are deemed invalid and quashed void ab initio.