ITAT Kolkata Judgments — January 2026

The Tribunal held that while the assessee could not furnish direct evidence for the entire amount, there was evidence of conducting business. The Tribunal viewed the cash deposits as business receipts and directed the AO to compute total income at a net profit rate of 8% on the turnover reflected in the bank account, deleting the remaining addition. Ground Nos. 1, 2, and 3 were allowed, and Ground No. 4 was dismissed.

The Tribunal noted that notices were sent to an incorrect email, depriving the assessee of an opportunity to be heard at both the assessment and appellate stages. In the interest of justice, the Tribunal set aside the order of the CIT(A) and remitted the matter back to the AO for reassessment de novo.

The Tribunal held that the reopening of assessment was not sustainable because the approval for issuing the notice u/s 148A(d) and notice u/s 148 of the Act was not obtained from the competent authority as prescribed under Section 151(ii) of the Act. The approval was obtained from the CIT(IT & TP) instead of the Principal Chief Commissioner of Income Tax (PCCIT), which is required when the assessment is reopened after four years from the end of the relevant assessment year.

The Tribunal noted that the assessee had filed evidence before the CIT(A) but the appeal was dismissed without considering it. In the interest of justice, the Tribunal set aside the CIT(A)'s order and restored the issue to the Assessing Officer for de novo assessment. The assessee was directed to provide evidence for the source of share capital and justify the share premium charged, and the AO was to examine directors of investor companies.

The tribunal held that the penalty levied by the Assessing Officer at 60% under Section 271AAB(1A)(b) was excessive. It was found that the authorized officers failed to properly question the assessee regarding the source of cash and other valuables. Consequently, the penalty should have been levied at 30% under Section 271AAB(1A)(a).

The Tribunal held that the notice issued under section 143(2) of the Act was not in the prescribed format as per the CBDT instructions and e-proceeding guidelines. Consequently, the notice was deemed invalid, and all subsequent assessment proceedings and the assessment order were quashed.

The Tribunal held that the penalty should be levied at 30% instead of 60%. This decision was based on the finding that the authorized officers did not adequately question the assessee regarding the source of the cash and other valuables found during the search, which is a prerequisite for levying the higher penalty rate.

The tribunal noted that the loans, which formed the basis of the addition, had been repaid by the assessee during the assessment years 2015-16 and 2016-17, leaving no outstanding loans. Following the precedent set by the Hon'ble Gujarat High Court in Ambe Tradecorp (P) Ltd., the tribunal held that if the assessee is no longer a beneficiary of the loans, no addition under section 68 of the Act can be made. Consequently, the additions made by the AO and confirmed by the CIT(A) were deleted.

The Tribunal held that the Assessing Officer (AO) had not applied his mind independently and had merely reproduced the information from the investigation wing without verification. The reasons recorded for reopening were not self-evident and lacked a tangible link between the information provided and the formation of the belief that income had escaped assessment.

The Tribunal held that the reopening of assessment was invalid because the Assessing Officer (AO) did not apply his mind to the information and merely copied the investigation report's content. The AO failed to verify the information and did not dispose of the assessee's objections. The approval for reopening was mechanical.

The Tribunal held that the levy of penalty at 60% was excessive. The AR argued that the penalty should be levied at 30% under Section 271AAB(1A)(a) as the authorized officers failed to properly question the assessee regarding the source of the cash and other valuables found during the search. The Tribunal found merit in this argument, noting the lack of specific questioning by the search team.

The Tribunal found that the loans were examined during the original assessment and that all loans had been repaid by AY 2015-16, with no outstanding loans thereafter. Following the precedent set by the Gujarat High Court in Ambe Tradecorp (P.) Ltd., the Tribunal held that once the assessee is no longer a beneficiary of the loans after repayment, no addition under Section 68 of the Act can be made. Therefore, the additions made by the AO and confirmed by the CIT(A) were deleted.

The Tribunal found that the assessee was not provided with adequate opportunity to explain the source of cash deposits and that the principles of natural justice might have been violated. The Tribunal considered it appropriate to set aside the order of the CIT(A) and remit the matter back to the AO for reassessment.

The Tribunal held that the authorized officers did not adequately question the assessee regarding the source of the cash and valuables found during the search. This failure to conduct a thorough inquiry meant that the conditions for levying penalty at 60% under section 271AAB(1A)(b) were not met. Therefore, the penalty should be levied at 30% as per section 271AAB(1A)(a).

The Tribunal held that the assessee had a reasonable cause for the delay in filing the appeal, and the Ld. CIT(A) ought to have condoned the delay and decided the appeal on merits. The order of the Ld. CIT(A) was set aside, and the appeal was restored for disposal on merits.

The Tribunal found that the assessee was not properly confronted with the findings of the Verification Unit and that principles of natural justice were violated. Therefore, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the AO for a de novo assessment, allowing the assessee an opportunity to be heard and present further submissions.

The Tribunal condoned the delay, acknowledging the assessee's age, lack of technical knowledge, and the impact of the Covid-19 pandemic. The Tribunal noted that the assessee believed their income was exempt under Section 10(26AAA) and set aside the ex-parte orders.

The Tribunal acknowledged that there was no proper representation before the AO and CIT(A), and the CIT(A) dismissed the appeal ex-parte without considering the merits. Considering the interest of justice and fair play, the Tribunal deemed it appropriate to set aside the order of the CIT(A) and restore the appeal back to the CIT(A) for disposal on merit.

The Tribunal held that the assessee was legally eligible for the deduction under Section 80-IA, and the claim was correctly made and supported by necessary documentation. The disallowance in the final totaling by the CPC was attributed to a software error.

The Tribunal condoned the delay, noting it was not deliberate and occurred due to reasons beyond the assessee's control. The Tribunal found that the assessee genuinely believed their income was exempt under Section 10(26AAA) of the Act. The case was remanded to the Assessing Officer for adjudication on merits after providing an opportunity to be heard.

The Assessing Officer (AO) made additions of Rs. 49,04,77,417/- under Section 68 of the Income Tax Act, 1961, treating unsecured loans as bogus, and disallowed interest of Rs. 61,97,131/- under Section 36(1)(iii). The CIT(A) allowed the assessee's appeal, deleting these additions. The Tribunal upheld the CIT(A)'s order, finding that the assessee had discharged its initial burden by providing documentation for the identity, creditworthiness, and genuineness of the loan transactions. The AO's reliance on shell company lists and retracted statements was found to be unsubstantiated and lacking in corroborative evidence. The Tribunal emphasized that the AO failed to establish a nexus between the alleged accommodation entry providers and the assessee's transactions and that the loans were repaid through banking channels.

The Tribunal noted that the assessee failed to provide evidence for the housing loan and did not diligently pursue the appeal. The CIT(A)'s order was ex-parte. The Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A) for fresh disposal on merits, with an opportunity to the assessee to present evidence and submissions.

The Tribunal held that the notice u/s 143(2) was issued without jurisdiction, violating CBDT Instruction No.1/2011 regarding pecuniary limits for issuing such notices. Therefore, the assessment proceedings were deemed bad in law.

The Tribunal condoned the delay, finding that the assessee had a reasonable and sufficient cause for the delay. The Tribunal set aside the order of the CIT(A) as the merits were not discussed and remanded the matter to the AO for fresh assessment, allowing the assessee an opportunity to be heard.

The Tribunal held that while self-assessment tax should ideally be paid before filing the return, credit for tax paid even after the due date, but before regular assessment, should be allowed. The incorrect mention of the minor head in the challan can be corrected by the AO.

The Tribunal noted that the assessee is a member of the Association of Old Settlers of Sikkim and the Supreme Court had decided a similar issue. The Tribunal also found that the Assessing Officer had granted only two days to respond to the show cause notice, which is inadequate. Therefore, in the interest of natural justice, the matter was remanded back to the Assessing Officer.

The Tribunal condoned the delay in filing the appeal, considering the assessee's age, lack of technical knowledge, and the impact of the Covid-19 pandemic. The Tribunal found that the assessee had a bona fide belief that their income was exempt under Section 10(26AAA) of the Act.

The Tribunal noted that the AO's addition was based on a search and seizure action, but the material substantiating the bogus donation finding was not discussed. The CIT(A) also did not specify the basis for finding the party to be a sham entity. The issue of TDS credit was also not decided in favor of the assessee. Therefore, the Tribunal deemed it appropriate to provide another opportunity to the assessee.

The tribunal held that filing of the audit report (Form 10B) is a procedural issue, not a substantive one. The delay in filing the correct form should be condoned, and the AO should consider the correct form filed on 23/01/2025. The Gujarat High Court's decision in Association of Indian Panelboard Manufacturer was cited.

The Tribunal held that the revised claim was made after the time limit for revising the return and without filing a revised return as per Section 139(5) of the Act. The mistake was not considered a 'prima facie' mistake eligible for rectification. The tribunal further noted that allowing such a claim would result in assessed income being lower than the returned income, which is legally untenable.

The Tribunal observed that Section 43CA of the Income Tax Act, 1961, was applicable from AY 2014-15. For FY 2013-14 and FY 2014-15, the variation between sale price and stamp duty value was within the 10% tolerance limit. However, for FY 2015-16, for two specific agreements, the variation was significant and addition was justified.

The Tribunal held that the provision for M/s Balbir Sharma was made due to an audit remark and was subsequently paid. The arbitration award, though pending before the High Court, represents a liability. Thus, both amounts are liable to be allowed in the year of payment.

The Tribunal noted the assessee's lack of compliance with the AO and CIT(A). Considering the ex-parte assessment and the need for fair play, the Tribunal decided to provide another opportunity to the assessee.

The Tribunal noted that the Supreme Court had decided the issue regarding exemption for members of the Association of Old Settlers of Sikkim in 2013. It also found that the Assessing Officer had granted only two days to respond to the show cause notice, which is insufficient. Therefore, to ensure natural justice, the matter was remanded.

The Tribunal noted that the assessee was a member of the Association of Old Settlers of Sikkim, and the Supreme Court had ruled in their favor. The assessee believed their income was exempt under Section 10(26AAA) of the Act. The Assessing Officer granted only two days for response, which was deemed insufficient.

The Tribunal condoned the delay in filing the appeal before the CIT(A), finding that the assessee had a sufficient cause. The Tribunal set aside the order of the CIT(A) and remitted the matter back to the AO for reassessment de novo, providing the assessee with a reasonable opportunity to be heard.

The Tribunal noted that the CIT(A) passed the impugned order without providing a reasonable opportunity of hearing to the assessee. In the interest of natural justice, the matter was remanded back to the Assessing Officer.

The Tribunal held that the CIT(A) had passed the impugned order without affording a reasonable opportunity of being heard to the assessee. Therefore, in the interest of natural justice, the matter was remanded back to the Assessing Officer.

The Tribunal condoned the delay, finding sufficient cause for the same. The Tribunal noted that the appeal was decided ex parte and that the assessee may not have had a proper opportunity to present their case. Therefore, the order of the CIT(A) was set aside.

The Tribunal held that the penalty notice issued under section 274 read with section 271(1)(c) of the Act was vague. The notice mentioned "have concealed the particulars of your income", while the Assessing Officer's order mentioned "furnishing inaccurate particulars of income", failing to specify the exact charge. Relying on High Court and Supreme Court decisions, the Tribunal found the notice to be bad in law.

The CIT(A) observed that the AO had made additions without examining facts, books of accounts, or interest paid to members. The CIT(A) found no material to indicate the appellant obtained benefits against the liabilities and that the addition of liabilities was mechanical. Consequently, the assessment order was set aside for a fresh assessment, allowing the grounds for statistical purposes.

The Tribunal found that the CIT(A) dismissed the assessee's appeal solely on account of a 53-day delay, without adjudicating on merits. Therefore, the matter was restored to the CIT(A) for fresh adjudication after condoning the delay.

The Assessing Officer failed to specify the charge for issuing the penalty notice under Section 270A of the Act, either for 'underreporting of income' or for 'misreporting of income'. The show cause notice was vague and did not satisfy the legal requirements.

The Tribunal noted that since the CIT(A) had previously passed an order u/s 263 directing fresh consideration by the Assessing Officer, the penalty proceedings initiated pursuant to a subsequent order by the Assessing Officer had become infructuous. Therefore, the penalty order was set aside.

The Tribunal noted that the PCIT's order under section 263 had directed a fresh examination of the matter. Considering this development and the submission of the assessee's AR, the Tribunal concluded that the present appeal had become infructuous.

The Tribunal held that the filing of Form No. 67 is a directory, not a mandatory, requirement. They referred to various judicial precedents, including decisions of the Supreme Court, which established that the DTAA provisions override the Act and Rules. The Tribunal concluded that the non-furnishing of Form No. 67 within the due date is not fatal to the claim for FTC, and disallowing the FTC solely on this technical ground is not justified.

The Tribunal held that the addition made under Section 56(2)(viib) was incorrect as revaluation reserves should not be deducted when calculating the fair market value of shares. The Tribunal also held that additions on account of provisions for interest on unsecured loans and for discount were incorrectly made, as they represented actual expenses and not provisions. Lastly, the Tribunal held that no disallowance under Section 14A was warranted as the assessee did not earn any exempt income.

The Tribunal noted that the CIT(A) passed an ex parte order without considering the merits of the case and the addition made under section 56(2)(x) of the Act. The matter requires fresh verification of the difference between stamp duty value and purchase consideration.

The Tribunal held that the CIT(A) erred in dismissing the appeal solely on the ground of delay without considering the merits. The death of a partner, Shri Narendra Narayan Das, who managed the day-to-day and legal affairs of the company, was the reason for the delay, and a death certificate was submitted. The delay was condoned, and the appeal was restored to the CIT(A) for fresh consideration.