ITAT Kolkata Judgments — October 2026

The Tribunal noted that both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] had passed ex parte orders due to the assessee's non-compliance and non-representation. The assessee's representative at the Tribunal argued that the matter should be remanded to the CIT(A) to allow an adequate opportunity of being heard. The Departmental Representative (DR) did not object to a remand. Considering the interest of justice and fair play, and acknowledging the lack of proper compliance before the lower authorities, the Tribunal deemed it appropriate to set aside the order of the CIT(A). The appeal was restored to the CIT(A) for disposal of the grounds of appeal on merits by passing a speaking order. The assessee was to be given a reasonable opportunity of being heard, without seeking unnecessary adjournments, and Rule 46A of the I.T. Rules, 1962, was to be followed. An opportunity of being heard was also to be provided to the AO, if required. The grounds taken by the assessee were partly allowed for statistical purposes. The specific issues regarding the addition of derivative loss (Ground 4), set-off of income under Section 115BBE (Ground 5), and levy of interest (Ground 6) were not adjudicated on merits by the ITAT, as the matter was remanded. The primary decision was to provide the assessee with a proper hearing before the CIT(A).

The Tribunal held that the reopening of assessment is barred by limitation. The notice under Section 148 of the Act was issued on 19.07.2022. The Supreme Court in Union of India vs Rajeev Bansal (supra) and the Delhi High Court in ADM Agro Industries Latur and Vizag Private Limited Vs. ACIT (supra) have clarified the period of limitation for issuing such notices, considering the impact of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the directions issued in Union of India & Ors. v. Ashish Agarwal. The Tribunal noted that the period of limitation for issuing the notice under Section 148 for AY 2013-14 expired on 19.06.2022, as per the analysis in the Rajeev Bansal judgment. Since the notice was issued on 19.07.2022, it was beyond the prescribed period of limitation. Therefore, the appeal of the assessee is allowed.

The Tribunal held that the AO erred in disallowing business expenses and reclassifying income. The Tribunal noted that the AO did not dispute the earning of income but twisted facts to treat it as 'Income from Other Sources' to deny expenses. The Tribunal found contradictions in the AO's reasoning, particularly regarding the nature of commission income and the requirement for Custom House Agent registration. The Tribunal also observed that similar expenses were allowed in preceding and succeeding years, and the revenue had taken a consistent stand in other years, citing Radhasoami Satsang vs. Commissioner of Income-tax (SC) on the principle of consistency. Therefore, the Tribunal set aside the appellate order and directed the AO to allow the expenses and the set off of business loss against house property income. Regarding the key man insurance policy, the Tribunal noted that the premium was for a key person and had been regularly allowed. Following CBDT Circular No. 762 and the decision in CIT vs BN Export (Bom), and also referring to Radhasoami Satsang, the Tribunal directed the AO to allow the deduction. For the Section 14A addition, the Tribunal found that the interest expense was attributable to housing loans for house property income, and the CIT(A) had allowed the entire interest under Section 24(b) while concurring with the AO's disallowance under Section 14A. Considering the minimal exempt income and self-disallowed expenses, the Tribunal set aside the order and directed the deletion of the addition. One ground was dismissed as not pressed.

The Tribunal allowed the assessee's appeal on the legal issue. It held that the notice under Section 148 of the Act was issued on 25.05.2022, which was beyond the three-year period from the end of AY 2018-19 (which expired on 31.03.2022). In such cases, where more than three years have elapsed, the approval for issuing the notice under Section 148 must be obtained from the PCCIT as per Section 151(ii) of the Act. However, the approval in this case was obtained from the PCIT. The Tribunal found this to be contrary to the provisions of Section 151 of the Act and relied on the decision of the Telangana High Court in Deloitte Consulting India (P) Limited vs. Assessment Unit, Income Tax Department, NFAC, New Delhi, and the Supreme Court's dismissal of SLPs in similar cases (ACIT v. LinkedIn Singapore Pte. Ltd and ACIT Vs Prakash Pandurang Patil). Consequently, the Tribunal quashed the notice issued under Section 148 and the consequential assessment order dated 20.03.2024 as invalid. The Tribunal noted that other grounds raised on merit were not adjudicated at this stage and were left open. The Revenue's appeal was dismissed as infructuous.

The Tribunal held that the AO erred in disallowing business expenses and reclassifying income. The Tribunal noted that the AO did not dispute the earning of income but twisted facts to treat it as 'Income from Other Sources' to deny expenses. The Tribunal found contradictions in the AO's reasoning, particularly regarding the nature of commission income and the requirement for Custom House Agent registration. The Tribunal also observed that similar expenses were allowed in preceding and succeeding years, and the revenue had taken a consistent stand in other years, citing Radhasoami Satsang vs. Commissioner of Income-tax (SC) on the principle of consistency. Therefore, the Tribunal set aside the appellate order and directed the AO to allow the expenses and the set off of business loss against house property income. Regarding the key man insurance policy, the Tribunal noted that the premium was for a key person and had been regularly allowed. Following CBDT Circular No. 762 and the decision in CIT vs BN Export (Bom), and also referring to Radhasoami Satsang, the Tribunal directed the AO to allow the deduction. For the Section 14A addition, the Tribunal found that the interest expense was attributable to housing loans for house property income, and the CIT(A) had allowed the entire interest under Section 24(b) while concurring with the AO's disallowance under Section 14A. Considering the minimal exempt income and self-disallowed expenses, the Tribunal set aside the order and directed the deletion of the addition. One ground was dismissed as not pressed.

The Tribunal held that the additional evidence, including ledger extracts, purchase orders, invoices, sales tax intimations, TDS certificates, and reconciliation statements, was necessary for a proper and correct adjudication of the issue. The Tribunal admitted these evidences. Since the examination of these evidences was required at the Assessing Officer's (AO) level, the Tribunal restored the issue back to the file of the AO for re-adjudication after considering all the admitted evidences. The assessee was to be given a fair opportunity of hearing. The Tribunal allowed the appeal for statistical purposes.

The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal. It found that the sales tax incentives and electricity duty remission were received for fresh capital investment made on the expansion of the project under the West Bengal Incentive Scheme, 2008. The Tribunal relied on the 'purpose test' as laid down by the Supreme Court in Sahney Steel & Press Works Ltd. and reiterated in Ponni Sugars and Chemicals Ltd. It held that if the object of the subsidy is to enable the assessee to set up a new unit or expand an existing one, the receipt is capital in nature. The Tribunal noted that the scheme's object was for expansion of capacities, modernization, and improving marketing capabilities, which are for assistance on capital account. The Tribunal also referred to the jurisdictional Calcutta High Court's decision in Rasoi Ltd., which held that VAT remission under the West Bengal Industrial Scheme was capital in nature. Therefore, the incentives were treated as capital receipts and not taxable income. The addition of Rs. 3,43,87,168/- was deleted, and consequently, the adjustment to book profit under Section 115JB was also directed to be deleted.

The Tribunal held that the assessee had not established a sustainable legal basis for annulling the assessment order passed under Section 153A read with Section 263, as the revision order had not been set aside. The Tribunal found that the Warrant of Authorization, Panchanama, Tally entries, Annexure III, and corroborative statements provided an evidentiary basis for the addition. The addition of Rs. 19,50,000/- was supported by material found during the search, and the assessment year being unabated did not warrant deletion. The assessee failed to provide a satisfactory explanation for the nature and source of the cash credits and did not establish a nexus between the cash receipts and income considered in settlement proceedings for telescoping. The Tribunal rejected the assessee's reliance on case laws like Abhisar Buildwell and Ajitabh Agro Farms, finding them distinguishable. Consequently, the CIT(A)'s order confirming the addition of Rs. 19,50,000/- under Section 68 was upheld. Both grounds of appeal were dismissed.

The Tribunal held that the assessee had not established a sustainable legal basis for annulling the assessment order passed under Section 153A read with Section 263, as the revision order had not been set aside. The Tribunal found that the Warrant of Authorization, Panchanama, Tally entries, Annexure III, and corroborative statements provided an evidentiary basis for the addition. The addition of Rs. 19,50,000/- was supported by material found during the search, and the assessment year being unabated did not warrant deletion. The assessee failed to provide a satisfactory explanation for the nature and source of the cash credits and did not establish a nexus between the cash receipts and income considered in settlement proceedings for telescoping. The Tribunal rejected the assessee's reliance on case laws like Abhisar Buildwell and Ajitabh Agro Farms, finding them distinguishable. Consequently, the CIT(A)'s order confirming the addition of Rs. 19,50,000/- under Section 68 was upheld. Both grounds of appeal were dismissed.

The Tribunal held that the assessee had not established a sustainable legal basis for annulling the assessment order passed under Section 153A read with Section 263, as the revision order had not been set aside. The Tribunal found that the Warrant of Authorization, Panchanama, Tally entries, Annexure III, and corroborative statements provided an evidentiary basis for the addition. The addition of Rs. 19,50,000/- was supported by material found during the search, and the assessment year being unabated did not warrant deletion. The assessee failed to provide a satisfactory explanation for the nature and source of the cash credits and did not establish a nexus between the cash receipts and income considered in settlement proceedings for telescoping. The Tribunal rejected the assessee's reliance on case laws like Abhisar Buildwell and Ajitabh Agro Farms, finding them distinguishable. Consequently, the CIT(A)'s order confirming the addition of Rs. 19,50,000/- under Section 68 was upheld. Both grounds of appeal were dismissed.

The Tribunal held that the assessee had not established a sustainable legal basis for annulling the assessment order passed under Section 153A read with Section 263, as the revision order had not been set aside. The Tribunal found that the Warrant of Authorization, Panchanama, Tally entries, Annexure III, and corroborative statements provided an evidentiary basis for the addition. The addition of Rs. 19,50,000/- was supported by material found during the search, and the assessment year being unabated did not warrant deletion. The assessee failed to provide a satisfactory explanation for the nature and source of the cash credits and did not establish a nexus between the cash receipts and income considered in settlement proceedings for telescoping. The Tribunal rejected the assessee's reliance on case laws like Abhisar Buildwell and Ajitabh Agro Farms, finding them distinguishable. Consequently, the CIT(A)'s order confirming the addition of Rs. 19,50,000/- under Section 68 was upheld. Both grounds of appeal were dismissed.

The Tribunal held that the return filed in ITR No. 7 was a defective return as per Section 139(9) of the Act, due to the mismatch in the form. The CPC should have noticed this defect. The Tribunal directed the Assessing Officer (AO) to accept the correct return in ITR No. 5. It was also held that a technical glitch regarding the Tax Audit Report in Form No. 10B should not be fatal to the assessee's exemption claim. Regarding the late filing of the return under Section 139(4A)/139(4C), the Tribunal directed the assessee to file an application under Section 119(2)(b) before the prescribed authority. If the delay is condoned, the exemption is to be restored. Furthermore, the Tribunal noted that the assessee had incurred a deficit of Rs. 82,21,859/-. Therefore, even if exemption was not allowed, the CPC should have considered the real accounting surplus/deficit and not taxed the entire gross receipt. The CPC was directed to consider this loss along with the order of delay condonation. The appeal was allowed for statistical purposes, and the delay in filing the appeal before the ITAT was condoned with a cost of Rs. 25,000/- to be deposited with the Tamil Nadu State Legal Service Authority.

The Tribunal held that the additional ground of appeal, raising a purely legal issue with all facts available on record, was admissible. The Tribunal found that the Assessing Officer's addition of Rs. 51,94,684/- by disallowing the deduction under Section 80P(2)(a)(iv) was not sustainable in law. This was because the basis for reopening the assessment, as stated in the show-cause notice under Section 148A(b) and the subsequent order under Section 148A(d), was cash deposits amounting to Rs. 16,56,183/-. The Assessing Officer did not make any addition in respect of these original grounds for reopening. Consequently, the Tribunal set aside the order of the CIT(A) and directed the Assessing Officer to delete the addition. The ratio decidendi is that an addition made on grounds different from those forming the basis of reopening under Section 147/148A is invalid.

The Tribunal held that the Assessing Officer (AO) had taken a possible view on the issue after conducting necessary inquiries and verifications, which were documented through notices under Section 142(1) and the assessee's detailed replies. The Tribunal relied on the Supreme Court decision in CIT vs. Max India Ltd. (2007) 295 ITR 0282, stating that jurisdiction under Section 263 is not available to the Principal Commissioner (PCIT) where the AO has taken a possible view, unless that view is unsustainable in law. The Tribunal further analyzed Section 13(1)(c)(ii) read with Section 13(3) of the Act and found that the CIT(E) failed to demonstrate how Medica Hospital Private Limited qualified as a related party or how any benefit was conferred upon persons specified in Section 13(3). The shareholding patterns of Medica Hospital Private Limited and Medica Synergie Private Limited were examined, showing no substantial interest (20% voting power) held by any trustee, author, or founder of the assessee trust in Medica Hospitals Pvt Ltd. Consequently, the transaction was not considered to be in contravention of Section 13(1)(c)(ii). The Tribunal concluded that the CIT(E) had invalidly invoked jurisdiction under Section 263 without proper application of mind, and therefore, the proceedings and order under Section 263 were quashed. The appeal of the assessee was allowed.

The Tribunal held that the jurisdiction invoked by the CIT(E) under Section 263 was invalid. The Tribunal noted that the AO had conducted inquiries during the assessment proceedings, issuing notices under Section 142(1) and receiving detailed replies concerning foreign donations and expenditure. The AO had taken a possible view on the issue, which is permissible under law, as established in CIT vs. Max India Ltd. (2007) 295 ITR 0282 (SC). The Tribunal found that the CIT(E) failed to demonstrate how Medica Hospital Private Limited qualified as a related party under Section 13(3) of the Act, as the shareholding patterns did not show any substantial interest (20% voting power) held by the assessee's trustees, authors, or founders in Medica Hospitals Pvt Ltd. Furthermore, the CIT(E) did not establish that the funds were utilized for the benefit of persons specified in Section 13(3). Considering Medica's own substantial contribution to the project, the Tribunal concluded that the payment to Medica was unlikely to benefit related parties. Therefore, the proceedings and order under Section 263 were quashed.

The Tribunal allowed both appeals. On the first issue, the Tribunal held that the AO had not disputed the earning of income but had twisted facts to reclassify it. The Tribunal noted that business expenses were not claimed as bogus, fictitious, or excessive, and that similar expenses were allowed in preceding and succeeding years, citing the principle of consistency as per Radhasoami Satsang vs. Commissioner of Income-tax (SC). The AO's denial of business expenses and denial of set-off of business loss against house property income was set aside, and the AO was directed to allow the expenses and the set-off. On the second issue, the Tribunal held that the keyman insurance policy premium loss was a regular claim allowed in earlier years and that the policy was for a key person. Following CIT vs. BN Export (Bom) and Radhasoami Satsang, the deduction was allowed. On the third issue, the Tribunal noted that the interest expense was attributable to housing loans for house property income, and the CIT(A) had allowed the entire interest expense under Section 24(b) but concurred with the AO's disallowance under Section 14A. Given the minimal exempt income and the assessee's own disallowance, the addition under Section 14A was directed to be deleted. Ground 4 was dismissed as not pressed.

The Tribunal held that the reassessment proceedings initiated under Section 147 read with Section 148 of the Income-tax Act, 1961, were null and void. The reasoning was that the proceedings were initiated based on documents seized during a search operation on third parties (Sanwaria and Kasera Group) conducted prior to 01.04.2021. In such circumstances, the assessment proceedings should have been initiated under Section 153C of the Act, which is an exclusive code for such situations and overrides other sections. The Tribunal relied on several judicial precedents, including DCIT vs. Nawal Kumar Kanodia, Sri Dinakara Suvarna vs. DCIT, Shyam Sunder Khandelwal vs. ACIT, Sejal Jewellary vs. Union of India, ACIT vs. Pramod Jain, and its own decision in Maan Steel & Power Limited vs. DCIT. Consequently, the Tribunal quashed the proceedings initiated under Section 148 and the assessment framed as a nullity and invalid. The appeal of the assessee was allowed.

The Tribunal noted that after the intimation under Section 143(1) and the subsequent appeal to the Ld. Addl./JCIT(A)-1, the assessee's case was selected for scrutiny under Section 143(2) and 142(1). Subsequently, an assessment order under Section 143(3) read with Section 144B was passed on 27.02.2026. Crucially, this scrutiny assessment order accepted the returned income of the assessee without any disallowance or addition, and the benefit of tax exemption under Section 10(23C)(v) was allowed. The Tribunal observed that the intimation issued under Section 143(1) merged with the subsequent assessment order under Section 143(3) r.w.s. 144B. Since the scrutiny order accepted the assessee's returned income and granted the exemption, the assessee had no grievance. Therefore, the appeal filed by the assessee was dismissed as infructuous, and the grounds raised were also dismissed as they became infructuous in light of the scrutiny order.

The Tribunal upheld the order of the CIT(A), dismissing the Revenue's appeal. The Tribunal found that the incentives, including electricity duty remission and sales tax incentives, were received for fresh capital investment made for expansion of the project under the West Bengal Incentive Scheme, 2008. The Tribunal relied on the 'purpose test' laid down by the Supreme Court in Sahney Steel & Press Works Ltd. and reiterated in Ponni Sugars & Chemicals Ltd. It was held that if the object of the subsidy is to enable the assessee to set up a new unit or expand an existing one, the receipt is capital in nature. The Tribunal also referred to the jurisdictional Calcutta High Court's decision in Rasoi Ltd., which held that VAT remission under a similar scheme was capital in nature. The Tribunal concluded that the incentives were for assistance on capital account, and therefore, not taxable income. The addition to book profits under Section 115JB was also directed to be deleted as per the CIT(A)'s finding.

The Tribunal allowed the assessee's appeal on the legal issue concerning the validity of the reassessment proceedings. It held that the notice under Section 148 of the Act was issued on 25.05.2022, which was beyond the three-year period from the end of Assessment Year 2018-19 (which expired on 31.03.2022). In such cases, where more than three years have elapsed, the approval for issuing the notice under Section 148 must be obtained from the Principal Chief Commissioner (PCCIT) or Chief Commissioner (CCIT), not the Principal Commissioner (PCIT) or Commissioner (CIT). The Tribunal noted that the approval was obtained from the PCIT. Relying on the decisions of the Telangana High Court in Deloitte Consulting India (P) Limited and the Bombay High Court in Vodafone Idea Limited, as well as the Supreme Court's dismissal of SLPs in similar cases (ACIT v. LinkedIn Singapore Pte. Ltd and ACIT Vs Prakash Pandurang Patil), the Tribunal concluded that the notice issued under Section 148 and the consequential assessment order were invalid and quashed. Consequently, the Revenue's appeal was rendered infructuous and dismissed. The grounds raised on merit were not adjudicated and were left open.

The Tribunal allowed both appeals. On the first issue, the Tribunal held that the AO had not disputed the earning of income but had twisted facts to reclassify it. The Tribunal noted that business expenses were not claimed as bogus, fictitious, or excessive, and that similar expenses were allowed in preceding and succeeding years, citing the principle of consistency as per Radhasoami Satsang vs. Commissioner of Income-tax (SC). The AO's denial of business expenses and denial of set-off of business loss against house property income was set aside, and the AO was directed to allow the expenses and the set-off. On the second issue, the Tribunal held that the keyman insurance policy premium loss was a regular claim allowed in earlier years and that the policy was for a key person. Following CIT vs. BN Export (Bom) and Radhasoami Satsang, the deduction was allowed. On the third issue, the Tribunal noted that the interest expense was attributable to housing loans for house property income, and the CIT(A) had allowed the entire interest expense under Section 24(b) but concurred with the AO's disallowance under Section 14A. Given the minimal exempt income and the assessee's own disallowance, the addition under Section 14A was directed to be deleted. Ground 4 was dismissed as not pressed.

The Tribunal noted that the figures of turnover and the liability to get accounts audited under Section 44AB were not under challenge. The sole issue was the applicability of Section 273B, which provides that no penalty shall be imposed for certain failures if the assessee proves a reasonable cause. The Tribunal acknowledged that the law on reasonable cause for waiving/dropping penalties is well-settled, with the onus on the assessee to prove it. Citing decisions from the Jurisdictional High Court in P. Senthil Kumar v. PCIT and Lakshmi Card Clothing Manufacturing Co. (P.) Ltd. v. DCIT, the Tribunal observed that while the assessee's submissions formed a reasonable cause, they were not supported by evidence. Therefore, the matter was restored to the AO for examination under Section 273B, with a direction to provide the assessee an opportunity of being heard under Section 282. The assessee was also directed to be vigilant and cooperative, providing relevant evidence to establish a reasonable cause. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the assessment order dated March 21, 2022, passed by the National Faceless Assessment Centre (NFAC) was without jurisdiction. This was because Section 151A of the Act, which deals with faceless assessment of income escaping assessment, was notified and made effective from March 29, 2022, vide Notification No. 18/2022. Therefore, any assessment framed prior to this date under this section was invalid. The Tribunal relied on the coordinate bench decision in MD Mahimud SK Vs. ITO. Consequently, Ground No. 4 of the assessee's appeal was allowed, and the assessment order was quashed. Regarding Ground No. 5, the Tribunal found that the new regime for assessment under Sections 147 to 151 came into force from April 1, 2021. Although the notice under Section 148 was dated March 31, 2021, it was served on April 16, 2021. The AO did not treat this notice as a show-cause notice, nor did they call upon the assessee to furnish details, and crucially, no order under Section 148A(d) was passed. The assessment was framed under the old regime. The Tribunal held that the notice and the consequent assessment were invalid as the AO failed to follow the mandatory procedures under the new regime. Therefore, Ground No. 5 was also allowed, and the notice and assessment were quashed. The appeal of the assessee was allowed.

The Tribunal held that the additional evidence filed by the assessee, comprising ledger extracts, purchase orders, invoices, sales tax intimation, TDS certificates, and a reconciliation statement, was crucial for a proper and correct adjudication of the issue. Consequently, the Tribunal admitted these evidences. Since the examination of these newly admitted evidences was required at the Assessing Officer's level, the Tribunal restored the issue back to the file of the Assessing Officer for re-adjudication. The assessee was to be given a fair opportunity of hearing. The appeal was allowed for statistical purposes.

The Tribunal held that the appeal filed by the Revenue is dismissed. The Tribunal observed that the order passed under Section 148A(d) clearly stated that the reopening was initiated due to an alleged escapement of income of Rs. 4,20,00,000/- from Sanwaria Vyapaar Pvt. Ltd. However, a perusal of the assessment order revealed that no addition was made on account of these specific reasons. The Tribunal found that the very foundation of the reopening had failed. Citing the principles laid down by the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd., the Tribunal found no reason to interfere with the order of the CIT(Appeals). Therefore, the appeal filed by the Revenue was dismissed.

The Tribunal allowed the assessee's appeals for statistical purposes. The Tribunal noted that the assessee had not participated effectively before the lower authorities, leading to ex-parte orders. However, the assessee filed additional evidence along with a petition under Rule 29 of the ITAT Rules, 1963. The Tribunal, considering its role as the final fact-finding authority and the ex-parte nature of the lower orders, admitted the additional evidence. The Tribunal reasoned that this evidence had a substantial bearing on the adjudication of the issues, particularly concerning the estimation of business income and additions under section 69A. Consequently, the matter was restored to the Assessing Officer (AO) with a direction to consider the adduced evidence after providing the assessee with a proper opportunity of being heard as per section 282. The assessee was also directed to be vigilant, cooperate with the AO, and provide all relevant evidence without seeking adjournments. The Tribunal explicitly stated that the appeal was allowed for statistical purposes only, implying that a final decision on merits would be taken by the AO after considering the evidence.

The Tribunal held that the penalty under Section 271(1)(c) of the Income Tax Act, 1961, cannot be levied on additions made purely on an estimated basis. The reasoning was that such estimated additions do not conclusively establish the furnishing of inaccurate particulars of income or concealment of income. The Tribunal followed the decisions of the Hon'ble Apex Court, Jurisdictional High Court, and the Bombay High Court, specifically citing *CIT, Chennai v. P. Rojes* and *PCIT v. Elcon Pipe and Fittings (P.) Ltd.*, which held that penalty is not imposable when additions are sustained purely on an estimate or guesswork. The Tribunal noted that the revenue had not presented any new facts or differentiated the decisions relied upon by the assessee. Consequently, the penalty levied on estimated additions was deleted. For specific appeals (ITA 1741/Chny/2026 and ITA 1742/Chny/2026), the Tribunal also directed the deletion of penalty on additions related to income from house property, following coordinate bench decisions.

The Tribunal held that the penalty under Section 271(1)(c) of the Income Tax Act, 1961, cannot be levied on additions made purely on an estimated basis. The reasoning was that such estimated additions do not conclusively establish the furnishing of inaccurate particulars of income or concealment of income. The Tribunal followed the decisions of the Hon'ble Apex Court, Jurisdictional High Court, and the Bombay High Court, specifically citing *CIT, Chennai v. P. Rojes* and *PCIT v. Elcon Pipe and Fittings (P.) Ltd.*, which held that penalty is not imposable when additions are sustained purely on an estimate or guesswork. The Tribunal noted that the revenue had not presented any new facts or differentiated the decisions relied upon by the assessee. Consequently, the penalty levied on estimated additions was deleted. For specific appeals (ITA 1741/Chny/2026 and ITA 1742/Chny/2026), the Tribunal also directed the deletion of penalty on additions related to income from house property, following coordinate bench decisions.

The Tribunal held that the penalty under Section 271(1)(c) of the Income Tax Act, 1961, cannot be levied on additions made purely on an estimated basis. The reasoning was that such estimated additions do not conclusively establish the furnishing of inaccurate particulars of income or concealment of income. The Tribunal followed the decisions of the Hon'ble Apex Court, Jurisdictional High Court, and the Bombay High Court, specifically citing *CIT, Chennai v. P. Rojes* and *PCIT v. Elcon Pipe and Fittings (P.) Ltd.*, which held that penalty is not imposable when additions are sustained purely on an estimate or guesswork. The Tribunal noted that the revenue had not presented any new facts or differentiated the decisions relied upon by the assessee. Consequently, the penalty levied on estimated additions was deleted. For specific appeals (ITA 1741/Chny/2026 and ITA 1742/Chny/2026), the Tribunal also directed the deletion of penalty on additions related to income from house property, following coordinate bench decisions.

The Tribunal allowed the appeal on the legal ground concerning the validity of the reassessment proceedings. The Tribunal noted that the words 'income chargeable to tax' in Section 149(1)(b) must be interpreted in terms of 'income' as arising from 'Capital Gains' under Section 48. The entire sale consideration does not constitute 'income'. The AO had not applied their mind to the assessee's reply nor considered the legal position regarding the application of the extended period under Section 149(1)(b). The Tribunal found that the revenue's contention that the entire sale consideration should be taken into account at the premature stage of issuing the notice was not acceptable, as Section 48 clearly defines what constitutes 'income'. The Tribunal respectfully followed the cited judgments, allowing the legal ground raised by the assessee. Consequently, the addition made by the AO was directed to be deleted, and there was no need to adjudicate on the merits of the case.

The Tribunal held that the issuance of a notice under section 143(2) is a mandatory requirement for the Assessing Officer to assume jurisdiction to complete an assessment when a valid return has been filed. In this case, the Assessing Officer issued a notice under section 148, and the assessee filed a return in response. However, the Revenue was unable to controvert the assessee's submission that no notice under section 143(2) was issued before the completion of the assessment. The Tribunal found no material on record to suggest that such a notice was issued, and therefore, section 292BB of the Act could not be invoked to save the assessment. Relying on the judgment in Balbir Singh vs. ACIT and other cited precedents, the Tribunal concluded that the assessment framed without the mandatory notice under section 143(2) was unsustainable and liable to be quashed. Consequently, the appeal of the assessee was allowed, and the assessment order was quashed. Other contentions on the merits of the case were left open.

The Tribunal held that the penalty under Section 271(1)(c) of the Income Tax Act, 1961, cannot be levied on additions made purely on an estimated basis. The reasoning was that such estimated additions do not conclusively establish the furnishing of inaccurate particulars of income or concealment of income. The Tribunal followed the decisions of the Hon'ble Apex Court, Jurisdictional High Court, and the Bombay High Court, specifically citing *CIT, Chennai v. P. Rojes* and *PCIT v. Elcon Pipe and Fittings (P.) Ltd.*, which held that penalty is not imposable when additions are sustained purely on an estimate or guesswork. The Tribunal noted that the revenue had not presented any new facts or differentiated the decisions relied upon by the assessee. Consequently, the penalty levied on estimated additions was deleted. For specific appeals (ITA 1741/Chny/2026 and ITA 1742/Chny/2026), the Tribunal also directed the deletion of penalty on additions related to income from house property, following coordinate bench decisions.

The Tribunal allowed the assessee's appeals for statistical purposes. The Tribunal noted that the assessee had not participated effectively before the lower authorities, leading to ex-parte orders. However, the assessee filed additional evidence along with a petition under Rule 29 of the ITAT Rules, 1963. The Tribunal, considering its role as the final fact-finding authority and the ex-parte nature of the lower orders, admitted the additional evidence. The Tribunal reasoned that this evidence had a substantial bearing on the adjudication of the issues, particularly concerning the estimation of business income and additions under section 69A. Consequently, the matter was restored to the Assessing Officer (AO) with a direction to consider the adduced evidence after providing the assessee with a proper opportunity of being heard as per section 282. The assessee was also directed to be vigilant, cooperate with the AO, and provide all relevant evidence without seeking adjournments. The Tribunal explicitly stated that the appeal was allowed for statistical purposes only, implying that a final decision on merits would be taken by the AO after considering the evidence.

The Tribunal held that the issue was purely factual and clearly discernible from the documentary evidence presented. The Tribunal agreed with the assessee that the difference of Rs. 1,00,03,228/- in contractual receipts between the assessee firm's books and Form 26AS arose due to the wrong deduction of TDS and subsequent incorrect reporting of contractual receipts belonging to the individual, Shri Goutam Chowdhury, under the firm's PAN. The Tribunal noted that the assessee had furnished relevant documents, including audited Profit & Loss accounts for both the firm and the individual, which clearly showed the breakdown of contractual receipts. A certificate from West Bengal Housing & Infrastructure Development Corporation Ltd. further corroborated the assessee's claim that specific contractual receipts belonged to the individual. Therefore, the Tribunal found no undisclosed income in the hands of the assessee firm. The order of the Ld. CIT(A) was set aside, and the AO was directed to delete the addition of Rs. 1,00,03,228/-. The ratio decidendi is that discrepancies in Form 26AS arising from misreporting of TDS due to incorrect PAN attribution, if substantiated by documentary evidence, do not constitute undisclosed income.

The Tribunal held that the notice issued under Section 148 of the Income Tax Act, 1961, in the name of a non-existent entity is bad in law and is hereby quashed. Consequently, the assessment framed based on this invalid notice is also invalid and quashed. The Tribunal relied on the decision of the Hon'ble Jurisdictional Calcutta High Court in Principal Commissioner of Income Tax vs GPT Sons Pvt. Ltd. [2024] 168 taxmann.com 593 (Calcutta), which held that reassessment proceedings initiated by issuing notice in the name of a non-existing entity are invalid in law. The Tribunal also referred to the Hon'ble Apex Court's decision in PCIT Vs. Maruti Suzuki India Limited (2019) 416 ITR 613, which held that the amalgamating entity ceasing to exist upon an approved scheme of amalgamation renders the jurisdictional notice issued in its name invalid. The principle is that a defect that goes to the root of jurisdiction cannot be cured, and participation in proceedings by an entity that has ceased to exist cannot operate as an estoppel against law. The appeal of the assessee was allowed.

The Tribunal held that while the reassessment proceedings were initiated following due procedure based on information received from the Director of Income Tax (Investigation), Mumbai, the core issue revolved around the factual correctness of the basis for reopening. The assessee presented documentary evidence, including the NSEL party master (Page 37 of Paper Book) and bank statements (Page 36 of Paper Book), clearly indicating that the account with National Spot Exchange Limited (NSEL) was opened only on 24.05.2012. The bank statement for Bank of India showed consistent opening and closing balances of Rs. 4,840/-, which tallied with the audited financial statement. The revenue's representative could not controvert this evidence. Therefore, the Tribunal concluded that before 31.03.2012 (which falls within FY 2011-12), there were no transactions with NSEL, as the account was opened later. Consequently, the reopening based on this premise was unsustainable. The Assessing Officer was directed to delete the addition. The Tribunal did not expressly leave any issue undecided.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal allowed the appeal, reversing the findings of the CIT(A) and directing the AO to allow the deduction under Section 80G. The Tribunal noted that while Section 135 of the Companies Act, 2013, mandates CSR expenditure, the Income Tax Act, 1961, specifically carves out exceptions for certain donations made under CSR. It highlighted that sub-sections (iiihk) and (iiihl) of Section 80G explicitly exclude CSR expenditure for donations to Swachh Bharat Kosh and Clean Ganga Fund, respectively. However, no such restriction is placed on donations to other eligible charitable trusts, including the Prime Minister's National Relief Fund or PM CARES Fund, even if they fall under Schedule VII of the Companies Act. The Tribunal relied on recent coordinate bench decisions in Deputy Commissioner of Income-tax vs. Phillips Carbon Black Ltd. and Britannia Industries Ltd. vs. Deputy Commissioner of Income-tax, which held that donations to registered charitable trusts made as part of CSR are eligible for Section 80G deduction unless specifically excluded by law. The reasoning is that the legislature was aware of CSR contributions to 80G-approved trusts and only imposed restrictions for specific funds.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal set aside both the orders of the AO and the CIT(A). Regarding the validity of reassessment proceedings, while the reopening was based on tangible information from CGST regarding bogus purchases, the Tribunal noted that the assessee's purchases related to spare parts for the repair and maintenance of dozers, which were given on hire. The Tribunal found merit in the assessee's argument that at most, the disallowance could be considered under Section 37(1) of the Act, as the expenses related to repair and maintenance of machinery. The Tribunal remanded the issue to the AO to examine the nature of the claim, the final findings of the CGST Department on the allegation of bogus bills, and whether the expenditure was revenue or capital in nature. The AO was directed to allow the claim under Section 37(1) read with Section 31 of the Act as per law, given the assessee's claim that the purchases were for spare parts for repair and maintenance and no sales were made out of these purchases. Grounds 4 and 5 were partly allowed for statistical purposes.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal considered the rival contentions and submissions. In the interest of justice and fair play, the Tribunal decided to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. AO for assessment de novo. The assessee would be provided a reasonable opportunity to be heard and make further submissions. The Tribunal noted that the grounds taken by the assessee were partly allowed for statistical purposes. The reasoning was that a proper opportunity of being heard should be provided to the assessee. The specific issue of whether the loan was genuine and whether the lender had the capacity to advance the loan was not decided on merits but was to be re-examined by the AO. The operative direction was to set aside the order and remand the matter to the AO.

The Tribunal held that the CIT(A) was correct in deleting the additions made under Section 68 of the Income Tax Act, 1961. The Tribunal noted that the CIT(A) had thoroughly examined the factual position, analyzed the pattern of transactions in the bank accounts of the investor companies and the assessee, and found that the funds were routed through banking channels. The CIT(A) observed that the investor companies, despite having negligible revenue or losses, had invested in the assessee's shares at a high premium. The Tribunal agreed with the CIT(A)'s finding that these transactions appeared to be a 'round tripping' of funds and that the bank accounts acted as a 'highway' for the movement of money to create a façade of genuine transactions. However, the Tribunal emphasized that the mere fact that transactions were through banking channels or that the investor companies were registered with the tax authorities did not automatically validate the genuineness of the credit. The Tribunal ultimately upheld the CIT(A)'s deletion, implying that the Revenue had not sufficiently demonstrated the lack of genuineness or the nature of the credit as undisclosed income.

The Tribunal held that both the order of the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] were non-speaking, erroneous, and cryptic, as even basic facts were not considered. The Tribunal, referencing the Supreme Court's decision in Jute Corporation of India Ltd. vs. Commissioner of Income-tax, stated that an appellate authority has all the powers that the original authority may have. The Tribunal found that since the assessee received money, it was incumbent upon the assessee to furnish required evidence, and it was not specifically denied that no money was received. Therefore, in the interest of justice and fair play, the Tribunal set aside the orders of both the Ld. CIT(A) and the Ld. AO. The issue was remanded to the Ld. AO for de novo assessment. The assessee was directed to furnish details of transactions and necessary evidence regarding the identity, creditworthiness of creditors/subscribers, and genuineness of transactions. The Ld. AO was directed to reframe the assessment as per law after granting an adequate opportunity of being heard to the assessee. The grounds of appeal were considered partly allowed for statistical purposes.

The Tribunal noted that the assessee had failed to comply with the previous order of the ITAT, which had restored the appeal to the CIT(A) on the condition of paying a cost of ₹50,000/- and cooperating. The assessee had not paid this cost and had again failed to respond to the CIT(A)'s notices, leading to the dismissal of the appeal for non-prosecution. The Tribunal acknowledged that non-compliance with its directions should have resulted in the confirmation of the CIT(A)'s order. However, in the interest of justice and fair play, and because the merits of the case had not been examined, the Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A)'s file. This was subject to the assessee paying an additional cost of ₹10,000/- (in addition to the ₹50,000/- previously imposed). Failure to pay both costs would result in the confirmation of the CIT(A)'s order. The assessee was directed to furnish proof of payment of both costs at the first hearing before the CIT(A). All grounds of appeal were considered partly allowed for statistical purposes.