ITAT Mumbai Judgments — July 2025

The Tribunal held that the assessment order passed by the Assessing Officer without following the mandatory procedure of issuing a draft assessment order under Section 144C was invalid and null and void. Consequently, the revisionary proceedings initiated by the PCIT under Section 263 were also vitiated.

The Tribunal held that the contribution to the SPV, being judicially mandated and compulsory for the continuation of business, is a legitimate business expenditure. It was compensatory in nature, aimed at mitigating environmental damage, and not a penal imposition.

The Tribunal held that interest income earned by a co-operative society from investments in other co-operative banks is eligible for deduction under section 80P(2)(d). The reliance on the Supreme Court judgment regarding section 80P(2)(a)(i) was considered misplaced.

The Tribunal deleted the additions under Sections 69 and 56, holding that no incriminating material was found during the search on the assessee, and additions based on third-party material require the procedure under Section 153C. It was held that export incentives (FPS/MEIS) are capital receipts not taxable under Section 2(24)(xviii). For abated (A.Y. 2017-18) and regular (A.Y. 2018-19) assessment years, the claims were admitted and restored to the AO for merits adjudication; for unabated (A.Y. 2012-13 to 2016-17) years, the issue was restored to the AO to determine admissibility in the absence of incriminating material.

The Tribunal held that since additional evidence filed by the assessee before the CIT(A) was not considered, the appeal should be restored to the CIT(A) for a de-novo decision after considering the additional evidence.

The Tribunal held that the PCIT's revisionary order under Section 263 was invalid because the issue of capital gains on mutual fund redemption was not part of the original reopening notice under Section 147. The AO exceeded jurisdiction by considering an issue not subject to reopening.

The Tribunal observed that the assessee was given opportunities but failed to present its case effectively before the lower authorities. Considering the principles of natural justice, the Tribunal decided to remand the matter back to the CIT(A) for fresh adjudication.

The Tribunal held that the AO's failure to dispose of the assessee's objections before proceeding with the assessment and issuing notice u/s 142(1) constituted a breach of mandatory procedure, as laid down by the Supreme Court. Furthermore, the reasons for reopening were based on information pertaining to a different assessee (HUF), making the reopening invalid.

The Tribunal held that club membership and subscription fees are pure business expenses, drawing strength from a Supreme Court decision. However, restaurant charges incurred at the club were not discernible as business-related and were therefore disallowed.

The Tribunal held that the Assessee had furnished sufficient supporting documents like ledger accounts, purchase bills, bank statements, and sales bills. The Revenue failed to point out any infirmity in these documents or the CIT(A)'s order. Thus, the Tribunal found no reason to interfere with the CIT(A)'s order.

The Tribunal allowed the appeal for statistical purposes and remitted the matter back to the CIT(A) with a direction to decide the issues afresh after affording a reasonable opportunity of being heard to the assessee.

The Tribunal found it appropriate, in the interest of justice, to remit the matter back to the CIT(A) for denovo adjudication. The assessee was directed to be diligent in attending hearings and making necessary compliance.

The Tribunal noted that the appellant did not get an opportunity to explain the sources of cash deposits and gold acquisition. Therefore, the matter was remitted back to the CIT(A) for fresh adjudication after admitting the evidence.

The Tribunal, relying on a precedent from a coordinate bench, held that while CSR expenditure is not allowable under Section 37(1) as business expenditure, it can still be eligible for deduction under Section 80G if the conditions for Section 80G are met and the donation is not specifically excluded. Since the donation was not to a fund explicitly disallowed under Section 80G, the Assessing Officer's action of allowing the deduction was not erroneous or prejudicial to revenue. Thus, the PCIT's revisionary order was quashed.

The Tribunal noted that the Assessee had now obtained further interest certificates and granted the Assessee another opportunity. The issue was restored to the Assessing Officer to decide the claim of deduction under Section 80P based on the relevant provisions.

The Tribunal found that the CIT(A) misdirected himself by treating the assessee as one of the concerns controlled by Shri Vipul V. Bhatt, while the AO identified the assessee as a beneficiary of accommodation entries. The Tribunal set aside the CIT(A)'s order and restored the matter to the AO.

The Tribunal held that the Assessing Officer had conducted a thorough inquiry and examined the submissions and documentary evidence. The PCIT's invocation of Section 263 was based on a difference of opinion, not a lack of inquiry, and thus was not justified.

The Tribunal condoned the delay of 162 days, finding sufficient and bona fide cause due to the Director's health condition. It also ruled that the CIT(A)'s ex parte dismissal of the appeal was erroneous because the assessee was denied an effective opportunity to present its case due to lack of awareness about the procedural changes. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication after allowing the assessee an adequate opportunity of hearing.

The Tribunal held that the Commissioner ought to have considered the application on merits after giving the assessee an opportunity to furnish requisite details.

The Tribunal upheld the addition made by the Assessing Officer and sustained by the CIT(A). The Tribunal found that the assessee failed to provide satisfactory explanation and documentary evidence for the source of the cash deposits, and the explanation of withdrawing from the bank and re-depositing seemed to be an afterthought.

The Tribunal held that the surcharge applicable to the assessee should be at 15% and not 37%, as its total income did not exceed Rs. 2 crores. This decision was based on a Special Bench ruling that for private discretionary trusts taxed at the maximum marginal rate, surcharge should be computed based on slab rates.

The Tribunal held that the CIT(E) erred in invoking Section 263 as the premises sold was not part of the block of assets and no depreciation was claimed by the assessee on these premises. Therefore, Section 50 was not applicable. The revisional jurisdiction invoked by the CIT(E) was not sustainable.

The Tribunal held that there was a 'sufficient cause' for the delay in filing the appeal before the first appellate authority, considering the liberal approach adopted by higher courts. The case was remanded to the CIT(A) for de novo adjudication on merits.

The Tribunal noted that the assessee had opted for the Direct Tax Vivad Se Vishwas Scheme and consequently sought to withdraw the appeal. Therefore, the appeal was dismissed as withdrawn.

The Tribunal noted that the assessment order u/s 143(1)(a) did not clearly specify under which sub-section the adjustment for delayed PF and ESIC payments was made. Finding a lack of clear reasoning, the Tribunal set aside the order.

The Tribunal held that the assessee failed to substantiate the source and nature of the cash deposits, and the explanation of withdrawing from the bank and re-depositing appeared to be an afterthought. The Tribunal found no justifiable reason to interfere with the findings of the Assessing Officer and CIT(A) who upheld the addition.

The Tribunal found that the lower authorities did not decide the issue on merits and that the assessee was not given a sufficient opportunity to present its case. The case was remanded to the CIT(A) for de novo adjudication.

The Tribunal held that the penalty notice issued under Section 271(1)(c) was defective for using "and" instead of "or" between the charges of concealment and furnishing inaccurate particulars, making it ambiguous and violative of principles of natural justice. The Tribunal followed the precedent set by the Hon'ble Jurisdictional High Court of Bombay in the case of Mohd. Farhan A. Shaikh.

The Tribunal found that the CIT(A) had not elaborately discussed the amended definition of income under Section 2(24)(viii) and had made observations regarding missing documents. The Tribunal accepted the assessee's prayer to remit the matter back to the CIT(A) for de novo adjudication.

The Tribunal held that the reassessment proceedings were bad in law and quashed them. The AO erroneously mentioned two properties and failed to consider that the transaction amount was below Rs. 50 lacs, making the notice u/s 148 of the Act invalid as more than 3 years had elapsed.

The Tribunal noted that while the assessee filed as an AOP, the will clearly indicated a single executor. However, since the will was produced as additional evidence and not conclusively verified by the CIT(A), the matter was restored to the CIT(A) for fresh adjudication.

The Tribunal, in the interest of justice, restored the matter to the Assessing Officer for a fresh decision on merits. The assessee will be given due opportunity to explain the sources of its deposits and is directed to make all necessary compliances. The appeal was allowed for statistical purposes.

The Tribunal upheld the CIT(A)'s decision to restrict the Section 14A disallowance to the amount of exempt income, relying on the precedent set by PCIT v. Caraf Builders. It also confirmed the deletion of the notional rent addition under Section 23, affirming that the bungalow was self-occupied and the shop was used for business. Furthermore, the Tribunal dismissed the revenue's ground regarding Section 41(1), concluding that the liability was towards loans/advances and had not ceased.

The Tribunal condoned the delay finding that the assessee's explanation was bonafide and due to circumstances beyond her control. The Tribunal also noted that the Ld. CIT(A) did not adjudicate the matter on merits. Therefore, the impugned order was set aside.

The Tribunal held that the delay in filing the appeal was due to sufficient and bona fide reasons and condoned it. The CIT(A)'s order was found to suffer from procedural infirmity as it did not adjudicate the matter on merits.

The Tribunal held that there was a 'sufficient cause' for the delay in filing the appeal before the first appellate authority, considering a liberal approach towards procedural defects. The case was remanded to the CIT(A) for de novo adjudication on merits after condoning the delay.

The assessee requested to withdraw the appeal, and the Departmental Representative raised no objection. The Tribunal allowed the assessee's application and dismissed the appeal as withdrawn.

The Tribunal held that the penalty imposed under Section 271(1)(c) was based on the addition made by the AO. Since a co-ordinate bench of the Tribunal had already deleted this addition by allowing the assessee's appeal, the foundation for the penalty no longer existed.

The Tribunal found it appropriate to remit the matter back to the CIT(A) for joint adjudication of both the present appeal and a related pending appeal concerning a reassessment. The assessee is to be given a reasonable opportunity to be heard.

The Tribunal held that Section 70(2) of the Income Tax Act does not prescribe a specific hierarchy for setting off short-term capital losses against gains with differential tax rates, thereby allowing the assessee to choose the most beneficial method. It affirmed that the mere difference in tax rates cannot be a ground to disallow a legitimate set-off, relying on previous coordinate bench decisions and High Court rulings.

The Tribunal upheld the CIT(A)'s decision, finding that the assessee had discharged the initial onus by providing loan confirmations, PAN of lenders, their income tax returns, bank statements, and balance sheets. The AO failed to conduct independent inquiries to disprove the genuineness of the transactions.

The Tribunal held that penalty cannot be levied on additions made on an estimated basis, especially when the grounds for concealment or inaccurate particulars are not proven. The issue of penalty on estimated additions is no longer debatable.

The Tribunal condoned the delay in filing the appeal, finding sufficient cause. Regarding the capitalized interest, the Tribunal directed the AO to verify the interest paid based on bank certificates. For the cash deposits, the Tribunal ordered a de-novo verification. Consequently, grounds related to interest and cash deposits were partly allowed.

The Tribunal held that the CIT(E) erred by issuing the show-cause notice on 22.12.2024 and passing the rejection order on 28.12.2024, which did not provide sufficient time for the appellant to respond. The Tribunal directed the CIT(E) to grant one more opportunity.

The Tribunal held that the delay in filing the appeal before the CIT(A) should have been condoned, considering the COVID-19 pandemic period as per the Supreme Court's directions. The matter was remitted back to the CIT(A) for adjudication on merits.

The Tribunal held that additions under Sections 69 and 56 made without incriminating material found during the assessee's own search, and based solely on third-party material without following Section 153C, are legally unsustainable and were deleted. Regarding export incentives (FPS/MEIS), the Tribunal ruled that MEIS 'rewards' for AY 2020-21 are capital receipts not taxable under Section 2(24)(xviii), and the related addition was deleted. For AY 2017-18 (abated) and 2018-19 (regular), the fresh claims for export incentives were admitted and remanded to the AO for merits-based adjudication. For AY 2012-13 to 2016-17 (unabated), the issue of admitting the fresh claims was also remanded to the AO to determine if they can be entertained within the scope of Section 153A proceedings.