ITAT Mumbai Judgments — January 2026

The Tribunal held that the amount received by the assessee as hardship compensation is a capital receipt and not liable to tax. The Tribunal followed the decisions of its Coordinate Benches in the assessee's own case for AY 2011-12 and other similar cases, such as Smt. Delilah Raj Mansukhani and Shri Devshi Lakhamshi Dedhia. These decisions held that compensation received for hardship, rehabilitation, and shifting due to property redevelopment is not a revenue receipt but a capital receipt. Consequently, the addition made by the AO was directed to be deleted. The issue of reopening under Section 147 was not adjudicated as the addition was deleted. The grounds relating to interest under Sections 234A and 234B were dismissed as consequential. The ground regarding penalty under Section 271(1)(c) was dismissed as premature. The appeal was allowed in part.

The Tribunal held that the CIT(A) had correctly deleted the addition as the income had already been substantively assessed in the hands of the actual co-owner, Mr. Sujan A. Parikh, and affirmed by the ITAT. Continuing to tax the assessee would lead to double taxation.

The Tribunal held that the profit margin disclosed by the assessee in its audited books of accounts, which included commission income, was sufficient. It found that no prudent businessman would pay a high commission to an entry provider when it exceeded legitimate trading profit margins, and thus no further addition was warranted.

The Tribunal held that the profit margins disclosed by the assessee in its audited books of accounts already included the commission income earned. Considering industry practices and the lack of evidence of cash payments, no further additions were warranted. Therefore, the additions sustained by the CIT(A) were deleted.

The Tribunal held that the AO was under a statutory obligation to facilitate cross-examination. The assessee could have dispelled the material relied upon by the AO only if it was provided an opportunity to cross-examine the persons who allegedly referred to the assessee in relation to cash transactions. The Tribunal noted that the AO did not make available the statements of key persons from Hind Unitrade, which were heavily relied upon. Once these statements were used adversely, it was incumbent on the AO to supply them to the assessee for its defence, thus violating the principles of natural justice. The Tribunal cited various judgments, including ITO v. M. Pirai Choodi and Andaman Timber Industries v Commissioner of Central Excise, to emphasize the importance of providing an opportunity for cross-examination. Accordingly, the Tribunal set aside the appellate order and restored the issue to the AO with a direction to allow the assessee to cross-examine the relevant persons and to supply the relevant statements of Sri Vinod Agrawal and Sri Sanjay Mittal. The AO was directed to decide the issue afresh after affording adequate opportunity of hearing. The matter was remanded for statistical purposes, and the decision on merits was not made.

The Tribunal held that the profit margin disclosed by the assessee in its audited books of accounts, which included commission income, was sufficient. It found that no prudent businessman would pay a high commission to an entry provider when it exceeded legitimate trading profit margins, and thus no further addition was warranted.

The Tribunal held that the issue of whether CSR expenditure is allowable under Section 80G is no longer res integra, having been covered in favour of the assessee by a catena of decisions from various co-ordinate benches of the Tribunal. The Tribunal specifically referred to the decision in Alubond Dacs India (P.) Ltd. (2024) 163 taxmann.com 536 (Mum), which considered the provisions of the Companies Act and the Income Tax Act. The Tribunal noted that while CSR expenses are not allowable as business expenditure under Section 37(1) due to Explanation 2, this does not automatically preclude them from being eligible for deduction under Section 80G, provided the conditions stipulated in Section 80G are satisfied. The Tribunal also cited the case of Goldman Sachs Services (P.) Ltd. where it was held that contributions under Section 135(5) of the Companies Act are eligible for deduction under Section 80G, subject to requisite conditions, and remanded the issue for examination. In the present case, the assessee specifically contended that the donee institutions were registered under Section 80G. Respectfully following the ratio laid down in the judicial precedents, the Tribunal directed the Assessing Officer to allow the assessee's claim of deduction under Section 80G, subject to factual verification that the donee institutions are registered under Section 80G and other conditions are fulfilled. For AY 2018-19, the issue being identical, the same decision was applied.

The Tribunal held that the AO failed to prove that the transactions were indeed fictitious or that the assessee was involved in any collusion. The Tribunal found that the AO mechanically added amounts without verifying the necessary ingredients of a valid transaction and relied on the decision in Comet Investments Pvt. Ltd. where similar additions were deleted.

The Tribunal held that the ownership property received by virtue of surrender of tenancy rights has a valuable right, and its cost of acquisition needs to be determined. The Tribunal referred to the decision in CIT vs. Abrar Alvi (Bombay High Court) and its own previous decision where it was held that the market value of the property as on the date of possession would be the cost of acquisition. The Tribunal found force in the assessee's contention that the market value of the surrendered tenancy right on the date of surrender would constitute the cost of acquisition. Accordingly, the Tribunal set aside the impugned order of the CIT(A) and restored the issue back to the Assessing Officer. The AO was directed to re-compute the capital gains by taking the Fair Market Value (FMV) of the flats acquired in exchange for the surrender of tenancy rights to the developer vide the development agreement dated 22.07.2008 as the cost of acquisition. Regarding the claim for exemption under Section 54/54F, the Tribunal rejected the assessee's contention as it could not be substantiated by furnishing relevant documents. Therefore, the grounds related to cost of acquisition were partly allowed for statistical purposes, and the ground related to Section 54 exemption was dismissed.

The Tribunal held that the issue of whether CSR expenditure is allowable under Section 80G is no longer res integra, having been covered in favour of the assessee by a catena of decisions from various co-ordinate benches of the Tribunal. The Tribunal specifically referred to the decision in Alubond Dacs India (P.) Ltd. (2024) 163 taxmann.com 536 (Mum), which considered the provisions of the Companies Act and the Income Tax Act. The Tribunal noted that while CSR expenses are not allowable as business expenditure under Section 37(1) due to Explanation 2, this does not automatically preclude them from being eligible for deduction under Section 80G, provided the conditions stipulated in Section 80G are satisfied. The Tribunal also cited the case of Goldman Sachs Services (P.) Ltd. where it was held that contributions under Section 135(5) of the Companies Act are eligible for deduction under Section 80G, subject to requisite conditions, and remanded the issue for examination. In the present case, the assessee specifically contended that the donee institutions were registered under Section 80G. Respectfully following the ratio laid down in the judicial precedents, the Tribunal directed the Assessing Officer to allow the assessee's claim of deduction under Section 80G, subject to factual verification that the donee institutions are registered under Section 80G and other conditions are fulfilled. For AY 2018-19, the issue being identical, the same decision was applied.

The Tribunal held that the six-month period from the commencement of activities is applicable only to newly formed trusts and not to those whose activities commenced prior to the provisional approval. Therefore, the rejection solely on the ground of delay was not sustainable.

The Tribunal held that the profit margin disclosed by the assessee in its audited books of accounts, which included commission income, was sufficient. It found that no prudent businessman would pay a high commission to an entry provider when it exceeded legitimate trading profit margins, and thus no further addition was warranted.

The Tribunal allowed the assessee's appeals and dismissed the revenue's appeals. It held that the profit declared in audited books of accounts for circular transactions covers commission income, and no further addition is warranted, especially in the absence of evidence of cash payments. The Tribunal also found the commission rate estimated by the AO to be excessive and contrary to commercial logic.

The Tribunal held that the profit margins disclosed by the assessee in its audited books of accounts already included the commission income earned, especially considering the thin margins in the business and the absence of evidence of cash payments. Consequently, no further additions were warranted.

The Tribunal held that the profit margin disclosed by the assessee in its audited books of accounts, which included commission income, was sufficient. It found that no prudent businessman would pay a high commission to an entry provider when it exceeded legitimate trading profit margins, and thus no further addition was warranted.

The Tribunal held that the profit margin disclosed by the assessee in its audited books of accounts, which included commission income, was sufficient. It found that no prudent businessman would pay a high commission to an entry provider when it exceeded legitimate trading profit margins, and thus no further addition was warranted.

The Tribunal held that the profit margin disclosed by the assessee in its audited books of accounts, which included commission income, was sufficient. It found that no prudent businessman would pay a high commission to an entry provider when it exceeded legitimate trading profit margins, and thus no further addition was warranted.

The Tribunal held that the expenditure incurred for obtaining a loan (NCD) is not capital in nature as no assets are created. The accounting treatment does not override the substantive nature of the transaction. Relying on previous judgments, including that of the Bombay High Court in similar cases, the Tribunal found the expenditure to be revenue in nature.

The Tribunal held that the notice under Section 148 was indeed issued beyond the period of limitation as it was digitally signed on 01.04.2021, making the subsequent action void ab initio. The Tribunal relied on various High Court decisions supporting this view.

The Tribunal noted that the assessee had provided documentary evidence for the purchase and sale of shares, including payments through account payee cheques and recording in books of account. The Tribunal also observed that similar additions related to the same scrip had been deleted by coordinate benches of the ITAT, Mumbai, in other cases.

The Tribunal held that the AO failed to conduct proper enquiry into the allowability of depreciation on roads constructed under an annuity concession agreement. The reliance on the Supreme Court case of Malabar Industrial Co. Ltd. was considered misplaced due to a subsequent explanation to section 263. The Tribunal found the PCIT's action under section 263 to be justified.

The Tribunal held that the AO expanded the scope of limited scrutiny from section 56(2)(viib) to section 68 without obtaining necessary approval. Following precedents from co-ordinate benches, the addition made under section 68 was deemed legally unsustainable.

The Tribunal noted that similar additions based on identical information and code words from the same survey action were deleted by coordinate benches in previous cases. The Tribunal found the addition unsustainable in law, especially considering the potential retraction of statements and lack of clear attribution.

The Tribunal found that the characterization of transactions, the FAR profile, and the selection of the Profit Split Method were not conclusively examined. Therefore, the matter was restored to the Assessing Officer/Transfer Pricing Officer for de novo adjudication.

The Tribunal held that the Assessing Officer had conducted necessary inquiries and taken plausible views supported by law. The Principal Commissioner's assumption of jurisdiction under section 263 was found unsustainable as no error of law or fact prejudicial to the revenue was demonstrated.

The Tribunal held that considering the nature of the assessee's business activities, which primarily involve cash sales, the cash deposit, including the amount in SBN, was not abnormal. The lower authorities had not allowed the concession permitted by CBDT Circular No. 3 of 2017, and the addition was confirmed by the CIT(A).

The Tribunal held that while the AO's order was erroneous due to non-application of mind regarding the delay in filing Form 10DA, it did not prejudice the revenue as the AO had conducted inquiries and allowed the claim on merits. Therefore, the PCIT's order under Section 263 was not valid.

The Tribunal held that Section 68 of the Income Tax Act cannot be invoked as no amount was credited in the assessee's books. The addition was based solely on a third-party statement without independent corroboration or proper identification of the assessee.

The Tribunal decided to take up the assessee's cross-objection first, as it pertained to the validity of the assessment order. The Tribunal condoned the delay in filing the cross-objection, relying on the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji And Others. Regarding the jurisdictional issue, the Tribunal held that the assessment order passed under Section 143(3) of the Act was void ab initio. This was because the Income Tax Officer (ITO) who issued the notice under Section 143(2) and completed the assessment lacked the requisite jurisdiction. The Tribunal noted that as per CBDT Instruction No. 1/2011, cases with declared income above Rs. 30 lakhs (or Rs. 20 lakhs for non-corporate assessees as per a related case cited) fall under the jurisdiction of ACIT/DCIT. Since the assessee's declared income of Rs. 2,56,43,720/- exceeded this limit, the ITO wrongly assumed jurisdiction. The Tribunal relied on its own decisions and those of coordinate benches in Monarch & Qureshi Builders and Sapna Rastogi, holding that a jurisdictional defect in the notice under Section 143(2) is fatal and not curable. Consequently, the assessment order was quashed. As the assessment order was quashed, the Revenue's appeal was rendered infructuous and dismissed. The Tribunal expressly left the other grounds of appeal raised by the assessee on merits undecided.

The Tribunal noted that the assessee's claim was that she follows a receipt basis of accounting and had not received the interest in the year under consideration. The Tribunal observed that the assessee needed to demonstrate when the interest was received in subsequent years and also establish non-receipt in the year under consideration by providing documentary evidence, such as a confirmation letter from the payer.

The Tribunal held that additions under section 153A must be based on incriminating material found during the search of the assessee. Reliance on third-party material without invoking section 153C or on retracted statements without corroboration is unsustainable.

The Tribunal held that additions under section 153A must be based on incriminating material found during the search of the assessee. Statements recorded under section 132(4) alone, without corroborative material, are insufficient for additions. Proceedings under section 153C were not initiated for third-party material.

The Tribunal held that the additions made on account of alleged cash loans to Shri Nilesh Bharani/Evergreen Enterprises and notional interest thereon are unsustainable. The primary reason is the absence of any incriminating material found during the search at the assessee's premises. The AO relied on statements recorded under section 132(4) and documents seized from third parties. The Tribunal noted that the assessee had retracted these statements, asserting they were made under pressure and based on third-party material, and this retraction was not controverted by the Revenue. The Tribunal relied on the Supreme Court's decision in PCIT vs. AbhisarBuildwell (P) Ltd., which held that for completed assessment years, additions under section 153A must be based on incriminating material found during the search of the assessee. Coordinate benches of the Tribunal have consistently held similar additions to be unsustainable due to the lack of incriminating material found in the assessee's possession and the reliance on third-party documents and retracted statements. The Tribunal found that the alleged cash loans were not established by reliable evidence. Consequently, the additions under section 69 and section 56 were deleted. The issue concerning unexplained jewellery under section 69A for AY 2018-19 was not explicitly decided in the provided excerpt, but the reasoning regarding the lack of incriminating material would likely apply.

The Tribunal held that additions under Section 69 and 56 were unsustainable as they were based on statements retracted by the assessee and lacked incriminating material found during the search. The addition for unexplained jewellery under Section 69A was also deleted as the assessee provided satisfactory explanations and evidence.

The Tribunal held that additions under Section 153A must be based on incriminating material found during the search of the assessee. Reliance on third-party material without invoking Section 153C, or on statements recorded under Section 132(4) without corroborative evidence, is not permissible.

The Tribunal held that additions under Section 153A must be based on incriminating material found during the search of the assessee, not on third-party material without invoking Section 153C. Statements recorded under Section 132(4) alone, without corroborative material, are insufficient for additions.

The Tribunal held that additions under Section 69 and 56 were unsustainable as they were based on statements retracted by the assessee and lacked incriminating material found during the search. The addition for unexplained jewellery under Section 69A was also deleted as the assessee provided satisfactory explanations and evidence.

The Tribunal noted that the seller categorically denied any cash transaction with the assessee for the period under consideration. The assessee also denied the cash payment and stated the purchase was made in AY 2022-23, with payments made through banking channels. No independent corroborative evidence was presented by the revenue.

The Tribunal held that the delay in filing Form No. 10AB was due to a bona fide belief and the CBDT circulars, and the assessee had taken steps to rectify the objectionable clause. The Tribunal also noted that the assessee was already enjoying provisional registration.

The Tribunal held that substantial justice should prevail over technical considerations, especially when the delay is not intentional or malafide. The Tribunal condoned the significant delay in filing the appeals and set aside the CIT(A)'s orders.

The Tribunal condoned the delay of 153 days in filing the appeal before the CIT(A). The Tribunal found that the delay was not intentional and that the CIT(A) had not appreciated the assessee's explanation in the correct perspective. Relying on the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji And Others - 167 ITR 471 (SC), the Tribunal held that refusing to condone delay can result in a meritorious matter being thrown out and cause of justice being defeated. Therefore, the Tribunal set aside the appellate order of the CIT(A) and restored the entire matter back to the CIT(A) for passing a fresh appellate order. The CIT(A) was directed to adjudicate the grounds of appeal on merits. The assessee was directed to cooperate and not seek frivolous adjournments. The other grounds of appeal were not adjudicated as the matter was remanded.

The Tribunal found that the CIT(A) had issued multiple notices and granted adjournments, but the assessee failed to provide necessary documents and explanations. Despite the assessee's negligence, the Tribunal decided to remand the matter to the CIT(A) for a fresh decision.

The reopening of assessment under section 147 by issuing notice u/s 148 on 13.04.2022 for AY 2015-16 is barred by limitation, as it falls beyond the period of six years from the end of the assessment year and the provisions of TOLA are not applicable. Therefore, the notice and consequential assessment order are void-ab-initio.

The Tribunal held that since the assessee had not commenced its business and had incurred capital expenditure, there was no basis for profit shifting. Therefore, the transfer pricing adjustment was not sustainable.

The Tribunal noted the assessee's submission that while a provision for interest under Section 23 of the MSMED Act was made, it was not claimed as a deduction. The Tribunal directed the AO to factually verify this claim and if found to be true, no addition should be made.

The Tribunal held that substantial justice should prevail over technical considerations, especially when the delay is not intentional or malafide. The Tribunal condoned the significant delay in filing the appeals and set aside the CIT(A)'s orders.

The Tribunal observed that the claimed loss was for carry forward and no benefit had been availed by the assessee. As the loss was revenue neutral and no benefit was derived, the Tribunal held that there was no basis for imposing a penalty under Section 271(1)(c).

The Tribunal held that the AO failed to establish that the suppliers were accommodation entry providers and did not conduct independent inquiries. The assessee had provided sufficient documentary evidence, and the CIT(A)'s deletion of the addition was justified.

The Tribunal found the assessee's reason for delay plausible and that it ought not to have been rejected. The Tribunal also noted that the addition was made due to the failure to furnish documentary evidence for the source of payment.

The Tribunal held that the assessee trust falls under the exception carved out in clause (iv) of the first proviso to section 164(1) of the Act, meaning its income is subject to tax at normal rates applicable to AOP and not at maximum marginal rates. Furthermore, since the taxable income was below Rs. 50 lakhs, no surcharge was leviable.