ITAT Mumbai Judgments — February 2026

The Tribunal found that the CIT(A) failed to adjudicate all grounds of appeal and did not pass a speaking order on the merits of the addition. Consequently, the Tribunal remanded the matter to the CIT(A) for a fresh adjudication of all grounds.

The Tribunal held that the purchases were not genuine and the assessee failed to discharge its onus to prove their genuineness. The Tribunal set aside the CIT(A)'s order and restored the issue to the AO for fresh adjudication.

The ITAT found that the CIT(A) had failed to adjudicate all grounds raised by the assessee, including those challenging the reopening and the merits of the addition under section 68. The tribunal noted that the CIT(A)'s order was cryptic and lacked a speaking order.

The Tribunal held that the reassessment proceedings were validly initiated based on the information received from the Investigation Wing. The AO had applied his mind independently to the material, establishing a live and rational nexus for reopening.

The assessee failed to respond to notices and provide necessary documentary evidence to the CIT(A). However, the ITAT noted that the legal ground regarding the sanction for issuing the notice under section 148 was not raised before the CIT(A) and relevant details were not discernible.

The Tribunal acknowledged the importance of substantial justice over technical lapses and the right to be heard. It recognized that the assessee's failure to respond might be due to a digital divide rather than mala fide intent. Therefore, the Tribunal set aside the CIT(A)'s order.

The Tribunal condoned the delay in filing the cross-objection. It was held that the Revenue's appeal was not maintainable as the penalty amount of Rs. 30,77,876/- fell significantly below the revised monetary threshold of Rs. 60,00,000/- for appeals before the ITAT, as per CBDT Circular No. 05/2024, and did not fall under any exceptional categories.

The Tribunal condoned the delay, citing the assessee's widowhood, ill health, and financial constraints as genuine reasons. The Tribunal also noted that the impugned order was ex-parte and not on merits.

The Tribunal held that additions cannot be made solely on third-party electronic data without corroboration and without providing an opportunity for cross-examination. The reliance on uncertified electronic evidence under Section 65B of the Evidence Act was also deemed impermissible.

The Tribunal held that additions cannot be made solely on third-party electronic data without corroboration and without providing an opportunity for cross-examination. The reliance on uncertified electronic evidence under Section 65B of the Evidence Act was also deemed impermissible.

The Tribunal held that penalty under section 271(1)(c) cannot be sustained as the reassessment order accepted the assessee's revised return without making any addition or disallowance. Furthermore, the penalty notice was deemed invalid due to the failure to specify whether the penalty was for concealment of income or furnishing inaccurate particulars.

The Tribunal held that the difference between the purchase consideration and the stamp duty value was 3.98%, which falls within the tolerance band of 5% (and later 10%) introduced by the legislature. The insertion of the tolerance band is remedial and curative, and its benefit should be extended to the assessee.

The ITAT found that the CIT(A) failed to adjudicate all grounds of appeal, including the validity of reopening, natural justice violations, the addition under Section 68, and other issues like TDS credit and interest. The ITAT, therefore, remanded the matter back to the CIT(A) for a denovo adjudication of all grounds on merits, providing the assessee a proper opportunity of hearing and to submit evidence.

The Tribunal held that the overlooking of an adjournment application constituted a breach of natural justice. To subserve justice, the assessee deserves a final opportunity to present their case.

The Tribunal held that disallowing TDS credit solely because a portion of gross salary was exempt or not offered to tax is legally flawed. The tax deducted on the entire payment cannot be denied if part of it is legally exempt.

The Tribunal directed the exclusion of several comparable companies (KALS Information Systems, Wipro Ltd., Infosys Ltd., Larsen & Toubro Infotech Ltd., Thirdware Solutions Ltd., Sasken Communication Technologies Ltd., and Persistent Systems Ltd.) from the final list for transfer pricing analysis.

The Tribunal held that the interest expenditure incurred by the assessee for acquiring Corus was for business purposes and thus allowable under Section 36(1)(iii). The legal contentions regarding the reopening of assessment were left undecided as the appeal was decided on merits.

The Tribunal held that the AO could not treat cash deposits as unexplained income solely due to the unavailability of PAN of some buyers, especially when supporting evidence was provided. The Tribunal also found that the reassessment proceedings were vitiated due to non-compliance with the approval requirements under Section 151.

The Tribunal held that additions made under Section 153A/153C of the Income-tax Act, 1961, in respect of transactions already recorded in the regular books of account are invalid if no incriminating material was found during the search operation. Assessments that have attained finality and are not pending cannot be reopened under Section 153A unless such incriminating material is discovered.

The Tribunal noted that the issues in the present appeals were identical to those decided in the assessee's own case for A.Y. 2008-09. The Tribunal found that the previous order had examined the identical issues in detail, and in the absence of any distinguishing facts, the findings and conclusions from that order were respectfully followed and applied mutatis mutandis to the present assessment years. An additional ground raised by the assessee for A.Y. 2007-08, challenging the validity of the assessment order on the ground of limitation, was withdrawn by the assessee and consequently dismissed.

The Tribunal condoned the 51-day delay in filing the appeal, citing that substantial justice should prevail over technical considerations. The Tribunal found that the CIT(A)'s order was passed without considering the Assessee's submissions and directed the CIT(A) to re-adjudicate the appeal after providing a reasonable opportunity.

The Tribunal held that the CIT(A) correctly deleted the additions and disallowance of interest by respectfully following the binding precedent of a coordinate bench in the assessee's own case for AY 2008-09, where similar issues were decided in favor of the assessee.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal held that the assessee had a reasonable cause for not obtaining the audit report due to the internal dispute among directors. Citing a previous decision in the assessee's own case with similar facts, the Tribunal ruled that penalty under Section 271B cannot be levied when there is a genuine and bonafide reason for non-compliance.

The Tribunal considered the rival submissions and material on record. It acknowledged that the period in question saw the CBDT recognizing misunderstandings and difficulties faced by assessees in filing forms, leading to relaxations like Circular No. 7/2024, extending the filing date to 30.06.2024. The Tribunal noted that the decisions relied upon by the assessee's representative took the view that if a delay was caused by an unintentional mistake and not a deliberate act, it should be condoned in the interest of natural justice. The Tribunal also referred to the settled principle of adopting a justice-oriented and liberal approach while dealing with condonation of delay, citing the Hon'ble Apex Court's decision in Jaiswal Vidya Shankar vs. ITO. Therefore, the Tribunal was of the considered view that the delay in filing Form 10AB was due to unintentional reasons and deserved to be condoned. The application was to be decided on merits. The delay was condoned, and the matter was restored to the file of the CIT(E) for fresh adjudication, with a reasonable opportunity of being heard to be provided to the assessee. The issue of whether the application should be decided on merits was not expressly left undecided, as the restoration implies it will be.

The Tribunal held that the reopening under Section 147 was bad in law as it amounted to a change of opinion by the Assessing Officer. Regarding derivative loss, it was held to be a business loss, not speculative. Additions made under Section 69A and Section 69C based on loose papers, rough jottings, and WhatsApp chats were deleted, as the Tribunal found no cogent material or corroborative evidence to support these additions. It was emphasized that additions cannot be made on the basis of surmises, suspicion, or guesswork. The ad-hoc disallowance of 30% from reimbursement of expenses to directors was also allowed in favour of the assessee, following previous consistent findings. The ratio decidendi is that additions must be supported by cogent evidence, and reassessments based on a change of opinion are invalid. The operative direction was the deletion of additions and allowance of the assessee's grounds.

The Tribunal held that the reopening under Section 147 was bad in law as it amounted to a change of opinion by the Assessing Officer. Regarding derivative loss, it was held to be a business loss, not speculative. Additions made under Section 69A and Section 69C based on loose papers, rough jottings, and WhatsApp chats were deleted, as the Tribunal found no cogent material or corroborative evidence to support these additions. It was emphasized that additions cannot be made on the basis of surmises, suspicion, or guesswork. The ad-hoc disallowance of 30% from reimbursement of expenses to directors was also allowed in favour of the assessee, following previous consistent findings. The ratio decidendi is that additions must be supported by cogent evidence, and reassessments based on a change of opinion are invalid. The operative direction was the deletion of additions and allowance of the assessee's grounds.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal decided the following: Regarding Ground No. 12 (Club Expenses): The Tribunal dismissed the Revenue's ground, upholding the CIT(A)'s deletion of disallowance. The Tribunal relied on its own earlier decisions for AY 2008-09 and AY 2007-08, which in turn followed the Hon'ble Bombay High Court's decision in CIT vs. Otis Elevators Co. Ltd. The principle is that club membership fees incurred to promote business interests are allowable as business expenditure. Regarding Ground No. 13 (Business Loss and other Expenses): The Tribunal dismissed the Revenue's ground, upholding the CIT(A)'s deletion of disallowance. The Tribunal followed its own earlier decision for AY 2009-10, which allowed similar business losses incurred in the course of banking business based on consistency. The Tribunal also noted that revised claims can be allowed, referencing decisions of the Hon'ble Supreme Court in Jute Corporation of India Ltd. and the Hon'ble Bombay High Court in Pruthvi Brokers & Shareholders. The Tribunal noted that the appeals were cross-appeals and were partly allowed in terms of the observations made. Specific findings on other grounds were not detailed in the provided excerpt.

The Tribunal held that the additions were bad in law and unsustainable as they were based solely on third-party statements and materials found in their possession, without corroborative evidence from the assessee's side. Crucially, the assessee was denied the opportunity to cross-examine the declarants whose statements were relied upon, thus violating the principles of natural justice.

The Tribunal held that Section 143(1) adjustments are for prima facie errors and do not allow re-characterization of income or rejection of substantive exemption claims requiring legal interpretation. The subsequent scrutiny assessment under Section 143(3) had examined and accepted the exemption claim, making the Section 143(1) adjustment unsustainable.

The Tribunal found merit in the Assessee's submission that the CIT(A) had dismissed the appeal without proper consideration of the evidence and arguments. Therefore, the Tribunal decided to set aside the CIT(A)'s order.

The Tribunal held that derivative losses are business losses, not speculative losses. It also ruled that additions based solely on loose papers, WhatsApp chats, or third-party statements without corroborative evidence are not sustainable. Several grounds raised by the assessee were allowed, while appeals by the revenue were dismissed.

The Tribunal consolidated all 12 appeals due to commonality in issues. It noted that the facts and submissions for each issue would be taken from the first year the issue arose, with findings applying mutatis mutandis to other years unless specific variations existed. The Tribunal heard both parties extensively and perused the material placed on record, including the orders of the lower authorities. The Revenue's written submissions were noted to summarize and reiterate the observations and findings of the authorities below. The judgment details a tabular breakdown of the issues and the assessment years to which they pertain, indicating the nature of the appeal (Assessee or Department) and the relevant section under which the assessment order was passed. Specific findings on each of the 24 enumerated issues are not detailed in the provided excerpt, but the structure indicates a comprehensive adjudication is intended. The operative directions for each issue would depend on the specific findings, which are not fully elaborated in the provided text.

The Tribunal held that the amounts received before the necessary approval for sale could not be treated as taxable sale proceeds and were only advances. Regarding notional interest, the Tribunal held that the AO has no authority to tax hypothetical interest, as only real income can be brought to tax.

The Tribunal noted that the issues in the present appeals were identical to those decided in the assessee's own case for A.Y. 2008-09. The Tribunal found that the previous order had examined the identical issues in detail, and in the absence of any distinguishing facts, the findings and conclusions from that order were respectfully followed and applied mutatis mutandis to the present assessment years. An additional ground raised by the assessee for A.Y. 2007-08, challenging the validity of the assessment order on the ground of limitation, was withdrawn by the assessee and consequently dismissed.

The Tribunal noted that the issues in the present appeals were identical to those decided in the assessee's own case for A.Y. 2008-09. The Tribunal found that the previous order had examined the identical issues in detail, and in the absence of any distinguishing facts, the findings and conclusions from that order were respectfully followed and applied mutatis mutandis to the present assessment years. An additional ground raised by the assessee for A.Y. 2007-08, challenging the validity of the assessment order on the ground of limitation, was withdrawn by the assessee and consequently dismissed.

The Tribunal condoned the delay in filing the appeal and admitted it for adjudication. While acknowledging the assessee's lack of due diligence, the Tribunal noted that the appeal was disposed of ex parte without examining the merits.

The Tribunal held that the reopening of assessment under section 147 was invalid because the issue of disallowance under section 14A r.w.r. 8D was already examined during the original assessment and there was no fresh tangible material. Furthermore, since the assessee had not earned any exempt income, the disallowance under section 14A r.w.r. 8D was not applicable. The disallowance under section 43B was also not sustainable as the expenditure was not routed through the P&L account.

The Tribunal held that derivative loss is a business loss and not speculative. It also deleted additions made on account of cash loans and payments based on WhatsApp chats, finding no corroborative evidence. Ad-hoc disallowances from director reimbursements were also allowed in favor of the assessee.

The Tribunal held that the CIT(A) correctly deleted the addition as the salary became due and payable in the subsequent month after client certification, and the due date for PF/ESI deposit should be reckoned from that month. The revised audit report was considered admissible, and challans confirmed no delay beyond statutory due dates.

The Tribunal held that sales conducted under SARFAESI Act are statutory recovery proceedings and are typically distress sales discovered through competitive bidding. The deeming provisions of section 56(2)(x) should not be applied in a mechanical manner to a bona fide SARFAESI auction purchase, especially when section 35 of SARFAESI Act gives it overriding effect. Furthermore, the Assessing Officer should have referred the matter to the Departmental Valuation Officer when there was a substantial variation between the stamp duty value and the actual consideration.

The Tribunal upheld the denial of the deduction, citing Section 80A(5) of the Act, which mandates that a deduction can only be allowed if it is claimed in the original return of income. Non-compliance with this and other procedural requirements disentitled the assessee.

The Tribunal held that the addition was unsustainable as the evidence relied upon, primarily third-party records and statements, lacked independent corroboration and did not prove actual cash receipt by the assessee. The evidentiary threshold was not met.

The Tribunal noted that the issues in the present appeals were identical to those decided in the assessee's own case for A.Y. 2008-09. The Tribunal found that the previous order had examined the identical issues in detail, and in the absence of any distinguishing facts, the findings and conclusions from that order were respectfully followed and applied mutatis mutandis to the present assessment years. An additional ground raised by the assessee for A.Y. 2007-08, challenging the validity of the assessment order on the ground of limitation, was withdrawn by the assessee and consequently dismissed.