ITAT Mumbai Judgments — February 2026

The Tribunal noted that the co-ordinate bench had previously decided the quantum appeal in favor of the assessee, holding that unabsorbed depreciation cannot be set off against profits of initial years. Since the basis for the disallowance by the AO was set aside, the Tribunal held that the penalty could not be sustained.

The High Court quashed and set aside the order rejecting the condonation application and condoned the delay of 181 days in filing Form 10B. The Tribunal respectfully followed the High Court's directions.

The Tribunal held that the transactions were routed through recognized stock exchanges, supported by documentary evidence like contract notes, demat statements, and bank statements. The AO's addition was based on suspicion and general investigation reports without cogent material linking the assessee to any manipulation.

The Tribunal held that the sale transaction of stock-in-trade was completed in FY 2013-14 with the receipt of consideration and possession, not on the date of registration of the deed in AY 2018-19. The addition made by the AO was therefore unjustified.

The Tribunal held that the capital gains on sale of BSE shares should be treated as long-term capital gains. The cost of acquisition should be the original cost of the membership card as per Section 55(2)(ab), and the period of holding should be reckoned from the date of original membership.

The Tribunal held that the delay in filing Form 10-IE was due to technical glitches beyond the assessee's control and that the filing of the form is directory, not mandatory for invalidating the option. Therefore, the assessee should not be penalized for the delay.

The Tribunal found that the assessee had reported the unutilized amount and there was no suppression of facts. The claim for 15% deduction was made based on a bona fide belief and legal position, making it a debatable issue. The Tribunal also noted that the AO had shifted the reason for penalty from under-reporting to misreporting without fulfilling the criteria for misreporting. Furthermore, the penalty related to capital expenditure was not tenable as there was no disallowance or initiation of penalty proceedings for it in the assessment order. Therefore, the penalty imposed by the AO was not tenable.

The Tribunal held that the delay in filing Form 10-IE was due to technical glitches beyond the assessee's control and that the filing of the form is directory, not mandatory to invalidate the option. Therefore, the assessee should not be penalized for the delay.

The Tribunal noted that Form 67 is a directory requirement, not mandatory, and its delayed filing does not automatically lead to the disallowance of foreign tax credit. The Double Taxation Avoidance Agreement (DTAA) overrides the Act and Rules, and Rule 128 does not prescribe denial of credit for delayed filing.

The Tribunal first noted that Ground No. 1 was not pressed and dismissed it. Regarding Grounds Nos. 2 and 3, the Tribunal observed that the addition on account of commission income from the draft discounting business was ultimately determined at 0.2137% of the credited amount by a Coordinate Bench of the Tribunal. The Tribunal found that the Assessing Officer had levied a penalty under section 158BFA(2) based on this estimated addition. Citing the decision in Bagga Distillery Hyderabad Pvt. Ltd. v. DCIT, which was upheld by the Hon’ble High Court of Andhra Pradesh and Telangana, and the decision in Smt. Bitoli Devi vs. ACIT, the Tribunal held that a penalty under section 158BFA(2) cannot be levied merely on the basis of an estimated addition. The Tribunal reasoned that the determination of undisclosed income on an estimated basis does not automatically result in the imposition of penalty, as the Assessing Officer has discretion. Therefore, the Tribunal directed the Assessing Officer to delete the penalty. Grounds Nos. 2 and 3 were allowed.

The Tribunal held that the addition of Rs. 3,80,00,000/- as unexplained cash credit was to be remanded to the AO for verification of additional evidence filed by the assessee. The disallowance of Rs. 86,99,072/- on account of proportionate interest on interest-free loans was deleted.

The Tribunal held that the service of a valid notice under section 147 is the foundation for initiation of reassessment and a condition precedent for its validity. If the notice under section 148 was not served validly, the same cannot be cured. In this case, the revenue failed to substantiate the validity of the service of notice for AY 2009-10. For AY 2010-11, the notice was affixed on an address other than the one on record for the assessee.

The Tribunal held that the service of a valid notice under section 147 is the foundation for initiation of reassessment and a condition precedent for its validity. If the notice under section 148 was not served validly, the same cannot be cured. In this case, the revenue failed to substantiate the validity of the service of notice for AY 2009-10. For AY 2010-11, the notice was affixed on an address other than the one on record for the assessee.

The Tribunal held that the AO had no jurisdiction to make additions based on the book profit computation under Section 115-JB after accepting the returned income and drawing no adverse inference for the original grounds of reopening. The AO's actions went beyond the scope of the reassessment proceedings initiated under Section 147.

The Tribunal noted the assessee's consistent non-compliance and failure to provide any explanation or justification for the cash deposits or the claimed losses. Consequently, the additions and disallowances were upheld.

The Tribunal noted that the assessee did not appear and no adjournment was sought. The Tribunal also observed that the CIT(A) had limited the disallowance to 12.5% based on certain documentation, which the Revenue contested as fabricated and non-existent. Due to conflicting findings and absence of crucial facts regarding stock and sales, the Tribunal decided to remand the matter.

The Tribunal, following the Hon'ble Delhi High Court's decision in Cheminvest, held that Section 14A cannot be invoked if no exempt income is earned in the assessment year. The disallowance made by the AO was therefore deleted.

The Tribunal held that assessments under Section 153A are invalid in the absence of incriminating material found during the search. Additions based solely on reconciliation issues without concrete evidence of undisclosed income were also deemed unsustainable.

The Tribunal held that the penalty under section 271(1)(c) cannot be imposed with reference to additions/disallowances made under normal provisions when the tax liability has been determined under MAT provisions (Section 115JB), especially for assessment years prior to April 1, 2016. This is based on the Delhi High Court's decision in CIT vs. Nalwa Sons Investment Ltd. and CBDT Circular dated 31-12-2015.

The Tribunal held that the penalty under section 271(1)(c) cannot be imposed with reference to additions/disallowances made under normal provisions when the tax liability has been determined under MAT provisions (Section 115JB), especially for assessment years prior to April 1, 2016. This is based on the Delhi High Court's decision in CIT vs. Nalwa Sons Investment Ltd. and CBDT Circular dated 31-12-2015.

The Tribunal held that the diamond division, being the least complex entity, should be accepted as the tested party for transfer pricing analysis. This was supported by the TPO's acceptance of the same in a subsequent assessment year.

The Tribunal admitted additional evidence relating to agricultural income, citing sufficient cause for the delay. Consequently, the issues concerning agricultural income and related cash deposits were restored to the Assessing Officer for de novo adjudication. However, the disallowance of the Section 80-C deduction was upheld due to the absence of supporting documents.

The Tribunal held that the referral fees received by the assessee were for commercial services and not FTS, following previous co-ordinate bench decisions. Similarly, reimbursement of expenses was held to be cost recovery and not taxable income, also based on prior rulings.

The Tribunal held that the penalty under Section 270A is directly linked to the addition made under Section 56(2)(x), which is still pending adjudication. Dismissing the penalty appeal solely on technical grounds of delay without examining merits is not justified. The interest of justice would be served by restoring the matter to the CIT(A) for adjudication on merits.

The Tribunal restored the issue related to Section 43CA additions to the Assessing Officer for adjudication, considering additional evidence. Grounds related to disallowance under Section 14A and adjustment for book profit under Section 115JB were allowed.

The Tribunal restored the issue related to Section 43CA additions to the Assessing Officer for adjudication, considering additional evidence. Grounds related to disallowance under Section 14A and adjustment for book profit under Section 115JB were allowed.

The Tribunal held that the AO did not conduct independent inquiries and relied on general observations from investigation reports without specific material linking the assessee to any alleged accommodation entry operators. The documentary evidence provided by the assessee was not disproven, and suspicion alone cannot replace evidence.

The Tribunal held that the notice issued under Section 148 of the Act was bad in law due to non-compliance with the provisions of Section 151 regarding the approval of the appropriate authority. Consequently, the reassessment proceedings initiated were also quashed.

The Tribunal noted that the CIT(A) had passed an ex-parte order due to the assessee's non-appearance. Since the assessee was now duly represented and wished to pursue the appeal on merits, the Tribunal, in the interest of justice, set aside the impugned order. The matter was restored to the file of the CIT(A) for de novo adjudication on merits, with a direction to grant the assessee a reasonable and adequate opportunity of hearing. The assessee was also directed to furnish/update their email address for receiving hearing notices and to appear on all scheduled dates without default. The grounds raised by the assessee were allowed for statistical purposes. The Tribunal did not decide the merits of the grounds raised.

The learned CIT(A) allowed the assessee's appeal, holding that the assessee had discharged the primary onus to establish the identity, creditworthiness of creditors, and genuineness of the transactions. The tribunal found that the AO's addition was solely based on Mr. Salecha's statement, which was not corroborated by independent evidence. The creditors had sufficient shareholder funds and reserves, and the loans were repaid with interest in subsequent years.

The tribunal held that the CPC could not have made the adjustment without issuing a prior show-cause notice to the assessee, as per the proviso to Section 143(1)(a) of the Act, which requires compliance with natural justice principles. Additionally, on merits, the tribunal found that the bad debt recovered was indeed credited to the profit and loss account and offered as income by the assessee.

The CIT(A) confirmed the addition made by the AO, holding that the assessee failed to disclose a complete trail of share transactions and that the evidence was not satisfactory. However, the Tribunal found that the assessee had furnished complete details of investment sources, including bank statements and purchase bills through well-known brokers.

The Tribunal held that the relevant date for considering the purchase of a new residential house for the purpose of Section 54 is the date of possession, not the date of the agreement. Since the assessee took possession of the new flat within the prescribed period after the sale of the original property, the exemption is admissible.

The Tribunal noted that the assessee had provided documentary evidence explaining the source of cash deposits and business expenses, which were also furnished before the AO but seemingly not properly examined. The Tribunal found that these evidences were crucial for proper adjudication and required comprehensive verification.

The Tribunal noted that the assessee's legal heir was in the process of being substituted and argued that hearing notices were complied with. The CIT(A) had incorrectly assumed non-compliance. The Tribunal restored the matter to the CIT(A) for de novo adjudication, emphasizing that no opinion on merits was expressed.

The Tribunal noted that the assessee's legal heir was in the process of being substituted and argued that hearing notices were complied with. The CIT(A) had incorrectly assumed non-compliance. The Tribunal restored the matter to the CIT(A) for de novo adjudication, emphasizing that no opinion on merits was expressed.

The Tribunal noted that the assessee's legal heir was in the process of being substituted and argued that hearing notices were complied with. The CIT(A) had incorrectly assumed non-compliance. The Tribunal restored the matter to the CIT(A) for de novo adjudication, emphasizing that no opinion on merits was expressed.

The Tribunal held that no incriminating material directly connected to the assessee was found during the search, and the revenue failed to provide corroborative evidence or an opportunity for cross-examination. Therefore, the addition was deleted.

The Tribunal held that no incriminating material directly connected to the assessee was found during the search, and the revenue failed to provide corroborative evidence or an opportunity for cross-examination. Therefore, the addition was deleted.

The Tribunal held that no incriminating material directly connected to the assessee was found during the search, and the revenue failed to provide corroborative evidence or an opportunity for cross-examination. Therefore, the addition was deleted.

The Tribunal held that the addition was unsustainable as no incriminating material directly connected to the assessee was found. The revenue failed to substantiate the evidence or provide an opportunity for cross-examination of witnesses.

The Tribunal found that no incriminating material directly connected to the assessee was discovered. Crucially, the revenue failed to provide corroborative evidence or grant the assessee an opportunity to cross-examine the witnesses whose statements formed the basis of the addition.

The Tribunal held that there was no basis for the impugned addition. The assessee had demonstrated the identity, creditworthiness of the lender (Mr. Mitu Misra), and the genuineness of the transaction, thereby discharging the onus. The AO had invoked Section 69, ignoring all evidence and without cross-verification from the NRI lender, who had sufficient creditworthiness and to whom the loan was repaid. The CIT(A)'s reliance on the McDowell and Co. Ltd. decision, treating the transaction as a colourable device, was deemed inapplicable. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the addition, allowing the grounds on merit. The legal grounds challenging the reopening were not adjudicated as the assessee succeeded on merit, but were left open.

The tribunal acknowledged the delay in filing the appeal but noted that the assessee had made out a reasonable cause for the delay and there was no malafide intention. Citing the Supreme Court's decision in Collector Land Acquisition Vs. Mst. Katiji & Ors., the tribunal decided to condone the delay.

The Tribunal held that suspicion, however strong, cannot substitute proof. The assessee had provided documentary evidence to establish the genuineness of the transactions, and the Revenue failed to rebut this evidence with cogent material.

The Tribunal condoned the delay in filing the appeal, citing that there was no malafide intention on the part of the assessee and a reasonable cause for the delay was established. The Tribunal also held that the principles of natural justice were violated as the impugned order was passed ex-parte without effective opportunity to the assessee.

The Tribunal held that the reopening notice under Section 148 and the subsequent reassessment order were invalid. This was because the approval for reopening, which was initiated more than three years after the end of the relevant assessment year, was granted by an authority not specified for such cases under Section 151(ii) of the Act. The Tribunal relied on the decisions of the Bombay High Court in Vodafone Idea Ltd. and Siemens Financial Services Pvt. Ltd.

The Tribunal held that the reassessment notice issued under Section 148 was bad in law due to non-compliance with the provisions of Section 151 regarding the approval of the appropriate authority. Consequently, the reassessment proceedings were quashed.

The Tribunal condoned the delay of 53 days in filing the appeals. It reasoned that the explanation provided by the assessee, including the lack of timely notification of the CIT(A)'s order and the change in tax consultants, constituted sufficient cause. The Tribunal relied on the Hon'ble Supreme Court's decision in Collector, Land Acquisition vs. Mst. Katiji & Ors. (167 ITR 47), emphasizing a liberal approach to condoning delays to advance substantial justice and avoid technicalities defeating meritorious matters. The Tribunal found that the assessee was prevented by sufficient cause from filing the appeal within the prescribed time. On merits, the Tribunal set aside the ex parte orders passed by the CIT(A) and remitted the matters to the CIT(A)'s file for fresh adjudication. The reasoning was based on the principles of natural justice, acknowledging that the orders were passed without an effective opportunity for the assessee to be heard. The CIT(A) was directed to pass a reasoned and speaking order after considering evidence, potentially calling for a remand report from the AO, and granting the assessee an adequate opportunity of being heard. The assessee was also directed to cooperate in the proceedings. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal condoned the delay of 53 days in filing the appeals. It reasoned that the explanation provided by the assessee, including the lack of timely notification of the CIT(A)'s order and the change in tax consultants, constituted sufficient cause. The Tribunal relied on the Hon'ble Supreme Court's decision in Collector, Land Acquisition vs. Mst. Katiji & Ors. (167 ITR 47), emphasizing a liberal approach to condoning delays to advance substantial justice and avoid technicalities defeating meritorious matters. The Tribunal found that the assessee was prevented by sufficient cause from filing the appeal within the prescribed time. On merits, the Tribunal set aside the ex parte orders passed by the CIT(A) and remitted the matters to the CIT(A)'s file for fresh adjudication. The reasoning was based on the principles of natural justice, acknowledging that the orders were passed without an effective opportunity for the assessee to be heard. The CIT(A) was directed to pass a reasoned and speaking order after considering evidence, potentially calling for a remand report from the AO, and granting the assessee an adequate opportunity of being heard. The assessee was also directed to cooperate in the proceedings. The grounds raised by the assessee were allowed for statistical purposes.