ITAT Mumbai Judgments — September 2026

The Tribunal decided to dismiss the appeal for non-prosecution. While the assessee provided reasons for the delay in its affidavit, the Tribunal noted the assessee's subsequent conduct, including repeated absences on hearing dates and failure to furnish documentary evidence for which time had been sought. The Tribunal observed that despite several opportunities, the assessee did not appear to substantiate its condonation petition or to address the substantive grounds of appeal concerning the addition under Section 68. The Tribunal found itself unable to effectively adjudicate the appeal due to the lack of effective participation and necessary material from the assessee. The dismissal is on account of non-prosecution, and the assessee may seek restoration by demonstrating sufficient cause for its non-appearance and failure to prosecute.

The Tribunal held that the penalty levied under section 270A of the Act cannot be sustained. The Tribunal found that the assessee's claim, though not accepted in the quantum proceedings, was based on disclosed facts and an arguable legal position regarding the characterisation of the expenditure. The Tribunal noted that the expenditure related to software development, with a portion remaining as capital work-in-progress and another part being impairment of an IP asset, both disclosed in financial statements. The Tribunal relied on the principle established in cases like Carona Ltd. and Trigent Software Ltd., which distinguish between a false factual statement and an unsuccessful legal claim. It was held that the mere fact that the Revenue characterised the expenditure differently does not convert a bona fide claim into a non-bona fide one. The Tribunal observed that the CIT(A) himself recorded the disclosure of facts by the assessee. Applying the provisions of section 270A(6)(a), which excludes amounts from under-reported income where an explanation is bona fide and all material facts are disclosed, the Tribunal concluded that the ingredients of the section were satisfied. Consequently, the penalty of Rs.1,23,71,443 was directed to be deleted. The Tribunal also noted that three appeals were filed, and two were dismissed as withdrawn, with the decision pertaining to the main appeal.

The Tribunal held that the Ld. CIT(E) was not justified in imposing a condition while granting registration under Section 12AB(1)(b) of the Act. While the Ld. CIT(E) had granted registration, the condition that its applicability and consequential tax benefits would remain subject to the outcome of a Supreme Court decision was found to be beyond the powers conferred by the statute. The Tribunal noted that Section 12AB empowers the Commissioner to either grant or reject registration, but the statute does not contemplate the grant of conditional registration dependent on a future event. Once registration is granted, its consequences must follow according to the Act. The Tribunal respectfully followed the decision of a co-ordinate bench in Chandraprabhu Digamber Jain Mandir vs CIT(Exemptions) and other cited cases. Accordingly, the Tribunal directed the deletion of the condition, and the registration granted to the assessee shall operate in accordance with law without the imposed condition. The appeal was disposed of in these terms.

The Tribunal allowed the assessee's appeal on the preliminary legal ground concerning the validity of the proceedings initiated under section 147 of the Act. The Tribunal noted that the order under section 148A(d) was passed on 28.07.2022, which was beyond three years from the end of Assessment Year 2017-18 (ending 31.03.2018). As per the statutory scheme of section 151(ii) of the Act, for proceedings initiated beyond three years, approval was required from the Principal Chief Commissioner or Chief Commissioner. However, the approval in this case was granted by the Principal Commissioner of Income Tax-17, Mumbai. The Tribunal, respectfully following the principles laid down by the Hon'ble Supreme Court in *Union of India v. Rajeev Bansal* and the Hon'ble Bombay High Court in *Alag Property Construction (P.) Ltd.*, held that the approval obtained did not satisfy the mandatory requirement prescribed under section 151(ii). Consequently, the order passed under section 148A(d), the notice issued under section 148, and the assessment order passed under section 147 were quashed. The impugned order of the CIT(A) was set aside. Since the assessment itself was quashed on this preliminary ground, the other grounds raised by the assessee were rendered academic and did not require separate adjudication.

The Tribunal held that the rates at which the assessee's cement units purchased electricity from CSPDCL and MPPKVVCL were valid internal Comparable Uncontrolled Prices (CUPs) for benchmarking the transfers from the captive power plants (CCTPP and MCTPP). The Tribunal reasoned that these consumer-side rates represented the actual prices paid to independent suppliers for electricity in the relevant locations and were the prices at which the consuming units could obtain electricity for their manufacturing operations. The TPO's approach of substituting these with generation-side procurement rates was not justified because those were prices at a different stage of the supply chain and were not shown to be prices available to the assessee's consuming units. The Tribunal noted that the distribution company's tariff, even with its additional functions, was accepted as comparable under the CUP method in similar cases by higher courts. The factual position and the principle applied were materially the same for both AY 2013-14 and AY 2016-17. Consequently, the Tribunal upheld the orders of the learned CIT(A) deleting the transfer-pricing adjustments.

The Tribunal held that the appeals were not maintainable before the ITAT Mumbai Benches due to a lack of jurisdiction. The reasoning was based on the submissions of both parties and the established principle that appeals should be filed before the Benches having jurisdiction over the jurisdictional Assessing Officer. The Tribunal noted that the assessment orders were passed by the DCIT, Ahmedabad, and the reassessment order by the NFAC, Delhi. Consequently, the appeals should have been filed before the ITAT Benches located in Ahmedabad. The Tribunal granted the Revenue liberty to file fresh appeals before the appropriate Benches in Ahmedabad, with a condition to file an appropriate application for condonation of delay if required. The period consumed in litigating before the Mumbai Benches was to be excluded from the period of limitation for the fresh appeals. The Tribunal explicitly stated that there could be no miscarriage of justice merely on account of approaching and filing the appeals before the Mumbai Benches instead of the appropriate Benches.

The Tribunal held that the application in Schedule II filed before the Charity Commissioner, along with the registration certificate, cumulatively constitutes sufficient evidence of the assessee's creation and establishment under Rule 17A(2)(b). The Tribunal reasoned that Rule 17A(2) distinguishes between trusts created by an instrument (clause (a)) and those created otherwise (clause (b)), and the latter requires a document evidencing creation, not necessarily a formal trust deed. The Schedule II application and the subsequent registration certificate, issued after statutory inquiry, are substantive evidence of the trust's establishment and continued existence. The Tribunal also held that a scheme framed by the Charity Commissioner or a competent court is not an invariable condition for registration under Section 12AB. The CIT(E) was not justified in rejecting the application at the threshold for want of a formal trust deed or scheme. However, since the CIT(E) had not examined other statutory parameters under Section 12AB, the matter was restored to the CIT(E) for examining the objects, genuineness of activities, and compliance with other laws, without again rejecting the application solely for the absence of a formal trust deed or scheme. The CIT(E) was directed to grant renewal of registration after verification and affording an opportunity of hearing.

The Tribunal held that the assessee had discharged her primary onus under section 68 of the Act by furnishing relevant documentary evidence, including purchase bills, bank statements, DP statements, and broker notes, to establish her claim of LTCG. The Tribunal noted that the AO had no corroborating material to make the addition, relying solely on investigation reports and SEBI reports, without any evidence of the assessee's own money being routed back or any nexus with price rigging. The Tribunal found that no action had ever been taken against the assessee by SEBI or any investigation agency. The Tribunal respectfully relied on the orders of the Hon'ble Supreme Court in PCIT vs. Smt. Renu Aggarwal and the decision of the jurisdictional High Court, as well as a Co-ordinate Bench of the ITAT in the assessee's own case for a different assessment year, which had similar facts and circumstances. The Tribunal also noted that the scrip involved had been subject to adjudication in other cases, resulting in the deletion of identical additions. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the entire addition of Rs. 55,66,000/- made under section 68 of the Act. The grounds raised by the assessee were allowed. The Tribunal expressly left undecided any issue related to interest under sections 234A, 234B, and 234C, as the substantive addition was deleted.

The Tribunal held that the notice issued under section 148 and the reassessment proceedings pursuant thereto are not sustainable in law. The Tribunal upheld the order of the learned CIT(A) in annulling the reassessment proceedings. The reasoning was that the reopening was done after four years from the end of the assessment year, and therefore, the first proviso to section 147 was applicable. This proviso requires a failure on the part of the assessee to disclose fully and truly all material facts. The Tribunal found that the reasons recorded by the AO did not identify any particular material fact that the assessee had failed to disclose during the original assessment proceedings. The mere use of the statutory expression regarding failure to disclose was not sufficient. The AO had to identify the material fact and show its connection with the alleged escapement of income. The Tribunal noted that the original assessment under section 143(3) had been completed, and the assessee had furnished details relating to its share transactions. The reasons recorded did not state that any particular material fact was withheld. Therefore, the reasons recorded did not satisfy the requirements of the first proviso to section 147, and the material referred to did not establish a sufficient nexus between the assessee's transactions and the alleged accommodation entry. Consequently, the grounds raised by the Revenue challenging the validity of the reassessment were dismissed. Since the reassessment itself was held to be invalid, the grounds challenging the additions made under sections 68 and 69C were rendered academic and not adjudicated upon.

The Tribunal noted that the assessee is a registered Non-Banking Financial Company (NBFC) engaged in money lending and borrowing. The assessee's director, Mr. Kashyap Mehta, acquired the assessee company from Jagdish Purohit and the lender company, M/s. Sulabh Resources Pvt. Ltd., from him. Mr. Mehta confirmed these transactions in his statement. The Tribunal also considered the submission that M/s. Sulabh Resources Pvt. Ltd. is an RBI-registered NBFC with a substantial net worth. The Tribunal observed that the Ld. CIT(A) had deleted the additions concerning M/s. Sulabh Resources Pvt. Ltd. while confirming additions related to other entities. The Tribunal decided to examine the deletion made by the Ld. CIT(A) in the case of M/s. Sulabh Resources Pvt. Ltd. as the lead case. The Tribunal found that the Ld. CIT(A) had deleted the addition of Rs. 35,96,507/- and consequential interest of Rs. 2,33,688/- made under Sections 68 and 69C for AY 2014-15 in respect of M/s. Sulabh Resources Pvt. Ltd. The Tribunal noted that the Ld. CIT(A) had accepted the assessee's claim that the transaction was a loan given to Sulabh Resources Pvt. Ltd. and that Sulabh Resources Pvt. Ltd. was a genuine NBFC. The Tribunal, therefore, upheld the deletion of additions in this regard. The Tribunal also noted that for other assessment years, additions were confirmed by the Ld. CIT(A) for loans from M/s. Sahanbhuti Distributors Pvt. Ltd. and M/s. Intero Infrastructure & Trading Pvt. Ltd., which were considered shell entities. The Tribunal held that the assessee's appeals regarding these confirmed additions would be dismissed, and the Revenue's appeal regarding the deletion for Sulabh Resources Pvt. Ltd. would be allowed.

The Tribunal held that the reopening of assessment under section 147 was valid. Relying on the Supreme Court's decision in Raymond Woollen Mills Ltd. vs. ITO, the Tribunal stated that at the time of recording reasons for satisfaction, prima facie material is sufficient, and the correctness of the material is not to be considered at that stage. The information received from the Investigation Wings of Ahmedabad and Hyderabad constituted fresh tangible material. Therefore, grounds related to the validity of reopening (Grounds 2 and 4) were dismissed. Regarding the addition under Section 69C (Grounds 5 to 7), the Tribunal found that the assessee had submitted a ledger account, invoices, purchase orders, bank statements, and TDS certificates for the payments made to SIPPL and TIPL. The AO had relied solely on information from the Investigation Wing without independent verification. The Tribunal noted that similar additions in earlier assessment years (AY 2014-15 and AY 2012-13) based on similar allegations were deleted by the CIT(A) and confirmed by the Tribunal. Furthermore, citing the Bombay High Court's decision in CIT vs. Nikunj Eximp Enterprises (P) Ltd., the Tribunal held that if sales are supported by purchases and payments are made through banks, purchases cannot be rejected as bogus merely because suppliers did not appear before the AO. The Tribunal also observed that the disputed payments constituted a negligible percentage of the total subcontract charges and total turnover. Consequently, grounds 5 to 7 were allowed, and the addition was deleted. Grounds 8 and 9 became academic as grounds 5 to 7 were allowed.

The Tribunal noted that the crux of the dispute was the reconciliation of Service Tax collected and paid. It observed that the reconciliation statement, which would have been crucial, was not produced before the AO or the JCIT(A). Neither party objected to remitting the matter back to the lower authorities for verification and reconciliation. Therefore, in the interest of justice, the Tribunal set aside the impugned order of the JCIT(A) and remanded the specific issue of Service Tax reconciliation to the AO for fresh adjudication. The assessee was directed to cooperate and furnish all required information. Ground No. (iii) regarding the addition of Rs. 1,20,549/- was not pressed and was left undecided. The appeal was allowed for statistical purposes.

The Tribunal held that the reassessment proceedings, initiated and concluded in the name of M/s Mode Export Private Limited, are unsustainable in law because the company had ceased to exist pursuant to an approved scheme of amalgamation. The Tribunal noted that the Assessing Officer was expressly informed of the amalgamation and the cessation of existence of M/s Mode Export Private Limited during the reassessment proceedings. The Tribunal relied on the Supreme Court's decision in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., which held that participation in proceedings cannot operate as an estoppel against law when the notice is fundamentally at odds with the settled principle that an amalgamating entity ceases to exist. The Tribunal found that the distinction drawn by the CIT(A) regarding the assessee's participation and failure to object at the assessment stage could not cure the jurisdictional defect. Participation cannot confer legal existence upon a non-existent entity or jurisdiction where the assessee itself was not in existence. Consequently, the reassessment order passed in the name of M/s Mode Export Private Limited was quashed, and the impugned order of the CIT(A) sustaining the reassessment proceedings was set aside. The Tribunal deemed it unnecessary to examine the merits of the addition of ₹99,67,300/-, as the assessment itself was held to be invalid. Ground No. 2 of the assessee's appeal was allowed, and other grounds were dismissed as infructuous.

The Tribunal held that the appeals were not maintainable before the ITAT Mumbai Benches due to a lack of jurisdiction. The reasoning was based on the submissions of both parties and the established principle that appeals should be filed before the Benches having jurisdiction over the jurisdictional Assessing Officer. The Tribunal noted that the assessment orders were passed by the DCIT, Ahmedabad, and the reassessment order by the NFAC, Delhi. Consequently, the appeals should have been filed before the ITAT Benches located in Ahmedabad. The Tribunal granted the Revenue liberty to file fresh appeals before the appropriate Benches in Ahmedabad, with a condition to file an appropriate application for condonation of delay if required. The period consumed in litigating before the Mumbai Benches was to be excluded from the period of limitation for the fresh appeals. The Tribunal explicitly stated that there could be no miscarriage of justice merely on account of approaching and filing the appeals before the Mumbai Benches instead of the appropriate Benches.

The Tribunal held that the order of the learned CIT(A) deleting the disallowance of Rs.3,32,62,140/- made under section 43B of the Act was not to be interfered with. The reasoning was based on the principle that the mere pendency of a Special Leave Petition (SLP) before the Hon'ble Supreme Court does not obliterate the precedential value of a High Court judgment. The Tribunal noted that the Hon'ble Karnataka High Court in Commissioner of Income-tax (LTU) v. Biocon Ltd. had affirmed the Special Bench decision in Biocon Ltd., answering the questions of law against the Revenue. Although the Revenue had filed an SLP and notice was issued, no final judgment reversing or modifying the High Court's decision had been rendered. In the absence of any stay, reversal, or modification by the Supreme Court, the High Court's judgment continues to hold the field. Therefore, respectfully following the judgment of the Hon'ble Karnataka High Court, the Tribunal found no infirmity in the CIT(A)'s order. The grounds raised by the Revenue were dismissed. The disallowance made by the Assessing Officer was directed to be deleted.

The Tribunal held that the assessee's appeal should be allowed. The core issue revolved around the applicability of Section 80AC, which mandates the filing of a return of income for claiming deductions under Chapter VI-A. While the lower authorities disallowed the deduction under Section 80P(2)(a)(i) solely on the ground that no return of income was filed, the Tribunal noted that the amendment to Section 80AC, making the filing of a return under Section 139(1) mandatory, was effective from AY 2018-19. The Tribunal found that for AY 2017-18, this condition was not mandatory. The Tribunal relied on the decision in Mount Mary Nagari Cooperative Credit Society Ltd. vs. ITO, which held that the mandatory requirement of filing a return for claiming Chapter VI-A deductions was introduced from AY 2018-19. This ratio was followed in subsequent decisions cited by the assessee. Consequently, the Tribunal directed the Jurisdictional Assessing Officer to verify the computation of income and allow the deduction under Section 80P(2)(a)(i) to the assessee.

The Tribunal held that the penalty levied under Section 270A for the disallowance of education cess is not sustainable. The Tribunal noted that at the time of filing the return, the prevailing judicial position, including decisions of the Bombay High Court in Sesa Goa Limited v. JCIT, allowed the deduction of education cess from business income. The retrospective amendment by the Finance Act, 2022, changed the settled judicial position. The Tribunal found that the claim was bona fide and based on judicial precedents, thus falling under the provisions of Section 270A(6), which excludes certain situations from penalty for underreporting. Therefore, the penalty for the education cess disallowance was deleted. Regarding the GST late filing fees of ₹550, the Tribunal observed that the assessee admitted the disallowance and offered it for tax, resulting in a minimal tax amount. Considering the overall income and tax paid, the claim was not intentional to suppress tax liability. The Tribunal found the explanation for this underreporting to be bona fide and not liable for penalty under Section 270A. Consequently, the entire penalty of ₹2,70,277 was deleted. The Tribunal also referred to its own decisions in Poonawalla Fincrop Ltd v. ITO and Wellknown Polyesters Limited v. DCIT, which deleted penalties for similar claims of education cess based on prevailing judicial precedents.

The Tribunal held that the sanction for issuing the notice under Section 148 of the Income Tax Act, 1961, was granted by the PCIT, Mumbai-19, on 25th April 2022, for the Assessment Year 2018-19. The Tribunal noted that this sanction was for a period beyond three years from the end of the relevant assessment year. As per Section 151 of the Act, for reopening beyond three years, the approval should have been obtained from the Pr.CCIT or CCIT, not the PCIT. Following the jurisdictional High Court of Bombay's decision in *Holiday Developers Private Limited vs. Income Tax Officer*, the Tribunal found the sanction to be invalid. Consequently, the entire reassessment proceedings, including the assessment order passed under Section 147, were quashed and set aside as being void ab initio due to lack of valid jurisdiction. Since the reassessment order was quashed on a preliminary legal ground, the Tribunal did not adjudicate the grounds raised by the Revenue regarding the addition of Rs. 4,13,34,282/- under Section 69C. The appeal filed by the Revenue was dismissed, and the cross-objections filed by the assessee were allowed.

The Tribunal held that the appeals were not maintainable before the ITAT Mumbai Benches due to a lack of jurisdiction. The reasoning was based on the submissions of both parties and the established principle that appeals should be filed before the Benches having jurisdiction over the jurisdictional Assessing Officer. The Tribunal noted that the assessment orders were passed by the DCIT, Ahmedabad, and the reassessment order by the NFAC, Delhi. Consequently, the appeals should have been filed before the ITAT Benches located in Ahmedabad. The Tribunal granted the Revenue liberty to file fresh appeals before the appropriate Benches in Ahmedabad, with a condition to file an appropriate application for condonation of delay if required. The period consumed in litigating before the Mumbai Benches was to be excluded from the period of limitation for the fresh appeals. The Tribunal explicitly stated that there could be no miscarriage of justice merely on account of approaching and filing the appeals before the Mumbai Benches instead of the appropriate Benches.

The Tribunal condoned the delay of 28 days in filing the appeal, being satisfied that the assessee was prevented by sufficient cause due to the medical circumstances explained in the affidavit and supported by relevant medical documents. Regarding the rejection of the section 80G application, the Tribunal found that it was primarily rejected due to non-compliance with the notice. Considering the circumstances explained by the assessee and in the interest of substantial justice, the Tribunal deemed it appropriate to examine the application on its merits. Therefore, the impugned order of the CIT(E) was set aside, and the matter was restored to the CIT(E)'s file for fresh consideration of the assessee’s application for renewal of approval under section 80G. The assessee was to be afforded a reasonable opportunity to furnish the requisite documents and explanations. The ratio is that where substantial justice requires it, and sufficient cause for non-compliance is shown, a matter should be decided on merits after affording a proper opportunity, rather than being dismissed on procedural grounds.

The Tribunal held that the rates at which the assessee's cement units purchased electricity from CSPDCL and MPPKVVCL were valid internal Comparable Uncontrolled Prices (CUPs) for benchmarking the transfers from the captive power plants (CCTPP and MCTPP). The Tribunal reasoned that these consumer-side rates represented the actual prices paid to independent suppliers for electricity in the relevant locations and were the prices at which the consuming units could obtain electricity for their manufacturing operations. The TPO's approach of substituting these with generation-side procurement rates was not justified because those were prices at a different stage of the supply chain and were not shown to be prices available to the assessee's consuming units. The Tribunal noted that the distribution company's tariff, even with its additional functions, was accepted as comparable under the CUP method in similar cases by higher courts. The factual position and the principle applied were materially the same for both AY 2013-14 and AY 2016-17. Consequently, the Tribunal upheld the orders of the learned CIT(A) deleting the transfer-pricing adjustments.

The Tribunal allowed Ground No. 2, holding that the CIT(A) erred in sustaining the addition under Section 69A of the Act without issuing a specific notice of enhancement under Section 251(2) and without affording the assessee a reasonable opportunity to explain why the amount should not be treated as unexplained money under Section 69A. The Tribunal noted that the CIT(A) first held the addition under Section 68 unsustainable and then, without following the statutory requirement of Section 251(2), sustained the same amount under Section 69A. This action was considered beyond jurisdiction and contrary to appellate powers. The Tribunal also observed that the distinction between Section 68 and Section 69A was material, and once the CIT(A) accepted the assessee's objection regarding the applicability of Section 68 (due to no books of account), the assessee was entitled to an opportunity to address the applicability of Section 69A. Consequently, the addition of Rs. 1,14,25,29,008/- made by the AO under Section 68 and sustained by the CIT(A) under Section 69A was directed to be deleted. Ground No. 1 was not adjudicated as Ground No. 2 was allowed, leading to the deletion of the addition.

The Tribunal held that the penalty levied under section 270A of the Act cannot be sustained. The Tribunal found that the assessee's claim, though not accepted in the quantum proceedings, was based on disclosed facts and an arguable legal position regarding the characterisation of the expenditure. The Tribunal noted that the expenditure related to software development, with a portion remaining as capital work-in-progress and another part being impairment of an IP asset, both disclosed in financial statements. The Tribunal relied on the principle established in cases like Carona Ltd. and Trigent Software Ltd., which distinguish between a false factual statement and an unsuccessful legal claim. It was held that the mere fact that the Revenue characterised the expenditure differently does not convert a bona fide claim into a non-bona fide one. The Tribunal observed that the CIT(A) himself recorded the disclosure of facts by the assessee. Applying the provisions of section 270A(6)(a), which excludes amounts from under-reported income where an explanation is bona fide and all material facts are disclosed, the Tribunal concluded that the ingredients of the section were satisfied. Consequently, the penalty of Rs.1,23,71,443 was directed to be deleted. The Tribunal also noted that three appeals were filed, and two were dismissed as withdrawn, with the decision pertaining to the main appeal.

The Tribunal held that the rejection of the assessee's application for approval under Section 80G was solely based on the rejection of its application for registration under Section 12AB. However, the Tribunal noted that the order rejecting the Section 12AB application had been set aside by the ITAT in a previous appeal (ITA No. 4762/Mum/2026, dated 24.07.2026) and restored to the file of the CIT(Exemptions) for de novo adjudication. Consequently, the basis for rejecting the Section 80G application no longer subsisted. The Tribunal reasoned that since the Section 12AB matter was open for fresh consideration, the Section 80G application, being consequential, also deserved to be restored. The CIT(Exemptions) was directed to adjudicate both applications afresh, affording the assessee an adequate opportunity of being heard, and to consider the Section 80G application in light of the outcome of the Section 12AB proceedings. The appeal was allowed for statistical purposes.

The Tribunal allowed the Cross-Objection filed by the assessee and dismissed the appeal filed by the Revenue. The Tribunal found that the reassessment proceedings were initiated beyond three years from the end of AY 2013-14. For invoking the extended period of limitation under section 149(1)(b), the material available with the AO must reveal that the income chargeable to tax which has escaped assessment amounts to, or is likely to amount to, Rs. 50 lakh or more. The statutory threshold is referable to the escaped income, not the gross value of the transaction. In this case, the actual profit from the transaction was Rs. 69,459. Even considering the sale transaction of Rs. 41,89,800 as the relevant amount (allegation of benefit from CCM), both figures are below the Rs. 50 lakh threshold. The AO's figure of Rs. 82,99,900 was an aggregation of purchase and sale values, which does not represent income chargeable to tax that escaped assessment. Therefore, the condition prescribed under section 149(1)(b) was not satisfied. Consequently, the assumption of jurisdiction for initiating reassessment proceedings was not in accordance with the limitation prescribed under section 149(1) of the Act. The reassessment proceedings, including the assessment order, were liable to be quashed. As the impugned reassessment proceedings were quashed on jurisdictional grounds, other grounds raised by the assessee and the Revenue were rendered academic and did not require adjudication.

The Tribunal noted that the assessee is a registered Non-Banking Financial Company (NBFC) engaged in money lending and borrowing. The assessee's director, Mr. Kashyap Mehta, acquired the assessee company from Jagdish Purohit and the lender company, M/s. Sulabh Resources Pvt. Ltd., from him. Mr. Mehta confirmed these transactions in his statement. The Tribunal also considered the submission that M/s. Sulabh Resources Pvt. Ltd. is an RBI-registered NBFC with a substantial net worth. The Tribunal observed that the Ld. CIT(A) had deleted the additions concerning M/s. Sulabh Resources Pvt. Ltd. while confirming additions related to other entities. The Tribunal decided to examine the deletion made by the Ld. CIT(A) in the case of M/s. Sulabh Resources Pvt. Ltd. as the lead case. The Tribunal found that the Ld. CIT(A) had deleted the addition of Rs. 35,96,507/- and consequential interest of Rs. 2,33,688/- made under Sections 68 and 69C for AY 2014-15 in respect of M/s. Sulabh Resources Pvt. Ltd. The Tribunal noted that the Ld. CIT(A) had accepted the assessee's claim that the transaction was a loan given to Sulabh Resources Pvt. Ltd. and that Sulabh Resources Pvt. Ltd. was a genuine NBFC. The Tribunal, therefore, upheld the deletion of additions in this regard. The Tribunal also noted that for other assessment years, additions were confirmed by the Ld. CIT(A) for loans from M/s. Sahanbhuti Distributors Pvt. Ltd. and M/s. Intero Infrastructure & Trading Pvt. Ltd., which were considered shell entities. The Tribunal held that the assessee's appeals regarding these confirmed additions would be dismissed, and the Revenue's appeal regarding the deletion for Sulabh Resources Pvt. Ltd. would be allowed.

The Tribunal noted that the assessee is a registered Non-Banking Financial Company (NBFC) engaged in money lending and borrowing. The assessee's director, Mr. Kashyap Mehta, acquired the assessee company from Jagdish Purohit and the lender company, M/s. Sulabh Resources Pvt. Ltd., from him. Mr. Mehta confirmed these transactions in his statement. The Tribunal also considered the submission that M/s. Sulabh Resources Pvt. Ltd. is an RBI-registered NBFC with a substantial net worth. The Tribunal observed that the Ld. CIT(A) had deleted the additions concerning M/s. Sulabh Resources Pvt. Ltd. while confirming additions related to other entities. The Tribunal decided to examine the deletion made by the Ld. CIT(A) in the case of M/s. Sulabh Resources Pvt. Ltd. as the lead case. The Tribunal found that the Ld. CIT(A) had deleted the addition of Rs. 35,96,507/- and consequential interest of Rs. 2,33,688/- made under Sections 68 and 69C for AY 2014-15 in respect of M/s. Sulabh Resources Pvt. Ltd. The Tribunal noted that the Ld. CIT(A) had accepted the assessee's claim that the transaction was a loan given to Sulabh Resources Pvt. Ltd. and that Sulabh Resources Pvt. Ltd. was a genuine NBFC. The Tribunal, therefore, upheld the deletion of additions in this regard. The Tribunal also noted that for other assessment years, additions were confirmed by the Ld. CIT(A) for loans from M/s. Sahanbhuti Distributors Pvt. Ltd. and M/s. Intero Infrastructure & Trading Pvt. Ltd., which were considered shell entities. The Tribunal held that the assessee's appeals regarding these confirmed additions would be dismissed, and the Revenue's appeal regarding the deletion for Sulabh Resources Pvt. Ltd. would be allowed.

The Tribunal condoned the delay of 290 days in filing the appeal, finding the assessee's explanation to be bona fide and supported by exceptional humanitarian and financial circumstances. On the substantive issue, the Tribunal held that the mere change in the method or manner of accounting, from inclusive to exclusive for indirect taxes, cannot lead to taxation unless the underlying transactions establish that such a change has actually resulted in an increase in real profit or taxable income. The Tribunal noted that the assessee's explanation regarding the treatment of collected taxes, paid taxes, and input tax credit required examination with reference to the actual books of account and underlying transactions. The Tribunal set aside the impugned order of the CIT(A) and restored the matter to the Assessing Officer for fresh examination. The AO is directed to examine the books of account, relevant records, and details of taxes collected and paid to determine the actual effect of the accounting change on the profit and taxable income. If no increase in profit is found, no addition should be made. If an increase is found, the AO shall adjudicate accordingly after providing an opportunity of being heard to the assessee.

The Tribunal held that the penalty levied under section 270A of the Act cannot be sustained. The Tribunal found that the assessee's claim, though not accepted in the quantum proceedings, was based on disclosed facts and an arguable legal position regarding the characterisation of the expenditure. The Tribunal noted that the expenditure related to software development, with a portion remaining as capital work-in-progress and another part being impairment of an IP asset, both disclosed in financial statements. The Tribunal relied on the principle established in cases like Carona Ltd. and Trigent Software Ltd., which distinguish between a false factual statement and an unsuccessful legal claim. It was held that the mere fact that the Revenue characterised the expenditure differently does not convert a bona fide claim into a non-bona fide one. The Tribunal observed that the CIT(A) himself recorded the disclosure of facts by the assessee. Applying the provisions of section 270A(6)(a), which excludes amounts from under-reported income where an explanation is bona fide and all material facts are disclosed, the Tribunal concluded that the ingredients of the section were satisfied. Consequently, the penalty of Rs.1,23,71,443 was directed to be deleted. The Tribunal also noted that three appeals were filed, and two were dismissed as withdrawn, with the decision pertaining to the main appeal.

The Tribunal held that the disallowance of ₹17,89,01,092 was deleted. The Tribunal found that the assessee had distinguished the prior-year provision, which was added back, from the current-year provision, which was separately disallowed. The amount in dispute was traceable to the prior-year computation and not an unexplained amount appearing for the first time. The authorities below treated the reversal as a fresh claim without establishing a double deduction or that the amount did not represent business expenditure. The Tribunal also deleted the disallowance of ₹1 crore for the reversal of litigation provision. It found that the amount was referable to an earlier-year provision disallowed in the preceding year and separately identified as a reversal. The disallowance below rested on the proposition that a reversal not routed through the profit and loss account is inadmissible, which the Tribunal found did not address the tax effect of the earlier-year disallowance. The disallowance of ₹86,66,000 for education cess was confirmed, as Explanation 3 to Section 40(a)(ii) clarifies that 'tax' includes cess. The deletion of the disallowance under Section 14A was upheld, as the CIT(A) correctly noted the absence of exempt income, and the revenue did not provide material to show otherwise. The Department's ground on this was dismissed. The assessee's appeal was partly allowed, and the Department's appeal was dismissed.

The Tribunal noted that the assessee is a registered Non-Banking Financial Company (NBFC) engaged in money lending and borrowing. The assessee's director, Mr. Kashyap Mehta, acquired the assessee company from Jagdish Purohit and the lender company, M/s. Sulabh Resources Pvt. Ltd., from him. Mr. Mehta confirmed these transactions in his statement. The Tribunal also considered the submission that M/s. Sulabh Resources Pvt. Ltd. is an RBI-registered NBFC with a substantial net worth. The Tribunal observed that the Ld. CIT(A) had deleted the additions concerning M/s. Sulabh Resources Pvt. Ltd. while confirming additions related to other entities. The Tribunal decided to examine the deletion made by the Ld. CIT(A) in the case of M/s. Sulabh Resources Pvt. Ltd. as the lead case. The Tribunal found that the Ld. CIT(A) had deleted the addition of Rs. 35,96,507/- and consequential interest of Rs. 2,33,688/- made under Sections 68 and 69C for AY 2014-15 in respect of M/s. Sulabh Resources Pvt. Ltd. The Tribunal noted that the Ld. CIT(A) had accepted the assessee's claim that the transaction was a loan given to Sulabh Resources Pvt. Ltd. and that Sulabh Resources Pvt. Ltd. was a genuine NBFC. The Tribunal, therefore, upheld the deletion of additions in this regard. The Tribunal also noted that for other assessment years, additions were confirmed by the Ld. CIT(A) for loans from M/s. Sahanbhuti Distributors Pvt. Ltd. and M/s. Intero Infrastructure & Trading Pvt. Ltd., which were considered shell entities. The Tribunal held that the assessee's appeals regarding these confirmed additions would be dismissed, and the Revenue's appeal regarding the deletion for Sulabh Resources Pvt. Ltd. would be allowed.

The Tribunal condoned the delay of 922 days, subject to the assessee depositing a cost of Rs.33,000/- with the Revenue Department within 30 days. The Tribunal found the assessee's explanation plausible and bona fide, constituting sufficient cause. The reasoning was based on the prolonged cessation of business activity, absence of transactions in Form 26AS, AIS, and bank accounts, consequent non-access of the income-tax portal, the ex parte nature of the impugned order, stated absence of actual knowledge, subsequent discovery of the penalty demand, and the absence of material suggesting deliberate delay or mala fides. The Tribunal noted that the underlying assessment had been quashed by the Tribunal earlier. On merits, the Tribunal noted that the impugned order was passed ex parte and did not consider the effect of the Tribunal's earlier order dated 10.08.2016 which quashed the assessment. Since the complete relevant record was not before the Tribunal, and in the interest of justice, the Tribunal set aside the impugned order and restored the matter to the file of the Ld. Commissioner for fresh adjudication in accordance with law, after considering the Tribunal's order dated 10.08.2016 and all relevant material. The assessee was directed to cooperate without seeking unnecessary adjournments.

The Tribunal held that the PCIT was not justified in invoking revisional jurisdiction under Section 263. The Tribunal noted that the issue of the gift transaction, including its disclosure in subsequent years and the nature of the addition (substantive vs. protective), had already been considered by the CIT(A) and this Tribunal for AY 2019-20, and by the AO for AY 2020-21. The deletion of the protective addition for AY 2019-20 was upheld by the Tribunal. The Tribunal emphasized that the PCIT's direction for re-examination of aspects already gone into by the authorities below did not warrant the exercise of Section 263 jurisdiction. Relying on the Bombay High Court's decision in Gabriel India Ltd., the Tribunal stated that the Commissioner cannot revise an order merely because he disagrees with the AO's conclusion. Therefore, the impugned order of the PCIT was set aside. The appeal was allowed.

The Tribunal held that the PCIT was justified in invoking revisional jurisdiction under section 263 of the Income Tax Act, 1961. The Tribunal found that the AO's assessment order was passed without the requisite inquiry and verification concerning the allowability of the Rs. 29,05,00,000/- contribution to the Core Settlement Guarantee Fund. The PCIT correctly identified that the nature of the contribution, its potential as a contingent liability versus a crystallized business liability, and the existence of an accumulated corpus with earned interest were material aspects that required detailed examination. The Tribunal emphasized that merely issuing notices or obtaining a response is insufficient; the inquiry must be commensurate with the issue. The omission to examine whether the payment represented an existing liability or a possible future obligation was significant. Therefore, the assessment order was considered erroneous and prejudicial to the interest of the revenue. The Tribunal upheld the PCIT's order setting aside the assessment on this limited issue and remanding it to the AO for fresh examination in accordance with law, after affording the assessee an adequate opportunity of being heard. The Tribunal explicitly stated that it was not expressing any concluded view on the ultimate allowability of the deduction under Section 37(1), leaving that question open for the AO's fresh inquiry.

The Tribunal noted that the assessee is a registered Non-Banking Financial Company (NBFC) engaged in money lending and borrowing. The assessee's director, Mr. Kashyap Mehta, acquired the assessee company from Jagdish Purohit and the lender company, M/s. Sulabh Resources Pvt. Ltd., from him. Mr. Mehta confirmed these transactions in his statement. The Tribunal also considered the submission that M/s. Sulabh Resources Pvt. Ltd. is an RBI-registered NBFC with a substantial net worth. The Tribunal observed that the Ld. CIT(A) had deleted the additions concerning M/s. Sulabh Resources Pvt. Ltd. while confirming additions related to other entities. The Tribunal decided to examine the deletion made by the Ld. CIT(A) in the case of M/s. Sulabh Resources Pvt. Ltd. as the lead case. The Tribunal found that the Ld. CIT(A) had deleted the addition of Rs. 35,96,507/- and consequential interest of Rs. 2,33,688/- made under Sections 68 and 69C for AY 2014-15 in respect of M/s. Sulabh Resources Pvt. Ltd. The Tribunal noted that the Ld. CIT(A) had accepted the assessee's claim that the transaction was a loan given to Sulabh Resources Pvt. Ltd. and that Sulabh Resources Pvt. Ltd. was a genuine NBFC. The Tribunal, therefore, upheld the deletion of additions in this regard. The Tribunal also noted that for other assessment years, additions were confirmed by the Ld. CIT(A) for loans from M/s. Sahanbhuti Distributors Pvt. Ltd. and M/s. Intero Infrastructure & Trading Pvt. Ltd., which were considered shell entities. The Tribunal held that the assessee's appeals regarding these confirmed additions would be dismissed, and the Revenue's appeal regarding the deletion for Sulabh Resources Pvt. Ltd. would be allowed.

The Tribunal held that the disallowance of ₹17,89,01,092 was deleted. The Tribunal found that the assessee had distinguished the prior-year provision, which was added back, from the current-year provision, which was separately disallowed. The amount in dispute was traceable to the prior-year computation and not an unexplained amount appearing for the first time. The authorities below treated the reversal as a fresh claim without establishing a double deduction or that the amount did not represent business expenditure. The Tribunal also deleted the disallowance of ₹1 crore for the reversal of litigation provision. It found that the amount was referable to an earlier-year provision disallowed in the preceding year and separately identified as a reversal. The disallowance below rested on the proposition that a reversal not routed through the profit and loss account is inadmissible, which the Tribunal found did not address the tax effect of the earlier-year disallowance. The disallowance of ₹86,66,000 for education cess was confirmed, as Explanation 3 to Section 40(a)(ii) clarifies that 'tax' includes cess. The deletion of the disallowance under Section 14A was upheld, as the CIT(A) correctly noted the absence of exempt income, and the revenue did not provide material to show otherwise. The Department's ground on this was dismissed. The assessee's appeal was partly allowed, and the Department's appeal was dismissed.

The Tribunal noted that the assessment was completed under Section 144 due to the assessee's failure to furnish details and documentary evidence. The CIT(A) also found that the assessee did not provide a proper reconciliation of income or supporting documents. Before the Tribunal, the assessee submitted additional evidence regarding cash deposits and credit card payments, claiming the funds originated from a partnership firm. The assessee also contended that the underlying transaction details from Form 26AS, forming the basis of the addition, were not provided by the AO. The Tribunal found these aspects, especially in light of the additional evidence, required factual verification by the Assessing Officer. The claim of non-furnishing of transaction details also needed examination at the assessment stage. Therefore, without expressing an opinion on the merits, the Tribunal restored the matter to the AO for fresh adjudication. The AO is to provide the transaction details, and the assessee must furnish all relevant documentary evidence and reconciliation. The AO will then pass a fresh order after providing an adequate opportunity of being heard.

The Tribunal held that Ground No. 2, concerning the interest on outstanding trade receivables, is allowed for statistical purposes. Regarding the assessee's claim that INR 4,64,15,438 pertains to SmartStream RDU India Pvt. Ltd., an Indian entity, the Tribunal found this to be a factual matter requiring verification. Therefore, this aspect was restored to the AO/TPO to verify the claim and, if correct, exclude the corresponding amount from interest adjustment computation. Concerning the appropriate interest rate, the Tribunal held that a mechanical application of a uniform spread is not appropriate. The rate must be determined based on the facts and circumstances, including the financial standing of the associated enterprise and comparable uncontrolled transactions. This issue was also restored to the AO/TPO for fresh consideration, taking into account the principles and judicial precedents relied upon by the assessee, and affording the assessee an opportunity of being heard. Ground No. 3, related to penalty initiation, was dismissed as premature and infructuous. Ground No. 4, being general, was also dismissed as infructuous. The Tribunal did not decide on the merits of the transfer pricing adjustment for software development services (Ground No. 1) as it was not explicitly discussed in the provided excerpt of the judgment.

The Tribunal noted that the assessee is a registered Non-Banking Financial Company (NBFC) engaged in money lending and borrowing. The assessee's director, Mr. Kashyap Mehta, acquired the assessee company from Jagdish Purohit and the lender company, M/s. Sulabh Resources Pvt. Ltd., from him. Mr. Mehta confirmed these transactions in his statement. The Tribunal also considered the submission that M/s. Sulabh Resources Pvt. Ltd. is an RBI-registered NBFC with a substantial net worth. The Tribunal observed that the Ld. CIT(A) had deleted the additions concerning M/s. Sulabh Resources Pvt. Ltd. while confirming additions related to other entities. The Tribunal decided to examine the deletion made by the Ld. CIT(A) in the case of M/s. Sulabh Resources Pvt. Ltd. as the lead case. The Tribunal found that the Ld. CIT(A) had deleted the addition of Rs. 35,96,507/- and consequential interest of Rs. 2,33,688/- made under Sections 68 and 69C for AY 2014-15 in respect of M/s. Sulabh Resources Pvt. Ltd. The Tribunal noted that the Ld. CIT(A) had accepted the assessee's claim that the transaction was a loan given to Sulabh Resources Pvt. Ltd. and that Sulabh Resources Pvt. Ltd. was a genuine NBFC. The Tribunal, therefore, upheld the deletion of additions in this regard. The Tribunal also noted that for other assessment years, additions were confirmed by the Ld. CIT(A) for loans from M/s. Sahanbhuti Distributors Pvt. Ltd. and M/s. Intero Infrastructure & Trading Pvt. Ltd., which were considered shell entities. The Tribunal held that the assessee's appeals regarding these confirmed additions would be dismissed, and the Revenue's appeal regarding the deletion for Sulabh Resources Pvt. Ltd. would be allowed.

The Tribunal upheld the order of the CIT(A), dismissing the Revenue's appeals. The primary finding was that the reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, were invalid due to the prior approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal reasoned that a reduction in the determined loss for an earlier assessment year has a consequential bearing on the tax attributes of the Corporate Debtor, including losses available for carry forward and set-off in subsequent years. Therefore, such proceedings directly impacted the tax position relating to the period prior to the Resolution Plan's approval. The Tribunal referred to the decisions of the Bombay High Court in Alok Industries Ltd. v. ACIT and Uttam Value Steels Ltd. v. ACIT, which considered the effect of approved Resolution Plans on reassessment proceedings for periods prior to approval. The Tribunal noted that while the Resolution Plan allowed for carry forward of losses, this did not grant the Revenue an unrestricted power to reopen assessments concluded before the plan's approval. The Tribunal found no infirmity in the CIT(A)'s conclusion that reassessment proceedings could not be validly initiated after the Resolution Plan's approval. Consequently, the reassessment proceedings were liable to fail on jurisdictional grounds. The Tribunal found it unnecessary to adjudicate the validity of the reopening under the first proviso to Section 147 or the issue of change of opinion, as well as the allowability of depreciation, as these became academic. The addition/disallowance of Rs. 8,38,63,725/- made by the AO was consequently deleted.

The Tribunal held that the adjustment amount of Rs. 1,26,05,962/- requires verification with reference to the business transfer arrangement and the accounting treatment under Appendix C to Ind AS 103. The Tribunal noted that the Assessing Officer had not afforded sufficient time to the Assessee for substantiation, and the detailed working was not examined by the CIT(A). Therefore, the Tribunal restored this limited issue to the file of the jurisdictional Assessing Officer for the purpose of verification of the correctness and quantification of the adjustment. The Assessee is to furnish complete working, reconciliation, and supporting documents, and the AO is to verify the same after affording a reasonable opportunity of being heard. This remand is confined to the verification of the adjustment and does not reopen any other concluded issue. Consequently, grounds 1 to 5 of the Assessee's appeal relating to this disallowance are restored to the AO. Ground 6 of the Assessee's appeal regarding penalty proceedings under Section 270A is consequential and does not require separate adjudication at this stage. The Tribunal dismissed the Revenue's appeal and partly allowed the Assessee's appeal for the limited purpose of verification.

The Tribunal allowed the assessee's appeal, directing the deletion of all additions. Regarding the Rs. 23,00,000/- loan addition under section 68, the Tribunal found that the assessee had provided primary documents like loan confirmation, bank statements, and the lender's financial material, establishing the lender's identity and creditworthiness. The Tribunal noted that the AO's reliance on Shri Mehta's statement was not sufficiently substantiated by independent adverse findings concerning the loan transaction itself, especially when the assessee sought cross-examination. The Tribunal distinguished the present case from Bajaj International Realty by emphasizing the availability of primary documents and audited accounts, and the revenue's failure to point out defects in the assessee's material. The Tribunal held that an untested general statement could not overcome the assessee's transaction-specific explanation without an inquiry addressing that explanation. For the commission addition of Rs. 12,420/- under section 69C, the Tribunal found no evidence that the assessee incurred such expenditure. The rate was derived from Shri Mehta's statement concerning unrelated transactions, and the assessment order did not show a distinct proposed commission addition. The Tribunal directed deletion of this addition. For the interest disallowance of Rs. 1,69,003/-, the Tribunal noted that the AO's sole reason was the characterization of the principal loan as unexplained, which had been set aside. The Tribunal also observed that the assessee claimed income under section 44ADA, where interest is deemed to have been allowed. The Tribunal directed deletion of this disallowance. The AO was directed to recompute the income and tax liability accordingly.

The Tribunal held that the Ld. CIT(A) erred in dismissing the appeal solely on the grounds of delay without adjudicating the merits. The Tribunal noted that the notice under section 143(2) for AY 2007-08 was issued at the assessee's new address, indicating the AO's awareness of the address change. The Tribunal accepted the assessee's explanation that the assessment order was not received at the new address and that the relevant documents were subsequently obtained, leading to the delay. Therefore, the delay in filing the appeal before the Ld. CIT(A) was condoned in the interest of substantial justice. Furthermore, the Tribunal observed that the assessment was completed ex parte and the documentary evidence furnished by the assessee was not examined on merits by the Ld. CIT(A). Consequently, the Tribunal restored the matter to the file of the Assessing Officer for fresh adjudication in accordance with law. The Assessing Officer was directed to examine the documentary evidence, afford an opportunity of being heard, and adjudicate the issues afresh on merits. The assessee was directed to cooperate in the de novo proceedings. The appeal was allowed for statistical purposes.

The Tribunal held that the notice under Section 148 was issued on 18.04.2022 for AY 2015-16, which is beyond six years from the end of the relevant assessment year (31.03.2016). Applying the first proviso to Section 149(1), the limitation period as it stood prior to 01.04.2021 is applicable. The Tribunal found that the notice was barred by limitation, as the fifth and sixth provisos to Section 149(1) do not extend the period of limitation applicable to this case. Consequently, the assumption of jurisdiction by the Assessing Officer was invalid, and the assessment order passed pursuant to this invalid assumption of jurisdiction was liable to be quashed. The additions and disallowances made in the assessment proceedings, therefore, do not survive. Any other grounds raised by the assessee were rendered academic and did not require separate adjudication.

The Tribunal held that the issue had already been decided in the connected cross-appeals of Shri Narsiram Natharamji Choudhary for assessment year 2015-16. In paragraphs 21 to 26 of that order, the Tribunal had examined the same seized papers, builder's records, statements, and documents concerning cancellation and subsequent sale, and concluded that the alleged cash investment had not been established. The addition of Rs. 8,27,75,848 was deleted, and the Revenue's ground for restoration of a higher addition was dismissed. Specifically, the joint booking of Flat No. 5704 in the names of Smt. Mafari Devi Choudhary and Shri Narsiram Natharamji Choudhary was considered, and it was held that joint booking and matching cheque payments did not establish actual payment of the disputed cash. The deletion of the substantive addition was on merits. The protective additions before the Tribunal arose from the very same alleged cash payments for Flat Nos. 5702, 5703, and 5704 and rested on the same evidence. No independent material establishing payment of the disputed cash by these respondents was brought to notice. The principle permitting protective proceedings where the person chargeable is uncertain does not warrant sustaining these additions when the alleged investment itself was found not established on common material. Following the decision in the main appeals of Shri Narsiram Natharamji Choudhary, the Tribunal found no infirmity in the deletion of the corresponding protective additions by the CIT(A). The effective grounds of the Revenue in all three appeals were dismissed.

The Tribunal noted that the primary dispute concerns the applicability of Section 14A. It observed that the assessee claimed that as a mutual concern, no expenditure was incurred and claimed against exempt income, and that income was offered on a gross basis. The Tribunal referred to a coordinate Bench decision in ACIT vs. Bombay Gymkhana Ltd. (ITA No. 6410/Mum/2016), which dealt with identical facts and circumstances concerning a mutuality concern that did not claim any expenditure. In that case, the CIT(A) had deleted the disallowance, agreeing that when income is offered on a gross basis and no expenditure is claimed, the question of disallowance under Section 14A does not arise. However, in the present case, the Tribunal found a slight difference: it was admitted that at least 5% of expenses related to sponsorship income were claimed, and not the entire income was grossed up with no expenses. Therefore, the issue was set aside to the AO for verification of the claim that expenses related solely to sponsorship income and not to investments yielding exempted income. The AO was directed to restrict the disallowance accordingly. Regarding the contention of consistency in prior assessment orders, the Tribunal dismissed this ground, stating that the principle of res judicata is not applicable to income tax proceedings, and each year is a separate assessment event. The appeal was partly allowed for statistical purposes.

The Tribunal found that the assessee had not been able to effectively substantiate his engagement in any business activity by producing cogent and corroborative evidence. The claim that receipts represented business receipts liable under Section 44AD remained unsubstantiated. Furthermore, the declared turnover of ₹1,09,05,007/- exceeded the threshold of ₹1 crore prescribed for AY 2016-17 under Section 44AD, disentitling the assessee from presumptive taxation. The Tribunal also noted that addition under Section 68 could not be sustained for the entire receipts without examining corresponding credits and withdrawals. Therefore, the matter was restored to the Assessing Officer (AO) for fresh adjudication. The AO is directed to examine the complete bank account, with reference to deposits and withdrawals, and determine the nature and source of transactions. If unexplained funds/investments are found, the AO may consider the unexplained peak amount for taxation under Section 69. The assessee will be afforded an opportunity to present evidence and explanations. The appeal was allowed for statistical purposes.

The Tribunal held that the additions made in all three assessment years were outside the permissible scope of assessments framed under section 153C read with section 143(3) due to the absence of incriminating material found during the search having the requisite nexus with the respective additions. The Tribunal noted that the assessment years were unabated as on the date of search. The material relied upon by the Revenue, such as statements recorded during the search, inability of key persons to furnish details of the loan arrangement, and contemporaneous spot verification, did not establish that the loan or the consequential interest expenditure represented undisclosed income of the assessee. The Tribunal followed the Coordinate Bench decisions in M/s Sapphire Developers and Nikita Shilpin Tater, which held that material gathered during subsequent searches or assessment proceedings, or statements and field inquiries contemporaneous with the search, could not satisfy the requirement of incriminating material for unabated assessments as laid down by the Supreme Court in PCIT v. Abhisar Buildwell P. Ltd. The Tribunal clarified that it was not examining the genuineness of the lender or the assessee's discharge of burden under section 68, as the foundational jurisdictional requirement of finding incriminating material during the search was not met. Consequently, the additions of Rs. 30,50,000/- and Rs. 2,61,851/- for AY 2013-14, Rs. 4,99,500/- for AY 2014-15, and Rs. 5,20,588/- for AY 2015-16 were deleted.

The Tribunal upheld the deletion of additions related to cash payments for flats, finding that the loose papers alone did not establish the entire cash as unexplained money of the assessee. The Tribunal also upheld the deletion of Rs.98,01,469/- added under section 69C for alleged cash payments to Chinese suppliers, agreeing with the assessee that these payments related to procurement of goods for the business and that a separate addition would duplicate the profit already taxed. Regarding stock valuation, the Tribunal found that neither the entire physical stock value nor the estimation of profit on it was justified. The valuation difference of Rs.17,74,324/- was restricted to 5% of this difference, amounting to Rs.88,716, in place of Rs.21,43,312 sustained by the CIT(A). The Tribunal dismissed the Revenue's grounds concerning the absence of a remand report and the cumulative effect of evidence. The assessee's appeals were partly allowed, and the Revenue's appeals were dismissed.

The Tribunal held that the case of the assessee is identical to the case of Shri Rajesh Ravjibhai Patel vs. Asst. CIT Cir 26(2), decided by the same bench (ITA No.328/Mum/2023 for AY 2007-08). In that identical case, the Tribunal observed that the AO's premise was based on information from a pen drive seized during a search and a statement from Shri Ranjan Hiranandani, which merely confirmed receipt of 'on-money' without naming specific individuals. The assessee had submitted details of flat purchases and denied any cash payment, attributing advance payments to a home loan. The Tribunal noted that the AO did not conduct further inquiries from the builder or cross-examine Shri Ranjan Hiranandani. It was held that an addition cannot be made solely based on uncorroborated information from third-party books without further inquiry or corroboration. The burden of proof was considered discharged by the assessee, and the AO failed to bring material on record to disprove the assessee's explanation. Therefore, the addition under section 69B (or section 69 as stated in the AO's order) was deleted on merits. Since the substantive addition was deleted, the legal contentions regarding the validity of the notice under section 148 were rendered academic and infructuous and were not adjudicated. The AO was directed to delete the addition.