ITAT Mumbai Judgments — September 2026

The Tribunal held that the Ld. CIT(E) had rejected the applications on the ground of delay without granting the assessees a specific and effective opportunity to explain the delay and place their case for condonation. While the assessees had responded to notices and furnished documents, the Ld. CIT(E) noted a lack of comments or clarification regarding the delay. The Tribunal acknowledged the assessee's specific contention that no show-cause notice was issued concerning the delay. Considering this, and without expressing any opinion on the merits of the explanation for delay or the entitlement to registration/approval, the Tribunal set aside the impugned orders. The Ld. CIT(E) was directed to grant a reasonable and effective opportunity to the assessees to file their explanation for condonation of delay with supporting evidence. If the delay is condoned, the Ld. CIT(E) is to adjudicate the applications for registration under section 12AB and approval under section 80G on merits after granting an adequate opportunity of being heard. All issues regarding the sufficiency of the cause for delay and the merits of the applications were kept open for the Ld. CIT(E)'s consideration. The appeals were allowed for statistical purposes.

The Tribunal held that the additions on account of alleged on-money receipts should be restricted to 8% of the identified receipts, not 15% as sustained by the CIT(A). The reasoning was that the Revenue had not established that the entire gross receipt represented income, nor that project-related expenditure arose from an independent source, nor that reliable material existed for estimating on-money in respect of unidentified units. The Tribunal also deleted the 5% disallowance from subcontracting expenditure, finding no identified defect in the assessee's supporting documents. The adjustment retained by the CIT(A) was deleted, and the AO was directed to restore the amount to Work-in-Progress. Regarding section 43CA, the AO was permitted to examine its applicability in the legally appropriate year upon corresponding revenue recognition, with due opportunity to the assessee. The grounds challenging the validity of section 147 proceedings were dismissed as not pressed. Additional legal grounds concerning section 148 were left open and treated as academic. The Tribunal dismissed the Revenue's appeals entirely.

The Tribunal noted that the assessee had raised specific legal grounds challenging the jurisdiction assumed under sections 147 and 148, the order passed under section 148A(d), and the approval for the notice under section 148, relying on the Supreme Court decision in Union of India v. Ashish Agarwal. The Tribunal found that the impugned order did not deal with these legal grounds by examining the relevant facts, statutory provisions, and judicial precedent. The legal grounds were dismissed by the CIT(A) primarily for want of material and on the observation that no serious lacuna was pointed out at the assessment stage. The Tribunal held that these legal grounds, which go to the root of jurisdiction, were not adjudicated with a reasoned finding on their merits. In the interest of justice, the Tribunal set aside the impugned order and restored the appeal to the file of the CIT(A) for fresh adjudication. The CIT(A) was directed to consider each ground, including the plea based on the Supreme Court decision, and pass a speaking order after granting a reasonable opportunity of being heard. The Tribunal explicitly stated that it had not expressed any opinion on the merits of any ground and all issues were left open. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal upheld the decision of the CIT(A) in deleting the penalty under Section 271(1)(c) on both counts. Regarding the Section 43B addition, the Tribunal held that Section 43B applies to deductions "otherwise allowable." Since the assessee followed an "exclusive method" of accounting and did not route the statutory taxes through the Profit and Loss Account, no deduction was claimed against profits. The disclosure in Form 3CD was transparent, and the assessee had sufficient ITC. The claim was based on a plausible legal interpretation backed by judicial decisions. The Tribunal cited CIT vs. Reliance Petroproducts Pvt. Ltd. to state that making an unsustainable legal claim does not amount to furnishing inaccurate particulars if primary facts are disclosed. Therefore, penalty was not warranted. Concerning the dividend income, the Tribunal noted that the dividend was disclosed in "Schedule SI" and tax was offered under Section 115BBD. The omission from the summary computation was an inadvertent reporting mismatch, not a deliberate suppression. The assessee's suo moto Section 154 application prior to detection by the AO demonstrated no intention to evade tax. The Tribunal concluded that the charge of "tax sought to be evaded" did not hold good, and thus the penalty could not be sustained. The CIT(A)'s deletion of the penalty was affirmed.

The Tribunal held that a penalty under section 270A is necessarily founded upon under-reported or misreported income as determined in accordance with the Act. Any modification to the additions in the quantum proceedings would materially affect the leviability and quantum of the penalty. Therefore, adjudicating the penalty appeal while the underlying additions are still under appellate review would be premature. The Tribunal set aside the impugned order and restored the penalty appeal to the file of the CIT(A). The CIT(A) is directed to first dispose of the quantum appeal and thereafter adjudicate the penalty appeal afresh, considering the outcome of the quantum proceedings and providing the assessee with a reasonable opportunity of hearing. The assessee is also directed to cooperate and provide necessary material. The grounds raised by the assessee are allowed for statistical purposes.

The Tribunal dismissed the Revenue's appeal. The Tribunal found that the assessee had provided assessment orders for AYs 1991-92 and 1992-93, which were part of the Revenue's own records. These earlier assessment orders showed that the transactions relating to the purchase of these properties had already been examined by the Department. During those earlier assessments, the transactions were referred to the Departmental Valuation Officer (DVO), and additions were made towards undisclosed consideration based on the DVO's reports. Therefore, the subsequent registration in FY 2013-14 did not alter the factual position that the acquisition transactions had taken place in the earlier period and had been scrutinized by the Department. The registration in FY 2013-14 was considered a completion of formalities for properties already acquired, not a new acquisition. The Tribunal held that the Ld. CIT(A) had correctly considered the relevant assessment records and made a finding consistent with the Department's own records. The Revenue's reliance on Sumati Dayal v. CIT was not advanced as it could not displace established documentary material from the Department's own assessment records. The absence of specific evidence in the current proceedings did not render irrelevant the earlier assessment orders where the same transactions were considered. Thus, the Ld. CIT(A)'s order was upheld.

The Tribunal held that the authorities below were not justified in sustaining the penalty merely on the ground that the return was furnished for the first time under Section 148. The Tribunal reasoned that Section 270A has a composite scheme requiring identification of situations under subsection (2), determination of under-reported income under subsection (3), examination of exclusions under subsection (6), and then quantification of penalty. While Section 270A(2)(b) is attracted if a return is filed for the first time under Section 148 and assessed income exceeds the threshold, it does not automatically mean the entire assessed income is under-reported income. The determination of under-reported income is governed by Section 270A(3). For an individual in such a scenario, Section 270A(3)(i)(b)(B) prescribes the under-reported income as the difference between assessed income and the maximum amount not chargeable to tax. In this case, the assessed income was identical to the disclosed income, with no additions or unexplained amounts. Furthermore, Section 270A(6)(a) provides an exclusion if the assessee offers a bona fide explanation with full disclosure of material facts. The assessee's explanation of being at sea due to his profession and unawareness of filing requirements, coupled with the fact that his salary income suffered TDS and was reported, and his investments were explained, was considered bona fide. Therefore, the penalty under Section 270A was deleted.

The Tribunal held that the learned CIT(Exemptions) erred in imposing the condition that the registration under section 12AB and approval under section 80G, along with consequential tax benefits, would be subject to the outcome of a proposed Special Leave Petition. The Tribunal reasoned that once the CIT(Exemptions) accepted the binding judgment of the jurisdictional High Court in 'Chamber of Tax Consultants v. CIT (Exemptions)', they could not dilute that grant by making it conditional on a proposed challenge. A judgment of the jurisdictional High Court is binding on tax authorities unless stayed, modified, or reversed. A mere proposal to challenge does not reduce its binding force. The Tribunal relied on its own coordinate bench decisions in 'ILLA Rajesh Foundation v. CIT (Exemptions)', 'Keshavlal Vajechand Kapadia Charity Trust v. CIT (Exemptions)', and 'Bai Manekbai A. Dubash Hareshwar Pandit Trust v. CIT (Exemptions)', which held that such contingent conditions are unsustainable. The Tribunal directed the CIT(Exemptions) to delete the conditional rider, and the registration/approval shall operate in accordance with law without the qualification. The Tribunal noted that if the legal position is subsequently altered by the Supreme Court, consequences would follow at that stage.

The Tribunal admitted the Assessee's legal ground under Rule 27, following the Supreme Court's decision in National Thermal Power Co. Ltd. Vs. CIT. The Tribunal noted that the notice under section 148 was issued by the ACIT-20(1), Mumbai, and subsequently, the Assessee requested a transfer to ITO-20(1)(5), Mumbai, due to returned income below Rs. 20 lakhs, which was granted, and the assessment order was passed by the ITO. However, the Tribunal observed that neither party had provided complete jurisdictional records, including assignment or transfer orders, to definitively establish whether the ACIT-20(1), Mumbai, was vested with jurisdiction on the date of the notice. Adjudicating this jurisdictional issue required factual verification of relevant orders under sections 120 and 127 of the Act. In the absence of complete primary records, the Tribunal could not make a conclusive finding. Therefore, the impugned order was set aside, and the case was remanded to the Ld. Commissioner for a decision on the jurisdictional ground first. The Ld. Commissioner was directed to examine jurisdictional records, including orders under section 120 and 127, the jurisdictional history, and records of the subsequent transfer. The grounds raised by the Revenue on merits were left open for adjudication by the Ld. Commissioner after deciding the jurisdictional issue.

The Tribunal held that the reassessment orders dated 22.05.2023 could not furnish a legally sustainable foundation for the exercise of jurisdiction under section 263. For AY 2016-17, the approval obtained on 28.07.2022 from the Principal Commissioner under section 151(i) did not satisfy the requirement of section 151(ii), as more than three years had elapsed from the end of the assessment year. For AY 2017-18, although the officer signing the approval held the rank of Chief Commissioner, the Revenue failed to establish the statutory condition for exercising power under section 151(ii). The defect in the approval went to the jurisdiction of the AO to proceed under sections 148A(d) and 148. The Tribunal clarified that the reassessment orders themselves were not the subject of the appeal, but their validity was examined to determine if they could support the PCIT's section 263 jurisdiction. The Tribunal also noted that even if the reassessment orders were considered erroneous, the cumulative requirement of prejudice to the interests of the Revenue had not been established. Consequently, the PCIT's orders under section 263 were quashed. Grounds 1 and 2 in both appeals were allowed. Grounds 3 and 4 were dismissed as not pressed.

The Tribunal held that the learned CIT(Exemptions) erred in imposing the condition that the registration under section 12AB and approval under section 80G, along with consequential tax benefits, would be subject to the outcome of a proposed Special Leave Petition. The Tribunal reasoned that once the CIT(Exemptions) accepted the binding judgment of the jurisdictional High Court in 'Chamber of Tax Consultants v. CIT (Exemptions)', they could not dilute that grant by making it conditional on a proposed challenge. A judgment of the jurisdictional High Court is binding on tax authorities unless stayed, modified, or reversed. A mere proposal to challenge does not reduce its binding force. The Tribunal relied on its own coordinate bench decisions in 'ILLA Rajesh Foundation v. CIT (Exemptions)', 'Keshavlal Vajechand Kapadia Charity Trust v. CIT (Exemptions)', and 'Bai Manekbai A. Dubash Hareshwar Pandit Trust v. CIT (Exemptions)', which held that such contingent conditions are unsustainable. The Tribunal directed the CIT(Exemptions) to delete the conditional rider, and the registration/approval shall operate in accordance with law without the qualification. The Tribunal noted that if the legal position is subsequently altered by the Supreme Court, consequences would follow at that stage.

The Tribunal held that the assessee's contention throughout the proceedings under Section 201(1) was that the payments made were on account of reimbursement of common area maintenance charges without any mark-up. The Tribunal found that when payments are made merely as reimbursement of common area maintenance charges on an actual basis, no Tax Deducted at Source (TDS) was warranted on such payments. Therefore, the grounds of appeal raised by the assessee were allowed. The Tribunal did not explicitly mention any issue left undecided. The operative direction was to allow the appeal of the assessee.

The Tribunal decided the issues as follows: Regarding the validity of the notice under section 148, the Tribunal rejected the assessee's plea for jurisdiction under section 153C, stating that the relevant assessment year (2007-08) fell outside the six-year period stipulated in section 153A and the amendment extending abatement to 10 years was not applicable. On merits, the Tribunal found that the AO's entire premise for the addition was based on a pen drive seized from a third party and a statement from Shri Ranjan Hiranandani confirming receipt of on-money. However, the assessee had denied making any cash payment and provided details of payments made through bank loans. The Tribunal held that the AO failed to conduct further inquiries from the builder or confront the builder for cross-examination, especially since the builder's statement did not specifically name the assessee. The Tribunal emphasized that uncorroborated information from a third party cannot lead to an addition without further inquiry or material evidence. Therefore, the addition under section 69B was deleted. Since the appeal was allowed on merits, the legal grounds regarding the notice were rendered academic and not adjudicated separately. The appeal was allowed on merits.

The Tribunal held that the CIT(A)'s order, while stating it was decided on merits, substantially relied on the absence of further submissions and the AO's conclusion. It did not independently determine the material questions regarding the agreement date, registration date, payment evidence, and the application of section 56(2)(vii)(b). The assessee also raised a jurisdictional objection which was not addressed. The Tribunal found that a fresh decision by the CIT(A) was warranted to ensure the appellate order stated the points for determination, the decision thereon, and the reasons for the decision, as required by section 250(6). Therefore, the Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A)'s file for a fresh, reasoned decision. The CIT(A) was directed to afford the assessee a reasonable opportunity of being heard, consider all grounds and material, including the jurisdictional objection, and decide the appeal afresh. The assessee was directed to pay costs of Rs.5,000/- for the restoration. The Tribunal expressed no view on the validity of the reassessment or the merits of the addition.

The Tribunal held that the issue regarding the computation of disallowance under Section 14A read with Rule 8D stands covered by the decision of the Hon'ble Special Bench of the Tribunal in ACIT v. Vireet Investment Private Limited [2017] 82 taxmann.com 415 (Delhi-Trib.) (SB). Following the ratio laid down in that decision, the Tribunal ruled that for the purpose of computing the disallowance under Section 14A read with Rule 8D, only such investments which have actually yielded exempt income during the relevant previous year are to be considered. The Tribunal found that the CIT(A)'s opinion that disallowance should be computed with reference to all investments capable of yielding exempt income, irrespective of whether such income has actually accrued, arisen, or been received during the relevant previous year, was contrary to the Special Bench decision. Accordingly, the impugned order of the CIT(A) was set aside to this extent, and the Assessing Officer was directed to recompute the disallowance under Section 14A read with Rule 8D in accordance with the principles laid down by the Hon'ble Special Bench in Vireet Investment (supra) and grant consequential relief to the assessee. The issue of Section 69C disallowance was not decided as it was set aside by the CIT(A) for fresh adjudication.

The Tribunal held that the reassessment orders dated 22.05.2023 could not furnish a legally sustainable foundation for the exercise of jurisdiction under section 263. For AY 2016-17, the approval obtained on 28.07.2022 from the Principal Commissioner under section 151(i) did not satisfy the requirement of section 151(ii), as more than three years had elapsed from the end of the assessment year. For AY 2017-18, although the officer signing the approval held the rank of Chief Commissioner, the Revenue failed to establish the statutory condition for exercising power under section 151(ii). The defect in the approval went to the jurisdiction of the AO to proceed under sections 148A(d) and 148. The Tribunal clarified that the reassessment orders themselves were not the subject of the appeal, but their validity was examined to determine if they could support the PCIT's section 263 jurisdiction. The Tribunal also noted that even if the reassessment orders were considered erroneous, the cumulative requirement of prejudice to the interests of the Revenue had not been established. Consequently, the PCIT's orders under section 263 were quashed. Grounds 1 and 2 in both appeals were allowed. Grounds 3 and 4 were dismissed as not pressed.

The Tribunal noted that this was the second round of litigation and that the assessee had failed to utilize the opportunities granted by the Tribunal and the CIT(A) to present their case and furnish documentary evidence. However, the Tribunal also acknowledged that substantial additions were made and that the assessee had now filed additional evidence before the Tribunal which had not been examined by the lower authorities. Considering the quantum of additions, the nature of the dispute, and the additional evidence, the Tribunal decided to grant one final opportunity to the assessee to present their case on merits. The impugned order of the CIT(A) was set aside, and the matter was restored to the file of the CIT(A) for de-novo consideration, including the additional evidence. This restoration was made subject to the payment of a cost of Rs. 11,000/- to the Prime Minister's Relief Fund, as a measure to address the assessee's repeated non-compliance. The Tribunal clarified that this was a final opportunity in the interest of justice and not an approval of the assessee's past conduct. The appeal was allowed for statistical purposes.

The Tribunal noted that while dividend income itself is exempt under Section 10(35), the reinvestment of such dividend results in the fresh acquisition of capital assets. The redemption of these units constitutes a transfer under Section 2(47) of the Act. Consequently, any gains arising from such a transfer are to be computed under Section 45. If the holding period is less than thirty-six months, these gains are taxable as short-term capital gains. The Tribunal found that the assessee had not furnished crucial details like unit-wise acquisition data, dividend reinvestment schedules, aggregate cost computation, and a capital gains working to demonstrate that redemption proceeds equaled the cumulative investment cost. The Tribunal also acknowledged the assessee's request to admit additional evidence. Considering the need for factual appreciation of these details, the Tribunal set aside the appellate order and remanded the entire matter to the CIT(A) for a de novo order. The CIT(A) was directed to examine all relevant details, including any additional evidence, to arrive at a just and fair decision regarding the nature of reinvestments and the applicability of capital gains provisions.

The Tribunal held that the reassessment framed by the Assessing Officer under section 143(3) read with section 147 of the Act for Assessment Year 2012-13 is bad in law and consequently quashed. The Tribunal noted that an identical issue was considered by the jurisdictional High Court in the case of Sejal Jewellery Vs. Union of India. In that case, the jurisdictional High Court, after considering the decisions of the Supreme Court in PCIT Vs. Abhisar Buildwell Private Limited and the Rajasthan High Court in Shyam Sunder Khandelwal Vs. ACIT (whose SLP was dismissed by the Supreme Court), held that where an AO reopens an assessee's case under section 147 based on a search operation at the premises of a group concern, and the foundation of the case is the seized materials, then the provisions of section 153C read with section 153A would be applicable, making the notice under section 147 bad in law. Although the Delhi High Court took a contrary view in PCIT Vs. Naveen Kumar Gupta, the Tribunal is bound by the decision of the jurisdictional High Court. Therefore, respectfully following the jurisdictional High Court's decision in Sejal Jewellery, the Tribunal allowed grounds 1 and 2 of the assessee's appeal. As the reassessment proceedings were quashed on a legal point, the grounds raised on merits were not adjudicated as they would be academic.

The Tribunal held that the fresh notices issued under section 148 on 29.07.2022 were beyond the surviving period of limitation as per the Supreme Court's decision in Rajeev Bansal. Consequently, the reassessment proceedings and assessment orders were quashed.

The Tribunal decided the issues as follows: Issue 1 (Section 14A and Section 115JB): The Tribunal upheld the CIT(A)'s deletion of the disallowance under Section 14A read with Rule 8D for AY 2011-12, agreeing that no disallowance can be made in the absence of exempt income. The Tribunal also concurred with the CIT(A)'s finding that Section 14A disallowances are covered under clause (f) of Explanation 1 to Section 115JB(2), meaning they are not to be added to book profit. The ratio is that Section 14A requires a nexus with exempt income, and its disallowances are not automatically includible in book profit under Section 115JB unless specifically covered by the Explanation. Issue 2 (Delayed deposit of employees' contribution to PF/ESIC): The Tribunal allowed the Revenue's appeal, setting aside the CIT(A)'s order. It relied on the Supreme Court's decision in Checkmate Services P. Ltd. vs. CIT, holding that employees' contribution, governed by Section 36(1)(va) and Section 2(24)(x), must be deposited by the due date prescribed under PF/ESIC legislation. The benefit of Section 43B's extended due date is not applicable to employees' contributions. The disallowance made by the AO was restored. Issue 3 (ALV of unsold finished stock): The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the addition. Following the consistent view of the Tribunal in the assessee's own case for AY 2013-14 and the CIT(A)'s subsequent orders, the Tribunal held that additions on account of deemed rent in respect of unsold flats held as stock-in-trade are not sustainable. The principle of judicial consistency was applied.

The Tribunal decided the issues as follows: Issue 1 (Section 14A and Section 115JB): The Tribunal upheld the CIT(A)'s deletion of the disallowance under Section 14A read with Rule 8D for AY 2011-12, agreeing that no disallowance can be made in the absence of exempt income. The Tribunal also concurred with the CIT(A)'s finding that Section 14A disallowances are covered under clause (f) of Explanation 1 to Section 115JB(2), meaning they are not to be added to book profit. The ratio is that Section 14A requires a nexus with exempt income, and its disallowances are not automatically includible in book profit under Section 115JB unless specifically covered by the Explanation. Issue 2 (Delayed deposit of employees' contribution to PF/ESIC): The Tribunal allowed the Revenue's appeal, setting aside the CIT(A)'s order. It relied on the Supreme Court's decision in Checkmate Services P. Ltd. vs. CIT, holding that employees' contribution, governed by Section 36(1)(va) and Section 2(24)(x), must be deposited by the due date prescribed under PF/ESIC legislation. The benefit of Section 43B's extended due date is not applicable to employees' contributions. The disallowance made by the AO was restored. Issue 3 (ALV of unsold finished stock): The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the addition. Following the consistent view of the Tribunal in the assessee's own case for AY 2013-14 and the CIT(A)'s subsequent orders, the Tribunal held that additions on account of deemed rent in respect of unsold flats held as stock-in-trade are not sustainable. The principle of judicial consistency was applied.

The Tribunal dismissed the appeal, upholding the disallowance of ₹13,51,000/- under Section 80GGC. The Tribunal noted that while the decision concerning the Public Political Party (the donee) did not specifically state that the assessee received back the donation, it was relevant due to the party being judicially found to issue bogus donation receipts and return purported donations. The Tribunal found deficiencies in the assessee's own case, including inconsistencies in donation amounts and party names, failure to furnish the complete Axis Bank statement despite opportunities, and not providing details of contacts with the political party or donation arrangements. The Tribunal held that a transaction routed through a bank or supported by a receipt does not become genuine if it is an accommodation entry. It distinguished the assessee's reliance on ACIT vs. Anuj Prakash Gupta, stating that the present case had additional factors, including judicial findings against the donee party. The Tribunal also found that the disallowance was not solely based on third-party statements but on cumulative material, including information about the donee, inconsistencies in the assessee's submissions, and judicial findings. The Tribunal was not satisfied that the payment represented a genuine political contribution eligible for deduction. Ground No. 11 regarding penalty proceedings u/s 270A was dismissed as premature. Ground No. 12 was general.

The Tribunal held that while the CIT(A) was not justified in denying the claim solely for non-furnishing of Form 10BB, the assessee is not entitled to exemption under Section 10(23C)(iiiad). This is because the pre-primary, primary, and secondary sections are considered constituent parts of a single recognized educational institution, and their receipts, aggregating to Rs. 1,01,83,461/-, exceed the prescribed limit of Rs. 1 crore for AY 2015-16. The Tribunal distinguished the case of ICF Silver Jubilee Nursery & Primary School v. DCIT, noting that the approvals in the present case recognize one school with different educational levels, not three independent institutions. Therefore, the aggregation of receipts is justified. However, the Tribunal found that the CPC treated the entire gross receipts as taxable income without considering admissible expenditure, depreciation, and allowances. Since this aspect was not examined by the lower authorities, the issue of correct quantification of taxable income under normal computation provisions is restored to the Assessing Officer. The Assessing Officer is directed to examine the books of account, income and expenditure statements, and allow admissible expenditure, depreciation, and allowances to determine the net taxable income, without disallowing expenditure merely because exemption was denied. The restoration is limited to this computation and does not permit a de novo assessment.

The Tribunal condoned the delay of 50 days in filing the appeal, subject to a cost of ₹10,000/- to the Prime Minister's National Relief Fund, considering the ex-parte decision of the first appeal and the need for a merits-based examination. On the merits, the Tribunal noted that the assessee had not effectively prosecuted its appeal before the CIT(A) and had not presented its explanations regarding the discrepancies found by the AO. The Tribunal observed that the AO had identified discrepancies in the purchase documents, including an invoice referencing GST Rules, 2017 before GST implementation and differences between the assessee's and supplier's documents. The CIT(A) had upheld the addition of ₹27,56,000/- under Section 69C and disallowed depreciation of ₹8,26,800/-. The Tribunal, in the interest of justice, set aside the impugned order and restored the matter to the file of the CIT(A) for de-novo consideration, directing the assessee to deposit the cost and cooperate with the proceedings. The Tribunal expressly left undecided the validity of the reassessment proceedings and the merits of the additions.

The Tribunal held that the first proviso to Section 201(1) read with the second proviso to Section 40(a)(ia) allows relief if the recipient has filed its return, accounted for the income, paid the tax due, and the payer furnishes a prescribed accountant's certificate. The object is to avoid double disallowance when tax has already been paid by the recipient. The Tribunal noted that the CIT(A) found that Religare Finvest Ltd. had offered the interest income of ₹3,75,466/- to tax. The Revenue did not provide any material to show that Form 26A was incorrect, the recipient had not incorporated the interest in its income, or that the tax due had not been paid. The Tribunal found no infirmity in the CIT(A)'s order directing the deletion of the disallowance, as the substantive conditions of the proviso were satisfied. The objection regarding the mode of furnishing Form 26A was not a ground for disallowance when the recipient had already paid the tax. The Tribunal relied on the Supreme Court decision in Hindustan Coca Cola Beverage (P.) Ltd. v. CIT and the Bombay High Court decision in Principal Commissioner of Income-tax v. Morgan Stanley India Capital (P.) Ltd.

The Tribunal upheld the CIT(A)'s deletion of the transfer pricing adjustment of ₹20,77,95,113/-, finding no material factual distinction to render the principles in the cited decisions inapplicable. The Revenue's grounds 1 and 2 were dismissed. Regarding Section 14A and Rule 8D, the Tribunal held that the statutory requirement of objective dissatisfaction by the Assessing Officer under Section 14A(2) prior to invoking Rule 8D was not fulfilled. The assessment order did not demonstrate with reference to the assessee's accounts why the suo motu disallowance was incorrect. The Tribunal noted that the assessee's own funds (net worth) exceeded its investments, a factor considered by the CIT(A). Consequently, the additional disallowance made by invoking Section 14A read with Rule 8D was not sustained and was restricted to the suo motu disallowance of ₹5,66,656/- made by the assessee. The assessee's appeal on this ground was allowed. As the invocation of Rule 8D itself was not sustained, the grounds relating to the computation under Rule 8D (Revenue's grounds 3 to 7) and the corresponding adjustment under Section 115JB (Revenue's ground 8) were dismissed. The Tribunal noted that a co-ordinate bench had upheld the deletion of an addition to book profit arising from a notional disallowance computed under Section 14A. The cross-objection regarding limitation was dismissed as not requiring adjudication, with the issue kept open, as the Revenue's appeal was dismissed and the assessee had obtained relief.

The Tribunal held that the CIT(A) was not justified in restricting the addition to 25% of the alleged bogus purchases. The assessee failed to discharge the primary onus of substantiating the purchases and explaining the expenditure, while the AO had made the addition of the entire amount under Section 69C. The Tribunal found that the CIT(A)'s premise that goods must have been purchased from the open/grey market was not supported by any evidence. There was no material demonstrating actual procurement from third parties in the cash/grey market. The Tribunal relied on the jurisdictional Bombay High Court's decision in PCIT v. Kanak Impex (India) Ltd., which held that when purchases are not proved, the entire purchases ought to be confirmed, and estimating profit misdirects the proceedings. The Supreme Court's dismissal of the SLP against Kanak Impex and the decision in N.K. Proteins Ltd. were also noted. The Tribunal set aside the CIT(A)'s order regarding the restriction of the addition and restored the AO's addition of Rs. 19,29,09,326/- under Section 69C. Consequently, all grounds raised by the Revenue were allowed. For ITA 2079/MUM/2024 concerning penalty under Section 271(1)(c), since the order dated 21.02.2024 (which confirmed the quantum additions to the extent of 25%) was set aside in ITA No. 2085/Mum/2024, the penalty order of the AO was restored.

On the first issue concerning Section 14A, the Tribunal held that the Ld. CIT(A) correctly applied the settled legal position that no disallowance can be made under Section 14A in the absence of exempt income. The Tribunal noted that the amendment to Section 14A by the Finance Act, 2022, is prospective and does not apply to Assessment Year 2018-19. Therefore, the deletion of the disallowance of Rs. 10,86,74,067/- was upheld. On the second issue regarding the sundry creditor, the Tribunal found that the assessee had discharged its primary onus by producing supporting documents. The Tribunal agreed with the Ld. CIT(A)'s balanced approach of sustaining only 12.5% of the disputed amount, as the Revenue had not provided any evidence to establish that the liability was bogus or the expenditure was not genuine, and the verification was incomplete only due to the vendor's non-response. The relief granted by the Ld. CIT(A) was upheld.

The Tribunal decided the issues as follows: Issue 1 (Section 14A and Section 115JB): The Tribunal upheld the CIT(A)'s deletion of the disallowance under Section 14A read with Rule 8D for AY 2011-12, agreeing that no disallowance can be made in the absence of exempt income. The Tribunal also concurred with the CIT(A)'s finding that Section 14A disallowances are covered under clause (f) of Explanation 1 to Section 115JB(2), meaning they are not to be added to book profit. The ratio is that Section 14A requires a nexus with exempt income, and its disallowances are not automatically includible in book profit under Section 115JB unless specifically covered by the Explanation. Issue 2 (Delayed deposit of employees' contribution to PF/ESIC): The Tribunal allowed the Revenue's appeal, setting aside the CIT(A)'s order. It relied on the Supreme Court's decision in Checkmate Services P. Ltd. vs. CIT, holding that employees' contribution, governed by Section 36(1)(va) and Section 2(24)(x), must be deposited by the due date prescribed under PF/ESIC legislation. The benefit of Section 43B's extended due date is not applicable to employees' contributions. The disallowance made by the AO was restored. Issue 3 (ALV of unsold finished stock): The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the addition. Following the consistent view of the Tribunal in the assessee's own case for AY 2013-14 and the CIT(A)'s subsequent orders, the Tribunal held that additions on account of deemed rent in respect of unsold flats held as stock-in-trade are not sustainable. The principle of judicial consistency was applied.

The Tribunal condoned the delay of 164 days in filing the appeal, acknowledging the peculiar facts of the case, specifically the death of the husband of the assessee's accountant, supported by the death certificate. The Tribunal found the delay to be unintentional. Regarding the merits of the case, the Tribunal noted that the assessee had not made sufficient compliance before the lower authorities (AO and CIT(A)) to prove the identity, creditworthiness of the lender, and genuineness of the loan transaction to the satisfaction of the AO. However, considering the undertaking by the assessee's AR to be more vigilant in future and to make timely compliance before lower authorities, the Tribunal decided to restore the matter back to the file of the learned CIT(A). The CIT(A) is directed to adjudicate all grounds of appeal on merits. This restoration is subject to the assessee paying a cost of Rs. 25,000/- to be deposited with the Miscellaneous account of the Income Tax Department. The grounds of appeal are allowed for statistical purposes.

The Tribunal held that the CIT(A) was not justified in restricting the addition to 25% of the alleged bogus purchases. The assessee failed to discharge the primary onus of substantiating the purchases and explaining the expenditure, while the AO had made the addition of the entire amount under Section 69C. The Tribunal found that the CIT(A)'s premise that goods must have been purchased from the open/grey market was not supported by any evidence. There was no material demonstrating actual procurement from third parties in the cash/grey market. The Tribunal relied on the jurisdictional Bombay High Court's decision in PCIT v. Kanak Impex (India) Ltd., which held that when purchases are not proved, the entire purchases ought to be confirmed, and estimating profit misdirects the proceedings. The Supreme Court's dismissal of the SLP against Kanak Impex and the decision in N.K. Proteins Ltd. were also noted. The Tribunal set aside the CIT(A)'s order regarding the restriction of the addition and restored the AO's addition of Rs. 19,29,09,326/- under Section 69C. Consequently, all grounds raised by the Revenue were allowed. For ITA 2079/MUM/2024 concerning penalty under Section 271(1)(c), since the order dated 21.02.2024 (which confirmed the quantum additions to the extent of 25%) was set aside in ITA No. 2085/Mum/2024, the penalty order of the AO was restored.

The Tribunal found merit in the assessee's contention that the additional evidence sought to be produced had a direct bearing on the issues and was necessary for a proper, fair, and effective adjudication. The Tribunal also noted the assessee's argument that appellate notices from the NFAC were not served on its registered e-mail address, depriving it of an effective opportunity to present evidence. Consequently, the Tribunal admitted the additional evidence and set aside the order of the NFAC, restoring the matter to the NFAC's file for fresh adjudication. The NFAC is directed to examine the additional evidence, afford an adequate opportunity of hearing to both parties, and then adjudicate the issues on merits by passing a speaking order. The Tribunal expressly left undecided the substantive grounds of appeal concerning the disallowances and penalty proceedings, as these are to be decided by the NFAC upon remand.

The Tribunal held that the assessment order was void ab initio due to the non-issuance and non-service of notice under Section 143(2) of the Income-tax Act, 1961. The Tribunal relied on the Supreme Court's decision in CIT v. Lakshman Das Khandelwal, which clarified that Section 292BB of the Act does not cure the complete absence of a notice, but only infirmities in its service. The judgment stated that for Section 292BB to apply, the notice must have emanated from the Department, and it is only the manner of service that the section seeks to cure, not the complete absence of notice. The Tribunal found that the Assessing Officer failed to substantiate the issue and service of the notice under Section 143(2) by placing any evidence on record. The assessment order sheet also did not reflect any recording about the issue of such a notice. Therefore, the Tribunal concluded that the issuance and service of a statutory notice under Section 143(2) is a prerequisite for the valid assumption of jurisdiction for continuing assessment proceedings and cannot be dispensed with. Consequently, the impugned assessment order was quashed. As the assessment order was quashed on this legal ground, the remaining grounds of appeal for both the assessee and the revenue were not adjudicated.

The Tribunal held that both the assessment order and the appellate order were passed ex parte due to the assessee's non-compliance. The assessee's primary contention was the non-receipt of statutory notices, which prevented participation. The Tribunal found no conclusive evidence that the assessee deliberately avoided proceedings. Citing the settled principle that no person should be condemned unheard and the right to a reasonable opportunity of being heard as an integral part of natural justice, the Tribunal concluded that the additions were sustained without the assessee's explanation or supporting evidence. Therefore, in the interest of justice, the Tribunal set aside the orders of the Ld. CIT(A) and the AO, restoring the matter to the AO for de novo adjudication. The AO is directed to provide a reasonable opportunity to be heard and consider all evidence. The assessee is directed to cooperate fully. The appeal is allowed for statistical purposes.

The Tribunal upheld the CIT(A)'s deletion of the transfer pricing adjustment of ₹20,77,95,113/-, finding no material factual distinction to render the principles in the cited decisions inapplicable. The Revenue's grounds 1 and 2 were dismissed. Regarding Section 14A and Rule 8D, the Tribunal held that the statutory requirement of objective dissatisfaction by the Assessing Officer under Section 14A(2) prior to invoking Rule 8D was not fulfilled. The assessment order did not demonstrate with reference to the assessee's accounts why the suo motu disallowance was incorrect. The Tribunal noted that the assessee's own funds (net worth) exceeded its investments, a factor considered by the CIT(A). Consequently, the additional disallowance made by invoking Section 14A read with Rule 8D was not sustained and was restricted to the suo motu disallowance of ₹5,66,656/- made by the assessee. The assessee's appeal on this ground was allowed. As the invocation of Rule 8D itself was not sustained, the grounds relating to the computation under Rule 8D (Revenue's grounds 3 to 7) and the corresponding adjustment under Section 115JB (Revenue's ground 8) were dismissed. The Tribunal noted that a co-ordinate bench had upheld the deletion of an addition to book profit arising from a notional disallowance computed under Section 14A. The cross-objection regarding limitation was dismissed as not requiring adjudication, with the issue kept open, as the Revenue's appeal was dismissed and the assessee had obtained relief.

The Tribunal dismissed Ground Nos. 1(A) and 1(B). Following the Coordinate Bench's decision in the assessee's own case for Assessment Years 2016-17 and 2018-19, which in turn followed an earlier decision for AY 2015-16, the Tribunal held that the lease premium paid is capital in nature and not allowable as revenue expenditure under Section 37(1). Furthermore, rights in land were held not to constitute an 'intangible asset' as defined under Section 32(1)(ii) of the Act. The Tribunal dismissed Ground Nos. 2(A) and 2(B) by respectfully following the settled judicial precedent in the assessee's own case for preceding years. The Tribunal noted that the issue regarding the exclusion of foreign branch profits was decided against the assessee, and the alternate claim for computation under foreign tax laws was also rejected, holding that worldwide income of a resident Indian enterprise must be computed under the Income-tax Act, 1961, with credit for foreign taxes allowed under Section 90/91. Ground No. 3 was dismissed as not pressed, as the assessee had received relief via a subsequent rectification order.

The Tribunal held that the penalty of Rs. 4,30,560/- levied under section 270A(8) of the Income-tax Act, 1961, is not sustainable. The reasoning is twofold: Firstly, the Assessing Officer failed to specify the particular circumstance of misreporting under section 270A(9) that was attracted in the assessee's case. The Tribunal relied on the decision in G.R. Infraprojects Ltd. (Rajasthan High Court) and Schneider Electric South East Asia (HQ) Pte Ltd. (Delhi High Court), which mandate the specification of the exact clause of misreporting. Secondly, the penalty order did not provide specific material to connect the assessee with any alleged accommodation-entry arrangement or to demonstrate that the donation was bogus or that the amount was returned to him in cash. The mere general modus operandi of the political party was insufficient to establish misreporting by the assessee. The Tribunal noted that while the timing of the withdrawal (after the section 148 notice) is a factor, it does not, by itself, establish misreporting. The assessee's subsequent compliance by offering the amount to tax and discharging the consequential tax liability, coupled with the absence of specific material establishing misreporting, led to the deletion of the penalty. The order of the CIT(A) confirming the penalty was set aside, and the AO was directed to delete the penalty.

The Tribunal held that the addition of Rs. 3,80,196/- under Section 56(2)(x) of the Income Tax Act, 1961, is not sustainable. The Tribunal noted that the difference between the consideration and the stamp duty value was Rs. 11,40,589/-, representing approximately 4.60% of the consideration. This variation is well below the 10% tolerance band. The Tribunal respectfully followed the decision of a Coordinate Bench in M/s. Padmavati Developers v. ITO, which held that the enhancement of the tolerance band to 10% under Section 56(2)(x)(b)(B) is curative and beneficial and applicable to AY 2018-19. Since the variation in the present case (4.60%) is substantially below the 10% tolerance band, the assessee is entitled to the benefit of the tolerance band. Consequently, the addition made by the AO and sustained by the CIT(A) was deleted. The alternative contention regarding the date of the agreement and the first payment receipt was not adjudicated separately as the primary issue was decided in favour of the assessee. Ground No. 1 of the assessee was allowed. Ground No. 2 relating to interest and penalty proceedings were consequential and premature, respectively.

The Tribunal held that the conditions necessary for invoking Section 263 of the Act were not satisfied. The Tribunal noted that the absence of elaborate discussion in the assessment order does not, by itself, lead to the conclusion that there was no application of mind, especially when the order expressly states that relevant details and supporting documentary evidence were perused. Citing the jurisdictional Bombay High Court's decisions in CIT v. Gabriel India Ltd. and CIT v. Fine Jewellery (India) Ltd., the Tribunal held that where the AO has made enquiries and considered the assessee's explanation, the order cannot be deemed erroneous merely because the Commissioner believes further enquiry was needed. The Tribunal found that the AO had asked for details and examined supporting material, indicating it was not a case of 'no enquiry'. The Tribunal also referred to co-ordinate bench decisions in Blue Cross Laboratories Pvt. Ltd. and Siddharth Colorchem Pvt. Ltd., which dealt with similar issues of Section 80G deduction on CSR expenditure and the invocation of Section 263. The Tribunal concluded that the AO had taken a possible view, and merely because the PCIT held a different view, the assessment order could not be considered erroneous. The impugned order of the PCIT under Section 263 was set aside, and the assessment order was restored. The appeal of the assessee was allowed.

The Tribunal held that the First Appellate Authority erred in dismissing the appeal on the ground of delay without affording the assessee a specific opportunity to explain the reasons for the delay and file a petition for condonation. The Tribunal emphasized that the question of condonation of delay is a threshold issue affecting the maintainability of the appeal and that principles of natural justice require an adequate and effective opportunity of being heard. Therefore, the impugned order of the First Appellate Authority was set aside to that extent. The matter was restored to the file of the First Appellate Authority, directing the assessee to file a petition for condonation of delay with supporting material. The First Appellate Authority was directed to afford a reasonable opportunity of being heard and adjudicate the petition by passing a speaking order. If the delay is condoned, the appeal is to be disposed of on merits. The grounds raised were allowed for statistical purposes.

The Tribunal held that the appeal before the CIT(Appeals) was decided without proper representation from the assessee and that the CIT(Appeals), as the first appellate authority, must independently examine the grounds on merits. The Tribunal noted that the AO's estimation of gross profit at 8% lacked supporting material, such as the assessee's past profit rates, business nature, or comparable cases. The CIT(Appeals) also confirmed this rate without independent examination. Furthermore, the evidence regarding different suppliers varied, requiring proper examination. The Tribunal found that the legal grounds challenging jurisdiction and validity of the assessment also required adjudication. In the interest of justice, the Tribunal restored the appeal to the CIT(Appeals) for de-novo consideration, directing the CIT(Appeals) to first adjudicate the legal grounds and then, if necessary, examine the merits of the addition after considering all relevant material. The appeal was allowed for statistical purposes.

The Tribunal held that the assessee's contention that the AO should not have examined the issue of commission income once the addition under Section 68 was deleted is misconceived. The assessee itself accepted acting as a conduit. In such a scenario, the AO was justified in estimating commission income on the transactions. The Tribunal found the estimation of commission income at 0.15% on the transaction amount of Rs. 13.95 crore, resulting in an addition of Rs. 2,09,250/-, to be more than reasonable, especially since the assessee had not offered any commission or business income from such huge transactions. The Tribunal also noted that the assessee had, in its alternative submission before the AO, relied on case laws where commission was restricted to 0.15% or 0.1% for similar activities. The decisions relied upon by the assessee were found to have no application to the specific transaction. Therefore, all grounds of appeal raised by the assessee were rejected.

The Tribunal held that the learned PCIT erred in invoking revisionary jurisdiction under section 263. The Tribunal found that the ESOP expenditure, representing the discount on issue of options, is an employee-remuneration expenditure allowable under section 37(1) of the Act. This position is well-settled by the Special Bench decision in Biocon Ltd. v. DCIT, affirmed by the Karnataka High Court in CIT v. Biocon Ltd., and further reiterated by the Delhi High Court in PVR Ltd. v. CIT and the Madras High Court in CIT v. Shriram City Union Finance Ltd. The Tribunal noted that the AO's acceptance of the ESOP expenditure was based on this prevailing judicial position and thus constituted a legally plausible view. The PCIT's reliance on section 17(2)(vi) was misplaced, as it pertains to the employee's taxation and not the employer's deductibility. The Tribunal also found that the invocation of Explanation 2 to section 263 was not justified, as the PCIT failed to demonstrate that the assessment order was erroneous and prejudicial to the Revenue, or that the AO's enquiry was completely absent. The PCIT's view that a more elaborate enquiry was needed did not, by itself, confer jurisdiction for revision. Consequently, the impugned order of the PCIT was quashed, and the assessment order was restored. The grounds raised by the assessee were allowed.

The Tribunal dismissed the appeal filed by the assessee. The Tribunal noted that the assessee did not appear for the hearing, and the appeal was decided ex parte. The Tribunal observed that the additions were made by the AO and upheld by the Ld. CIT(A) on the grounds that the assessee failed to discharge its onus with regard to the identity, creditworthiness of the creditor, and genuineness of the transactions. The Tribunal further noted that even before it, the assessee had not filed any supporting documents or placed on record any submissions to rebut the findings of the Ld. CIT(A). Therefore, the Tribunal found no reason to interfere with or deviate from the findings of the Ld. CIT(A) and upheld the order of the Ld. CIT(A). The grounds raised by the assessee were dismissed. The operative direction was to dismiss the appeal.

The Tribunal decided the issues as follows: Issue 1 (Section 14A and Section 115JB): The Tribunal upheld the CIT(A)'s deletion of the disallowance under Section 14A read with Rule 8D for AY 2011-12, agreeing that no disallowance can be made in the absence of exempt income. The Tribunal also concurred with the CIT(A)'s finding that Section 14A disallowances are covered under clause (f) of Explanation 1 to Section 115JB(2), meaning they are not to be added to book profit. The ratio is that Section 14A requires a nexus with exempt income, and its disallowances are not automatically includible in book profit under Section 115JB unless specifically covered by the Explanation. Issue 2 (Delayed deposit of employees' contribution to PF/ESIC): The Tribunal allowed the Revenue's appeal, setting aside the CIT(A)'s order. It relied on the Supreme Court's decision in Checkmate Services P. Ltd. vs. CIT, holding that employees' contribution, governed by Section 36(1)(va) and Section 2(24)(x), must be deposited by the due date prescribed under PF/ESIC legislation. The benefit of Section 43B's extended due date is not applicable to employees' contributions. The disallowance made by the AO was restored. Issue 3 (ALV of unsold finished stock): The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the addition. Following the consistent view of the Tribunal in the assessee's own case for AY 2013-14 and the CIT(A)'s subsequent orders, the Tribunal held that additions on account of deemed rent in respect of unsold flats held as stock-in-trade are not sustainable. The principle of judicial consistency was applied.

The Tribunal upheld the order of the CIT(A). Regarding the validity of reopening, the Tribunal found that the CIT(A) had correctly noted that the AO received specific information from the Investigation Wing regarding large cash deposits, which constituted tangible material for forming a belief that income had escaped assessment. The Tribunal found no material to controvert these findings. On the issue of the addition under Section 68, the Tribunal agreed with the CIT(A) that the assessee failed to establish the genuineness of the cash sales with supporting material, specifically the link between alleged cash sales, stock movement, and bank deposits. The documents produced were deemed insufficient. The Tribunal noted that the assessee did not appear to present arguments or evidence to challenge the CIT(A)'s factual findings. The Tribunal also agreed with the CIT(A) that the challenge to penalty proceedings under Section 271(1)(c) was premature and that interest under Sections 234B and 234C was consequential. Consequently, all grounds raised by the assessee were dismissed.

The Tribunal decided that the addition of Rs. 8,87,290/- made by the Assessing Officer under section 56(2)(x)(b) of the Income-tax Act, 1961, was not justified. The Tribunal found that the assessee and her husband purchased the property jointly, and the stamp duty value of the property was Rs. 6,97,15,803. The assessee's 50% share of the stamp duty value was Rs. 3,48,57,902, while her 50% share of the purchase consideration was Rs. 3,39,70,612. The difference of Rs. 8,87,290 was the subject of the addition. The Tribunal noted that the amendment to Section 56(2)(x) by the Finance Act, 2020, which introduced a safe harbour or tolerance band of 10% (or 20% in certain cases) for the difference between stamp duty value and consideration, was made effective from April 1, 2021. However, the Tribunal observed that the assessee's contention regarding the retrospective and curative nature of this amendment was not supported by the judgment of the Hon'ble Jurisdictional High Court in the case of CIT vs. Shri Prakash P. Hinduja, which held that the amendment was prospective. Therefore, the benefit of the tolerance band was not applicable for Assessment Year 2018-19. The Tribunal directed the deletion of the addition.

The Tribunal held that the assessee was deprived of a reasonable opportunity to present its case before the first appellate authority. Therefore, the impugned order was set aside to allow the assessee to present its case on merits.

The Tribunal observed that the confirmation from Kasturi Commodities Pvt. Ltd. showed an opening balance of Rs. 40 lac due for recovery. The Tribunal noted that neither the AO nor the CIT(A) had examined this aspect of the opening balance. The Tribunal found that the recovery of debt to the extent of Rs. 40 lac against the opening balance cannot be treated as an unexplained credit under Section 68, as it is not a fresh credit. However, the Tribunal also noted that there were fresh credits of Rs. 12.20 lac taken by the assessee from Kasturi Commodities Pvt. Ltd., the source of which had not been explained by the assessee before the AO and CIT(A). Additionally, a credit entry of Rs. 53,260/- dated May 5, 2015, representing interest on unsecured loan charged from Kasturi Commodities, was not disclosed by the assessee and remained undisclosed. In the interest of substantial justice, the Tribunal decided to restore both issues – the explanation of the source of Rs. 12.20 lac and proof of the outstanding opening balance of Rs. 40 lac – back to the file of the jurisdictional AO for proper examination and verification. The impugned direction for reconsideration is confined to the addition of Rs. 52,94,120/-.