ITAT Mumbai Judgments — October 2026

The Tribunal held that the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, is unsustainable. The Tribunal noted that the addition on account of alleged bogus purchases was ultimately restricted to 3% purely on an estimation basis. Following the Supreme Court's decision in CIT v. Reliance Petroproducts Pvt. Ltd., which stated that mere disallowance does not attract penalty unless concealment or inaccurate particulars are satisfied, and the jurisdictional Bombay High Court's decisions in Pr. CIT-6 v. Colo Colour Pvt. Ltd. and Pr. CIT-17 v. Anil Bajaria, which held that penalty cannot be sustained on estimated additions without material establishing concealment or inaccurate particulars, the Tribunal found the penalty to be unsupportable. Consequently, the Tribunal set aside the impugned order and directed the Assessing Officer to delete the penalty of Rs. 2,26,119/-.

The Tribunal found that the Learned CIT(E) had rejected the application for registration under Section 12AB without appreciating the submissions made by the assessee on February 6, 2026. The CIT(E) did not discuss these submissions in the impugned order, indicating that the rejection was made in ignorance of the examination of the written submission. The Tribunal also noted that the CIT(E) had not provided a sufficient and meaningful opportunity to the assessee during the proceedings. Consequently, the Tribunal restored the application for registration under Section 12AB to the file of the Learned CIT(E) for de novo adjudication. Regarding the rejection of the application under Section 80G, the Tribunal noted that it was rejected for the reason of the rejection of the Section 12AB application. Since the Section 12AB issue was remanded, the order rejecting the Section 80G application was also set aside and restored to the file of the Learned CIT(E) for fresh decision. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the Ld. CIT(E) erred in rejecting the application for renewal of registration solely on the ground of non-furnishing of a formal instrument of trust/MOA. The Tribunal referred to Rule 17A(2) of the Income-tax Rules, 1962, noting that clause (a) applies where the applicant is created under an instrument, while clause (b) applies where it is created otherwise than under an instrument, requiring a document evidencing creation. The Tribunal reasoned that the assessee, being a public charitable trust registered under the Maharashtra Public Trusts Act, 1950, had provided its application for registration and the certificate issued by the Charity Commissioner. These documents, according to the Tribunal, served as evidence of the creation and establishment of the trust, especially when no formal trust deed existed. The Tribunal found that the Ld. CIT(E)'s insistence on a document that admittedly never existed rendered the provision of Rule 17A(2)(b) redundant. Therefore, the rejection was set aside, and the matter was remanded to the Ld. CIT(E) for fresh consideration on merits.

The Tribunal held that the delay of 95 days in filing the appeal was condoned, finding the assessee's explanation to be bona fide and reasonable, in line with the principle of advancing substantial justice as laid down in Collector, Land Acquisition v. Mst. Katiji&Ors. [1987] 167 ITR 471. Regarding the main issue, the Tribunal found that the Ld.CIT(E) could not sustain Condition No. 15. The Tribunal noted that the impugned condition itself acknowledged the Bombay High Court's decision in The Chamber of Tax Consultants &Ors. v. CIT(E), which held that a public charitable trust is deemed irrevocable by operation of law unless the instrument expressly provides for revocation, and that registration should not be denied solely for the absence of an explicit irrevocability clause. The Tribunal reasoned that authorities within the Bombay High Court's jurisdiction are bound by its judgments unless stayed or reversed. A mere proposal to challenge a judgment does not render it inoperative. Furthermore, registration under Section 12AB must adhere to statutory requirements, and an additional condition making tax consequences contingent on future litigation cannot be imposed without express legal authorization. The Ld.CIT(E) had not recorded any finding that the trust deed allowed revocation or appropriation of assets for non-charitable purposes. Therefore, Condition No. 15 was directed to be expunged, and the registration granted to the assessee was to operate without this condition. All other statutory requirements and conditions were to continue to govern the registration.

The Tribunal condoned the delay of 417 days in filing the appeal before it, finding the reasons provided by the assessee, including director disputes, new appointments, and medical issues of the director handling the matters, to be reasonable and sufficient. The Tribunal relied on the Supreme Court's decision in Collector, Land Acquisition, Anantnag & Anr. v. Mst Katiji & Ors. and the Madras High Court's decision in Sreenivas Charitable Trust, emphasizing a pragmatic approach to substantial justice over technicalities. The Tribunal also noted the absence of a counter-affidavit from the revenue opposing the delay condonation. On the merits of the case concerning the 59-day delay in filing the application for regularization of provisional registration, the Tribunal found the reasons, primarily management issues leading to director resignations, to be bonafide. Citing decisions of coordinate benches, including Narke Green Foundation Charitable Institution, the Tribunal emphasized the need for a flexible and pragmatic approach to procedural laws to avoid injustice. The Tribunal restored the application for regularization of provisional registration to the file of the CIT(E) to be considered as filed in time and decided on merits. The appeal was allowed for statistical purposes.

The Tribunal held that the disallowance of commission expenditure under Section 40(a)(i) for non-deduction of tax at source under Section 195 was partly justified. For the payment to M/s. Incentive Building Information Technology Inc. (IBIT), the Tribunal directed the AO to delete the disallowance. The reasoning was that the primary requirement for Section 195 is that the sum paid must be chargeable to tax in India. The assessee provided evidence of IBIT's incorporation in the USA and its US taxpayer identification particulars. The Tribunal found no material on record demonstrating that IBIT rendered services in India or that its business operations giving rise to the commission were carried out in India. Relying on CIT v. Toshoku Ltd. [1980] 125 ITR 525 (SC), the Tribunal held that commission earned for services rendered outside India by a non-resident without business operations in India is not deemed to accrue or arise in India. The absence of a TRC for FY 2019-20 did not, by itself, create a charge of tax under domestic provisions where income is otherwise not chargeable. The nomenclature 'Consulting Services' in Form 15CB was not determinative of the true character of the payment. Therefore, since the payment was not chargeable to tax in India, there was no obligation to deduct tax under Section 195, and consequently, no disallowance under Section 40(a)(i) was warranted for this part. However, for the payment of Rs. 4,46,855/- to M/s. Kheddache Consulting and Engineering, the Tribunal upheld the disallowance as the assessee had accepted the proposed variation in the assessment order and provided no controverting material. The appeal was partly allowed.

The Tribunal held that it is competent to entertain additional grounds if they are necessary for correctly determining the tax liability, especially when they raise a question of law arising from relevant facts. Following the principles laid down in National Thermal Power Co. Ltd. and Jute Corporation of India Ltd., the Tribunal admitted the additional grounds. Regarding the additional documents, the Tribunal found they were crucial to establishing the agricultural character of the land and whether it fell outside the definition of a "capital asset" under Section 2(14). Since this evidence was not examined by the AO, and it goes to the root of the matter, the Tribunal admitted the additional evidence in the interest of substantial justice. The matter was restored to the AO for a fresh examination of the nature and character of the land, agricultural operations, revenue records, conversion details, and the cost of acquisition if it is held to be a capital asset. The AO was directed to decide the issue afresh, uninfluenced by previous orders.

The Tribunal held that the notice dated 24.03.2023, which required compliance by 30.03.2023, afforded only six days for the assessee to furnish a reply, excluding the date of issuance. This falls short of the statutory minimum period of seven days mandated by section 148A(b) of the Income Tax Act, 1961. The Tribunal respectfully followed the binding decision of the Hon'ble jurisdictional Bombay High Court in *Mukesh J. Ruparel v. ITO*, which held that failure to grant the prescribed minimum period renders the notice invalid. The Tribunal also noted that the Hon'ble Calcutta High Court in *Girdhar Gopal Dalmia v. Union of India* held that the date of receipt must be excluded and the opportunity must be reasonable and effective. The revenue's contention to include the date of issuance was found untenable. Consequently, the Tribunal quashed the notice under section 148A(b), the consequential order under section 148A(d), the notice under section 148 dated 31.03.2023, and the reassessment order dated 28.03.2024. The remaining grounds were rendered academic. The ratio decidendi is that a violation of the mandatory minimum notice period under section 148A(b) invalidates the subsequent reassessment proceedings.

The Tribunal held that Ground 1, challenging the validity of the Section 143(2) notice, was dismissed as not pressed by the assessee. Grounds 2 and 3, challenging the DRP directions and the time-barring of the assessment order, were dismissed as infructuous in view of the relief granted on the substantive addition. Regarding Ground 4, the Tribunal found that the assignment deeds, despite certain restrictions concerning territory and brand protection, reflected a transfer of ownership of registered trademarks. The consideration was for the alienation of trademark rights, not for the use of property belonging to the assessee. The Tribunal relied on the OECD Model Tax Convention commentary and the specific provisions of the assignment deeds, which indicated a transfer of rights in perpetuity and absolute ownership. It concluded that the alienation of these capital assets fell under Article 13(6) of the India-Switzerland DTAA, making the gains taxable only in Switzerland. Therefore, the addition of Rs. 433,14,76,894 was deleted. Grounds 4(a) and 4(b) were allowed. Ground 4(c) was left open. Grounds 5(a) and 5(b), concerning the tax rate and levy of surcharge/cess, became academic and did not require separate adjudication. Ground 6, challenging penalty proceedings, was consequential and no independent finding was rendered. The appeal was partly allowed.

The Tribunal held that for Section 263 jurisdiction, the assessment order must be both erroneous and prejudicial. It noted that Section 37(1) Explanation 2 states CSR expenditure is not for business/profession, but this restriction applies to business expenditure. The assessee had disallowed the entire CSR expenditure under Section 37(1), so no business expenditure deduction was allowed. Section 80G operates independently and allows deductions for qualifying donations. An amount disallowed under Section 37(1) does not automatically become ineligible for Section 80G. The claim must be tested under Section 80G itself. While specific CSR contributions to Swachh Bharat Kosh and Clean Ganga Fund are excluded under Section 80G(2)(a)(iiihk) and (iiihl), these express exclusions cannot be generalized to prohibit all CSR-linked donations. The Tribunal found that the PCIT's reasoning, based on a premise that Section 80G deduction is legally unavailable for CSR-linked donations, was unsustainable. The PCIT failed to identify any specific factual defect in the Section 80G claim, such as an ineligible recipient or a breach of limits. The alleged lack of enquiry was founded on the same general legal objection. Therefore, the revision under Section 263 could not be sustained. The appeal was allowed.

The Tribunal, after considering the facts and circumstances, acknowledged that the assessee had furnished replies, though they were not found satisfactory. The primary reason for rejection by the Commissioner was the failure to satisfactorily explain alleged violations and provide requisite information. However, the assessee claimed to have submitted various documents that warranted proper examination. In the interest of substantial justice, the Tribunal decided to grant one more opportunity to the assessee to substantiate its claim. Accordingly, the impugned order of the Commissioner was set aside, and the matter was restored to the Commissioner's file for fresh consideration. The Commissioner was directed to examine the replies, supporting documents, and other relevant material, specifically consider explanations concerning alleged violations, and pass a reasoned order after affording a reasonable opportunity of being heard. The Tribunal clarified that it had not expressed any opinion on the merits of the assessee's eligibility. The appeal was allowed for statistical purposes.

The Tribunal held that the reassessment order passed under Section 147 of the Act, in this case, could not be termed as a 'regular assessment' for the purposes of Section 234D. The Tribunal reasoned that the definition of 'regular assessment' under Section 2(40) specifically refers to assessments under Section 143(3) or 144. While Explanation 1 to Section 234D extends this definition to include assessments made 'for the first time under Section 147 or Section 153A', the crucial phrase is 'for the first time'. In the present case, a regular assessment under Section 143(3) was already completed on September 29, 2021, before the reassessment under Section 147 was made on March 15, 2024. Therefore, the reassessment was not the first assessment made under Section 147. Consequently, the provisions of Section 234D were not applicable, and no interest could be levied. The Tribunal set aside the appellate order and directed the deletion of the interest charged under Section 234D. Ground number 4, relating to the applicability of Section 154, was rendered academic.

The Tribunal held that the Order Giving Effect (OGE) dated 29.03.2023 was barred by limitation under Section 153(5) read with Section 153(3) of the Act. The receipt of the Tribunal's order on 30.10.2017 was undisputed. Section 153(5) prescribes three months from the end of the month of receipt of the appellate order for passing a consequential order. Even considering the second proviso to Section 153(5) read with Section 153(3), which allows a longer period of nine months from the end of the financial year in which the order was received, the limitation expired on 31.12.2018. The AO's actions of seeking details on 16.01.2023 and passing the OGE on 29.03.2023 were well beyond this period. The Tribunal followed the precedent set by the Hon'ble Karnataka High Court in DCIT v. Biesse India Pvt. Ltd. (supra), stating that administrative exigencies cannot override mandatory statutory limitations. Consequently, the additional ground raised by the assessee was allowed, the OGE and the impugned appellate order sustaining the addition of Rs. 5,00,000/- were quashed, and the addition was deleted. Remaining grounds were rendered academic.

The Tribunal held that the educational receipts of INR 17,23,12,909 fall within the exclusion provided under Article 12(5)(c) of the India-USA DTAA and are not taxable in India as Fees for Included Services. The Tribunal reasoned that the specific exclusion for teaching in or by educational institutions in Article 12(5)(c) overrides Article 12(4), even if knowledge is made available. The payment of Equalisation Levy does not alter the character of the receipt under the DTAA, especially since the AO recognized the assessee as an educational institution. The Tribunal also noted that similar claims were accepted in preceding assessment years. The AO was directed to delete the addition made in respect of these receipts. Consequently, Ground No. 3 was allowed. The Tribunal found that the legal ground regarding limitation (Ground No. 2) and the alternative contention regarding refund/set-off of Equalisation Levy (Ground No. 4) became academic. Issues related to capital gains, tax computation, TDS credit, refund adjustment, and interest levies (Grounds 5, 6, 7, 8, 10, and 9) were dismissed as infructuous or consequential, as they were decided in favour of the assessee by the CIT(A) following a rectification application. Initiation of penalty proceedings (Ground No. 11) was also not adjudicated as premature. The appeal was partly allowed.

The Tribunal held that the addition of Rs. 29,50,001/- as unexplained expenditure under Section 69C could not be sustained solely on the grounds that the supplier and transporter did not respond to notices, were untraceable, or that the supplier's GST registration was cancelled. The Tribunal noted that the assessee had furnished primary documentary evidence, including purchase invoices, e-way bills, and transportation receipts. It relied on the jurisdictional Bombay High Court's decisions in CIT v. Nikunj Eximp Enterprises (P.) Ltd. and Ashok Kumar Rungta v. ITO, which held that the inability to produce suppliers or their subsequent non-response does not automatically invalidate purchases, especially in the absence of cogent evidence demonstrating the transactions were bogus or that the goods were not received. The Court emphasized that general information cannot substitute transaction-specific inquiry. The Tribunal found no specific material disproving the genuineness of the documents or the receipt of goods by the assessee. The addition was deleted, and the assessee's appeal was allowed.

The Tribunal held that the reassessment order dated 27.12.2019 passed under Section 143(3) read with Section 147 is legally unsustainable and liable to be quashed due to the non-issuance of the mandatory notice under Section 143(2). The Tribunal relied on Supreme Court and jurisdictional High Court judgments, stating that Section 292BB cures defects in service of an existing notice, not its complete non-issuance. The Revenue's failure to produce evidence of the Section 143(2) notice was noted. Independently on merits, the Tribunal deleted the addition of Rs. 2,10,30,300/- made under Section 68. The Assessee had discharged the initial onus by providing documentary evidence for share acquisition, holding, and sale through recognized platforms with consideration received via banking channels. The Revenue failed to demonstrate any infirmity in these documents or establish a specific nexus between the Assessee and alleged manipulation. The addition was considered unsustainable, being founded on suspicion and uncorroborated allegations. The grounds challenging reopening under Section 147/148 and sanction under Section 151 were rendered academic.

The Tribunal observed that the core dispute revolved around the source of the Rs. 99,00,000/- fixed deposit and its reporting against the old PAN. The assessee claimed the investment originated from matured fixed deposits and was accounted for under its new PAN. However, the NFAC confirmed the addition due to an unestablished fund trail and lack of correlation with the books of account. The Tribunal found that the documents submitted by the assessee, including details of matured fixed deposits, bank transactions, financial statements, returns filed under the new PAN, and updated Form 26AS, warranted proper examination and reconciliation. Therefore, in the interest of substantial justice, the Tribunal set aside the impugned order and restored the matter to the file of the NFAC for fresh adjudication. The NFAC was directed to examine the documentary evidence, specifically the source and maturity proceeds of earlier fixed deposits, the subsequent investment, its accounting treatment, and the PAN correction by the bank. The NFAC was also to verify returns and financial statements filed under the new PAN and determine the addition afresh after providing the assessee an opportunity of being heard. The Tribunal explicitly stated that it had not expressed any opinion on the merits of the addition.

The Tribunal held that there is no specific bar in the Income Tax Act or the India-Mauritius DTAA that restricts an assessee from claiming exemption benefit under Article 13 of the DTAA for current year capital gains income without setting off brought-forward losses. The assessee has the option under Section 90(2) of the Act to choose the more beneficial provision between the DTAA and the Income Tax Act. In this case, the assessee exercised its option to claim exemption for current year's entire capital gains income without setting off brought-forward capital losses. The Tribunal found that the issue was no longer res integra and respectfully followed decisions of the High Court and the Tribunal in similar cases, such as Goldman Sachs Investments (Mauritius) Ltd. Accordingly, the Tribunal found no infirmity in the order of the CIT(A) in granting relief to the assessee and dismissed the grounds raised by the Revenue. The appeal filed by the Revenue was dismissed.

The Tribunal held that the Assessee had discharged its prima facie onus by furnishing contemporaneous documentary evidence substantiating the purchase, holding, and sale of shares through the recognized Stock Exchange and receipt/payment of consideration through banking channels. The AO had acknowledged that transactions were executed online and payments were made through banking channels but rejected their genuineness based on BFL's financial condition, abnormal price movements, and general investigation findings. The Ld. Commissioner had noted that no independent verification or specific infirmity in the documentary evidence was brought forth. The Tribunal relied on the jurisdictional Bombay High Court's decisions in Ziauddin A. Siddique and Indravadan Jain (HUF), which accepted share transactions conducted through recognized Stock Exchange and banking channels where the AO had neither discredited supporting documents nor established the Assessee's involvement in price manipulation. Co-ordinate Bench decisions involving the identical scrip were also followed. The Tribunal found that the Revenue had neither identified any specific infirmity in the Assessee's documents nor brought on record cogent material connecting the Assessee's transactions with alleged price manipulation. Therefore, the Ld. Commissioner rightly deleted the disallowance of STCL. The appeal by the Revenue was dismissed.

The Tribunal, acknowledging the extraordinary circumstances explained by the assessee, including the demise of her husband, subsequent financial crisis of the RNA Group, insolvency proceedings, and numerous litigations, found that the assessee deserved a final opportunity to substantiate her claims. The Tribunal set aside the impugned order and restored the appeal to the file of the NFAC for fresh adjudication on merits. This decision was made in the interest of substantial justice and in accordance with section 250(6) of the Act. The NFAC was directed to consider relevant documentary evidence and afford a reasonable opportunity of being heard to the assessee. However, considering the repeated non-compliance despite eight notices, the restoration was made conditional upon the assessee depositing a cost of Rs. 55,000/- with the Revenue Department within 15 days and furnishing proof thereof. The assessee was directed to cooperate fully without seeking unnecessary adjournments. The Tribunal explicitly stated that no opinion had been expressed on the merits of the additions.

The Tribunal held that for renewal under section 12AB, the Ld. CIT(E) must examine the objects, genuineness of activities, and compliance with other laws. An alleged violation of section 13(1)(c) is primarily an assessment matter and does not, by itself, prove non-charitable objects or non-genuine activities. The Tribunal found that DVPL was not identified as a specified person under section 13(3) in the impugned order, and a common address or operational nexus does not automatically establish such a relationship. The observation that section 13(1)(c) applies without identifying a specified beneficiary was not sustainable. The explanation of the amount as a refundable deposit required examination of agreements and educational activities. Finance costs exceeding receipts do not inherently prove non-genuine activities. These matters were not adequately examined. Therefore, the order rejecting the section 12AB renewal was set aside and restored for fresh consideration. Consequently, the order rejecting the section 80G renewal was also set aside and restored for fresh decision in light of the section 12AB decision. The assessee was directed to furnish documents and cooperate.

The Tribunal held that for renewal under section 12AB, the Ld. CIT(E) must examine the objects, genuineness of activities, and compliance with other laws. An alleged violation of section 13(1)(c) is primarily an assessment matter and does not, by itself, prove non-charitable objects or non-genuine activities. The Tribunal found that DVPL was not identified as a specified person under section 13(3) in the impugned order, and a common address or operational nexus does not automatically establish such a relationship. The observation that section 13(1)(c) applies without identifying a specified beneficiary was not sustainable. The explanation of the amount as a refundable deposit required examination of agreements and educational activities. Finance costs exceeding receipts do not inherently prove non-genuine activities. These matters were not adequately examined. Therefore, the order rejecting the section 12AB renewal was set aside and restored for fresh consideration. Consequently, the order rejecting the section 80G renewal was also set aside and restored for fresh decision in light of the section 12AB decision. The assessee was directed to furnish documents and cooperate.

The Tribunal held that while Section 234E was introduced in 2012, the specific enabling provision for computing such fee under Section 200A, namely Section 200A(1)(c), was introduced w.e.f. 01.06.2015. Following the judgments of the Hon'ble Karnataka High Court in Fatheraj Singhvi & Ors. v. Union of India & Ors. and the Hon'ble Kerala High Court in Sarala Memorial Hospital v. Union of India & Anr. and Jiji Varghese v. Income Tax Officer (TDS), the Tribunal ruled that the amendment to Section 200A operates prospectively. Therefore, fee attributable to the period prior to 01.06.2015 cannot be computed through Section 200A, even if the TDS statements were filed or processed subsequently. The Tribunal acknowledged contrary views from other High Courts but chose to follow the decisions favorable to the assessee, citing the principle from CIT v. Vegetable Products Ltd. For AY 2014-15, the fee attributable to the period prior to 01.06.2015 was directed to be deleted. However, since the default continued beyond 01.06.2015, the Assessing Officer was directed to recompute the fee only for the period commencing from 01.06.2015 until the respective dates of filing, subject to statutory ceilings. The connected appeal for AY 2015-16 was partly allowed on similar terms.

The Tribunal held that while Section 234E was introduced in 2012, the specific enabling provision for computing such fee under Section 200A, namely Section 200A(1)(c), was introduced w.e.f. 01.06.2015. Following the judgments of the Hon'ble Karnataka High Court in Fatheraj Singhvi & Ors. v. Union of India & Ors. and the Hon'ble Kerala High Court in Sarala Memorial Hospital v. Union of India & Anr. and Jiji Varghese v. Income Tax Officer (TDS), the Tribunal ruled that the amendment to Section 200A operates prospectively. Therefore, fee attributable to the period prior to 01.06.2015 cannot be computed through Section 200A, even if the TDS statements were filed or processed subsequently. The Tribunal acknowledged contrary views from other High Courts but chose to follow the decisions favorable to the assessee, citing the principle from CIT v. Vegetable Products Ltd. For AY 2014-15, the fee attributable to the period prior to 01.06.2015 was directed to be deleted. However, since the default continued beyond 01.06.2015, the Assessing Officer was directed to recompute the fee only for the period commencing from 01.06.2015 until the respective dates of filing, subject to statutory ceilings. The connected appeal for AY 2015-16 was partly allowed on similar terms.

The Tribunal noted that Ground No. 1 was general and Ground No. 2 regarding the validity of the assessment order was not pressed and thus dismissed. Regarding the disallowance of the provision for decommissioning, the Tribunal observed that the assessee's contentions before the Tribunal were different from those made before the lower authorities. The CIT(A) had noted that the lease deed only permitted removal of fixtures and restricted liability to damages, not a general obligation to restore the premises. The Tribunal, considering the different angles presented and for better appreciation of facts, decided to remand the issue back to the file of the CIT(A) to examine all contentions and decide in accordance with law, allowing adequate opportunity of hearing. Similarly, for the retention bonus, the Tribunal found that the assessee's submissions before it differed from those made before the lower authorities. The CIT(A) had found no basis for the provision and directed the AO to verify the claim regarding double addition in the next year. The Tribunal, for better appreciation of facts, decided to remand the issue to the CIT(A) to examine all contentions and decide in accordance with law, allowing adequate opportunity of hearing. The appeal was allowed for statistical purposes.

The Tribunal held that the operative notice under section 148 dated 14.07.2022 was issued well beyond three years from the end of assessment year 2017-18. The alleged income escaping assessment was Rs.9,28,750/-, which is substantially below the Rs.50,00,000/- threshold prescribed under section 149(1)(b). The Tribunal found that this failure to satisfy the jurisdictional condition under section 149(1)(b) for issuing a notice beyond three years renders the reassessment proceedings without jurisdiction, as held by the Hon'ble Bombay High Court in Ruhaan Shelters (P.) Ltd. v. Income-tax Officer. Additionally, the approval for the notice was obtained from the Principal Commissioner of Income-tax-17, Mumbai. However, for a notice issued beyond the three-year period, the authority contemplated under section 151(ii), i.e., the Principal Chief Commissioner or equivalent, was required to grant approval, as per the Hon'ble Bombay High Court's decisions in Alag Property Construction(P.) Ltd. v. ACIT, Skypak Travels (P.) Ltd. v. Income-tax Officer, and Anil Gupta (P.) Family Trust v. Income-tax Officer. This also constitutes a jurisdictional defect. Consequently, the reassessment proceedings and the assessment order, as well as the CIT(A)'s order, were set aside as being without jurisdiction. Other grounds raised by the assessee were left undecided.

The Tribunal held that the CIT(E) had rejected the application by examining its maintainability only under clause (iii) of the first proviso to section 80G(5) and had not considered whether the application could be entertained under clause (iv)(B) of the said proviso. The Tribunal noted that clause (iv) of the first proviso to section 80G(5), as substituted and amended by the Finance Act, 2023 and Finance (No.2) Act, 2024, permits an institution whose activities have commenced to apply for approval at any time after the commencement of such activities. The assessee's request for consideration under clause (iv)(B) required examination under the provision as it stood on 09.10.2025. Since the CIT(E) had not examined the application under clause (iv)(B) and had not dealt with its merits, the Tribunal set aside the impugned order and restored the matter to the CIT(E)'s file. The CIT(E) was directed to consider the application under clause (iv)(B), examine the genuineness of activities and fulfilment of conditions, and pass a fresh order after affording the assessee an opportunity of being heard. The period and assessment year from which approval is to operate will be determined in accordance with applicable statutory provisions.

The Tribunal noted that the application was rejected by examining its maintainability only under clause (ii) of the first proviso to section 80G(5). The CIT(E) had not examined whether the application could be considered under clause (iv)(B) of the said proviso. The Tribunal referred to the amendments made by the Finance Act, 2023 and the Finance (No.2) Act, 2024, which, as applicable on the date of the application, permitted an institution whose activities have commenced to apply for approval at any time after commencement of such activities. Since the CIT(E) had not examined the application under clause (iv)(B) and had not dealt with its merits, the Tribunal set aside the impugned order and restored the matter to the CIT(E)'s file. The CIT(E) was directed to consider the application under clause (iv)(B), examine the genuineness of activities and fulfillment of conditions, and pass a fresh order after affording the assessee an opportunity of being heard. The period and assessment year for approval were to be determined as per statutory provisions. The assessee was directed to cooperate and furnish necessary documents.

The Tribunal held that a fundamental requirement of appellate adjudication is to provide the assessee with a reasonable and effective opportunity of being heard. Additionally, appellate orders must demonstrate due application of mind to the grounds raised and provide reasons for the conclusions. In this case, the Tribunal found that the assessee's grievance regarding the lack of an effective hearing and the absence of reasoned orders was valid. Consequently, the impugned orders of the learned CIT(A) were set aside in the interest of substantial justice. The matters were restored to the file of the learned CIT(A) for fresh adjudication. The learned CIT(A) was directed to afford the assessee a reasonable and effective opportunity of being heard, consider any necessary documentary evidence the assessee wished to place on record, and pass a speaking and reasoned order dealing with all grounds raised. The Tribunal explicitly stated that it had not expressed any opinion on the merits of the additions or other issues, leaving them open for the learned CIT(A)'s adjudication. Both appeals were allowed for statistical purposes.

The Tribunal held that the reassessment proceedings initiated by the Assessing Officer were not sustainable in law. The Tribunal noted that the AO issued a notice under Section 143(2) on October 17, 2019, while the assessee's objections to the reopening under Section 148 were pending and were only disposed of on February 16, 2021. This action was contrary to the procedure mandated by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO and the jurisdictional High Court in HP Diamonds India Pvt. Ltd. v. DCIT, which require the AO to adjudicate objections to the assumption of jurisdiction by passing a speaking order before proceeding with the assessment. The Tribunal found this defect to be a jurisdictional one, rendering the reassessment proceedings and the consequent assessment order liable to be quashed. As the reassessment proceedings were quashed on this jurisdictional ground, the other grounds raised by the assessee and the Revenue became academic, and the Tribunal did not consider it necessary to adjudicate upon them. The cross-objection filed by the assessee was allowed, and the appeal filed by the Revenue was dismissed.

The Tribunal held that the application was rejected for non-compliance with a solitary opportunity afforded to the assessee. The Tribunal noted that proceedings for registration under Section 12AB require the CIT(E) to examine the objects, genuineness of activities, and other compliances. The impugned order itself stated that the CIT(E) could not arrive at the required satisfaction due to the absence of documents. Considering that only one effective opportunity was given, the Tribunal was of the view that granting one further effective opportunity would meet the ends of substantial justice. Accordingly, the Tribunal set aside the impugned order and restored the application to the file of the CIT(E) for fresh adjudication, directing the CIT(E) to grant a reasonable and effective opportunity of being heard and to decide the application in accordance with law after considering all furnished material. The assessee was also directed to cooperate and furnish details within the granted time. The Tribunal explicitly stated that it had not expressed any opinion on the merits of the assessee's eligibility for registration, leaving all issues open for the CIT(E)'s consideration.

The Tribunal held that the assessee's grievance was not against the rejection of the application but against the conditions attached to the approval, particularly Condition No. 5. The Tribunal noted that the Ld. CIT(E) himself acknowledged the Bombay High Court's decision in The Chamber of Tax Consultants & Ors. v. CIT(E) and granted approval in compliance with it, while simultaneously making the benefits subject to a potential Supreme Court outcome. Considering the peculiar facts and the nature of the grievance, the Tribunal deemed it appropriate to set aside the impugned order to the limited extent of the disputed conditions, especially Condition No. 5. The issue was restored to the file of the Ld. CIT(E) for fresh adjudication. The Ld. CIT(E) was directed to consider the Hon'ble High Court's decision, any subsequent Supreme Court order, and other binding judicial developments, and decide the issue afresh after affording the assessee an opportunity to be heard. The Tribunal made it clear it had not expressed any opinion on the merits of the conditions or the assessee's entitlement, leaving all contentions open. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the NFAC erred in dismissing the assessee's appeal at the threshold by invoking section 249(4)(b) without examining the substantive grounds raised against the assessment. The Tribunal noted that the assessee disputed the addition made by the Assessing Officer and had raised grounds concerning both the validity of the reassessment proceedings and the merits of the addition. Following the decision of the Chennai Bench of the Tribunal in Perumal Pillai Sreenivasan v. ITO, ITA No.3186/Chny/2024, dated 18.03.2025, which held that further payment of tax on disputed additions is not required merely for the admission of an appeal, the Tribunal set aside the impugned order of the NFAC. The appeal was restored to the NFAC's file for adjudication on merits. The NFAC was directed to admit the appeal and decide all grounds raised by the assessee, including legal/jurisdictional grounds and grounds on merits, after providing a reasonable opportunity of hearing. The assessee was granted liberty to place relevant material on record. The Tribunal explicitly stated that it had not expressed any opinion on the merits of the addition or the legal grounds challenging the reassessment proceedings, leaving these issues open for adjudication by the NFAC.

The Tribunal held that the rejection of the assessee's applications for registration under Section 12AB and approval under Section 80G was based on a curable procedural defect. The Tribunal noted that the assessee had specifically pleaded that the defect was inadvertent and sought an opportunity to rectify it. Considering that the issue of registration of a charitable institution and its approval for deductions should be examined on merits after proper consideration of documents and provisions, the Tribunal decided to grant the assessee one more opportunity. Accordingly, the impugned orders of the Ld. CIT(E) were set aside, and the applications were restored to the file of the Ld. CIT(E) for de novo adjudication. The Ld. CIT(E) was directed to provide a reasonable opportunity of being heard and permit the assessee to furnish necessary documents and explanations. The Tribunal explicitly stated that no opinion was expressed on the merits of the assessee's eligibility for registration or approval, leaving all issues open for the Ld. CIT(E)'s consideration. The appeal concerning Section 80G approval was considered consequential to the Section 12AB registration.

The Tribunal condoned the substantial delay in filing the appeal, finding the explanation of administrative lapse to be a sufficient cause under section 253(5). Regarding the 24-day delay in filing Form 10B, the Tribunal held that it shall not, by itself, prevent the consideration of the assessee's exemption claim on merits, following the approach of a coordinate bench. The Tribunal also addressed the discrepancy in the application of income, stating that the CIT(A) erred in treating it as fatal and the absence of a separate ground as an admission. The Tribunal noted that the working provided by the assessee offered an explanation for the figures, requiring examination of accounts and sources of expenditure, including the treatment of depreciation under section 11(6). The Tribunal set aside the impugned order and restored the exemption claim to the Assessing Officer for limited verification of the reconciliation of application of income. The Assessing Officer was directed to consider Form 10B, financial statements, and working, verify the composition of expenditure, application of income, treatment of depreciation, source and classification of amounts, and current-year application. The exemption shall be allowed to the extent admissible, and the claim shall not be rejected merely on account of the delay in furnishing Form 10B or the premise of admission. Grounds 1 to 8 were allowed for statistical purposes.

The Tribunal held that the addition of ₹7,75,672 as commission income is unsustainable. The Tribunal distinguished between the existence of accommodation entries and the identity of the person who earned the commission attributed to them. It found that while the entries might have been routed through concerns controlled by the Bhanwarlal Jain Group, this alone did not establish that the assessee personally earned commission. The assessment order lacked material showing the assessee received separate commission or that commission was paid to him in addition to what was assessed in Shri Bhanwarlal Jain's hands. The Tribunal noted that the transactions were the same as those considered in Shri Bhanwarlal Jain's substantive assessment. Sustaining the same commission stream again in the assessee's hands would duplicate the assessment made in the hands of the principal operator. The Tribunal also referred to its own order in Shri Bhanwarlal M. Jain v. DCIT, where the commission estimate for accommodation entries of bogus purchases was reduced from 0.075% to 0.05%. Since the addition in the assessee's hands failed for want of evidence of him earning a separate commission, the addition was deleted. The remaining grounds were rendered infructuous.

The Tribunal held that the rejection of the assessee's applications for registration under Section 12AB and approval under Section 80G was based on a curable procedural defect. The Tribunal noted that the assessee had specifically pleaded that the defect was inadvertent and sought an opportunity to rectify it. Considering that the issue of registration of a charitable institution and its approval for deductions should be examined on merits after proper consideration of documents and provisions, the Tribunal decided to grant the assessee one more opportunity. Accordingly, the impugned orders of the Ld. CIT(E) were set aside, and the applications were restored to the file of the Ld. CIT(E) for de novo adjudication. The Ld. CIT(E) was directed to provide a reasonable opportunity of being heard and permit the assessee to furnish necessary documents and explanations. The Tribunal explicitly stated that no opinion was expressed on the merits of the assessee's eligibility for registration or approval, leaving all issues open for the Ld. CIT(E)'s consideration. The appeal concerning Section 80G approval was considered consequential to the Section 12AB registration.

The Tribunal held that the CIT(E) erred in his observation regarding the commencement of activities and the calculation of delay. The Tribunal condoned the delay of 192 days in filing Form No. 10AB, finding that the assessee had reasonable cause for the delay, supported by FIRs and trustee affidavits. Regarding the objects of the trust, the Tribunal noted that the CIT(E)'s apprehension that the assessee was spending beyond territorial limits was based on clauses providing for scholarships and publications. However, the assessee clarified that no such expenditure or publication occurred outside India. The Tribunal opined that whether the assessee incurred expenditure beyond the objects and if such expenditure could be allowed under Section 11 is a matter for the Assessing Officer during assessment. The Tribunal found no reason to deny registration under Section 12AB, especially since the trust had been granted registration in 1976 on the same objects, and directed the CIT(E) to grant registration from AY 2026-27. Consequently, the appeal regarding Section 80G approval was restored to the CIT(E) for decision on merits, and the appeal related to the denial of registration was dismissed as infructuous.

The Tribunal held that the Ld. CIT(E) had no statutory power to impose an additional, contingent condition while granting registration under Section 12AB of the Act, beyond what is contemplated by the statute. The scheme of Section 12AB, particularly sub-sections (4) and (5), provides for cancellation or withdrawal of registration under specific circumstances, which adequately addresses the Revenue's concerns about non-genuine activities or violations. Therefore, a precautionary or contingent condition based on a proposed SLP to the Supreme Court was not sustainable. The Tribunal noted that the Ld. CIT(E) himself acknowledged the prevailing legal position that the absence of an express irrevocability clause does not automatically invalidate a public charitable trust's registration. Consequently, the condition making the registration and its benefits subject to the Supreme Court's outcome was deleted. The same reasoning was applied to the approval granted under Section 80G(5)(ii), and the impugned condition was also deleted for that approval. The Tribunal clarified that the registration and approval would remain governed by all statutory conditions and consequences prescribed under the Act.

The Tribunal held that the Ld. CIT(E) had no statutory power to impose an additional, contingent condition while granting registration under Section 12AB of the Act, beyond what is contemplated by the statute. The scheme of Section 12AB, particularly sub-sections (4) and (5), provides for cancellation or withdrawal of registration under specific circumstances, which adequately addresses the Revenue's concerns about non-genuine activities or violations. Therefore, a precautionary or contingent condition based on a proposed SLP to the Supreme Court was not sustainable. The Tribunal noted that the Ld. CIT(E) himself acknowledged the prevailing legal position that the absence of an express irrevocability clause does not automatically invalidate a public charitable trust's registration. Consequently, the condition making the registration and its benefits subject to the Supreme Court's outcome was deleted. The same reasoning was applied to the approval granted under Section 80G(5)(ii), and the impugned condition was also deleted for that approval. The Tribunal clarified that the registration and approval would remain governed by all statutory conditions and consequences prescribed under the Act.

The Tribunal decided the issues as follows: 1. Ground No. 1 (Notional Interest): The addition of Rs. 4,50,600 was deleted. The Tribunal held that tax can only be levied on real income that has accrued or arisen, not on hypothetical returns. Since the security deposits were interest-free and there was no finding of suppressed rent, no interest income had accrued. 2. Grounds 2(a) & 2(b) (Capital Introduction): The Tribunal noted that the issue of capital introduction by partner Shri V.M. Shah was restored to the AO for verification of the source of funds and the correct figure of introduction. 3. Grounds 3(a) & 3(b) (Cash Deposits): The addition of Rs. 7,58,500 was deleted as it was found to be part of the capital introduction already considered, thus avoiding double addition. The balance amount of Rs. 1,60,000 was restored to the AO for verification from the cash book and other materials, with a direction to grant an opportunity of hearing. 4. Ground No. 4 (Section 14A): The addition of Rs. 1,46,239 was deleted. The Tribunal held that Section 14A can only be invoked if there is exempt income, which was not the case here. Furthermore, no specific defect in expenditure was pointed out. 5. Ground No. 5 (Interest): The AO was directed to recompute interest under Sections 234A, 234B, and 234C while giving effect to the order. 6. Ground No. 6 (Penalty): The challenge to the initiation of penalty proceedings was considered premature and not adjudicated. 7. Ground No. 7 (CIT(A)'s Order): As substantive additions were adjudicated, no separate adjudication was required. The appeal was partly allowed for statistical purposes.

The Tribunal held that the rejection of the Section 12AB registration application was primarily due to non-compliance with notices and failure to furnish requisite documents, without any adjudication on the merits of the assessee's eligibility. The Tribunal noted that it is well-settled that an adverse order requires a reasonable and effective opportunity for the assessee to present its case. In the interest of substantial justice, the Tribunal decided to grant one more opportunity to the assessee. Consequently, the impugned order rejecting the Section 12AB registration was set aside, and the application was restored to the file of the Ld. CIT(E) for de novo adjudication, with a direction for the assessee to cooperate and furnish all required documents. The Tribunal explicitly stated that no opinion was expressed on the merits of the assessee's entitlement. Regarding the Section 80G approval, the Tribunal observed that its rejection was consequential to the rejection of the Section 12AB registration. Since the Section 12AB order was set aside, the consequential order for Section 80G could not survive independently. Therefore, the impugned order rejecting the Section 80G approval was also set aside and restored to the file of the Ld. CIT(E) for fresh adjudication, to be considered consequentially upon the adjudication of the Section 12AB application.

The Tribunal held that the rejection of the Section 12AB registration application was primarily due to non-compliance with notices and failure to furnish requisite documents, without any adjudication on the merits of the assessee's eligibility. The Tribunal noted that it is well-settled that an adverse order requires a reasonable and effective opportunity for the assessee to present its case. In the interest of substantial justice, the Tribunal decided to grant one more opportunity to the assessee. Consequently, the impugned order rejecting the Section 12AB registration was set aside, and the application was restored to the file of the Ld. CIT(E) for de novo adjudication, with a direction for the assessee to cooperate and furnish all required documents. The Tribunal explicitly stated that no opinion was expressed on the merits of the assessee's entitlement. Regarding the Section 80G approval, the Tribunal observed that its rejection was consequential to the rejection of the Section 12AB registration. Since the Section 12AB order was set aside, the consequential order for Section 80G could not survive independently. Therefore, the impugned order rejecting the Section 80G approval was also set aside and restored to the file of the Ld. CIT(E) for fresh adjudication, to be considered consequentially upon the adjudication of the Section 12AB application.

The Tribunal held that while the assessee's records were not complete and verifiable, the shortcomings did not justify treating the entire deposit amount as unexplained money under Section 69A. The Tribunal noted that the assessee had disclosed business income, provided accounts showing significant sales, and produced some purchase documents. The cash deposits were also lower than the disclosed sales. The authorities below had not presented material to prove the sales were fictitious or the deposits originated from a source entirely unrelated to the business. The Tribunal reasoned that the precise profit could not be verified due to evidentiary deficiencies, but this warranted a reasonable estimate of profit, not treating gross deposits as income. Applying an 8% profit rate to the disclosed sales of ₹18,84,250 yielded an estimated profit of ₹1,50,740, which exceeded the returned income of ₹1,90,000. Therefore, the addition of ₹13,72,700 was deleted. The issue regarding the ₹4,00,000 from the husband was not independently considered as the conclusion rested on the business receipts and returned income. The assessee's ground was allowed.

The Tribunal held that the revisional jurisdiction under Section 263 was not sustainable on both issues. Regarding the education cess, it was noted that the AO passed a rectification order under Section 154 r.w.s. 155(18) prior to the PCIT's revisional order, adding back the surcharge and education cess. Since the issue was already rectified by the AO, the PCIT's exercise of revisional jurisdiction was unwarranted. Concerning the CSR expenses and Section 80G deduction, the Tribunal found that the AO had made specific inquiries and examined the issue during the assessment proceedings, calling for details on Chapter VI-A deductions and CSR expenditure. The Tribunal relied on the jurisdictional High Court's decision in Castrol India Limited, which held that donations made out of CSR funds to eligible trusts would still qualify for deduction under Section 80G. The dismissal of the Revenue's SLP against this judgment by the Supreme Court further supported the assessee's position. The Tribunal also noted that one of the precedents relied upon by the Revenue, Triveni Turbine Ltd., had been recalled. Therefore, the assessment order was not erroneous or prejudicial to the revenue's interest, as the AO had made necessary inquiries and taken a view consistent with the law laid down by the jurisdictional High Court. The impugned revisional order was set aside.

The Tribunal held that the Ld. CIT(E) erred in imposing the condition that the registration under section 12AB and approval under section 80G would be subject to the outcome of future proceedings before the Hon'ble Supreme Court. The Tribunal reasoned that once registration/approval is granted after examining the application and material, it cannot be made contingent on a possible future outcome of higher judicial proceedings. The exercise of jurisdiction under section 12AB and 80G must be completed based on the law applicable at the time of the order. The possibility of a subsequent alteration of the legal position does not justify qualifying the granted registration/approval. The Ld. CIT(E) had already considered the decision of the Hon'ble Bombay High Court in 'The Chamber of Tax Consultants & Ors. vs. CIT(E)' and granted registration/approval. Therefore, imposing such a condition diluted the effect of the granted registration/approval. The Tribunal noted the assessee's steps to modify the trust deed but stated it was not necessary to opine on those proceedings as registration was already granted. Accordingly, the Tribunal deleted the condition imposed by the Ld. CIT(E) in both orders. The registration and approval granted shall operate in accordance with law without being subjected to the impugned condition.

The Tribunal condoned the delay in filing the appeal before the CIT(A), citing the well-settled principle that the expression 'sufficient cause' in Section 249(3) of the Act should be construed liberally to advance substantial justice, especially when no mala fide or deliberate negligence is attributable to the assessee. Reliance was placed on the Supreme Court's decision in Collector, Land Acquisition v Mst. Katiji And Others. Consequently, the Tribunal decided to afford the assessee one more opportunity to substantiate its grounds on merits. The matter was restored to the CIT(A) for de novo consideration, adhering to the principles of natural justice. The assessee's Ground No. 2, challenging the jurisdiction and legal validity of reassessment proceedings under Section 147, was withdrawn by the assessee and dismissed as such. Grounds 1, 3, and 4 were allowed for statistical purposes, meaning they would be adjudicated on merits by the CIT(A). The Tribunal clarified that this restoration should not affect the merits of the case, which the CIT(A) is empowered to decide independently. The operative direction was to set aside the order and restore the appeal to the CIT(A) for fresh adjudication.

The Tribunal held that the CIT(E) erred in his observation regarding the commencement of activities and the calculation of delay. The Tribunal condoned the delay of 192 days in filing Form No. 10AB, finding that the assessee had reasonable cause for the delay, supported by FIRs and trustee affidavits. Regarding the objects of the trust, the Tribunal noted that the CIT(E)'s apprehension that the assessee was spending beyond territorial limits was based on clauses providing for scholarships and publications. However, the assessee clarified that no such expenditure or publication occurred outside India. The Tribunal opined that whether the assessee incurred expenditure beyond the objects and if such expenditure could be allowed under Section 11 is a matter for the Assessing Officer during assessment. The Tribunal found no reason to deny registration under Section 12AB, especially since the trust had been granted registration in 1976 on the same objects, and directed the CIT(E) to grant registration from AY 2026-27. Consequently, the appeal regarding Section 80G approval was restored to the CIT(E) for decision on merits, and the appeal related to the denial of registration was dismissed as infructuous.