ITAT Mumbai Judgments — October 2026

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that orders passed by the Ld. CIT(E) under Section 119(2)(b) of the Act are not appealable before the ITAT under Section 253 of the Act. Section 253(1) enumerates specific orders against which an appeal can be filed, and an order under Section 119(2)(b) is not included. Therefore, the Tribunal cannot examine the merits of the Ld. CIT(E)'s decision regarding the condonation of delay or the sufficiency of the cause for delay. Consequently, the appeals challenging these specific orders were dismissed as non-maintainable. For other appeals, where the issue was not solely about Section 119(2)(b) orders, they were allowed for statistical purposes, implying that the primary issue of appealability under Section 253 was the deciding factor for the dismissal of specific appeals.

The Tribunal held that the assessee's internal TNMM analysis for freight forwarding services was appropriate and satisfied the arm's length test. Consequently, the transfer pricing adjustment of Rs. 3,37,76,000 made by the TPO was directed to be deleted. As a result, Ground Nos. 4 to 7 were allowed. Ground No. 1, which challenged the total income determination, was allowed for statistical purposes, directing the AO to recompute the assessed income/loss after deleting the transfer pricing adjustment. Grounds 8 to 19, which dealt with the selection and rejection of comparables, application of filters, working capital adjustment, and PLI, were rendered academic as the primary issue of accepting internal TNMM was decided in favour of the assessee. Ground No. 2 (limitation) and Ground No. 3 (reference to TPO) were left open without expressing any opinion, as the substantive issue was decided on merits. Ground No. 20, challenging penalty proceedings, was dismissed as premature. The appeal was partly allowed.

The Tribunal decided the appeal partly. Regarding Ground No. 1, it was considered general and required no separate adjudication. Ground No. 2 concerning limitation was kept open, with the Tribunal refraining from recording a finding due to other issues being adjudicated or restored. Grounds Nos. 3 to 10, relating to the transfer pricing adjustment for business support services, were restored to the file of the Ld. AO/Ld. TPO for fresh adjudication. This was to allow consideration of additional evidence and grant a reasonable opportunity to the assessee. Grounds Nos. 11 to 16, concerning the transfer pricing adjustment for interest on CCDs, were allowed. Ground No. 17, regarding penalty proceedings under section 270A, was dismissed as premature. Ground No. 18, concerning interest under sections 234B, 234C, and 234D, was consequential, and the Ld. AO was directed to give effect accordingly. Additional Ground No. 19, seeking deduction under section 80JJAA, was restored to the file of the Ld. AO. The Tribunal distinguished the case of 360 One Distribution Services Ltd. by noting that the assessee had raised the claim during assessment proceedings and furnished necessary documents, including Form No. 10DA, and pleaded impossibility of performance. The Ld. AO was directed to examine the claim and supporting evidence without being influenced by any observations on merits. The Tribunal did not express an opinion on the allowability of the deduction itself. The overall result was that the appeal was partly allowed for statistical purposes.

The Tribunal admitted the additional ground regarding the applicability of Section 69C, citing the Supreme Court in NTPC Ltd. vs. CIT and the Bombay High Court in CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd., as it was legal in nature and arose from facts on record. Regarding the main grounds, the Tribunal noted that the AO had specifically doubted the genuineness of purchases from only two suppliers, Shri Vishal Ganeshbai Adesara (Rs. 15,05,01,748) and Mr. Mehul Ghevarchand Jagawat (Rs. 6,00,82,236), totaling Rs. 21,05,83,984. The Tribunal found that the profit element on these specific purchases could be added, not on the entire turnover. Citing various High Court and Tribunal decisions (PCIT vs. Ramelex Pvt. Ltd., CIT vs. Simit Seth, Amarshi Harakchand Gada vs. ITO), which upheld additions ranging from 12.5% to 15% of bogus purchases, the Tribunal directed the AO to restrict the addition to 12.5% of the purchases from the two doubted suppliers (Rs. 21,05,83,984). This resulted in a confirmed addition of Rs. 2,63,22,998, with the remaining addition deleted. On the additional ground concerning Section 69C, the Tribunal noted that no arguments were made by either party. However, since an addition of 12.5% on the impugned purchases (representing the profit element) had already been made and the sales were accepted, no further addition was required under Section 69C. The appeal was partly allowed.

The Tribunal granted the assessee's request to withdraw the appeal. The reasoning was based on the assessee's submission that the appeal was a duplicate of another pending appeal (ITA No. 5861/Mum/2026). Consequently, the Tribunal dismissed the appeal as withdrawn. No decision was made on the merits of the PCIT's order under Section 263. The operative direction was to dismiss the appeal as withdrawn.

The Tribunal held that the addition of Rs. 59,25,227/- on account of inflated purchases could not be sustained. The entire basis for the addition rested on statements from third parties, Shri Manoj Suresh Jayawant and Shri Jagdish Chandra Somani. The Tribunal noted that no incriminating material was found during the survey at the assessee's premises, and no cash trail demonstrating refunds was established. Crucially, the assessee was denied the opportunity to cross-examine Shri Jagdish Chandra Somani, a violation of natural justice, as held in Andaman Timber Industries v. CCE (SC). Furthermore, statements recorded under Section 133A, like that of Shri Somani, lack standalone evidentiary value without corroboration, as per CIT v. S. Khader Khan Son (SC). The statement of Shri Jayawant was also retracted and factually inaccurate. The purchases were substantiated by regular documents and banking transactions, and the assessee's financial performance was robust. Therefore, the addition was deleted. Consequently, the grounds challenging the reopening of assessment (Grounds 1 and 2) were rendered academic and dismissed as infructuous. The appeal was allowed.

The Tribunal condoned the delay of 24 days in filing the appeals, finding it neither intentional nor deliberate. The Tribunal prioritized substantial justice over technical considerations, especially given the short delay and the explanation provided by the assessee's representative. Regarding the merits, the Tribunal noted the assessee's limited prayer for one more opportunity to file complete submissions and documentary evidence before the CIT(A). The Tribunal observed that the CIT(A)'s order did not record the full contents of the assessee's written submissions. Considering that no prejudice would be caused to the revenue, the Tribunal allowed the assessee one more opportunity to contest the case on merit by filing complete evidence. Consequently, the grounds of appeal raised by the assessee were restored back to the file of the CIT(A) for adjudication afresh. The appeals were allowed for statistical purposes.

The Tribunal held that the disallowances out of employee benefit expenses and labour charges, whether at 15% or 10%, lacked a clear basis and were essentially ad hoc estimations. The Tribunal noted that a percentage cannot substitute actual verification. The assessee's without prejudice offer of 3% disallowance was also found to have no basis. Consequently, the Tribunal restored this issue to the Assessing Officer (AO) for de novo consideration. The AO is directed to verify the evidence, examine the genuineness of expenditure and its business nexus, and make disallowance only to the extent found unsupported or non-genuine, providing reasons based on material evidence rather than ad hoc percentages. Regarding the addition of ₹31,98,007/- under section 69C, the Tribunal found that the dispute required reconciliation of the negative cash balance with the corrected books. The assessee's explanation of accounting errors needed verification from original records. Therefore, this issue was also restored to the AO for de novo consideration. The findings of the CIT(A) on both these issues were set aside. The appeals were allowed for statistical purposes.

The Tribunal held that the Principal Commissioner of Income Tax (PCIT) was justified in invoking section 263 of the Act. The Tribunal found that the Assessing Officer had failed to conduct any enquiry regarding the substantial claims of advertisement and sales promotion expenditure (Rs. 3065.19 lakhs) and ESOP expenses (Rs. 1,05,56,000/-). The assessment order merely accepted the assessee's return without examining the facts relevant to the allowability of these claims. This lack of enquiry rendered the assessment order erroneous and, due to the potential tax consequences, prejudicial to the interests of the revenue. The Tribunal clarified that this was not a case of the PCIT substituting his view for a possible view of the Assessing Officer, as no view was taken by the Assessing Officer due to the absence of any examination. The Tribunal also dismissed the assessee's contention that the revision was based on an internal audit objection, stating that the source of the issue is not decisive; what matters is the PCIT's independent satisfaction after examining the record. Consequently, the Tribunal sustained the revisional jurisdiction exercised by the PCIT under the main provision of section 263(1) and did not find it necessary to rely on Explanation 2. The grounds raised by the assessee were dismissed, and the PCIT's order was upheld, restoring the issues to the Assessing Officer for proper enquiry.

The Tribunal held that the disallowances out of employee benefit expenses and labour charges, whether at 15% or 10%, lacked a clear basis and were essentially ad hoc estimations. The Tribunal noted that a percentage cannot substitute actual verification. The assessee's without prejudice offer of 3% disallowance was also found to have no basis. Consequently, the Tribunal restored this issue to the Assessing Officer (AO) for de novo consideration. The AO is directed to verify the evidence, examine the genuineness of expenditure and its business nexus, and make disallowance only to the extent found unsupported or non-genuine, providing reasons based on material evidence rather than ad hoc percentages. Regarding the addition of ₹31,98,007/- under section 69C, the Tribunal found that the dispute required reconciliation of the negative cash balance with the corrected books. The assessee's explanation of accounting errors needed verification from original records. Therefore, this issue was also restored to the AO for de novo consideration. The findings of the CIT(A) on both these issues were set aside. The appeals were allowed for statistical purposes.

The Tribunal held that the disallowances out of employee benefit expenses and labour charges, whether at 15% or 10%, lacked a clear basis and were essentially ad hoc estimations. The Tribunal noted that a percentage cannot substitute actual verification. The assessee's without prejudice offer of 3% disallowance was also found to have no basis. Consequently, the Tribunal restored this issue to the Assessing Officer (AO) for de novo consideration. The AO is directed to verify the evidence, examine the genuineness of expenditure and its business nexus, and make disallowance only to the extent found unsupported or non-genuine, providing reasons based on material evidence rather than ad hoc percentages. Regarding the addition of ₹31,98,007/- under section 69C, the Tribunal found that the dispute required reconciliation of the negative cash balance with the corrected books. The assessee's explanation of accounting errors needed verification from original records. Therefore, this issue was also restored to the AO for de novo consideration. The findings of the CIT(A) on both these issues were set aside. The appeals were allowed for statistical purposes.

The Tribunal held that the notice dated 09.04.2022 issued under section 148 of the Income Tax Act, 1961, for Assessment Year 2018-19, was unsustainable in law. The Tribunal noted that the notice was issued after the expiry of three years from the end of the relevant assessment year and that the sanction for its issuance was obtained from the Ld. PCIT, Mumbai-17, which is not the specified authority under section 151(ii) of the Act. The Tribunal found that the Revenue did not dispute these factual assertions. Citing the Hon’ble Jurisdictional High Court's decision in Skypak Travels Private Limited v. ITO & Ors., the Tribunal concluded that the notice and the consequential assessment order passed in pursuance thereof were liable to be quashed. Consequently, the issues on merits were rendered academic and did not require adjudication. The Assessee's Cross Objection was allowed, and the Revenue's appeal was dismissed as infructuous.

The Tribunal held that the assessee's Ground No. 1 was dismissed because the assessee failed to provide any rebuttal to the contention that the appeal against the quantum addition had already been dismissed. Ground No. 2 was dismissed as it was raised for the first time before the Tribunal without any application for permission.

The Tribunal held that the assessee succeeded in the quantum appeal, and the addition of ₹4,00,000/- made under Section 68 of the Act had already been deleted by the ITAT. Since this addition was the sole foundation for the levy of the impugned penalty under Section 271(1)(c), and the addition no longer survived, the penalty order could not be sustained. Consequently, the Tribunal directed the AO to delete the penalty of ₹1,23,600/-. The grounds of appeal raised by the assessee were allowed. The Tribunal did not explicitly discuss the second ground regarding the AO's notice, as the deletion of the primary addition rendered the penalty unsustainable.

The Tribunal condoned the delay of 24 days in filing the appeals, finding it neither intentional nor deliberate, and prioritizing substantial justice over technical considerations. Regarding the merit of the case, the Tribunal noted the assessee's limited prayer for one more opportunity to file complete submissions and documentary evidence before the CIT(A), as the assessee had not filed complete details earlier. The Tribunal observed that the CIT(A)'s order recorded the assessee's written submissions but did not detail their contents. Considering that no prejudice would be caused to the revenue, the Tribunal restored both appeals to the file of the CIT(A) to adjudicate all grounds of appeal afresh. The appeals were allowed for statistical purposes.

For AY 2014-15, the Tribunal upheld the CIT(A)'s deletion of the ₹62,50,000/- addition. The Tribunal found that the CIT(A) had considered the documentary evidence, including confirmations, bank statements, financial statements, and replies under Section 133(6), and noted the substantial net worth and turnover of the lenders. The Tribunal agreed that routing funds through banking channels and providing documentation, when not specifically rebutted by the Revenue with adverse material beyond general investigation findings, was sufficient to establish the identity, creditworthiness, and genuineness of the transactions. The Tribunal dismissed the Revenue's appeal on this issue. For AY 2015-16, the Tribunal upheld the CIT(A)'s deletion of ₹1,00,00,000/-. The Tribunal found that the CIT(A) correctly identified that the transaction with M/s Victory Sales Pvt. Ltd. was an advance of ₹35,00,000/- by the assessee, creating a debit balance, thus not a credit under Section 68. Similarly, the amount from M/s B.K. Dyeing & Printing Mills Pvt. Ltd. was an opening balance from the previous year, not subject to Section 68 in the current year. The Tribunal also found that the remaining loan of ₹15,00,000/- from M/s P. Saji Textiles Ltd. was supported by sufficient documentary evidence and the lender had the financial capacity, and the AO had not brought specific material to rebut this. Therefore, the Tribunal dismissed the Revenue's appeal for this AY as well.

The Tribunal condoned the delay of 24 days in filing the appeals, finding it neither intentional nor deliberate. The Tribunal prioritized substantial justice over technical considerations, especially given the short delay and the explanation provided by the assessee's representative. Regarding the merits, the Tribunal noted the assessee's limited prayer for one more opportunity to file complete submissions and documentary evidence before the CIT(A). The Tribunal observed that the CIT(A)'s order did not record the full contents of the assessee's written submissions. Considering that no prejudice would be caused to the revenue, the Tribunal allowed the assessee one more opportunity to contest the case on merit by filing complete evidence. Consequently, the grounds of appeal raised by the assessee were restored back to the file of the CIT(A) for adjudication afresh. The appeals were allowed for statistical purposes.

The Tribunal held that the disallowance under Section 14A of the Income Tax Act, 1961, read with Rule 8D(2)(iii) of the Income Tax Rules, 1962, should be computed by considering only those investments that yielded exempt income during the relevant assessment year. The Tribunal found that the assessee had correctly computed its suo motu disallowance of Rs. 4,945/- by considering the average value of investments that actually yielded exempt income. The AO's inclusion of an investment of Rs. 23,25,00,000/- in M/s Magnum Foundation Pvt. Ltd., which did not yield any exempt income during the year, was contrary to the established legal position. The Tribunal relied on the decision of the Special Bench of the Tribunal in ACIT vs Vireet Investment Private Limited, which held that only investments yielding exempt income should be considered for computing the average value of investments under Rule 8D(2)(iii). Consequently, the additional disallowance of Rs. 5,81,250/- made by the AO was deleted, and the assessee's suo motu disallowance of Rs. 4,945/- was sustained. The ground raised by the assessee was allowed.

The Tribunal held that Section 43CB of the Act, which deals with construction contracts or contracts for providing services, is not applicable to a real estate developer developing and selling property on its own account. The Tribunal noted that the assessee had consistently followed the Project Completion Method, which was accepted by the Department in Assessment Years 2016-17, 2017-18, and 2022-23. The Tribunal also found that there was no actual construction activity during the year under consideration, and the increase in work-in-progress was primarily due to finance and administrative costs, which by themselves could not lead to the recognition of project profit. The Tribunal further held that the computation made by the Assessing Officer under the Percentage Completion Method was incorrect as it mixed cumulative figures with current-year figures, leading to a mismatch between revenue and cost. Regarding the enhancement by the CIT(Appeals), the Tribunal found it unsustainable as no reasonable opportunity of showing cause against such enhancement was provided to the assessee, violating Section 251(2) of the Act. The enhancement was also found to lack merit on the ground that the entire increase in work-in-progress was treated as income without corresponding revenue recognition. The Tribunal allowed the assessee's grounds.

The Tribunal held that the assessment order was not barred by limitation. Regarding the re-characterization of CCDs as equity and the determination of ALP of interest at Nil, the Tribunal, following its own prior decisions in HCY Industrial Parks Pvt. Ltd. and Andromeda Sales and Distribution Pvt. Ltd., held that CCDs cannot be re-characterized as equity merely because they are compulsorily convertible. The TPO cannot determine interest at Nil solely upon such re-characterization. The Tribunal found no reason to take a different view, stating that the eventual conversion of principal into equity is conceptually distinct from the pricing of a subsisting pre-conversion coupon. The ALP of interest must be determined according to prescribed transfer pricing provisions and cannot be reduced to Nil by treating the instrument as future equity. The TPO failed to demonstrate through an appropriate method an ALP of Nil. Therefore, the transfer pricing adjustment of Rs. 4,76,60,340 was directed to be deleted. The alternative disallowance under sections 36(1)(iii)/37(1) was also set aside, as it rested on the same proposition that unconverted CCDs should be treated as issued equity, which was not accepted. The Tribunal noted that no independent finding was brought to its notice demonstrating that the entire interest expenditure lacked business nexus or was utilized for a purpose warranting disallowance. The issue concerning section 94B was treated as consequential to the transfer pricing adjustment; thus, its reasoning could not survive the deletion of the adjustment. The AO was directed to verify the assessee's computation under section 94B and grant consequential treatment. The levy of statutory interest was also to be recomputed with reference to the finally determined assessed income. The grounds relating to the principal transfer pricing adjustment and the alternative disallowance were allowed. The consequential grounds were disposed of accordingly.

The Tribunal condoned the delay of 24 days in filing the appeals, finding it neither intentional nor deliberate, and prioritizing substantial justice over technical considerations. Regarding the merit of the case, the Tribunal noted the assessee's limited prayer for one more opportunity to file complete submissions and documentary evidence before the CIT(A), as the assessee had not filed complete details earlier. The Tribunal observed that the CIT(A)'s order recorded the assessee's written submissions but did not detail their contents. Considering that no prejudice would be caused to the revenue, the Tribunal restored both appeals to the file of the CIT(A) to adjudicate all grounds of appeal afresh. The appeals were allowed for statistical purposes.

For AY 2014-15, the Tribunal upheld the CIT(A)'s deletion of the ₹62,50,000/- addition. The Tribunal found that the CIT(A) had considered the documentary evidence, including confirmations, bank statements, financial statements, and replies under Section 133(6), and noted the substantial net worth and turnover of the lenders. The Tribunal agreed that routing funds through banking channels and providing documentation, when not specifically rebutted by the Revenue with adverse material beyond general investigation findings, was sufficient to establish the identity, creditworthiness, and genuineness of the transactions. The Tribunal dismissed the Revenue's appeal on this issue. For AY 2015-16, the Tribunal upheld the CIT(A)'s deletion of ₹1,00,00,000/-. The Tribunal found that the CIT(A) correctly identified that the transaction with M/s Victory Sales Pvt. Ltd. was an advance of ₹35,00,000/- by the assessee, creating a debit balance, thus not a credit under Section 68. Similarly, the amount from M/s B.K. Dyeing & Printing Mills Pvt. Ltd. was an opening balance from the previous year, not subject to Section 68 in the current year. The Tribunal also found that the remaining loan of ₹15,00,000/- from M/s P. Saji Textiles Ltd. was supported by sufficient documentary evidence and the lender had the financial capacity, and the AO had not brought specific material to rebut this. Therefore, the Tribunal dismissed the Revenue's appeal for this AY as well.

The Tribunal set aside the impugned appellate order and restored the matter to the file of the CIT(A) for fresh adjudication. The CIT(A) was directed to examine the ledger entries, bank and broker records, disputed trading transactions, and their treatment in the assessee's books and return. This requires obtaining a remand report from the AO. The assessee is permitted to urge its grounds concerning the validity of reopening, which were left unadjudicated. The CIT(A) must expressly decide the jurisdictional grounds concerning reopening, considering the recorded reasons and objections. The addition will be adjudicated on merits depending on the outcome of the reopening challenge. The Tribunal expressed no concluded opinion on the validity of reopening, authorization of trades, nature of the outstanding balance, or sustainability of the addition. Ground No. 1 of the Revenue's appeal is allowed for statistical purposes.

The Tribunal allowed the assessee's appeal. On the primary issue, the Tribunal followed the decision of a Co-ordinate Bench in the case of Pathare Prabhu Co-operative Housing Society Ltd. vs ITO (ITA No. 1346 and 1347/Mumbai/2023). The Tribunal noted that while all co-operative banks are co-operative societies, the converse is not always true. It referred to the decision in Kaliandas Udyog Bhavan Premises Co-operative Society Ltd. v. ITO, which held that the insertion of Section 80P(4) does not jeopardize the claim of deduction of a co-operative society under Section 80P(2)(d) for interest income on investments parked with a co-operative bank, as long as the interest income is derived by a co-operative society. The Tribunal also noted that a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912. While acknowledging divergent views from the Karnataka High Court, the Tribunal found guidance in the Supreme Court's decision in CIT(A) v. Vegetable Products Ltd., which states that if two reasonable constructions of a taxing provision are possible, the one favouring the assessee should be adopted. Therefore, the Tribunal directed the AO to allow the assessee's claim of deduction under Section 80P(2)(d). The issue of interest under Section 234B and 234C was deemed consequential and not adjudicated.

The Tribunal held that the disallowance of Rs. 91,43,535/- made under Section 14A read with Rule 8D could not be sustained for Assessment Year 2014-15. The Tribunal found that the NFAC sustained the disallowance by treating the Explanation inserted in Section 14A by the Finance Act, 2022, as retrospective. However, the Tribunal respectfully followed the ratio laid down by the Hon'ble Delhi High Court in PCIT vs. Era Infrastructure (India) Ltd. This decision held that the amendment to Section 14A, though stated to be for removal of doubts, cannot be presumed to have retrospective effect where it alters the law. The amendment was held to be effective from April 1, 2022, applicable for Assessment Year 2022-23 onwards. Since the impugned assessment year (2014-15) is prior to the effective date of the amendment, the Explanation cannot be applied retrospectively. The Tribunal also noted that the assessee had not earned any exempt income. Therefore, the finding of the NFAC treating the amendment as retrospective was set aside, and the disallowance was deleted. The ground raised by the assessee was allowed.

The Tribunal held that the issue regarding the validity of the Section 148 notice, issued beyond three years with approval from the PCIT instead of the PCCIT/CCIT, was no longer res integra and stood settled by the Supreme Court's judgment in Union of India vs. Rajeev Bansal. The Tribunal noted that the Supreme Court clarified that for reassessment notices issued after 30.06.2021, the specified authority under Section 151(ii) of the Act (new regime) should be the PCCIT/CCIT, not the PCIT. In the present case, the order under Section 148A(d) and the notice under Section 148 were issued on 20-04-2022, which was after 30.06.2021, with the approval of the PCIT, Mumbai-8. The Tribunal found this to be contrary to the Supreme Court's ruling. Consequently, the Tribunal quashed and set aside the order passed under Section 148A(d) and the consequential notice issued under Section 148, both dated 20-04-2022, as being bad in law. As a result, the assessment order dated 14-02-2024 was also quashed. The Tribunal allowed the legal ground of appeal and did not adjudicate on other legal grounds or the merits of the case, as they had become academic.

The Tribunal held that the primary issue was the validity of the notice issued under Section 148. The notice was issued under the new regime for AY 2018-19, with approval from the Pr. CIT under Section 151(i). However, the notice was issued on 20-04-2022, which was after 30.06.2021. According to the Supreme Court judgment in Union of India vs. Rajeev Bansal, for notices issued after 30.06.2021, where the period of three years from the end of the relevant assessment year has expired, the approval should have been obtained from the Pr. CCIT/CCIT under Section 151(ii), not the Pr. CIT under Section 151(i). The jurisdictional High Court in Alag Property Construction (P) Ltd. also held that in the absence of approval from the specified authority under Section 151(ii), the AO lacked jurisdiction. Therefore, the Tribunal quashed the order passed under Section 148A(d) and the consequential notice issued under Section 148, both dated 20-04-2022, as being bad in law. Consequently, the assessment order dated 14-02-2024 was also quashed. As the legal ground regarding the validity of the notice was allowed, other legal grounds and the merits of the case were rendered academic and left undecided. The appeal of the assessee was allowed on this legal ground.

The Tribunal first addressed the ground challenging the validity of reassessment proceedings due to limitation. The Assessing Officer issued the notice under Section 148 on 19.04.2022 for AY 2015-16. The Tribunal noted that the erstwhile six-year limitation period under Section 149(1)(b) for AY 2015-16 expired on 31.03.2022. The substituted Section 149(1) with its first proviso prohibited issuing a notice under Section 148 after the expiry of the old limitation period, even if the case fell under the new ten-year period for income exceeding ₹50 lakhs. The Tribunal found that no notice under Section 148A(b) was issued before 31.03.2022, and therefore, no exclusion period under the fifth proviso to Section 149(1) could be applied. Relying on Supreme Court and Bombay High Court judgments, the Tribunal held that the notice dated 19.04.2022 was barred by limitation. Consequently, the reassessment proceedings based on this invalid notice were quashed. As the reassessment proceedings were quashed on jurisdictional grounds, the grounds relating to the additions under Section 69A became academic and did not require separate adjudication.

The Tribunal held that separate conveyance deeds, separate flat numbers, separate parking spaces, or the absence of a separate municipal/RERA amalgamation approval, by themselves, cannot conclusively deny exemption under Section 54F if the units, in fact, constitute one composite residential house. The Tribunal found that the distinction lies between acquiring multiple independent houses versus acquiring units that functionally constitute a single dwelling. The Revenue's appeal was dismissed, upholding the Rs. 4,77,73,095/- exemption granted by the CIT(A), as the Revenue failed to demonstrate a legal or factual basis for its withdrawal. However, the Assessee's appeal for the balance exemption of Rs. 4,77,73,095/- was allowed for statistical purposes, with the limited factual issue of whether the flats physically interconnect and function as one composite residential dwelling restored to the Jurisdictional Assessing Officer (JAO) for physical verification. The JAO is to verify physical interconnection, common passage/access, common kitchen, single residential use, correspondence with submitted evidence, and actual maintenance/use as one house, without being deterred by separate deeds or approvals. If verified as one composite house, the entire claim will be allowed; otherwise, the relief already granted will remain undisturbed.

The Tribunal held that the assessee was not afforded an adequate and reasonable opportunity to present its case before the Ld. CIT(E). Considering the principles of natural justice, the Tribunal deemed it appropriate to restore the matter to the file of the Ld. CIT(E) for fresh consideration after granting the assessee a reasonable opportunity of being heard. The Tribunal directed the Ld. CIT(E) to first adjudicate the assessee's application for registration under Section 12AB and thereafter proceed to consider the application for approval under Section 80G(5). The assessee was also advised to be diligent and cooperate for expeditious disposal. The appeals were allowed for statistical purposes.

The Tribunal held that the assessee had not shown any sufficient cause for the inordinate delay of 1005 days in filing the appeals. The affidavit filed by the assessee merely stated "unavoidable circumstances" without providing any specific details, dates, or explanations for how these circumstances prevented the filing of the appeal. The subsequent written submissions, mentioning relocation, change of mobile number and email, personal difficulties, and issues with the previous CA, were also deemed insufficient to explain the delay. The Tribunal noted that the delay in filing the appeal before the ITAT was significantly longer than the time taken to become aware of the CIT(Appeals)'s order. Citing the Supreme Court's decision in C.I. Builders (P.) Ltd. v. Principal Commissioner of Income-tax, the Tribunal emphasized that condonation of delay is not automatic and requires a clear and bona fide explanation. Since no such explanation was provided, the Tribunal declined to condone the delay and dismissed the appeals as barred by limitation, without going into the merits of the additions or penalty. The appeals for AY 2001-02 (penalty) were also dismissed on the same grounds of delay.

The Tribunal upheld the order of the CIT(A). Regarding the deletion of Rs. 31,50,000 as notional income from properties (Ground 1), the Tribunal found that the CIT(A) had exhaustively dealt with the issue. The Raheja House was considered to be used for professional purposes and for maintaining records, justifying the deletion of notional ALV. For the Lonavala Bungalow, the CIT(A) restricted the ALV to 7% of the cost of acquisition, which the Tribunal found reasonable. The Asha Bhawan flat was correctly treated as self-occupied. The Tribunal agreed that the AO's estimation lacked cogent basis. Regarding the deletion of Rs. 1,17,36,000 as estimated interest on loans and advances (Ground 3), the Tribunal found that the CIT(A) had correctly observed that only a portion of the advances were from staff, and others were without interest stipulation. The recovery was uncertain, and the assessee had no borrowings. The CIT(A)'s conclusion that the AO was not justified in making the addition was upheld. The Tribunal found no infirmity in the appellate order and dismissed the Revenue's grounds of appeal. The issue regarding deemed income from investments (Ground 2) was not explicitly discussed in the provided excerpt, but the overall dismissal of the appeal implies it was also decided in favour of the assessee or not pressed by the Revenue.

The Tribunal held that the assessee had not shown any sufficient cause for the inordinate delay of 1005 days in filing the appeals. The affidavit filed by the assessee merely stated "unavoidable circumstances" without providing any specific details, dates, or explanations for how these circumstances prevented the filing of the appeal. The subsequent written submissions, mentioning relocation, change of mobile number and email, personal difficulties, and issues with the previous CA, were also deemed insufficient to explain the delay. The Tribunal noted that the delay in filing the appeal before the ITAT was significantly longer than the time taken to become aware of the CIT(Appeals)'s order. Citing the Supreme Court's decision in C.I. Builders (P.) Ltd. v. Principal Commissioner of Income-tax, the Tribunal emphasized that condonation of delay is not automatic and requires a clear and bona fide explanation. Since no such explanation was provided, the Tribunal declined to condone the delay and dismissed the appeals as barred by limitation, without going into the merits of the additions or penalty. The appeals for AY 2001-02 (penalty) were also dismissed on the same grounds of delay.

The Tribunal held that the assessee had not shown any sufficient cause for the inordinate delay of 1005 days in filing the appeals. The affidavit filed by the assessee merely stated "unavoidable circumstances" without providing any specific details, dates, or explanations for how these circumstances prevented the filing of the appeal. The subsequent written submissions, mentioning relocation, change of mobile number and email, personal difficulties, and issues with the previous CA, were also deemed insufficient to explain the delay. The Tribunal noted that the delay in filing the appeal before the ITAT was significantly longer than the time taken to become aware of the CIT(Appeals)'s order. Citing the Supreme Court's decision in C.I. Builders (P.) Ltd. v. Principal Commissioner of Income-tax, the Tribunal emphasized that condonation of delay is not automatic and requires a clear and bona fide explanation. Since no such explanation was provided, the Tribunal declined to condone the delay and dismissed the appeals as barred by limitation, without going into the merits of the additions or penalty. The appeals for AY 2001-02 (penalty) were also dismissed on the same grounds of delay.

The Tribunal held that the assessee had not shown any sufficient cause for the inordinate delay of 1005 days in filing the appeals. The affidavit filed by the assessee merely stated "unavoidable circumstances" without providing any specific details, dates, or explanations for how these circumstances prevented the filing of the appeal. The subsequent written submissions, mentioning relocation, change of mobile number and email, personal difficulties, and issues with the previous CA, were also deemed insufficient to explain the delay. The Tribunal noted that the delay in filing the appeal before the ITAT was significantly longer than the time taken to become aware of the CIT(Appeals)'s order. Citing the Supreme Court's decision in C.I. Builders (P.) Ltd. v. Principal Commissioner of Income-tax, the Tribunal emphasized that condonation of delay is not automatic and requires a clear and bona fide explanation. Since no such explanation was provided, the Tribunal declined to condone the delay and dismissed the appeals as barred by limitation, without going into the merits of the additions or penalty. The appeals for AY 2001-02 (penalty) were also dismissed on the same grounds of delay.

The Tribunal held that separate conveyance deeds, separate flat numbers, separate parking spaces, or the absence of a separate municipal/RERA amalgamation approval, by themselves, cannot conclusively deny exemption under Section 54F if the units, in fact, constitute one composite residential house. The Tribunal found that the distinction lies between acquiring multiple independent houses versus acquiring units that functionally constitute a single dwelling. The Revenue's appeal was dismissed, upholding the Rs. 4,77,73,095/- exemption granted by the CIT(A), as the Revenue failed to demonstrate a legal or factual basis for its withdrawal. However, the Assessee's appeal for the balance exemption of Rs. 4,77,73,095/- was allowed for statistical purposes, with the limited factual issue of whether the flats physically interconnect and function as one composite residential dwelling restored to the Jurisdictional Assessing Officer (JAO) for physical verification. The JAO is to verify physical interconnection, common passage/access, common kitchen, single residential use, correspondence with submitted evidence, and actual maintenance/use as one house, without being deterred by separate deeds or approvals. If verified as one composite house, the entire claim will be allowed; otherwise, the relief already granted will remain undisturbed.

The ITAT noted that the addition pertained to the computation of capital gains on the sale of immovable property, involving specific factual objections regarding ownership extent, cost of acquisition, and depreciation adjustment. The Tribunal acknowledged that these issues required verification from purchase/sale documents, ownership records, earlier returns, and depreciation schedules. However, it also observed that the assessee did not properly pursue the proceedings before the CIT(A) despite opportunities, preventing examination of evidence at the first appellate stage. Considering the nature and quantum of the addition and the factual issues, the ITAT decided to grant one final opportunity to the assessee for a decision on merits. The impugned order was set aside, and the issues were restored to the file of the Assessing Officer for de novo consideration. This was made conditional upon the assessee depositing ₹25,000/- as cost with the Prime Minister's National Relief Fund and producing proof of payment. The AO was directed to examine the 50% ownership claim, original cost of acquisition, depreciation, computation under sections 48 and 50, and the assessee's submissions. The assessee was directed to cooperate fully and not seek unnecessary adjournments. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the assessee was not afforded an adequate and reasonable opportunity to present its case before the Ld. CIT(E). Considering the principles of natural justice, the Tribunal deemed it appropriate to restore the matter to the file of the Ld. CIT(E) for fresh consideration after granting the assessee a reasonable opportunity of being heard. The Tribunal directed the Ld. CIT(E) to first adjudicate the assessee's application for registration under Section 12AB and thereafter proceed to consider the application for approval under Section 80G(5). The assessee was also advised to be diligent and cooperate for expeditious disposal. The appeals were allowed for statistical purposes.

The Tribunal held that the royalty rate of 4% paid by the assessee for know-how and licence fees falls within the arm's length range of 3% to 4% determined by the DRP. Consequently, by virtue of Rule 10CA(5), the price actually paid is required to be treated as the arm's length price (ALP). The adjustment of ₹1,13,63,830 is deleted. The Tribunal also held that the contemporaneous evidence establishes the commercial need for and actual rendition of SBS, CPS, and administrative support services, along with their economic utility. The Revenue did not identify any specific duplication or shareholder activity. The cost-allocation mechanisms were disclosed, and the contractual mark-up of 5% falls within the assessee's benchmarking ranges. The TPO, after rejecting the assessee's analysis, did not undertake an objective determination and arrived at nil without identifying comparable uncontrolled transactions. Therefore, the transfer-pricing adjustment of ₹1,20,51,093 is deleted. The alternative disallowance of the same amount under Section 37(1) is also deleted. The grounds challenging procedural aspects were left undecided.

The Tribunal held that the determination of the ALP of interest at nil could not be sustained. The reasoning was that the current interest obligation was displaced by a conclusion about eventual equity ownership, material terms of conversion were inaccurately stated, and a nil price was not established through an asserted method. The Tribunal directed the deletion of the transfer pricing adjustment of Rs. 3,40,27,280. It clarified that it was not determining a universally applicable arm's length rate for CCDs. Grounds 1 to 3 and 8 were allowed to this extent. The DRP's alternative disallowance under sections 36(1)(iii) and 37(1) was also set aside as it rested on the same proposition that CCDs represented issued equity. The consequential direction to reduce the capital asset or work-in-progress base was also vacated. The Tribunal directed the AO to verify the amount actually capitalized and apply governing provisions. Regarding Ground 7, the AO was directed to verify the disallowance made under section 94B and give effect to it, ensuring no double disallowance. The Tribunal expressed no view on the merits of the disallowance itself, only on the procedural error of double disallowance. Any statutory interest or fee affected by the recomputation was to be recalculated. The issue concerning initiation of proceedings under section 270A was deemed premature. The operative direction was to delete the transfer pricing adjustment, set aside the alternative disallowance, and give consequential effect to directions concerning capitalization, section 94B, and statutory levies.

The Tribunal held that the notice under Section 148 dated 24.04.2023 was issued beyond the limitation prescribed under Section 149(1)(a), read with the applicable provisos. The ordinary period of three years from the end of Assessment Year 2019-20 expired on 31.03.2023. The notice under Section 148A(b) was issued on 29.03.2023, with a reply due by 14.04.2023. The assessee furnished the reply on 14.04.2023. Excluding this period and applying the sixth proviso to Section 149(1), the permissible period for issuing the notice under Section 148 expired on 21.04.2023. The notice issued on 24.04.2023 was therefore beyond the permissible period. The Tribunal also noted that the CIT(A) incorrectly identified the date of the Section 148 notice as 29.03.2023, whereas it was 24.04.2023, making the finding on limitation factually unsustainable. Consequently, the notice under Section 148 was invalid, and the reassessment could not be sustained. The impugned order of the CIT(A) was set aside, and the reassessment order was quashed. The jurisdictional and other objections regarding the basis of reopening, and the issues concerning the deduction under Section 80GGC and reliance on third-party material, were left undecided as they became academic.

The Tribunal held that the assessee had established sufficient cause for not filing the appeal within the prescribed period before the CIT(A). The explanation, supported by an affidavit, detailed the announcement and holding of elections for the managing committee, the outgoing committee becoming functus officio, and the subsequent steps taken to file the appeal. The Tribunal considered the principles laid down by the Supreme Court in Collector, Land Acquisition, Anantnag and N. Balakrishnan, emphasizing practical consideration of the explanation and the acceptability of the explanation over the length of delay. While acknowledging a discrepancy in the dates of receipt of the assessment order, the Tribunal found that it did not establish deliberate inaction or falsehood. The Tribunal condoned the delay of 86 days. Consequently, the order of the CIT(A) was set aside, and the appeal was restored to the file of the CIT(A) for adjudication on merits. The Tribunal clarified that this restoration does not grant registration under section 12A/12AB or entitlement to exemption under sections 11 and 12, and the substantive contentions remain open for adjudication by the CIT(A).

The Tribunal held that the penalty order under appeal could not be sustained. The reasoning was that the transfer-pricing adjustment, which formed the basis of the penalty, had been set aside by the Tribunal in its earlier order dated January 28, 2019, and the matter was restored for fresh adjudication. The Tribunal clarified that its earlier order had not expressed any opinion on the merits of the transfer-pricing issues, and the adjustment did not remain a concluded determination. Since the original adjustment was not a concluded determination and was subject to reconsideration in remanded proceedings, a penalty founded upon it could not stand. The Tribunal noted that in the second round, the Assessing Officer had passed a fresh assessment order and initiated fresh penalty proceedings. Therefore, the penalty order presently under appeal, based on the earlier set-aside adjustment, was quashed. The Tribunal explicitly stated that it had expressed no opinion on the merits of the fresh assessment or the validity of the fresh penalty proceedings, which were to be dealt with independently. The appeal filed by the assessee was allowed.

The Tribunal held that the notice under Section 148 and the consequent assessment order were without jurisdiction and quashed them. The Tribunal reasoned that the alleged escapement of income was founded on information and statements emanating from the search of the Rajesh Lifespaces Group. The jurisdictional High Court's decision in Sejal Jewellary & Anr. v. Union of India & Ors. was applied, which held that provisions of sections 153A and 153C apply when the foundation is incriminating material from a search, carving out an exception to normal action under Section 147. The Tribunal found no independent material forming a different foundation for the Section 148 notice. Therefore, the Assessing Officer could not bypass the procedure prescribed for persons other than the searched person by issuing a Section 148 notice. Consequently, grounds concerning cross-examination, Section 69B, and the merits of the addition did not require adjudication.