ITAT Pune Judgments — February 2026

The Income Tax Appellate Tribunal (ITAT) observed that since the assessee's declared income in response to a section 148 notice was accepted without any additions, and the assessee had a bona fide explanation, the income should not be treated as 'under-reported income' as per section 270A, particularly section 270A(6). Relying on the ITAT Hyderabad Bench decision in Subbalakshmamma Pinnama and maintaining consistency with the assessee's own case in a prior year where penalty was dropped on similar facts, the Tribunal directed the AO to delete the penalty levied under section 270A.

The Tribunal accepted the assessee's request to withdraw the appeals, as the Departmental Representative did not raise any objection. Consequently, both appeals filed by the assessee were dismissed as 'withdrawn'.

The Tribunal acknowledged that both the original assessment and the first appeal dismissal were ex-parte. Considering the assessee's contention that the ex-parte nature and delay were due to their erstwhile counsel's failure to inform them, and in the interest of justice, the Tribunal condoned the delay in the current appeal. It set aside the CIT(A)'s order and restored the entire matter to the Assessing Officer for fresh assessment, directing the AO to provide a reasonable opportunity of hearing and the assessee to comply with notices.

The Tribunal condoned the 401-day delay in filing the appeal, finding "reasonable cause" as per the affidavit and Supreme Court precedent. On the merits, the Tribunal found that the disallowance u/s 40(a)(ia) was based on a clerical error in the Tax Audit Report, and since no such rent payment was made by the assessee, the disallowance was deleted, reversing the CIT(A)'s order.

The Tribunal condoned the 187-day delay in filing the appeal before the CIT(A), finding it not deliberate and noting that the assessee gained nothing from the delay. The case was restored to the CIT(A) for fresh adjudication on merits, as the CIT(A) had not previously considered the substantive issues.

Given that the assessee had obtained the necessary relief, they sought to withdraw their appeals before the Tribunal. The Departmental Representative had no objection, and the Tribunal accepted the request, dismissing both appeals as 'withdrawn'.

Despite the assessee's repeated non-appearance before the lower authorities and the Tribunal, the Tribunal decided to grant one more opportunity in the interest of justice. All issues raised in the appeal are restored to the file of the Ld. CIT(A) for fresh adjudication, with directions to afford a reasonable opportunity of being heard to the assessee.

The Tribunal found that the assessee had indeed filed an affidavit for condonation of delay, which the CIT(A) had overlooked. The ITAT restored the matter to the file of the CIT(A) / NFAC with directions to consider the condonation affidavit and decide the appeal on its merits.

The Tribunal noted that the assessee maintained proper books of accounts, quantitative details, and filed VAT returns, and the gross sales were accepted by the AO. It held that the comparison of cash sales for fixed dates across different financial years was flawed due to the varying dates of the Diwali festival. The Tribunal found that the assessee successfully explained the source of cash and established an increasing trend in cash sales consistent with a 40% increase in gross sales. Consequently, the addition made under section 69A was deleted.

The Tribunal condoned the 95-day delay in filing the appeal before the CIT(A), relying on a justice-oriented approach and Supreme Court judgments. It remitted the issue regarding the addition of ₹ 59,00,333 back to the CIT(A) for fresh adjudication under section 250(6), directing the CIT(A) to provide a reasonable opportunity of being heard to the assessee.

The Tribunal set aside the ex-parte order of the CIT(A) and restored the matter to the CIT(A) for fresh adjudication. The assessee was directed to cooperate by responding to notices and providing evidence, ensuring a reasonable opportunity of hearing.

The Tribunal, considering the request for an additional opportunity and in the interest of justice, decided to grant the assessee one more chance to present their case before the ld. CIT(A). The issues raised in the appeal are remitted back to the file of the ld. CIT(A) for fresh adjudication, with a direction for the CIT(A) to provide due opportunity of hearing. The assessee is also directed to be vigilant and ensure compliance with notices.

The Tribunal condoned the delay in filing the appeals, emphasizing that substantive justice should not be hindered by technicalities. It held that the amendment to Section 200A(1)(c), which empowers the levy of late fees under Section 234E during processing, is prospective, effective only from 01.06.2015. Therefore, late filing fees under Section 234E can only be calculated from 01.06.2015 until the actual filing date, not for periods prior to it. The matter was remanded to the Jurisdictional TDS Officer for recalculation.

The Tribunal, acknowledging the assessee's non-participation and lack of detailed income calculation, applied the provisions of Section 44AD for presumptive taxation. It reduced the estimated Net Profit rate from 18% (applied by the AO) to 8% of the gross receipts. Consequently, the assessee's income was re-calculated to Rs. 13,34,400/-, and an addition of Rs. 16,68,000/- was deleted.

The ITAT held that the issue was covered by prior decisions of the Pune Bench of the Tribunal, particularly The Karad Urban Sevak Sahakari Patsanstha Maryadit Karad. It was concluded that interest income earned by a co-operative credit society from deposits/investments with co-operative banks is eligible for deduction under section 80P(2)(d) of the Income Tax Act. The Tribunal therefore set aside the order of the CIT(A) and allowed the deduction claimed by the assessee.

The Tribunal observed that in the absence of details regarding the assessee's income for the preceding A.Y. 2019-10, the advance tax liability could not be quantified, thus the CIT(A) should have adjudicated the case on its merits. Consequently, the Tribunal restored the issues back to the file of the CIT(A) for fresh adjudication on merits under section 250(6) of the Act, after providing the assessee a reasonable opportunity of hearing.

The Tribunal held that the penalty notice was invalid as it failed to specify which limb of Section 270A(9) was attracted, as required by judicial precedents. It also found that the assessee's claims were made under a bona fide belief and that the assessee had already paid the entire demand, including excess interest. Consequently, the Tribunal concluded that the assessee was not guilty of underreporting or misreporting of income and vacated the penalty.

The Tribunal found that the CIT(A)/NFAC's dismissal of the appeal for non-prosecution, without addressing the merits and stating reasons, violated Section 250(6) of the Income Tax Act. Consequently, the Tribunal set aside the CIT(A)/NFAC's order and remanded the matter back for fresh adjudication on merits, providing the assessee a final opportunity of hearing.

The ITAT, relying on a Bombay High Court judgment, held that the CIT(A) is obligated to decide appeals on merits and cannot dismiss an appeal merely for non-prosecution. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter for de novo adjudication, instructing the CIT(A) to provide the assessee an opportunity to present documents.

The Tribunal acknowledged that the Renuka Mata Multi State Urban Co-operative Credit Society Ltd. operated on an 'Angadia Model' involving accommodation entries, and the assessee was likely a name lender. Given that the Revenue found no evidence of lavish expenditure by the assessee and that the assessee maintained audited books, the Tribunal concluded that adding the entire deposit as income was not justified. Based on judicial precedents that allowed a percentage addition in similar cases, the Tribunal directed the Assessing Officer to treat 2% of the Rs. 32.25 lakhs deposit as the assessee's income.

Considering the larger interest of justice, the ITAT restored the issues raised in the appeal on merits to the file of the Ld.CIT(A) for fresh adjudication. The CIT(A) is directed to pass a speaking order under section 250(6) of the Act after granting a fair hearing opportunity to the assessee, who is also directed to remain vigilant.

The Tribunal observed that the CIT(A) dismissed the appeal for non-compliance without adjudicating it on merits. Relying on the Bombay High Court's ruling in Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF), the Tribunal held that the CIT(A) is obliged to decide appeals on merit and does not possess the power to dismiss an appeal for non-prosecution. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter for de novo adjudication, directing the CIT(A) to provide the assessee with an opportunity to present all necessary documents.

The Tribunal restored the matter to the Ld. Jurisdictional Assessing Officer (JAO) for limited verification. The assessee is directed to furnish necessary evidence, including Form 16, and a revised income computation without claiming the deposited excess refund as prepaid tax. The JAO shall provide a reasonable opportunity and decide the issues in accordance with law.

The Tribunal determined that the bank transactions were business-related and only the profit element should be added to the assessee's income. The matter was restored to the AO for due verification of the assessee's total turnover and for estimation of Net Profit, with the condition that the estimated profit should not exceed the rate provided under Section 44AD of the Act or the peak credit balance in the bank account, whichever is less.

The Tribunal held that the assessee successfully discharged the primary onus by providing comprehensive documentary evidence for the identity, genuineness of the transaction, and creditworthiness of the creditor, and that the loan was repaid. The Revenue failed to controvert these facts, and the Tribunal noted that the "source of source" rule under Section 68 was not applicable for the relevant period (prior to 01.04.2013 amendment). Consequently, the addition was deleted.

The Tribunal set aside the CIT(A)'s order and remanded the case for de novo adjudication. The CIT(A) was directed to obtain copies of the notices under sections 148A(b) and 148A(d) from the AO, provide the assessee with an opportunity, and decide all grounds of appeal on merits, including the maintainability of the reassessment notice issued after three years for an amount less than Rs. 50 lakhs.

The Income Tax Appellate Tribunal (ITAT) condoned the delay in filing the appeals, prioritizing substantive justice. The ITAT held that the amendment to Section 200A(1)(c) of the IT Act, which enables the levy of late fees under Section 234E during processing, is prospective in nature and applies only from 01.06.2015. Consequently, late fees under Section 234E must be calculated only for the period from 01.06.2015 until the date of filing the TDS return, and not for any prior period. The matter was remanded to the Jurisdictional TDS Officer for re-calculation accordingly.

The Tribunal upheld the CIT(A)'s decision to treat the excess stock of Rs. 4,42,86,847/- as business income, dismissing the Revenue's ground for taxation under sections 69B r.w.s. 115BBE, citing judicial precedents. However, the Tribunal allowed the Revenue's appeal regarding the expense disallowances. It reversed the CIT(A)'s partial relief and restored the AO's full disallowances for sales promotion expenses, meal expenses (due to double booking), and vehicle expenses, finding the CIT(A)'s reasoning unsound or lacking supporting evidence.

The Addl./JCIT(A) allowed the assessee's appeal, directing the CPC/AO to delete the addition and grant exemption u/s 11, noting that no prior intimation was given by CPC/AO before making the adjustment. The Revenue then appealed to the ITAT. The ITAT, relying on various Tribunal and High Court decisions, held that the filing of Form 10B is a directory requirement, not mandatory, and that the Form 10B was filed before the intimation order u/s 143(1) was passed. Therefore, the assessee was eligible for the exemption u/s 11. The ITAT dismissed the Revenue's appeal.

The Tribunal held that the amendment to Section 200A(1)(c) of the IT Act, which facilitates the levy of late fees under Section 234E, is prospective and effective from 01.06.2015. Therefore, late fees under Section 234E should only be calculated from 01.06.2015 till the actual date of filing. The CIT(A)'s orders were set aside, and the matter was restored to the Jurisdictional TDS Officer for re-calculation accordingly. The Tribunal also condoned the delay in filing the appeals, emphasizing that substantive justice should not be hindered by technicalities.

Considering the facts, circumstances, and practical difficulties faced by the assessee during the COVID-19 pandemic, the Tribunal decided to grant another opportunity. The matter was remitted back to the Jurisdictional Assessing Officer to verify the assessee's claim for deduction u/s 43B for the payment made in FY 2020-21 and to confirm if similar disallowances were made in prior assessment years. If the claim is found to be correct upon verification, the JAO is directed to allow it.

The Tribunal found the assessee was a 'name lender' for accommodation entries involving Renukamata Society, not the true beneficiary of the substantial deposits. Citing precedents, the Tribunal directed the Assessing Officer to adopt a profit rate of 2% on the total deposits of Rs.2,47,52,218/- in the assessee's account, thereby modifying the addition instead of the Rs.2,50,000/- sustained by the CIT(A). The Revenue's appeal was partly allowed, and the assessee's cross-objection was dismissed as not pressed.

The Tribunal acknowledged that the assessee was not the true beneficiary of the funds, which were part of an accommodation entry scheme orchestrated by the cooperative society. Citing precedents where only a percentage of such deposits was treated as income and noting the absence of lavish expenditure by the assessee, the Tribunal directed the Assessing Officer to adopt 2% of the deposit as the assessee's income instead of the entire amount. This approach was applied consistently across all three assessment years.

The Tribunal, considering the prospective nature of the amendment to Section 200A(1)(c) effective from 01.06.2015, ruled that late fees under Section 234E can only be calculated from 01.06.2015 until the actual filing date. The Tribunal also condoned the delay in filing the appeals, emphasizing substantive justice, and remanded the matter to the Jurisdictional TDS Officer for re-calculation of fees based on this directive.

The Tribunal condoned the delay in filing the appeals, emphasizing the principle of substantial justice. It held that the amendment to Section 200A(1)(c) for levying late fees under Section 234E is prospective, effective from 01.06.2015. Consequently, the late fees under Section 234E are to be recalculated by the Jurisdictional TDS Officer, applying only from 01.06.2015 until the actual date of filing the TDS returns/statements.

The Tribunal determined that the total salary expense of Rs.41,27,199/- claimed by the assessee was correct and allowable. It directed the Assessing Officer to re-compute the deduction under Section 80IA by apportioning the salary expenses between the power generation unit and the share trading business based on their respective turnovers, considering this a scientific method.

The Tribunal remitted the issue of the Section 80P deduction claim back to the Jurisdictional Assessing Officer (JAO) for de novo adjudication. This adjudication is to occur only after the JAO decides on the assessee's pending application for condonation of delay under Section 119(2)(b) of the Act, ensuring a reasonable opportunity of hearing is provided to the assessee.