Income Tax - Sections 143(3), 144C(13), 144B - Delhi ITAT Quashes Final Assessment Order for AY 2020-21 as Time-Barred: Interplay of Sections 144C(13) and 153 Cited - In view of the binding legal precedents, particularly the Madras High Court’s decision in Roca Bathroom Products and the similar ruling in Teva Pharmaceutical, the Delhi ITAT concluded that the limitation period for passing a final assessment order under Section 144C(13) must be determined by reading Section 144C together with Section 153. As the final order for AY 2020-21 was passed beyond this prescribed period, it was quashed as time-barred. Parties retain the right to seek revival of the matter depending on the outcome of the pending Supreme Court case.
Income Tax - Section 263 - ITAT Pune Overturns CIT Revision: Deduction for Provision on Standard Assets Under Section 36(1)(viia) Upheld for Co-operative Bank - Based on the established legal position and the facts of the case, the Tribunal quashed the revisionary proceedings initiated by the CIT under Section 263 with respect to the deduction for provision on standard assets under Section 36(1)(viia). The assessment order as originally framed by the AO for A.Y. 2019-20 was restored, favoring the assessee.
Delhi ITAT Quashes Penalty under Section 271(1)(b) Due to Defective Show-Cause Notice and Setting Aside of Original Assessment - Based on the findings, the Tribunal allowed the assessee’s appeal and directed that the penalty levied under section 271(1)(b) be deleted. The Tribunal emphasized that penalty proceedings must comply with the principles of natural justice, including issuing a clear and specific show-cause notice and ensuring that the underlying assessment forming the basis for penalty is valid and subsisting.
Income Tax - Section 132 - ITAT Delhi Quashes Section 68 Addition for Unsecured Loans: Reliance Solely on Investigation Wing Reports and Third-Party Statements Held Insufficient; Presumed Commission Enhancement Also Deleted - In view of the above, the Tribunal allowed the assessee’s appeal. The additions made under Section 68 and the enhancement of 2% commission sustained by the CIT(A) were deleted, and the impugned assessment order was set aside. The actionable takeaway is that mere reliance on third-party statements or investigation reports, without direct and independent verification, cannot form a valid basis for additions under Section 68.
Income Tax - Sections 143(3), 147 - ITAT Delhi Quashes Assessment: Section 148 Notice Held Invalid for Lack of Application of Mind and Absence of Section 151 Approval - Based on the findings, the ITAT Delhi held that the reassessment framed on the foundation of a procedurally invalid notice under Section 148, lacking both application of mind and the mandatory Section 151 approval, cannot be sustained in law. The entire assessment order for the relevant assessment year was consequently quashed as being void ab initio. Tax authorities are thus reminded to strictly adhere to the statutory requirements before initiating reassessment proceedings.
Income Tax - Section 263 - ITAT Delhi Quashes Revision Order: Disallowance of Bogus Purchases Under Section 37(1) Does Not Mandate Invocation of Section 69C/115BBE Without Evidence of Unexplained Source - On the facts and law, the ITAT Delhi held that the revisionary order passed by the Pr. CIT under section 263 is not justified in circumstances where the AO has already disallowed purchases as bogus under section 37(1) and there is no material to suggest that the source of the expenditure was unexplained. Mere non-invocation of section 69C and 115BBE, in the absence of such evidence, does not render the assessment order erroneous or prejudicial to the interests of the Revenue. Accordingly, the assessee’s appeal was allowed and the revision order was set aside.
ITAT Chennai Rules Interest on Deposits with Co-operative Bank Eligible for Section 80P(2)(d) Deduction: Broad Interpretation of ‘Co-operative Society’ Upheld - Based on a harmonious interpretation of section 2(19) and section 80P(2)(d) of the Income Tax Act, in conjunction with binding judicial precedents, the Tribunal has directed that the entire interest income earned by the assessee co-operative society from deposits with a co-operative bank is allowable as deduction under section 80P(2)(d) for Assessment Year 2016-17. This conclusion is actionable for co-operative societies placing surplus funds as deposits with other co-operative banks, provided the latter are registered under the relevant co-operative societies legislation.
Income-tax - Section 143(3) - AO Cannot Use New Seized Material Not Before CIT(A) at Time of Set-Aside—Assessment Quashed for Jurisdictional Overreach - The ITAT Delhi categorically held that in set-aside assessment proceedings, the AO is confined to using only that material which was available before the CIT(A) at the time the assessment was set aside. The AO’s attempt to introduce and rely upon new seized material—especially when such material was secured after the set-aside order and not part of the original record—renders the assessment order invalid. The Tribunal’s actionable direction is that the AO must initiate fresh, independent proceedings under section 158BD if new material is discovered, rather than incorporating it into the existing set-aside proceedings. The Revenue’s appeal was accordingly dismissed.
Income Tax - Sections 143(3), 153A - Assessment Annulled: ITAT Quashes Section 153A Read with 143(3) Assessment for Lack of Jurisdictionally Valid Section 143(2) Notice - The ITAT Delhi categorically held that the assessment framed under section 153A read with section 143(3) for AY 2019-20 was void ab initio, as the notice under section 143(2) was issued before jurisdiction was assumed by the Assessing Officer. The absence of a valid, jurisdictionally competent notice is a fatal defect, which cannot be cured under section 292BB or by subsequent jurisdictional assumption. The assessment was thus quashed, and the Revenue’s cross-appeal was dismissed as infructuous. Tax authorities must ensure strict compliance with jurisdictional requirements before issuing statutory notices to avoid vitiation of assessment proceedings.
Income Tax - Sections 143(3), 153A - Assessment Annulled: ITAT Quashes Section 153A Read with 143(3) Assessment for Lack of Jurisdictionally Valid Section 143(2) Notice - The ITAT Delhi categorically held that the assessment framed under section 153A read with section 143(3) for AY 2019-20 was void ab initio, as the notice under section 143(2) was issued before jurisdiction was assumed by the Assessing Officer. The absence of a valid, jurisdictionally competent notice is a fatal defect, which cannot be cured under section 292BB or by subsequent jurisdictional assumption. The assessment was thus quashed, and the Revenue’s cross-appeal was dismissed as infructuous. Tax authorities must ensure strict compliance with jurisdictional requirements before issuing statutory notices to avoid vitiation of assessment proceedings.
Income Tax - Sections 143(3), 144C(13) - Delhi ITAT Reaffirms No Disallowance Under Section 14A Without Exempt Income, Upholds Key Deletions by DRP in Transmission Charges, Software Expenses, and Transfer Pricing Comparables; ESOP Deduction Allowed; Corporate Guarantee Issue Remanded - The Tribunal’s decision for AY 2010-11 unequivocally supports the DRP’s deletions of major disallowances/additions made by the AO, especially where binding judicial precedents have already settled the legal position. Assessees should ensure that where no exempt income is earned, section 14A is not attracted, and similar vigilance should be exercised regarding TDS obligations on cross-border payments by evaluating taxability in the hands of the recipient. Transfer pricing comparability analysis should be robust, focusing on functional similarity, and ESOP accounting should align with judicially accepted standards. Matters pending adjudication, such as the corporate guarantee issue, should be actively monitored and addressed in line with court directions.
ITAT Delhi Directs Goodwill Amortisation to be Treated as Non-Operating Expense in PLI Computation under TNMM; Penalty Proceedings Set Aside as Premature - The Tribunal’s decision requires the AO/TPO to treat the amortisation of goodwill as a non-operating/extraordinary item for the purposes of PLI computation under TNMM for the relevant assessment year, after providing the assessee an opportunity of being heard. Further, the penalty proceedings initiated under Section 271(1)(c) are to be set aside as premature. Assessees engaged in cross-border transactions should ensure that extraordinary items such as goodwill amortisation are appropriately segregated from operating profits while undertaking transfer pricing analysis under TNMM.
Income Tax - Section 263 - ITAT Pune Quashes Section 263 Revision: Deduction under Section 80P(2)(d) for Interest from Cooperative Banks and Income Tax Disallowance Upheld - In view of the above, the Tribunal decisively quashed the Commissioner’s revisionary order under Section 263 pertaining to both the deduction under Section 80P(2)(d) for interest income from cooperative banks and the treatment of income tax paid debited to the profit and loss account. The assessment order for the relevant assessment year was restored, and the appeal of the assessee was allowed. Assessees facing similar revisionary actions should ensure robust documentation of AO’s examination of such issues and rely on prevailing judicial precedents.
ITAT Ranchi Quashes Section 69A Addition: No Unexplained Cash Deposits After Bank Reconciliation and Loan Verification - In light of the above findings, the ITAT Ranchi allowed the assessee’s appeal, holding that after proper reconciliation of bank credits and exclusion of the amounts pertaining to inter-bank transfers and a short-term unsecured loan, no unexplained cash deposit remained to justify an addition under Section 69A. The Tribunal’s direction to delete the addition is actionable, and any similar additions must be supported by specific evidence of unexplained nature, not just based on prima facie bank credits.
Income Tax - Section 250 - ITAT Mumbai Affirms Section 80IA(4)(i) Deduction for Energy-Efficient Public Lighting: Lighting System Recognized as Integral Infrastructure, Not Mere Works Contract - On a careful appraisal of the facts, legal framework, and contractual obligations, the Tribunal held that the assessee’s energy-efficient public lighting project constituted an integral part of road infrastructure. The assessee successfully established itself as a “developer” within the meaning of section 80IA(4)(i), by virtue of undertaking comprehensive developmental and operational responsibilities and bearing entrepreneurial risk. The Tribunal, therefore, deleted the disallowance and allowed the deduction under section 80IA(4)(i) for the relevant assessment year. Taxpayers undertaking similar projects with DBFOM-like models and substantial operational exposure should ensure proper documentation and presentation to avail this benefit.
Income Tax - Section 115BAA - ITAT Pune Directs AO to Permit Filing of Form 10-IC for Section 115BAA Concessional Tax Rate Despite Initial Non-Filing, Citing Substantive Compliance and Pandemic Constraints - The Tribunal’s decision makes it clear that where an assessee has unequivocally opted for the concessional tax regime under section 115BAA in the ITR and paid taxes accordingly, the benefit should not be denied solely due to non-filing of Form 10-IC with the original return, if the omission is satisfactorily explained and the assessee is otherwise eligible. The AO must permit filing of Form 10-IC and then determine eligibility for relief, ensuring compliance with all prescribed statutory and circular conditions. Assessees in similar situations should proactively prepare to explain the reasons for procedural non-compliance and ensure that all subsequent filings are complete and correct.
Income Tax - Section 250 - ITAT Mumbai Nullifies Reassessment Proceedings Due to Invalid Sanction by Non-Competent Authority under Section 151 for Cases Beyond Three Years - The Tribunal unequivocally held that reassessment proceedings initiated after three years from the end of the relevant assessment year require sanction from the specific authority mentioned in Section 151(ii) as it stood prior to 01.04.2023. The sanction provided by an authority not explicitly empowered by the unamended provision is invalid, and all consequential proceedings are liable to be quashed. This decision is actionable for all stakeholders—officers must strictly adhere to the statutory hierarchy for sanction, and assessees should scrutinize the competency of sanctioning authorities in reopened cases.
Sections 37(1), 145 of the Income-tax Act, 1961 - ITAT Chandigarh Disallows Income Estimation Without Rejection of Audited Books and Upholds Dealer Scheme Deductions for Fertilizer Distributor - The Chandigarh ITAT has categorically held that the estimation of income based solely on declining profit margins, without the rejection of audited books of account and in the absence of specific defects, is not permissible under law. Similarly, disallowance of business expenditure such as dealer scheme payments is unjustified where the assessee substantiates the expenditure with detailed workings and documentary evidence, and the Revenue fails to controvert such evidence. Assessees in similar circumstances should ensure thorough maintenance of books and robust documentation for all business expenses to withstand scrutiny.
Section 80JJAA of the Income-tax Act, 1961 - ITAT Pune Orders Re-examination of Section 80JJAA Deduction Claim Where AO Overlooked Statutory Requirements and Relied Solely on Employee Headcount - The ITAT Pune decision mandates that Assessing Officers cannot summarily deny claims under Section 80JJAA based solely on employee headcount. Instead, they must conduct a thorough examination of all statutory conditions, including proper verification of Form 10DA and the underlying details. The order remanding the matter to the AO is actionable: assessees must ensure that all documentary evidences and statutory forms, particularly Form 10DA, are accurate and comprehensive to withstand scrutiny. Similarly, AOs are directed to follow the statutory framework in both letter and spirit before arriving at a conclusion regarding such claims.
Sections 149, 148A, 69A of the Income-tax Act, 1961 - ITAT Mumbai Quashes Reassessment for NRI Property Purchase: Notice under Section 148 Issued Beyond Three-Year Limitation Held Invalid - The ITAT Mumbai has decisively held that for AY 2017-18, the issuance of a notice under section 148 after expiry of three years, in relation to alleged escaped income less than ₹50 lakh, is invalid under section 149(1). The consequential reassessment order and proceedings are thus quashed. Assessees facing similar notices can rely on this decision to challenge the validity of proceedings initiated beyond the statutory period, especially where the alleged escaped income does not meet the threshold for extended limitation.