June 2026

This judgment by the Income Tax Appellate Tribunal, Mumbai B Bench, dismisses two appeals filed by the Revenue against the CIT(A)’s order deleting additions made in reassessment for AYs 2016-17 and 2018-19. The core legal issue pertained to the validity of reassessment notices issued under section 148 after the expiry of three years from the end of the relevant assessment years. The Tribunal held that the approval under section 151(ii) was required from the Principal Chief Commissioner, not the Principal Commissioner, and the failure to obtain such approval from the specified authority rendered the reassessment proceedings void ab initio. The Tribunal relied on binding decisions of the Bombay High Court and the Supreme Court’s dismissal of the Revenue’s SLP, thereby confirming the CIT(A)’s order. The appeals were dismissed on this legal ground, with other issues left open.

The ITAT Delhi Bench allowed the appeal of the assessee, holding that the requirement to file Form 67 for claiming Foreign Tax Credit (FTC) under Rule 128 is directory and not mandatory. The assessee, an architect, earned income in Nepal and claimed FTC of Rs. 2,86,260/- but filed Form 67 after the due date. The CPC and CIT(A) denied credit, but the Tribunal, following earlier decisions and the Madras High Court in Duraiswamy Kumaraswamy, directed the AO to allow FTC after due verification. The Tribunal distinguished the Supreme Court’s ruling in Wipro Ltd. as it pertained to section 10B(8) which is on a different footing.

The Income Tax Appellate Tribunal, Mumbai, disposed of cross appeals for AY 2011-12. The Revenue appealed against CIT(A)’s deletion of additions under Section 68 for unsecured loans (Rs. 5,61,65,591) and sundry creditors (Rs. 4,97,83,000), deletion of interest addition (Rs. 10,92,239), and restriction of disallowance under Section 14A to exempt income. The Assessee appealed against sustained addition of Rs. 35,00,000 for a loan from Bengal Exim Scrip Pvt. Ltd. The ITAT upheld CIT(A)’s deletions, finding assessee discharged its onus and Revenue failed to rebut, and that low income of creditors is not determinative. For Section 14A, it held disallowance cannot exceed exempt income and the 2022 amendment is prospective. For the assessee, the addition was deleted as no adverse evidence was brought despite assessee’s diligence. Both appeals decided accordingly.

The ITAT, Bangalore Bench, in ITA No. 2617/Bang/2025 for AY 2018-19, allowed the appeal of Anasuya Foundation, a charitable trust. The core issue was the belated filing of Form No. 10B (audit report required under Section 12A(1)(b)). The assessee had failed to upload the form before the due date of filing the return or even before the intimation under Section 143(1). However, the form was uploaded during the pendency of the appeal before the CIT(A). The CIT(A) dismissed the appeal holding that the filing of Form 10B within the prescribed time is mandatory. On further appeal, the ITAT, following the Gujarat High Court’s decision in Laxmanarayan Dev Shrishan Seva Khendra, held that the time limit for filing Form 10B is directory. The ITAT distinguished the Supreme Court’s judgment in Wipro Ltd., which dealt with Section 10B(8), a different provision. Accordingly, the ITAT directed the Assessing Officer to allow the claim of application of income (Rs. 38,52,101) and accumulation of income (Rs. 38,37,000) under Section 11. The appeal was allowed.

The Hon’ble ITAT, Chandigarh Bench, heard cross-appeals in the case of Pawan Kumar Bansal vs. DCIT arising from a search action. The core issue was the treatment of entries in a seized diary concerning advances and interest. The Revenue challenged the CIT(A)’s restriction of unexplained investment addition to Rs.53,21,510/- and deletion of notional interest. The Assessee challenged the confirmation of the restricted addition and the addition of undisclosed interest. The Tribunal held that the assessee’s cash flow statement, based solely on the diary, showed a peak deficit of Rs.11,17,950/- which was fully covered by the opening cash balance of Rs.13,31,117/- as per the audited balance sheet, leading to no addition for unexplained investment. The undisclosed interest addition of Rs.48,24,020/- was upheld as it represented pure income not disclosed. The notional interest addition of Rs.1,13,579/- was rightly deleted as advances were from own capital and no interest was charged. The approval u/s 153D was valid. Consequently, the Revenue’s appeal was dismissed and the Assessee’s appeal was partly allowed.

In this writ petition, the petitioners challenged the order dated 30.06.2025 passed under Section 148A(3) and the consequential notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2019-20. The Assessing Officer had issued a show cause notice under Section 148A(1) alleging that transactions with M/s Dhansidhi Developers Pvt. Ltd. and M/s Foremost Enterprise Pvt. Ltd. lacked commercial substance and were accommodation entries. The petitioners filed replies on 11.04.2025 and 19.06.2025, but the impugned order did not consider these replies in their entirety. The Court found that the order only mentioned submission of partial bank statements and did not deal with the explanations offered. The conclusion of circular transactions was perverse and without jurisdiction as it failed to analyze the commercial rationale or materials furnished. Accordingly, the order and notice were quashed, and the Assessing Officer was directed to re-examine the issue after affording a fresh opportunity of hearing to the petitioners. The writ petition was disposed of with no order as to costs.

The assessee appealed against the order of CIT(A) who had upheld the CPC’s denial of rebate u/s 87A on tax attributable to short-term capital gains u/s 111A. The ITAT allowed the appeal, holding that the rebate u/s 87A is available on the total income irrespective of the rate at which income is taxable, in the absence of any express statutory bar. The Tribunal noted that section 112A contains an express restriction but section 111A does not, and the Finance Act 2025 amendment is prospective. Thus, the claim for rebate was valid and the consequential demand was deleted.