Direct Tax Monthly Digest: January 2026
Kapil Dhyani
4 Feb 2026 9:41 PM IST
SUPREME COURT
CITATION : 2026 LLBiz SC 16
Case Number : CIVIL APPEAL NO.197 OF 2026
Case Title : Income Tax Assessing Officer, Baroda & Ors. v. Shobhan Shantilal Doshi
The Supreme Court on January 12, 2026, set aside directions issued by the Gujarat High Court requiring the Central Board of Direct Taxes (CBDT) to modify the income-tax department's software. The court, however, left untouched the relief granted to the taxpayer on merits. A bench of Justices Rajesh Bindal and Vijay Bishnoi was hearing an appeal filed by the Income Tax Department against a Gujarat High Court order passed in favour of Shobhan Shantilal Doshi, an individual taxpayer.
Supreme Court Upholds Gujarat High Court Order Quashing Adani Power's Income Tax Reassessment Notice
Case Title : Assistant Commissioner Of Income Tax, Circle vs Adani Power Limited
Case Number : Diary No(s).404/2026
CITATION : 2026 LLBiz SC 21
The Supreme Court has refused to interfere with a 2024 Gujarat High Court ruling that quashed a reassessment notice issued to Adani Power Limited for the 2014–15 assessment year. A bench led by the Chief Justice of India, Surya Kant, and comprising Justices Joymalya Bagchi and Vipul M. Pancholi said the High Court's view “warrants no interference at all.” The court declined to condone a delay of 426 days in filing the petition. It said the explanation offered by the tax department was “absolutely vague and unacceptable.”
Case Title : Deputy Commissioner of Income Tax, Special Range-18, Mumbai v. Reliance Industries Limited
Case Number : Diary No. 67659-2025
The Supreme Court on Tuesday issued notice on an appeal filed by the Revenue challenging a Bombay High Court ruling that had quashed income tax assessments against Reliance Polyethylene Ltd. and Reliance Polypropylene Ltd. following their merger with Reliance Industries Ltd. A Bench of Justice Pamidighantam Sri Narasimha and Justice Vijay Bishnoi called for a response from Reliance Industries Ltd. and directed that the matter be listed for further hearing after completion of pleadings.
Case Title : Woodland (Aero Club) Private Limited Director vs Assistant Commissioner of Income Tax
Case Number : SLP(C) NO. 1532/2026
The Supreme Court has recently said that it will examine a long-standing dispute under the Income Tax Act on whether employees' provident fund and ESI contributions, deposited late under labour welfare laws, can still be allowed as deductions if paid before the income tax return due date. A Bench of Justice J.B. Pardiwala and Justice Sandeep Mehta, while hearing a petition filed by Woodland (Aero Club) Private Limited, noted that High Courts across the country have taken conflicting views on the issue.
Supreme Court Slaps Rs 5 Lakh Costs On Union Govt For Stalling IRS Officer's ITAT Appointment
Case Title : Captain Pramod Kumar Bajaj vs Union of India and Anr.
Case Number : WRIT PETITION(CIVIL) NO(S). 1180 OF 2025
CITATION : 2026 LLBiz SC 31
The Supreme Court on Friday allowed a petition filed by Captain Pramod Kumar Bajaj, a former Indian Revenue Service officer and ex-Army personnel, holding that he was subjected to sustained institutional bias, mala fide conduct and deliberate obstruction by departmental authorities in relation to his appointment as Member (Accountant) of the Income Tax Appellate Tribunal. It also imposed costs of Rs 5 lakh on the Union Government for rank procrastination and deliberate obstruction in his appointment.
HIGH COURTS
Allahabad HC
Allahabad High Court Dismisses PIL Against Retrospective Property Tax By Kanpur Municipal Corp.
Case Title : Indian Industries Association Versus State of Uttar Pradesh and 4 Ors.
Case Number : (PIL) No. - 3560 of 2025
CITATION : 2026 LLBiz HC (ALL) 9
On 12 January, the Allahabad High Court dismissed a public interest litigation (PIL) challenging the retrospective enhancement of property tax by the Kanpur Municipal Corporation, holding that a PIL is not maintainable where the relief sought essentially pertains to the private grievances of an association's members.
A Division Bench comprising Chief Justice Arun Bhansali and Justice Kshitij Shailendra held: “Filing of petitions in the nature of PIL, though essentially projecting the interest of the members of the Association and as a result claiming the general public as affected by the same grievance, cannot be countenanced. Once the petitioner Association has claimed relief qua their own members, the nature of the petition as a public interest petition cannot be maintained.”
Andhra Pradesh HC
Case Title: M/s Amnos Evangelical v. The Centralized Processing Centre, Bengaluru
Case Number: WRIT PETITION NO: 8798 OF 2025
The Andhra Pradesh High Court held that the exemption under Section 11 of the Income Tax Act cannot be denied merely on account of delay in filing the Form 10-B Audit Report when such delay was caused by the COVID-19 Pandemic.
Justices Battu Devanand and A. Hari Haranadha Sarma observed that the assessee is a religious and charitable society and has to comply with the instructions issued by the Income Tax Department through their letter. Due to the Covid-19 Pandemic, the assessee could not attend the letter issued by the Department and the documents sought by the Department were not furnished within the stipulated time.
Bombay HC
Reassessment Notice To Non-Existent Firm Invalid: Bombay High Court Reiterates
Case Title: J M Mhatre Infra Pvt Ltd. (Erstwhile J M Mhatre Partnership Firm) Vs. The Union of India
Citation: 2026 LLBiz HC (Bom) 6
Case Number: Writ Petition (L) No. 16514 of 2023
The Bombay High Court has reiterated that proceedings initiated against a non-existent entity are invalid in law.
A Division Bench of Justices B.P. Colabawalla and Amit S. Jamsandekar set aside a reassessment notice and a consequential assessment order issued under the Income Tax Act against a partnership firm that had merged into a private limited company years earlier.
Bombay High Court Quashes Special Audit Order For Want Of Mandatory DIN
Case Name: Sanjay Nathalal Shah v. Assistant Commissioner of Income Tax, Central Circle 5(2) & Ors.
Citation: 2026 LLBiz HC(BOM)16
Case Number: WRIT PETITION (L) NO. 19240 OF 2025
The Bombay High Court has held that an approval for a special audit issued without a Document Identification Number (DIN) is invalid and deemed never to have been issued. A Division Bench of Justice B P Colabawalla and Justice Firdosh P Pooniwalla allowed a writ petition filed by assessee Sanjay Nathalal Shah and quashed a special audit ordered for Assessment Year 2023–24 .
Bombay High Court Quashes Tax Reassessment Against Hospital Over Unsigned Reopening Notice
Case Title: Ambernath City Hospital Pvt.Ltd. vs The Union of India and Ors.
Citation: 2026 LLBiz HC(BOM) 17
Case Number: WRIT PETITION 2713 OF 2024
The Bombay High Court has set aside reassessment and penalty proceedings against Ambernath City Hospital Pvt. Ltd., holding that the Income Tax Department lacked jurisdiction to reopen the assessment, as the mandatory notice issued under Section 148 of the Income Tax Act, 1961, was unsigned.
Relying on its own decision in Prakash Krishnavtar Bhardwaj vs. Income Tax Officer,(2023), the court held, “the Notice issued under Section 148, having no signature affixed to it, either digitally or manually, is invalid and would not vest the Assessing Officer with any further jurisdiction to proceed to re-assess the income of the Petitioner.”
Bombay HC Quashes IT Assessment for Breach of Natural Justice, Orders Fresh Hearing
CITATION : 2026 LLBiz HC(BOM) 33
Case Number : WRIT PETITION NO.15217 OF 2023
Case Title : Yogesh Mangalsen Behl vs Union of India & Ors.
The Bombay High Court has reiterated that a tax assessment order passed without granting the assessee an effective personal hearing violates the principles of natural justice. A Division Bench of Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla was hearing a writ petition filed by Yogesh Mangalsen Behl, challenging the assessment under Section 143(3) of the Income Tax Act, 1961, and the consequential demand notice issued under Section 156. The Bench noted that the assessment was challenged “on the short ground that it is passed in breach of principles of natural justice.”
CITATION : 2026 LLBiz HC(BOM) 34
Case Number : WRIT PETITION (L) NO.19724 OF 2025
Case Title : Y-NOT Films LLP Vs National Faceless Assessment Centre & Ors.
Granting relief to Y-NOT Films LLP, the Bombay High Court reiterated that the Income Tax Department could not take the entire tax refund of a later year to recover an earlier tax demand that is still under appeal. The court said that in such situations, the tax department can normally adjust only 20% of the disputed amount, unless senior tax authorities specifically approve a higher recovery.
A Division Bench of Justices B.P. Colabawalla and Firdosh P. Pooniwalla was hearing a petition filed by the production house challenging the 100% adjustment of its tax refund for the year 2023–24, against a dispute of the previous year.
Calcutta HC
CITATION : 2026 LLBiz HC (CAL) 8
Case Number : WPA 28765 of 2025
Case Title : Amalgam Steel Private Limited & Anr. v. The Assistant Commissioner of Income Tax & Ors.
The Calcutta High Court has recently clarified that the income tax department cannot deny immunity from penalty for under-reporting of income once a taxpayer meets the conditions prescribed under the law.
A bench of Justice Om Narayan Rai said Section 270AA of the Income Tax Act leaves no discretion with the Assessing Officer. The provision allows immunity where the taxpayer has paid the tax demand, has not filed an appeal, and has applied for immunity within the prescribed time. It also requires that the case should not involve misreporting of income.
Income Tax Dept Cannot Reopen Assessment on New Grounds Without Due Notice: Calcutta High Court
Citation: 2026 LLBiz HC (CAL) 9
Case Title: Balmer Lawrie And Company Limited v. Union of India & Ors.
Case Number: WPO 656 of 2025
The Calcutta High Court has recently held that the income tax department cannot reopen a completed assessment by raising new issues without first following the mandatory procedure under the Income Tax Act. On this basis, the court set aside the reassessment notice issued against a government-owned company. Under the tax law, Sections 148 and 148A require the department to first issue a detailed notice explaining why it believes income may have escaped tax, give the taxpayer an opportunity to respond, and pass a reasoned order before formally reopening an assessment. Section 147, which allows the department to assess income that was earlier missed, operates only after this initial process is completed.
Case Title : Basu Tea Pvt. & Anr. v. The Union of India & Ors.
Case Number : WPA 18470 of 2025
CITATION : 2026 LLBiz HC (CAL) 28
The Calcutta High Court on 20 January held that merely uploading income tax notices on the portal, without issuing a real-time alert to the taxpayer's registered mobile number, is insufficient to sustain reassessment proceedings under the Income Tax Act, as it violates the principles of natural justice. A Single Judge Bench of Justice Om Narayan Rai set aside the reassessment proceedings against Basu Tea Pvt. Ltd., the taxpayer and legally unsustainable. The Bench held that the it had been deprived of a meaningful opportunity of being heard.
Case Title : Principal Commissioner of Income Tax, Kolkata v. Megapode Vyapar Pvt. Ltd.
Case Number : ITAT/146/2025
CITATION : 2026 LLBiz HC (CAL) 30
The Calcutta High Court has dismissed the income tax department's appeal against an ITAT order allowing an NBFC to set off losses described by the department as penny stock trades against its interest and other income. The Court held that the case raised no substantial question of law. A Division Bench of Justice Rajarshi Bharadwaj and Justice Uday Kumar said the department had failed to produce any direct or substantial evidence to support its case.
Case Title : Shri Miraj Digvijay Shah v. The Assistant Commissioner of Income Tax, Central Circle I (1), Kolkata & Ors.
Case Number : WPA 25602 of 2025
CITATION : 2026 LLBiz HC (CAL) 35
The Calcutta High Court on 28 January dismissed a writ petition challenging inspection notices issued by the Income Tax Department for jewellery and bullion seized during a search operation, holding that the revenue authorities are not required to disclose the information or reasons that prompted the inspection, so long as it is undertaken for purposes permitted under the Income Tax Act (IT Act), 1961.
Justice Om Narayan Rai delivered the ruling while examining a challenge to notices issued under Rule 112(13) of the Income Tax Rules, 1962, which prescribes the procedure for opening and inspecting sealed packages seized during search and seizure operations under Section 132 of the IT Act.
Delhi HC
Case title: Pr. Commissioner Of Income Tax -7, Delhi M/S TCK Advisers Pvt. Ltd.
Case no.: ITA 778/2025
The Delhi High Court has made it clear that companies engaged in activities beyond export services cannot be treated as functionally comparable to an assessee providing export-only services.
A Division Bench of Justices V. Kameswar Rao and Vinod Kumar thus upheld exclusion of such entities for the purpose of transfer pricing analysis qua an assessee engaged in providing investment advisory services to its Associated Enterprises (AE) in Mauritus.
Case title: Veena Arora v. Commissioner Income Tax - 12 Delhi & Anr.
Citation: 2026 LLBiz HC (DEL) 17
Case Number: W.P.(C) 22/2026
The Delhi High Court has refused to interfere with reassessment proceedings initiated against a taxpayer after documents seized from real estate group Bhutani Infra allegedly reflected a cash transaction linked to a flat purchase.
A Division Bench of Justices Dinesh Mehta and Vinod Kumar observed that the notice issued under Section 148 of the Income Tax Act cannot be termed as without jurisdiction at the threshold.
Belated Deposit Of TDS Doesn't Extinguish Criminal Liability Under Income Tax Act: Delhi High Court
Case Title: Dr Manoj Khanna v. Income Tax Office
Citation: 2026 LLBiz HC (DEL) 20
Case Number: CRL.M.C. 7461/2025
The Delhi High Court has held that the subsequent or belated deposit of tax deducted at source (TDS) does not absolve an assessee or company officials of criminal liability under Section 276B of the Income Tax Act, 1961.
Justice Amit Mahajan thus dismissed the petition filed by a company's Managing Director, seeking quashing of a criminal complaint and summoning order in a case relating to delayed deposit of TDS amounting to over ₹2.09 crore for the financial year 2017–18.
"Shocking": Delhi HC Pulls Up IT Dept For 8-Year Delay In Processing ₹5.37 Crore Microsoft Refund
Case Title: Microsoft Corporation India Pvt. Ltd v. Deputy Commissioner Of Income Tax & Ors
Citation: 2026 LLBiz HC (DEL) 21
Case Number: W.P.(C) 5608/2025
The Delhi High Court has pulled up the Income Tax Department over “shocking” eight years delay in processing Rs 5.37 crore tax refund to Microsoft Corporation India.
A Division Bench of Justices Dinesh Mehta and Vinod Kumar allowed the writ petition filed by Microsoft India seeking refund of amounts arising from Fringe Benefit Tax (FBT), which had been acknowledged as payable as far back as in June 2017.
Income Tax | Delhi High Court Bars Tax Recovery After Taxpayer Pays 20% Of Disputed Demand
Case Detail: Shree Krishna Steel Traders Through Proprietor Nikhil Sharma vs. Union of India
Case No.: WP 8187/2025
The Delhi High Court on Tuesday restrained the Income Tax Department from taking any recovery action, including adjusting refunds, after it orally observed that the taxpayer had already paid 20% of the disputed tax demand and had the balance stayed during the pendency of the appeal.
A Division Bench of Justice Dinesh Mehta and Justice Vinod Kumar was hearing a petition filed by a trader who had filed his return for Assessment Year 2021–22.
Delhi High Court Quashes Higher 3.5% TDS On GE Group Payments, Restores 1.5% Rate
Case Title: GE Energy Parts Inc v. Assistant Commissioner Of Income Tax & Anr. (and connected matter)
Citation: 2026 LLBiz HC (DEL) 22
Case Number: W.P.(C) 10259/2025 (and connected matter)
The Delhi High Court has quashed the certificates issued by the Income Tax Department directing deduction of tax at source (TDS) at a higher rate of 3.5% on payments made to two GE group entities, and directed the authorities to issue fresh certificates prescribing deduction at the rate of 1.5%.
A Division Bench of Justices Dinesh Mehta and Vinod Kumar allowed the writ petitions filed by GE Energy Parts Inc. and GE Global Parts and Products GmbH, challenging certificates issued under Section 197 of the Income Tax Act, 1961 for the assessment year 2025–26.
Case Title: Principal Commissioner Of Income Tax, Delhi-1 v. Borgwarner Emissions Systems India Private Ltd
Citation: 2026 LLBiz HC (DEL) 23
Case Number: ITA 750/2025
While dealing with the Income Tax Department's appeal in a transfer pricing case, the Delhi High Court has flagged that the Dispute Resolution Panel (DRP) failed to discharge its statutory duty by merely approving the conclusions of the Transfer Pricing Officer (TPO) without recording independent findings.
A Division Bench of Justices V Kameswar Rao and Justice Vinod Kumar made the observation in an order dated December 16, 205. It said, “...in the facts of this case, the DRP, except approving the conclusion of the TPO had not given its findings on the same which was incumbent upon it.”
Case title: Koshaliya Devi Rastogi v. Assistant/ Deputy Commissioner Of Income Tax, Central Circle-27, New Delhi And Anr (and batch)
Citation: 2026 LLBiz HC (DEL) 27
Case Number: W.P.(C) 7448/2025 (and batch)
The Delhi High Court has directed the Income Tax Department to release the jewellery and cash seized from a family's house, after the latter agreed to deposit advance tax towards their probable tax liability arising from a search operation.
A division bench of Justices Dinesh Mehta and Vinod Kumar passed the order while disposing of writ petitions filed by members of a family whose jewellery worth Rs 5.95 Crores and cash/forex amounting to about Rs 40 lakh had been seized during a search conducted under the Income Tax Act, alleging it to be out of the undisclosed income.
Case title: Rakesh Suri v. Assistant Commissioner Of Income Tax & Ors.
Citation: 2026 LLBiz HC(DEL) 48
Case Number: W P (C) 4901/2025
The Delhi High Court recently (January 13) allowed income tax assessment proceedings to continue against a taxpayer despite him holding more than one Permanent Account Number (PAN) and directed that the unused PAN be cancelled. A Division Bench of Justices Dinesh Mehta and Vinod Kumar was dealing with a writ petition wherein the taxpayer challenged the continuation of assessment proceedings on the ground that notices had been issued under a PAN different from the one currently claimed by him.
Reassessment Unsustainable Where Income Was Declared And Tax Paid At Highest Rate: Delhi High Court
Case Title: Pr. Commissioner Of Income Tax-7, Delhi v. Atul Goel
Citation: 2026 LLBiz HC(DEL) 49
Case Number: ITA 10/2026
The Delhi High Court has dismissed an appeal filed by the Income Tax Department, holding that reassessment proceedings cannot be sustained where the assessee has already offered the disputed income to tax at the highest applicable rate. A Division Bench of Justices Dinesh Mehta and Vinod Kumar was hearing the Department's appeal against an ITAT order that had quashed the reassessment initiated against the assessee on allegations relating to Client Code Modification (CCM).
Case title: Nord Anglia Education Limited v. Deputy Commissioner Of Income Tax Circle Int. Tax 2(2) (2), New Delhi
Citation: 2026 LLBiz HC(DEL) 50
Case Number: W.P.(C) 13473/2025
The Delhi High Court has quashed the rejection of a Nil Withholding Certificate sought by a UK-based education company after noting that the Assessing Officer (AO) failed to comply with the mandatory requirements under Rule 28AA of the Income Tax Rules, 1962. A Division Bench comprising Justices V. Kameswar Rao and Vinod Kumar set aside the certificate dated July 30, 2025, by which the Revenue had directed deduction of tax at source (TDS) at 15% under Section 197 of the Income Tax Act, 1961.
Income Tax Recovery Without Supplying Assessment Order Is Illegal: Delhi High Court
Case Title: Philco Exports Private Limited v. Assistant Commissioner Of Income Tax, & Ors.
Citation: 2026 LLBiz HC(DEL) 51
Case Number: W.P.(C) 12318/2021
The Delhi High Court has held that recovery of tax from an assessee without supplying the underlying assessment order is illegal and amounts to recovery without authority of law. A Division Bench of Justices Dinesh Mehta and Vinod Kumar thus directed the Income Tax Department to refund Rs 11.14 lakh to Philco Exports Private Limited along with applicable interest.
CITATION : 2026 LLBiz HC(DEL)52
Case Number : ITA 4/2026
Case Title : The Commissioner Of Income Tax - International Taxation -3 v. Sri Lanka Cricket
The Delhi High Court has reiterated that payments received for granting the right to live telecast international cricket matches in a specific series do not constitute “royalty” under the Income Tax Act, 1961. A Division Bench of Justices Dinesh Mehta and Vinod Kumar thus upheld the orders of the Income Tax Appellate Tribunal (ITAT) in favour of Sri Lanka Cricket, ruling that consideration received for providing live broadcast feeds of cricket matches cannot be taxed as royalty under Section 9(1)(vi) of the Act.
CITATION : 2026 LLBiz HC (DEL) 59
Case Number : W.P.(C) 16354/2025
Case Title : SFDC Ireland Limited v. Commissioner Of Income Tax International Taxation 3 New Delhi & Anr.
The Delhi High Court has criticised the Income Tax Department for adopting a revenue-driven approach while issuing tax deduction at source (TDS) certificates, holding that the government's “ease of doing business” policy must translate into fair and reasoned tax orders. A Division Bench of Justices Dinesh Mehta and Vinod Kumar observed,
“Ease of doing business cannot be confined to slogans and Government policies; it has to percolate down in executive actions and quasi judicial orders. Passing similar orders year after year portrays an unhealthy and unwelcoming picture of the country's bureaucracy on the one hand and gives pseudo satisfaction to the Revenue on the other.”
Case Number : W.P.(C) 578/2026
Case Title : Express Freight Consortium v. Assessment Unit, Income-Tax Department & Ors.
In order to flag gaps in the income tax faceless assessment regime, the Delhi High Court has directed the Dispute Resolution Panel (DRP) Registry to not accept objections filed by assessees/taxpayers against draft assessment orders unless accompanied by proof that the same have been served on the Assessing Officer (AO) as well. A Division Bench of Justices Dinesh Mehta and Vinod Kumar passed the direction while dealing with a case in which the AO proceeded to pass the final assessment order under Section 144C(4) of the Income Tax Act, as he was unaware of the objections filed by the petitioner-assessee.
Kingfisher Airlines Employee Cannot Be Denied TDS Credit For Employer's Default: Delhi High Court
CITATION : 2026 LLBiz HC(DEL) 61
Case Number : W.P.(C) 538/2026
Case Title : Venkatachalam Thangavelu v. ITO
The Delhi High Court has held that an employee can't be penalised for the failure of its employer to deposit tax deducted at source (TDS) with the Revenue. The bench of Justices Dinesh Mehta and Vinod Kumar was dealing with a writ petition filed by a former employee of Kingfisher Airlines, whose salary had suffered TDS deductions, but the employer failed to deposit the deducted amount with the Income Tax Department.
Case Title : Commissioner Of Income Tax Delhi Xvii v. Royal Jordanian Airlines
Case Number : ITA 187/2008
CITATION : 2026 LLBiz HC (DEL) 73
The Delhi High Court has held that Royal Jordanian airline can't be saddled with the burden of proving, after a decade, that its travel agents had discharged their tax liability. The observation was made by the division bench of Justices Dinesh Mehta and Vinod Kumar while dealing with proceedings relating to deduction of tax at source (TDS) under the Income Tax Act.
Case Title : Pr. Commissioner Of Income Tax, Central-1, Delhi v. Sanjay Jain
Case Number : ITA 38/2026
The Delhi High Court has ruled that the Income Tax Department cannot extend the time limit for completing search assessments merely by making a reference to a foreign tax authority if the information sought is not permissible under the applicable tax treaty.
Dismissing a batch of appeals filed by the Revenue, a Division Bench of Justices Dinesh Mehta and Vinod Kumar upheld the Income Tax Appellate Tribunal's finding that assessment orders passed for Assessment Years 2011–12 to 2017–18 were barred by limitation, after holding that the reference made to the Foreign Tax and Tax Research Division in this case was legally impermissible.
Case Title : Sahara India Ltd v. Income Tax Appellate Tribunal Delhi Bench & Ors (and batch)
Case Number : W.P.(C) 6024/2025
CITATION : 2026 LLBiz HC (DEL) 93
The Delhi High Court has set aside a series of orders passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench, which had dismissed long-pending tax appeals of the Sahara Group on the ground of lack of territorial jurisdiction, despite the matters having been administratively transferred to Delhi nearly two decades ago.
A Division Bench of Justices Dinesh Mehta and Vinod Kumar held that once the President of the ITAT exercises his administrative powers to transfer appeals from one Bench to another, a judicial Bench of the Tribunal cannot sit in appeal over such an administrative order by dismissing the appeals.
Gujarat HC
Case title: MILACRON INDIA PRIVATE LIMITED v/s THE ASSESSMENT UNIT, INCOME TAX DEPARTMENT & ORS
Case no.: R/SPECIAL CIVIL APPLICATION NO. 11194 of 2025
The Gujarat High Court recently granted relief to a company which had inadvertently filed its objections to a proposed transfer pricing adjustment for Assessment Year 2022-23 before the jurisdictional assessing officer instead of filing it before the faceless authority.
The petitioner had sought quashing of final Assessment Order dated 02.05.2025 passed under Section 143(3) read with Section 144C (3) and Section 144B of the Income Tax Act, for Assessment Year 2022-23.
Ten-Year Limitation Bars Reopening Assessment For AY 2015-16: Gujarat High Court
Case Title : JayantiBhai Karamshibhai Maniya vs. Income Tax Officer, Ward, Bhavnagar
Case Number : R/Special Civil Application No. 16615 of 2025
CITATION : 2026 LLBiz HC (GUJ) 4
The Gujarat High Court on 5 January held that a notice to reopen an assessment is barred by limitation if issued beyond ten years from the end of the relevant assessment year A Division Bench of Justice A.S. Supehia and Justice Pranav Trivedi was hearing a case which included four different but legally identical writ applications. It clarified that under Section 153A(b) of the Income Tax Act, 1961, the “relevant assessment year” must be computed backwards from the end of the search year. The Court emphasised that Sections 147 to 151, as they stood prior to the Finance Act (No. 2), 2024, govern such instances.
Gujarat High Court Reaffirms Mandatory Draft Order In Transfer Pricing Officer Assessments
Case Title : Sun Pharmaceutical Industries Limited vs. Deputy Commissioner of Income Tax, Circle, Vadodara & Anr.
Case Number : R/Special Civil Application No. 5973 of 2025
CITATION : 2026 LLBiz HC (GUJ) 5
The Gujarat High Court has held that failure to issue a draft assessment order under Section 144C in cases involving Transfer Pricing Officer (TPO) adjustments renders the final assessment order void. The Court emphasised that an “eligible assessee” must be issued a draft order in terms of Section 144C, including cases with TPO adjustments, and that skipping this step deprives the assessee of the statutory right to approach the Dispute Resolution Panel (DRP).
Himachal Pradesh HC
Case Title: Jatinder Singh Vs. Assistant Commissioner of Income Tax Central Circle, Shimla & Ors.
Case No.: CWP No. 20938 of 2025
The Himachal Pradesh High Court has stayed reassessment proceedings initiated against an assessee under Section 148 of the Income Tax Act, 1961, noting that the validity of such notices is already under consideration before the Supreme Court.
A Division Bench comprising Justice Vivek Singh Thakur and Justice Romesh Verma passed the order while hearing a writ petition which had challenged a reassessment notice issued for Assessment Year 2017-18, on the ground that it was without jurisdiction.
Kerala HC
Employees Liable To Pay Tax Even If Employer Deducts TDS but Fails To Deposit It: Kerala High Court
Case Title: Sarath V S v. The Commissioner of Income Tax
Citation: 2026 LLBiz HC (KER) 5
Case Number: WA NO. 2142 OF 2025
Holding that employees cannot avoid their income tax liability merely because their employer deducted tax at source from their salaries but failed to deposit it with the Income Tax Department, the Kerala High Court has ruled that the statutory protection under Section 205 of the Income Tax Act applies only when the deducted tax is actually paid to the Central Government.
A division bench of Justice A K Jayasankaran Nambiar and Justice Jobin Sebastian madethe ruling while dismissing writ appeals filed by former employees of Attinad Software Pvt. Ltd. It clarified that “no credit for tax deducted at source can be granted to an assessee claiming the same unless a deduction of tax at source has been made in accordance with the provisions of the IT Act and paid to the Central Government.”
Madhya Pradesh HC
Case Title: Naresh Chandra Agrawal v. Income Tax Department & Ors.
Citation: 2025 LLBiz HC(MP) 1
Case Number: Writ Petition No. 1421 of 2001
The High Court of Madhya Pradesh at Jabalpur recently held that declaring income under the Voluntary Disclosure of Income Scheme, 1997 does not stop the income tax department from checking whether the correct income was disclosed, even though the scheme protects the assessee from being questioned about the source of that income.
A Division Bench of Justice Vivek Rusia and Justice Pradeep Mittal said that VDIS gives only limited immunity. “The assessee is only protected from disclosing the source of income, but as per the Scheme, the correct income is also liable to be disclosed,” it observed.
Madras HC
Case Title: C. Aryama Sundaram v. The Commissioner Of Income Tax, Chennai
Case Number: TCA Nos. 1161, 1163, 1164 and 1162 of 2009
The Madras High Court held that the Long-Term Capital Gains exemption under Section 54 of the Income Tax Act cannot be denied merely because the residential house was demolished before its sale.
The bench stated that since the sale took place later and the assessee reinvested the capital gains in another house within the prescribed time, the exemption is allowable.
Case Title: The Commissioner of Income Tax, Chennai v. M/s. Gemini Communication Ltd.
Citation: 2026 LLBiz HC (MAD) 6
Case Number: T.C.A. No.143 of 2014
The Madras High Court has held that from May 14, 2007, companies had to file their income tax returns electronically, and that paper returns filed after that date carry no legal validity
A bench of Justices Anita Sumanth and Mummineni Sudheer Kumar rejected a claim for deduction under Section 80-IC of the Income Tax Act, holding that electronic filing of returns was a mandatory requirement for availing the benefit.
Case Title: Commissioner of Income-tax Coimbatore v. M/s Eastman Exports Global Clothing Pvt Ltd.
Citation: 2026 LLBiz HC (MAD) 11
Case Number: TCA No. 602 of 2013
The Madras High Court has held that the Income Tax Department cannot invoke its revisionary powers under Section 263 of the Income Tax Act by proceeding on an incorrect assumption about the nature of a transaction. The court ruled that such powers cannot be exercised where a demerger is wrongly treated as an amalgamation.
Dismissing the revenue's appeal, a bench of Justices Anita Sumanth and Mummineni Sudheer Kumar said the Commissioner had failed to first establish any error in the assessment order before ordering a revision.
Auction Under Income Tax Act Cannot Be Confirmed Without Addressing Objections: Madras High Court
Case Title: C. Sowmya Raga v. The Tax Recovery Officer
Citation: 2026 LLBiz HC (MAD) 19
Case Number: W.P. No. 41739 of 2025
The Madras High Court has clarified that an auction under the Income Tax Act to recover tax dues cannot be confirmed in a mechanical manner and that objections to the sale must be examined first. The court said confirmation of an auction depends on whether a challenge to the sale is still open or has already been dealt with.
A single bench of Justice C Saravanan said the rules governing income tax auctions have to be read together. One rule allows a purchaser to challenge an auction if the person whose property was sold had no legal right to sell it (Rule 62).
Case Title: Sindhi Educational Society v. The Principal Commissioner of Income Tax
Citation: 2026 LLBiz HC (MAD) 20
Case Number: W.P.No.20037 of 2023
The Madras High Court has held that a charitable trust cannot be denied tax exemption merely because it filed Form 10 late, when the return of income and audit report were filed within time. Form 10 is the declaration through which a charitable trust informs the tax department that it intends to set aside part of its income for charitable use in future years. A single-judge bench of Justice C Saravanan said the tax department, in effect, treated a procedural delay as a ground to deny a substantive benefit.
Large Cash Claims In Civil Suits Can Be Flagged To Income Tax Department: Madras High Court
Case Title: Venkateshan v. Sanjay
Citation: 2026 LLBiz HC (MAD) 21
Case Number: CRP.No.5650 of 2025
The Madras High Court has recently held that courts may forward civil suit records to the Income Tax Department for its consideration when the pleadings disclose very large cash transactions. This can be done even if the transaction took place before Section 269ST of the Income Tax Act came into force. Justice S. Sounthar noted that Section 269ST, which bars receipt of Rs 2 lakh or more in cash, was introduced on April 1, 2017, to curb black money. The provision also prescribes a penalty equal to the amount received.
Realty Company's Sale of Long-Held Freehold Land Is Capital Gains Not Business Income: Madras Court
Case Title: Commissioner Of Income Tax, Chennai v. Gwl Properties Ltd.
Citation: 2026 LLBiz HC (MAD) 22
Case Number: TCA No. 288 of 2011
The Madras High Court has held that profits earned from the sale of decades-old freehold land must be taxed as capital gains and not as business income, rejecting the income tax department's attempt to treat the transaction as part of a real estate business. A division bench of Justices Anita Sumanth and Mummineni Sudheer Kumar said the record clearly showed that the land was held as a long-term asset and was sold without any development or trading activity.
Dormant Partner Cannot Face Criminal Liability Without Proof Of Control Over Firm: Madras High Court
Case Title : R. Kalaivani v. Deputy Commissioner of Income Tax
Case Number : Crl.R.C.Nos.872 & 956 of 2023
CITATION : 2026 LLBiz HC (MAD) 26
The Madras High Court has held that a dormant partner cannot be fastened with criminal liability in the absence of specific allegations showing that she was in charge of or responsible for the conduct of the firm's business. A Bench of Justice Sunder Mohan was considering criminal revision petitions filed by a firm, its managing partner, and another partner, challenging the trial court's order that had refused to discharge them from criminal proceedings initiated under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act).
Tax Recovery Officer Can't Void Third-Party Mortgages: Madras High Court In Sree Gokulam Chit's Case
Case Title : Sree Gokulam Chit and Finance Co. P. Ltd. v. The Tax Recovery Officer
Case Number : W.P.No.16885 of 2022
CITATION : 2026 LLBiz HC (MAD) 32
The Madras High Court has recently set aside an income tax recovery order that had declared a mortgage created in favour of Sree Gokulam Chit and Finance, a chit fund part of the Gokulam Group, as void from the outset. Justice Senthilkumar Ramamoorthy held that the Income Tax Department can recover its dues by selling an attached property, but the Tax Recovery Officer cannot decide the validity of a transfer in favour of a third party. The court said the recovery framework does not permit such an adjudication.
Kerala HC
New Constructions Cannot Be Taxed In Appeals Against Earlier Property Assessments: Kerala High Court
Case Title : M/s Synthite Industries Ltd. v. State of Kerala
Case Number : WA NO. 3092 OF 2025
CITATION : 2026 LLBiz HC (KER) 16
The Kerala High Court on 22 January held that new constructions cannot be brought to tax while deciding statutory appeals filed against earlier property tax assessments. It clarified that the scope of such appeals is confined to examining the validity of the existing demand and cannot be expanded to assess buildings constructed subsequently. A Bench of Justice Harisankar V. Menon observed: “The assessment as regards new constructions, if any, requires to be carried out with reference to the statutory provisions by the original authority and cannot be carried out in an appeal filed against an earlier assessment.”
Orissa HC
Tax Authority Must Consider 'Genuine Hardship' to Condone Filing Delays: Orissa High Court
The Orissa High Court has reiterated that tax authorities must exercise their power to condone a delay in filing income tax returns to address "genuine hardship" and not reject such requests mechanically. A Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman set aside an order of the Principal Chief Commissioner of Income Tax (PCCIT), Odisha Region, which had refused to condone the delay in filing income tax returns by The Reserve Bank Employees Co-operative Credit Society Limited. The Court noted that the tax authority failed to properly exercise discretion under the Income Tax Act while dealing with the society's plea of “genuine hardship” arising from delays in statutory audit beyond its control.
Punjab & Haryana HC
Case Title : M/s G.S. Builders v. State of Punjab and Ors.
Case Number : CWP-4380-2010 (O&M)
CITATION : 2026 LLBiz HC (PNH) 3
The Punjab and Haryana High Court recently held that Rail Coach Factory (RCF) cannot recover differential tax deducted at source (TDS) from contractors for past periods once the contractors' VAT liability has already been assessed and paid. A Bench of Justice Jagmohan Bansal and Justice Amarinder Singh Grewal was hearing writ petitions filed by G.S. Builders, Inderjit Bajaj and R. Tech Builders. The contractors had challenged recovery notices issued by RCF seeking to deduct additional amounts from their running and final bills.
Telangana HC
Case Title: A.G. Biotech Laboratories (India) Ltd. v. Income Tax Officer
Citation: 2026 LLBiz HC (TEL) 1
Case Number: Income Tax Tribunal Appeal Nos.91 and 92 of 2008
The Telangana High Court has held that income earned from the sale of tissue-cultured plants qualifies as agricultural income and is therefore exempt from income tax, though advanced scientific techniques are used in their cultivation.
The Bench of Justices P Sam Koshy and Narsing Rao Nandikonda heard a case where the assessee (appellant), who was engaged in the business of micropropagation of plants through tissue culture technology, claimed that the income from the same was exempt from tax as it was agricultural income.
ITAT
Case Title: Colombia Co-operative Housing Society Ltd. v. ITO
Citation: 2026 LLBiz ITAT(MUM)1
Case Number: ITA No. 4222/MUM/2025 A.Y. 2015-16
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has quashed a Rs 2.28 crore capital gains tax addition against Colombia Co-operative Housing Society, holding that redevelopment compensation paid directly to individual members cannot be taxed as the society's income.
The ITAT held that amount paid by a developer directly to individual members of a co-operative housing society pursuant to redevelopment cannot be taxed as capital gains in the hands of the society, particularly when the society itself never received the amount.
ITAT Allows ₹772 Crore Business Loss Claim Of Flipkart Group Firm Instakart
Case Detail: Instakart Services Private Limited vs. The Assistant Commissioner of Income Tax
Citation: 2026 LLBiz ITAT(DEL)2
Case Number: ITA No.496/Bang/2025
The Bengaluru Bench of the Income Tax Appellate Tribunal (ITAT) has allowed Instakart Services Pvt. Ltd., a Flipkart group logistics company, to claim Rs 772.25 Crore in business losses. The ruling sets aside tax disallowances for Assessment Years 2016-17 to 2018-19.
In an order dated December 18, 2025, Judicial Member Keshav Dubey and Accountant Member Waseem Ahmed held that the losses were genuine. The tribunal ruled that they could not be rejected solely on allegations of lack of profit motive.
ITAT Mumbai Strikes Down ₹2.70-Crore Reassessment Against Kalpataru Based On Employee Statements
Case Title: Kalpataru Projects International Ltd v. Deputy Commissioner of Income Tax
Citation: 2026 LLBiz ITAT(MUM)3
Case Number: ITA No.5962/MUM/2025
The Mumbai Bench of the Income Tax Appellate Tribunal has deleted a Rs 2.70-crore income tax addition made against Kalpataru Projects International Ltd, holding that purchases cannot be treated as bogus only on the basis of employee statements recorded years later, without any incriminating material being found in a search.
The bench, comprising Accountant Member Om Prakash Kant and Judicial Member Sandeep Singh Karhail, said that “ it is evident that no incriminating material was brought on record by the Revenue to prove that the purchase transaction by JMC with the afore-noted five impugned vendors was nongenuine and bogus.”
Case Title: Buniya Amin vs. The ITO
Citation: 2026 LLBiz ITAT(JAI) 4
Case Number: ITA No. 1324/JPR/2025 A.Y. 2017-2018
The Income Tax Appellate Tribunal (ITAT) at Jaipur has remanded a case involving a Rs 76.31 lakh tax addition, holding that the taxpayer should be given one more opportunity to establish that a disputed bank account linked to his PAN did not belong to him.
A coram of Judicial Member Narinder Kumar and Accountant Member Annapurna Gupta said the issue warranted closer examination, and observed that the appellate authority ought to have allowed the taxpayer to place proper material on record before rejecting his claim.
ITAT Delhi Quashes Revision Order, Says Tax Dept. Cannot Expand Limited Scrutiny Assessment
Case Title: Harun Ali vs. R. CIT Dehradun
Citation: 2026 LLBiz ITAT (DEL) 6
Case Number: ITA No.3444/Del/2025 A.Y. 2015-2016
The Income Tax Appellate Tribunal, Delhi Bench, has quashed a revision order passed against an individual taxpayer, holding that the tax department cannot expand a limited scrutiny assessment by invoking its revisionary powers. A coram comprising Judicial Member Yogesh Kumar U.S. Accountant Member S. Rifa'ur Rahman held that the Principal Commissioner of Income Tax had wrongly invoked Section 263 of the Income Tax Act which allows revision of an assessment only if it is both erroneous and prejudicial to the interests of the Revenue.
Case Title: Mithi Software Technologies Private Limited v. The Income Tax Officer
Citation: 2026 LLBiz ITAT(PUN) 8
Case Number: ITA No.2371/PUN/2025
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that the waiver of a company's liability to redeem debentures cannot be taxed as income when no deduction of interest on those debentures was claimed in earlier years. A coram comprising Judicial Member Astha Chandra and Accountant Member Dr. Dipak P. Ripote examined the applicability of Sections 28(iv) and 41(1) of the Income Tax Act on the action.
Carry Forward Of Losses Can't Be Denied On Vague Grounds: ITAT Pune
Case Title: Mithi Software Technologies Private Limited v. The Income Tax Officer
Citation: 2026 LLBiz ITAT (PUN) 8
Case Number: ITA No. 2371/PUN/2025
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that statutory tax benefits cannot be denied on vague grounds. Such rejections such as in the present case, reflect a “sheer lack of application of mind,” the tribunal said. Applying this principle, the tribunal allowed a Maharashtra based tech company to carry forward business losses of Rs 1.09 crore and unabsorbed depreciation totalling Rs 1.03 crore.
India–US DTAA Bars 100% Disallowance On Payments To US Firms Without TDS: ITAT Delhi
Case Title: LinkedIn Technology Information Pvt Ltd vs The P.C.I.T
Citation: 2026 LLBiz ITAT(DEL) 9
Case Number: ITA No. 2492/DEL/2024 [A.Y 2018-19]
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently held that restricting disallowance to 30% on payments made by an Indian company to US companies for not deducting tax at source on fees for technical services did not cause any prejudice to the Revenue, as such restriction was required under the non-discrimination clause of the India–US tax Double Taxation Avoidance Agreement. A coram of Judicial Member Vikas Awasthy and Accountant Member Naveen Chandra quashed a revision order passed under Section 263 of the Income-tax Act in an appeal filed by LinkedIn Technology Information Pvt. Ltd. for the 2018–19 assessment year.
Case Title: The Mysore Association Bombay Vs Income Tax Officer Exemption Ward 2(4), Mumbai
Citation: 2026 LLBiz ITAT(MUM) 11
Case Number: ITA No. 5860/Mum/2025
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that no tax addition can be made where a Mumbai charitable trust has incurred an overall loss, even if the Assessing Officer treats some of its receipts as business income. The tribunal made it clear that tax can be levied only on real and net income, and where expenditure exceeds receipts, nothing survives to be taxed.
ITAT Sets Aside Penalty Against Taxpayer For Receiving Property Sale Price In Cash At Registration
Case Detail: Surjit Kaur vs. ITO, Ward 3
Citation: 2026 LLBiz ITAT(MUM)12
Case Number: ITA No.1136/CHANDI/2025
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) recently quashed a penalty of Rs. 7.41 lakh imposed on a Ludhiana resident for receiving the sale consideration of a plot in cash at the time the sale deed was registered. The order was passed by Accountant Member Manoj Kumar Aggarwal, who held that the penalty had been wrongly imposed, as the cash was received in a single transaction at the time of execution of a registered sale deed and not as an advance.
Suppliers' Failure To File Income Tax Returns Alone Can't Render Purchases Bogus: ITAT Chandigarh
Case Title: ITO Ward-3 v. Raman Kohli
Citation: 2026 LLBiz ITAT (CHA)14
Case Number: ITA No.445/CHANDI/2024
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has recently observed that purchases cannot be treated as bogus only because some suppliers failed to file income tax returns or did not respond to departmental notices when the transactions are otherwise supported by records. Explaining this, a bench of Vice President Rajpal Yadav and Accountant Member Manoj Kumar Aggarwal observed that in the fctas of the case, the tax department had accepted the taxpayer's sales and had not found any supplier to be non-existent.
ITAT Mumbai Quashes Tax Reopening Over Political Donation, Allows Section 80GGC Deduction
Case Title: Abhishek Jayketu Joshi vs AC CIR-42(2)(1)
Case No.: ITA No. 5775/Mum/2025
Citation: 2026 LLBiz ITAT(MUM)10
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has quashed reassessment proceedings initiated against a taxpayer for AY 2019–20, holding that the disallowance of political donation under Section 80GGC was unsustainable.
The appeal was decided by a Bench comprising Judicial Member Amit Shukla and Accountant Member Makarand Vasant Mahadeokar, who held that the mandatory procedure under Section 148A of the Act was violated. The Bench stated, Mere suspicion, conjectures, or application of human probabilities, in the absence of any corroborative material, cannot be a ground to deny a statutory deduction expressly provided under the Act.
ITAT Raipur Sets Aside Deletion Of Bogus Purchase Addition For Want of Remand Report From AO
Case Title: The Deputy Commissioner of Income Tax-1(1), Raipur (C.G.) v. Goenka Rockwool India Private Limited
Citation: 2026 LLBiz ITAT (RAI) 13
Case Number: ITA No.453/RPR/2025
The Raipur bench of the Income Tax Appellate Tribunal (ITAT) has remanded a tax appeal after holding that the Commissioner of Income Tax (Appeals) could not delete an addition based on fresh evidence without first seeking a remand report from the Assessing Officer. A coram of Judicial Member Partha Sarathi Chaudhury and Accountant Member Arun Khodpia held that the Commissioner of Income Tax (Appeals), NFAC, could not have decided the case on merits after admitting additional evidence without first obtaining a remand report from the Assessing Officer.
ITAT Delhi Sets Aside ₹4 Crore Additions Based on WhatsApp Evidence From Third-Party Broker
Case Title: Arti Garg Vs DCIT, Delhi
Citation: 2026 LLBiz ITAT (DEL)15
Case Number: ITA No.3143/Del/2025 (A.Y 2021-22)
The Income Tax Appellate Tribunal (ITAT), Delhi, has set aside Rs 2 crore income-tax additions based on a images allegedly found in the WhatsApp of a third-party property broker. The tribunal held that the electronic evidence relied was not in compliance with the Evidence Rules and therefore not credible. A coram comprising Judicial Member Vimal Kumar and Accountant Member S. Rifa ur Rahman deleted additions of Rs 2 crore each made in the hands of a property buyer and seller, observing that the statutory safeguards governing the collection, certification, and chain of custody of electronic evidence had not been complied with.
ITAT Pune Upholds ₹6 Lakh Professional Fees Disallowance For Lack of Evidence
Case Title: Tooltech Global Engineering Pvt Ltd v. The Income Tax Officer
Case Number: ITA No.2212/PUN/2025
Citation: 2026 LLBiz ITAT(PUN)16
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the disallowance of Rs. 6 lakh claimed as professional fees for the assessment year 2017-18, noting that the payment was not supported by sufficient evidence such as the recipient's income tax return, Form 26AS (annual tax statement), or bank statements. The Bench, comprising Accountant Member Dr Dipak P. Ripote and Judicial Member Vinay Bhamore, reaffirmed that expenses claimed as professional fees must be substantiated with proper evidence and reflected in the recipient's tax filings, failing which they can be disallowed under the Income Tax Act.
Case Title : Hasbro SA v. Deputy Commissioner of Income Tax (International Tax)
Case Number : ITA No. 2842/Del/2025
CITATION : 2026 LLBiz ITAT(DEL)17
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that an assessee should not be penalised for a technical lapse in filing evidence and allowed Swiss-based Hasbro SA to submit additional evidence in support of its claim for TDS credit. It remanded the matter to the assessing officer for fresh consideration. A Bench comprising Accountant Member Ramit Kochar and Judicial Member Raj Kumar Chauhan passed the order in an appeal filed by Hasbro SA against the Commissioner of Income Tax (Appeals), which had upheld the denial of TDS credit of Rs. 21.14 lakh for the assessment year 2020–21.
ITAT Delhi Deletes ₹30.7 Lakh Tax, Accepts Marriage 'Sagan' As Source Of Demonetisation-Era Deposits
Case Title : Gaurav Bhatia v. ITO Ward 70(5)
Case Number : ITA No. 5531/Del/2025
CITATION : 2026 LLBiz ITAT(DEL)18
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 22 January held that cash deposits during the demonetisation period representing marriage 'sagan' (gifts from friends and relatives) cannot be treated as unexplained income while deleting an addition of Rs. 30.7 lakh made against an individual assessee. The order was passed by Vice President Mahavir Singh, in an appeal against an order of the National Faceless Appeal Centre dated 3 July 3 2025.
Following Earlier Rulings, ITAT Delhi Holds Air France Income Not Taxable Under India–France DTAA
Case Title : AIR France v. DCIT
Case Number : ITA No. 5205/Del/2025 & Connected Matters
CITATION : 2026 LLBiz ITAT(DEL)19
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that Air France's income from technical handling services, interest on operational funds, and commission from domestic airlines was not taxable in India for the assessment years 2017–18 and 2018–19. The tribunal followed its earlier rulings and noted that there was no change in facts. The receipts were held to be covered under Article 8 of the India–France tax treaty.
Tax Additions For Unsecured Loans Unsustainable Where Lender Creditworthiness Is Proven: ITAT Mumbai
Case Title : DCIT v. Supreme Holdings & Hospitality (India)
Case Number : ITA Nos. 3977/Mum/2025 & Connected Matters
CITATION : 2026 LLBiz ITAT(MUM)20
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 23 January held that additions under Section 68 of the Income Tax Act relating to unsecured loans are unsustainable where the lenders had been accepted as genuine in earlier assessment years and the transactions were supported by proper banking records.
A Bench of Saktijit Dey, Vice President, and Jagadish, Accountant Member, hearing appeals arising from a search conducted on the Jatia Group, dismissed the Revenue's challenge to the deletion of additions amounting to Rs. 14.61 crore.
Case Title : Bajaj Auto Ltd. v. The Principal Commissioner of Income-tax–3, Mumbai
Case Number : ITA No. 2666/MUM/2025
CITATION : 2026 LLBiz ITAT(MUM)21
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 23 January dismissed an appeal filed by Bajaj Auto Limited and upheld a revisionary order issued by the Principal Commissioner of Income-tax (PCIT) under Section 263 of the Income Tax Act. A Bench comprising Judicial Member Narender Kumar Choudhry and Accountant Member Om Prakash Kant agreed with the PCTI that the original assessment, completed on 27 May 2022, was erroneous and prejudicial to the interests of the Revenue, as the Assessing Officer (AO) failed to conduct adequate enquiries on key aspects.
Mere Doubts On Cash Utilisation Insufficient For Section 69A Additions: ITAT Mumbai
Case Title : Deputy Commissioner of Income-tax v. F A Construction
Case Number : ITA Nos. 3895 to 3897/MUM/2025
CITATION : 2026 LLBiz ITAT(MUM)22
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on 23 January, held that that additions under Section 69A cannot be made merely on doubts about utilisation, if the source of cash withdrawals is from disclosed bank accounts. A Bench of Judicial Member Sandeep Gosain and Accountant Member Om Prakash Kant dismissed three appeals filed by the Revenue against FA Construction (the taxpayer) and upheld the orders of the Commissioner of Income-tax (Appeals) deleting additions for assessment years 2014-15. It also clarified that ad hoc disallowances of expenditure cannot be sustained when the taxpayer furnishes adequate documentary evidence.
OTHER DEVELOPMENTS
Amendments To Income Tax Appellate Tribunal Rules Mandate Digital Signatures For Filing Appeals
The Ministry of Law and Justice has recently notified changes to the Income-tax (Appellate Tribunal) Rules, 1963, making the use of digital signatures compulsory for filing appeals before the Income Tax Appellate Tribunal (ITAT).
The changes have been brought in through the Income-tax (Appellate Tribunal) Amendment Rules, 2025.