LiveLawBiz Direct Tax Weekly Round-Up: March 23 - March 29, 2026
Kapil Dhyani
30 March 2026 12:59 PM IST
HIGH COURTS
Gujarat HC
Case Title : Herald Global Ventures Pvt. Ltd v. The Chief Commissioner of Income Tax
Case Number : R/SPECIAL CIVIL APPLICATION NO. 11722 of 2024
CITATION : 2026 LLBiz HC(GUJ) 43
The Gujarat High Court on 16 March, held that a bona fide delay of 53 days in filing Form 10-IC cannot deprive an eligible taxpayer of concessional tax benefits. The expression “genuine hardship” under the Income Tax Act must be given a liberal, justice-oriented interpretation. Form 10-IC is a declaration filed by a company to opt for the concessional corporate tax rate under Section 115BAA of the Income Tax Act.
A Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi allowed Herald Global Ventures Private Limited to avail benefits under Section 115BAA of the Income Tax Act. The judges held: "……if the delay in question is not condoned, the petitioner will have to pay substantial tax calculated as per 'normal rate of tax' despite the fact that the petitioner is otherwise eligible for claiming benefit under section 115BAA of the Act i.e. 'tax rate being 22%'. This will result into 'financial hardship' to the petitioner which is a 'genuine hardship'. Thus, by condoning delay, the genuine hardship caused to the petitioner could have been avoided."
Case Title : RAR Properties v. Principal Commissioner of Income Tax
Case Number : R/SPECIAL CIVIL APPLICATION NO. 2148 of 2026
CITATION : 2026 LLBiz HC(GUJ) 44
The Gujarat High Court has held that a taxpayer's delay in filing its income tax return due to a bona fide misunderstanding of audit requirements under Section 44AB of the Income Tax Act, resulting in denial of a tax deduction under Section 80-IAB for Special Economic Zone developers, constitutes “genuine hardship” warranting condonation. The case arose from the petitioner firm's failure to file its return of income for Assessment Year 2023–24 within the prescribed due date of 31 July 2023. The delay of 87 days was attributed to incorrect professional advice that the firm was required to get its accounts audited under Section 44AB of the Income Tax Act.
Kerala HC
Case Title : The Principal Commissioner of Income Tax v. Kalyan Jewellers India Ltd.
Case Number : ITA NO. 71 OF 2025
CITATION : 2026 LLBiz HC (KER) 58
The Kerala High Court on 11 March, held that unrealised gains arising from mark-to-market valuation of forward contracts are not taxable as income unless actually realised. The Division Bench comprising Justice Devan Ramachandran and Justice Basant Balaji dismissed the appeal filed by the Principal Commissioner of Income Tax against Kalyan Jewellers India Ltd. The judges held: “It is doubtless that, in a 'mark-to-market' forward commodities contract, the gains and losses fluctuate until the instrument matures on the period of expiry. In one year it is likely that there would be losses, which would perhaps transmute to be profits in the next year; and it continues in that cycle until the maturity happens.”
Madras HC
Case Title : M/s. Wheels India Limited v. The Assistant Commissioner of Income Tax
Case Number : T.C.A.No.104 of 2015
CITATION : 2026 LLBiz HC (MAD) 87
The Madras High Court on 2 March held that a taxpayer is entitled to claim the balance 50% of additional depreciation in the subsequent assessment year where new plant and machinery are put to use for less than 180 days in the year of acquisition. A Bench of Justice G. Jayachandran and Justice Shamim Ahmed allowed an appeal filed by Wheels India Limited against an order of the Income Tax Appellate Tribunal for the assessment year 2007–08, which had upheld the partial disallowance of the company's claim for additional depreciation.
ITAT
ITAT Ahmedabad Sets Aside Ad-Hoc Expense Disallowance As AO Failed To Point Out Defects
Case Title : Raghani Tradelink v. The Income Tax Officer
Case Number : ITA No.1692/Ahd/2025
CITATION : 2026 LLBiz ITAT(AHM) 68
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has recently set aside ad-hoc disallowances made against Raghani Tradelink, a commission agent engaged in facilitating sales of sarees, suits, and garments across India, holding that additions towards sub-brokerage and administrative expenses cannot be sustained when the Assessing Officer fails to point out specific discrepancies in the evidence produced by the assessee. The coram comprising Judicial Member Sanjay Garg and Accountant Member Annapurna Gupta was dealing with the appeal filed by the taxpayer for the Assessment Year 2020–21.
Case Title : Deputy Commissioner of Income Tax v. M/s Zen Industries Pvt. Ltd.
Case Number : 888/Ahd/2025
CITATION : 2026 LLBiz ITAT(AHM) 69
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the deletion of tax additions made against a mouth freshener manufacturing company, finding that the additions were founded only on loose sheets that lacked basic particulars and were unsupported by any corroborative evidence to establish unaccounted transactions. The case arose from a search conducted on a third party, during which certain handwritten loose sheets were found in the possession of an employee of the taxpayer company, Zen Industries Pvt. Ltd.
Lower Cost Of Acquisition Without Justification Not Warranted: ITAT Ahmedabad
Case Title : Nirmalaben Kamleshbhai Contractor v. Assessment Unit, Income Tax Department
Case Number : ITA No.1911/Ahd/2025
CITATION : 2026 LLBiz ITAT(AHM) 70
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) on 27 February held that adopting a lower deemed cost of acquisition than that accepted for co-owners, without justification, was not warranted. A Tribunal Bench comprising Vice-President Dr. B.R.R. Kumar and Judicial Member Suchitra Kamble allowed the appeal of Nirmalaben Kamleshbhai Contractor and allowed deduction under Section 54EC, finding the investment was made within the prescribed period.
Case Title : Shilpa Shetty Kundra vs. DCIT, CC-5(2), Mumbai
Case Number : ITA No.996/M/2025
CITATION : 2026 LLBiz ITAT(MUM) 71
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has recently asked actor Shilpa Shetty Kundra to submit “complete details/clarifications and documents” to justify a Rs 12.54-crore gift received from her husband Raj Kundra, while remanding the matter to the Jurisdictional Assessing Officer for fresh examination under Section 68 of the Income Tax Act, 1961. Judicial Member Narender Kumar Choudhry and Accountant Member Prabhash Shankar said the material on record was not sufficient to establish the genuineness of the transaction and required further factual verification. The Bench noted that Shetty had not fully discharged the initial burden placed on her under the Act.
Double Taxation Of Share Application Money Impermissible: ITAT Kolkata
Case Title : Income Tax Officer, Ward 9(1), Kolkata v. Littlestar Securities Private Limited
Case Number : ITA No. 694/KOL/2025
CITATION : 2026 LLBiz ITAT(KOL) 72
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) on 6 March, held that taxing share application money already taxed in the hands of investor companies amounts to impermissible double addition. The Bench comprising Accountant Member Rajesh Kumar and Judicial Member Pradip Kumar Choubey dismissed the Revenue's appeal against Littlestar Securities Pvt. Ltd. for Assessment Year 2012-13 and upheld the deletion of Rs. 27.63 crore added as unexplained cash credit.
Ad-Hoc Estimation of Income Without Rejecting Books of Account Not Permissible: ITAT Kolkata
Case Title : Rakhi Mondal v. Assessment Unit, Income Tax Department (NFAC)
Case Number : ITA No. 2151/Kol/2025
CITATION : 2026 LLBiz ITAT(KOL) 73
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) on 17 February 2026 held that income cannot be estimated on an ad-hoc basis without first rejecting the books of account, and set aside an addition made on that basis while quashing the reassessment proceedings. The Bench comprising Accountant Member Rajesh Kumar and Judicial Member Pradip Kumar Choubey allowed the appeal filed by Rakhi Mondal for Assessment Year 2017-18. It held: “the said reopening has been done without meeting the specific requirement as provided u/s 149(1)(b) of the Act. Therefore, we quash reopening of assessment.”
Bona Fide Delay In Filing Tax Appeal Caused By Pursuing Alternate Remedy Condonable: ITAT Chennai
Case Title : M/s. A-One Leathers v. Assistant Commissioner of Income Tax, Non-Corporate Circle 4(1), Chennai
Case Number : ITA No. 4148/CHNY/2025
CITATION : 2026 LLBiz ITAT(KOL) 74
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) held that a delay of 1036 days in filing an appeal could be condoned when it arose from pursuing an alternate remedy and was not deliberate. A Bench comprising Vice President George George K and Accountant Member S.R. Raghunatha, in an appeal filed by A-One Leathers for Assessment Year 2015-16, remanded the matter to the Assessing Officer to examine a claim of double taxation. It observed: “The delay… neither wanton nor willful but only on account of the party pursuing an alternate remedy under the rectification route.”
Case Title : Vinayaga Fireworks v. DCIT
Case Number : ITA No. 2282/Chny/2025
CITATION : 2026 LLBiz ITAT(CHE) 75
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) on 3 March 2026 held that cash deposits made during the demonetisation period cannot be treated as unexplained under Section 68 of the Income Tax Act, 1961, if corresponding sales are accepted and recorded in the books of account. A Bench comprising Judicial Member S.S. Viswanethra Ravi and Accountant Member S.R. Raghunatha allowed an appeal by Vinayaga Fireworks, a Sivakasi-based cracker manufacturer, against an order of the Commissioner of Income Tax (Appeals), NFAC. It observed: “Unless the sales are held to be bogus, the corresponding sales receipts cannot be treated as unexplained cash credits.”
ITAT Mumbai Deletes ₹48.97 Lakh Tax Addition Against Zee Entertainment For Failing To Record Reasons
Case Title : Zee Entertainment Enterprises Limited v. DCIT
Case Number : ITA No.6872/Mum/2025 & ITA No.6873/Mum/2025
CITATION : 2026 LLBiz ITAT(MUM) 76
The Income Tax Appellate Tribunal (ITAT) at Mumbai has recently given relief to Zee Entertainment Enterprises Ltd by deleting a Rs 48.97 lakh tax addition under Section 14A of the Income Tax Act, 1961, which deals with expenses linked to earning tax-free income. The Tribunal held that tax officers cannot recalculate such expenses without first clearly explaining why they disagree with the company's own calculation. A coram comprising Judicial Member Anikesh Banerjee and Accountant Member Arun Khodpia was hearing appeals filed by Zee against orders of the Commissioner of Income Tax (Appeals) under Section 250, the provision that governs the first stage of tax appeals.
Case Title : Income Tax Officer v. Udayan Mandavia
Case Number : I.T.A. No.154/Ahd/2026
CITATION : 2026 LLBiz ITAT(AHM) 77
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Department's appeal in a dispute over the applicable tax rate on unexplained income, holding that the enhanced 60% tax under Section 115BBE cannot be applied to Assessment Year 2017–18 and that such a change cannot be made through rectification under Section 154. Section 115BBE of the Income Tax Act, 1961, imposes a steep penal tax rate on unexplained income, such as cash credits, investments, or assets found during searches or assessments.
Case Title : State Bank of India Bhavnagar Para Branch v. Income Tax Officer
Case Number : I.T.A. No.453&454/Ahd/2026
CITATION : 2026 LLBiz ITAT(AHM) 78
The Ahmedabad Income Tax Appellate Tribunal (ITAT) has held that State Bank of India (SBI) cannot be treated as an “assessee in default” for failure to deduct tax at source on Leave Fare Concession (LFC) payments made to its employees, where such non-deduction was in compliance with binding interim orders of a High Court. A coam of Judicial Member Siddhartha Nautiyal and Accountant Member Narendra Prasad Sinha observed that, during the relevant period, the bank was bound by interim orders of the Madras High Court, which had directed that LFC payments would not be treated as income and no tax was required to be deducted at source.
OTHER DEVELOPMENTS
The Income Tax Department has clarified that the proposed 12% surcharge in the Finance Bill, 2026 will apply only to the additional income-tax payable by promoters on capital gains arising from buybacks, and not on the entire gains. In a clarification issued on March 26, 2026, the Department explained that the amendment relates to taxation of capital gains earned by promoters when companies buy back their own shares under section 68 of the Companies Act, 2013, which governs share buybacks.