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1. Alleged Bogus Purchases – Section 69C – Order of Tribunal confirming addition @ 6% of purchases affirmed by High Court – Dismissal of SLP by Supreme Court

Assessee was found to have obtained non-genuine purchase bills aggregating to about Rs. 1.31 crores from Bhanwarlal Jain group engaged in providing accommodation entries. Assessing Officer treated purchases as bogus and made addition of 100 per cent of alleged bogus purchases. On appeal by the assessee, the Tribunal restricted addition to 6 per cent of purchases. Revenue filed appeal to the High Court. The High Court held that in several matters arising out of transactions with said Bhanwarlal Jain Group, Tax Appeals filed by Department had been dismissed where Tribunal had assessed disallowance at 6 per cent. Therefore, no substantial question of law arose. [See Pr. CIT v. Prathana Gems 186 taxmann.com 673 (Guj)]

On SLP filed by the revenue to the Supreme Court, the Supreme Court held that the court was not inclined to interfere with the order of the High Court. Accordingly the Supreme Court dismissed the SLP of the department by way of a speaking order.

Pr. CIT v. Prathana Gems 186 taxmann.com 984 (SC)

2. Alleged Bogus Purchases – Addition confirmed @12.5% of the purchases on estimation basis – Levy of penalty u/s. 271(1)(c) in respect of the Addition – Held not justified

Based on information from Sales Tax Department regarding bogus purchase bills, Assessing Officer reopened assessment under Section 148 and completed reassessment under Section 144 read with Section 147, treating purchases as non-genuine and assessing total income at about Rs. 71.59 lakhs. Penalty proceedings under Section 271(1)(c) were initiated and 100% penalty of tax evaded, about Rs. 22.12 lakhs, was levied. On appeal by the assessee in the quantum proceedings, the Commissioner (Appeals) restricted bogus purchase addition to 12.5%. In relation to the appeal against the penalty, Commissioner (Appeals) held penalty leviable but restricted it to sustained addition (i.e., to 12.5%). On further appeal by the assessee, the Tribunal set aside entire penalty on ground that penalty could not be levied when quantum addition was sustained on an estimation.

On revenue’s appeal to the High Court, the High Court held that since addition made in quantum proceedings was on estimation (i.e. 12.5% of bogus purchases), the Tribunal was correct in setting aside penalty order. Accordingly the appeal of the revenue was dismissed.

Pr. CIT v. Elcon Pipe & Fittings Pvt. Ltd. (2026) 187 taxmann.com 886 (Bombay)

3. Income surrendered during survey – Claim of Remuneration to partners against the same – Deduction allowable – Section 40(b) of the Act

A survey was conducted u/s. 133A of the act in the case of the assessee. The assessee surrendered Rs. 55 Lakhs and disclosed it as additional income. The assessee claimed deduction of remuneration to partners against the income surrendered. The AO held the assessee failed to prove a direct nexus between its business and the surrendered amount, noted excess stock and unaccounted expenditure not recorded in the regular books, treated Rs. 50.56 lakhs as deemed income under section 69B, and added Rs. 4.33 lakhs as unexplained expenditure under section 69C. The CIT(A) partly allowed the appeal by holding that the surrendered Rs. 55 lakhs was earned during the course of business and treating it as business income, and remanded the issue of unexplained expenditure of Rs. 4.33 lakhs for verification under section 69C. The revenue filed appeal to the Tribunal and the assessee filed cross objection thereto. The Tribunal dismissed the appeal of the revenue and also dismissed the assessee’s cross objection. The revenue’s appeal to the High Court was dismissed for lower tax effect.

On appeal by the assessee to the High Court, the High Court followed its earlier judgement in the case of CIT v. Shilpa Dyeing & Printing Mills (P.) Ltd. [2013] 39 taxmann.com 3 (Gujarat), and held that Section 71 of the Income-tax Act, 1961 permits an assessee to set off loss other than that of capital gains against income from other head. Section 71 deals with set off of loss against income under any other head. After setting off losses against the income under the same head, if the net result is still a loss, the assessee can set off the said loss under Section 71 against income of the same year under any other head, except for losses which arise under the head ‘capital gains’. The benefit provided under Section 71 cannot be denied. In view of this, the High Court held that assessee is entitled to the benefit of regular deductions available under the Act in respect of the business income which is liable to tax even if the same is declared during the course of survey.

Parashuram Dayaram Jewellers v. ITO (2026) 187 taxmann.com 586 (Gujarat)

4. Reassessment on the basis of a loose paper from a non related third party – Addition made u/s. 69A not justified.

Case of the assessee was taken up for reassessment based solely on a loose paper from a non-related third party, with illegible data and no nexus to the assessee. The assessment was completed making addition u/s. 69A of the Act. The assessee filed a petition before the High Court challenging the reassessment.

The High Court held that such a reassessment is unsustainable in law. The High Court also noted that the satisfaction note did not record any link of petitioner with entities involved, and sale deed on record confirmed land was sold as agricultural. Accordingly the impugned reopening of assessment by issuance of notice under section 148 and consequent reassessment under section 147 read with section 143(3), was held to be not valid and were quashed.

Naveenchandra Prahladbhai Patel v. ITO (2026) 187 taxmann.com 377 (Gujarat)

5. Reassessment – No addition in respect of reasons recorded – Addition made on other issue not justified.

Assessee’s case was reopened under section 147 on ground that assessee had not adopted value determined by Stamp Valuation Authority for computing capital gains. In reassessment order, no addition was made on issue for which reopening was initiated (difference between stamp duty valuation and consideration disclosed). Instead, Assessing Officer made an addition by disallowing deduction claimed under section 54. This was confirmed by the Commissioner (Appeals).

On further appeal to the Tribunal, the Tribunal followed the judgement of the Bombay High Court in the case of CIT v. Jet Airways (I) Ltd. 331 ITR 236 (Bom) and held that where reassessment proceedings are initiated for a particular item of income escaping assessment, Assessing Officer must make an addition on that issue, and if no addition is ultimately made on very reason for which jurisdiction under section 147 was assumed, then no other addition can be sustained in reassessment order. On the facts of the case, the impugned addition made by Assessing Officer u/s 54 was not sustainable in law.

Narendra Vinayak Palmure v. ITO (2026) 187 taxmann.com 748 (Bangalore Trib.)

6. Deduction of Tax at source – Salary (Employee v. Professional Fees) – On facts – Deduction held applicable u/s. 194J

Assessee was a coaching institute and imparted coaching for medical and engineering aspirants. During survey, it was noticed that payments to teachers/faculties were treated as professional fees with TDS deducted under section 194J of the Act. The Assessing Officer observed that faculty members were recruited through interviews, required to follow fixed working hours, maintain attendance, obtain leave approval, refrain from teaching in other coaching institutes and were paid monthly remuneration with annual increments. He, thus, held that these factors established an employer-employee relationship and treated assessee as an assessee in default under sections 201(1) and 201(1A) for short deduction of tax under section 192. The order of the assessee was confirmed by the CIT (A).

On further appeal to the Tribunal, it was found that teachers were not entitled to any statutory service benefits such as PF, Gratuity, Bonus, medical reimbursement, insurance, leave encashment etc. - It was also noted that assessee did not exercise any control, intervention or direction over exercise of professional duties and teachers were free to teach in their own way subject to curriculum. There was no indemnity between assessee and professionals/teachers engaged and there was no written agreement/contract between assessee as well as teachers either of employment or of professional engagement. Thus, teachers could not be held to be employees of assessee and tax deduction at source could not have been forced under section 192. Thus, no infirmity was found in assessee treating them as professionals and deducting tax at source on their payment under section 194J.

Brilliant Study Centre Pvt. Ltd. v. ITO (TDS) 187 taxmann.com 816 (Cochin Trib.)

7. Share Premium received – Addition u/s. 68 made for excessive premium in the opinion of the assessing officer – Held not justified

Assessee-company received share premium of about Rs. 112.52 crores from its holding company on issue of equity shares. The assessing officer treated the said amount as unexplained cash credit under section 68 on ground that assessee was a loss-making company and share premium charged was excessive and unsupported by intrinsic value of shares. The CIT (A) deleted the addition made.

On revenue’s appeal to the Tribunal, it was held that the subscriber was identifiable, source of funds available with subscriber had been examined by assessing officer and accordingly the assessee had established identity of subscriber, genuineness of transaction and creditworthiness of investor. Considering this the addition under section 68 could not be sustained merely because the assessing officer disagreed with valuation adopted by parties and considered share premium excessive.

ACIT v. Diligent Media Corporation Ltd (2026) 187 taxmann.com 533 (Mumbai - Trib.)

8. Impact of Extension of time as per SC judgment on account of Covid 19 – Time limits for completion of assessment not extended

In the case of the assessee, the DRP issued directions on 21-9-2021 but Assessing Officer passed final assessment order on 18-11-2021 instead of 31-10-2021. Assessee filed an appeal before Tribunal, and by order dated 04.07.2025, Tribunal allowed appeal and quashed assessment order dated 18.11.2021 as barred by limitation under Income-tax Act, 1961. Revenue filed a miscellaneous application under section 254(2) contending that, in view of Supreme Court’s order dated 10.01.2022 in Cognizance for Extension of Limitation, period from 15.03.2020 to 28.02.2022 stood excluded for computing limitation in all judicial and quasi-judicial proceedings and, therefore, assessment order dated 18.11.2021 was within time.

The Tribunal held that so far as framing of assessment is concerned, Department has to frame assessment within time provided under 1961 Act and extension of limitation by way of exclusion of period from 15.03.2020 to 28.02.2022 owing to Covid-19 granted by Supreme Court in Cognizance for Extension of Limitation, In re ([2022] 134 taxmann.com 307/441 ITR 722 (SC)) was not applicable to assessment proceedings. The Tribunal further held that since no mistake apparent from record existed, miscellaneous application filed by revenue was to be dismissed.

ACIT v. Rolls Royce India (P.) Ltd. (2026) 187 taxmann.com 524 (Delhi - Trib.)

9. Time Limit for filing of appeal – Condonation of delay

Assessee filed appeals against quantum assessment and penalty orders. CIT(A) treated appeals as delayed by 1,486 days and 1,181 days respectively, declined to condone delay under section 249(3), and dismissed both appeals in limine without adjudicating merits or affording an opportunity to file a condonation application.

Before the Tribunal, the assessee contended that statutory notices and assessment orders had not been served and, on becoming aware of demand, obtained certified copies from JAO and filed appeals thereafter. The Tribunal held that the assessee had shown sufficient cause for delay and no mala fides or gross negligence were attributable to her, particularly during transition from physical to faceless regime. Accordingly the Tribunal held that the delay deserved to be condoned and the matter was remitted to CIT(A) for disposal on merits.

Ms. Neeta v. ITO (2026) 188 taxmann.com 118 (Delhi - Trib.)