Direct Tax Alert February 2026

Important Judicial Precedents

• Tribunal erred in granting registration u/s 12AB and 80G without inquiry into trust’s genuineness; matter remanded: HC

[2026] 183 taxmann.com 742 (Delhi-HC) CIT, Exemption vs. Kush Innovative Foundation

Where assessee-trust holding provisional registration under section 12AB applied for regular registration and approval under Section 80G but Commissioner rejected same for non-furnishing of documents, Tribunal’s direction to grant registration without recording findings on genuineness and compliance under section 12AB(1)(b) was unsustainable, and thus, matter was remanded for fresh adjudication.

• Admission of additional evidence for TDS credit claim justified as assessee acted bonafide: ITAT

[2026] 182 taxmann.com 696 (Delhi – Trib.) Hasbro SA vs. DCIT (International Tax)

Where assessee, a Switzerland based company, offered royalty income to tax and claimed TDS credit which was denied merely because corresponding TDS appeared in Form 26AS of next assessment year, and assessee sought admission of additional evidence under Rule 29 to establish correct year of accrual, in absence of any mala fide and since tax was already deposited, additional evidence must be admitted and matter was to be remanded to Assessing Officer for verification and grant of lawful TDS credit.

• SLP dismissed; reopening u/s 148 invalid as depreciation issue was examined in original assessment

[2026] 182 taxmann.com 814 (SC) ACIT vs. Adani Power Ltd

SLP dismissed against order of High Court that where Assessing Officer, during regular assessment, had already considered issue of depreciation and made additions only on excess depreciation claimed by assessee, in such circumstances, subsequent notice under section 148 to reopen assessment was untenable and liable to be quashed.

• Delay in appeal condoned as illiterate assessee failed to notice final order; matter remanded for fresh adjudication : ITAT

[2026] 182 taxmann.com 743 (Bangalore – Trib.) Muniyappa Prashanth Kumar vs. Income-tax Officer Ward 4(3)(3)

Where assessee, a small milk vendor, did not file his return of income for relevant year and Assessing Officer taxed huge cash deposits made by assessee in bank account and payments made to contractors as unexplained money, since assessee was an illiterate person who was unaware that final appellate order had been passed, it was a sufficient cause in filing appeal belatedly before Commissioner (Appeals) and, thus, entire issue in dispute was to be remitted to Assessing Officer to decide afresh in accordance with law.

• Reassessment on audit objection without new facts after original enquiry is mere change of opinion: HC

[2026] 183 taxmann.com 690 (Delhi) PCIT vs. NTPC Ltd.

Where reassessment was initiated solely based on an audit party’s objection regarding corporate expense allocation for deduction under section 80-IA, without any new facts and on issues already examined in original assessment, such initiation was a mere change of opinion and thus invalid.

• Limitation period for penalty u/s 271AAB governed by sec. 275(1)(a) where assessment is under appeal: HC

[2026] 183 taxmann.com 263 (Madras) Chandrasekaran Joseph Vijay vs. DCIT

Where penalty proceedings under section 271AAB were initiated in assessment order that became subject of appeal before Commissioner(Appeals) and Tribunal, limitation for passing penalty order would be governed by section 275(1)(a) and not residuary clause (c) of section 275(1), and thus, penalty order passed within six months from end of month of receipt of Tribunal’s order was held to be within limitation

• Capital gains under JDA taxable only on completion certificate, not in year of agreement: ITAT

[2026] 183 taxmann.com 30 (Bangalore – Trib.)  Keshava Reddy vs . DCIT

Where assessee entered into a Joint Development Agreement and handed over possession of land merely for development without part performance under section 53A, capital gains were not taxable in year of JDA but only in year of completion certificate on receipt of constructed flats.

• Competent Authority bound to grant nil-rate TDS certificate under section 197 pursuant to earlier HC order despite proposed SLP: HC

[2026] 183 taxmann.com 692 (Delhi-HC) AECOM Intercontinental Holdings UK Ltd. vs. ACIT

Where assessee provided corporate and management support services to its AE and, in preceding year, High Court between same parties had directed issuance of a nil-rate withholding certificate for identical services, Competent Authority, while acting under section 197, was bound to follow said decision and could not take a contrary view merely on ground of proposed SLP or principle that each assessment year is separate; consequently, nil-rate certificate was to be issued.