MECHINENI PROJECTS PRIVATE LIMITED,HYDERABAD vs. DCIT, CENTRAL CIRCLE - 3(3), HYDERABAD

ITA 2209/HYD/2025Status: DisposedITAT Hyderabad23 October 2026AY 2023-244 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance made by the CPC, Bengaluru, under Section 143(1) of the Income Tax Act, 1961, for want of certain evidences was not sustainable. The Tribunal noted that no reasoning was provided by the CPC for rejecting the claim, either in the initial processing order or in the rectification order. The Tribunal further reasoned that the issue of availability or validity of evidence for the cost of improvement is a matter that should be examined during a scrutiny assessment under Section 143(3) and not during the summary processing of the return under Section 143(1). The CPC does not have the jurisdiction under Section 143(1) to make such disallowances based on a lack of evidence. Therefore, the disallowance made by the lower authorities was ordered to be deleted. The appeal filed by the assessee was allowed.

What were the facts?

The assessee, Mechineni Projects Private Limited, filed its return of income for Assessment Year 2023-24 on 28/10/2023, claiming a cost of improvement of Rs. 2,94,75,372/- for capital gains. The Centralized Processing Centre (CPC), Bengaluru, disallowed this claim while processing the return under Section 143(1) of the Income Tax Act, 1961. The assessee filed a rectification application under Section 154, which was also rejected by the CPC without providing reasons. The assessee then appealed to the Learned Commissioner of Income Tax (Appeals) - 11, Hyderabad. The Ld. CIT(A) dismissed the appeal, noting that the assessee had not provided requisite evidence for the cost of improvement. The assessee is now before the Income Tax Appellate Tribunal (ITAT), Hyderabad Bench.

What were the issues?

1. Whether the disallowance of the cost of improvement of Rs. 2,94,75,372/- made by the CPC, Bengaluru, while processing the return under Section 143(1) of the Income Tax Act, 1961, is sustainable? Assessee's Contention: The assessee argued that the CPC disallowed the claim without providing any reasons. The assessee also contended that the issue of availability of evidence for the cost of improvement should be examined during a scrutiny assessment under Section 143(3), not during processing under Section 143(1). Revenue's Contention: The revenue, through the Ld. CIT(A), contended that the assessee had not attached the requisite evidences to prove the cost of improvement, leading to the dismissal of the appeal.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 154,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SANJAY GARG & SHRI MADHUSUDAN SAWDIA

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee company against the order of the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad (hereinafter referred to as “Ld. CIT(A)”), dated 16/10/2025 for the Assessment Year (AY) 2023-24. ITA 2209/HYD/2025 MECHINENI PROJECTS PRIVATE LIMITED

2.

The assessee company in this appeal is aggrieve

The order continues below.

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