Commissioner of Income Tax vs. Rapiscan Systems Inc

ITTA/2/2026HC TelanganaHBHC01078542202523 February 2026Author: P.SAM KOSHY,NARSING RAO NANDIKONDA7 pages

AI SummaryDismissed

What did the High Court hold?

The High Court noted that the issue raised in these appeals was identical to the one decided by the same High Court in W.P. Nos. 44891 and 44915 of 2022, decided on 09.01.2025. In those writ petitions, the High Court had ruled against the Revenue on the question of whether the upload of DRP directions constituted receipt by the AO. Consequently, the High Court held that the question of law agitated by the appellant Revenue in the present batch of appeals stood decided against the Revenue, following its earlier order. The Court acknowledged that the matter had been subjected to challenge before the Hon'ble Supreme Court in Special Leave to Appeal (C) No. 21530 of 2025, and stated that its decision would be subject to the outcome of that Supreme Court appeal. The appeals were dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax (International Taxation and Transfer Pricing), Hyderabad, filed four appeals before the High Court of Telangana at Hyderabad. These appeals challenged orders passed by the Income Tax Appellate Tribunal (ITAT) in ITA Nos. 587/Hyd/2024 and 588/Hyd/2022 for Assessment Years 2018-19 and 2019-20, respectively. The core issue revolved around the date of receipt of directions by the Assessing Officer (AO) from the Dispute Resolution Panel (DRP). The Revenue contended that the DRP directions were not effectively received by the AO on the date of upload, as they only became visible later, specifically on 05.07.2022, and that manual DRP proceedings did not automatically reflect in the AO's case history module. The ITAT had previously held that the upload of DRP directions was equivalent to receipt by the AO.

What were the issues?

1. Whether the Income Tax Appellate Tribunal (ITAT) was justified in holding that the upload of Dispute Resolution Panel (DRP) directions is equivalent to receipt by the Assessing Officer (AO), even when the record indicates the directions became visible to the AO only on 05.07.2022 (question of law). 2. Whether materials relied upon by the assessee pertain to manual dispatch/manual upload at the DRP's end, and when DRP proceedings were initiated through manual entry, the DRP's order does not automatically reflect in the AO's case history module, thereby rendering 30.06.2022 incapable of being treated as the date of receipt by the AO (question of mixed law and fact). Assessee's Contentions: The assessee argued that the DRP's order, once uploaded, should be considered as received by the AO. The judgment does not explicitly record the assessee's arguments beyond what is implied by the Revenue's contentions regarding manual entry and visibility. The assessee relied on the ITAT's finding that upload is equivalent to receipt. Revenue's Contentions: The Revenue contended that the ITAT erred in treating the upload of DRP directions as equivalent to receipt by the AO, especially when the directions only became visible to the AO on 05.07.2022. They argued that manual DRP proceedings did not automatically update the AO's case history module, making the date of upload (or a date prior to visibility) invalid as the date of receipt by the AO.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

13447l IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD MONDAY, THE TWENTY THIRD DAY OF FEBRUARY TWO THOUSAND AND TWENTY SIX THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE NARSING RAO NANDIKONDA Appeal under Section 2604 of the Income Tax Act, 1961 aggriev.ed by the order dated 18-03-2025 passed in lTA.No.588/Hyd12022 in Assessment year 20'19- 20 on the file of the lncome tax Appellate Tribunal,in M.A.No.62/Hyd/2024 Hyderabad'B' Bench, Hyderabad. Between: Commissioner of lncome Tax, (lnternational Taxation and Transfer Pricing), Hyderabad. ...Appellant AND Rapiscan Systems lnc, US C/o Ernst and Young LLP Hyderabad. ...Respondent Counsel for the Appellant: Mr. Vijhay K Punna (Senior Standing Counsel for lncome Tax Department) Counsel for the Respondent: Mr. T. Pradyoth lTTA.No.2 ot 2026 Appeal under Section 2604 of the lncome Tax Act, 1961 aggrieved by the order dated 23-07-2024 passed in lTA.No.588/Hyd12022 in Assessment year 20'tg- 20 on the file of the lncome tax Appellate Tribunal, Hyderabad 'B' Bench, Hyderabad. Between: Commissioner of lncome Tax, (lnternational Taxation & Transfer Pricing), Hyderabad. ...APPellant AND PRESENT ITTA Nos.'t & 2 of 2026, 243 & ITTA No.249 OF 2025 ITTA.No.1 of 2026 Rapiscan Systems lnc, US Cio Ernst & Young LLP, Hyderabad ...Respondent Counsel for the Appellant: Mr. Vijhay K Punna (Senior Standing Counsel for lncome Tax Department) Counsel for the Respondent: Mr. T. Pradyoth lTTA.No.243 of 2025 Appeal under Section 2604 of the lncome Tax Act, 1961 aggrieved by the order dated 18-03-2025 passed in lTA.No.5B7lHydl2024 in Assessment year 2018- 19 on the file of the lncome tax Appellate Tribunal, Hyderabad 'B' Bench, Hyderabad. Between: Commissioner of lncome Tax, (lnternational Taxation & Transfer Pricing), HYderabad ...Apperant AND Rapiscan Systems lnc, US C/o Ernst and Young LLP Hyderabad. ...Respondent Counsel for the Appellant: Mr. Vijhay K Punna (Senior Standing Counsel for lncome Tax Department) Counsel for the Respondent: Mr. T. Pradyoth lTTA.No.249 ot 2025 Appeal under Section 2604 of the lncome Tax Act, 1961 aggrieved by the order dated 18-03-2025 passed in lTA.No.587/Hydl2024 in Assessment year 2018- 19 on the file of the lncome tax Appellate Tribunal, Hyderabad 'B' Bench, Hyderabad. Between: Commissioner of lncome Tax (lnternational Taxation & Transfer Pricing), Hyderabad. ...Appellant AND Rapiscan Systems lnc, US C/o Ernst and Young LLP Hyderabad ...Respondent Counsel for the Appellant: Mr. Vijhay K Punna (Senior Standing Counsel for lncome Tax Department) Counsel for the Respondent: Mr. T. Pradyoth The Court delivered the following: COMMON JUDGMENT I I TN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTTCE NARSTNG RAO NANDIKONDA ITTA Nos.l & 2 OF 2026 243 & ITTA No.249 OF 2025 23.02.2026 ITTA No.l of 2026 Between: Commissioner of lncome Tax, (Intemational Taxation & Transfer Pricing), Hyderabad. ...Appellant Rapsican Systems Inc. US C/o Emst & Young LLP, Hyderabad. ...Respondent

COMMONJUDGMENT. (per Hon'ble Sri Justice P.Sam Koshy) Heard Mr. Vijhay K Punna, learned Senior Standing the respondent. Perused the record. I / AND Counsel for the Income Tax Department and Ms. Ananya Kapoor, leamed counsel representing Mr. T.Pradyoth, leamed counsel for I I l I

These batch offour appeals have been fi1ed by the Revenue assailing the orders passed by the Income Tax Appellate Tribunal (ITAT) ln M.A.No.6llHyd/2024 and M.A.No.62lHyd/2024, decided on 18.03.2025 and ITA Nos.587 and 588 of 2022, decided on23.07.2024. 3. The question oflaw raised by the appellant is - whether the ITAT was .lustihed in holding that the upload of DRP directions being equivalent to the receipt by the Assessing Ofhcer, even though the record shows that the directions became visible to the Assessing Officer only on 05.07.2022. Likervise, in the appeal pending before the ITAT, the question of law agitated was whether the materials relied upon by the assessee pertain to manual dispatch/manual upload at the DRP's end and that when DRP proceedings being initiated through manual entry, the DRP's order does not automatically reflect in the Assessing O{ficer's case history module, thereby rendering 30.06.2022 incapable of being treated as the date of receipt by the Assessing Ofhcer.

Today, when the matters are taken up for hearing as would reflect from the proceedings drawn by this Bench on the previous date ofhearing, it has been pointed out that the said issue stands decided by this High Court in a couple of writ petitions i.e., W.P.Nos.4489l and44915 of 2022, decided on 09.01.2025. 5. The leamed counsel for the appellant Revenue does not Bench of this High Court. However, he submits that the matter has been subjected to challenge and it is pending consideration before the Hon'ble Supreme Court in Special Leave to Appeal (C) No.21530 of2025. 6. Given the fact that identical set of matter has already been decided by this High Court, we see no reason why the same order should not be made applicable in the present set of appeals as well. However, as regards the matter pending before the Hon'ble Supreme Court, it goes without saying that the decision rendered by this Bench would, however, be subject to outcome of the decision of the Hon'ble Supreme Court in the aforesaid Special dispute the fact that the issue has been decided by the Division I

4 lrave to Appeal, where there is already a challenge to identical set of facts on an order passed by this High Court.

In view of the same, the question of law being agitated by the appellant Revenue in this batch of appeals stands decided against the Revenue in terms of the order dated 09.01 .2025 passed in W.P.Nos.4489l and 44915 of 2022. However, the rider mentioned above so far as the matter is seized by the Hon'ble Supreme Court is concemed would be applicable in this case also.

These appeals stand dismissed. There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed. N.CHANDRA SEKHAR RAO DEPUTY RE //// SECTION OFFICER To,

The lncome tax Appellate Tribunal, Hydera

One CC to Mr. Vijhay K Punna, Senior Department [OPUC]

One CC to Mr T. Pradyoth, Advocate [OPUCI

Two CD Copies Kam/PSL .B ch, Hyderabad Sta d Counsel for lncome Tax W \

HIGH COURT DATED: 2310212026 COMMON JUDGMENT lTTA.Nos.l & 2 oI 2026, 243 & 249 ot 2025 DISMISSING THE APPEALS O >r 15 APfl 2026 .a- t. i i.l (j ,.)/ D ..\ \ b ) L

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