ITAT Hyderabad Judgments — September 2025

The Tribunal found that the AO and CIT(A) had summarily rejected the assessee's explanation regarding the source of cash deposits. The matter was set aside and restored to the AO for de novo adjudication, allowing the assessee to substantiate her claim with fresh evidence.

The Tribunal condoned a 60-day delay in filing the appeal, finding it due to genuine reasons. It held that the assessment framed against the non-existent firm (which had converted to a company) was not justified, as the department was aware of the conversion. Citing Supreme Court judgments, the Tribunal affirmed that assessments cannot be conducted on a non-existent entity. The Tribunal upheld the CIT(A)'s decision to set aside the assessment but remanded the matter to the AO for a fresh assessment, instructing to verify the firm's legal existence, the successor company's disclosed income, and the principles from the Supreme Court judgments.

The Tribunal held that while the assessee failed to provide sufficient documentary evidence for the availability of the entire cash in hand, the AO had implicitly accepted the returned income from tuition. Therefore, the addition was scaled down.

The Tribunal found that the CIT(A) had failed to consider the assessee's submissions and evidence regarding the source of cash deposits. Therefore, the matter was restored to the Assessing Officer for re-adjudication with a direction to provide a reasonable opportunity of being heard to the assessee.

The Tribunal held that the CIT(A) erred in dismissing the appeal without considering the submissions and documentary evidence filed by the assessee. The Tribunal found that the assessee had indeed provided submissions and evidence, and the CIT(A)'s observation that the assessee did not respond was an infirmity violating natural justice. The CIT(A)'s order was set aside.

The Tribunal upheld the CIT(A)'s decision to restrict the addition to 10% of the unaccounted cash receipts. It was concluded that taxing the entire receipts would lead to manifest injustice and double taxation, especially since "Spectra Group" (the ultimate beneficiary) had already been assessed separately on similar seized material. The CIT(A)'s approach was deemed fair, consistent with similar cases, and in line with the principle of consistency as emphasized by the Supreme Court.

The Tribunal held that Section 56(2)(x) applies to 'any immovable property' and is wider than the definition of 'capital asset'. The exclusion of rural agricultural land from 'capital asset' under Section 2(14) is not relevant for Section 56(2)(x). The contention regarding the tolerance limit was also rejected.

The Tribunal held that assessments cannot be conducted on a non-existent entity and that the department was aware of the conversion. The additions made in the hands of the assessee firm, which had ceased to exist, cannot be sustained.

The Tribunal condoned the delay of 506 days, finding sufficient cause due to the non-communication of the impugned order. Citing jurisdictional High Court precedents and CBDT circulars, the Tribunal held that denial of exemption under Sections 11 and 12 merely due to delayed filing of Form 10B, especially during the Covid-19 pandemic when due dates were extended, is not justified. The CIT(A) order was set aside, and the assessee's claim for exemption was allowed.

The Tribunal admitted additional evidence from the assessee regarding its interest-free funds and non-current investments. Relying on Supreme Court precedents (Reliance Industries Ltd. and South Indian Bank Ltd.), the Tribunal observed that if interest-free funds are sufficient to cover investments, a presumption arises that investments are made from such funds. As the additional evidence was not before lower authorities, the matter was set aside to the AO for verification, with a direction to delete the disallowance under Section 36(1)(iii) if the interest-free funds are found sufficient.

The Tribunal held that the CIT(A)'s order deleting the additions was not sustainable as the assessee had failed to pay self-assessment tax, a prerequisite for appeal maintainability under Section 249(4) read with Section 140A. Consequently, the Tribunal restored the Assessing Officer's assessment order. Regarding the penalty, the Tribunal ruled that the CIT(A) wrongly deleted the penalty under Section 221(1) by admitting a revised computation without a corresponding revised return, emphasizing the mandatory nature of self-assessment tax payment. Citing High Court and Special Bench ITAT precedents, the Tribunal restored the penalty order.

The Tribunal set aside both the assessment and penalty orders to the file of the Ld. AO for de novo adjudication on merits, granting the assessee one more opportunity to furnish all necessary evidences and explanations. The Ld. AO is directed to provide an adequate opportunity of being heard and decide the issues as per law, with the assessee directed to cooperate without seeking unnecessary adjournments.

The Tribunal noted the gap in hearing notices and the dismissal without merits. Considering the facts and the interest of justice, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication on merits, ensuring the assessee is given a proper opportunity of hearing.

The Tribunal held that the assessee's appeal before the CIT(A) was not maintainable due to non-payment of self-assessment tax as per Section 249(4) read with Section 140A. Consequently, the CIT(A)'s order deleting additions was set aside, and the Assessing Officer's assessment order was restored. Regarding the penalty under Section 221(1), the Tribunal found the CIT(A) erred in deleting it based on a revised computation, as the assessee had not paid the admitted tax, and thus restored the Assessing Officer's penalty order.

The ITAT condoned the 110-day delay, finding a reasonable cause based on the assessee's affidavit and corroborating evidence of bank account attachment. Recognizing that both the AO and CIT(A) orders were passed without the assessee's full participation due to communication issues and the pandemic, the ITAT set aside the CIT(A)'s order. The matter was remanded to the Assessing Officer for fresh adjudication after verifying the additional evidence filed by the assessee and providing a proper opportunity of hearing.

The Income Tax Appellate Tribunal found a reasonable cause for the assessee's 54-day delay in filing the appeal and condoned it. The Tribunal remanded the case back to the CIT(A) to decide the appeal on merits, specifically addressing the validity of the assessment reopening, after providing the assessee an appropriate opportunity of hearing.

The Tribunal held that since the legal representatives of the deceased assessee failed to come on record and comply with Rule 26 of ITAT Rules, 1963 and Order 22 Rule 3 of CPC, the appeals stood abated and were accordingly dismissed.

The ITAT condoned the delay in filing the appeal before the CIT(A), citing the Supreme Court's extension of limitation period during the Covid-19 pandemic. On merits, the ITAT found no fresh investment was made and the valuation difference was due to a typographical error in the previous year's return (omitting a '0') and market fluctuations. Consequently, the addition of Rs. 96,70,802 under Section 69 and the related penalty under Section 270A were both deleted.

The Tribunal ruled that the PCIT's invocation of Section 263 was erroneous. It held that the assessee had not earned any exempt income for the relevant year, and the Assessing Officer had adequately inquired into the investments. Crucially, the Tribunal reiterated that the proviso to Section 14A, inserted by the Finance Act, 2022, is prospective and cannot be applied retrospectively to AY 2020-21, thus finding the original assessment neither erroneous nor prejudicial.

The Tribunal upheld the CIT(A)'s decision, confirming that in the absence of an FTS clause in the DTAA, such payments for technical services to a non-resident are considered business income and not taxable in India without a PE. Consequently, the disallowance under Section 40(a)(i) of the Act was not justified.

The Tribunal remanded the issue of immovable property construction costs back to the Assessing Officer to verify additional evidence (completion certificate, receipts, loan certificate). For salary income, the AO was directed to allow deductions under Section 10 and for professional tax, preventing double taxation. For commission income, the AO was instructed to grant credit for tax already paid, as the income was duly declared in the return.

The Tribunal held that since no steps were taken to substitute the deceased assessee with their legal representatives as required by Rule 26 of ITAT Rules, 1963 and Order 22 Rule 3 of CPC, 1908, the appeals stood abated and were consequently dismissed.

The Tribunal held that the reassessment proceedings for AYs 2014-15 to 2018-19 were invalid. It found that the seized material from the third party's laptop did not constitute 'asset' or 'entries in books of account' as per Section 149(1)(b), and the sanction under Section 151 was granted mechanically without due application of mind. For AY 2019-20, the Tribunal ruled that the second notice u/s 148, issued after the first was dropped (due to AO's own technical reasons), was invalid as it was based on the same material without new facts, violating Section 148A procedures.

The Tribunal upheld the CIT(A)'s decision, affirming that when an assessment is reopened under Section 147 for specific reasons, and no addition is made on those initial grounds, then any additions made on new issues during the reassessment proceedings are invalid. Following the precedent set by the Bombay High Court in Jet Airways (I) Ltd., the Tribunal dismissed the Revenue's appeals for AYs 2013-14, 2015-16, and 2017-18, finding no error in the CIT(A)'s deletion of the disallowance of loss.

The Tribunal upheld the CIT(A)'s decision, affirming that when an assessment is reopened under Section 147 and the original reasons for reopening do not lead to any additions, no additions can be made on other issues discovered during reassessment proceedings. The Tribunal reiterated that a fresh notice under Section 148 would be required to assess other income.

The Tribunal held that the Assessing Officer made additions on issues different from those for which the assessment was reopened. Relying on the decision in Jet Airways (I) Ltd., the Tribunal found that once the reassessment is based on specific reasons, additions on other unrelated issues are invalid if no addition is made on the original issue. The CIT(A)'s deletion of additions was upheld.

The ITAT held that the CIT(A) erred in sustaining the disallowance of Rs. 55,25,590/- without providing the assessee an opportunity to address the doubt regarding the genuineness of expenses based on unsigned vouchers. The Tribunal found the CIT(A)'s unilateral action unsustainable, especially as the AO's remand report had not questioned the genuineness of the overall expenditure. Therefore, the ITAT set aside the CIT(A)'s order and vacated the disallowance.

The Tribunal ruled that a mere difference between reported and assessed income, particularly when the income is estimated by the AO without specific reasons or proof of incorrect details/discrepancies by the assessee, does not constitute under-reporting for penalty under Section 270A. Citing High Court precedents, the Tribunal deleted the penalty.

The Tribunal held that the CIT(A) erred in dismissing the appeal for non-prosecution without deciding it on merits, which is contrary to the settled position of law. The Tribunal set aside the CIT(A)'s order and remitted the case back for fresh adjudication, granting the assessee another opportunity to be heard, subject to payment of Rs. 5000/- as costs for negligence.

The Tribunal held that the CIT(A) erred in dismissing the appeal for non-prosecution without deciding it on merits, despite the assessee having submitted some details to the AO. Citing established legal principles, the Tribunal ruled that appeals should be decided on merits even without appellant representation. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the case back for a fresh decision on merits after granting the assessee a reasonable opportunity of hearing.

The Tribunal noted that the AO passed an order without considering the assessee's submissions and the CIT(A) dismissed the appeal for non-prosecution without deciding on merits. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter back to the CIT(A) for fresh adjudication, directing to provide the assessee a reasonable opportunity of hearing to present its case and evidence.

The Tribunal held that the disallowance of service tax payment of Rs. 1,40,23,520/- and TDS payment of Rs. 1,66,44,340/- made during the financial year 2017-2018 (relevant to AY 2018-2019) should be allowed as deduction as the assessee had provided sufficient evidence of payment. However, the balance amount of Rs. 1,03,93,805/- which included part of TDS, service tax, professional tax, PF, and sales tax remained unsubstantiated and was sustained.

The Tribunal condoned the delay in filing the appeal. It held that while the IBC moratorium bars recovery of tax, it does not bar the determination of tax liability. The CIT(A) should have either kept the appeal in abeyance or continued proceedings to determine liability without recovery. The CIT(A)'s order dismissing the appeal *in limine* was set aside, and the matter was remitted back for reconsideration.

The Tribunal kept the issue of the assessment order being time-barred open, directing the AO to abide by the Supreme Court's final decision. Regarding the TP adjustment, the Tribunal deleted the entire adjustment of Rs. 10,10,03,573/-, finding the TPO's determination of ALP at 'Nil' to be arbitrary as the services were rendered, and similar transactions were accepted in prior years. For the PF/ESI disallowance, the matter was remanded to the AO to verify if it was a double disallowance and, if so, to delete the addition.

The Tribunal kept open the issue of the assessment order being time-barred, directing the AO to follow the Supreme Court's final decision. The disallowance of section 80IA deduction was remanded to the AO for verification regarding the project start date as per the second proviso to section 80IA(4). The Tribunal deleted the transfer pricing adjustment, holding that the TPO's rejection of the assessee's Comparable Uncontrolled Price (CUP) method and re-allocation of costs were beyond jurisdiction, as the transactions were at arm's length since revenue was passed without mark-up. Credit claims under section 115JAA and for TDS were directed to be verified and allowed by the AO, and interest under sections 234A and 234B were deemed mandatory and consequential.

The Tribunal found that the sanction granted u/s 151 for reopening assessments was mechanical and lacked due application of mind by the approving authority. It held that the conditions under Section 149(1)(b) for reopening beyond three years were not met, as the seized digital data did not constitute 'books of account' or 'assets' as defined by the Act, and the income quantification was arbitrary. For AY 2019-20, a second notice u/s 148 issued after the first was dropped for technical reasons within the AO's control, was also deemed invalid. Consequently, all assessment reopening proceedings and notices issued u/s 148 for the relevant assessment years were quashed.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that income from foundation seed sales is agricultural income based on previous ITAT rulings for the assessee. It also dismissed the assessee's appeal, upholding the CIT(A)'s disallowance of Section 35(2AB) weighted deduction due to the assessee's failure to provide the mandatory Form-3CK.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that income from the sale of foundation seeds constitutes agricultural income exempt under Section 10(1), consistent with prior Tribunal rulings for the assessee. The Tribunal also dismissed the assessee's appeal, upholding the CIT(A)'s decision to disallow the weighted deduction under Section 35(2AB) because the assessee failed to furnish the required Form-3CK from the competent authority.