ITAT Hyderabad Judgments — November 2025

The Tribunal condoned the delay of 868 days, citing sufficient cause due to the previous counsel's advice, the Covid-19 pandemic, and the rejection of the Vivad se Vishwas application. The Tribunal observed that the Section 50C addition was prima facie unsustainable in Section 153A proceedings without incriminating material when the assessment was not pending. Consequently, the matter was remanded to the CIT(A) for fresh adjudication, with directions to consider all facts and documentary evidence, and provide an appropriate opportunity of hearing to the assessee.

The Tribunal held that the addition made by the AO was unsustainable. It was observed that the partners made substantial payments from their bank accounts for land purchase, which were reflected in sale deeds and credited to their capital accounts. The Tribunal also noted that the "source of the source" requirement under Section 68 of the Act was not applicable retrospectively to the assessment year 2017-18.

For AY 2016-17, the tribunal held that the reassessment notice under Section 148 was time-barred as per Supreme Court judgments (Ashish Agarwal and Rajeev Bansal) and invalid due to approval by an incompetent authority. Consequently, the reassessment order was quashed. For AY 2020-21, the tribunal remanded the matter to the Assessing Officer to re-examine the assessee's Section 54F claim, considering the documentary evidence that had been submitted but not previously considered by the CIT(A).

The tribunal, following several High Court judgments (including Kankanala Ravindra Reddy) and its own previous decisions, held that the reassessment notices issued by the Jurisdictional Assessing Officer were invalid due to procedural non-compliance with the faceless assessment scheme. Consequently, the reassessment order was quashed. The tribunal granted liberty to the parties to revive the appeal if the Supreme Court's decision on similar pending matters (e.g., Hexaware Technology Ltd.) necessitates a modification of this order. Other grounds on the merits of additions were not adjudicated and kept open.

The Tribunal found that the assessee offered income under two heads, but the AO considered only one. The Tribunal held that if income offered under the 'real estate business activity' head is considered, the difference is explained. Therefore, the additions sustained by the lower authorities were deleted.

The Income Tax Appellate Tribunal allowed the assessee's appeal, quashing the assessment order passed by the AO. The Tribunal held that the assessment order, issued consequent to a notice under Section 148 by a Jurisdictional Assessing Officer (JAO) after 29.03.2022, was without jurisdiction and unsustainable. This decision relied on rulings from the Hon'ble Telangana High Court, which established that JAOs lack the power to issue Section 148 notices post-introduction of the Faceless Assessment Scheme. The Tribunal noted that while the issue is pending before the Supreme Court, the High Court's decision is binding.

The Tribunal condoned both the 325-day delay in filing the appeal before it and the 13-day delay before the CIT(A), acknowledging the assessee's family tragedies and health issues. It found that the CIT(A) dismissed the appeal in limine without deciding on merits and the AO passed an ex-parte order. Consequently, the Tribunal set aside the CIT(A) order and remanded the matter to the Assessing Officer for fresh adjudication, directing reconsideration of income estimation in light of precedents for sub-contractors and affording the assessee an opportunity of being heard.

The Tribunal condoned the delay of 117 days subject to a cost of Rs. 2000/- to be paid to the Prime Minister's National Relief Fund, considering the facts and circumstances and in the interest of justice. The Tribunal then proceeded to quash the reassessment notice and consequently the assessment order, finding it to be illegal and void ab initio due to procedural irregularities in obtaining approval under Section 151 of the Act.

The Tribunal noted the discrepancy between the section claimed by the assessee (10(23C)(vi)) and the section of approval granted by the CIT(E) (10(23C)(ii)), and the pending rectification application by the assessee before the CIT(E). The matter was set aside to the Assessing Officer for re-verification of the correct registration/approval details, pending the assessee pursuing the rectification application with the CIT(E).

For AY 2016-17, the Tribunal held that the reassessment notice issued under section 148 was time-barred and invalid due to lack of proper approval from the competent authority (Principal Chief Commissioner of Income-tax instead of Principal Commissioner of Income-tax) as required under section 151(ii) for assessments reopened after three years, and also violated the faceless assessment scheme. Consequently, the notice and subsequent reassessment order were quashed. For AY 2020-21, the Tribunal remanded the matter back to the Assessing Officer for fresh adjudication because the CIT(A) failed to consider all documentary evidences submitted by the assessee for the section 54F exemption claim.

The Tribunal held that the addition made by the AO was not sustainable as it was based solely on statements recorded during a survey, which were later retracted. Furthermore, the assessment for the year in question was already concluded before the search, and no incriminating material was found during the search itself.

The Tribunal condoned the 151-day delay in filing the appeal. It held that the AO's rejection of audited books was not justified as it lacked specific defects and was based on generalized observations. The estimation of net profit at an ad hoc rate of 12.5% of gross turnover was found to be arbitrary and without comparable cases or supporting data. The Tribunal vacated the addition.

The Tribunal held that once an addition is sustained under Section 69B r.w.s. 115BBE, the penalty under Section 271AAC becomes mandatory and is consequential. The assessee failed to demonstrate the applicability of any exclusionary clause under Section 271AAC(2) or provide a reasonable cause for non-levy, despite having disclosed the income during the search.

For AY 2007-08, the Tribunal set aside the CIT(A)'s order and remanded the issue back to the A.O./CPC for verification of the Section 10(38) exemption claim upon submission of STT details. For AY 2008-09, the appeal was dismissed as infructuous because the A.O./CPC had already accepted the assessee's claim for exemption following a remand by the CIT(A).

The ITAT held that the proceedings under Section 153C were validly initiated as the AO had recorded satisfaction linking the seized documents to the assessee. The addition under Section 69 for unexplained investment in the flat was restricted to Rs. 10,00,000/-, as evidence from seized papers only supported this amount, deleting the balance. The addition of Rs. 8,231/- for pension income difference was confirmed due to the assessee's failure to provide supporting evidence.

The Tribunal largely ruled in favor of the assessee on principle, holding that chilling units were eligible for Section 80IB(11A) deduction as inter-unit transfers at market value were permissible under Section 80IA(8). The disallowance under Section 14A was restricted to the actual exempt income earned, and the interest disallowance under Section 37 was vacated due to the availability of sufficient interest-free funds. However, the claims for Section 80IB(11A) and Section 80JJAA were remanded to the Assessing Officer for factual verification of Form 10CCBs and re-adjudication of the deduction amount, respectively, due to conflicting reports.

The Tribunal held that the appeal against the rectification order, applying Section 115BBE, is intrinsically linked to the main appeal challenging the underlying additions under Sections 68 and 69. It ruled that the CIT(A) erred in deciding the rectification appeal without considering the pending main appeal on merits. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter back for reconsideration of both appeals together.

The Tribunal condoned the delay of 843 days in filing the appeals, accepting the assessee's medical condition as 'sufficient cause' based on the principle of liberal approach for condonation of delay. Relying on the Supreme Court's decision in Pr. CIT Vs. Abhisar Buildwell (P) Ltd., the Tribunal held that all additions made by the AO and sustained by the CIT(A) for all assessment years were not based on incriminating material found during the search operation. Consequently, the Tribunal directed the deletion of all additions across all assessment years.

The Tribunal condoned the delay in filing appeals, accepting the assessee's medical reasons as 'sufficient cause' based on Supreme Court principles. Applying the ruling in Pr. CIT Vs. Abhisar Buildwell (P) Ltd., the Tribunal held that additions made for completed/unabated assessments without incriminating material found during the search operation could not be sustained. The Balance Sheet, an unsigned agreement, and gifts made through proper banking channels from known sources were not considered incriminating material.

The Tribunal held that the assessee's claim was based on a bona fide belief and a reasonable understanding of the law, and all material facts were disclosed. Therefore, it did not constitute under-reporting of income for penalty purposes.

The Tribunal held that as per Section 139(3) and Section 80 of the Income Tax Act, a loss can only be carried forward if the return of income is filed on or before the due date. The filing of a return under Section 153A, even if within the time stipulated in the notice, does not override the requirement of filing the original return within the due date for the purpose of carrying forward losses.

The Tribunal deleted the additions for bogus subcontract expenditure, finding that the A.O. relied solely on retracted statements without corroborative evidence, while the assessee provided substantial documentary evidence (bank payments, TDS, Form 26AS, subcontractor's ITRs) proving the genuineness of the expenses. The legal ground challenging the validity of Section 153A proceedings for an unabated assessment was dismissed as academic, as the assessee received relief on merits.

The ITAT held that the CIT(A) exceeded its jurisdiction under Section 154 of the Income Tax Act, 1961. Rectification powers are limited to patent, obvious, clerical, or arithmetical errors apparent on the face of the record and do not permit revisiting adjudicated matters, re-appreciating facts, or substituting new conclusions requiring elaborate inquiry. The change in the critical date for computing limitation was deemed a substantive recharacterization of facts and an attempt to review a reasoned decision, not a simple error. The ITAT, therefore, quashed the impugned rectification order.

The Tribunal held that the assessee had discharged its primary onus by providing confirmations, bank details, PAN, and TDS details. The non-response of the payee did not, by itself, make the expenditure bogus. The revenue failed to bring irrefutable material to disprove the assessee's claim.

The Tribunal, following High Court and its own previous decisions, held that the assessment order for AY 2017-18, passed on 26.02.2022, was barred by limitation under Section 153 of the Income Tax Act, as the extended time limit (including Section 92CA and TOLA extensions) expired on 30.09.2021. Similarly, the assessment order for AY 2018-19, passed on 22.07.2022, was also found to be barred by limitation for the same reasons. Consequently, both assessment orders were quashed. The other issues raised by the assessee were kept open for potential revival, contingent on the outcome of a pending Supreme Court decision on the identical legal issue of limitation.

The Tribunal deleted the Rs. 8,08,000/- addition for subcontract expenditure, ruling that additions cannot be sustained solely on retracted statements obtained under duress, especially when the assessee provided evidence of genuine transactions like bank payments, TDS, and 26AS. The legal challenge to the validity of the Section 153A assessment was deemed academic as the assessee received full relief on the merits of the disputed additions.

The Tribunal condoned the minor three-day delay in filing the appeal. On merits, it held that the subcontract payment was a genuine business expenditure allowable under Section 37(1), as the identity of the payee, genuineness of the payment (via banking channels, TDS deducted, ITR filed by subcontractor), and business purpose were established. The Tribunal directed the AO to delete the addition.

The Tribunal condoned the delay in filing the appeals, citing medical reasons and circumstances beyond the assessee's control, following a liberal approach as laid down by the Supreme Court. The Tribunal then proceeded to decide the appeals on merits.

The Tribunal ruled that the additions made towards subcontract expenditure were unsustainable, primarily because the assessment for the relevant year was concluded/unabated before the search, and no incriminating material was found during the search. It was also held that additions could not be made solely based on retracted statements obtained under duress during a survey, especially when the assessee provided comprehensive documentary evidence of the genuineness of the expenditure. The legal ground challenging the validity of Section 153A proceedings was dismissed as 'infructuous' as the assessee received relief on the merits of the addition.

The Tribunal condoned the 692-day delay, finding sufficient cause based on medical evidence and adopting a lenient approach. For Assessment Year 2017-18, it upheld a partial disallowance of subcontract payments under Section 40(a)(ia) due to non-deduction of TDS but deleted disallowances for advertisement expenses (TDS was deducted) and interest on TDS (not disallowable). For Assessment Year 2018-19, the Tribunal deleted additions for inflated 'site expenses' (finding double addition and reliance on provisional accounts) and unexplained expenditure under Section 69C due to lack of corroborative evidence. It also deleted Section 40(a)(ia) disallowances for opening trade payables and dummy subcontract entries, as they were not actual expenditures requiring TDS, and for machinery hire charges where TDS was proven. However, disallowances for audit fee and freight/forwarding charges were upheld due to non-deduction of TDS or lack of evidence. For Assessment Year 2019-20, the Tribunal deleted the addition for unexplained cash under Section 69A, accepting the assessee's explanation of sufficient cash balance. It upheld the Section 40(a)(ia) disallowance for site expenses where the assessee failed to provide supporting evidence for material purchases and daily labour payments.

The Tribunal condoned the delay in filing appeals, citing sufficient cause due to the assessee's Director's medical condition. It partly allowed the appeals for all three assessment years. Many additions and disallowances were deleted, including those based on provisional financials, unexplained expenditures under Section 69C where A.O. failed to provide corroborative evidence, double additions under Section 40(a)(ia), and unexplained cash under Section 69A as the assessee had a sufficient cash balance. However, some disallowances under Section 40(a)(ia) for non-deduction of TDS on certain subcontract payments, freight and forwarding charges, and audit fee were upheld where the assessee failed to provide adequate evidence of TDS deduction or payment.

The Tribunal condoned the delay of 692 days, accepting the explanation of medical emergencies faced by the director as sufficient cause. The appeals were admitted for adjudication on merits.

The ITAT condoned the 482-day delay in filing the appeal, finding that the CIT(A) failed to serve notices properly at the postal address specifically opted by the assessee in 'Form 35'. It was held that service via email, despite an email ID being provided for form-filing, was invalid when physical service was requested. The ITAT set aside the ex-parte order of the CIT(A) and restored the matter for fresh adjudication after providing a reasonable opportunity of being heard to the assessee.

The Tribunal held that as per Section 139(3) and Section 80 of the Income Tax Act, 1961, a loss cannot be carried forward if the return of income is not filed on or before the due date under Section 139(1). The return filed under Section 153A, even if filed within the due date, cannot transform into a return under Section 139(3) to avail the benefit of loss carry forward, as per the Supreme Court's decision in Pr. CIT Vs. Wipro Ltd.

The Tribunal, following judgments from the Madras and Bombay High Courts, held that the assessment orders for both assessment years were barred by limitation and thus liable to be quashed. It clarified that Supreme Court extensions for suo motu Cognizance for Extension of Limitation were not applicable to original assessments by tax authorities beyond statutory limits. The other issues raised by the assessee on merits were kept open, contingent on the final decision of the Supreme Court on the limitation issue.

The Tribunal, following High Court judgments, held that Section 144C and Section 153 of the Income Tax Act are not mutually exclusive, and the time limits under Section 153 for completing assessments prevail. It found that the assessment orders for both AYs were passed on 15.02.2022 and 27.07.2022, respectively, which were beyond the extended limitation period of 30.09.2021. Consequently, the assessment orders were quashed as being time-barred, with other issues on merits kept open pending any future Supreme Court decision.

The Tribunal held that the assessment orders were passed beyond the statutory limitation period. It relied on pronouncements from the Hon'ble Madras High Court and Hon'ble Bombay High Court, stating that the provisions of Section 144C and Section 153 are not mutually exclusive and the limitation period under Section 153 is applicable.

The Tribunal primarily addressed the limitation issue, concluding that the assessment orders for both assessment years were passed beyond the time limits stipulated under the Income Tax Act, 1961, even after considering extensions granted by the Taxation and Other Laws (Relaxation and Amendment) Act, 2020 (TOLA). Relying on High Court precedents, it held that the extensions granted by the Supreme Court for judicial/quasi-judicial proceedings did not apply to original assessment proceedings by tax authorities. Consequently, the assessment orders were quashed as time-barred, with other grounds on merits kept open pending Supreme Court adjudication on the limitation issue.

The Tribunal found that the assessment order was passed beyond the extended limitation period, which expired on 31.12.2023, even after accounting for the 12-month extension due to a Section 92CA reference. Relying on precedents from the Madras and Bombay High Courts, the Tribunal quashed the assessment order on the legal issue of limitation, keeping the other substantive issues open for potential revival if the Supreme Court's decision on similar matters necessitates modification.

The Tribunal held that the addition of Rs. 63,00,000/- for money-lending business and the addition of Rs. 10,00,000/- for unexplained credit require further verification. The matters were remanded to the AO for de novo adjudication with specific directions.

The Tribunal held that the employees' contribution to PF and ESI must be deposited within the statutory due dates to be allowed as a deduction. Since the assessee had not deposited the amounts within the due dates, the disallowance was upheld. The Tribunal also noted that the jurisdictional High Court's decision in Synergies Castings Ltd. is binding.

The Tribunal deleted the additions for bogus subcontract expenditure across all assessment years. For AY 2014-15, which was unabated, no incriminating material was found during the search to justify the additions. The additions were based solely on initial statements from subcontractors, which were later retracted by affidavits and lacked corroborative evidence. The assessee provided extensive evidence (bills, bank payments, TDS, Form 26AS, ITRs of subcontractors) to prove the genuineness of the expenditure. The legal ground challenging the validity of the search under Section 153A was deemed academic as relief was granted on the merits.

For AY 2007-08, the Tribunal set aside the CIT(A) order and remanded the issue back to the A.O./CPC for verification of the Section 10(38) exemption claim, directing them to consider all evidence including STT payment. For AY 2008-09, the appeal was dismissed as infructuous since the A.O./CPC had already granted the exemption in consequential assessment proceedings following a previous CIT(A) remand.

The Tribunal found a commercial expediency and business nexus, as the sister concern purchased land that was then developed by the assessee, generating revenue. Thus, the interest disallowance under Section 36(1)(iii) was not warranted, and the Revenue's appeal was dismissed. The assessee's cross-objection was also dismissed due to an unexplained delay of 2915 days.