ITAT Hyderabad Judgments — December 2025

The Tribunal found that neither the AO nor the CIT(A) identified corresponding credit entries in the assessee's accounts. The addition was made solely on an investigation report without independent verification or corroboration. The Tribunal set aside the addition and remanded the matter to the AO for fresh adjudication, directing the AO to examine all documentary evidence, confront it with the assessee, and provide a reasonable opportunity of being heard.

The Tribunal partly allowed the appeal, granting a relief of Rs. 5,00,000/- for reasonable cash in hand, reducing the sustained addition to Rs. 15,65,000/-. It further directed the AO to apply a tax rate of 30% under Section 115BBE, as the enhanced 60% rate is not applicable to transactions entered before April 1, 2017.

The Income Tax Appellate Tribunal quashed the reassessment order, holding that the Assessing Officer lacked valid jurisdiction. For AY 2018-19, with more than three years having elapsed, approval for the Section 148 notice was required from the Principal Chief Commissioner or Principal Director General as per Section 151(ii) of the Income Tax Act. The AO's approval from the Principal Commissioner was deemed invalid as per the statutory mandate and Supreme Court/High Court precedents.

The Tribunal held that the AO was justified in rectifying the order under Section 154 to apply the special rate of tax under Section 115BBE, as the assessee's explanation for the unexplained investment and loan transactions was vague and lacked credibility. The initial assessment at normal rates was considered a prima facie mistake.

The Tribunal condoned the 294-day delay, finding that the assessee was deprived of a proper opportunity of being heard due to the CIT(A)'s failure to serve notices at the provided physical address. The impugned order of the CIT(A) was set aside, and the matter was remanded for fresh adjudication with adequate opportunity for the assessee.

The Tribunal found the CIT(A)'s dismissal factually incorrect and mechanically applied, noting that the filing of Form 35 is presupposed upon appeal registration and an adjournment request was duly acknowledged. Concluding that the assessee was denied a proper opportunity of being heard, the Tribunal set aside the CIT(A)'s order and restored the appeal for fresh adjudication on merits, directing the CIT(A) to consider all materials and provide a reasonable opportunity.

The ITAT held that the penalty under Section 270A for HEC disallowance was not sustainable in law. The claim was made based on a debatable legal issue supported by judicial precedents, and the retrospective amendment by the Finance Act, 2022, altered the legal position. The assessee voluntarily offered the disallowance before receiving a Show Cause Notice, and the procedural mechanism under Section 155(18) was not operational at the time of assessment.

The Tribunal held that the assessee did not respond to repeated notices and failed to provide necessary documents to establish the genuineness of its activities. Therefore, the Tribunal found no reason to interfere with the CIT(E)'s order.

The tribunal held that the reassessment notices issued by the Jurisdictional Assessing Officer (JAO) under Sections 148A(d) and 148 were invalid, as after the introduction of the Faceless Assessment Schemes (2022), such notices must exclusively be issued by a Faceless Assessing Officer (FAO). Citing principles from the Supreme Court and the Telangana High Court, the tribunal ruled that the initiation of proceedings by an officer lacking inherent jurisdiction rendered the subsequent assessment orders a nullity. The appeals were allowed, and the assessment orders were quashed due to invalid assumption of jurisdiction.

The Tribunal, following relevant High Court judgments, held that reassessment notices under Section 148, including for 'central charges' cases, must be issued under the faceless mechanism mandated by the Finance Act, 2021 (w.e.f. 01.04.2021) and the e-Assessment Scheme, 2022, not by the Jurisdictional Assessing Officer (JAO). It distinguished the Supreme Court's Kalinga Institute case, clarifying that Section 124(3) on waiver of jurisdiction applies to territorial jurisdiction, not an inherent lack of jurisdiction. Consequently, the impugned notices under Section 148 and the resultant assessment orders under Section 147 for both AYs were quashed, with liberty granted to the Revenue to proceed under the substituted provisions as per the Ashish Agarwal judgment.

The Tribunal condoned the delay of 19 days in filing the appeal, acknowledging the medical emergency and financial difficulties faced by the assessee during the Covid-19 pandemic. The Tribunal set aside the CIT(A)'s order dismissing the appeal for non-prosecution and remanded the matter to the Assessing Officer for proper verification and examination of records.

The ITAT dismissed the assessee's cross-objection, ruling that the AO acted within the scope of limited scrutiny as the deemed dividend issue was intrinsically linked to the verification of unsecured loans. On the Revenue's appeal, the ITAT reversed the CIT(A)'s order, finding the assessee's claims about current account transactions and advance for land purchase lacked credible evidence and were contradicted by the company's balance sheet. Relying on Supreme Court precedents, the ITAT held that subsequent repayment does not negate the deemed dividend at the time of advance and that the CIT(A) erred in its interpretation of judicial pronouncements.

The Tribunal held that the AO cannot disallow expenses and estimate profit based on rejected books of account simultaneously, as it amounts to blowing hot and cold. The CIT(A) erred in deleting the addition on estimated profit without adjudicating other grounds.

The Tribunal held that the notice issued u/s 153C of the Act was beyond the prescribed time limit, making the assessment order invalid. Therefore, the addition made by the AO was quashed on legal grounds.

The Tribunal upheld the CIT(E)'s rejection, finding that the assessee did not respond to repeated notices from the CIT(E) nor appeared before the Tribunal or filed any documentary evidence. The Tribunal concluded that there was no reason to interfere with the CIT(E)'s orders rejecting the applications.

The Income Tax Appellate Tribunal, following the Telangana High Court's judgment, held that the notices issued under Section 148 and 148A by the Jurisdictional Assessing Officer (JAO) were invalid. This is because, after the introduction of the Faceless Assessment Schemes, only the Faceless Assessing Officer (FAO) had the jurisdiction to issue such notices. Consequently, the assessment orders framed based on these invalid notices were quashed due to an inherent lack of jurisdiction.

The Tribunal held that notices under Section 148 and orders under Section 148A(d) issued by the JAO after March 29, 2022, are invalid and bad in law, as the CBDT notification mandates faceless assessment by the FAO from that date. It distinguished the Supreme Court's ruling in *DCIT vs. Kalinga Institute* as it pertained to territorial jurisdiction rather than an inherent lack of jurisdiction to initiate proceedings, thereby upholding the assessees' challenge.

The Tribunal found that the Assessing Officer failed to conduct proper enquiry into the complex facts surrounding the computation of EBITDA and the claim for interest deduction under Section 94B, especially concerning the treatment of fair value gains on equity investments over multiple years as per IND-AS. This lack of enquiry rendered the original assessment order erroneous and prejudicial to the revenue. Therefore, the Tribunal upheld the Pr. CIT's revision order.

The Tribunal held that a pre-requisite for initiating penalty u/s 271D/271E is the existence of an assessment proceeding or a proceeding arising from an assessment order, and a mandatory satisfaction recorded by the AO. Since no such satisfaction was recorded by the AO in the present case, and no assessment proceedings were pending, the penalty levied u/s 271D was invalid.

The Tribunal upheld the CIT(A)'s decision, ruling that the Assessing Officer's satisfaction note for initiating Section 153C proceedings was vague and invalid. It lacked a specific correlation between the seized material, the undisclosed income, and the particular assessment years, failing to meet the mandatory requirements of Section 153C and established Supreme Court precedents (ACIT & Another Vs. Pepsi Foods Pvt.Ltd. and CIT Vs. Sinhgad Technical Education Society). Consequently, the Section 153C notices and subsequent assessment orders were quashed.

The Tribunal found that the assessee had shown sufficient cause for the 96-day delay, considering her educational background and lack of familiarity with electronic communication, and that the delay was bona fide. Adopting a liberal approach, the Tribunal condoned the delay, set aside the CIT(A)'s order, and restored the matter to the CIT(A) for fresh adjudication on merits.

The Tribunal held that the reassessment notices issued under Section 148A(b) and Section 148 by the Jurisdictional Assessing Officer (JAO), instead of the Faceless Assessing Officer, violated the procedure prescribed under Section 144B read with Schedule 151A of the Income Tax Act. Relying on consistent High Court judgments, including the jurisdictional High Court, the Tribunal quashed the impugned notices and the consequential reassessment order. The other grounds of appeal concerning the merits of the additions were not adjudicated and were kept open, with liberty to both parties to revive the appeal based on the outcome of a pending SLP before the Supreme Court on this jurisdictional issue.

The Tribunal found that the assessee's incorrect claim for deduction under Section 54F was due to a bona fide mistake and not mala fide intention, as admitted promptly when confronted by the PCIT. Citing a Supreme Court judgment, the Tribunal concluded that penalty under Section 271(1)(c) is not justified for bona fide and inadvertent errors. Consequently, the penalty imposed by the AO and upheld by the CIT(A) was set aside.

The Tribunal, relying on jurisdictional High Court judgments (Kankanala Ravindra Reddy and Kotha Kanthaiah) and its own precedents, held that reassessment notices under Section 148 and orders under Section 148A(d) issued by the JAO after 29.03.2022 are invalid and bad in law, as they violate the mandatory faceless reassessment scheme. The Revenue's argument that the assessee was barred from challenging jurisdiction under Section 124(3) was rejected, as the challenge was to the inherent lack of jurisdiction, not merely territorial jurisdiction.

The Tribunal held that the AO correctly applied Section 115BBE to the unexplained investment and loan transactions, as the assessee's explanation was vague and unconvincing. The rectification under Section 154 was deemed appropriate to correct a prima facie mistake in not applying the special rate of tax.

The Tribunal held that the compensation received, though partly declared by the assessee, was subject to the final outcome of appeals. It further noted that if compensation is for loss and expenditure incurred by the deceased husband, it would not be considered income. Therefore, the balance amount after deducting allowable expenses is assessable. The Tribunal partly allowed the appeal.

The Tribunal, following the Madras High Court judgment in Venkata Dilip Kumar v. CIT, held that Section 54(2) is procedural while Section 54(1) is substantive. As the assessee invested the entire capital gain in a new residential house within the stipulated period, satisfying Section 54(1), the deduction cannot be denied merely for procedural non-compliance with Section 54(2). The disallowance of Rs. 22,51,617/- was directed to be deleted, allowing the full deduction claimed under Section 54.

The Tribunal held that notices issued by the JAO under Section 148 and orders passed under Section 148A(d) after the effective date of the CBDT Notification (29.03.2022) were invalid due to inherent lack of jurisdiction. Relying on High Court judgments, it was concluded that the mandatory faceless procedure was violated, rendering the proceedings bad in law. Consequently, the orders of the Ld. CIT(A) were set aside and the impugned assessment orders were quashed.

The Tribunal found the assessee's retraction to be an unsupported afterthought, noting that the initial statement under Section 132(4) has significant evidentiary value. The ledger entries provided by Spectra India Group were insufficient as there was no corresponding debit in the assessee's personal account, nor any corroborative evidence for the claim. Therefore, the CIT(A) erred in deleting the addition, and the AO's addition under Section 69A is restored.

The Tribunal held that the notices and subsequent assessment orders issued by the JAO after 29.03.2022 were invalid and bad in law, as the JAO lacked the inherent jurisdiction to initiate such proceedings post the CBDT notification. The Tribunal distinguished the Supreme Court's Kalinga Institute judgment, stating it concerned territorial jurisdiction, whereas the present case involved inherent lack of jurisdiction. All appeals were allowed, setting aside the CIT(A)'s orders and quashing the impugned assessment orders.

The Income Tax Appellate Tribunal dismissed the appeal, noting the assessee's consistent non-compliance at all stages of the proceedings (before AO, CIT(A), and ITAT). The Tribunal found no infirmity in the lower authorities' orders as the assessee failed to provide any satisfactory explanation or evidence to discharge the onus regarding the cash deposits.

The Tribunal, admitting the jurisdictional challenge, ruled that after the notification of the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022" and "e-Assessment of Income Escaping Assessment Scheme, 2022," only the Faceless Assessing Officer (FAO) possesses the authority to issue notices under Section 148. Relying on the Telangana High Court's decision and Supreme Court precedents, the Tribunal affirmed that an act without inherent jurisdiction is a nullity, and the principle of waiver does not confer such jurisdiction. Consequently, the notices issued by the JAO and the resulting assessment orders were deemed invalid and quashed due to a lack of valid assumption of jurisdiction.

The Tribunal, following the jurisdictional High Court's judgment in `Kings Pride Infra Projects`, held that the reassessment notice issued by the Jurisdictional Assessing Officer (JAO) was invalid. It concluded that assessments initiated after 01.04.2021 must follow the faceless mechanism, and notices under Section 148 cannot be issued by a JAO. Consequently, the assessment order passed under Section 147 was quashed due to a lack of valid assumption of jurisdiction.

The Tribunal held that notices issued by the JAO after 29.03.2022, contrary to the CBDT notification requiring faceless assessment, were without inherent jurisdiction and therefore invalid. Distinguishing the Revenue's reliance on Section 124(3), the Tribunal quashed the impugned assessment order and the underlying notices under Section 148A(d) and 148. The appeal was allowed on this preliminary legal ground, and other issues were not adjudicated.

The ITAT upheld the CIT(A)'s decision, ruling that the Assessing Officer's satisfaction note for initiating proceedings under Section 153C was invalid. The tribunal found that the AO failed to establish a clear and specific link between the seized incriminating material and undisclosed income pertaining to each relevant assessment year of the assessee, and the satisfaction note was vague and general, not meeting the legal requirements of Section 153C as established by Supreme Court and High Court precedents. It was also noted that the material considered for recording satisfaction was different from the material used for making additions.

The Tribunal condoned a 276-day delay in filing the appeal, accepting the assessee's ill-health as a genuine reason for non-compliance. Noting that both assessment and first appeal proceedings were ex-parte, the Tribunal set aside the CIT(A)'s order and remitted the matter to the Assessing Officer for a de novo verification, granting the assessee a fresh opportunity to present her case.

The Tribunal, relying on jurisdictional High Court precedents, held that the reassessment notice issued under Section 148 was invalid and void due to the approval being obtained from an incorrect authority (Principal Commissioner of Income Tax instead of Principal Chief Commissioner or Principal Director General) as mandated by Section 151(ii) for notices issued after three years. Consequently, the reassessment order passed under Section 147 read with Section 144 was quashed for lack of jurisdiction.

The Tribunal found that the lower authorities had summarily rejected the assessee's explanations without properly verifying the documentary evidence, specifically the 'Way Bills' related to the pulses business. Therefore, the Tribunal set aside the matter to the Assessing Officer, directing him to re-examine the assessee's claims in light of the available documents and afford a reasonable opportunity of being heard.

The Tribunal upheld the CIT(A)'s decision to dismiss the appeal in limine, agreeing that the assessee failed to show sufficient cause for the inordinate delay of over 18 months. It found that the assessment order was duly served electronically, and the assessee was negligent in tracking proceedings and failed to provide a proper explanation for the delay. Citing Supreme Court precedents, the Tribunal reiterated that a liberal approach to condonation of delay does not extend to cases of gross negligence or inaction.

The Tribunal dismissed the assessee's appeal for A.Y. 2019-20, holding that Section 80-IA(4) deduction must be claimed in the original return filed by the due date as per Section 80A and 80AC, and a revised return cannot introduce new claims. For A.Y. 2023-24, the Tribunal allowed the Revenue's appeal for statistical purposes, remanding the TDS credit issue to the AO for verification, stating that mobilization advance is a contract receipt. It also dismissed the assessee's cross-objection, upholding the AO's Section 143(1)(a) adjustment as valid.

The ITAT found that the credit entries of Rs.91,090/- were rental receipts duly disclosed by the assessee in her return of income for the relevant assessment year. As the source of the income was explained and disclosed, there was no justification for the addition under Section 69A. Therefore, the addition of Rs.91,090/- sustained by the CIT(A) was vacated.

The Tribunal held that the assessee failed to provide sufficient evidence to support the claim of share application money from directors, especially when the amount claimed exceeded the authorized share capital. The explanation was considered an afterthought to circumvent Section 69A of the Act.

The Tribunal held that a belated return filed in response to a Section 142(1) notice, and during the pendency of assessment proceedings, is a valid return. Citing judicial precedents, it ruled that the issuance of a Section 143(2) notice is a mandatory jurisdictional requirement for scrutiny assessments, and its complete absence renders the assessment order void ab initio. Section 292BB does not cure the total non-issuance of notice, only infirmities in its service.

The Tribunal held that the delay in filing Form-67 is a procedural irregularity and not mandatory, and therefore, the FTC claim should not be denied solely on this ground. The Tribunal relied on judicial pronouncements stating that DTAA provisions override domestic law and that FTC is a vested right.

The Tribunal upheld the CIT(A)'s decision to dismiss the appeal on the grounds of limitation. The assessee failed to provide a plausible explanation for the inordinate delay of 517 days in filing the appeal before the CIT(A).

The Tribunal dismissed the assessee's legal ground concerning the assessment in the name of a non-existent entity, as the assessee failed to formally intimate the AO about the amalgamation. However, it set aside the ad-hoc 10% disallowances for Travels & Tours and Vehicle Hire Charges, finding no doubt on the genuineness of expenditure and explaining the bill name discrepancy by amalgamation. The issue of Site and Other Expenses disallowance was remanded back to the AO for re-verification due to contradictory facts.