ITAT Hyderabad Judgments — January 2026

The Tribunal condoned the delay in filing the appeals, considering the circumstances explained by the assessee, including its nature as a joint venture and operational disruptions. However, for penalty appeals related to AY 2015-16, the delay was not condoned, and the appeal was dismissed. For other appeals, the matter was restored to the AO for fresh adjudication.

The Tribunal condoned the delay in filing the appeals, acknowledging the compelling circumstances presented by the assessee, such as the company's operational shutdown and administrative challenges. However, the Tribunal also imposed a cost on the assessee for its lackadaisical approach. The quantum appeals were restored to the AO for fresh adjudication, while the penalty appeals were set aside.

The Tribunal held that the notice issued under section 148 of the Act was barred by limitation. The notice dated 25/04/2022 was issued beyond the time limit specified under the pre-amended section 149(1)(b) of the Act, which expired on 31/03/2022. The 'first proviso' to section 149 of the Act, as amended by the Finance Act, 2021, was applicable and restricted the issuance of such notices. The Tribunal concluded that the AO lacked valid jurisdiction to issue the notice.

The Tribunal held that the issuance of notice under Section 148 by the JAO, after the introduction of the Faceless Assessment Scheme, was without jurisdiction and thus illegal. This decision was based on the High Court of Telangana's rulings in similar cases and a previous order of the Tribunal in the assessee's own case for AY 2015-16.

The ITAT condoned the delay in filing the appeal, citing justifiable reasons presented by the assessee. However, regarding the penalty appeals, the Tribunal upheld the CIT(A)'s decision to dismiss the appeal due to an inordinate delay of 663 days. The Tribunal set aside the quantum appeals to the file of the AO for de-novo adjudication, while imposing a cost on the assessee for their lackadaisical approach.

The Tribunal held that the notice issued under Section 148 of the Act, dated 11/04/2023, by the DCIT, Central Circle-1(2), Hyderabad, was bad and illegal. This was because the notice was issued outside the faceless mechanism, which is mandatory for reassessment proceedings initiated after April 1, 2021, as per the Finance Act, 2021 and subsequent judicial pronouncements. Consequently, the assessment order was quashed for want of valid assumption of jurisdiction.

The Tribunal condoned the delay, finding sufficient cause. The core issue was the validity of the notice issued under Section 148 by the ITO, which the assessee argued was without jurisdiction as per the Faceless Assessment Scheme and High Court pronouncements. The Revenue contended that the notice was part of the assessment procedure, but the Tribunal found the notice to be invalid and quashed the assessment order.

The Tribunal held that the CIT(A) erred in dismissing the appeal without considering the assessee's petition for condonation of delay and explanation for the delay. The Tribunal noted that the assessee had provided evidence of responding to notices. Therefore, the order of the CIT(A) was set aside.

The Tribunal held that the reassessment proceedings were initiated by the Jurisdictional Assessing Officer (JAO) outside the faceless mechanism, which is contrary to the 'Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022' and 'e-Assessment Scheme of Income Escaping Assessment Scheme, 2022'. The issue was squarely covered by the judgment of the Hon'ble High Court of Telangana, which held that only the Faceless Assessing Officer (FAO) can issue such notices. Thus, the reassessment proceedings were invalid and void.

The Tribunal condoned the delay in filing the appeals, citing justifiable reasons and the need for a liberal approach. The Tribunal found merit in the assessee's contentions regarding the circumstances leading to non-operation and lack of communication. Consequently, the quantum appeals were restored to the AO for de-novo adjudication, while the penalty appeals were set aside.

The CIT(A) dismissed the appeal ex-parte for non-prosecution. The Tribunal held that the CIT(A) erred in dismissing the appeal without adjudicating on merits, especially since the assessee claimed not to have received notices due to incorrect email communication.

The Tribunal held that the notice issued under Section 148 of the Act was bad and illegal because it was issued by the Jurisdictional Assessing Officer (JAO) outside the faceless mechanism, which is mandatory for reassessment proceedings initiated after April 1, 2021. This violates the provisions of Section 151A and the e-Assessment Scheme, 2022.

The Income Tax Appellate Tribunal (ITAT) held that the CIT(A) erred by not addressing the specific grounds of appeal (No. 7-10) raised by the assessee, which challenged the validity of the AO's jurisdiction to initiate reassessment. The ITAT clarified that while the amended proviso to Section 251(1)(a) empowers the CIT(A) to set aside and refer best judgment assessments back to the AO, this power does not override the obligation to first adjudicate jurisdictional issues. The ITAT set aside the CIT(A)'s order and remanded the case back to the CIT(A) for fresh adjudication specifically on the validity of the AO's jurisdiction.

The Tribunal condoned the delay in filing the appeals by the assessee, noting the compelling circumstances that led to the non-operation of the company and the lack of staff to handle tax matters. The Tribunal restored the matter to the file of the AO for de-novo adjudication, directing the AO to provide a reasonable opportunity of being heard. A cost of Rs. 25,000/- was imposed on the assessee for their lackadaisical approach.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty. It held that the transactions, though made in cash and attracting disallowance under Section 40A(3), were recorded in the assessee's books as advances and did not amount to 'undisclosed income' as defined under Section 271AAB, nor did they constitute a 'false entry' under Section 270A(9)(d). The Tribunal emphasized that a genuine entry attracting disallowance does not automatically become a false entry for penalty purposes and relied on its consistent view in the assessee's own case for a prior assessment year.

The Tribunal held that the reassessment notices issued by the Jurisdictional Assessing Officer (JAO) outside the faceless mechanism were bad in law. Relying on the judgment of the Hon'ble High Court of Telangana in Kings Pride Infra Projects (P) Ltd. vs. Deputy Commissioner of Income-tax, the Tribunal found that such notices must be issued in a faceless manner as per amended provisions. The assessment orders were quashed for want of valid assumption of jurisdiction.

The Tribunal held that the CIT(A) erred by admitting additional documentary evidence without giving the Assessing Officer an opportunity to examine or rebut it, thereby violating Rule 46A of the Income Tax Rules, 1962. The order passed by the CIT(A) was set aside for non-compliance with mandatory provisions.

The Tribunal held that the notices issued by the Jurisdictional Assessing Officer (JAO) under section 148A and 148 of the Act were invalid and without jurisdiction, as they were issued after the introduction of the Faceless Assessment Scheme, 2022. The Tribunal relied on the decisions of the High Court of Telangana in similar cases, which held that only the Faceless Assessing Officer (FAO) can issue such notices under the said scheme.

The Tribunal held that the CIT(A)'s order was bad in law as it was passed against a deceased person without bringing the legal heirs on record. Regarding the assessment of cash deposits, the Tribunal found that the Assessing Officer and CIT(A) had not properly verified the transactions and documentation provided by the assessee, which indicated the deposits were sale proceeds of the petrol pump and not the assessee's income. Consequently, the matter was remanded to the Assessing Officer for fresh verification.

The Tribunal condoned the delay in filing the appeals due to circumstances beyond the assessee's control, including the cancellation of coal block allotments and division of the state, which led to non-operation and lack of personnel. The Tribunal restored the matters to the AO for de-novo adjudication, directing the AO to provide a reasonable opportunity of being heard.

Both the assessee's Authorised Representative and the learned DR confirmed the settlement of the dispute under the Direct Tax Vivad Se Vishwas Scheme-2024. Given that Form-2 reflects a refundable amount and no outstanding payment under section 90, the Tribunal held that the Revenue's appeal is not maintainable and is dismissed as withdrawn.

The ITAT held that the Assessing Officer (AO) failed to conduct proper inquiries and verify the issue of capitalization of cost incurred for developing the toll road and the depreciation claimed thereon, in light of CBDT Circular No. 9 of 2014. The AO's order was considered erroneous and prejudicial to the interest of the revenue. The Tribunal upheld the PCIT's order.

The Tribunal held that the notice issued under Section 148 of the Income Tax Act, dated 09.04.2022, for Assessment Year 2015-16, was barred by limitation. The court followed the legal proposition that for assessment years prior to 2021-22, a notice under Section 148 could not be issued if the six-year period from the end of the relevant assessment year had expired.

The Tribunal admitted an additional legal ground challenging the validity of the reassessment notices. Relying on various High Court judgments, including that of the jurisdictional High Court in the case of Kotha Kanthaiah, the Tribunal held that notices issued by the Jurisdictional Assessing Officer without following the faceless assessment procedure mandated by Sections 144B read with 151A of the Income Tax Act, 1961, were invalid. Consequently, the notices and the entire reassessment order were quashed. The Tribunal granted liberty to the parties to revive the appeal if a pending Supreme Court decision on a similar issue (Hexaware Technology Ltd.) necessitates modification of this order, thereby not adjudicating other grounds on merits.

The Tribunal held that the addition made by the AO under Section 69 was unsustainable in law because it was based merely on suspicion and surmises, without any corroborative evidence. The Tribunal found substantial and material dissimilarities between the seized document and the actual registered transactions, noted that the document was unsigned and not seized from the assessee, and emphasized that no material evidence was brought by the Revenue to establish actual cash payment, especially considering the unchallenged vendor affidavits.

The Tribunal found substantial dissimilarities between the seized document and the actual registered transactions. The seized document was unsigned, undated, not seized from the assessee's possession, and lacked corroborative evidence of cash payment. Affidavits from vendors confirmed no excess payment. The addition was based on suspicion, which cannot substitute proof.

The Tribunal held that the Assessing Officer (AO) had made proper enquiries and accepted the assessee's explanation regarding the capital gains/loss from the relinquishment of rights in property. The PCIT erred in assuming jurisdiction under Section 263 as the AO's order was neither erroneous nor prejudicial to the revenue.

The Tribunal noted that the CIT(A) dismissed the appeal ex-parte without considering the merits of the case, which is against the well-settled principle of law. The Tribunal held that even in cases of non-prosecution, the appellate authority should decide on merits based on available records.

The Tribunal, following the pronouncements of various High Courts and in particular the Telangana High Court in the case of Tecumseh Products India (P.) Ltd., held that the notice issued under Section 148 by the JAO without following the procedure prescribed under Section 144B read with Section 151A of the Act is invalid and liable to be quashed.

The Tribunal noted that the assessee had a delay of 314 days in filing the appeal and failed to provide sufficient cause or supporting evidence for this delay. Citing various Supreme Court judgments, the Tribunal held that delay cannot be condoned without adequate and convincing reasons and that the assessee displayed a casual approach and negligence in pursuing the case.

The Tribunal held that the addition made by the AO was based on suspicion and surmises, lacking corroborative evidence. The seized document had significant dissimilarities with the registered transactions, was not signed or dated, and was not seized from the assessee's possession.

The Tribunal condoned the 413-day delay, accepting the explanation of "sufficient cause." Regarding the validity of the CIT(A) order, it was held to be invalid as it was passed without a Document Identification Number (DIN), contravening CBDT Circular No.19/2019. The Tribunal set aside the CIT(A)'s order and remanded the matter for a fresh order to be passed in conformity with the DIN Circular, also directing the CIT(A) to examine the merits of the Section 54F deduction, considering the doctrine of 'lex non cogit ad impossibilia' and relevant High Court judgments on land acquisition.

The Tribunal held that the cash deposits arising from sales declared for the period before 08.11.2016, as recorded in the books of account, should be accepted as the source for cash deposits. However, capital contributions from partners could not be accepted due to lack of evidence of creditworthiness.

The Tribunal held that the notices issued under Section 148A and 148 were invalid and liable to be quashed as they were not issued in a faceless manner as prescribed by the National Faceless Assessment Scheme. The Tribunal also noted that the reassessment proceedings were barred by limitation.

The Tribunal noted that while the entire receipts were subject to TDS, assessing the entire gross receipt without considering expenditure or profit was incorrect. It acknowledged that the assessee did not maintain proper books of account.

The Tribunal noted that while the sale deeds acknowledged the entire sale amount, they lacked payment particulars. However, the assessee provided bank statements and a TDS challan as evidence of subsequent payment. Considering this evidence, the Tribunal found the addition unsustainable.

The Tribunal condoned the delay of 506 days, finding sufficient cause due to the subsequent penalty levy and risk of prosecution, emphasizing the preference for substantial justice. It allowed the advertisement expense claim of Rs. 15,30,650/-, holding that a company cannot incur personal expenses and the expenditure for distributing devotional books with company advertisements was for business promotion. The additional grounds regarding the share sale transaction were admitted and remanded to the CIT(A) for fresh adjudication on merits, with the Assessing Officer given the opportunity to verify and examine the additional evidence.

The Tribunal found that the Supreme Court's order (MA 665 of 2021) for extending limitation periods applied only to judicial/quasi-judicial proceedings, not for filing TDS returns. It also noted that CBDT notifications for COVID-19 extensions were specific and not general for all quarters, except for a particular extension for Q4 FY 2020-21 up to July 15, 2021. Since the assessee failed to prove it met the conditions to not be treated as an assessee-in-default, the levy of fees and interest was largely upheld.

The Tribunal ruled that the digital evidence (WhatsApp messages) was inadmissible without a Section 65B certificate under the Indian Evidence Act, 1872, and lacked corroborative evidence. It found the A.O. misinterpreted the document, which indicated cash receipts, not cash loans given, and based additions on assumptions without discharging the primary onus of proof. Thus, the document was deemed unreliable for making additions.

The Tribunal found that the booking advances received by the assessee were on behalf of the principal dealer, M/s. Anika Bajaj, and were remitted to them, thus not constituting the assessee's turnover or income. Consequently, the addition of Rs. 7,97,500/- u/s 69A was deleted. Furthermore, the Tribunal held that the additions made for estimated income at 8% on gross bank deposits and the disallowance of deductions u/s 80C (under Chapter-VIA) were beyond the scope of the limited scrutiny, as there was no order converting the case to complete scrutiny. Therefore, these additions/disallowances were also deleted.

The Tribunal directed the AO to allow 1/5th of the ROC fee paid for authorized capital increase as a deduction under Section 35D. It upheld the disallowance of interest paid on late TDS payment, characterizing it as income-tax liability. However, the Tribunal set aside the disallowance of interest expenditure for advances to related parties, finding them to be for business purposes from mixed funds, and also set aside the disallowance of cash discounts, acknowledging sufficient evidence. Furthermore, the disallowance of seed purchases was set aside, as the purchases were deemed genuine despite PAN issues, and disallowing them would distort the gross profit.

The CIT(A) dismissed the appeal in limine due to the delay, finding no sufficient cause and relying on a High Court decision. However, the Tribunal found the assessee's reasons for delay to be a 'sufficient cause' and set aside the CIT(A)'s order.

The Tribunal held that the approval granted under Section 153D was invalid as it was a single, omnibus approval for multiple assessment years without independent application of mind to each year. This non-application of mind vitiated the assessment proceedings. Therefore, the assessment orders passed by the AO were quashed.

The Tribunal held that the notice under section 148, issued beyond three years from the end of the assessment year, required prior approval from the Principal Chief Commissioner or higher authorities, as per Section 151 of the Act, which was not obtained in this case. The approval obtained was from the Principal Commissioner of Income Tax, who lacked the jurisdiction for such approval post-01.04.2021. Therefore, the assessment was framed without valid jurisdiction.

The Tribunal held that the assessee's benchmarking of interest on ECB loans at LIBOR + 500/450 basis points was at arm's length, considering the loan tenure of seven years. The addition of Rs. 2,28,23,848 on this account was directed to be deleted. Regarding the disallowance under Section 43B, the Tribunal restored the issue to the AO for verification, as the direction from the DRP for verification was not complied with.

The Tribunal held that the CIT(A) order was a non-speaking order and failed to address the specific grounds of appeal regarding merits and validity of jurisdiction. Therefore, the appeal was restored to the file of the CIT(A) for a fresh adjudication with a direction to pass a speaking order.

The Tribunal held that the assessee failed to substantiate the source of the additional income, and thus it was correctly treated as income from unexplained sources and liable to tax under Section 115BBE of the Act.

The Tribunal held that the omnibus approval granted by the Additional CIT for multiple assessment years (AY 2012-13 to 2016-17) under Section 153D was mechanical and without independent application of mind. Citing High Court and Supreme Court precedents, it ruled that Section 153D mandates separate approval for each assessment year with due application of mind. Consequently, the assessment orders passed by the AO were deemed invalid and void ab initio due to want of valid assumption of jurisdiction.

The Tribunal held that the common and omnibus approval granted by the Additional CIT for multiple assessment years, without independent application of mind to each year, was invalid. This non-compliance with the mandatory requirement of Section 153D vitiated the assessment proceedings. Consequently, the assessment orders passed by the AO were quashed.