ITAT Hyderabad Judgments — February 2026

The Tribunal condoned the delay of 8 days in filing the appeal. Grounds 1, 2, 4, 5, and 6 were allowed in favor of the assessee, meaning the addition on account of interest income earned on fixed deposits and rental income was eligible to be set off against maintenance expenses. Ground 8, concerning the non-grant of credit for self-assessment tax, was also decided in favor of the assessee. The Assessing Officer was directed to verify and allow the credit for self-assessed tax.

The Tribunal condoned the delay of 200 days, subject to a cost of Rs. 5000/-, and set aside the impugned order of the CIT(A). The matter was remanded to the Assessing Officer for re-adjudication after verifying the additional evidence submitted by the assessee.

The Tribunal held that since the assessee did not receive any consideration for the sale of the property, no income accrued to her. The capital gains should have been assessed in the hands of the brothers who actually received the sale consideration. Relying on judicial precedents, the Tribunal emphasized the concept of 'real income' for taxation.

The Tribunal held that the purchase and sale of shares were genuine transactions executed on a recognized stock exchange at prevailing market prices, and the Assessing Officer did not dispute their authenticity. The Tribunal clarified that SEBI's penalties on company promoters for disclosure violations did not affect the genuineness of the assessee's transactions. Since the transactions were legally permissible, the loss incurred, even if viewed as a result of imprudent business decisions or tax planning, could not be disallowed as artificial or bogus.

The Tribunal held that the validity of reassessment proceedings, particularly the jurisdiction to issue a notice under Section 148 beyond three years, must be determined by the material available with the AO at the time of issuance of the notice, not by the income ultimately assessed. Given that the AO possessed specific information regarding cash withdrawals exceeding Rs. 1.50 crores and the non-filing of ITR, this constituted tangible material establishing a prima facie case for escapement of income above the Rs. 50 lakhs threshold under Section 149(1)(b), thus making the extended period notice valid.

The Tribunal held that the property was owned and sold by the assessee's spouse, and the sale consideration was deposited in a joint account. Therefore, imposing a penalty on the assessee for the mode of receipt of sale consideration was incorrect. Furthermore, the Assessing Officer (AO) had not recorded satisfaction for initiating penalty proceedings under Section 271D in the assessment order, which is a mandatory requirement as per Supreme Court judgments.

The Tribunal held that the notice issued under section 148 of the Act dated 06/04/2022 was beyond the limitation period prescribed under the old regime of section 149(1) and consequently, the assessment order passed by the AO was bad in law and liable to be quashed. The Tribunal followed the decision of the Hon'ble High Court of Telangana in the case of Cyberabad Citizens Health Services Private Limited and its own previous order in the case of Peda Subbarao Unnam.

The Tribunal condoned a 145-day delay in filing the appeal due to a bona fide mistake concerning an email ID change. It held that the reopening of the assessment beyond four years was invalid as the assessee had fully disclosed all material facts during the original assessment, and the reopening was based on a re-appreciation of existing facts, thus constituting an invalid 'change of opinion.' Consequently, the Tribunal ruled that the AO lacked valid jurisdiction to reopen the assessment under Section 147/148.

The Tribunal held that the notice issued under Section 148 of the Act was invalid because the AO considered non-existing or incorrect information to conclude that the escaped income exceeded Rs. 50 lakhs, which was a prerequisite for reopening assessment beyond three years. The AO should have verified the bank account statement before reopening.

The Tribunal held that the applications were filed within the prescribed time limit. The commencement of activities was stated as 28.03.2024, and the application was filed on 22.09.2024, which is within six months. The prior provisional registration period also provided a deadline of 30.09.2024, making the filing timely.

The Tribunal held that the assessee society had filed its applications within the prescribed time limit as per Section 12A(1)(ac)(iii) and Section 80G(5)(ix) of the Income-tax Act. The CIT(Exemptions) had wrongly dismissed the applications by overlooking the commencement date of activities.

The tribunal found that the notice issued under section 153C on 3/8/2022 was beyond the permissible timeframe, as it was issued 10 months after the completion of assessment of the searched person (M/s. Skill Promoters) on 26/09/2021. Citing Supreme Court and High Court decisions, the tribunal ruled that a satisfaction note and subsequent notice under section 153C must be issued 'immediately thereafter' the completion of the searched person's assessment. Consequently, the notice and the assessment order passed under section 153C were deemed invalid, void ab initio, and quashed, rendering the addition on merits infructuous.

The Tribunal held that the penalty order passed by the AO was barred by limitation as per Section 275(1)(c) of the Act. The Tribunal also found that the evidence in the excel sheet was aggregated and did not clearly demonstrate violation of Section 269ST for individual transactions. Therefore, the penalty was not sustainable on merits.

The Tribunal admitted additional evidence in the assessee's appeal concerning unexplained cash credits and remanded the issue to the Assessing Officer for verification. In the revenue's appeal, the addition for kitchen consumables was deleted, and the disallowance of professional charges was deleted. The disallowance of job work expenses was also deleted.

The Tribunal noted that the assessee failed to provide documentary evidence to support its claim that it was a cooperative society eligible for deduction under section 80P(2). Furthermore, the assessee did not produce any material to show it maintained audited regular books of account. The Tribunal also observed that the appeal was filed beyond the limitation period without sufficient cause.

The Tribunal held that the assessment orders were passed beyond the limitation period prescribed under Section 153B of the Income Tax Act, 1961. The AO's argument regarding extended time limits due to being an 'eligible assessee' was rejected as it only applies in cases of reference to the TPO, which was not the scenario here.

The ITAT held that additions made under Section 69A based on unsubstantiated entries in seized loose sheets are not sustainable without corroborative evidence or proof that the assessee was the owner of unexplained money. It noted the AO's failure to establish a direct correlation between the loose sheet entries and actual transactions or bogus expenses, and to examine relevant parties. Consequently, the ITAT vacated the additions of Rs. 30 lakhs (Cement Shop-Dwaraka-RRR), Rs. 27 lakhs (Venkat Rama Ref-Fertilr), and Rs. 20 lakhs (Basheer Khan Pump Direct RRR) upheld by the CIT(A), and also upheld the CIT(A)'s vacation of other larger additions related to loose sheets. The basic preconditions for invoking Section 69A were found not to be met.

The Tribunal held that the assessment orders were passed beyond the time limit prescribed under Section 153B of the Income Tax Act, 1961. The extended time limit provisions, as argued by the Revenue, were found not applicable in this case, particularly concerning non-resident assessments.

The Tribunal quashed the penalty orders, ruling that the show cause notices issued under Section 274 r.w.s. 270A were vague, as they failed to specify the precise charge (under-reporting vs. misreporting) or the specific limb of Section 270A(9) applicable. It emphasized that such vague notices violate natural justice and render penalty proceedings void ab-initio. The Tribunal also noted that since the AO accepted the income declared in the Section 153A return without further additions, and the income was determined on an estimation basis, the conditions for penalty under Section 270A(9) were not met.

The Tribunal held that the addition related to cash deposits during demonetization, which was claimed to be from petrol sales, was not justified as the AO ignored the assessee's records, including the Form 'C' and stock statements. The addition concerning sundry creditors was remanded to the AO for proper verification, as the explanation that it was a book entry transfer from capital was not presented earlier.

The Tribunal held that the assessment orders passed by the AO were barred by limitation as per Section 153B of the Income Tax Act, 1961. The AO failed to complete the assessment within the prescribed time limits following the search operation and the issuance of notice under Section 153C. The contention regarding extended time limits under Section 144C and its provisos was also rejected.

The tribunal admitted additional evidence in the assessee's appeal concerning unexplained cash credits and remanded the issue to the AO for verification. The revenue's appeal concerning kitchen consumables and professional charges was dismissed, while the ground regarding job work expenses was upheld.

The Tribunal held that the show cause notice issued by the AO under Section 274 r.w.s. 270A was vague, failing to specify the exact limb or clause of misreporting under Section 270A(9). Citing judicial precedents, the Tribunal ruled that such a vague notice vitiates the penalty proceedings. Furthermore, it found that the additional income was either based on estimation or accepted by the AO without further modification, thus not warranting a misreporting penalty under Section 270A(9).

The Tribunal held that the final assessment order passed by the A.O under section 153C read with section 144C(13) of the Act, dated 17/01/2025, was barred by limitation as per section 153B of the Act. The Tribunal clarified that the extended period of 12 months provided under the 4th proviso to section 153B or section 153(4) is applicable only when a reference is made to a Transfer Pricing Officer (TPO) under section 92CA, which was not the case here. Consequently, the assessment orders were quashed for being time-barred.

The Tribunal held that the reassessment notice issued under Section 148 dated 30/07/2022 for AY 2015-16 was beyond the time limit specified by the pre-amended Section 149(1)(b) of the Act (expiring 31/03/2022). It clarified that the fifth and sixth provisos to the amended Section 149 do not apply to extend the limitation period for notices issued under the first proviso of the post-amended Section 149(1). Consequently, the reassessment order was quashed due to invalid assumption of jurisdiction.

The Tribunal held that the assessee's arguments regarding the property being HUF property were not tenable. The delay in filing the appeal was not sufficiently explained and was therefore not condoned, leading to the dismissal of the appeals. The AO rightly assessed the capital gains in the hands of the assessee.

The Tribunal held that the penalty orders issued by the Assessing Officer under Section 271DA for Assessment Years 2018-19 to 2021-22 were barred by limitation under Section 275(1)(c) of the Income Tax Act, 1961. Furthermore, the penalty levied for alleged violation of Section 269ST was deemed unsustainable in law due to the Revenue's failure to discharge the burden of proof regarding single transactions exceeding Rs. 2 lakhs. Consequently, the penalty orders were quashed and deleted.

The Tribunal held that the assessee's delay in filing the appeal was not sufficiently explained and upheld the CIT(A)'s decision to dismiss the appeal on the ground of limitation. Regarding the merits, the Tribunal found that the assessee had sold her share of the property in her individual capacity and was not entitled to claim it as HUF property. Therefore, the capital gain was assessable in her hands. The penalty for concealment of income was also upheld.

The Tribunal held that the penalty order was barred by limitation. It was observed that the penalty proceedings were initiated on 25/05/2023 when the AO sent a reference to the JCIT. Six months from the end of May 2023 would be 30/11/2023, but the order was passed on 27/09/2024, which is beyond the statutory time limit. Furthermore, the Tribunal found that the evidence (excel sheets) was not specific enough to prove a violation of Section 269ST for individual transactions exceeding Rs. 2 lakhs.

The Tribunal held that the reopening of the assessment was invalid as it was beyond four years from the end of the relevant assessment year, and the assessee had fully and truly disclosed all material facts, thus the proviso to Section 147 applied. Additionally, the addition for bogus purchases was not sustainable on merits, especially since the assessee was denied the opportunity to cross-examine Shri Rajendra Jain, whose statement formed the sole basis of the addition, violating principles of natural justice. Therefore, the notice under Section 148 and the additions were set aside.

The Tribunal found that the satisfaction note for initiating proceedings under Section 153C was recorded and the notice issued after a 10-month delay from the completion of the searched person's assessment. Citing Supreme Court and High Court precedents, the Tribunal ruled that such a delay violated the 'immediately thereafter' requirement, rendering the Section 153C notice and the subsequent assessment order invalid, void ab initio, and quashed. The other grounds related to the merits of the addition thus became infructuous.

The Tribunal held that the assessee had sufficient cash in hand as of November 8, 2016, which was evidenced by the cash book and accounted for the deposits made after November 9, 2016. The Tribunal found that the AO and CIT(A) incorrectly presumed that the assessee received cash from sundry debtors after November 8, 2016, and disallowed the source without considering the available evidence.

The Tribunal acknowledged that there was evidence of suppressed turnover and that estimation was permissible. However, they found the estimations by both the Assessing Officer (59.68%) and CIT(A) (50%) to be ad-hoc and lacking sound basis. Therefore, they directed a revised estimation of suppressed turnover at 25%. For net profit, considering the assessee's declared profit of 12% and CIT(A)'s estimation of 20%, the Tribunal directed an estimation of 15%.

The Tribunal observed that the assessee's audited profit of 2.2% on sales of Rs. 7.56 crores could not be summarily discarded. However, the AO's rejection of books of account was also not entirely without merit. The Tribunal found substance in the assessee's contention that cash deposits were from regular business transactions.

The Tribunal held that the AO erred in assessing gross receipts as income without allowing deductions for expenditure when exemption under Section 11 was denied. The appeals were restored to the AO for assessment based on commercial principles.

The Tribunal noted that the appeal was filed with a delay of 147 days, which was condoned due to the accountant's medical emergency. Regarding the merits, the Tribunal found substance in the assessee's claim that the investment was sourced from its bank account. However, as the assessee failed to fully substantiate this claim before the lower authorities, the matter was set aside to the AO for readjudication.

The Tribunal condoned a one-day delay in filing the appeal. It upheld the rejection of books of accounts by the lower authorities. However, it deleted the addition of Rs.72,45,860/- made under Section 69A, noting that the AO had already estimated business income based on sales, and the cash deposits were derived from sales and used for liquor purchases, consistent with the bank account entries and balance sheet. The disallowance of Rs.30,000/- claimed under Section 80C was upheld due to the assessee's failure to provide supporting evidence.

The Tribunal held that the penalty related to the addition of Rs. 1,86,32,023/- concerning long-term capital gains (LTCG) on sale of securities is not sustainable because the High Court admitted the assessee's appeal on substantial questions of law, making the issue debatable. However, the penalty related to the addition of Rs. 31,29,215/- from the sale of jewellery and Rs. 61 lakhs from unsecured loans was upheld.

The Tribunal acknowledged evidence of suppressed receipts but found the estimations by the Assessing Officer and CIT(A) to be arbitrary. The Tribunal directed the Assessing Officer to estimate 25% of the quantified turnover as suppressed turnover and to estimate net profit at 15% on the suppressed turnover, averaging the assessee's declared profit and the CIT(A)'s estimation.

The Tribunal acknowledged evidence of suppressed turnover but found the estimations by the Assessing Officer and CIT(A) to be arbitrary. The Tribunal directed a reasonable estimation of suppressed turnover at 25% and net profit at 15%, considering the business's seasonal nature and the parties' arguments.

The Tribunal held that if exemption u/s 11 is denied, income should be assessed on commercial principles, considering profit or loss. The AO erred in assessing gross receipts without allowing deductions for expenditure, as this was a mistake apparent from the record.

The Tribunal noted that the delay in filing Form 10 was condoned by the CIT(Exemptions) and that the donor details were not filed before the AO due to justifiable reasons, and the CIT(A) failed to consider the submitted donor details. Therefore, the matter was restored to the AO for readjudication.

The Assessing Officer made an addition of Rs. 40 lakhs as unexplained cash credit. The CIT(A) upheld this addition. However, the Tribunal noted that the seized documents were not found with the assessee, not confronted to him, and no opportunity for cross-examination was provided, violating principles of natural justice.

The Tribunal held that the AO erred in assessing gross receipts without allowing deductions for expenditure, especially when exemption u/s 11 was denied. The intimation suffered from a mistake apparent on record. The CIT(A) also erred in upholding the AO's order without considering the relevant facts.

The Tribunal held that while there was evidence of suppressed turnover, the estimations by the Assessing Officer and CIT(A) were arbitrary. A reasonable estimation of suppressed turnover was necessary. The Tribunal directed the Assessing Officer to estimate 25% of the turnover quantified by the AO as suppressed turnover.

The Tribunal noted that while the assessee had a history of filing returns and deriving income from various sources, he failed to provide irrefutable evidence to substantiate the availability of cash in hand on the dates of deposit. Therefore, the Tribunal, through estimation, sustained the addition to the extent of Rs.2,65,375.

The demolition was part of the sale transaction and not an independent event. The cost of the demolished structure is directly linked to the transfer consideration and is deductible under Section 48. The extinguishment of rights in the building constitutes a transfer. The CIT(A)'s denial of the indexed cost was upheld by the AO and Pr. CIT based on technical grounds, but the Tribunal found contradictions in the CIT(A)'s findings.

For the quantum appeals (AY 2019-20 & 2020-21), the Tribunal condoned the delay in filing appeals to CIT(A) and remanded the exemption issue to the Assessing Officer for fresh consideration after the outcome of the condonation application for Form 10B/10BB. It directed that if exemption is denied, only net income/profit (not gross receipts) should be taxed. For the penalty appeal under section 271D (AY 2017-18), the Tribunal deleted the penalty, finding a lack of recorded satisfaction by the Assessing Officer and holding that Section 269SS did not apply to sale consideration received in cash at the time of registered property transfer. The findings of the CIT(A) regarding a Section 154 order for AY 2020-21 were also deleted.