ITAT Hyderabad Judgments — March 2026

The Tribunal held that while BAPA is not strictly binding for transactions not covered, the margin agreed under BAPA can be applied to such transactions if the Functional, Asset, and Risk (FAR) profile is identical and no separate benchmarking was done by the TPO. The principle of consistency supports this approach.

The Tribunal held that the seized 'Agreement of Sale' lacked evidentiary sanctity as it was unsigned by the alleged vendors (assessees) and was seized from a third party. In the absence of any independent corroborative evidence linking the assessees to the document, it could not be treated as incriminating material for invoking jurisdiction under section 153C. The assessment was consequently held to be unsustainable.

The Tribunal held that the BAPA margin should be applied to transactions with non-US AEs not covered by the agreement, following coordinate benches' decisions in similar cases. The Tribunal found no separate benchmarking by the TPO for these transactions and no different FAR profile presented by the revenue.

The Tribunal held that the assessee could raise the claim for deduction under section 54F before the appellate authorities as it was relatable to the escaped income. The Tribunal further held that the share in bungalows to be constructed under the Joint Development Agreement would qualify as investment in construction of a new residential house for the purpose of section 54F.

The Tribunal observed that while the assessee had a lackadaisical approach, the disallowance of entire expenses by the AO did not inspire confidence as the firm was not shown to be bogus. The Tribunal held that in the interest of justice, the matter should be set aside for fresh adjudication by the AO after affording a reasonable opportunity of being heard to the assessee.

The tribunal noted that the notices under section 148 were issued after the prescribed dates and without proper sanction as per amended law. It also considered grounds related to the AO treating the return as non-est, invalidity of assessment orders due to lack of valid notice under Section 143(2), and improper confirmation of additions regarding long-term capital gains.

The Tribunal noted that common issues were involved in the appeals and decided to dispose them of via a consolidated order. The specific grounds raised by the assessee challenge the CIT(A)'s upholding of the AO's actions regarding the validity of notices and additions made.

The Tribunal held that an unsigned document, seized from a third party without independent corroboration, cannot be considered incriminating material to invoke section 153C. The assessment based solely on such a document is unsustainable.

The Tribunal held that the CIT(A) erred in dismissing the appeal based on a factually incorrect observation regarding the service date of the assessment order. The Tribunal also noted that the additions made by the AO regarding brought-forward liabilities appeared questionable. The matter was restored to the CIT(A) for fresh adjudication.

The Tribunal held that the 'Agreement of Sale' was not incriminating material as it was unsigned by the alleged vendors and lacked any corroborative evidence linking the assessee. Following the Supreme Court's decision in CIT v. U.K. Paints Overseas Ltd., the Tribunal found that assessments initiated under section 153C without incriminating material are not sustainable.

The Tribunal found that the assessee failed to provide conclusive evidence for the cancellation of shipping bill No. 1475961 before the lower authorities. However, a letter from the customs agent submitted to the Tribunal confirmed that the shipping bill was purged and no shipment occurred. Therefore, the matter was remitted back to the Assessing Officer for re-adjudication.

The Tribunal held that while BAPA is not strictly binding for transactions not covered, the agreed margin serves as a reliable benchmark in the absence of separate benchmarking by the TPO and differing FAR profiles. The principle of consistency was applied.

The Tribunal held that the delay of 17 days was not deliberate and was properly explained. Following a liberal approach towards condonation of delay, the Tribunal condoned the delay. The Tribunal further held that the dismissal by the Ld. CIT(A) without adjudicating on merits denied the assessee an effective opportunity to present her case.

The Tribunal noted that the assessee claimed the credit cards were given to another person for use on commission, but could not provide documentary evidence. However, an FIR against that person and the availability of the person's PAN and email suggested a dispute, making it difficult to obtain evidence. The Tribunal found merit in the assessee's argument that the AO could have used powers under section 133(6) for better verification.

The Tribunal held that the 'Agreement of Sale' lacked evidentiary sanctity as it was unsigned by the alleged vendors and not seized from the assessee's possession. In the absence of independent corroborative evidence, it could not be treated as incriminating material for invoking jurisdiction under section 153C. The Tribunal, following the Supreme Court's decision in CIT v. U.K. Paints Overseas Ltd., quashed the assessment.

The Tribunal held that reopening the assessment beyond four years requires a finding of failure on the part of the assessee to disclose fully and truly all material facts. Since the 'reasons to believe' recorded by the AO did not contain such an allegation, the jurisdiction was wrongly assumed.

The Tribunal condoned the delay in filing the appeal. It noted that the AO had made the assessment subject to receiving a valuation report, but failed to re-determine capital gains after receiving the report. The Tribunal set aside the matter to the AO for re-determination.

The Tribunal held that the conclusion of search, for the purpose of determining the limitation period under Section 153B, is as recorded in the last panchanama. In this case, while the search at the assessee's premises concluded on February 12, 2020, a prohibitory order on other premises related to the joint warrant was revoked on July 23, 2020, which was considered the date of conclusion of the search for limitation purposes. Therefore, the assessment order was within the prescribed time limit.

The Tribunal held that the conclusion of search, for the purpose of computing the limitation period under Section 153B, is to be determined by the date of the last panchanama drawn in relation to any person in whose case the warrant was issued. The Tribunal found that the last panchanama in this case was drawn on 12.02.2020, concluding the search for the assessee. The Tribunal also noted that the extended limitation period due to COVID-19 was applicable. The Tribunal ruled that the assessment order, passed after this period, was time-barred.

The Tribunal considered the appeals concerning the limitation period for assessment and additions made based on seized documents. The key issue was whether the search concluded on February 12, 2020, or July 23, 2020, impacting the assessment timeline.

The Tribunal admitted the additional ground, holding that the approval under Section 148B by the Additional CIT/JCIT was mechanical and lacked application of mind, as evidenced by the brief approval order and the short time taken. Consequently, the assessment order was deemed invalid.

The Tribunal held that since the quantum appeal's delay was condoned by the ITAT based on similar reasons, the delay in the penalty appeal should also be condoned. The CIT(A)'s order dismissing the appeal on limitation was set aside.

The Tribunal held that the addition under section 68 was not sustainable as the transactions were recorded as sales in the books, supported by invoices and received through banking channels, and no specific defects were found. However, the disallowance of expenses was upheld due to the failure to provide supporting bills and vouchers.

The Tribunal held that the AO erred in treating the difference in cash balance as unexplained money without considering the assessee's personal cash flow statement and cash book extracts. The closing balance of one year was correctly carried forward as the opening balance of the next year, rendering the AO's observation incorrect.

The Tribunal held that the assessment order was time-barred. The search in the assessee's case concluded on 12.02.2020, and the subsequent assessment order passed on 31.03.2022 was beyond the prescribed limitation period of 12 months from the end of the financial year in which the search concluded, even after considering extensions due to COVID-19.

The Tribunal held that regarding the non-deduction of TDS, the matter should be remanded to the AO for verification of Form 26A filed by the assessee. Regarding the difference in subcontract expenditure, the Tribunal found that the AO and CIT(A) erred by not considering the ledger account which showed no difference.

The Tribunal admitted the assessee's additional ground challenging the validity of the assessment order. It found that the approval granted by the Addl.CIT/JCIT under Section 148B was mechanical and lacked application of mind, rendering the assessment order unsustainable in law.

The Tribunal condoned the delay in filing the appeal, noting the assessee's bona fide medical reasons. The Tribunal held that the notice issued under section 148 was beyond the 'surviving period' as per Supreme Court rulings, making it time-barred and invalid.

The Tribunal held that the conclusion of the search, for the purpose of computing the limitation period under Section 153B, is determined by the date of the last panchnama drawn in relation to any person covered by the joint warrant. The Tribunal noted that while the assessee claimed the search concluded on February 12, 2020, the Revenue presented evidence of a later conclusion on July 23, 2020, after the revocation of a prohibitory order. The Tribunal found that the assessment order was passed within the extended time limit considering the provisions of Section 153B and the impact of COVID-19 related extensions. Regarding the additions, the Tribunal observed that the assessee failed to provide satisfactory explanations for the cash transactions and directed the Assessing Officer to identify overlapping entries.

The Tribunal condoned the delay, citing reasonable cause for the delay and the interest of justice, subject to a cost. The Tribunal set aside the orders of the CIT(A) and remanded the quantum appeals to the AO for fresh adjudication. The penalty appeal was consequential and thus deleted.

The Tribunal held that the penalty proceedings were initiated when the Assessing Officer (AO) made a reference to the Joint Commissioner (JC) for penalty action, not when the JC issued a show-cause notice. Therefore, the penalty order passed by the JC was beyond the prescribed limitation period.

The Tribunal held that the credit for tax deducted at source (TDS) should be allowed in the assessment year in which the corresponding income is assessable, irrespective of when the deductor accounted for the expense or deducted the tax. Denial of TDS credit in the year of taxability leads to double taxation.

The Tribunal held that the approval granted under section 148B was mechanical and lacked application of mind, as evidenced by the cursory nature of the approval order and the short time frame between the draft order submission and approval. Therefore, the assessment order was vitiated and liable to be quashed.

The Tribunal held that the foreign exchange loss on FCCBs should be treated as revenue expenditure, following its own previous decisions and Supreme Court precedents regarding mercantile accounting. The Tribunal noted that there was no finding that the FCCB loans were used for capital assets. The Tribunal found the AO's disallowance to be erroneous.

The Tribunal held that the penalty order was barred by limitation. The trigger for the limitation period under Section 275(1)(c) of the Income Tax Act is the date the AO referred the matter to the higher authority for penalty proceedings, not the date of the show-cause notice by the JCIT. As the penalty was imposed beyond the stipulated six months from the end of the month of such reference, it was quashed.

The Tribunal held that since the assessee failed to provide any explanation for the source of the Rs. 18 lakhs payment, the addition made by the lower authorities as unexplained investment under section 69 of the Act was justified. The assessee's failure to appear before the Tribunal led to the appeal being dismissed.

The Tribunal found substance in the assessee's challenge regarding the validity of the jurisdiction assumed by the AO for issuing the notice under section 148. It noted that the notice was issued after the amendment by the Finance Act, 2021, which requires specific approvals and procedures. The Tribunal relied on the Supreme Court's decision in Ashish Agrawal to treat the notice as a show-cause notice under section 148A, allowing the Revenue to proceed further.

The Tribunal held that the penalty proceedings were initiated when the Assessing Officer (AO) referred the matter to the Joint Commissioner (JC) for penalty action, not when the JC issued the show-cause notice. Therefore, the penalty order was passed beyond the statutory limitation period prescribed under Section 275(1)(c).

The Tribunal held that the time limit for completing the assessment is governed by the date of conclusion of the search as recorded in the last panchanama drawn in relation to any person in whose case the warrant of authorization was issued. The Tribunal found that the last panchanama in this case was drawn on February 12, 2020, making the assessment order passed on March 31, 2022, time-barred.

The Tribunal held that the assessment order was time-barred. It reasoned that the search concluded in the assessee's case on 12.02.2020, and the subsequent conclusion date of 23.07.2020 cited by the Revenue, which involved a prohibitory order on a director's premises, did not extend the limitation period for the assessee. The Tribunal also noted that additions based on photocopied documents without corroboration were unsustainable.

The Tribunal held that the CIT(A) should have adopted a liberal and justice-oriented approach in condoning the delay, considering the bona fide reasons explained by the assessee. The CIT(A) ought to have admitted the appeal and decided it on merits.

The Tribunal held that the search concluded on February 12, 2020, as recorded in the panchanama specific to the assessee's premises. The subsequent revocation of a prohibitory order at a different location did not extend the conclusion date for the assessee's specific search. Therefore, the assessment order passed on March 31, 2022, was indeed time-barred.

The Tribunal condoned the delay in filing the appeals, considering the explanation of internal disputes and mismanagement as a reasonable cause, especially in the interest of justice. The quantum appeals were set aside and remanded to the Assessing Officer for fresh adjudication, and the penalty appeal was consequently deleted.

The Tribunal condoned the delay of 266 days, subject to a cost of Rs. 15,000/-, acknowledging the prolonged internal management issues and subsequent challenges in maintaining accounts. The Tribunal set aside the assessment orders and remanded the matters to the Assessing Officer for fresh adjudication after verification of records and deleted the penalty.

The Tribunal held that the approval granted by the Additional CIT/JCIT under Section 148B for the assessment order was mechanical and lacked application of mind, as evident from the brief approval and short time frame. Consequently, the assessment order passed based on this invalid approval was deemed non-est in law.

The Tribunal held that the completion of the search, for the purpose of calculating the limitation period under Section 153B, should be based on the date recorded in the last panchanama drawn for the assessee. The Tribunal further directed the AO to re-examine the additions made based on photocopied documents and to verify the nexus of the transactions with the assessee's business.

The Tribunal held that the limitation period for assessment under Section 153B is determined by the conclusion of the search as recorded in the last panchanama. While the assessee's individual search concluded on February 12, 2020, the ongoing prohibitory order in relation to associated individuals meant the search under the joint warrant concluded on July 23, 2020. Therefore, the assessment order passed within 12 months from the end of that financial year was within the prescribed time limit. Regarding additions, the Tribunal remanded the issue for fresh consideration by the Assessing Officer, emphasizing the need for proper evidence to link the seized material to the assessee's transactions and for correct application of Section 115BBE.

The Tribunal held that the validity of the assessment order hinges on the interpretation of Section 153B of the Income Tax Act regarding the conclusion of search operations when a joint warrant is issued. The Tribunal also considered the admissibility of electronic evidence and the proper application of Section 115BBE.

The Tribunal held that the limitation period for assessment under Section 153B is determined by the conclusion date of the search as recorded in the last panchanama drawn concerning any person covered by the joint warrant of authorization. The assessment order was found to be within the prescribed time limit.