ITAT Lucknow Judgments — February 2026

The ITAT noted that the quantum appeal related to the long-term capital gains disallowance had already been remanded back to the CIT(A) for re-adjudication. Given this, the ITAT decided to also restore the penalty proceedings under section 271(1)(c) to the CIT(A) to be decided afresh concurrently with the quantum appeal.

The ITAT condoned the delay in filing the appeal, acknowledging the difficulties. While noting the assessee's failure to comply with notices at lower stages, the Tribunal held that the entire cash deposit from petrol sales cannot be automatically treated as income without proper verification. Therefore, the matter was restored to the file of the AO for a fresh assessment, directing the AO to provide the assessee a proper opportunity to furnish all necessary evidence. A cost of Rs. 5,000/- was imposed on the assessee for non-compliance before the CIT(A).

The Tribunal held that the PCIT(C) lacked the power to cancel the registration retrospectively, citing various High Court judgments which establish that Section 12AA(3) does not grant retrospective cancellation, particularly in the absence of fraud. Furthermore, the factual foundation for the PCIT(C)'s cancellation order was demolished by the subsequent fresh assessments, which exonerated the assessee from most allegations and accepted the genuineness of its activities. Therefore, the PCIT(C)'s order of retrospective cancellation was legally and factually unsustainable.

The Tribunal observed that Section 43CA read with Section 50C(2) permits the AO to refer the valuation to a DVO if the assessee disputes the stamp duty value as exceeding the fair market value. The Tribunal held that since the assessee had disputed the stamp duty value, the AO should have referred the matter to the DVO. Consequently, the Tribunal restored the issue back to the AO to refer the matter to the Valuation Officer, directing the assessee to produce the pre-dated agreements.

The ITAT observed that the CIT(A) dismissed the appeal for default without deciding on the merits, despite the assessee having filed a statement of facts. The Tribunal held that the CIT(A) was obliged to decide the issue on merits and could have sought a remand report. Consequently, the matter was restored to the file of the CIT(A) to decide on merits after providing the assessee an opportunity to make submissions.

The ITAT held that the CIT(A) erred in remanding the matter for de novo assessment without first adjudicating the legal and jurisdictional issues raised by the assessee concerning the validity of the Section 148 notice and assessment order, particularly in light of the 'e-Assessment of Income Escaping Scheme, 2022'. The ITAT allowed the additional ground of appeal and remanded the matter back to the CIT(A) for adjudication of these legal issues, with other grounds becoming infructuous.

Following the precedent set in the identical case, the Tribunal set aside the order of the Ld. CIT(A) for AY 2020-21. The case was remanded to the Assessing Officer with a direction to pass a de novo assessment order, providing the assessee a reasonable opportunity of being heard.

The Tribunal found that no admitted tax was payable, thus section 249(4)(b) was not applicable. The CIT(A)'s order was set aside, and the CIT(A) was directed to admit the appeal for adjudication on merits. Consequently, the issues in dispute regarding additions were restored to the Assessing Officer for a de novo assessment.

The Tribunal observed that neither the AO nor the CIT(A) provided reasonable opportunity to the assessee. Consequently, the impugned order of the CIT(A) was set aside, and the issues in dispute were restored to the file of the Assessing Officer to pass a de novo assessment order in accordance with law, after providing proper opportunity to the assessee.

The Tribunal, relying on its previous order for A.Y. 2012-13 with identical facts, held that the loss incurred from trading in derivatives is a business loss and not a capital loss. It found the AO's reclassification unjustified and noted the CIT(A)'s failure to independently apply mind to the evidence. The Tribunal allowed the appeal, deleting the disallowance and permitting the loss to be set off against business income.

The Tribunal found sufficient cause for the delay in filing the appeal, noting that the intimation order u/s 143(1) was not physically served on the assessee, and the Department failed to provide proof of service. Considering the Supreme Court's directives regarding the exclusion of limitation periods due to the Covid-19 pandemic and the principle that substantial justice should prevail over technicalities in delay condonation, the Tribunal directed the CIT(A) to condone the delay and hear the appeal on its merits.

The Tribunal found that the Addl/JCIT(A) had not provided adequate opportunity to the assessee and dismissed the appeal in a manner inconsistent with natural justice, without addressing the merits. Therefore, the Tribunal restored the appeal to the Addl/JCIT(A) for fresh adjudication on merits, allowing the assessee a proper opportunity to present its case.

The CIT(A) deleted the penalty, finding that separate bills were issued for distinct medical services, none of which exceeded Rs. 2,00,000. The Tribunal upheld the CIT(A)'s decision, clarifying that a patient's admission and treatment do not automatically constitute a single 'event' or 'occasion' under section 269ST, especially when services are billed individually rather than as a composite package. Since no single transaction exceeded the prescribed cash limit, the penalty under section 271DA was not leviable.

The Tribunal observed that it was unclear if the CIT(A) had communicated the consequences of non-compliance to the assessee before dismissing the appeal for default. Therefore, the Tribunal restored the matter back to the file of the CIT(A) for fresh adjudication after providing a proper opportunity of being heard to the assessee. The appeal was allowed for statistical purposes.

The Tribunal observed that the CIT(A) failed to consider the additional evidence submitted by the assessee under Rule 46A and merely reproduced the AO's observations without independent adjudication. Therefore, the matter is remanded back to the CIT(A) for fresh consideration of all documents. Additionally, the recovery of the balance demand is stayed until the CIT(A) decides the matter or for six months, whichever is earlier.

The Tribunal found inconsistencies in the assessee's explanations regarding transportation, sale, and VAT. It observed that critical evidence presented during the appeal, such as an FIR and a Deputy Collector's order, might not have been fully considered by the AO or formed the basis of the CIT(A)'s decision. Consequently, the Tribunal deemed it appropriate to remand the case to the AO for a de novo assessment, allowing the assessee to present new evidence.

The Tribunal observed that the nature of interest income and WCT recovery was not adequately examined by the lower authorities. It admitted additional evidence and restored the matter to the AO for a de novo assessment. The AO is directed to re-examine the classification of these incomes and their appropriate taxation rate after considering new information provided by the assessee.

The Tribunal found that the AO had indeed conducted necessary inquiries, rendering the CIT's Section 263 jurisdiction unjustified. It further held that the commission payments for procuring export orders were not FTS, as the services were not managerial, technical, or consultancy, nor did the income accrue or arise in India, as the services were rendered abroad and there was no business connection or permanent establishment in India for the foreign entities.

The Tribunal found a gross violation of natural justice, acknowledging that the CIT(A) issued notices to an incorrect email, leading to an ex-parte order. Considering the assessee's limited income and the large cash deposits, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the Assessing Officer for a de novo assessment, granting the assessee a proper opportunity to explain the source of deposits. The appeal grounds were allowed for statistical purposes.

The Tribunal found that the CIT(E) had not provided adequate opportunity to the assessee to present its case, particularly after the assessee failed to comply with an initial notice. Citing principles of natural justice, the Tribunal set aside the CIT(E)'s order and restored the application for fresh consideration, directing the CIT(E) to provide the assessee with an adequate opportunity of being heard and to furnish requisite evidence.

The tribunal held that the issue of interest on self-assessment tax under section 244A(1)(b) was a debatable matter, supported by various High Court judgments. Therefore, it could not be considered a 'mistake apparent from the record' rectifiable under section 154. The rectification order passed by the AO under section 154 was quashed as not maintainable, and the assessee's appeal was allowed.

The ITAT held that orders passed under Section 154 and by the CIT(A) require due application of mind, not merely mechanical reliance on the CPC's automated processing. Citing CBDT Circular No. 14 and prior ITAT judgments, the Tribunal found that authorities mechanically rejected the claim without considering the merits of the exemption under Section 10(23C)(iiiad). Therefore, the CIT(A)'s order was set aside, and the matter was remanded to the Assessing Officer to examine the assessee's claim for exemption under Section 10(23C)(iiiad) on its merits, providing a reasonable opportunity of being heard, and uninfluenced by previous mechanical rejections.

The Tribunal held that the assessee had discharged its primary onus by furnishing complete details, PANs, bank statements, and ITRs of the lenders, demonstrating that the loans were advanced from cash credit limits. The AO failed to provide any counter-evidence and did not appreciate that many loan accounts had debit transactions and reduced balances. The Tribunal concluded that the addition under Section 68 was not warranted.

The ITAT upheld the CIT(A)'s decision, ruling that a mere change in trading patterns during demonetization is not sufficient to make an addition under Section 68 without rejecting the books of accounts or proving that the sales were not genuine. As the AO failed to identify any defects in the assessee's purchases, stocks, or sales, which were supported by audited accounts and VAT returns, the cash deposits, explained as sales proceeds, could not be taxed again, as it would amount to double taxation.

The Tribunal held that the re-assessment proceedings were void ab initio. The AO had issued a notice under section 148A(b) on 25.03.2022, giving time until 31.03.2022 for response, but passed the order under section 148A(d) prematurely on 29.03.2022 without considering the assessee's reply filed on 26.03.2022. This violated principles of natural justice and the statutory procedure laid down in section 148A(b) and 148A(c).

The Tribunal ruled that the PCIT's order under section 263 was invalid because the PCIT failed to specifically point out what inquiries the Assessing Officer ought to have conducted, as required by Explanation 2(a) to section 263. Without such specific guidance on the lack of enquiry or verification, the AO's order could not be deemed erroneous and prejudicial to the Revenue. The PCIT's order was therefore quashed.

The ITAT acknowledged the assessee's submission of additional evidence, attributing the delay in earlier submission to the counsel's illness. Noting that the CIT(A) had already remanded several matters for verification, the Tribunal deemed it necessary to provide the AO an opportunity to re-examine all the details and explanations afresh, including the newly furnished evidence, to pass a reasoned order in accordance with law.

The First Appellate Authority (CIT(A)) deleted the additions, finding no incriminating material in possession of the AO related to these additions during the search operations. The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, citing Apex Court and High Court precedents that for completed/unabated assessments, additions under Section 153A can only be made if incriminating material is found during the search, and mere balance sheets or statements under Section 132(4) do not constitute such material.

The Tribunal affirmed the CIT(A)'s deletion of additions, ruling that in cases of completed assessments under Section 153A, any addition must be based on incriminating material unearthed during the search. As no such material was found regarding the alleged bogus LTCG, and the assessments had achieved finality, the additions made by the AO were not justifiable. The Tribunal relied on the Apex Court's judgment in PCIT vs. Abhisar Buildwell Pvt. Ltd.

The Tribunal upheld the CIT(A)'s decision, ruling that for completed assessments under Section 153A, additions can only be made based on incriminating material found during the search. Since no such material was found in the assessees' cases, as established by the CIT(A) and supported by Supreme Court precedent in PCIT vs. Abhisar Buildwell Pvt. Ltd., the additions were not sustainable. The Tribunal dismissed all appeals filed by the Department.

The Tribunal noted that the rejection was due to non-compliance, not an adverse inference on merits. Considering the assessee's small-town location and claims of non-service of notices and the CIT(E)'s order, the Tribunal condoned the delay in filing the appeal and remanded the case back to the CIT(E) for a fresh decision on merits after providing the assessee a proper opportunity of being heard.

The Tribunal noted that the quantum appeal concerning the Section 69A addition had been restored to the Assessing Officer for a *de novo* adjudication. As the penalty under Section 271AAC(1) is consequential to the quantum addition, the Tribunal similarly restored the penalty issue to the AO for a *de novo* order.

The Tribunal observed that the CIT(A) failed to pass a speaking order on merits, thus violating Section 250(6) of the Income Tax Act, 1961. Consequently, the Tribunal set aside the CIT(A)'s order dated 17.09.2025 and remanded the matter back to the CIT(A) with a direction to pass a de novo speaking order in accordance with law, after providing a reasonable opportunity of being heard to the assessee.

The Tribunal found that both the Assessing Officer and the CIT(A) failed to provide a reasonable opportunity of hearing to the assessee. Consequently, the CIT(A)'s order was set aside, and the matter was restored to the file of the Assessing Officer to pass a de novo speaking order on merits, ensuring a reasonable opportunity for the assessee.

The Tribunal noted that neither the Assessing Officer nor the CIT(A) had provided a reasonable opportunity of being heard to the assessee. Consequently, the Tribunal set aside the CIT(A)'s order and restored the issues to the file of the Assessing Officer with a direction to pass a fresh speaking order on merits after providing proper opportunity to the assessee.

The Tribunal observed that the assessee was not given a reasonable opportunity during both assessment and appellate proceedings. Consequently, the Tribunal remitted the disputed addition back to the Assessing Officer with a direction to pass a fresh assessment order in accordance with law, after providing the assessee a proper opportunity.

The Tribunal found that there was sufficient cause for the delay in filing the appeal before the CIT(A), falling within the meaning of Section 249(3) of the Income Tax Act. Consequently, the CIT(A)'s order was set aside, and the CIT(A) was directed to condone the delay, admit the appeal, and pass a de novo order on merits after providing a reasonable opportunity to the assessee.

The tribunal found that the CIT (Exemptions) passed the impugned orders without providing the assessee a reasonable opportunity of being heard. Consequently, both appeals are restored to the file of the CIT (Exemptions) with directions to pass a de novo order in accordance with law after affording a proper opportunity to the assessee.

The Tribunal observed that neither the Assessing Officer nor the CIT(A) had adequately examined the assessee's accounting method of treating membership/enrollment fees as capital receipts or the claim that interest income and related expenses should be assessed under the same head. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the case to the Assessing Officer for a de novo assessment, directing a fresh examination of these issues and allowing the assessee reasonable opportunity.

The ITAT noted that the assessee's representative did not press the grounds related to the validity of reopening under Sections 148A/148 and admitted to lacking supporting evidence for claimed purchases. The Tribunal found no material to demonstrate that the 8% estimation of profit on turnover was excessive or unreasonable. Therefore, the ITAT upheld the rejection of books of account due to insufficient evidence and confirmed the 8% profit estimation, dismissing the appeal.

The Tribunal upheld the CIT(A)'s direction to the Assessing Officer to verify the correct opening stock quantity. It found this direction fair and reasonable given the assessee's own admission of a typographical error by their advocate. The Tribunal concluded that merely directing verification of the stock quantity caused no prejudice to the assessee, thereby sustaining the CIT(A)'s impugned appellate order.

The Tribunal noted that the assessee was not given a reasonable opportunity by both the AO and CIT(A). Consequently, the Tribunal set aside the CIT(A)'s order and restored the matter to the Assessing Officer with a direction to pass a de novo assessment order on merits, after providing adequate opportunity to the assessee.