ITAT Visakhapatnam Judgments — November 2025

The Tribunal held that the reassessment proceedings initiated by the AO under Section 147 for assessment years prior to the date of registration under Section 12A/12AA are not valid in law, relying on the third proviso to Section 12A(2) and a Supreme Court upheld decision of the Punjab & Haryana High Court. Consequently, the assessment orders for these years were quashed. The Tribunal also condoned a delay in filing one of the appeals.

The Tribunal held that reassessment proceedings initiated under Section 147 solely based on non-registration under Section 12A for assessment years preceding the year of registration are invalid. Relying on the third proviso to Section 12A(2) and a Supreme Court upheld High Court decision, the Tribunal quashed the assessment orders for the impugned assessment years. The appeals for all assessment years (2013-14 to 2016-17) were allowed.

The Tribunal held that the reassessment proceedings initiated by the AO under Section 147 for assessment years prior to the date of registration under Section 12A were invalid in law, relying on the third proviso to Section 12A(2) and Supreme Court precedent. The Tribunal quashed the assessment orders and allowed the assessee's appeal.

The Tribunal held that the assessee's argument challenging the jurisdiction of the AO and the validity of the notice under section 143(2) was not sustainable. The assessee had participated in the proceedings without raising objections before the lower authorities and had not questioned the jurisdiction within the stipulated time frame. Therefore, the ground raised on this issue was dismissed. Regarding the merits, the Tribunal found no merit in the assessee's argument of gift received from her husband or the exemption of agricultural income from tree sales, as no evidence was produced to substantiate these claims.

The Income Tax Appellate Tribunal found that the Ld. CIT(A) dismissed the appeals ex-parte because the hearing notices were sent to an incorrect email ID, not the one provided by the assessee in Form No.35. The Tribunal held that this denied the assessee a reasonable opportunity of being heard and, upholding principles of natural justice, remitted the matter back to the Ld. CIT(A) for fresh adjudication after affording due opportunity.

The Tribunal found that the Ld. CIT(A) had not sent hearing notices to the correct email ID provided by the assessee in Form No.35, thereby denying a reasonable opportunity of being heard. Applying principles of natural justice, the Tribunal remitted the matter back to the Ld. CIT(A) to provide the assessee with an opportunity to present its case.

The Tribunal held that the reassessment proceedings initiated under Section 147 for assessment years prior to the date of the assessee's Section 12A/12AA registration were invalid, citing the third proviso to Section 12A(2) of the Income Tax Act. Relying on a Punjab & Haryana High Court decision, subsequently upheld by the Supreme Court, the Tribunal quashed the assessment order.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, confirming that the assessee operates as a full-fledged educational infrastructure provider offering a bouquet of integrated services, thus deeming its income as "business receipts." The Tribunal also affirmed that the disallowance under Section 14A cannot exceed the actual exempt income earned, citing judicial precedents and the principle of consistency, as the Revenue had accepted similar income classifications in prior and subsequent assessment years. The Revenue's contention regarding the improper admission of additional evidence by the CIT(A) was also dismissed.

The Tribunal upheld the CIT(A)'s decision, ruling that the assessee's complex activities of leasing custom-built educational infrastructure along with comprehensive services constituted 'Business Income' and not 'Income from House Property'. It further affirmed that the disallowance under Section 14A should be limited to the actual exempt income earned, citing judicial precedents and the principle of consistency. The procedural ground regarding additional evidence was dismissed as misconceived.

The Tribunal held that the AO was statutorily obligated to refer the matter to the Valuation Officer under the first proviso to Section 56(2)(vii)(b) r.w.s. Section 50C(2) of the Act, given the assessee's specific explanation for the difference in value. The AO's failure to do so exceeded his jurisdiction, making the adoption of the SRO value fallacious. The case was remanded back to the AO for re-valuation by the Valuation Officer.

The ITAT held that for reassessment notices issued under Section 148 beyond three years from the end of the assessment year (AY 2018-19), approval from the Principal Chief Commissioner or Principal Director General was mandatory under Section 151(ii) of the Act, as per the Finance Act, 2021. Since the AO obtained approval only from the Principal Commissioner (an authority competent for cases within three years), the notice and the subsequent assessment framed were deemed to be without valid jurisdiction and were therefore quashed. The Tribunal also rejected the retrospective application of the Finance Act, 2023, regarding time exclusions.

The ITAT affirmed the AO's rejection of the books of account due to serious infirmities found within the limited scrutiny. However, the tribunal found the 12% profit estimation by the AO arbitrary and lacking a justifiable basis, as the department could not explain its derivation. The ITAT concluded that the income should have been estimated using the weighted average net profit rate (4.01%) from the assessee's two preceding scrutiny-assessed years, particularly since the current year's disclosed rate (5.02%) was higher. Consequently, the addition of Rs. 65,08,444/- was vacated.

The Tribunal upheld the CIT(A)'s order, ruling that the assessee was engaged in systematic commercial exploitation of large-scale educational infrastructure with a bouquet of services, thus rendering the income as "business income". The Tribunal also affirmed that the disallowance under Section 14A could not exceed the actual exempt income earned and emphasized the principle of consistency, noting the revenue's acceptance of business income classification in prior and subsequent years. Consequently, all appeals filed by the revenue were dismissed.

The Tribunal acknowledged the additional ground of appeal regarding the invalidity of the assessment due to a lack of a valid notice under section 143(2) of the Act. However, following judicial precedents, the Tribunal held that since the assessee participated in the assessment proceedings without raising objections before lower authorities, the additional ground could not be sustained and was dismissed.

The Tribunal found that the assessee failed to provide sufficient documentary evidence to substantiate its claim for agricultural income. However, considering that in a similar previous assessment year (AY 2014-15), the AO had accepted Rs. 7 lakhs as agricultural income, the Tribunal restricted the addition to Rs. 15,67,968/-, thereby accepting Rs. 7 lakhs as agricultural income for the current year.

The Tribunal ruled that Section 80AC, which mandates filing a return by the due date for claiming certain deductions, is prospective and not applicable for AY 2017-18. It noted that Section 80A(5) requires a claim in the return but does not specify a time limit for filing for the relevant assessment year. The Tribunal directed the AO to consider the Section 80P deduction claim on its merits.

The Tribunal held that the reassessment proceedings initiated for A.Y. 2015-16 were without jurisdiction. The notice issued under section 148 of the Act dated 03.04.2022 was barred by limitation as per the un-amended provisions of section 149(1)(b), as the six-year period expired on 31.03.2022. Consequently, the assessment completed under section 147 based on this invalid notice was quashed, relying on Supreme Court judgments.

The Tribunal upheld the CIT(A)'s decision to delete the addition in the assessee's hands. Since M/s. Polisetty Somasundaram had already admitted the Rs.3,57,77,500/- as its income, and that admission had attained finality, the protective assessment made in the assessee's hands could not be legally sustained.

The Tribunal noted that while the medical certificate substantiated the trustee's ill-health until 15.02.2025, the assessee failed to provide sufficient cause for the subsequent delay from 16.02.2025 to 21.05.2025. The Tribunal also observed the assessee's continuous non-compliance with the notices from the Ld. CIT(E). Therefore, the condonation petition was rejected, and both appeals were dismissed in limine.

The Tribunal found that while a medical certificate covered part of the delay, the period from 16.02.2025 to 21.05.2025 remained unsubstantiated. Considering this unexplained delay and the assessee's continuous non-compliance with the Ld.CIT(E)'s notices, the condonation petition was rejected. Consequently, both appeals filed by the assessee were dismissed in limine.

The ITAT held that the CIT(A) erred by summarily dismissing the appeal for non-prosecution without a speaking order, emphasizing the CIT(A)'s statutory obligation under Section 250 and Section 251 to dispose of appeals on merits with reasoned decisions. The tribunal set aside the CIT(A)'s order and remanded the case for fresh adjudication, directing the CIT(A) to consider both the original and additional grounds, including the assessee's challenge to the validity of the Section 148 notice concerning Section 151 approval for reopening beyond three years.

The Tribunal found a clear contradiction between the AO's assessment order, which explicitly stated no addition on the limited scrutiny issue, and the computation sheet, which disallowed the Section 80P deduction. The Tribunal held that once the AO categorically observed no addition in the body of the assessment order, he could not subsequently disallow the deduction via the computation sheet without justification. Therefore, the disallowance and the CIT(A)'s order sustaining it were deemed unsustainable.

The Tribunal held that the paddy procurement commission was eligible for deduction under Section 80P(2)(a)(iii) as it was for marketing members' agricultural produce, with APSCSCL acting as an intermediary. It further held that the interest income from deposits with DCCB was eligible for deduction under Section 80P(2)(d), recognizing DCCB as a co-operative society and relying on judicial precedents.

The Tribunal found no infirmity in the CIT(A)'s decision to sustain the AO's rectification order under Section 154. It noted that the assessee had accepted the quantum addition in the original assessment under Section 153A and had not challenged it. Therefore, the rectification by the AO to apply the correct tax rate under Section 115BBE for unexplained cash was deemed legally correct.

The ITAT held that the Section 148 notice, issued on 27/07/2022 for AY 2016-17, was beyond the three-year period, thus requiring approval from a higher authority as per Section 151(ii) (Principal Chief Commissioner/Principal Director General). Since the approval was obtained from a Principal Commissioner of Income Tax, which was not the statutorily mandated authority, the assumption of jurisdiction by the AO was invalid. The ITAT also clarified that the Finance Act, 2023 proviso to Section 151, concerning time exclusion, could not be applied retrospectively.

The CIT(A) dismissed the appeals `in limine` without condoning the delay, ruling that the reasons provided by the assessee did not constitute "sufficient cause" under Section 249 of the Income Tax Act. The Tribunal upheld this decision, stating that the assessee's explanations reflected negligence and a casual approach, and emphasized that the law of limitation must be applied rigorously, especially in cases of gross negligence. Both the assessment and penalty appeals were accordingly dismissed by the Tribunal.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to quash the reassessment. It was held that for AY 2018-19, where more than three years had elapsed, the AO obtained approval from an incorrect authority (Pr. Commissioner of Income Tax) instead of the statutorily mandated higher authority (Principal Chief Commissioner/Director General or Chief Commissioner/Director General) as per Section 151(ii) of the Act. This jurisdictional defect rendered the reassessment void, and the merits of the addition were left open.

The CIT(A) dismissed the appeal in limine for not explaining "sufficient cause" for the 965-day delay under Section 249. The Tribunal upheld this dismissal, observing that the assessee's reasons for the delay, including a further 126-day delay even after allegedly receiving the assessment order, demonstrated negligence and a casual approach to tax matters. Citing Supreme Court precedents, the Tribunal ruled that such an inordinate and unexplained delay could not be condoned, thus dismissing both appeals.

The Tribunal upheld the CIT(A)'s decision to delete the penalty, ruling that once the quantum addition forming the basis for the penalty under Section 271AAC(1) is vacated by the ITAT, the penalty cannot survive on a standalone basis. The fact that the department appealed the quantum order to the High Court does not alter this, as the ITAT's order was neither set aside nor stayed.

The ITAT upheld the validity of the reopening under Section 147 but allowed the appeal on merits. It ruled that once the AO accepts the trading results and books of account, he cannot re-characterize recorded sales proceeds as unexplained cash credit under Section 68 without rejecting the books under Section 145(3) or proving the sales are fictitious. The tribunal emphasized that the assessee had provided substantial documentary evidence to prove the genuineness of the transactions, and receipts forming part of business turnover cannot be taxed again under Section 68.

The ITAT found that the assessee failed to provide sufficient and reasonable cause, supported by evidence, for the substantial delay in filing appeals before the Ld. CIT(A). Upholding the Ld. CIT(A)'s decision, the ITAT concluded there was no infirmity in the orders dismissing the appeals due to non-condonation of delay.

The Income Tax Appellate Tribunal (ITAT) upheld the decision of the CIT(A), concluding that the assessee failed to provide sufficient and reasonable cause, along with documentary evidence, for the considerable delay in filing the appeals before the CIT(A). Consequently, the ITAT found no infirmity in the CIT(A)'s orders and dismissed both the quantum and penalty appeals filed by the assessee.

The Income Tax Appellate Tribunal (ITAT) affirmed the CIT(A)'s decision, concluding that the assessee failed to provide sufficient and reasonable cause, supported by evidence, for the excessive delays in filing the appeals. Consequently, the ITAT found no infirmity in the CIT(A)'s orders to dismiss both appeals.

The ITAT ruled that the CIT(A) erred in dismissing the appeal solely for non-prosecution without adjudicating its merits, emphasizing the statutory obligation to pass a reasoned order. Citing a Bombay High Court precedent, the ITAT remanded the case back to the CIT(A) for fresh adjudication on merits after providing the assessee a proper hearing.

The Tribunal upheld the CIT(A)'s decision, quashing the penalty proceedings initiated by the AO. It reiterated that for penalty under Section 271(1)(c), the notice must unequivocally specify whether it is for "furnishing inaccurate particulars" or "concealment of income," as these are distinct grounds. The failure to specify the limb renders the notice vague and invalid, thus denying the assessee a proper opportunity to defend.

The Ld. CIT(A) dismissed both appeals, refusing to condone the delay as the assessee failed to provide cogent evidence for the claimed reasons, especially ill-health. The ITAT upheld the CIT(A)'s decision, finding no infirmity in the dismissal, as the assessee could not demonstrate sufficient or reasonable cause for the belated filing of appeals.