ITAT Visakhapatnam Judgments — December 2025

The Tribunal found that the tax effect was below the monetary limit. It ruled that the exception invoked by the Revenue (Clause-(f) of Para No.3.1 of CBDT Circular No. 5/2024, concerning non-quantifiable tax effect for registration cases like Section 12AA) was inapplicable for AY 2017-18, as the assessee's Section 12AA registration was only effective from AY 2018-19. Consequently, the Revenue's appeal was dismissed.

The Tribunal held that the AO made a double addition by not reducing the re-characterized commission income from the assessee's declared business income and directed recomputation. It further held that the addition under Section 68 should be taxed at 30% instead of 60%, considering the effective date of the Taxation Laws (Second Amendment) Bill, 2016, and various judicial precedents.

The Tribunal held that the provisos to Section 50C, inserted by the Finance Act, 2016, are curative and retrospective, applying from April 1, 2003. However, the original agreement to sell from 2004 was rendered ineffective due to subsequent disputes and revised agreements. Thus, the AO was directed to recompute LTCG by adopting SRO values based on the dates of the compromise deed (23.11.2013) and two memorandums of understanding (12.08.2013) for the respective land portions covered, and for the remaining land, the SRO value on the dates of the last sale deeds (16/11/2015 and 18/11/2015). The CIT(A)'s order was set aside.

The Tribunal quashed the penalty, ruling that the notice issued under Section 274 r.w.s. 271(1)(c) was invalid as it failed to specify whether the penalty was for 'concealment of income' or 'furnishing inaccurate particulars of income'. Citing the jurisdictional High Court decision, the Tribunal held that such an ambiguous notice deprives the assessee of proper defense.

The Tribunal held that the impugned notices and orders were issued outside the prescribed faceless mechanism and thus were bad in law and illegal. The Jurisdictional Assessing Officer (JAO) lacked the jurisdiction to issue these notices and orders. The Tribunal relied on various High Court and Supreme Court judgments, emphasizing that jurisdiction must be exercised according to the prescribed procedure, and any deviation renders the action invalid.

The Tribunal upheld the jurisdictional validity of the faceless assessment order, stating that Section 144B already allowed for such assessments. However, on the merits of the additions, the Tribunal found the AO's approach arbitrary, particularly regarding the non-consideration of cash withdrawals for redeposit and potential double additions for credit card payments and equity purchases. Consequently, the Tribunal set aside the matter for re-adjudication by the AO, directing proper verification of sources, provision of details to the assessee, and allowance for the cost of acquisition for short-term capital gains.

The Tribunal held that the reassessment notice issued under Section 148 for AY 2016-17, dated 27/07/2022, was beyond three years from the end of the relevant assessment year. As per Section 151(ii) of the Act (w.e.f. 01.04.2021), approval from the Principal Chief Commissioner or Principal Director General was mandatory for such cases. Since the AO obtained approval only from the Principal Commissioner of Income-tax, who was not the competent authority, the reassessment proceedings were devoid of valid jurisdiction and were quashed.

The Tribunal held that the date of issuance of a Section 148 notice is the date it is handed over to the postal authority for booking, which in this case was 08.04.2021. Since this date falls after 01.04.2021, the notice should have been treated as a show-cause notice under the new Section 148A(b) of the Act. As the Assessing Officer failed to comply with the Supreme Court's decision in UOI v. Ashish Agarwal and CBDT Instruction No.1 of 2022, the assessment order was passed without proper authority of law and was therefore quashed.

The ITAT noted that the assessee submitted fresh evidence (confirmation letters) for the first time, which had not been examined by the lower authorities. Given that the genuineness of transactions and identity of parties were unverified, the Bench decided to remit the issue back to the Assessing Officer for fresh examination after providing an opportunity to the assessee.

The Income Tax Appellate Tribunal (ITAT) upheld the Ld.CIT(A)'s decision to remand the issues back to the Ld.AO. The Tribunal observed that despite multiple opportunities, the assessee failed to represent herself or provide proper evidence regarding the sources of deposits and capital gains. Consequently, the ITAT dismissed the assessee's appeal, endorsing the need for further investigation by the Assessing Officer.

The Tribunal held that the Jurisdictional Assessing Officer (JAO) lacked the inherent jurisdiction to initiate reassessment proceedings and issue notices under Sections 148/148A, and to frame the assessment under Section 147, after the implementation of the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022". It clarified that Section 124(3) pertains only to territorial jurisdiction, not an inherent lack of jurisdiction. Following High Court judgments, the Tribunal ruled that only a Faceless Assessing Officer (FAO) was competent to perform these actions under the new scheme. Therefore, the assessment order and consequential penalty orders passed by the JAO were deemed invalid and quashed.

The Tribunal held that the assessment order and consequential penalty orders were invalid as the notices under Sections 148A and 148 were issued by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO). This contravened the provisions of Section 151A and the 'Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022,' which mandates faceless assessment procedures. The Tribunal emphasized that a lack of inherent jurisdiction cannot be waived.

The ITAT upheld the CIT(A)'s decision, ruling that the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) under Section 148A and the subsequent notice under Section 148 were void ab initio. This was because, after the introduction of the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022" and the "e-Assessment of Income Escaping Assessment Scheme, 2022" (under Section 144(b) r.w. Section 151A), only a Faceless Assessing Officer (FAO) has the authority to issue such notices, not a JAO. The Tribunal emphasized that jurisdiction cannot be conferred by consent and any action without inherent jurisdiction is a nullity.

The Tribunal held that the reassessment notice issued under Section 148 and the subsequent assessment framed by the Jurisdictional Assessing Officer (JAO) were invalid and illegal. This was because, following the introduction of the Faceless Assessment Scheme (governed by Sections 151A and 144B), only a Faceless Assessing Officer (FAO) has the inherent jurisdiction to issue such notices and complete assessments. Consequently, the assessment order passed under Section 147 and the penalties initiated under Section 270A and 271AAC(1) were quashed.

The Tribunal noted that notices were not properly delivered to the assessee due to a blank recipient ID in emails and that the assessee was not aware of the proceedings. Concluding that the assessee deserved an opportunity, the Tribunal allowed the appeal for statistical purposes, remanding the case to the CIT(A) to allow the assessee to substantiate the cash deposits.

For A.Y. 2015-16, the tribunal upheld the addition of Rs.1,06,48,000/- as unexplained investment under section 69, dismissing the assessee's appeal. For A.Y. 2019-20, the tribunal confirmed the CIT(A)'s deletion of the Rs.88,87,000/- addition, finding the cash deposits duly accounted for, and thus dismissed the revenue's appeal.

The Tribunal noted that the original return was filed correctly, but a fraudulent revised return was processed. Citing the Supreme Court in CIT vs. Kanpur Coal Syndicate, the Tribunal held that the assessee is entitled to an appeal when there is a denial of liability. The Ld.CIT(A) had dismissed the appeal as non-appealable.

The Tribunal held that the notice under section 148, issued on 07.04.2022 for AY 2015-16, was barred by limitation as per the unamended provisions of section 149(1)(b), as the six-year period expired on 31.03.2022. The reassessment proceedings were initiated without jurisdiction.

The tribunal held that filing Form 10B is a procedural requirement, not mandatory for claiming exemption under Section 11 and 12, citing the Gujarat High Court. It remanded the matter back to the Assessing Officer to verify the assessee's claim in accordance with Form 10B and decide the allowability of exemption on merits.

The Tribunal held that an order cannot be passed against a dead person. Proceedings against a deceased assessee must be continued against legal representatives from the stage at which they stood on the date of death. The assessment order passed in the name of the deceased was deemed a nullity.

The Tribunal found the assessee's selection of comparables unconvincing and noted a failure to demonstrate commercial benefit from the trademark license agreements, suggesting the AE was 'piggy-backing.' Distinguishing the case from EKL Appliances Ltd., the Tribunal upheld the TPO's determination of NIL ALP, affirming the upward adjustment and dismissing the assessee's appeal.

The Income Tax Appellate Tribunal found that the CIT(A) had called for a remand report from the AO and additional evidence from the assessee, but disposed of the appeal without considering them or adjudicating on the request for additional evidence. Citing procedural infirmity and violation of natural justice, the Tribunal set aside the CIT(A)'s order and remanded the matter for fresh adjudication, directing the CIT(A) to consider the remand report and additional evidence.

The Tribunal found that the CIT(A)'s order was not a speaking order, as it summarily dismissed the appeal without addressing specific grounds, particularly concerning the validity of the Section 148 notice and the lack of proper approval under Section 151. The matter was set aside to the file of the CIT(A) for re-adjudication, with a specific direction to verify the factual position regarding the AO's failure to obtain the requisite approval for issuing the Section 148 notice.

The ITAT held that the CIT(A)'s order was a non-speaking order as it failed to address the specific legal issues concerning the validity of the Section 148 notice. Furthermore, the CIT(A) exceeded its jurisdiction by setting aside an assessment made under Section 143(3) r.w. Section 147 r.w. Section 144B, as the 'first proviso' to Section 251(1)(a) limits such power only to assessments framed under Section 144. Consequently, the ITAT set aside the matter to the CIT(A) for re-adjudication with a speaking order.

The Tribunal held that the enabling provision for computation and levy of late filing fees under Section 234E via processing under Section 200A was inserted with effect from 01.06.2015 by Finance Act, 2015. Since the period of default for which the fee was levied in the assessee's case was prior to this effective date, Section 234E could not be enforced retrospectively. The Tribunal relied on precedents from Karnataka High Court, Kerala High Court, and its own earlier decisions.

The ITAT found the CIT(A)'s order to be non-speaking as it failed to adjudicate the assessee's specific legal challenges regarding the validity of the Section 148 notice. Furthermore, the CIT(A) exceeded its jurisdiction by setting aside an assessment framed under Section 143(3) r.w.s. 147, as the relevant proviso to Section 251(1)(a) limits such power only to assessments made under Section 144. Consequently, the ITAT remanded the matter back to the CIT(A) for re-adjudication with directions to consider all contentions and issue a speaking order after affording due opportunity to the assessee.

The Tribunal observed that the quantum assessment, which was the basis for the penalty, had previously been set aside by a co-ordinate bench and remanded to the AO for re-adjudication. Since the underlying assessment itself was not final and required reconsideration, the penalty imposed under Section 271(1)(c) could not stand alone and was consequently set aside.

The Tribunal noted that in a previous consolidated order concerning the quantum appeal, the underlying assessment for the cash deposits was set aside and remanded to the AO for re-adjudication, including verifying bank account ownership. As the quantum assessment forming the basis for the penalty is currently under re-adjudication, the penalty under Section 271(1)(c) cannot be sustained independently and is also set aside.

The Tribunal found that the assessee had adequately explained the source of the cash deposits by demonstrating previous large cash withdrawals and a regular pattern of withdrawing and redepositing funds after incurring expenditures. Consequently, the Tribunal ruled that the addition made by the AO was not justified and directed its deletion.

The Tribunal, while acknowledging the CIT(E)'s justification in rejecting the application due to non-compliance, decided to grant the assessee one final opportunity in the interest of natural justice. The impugned order of the CIT(E) was set aside, and the matter was remanded back to the CIT(E) for fresh consideration, with directions for the assessee to cooperate and furnish all required documents.

The Tribunal condoned the delay in filing the appeal due to a reasonable cause. The appeal raised grounds challenging the ex-parte assessment and the application of the enhanced tax rate under Section 115BBE. The Tribunal allowed the ground related to Section 115BBE, stating that the 60% rate is applicable from 01.04.2017 onwards, not retrospectively for the period in question.

The Tribunal ruled that the capital gains are assessable solely in the hands of the assessee firm, as it was the legal vendor, regardless of business discontinuance or claims of AOP status. It clarified that the entire gain was Long Term Capital Gain on land. The proportionate income disclosed by partners must be excluded from their returns, and the tax credit for any taxes paid by partners on this income should be granted to the firm.

The Income Tax Appellate Tribunal (ITAT) found that the CIT(A) erred by arbitrarily failing to address and adjudicate the assessee's specific ground of appeal concerning the validity of the Section 148 notice. The assessee contended that the notice, issued on 31/03/2022, was invalid as it was not issued by a Faceless Assessing Officer as mandated by the Faceless Reassessment Scheme effective from 29/03/2022. The ITAT remanded the matter back to the CIT(A) for re-adjudication of this crucial legal issue.

The ITAT condoned the 244-day delay in filing the appeal, accepting the reason of the assessee's counsel's ill-health and unawareness of the CIT(A) order. It found that the CIT(A) improperly served notices via email despite the assessee having opted for physical service in Form-35. The ITAT set aside the ex-parte order of the CIT(A) and remanded the matter for fresh adjudication with a direction to provide a reasonable opportunity of being heard to the assessee.

The Tribunal held that following the introduction of the Faceless Jurisdiction of Income Tax Authorities Scheme, 2022, and the e-Assessment Scheme of Income Escaping Assessment Scheme, 2022, only a Faceless Assessing Officer (FAO) has the authority to issue notices under Section 148 and initiate proceedings under Section 148A. The notice issued by the Jurisdictional Assessing Officer (JAO) was found to be inherently without jurisdiction, making the subsequent assessment order by the FAO invalid. The Supreme Court's judgment relied upon by the Revenue was distinguished as it pertained to territorial jurisdiction under Section 124(3), not an inherent lack of authority.

The Tribunal held that the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) through notices under Section 148A(d) and Section 148 were invalid, as they were issued outside the mandatory faceless mechanism prescribed by Section 151A and the "e-Assessment Scheme of Income Escaping Assessment Scheme, 2022." Relying on Supreme Court and High Court judgments, it was clarified that Section 124(3) applies to territorial jurisdiction, not an inherent lack of jurisdiction, which cannot be waived. Consequently, the assessment order was quashed for want of valid jurisdiction.

The Income Tax Appellate Tribunal held that the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) through a Section 148 notice were invalid. This was because, after the "e-Assessment of Income Escaping Assessment Scheme, 2022" came into effect, only the Faceless Assessing Officer (FAO) was competent to issue such notices. The Tribunal, following High Court precedents, found that the JAO inherently lacked jurisdiction.

The Tribunal held that the reassessment proceedings initiated by the Jurisdictional Assessing Officer (JAO) and the subsequent assessment order framed by the Faceless Assessing Officer (FAO) were bad in law and illegal due to the JAO's inherent lack of jurisdiction. The Tribunal noted that after the introduction of the Faceless Jurisdiction and e-Assessment Schemes, only a Faceless Assessing Officer is authorized to issue notices under Section 148, not a Jurisdictional Assessing Officer.

The Income Tax Appellate Tribunal held that Section 43B(c) of the Income Tax Act, 1961, allows for the deduction of bonus payments in the assessment year when the payment is actually made to the employees, irrespective of the previous year in which the liability was incurred. Since the bonus payments were made during the impugned assessment year, they are allowable.

The Tribunal found that the Ld. CIT(A) erred by not adjudicating the issue on merits, especially regarding the compensation from agricultural land acquisition. It directed the CIT(A) to re-examine the supporting evidences and adjudicate the matter on merits. The case was remitted back to the file of the Ld. CIT(A) for fresh adjudication.

The Tribunal, relying on judicial precedents, held that cotton waste used as raw material by open-ended spinning mills does not fall under the definition of 'scrap' as per Explanation (b) to Section 206C. It stated that the non-furnishing of Form 27C is a technical breach which can be condoned. Consequently, the matter was remitted back to the Ld. AO to verify the end-use of the cotton waste by 'open ended spinning mills' and allow the assessee's claim accordingly.