ITAT Visakhapatnam Judgments — February 2026

The ITAT condoned the 176-day delay in filing the appeal, accepting the medical reasons provided by the assessee. The tribunal noted that the CIT(A) failed to adjudicate specific Ground of Appeal No. 4, which challenged the validity of the assessment based on the procedural non-compliance with Section 148/148A(b) of the Act as amended by the Finance Act, 2021. Consequently, the ITAT set aside the matter to the file of the CIT(A) with a direction to re-adjudicate this specific ground after affording the assessee a reasonable opportunity of being heard.

The Tribunal decided to remit the issue back to the Assessing Officer (AO) for further examination. The assessee's claim of incurring huge losses from online games was noted, but the inability to demonstrate sources for investment/expenditure was also highlighted. The assessee was granted one more opportunity to explain the cash deposits before the AO.

The Tribunal condoned a 7-day delay in filing the appeal due to the assessee being abroad. The Tribunal admitted additional evidence (LIC premium receipts, educational loan certificate, bank statement) submitted by the assessee, as the assessee was not available to present them earlier. The matter was set aside to the Assessing Officer for re-adjudication with the additional evidence.

The Tribunal held that since the Joint Development Agreement was cancelled, no construction took place, and the assessee did not receive any consideration or part with possession of the land, no capital gains tax was leviable. It clarified that the amount in the JDA was construction cost, not consideration received. Consequently, the entire addition for capital gains was deleted, and the consequential penalty under section 271(1)(c) was also quashed.

The ITAT held that the AO and CIT(A) failed to conduct proper enquiries into the genuineness of purchases and cash credits. The CIT(A) erred in refusing to admit additional evidence under Rule 46A, especially given the appellant's reason for delay. The tribunal found no evidence of fictitious transactions or defects in audited books and concluded that adhoc additions without enquiry are not permissible.

The Tribunal admitted additional evidence submitted by the assessee, noting that the assessee was abroad during the original proceedings and could not furnish the documents. Since these documents prima facie substantiate the deductions claimed, the Tribunal set aside the orders of the lower authorities and remanded the matter to the Assessing Officer for re-adjudication.

The Tribunal decided to remit the issue back to the AO, allowing the assessee one more opportunity to explain the cash deposits and the sources of investment/expenditure related to games. This is subject to the assessee paying a cost of Rs. 10,000 for each assessment year.

The Tribunal referred to the Supreme Court's clarification that while an assessee advancing general public utility cannot engage in trade or business for consideration, it can do so if the activities are connected to its GPU objects and receipts do not exceed 20% of total receipts. The Tribunal noted that the previous order did not consider the Supreme Court's decision.

The ITAT held that the reopening of assessment was not properly justified and the Joint Development Agreement was cancelled by both parties because the builder failed to obtain necessary permissions and commence construction. There was no proof of the assessee receiving the Rs. 70.80 lakhs, nor was the land transferred. Therefore, the addition and the consequential penalty were deleted.

The tribunal condoned the delays in filing the appeals, accepting the assessees' bonafide belief that their earlier appeals to the CIT(A) were rendered infructuous by the subsequent AO order under Section 154. It ruled that the CIT(A) erred in upholding the LTCG addition as it had already been vacated by the AO. The matter was set aside to the Assessing Officer with directions to verify the assessees' claims and vacate the impugned additions if found to be in order.

The Income Tax Appellate Tribunal (ITAT) observed that the original assessment order, which was the basis for the penalty, had already been set aside to the file of the AO by a separate ITAT order. Consequently, the underlying additions would not survive, and therefore, the penalty levied on those additions also could not be sustained. The ITAT deleted the penalty.

The Tribunal condoned the 161-day delay in filing the appeal, accepting the assessee's medical reasons as bonafide. While upholding the addition of unexplained cash under Section 69A, the Tribunal directed the AO to restrict the addition to Rs. 8,50,000/-, allowing Rs. 2,50,000/- as household savings per CBDT Instruction No. 3/2017. The Tribunal also ruled that the enhanced tax rate of 60% under Section 115BBE is applicable from AY 2017-18 onwards, preferring the view of the Kerala High Court Division Bench over the Madras High Court Single Judge's view.

The ITAT condoned the delay in filing the appeal, finding the assessee's reasons justifiable due to the CIT(A)'s improper service of notices and the non-consideration of the assessee's rejoinder to the AO's remand report. The case was set aside and remanded to the CIT(A) for fresh adjudication, with directions to provide a reasonable opportunity of being heard and to consider the previously filed rejoinder. The appeal was allowed for statistical purposes.

The ITAT held that the CIT(A) exceeded their jurisdiction by setting aside an assessment order made under Section 147 r.w.s. 144B. The first proviso to Section 251(1)(a), which grants powers to set aside an assessment for fresh adjudication, is specifically limited to orders made under Section 144 (best judgment assessment), not those under Section 147/144B. The ITAT set aside the CIT(A)'s order and restored the matter to the CIT(A) for re-adjudication based on the assessee's grounds of appeal.

The Tribunal condoned the delay in filing the appeal, citing the death of the assessee and the illiteracy of the legal heir. The Tribunal held that the CIT(A)'s order passed in the name of the deceased assessee was invalid and could not be sustained. The matter was set aside to the CIT(A) for re-adjudication after impleading the legal heir.

The Tribunal held that the AO erred in summarily adopting the stamp valuation authority's value as deemed sale consideration under Section 50C without referring the matter to the 'Valuation Cell' for determining the Fair Market Value (FMV). Citing the Calcutta High Court judgment in *Sunil Kumar Agarwal v. CIT*, the Tribunal emphasized that the AO, as a quasi-judicial authority, has a duty to refer the matter to the Valuation Cell for fair treatment, even if the assessee did not explicitly request it. Consequently, the Tribunal set aside the CIT(A)'s and AO's orders.

The Tribunal noted that the delay of 1503 days in filing the appeal before the CIT(A) was inordinate. The assessee's explanation that she could not download the intimation was found to be unsubstantial and lacking in bona fides. Citing various Supreme Court judgments, the Tribunal held that a delay of this magnitude requires a plausible explanation, which was not provided.

The Tribunal admitted additional grounds regarding procedural validity and faceless assessment non-compliance. It held that the CIT(A) erred by not passing a speaking and reasoned order, merely confirming the AO's decision without addressing specific grounds. Citing judicial precedents, the Tribunal emphasized the CIT(A)'s obligation to decide appeals on merits, even in cases of non-prosecution, and remanded the case for fresh adjudication with a direction to afford the assessee a proper opportunity of being heard.

The Tribunal held that since the notice under section 148 of the Act was quashed by the High Court, the consequential assessment order and the CIT(A) order upholding it cannot be sustained and are liable to be quashed. The penalty imposed under section 271(1)(c) also cannot survive.

The ITAT held that since the Hon'ble High Court of Andhra Pradesh had quashed the Section 148 notice for being issued outside the faceless assessment mechanism and for absence of jurisdiction, the subsequent assessment order and the penalty order could not be sustained and were thus quashed.

The Tribunal held that while the rejection of books was justified, the AO's arbitrary 8% profit estimation lacked proper basis. It directed the AO to restrict the estimated net profit to 6% of gross receipts for both assessment years, taking into account the weighted average net profit rates from the assessee's prior scrutiny assessments.

The tribunal found the AO's estimation of income at 8% of gross receipts to be unjustified, lacking a logical basis. It observed that the assessee's cases for previous years (AY 2014-15 and 2015-16) were subjected to scrutiny assessments with accepted net profit rates. Considering the weighted average of these past scrutinized assessment years' net profit rates (6.10%) and the overall average of three preceding years (5.83%), the tribunal directed the AO to estimate the income at 6% of the gross receipts for both assessment years, as there was no evidence of abnormal profit increase.

The Tribunal condoned the delay of 231 days in filing the appeal, considering the assessee's medical ailments and the accountant's oversight. The matter was set aside to the CIT(A) for fresh adjudication.

The Tribunal allowed the appeal in part. It directed the AO to delete upward adjustments for notional interest on outstanding receivables (Ground 1) and leasehold amortization charges (Ground 4), following its own consolidated order for previous assessment years. For interest on ECB, the Tribunal upheld the ALP at LIBOR + 200 basis points as determined by the DRP (Ground 3 was dismissed). Regarding royalty payments (Ground 2), while concurring with the assessee that a separate adjustment was inappropriate as royalty was part of operating cost for TNMM, the matter was remanded to the AO for reconciliation of a discrepancy in operating cost figures and fresh adjudication.

The Tribunal ruled that the notice issued under section 148 of the Act on 02.04.2022 for AY 2015-16 was barred by limitation as per the un-amended Section 149(1)(b), which had expired on 31.03.2022. Relying on various High Court precedents, it clarified that the fifth and sixth provisos of the amended Section 149 could not override the first proviso and retroactively extend the limitation for notices already time-barred. Consequently, the Tribunal held that the AO lacked valid jurisdiction to initiate the reassessment, thereby quashing the assessment order.

The Tribunal noted that the assessee-firm was indeed dissolved and its business taken over by Shri Kota Nagaiah. The cash deposits in the bank account were made during the period when Shri Kota Nagaiah was operating the business as a sole proprietor. However, the Tribunal also observed that neither the AO nor the CIT(A) had factually verified this claim. Therefore, the matter was restored to the file of the AO for fresh adjudication.

The Tribunal held that while registration under Section 12A/12AB is a precondition for exemption under Section 11, it is cardinal principle that gross receipts should not be taxed but only net profit. The Tribunal directed the AO to consider the expenditure claimed by the assessee that is relevant to earning the income and then tax the net income.

The CIT(A) held that condonation of delay is not automatic and requires a "sufficient cause" supported by cogent evidence. Since the appellant failed to provide sufficient evidence for the reasons stated, the delay was not condoned, and the appeal was dismissed in-limine.

The Tribunal held that the penalty notice issued by the Ld.AO was invalid because it did not clearly specify whether the penalty was for concealment of income or for furnishing inaccurate particulars of income. This ambiguity, coupled with a confused finding by the AO that the assessee was guilty of both, rendered the notice defective.

The Tribunal condoned the delay in filing the appeal after considering the medical reasons provided. The core of the decision revolved around the invalidity of the notice issued under Section 148A due to a lack of proper sanction from the prescribed authority, as per Section 151(ii) of the Income Tax Act, given that more than three years had elapsed since the end of the assessment year. The Tribunal relied on various High Court and Supreme Court decisions supporting this view.

The tribunal upheld the addition of Rs. 12.51 lakhs as the assessee failed to furnish concrete evidence for the source of deposits. However, it ruled that the applicable tax rate for this unexplained cash should be 30% and not 60%, citing precedents from other ITAT benches and High Courts that the amended provisions of Section 115BBE imposing a 60% tax rate are not applicable for A.Y. 2017-18.

The Tribunal observed that the lower authorities had summarily discarded substantial documentary evidence provided by the assessee, including a gift deed, confirmation letter, affidavit from the daughter, and her income tax returns. The Tribunal found it incomprehensible that these documents were discarded without proper verification. Therefore, the Tribunal set aside the matter to the AO for fresh adjudication.

The Tribunal held that the assessee's explanation for the inordinate delay of 918 days in filing the present appeal was not a sufficient cause and amounted to an 'eye wash'. Relying on Supreme Court judgments regarding limitation, the Tribunal found the delay inordinate and not backed by any justifiable reason.

The Tribunal held that the assessee's explanation for the 218-day delay in filing the appeal before the CIT(A) was not plausible or convincing. The Tribunal emphasized that the law of limitation is based on public policy and cannot be condoned based on vague, casual explanations or lack of bona fides. Therefore, the Tribunal upheld the CIT(A)'s order dismissing the appeal.

The Tribunal found that the CIT(A)'s view that the surplus in the bank account justified the addition was flawed. The Tribunal held that the AO should verify the assessee's claim that the transactions were solely related to commission agency in prawn culture and, if substantiated, compute the income at 0.4% of the total credits, as per precedent.