ITAT quashed order u/s 143(3) dated 31.03.2024 by observing that AO did not issue the mandatory notice u/s 148 as required under search cases but had only issued a notice under Section 143(2); Search and seizure action took place u/s 132 in case of third party in which Assessee was also a searched party and so the Assessee’s case was selected for compulsory scrutiny; As per ITAT, when a search takes place, AO must act u/s 148 (which now performed the role formerly assigned to Section 153A w.e.f. 1.4.2021) rather than continuing with a pending Section 143(3) proceeding; Once Search had taken place, no normal assessment u/s 143(3) of the Act could be framed.

ITAT deleted penalty levied u/s 271(1)(c) noting that Assessee duly disclosed concerned income in the return of income filed in response to the notice u/s 148, which the AO had accepted; On receipt of information from DDIT (Investigation) that the Assessee had not offered the income from sale of plots co-owned by him, Revenue issued notice u/s 148, in response to which Assessee filed the return of income offering sale proceeds of plots of Rs. 82.36 lakhs; Assessee had offered the gain from transactions which were not even part of the investigation report, which reflected the bonafide intention of the Assessee.

Gujarat HC quashed notice u/s 148 dated 22.03.2025 for AY 2015-16, notice being barred by limitation of more than 10 years; Fourth proviso permits assessment beyond 6 years subject to specified conditions and refers to “relevant AY” as stated in Explanation 1 in Section 153A, that defines “relevant AY”; AY relevant to the previous year of search becomes the reference year and the 10 year period is counted from the end of that AY; This includes the search assessment year within the tenyear framework; Thus, while computing 10 year period under Explanation 1 to Section 153A r.w.s 153C, the AY to the previous year of search is to be included in the reckoning.

ITAT held that notice issued by the AO u/s 148 for AY 2015-16 was barred by limitation as per first proviso to Section 149 as introduced by Finance Act, 2021; As per pre-amended section 149(1)(b), a notice u/s 148 for AY 2015-16 could be issued by the AO latest by March 31, 2022; The provisions contemplated in the “fifth proviso” of Section 149(1) of the Act (post amended), and also the extension of time limit to seven days in a case where after the exclusion of the time limit contemplated in the “fifth proviso” the period remaining is less than seven days (as per the “sixth proviso”), cannot be read into the first proviso, for the purposes of computing the period of limitation for issuance of notice under Section 148 of the Act.

ITAT deleted addition u/s 68 on account of unsecured loan noting that AO misinterpreted repayment as fresh credit and Assessee discharged its onus by proving the identity, creditworthiness, and genuineness; Repayment of an existing loan cannot be treated as unexplained cash credit u/s 68 in a subsequent AY; Lender company responded to notices issued under Sections 133(6) and 131 by furnishing relevant documents; Mere absence of the director’s personal appearance or the lender companies’ low income/negative networth, could not justify invoking of Section 68.

Assessee purchased its own shares pursuant to a buy back offer and the AO made the addition in the hands of the Assesee by invoking Section 56(2)(x); HC opines that the very hypothesis that the Assessee had acquired an asset at lesser rate than the FMV has no legs to stand on and “...Buy-back of its own shares is antitheses to buying an asset”; HC stated that as per Section 68(vii) of Companies Act, the Assessee must have destroyed the shares (via capital reduction) which the AO has sought to tax and a person cannot be taxed for so-called deemed profit from the property (shares) which accrues to it consequent to destruction of the very same property

ITAT held that TDS credit cannot be denied merely due to timing mismatch between revenue recognition and deduction year; ITAT noted Assessee’s contention that since the time for revising returns of preceding AY had expired, it claimed TDS credit in AY in which such TDS was actually deducted and deposited; ITAT remitted the matter back to AO with a direction to verify whether the revenue pertaining to TDS had been offered to tax in preceding AY and if verification was confirmed, ITAT directed the AO to allow Assessee’s claim.

For AY 2001-02, HC held that the consideration received on “transfer of trademark along with goodwill”, was not chargeable to tax since it was not an “asset” to attract the charging provisions of Section 45(1), and its assignment/transfer thus was not subject to income tax under the head of “capital gains”; SC judgment in B.C. Srinivasa Shetty relied upon; Amendment in Section 55(2) by Finance Act, 2001 wherein the words ‘or a trademark or brand name associated with a business’, was a prospective one w.e.f. 01/04/2002.; AO’s approach in taxing the impugned consideration as business income u/s 28(iv) or 41(1), was unjustified.

AO in both the draft assessment order as well as in final assessment order, started his computation of income from the income determined by the CPC u/s 143(1); Assessee had filed rectification applications u/s 154, both before the JAO and FAO, that were still pending for adjudication; AO ought to have taken cognizance of the grievance of the Assessee in the assessment order framed both u/s 143(3) r.w.s 144C(1) and 143(3) r.w.s. 144C(13); Intimation u/s 143(1) stood merged with the draft assessment order u/s 144C(1) and it was ought to have been adjudicated by the DRP; ITAT remanded matter back to AO to adjudicate the additions.

ITAT quashed reassessment proceedings noting that the notice u/s 148 in the name of a deceased Assessee was void ab initio; Assessee expired prior to issuance of reassessment notice u/s 148; Reliance placed on Delhi HC judgment in Savita Kapila and Madras HC judgment in Alamelu; Section 292B cannot be invoked to rectify a fundamental jurisdictional error such as issuance of notice to a nonexistent person; A proper course would have been to issue notice to the legal heirs in terms of Section 159, as per ITAT.

ITAT upheld CIT(A) order deleting the addition of Rs. 4.87 Cr made by estimating profit at 12% of turnover in the case of F&O transactions without any reasonable basis; Assessee’s books of account were duly audited, and ITAT pointed out that the AO had not brought any material on record to justify rejection of books or to support estimation of profit at such a rate; As per ITAT, in the business of derivative trading, profit estimation based on turnover at a fixed percentage cannot be applied in an arbitrary manner.