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2026 Supreme(Online)(ITAT) 8867

आयकर अपीलय अधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘ DB-A ‘ Bench, Hyderabad

ी रिवश सूद,ाियक सद एवंी मधुसूदन साविड़या लेखा सद सम |
Before Shri Ravish Sood, Judicial Member
A N D
Shri Madhusudan Sawdia, Accountant Member

आ.अपी.सं /ITA No.1406 & 1511/Hyd/2025
(िनधारण वष/Assessment Year: 2016-17 & 2020-21)

Dy. CIT
Circle 3(1)
Hyderabad
Vs. Sarvejana Healthcare
Private Limited,
Hyderabad
PAN: AAMCS6700Q

राज व ारा/Revenue by: Smt.U.Mini Chandran,CIT(DR)

िनधारती ारा/Assessee by: C.A. Satya Dinakar

सुनवाई की तारीख/Date of hearing: 24/03/2026

घोषणा की तारीख/Pronouncement: 08/04/2026

Advocates:
For the Appellants/Petitioners: Smt. U. Mini Chandran, CIT(DR)
For the Respondents: C.A. Satya Dinakar

Appellate authorities admitting additional evidence under Rule 46A of the Income-tax Rules, 1962, must grant the Assessing Officer an opportunity to verify the evidence and provide a remand report; failure to do so violates the principles of natural justice and renders the appellate order liable to be set aside.

Headnote:(A) Income-tax Act, 1961 - Section 32, Section 56(2)(vii)(b), Section 40A(7), Section 143(3), Section 147 - Income-tax Rules, 1962 - Rule 46A - Depreciation on Goodwill - Computation method - Appellate procedure - Admission of additional evidence - Failure to call for remand report from Assessing Officer violates principles of natural justice and Rule 46A of Income-tax Rules, 1962 - Matters remanded to CIT(A) for fresh adjudication.

Facts of the case:
The Revenue challenged the orders of the CIT(A) which deleted various additions made by the Assessing Officer concerning depreciation on goodwill, excess share premium receipt, and reversal of provisions (rent, gratuity). The Revenue contended that the CIT(A) failed to adjudicate the core issue of the computation method for goodwill and admitted additional evidence without following the mandatory remand procedure under Rule 46A.

Findings of Court:
The Tribunal found that the CIT(A) neglected to adjudicate upon the core dispute regarding the computation of goodwill (market value vs. book value) and failed to follow the mandatory procedure under Rule 46A when admitting additional evidence, thereby violating principles of natural justice. Accordingly, the matters were set aside to the file of the CIT(A) for fresh adjudication after calling for remand reports.

Issues: Whether the method of computation of goodwill by the assessee was correct; whether the CIT(A) erred in deleting additions without adjudicating the core dispute; and whether the admission of additional evidence by the CIT(A) without a remand report violated Rule 46A.

Ratio Decidendi: When an appellate authority admits additional evidence under Rule 46A, it is mandatory to provide an opportunity to the Assessing Officer to examine it and furnish a remand report. Failure to do so constitutes a violation of natural justice. Additionally, appellate authorities must address the specific grounds of dispute raised by the Assessing Officer rather than resolving issues on different parameters.

Result: Appeals of the Revenue are allowed for statistical purposes.

आदेश/ORDER

Per Madhusudan Sawdia, A.M.:

These appeals are filed by the Revenue feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 25.06.2025 and 14.07.2025 for the A.Ys.2016-17 and 2020-21 respectively.

ITA No. 1406/Hyd/2025 for A.Y. 2016-17

2. The Revenue has raised the following grounds of appeal:

1. The Ld. CIT(A) erred both in law and facts of the case in allowing relief to the assessee.

2. The Ld.CIT(A) erred in deleting the disallowance of depreciation of Rs 3,56,19,580 on ‘goodwill’ claimed under section 32, without appreciating that the assessee failed to prove that any intangible asset or goodwill was acquired as part of the business transfer agreement.

3. The Ld.CIT(A) failed to appreciate that the business transfer agreement did not separately quantify goodwill or any intangible asset, and in absence of such quantification or evidence, the claim of depreciation on goodwill was rightly disallowed by the AO.

4. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs 50,38,59,200 made by the Assessing Officer u/s 56(2)(vii)(b) on account of excess share premium received over the fair market value, without properly appreciating the provisions of section 56(2)(vii)(b) and Rule 11UA, and without considering that the assessee failed to produce valuation report during the course of assessment proceedings.

5. The Ld. CIT(A) erred in law in accepting the Discounted Cash Flow (DCF) valuation produced during appellate proceedings without affording an opportunity to the AO to examine the same, thereby violating the principles of natural justice.

6. The appellant craves leave to add, amend, alter, or withdraw any of the above grounds at the time of hearing.

3. The brief facts of the case are that the assessee is a multi-specialty hospital engaged in the business of providing healthcare services. The assessee filed its return of income for Assessment Year 2016–17 on 16.10.2017, declaring total income of Rs.15,32,50,530/-. The assessee subsequently revised its return of income on 31.03.2017, revising the total income to Rs.18,17,25,530/-. The case of the assessee was selected for scrutiny and the assessment was completed under section 143(3) of the Income Tax Act, 1961 (“the Act”) on 25.12.2018, wherein addition of Rs.58,69,570/- was made. The assessee did not prefer any appeal against the said order. Subsequently, the case of the assessee was reopened under section 147 of the Act and accordingly, notice under section 148 of the Act dated 30.03.2021 was issued by the Learned Assessing Officer (“Ld. AO”). The assessee did not file any return of income in response to the said notice. During the reassessment proceedings, the assessee responded only on one occasion by filing submissions dated 13.10.2021. Considering the submissions of the assessee, the Ld. AO made addition of Rs.3,56,19,580/- on account of disallowance of depreciation on goodwill, Rs.50,38,59,200/- as income from other sources under section 56(2)(vii)(b) of the Act and Rs.65 lakhs under section 69A of the Act. Accordingly, the reassessment was completed by the Ld. AO under section 147 r.w.s. 144B of the Act on 31.03.2022, assessing the total income of the assessee at Rs.73,35,73,880/-.

4. Aggrieved by the reassessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT (A) confirmed the addition of Rs.65 lakhs under section 69A of the Act and deleted the additions of Rs.50,38,59,200/- and Rs.3,56,19,580/-. Thus, the appeal of the assessee was partly allowed by the Ld. CIT (A).

5. Aggrieved by the relief granted by the Ld. CIT(A), the Revenue is in appeal before this Tribunal. At the outset, the Learned Departmental Representative (“Ld. DR”) submitted that the present appeal of the Revenue involves two issues, namely, (i) deletion of addition of Rs.3,56,19,580/- made by the Ld

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Dy. CIT Circle 3(1) Hyderabad	Vs.	Sarvejana Healthcare Private Limited, Hyderabad PAN: AAMCS6700Q
राज व ारा/Revenue by:	Smt.U.Mini Chandran,CIT(DR)
िनधारती ारा/Assessee by:	C.A. Satya Dinakar
सुनवाई की तारीख/Date of hearing:	24/03/2026
घोषणा की तारीख/Pronouncement:	08/04/2026