The Telangana High Court has dismissed an appeal filed by the Income Tax Department, holding that an amendment introduced through the Finance Act, 2026 to the proviso to Section 147A of the Income Tax Act, 1961 cannot be relied upon to challenge an Income Tax Appellate Tribunal (ITAT) order that was passed before the amendment came into force.
The Bench of Justice P. Sam Koshy and Justice Narsing Rao Nandikonda has observed that the ITAT’s impugned order had been passed in November 2025, much before the Finance Act, 2026 amendment was enacted by Parliament. Therefore, the Tribunal could not have been expected to apply a statutory amendment that did not exist when it rendered its decision.
The appeal was preferred by the Principal Commissioner of Income Tax-4, Hyderabad, challenging the order passed by the Hyderabad ‘B’ Bench of the ITAT in ITA No. 1231/Hyd/2024 relating to Assessment Year 2016-17.
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The department primarily argued that the Tribunal ought to have taken into account the amendment introduced to the proviso to Section 147A by the Finance Act, 2026, while deciding the matter.
The High Court found no merit in the Department’s contention.
The Court further noted that, at the time the Tribunal decided the appeal, there were numerous binding judgments of the jurisdictional High Court governing the issue and laying down the applicable legal position. Consequently, the Tribunal had correctly applied the law as it stood on that date.
The court held that the ITAT’s findings could neither be regarded as contrary to the law prevailing at the relevant time nor as contrary to the evidence available on record. Since the Revenue failed to demonstrate any substantial question of law requiring adjudication, the High Court declined to interfere with the Tribunal’s order.
Accordingly, the appeal was dismissed, with the Court directing that there would be no order as to costs. It also ordered that all pending miscellaneous applications, if any, would stand closed.
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