ITAT Visakhapatnam Ruling: Appeal Allowed Against Fraudulent Revised Income-Tax Return Filed Without Consent

In a significant judgment delivered in December 2025, the Income Tax Appellate Tribunal (ITAT), Visakhapatnam Bench, provided vital clarity on the right to appeal and proper assessment procedures where a revised income-tax return was fraudulently filed without the taxpayer’s knowledge or consent. The case of Nagarjuna Vutla vs. ITO (Assessment Year 2024-25) highlights important issues around fraudulent revised returns, procedural rights under the Income-tax Act, and the scope of appellate remedies available when a taxpayer’s liability has been incorrectly determined due to wrongful actions of third parties.

Facts and Issues of the Case

The core facts of the case revolve around fraudulent filing of a revised income-tax return by a third party without the assessee’s consent, leading to a large tax demand based on incorrect figures. Mr. Nagarjuna Vutla, a non-resident individual taxpayer, filed his original return of income for Assessment Year 2024-25 on 22 July 2024. The original return was duly e-verified by the assessee using Aadhaar OTP, reflecting income details that matched the information available in his Form 26AS.

However, on 6 August 2024, a revised return was filed on his behalf by his consultant without his knowledge. This revised return claimed higher “salary income” and “income from other sources” than originally declared, and it was signed and submitted to the Centralized Processing Centre (CPC), Bangalore with a forged signature on the ITR-V. Based on this revised return, a tax demand of ₹12,93,760 was raised through an intimation under Section 143(1) of the Income-tax Act.

The assessee, who was completely unaware of the revised return, only became aware of it when he received the tax demand notice in February 2025. Immediately upon receiving the demand, he filed a complaint with the Cyber Crime Branch, alleging that his tax login was hacked and the revised return was filed fraudulently. The income figures in the revised return also did not match with Form 26AS, demonstrating clear discrepancies caused by the unauthorized modification.

Aggrieved by the steep demand, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], but the appeal was dismissed in limine on the basis that intimation under Section 143(1) is not an appealable order under Section 246A of the Income-tax Act. Dissatisfied, the taxpayer took the matter to the ITAT, raising multiple grounds — including the contention that the intimation was not appealable and that processing the revised return without verification violated basic statutory safeguards.

The main issues before the Tribunal were:

• Whether an appeal lies against an intimation under Section 143(1) when the revised return was fraudulently filed.
• Whether the Tribunal can direct reassessment and allow the taxpayer to furnish a correct return.

Observations by the Tribunal

After hearing both sides and examining the facts, the ITAT Visakhapatnam Bench made several important observations that are crucial for understanding taxpayers’ rights in similar situations.

Firstly, the Tribunal observed that the original return was duly filed and e-verified by the assessee, whereas the revised return was filed without consent, by a third party who forged the ITR-V. The revised return contained inflated income figures that did not align with Form 26AS and therefore could not possibly represent the taxpayer’s actual income.

The Tribunal noted that the CIT(A) wrongly dismissed the appeal on the ground that the order under Section 143(1) is not appealable. In doing so, the CIT(A) overlooked well-settled legal principles that where there is total or partial denial of tax liability, the right to appeal cannot be denied on technical grounds. In this regard, the Tribunal relied on the Supreme Court’s decision in CIT v. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC), wherein it was held that appellate tribunals have jurisdiction to give directions and allow appeals even in situations where liability is wrongly imposed or denied due to procedural issues.

The Tribunal underscored that the taxpayer had categorically denied the liability created by the fraudulent revised return, supported by documentary evidence including FIR lodged with the Cyber Crime Branch. Since the intimation notice was based on the fraudulently filed revised return, the denial of liability was genuine, not a mere technical dispute. Therefore, the Tribunal ruled that the CIT(A) erred in treating the order under Section 143(1) as non-appealable.

Summing up its observations, the Tribunal noted:

• The revised return was invalid as it was filed without consent and with forged signature;
• The intimation under Section 143(1) based on the invalid revised return should not stand;
• A taxpayer must have the right to appeal where tax liability is incorrectly determined due to fraud or unauthorized action.

Law Applicable

The Tribunal’s decision is grounded in several key provisions and principles of Indian tax law:

a) Section 143(1) of the Income-tax Act
Section 143(1) allows the CPC to issue an intimation to the taxpayer after processing a return to determine tax liability, refund, or demand. However, this provision assumes that the return processed reflects the taxpayer’s true income. If a return is fraudulent or invalid, the intimation arising from it also becomes contentious.

b) Section 246A — Appeal Jurisdiction
Section 246A specifies orders that can be appealed to the CIT(A). While generally intimations under Section 143(1) are considered non-appealable, the Tribunal found that where liability is denied or contested due to fraudulent grounds, appeal remedies must be available. This interpretation aligns with longstanding judicial principles that taxpayers cannot be denied a forum to challenge wrongful tax demands.

c) Supreme Court’s Ruling in CIT v. Kanpur Coal Syndicate
The Tribunal extensively relied on this Supreme Court precedent to justify that a denial of liability, including partial denial, warrants appellate intervention, regardless of the technical classification of the order. The Supreme Court held that appellate authorities can give directions lasting from assessment cancellation to fresh assessment where appropriate.

d) Principles of Natural Justice & Due Process
The case also underscores basic principles of fairness and due process — where a taxpayer’s statutory rights should not be defeated by fraud that they did not commit. Tax administration must ensure that appeals are heard where genuine denial of liability exists.

Conclusion by the Tribunal

Based on the above analysis, the ITAT Visakhapatnam Bench allowed the taxpayer’s appeal for statistical purposes (meaning the appeal was decided on merits but without affecting precedent status), and restored the matter to the file of the Assessing Officer (AO) with clear directions.

The Tribunal directed:

• The AO to provide a window to the assessee to file a correct return or computation of income;
• The assessee to submit complete supporting details and documents corresponding to the correct income figures;
• The AO to then conduct a fresh (“de novo”) assessment in accordance with law based on the correct information.

In simple terms, the Tribunal recognized that when a revised return is fraudulently filed without consent, the taxpayer must not be penalized for the same. Even if an intimation under Section 143(1) is generally non-appealable, the right to appeal must be upheld where liability is wrongly imposed. By directing a fresh assessment, the Tribunal ensured that the taxpayer’s actual income is assessed correctly, removing the inflated demand generated by the forged revised return.