Research Team

326. S.2(24)(iia): Income – Voluntary contribution- Grant-in-aid received from Government of India with a specific purpose – Could not be termed to be revenue receipt. [S. 2(24)(iia), 2(24) (xviii), 4, Himachal Pradesh Nursing Registration Council Act, 1977]

In the present case Hon’ble Himachal Pradesh High Court has held that the assessee an institution created by Himachal Pradesh Nursing Registration Council Act, 1977 received one time grant-in-aid from Government of India with a specific purpose of upgradation and strengthening of institutions, which nowhere suggested scope of profit generation or revenue for assessee, said amount received by assessee could not be termed to be revenue receipt. (AY. 2010-11)

H.P. Nursing Registration Council v. PCIT [2023] 455 ITR 512 (HP) (HC)

327. S. 5: Scope of total income – Revenue recognition – Accrual of income – Accounting Standard cannot override the provisions of the Income -tax Act – Paid taxes as and when services are rendered in subsequent years upon considering the contractual terms and conditions – Order of Tribunal is affirmed. [S. 145]

The Assessee has paid taxes as and when services are rendered in subsequent years. Upon considering the contractual terms and conditions, the Tribunal held that Revenue can only be recognized when the services are rendered. If the services are rendered partially, Revenue is to be shown proportionate to the degree of completion of the services. This principle has been accepted in earlier years. The High Court found no substantial question of Law (AY. 2010- 11)

PCIT v. Nokia Solutions and Networks India (P.) Ltd. [2023] 294 Taxman 615 (Delhi)(HC)

328. S. 10B: Export oriented undertakings – Filing of Form 56G is mandatory requirement – Denial of exemption is justified. [S. 10A, 10B(5), Form 56F, 56G]

Hon’ble Orissa High Court upheld the view of the lower authorities in denying the exemption claimed under section 10B of the Act by observing that the assessee has filed Form 56F which is relevant for claiming deduction under section 10A of the Act. Thus, the assessee has not satisfied the mandatory requirement under section 10B(5) of the Act of filing Form-56G. Hence, exemption under section 10B of the Act cannot be allowed. (AY. 2011-12)

Durr India Pvt. Ltd. v. ACIT (OSD) [2023] 455 ITR 151/147 taxmann.com 262 (Orissa)(HC)

329. S.11: Property held for charitable purposes – Capitation Fee – No action was initiated against by State for any violation of the Act – Certificate was issued under section 12A of the Act – Denial exemption is held to be not justified.[S. 12, 12A, Karnataka Educational Institution (Prohibition of capitation fee) Act, 1984]

Assessee is an educational trust filed its return of income claiming exemption under section 11 of the Act. The Assessing Officer denied benefit of section 11 to assessee on ground that assessee had collected capitation fee in violation of Karnataka Educational Institution (Prohibition of capitation fee) Act, 1984. The assessee had filed an affidavit stating that no action was initiated against it by State for any violation under said Act. The Tribunal held that the Assessing Officer, based on assumption and surmise, had held that there was violation under KEI (Prohibition of Capitation Fee) Act by assessee. Tribunal also held that department had issued certificate under section 12A to assessee. Accordingly the denial of exemption. was not justified. On appeal by the Revenue, High Court affirmed the order of the Tribunal. Followed Kammavari Sangham v. Dy.CIT (E) (2023) 146 taxmann.com 367 (Karn)(HC) (AY. 2012-13)

PCIT (E) v. Rashtreeya Sikshana Samithi Trust (2023) 294 Taxman 349 / 334 CTR 705 (Karn.)(HC)

332. S. 14A : Disallowance of expenditure – Exempt income – Strategic investments – Subsidary companies, associate concerns and partnership firms- Restricted 5% of aggregate of expenditure – Order of Tribunal was quashed and set aside- a Assessing Officer was directed to pass an order in accordance with law and formula laid down in Maxopp Investment Ltd. v. CIT [2018] 254 Taxman 325/402 ITR 640 (SC). [R. 8D, 260A]

The Assessing Officer disalalowed the expenses under section n 14A of the Act. Commissioner (Appeals) held that assessee had made major portion of investments only in subsidiary companies, associates concerns and partnership firms in which assessee was a partner, thus, investments made by company were in form of strategic investments and he restricted disallowance at 5 per cent of fixed/semi variable aggregate of expenditure. Tribunal upheld the order of the CIT(A). On appeal by the Revenue following the judgement in Maxopp Investment Ltd. v. CIT [2018) 254 Taxman325/402 ITR 640 (SC),  the order of Tribunal was quashed and set aside and the Assessing Officer was directed to pass an order in accordance with law and formula laid down by the Apex court referred above. (AY. 2010-11)

PCIT v. D.B. Realty (P.) Ltd. (2023) 294 Taxman 241 (Bom.)(HC)

331. S. 14A : Disallowance of expenditure – Exempt income – Failure to record dissatisfaction – Not earned any exempt income – Order of Tribunal deleting the disallowance is affirmed. [S.115JB, 260A, R.8D]

Dismissing the appeal of the Revenue the Court held that the Tribunal has given finding that the assessee had not earned any exempt income for year under consideration and AO had not given any reason to reject claim of assessee. Order of Tribunal is affirmed. (AY. 2009-10)

PCIT (C) v. JSW Energy Ltd. (2023) 294 Taxman 407 (Bom.)(HC)

332. S.28(i): Business loss – Penny stock – Share trading – Information from investigation wing – VAS Insfratcture Ltd (VASIL) – Not black listed by SEBI – Order of Tribunal allowing the loss is affirmed.[S. 10(38), 45, 260A]

On the basis of the information received from the Investigation Wing that the assessee made transaction with penny stock scrip VAS Insfratcture Ltd (VASIL) to launder money to grab long-term capital gain and claimed exemption under section 10(38). Scrip of the VAS were manipulated by the assessee to generate bogus loss. Additions were made to income of assessee on account of bogus loss incurred in penny stock. The Tribunal deleted the additions.

On appeal to the High Court, the Revenue submitted the order of the Tribunal was ex-facie erroneous, illegal and perverse because Tribunal deleted the additions on account of disallowance of bogus loss in penny stock incurred, without appreciating that the transaction was pre- arranged as well as sham and was carried out through penny scrip company/paper Company. High Court held that thee Tribunal held that thee assessee was continuously dealing in share trading of various shares/scrips and said fact was not disputed. Further the Tribunal had observed that scrip of VAS was not black listed by SEBI at relevant point of time. Tribunal had also considered order passed by SEBI and nowhere in said order, scrip of VAS was blacklisted or was penny stock or sham and bogus scrips/shares. Tribunal had also observed that entire transaction of purchase and sale of scrips was through Stock Exchanges, through authorized brokers and payments made to brokers were reflected in bank account. Tribunal had therefore opined that merely on conjecture and surmises, Assessing Officer could not make disallowance. Court affirmed the order of the Tribunal. (AY. 2012-13)

PCIT v. Genuine Finance P. Ltd. (2023) 294 Taxman 303 (Guj.)(HC)

333. S.32 : Depreciation – Rate of depreciation – Computer accessories and peripherals – Entitle to depreciation at 60 percent.

Held that UPS supports a computer system and it is amenable to depreciation at higher rate of 60 per cent as applicable to computers. Computer accessories and peripherals Computer accessories and peripherals are used for uninterrupted power supply system integral part of computer system (AY.2009-10)

PCIT v. Nestle India Ltd. (No. 2) (2023) 457 ITR 216 / 294 Taxman 397 (Delhi)(HC)

334. S. 32: Depreciation – Actual cost – Block of assets – Subsidy from State Government – Incentive to establish an industrial unit in the backward area – Employment generation – Capital receipt – No adjustment is warranted to reduce form the cost of acquisition. [S.2(11), 4, 43(1)]

The Hon’ble Delhi High Court dismissing the Revenue appeal held that subsidy received was an incentive given by the State Government to establish an industrial unit in backward area for the purpose of generation of employment for local inhabitants hence the said subsidy should be treated as capital receipt. The measure for calculating the subsidy, which was 25% of the fixed capital cost cannot determine the purpose for which the subsidy was given and thus as directed by Ld CIT(A) was adjusted proportionately against the cost of the assets. The Hon’ble Delhi High Court upholding the view taken by the Hon’ble Tribunal held that since subsidy in this case was not intended as a payment to meet, directly or indirectly, a part of cost of assets hence no adjustment is warranted and therefore should not be reduced from the cost of acquisition. (AY.2004-05)

PCIT v. Nestle India Ltd (2023) 457 ITR 216/ 294 Taxman 397 (Delhi)/[2023] (Delhi) (HC)

335. S. 32: Depreciation – Actual cost of assets – Revaluation – Assets taken over will be actual cost which assessee- successor paid to predecessor after revaluing assets and certainly, assessee will be entitled to claim depreciation for subsequent years on basis of actual cost paid even in the form of shares. [S. 43(1), R. 5]

Dismissing the appeal of the Revenue the High Court held that for AY 2008-09, predecessor, i.e., the partnership firm has claimed depreciation for five months from 1-4-2007 to 31-8-2007 and successor, i.e., assesse has claimed depreciation for assessment year 2008-09 for the period from 1-9-2007 to 31-3-2008. As per section 32 read with Rule 5, the assessee will be entitled to claim depreciation in respect of any assets on the actual cost of the said assets. The actual cost of the said assets will be the actual cost which the assessee paid to the predecessor after revaluing the assets and certainly, assessee will be entitled to claim depreciation for the subsequent years on the basis of the actual cost paid. For the actual cost no money was paid but shares were issued in lieu of cash. Certainly that will be the cost which assessee has paid to procure the assets. No substantial question of law. (AY 2009-10).

PCIT v. Dharmanand Diamonds (P.) Ltd. (2023) 294 Taxman 29 (Bom)(HC)

336. S. 36(1)(iii) : Interest on borrowed capital – Interest free advances to partners – Commercial expediency – Assessee was not required to demonstrate commercial expediency in each year – Order of Tribunal is affirmed.[S. 37(1)]

Dismissing the appeal of the Revenue the Court held that interest paid by assessee was allowed as expenditure for assessment years 2005-06 and 2011-12. Since loan availed on account of stated commercial expediency had received approval of revenue when loan was first taken, assessee was not required to demonstrate commercial expediency in each year. Decision of Tribunal is affirmed. (AY. 2015-16)

PCIT v. N.S. Software (2023) 294 Taxman 403 (Delhi)(HC)

337. S. 37(1) : Business expenditure – Corporate Social Responsibility Expenditure Corporate Social Responsibility Expenditure (CSR) expenditure incurred before insertion of Explanation 2 to section 37(1) is allowable as deduction.

In the present case it has been held that explanation 2 appended to section 37(1) by Finance Act, 2014 with effect from 01.04.2015 is applicable prospectively i.e., from assessment year 2015-16. Hence, corporate social responsibility expenditure incurred by assessee- company on or before 31.03.2014 is to be allowed as deduction under section 37(1) of the Act for the relevant assessment year.

PCIT v. Steel Authority of India Ltd. [2023] 455 ITR 139 (Delhi)(HC)

338. S. 37(1) : Business expenditure – Capital or revenue – Interest paid on securities held as stock in trade – Allowable as revenue expenditure. [S. 28(i)]

Hon’ble Telangana High Court has held that the assessee, a banking company, had been holding its securities all along as stock-in-trade, and therefore, interest paid on such securities would be allowed as revenue expenditure. (AY. 1998-99)

CIT v. State Bank of Hyderabad [2023] 455 ITR 122/ 292 Taxman 38 (Telangana)(HC)

339. S. 69A: Unexplained money – Seizure of gold – Distinctive identification numbers on challans – Deletion of addition by the Tribunal is affirmed.[S. 260A]

During search, gold and jewellery was seized and Assessing Officer made additions under section 69A of the Act on ground that they lacked distinctive identification numbers on challans. Commissioner (Appeals) deleted additions which was affirmed by the Tribunal on the ground that gold and ornaments were given to assessee for purpose of making jewellery or for polishing which was established from challans. On appeal High Court affirmed the order of the Tribunal. Chuharmal v. CIT (1988) 172 ITR 250/ 38 taxmann.190 (SC), distinguished. (AY. 2017-18)

PCIT v. Goutam Chakraborty (2023) 294 Taxman 284/ 334 CTR 593 (Cal.)(HC)

340. S.69C : Unexplained expenditure – Survey – Bogus purchases – Statement retracted – Deletion of addition by the Tribunal is affirmed.[S.131, 133A, 260A]

In the course of survey partner of the firm admitted to bogus purchases of packing materials. Assessing Officer made additions to assessee’s income on basis of said statement which was later retracted. On appeal the Commissioner (Appeals) held that only 7 per cent of purchase of packing material was to be disallowed. Tribunal deleted the additions confirmed by the CIT(A). On appeal the High Court held that the Tribunal was correct to delete the addition made by Commissioner (Appeals). (AY. 2010-11)

PCIT v. Yog Oil Traders (2023) 294 Taxman 480 (Bom.)(HC)

341. S. 80IA : Industrial undertakings – Infrastructure development – Initial assessment year – loss or unabsorbed depreciation, which had already been set-off prior to initial year, would not be notionally carried forward and adjusted against profits of eligible business in order to determine deduction. [S. 32, 72, 80IA(5)]

Hon’ble Delhi High Court held that Sub-clause (5) of Section 80IA of the Act do not create any fiction that losses which have already been absorbed, will be notionally carried forward and adjusted against the profits derived from the eligible business to quantify the deduction that the assessee could claim under section 80IA of the Act. (AY. 2016-17)

PCIT v. Sterling Agro Industries Ltd. (Delhi) [2023] 455 ITR 65 (Delhi)(HC)

342. S.119: Central Board of Direct Taxes- Instructions – Delay in filing of return – Application for condonation of delay was filed after 16 years – Delay was rejected – Writ petition was dismissed.[S.119(2)(b), 139, Art. 226]

Assessee filed return of income belatedly. After 16 years it filed an application with CBDT for condonation of delay in filing return. CBDT rejected application. On writ the Court held that since application for condonation of delay itself had been filed belatedly, CBDT had rightly rejected application. Court also observed that even a declaration of loss would require assessment so that only the genuine loss is recognised and which would be available for carry forward to be set off against future income or to claim refund. Accepting assessee’s request for such a huge delay would amount to reopening the assessment of assessment year 1998-99 in assessment year 2023-24. Referred. CBDT Circular No. 9/2015, dated 9-6-2015. (2015) 374 ITR ITR 25 (St). (AY. 1998-99)

Mathuradas Narandas & Sons Forwarders Ltd. v. CBDT, Ministry of Finance, Department of Revenue (2023) 294 Taxman 394 (Bom.)(HC)

343. S. 119: Central Board of Direct Taxes – Instructions – Refund – Tax deduction at source – Condonation of delay – Rectification application filed after over 12 years from the relevant assessment year is barred by limitation. [S.119(2)(b), 237, Art.226]

Hon’ble Uttarakhand High Court held that with the expiry of limitation, the law bars the remedy even if the right is not extinguished. Therefore, the right of the assessee, to avail of the remedy of rectification, stood barred by the law of limitation. The assessee has only itself to blame for not availing of the remedy available to it within the period of limitation, or even within the period during which the application for condonation of delay could be entertained.

Hon’ble High Court, therefore, refused to entertain the petition of the assessee on the ground that the assessee filed an application seeking rectification of assessment and refund of TDS after about 12 years from assessment year. Hence, same is barred by limitation and therefore, not maintainable. (AY. 2008-09)

Gee Cee Metals Pvt. Ltd. (AOP) v. PCIT [2023] 455 ITR 211 (Uttarakhand)(HC)

344. S.119: Central Board of Direct Taxes – Instructions – Return – Delay of 21 seconds – Disallowance of claim under section 80IA – Delay was condoned.[S.80IA, 119(2)(b), 143(1), Art. 226]

For the assessment year 2020-21 the assessee filed the return of income on 00.00.21 am of 16-2-2021, i.e., with a delay of 21 seconds as against due on 15-2-2021 midnight. The Assessing Officer disallowed the claim under section 80IA and issued intimation under section 143(1) of the Act. The application for condonation of delay was rejected by the The Principal Commissioner. On writ allowing the petition the Court held that the quantum of delay is not substantial, being 21 seconds. Undoubtedly the assessee ought not to have undertaken the exercise of filing of the return literally at the last second, but the 21 seconds delay could be considered to be a human error and condoned bearing in mind the dictates of substantial justice the request for condonation has been considered not by a machine but a human being, who could well have considered the request in proper perspective condoning the delay of 21 seconds. The delay was condoned. The return of the assessee shall be taken to have been filed in time with all consequences thereof. (AY. 2020-21)

Balaji Super Alloys v. PCIT (2023) 294 Taxman 346 (Mad.)(HC)

345. S. 127 : Power to transfer cases – Cases transferred from E-assessment unit to Central Circle – Sanction of CBDT is not required as provided in E-assessment Scheme – Writ Petition Dismissed.[Art. 226]

The Court held that transfer of assessments from

National e-Assessment Centre to Central Circle for co-ordinated investigation by way of the order passed under section 127 was in accordance with law and valid. Some of the relevant findings are here in below:

a) the concept of Faceless Assessment was introduced in 2020, yet the Jurisdictional Assessing Officer continues to exercise concurrent jurisdiction with the Faceless Assessing Officer; b) the powers under the sec. 127 would continue to apply to all cases in an unmodified manner since the Faceless Assessment Scheme has not modified the said section; (c) Prior approval of CBDT as specified in the E-assessment scheme is not required for cases transferred u/s. 127; (d) the power of transfer u/s. 127 is not in any manner barred by the Faceless Assessment Scheme when the transfer is sought to be made from a Jurisdictional Assessing Officer under one Principal Commissioner of Income-tax to another Assessing Officer under a different Principal Commissioner of Income-tax who are not exercising concurrent jurisdiction over the case.

Sanjay Gandhi Memorial Trust v. CIT (2023) 455 ITR 164 /294 Taxman 130 / 332 CTR 817 (Delhi) (HC)

346. S. 127: Power to transfer cases – Search operations – No incriminating material – No connection between the two entities – Transfer is invalid.[S. 132, Art.226]

Following a search and survey operation on entities in Jaipur and the Assessee and its companies in Mumbai, an order was passed transferring the assessment jurisdiction from Mumbai to Jaipur. The Assessee challenged this transfer on the grounds that no incriminating material was found during the survey operation, neither in the case of the Assessee nor in the case of the company in Jaipur.

The Court noted that the affidavit in reply did not contain specific averments about any incriminating material discovered during the search. Additionally, neither the show cause notice nor the transfer order addressed the Assessee’s contention that no incriminating material connecting the two entities in Mumbai and Jaipur was found. The Court observed that all the proceedings were initiated based on speculation that the seized documents and data might be related to the Assessee and other entities. When centralizing proceedings, it is crucial to establish the relationship between the two entities. However, the Revenue failed to provide any reasons except speculation for centralizing the case. Accordingly the transfer held to be invalid.

Kamal Varandmal Galani v. PCIT [2023] 294 Taxman 265 (Bom)(HC)

347. S. 143(3): Assessment – legal heirs – No opportunity of being heard – Matter set aside to give opportunity. [Art. 226]

During the assessment proceedings, the original Assessee passed away. The death of the original Assessee was promptly communicated to the authority by the legal heirs. Subsequently, the authority issued notices to each one of the legal heirs. Since there was no response from the legal heirs of the original Assessee, the order was passed.

Upon being challenged through a writ petition, the Court held that since no ample opportunity was given to the legal heirs of the deceased Assessee, the impugned order was liable to be set aside. The matter was then remitted back to the original authority, instructing them to allow the legal heirs of the original Assessee to present their case.(AY. 2017-18)

Prema Rengarajan v. DY.CIT [2023] 294 Taxman 104 (Mad)(HC)

348. S. 143(2) : Assessment – Notice – Cash credits – Notice did not suffer from any legal infirmity as it satisfied all ingredients under that provision- Writ petitions dismissed. [S. 68, Art. 226]

Where a notice under section 143(2) was issued upon assessee in format normally utilised for this purpose and it was conveyed to assessee that return had been selected for limited scrutiny and issue of share capital/capital was identified for further verification and further, AO proceeded to fix matter for hearing and provided opportunity to assessee to appear and cause evidence in support of return of income, there was nothing further that was required to be set out as far as notice u/s 143(2) of the Act was concerned and, thus, said notice under section 143(2) was complete and did not suffer from any legal infirmity. (AY 2017-18)(SJ)

Anguswamy Gounder Subbu Rathinamun v. ACIT (2023) 294 Taxmann 34 (Mad)(HC)

349. S. 144B: Faceless Assessment – Based on incorrect assumptions – No personal hearing provided – Order set aside – Directed to provide personal hearing.[S. 147, Art. 226]

The AO reopened the assessment of the Assessee under section 147, citing that the proper value of the property had not been disclosed, and subsequently passed the assessment order. The Assessee filed a writ petition challenging the assessment order and argued that the property was situated on Canal Street, not in the Gandhi Nagar area. The Assessee contended that the value taken by the AO was incorrect and not in accordance with the guidelines.

The Court observed that the assessment order did not refer to the two guidelines but only utilized the guidelines provided for Gandhi Nagar. As a result, the Court set aside the assessment for the AO to reconsider the assessment after affording a personal hearing to the Assessee.(AY. 2015-16 (SJ)

R. Rajasekaran v. NFAS (2023) 294 Taxman 60 (Mad)(HC)

350. S. 144B: Faceless Assessment – Natural justice – Assessment order passed without affording an opportunity of personal hearing is in violation of principles of natural justice and prescribed procedure – Order is quashed. [Art. 226]

High Court quashed the assessment order passed by faceless unit by observing that the AO had passed the assessment order against the assessee without providing an appropriate opportunity of being heard. Thus, the impugned assessment order is passed without following prescribed procedure for faceless assessment under section 144B of the Act. Hence, the assessment order is liable to be quashed and set aside. (AY. 2018-19)

Dediyasan Industrial Co-op Credit Society Ltd v. DY. CIT [2023] 455 ITR 728 (Guj)(HC)

351. S. 144B : Faceless Assessment – Natural justice – Specific request to afford an opportunity of personal hearing through video conference- Order is set aside. [S.144B(6)(viii), Art. 226]

Allowing the petition the Court held that from a bare perusal of the provisions of the Act it is clear that when the assessee had made a specific request to afford an opportunity of personal hearing through video conference, the Department was required to grant the same to the assessee. However, in the case on hand it has not happened and therefore, impugned order and demand notice were to be quashed and set aside and matter would be remanded to AO concerned, who would grant an opportunity of personal hearing to assessee and thereafter, would pass a fresh, reasoned order, in accordance with law. (AY. 2017-18)

Maheshkumar Bhagvandas Patel v. ITO (2023) 294 Taxman 376 (Guj)(HC)

352. S. 145: Method of accounting – Project completion method – Accounting Standard 7 – AO changing the method of accounting to percentage completion method is held to be not justified.

The assessee engaged in the business of real estate development was following project completion method as per Accounting Standard 7 issued by ICAI. The project completion method is accepted by the AO in the earlier assessment years upto AY 2014-15. Hence, AO is not justified in changing the method of accounting to percentage completion method to tax the advance received by the assessee, particularly when there is no change in the facts and circumstances of the case. (AY. 2015-16)

PCIT v. Salarpuria Simplex Dwelling LLP [2023] 455 ITR 712 (Cal) (HC)

353. S. 145 : Method of accounting – Deduction of tax at source – Tax deducted is income received – Running bills – AO was not justified in making addition on account of difference in payment received as per Form 26AS and books of accounts without verifying total contract amount and relevant bills. [S. 198, Form No. 26AS]

Dismissing the appeal of the Revenue the Court held that the Tribunal had specifically observed that AO had not verified claim of assessee and the CIT(A) had rightly deleted addition after verification of bank account, contract amount which was received by assessee on basis of running bills. Accordingly the Tribunal had rightly deleted addition made by AO on account of difference in payment received as per Form 26AS and books of accounts. (AY 2013-14).

PCIT v. MBC Infra Space (P.) Ltd (2023) 294 Taxman 358) (Guj.)(HC)

354. S.147: Reassessment – After the expiry of four years – Amalgamation – Carry forward and set off of accumulated loss and unabsorbed depreciation- No failure to disclose any material fact – Change of opinion – Reassessment notice and order disposing the objection was quashed. [S. 72A(2), 72(3), 148, Art. 226]

Assessee claimed carry forward of loss after setting off of brought forward losses which included losses pertaining to amalgamated company. Assessing Officer allowed claim holding that as per section 72A(2) losses on amalgamation get fresh life for further 8 years form date of amalgamation. Thereafter the Assessing Officer reopened assessment on ground that amalgamated company will be entitled for claim for only unexpired period and not full 8 years afresh thus, assessee was not entitled for set-off of losses as it had exceeded period of carry forward of 8 years as prescribed in section 72(3) of the Act. On writ the Court held that since Assessing Officer in original assessment order considered all submissions and accepted loss to be carried forward and there was no failure to disclose any material fact, reopening was mere change of opinion and notice was quashed. (AY. 2014-15)

Hindoostan Mills Ltd. v. Dy. CIT (2023) 294 Taxman 362 (Bom.)(HC)

355. S.147: Reassessment – After the expiry of four years – Business expenditure – Penalty imposed for breach of a civil obligation would be outside purview of Explanation 1 to section 37(1) – Assessing Officer who had specifically gone into the allowability of the claim – A mere assertion in the absence of any material would not constitute a ‘tangible material’ for purposes of reopening an assessment – Reassessment notice and order disposing the objection was quashed. [S.37(1), 143(3), 148, Art.226]

Allowing the petition the Court held that the settlement had the approval of the Court in the U.S. itself suggests that the payment made was for a lawful purpose. In any case it is perverse to even think or hold that an amount paid towards settling a civil class action suit would be either an offence or one prohibited by law so as to disallow a claim of deduction in terms of Explanation to section 37. In any case a penalty imposed for breach of a civil obligation would be outside the purview of the Explanation 1 to section 37. Admittedly, it is not the case of the revenue that the alleged penalty imposed upon the assessee was a part of a sentence in criminal proceedings which if it were, would certainly result in denying to the petitioner the benefit of the deductions claimed. Other than the information which was received by the Assessing Officer from the DDIT (Inv) Unit-2(4), Mumbai that the assessee had paid a penalty in USA, there was no material available with the Assessing Officer, in support of such an information that the payment made was in fact ‘as a result of a penalty imposed’. A plain piece of information without any cogent material in support thereof would not justify the reopening of the assessment more so when the Assessing Officer, in the regular assessment under section 143(3) had gone into the allowability of the claim for such a deduction in the said assessment proceedings. Apart from the bare information received by the Assessing Officer, there was no material received as the same is not reflected in the reason so recorded which would justify the reopening of the assessment, the Assessing Officer in fact seeks to accord a fresh consideration to an issue which already stands concluded in the regular assessment proceedings. Therefore the Assessing Officer had no reason to believe that the payment made towards settlement of the class action suit was a payment towards a penalty imposed and on that account it is held that there was no reason for the Assessing Officer to believe that income had escaped assessment. In the light of the above to hold that what was paid by the petitioner was a penalty, in fact, would be without any basis and aimed at reviewing an order passed earlier by the Assessing Officer who had specifically gone into the allowability of the claim. A mere assertion in the absence of any material would not constitute a ‘tangible material’ for purposes of reopening an assessment. Accordingly the notice under section 148 and the order are set aside. (AY. 2013-14)

Tata Consultancy Services Ltd. v. Dy. CIT (2023) 294 Taxman 190 (Bom.)(HC)

356. S.147: Reassessment – After the expiry of four years – Infrastructure development – Change of opinion- Pendency of appeal before CIT(A)- No failure to disclose material facts – Reassessment notice and order disposing the objection was quashed. [S. 80IA, 148, 246A, Art. 226]

Allowing the petition the Court held that, the from the reasons recorded it is observed that the Assessing Officer had relied upon facts and figures available from accounts and there was no tangible material on record to conclude that income had escaped assessment. The Assessing Officer had acted in excess of limit of his jurisdiction. Accordingly the notice and order passed is quashed. (AY. 2015-16)

Nuclear Power Corporation of India Ltd. v. Dy. CIT (2023) 294 Taxman 365 (Bom.)(HC)

357. S.147: Reassessment – After the expiry of four years – Share capital- Share premium – No failure to disclose material facts – Reasons not specifying material facts which were not disclosed – Notice and order disposing the objection was quashed and set aside.[S. 68, 132, 147, Art. 226]

Allowing the petition the Court held that the assessee had already made available shareholding agreement with SHPL and SCPL and same had been examined by Assessing Officer, who also in fact, did not accept assessee’s explanation and added amount of Rs. 3 crores to assessee’s income. The addition was deleted by Commissioner (Appeals) and order of Commissioner (Appeals) had been upheld by Tribunal. There was no failure on part of assessee to truly and fully disclose material facts. Even assuming that assessee should have disclosed that these were bogus or accommodation entries, still there was nothing on record to indicate that assessee was aware that these were bogus shares capital/premium from bogus paper companies, viz., SHPL and SCPL and were accommodation entries. Notice issued under section 148 as well as assessment order was quashed and set aside. (AY. 2012-13)

Rajshree Realtors (P.) Ltd. v. UOI (2023) 457 ITR 354 / 294 Taxman 228 / 334 CTR 866 (Bom.)(HC)

358. S. 147: Reassessment – After the expiry of four years – The assessee disclosed sale of building and land in its return of income and paid tax on the capital gains, assessment could not be reopened on ground that capital gains from sale of land were not disclosed in its return of income.[S. 45, 143(3), 148, Art.226]

The assessing officer acting upon information received from the Investigation Wing with respect to purchase of land by a person from the assessee issued a notice under section 148 of the Act observing that the assessee had not disclosed capital gains from sale of property in its return of income and no scrutiny assessment under section 143(3) of the Act was made. Upon writ, the Hon’ble High Court observed that the assessee had LTCG on sale of non-depreciable land and STCG on building in its return of income and paid tax thereon. Said facts were also disclosed by the assessee in its objections to re-opening of assessment. Accordingly, the Hon’ble High Court quashed the notice under section 148 of the Act for lack of income escaping assessment.(AY. 2015 -16)

Apex Remedies (P.) Ltd. v. ITO (2023) 294 Taxman 215 (Guj)(HC)

359. S.147 : Reassessment – After the expiry of four years – Order passed without disposing off objection raised by passing a speaking order – Assessment order is set aside.[S. 148, Art. 226]

The Court held that the procedure laid down in the GKN Driveshafts (India) Ltd. v. ITO [2002] 259 ITR 19 (SC) is to be strictly followed. Therefore, the reasons has to be furnished within reasonable time and the objections raised, if any, has to be disposed-off by the AO by passing a speaking order.

In the present case, the AO didn’t dispose of the objections raised by the assessee. Hence, the order passed u/s 143(3) r.w.s 147 was set aside. Referred Deepak Extrusions (P) Ltd v. Dy.CIT (2017) 80 taxmann.com 77 Karn)(HC), ACIT v. Mphasis Ltd (WP No. 919 of 2019 (T-IT) dt. 24-1-2023) (AY. 2011-12)

Hewlett Packard Financial Services (India) v. DCIT (2023) 294 taxman 25 (Karn)(HC)

360. S.147: Reassessment – After the expiry of four years – Cash credits – Search – Deposit of cash in bank – No scrutiny assessment was done – Reassessment notice is held to be justified.[S. 68, 143(1), 147, Art. 226]

Dismissing the petition the Court held although assessee had filed his return for relevant assessment year, however, he did not dispute fact that he had deposited cash amount in bank account. Accordingly the reopening notice under section 148 was justified. (AY. 2012-13)

Ramakant v. ITO (2023) 294 Taxman 48 (Delhi)(HC)

361. S.147: Reassessment – After the expiry of four years – Unexplained expenditure – Search – No failure to disclose material facts [S. 132, 143(3),

148]

Assessment was reopened on the ground that a search conducted at DSC Group of Companies revealed bogus purchases made by assessee through unexplained sources. The Assessing Officer made the addition which was confirmed by the CIT(A). On appeal the Tribunal held that the reasons recorded by Assessing Officer did not make specific allegations of failure to disclose all material facts, which was a prerequisite for reopening under section 147 and mere search action alone could not justify reopening of assessment. As the jurisdictional ingredients for reopening assessment provided in first proviso to section 147 were absent, both in form and substance and therefore, proceedings were bad in law. On appeal High Court affirmed the order of the Tribunal. (AY. 2006-07)

PCIT v. DSC Ltd. (2023) 294 Taxman 720 (Delhi) (HC)

362. S. 147 : Reassessment – With in four years – Interest paid on loans borrowed – Controlling interest – Change of opinion – Allowed as business expenditure – Notice to reopen assessment was merely on basis of change of opinion of Assessing Officer and same was to be set aside.[S. 37(1), 148, Art. 226]

The assessment was completed under section 143(3) of the Act. Reassessment notice was issued for the reason that interest paid on loan borrowed by assessee for purchase of shares of a company so as to have controlling stake in said company and not for business purpose was to be capitalised and could not be allowed as deduction. On writ allowing the petition the Court held that on the same issues of investment and interest on loans taken was subject matter of a query raised by Assessing Officer during original scrutiny assessment and that assessee had also addressed a communication to give an explanation in regard to allowability of interest and other expenditure as revenue expenditure. After considering submissions of assessee, assessment order was passed. Accordingly the notice to reopen assessment was merely on basis of change of opinion of Assessing Officer and is quashed and set aside. (AY. 2003-04)

Vedanta Ltd. v. B.D. Naik, Dy.CIT (2023) 294 Taxman 465 (Bom.)(HC)

363. S. 147 : Reassessment –With in four years – corporate social responsibility expenses – Reopening was without application of mind – Reassessment notice and order disposing the objection is quashed. [S. 148, Companies Act, 2013, S. 135 Art.226]

Allowing the petition the Court held that since Co-ordinate Bench of Gujarat High Court in assessee’s own cases for preceding year and succeeding year, Adani Power Maharashtra Ltd. v. ACIT (2023) 292 Taxman 475 / 147 taxmann.com 583 (Guj)(HC) in similar situation found action  of reopening without independent application of mind. Accordingly the notice and order disposing the objection is quashed and set aside. (AY. 2016- 17)

Adani Power Maharashtra Ltd. v. ACIT (2023) 294 Taxman 414 (Guj.)(HC)

364. S. 148: Reassessment – Notice in the name of amalgamated company which ceased to exist – Bad in law.[S. 147, Art. 226]

The scheme of merger of Panchdhara Agro Farms Pvt. Ltd. into Shantigram Estate Management Pvt. Ltd. (now Adani Estate Management Pvt. Ltd.) was approved by the Gujarat High Court on 28 January 2016 with retrospective effect from 1 April 2015 and the assessing officer of Panchdhara Agro Farms Pvt. Ltd. was duly informed on 31 March 2016. Subsequently, a notice under section 148 of the Act was issued on 27 March 2021 in the name of the erstwhile entity. Upon writ, the Hon’ble High Court relying on the decision in case of PCIT v. Maruti Suzuki India Ltd. (2019) 416 ITR 613 (SC)] and Adani Wilmar  Ltd v. CIT [2023)) 150 taxmann.com 178 (Guj) HC)] and distinguishing the decision in case of PCIT v. Mahagun Realtors (P.) Ltd. [2022] 443 ITR 194 (SC)] and quashed the notice under section 148 of the Act issued in name of the non-existent entity (i.e. Panchdhara Agro Farms Pvt. Ltd.)(AY. 2016-17)

Adani Estate Management (P.) Ltd. v. ITO [2023] 456 ITR 560/ 294 Taxman 18 (Guj)(HC)

365. S. 148 : Reassessment – Notice – Notice issued in the name of non- existent entity – Knowledge of amalgamation was made to the department – notice issued was set- aside.[S. 147, Art. 226]

The AO issued notice under section 148 in name of the amalgamating entity proposing to reassess income of said entity. The Court noted that the assessee (amalgamated entity) had filed revised return, post amalgamation, which was duly scrutinised under section 143(2). Therefore, from the material on records, it is evident that the Revenue was aware about factum of amalgamation.

The Court, following the ratio of the judgment of the Apex Court in the case of Saraswati Industrial Syndicate Ltd. v. CIT [1990] 186 ITR 278 (SC) as also in the case of Maruti Suzuki India Ltd. [2019] 416 ITR 613 (SC) held that the notice issued under section 148 on non-existent entity as unsustainable in law and accordingly the same was set aside.(AY. 2016-17)

Bennett Coleman and Company Ltd v. UOI (2023) 294 taxman 372 (Bom)(HC)

366. S. 148 : Reassessment – Notice – Dead person – Issuing a notice to a correct person is not merely a procedural requirement but a condition precedent for a notice to be valid in law – Order null and void.[S. 148A(b) 148A(d), Art. 226]

Allowing the petition, the Court held that notice issued on a dead person or reopening of assessment of a dead person is null and void in law. Accordingly the notice under section 148, order under section 148A(d) and notice under section 148A(b) were quashed and set aside. (AY. 2020-21)

Dhirendra Bhupendra Sanghvi v. ACIT (2023) 458 ITR 326 / 294 Taxman 13 (Bom.) (HC)

367. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Order passed under section 148A(d) is on the reasons different for which notice was issued under section 148A(b) – Order under section 148A(d) is invalid. [S. 148, 148A(b), Art.226]

On an appeal against the decision of single judge the Hon’ble High Court has quashed and set aside the order passed under section 148A(d) of the Act on the ground that notice under section 148A(b) was issued on the ground that assessee had done fictitious derivative transactions with a company. However, in the order passed under section 148A(d), the AO alleged that prima facie assessee had taken accommodation entry by way of fund transfer from a different company. As the order passed under section 148A(d) was not based on reason for which notice under section 148A(b) was issued, order passed under section 148A(d) is invalid and liable to be quashed. (AY. 2018-19)

Excel Commodity and Derivative Pvt. Ltd. v. UOI [2023] 455 ITR 341 (Cal)(HC)

368. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Unexplained investments- Purchase of property – Assessing Officer assumed it sale of an immoveable property – Capital gains – Order and consequential notice were set aside order and consequential notice were set aside. [S. 69, 133(6), 148A(b), 148A(d), Art. 226]

Assessing Officer issued notice under section 148A(b) on ground that assessee sold an immovable property but failed to disclose capital gains earned on said sale. The assesseee responded that it had not sold but purchased a property from which tax at source had been deducted. The Assessing Officer passed the order under section 148A(d) holding that asset was not declared by assessee and thus, income on said transaction had escaped assessment. On writ the Court held that the assessee supplied information with respect to purchase of property against a notice under section 133(6) which was issued prior to issuance of notice under section 148A(b) and said assertation was supported by relevant documents. Court also held that since Assessing Officer missed most crucial part of transaction that it was a purchase and not a sale transaction and impugned order did not align with notice issued under section 148A(b), order and consequential notice were set aside. Even if the Assessing Officer deemed it fit to carry out a fresh exercise, same would be started from stage prior to issuance of notice under section 148A(b) of the Act. (AY. 2017-18)

Krishna Diagnostic (P.) Ltd. v. ITO (2023) 294 Taxman 109 (Delhi)(HC)

369. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Unexplained investments – Notice issued was without application of mind – Order and notice was quashed and set aside. The matter is remitted back to revenue to consider matter afresh. [S. 148A(b), 148A(d), Art. 226]

The assessee subscribed to equity shares issued by subsidiary. The assessee was allotted certain equity shares at a premium. It remitted an aggregate amount from outside India to its subsidiary in two branches. Premium was ascertained based on a valuation report issued by accredited valuers. Assessee also submitted necessary details to Reserve Bank of India (RBI). RBI by an auto generated mail approved reporting form of assessee. Department issued notice for reopening assessment on ground that assessee had not submitted any documentary evidence to verify source of investment. On writ the Court held that since the assessee had necessary permission from RBI and if RBI had any doubts about assessee’s genuineness or source of funds, it would have red flagged assessee or subsidiary. Since the Revenue had failed to appreciate that assessee was a company organized under relevant laws of USA and was subject to tax in USA and assessee had sufficient funds to make investments in subsidiary during year in consideration. Accordingly the order passed under section 148A(d) was quashed and set aside. Matter remanded back to revenue to consider afresh. (AY. 2019-20)

J.P. Morgan Chase Holdings LLC v. ACIT (2023) 294 Taxman 245 (Bom.)(HC)

370. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – No obligation to supply material or evidence on basis of which opinion is formed – Interpretation of Taxing Statutes – Nothing can be read into or implied – Words to be given their plain meaning – A taxing statute is to be interpreted literally. There is no intendment to taxing statute and nothing can be implied from or read into a taxing statute. The words used in taxing statutory provision are required to be given their plain meaning – Alternative remedy – Writ petition is dismissed.[S. 148, 148A(b), 148A(d), Art. 226]

Dismissing the petition the Court held that if show-cause notice under section 148A (b) ought to be loaded with concise and precise information revealing foundational material which persuaded AO to come to a tentative finding that certain income had escaped assessment for relevant year and assessee had also filed a detailed reply to said notice, it was to be held that impugned order under section 148A(d) and consequential notice under section 148 had been issued/passed after following due process of law. Court also held that A taxing statute is to be interpreted literally. There is no intendment to taxing statute and nothing can be implied from or read into a taxing statute. The words used in taxing statutory provision are required to be given their plain meaning Assessee is directed to avail alternative remedy. (AY 2016-17).

Amrit Homes (P.) Ltd. v. DCIT (2023) 457 ITR 334 /294 Taxman 661 (MP)(HC)

371. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Principle of natural justice – Added new information without giving an opportunity – Order is set aside. [S.148, 148A(b), 148A(d), Art. 226]

Allowing the petition the Court held that the AO issued a notice under section 148A(b) of the Act proposing to issue a notice under section 148 for reason that a sum of Rs. 1.80 crores had escaped assessment for AY 2016-17. The AO passed an order under section 148A(d) in said order he had gone on to deal with loan account, employment details and salary certificates, etc. of assessee. The High Court held that since assessee had not been given an opportunity to answer and explain new reasons in impugned order, same was to be set aside and Assessing Officer was to be directed to pass order afresh after giving an opportunity of personal hearing to assessee. (AY 2016-17).(SJ)

Packirisamy Senthilkumar v. GoI (2023) 294 Taxman 546 (Mad)(HC)

372. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Time limit for notice – Notice dated 30- 6-2021 – The said notice was dispatched on 16-7-2021 – Limitation expired on 30- 6-2021 – Notice is barred by limitation- Notice and order was quashed.[S. 148, 148(b), 148A(d), 149, Art. 226]

Allowing the petition the High Court observed that although the notice dated 30-6-2021 under section 148 of the Act bears an endorsement at the foot of the page that it has been digitally signed, it is inchoate, in the sense that it is not accompanied by a date. The date would have revealed when the digital signatures were appended on the notice. Admittedly, the said notice was never physically delivered to the petitioner-assessee. As such, the fact remains that service of the said notice under section 148 of the Act was affected on the petitioner only on 16-7-2021 through email, though the limitation period had already expired on 30-6-2021. Hence, the notice under section 148A(b) and the order under section 148A(d) are quashed. (AY 2014-15).

Himanshu Infratech (P.) Ltd. v. ITO (2023) 294 Taxman 715 (Delhi)(HC)

373. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Principle of natural justice – Opportunity must be given – Order passed without considering the objection raised under the earlier unamended provisions of section 148 of the Act – Order is set aside. [S. 148, 148A(b), 148A(d), Art. 226]

The Assessee contended that it did not receive the notice under section 148A(b) as stated by the department. It became aware of the order being issued under section 148A (d) only through the portal. The Assessee challenged the order passed under section 148A(d) on the grounds that it violated the principles of natural justice and without considering the objections filed by the Assessee under the earlier unamended provisions of section 148. Additionally, the Assessee had no opportunity to respond to the notice under section 148A (b). The Court quashed the order passed under section 148A(d) of the Act and directed the AO to reevaluate the issues after issuing a notice under section 148A(b).(AY. 2016-17)

Sahil Infra Creative (P.) Ltd. v. Income-tax Officer [2023] 455 ITR 11 / 294 Taxman 113 (Guj)(HC)

374. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Unexplained money – Search – Financial scam – Principal CIT was directed to refer the case along with all other involving same broker where similar modus operandi was adopted relating to unaccounted cash loan to Enforcement Directorate (ED).[S. 69A, 132, 148A(b), 148A(d), Art.226]

A search was conducted at the premises of the Assessee, during which various materials and evidence were gathered, revealing multiple cash loan transactions. Based on these documents and evidence, it was deemed that the income chargeable to taxes had escaped assessment for the relevant assessment years. Consequently, a reopening notice was issued under section 148. The Assessee challenged the notice, and the order passed under section 148A (d) on the grounds that the AO lacked material evidence against the Assessee. The Assessee also argued that the documents provided by the investigation wing of the AO could not be relied upon.

The Court held that considering the facts and circumstances of the case, the notice under section 148 did not fall within the categories of cases where the initiation of the assessment proceedings was without jurisdiction or authority. The impugned order, based on the investigation and evidence, observed many incriminating documents indicating the Assessee’s involvement in unaccounted cash loan transactions. Additionally, various SMS and WhatsApp message exchanges between different parties before the cash loan transactions were provided as proof. Given these facts, the Court concluded that a Writ Petition under Article 226 of the Constitution of India could not be entertained.(SJ)

Kalicharan Agarwalla v. Office of The Income-tax Officer (2023)_ 294 Taxman 295 (Cal)(HC)

375. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Notice after three years – Limitation – Capital gains – Notice issued without considering the reply – Income escaping did not exceed 50 lakhs – Income chargeable to tax-notice barred by limitation.[S. 45, 48, 148A(b) 148(d), 149(1)(b) Art. 226]

Reopening notice dated 21-3-2023 under section 148A(b) was issued on ground that assessee had purchased a property and sold same after holding it for three years, therefore, long- term capital gain arose on same for Rs. 55.77 lakhs had escaped assessment. The assessee contended that capital gain was Rs. 33.85 lakhs after deducting indexed cost of acquisition and as income escaping assessment did not exceed Rs. 50 lakhs, in terms of section 149(1)(b), notice dated 21-3-2023 under section 148 for assessment year 2016-17 would not fall within extended time provided under section 149(1)(b) of the Act. The Assessing Officer passed an order under section 148A(d) and further issued a notice under section 148. On writ allowing the petition the court held that a plain reading of section 48 provide that entirety of sale consideration would not constitute income. The Revenue authorities had not applied its mind to said reply filed by assessee nor noticed legal position. Accordingly the order passed under section 148A(d) and notice issued under section 148 were set aside. Abdul MMajeed v. ITO (2022) 447 ITR 698 (Raj) (HC), distinguished. (AY. 2016-17)

Sanath Kumar Murali v. ITO (2023) 455 ITR 370 /294 Taxman 80 / 333 CTR 189 (Karn.)(HC)

376. S. 148A: Reassessment – Conducting inquiry, providing opportunity before issue of notice – Share application money – Order passed without considering the reply – Order is set aside – Matter is remanded. [S. 148A(b), 148A(d), Art. 226]

Allowing the petition the Court held that the Assessing Officer passed order under section 148A(d) without consideration of reply made by assessee and issued notice under section 148 of the Act since there was no consideration of reply made by assessee, order and notice was set aside with a direction to Assessing Officer to reconsider reply and advert to same while passing fresh order under section 148A(d) of the Act. Matter remanded.

Flipkart (P.) Ltd. v. ITO(IT) (2023) 294 Taxman 300 (Karn.)(HC)

377. S. 148A – Reopening – Incorrect information – Non application of mind by Assessing officer – notice u/s. 148A(b) as well order u/s. 148A(d) bad in law

Petitioner an individual assessed to income from salary, house property and other sources. Petitioner filed ROI on 29th November 2019 for Assessment Year 2019-2020. The return was processed and an order dated 26th February 2020 was passed under section 143(1) of the Act. Subsequently, Petitioner received a notice dated 31st March 2023 u/s. 148A(b) of the Act alleging that there was information which suggests that income chargeable to tax for Assessment Year 2019-2020 has escaped assessment within the meaning of section 147 of the Act.

The Hon Court held that the order dated 26th April, 2023 passed under Section 148A(d) of the Act is unsustainable. This is because the notice under Section 148A(b) of the Act does not call upon Petitioner to provide any justification on any transaction in question. The entire basis for issuing the notice under Section 148A(b) of the Act was that Petitioner was a non-filer for Assessment Year 2019-2020 as he has failed to file the Return of Income and therefore, the income from salary and purchase of securities have not been declared/offered for taxation. Consequentially the notice issued under Section 148A(b) of the Act, dated 26th April 2023, was quashed and set aside.

The Hon Court referred to the guidelines for issuance of notice under Section 148 of the Act bearing F. No. 299/10/2022-Dir(Inv.III)/611 dated 1st August 2022 paragraph 2.1 (vi) and (vii) and the instruction regarding uploading of data on functionalities/portal of the Income Tax Department bearing F. No. 299/10/2022-Dir(Inv. III)/647 dated 22nd August 2022 paragraphs 3 and 4.

The court observed that if the AO had only verified in the portal of assessee before initiating proceedings, particularly when he had the PAN number with him, AO would have realized that not only Petitioner has filed the Return of Income, but also the return has been processed and an order dated 26th February 2020 under Section 143(1) of the Act had been passed. Therefore, the notice issued under Section 148A(b) of the Act also has to be quashed and set aside.

Narendra Kumar Shah v. The ACIT Circle – 42 (2)(1) [WP NO. 2558 OF 2023, Dated: 10/10/2023, (Bom.) (HC); A.Y. 2019-2020]

378. S. 149 : Reassessment – Time limit for notice – Service of notice – Period of limitation – Authentication of notices and other documents – Notice dated 2-6-2022 for the assessment years 2013-14 and 2014-15, mailed after 3-6-2022 – Not mentioning the name and designation of the concerned officer – Notice and order is quashed and set aside. [S. 148, 148A(b), 148A(d), 282A, Art. 226]

The petitioner has challenged the notice dated 2-6-2022 for the assessment years 2013-14 and 2014-15, mailed after 3-6-2022 and also authentication of notices and other documents. The Court held that the notices under section 148 of the Act issued between 1 April 2021 to 30 June 2021 were deemed to be notices under section 148A(b) of the Act vide Hon’ble Supreme Court in UOI v. Ashish Aggarwal (2022) 444 ITR 1( SC). The Hon’ble Supreme Court also directed the Department to provide the information and material relied upon within 30 days of the Order. In pursuance to the Hon’ble Supreme Court’s order, CBDT issued Instruction No. 1/ 2022 dated 11 May 2022 (2022) 444 ITR 43 ( St) requiring the assessing officers to provide the data by 2 June 2022. In the assessee’s case, the notice under section 148A(b) of the Act was issued on 2 June 2022 but mailed after 3 June 2022. Hon’ble High Court quashing the notice held that not only was the act of mailing the notice after 3 June 2022 by the assessing officer in contravention of CBDT Instruction No. 1/ 2022 dated 11 May 2022 but the notice was also violative of section 282A insofar as the name and designation of the concerned officer was absent.(AY. 2013-14, 2014- 15)

Jindal Exports and Imports (P.) Ltd. v. DCIT [2023] 294 Taxman 711 (Delhi)(HC)

379. S. 153A: Assessment – Search – Alleged bogus long-term capital gains – No incriminating material – assessments cannot be substantiated. [S.45, 68, 69C, 132]

A search was conducted at the premises of the Assessee. Subsequent to the search, the AO passed an assessment order under section 143 r.w.s 153A and made additions under sections 68 and 69C on account of alleged bogus long- term capital gains. However, the CIT(A) and the Tribunal held that no incriminating material was found in the premises of the Assessee.

Referring to the decision of the Supreme Court in the case of PCIT v. Abhisar Buildwell P. Ltd (2023) 454 ITR 212( SC), the Court emphasized that the jurisdiction of the AO to make an assessment is confined to the incriminating materials found during the course of the search under section 132. In the absence of any incriminating material found during the search, the assessments could not be substantiated. Therefore, the Court concluded that there was no substantial question of law, and the appeal was dismissed.

PCIT v. Rajesh Mohanbhai Patel [2023] 294 Taxman 279 (Guj)(HC)

380. S. 154 : Rectification of mistake-Mistake apparent from the record – Limitation – Book – profit – Order giving effect to appellate order – Issue sought to be rectified not subject matter of appeal – Period of limitation will be reckoned from the date of original assessment order in respect of points not subjected to appellate jurisdiction- Oder passed in 2004 could not be rectified after a period of 4 years, impugned order passed under section 154 dated 29-3-2014 was barred by limitation. [S. 32, 115JB, 143(3), 154(IA)]

Dismissing the appeal of the Revenue the Court held that the AO, while giving effect to the ITAT’s order cannot go beyond the directions of the ITAT and since in this case, the issue of calculation of book profit qua diminution in the value of an asset was not the subject matter of the appeal, the Revenue was not justified in contending that the order is within the time limit. Because u/s. 154(1A) of the Act, the AO can rectify the order in respect of a matter other than the matter which has been considered and decided by the appellate/ revisional authority. In the instant case, since the issue of diminution in value of an asset for calculating book profit was not a subject matter of appeal or revision, the original order u/s. 143(3) of the Act dated 27/02/2004 is the order which can be rectified by the AO and since the order passed in 2004 cannot be rectified after a period of 4 years, the order passed u/s. 154 of the Act dated 29/03/2014 is barred by limitation under section 154(7) of the Act. (AY. 2001-02)

PCIT v. Godrej Industries Ltd [2023] 153 taxmann. com 529 (Bom.) (HC)

381. S. 179: Private Company – Liability of directors – The non-recovery of dues was not linked to the Assessee’s gross negligence, misconduct, or breach of duty, and all relevant circumstances were not reflected in the notice – Notice was quashed. [Art. 226]

The Assessee, a former director of the company, resigned from the position and sold off its shares. Subsequently, the company went into liquidation. After four years, a show cause notice under section 179 was issued to the Assessee, requiring payment of the company’s pending tax liabilities. On writ the Court held that the reading of section 179, which indicates that the authorities should examine the circumstances stated in the section before exercising jurisdiction under the provisions. The notice issued under section 179 was vague, as it only mentioned the Assessee being a director of the company without specifying the reasons for holding the Assessee responsible, and whether the conditions of section 179 had been complied with. Since the non-recovery of dues was not linked to the Assessee’s gross negligence, misconduct, or breach of duty, and all relevant circumstances were not reflected in the notice, its primary issuance was attributed to the failure to collect demands due to business closure and the non- existence of the company’s office. Therefore, demanding taxes from the Assessee appeared premature. Court also observed that recognizing the potential revenue loss, directed the authority to reconsider its decision and take fresh steps in accordance with the law after following the proper procedure.(AY. 2011-12)

Kushal Vinodchandra Mehta v. Income-tax Officer [2023] 458 ITR 359 / 294 Taxman 307 (Guj)(HC)

382. S. 179 : Private company – Liability of directors – Recovery proceedings – Gross neglect, misfeasance or breach of duty – Not proved – Order of the Assessing Officer and order rejecting the revision application was quashed. [S. 264, Art. 226]

Hon’ble Bombay High Court held that the assessee – director had brought sufficient material on record to suggest that she had a very limited role to play in company as a director. Further, the AO had not brought on record even a single incident, decision or action, which would be treated as an act of gross neglect, breach of duty or malfeasance resulting in non-recovery of tax due of company. Therefore, impugned notice issued upon assessee for recovery of tax demand of company is to be set aside. (AY. 2008-09, 2009- 10)

Geeta P. Kamat v. PCIT [2023] 455 ITR 234/ 150 taxmann.com 490 (Bom)(HC)

383. S. 194A : Deduction of tax at source – Interest other than interest on securities – Jammu Development Authority (JDA) being a corporation established by a State Act is outside purview of section 194A – Not and obliged to deduct tax at source on payment of interest by it on FDs/ deposits made by JDA. [Jammu Development Authority Act,1970, S. 3]

Dismissing the appeal of the Revenue the Court held that from a conjoint reading of section 194A and SO 3489 dated 22-10-1970, it becomes abundantly clear that, apart from others, a corporation established by a Central, State or Provincial Act is exempt from the operation of sub-section (1) of section 194A and such corporation is, thus, not obliged to deduct TDS on the interest payment made by it to the payee. The issue raised i.e., whether the JDA is a corporation established by or under the State Act, is no longer res integra as the Hon’ble Supreme Court has dealt with the similar issue in the case of CIT (TDS), Kanpur v. Canara Bank, [2018] 95 taxmann.com 81/257 Taxman 12/406 ITR 161 (SC) and based on this ratio the inescapable conclusion would be that the assessee-bank shall not be obliged to deduct TDS from the interest payments made to the JDA on its amount kept in FDRs. (AY 2010-11, 2011-12).

PCIT v. J&K Bank Ltd (2023) 294 Taxman 580 (J & K and Ladakh)(HC)

384. S. 220: Collection and recovery – Assessee deemed in default – Waiver of interest Tax paid through the PAN of minor son – Denying the credit is not justified – Directed to waiver of interest. [S.64, 220(2A), 244A, Art. 226]

Allowing the petition the Court held that interest cannot be levied under section 220(2) when the advance taxes were in fact paid on time though mistakenly in the assessee’s minor son’s PAN number. Directed for waiver of interest. (AY 2009- 10, 2011-12) (SJ)

Fuaad Musvee v. PCIT [2023] 455 ITR 243 (Mad) (HC)

385. S. 220: Collection and recovery – Assessee deemed in default – Stay of demand – Pendency of appeal before CIT(A) – Directed to stay the recovery proceedings – CIT(A) is directed to dispose of appeal expeditiously. [S. 250, Art. 226]

Hon’ble High Court granted complete stay on the recovery of outstanding demand by observing that the assessee had filed loss return, however, AO passed high pitched assessment order and also issued notice of demand under section 156 of the Act. Stay application filed by the assessee is rejected by the AO and directed the assessee to deposit 20 per cent of tax as determined in assessment order. As the appeal filed before Commissioner (Appeals) is pending, recovery proceedings is to be kept in abeyance till appeal is disposed of by the Commissioner (Appeals).

Great Barter Pvt. Ltd. v. ACIT [2023] 455 ITR 452 (Cal)(HC)

Editorial : Decision of single judge is reversed (WP. Nos. 4717 / 4720 of 2018 dated September 26, 2018.

386. S. 220: Collection and recovery – Assessee deemed in default – Stay of demand – Pendency of appeal before CIT(A) – Financial hardship – Directed the authority to issue a fresh order after thoroughly considering the facts, circumstances, and submissions made by the Assessee.[S. 250 Art.226]

The Assessee filed an appeal before the CIT (A). Simultaneously, the Assessee filed a stay application before the Principal Commissioner, who disposed of the application by granting a stay until the disposal of the appeal, subject to the payment of 20 per cent of the demand amount. On writ the Court observed that the order had been passed without addressing the contentions raised by the Assessee regarding undue hardships arising from their financial condition and the downturn in the export industries. Additionally, the Court noted that neither the circular nor the office memorandum on dealing with demands raised in high-pitched demands had been considered. In this case, the Revenue had merely followed the instructions provided in the memorandum dated 29-2-2016 and 31-7-2017. The Court emphasized that these instructions and memorandum should not act as a constraint, and the authority, being a quasi- judicial entity, retains the discretion to issue a deposit order for less than 20 per cent. Since the order lacked reasoning and explanation, the Court quashed and set aside the order. The Court directed the authority to issue a fresh order after considering the facts, circumstances, and submissions made by the Assessee.(AY. 2014-15, 2016-17, 2020-21)

Kunj Bihari Lal Agarwal v. PCIT(C) [2023] 294 Taxman 273 (Raj)(HC)

387. S. 220: Collection and recovery – Assessee deemed in default – Stay of demand – Pendency of appeal – Discretionary powers is to be exercised judiciously and reasonably and not arbitrary – Order quashed – Directed to to pass fresh order in accordance with law.[S. 220(6), 250, Art. 226]

On writ against the dismissal of stay application the Court emphasized that the discretionary powers granted to the ITO under section 220(6) for handling stay demand applications should be based on four parameters: (i) the prima facie case, (ii) balance of convenience, (iii) irreparable injury that may be caused to the Assessee, which cannot be compensated in terms of money, and (iv) whether the Assessee has come before the authority with clean hands. These discretionary powers must be exercised judiciously and reasonably, relying on relevant facts and circumstances, without being arbitrary or considering irrelevant or trivial facts. It is the responsibility of the authorities to consider the facts and circumstances of the case. Referred, Sant Raj v. O.P. Singla (1985) 2 SCC 349/ Reliance Airport Developers (P) Ltd v. Air ports Authority of India (2006) 10 SCC 1/ U.P. State Road Transport Corporation v. Mohd. Ismail (1991) 3 SCC 239

The Court stressed that while the ITO should not function solely as a tax collector but as a quasi-judicial authority with the power to alleviate hardships for the Assessee, they should remember they are not the final authority. Appellate authorities possess plenary powers. Since the order lacked any application of mind or detailed discussion on the prima facie case of the Assessee, balance of convenience, or any hardships on the Assessee, the Court quashed and set aside the order. (AY. 2020-21)

Nirmal Kumar Pradeep Kumar, (HUF) v. UOI [2023] 456 ITR 386/ 294 Taxman 321 (Jharkhand)(HC)

388. S. 226: Collection and recovery of tax – Priority over debts – Fixed deposit receipts – Income Tax Department’s preferential right to recovery of debts over other creditors is confined only to ordinary or unsecured creditors, it would not extend to secured creditors. [S. 226(3), Provisional Insolvency Act, 1920, S.(e), Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, S. 2(z)(f)]

Suit was filed for seeking recovery of amount along with pendente lite and future interest. It has been held by the Hon’ble Delhi High Court that where amount had been placed in FDR by a company to ensure repayment of debt owed by it to the assessee and lien had been marked on aforesaid FDR in favour of assessee-company, assessee being a secured creditor in view of lien possessed by it on said FDR will have a priority over Income Tax Department, who is an unsecured creditor. Hence, the assessee-company would be entitled to the amounts under the said FDR. Bank was directed to make the payment with interest. (SJ)

IFCI Factors Ltd. v. Bank of India [2023] 455 ITR 705 (Delhi)( HC)

389. S. 245HA: Settlement Commission – Abatement of proceedings – Shortfall on additional taxes and interest – Subsequently intimated – Abatement invalid.[S. 245C, 245D(2A), Art. 226]

The Assessee filed an application before the Settlement Commission. Furthermore, according to the Assessee’s calculation, it paid the taxes and interest on the additional income disclosed in the application. However, the Revenue objected, stating there was a shortfall in the taxes and interest paid by the Assessee. The Settlement Commission held that the application had abated since the Assessee failed to pay the appropriate taxes on the additional income disclosed in the said applications.

The High Court noted that the Revenue had not provided any information to the Assessee regarding the shortfall in the tax and interest paid as per the income disclosed in the application. It was only subsequently that the Joint Commissioner gave information about the shortfall in the taxes paid. The Assessee had complied with the provisions of section 245D(2D) by paying the additional tax and interest on the income disclosed in its application as per its own calculation. Therefore, the abatement of the application by the Settlement Commission was quashed and set aside, and the matter is directed to be placed before the Interim Board for Settlement constituted under section 245AA for consideration.(AY. 2002-03, to 2004-05)

Mahesh Gupta v. ITSC [2023] 294 Taxman 537 (Bom)(HC)

390. S. 254: Nonspeaking and Cryptic order – No reasons stated by ITAT – Matter remanded to rehear

The Hon Court observed that there is no reason given by the ITAT as to why the Tribunal disagrees with the view of the learned CIT(A) and opines that amount to be carried forward cannot exceed the unspent amount.

In the circumstances, the matter was remanded to the ITAT to give reasons as to why it has opined that the CIT(A) was not correct in concluding that the amount to be carried forward cannot exceed the unspent amount. The Hon Court relied on the decision of the Hon’ble Apex Court in Udhavdas Kewalram v. Commissioner of Income-tax (1967) 66 ITR 462 (SC)

In view of the above, the impugned order was set aside

National Centre For Cell Science v. Dy. CIT Exemption Circle, Pune [ITA (L) No. 24310 of 2023, Dated: 11/10/2023. (Bom.) (HC)]

391. S. 260A: Appeal – High Court – Revision of orders prejudicial to revenue – Appeal – Appeal against the assessment order and revision order – Both orders to be heard together. [S.10B(7), 80IA(8), 263]

The Commissioner invoked revisionary proceedings because the AO failed to apply his mind to the provisions of section 10B(7), read with sections 80-IA(8) and 80-IA(10). The Commissioner directed the AO to restrict the deduction under section 10B. The Assessee challenged the order passed under section 263 before the Tribunal and subsequently by the Revenue before the High Court. The High Court admitted the appeal filed by the Revenue. Pursuant to the Commissioner’s directions, the AO reframed the order under section 143(3) r.w.s. 263.

The Court held that since the order under section 263 was appealed by the Revenue before the High Court and admitted by a co-ordinate Bench of the High Court, the order passed under section 143(3) of the Act that has travelled to the Court ought to be admitted and tagged along. (AY. 2006-07)

PCIT v. Spicer India Ltd. [2023] 294 Taxman 740 (Bom)(HC)

392. S. 263: Commissioner – Revision of orders prejudicial to Revenue – Tax on distributed income to shareholders – Revision order barred by limitation – provisions not applicable for the year under consideration. [S.115QA(1), 154 The Companies Act, S 77]

The AO passed a rectification order stating that section 115QA(1) was not applicable before 1-6- 2016. Subsequently, the Principal Commissioner of Income Tax (PCIT) passed an order under section 263 on 10-6-2020, treating the rectification order as erroneous and prejudicial to the interest of the Revenue. The Tribunal, on appeal, held that the Commissioner could exercise jurisdiction only until 31-03-2019. Considering that the PCIT exercised jurisdiction on 10-06-2020 against an order dated 28-12-2017, the revision order was time-barred. Moreover, the Tribunal noted that section 115QA was not applicable before 1-6- 2016, concluding that the PCIT was not justified in invoking section 263. The High Court upheld the Tribunal’s findings on the issue of limitation and held that “buy back” means the purchase of a company’s own shares under section 77 of the Companies Act. As the buy-back was pursuant to an order of the Company Law Board under section 402 of the Companies Act, it was not included in section 115QA. Therefore, the PCIT was not justified in invoking the provisions of section 263.(AY. 2015-16)

PCIT v. C. M. Rajgarhia (P.) Ltd. [2023] 294 Taxman 288 (Cal)(HC)

393. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Interest on refunds – Order passed giving effect to the order of the CIT(A) – Order of Tribunal quashing the revision order is affirmed. [S. 244A]

Dismissing the appeal of the Revenue the Court held that while giving effect to CIT(A)’s order, it resulted in refund of certain sum and subsequently, on verification of records, Commissioner noticed that AO had failed to conduct proper enquiries and examine issues in an appropriate manner which gave rise to an erroneous enhanced refund as the Commissioner felt that delay in claiming enhanced refund was attributable to assessee and accordingly interest under section 244A of the Act was not allowable on said refund. The High Court held that since there was nothing in findings of Commissioner as to how the assessee delayed proceedings that resulted in refund or what were reasons that could be attributable to assessee and it was only in giving effect to CIT(A)’s order by AO which resulted in refund therefore it could not be stated that proceedings resulting in refund were delayed for reasons attributable to assessee wholly or in part. Accordingly the order of Tribunal is affirmed. (AY 2007-08)

PCIT v. Bank of Baroda (2023) 294 Taxman 455 (Bom)(HC)

394. S. 263: Revision – Erroneous and Prejudicial to the interest of Revenue – Show cause notice(SCN) – Issue not raised in SCN – No opportunity provided – Order cannot be erroneous:

The respondent/assessee was engaged in the business of manufacturing of chemicals. The assessee filed return of income for Assessment Year 2009-10 on 29th September 2009 declaring total income at loss of Rs.4,88,18,926/-. The assessment was completed under Section 143(3) of the Act and an assessment order dated 17th November 2011 came to be passed.

The Court further observed that the ITAT has proceeded to dispose the matter on merits and come to the conclusion that the very same issue of converting the capital asset into stock-in- trade was the subject of query raised during the assessment proceedings. The ITAT came to the conclusion that the assessment order has been passed by the A.O. by application of mind and after considering the response of assessee. Revenue has not disputed the replies that were placed by assessee before the A.O.

The Hon court further relied on the judgment of this court in Commissioner of Income Tax v. Fine Jewellery (India) Ltd. [2015] 372 ITR 303 (Bom).

Accordingly, appeal was dismissed.

Pr. Commissioner of Income Tax – 10 v. Nilkanth Tech Park Pvt. Ltd. Income Tax Appeal No. 807 OF 2018, dated 04/10/2023, (Bom.) (HC)

395. S. 264: Commissioner – Revision of other orders – Bonafide mistake – Commissioner is not justified in rejecting the application on the ground that assessee failed to file revised return without considering the merits of the case – Directed to pass a reasoned and speaking order. [S.10(38), 139(5), Art. 226, 265]

The assessee filed delayed return showing dividend income and long term capital gains as taxable income. The assessee realized her mistake on receipt of intimation under section 143(1) of the Act. The assessee filed an application under section 264 of the Act before the Commissioner of Income Tax to rectify the said mistake of declaring exempted income as taxable and paying tax thereon. The CIT rejected the application of the assessee on the ground that the assessee has not filed revised application under section 139(5) of the Act for the claim in question. Such claim could not be allowed in application under section 264 of the Act. Hon’ble Calcutta High Court quashed the order passed by CIT rejecting the application filed by the assessee under section 264 of the Act by observing that the assessee made bonafide mistake of including exempt income in her return as taxable income and same could not be rectified by filing revised return as original return itself was filed belatedly. As, the assessee had no other remedy except taking recourse to file revision application under section 264, CIT could not have rejected revision application merely on ground that assessee failed to file revised return under section 139(5) of the Act. (AY. 2007-08, 2008-09) (SJ)

Ena Chaudhuri v. ACIT [2023] 455 ITR 284 (Cal) (HC)

396. S. 271(1)(c): Penalty – Concealment – Notice – Not specifying the limb under which the penalty proceedings are initiated – Order of Tribunal is affirmed. [S. 274]

The penalty notice under section 274, read with section 271(1)(c), did not specify the limb under which the penalty was sought to be imposed, i.e., whether for concealment of income or for the reason that the Assessee had furnished inaccurate particulars. The Court held that penalty proceedings entail civil consequences for the Assessee. When initiating penalty proceedings, the AO must apply his mind to the material particulars and indicate what is alleged against the Assessee. The AO has an obligation to specify which limb of the said provision is being invoked. In the case of concealment, a higher burden is imposed on the Assessee than furnishing inaccurate particulars. Therefore, the AO must indicate the limb under which penalty proceedings are initiated against the Assessee.(AY. 2012-13) (AY.2004-05)

PCIT v. Unitech Reliable Projects (P.) (2023) 294 Taxman 507 (Delhi)(HC)

PCIT v. Gopal Kumar Goyal (2023) 294 Taxman 746 (Delhi) (HC)

397. S. 279 : Offences and prosecutions – Sanction – Chief Commissioner – Commissioner – Tax deduction at source – Delay in depositing the amount – No Limitation period for filing of Compounding application – The application cannot be rejected on the ground of delay in filing the application – Central Board of Direct Taxes cannot issue guidelines overriding the statutory provisions.[S. 119, 276B, 278B, 279(2), Art. 226]

The assessee made an application for compounding of offences, however, failed to deposit the compounding fees. Pursuant to the same, the revenue filed a complaint before the Metropolitan Magistrate. The assessee filed a fresh compounding application after making payment of compounding fees which was not considered or disposed-off. On writ the Court held that the compounding application cannot be rejected on the ground that delay in filing of the application, since no limitation period has been provided u/s 279 for filing or consideration of the compounding application.

The Court also held that the CBDT guidelines cannot provide for limitation nor can restrict the operation u/s. 279 and guidelines are subordinate to the principal Act and Rules and cannot override or restrict the application of specific provisions enacted by the legislature. Further, the Court also observed that there is no restriction on the number of applications that could be filed, and the only requirement of the provisions is that the complaint filed by the revenue should be still pending, which is admittedly pending in the present case. Accordingly, the Court directed to put a stay on the prosecution proceedings before the Metropolitan Magistrate, until the compounding application is disposed of.

Sofitel Realty LLP v. Income-tax officer (TDS)(2023) 457 ITR 18 / 294 Taxman 766 (Bom) (HC)

Kar Vivad Samadhan Scheme, 1998 (Finance (No. 2) Act, 1998)

S. 88 : Settlement of tax payable – Determination of disputed tax – Total assessed tax to be reduced by taxes already paid (including any refunds issued by revenue and interest paid on those refunds). [S.87(e), 87(f), 88(a)(i) 90(1) Art. 226]

The assessee challenged the legality of orders

issued by the Department determining the tax payable under the Kar Vivadh Samadhan Scheme, 1998. The assessee contested the deduction of refund and interest from the aggregate of advance tax paid and tax deducted at source arguing that only the refunded tax amount should be considered for calculating the tax paid, excluding the interest amount since any reduction should be limited to the refund of tax and not the refund of interest. Dismissing the writ, the Hon’ble Bombay High Court upheld the Departments approach to deduct the refund and interest amount from the tax paid by the assessee while emphasizing that to determine the disputed tax accurately, it was essential to consider any refunds issued by the revenue to the assessee and any interest paid on those refunds since disputed tax must be total tax determined and payable but which remains unpaid.

Bombay Dyeing & Manufacturing Co. Ltd. v. H.D. Trivedi, DCIT [2023] 456 ITR 569 (Bom)(HC)

Prohibition of Benami Transactions Act, 1988.

399. S.24: Notice and attachment of property involved in benami transaction – Benami Property – Provisional Attachment – Sufficient material – The Assessee was advised to approach the adjudicating officer to explain why the provisional attachment order is bad in law [Art. 226]

The Initiating Officer issued a notice under section 24(1), directing the Assessee to show cause as to why properties should not be treated as benami properties. Subsequently, the company’s and its directors’ properties were provisionally attached. The Assessee challenged the provisional attachment before the High Court.

The Court held that the provisional attachment is merely a preliminary step. Given the existence of material raising suspicion that the property was benami, the suspicion is deemed sufficient for the initiating authority to form an opinion on provisional attachment. The Act incorporates various checks and balances, eliminating the necessity for court intervention. The Assessee was advised to approach the adjudicating officer to explain why the provisional attachment order is bad in law.(SJ)

M. Kumudhavalli v. Initiating Officer Joint Commissioner of Income-tax (OSD) [2023] 294 Taxman 633 (Mad)(HC)