DIRECT TAXES – High Courts

Research Team

135. S.2(24)- Doctrine of Mutuality – Society with non-members also governed by the principle of mutuality. [S.260A]Even if there are non-permanent members, non- life members, temporary or honorary members, they are not entitled to vote or offer themselves as candidates for any elective office, or have no right of disposal over the surplus in case of dissolution of the club, the assessee would not cease to be governed by the principle of mutuality. Once the mutuality principle is attracted the club is governed by that principle. (ITTA 205/2005 decided on 4.1.2003)

     Jubilee Hills International Centre v. ITO [2023] 291 Taxman 600 (Telangana) [04-01-2023]

136. S.10(37) : Compensation of compulsory acquisition of agricultural land – Not to be added as income – Appeal dismissedThe income arising from transfer/acquisition of agricultural land is exempt under Section 10(37) of the Act and the fact that the agricultural land was not used for a period of two years prior to its acquisition was not raised by the Department before any of the appellate authorities hence the income is exempt under Section 10(37)(Tax Appeal 636/2022 decided on 20.12.2022)(AY: 2008-2009)

     PCIT v. Urmi Nilesh Nagarsheth [2023] 291 Taxman 611 (Gujarat) [20-12-2022]

137. S.14A: Expenditure incurred to earn exempt income – No disallowance in the absence of exempt income amendment to Section 14A prospective [S.260A]Where the assessee had no dividend income, then no disallowance can be made under Section 14A for AY 2010-2011 in the absence of such income. The amendment by the Finance Act, 2022 is only prospective and has no application to the AY in question[IT Appeal No. 380/2022 decided on 6-10-2022][AY: 2010-2011]

     PCIT v. Delhi International Airport (P.) Ltd. [2023] 291 TAXMAN 490 (Delhi)[06-10-2022]

138. S. 14A: Dividend income earned from the overseas entity – Included in the total income – No disallowance.The Assessee earned dividend income from an overseas company in Oman. However, the officer made a disallowance u/s 14A. The dividend received by the Assessee from the Oman company is chargeable to tax in India under the head “Income from other sources” and part of the total income. Further, the rebate of tax had been allowed to the Assessee from total taxes in terms of section 90(2) read with Article 25 of the Indo-Oman tax treaty and thus, the dividend earned could not be said to be in nature of excluded income. Hence, 14A is not applicable. (ITA NO. 390 of 2022, dt. 11-10-2022)(AY 2007-08)

     Pr. CIT v. IFFCO Ltd. [2023] 291 Taxman 493(Delhi)(HC)

139. S. 14A : Disallowance of expenditure – Exempt income – For computing the disallowance u/s 14A r.w. Rule 8D only those investments were to be considered for computing average value of investments which yielded exempt income during relevant AY.Allowing the appeal the High Court held that Rule 8D(2)(iii) clearly postulates that in calculating the amount of disallowance u/s 14A of the Act, ‘an amount equal to one half per cent of the value of the investment, income from which does not or shall not form part of the total income’ should be considered. Hence, it is not all the investments but only that which are expressly spelt out in Rule 8D(2)(iii) r.w.s 14A of the Act and Rule 8D(i) which is to be reckoned for purpose of calculating the average of half per cent. Consequently, only those investments are to be considered for computing average value of investments which yielded exempt income during the relevant assessment year.

     Cargo Motors (P.) Ltd. v. DCIT (2023) 291 Taxman 208 / 145 taxmann.com 641 / 453 ITR 554 (Delhi).

140. S. 36(1)(vii)/(1)(viia)/(2), r.w.s 72 : Bad debt-Provision for bad and doubtful debts – Schedule bank – Deduction towards bad and doubtful debts computed at rate of 7.5 per cent of total income should be computed after setting off of brought forward lossesAllowing the review petition filed by the Revenue, the High Court held that it is a settled law that deduction towards bad and doubtful debts at 7.5% shall be made after setting off the brought forward loss, to arrive at the total income. Hence, the judgment passed by this Court is modified and the substantial question framed is answered in favour of Revenue.

     DCIT v. Syndicate Bank (2022) 291 Taxman 166 /145 taxmann.com 336 (Kar).

141. S. 37(1) : Business expenditure – CSR expenditure incurred prior to 1-4-2015 was to be allowed as amendment brought by way of Explanation 2 to S.37(1) by Finance Act, 2014, was prospective in nature.Dismissing the appeal of the Revenue, the High Court observed that Explanation 2 to Section 37 was inserted by Finance (No.2) Act, 2004 w.e.f. 1-4-2015. Further, Memorandum to the Finance (No.2) Bill 2014 clearly indicated that such amendment would take effect from 1-4-2015, hence, would apply to AY 2015-2016 and the subsequent years. The High Court also observed that this position is also exemplified in the Circular dated 21-1-2015 issued by CBDT. Thus, relying on the Memorandum and the CBDT Circular the High Court held the CSR expenditure to be allowed as amendment is prospective in nature. (AYs 2013-14 and 2014-15)

     PCIT v. PEC Ltd. (2023) 291 Taxman 281 / 146 taxmann.com 407 (Delhi)

142. S. 37(1): Business expenditure – Derivative loss booked on a mark-to-market basis on account of foreign exchange fluctuation at year-end on the mercantile basis is allowable as a deduction under section 37(1) of the Act.Assessee claimed derivative loss which was booked on a marked-to-market basis on foreign exchange fluctuation at year-end on a mercantile basis. Revenue disallowed the loss on the basis that the same was a provision for the future and was, therefore, notional in nature. High Court dismissed the departmental appeal and held that the loss was allowable as a deduction under section 37(1) of the Act. In this regard, High Court followed its earlier decision in the case of Pr. CIT v. Pricewaterhouse Coopers (P.) Ltd. [ITAT No. 269 of 2017, dated 17-12-2021]. (AY 2011-12)

     PCIT v. Kesoram Industries Ltd. [2023] 291 Taxman 562 (Calcutta)/ [2023] 147 taxmann.com 127 (Calcutta)

143. S. 37(1) : Business expenditure – Provision made towards warranty claims based on past experience allowable as a deduction – Further, facts also demonstrated that the claims received were in excess of the provision madeAssessee was engaged in the business of manufacture and sale of pressure cookers and kitchenware. Based on its past experience, the assessee made a provision of 1% of the sales value of kitchen appliances towards warranty and replacement expenses which was disallowed by the Assessing Officer. High Court observed that the provision was made by the assessee based on its past experience and further noted that the business claims received by the assessee for the A.Y. in question were in excess of the provision made. High Court allowed the assessee’s claim for deduction of the provision. High Court also placed reliance on the Supreme Court’s decision in the case of Rotork Controls India (P) Ltd. (AYs 2011-12 to 2013-14)

     TTK Prestige Ltd. v. DCIT [2023] 291 Taxman 220 (Kar)/ [2023] 146 taxmann.com 33 (Karnataka)

144. S.40(b)(v): Remuneration paid to partners of the firm – Whether allowable as a deduction – Not allowable in view of findings of fact of TribunalSince the Tribunal is the final fact-finding authority has held that there is no stipulation in the partnership deed of the amount payable to the partners hence no allowance can be made under the said section. (ITA 203/2006 decided on 14.12.2022)(AY: 2001-2002)

     Egg Guard v. ITO [2023] 291 Taxman 615 (Telangana) [14-12-2022]

145. S. 43D: Public financial institutions – Amendment by the Finance Act, 2017 whereby non- scheduled banks are liable to pay tax on interest on sticky loans on receipt basis is retrospective in natureThe assessee was a non-scheduled bank. The assessee took the stand that tax was payable on interest accrued on loans categorized as non-performing assets (NPA)/sticky loans only on receipt basis because the assessee bank was not certain about recovery of principal amount or interest. However, Assessing Officer held that the same was taxable on accrual basis because the assessee followed mercantile system of accounting. High Court held that the amendment made by the Finance Act, 2017 whereby the scope of section 43D was expanded to cover non-scheduled banks was retrospective in nature. Accordingly, assessee was required to pay tax on interest on the sticky loans/NPAs only on receipt basis.(AYs 2012-13 and 2013-14)

     PCIT v. Kangra Central Co-op Bank Ltd. [2022] 145 taxmann.com 357 (Himachal Pradesh)/ [2023] 291 Taxman 566 (HP)

146. S. 50B : Capital gains – Slump sale – Itemized sale vs Slum Sale [S.2(42C) & 2(19AA)]The Assessee filed its returns for the A.Y. 2009- 10 which was subsequently selected for scrutiny. It was observed by AO that the Assessee was engaged in various business divisions such as chemical unit, railway wagon making unit, etc. and each such division had a separate book of accounts maintained and were independent profit centres. The Assessee sold one of its chemical units and the officer held such sale to be a slump sale under S. 2(42C). The Assessee filed an appeal before the CIT(A) claiming that the sale was not a slump sale. The CIT(A) dismissed the appeal against which the Assessee filed further appeal to the Tribunal. The Tribunal reversed the decision of the CIT(A) and held in favour of the Assessee. On further appeal the High Court observed that the unit was never sold/transferred as a going concern but only the assets were sold at a pre-determined price. The High Court observed that on perusal of the balance-sheet, the Tribunal found that on the date of transfer apart from the assets which were sold and transferred, the said chemical unit had several other assets which were never sold nor transferred to the purchaser. Furthermore, the Tribunal took note of the crucial fact that none of the liabilities were transferred to the purchaser and the same continued to be a liability of the assessee and to be discharged and were discharged by the assessee. The Court held that the transaction was of itemized sale and thus dismissed Revenue’s appeal. (Calcutta High Court, ITAT/70/2017, order dated 22-11- 2021) (A.Y. 2009-10)

     PCIT v. Hindustan Engineering and Industries Limited (2023) 453 ITR 758 (Calcutta)

147. S. 54G : Capital gains – Shifting of industrial undertaking from urban area – Assessee would be entitled for benefit of S.54G of the Act for the LTCG arising on sale of an industrial plot in Bengaluru as it is an urban area for purpose of S.54G of the Act.Allowing the appeal the High Court held that by virtue of Notification under section 280Y(d) of the Act dated 22-9-1967, Bengaluru Corporation was declared as Urban area. Hence, relying on the ratio laid down by the Apex Court in Fibre Boards (P.) Ltd. v. CIT [ITRC Nos. 26 & 27 of 1997, dated 26-5-2005], Bengaluru continues to be an Urban area for the purpose of section 54G of the Act. (AY 1998-99)

     Fabsun Engineering (P.) Ltd. v. ITO (2022) 291 Taxman 478 / 145 taxmann.com 509 (Kar)

148. S.68: Cash Credits – Assessee has proven the identity, creditworthiness and genuineness of the transactions – No addition required to be made – No substantial question of law’S. 260A]The Hon’ble ITAT has given clear findings about the identity, genuineness and creditworthiness of the investors and also the investors had the capacity to make the investments. The valuation report produced by the assessee’s chartered accountant is conclusive. No substantial question of law arises. Appeal dismissed. (ITA No. 558/2022 decided on 23.12.2022)

     PCIT v. Enrich Agro Food Products (P.) Ltd. [2023] 291 Taxman 606 (Delhi)[23-12-2022]

149. S. 69A : Unexplained money – If assessee failed to produce books of account, other relevant materials and also failed to furnish any documentary evidences for unsecured loans received, for expenses incurred and advance made for goods, the lower authorities and ITAT were justified in making additions u/s. 69A of the Act.Dismissing the appeal of the Assessee, the High Court held that on observing the orders passed by lower authorities, it appears that there are concurrent findings of fact arrived by them that the Assessee has failed to produced the books of accounts and other relevant materials which was required by the AO to inquire into the transactions of unsecured loans, expenses, advance for goods. Further, they have given factual finding that there is no material available on record, the claims are also not supported by any documentary evidence and notices u/s 133(6) of the Act were not complied with. Under these circumstances, no question of law much less any substantial question of law as proposed or otherwise arises from the impugned order of the Tribunal and accordingly, the appeal stands dismissed with no orders as to cost. (AY 1998-99)

     Dhansukhlal Jekisondas (HUF) v. ITO (2022) 291 Taxman 486 / 145 taxmann.com 434 (Guj).

150. S.69B : Unexplained investment – Rotation of funds on NSEL by petitioner assessee – Interception by High Court in writ petition not required – Assessee has not fully disclosed material facts before the AO- Good reasons have been provided and order on objections is a well-reasoned order as well- Petition dismissed in favour of the Revenue[S.148]One NK Proteins Ltd. became a member of NSEL in 2008 and executed rotation trades whereby the margin profit would eventually be credited back to its account. The investment to carry out such trades being unexplained, the transaction quite possibly was deemed to launder unaccounted money only. The assessee was providing accommodation entries and could not disclose the source of investment and failed to disclose fully all material facts before the AO. Only brokers’ ledgers and bank statements were provided whereas many details such as Demat accounts were asked for. The reasons expressly noted the modus operandi of the NK group and the order on objections was a well-reasoned order. Petition liable to be dismissed. [SCA/4945/2021 decided on January 12, 2023]

     Omni Lens (P.) Ltd. v. ACIT [2023] 291 Taxman 619 (Gujarat)[12-01- 2023]

151. S.69C: Bogus Purchases – Addition sustained by Tribunal of 12.5% of purchases is valid – No interference required [S.260A] Section 69C dealing with unexplained expenditure no substantial question of law arises since the books of account of the assessee are not rejected and the estimation by the Tribunal to the extent of 12.5% of purchases is valid.(Tax Appeal 674/2022 decided on 16.1.2023)(AY: 2009-2010)

     PCIT v. Surya Impex [2023] 451 ITR 395 (Guj)

152. S. 69C : Unexplained expenditure – Additions made on account of bogus purchases – Without giving any opportunity to assessee for cross examination – The additions made holding the purchases as bogus is unsustainable.An information was received from Sales Tax Department relating to certain persons who were engaged in providing accommodation entries on account of bogus purchases to several parties and that assessee was also one of beneficiaries of such bogus bills of purchases. Based on said information, Assessing Officer issued reopening notice upon assessee and, further, made additions to income of assessee on account of alleged bogus purchases. It was noted that Commissioner (Appeals) observed that if purchases were bogus, it would be impossible for assessee to complete business transaction and corresponding sales would also be bogus, thus, unless corresponding sales were held to be bogus, purchases also could not be bogus, rather it would be a case of purchase from bogus entities/parties. On appeal, the Tribunal noted that case of revenue was based on investigation carried out by sales tax department only and that no cross-examination of persons whose names had figured in list so prepared by sales tax department was allowed. The High Court affirming the Tribunal’s finding, noted that there is no dispute on the sales, and therefore, this was not a case of bogus purchase.

     (ITA No. 673 and 750 of 2018) (A.Y. 2010-11 and 2011-12).

     PCIT v. Nitin Ramdeoji Lohia (2022) 145 taxmann. com 546 / (2023) 291 Taxman 469 (Bom.)

153. S. 80IB: Deduction – The assessee developed a residential project – The Assessing Officer denied deduction – The CIT(A) and Tribunal on facts found that all the flats complied with the conditions of deduction under 80IB(10) – The assessee was entitled to deduction [S. 80IB(10)]Assessee developed a residential project and thus claimed deduction in terms of section 80- IB(10). The Assessing Officer denied claim on ground that some of flats constructed in Tower ‘A’ of its housing project had exceeded area of 1000 sq.ft. as envisaged under section 80-IB(10). However, the CIT(A) found that assessee was claiming deduction on basis of approved plans of BMC, occupancy certificate issued by BMC, possession letters and agreements for sale of flats entered into with individual buyers. As per approved plans of BMC all flats in ‘A’ wing of building were having built up area of less than 1000 sq.ft. and as per possession certificate issued to buyers of flats, buyers had been given possession separately for each of individual flats. Further, there was no evidence on record to indicate that assessee had combined two or more flats. Moreover, completion certificate was issued by competent authority, which could not have been issued if there was any violation of approved plans by municipal authorities. The order of the CIT(A) was affirmed by the Tribunal in appeal. On appeal, the High Court held that in view of the findings of facts by the lower authorities, the benefit of under section 80-IB(10) could not be denied (ITA No. 1244 of 2016 and ITA No. 83 of 2018 dt. 24 November 2022) (A.Y. 2009-10).

     PCIT v. Vardhan Builders (2022) 146 taxmann.com 232 / (2022) 291 Taxmann 450 (Bom.)

154. S. 80CCC r.w.s. 147 : Contribution to certain funds – Assessee not having obtained any relief under S. 80CCC(1) of the Act, redemption amount of policy prematurely surrendered would not be liable to be taxed.Allowing the petition, the High Court held that the facts relating to issue on the basis of which the reopening of the assessment was sought were earlier called for by the AO and all such information was furnished by the Assessee. Further, the Assessee having furnished details and clarified his stand with clear and convincing facts relating to the investment by him in the pension policy, source of funds applied and further pointing out that the deduction was not claimed in that regard under Section 80CCC(1) rendering the receipt of surrender value not liable to be offered to tax. (AY 2013-14)

     Piyush Ambalal Gandhi .v. DCIT (2022) 291 Taxman 396 / 145 taxmann.com 508 (Guj)

155. S.89: Salary – Relief available when the decision of High Court not available when assessment order passed – Relief to be granted to assessee. [S.10(10C)]If the issue involved is covered by a decision of the High court which is not available while passing the order on a 264 petition and is subsequently available, the decision will have to be applied and relief granted to the assessee. (WP/17116/2008 decided on 25.1.2023)

     N.S.R Murthy v. CIT [2023] 291 Taxman 580 (Telangana) [25-01-2023]

156. S. 119: Central Board of Direct Taxes – Instructions – Application for condonation – return – Application allowable – Bonafide reasons.The Assessee failed to file its return of income due to the change of auditor and Covid 19 pandemic. The Petitioner then applied under section 119(2)(b) seeking condonation of delay in filing the return. The authority rejected the application. The High Court noted that there were bona fide reasons and unavoidable circumstances. Further, the delay was less than 1 year and was not an extraordinary delay or laches on the part of the Assessee. Hence, the Writ Petition was allowed, and the Assessee was allowed to file the return within the specified time. (W.P No. 20858 of 2022 dt. 04-11-2022) (AY 2020-21)

     Combined Tracom (P.) Ltd. v. Union of India [2023] 291 Taxman 9 (Kar)(HC)

157. S.127: Transfer of case – Writ appeal – If assessment proceedings allowed to continue matter would become infructuous – Appeal disposedThe High Court in appeal held that if the direction of the single judge is to be maintained that the assessment proceedings would continue till the petition is decided it would amount to rendering the writ petition infructuous. Hence, the order passed by the PCIT ordering transfer of the case is to be treated as an SCN and objections filed within 15 days and the Section 148A(d) order and Section 148 notice be kept in abeyance(MAT 2029/2022 decided on 10.1.2023)

     Nouvelle Advisory Services (P.) Ltd. v. ACIT [2023] 291 Taxman 583 (Calcutta)[20-01-2023]

158. S. 127: Power to Transfer Case – Failure to give Assessee an opportunity of hearing – failure to consider Assessee’s objections – Violation of principles of natural justiceIn the present case, a notice under Section 127 of the Act was issued to the Assessee show causing why his income tax file should not be transferred from Kolkata to Delhi. Against the said notice Assessee filed two responses. Subsequently, no communication or order of transfer was received by the Assessee. However, on browsing the e-filing portal it was observed that the jurisdiction of the Assessee has shown as Delhi against Kolkata. Aggrieved by the same the Assessee has filed the said petition challenging the transfer of the case. Before the Court the Revenue accepted that the objections/ representations were received and were neither considered nor disposed of. The order u/s 127(2) was passed without giving opportunity of hearing and the order of transfer though passed was not even communicated to the Assessee. The Court quashed the transfer order and restored the jurisdiction of the Assessee to Kolkata. The Court clarified that there would be no bar on the Revenue to take appropriate action of transfer in future if it is found by the concerned officer that there exists a cogent material for doing so. However, the same shall be done in accordance with the provisions of section 127(2) of the Act. (Calcutta High Court, W.P.A. No. 11901 of 2021, order dated 27 September 2021)

     Kamal Nath v. PCIT & Others [2023] 453 ITR 583 (Cal)

159. S. 127 r.w.s. 132 : Power to transfer cases by Income Tax authorities – post search and survey actionSearch and survey operations were conducted on ‘involved persons’ at Kolkata, Indore, Bhopal and other places by the Investigation Wing, Delhi in which several transactions of large- scale collection of illegal money were found indicating the involvement of the Assessee i.e. ex-CM of Madhya Pradesh. During search, various documents, files in laptop of involved parties, diary and whatsapp chats were also recovered showing receipts and payments of such transactions. Department in order to centralise the Assessee’s assessment issued a showcause notice with the proposal to transfer the Assessee’s case to New Delhi keeping in mind that such transfer would not cause any prejudice to the Assessee since he was a very influential person, holding a residence and two bank accounts in Delhi whereas NIL at Kolkata. The Principal Commissioner after considering relation between involved persons and the assessee, documents/evidence found, and the department’s transfer plea, passed an order under section 127 transferring the assessee’s assessment from Kolkata to New Delhi. The assessee aggrieved by the order passed by Principal Commissioner filed petition before the High Court. Earlier the Court had quashed the first order for violation of the principles of natural justice. Post the said quashing, the petitioner has been given adequate opportunity to make his case and new order was passed.

     The High Court noted that entire link was build on the basis of trail of unaccounted money (Rs. 20 crores) which was picked up from assessee’s residence at Delhi, but accounted for, only after raids held at different places. The Court further noted that show-cause notices issued reflected a detailed account of nexus with involved persons and relevant material stating that unaccounted cash transactions had been found in whatsapp chats and accompanying documents obtained from several persons referred to term KN repeatedly. Even though said cash had been shown in books of All India Congress Committee, source of funds from Madhya Pradesh Congress Committee was required to be looked into by tax authorities. The assessee had been given adequate opportunity of hearing and there was lack of any inconvenience whatsoever. Court held that since there was enough material garnered from other persons to establish a nexus, it would be incontestable and sufficient to conclude transfer sought by Revenue could not be held to be mala fide or based on extraneous circumstances. The Writ petition was thus dismissed uploading the transfer order. (Calcutta High Court, W.P. No. 3868 of 2022; order dated 06-01-2023)

     Kamal Nath v. PCIT [2023] 453 ITR 588 (Calcutta) / 146 taxmann.com 182

160. S. 127 r.w.s. 132: Power to transfer cases – post search and survey actionA search and seizure operation under S. 132(1) was conducted against the Assessee and other individuals at various locations in India. The Investigation Department found that the Assessee was closely in involved in the collection of illegal money through various means. For a coordinated investigation, the revenue pursued to have a centralized assessment in Delhi under S. 127. The PCIT upheld the transfer order. The Assessee filed a writ petition challenging the PCIT’s order on the ground that there was no link between him and other parties. The High Court dismissed the writ petition and held that there was sufficient material ground available to establish the link between the Assessee and the third parties. The Assessee filed an intra-Court appeal against the said order. The Division bench of the Court observed that the whole unaccounted money trail began from the Assessee’s residence in Delhi and there was sufficient information available in the form of documents and WhatsApp chats to prove the same. Relying on the above information, the High Court upheld the transfer order in favor of the Department. (Calcutta High Court, M.A.T No. 40 of 2023, CAN No. 01 of 2023, order dated 10-02-2023)

     Kamal Nath v. PCIT (2023) 453 ITR 604 (Calcutta) / 149 taxmann.com 369 / 292 Taxman 295

161. S. 132B : Application of seized or requisitioned assets – Assets cannot be retained beyond period of limitationAssessee was engaged in manufacturing and trading of gold and silver jewellery. While he was travelling for business activities, his gold ornaments being nature of stock in trade were seized by the revenue authorities. Thereafter assessee filed an application for release of said ornaments, but no reply was received by the assessee. Aggrieved by the conduct of revenue, assessee filed a writ petition before the Gujarat High Court. The Court held that as per provisions of section 132B(1) the assets or any portion thereof shall have to be released within a period of 120 days from the date of last authorization. Once this period is over the Revenue authorities have no authority to retain these assets. Therefore, the Court directed to the Revenue Officer to decide Assessee’s application within period of two weeks. (Gujarat High Court, SCA No. 850 of 2013, order dated 17-01-2023)

     Yogeshbhai Chandrakant Pala v. ITO [2023] 453 ITR 263 (Gujarat) / 149 taxmann.com 49 / 292 Taxman 370

162. S. 143(2): Assessment – Notice – Issued for fringe benefits tax – Cannot be constructed for regular assessment – Assessment set aside.The Assessee filed a return of income for AY 2008-09 on 29-9-2008 that was selected for scrutiny. While a notice u/s 143(2) was issued on 17-9-2009 against the fringe benefits tax u/s 115WE, no notice u/s 143(2) was issued for regular assessments. Before the Tribunal, the Assessee raised additional grounds as notice u/s 143(2) was not issued for regular assessment. The Tribunal allowed the additional ground and held in favour of the Assessee. The High Court held that the notice u/s 143(2) r.w.s 115WE could not be constructed as a notice u/s 143(2) for regular assessment. Further, it held that the issue of notice goes to the root of the matter. The Tribunal was justified in entertaining the additional grounds filed by the Assessee. (ITA No. 246 of 2022 dt. 5-09-2022 (AY 2008-09)

     Pr. CIT v. GJ Trading (P.) Ltd. [2023] 291 Taxman 152 (Telangana)(HC)

163. S. 143(3) : Assessment – Where AO passed an assessment order under S/143(3) of the Act without issuing notice u/s 143(2) and in pursuance with notice issued u/s 143(2) by authority who had no jurisdiction over assessee at relevant time, such assessment order was rightly set aside by Tribunal.Dismissing the appeal filed by the Revenue, the High Court relying on the decision of Calcutta High Court in case of PCIT v. Oberoi Hotels (P.) Ltd. 96 taxmann.com 104 / 409 ITR 132 held that notice u/s 143(2) of the Act was required to be mandatorily issued and Section 292BB had no manner of operation. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedure irregularity and is not curable and, therefore, the requirement of notice u/s 143(2) cannot be dispensed with. (AY 2012-13)

     PCIT v. Cosmat Traders (P.) Ltd. (2022) 291 Taxman 6 / 146 taxmann.com 207 (Cal)

164. S. 144: No opportunity – Asseessee final opportunity to submit evidence – Matter set aside.The AO passed the best judgment assessment under section 144 r.w.s 144B of the Act. The Assessee contented that due to bona fide reasons and unavoidable circumstances, the Assessee could not provide its submission and documents. Further, the Revenue proceeded without providing the Assessee with a sufficient or reasoned opportunity. Considering the facts and circumstances, the Court set aside the best judgment assessment and granted the Assessee one final opportunity to put forth his defense along with the documents. (W.P. NO. 13180 of 2022 dt. 1-9-2022 (AY 2018-19)

     Sudhakar v. Additional/Joint/Deputy/Assistant CIT [2023] 291 Taxman 183 (Kar)(HC)

165. S.144B : Faceless Assessment – Assessment order quashed and matter remanded back to National Faceless Assessment Centre in a case where a fresh query in respect of an additional point was raised subsequent to passing of the draft assessment order and, thereafter, a final assessment order was passed without passing another draft assessment orderNational Faceless Assessment Centre (NFAC) issued a draft assessment order wherein it did not make any mention of the issue with regard to depreciation of goodwill claimed by the assessee. Subsequently, a notice was issued under section 142(1) of the Act, wherein NFAC for the first time raised a query with regard to the claim of depreciation of goodwill. Assessee responded to this notice issued under section 142(1) of the Act. However, instead of passing a fresh draft assessment order, NFAC directly passed the assessment order. High Court observed that merely because the draft assessment order had been issued once without taking into account the issue of depreciation of goodwill would not make the subsequent order of assessment good and held that NFAC had not complied with the provisions of section 144B(1) (xvi) of the Act and, accordingly, remanded the matter back to NFAC. (AY 2018-19)

     ACME Housing India (P.) Ltd. v. National Faceless Assessment Centre [2023] 146 taxmann.com 286 (Bombay)/ [2023] 291 Taxman 1 (Bom)(HC)

166. S. 144B: Faceless Assessment – Assessment order quashed and the matter remanded as the assessee was not provided with an opportunity of personal hearing through video conferenceAssessee challenged the assessment order passed by the National Faceless Assessment Centre (NFAC) without providing the assessee an opportunity of being heard. NFAC issued a show-cause notice along with draft assessment order asking the assessee to file her response by 10th February 2022 and also informed the assessee that a request could be made for personal hearing which would be conducted through video conferencing. Assessee filed an application for adjournment but did not receive any reply to the same. Thereafter, assessee noticed that the e-proceedings portal had been closed without giving the Petitioner an opportunity of hearing through video conferencing and a grievance was uploaded on the portal by the assessee. Subsequently, assessment order was passed after almost seven months by NFAC. High Court set aside the assessment order and directed NFAC to give an opportunity of personal hearing to the assessee through video conferencing and pass a fresh order after considering the assessee’s response. (AY 2020-21)

     Parul Bharat Shah v. National Faceless Assessment Centre, New Delhi [2023] 291 Taxman 294 (Bom)/ [2023] 451 ITR 360 (Bom)

167. S. 144B : Faceless assessment – Assessee has a vested right to personal hearing during faceless assessment and same has to be given, if it has been requested for.Allowing the writ petition of the Assessee, the High Court held the issue involved in the present writ petition is no longer res integra. Relying on its earlier decision in the case of Bharat Aluminium Company Ltd. v. UoI [2022] 134 taxmann.com 187/285 Taxman 447/442 ITR 101 has held that the use of the expression “may” in Section 144B(7)(viii) is not decisive. Where discretion is conferred upon a quasi judicial authority, whose decision has civil consequences, the word “may” which denotes discretion should be construed to mean a command. Consequently, the requirement of giving an assessee a reasonable opportunity of personal hearing is mandatory. Hence, an assessee has a vested right to personal hearing and the same has to be given, if an assessee asks for it. (AY 2020-21).

     DLF Emporio Ltd v. NFAC, Delhi (2023) ] 291 Taxman 455 / 146 taxmann.com 287 (Delhi)

168. S.147: Reassessment – After the expiry of four years – Reason to believe that income has escaped assessment – Case reopened to treat loss on cancellation of forward contracts as speculation loss – no failure to disclose fully and truly all material factsFor AY 2012-13, Assesse’s case was selected for scrutiny assessment and order u/s 143(3) of the Act was passed. Later on perusal of the records it was found that Assessee had set off loss on cancellation of forward contract against ordinary business profits. The Assessing officer was of the view that such loss was speculative loss and hence could not have been set off. Hence he issued a notice dated 27-03-2019 u/s 148 of the Act. The assessee filed objections against the said notice which were disposed of by the AO vide order dated 24-09-2019. The Assessee filed a writ petition challenging before the High Court challenging the said notice alongwith the order disposing off the objections. The High Court observed that all details were available before the AO passing order u/s 143(3) of the Act. The Court held that it was merely a fresh application of mind by a different Assessing Officer to the same set of facts. The notice for reassessment was issued without any new tangible material on record and was mere change of opinion. The Court further observed that there was no failure on the part of the Assessee to fully and truly disclose all material facts. Accordingly, order disposing of the Assessee’s objections as well as notice u/s 148 were quashed. (Bombay High Court, WP No. 2976 of 2019, order dated 21-12-2021, AY. 2012-13)

     Parle Products (P.) Ltd. v. ACIT, Mumbai (2023) 453 ITR 765 (Bombay)/ 136 taxmann.com 15 / 286 Taxman 235

169. S.147: Reassessment – After the expiry of four years – Business expenditure, allowability of sales promotion/freebies for marketing of animal health products (S.37)The Assessee was engaged in the business of marketing of animal health products. The Assessee filed its return for AY 2014-15 and an assessment order was passed. After 4 years, the AO issued a notice u/s 148 dated 26-3- 2021 and reopened the assessment stating that the expenditure incurred towards cost of purchase of samples for distribution under the head ‘advertisement and sales promotion’ was in violation of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2022, therefore was an inadmissible expense under S. 37(1). It was further contended that the Assessee had not disclosed the full and true material details which could not have been discovered by AO with due diligence leading to under assessment. The Assessee objected to the notice and reopening proceedings which was disposed by order dated 25-01-2022. Assessee thereafter filed a writ petition challenging the reopening proceedings. The Court observed that the Assessing Officer had all material facts before him when he made the original assessment. Apart from it, specific query in respect of expenditure in question was raised at the time of original assessment and the same was replied by the Assessee by it’s letter dated 22 December 2016. The Court observed that in the reasons for reopening, there is not even a whisper as to what was not disclosed. The Court was of the view that it is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of assessee to disclose truly and fully all material facts that were necessary for computation of income but is a case wherein the assessment sought to be reopened on account of change of opinion of the Assessing Officer about the manner of computation of income. The notice and order passed by the AO was thus quashed by the Court. (Bombay High Court, W.P No. 1467 of 2022 dated 14-6-2022) (A.Y. 2014-15)

     Virbac Animal Health India (P.) Ltd. v. Asst. CIT [2023] 453 ITR 787 (Bombay) / 139 taxmann.com/287 Taxman 590

170. S.147: Reassessment – After the expiry of four years – Reopening of assessment on account of failure to disclose unexplained money [S. 69A r.w.s. S.69B, S.148]Assessee was a director/partner in various firms and derived income from various sources. During the search proceedings conducted in the case of Mr. Piyush G. Modi, vital documents were found and seized and relevant information derived therefrom disclosed that suada chitthi of two lands that were sold by one Ramesh Bhadani to the assessee for certain amount of consideration. The suada chitthi also disclosed that the assessee held ownership right for a third land which was decided to be sold to Ramesh Bhadani in lieu of payments against the purchase of the two lands and the balance amount was paid to Ramesh Bhadani in cash on various occasions. The Court observed that even the Assessee in his statement statement had admitted that unaccounted cash had been paid for purchase of both the above lands but was not disclosed on account of fear of consequences and had also submitted that he would reveal after consultation with other partners. Basis above, assessment was reopened in case of the assessee. The assessee filed the filed writ petition before the Gujarat High Court challenging the reopening notice. High Court noted that MoU as well as Sauda-chitthi seized, clearly matched with registered document and assessee himself under a recorded statement had admitted that unaccounted cash had been paid for purchase of both lands, however, due to fear of payment of taxes, he did not state correct amount paid. The Court was of the view that the aforesaid details were very much expedient to proceed ahead in contemplated action, it was necessary for authorities to examine at length while reopening assessment and such discretion of authority could not be usurped by High Court. The Court thus dismissed the writ petition (Gujarat High Court, SCA No. 19274 of 2018, order dated 2-1-2023)

     Pavan Kishanchand Tulsiani v. UOI [2023] 453 ITR 284 (Gujarat) / 146 taxmann.com 396

171. S. 147 : Reassessment – Within four years – Reopening on the basis of record which was available at the time of original assessment proceedings would amount to a change of opinion which was not permissible, Provision made towards compensation payable in future to certain parties was allowable as deduction (r.w.s. 37(1))The assessment was completed under section 143(3) of the Act. Thereafter, a notice was issued under section 148 of the Act within a period of four years to reopen the assessment. The Assessing Officer in the reassessment proceedings disallowed a sum of Rs. 6.5 crore which was in the nature of provision made for compensation payable with respect to disputes with certain parties. High Court observed that the factual finding that the amount of compensation was recorded to be paid as and when settled by the Civil Courts and the amount not paid was returned back as part of other income was undisputed and uncontroverted by the Revenue. Accordingly, the High Court held that the provision of Rs. 6.5 crore was allowable as deduction. High Court further held that the dis-allowance of the claim of compensation was based on record that was already with the Assessing Officer at the time of the proceedings under section 143 (3) of the Act and that there was no new or fresh tangible material that had been brought on record. High Court held that the Assessing Officer had viewed the same material from a different angle of perception which was nothing but a case of change of opinion which could not be permitted. (AY 2008-09)

     PCIT v. NESCO Ltd. [2023] 146 taxmann.com 325 (Bombay)/ [2023] 291 Taxman 286 (Bom)(HC)

172. S. 147: Reassessment – After the expiry of four years – Notice issued under section 148 of the Act quashed as there was no failure to disclose any fact on the part of the assessee and further such reopening merely amounted to change of opinionAssessment was sought to be reopened after a period of four years from the end of the relevant assessment year. Further, original assessment was completed under section 143(3) of the Act. High Court observed that the revenue had failed to state whether any facts, material or otherwise were not disclosed by the assessee. High Court held that firstly, the reasons indicated the change of opinion which was impermissible in law, and secondly, the entire basis for re-opening was due to a mistake of the Assessing Officer that resulted in under assessment. High Court quashed the notice issued under section 148 of the Act.(AY 2012-13)

     CEAT Ltd. v. ACIT [2023] 146 taxmann.com 107(Bombay)/ [2023] 291 Taxman 366 (Bom)

     Note – SLP dismissed by the Supreme Court in [2023] 146 taxmann.com 108 (SC)

173. S. 147: Reassessment – After the expiry of four years – Notice issued under section 148 quashed as the same did not state what were the material facts which the assessee had failed to fully and truly discloseNotice was issued under section 148 of the Act after a period of four years from the end of the relevant assessment year. The same was challenged by way of a writ petition before the Bombay High Court. High Court observed that though the reasons recorded stated that the assessee had failed to fully and truly disclose “the following material facts”, the Assessing Officer omitted to mention what were the material facts which the assessee had failed to disclose. High Court observed that it was well settled that the reasons recorded by the AO cannot be supplemented by filing an affidavit or making oral submissions and that the reasons recorded must be clear and unambiguous and should not suffer from any vagueness. High Court quashed the notice issued under section 148 of the Act as there was no disclosure in the reasons as to which fact or material was not disclosed by the assessee fully and truly and which the AO thought, was necessary for assessment of the relevant AY. High Court further observed that the assessee had along with the return of income also filed annual accounts certified by the Chartered Accountant/ Auditor wherein a clear reference was made to the fact which was the subject matter of reopening. Accordingly, the assessee had disclosed fully and truly all the material facts that were alleged to have been suppressed. (AY 2012-13)

     Tumkur Minerals (P.) Ltd. v. JCIT [2022] 145 taxmann.com 397 (Bombay)/ [2023] 291 Taxman 340 (Bom)[07-12-2022]

174. S. 147 : Reopening of assessment – the issue of applicability of IMC Regulations was examined during the original assessment – notice issued under section 148 on the ground of IMC regulations – no failure on the part of the assessee to make full and true disclosure.Assessee company was engaged in business of marketing of animal health products. It filed a return of income which was selected for scrutiny and an assessment order was passed. After four years, Assessing Officer issued a reopening notice on ground that expenditure incurred by assessee towards cost of purchase of samples for distribution under head ‘advertisement and sales promotion’ was in violation of provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2022 and, thus, same was not admissible under section 37(1) being expenses prohibited by law. On challenge by way of a Writ Petition, the High Court observed that Assessing Officer had all material facts related to such expenses before him when he made original assessment. Apart from that, specific query in respect of expenditure in question was raised at time of original assessment and same was also replied by assessee. Therefore, there was no failure on part of assessee to truly and fully disclose all material facts necessary for purpose of assessment which were carefully scrutinized by Assessing Officer during original assessment. In fact, in reasons for reopening, there was not even a whisper as to what was not disclosed by assessee for which assessment was sought to be reopened. Accordingly, the reopening notice issued after four years on account of change of opinion was to be set aside. (WP No. 1467 of 2022 dt. 14-06-2022)(A.Y. 2014-15)

     Virbac Animal Health India (P.) Ltd. v. ACIT (2022) 139 taxmann.com 574 / 287 Taxman 590 (Bom.) (HC)

175. S. 147 : Reopening of assessment – Deduction claimed on account of cancellation of forward contracts – Assessment order passed after considering the same – Notice issued under section 148 seeking to disallow deduction claimed on cancellation of forward contract – No failure on the part of the assessee to make full and true disclosure. [S. 147,148]The assessee filed a return of income thereafter, assessment proceeding under section 143 of the Act was carried out. Subsequently, the Assessing Officer sought to reopen assessment in case of assessee as on verification of records, he observed that Schedule 31 in profit and loss account showed that assessee company had debited a sum of Rs. 1070.42 lakhs towards ‘net loss of cancellation of forward contract’. According to Assessing Officer, this amount of Rs. 1070.42 lakhs was speculation loss and should not have been allowed against regular business income. On Challenge by way of a Writ Petition, the High court found that all these details were available before Assessing Officer who passed assessment order and between date of order of assessment sought to be reopened and date of formation of opinion by Assessing Officer, nothing new had happened. It was merely a fresh application of mind by a different Assessing Officer to same set of facts. where on consideration of material on record, one view is conclusively taken by Assessing Officer, it would not be open to reopen assessment based on very same material with a view to take another view. Therefore, in given circumstances, impugned notice for reopening assessment and order passed disposing of objections was to be quashed and set aside. (WP No. 2976 of 2019) (A.Y. 2012-13).

     Parle Products P. Ltd. v. ACIT (2022) 136 taxmann. com 15 / (2022) 286 Taxman 235 (Bom.)(HC)

176. S. 148A : Reopening of assessment – Notice under section 148A(b) issued on a wrong address – The new address is available on the record of the Department – The proceeding carried out under section 148A without hearing the assessee and without giving an opportunity to file reply is without jurisdiction and liable to be quashed.Assessee did not file her return of income as per provisions of section 139. She held joint bank accounts with her husband through which investments were made and income therefrom was considered in her husband’s income tax returns. A notice under section 148A(b) dated 20-3-2022 was served upon assessee on ground that there was concrete information available on portal of risk management strategy formulated by CBDT under category of non-filing of returns (NMS) that assessee had entered into financial transactions during assessment year 2018- 19 which had escaped assessment. Assessee submitted that she had not received notice dated 20-3-2022. Whether before issuing notice under section 148A(b) it was imperative for Assessing Officer to have checked if there was a change of address because a condition precedent for any proceeding including a proceeding under section 148A, is a valid service of notice, lest it would be a jurisdictional error. Though, the Assessing Officer had new address of assessee as evinced from return but he chose to send notice to her old address due to which assessee did not get opportunity to respond to notice and was deprived of a hearing as contemplated under section 148A(b). Accordingly, the matter was to be remanded back to the Assessing Officer to complete the entire exercise within 12 weeks. (WP No. 15580 of 2022 dt.    ) (AY. 2018-19)

     Chitra Supekar v. ITO (2023) 149 taxmann.com 26 / (2023) 292 Taxman 511 (Bom.)(HC)

177. S. 148A r.w.s. 148 : Conducting inquiry, providing opportunity before issue of notice – AO issued notice u/s 148A and s/148 in name of a company which was amalgamated with Assessee (amalgamated company) and was not in existence on date of issue of such notice, the impugned notice and consequent order is invalid.Allowing the writ petition of the Assessee, the High Court held that where an AO passed an order under section 148A(d) dated 20-7-2022 and issued notice under section 148 on same date in name of a company which was amalgamated with Assessee with effect from 1-4-2014 and Assessee had informed AO in this regard, then the order passed under section 148A(d) and notice issued under section 148 is to be set aside (AY 2014-15)

     Sumant Investments (P.) Ltd. v. ACIT (2023) 291 Taxman 227 / 146 taxmann.com 32 (Delhi)

178. S.148: AO passed a well-reasoned order after considering all the details-It cannot be said that no enquiry was conducted at all- Tax effect is lower than the threshold and the exceptions are not applicable – No substantial question of law – Appeal Dismissed [S.260A]Where the AO had called for all the details and passed a well-reasoned order and the Tribunal rightly held that it cannot be said that no enquiry has been conducted, no reassessment can take place and there is no substantial question of law. The tax effect is below threshold and the exceptions contained in the circular are not applicable since orders under Section 263 are not excluded from the purview of the circular(IT Appeal 461/2022 decided on 17.1.2023][AY: 2015-2016]

     PCIT v. Pushp Steel & Mining (P.) Ltd. [2023] 146 taxmann.com 478 (Delhi)

179. S.148 : Second notice issued when time limit to pass an order of reassessment/give effect to the decision of High Court remanding matter to AO for passing order has elapsed-Second notice liable to be quashedWhere a second notice is issued under Section 148 after the High Court has remanded the matter to the AO for undertaking reassessment pursuant to issue of the first Section 148 notice then the second 148 notice is liable to be quashed since the AO cannot ignore the limitation period specified under Section 153(6)(i) and justify the second 148 notice. (WPO/578/2019 decided on 11.1.2023)

     Elite Pharmaceuticals v. ITO [2023] 291 Taxman 597 (Calcutta)[11-01-2023]

180. S. 148: Reassessment – Notice – Assessee requests all information/ material – Second notice more information and copies of the material – Not invalid – No denial of opportunity.The AO issued a reassessment notice furnishing information and material relied upon the AO, to which the Assessee provided its explanation/clarification. Further, the Assessee requested the AO to provide complete details and copies of the material relied on. Subsequently, the AO issued another notice setting out new facts to justify the issuance of previous notices. The Court did not accept the contention of the Assessee that the AO was precluded from providing the information set out in the second notice. The Assessee had asked for the material relied upon by the AO in the first reply. Hence, the issuance of the second notice cannot be faulted. The Assessee has not explained the transaction entered with SFMPL in the financial year. Without any explanation in her reply, there is no error in the impugned order. There is no denying the opportunity to respond to the allegations made in the reopening notice. (WP No. 11676 of 2022 dt.30.08.2022 (AY 2013-14)

     Saroj Chandna v. ITO [2023] 291 Taxman 233 (Delhi)(HC)

181. S. 148A: Reassessment – Notice – Accommodating entries – No evidence by the Assessee – Reopening valid.The Court noted that the party had already accepted that it was not engaged in real business activities. Further, the mere filing of VAT returns cannot help establish the genuineness of transactions without the VAT department making physical or spot enquiries. The parties still need to produce the relevant documents, transport details, purchase contracts or bills concerning the alleged purchases. Hence the investigation revealed that the transaction was merely accommodating entries. The AO correctly passed the order under section 148(d) and the notice for reassessment. (W.P.(C) No. 14855 of 2022 dt. 20-10-2022) (AY 2014-15)

     Mahalaxmi Dye India (P.) Ltd. v. ACIT [2023] 291 Taxman 473 (Delhi)(HC)

182. S. 148A r.w.s. 148 – Conducting inquiry, providing opportunity before issue of notice – AO having not given any reasons for not assigning time prescribed as per s/148A i.e. 7 to 30 days and passed order u/s 148A(d) of the Act without considering request of assessee to grant 30 days time to file reply to show cause notice issued u/s 148A(b) of the Act, order passed is set asideAllowing the writ petition of the Assessee, the High Court held that the legislature has provided a time schedule for AO from 7 to 30 days, as such, there is no impediment on part of AO to grant such time between 7 to 30 days. Further, since the AO has not considered the request of the petitioner for grant of 30 days’ time and also not assigned any reason why has he given the time prescribed under the Act, i.e. 7 to 30 days, considering the law laid down by Hon’ble High Court of Delhi in Ester Industries Ltd, the impugned order passed under section 148A(d) of the Act, is set aside.

     Vesser Engineering Services (P.) Ltd. v. UoI (2022) 291 Taxman 179 / 145 taxmann.com 74 (Chhattisgarh)

183. S. 149: Reassessment – Time limit for notice – Lapsed – Notice bad in law.The AO issued three notices u/s 148 dated 31- 3-2021, 1-4-2021 and 5-4-2021 seeking to reopen the AY 2013-14 assessment. Concerning the first notice (31-3-2021), the Court held that the time limit of six years had lapsed on 1-4-2020. The decision Ashish Agarwal will not apply, as the decision pertains to the issuances of notice issued on or after 1-04-2021. The Court noted that the two notices, 1-4-2021 and 5-4-2021, were issued without withdrawing the first notice dated 31-3-2021 and were bad in law on account of non-compliance with the mandatory requirements (conducting of prior enquires by the AO) u/s 148A. W.P. No. 1608 of 2022 dt. 01- 11-2022 (AY 2013-14)

     Stalco Consultancy & Systems (P.) Ltd. v. Pr. CIT [2023] 291 Taxman 390 (Orissa)(HC)

184. S.149 : Reassessment – Time limit for notice – New law vs. old law [S. 148 and 148A]Group of cases were tagged along. Earlier the Assessing Officer had issued reassessment notices on or after 1-4-2021 under the erstwhile sections 148 to 151 by relying on Explanations in the Notification No. 20/2021, dated 31-3- 2021 and Notification No. 38/2021, dated 27-4- 2021 which extended applicability of aforesaid provision as they stood on 31-3-2021, before commencement of Finance Act, 2021, beyond period of 31-3-2021. Supreme Court in case of UOI v Ashish Agarwal (2022) 444 ITR 1 (SC) had mandated that such notices u/s 148 be treated as show cause notices u/s 148A(b) with a rider that all defences under section 149 of the Act would be available to the assessee as well as the revenue. Assessees had challenged notices u/s 148 issued in 2022 post Ashish Agarwals case.

     The assessee-company filed its return of income and assessment was completed for same under section 143(3). Assessee-company filed writ petition challenging said notices u/s 148 on as well as consequent order passed u/s 148A(d) dated 26-07-2022 for assessment year 2014-15 on ground that both were bad, illegal and contrary to law and without jurisdiction. Gujarat High Court observed that while enacting the Finance Act, 2021, Parliament was aware of the existing statutory laws both under the Acts as amended by the Finance Act, 2021 as also the ordinance and the the Taxation and other Laws (Relaxation and Amendment of certain Provisions) Act, 2020 (“TOLA”) and Notification issued thereunder. However, the new scheme for reassessment which was made effective from 1-4-2021 did not have any saving clause. This brought an end to the possibility of any fresh proceedings being initiated under the unamended reassessment provisions after 1-4-2021. The Court held that TOLLA is a subsidiary legislation, whereas the unamended sections 147 to 151 being the principal legislation, substitution of sections 147 to 151 by Finance Act with the entire new set of provision having different conditions and procedures on which the existence of subsidiary legislation TOLA depended, ceased to exists, the provision contained in TOLA could not have any effect after the enactment of Finance Act, 2021. It was further held that Notification Nos. 20/2021 and 38/2021 could not extend time period provided under proviso to section 149(1). The Court held that CBDT’s Instructions No. 1 of 2022 dated 11-5-2022 if permits Jurisdictional Assessing Officer to act beyond jurisdiction prescribed under statute, same is ultra vires provision of Finance Act, 2021. The Court held that substituted provisions of sections 147 to 151 were applicable w.e.f. 1-4-2021, and as per First Proviso to section 149, limitation as specified under unamended provision as it stood prior to 1-4-2021, shall be applicable. As per unamended provision prescribing limitation, no notice can be issued under section 148, if six years have elapsed from the end of the relevant assessment year. For assessment year 2013-14, six years had ended on 31-3-2020 and for assessment year 2014-15, six years had ended on 31-3-2021. Had there been no amendment in Section 149, TOLA and through its delegated legislation by way of Notifications could have extended the time for ‘issuance of notice’. However in view of express language of 1st proviso to Section 149(1), legislative mandate required that no notice could be issued under the new provision, if such notice could not be issued at that time on account of being beyond the time specified under the said section as it stood before the commencement of the Finance Act 2021, i.e. a period of six years. Hence the notices under section 148A (by deeming fiction) issued between the period 1-4-2021 to 30-6-2021 (i.e after 31-3-2021), wherein six years had elapsed from end of the relevant assessment year were therefore time barred and the petitions were allowed. (Gujarat High Court, AY 2013-14 and 2014-15; SCA No. 17321 of 2022; order dt. 7-02-2023)

     Keenara Industries Private Limited v. ITO [2023] 453 ITR 51 (Gujarat) / 147 taxmann.com 585

185. S. 153A : Assessment – Search or requisition – S. 10 r.w.s. S. 2(11) – Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 – No application of mind – [S. 132]Pursuant to a search conducted on 07 January 2015 u/s 132 the Assessing Officer passed assessment orders u/s 153-A of the Income Tax Act for the A.Ys. 2009-10 to 2015-16 making certain additions by treating the Assessee as a beneficial owner of ‘Romulus Assets Ltd’ (RAL) Though CIT(A) dismissed the appeals, the Tribunal set-aside the additions vide order dated 30 July 2021 holding inter alia that the Assessing Officer has not discharged the burden cast on him to prove that Assessee was a beneficial owner of RAL. In the meantime on the basis of information received JCIT, Central Circle, Central Range – I Bengaluru issued a notice dated 11 August 2021 under section 10 of the Black Money Act for the A.Y. 2022-23. The Assessee had filed a writ petition challenging the proceedings initiated under section 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and to quash the notice dt.11 August 2021 issued by JCIT. The Single Judge bench of the Court dismissed the petition vide order dated 22 July 2022. Assessee filed intra-court appeal against said order. The High Court held that it is trite that a charge/imputation set aside by a judicial forum cannot be reopened in parallel proceedings and the Tribunal has deleted addition made by Assessing Officer on account of search proceedings. The Court observed that information was sent by Income-tax department to authorities under Black Money Act regarding black money transactions involving undisclosed assets of assessee by way of ownership in ‘RAL’ and based on same, Joint Commissioner issued a notice under section 10 on the Assessee. The Court held that there was no proper application of mind both at stage of sending information by Income-tax department and by authorities under Black Money Act before issuing notice under section 10 as authorities under Black Money Act had acted mechanically and issued impugned notice upon assessee. Hence the High Court quashed the notice issued under the Black Money Act. (Karnataka High Court, WP No. 844 of 2022, order dated 21-10-2022)

     Jitendra Virwani v. JCIT [2023] 453 ITR 342 (Karnataka) / 148 taxmann.com 238

186. S. 153C: Assessment – Income of any other person – Search and seizure – Document – without further investigation – No addition when the document is in doubt.A search was carried out in the case of a real estate broker, in which a document was seized showing that the Assessee had purchased a property in a shopping mall. The AO initiated assessment proceedings against the Assessee under section 153C. Thereafter, the AO made the addition to the income of the Assessee based on the contents and the words of the seized documents. The Tribunal held that additions made by Assessing Officer were erroneous, based on a seized document alone, without any further investigations, made additions and passed impugned assessment order. The High Court affirming the finding of the Tribunal, noted that the impugned addition made based on a single document whose genuineness itself was in doubt was rightly deleted by Tribunal. ITA NO. 638 OF 2019 dt. 22-11-2022 (AY 2007-08)

     Pr. CIT v. Vinita Chaurasia [2023] 291 Taxman 362 (Delhi)(HC)

187. S.179 : Liability of director of a private limited company – No liability if the director takes steps by filing an appeal before CIT (A) – Order under section 179 quashed and set asideWhere the directors of a private limited company have not paid 20% of the demand for a stay of demand on the company, it cannot be said that there is any negligence on the part of the directors since they have filed an appeal before CIT(A) and taken all steps to ensure no liability is cast upon the company.(SCA 12961/2019 decided on December 16, 2022)(AY 2014-2015)

     Devendra Babulal Jain v. ITO [2023] 291 TAXMAN 333 (GUJARAT)[16-12-2022]

188. S. 195: Deduction at source – Non-resident – Other sums – Commission earned by non- resident agent carrying on business of selling Indian goods outside India could not be said to be income which had accrued and/or arisen in India and, thus, assessee was not liable to deduct TDS on payment of such commission to foreign agentsAn appeal was filed by the Revenue challenging the order of the Tribunal wherein the Tribunal deleted the disallowance made under section 40(a)(i) of the Act in respect of payment made towards commission to foreign agents without deducting tax at source. High Court observed that the question of TDS on commission income paid to foreign agents and the non-deduction of TDS was fully covered by the decision of the Supreme Court in GE India Technology Centre (P.) Ltd. v. CIT (327 ITR 456). High Court further observed that it was well settled that commission earned by a non-resident agent who carried on the business of selling Indian goods outside India cannot be said to be deemed income accrued or arising in India. High Court dismissed the department’s appeal holding that no substantial question of law arose in the matter. (AY 2010-11)

     PCIT v. Sesa Goa Ltd. [2023] 146 taxmann.com 35 (Bombay)/ [2023] 291 TAXMAN 229 (Bom)

     Note – SLP dismissed by the Supreme Court in (2023) 146 taxman.com 34 (SC)

189. S. 201 : Deduction at source – Failure to deduct or pay – Payment to non-resident, not having Permanent establishment (PE), for import of licensed software is not royalty – Not liable to deduction of tax at source (‘TDS’) [S. 195 and S. 9(1)(vi)]The assessee company imported licensed software which was a copyright article. The non- resident vendor from whom it was imported did not have any PE in India. The software was directly supplied by the non- resident vendors to the end users in India under exclusive licenses, which are downloaded technically. Hon’ble Tribunal held that such payments made by the assessee to the non-resident vendor were in nature of the royalty. On further appeal, the High Court observed that the case is squarely covered by the decision of Hon’ble Supreme court in case of Engineering Analysis Centre of Excellence (432 ITR 631) wherein it was held that distribution agreements do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. Accordingly, basis decision of Supreme court the appeal of the assessee was allowed and the Court held that there was no liability to deduct tax under Section 195 of the Act. (Karnataka High Court, I.T.A. No. 724 of 201, AY 2007-08 to 2012-13)

     Wipro Limited v. ACIT (2023) 453 ITR 796 (Kar)

190. S. 220: Collection and Recovery of tax – The assessee filed a stay application on ground of financial hardship – The principal commissioner rejected the stay application without considering the same – The High Court remanded the matter back and directed him to consider the plea of financial hardship.There was a search carried out under section 132 of the Act on the assessee. Pursuant to the search, Assessing Officer completed assessment making certain additions to income of assessee and raised a tax demand. While an appeal filed against said assessment order was pending before Commissioner (Appeals), assessee filed an application for stay of demand of tax on the ground of financial hardship. The stay application was rejected by Principal Commissioner without assigning any reasons. On challenge, the High Court held that the case of assessee on financial stringency ought to be considered by Principal Commissioner after applying his mind and giving reasons thereof. Accordingly, the High Court remanded the matter back to Principal Commissioner to reconsider issue and pass an appropriate order after granting an opportunity of hearing to assessee. (WP No. 471 to 473 of 2022).

     Tungabhadra Minerals (P.) Ltd. v. DCIT (2023) 146 taxmann.com 23 / (2023) 291 Taxmann 250 (Bom.)

191. S. 220: Collection and recovery – Where the original assessment order is set aside and a fresh assessment is made, interest u/s 220(2) cannot be charged from the date of the first set aside assessment orderAssessment order was passed by the Assessing Officer making certain additions to the returned income which was upheld by the Commissioner of Income Tax. In appeal, the Tribunal set aside the assessment order and restored the issue to the Assessing Officer. In the second round, the Officer reconfirmed certain disallowances made in the original order and assessed a higher income. Assessing Officer levied interest under section 220(2) of the Act from the date of the original assessment order. High Court held that section 220(2) of the Act does not contemplate levy of interest which relates back to the date of the passing of the original order which was subsequently set aside by appellate authorities and a fresh assessment order was passed thereafter. High Court observed that this position was also clear from Circular No. 334 dated 3rd April 1982. (AY 2004-05)

     PCIT-1 v. AT & T Communication Services (India) (P.) Ltd. [2023] 291 Taxman 495 (Delhi)/[2023] 451 ITR 92/ [2023] 146 taxmann.com 243 (Delhi)

192. S. 220 : Collection and recovery – Assessee deemed in default – Assessee’s application for stay of demand of tax on ground of financial hardship was rejected by PCIT without assigning any reasons, the same was unjustified and PCIT was directed to reconsider the issue and pass an appropriate order dealing with the issue of financial hardship.Allowing the writ petition, the High Court held that the aspect of financial hardship is one of the grounds which is required to be considered by the PCIT and the PCIT should briefly indicate whether the Assessee is financially sound and viable to deposit the amount or the apprehension of the Revenue of non-recovery later is correct warranting deposit. Further, the High Court observed that at this stage such test is not applied and the PCIT has simplicitor referred to the AO’s report in rejecting stay on deposit of the tax. Hence, PCIT is directed to hear the petitioner(s) on the stay application on the specific plea of the petitioner in regard to financial stringency and after granting an opportunity of a hearing, pass an appropriate order on such issue (AY 2008-09).

     Tungabhadra Minerals (P.) Ltd. v. DCIT (2023) 291 Taxman 250 / 146 taxmann.com 23 (Bombay)

193. S. 225: Collection and recovery – Stay of proceedings – 20 percent not a pre-requisite for all appealsThe Assessee challenged the dismissal of the stay application and the direction to deposit 20% of the total outstanding demand. The Court noted that the requirement to deposit 20% of disputed tax demand is not a pre-requisite for putting the demand in abeyance for all first appeals in all cases. The same has been noted by the Office Memorandum dated 29- 02-2016 that the said pre-condition of deposit of 20% of the demand can be relaxed in appropriate cases. The authorities shall consider three basic principles, i.e., the prima facie case, the balance of convenience, and irreparable injury while disposing of the stay application. Consequently, the impugned stay order is set aside, and the matter is remanded for fresh adjudication after granting an opportunity to be heard. (W.P. Nos. 15850 & 15851 of 2022, dt.18-11-2022 (AY 2013-14 to 2020-21)

     Dabur India Ltd. v. CIT (TDS) [2023] 291 Taxman 3 (Delhi)(HC)

194. 260A: Appeal – High Court – Tax liability below 1 crore – Department appeal – Not allowable (CBDT Circular 17/2019)During the assessment proceedings, the AO made the tax addition of more than 1 crore. However, the tax liability was reduced below 1 crore during the appeal proceedings. Where tax liability was less than Rs. 1 crore, the appeal of Revenue would not be maintainable as per CBDT Circular 17/2019. (ITA Nos. 448 & 450 of 2018 dt.09-09-2022) (AY. 2007-08)

     Pr. CIT v. Bharat Infra Tech (P.) Ltd. [2022] 291 Taxman 185 (Karnataka)(HC)

195. S. 263: Commissioner – Revision of orders prejudicial to revenue – Initiation of proceedings under section 263 of the Act based on a proposal given by the assessing officer and without application of mind by the PCIT is invalidProceedings were initiated under section 263 of the Act based on a proposal given by the assessing officer and not at the behest of the PCIT. High Court observed that before exercise of power under section 263 of the Act, the PCIT had to apply his mind to the issue, record reasons as to how the assessment order is erroneous and prejudicial to the interests of revenue and then issue a show-cause notice to the assessee. High Court observed that there was nothing on record to show that such an exercise was done by the PCIT. Consequently, High Court quashed the order passed under section 263 of the Act. High Court further observed that the revenue in its appeal before the High Court did not challenge the Tribunal’s decision holding that PCIT had not validly exercised the powers under section 263 of the Act but the appeal was filed merely on the decision given by the Tribunal on the merits of the case which according to the High Court was not permissible.(AY 2014-15)

     PCIT v. Reeta Lakhmani [2023] 291 Taxman 358 (Calcutta)/ [2022] 145 taxmann.com 590 (Calcutta)

196. S. 263 : Commissioner – Revision of orders prejudicial to revenue – S. 35 – Scientific research expenditure – S.37 – prior period expenditureThe Assessee filed its return for the A.Y. 2016- 17 which was selected for scrutiny and the assessment was completed by order u/s 143(3). The PCIT re-initiated proceedings under S. 263 on the ground that the AO wrongly allowed excess expenditure on scientific research u/s 35 and wrongly allowed prior year advertisement expenditure u/s 37 incurred in A.Y. 2015-16. The assessment order was set aside by PCIT, and a fresh assessment was ordered.

     With regards to the deduction u/s 35 for scientific expenditure, the Tribunal observed that Assessee had furnished all the relevant details for the concerned F.Y. 2015-16 highlighting the breakup of items in the P/L account and it was not a case of lack of enquiry or lack of proper enquiry into the matter by the AO. Therefore, the PCIT could not initiate enquiry into the matter under S. 263, unless the order suffers from any perversity or ignores any material fact. Similarly, for the issue concerning the advertisement expenditure u/s 37 being wrongly allowed, the Court observed that the though the expenditure pertained to June 2014, it was related to a non-resident who provided other essential documents like TRC and No PE only in the current year and hence expenses was crystallized in the current year. Further there was no revenue implication as the tax rates for both the years were the same and hence no prejudice caused to the revenue. Basis above the Court upheld the Tribunal order quashing the revision proceedings initiated u/s 263. (Calcutta High Court, ITAT No. 211/ Kol./2022, order dated 23-12-2022) (AY. 2016 -17)

     PCIT v. Britannia Industries Ltd. (2023) 453 ITR 576 (Calcutta)/ [2022] 145 taxmann.com 618 (Calcutta)

197. S. 264 : Commissioner – Revision of other orders – Rejecting the prayer for withdrawal of petition u/s 264 and proceeding to decide revision on merits, the revisional authority wrongly exercised jurisdiction vested in it, hence matter was to be remanded to reconsider application for withdrawalAllowing the writ petition, the High Court observed that it is trite law that whenever a litigant invokes a particular remedy available under a Statute, then the authority before whom the lis (law suit) is preferred and pending, is ordinarily duty bound to decide the same on merits. Further, it also observed that it is also settled in law that the aggrieved person who initiates lis (law suit) has a right to withdraw the same before it is finally decided. This right of withdrawal is absolute but it is subject to the fact that withdrawal can be declined if there are cogent reasons. The High Court basis these observations held that the rejection of the prayer of withdrawal by revisional authority following decision of Bombay High Court in case of Simplex Enterprises v UoI (257 ITR 934) is not correct as in such case the prayer for withdrawal was never made and hence by not allowing the prayer for withdrawal in present case and proceeding to decide the revision on merits, the revisional authority wrongly exercised jurisdiction vested in it.

     Rajendra Singh v. UoI (2022) 291 Taxman 168 / 144 taxmann.com 167 (MP)

198. S. 271(1)(c) : Penalty – Concealment – Additions made in assessment order, giving rise to penalty for concealment, are deleted, then there is no basis for levying penalty for concealmentDismissing the Revenue’s appeal, the High Court by placing reliance on the decision of Hon’ble Supreme Court in the case of K.C. Builders v. ACIT (265 ITR 562) wherein the Hon’ble Supreme Court held that where additions made in the assessment order on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment and therefore in such a case no penalty can survive and the same is liable to be cancelled. Held that the order of assessment, which was subject matter of challenge before this Court at the instance of the Revenue was dismissed. If that be the case, it would automatically result in setting aside the order of penalty imposed on the assessee. (AY 2005-06).

     PCIT v. Smt. Jayashree Jayakar Mohanka (2023) 291 Taxman 273 / 146 taxmann.com 321 (Cal)

199. S. 271AAB r.w.s 273B : Penalty – Search initiated – Tribunal deleted penalty imposed u/s. 271AAB with respect to undisclosed income by merely relying on decision of Coordinate Bench in another case – Since Tribunal failed to examine the matter on merits and gave no findings on how decision relied upon would apply to instant case – Matter remanded for decision afreshRemanding the matter to the Tribunal, the High Court observed that the Tribunal has followed the decision of the Co-ordinate Bench in case of DCIT v. A. K. A. Logistics (P.) Ltd. with no finding recorded as to how such decision would apply to the present case and there has been no discussion on the factual aspect of the case by the Tribunal. Hence, it was held that in the absence of any independent reasoning by the Tribunal with regard to the merits of the matter, it was not possible for High Court to test the correctness of the order passed by the Tribunal, more particularly, when the Court were to ascertain as to whether any substantial question of law arises for consideration. The matter was remanded to the Tribunal for a fresh decision on merits. (AY 2013-14).

     PCIT v. Sanjay Dhingra (2023) 291 Taxman 291 / 146 taxmann.com 408 (Cal)

200. S. 276CC r.w.s. 153A : Offences and prosecutions – Failure to furnish return of income – Commissioner launched prosecution u/s 276CC of the Act against assessee for filing return after a delay – In view of fact that assessee had filed belated return and also deposited amount of tax along with interest for delay which was accepted by authority concerned, no sentence could be imposed u/s 276CC of the Act.Allowing the petition of the Assessee, the High Court relying strongly on the Calcutta High Court’s decision in the case of Gopal Ji Shaw v ITO, observed that the Department should not rush with the prosecution without any determination by the ITO of the liability of the accused-assessee, which is sought to be made the basis for prosecution and mens rea is one of the essential ingredient of a criminal offence. The High Court further observed that in the present case, the petitioner has already deposited the tax as well as the interest in light of the statute. When the ITO has levied interest on filing of the return, it must be presumed that the ITO has extended the time for filing the return after satisfying himself that there was ground for delay in filing the return. Hence, in such a case, no sentence could be imposed under Section 276CC of the Act. (AY 2013-14).

     Suresh Kumar Agarwal v. UoI (2023) 291 Taxman 258 / 146 taxmann.com 27 (Jharkhand)

201. S. 279: Offence and Prosecution – The application for immunity rejected by the authority on the ground of limitation – The provisions of section 279 do not provide for any period of limitation – The commissioner was required to consider the application made by the assessee. [S. 276B, 278B, 279]Assessee-company deducted certain amount from salaries of its employees under provision of section 192 however failed to deposit same to credit of Central Government within time prescribed under section 200. A Prosecution under section 276B, read with 278B was initiated and assessee was convicted with fine and one year imprisonment. The Assessee filed an application under section 279(2) before Chief Commissioner for compounding of offence. The Chief Commissioner rejected said application on ground that compounding was impermissible in view of guidelines issued by CBDT since application was made beyond permissible period of twelve months. The High Court observed that the assessee had voluntarily deposited TDS due along with penal interest thereon, though beyond time- limit set down, but before any demand notice was raised or any show cause notice was issued. The assessee had filed a reply setting out detailed reasons for not depositing same within time stipulated under law had also been filed in reply to show cause notice issued by revenue. And, It was further noted that though assessee had been convicted, a proceeding in form of an appeal was pending before Sessions Court, which was yet to be disposed of, with an order of suspension of sentence operating. The High Court held that CBDT guidelines, based on which compound application was denied, are not rules of limitation, but is only a guideline to authority and it in no manner takes away jurisdiction of authority under section 279(2) to consider application for compounding on its own merits. Therefore, the impugned order rejecting application for compounding of offence under section 279 on ground that same was filed beyond twelve months, being contrary to provision of sub-section (2), was liable to be set-aside. Consequently, the application of assessee under section 279(2) was to be remanded back for fresh consideration and further, Criminal appeal pending before Sessions Court shall remain stayed until disposal of application for compounding of offence – (AY. 2010-11) (WP No. 429 of 2022) dt. 28 November, 2022)

     Footcandles Film P. Ltd. v. ITO (2023) 146 taxmann.com 304 / (2023) 453 ITR 403 (Bom.)(HC)

202. S.281B: Provisional attachment – Order devoid of reasons and liable to be set aside – Simultaneously no withdrawals permitted from accounts attached..Where the order on provisional attachment was devoid of reasons, cryptic and laconic the same was set aside. Mere apprehension that huge payments would be made to defeat tax liability is unwarranted. No payments towards royalty from bank accounts being fixed deposits attached are to be made but an overdraft facility can be availed of to make the said payments. (WP/16692/2022 decided on 16.12.2022)(AY: 2019-2020, 2021-2022)

     Xiaomi Technology India Pvt. Ltd. v. DCIT & Ors. [2023] 451 ITR 58 (Kar)

203. S.24 of Prohibition of Benami Property Transaction Act, 1988 (‘PBPTA’): Notice and attachment of property involved in benami transactionPetitioner was issued a notice under Section 24(1) of PBPTA. However, the petitioner was not supplied with the material basis which the initiating officer (‘IO’) concluded that Petitioner is a benamidar in respect of the property in question despite of numerous requests. As a result, the petitioner was unable to prepare and file an effective reply before IO.

     In the meanwhile, the IO passed and order under Section 24(3) of the PBPTA provisionally attaching the said property. The said order was challenged on the ground the IO has not arrived at a satisfaction that the said property may be alienated during the specified period as required by Section 24 of PBPTA. Accordingly, entire action of the IO shall be void ab initio due to lack of jurisdiction.

     During the course of the hearing, it was submitted that IO has arrived at a satisfaction after consideration of certain facts and circumstances, that said property might be alienated. Further the action of the IO was approved by the appropriate authority basis the note placed before the Court.

     However, Petitioner alleged that there was no material based on which IO has arrived at a satisfaction and therefore, it appears that the satisfaction was a mechanical one and not based on any objective standards.

     The Court held that the prelude to the note by the IO is not connected with the requirement to come to a satisfaction regarding alienation of the said property. Considering the undertaking submitted by the Petitioner that the property would not be alienated and also that the petitioner is willing to submit the reply to the show-cause notice which is an obligation under section 24(1) of the PBPTA, the Court granted a period of 10 days to respond to the show cause notice and directed the authorities to strictly consider the same in accordance with provisions of the Section 24 of the PBPTA and the process to start afresh from the stage of the procedure laid down in section 24(1) strictly as per the law.

     (Gauhati High Court, W.P. (C) No. 3245 of 2022 order dated May 23,2022)

     Ganesh Chandra Das and Another v. DCIT and Another (2023)453 ITR 565 (Gau)

204. S.24 of Prohibition of Benami Property Transaction Act, 1988 (‘PBPTA’): order for continuation of provisional attachment of property involved in benami transactionPetitioner was issued a notice dated 30 March 2022 under Section 24(1) of PBPTA followed by the order of attachment dated 31 March 2022. However, the petitioner was not supplied with the material basis which the initiating officer (‘IO’) concluded that Petitioner is a benamidar in respect of the property in question despite of numerous requests. As a result, the petitioner was unable to prepare and file an effective reply before IO. The Court vide order dated 23 May 2022 had held that the prelude to the note by the IO is not connected with the requirement to come to a satisfaction regarding alienation of the said property. Considering the undertaking submitted by the Petitioner that the property would not be alienated and also that the petitioner is willing to submit the reply to the show-cause notice which is an obligation under section 24(1) of the PBPTA, the Court granted a period of 10 days to respond to the show cause notice and directed the authorities to strictly consider the same in accordance with provisions of the Section 24 of the PBPTA and the process to start afresh from the stage of the procedure laid down in section 24(1) strictly as per the law.

     In continuation of the above case, the petitioners filed a response challenging the jurisdiction of the IO. Post consideration of the reply filed by the petitioners, an order dated 15 June 2022 was by the IO under Section 24(3)(a)(i) of the PBPTA for continuation of the provisional attachment till the passing of final order by the Adjudicating Authority under section 26 (3) of the PBPTA. This order was challenged before the Court. It was submitted on the behalf of the petitioners that Hon’ble Supreme Court in the case of Union of India v. Ganpati Dealcom Private Limited (2022 SCC online SC 1064) has held that the provisions of the Benami Transactions (Prohibition) Amendment Act, 2016 wherein criminal offences were introduced in the form of Section 3 and Section 5 of the PBPTA would be effective only from 25.10.2016. The Court observed that in the present case there was no dispute regarding the fact that all sale deed in relation to the properties in question were made prior to 2016. Accordingly, the Court held that the notices and order issued under Section 24 of the PBPTA are not sustainable in law and were set aside. (Gauhati High Court, W. P. (C) No. 4385,4387 and 4390 of 2022, order dated December 16,2022)

Banamali Das, Ganesh Chandra Das, Sailen Das and Another v. DCIT and Others (2023) 453 ITR 569 (Gau)