This annual round-up analytically summarizes the key Direct and Indirect Tax Judgments of the Supreme Court and all High Courts of India reported at Taxscan.in during 2024.
The Supreme Court has dismissed a Public Interest Litigation ( PIL ) seeking the enforcement of a compliance rating mechanism under the Central Goods and Services Tax ( CGST ) Act, 2017. The Court held that it could not interfere in the administration of GST, a matter that falls under the jurisdiction of the government and legislature, not the judiciary.
However, the Supreme Court rejected the plea, stating, “We are not inclined to entertain the Writ Petition instituted under Article 32 of the Constitution of India. The Writ Petition is accordingly dismissed.” The Court emphasized that the issue was a matter for Parliament, not the judiciary, to resolve.
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The cost of Rs. 5 lakhs was dismissed by the Supreme Court which was imposed by the Allahabad High Court following the power abuse of the income tax department. The apex court condoned the delay, however, without going into merits, set aside the cost imposed by the High Court.
The SLP was filed by the department itself to delete the cost imposed by the Allahabad High Court. The bench of Justices B V Nagarathna and Nongmeikapam Kotiswar Singh, in its decision stated that “That in the event, this Court is not inclined to interfere in the matter on merits then the order as to costs of Rs.5,00,000/- may be set aside.
In a recent ruling, the Madras High Court set aside the order dated April 29, 2024, citing a violation of natural justice, as the petitioner was denied a personal hearing due to a printing error in the GST Show Cause Notice ( SCN) reply form, contrary to the mandate under Section 75(4) of the Goods and Service Tax Act.
A writ petition was filed under Article 226 of the Constitution of India, seeking the issuance of a Writ of Certiorari to quash the order dated April 29, 2024, issued by the first respondent under GSTIN: 33AAWFM9907E1ZV/2018-19.
The Division Bench observed that although the failure to disclose the new registration may have misled the Court regarding the need for premises verification, this alone did not justify dismissing the writ petition. The Court concluded that the non-disclosure was not material enough to affect the ultimate resolution of the case. Consequently, the order passed by the Single Judge could not be sustained.
The Division Bench allowed the appeal, set aside the order of the learned Single Judge, and remanded the matter back to the Single Judge for reconsideration on merits.
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In a recent case, the Madras High Court ( Madras HC ) has quashed a adverse GST ( Goods and Services Tax ) order passed against the petitioner by the department due to the petitioner’s non-appearance during the hearing, and remanded the matter back for reconsideration with certain conditions.
The writ petition was disposed of with these directions, and all connected miscellaneous petitions were closed. The Court did not impose any costs in this matter.
The Madras High Court has ordered the provisional release of secondhand digital multifunction print, copying, and scanning machines which import process already initiated by the petitioners before a restriction notification was issued by the Directorate General of Foreign Trade ( DGFT ).
The bench of Justice Krishnan Ramasamy directed the Customs Department to provisionally release the goods on the condition that the petitioners deposit the enhanced duty amount. Once the duty is paid, the customs department was directed to release the machines within three weeks.
Additionally, the court clarified that the Customs Department can proceed with further legal adjudication. Furthermore, the court also allowed the petitioners to file for a waiver of demurrage charges, which would be considered by the Customs Department based on the circumstances.
In a recent ruling of Calcutta High Court the writ petition challenging an order passed by the Deputy Commissioner of State Tax was remanded owing to imposition of penalty on fully paid tax liability.
The single bench of Calcutta High Court comprising Justice Raja Basu Chowdhury observed that the matter requires reconsideration by respondent 1, hence the matter was remanded back to respondent 1 and was asked to reconsider it and pass a fresh reasoned order.
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In a recent judgement, the Allahabad High Court ruled that proceedings under Section 130 of the Goods and Service Tax (GST) Act cannot be initiated for excess stock discovered during a survey.
The present writ petition was directed against the order dated 26.12.2023, issued by Respondent No. 1 in Appeal No. 204 of 2021, under Section 130 read with Section 122 of the UP GST Act.
Justice Piyush Agrawal, presiding, affirmed that the law mandates that Section 130 proceedings cannot be invoked solely based on the discovery of excess stock during a survey. The order dated 26.12.2023, passed by Respondent No. 1, under Section 130 read with Section 122 of the UP GST Act, was declared unsustainable and quashed. The writ petition was allowed.
The Madras High Court ( HC ), in a recent case, quashed an order passed under Tamil Nadu Goods and Services Tax Act, 2017 ( TNGST Act ) noting that the said order was passed without considering the additional reply and hearing request made by the petitioner, which is violative of principles of natural justice.
The case in question is a writ petition filed under Article 226 of the Constitution of India, which empowers the High Courts to issue directions, orders, or writs to any person or authority, including the government, for enforcement of fundamental rights and for any other purpose.
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The Delhi High Court disposed the Writ Petition against Non-Banking Financial Company (NBFC) under section 14(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002), as the writ petition is not maintainable against NBFC due to lack of jurisdiction.
Also the court suggests the aggrieved party to approach the Debt Recovery Tribunal (DRT) in terms of Section 17 of the SARFAESI Act, 2002.
The Division Bench comprising of Justice G.S Kulkarni and Justice Somesekhar Sundaresan observed that the the essential ingredient for attracting the Section 147 and 148 is that no action for reassessment can be taken after the expiry four years from the end of the relevant assessment year, unless the income escaping assessment has been caused by the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. That vital element is sorely missing in the instant case.
So without showing anything to prove that the Petitioner had failed in disclosing any material facts fully and truly, there is no scope for initiating reassessment. Consequently the writ petition is allowed by the court, quashing the Impugned Notices (dated 31st March, 2021), and both consequential notices under Section 143(2) (dated 30th June, 2021) and the notice under Section 142(1) (dated 21st December, 2021).
The Madras High Court ordered the GST ( Goods and Services Tax ) to dispose of the ignored representation to unlock blocked credit ledger filed by the assessee-petitioner.
In response, the government’s advocate acknowledged that the reply was yet to be addressed but assured the court that it would be considered as soon as possible. Justice Krishnan Ramasamy heard both the sides. The court observed that while the petition was filed challenging the initial blocking order, the primary issue was the department’s failure to act on the petitioner’s representation. As a result, the court directed the GST Department to dispose of the representation within two weeks from the receipt of the court’s order. Accordingly, the petition was disposed of.
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The Madras High Court has remanded several writ petitions involving the denial of Input Tax Credit ( ITC ) under Section 16(4) of the GST ( Goods and Services Tax ) Act, 2017 back to the Assessing Officer ( AO ) for a fresh review in light of the Finance Act, 2024.
Justice C. Saravanan decided that “Since the Parliament itself has come to the rescue of the assessees, I am of the view that the impugned orders passed by the Original Authority as also the Appellate Authority upholding the orders of the Assessing Officer in the batch of Writ Petitions are set aside and the cases are remitted back to the Assessing Officer to pass a fresh order on merits strictly in accordance with the Finance Act, 2024. In case, the proposals in Clauses 114 and 146 of the Finance (No.2) Bill, 2024 are accepted and enacted in the Finance Act, 2024, the benefit of these provisions may be extended to the respective petitioners.”
The Delhi HC observed that Section 167(2)(a)(ii) of the CrPC has been recognized by the apex court as a constitutional right to bail when procedural delays occur. The Court noted the prosecution’s lack of action in filing a complaint even after five years, suggesting that the department was more concerned with keeping the accused in custody than carrying out the actual trial.
The bench, consisting of Amit Mahajan, found no merit in the petition and dismissed it.
In a recent case before Bombay High Court the petition was allowed in absence of written reasoning mandated by Section 83(1) with respect to provisional attachment proceedings.
The division bench of Bombay High Court comprising Justice M.S.Jawalkar and Justice Avinash G. Gharote observed that, in absence of reasons for such opinion the impugned order can’t be sustained and the same was quashed and set aside, and the matter was remitted back to the Commissioner to record his reasons in writing.
The petition was allowed on the aforesaid terms.
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In a recent ruling, the Delhi High Court has set aside the cancellation of Goods and Service Tax registration, ruling that the Show Cause Notice ( SCN ) failed to provide specific details regarding the alleged fraud or misstatement. The court found that the cancellation order was unsustainable due to a breach of natural justice principles.
The bench of Justice Senthil Kumar after examining the facts of the case, agreed with the petitioner-company’s argument that the Customs Department could not re-open the classification issue, which had already been settled by appellate authorities.The Court stressed that there was no fraud or willful misstatement on the part of the petitioner, as the goods had consistently been imported under the same classification without any objections from the authorities.
In result, the Court quashed the show cause notice issued by the Customs Department and directed the department to clear the goods under CTH 70051010, provided that the goods imported matched the description of “Light Green Float Glass (Tinted Non-Wired Type).” However, the Court declined to issue a declaration affirming the correctness of the classification, noting that such a declaration would require a detailed examination of the goods, which was beyond the scope of the writ jurisdiction.
In a recent ruling, the Delhi High Court by relying on the Central Board of Indirect Taxes and Customs ( CBIC ) Circular dated 26-10-2018, held that the cancellation of GST registration cannot be withheld due to pending liabilities.
The Delhi High Court Bench, comprising Justice Vibhu Bakhru and Justice Sachin Datta, directed the concerned authority to process the new application that was submitted by the petitioner for the cancellation of GST within four weeks and asked the petitioner to submit the required KYC documents and a valid address for future correspondence.
The petition was disposed of, along with the pending application.
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The Delhi High Court recently ruled that an income tax assessment cannot be reopened under Section 148 of the Income Tax Act without new material evidence and quashed the reassessment proceedings initiated for the Assessment Year 2015-16.
The Bench noted that, “We also bear in mind that no fetter operated upon the AO to take remedial steps and follow or adopt the procedure as prescribed by Section 148A prior to 31 March 2022. This aspect assumes added significance in light of the writ petitioner itself having drawn the respondents attention to the amended procedure for reassessment. Thus, even though the AO was duly apprised and placed on notice of the aforesaid aspects, it failed to take any corrective action.”
In a recent ruling, the Delhi High Court allowed the writ petition, and the court was of the view that the reopening of the assessment did not meet the legal requirements under Sections 147 and 148 of the Income Tax Act, 1961.
The bench was of the view that it was incumbent on the part of the AO to conduct further inquiries and gather additional material to form a valid belief of escaped income. The bench, comprising Justice Yashwant Varma and Justice Ravinder Dudeja, allowed the writ petition and held that there was not even a line of reason to justify the formation of the belief.
The court was satisfied that the reopening did not meet the legal requirements under Sections 147 and 148 of the Income Tax Act, 1961.
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The Delhi High Court quashed the reassessment order because the Assessing Officer failed to issue a notice under Section 143(2) of the Income Tax Act, 1961, and further noted that, according to Ashok Chaddha’s judgment and various other decisions, compliance with Section 143(2) is mandatory during reassessment actions.
The bench, comprising Justice Yaswant Varma and Justice Ravinder Dudeja, found Mr. Agrawal’s contention untenable for several reasons. The Court noted that Ashok Chaddha specifically addressed assessments conducted under Section 153A, which are governed by different rules compared to standard reassessment procedures. The Court highlighted that in Ashok Chaddha, it was determined that compliance with Section 143(2) was not mandatory for search assessments under Section 153A.
In a recent ruling, the Madras High Court dismissed the Appeal against Income Tax Appellate Tribunal’s decision on extended tax stay beyond the statutory limit under section 245(2A). This decision was made since the stay in question had already expired.
Justice R. Mahadevan observed that the stay period granted by the ITAT had already expired. Therefore the court decided no further adjudication was required. The court kept open the substantial questions of law raised by the Revenue for adjudication in an appropriate future proceeding. Thus, the appeal of the revenue was disposed of without any order as to costs.
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In a recent ruling, the Madras High Court quashed the inquiry report and the proceedings due to procedural lapses under Regulation 17(5) of the Customs Broker Licensing Regulation, 2018.
The court acknowledged that the pandemic led to extended timelines under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, but no further extensions were granted after December 2020.
The Madras High Court set aside the draft assessment issued under Section 144C of the Income Tax Act, 1961 by the assessing officer ( AO ). This decision was made due to AO’s failure to address the objections raised by the petitioner.
Justice C. Saravanan observed both sides’ arguments and records submission. The court noted that the petitioner had provided additional documents that show the transfer of shares to Mr. V.N. Seshagiri Rao on 12.02.2015, during the financial year 2014-15. The court further observed that the procedure outlined in the GKN Driveshafts judgment was not fully complied with as the petitioner’s objections were not adequately addressed in a speaking order.
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In a recent ruling, the Madras High Court remanded the matter to the State Tax Officer ( First Respondent ) concerning the supplier’s delayed filing of Goods and Services Tax ( GST ) returns under B2C instead of B2B. This misclassification led to the issuance of a GST demand order against the buyer.
Justice Krishnan Ramasamy observed that the impugned order passed without giving a hearing opportunity which violated the principles of natural justice. The court agreed with the petitioner’s claim and directed the petitioner to pay 10% of the demand within four weeks. Upon payment, the court set aside the impugned order and remanded the matter to the State Tax Officer (First Respondent). Thus, the petitioner’s writ petition was disposed of without any order as to the costs.
In a recent ruling, the Karnataka High Court remits the case back to the Section 148A(b) stage as the income tax notices are being sent to an outdated email address created by the former accountant of the assessee who is not in service.
Acknowledging the procedural flaw and the impact it had on the petitioner’s ability to participate in the proceedings, the bench of Justice S. Sunil Dutt Yadav decided that it would be just to revert the matter to the stage of Section 148A(b). This section deals with the issuance of a notice and requires the recipient to respond before any further action is taken.
The court sets aside the orders and notices previously issued on April 1, 2022, and February 26, 2024, including the assessment order and penalty notices.
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The Supreme Court observed that as per sub-section (4) thereof every proceeding under sub-sections (2) and (3) is deemed to be a Judicial proceeding within the meaning of Section 193 and Section 228 of the Indian Penal Code,1860. Also according to sub-section(4) of Section 63, a person who intentionally disobeys any direction issued under Section 50 of Prevention of Money Laundering Act, 2002 ( PMLA,2002 ) is liable to be proceeded against under Section 174 of Indian Penal Code,1908.
Since the said Complaint is pending before the concerned Court of Chief Judicial Magistrate, the court does not express any opinion on the merits of the said Complaint. Suffice to say that the court finds no illegality in the said orders passed by the concerned court and that the said complaint shall be proceeded further by the said Court in accordance with law. For the reasons stated above, both the Appeals being devoid of merits are dismissed.
In a significant relief to Ericsson India Private Limited, the Supreme Court of India has upheld the deletion of the penalty imposed under Section 271G of the Income Tax Act, 1961. The penalty, which was earlier imposed by the tax authorities for failure to provide necessary documentation related to international transactions, was removed by the Delhi High Court, and the Supreme Court has now confirmed that ruling.
In this case, Ericsson India was initially penalized by the income tax department for non-compliance. However, both the Delhi High Court and the Supreme Court found that the conditions necessary to impose the penalty under Section 271G were not met. The Supreme Court’s decision reinforces the importance of procedural fairness in imposing penalties under the Income Tax Act, especially when it comes to transfer pricing requirements.
In a recent ruling, the Supreme Court granted bail to the assessee who got arrested for Goods and Services Tax ( GST ) fraud considering the lengthy incarceration and no direct documentary proof connecting to the assessee.
The Court allowed the bail petition, ordering the petitioner’s release on furnishing bail bonds amounting to Rs. 1,00,000 with sureties of the same amount and imposed serval other conditions.
Consequently, the Special Leave Petition was allowed, and any pending applications related to the case were disposed of.
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The Supreme Court has recently dismissed a Special Leave Petition (SLP) filed by the Commissioner of Income Tax (International Taxation), Income Tax Department against taxability of payments received in lieu of computer software access to member firms.
It was noted by the Delhi High Court that such payments do not result in income taxable in India, and the persons referred to in Section 195 of the Income Tax Act are not liable to deduct any Tax Deducted at Source (TDS) under that section. Earlier in April, the Supreme Court had also held that Licensing of software products of Microsoft in Territory of India is not taxable in India, in a similar case.
In a recent judgment, the Calcutta High Court dismissed a review petition filed by the State GST authorities in connection with the non-updation of Part B of an e-waybill. Thus, the request of imposing penalty was rejected and directed to release the bank guarantee.
The court held that no grounds for interference were established, and the review petition was dismissed. The connected application was similarly dismissed. Furthermore, the court ordered the immediate release of the bank guarantee dated 5th August, 2023, held by the State respondents, directing that it be returned to the petitioners.
A fresh opportunity to establish the authenticity of the income tax audit report was granted to the assessee by the Karnataka High Court. The court set aside the order of the Assessing Officer rejecting the tax audit report submitted by a Chartered Accountant ( CA ) on ground that the schedule and the annexures were not signed by the CA firm partner.
Considering the contention of the petitioner that additional documentation could verify the authenticity of the Tax Audit Report, the Court set aside the impugned order. The petitioner was granted liberty to present additional evidence, which must be considered by the Assessing Officer in accordance with the law.
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The Karnataka High Court has directed a stay on penalty orders and demand notices issued by the Income Tax Department, stating that the Section 275 of Income Tax Act, 1961 clearly bars the issuance of penalty orders while the appeals are pending.
The high court, upon reviewing the provisions of Section 275 and the case law of B.S. Uday Shetty vs. The Assistant Commissioner of Income Tax, agreed with the petitioner. The court ruled that the penalty orders and demand notices should be kept in abeyance until the appeals are disposed of.
In a matter of dispute over the payment source of 10% pre-deposit for filing GST ( Goods and Services Tax ) appeal from the Electronic Credit ledger ( ECRL ) or Electronic Cash Ledger ( ECL ), the Patna High Court, set asiding the order rejecting appeal, ordered the appellate authority to consider the case on merits.
As the petitioner had already paid the 10% pre-deposit from the Electronic Credit Ledger, the court ruled that the appeal was maintainable and directed the Appellate Authority to review the case on its merits. The appeal was allowed.
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The Madras High Court has ordered the issuance of a fresh Show Cause Notice ( SCN ) under Section 148 of the Income Tax Act to address new issues that were not covered in the original notice. The department was asked to provide a fresh order under Section 148A (d) after regarding the reply of the taxpayer.
The Madras High Court after regarding the submissions of both sides held in favor of the applicant. The same has been quashed in the impugned order. It asked the first respondent to provide a new order under Section 148A(b) of the Income Tax Act, furnishing the applicant with a reasonable chance to respond within a maximum period of 3 months from the date of receipt of the order of the court. To ensure the timely completion of the aforesaid practice the applicant was asked to extend the full cooperation.
In a recent ruling, the Karnataka High Court has directed the GST ( Goods and Services Tax ) Department to restore a petitioner’s GST registration within four weeks, following an unjust cancellation. The court noted that the department committed a factual error.
The court noted that this error warranted setting aside the cancellation order and reinstating the GST registration. Consequently, the High Court directed the GST registration be restored within four weeks, provided the petitioner files all pending returns and pays any due taxes.
In a recent ruling, the Madras High Court quashed the reopening of the assessment order under Section 148, stating that it was based on a grossly erroneous factual foundation, rendering it untenable in law.
As a result, the court quashed the impugned order and notices, rendering the subsequent assessment orders void. The ruling underscores the necessity for accurate factual bases and proper procedural adherence in reassessment proceedings.
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The Karnataka High Court has declared that issuing a single consolidated Show Cause Notice (SCN) under Section 73 of the Goods and Services Tax ( GST ) Act for multiple assessment years is unlawful. According to the court, the consolidated SCN issued by the GST department was fundamentally flawed. It also stated that such notices contravened the GST Act and the legal precedents.
The bench observed that the practice of issuing a single, consolidated show cause notice for multiple assessment years contravenes the provisions of the CGST Act and established legal precedents. The Karnataka High Court thus ruled that the consolidated SCNs were fundamentally flawed. It ordered the quashing of the notices and affirmed that separate SCNs must be issued for each assessment year in compliance with the GST Act.
In a recent ruling, the Madras High Court set aside the Income Tax assessment order which was passed hastily without considering the taxpayer’s submission amidst the approaching deadline.
The court noted that the explanation submitted by the petitioner on 29.09.2021 was not adequately considered in the assessment order. Therefore, the court set aside the impugned assessment order dated 30.09.2021 and directed the assessing officer to pass a new assessment order within six months, following due process and allowing the petitioner to present its case. Thus, the petitioner’s writ petition was disposed of without any order as to costs.
The Madras High Court ruled that the transferor’s unfulfilled obligations under an advance license, including liabilities related to customs duty, persist post-merger and are not extinguished, further holding that these obligations are transferred to and must be discharged by the transferee in cases of merger or amalgamation.
The court dismissed the writ petition and directed the petitioner to respond to the show cause notice within 30 days. A corrigendum to the notice would be issued, addressing the petitioner as the successor company. The respondents were instructed to adjudicate the matter within three months and complete the process within six months. Should the petitioner fail to cooperate, the respondents may confirm the demand and proceed with recovery. The petition was dismissed without costs, and all related miscellaneous petitions were closed.
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In a recent ruling, the Karnataka High Court has ruled that a minimum seven-day response period shall be granted mandatorily for the notices issued under Section 148A(b) of the Income Tax Act, 1961.
Justice S. Suni Dutt Yadav agreed with the petitioner’s argument, finding that the inadequate response time violated the principles of natural justice and caused prejudice. Consequently, the court declared the notices issued under Section 148A(b) as well as the subsequent orders and penalty notices, to be invalid. Consequently, the notices and orders in question were set aside, with the court granting the Revenue the liberty to issue new notices and take appropriate action in accordance with the law.
In a recent ruling, the Madras High Court ruled that reopening assessment under Section 148 of the Income Tax Act, 1961 within the time limit cannot be interfered with if there was an escapement of income.
The court acknowledged that reopening was initiated before the lapse of four years, and there was no scope for interference with the Income Tax authorities’ reopening decision if escapement income was found. Therefore, the court dismissed the writ petition and granted liberty to the petitioner to raise all objections before the Assessing Officer during the reassessment process.
In a recent ruling, the Madras High Court ruled that the Central Value Added Tax ( CENVAT ) Credit was permissible for electricity supplied to sister units from captive power plants under the CENVAT Credit Rules ( CCR ) ( Amendment ), 2011.
The Court acknowledged that wheeling electricity through TANGEDCO ensures transparency in the transfer process, and there is no inflated claim or misuse of the credit system. Therefore, the appellant’s eligibility for CENVAT credit for the coal used in electricity generation, even when wheeled to sister units, was upheld. The appeal of the appellant was allowed, and no order was passed as to costs.
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The Bombay High Court has ruled that tax proceedings related to periods before the commencement of the Corporate Insolvency Resolution Process ( CIRP ) are extinguished once a resolution plan is approved. This decision follows the Assessee’s transition to new ownership and management under the CIRP.
Moreover, the Court dismissed the Revenue’s claim that the tax amounts, not having crystallised yet, should be considered future dues, stating that they were, in fact, past dues. In conclusion, the Court stressed that no proceedings related to operations before the CIRP approval could be pursued after the approval of the resolution plan. The Bombay High Court thus quashed the tax proceedings, holding that since they predated the CIRP, they were extinguished, and the Assessee’s petition was allowed.
The Madras High Court has ruled that bank accounts cannot be freezed beyond the alleged amount involved in the financial frauds.
Despite this, the court frequently receives petitions to unfreeze accounts, mentioning the failure of investigation agencies to notify both account holders and the jurisdictional court as mandated by Section 102 of the Cr.P.C. and Section 106 of the BNSS Act. Therefore, the bench directed the fifth respondent bank to unfreeze the account but maintain a lien over ₹2,50,000/-. The petitioner was allowed to operate the account with the condition that it always retains a minimum balance of ₹2,50,000/-.
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