High Courts Weekly Round-Up

This weekly round-up analytically summarises the key stories related to the High Courts reported at Taxscan.in during the previous week from October, 3 to October 8, 2022.

THE COMMISSIONER OF INCOME TAX vs TRAVELPORT L.P. USA CITATION: 2022 TAXSCAN (HC) 731

In hearing an appeal by the Commissioner of Income Tax – International Taxation, a Division Bench of the Delhi High Court upheld the order or the Income Tax Appellate Tribunal (ITAT) and Commissioner of Income Tax (Appeals) (CIT(A)) in favour of the assessee, Travelport L P USA that, Performance of Booking does not amount to Substantial Business Activity carried out in India. Upholding the findings of CIT(A) and ITAT as, “out of several activities, the activities of Calleo Distribution Technologies Private Limited in India were only in respect of generating requests and receiving end-result of the process. In other words, the computers at the desk of the travel agent in India were merely connected to the extent that they could perform a booking function but were not capable of processing the data of all the airlines together at once,” the bench dismissed the appeal for not having any substantial questions of law for consideration.

M/S ESTER INDUSTRIES LTD vs ASSTT. COMMISSIONER OF INCOME TAX & ANR CITATION: 2022 TAXSCAN (HC) 729

In a recent decision of a Division Bench of the Delhi HIgh Court, it was held in favour of the Income Tax Department that, a notice served to the assessee under Section 148 of the Income Tax Act, 1961 need not meet the monetary requirement of Rs. 50 Lakhs if the issuance of notice was done within the prescribed time and the writ petition filed by assessee was dismissed. The Bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the monetary limit of Rs. 50 Lakhs to reopen the assessment is not applicable in this case as the notice cannot be considered to be time barred. In regard to the allegedly bogus sale proceeds and monies received, the court observed that the sale would be treated as unexplained cash credit under Section 68 of the Income Tax Act,1961 and the full value would be liable to tax.

GHODAWAT PACKERS LLP vs UNION OF INDIA CITATION: 2022 TAXSCAN (HC) 725

In a significant ruling, the Karnataka high court has ruled that the Union government is entitled to levy Central GST (CGST) as well as excise duty on tobacco and tobacco-derived products. Noting that though the Excise Act was repealed, the High Court held that the tobacco and tobacco products were added to the Seventh Schedule of the Constitution under Entry 84. “Thus, apart from levy of taxes under the provisions of CGST Act, 2017, excise duty can be levied on tobacco and tobacco products under the Central Excise Act, 1944.” As for the NCCD, the HC noted that Section 136 of the Finance Act, 2001 contemplates levy of such a duty. “NCCD is a surcharge and a type of excise duty which can be levied independently of the excise duty as contemplated under the provisions of Fourth Schedule to the Central Excise Act, 1944. Thus, levy of NCCD in the absence of levy of excise duty cannot be considered as bad in law,” the Court said.

BIRD WORLDWIDE FLIGHT SERVICES Vs DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 4(2) CITATION: 2022 TAXSCAN (HC) 724

A division bench of the Delhi High Court has held that the assessee has the right to get adequate time to respond to the show-cause notice under section 148A(b) of the Income Tax Act, 1961. Quashing the order with a direction to the AO to re-consider the matter, the Court held that “This Court in Meenu Chaufla Vs. ITO, WP(C) No. 7854 of 2022 dated 27th May 2022, has held that in such cases the mandate of Section 148A(c) is violated as it casts a duty on the AO, by using the expression ‘shall’, to consider the reply of the Assessee in response to notice under Section 148A(b), before making an order under Section 148A(d) of the Act.”

PANCHMUKHI MANAGEMENT SERVICES PVT. LTD vs PR. COMMISSIONER OF INCOME TAX CITATION: 2022 TAXSCAN (HC) 726

A division bench of the Delhi High Court, while dismissing a bunch of appeals by the income tax department has held that the recovery of share certificate allotted to investor companies found at the premises of issuing company is not “incriminating material” for the purpose of addition under the provisions of the Income Tax Act, 1961.

KAMLESH KESWANI vs ASSISTANT COMMISSIONER OF INCOME TAX CITATION: 2022 TAXSCAN (HC) 723

In a significant ruling, a division bench of the Delhi High Court has held that the statutory benefit under section 54 of the Income Tax Act, 1961 cannot be denied to the assessee merely for the reason that the name of the wife was included in the property newly purchased. A division bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the judgment of this Court in Ravinder Kumar Arora relied upon by the petitioner as regards his entitlement to claim LTCG is squarely applicable to the facts of the case. “We also find merit in the submission of the learned counsel for petitioner that the re-assessment has been initiated on the basis of change of opinion, which is not permissible. There is no new information available with the respondent to re-assess the LTCG claim. The AO had considered the same documents during the earlier assessment proceedings and was satisfied with the claim of LTCG made under Section 54 of the Act,” the Court said.

AKZONOBEL INDIA PRIVATE LIMITED vs THE ADDITIONAL COMMISSIONER OF INCOME TAX CITATION: 2022 TAXSCAN (HC) 722

In a major setback to M/s Akzonobel India Private Limited, the Delhi High Court has dismissed the appeal and held that every Assessment Year is a separate unit which is governed by its own peculiar facts. Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “Upon a perusal of the paper book, this Court finds that all the three authorities below have given concurrent findings of fact that the Appellant had failed to furnish evidence to demonstrate that administrative services were actually rendered by the AE and the assessee had received such services. In fact, the ITAT has noted in the impugned order “….On a specific query made by the Bench to demonstrate the receipt of services from AE through cogent evidence, including, any communication with the AE, learned counsel for the assessee expressed his inability to furnish any evidence and repeated his submission to restore the matter back to the Assessing Officer for enabling the assessee to furnish evidence, if any.”

Emami Agrotech Ltd. vs State of West Bengal & Ors. CITATION: 2022 TAXSCAN (HC) 721

While considering a petition in relation with the West Bengal State Support for Industries Scheme, 2008, the Calcutta High Court has directed the State Government to make the scheme GST-compliant to grant relief to the industries availing benefit of such schemes. Justice Moushumi Bhattacharya observed that “Upon considering the Scheme and the fact that the GST regime has come into place since 2017, the respondents should take expeditious steps to make the Scheme GST-compliant for the benefit of industrial units which fall under the Scheme. The industrial units like the petitioner cannot be kept in a limbo and denied the incentives, which were specifically promised to these units at the time of introduction of the Scheme from 2008 onwards. There is a definite case of legitimate expectation in the present case and the petitioners are entitled to be provided with clarity in that regard.”

M/s. R. P. Buildcon Private Limited & Anr vs The Superintendent CITATION: 2022 TAXSCAN (HC) 720

A division bench of the Calcutta High Court has held that the audit proceedings initiated by the Anti Evasion and Range Office for the same period shall be invalid under the Central GST Act, 2017. he High Court held that since the audit proceedings under Section 65 of the Act has already commenced, it is but appropriate that the proceedings should be taken to the logical end. “The proceedings initiated by the Anti Evasion and Range Office for the very same period shall not be proceeded with any further,” the Court said.

Shailesh Shah, Vs The Income Tax Offcer-Ward CITATION: 2022 TAXSCAN (HC) 717

A division bench of the Bombay High Court has held that the re-assessment under section 148 of the Income Tax Act, 1961 cannot be initiated against a dead person unless the legal representatives submit to the jurisdiction of the Assessing Officer without raising any objection. A bench of Justices Dhiraj Singh Thakur & Valmiki Sa Menezes has observed that where the legal representatives do not waive their right to a notice under Section 148 of the Income Tax Act, it cannot be said that the notice issued against the dead person is in conformity with the intent and purpose of the Income Tax Act.

Poonamchand Saran vs Union Of India CITATION: 2022 TAXSCAN (HC) 719

A division bench of the Rajasthan High Court has restored an appeal against the order cancelling GST Registration on the ground that the assessee failed to submit the hard copies after filling the appeal through online within the prescribed time. Justice Sandeep Mehta and Justice Kuldeep Mathur held that “It cannot be denied that the petitioners herein would not be able to continue with their business in absence of GST registration and thus, would be deprived of their livelihood which amounts to violation of right to life and liberty as enshrined in Article 21 of the Constitution of India.”

SUMAN JEET AGARWAL vs INCOME TAX OFFICER CITATION: 2022 TAXSCAN (HC) 713

A division bench of Delhi High Court comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora held that, Section 148 Notices sent as an attachment through emails, from the designated e-mail addresses of the JAOs, which do not bear the respective JAO’s Digital Signature Certificate (DSC) are valid.

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