This weekly round-up analytically summarises the key tax judgements of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from June 24 to June 30 2023.
The Supreme Court has held that the National Company Law Tribunals (NCLT) cannot reject applications under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) unless the debt has not become due & payable.
Even assuming that NCLT has the power to reject the application under Section 7 if there were good reasons to do so, in the facts of the case, the conduct of the appellant is such that no such good reason existed on the basis of which NCLT could have denied admission of the application under Section 7”, the two-judge bench comprising Justice Abhay S. Oka and Justice Rajesh Bindal held.
In a revolutionary decision the Madras High Court ruled that the wife, who contributed to acquisition of family assets by performing household chores entitled to equal share in property purchased by husband.
When the husband and wife are treated as two wheels of a family cart, then the contribution made either by the husband by earning or the wife by serving and looking after the family and children, would be for the welfare of the family and both are entitled equally to whatever they earned by their joint effort. The proper presumption is that the beneficial interest belongs to them jointly. The property may be purchased either in the name of husband or wife alone, but nevertheless, it is purchased with the monies saved by their joint efforts” the Court commented.
In a recent decision the Calcutta High Court observed that the husband acquiring property in the name of wife does not necessarily imply Benami transaction.
In India, two kinds of benami transactions are generally recognized. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami. In that case, the transferee holds the property for the benefit of the person who has contributed the purchase money, and he is the real owner. The second case which is loosely termed as a benami transaction is a case where a person who is the owner of the property executes a conveyance in favour of another without the intention of transferring the title to the property thereunder” the Court noted.
A Single Bench of Justice Krishna Rao of Calcutta High Court granted stay to the reassessment proceedings against the petitioner beyond 6 years with regards to the assessment linked to the fraudulent reversal of the stocks in stock exchange. The bench also directed to file an affidavit-in-opposition within 8 weeks.
The Calcutta High Court further ordered that no additional proceedings should be initiated based on the challenged order dated July 28, 2022, which is attached as Annexure P-4 to the writ petition, until the writ application is resolved. The matter will appear before the Circuit bench of the Calcutta High Court after the completion of a period of 11 weeks.
The Delhi High Court quashes income tax notice against Non Resident in India (NRI) in the matter of foreign remittance on the sale of the immovable property by the late father.
A Division Bench of the Court comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “Accordingly, the impugned order and notices are set aside. The AO will take into account the assertion(s) made in the writ petition and the accompanying documents. Besides this, documents which are already filed by the petitioner with the AO will also be considered. Thereafter, the AO will examine, whether the reassessment proceedings need to be taken forward.”
In a recent order, the Calcutta High Court directed the re-adjudication since the order passed under section 148 of the Income Tax Act, 1961 was without fixing a hearing for the assessee by the Assessing Officer(AO) which was a violation of the Natural Justice Principle.
Since there has been a violation of the principles of natural justice, the matter has to be remanded back to the Assessing Officer for a fresh decision. While allowing the appeal, the Court set aside the order passed under Section 148A(d) of the Income Tax Act dated 6th April 2022 and remanded the matter back to the Assessing Officer for fresh consideration.
The Calcutta High Court(HC) set aside the order under section 74 of the West Bengal Goods and Service Tax (WBGST Act), 2017 since the Show Cause Notice (SCN) on which the order passed was uploaded by the department in a different portal which was not known to the assessee.
The pre-deposit amounts which the appellant have to make shall be adjusted from and out of the amount already recovered from the appellant by way of recovery from the electronic cash ledger, the balance amount which was recovered from the appellant shall abide by the orders that may be passed by the appellate authority in the appeal to be filed by the appellant in terms of the above direction. If the appellant files a statutory appeal within the period stipulated by this order, the attachment of the appellant’s bank account shall be lifted.”, the Court held.
The Delhi High Court quashed an income tax notice on non- consideration of the reply filed by the petitioner, by the Assessing Officer (AO).
A Division Bench of the Delhi High Court comprising. Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “Accordingly, the impugned order passed under Section 148A(d) of the Income Tax Act is set aside. Liberty is, however, given to the AO to pass a fresh order, after according a personal hearing to the petitioner and/or his authorised representative. The AO will also take into account the reply filed by the petitioner. Needless to add, the AO will pass a speaking order; a copy of which will be furnished to the petitioner.”
The Calcutta High Court quashed the imposition of penalty at rate of 200% as E-Way Bill satisfied conditions under Section 129 of the Central Goods and Service Tax, 2017 (CGST) and West Bengal Goods and Services Tax Act, 2017 (WBGST).
For the above reasons, the appeal as well as the writ petition are allowed and the order of penalty passed by the adjudicating authority as affirmed by the appellate authority are set aside and modified with the direction to the appellants to pay a penalty of Rs.50,000/- which will include both CGST and WBGST instead of 200% penalty as imposed by the authorities” the Bench concluded.
The Gujarat High Court quashed an assessment order and commented that the filing of reply to show cause notice (SCN) is not possible within 12 Hours.
A Division Bench of the Gauhati High Court of Justices Vipul M Pancholi and Devan M Desai observed that “In the aforesaid case, less than five hours time was given to the concerned assessee for filing reply and this Court observed that the respondent had failed to grant reasonable opportunity of hearing to the concerned assessee and therefore it was held that it is the case of gross violation of principles of natural justice.”
In a recent decision the Calcutta High Court observed that Erstwhile directors are to assist official liquidator in affairs of company even after winding up, thereby dismissing a revision petition.
A Single Bench of Justice Shampa Dutt (Paul) observed that “Admittedly, considering the present situation, the official liquidator is a necessary party before the trial court. Though the official liquidator is now in-charge of the affairs of the company, the petitioners being the erstwhile directors are to assist the official liquidator in affairs of the company even after winding up.”
In a recent judgment the Delhi High Court observed that an assessment order cannot target sole legal heir of deceased assessee, thereby setting aside a demand of Rupees 10 crores.
A Division Bench comprising of Justices Rajiv Shakhdher and Girish Kathpalia observed that “Given this position, Mr Sunil Agarwal cannot but accept that the assessment order could not have been directed only against Darpan Kohli i.e., petitioner no.1. Therefore, according to us, the best way to forward would be to set-aside the assessment order. It is directed accordingly. The AO will issue notice to the petitioners, and grant them opportunity to present their defence qua the merits of the case.”
The Gauhati High Court issued notice to Income Tax Officer on contempt alleging non-compliance of the direction given by the Single Judge Bench of the High Court to refund Tax Deducted from the Border Security Force (BSF) Deputy Inspector General (DIG’s) salary.
A Single Bench of the Gauhati High Court comprising of Justice Kalyan Ray Surana ordered to issue notice returnable in 4 (four) weeks. The Court also directed the petitioner to take steps within 2 (two) days for service of notice on the respondents by registered post with A/D.
The Himachal Pradesh High Court dismissed a petition for anticipatory bail as the GST Registration was in the name of the proprietor of shop alleged of involvement in business of prohibited drugs.
A Single Bench of Justice Vivek Singh Thakur observed that “Taking into consideration entire facts and circumstances, I do not consider it a fit case for exercising discretionary power under Section 438 Cr.P.C., to enlarge the petitioner on bail. Accordingly, petition is dismissed.”
The Calcutta High Court sets aside order passed under Section 148 of Income Tax Act, 1961 without providing opportunity for personal hearing to the assessee, Winsome Highrise Pvt. Ltd. & Anr.
The matter is remanded back to the Assessing Officer concerned to pass a fresh order under Section 148A(d) of the Income Tax Act by giving opportunity of personal hearing and after considering the objection filed by the petitioner, within a period of eight weeks from the date of communication of the order” the Bench concluded.
The Calcutta High Court set aside the attachment order since the cash credit account is not a debt and cannot be made attachable.
While allowing the appeal, Justice Bibek Chaudhuri observed that subsection 5 of Section 159 gives adequate power to the petitioner to file an objection for releasing the bank account or, in the instant case cash-credit facility and held that cash credit cannot be attached.
A Division Bench of the Bombay High Court granted a capital gain exemption to Foreign Institutional Investors (FII) in the matter of capital gains from alienation of any property taxable only in Singapore.
The Coram of Justices KR Shriram and Firdosh P Pooniwalla observed that “The AO has held that the assessee has not produced any evidence to show such required repatriation as mandated by Article 24 of DTAA for entitlement of exempted income. This is an incorrect statement as rightly held by the ITAT. Therefore, Singapore authorities have themselves certified that the capital gain income would be brought to tax in Singapore without reference to the amount remitted or received in Singapore. The AO could not have concluded otherwise.”
The Delhi High Court quashed property tax demand on Advocate Office run in residence as Professional activity is not commercial activity under Delhi Municipal Corporation Act (DMC), 1957. The appellant in the present matter is South Delhi Municipal Corporation.
A Division Bench of the Delhi Court of Justices Najmi Waziri and Sudhir Kumar Jain observed that “Insofar as the statute has not included “professional activity” of lawyers as “commercial activity” the former cannot be put to tax. The aforesaid Bye-laws cannot seek to over-reach the statute itself. The assessment order issued by the MCD under section 123D of the DMC Act, 1957 along with any demand, was rightly quashed.”
A Division Bench of the Bombay High Court imposed costs of Rs 50,000 on the late filing of y Look Out Circular (LOC) and commented that Parties seeking a stay on LOC were required to apply to Court in good time.
The parties seeking stay on any Look Out Circular (“LOC”) are required to apply to the Court in good time and not to attempt to pressurize the Courts. When last-minute Applications are made like this, it is extremely disruptive. Our staff is greatly inconvenienced. Orders are to be drawn up after the order is passed, transcribed almost instantly, sometimes on the dais itself, then corrected, then signed and uploaded and we are supposed to believe that we are required to do this for a greater convenience of the Applicants, the disruption to Court being irrelevant” the Bench said.
A Division Bench of the Delhi High Court quashed an income tax notice even though there was error by in depositing tax not in relevant assessment year.
A Division Bench of the High Court of Justices Rajiv Shakdher and Girish Kathpalia observed that “Therefore, it is suggested that the impugned order be set aside, with liberty to the AO to reexamine the issue at hand. Accordingly, the impugned is set aside. Resultantly, the consequential notice will collapse. In case the AO recommences the proceedings, he will issue a fresh notice to the petitioner. The AO will also accord personal hearing to the petitioner and/or her authorized representative. In this behalf, the AO will issue a notice indicating the date and time of hearing.”
The Telangana High Court allowed the refund of advance tax and Tax deducted at Source(TDS) as the rectified migration order was uploaded timely.
Since the basic grievance of the petitioner has been redressed, we are of the view that the consequential refund is required to be remitted to the petitioner at an early date with applicable interest by the law.”, Chief Justice Ujjal Bhuyan and Justice N Tukaramji.
The Delhi High Court set aside income tax notice as allegations of undisclosed income did not form the part of income tax notice.
A Division Bench of the High Court comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “Based upon the aforesaid, the AO concluded that Rs.99,67,272/-, which was otherwise income assessable to tax, had escaped assessment. Undoubtedly, the aspects recorded in the order passed under Section 148A(d) of the Income Tax Act were not put to the petitioner. Therefore, in our view, the best way forward would be to set aside the impugned order and notices, with liberty to the AO to take the next steps in the matter, albeit, as per law.”
The Gauhati High Court directed to seek statutory remedy in the absence of documents in the writ petition to substantiate the mismatch between Tax Deducted at Source (TDS) and Form 26AS.
As an alternative and efficacious remedy is available to the petitioner, the Court is not inclined to entertain this writ petition and dismissed the writ petition challenging the legality of the impugned order.
The Chhattisgarh High Court has held that denial of credit on the ground of a non-existent supplier is not valid as purchases were made.
The Court comprising Justice Goutam Bahduri and Justice Sanjay Kumar Jaiswal considered prima facie that tax paid is shown on the GST portal of the petitioner and directed by way of interim relief, no further orders to be passed.
The Gauhati High Court dismissed the writ petition as the statutory remedy available under the Central Excise Act is more efficacious. Mr A. Jain, counsel for the petitioner and Mr S.C. Keyal, standing counsel for the CGST & Central Excise Commissionerate, appeared for all the respondents.
Since the alternative and efficacious remedy is available to the petitioner, the Court dismissed the writ petition. It was provided that if the petitioner was advised to seek an alternative and efficacious remedy by filing a statutory appeal, the period spent from 21.03.2022 till the date of delivery of the order would be entitled to be excluded from the computation of limitation.
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