Supreme Court and High Court Weekly Round-Up

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 July 29 to August 4 2023.

Assessing Authority is Duly Empowered to Call for Records and to Verify ITC as Claimed under DVAT Act: Delhi HC Dismisses Appeal claiming Malafide  M/S CHITRA HARDWARE vs COMMISSIONER OF VAT & ANR CITATION:   2023 TAXSCAN (HC) 1169

The Delhi High Court observed that the Assessing Authority is duly empowered to call for records and to verify Input Tax Credit (ITC) as claimed under Delhi Value Added Tax Act, 2004 (DVAT Act). 
It is well-settled that in case mala fides are alleged, the same has to be specifically pleaded with full particulars. The scope of the appeal, in the present case, is limited to examining the substantial questions of law that arise in the matter” the Court said.

 Death of Noticee before Initiation of Proceeding u/s 148A(b) of Income Tax Act: Calcutta HC set aside the Assessment Order  Mr. Sushil Kumar Gupta vs Income Tax Officer CITATION:   2023 TAXSCAN (HC) 1165

In a recent case, the Calcutta High Court set aside the assessment order as, the death of the noticee happened before the initiation of proceeding under section 148 A(b) of the Income Tax Act, 1961.
A single-judge bench comprising Justice Md. Nizamuddin set aside the aforesaid impugned assessment proceeding including the assessment order dated 28th March 2023 with liberty to the Assessing officer concerned to initiate any fresh proceeding by law.

 Relief to CCTEB India: Delhi HC Releases Provisionally Attached Rs 42 Crores Available as Fixed Deposit  CCTEB INDIA PRIVATE LIMITED vs ASSISTANT COMMISSIONER OF INCOME CITATION:   2023 TAXSCAN (HC) 1167

In a major relief to CCTEB India Private Limited, the Delhi High Court released provisionally attached Rs 42 crores available as Fixed Deposit.
The Court further added that the Commissioner of Income Tax (Appeals) [“CIT(A)”] will hear and adjudicate the appeal preferred against the assessment order, on merits. Needless to add, once deposit is made by the petitioner, no coercive measures will be taken against the petitioner, till the disposal of the appeal.

 Misinformation regarding PAN number Provided to AO triggers Reassessment Proceedings: Delhi HC sets aside Reassessment Order MS RAJ JAIN vs INCOME TAX OFFICER WARD 35 1 DELHI AND ANR CITATION:   2023 TAXSCAN (HC) 1171

A Division Bench of Delhi High Court set aside the reassessment order passed under Section 148A(d) of the Income Tax Act, 1961 on grounds of misinformation regarding the Permanent Account Number (PAN) was provided to the Assessing Officer (AO) and the same triggers for the reassessment proceedings.
It was further mentioned that if the petitioner provides the necessary material or information, they will be granted an opportunity to submit a response. Sufficient time will be provided for this purpose.

 Allahabad High Court Releases Ashish Kakkar on Bail Amidst Allegations of Forged GST Forms and Illegitimate ITC, Citing Ambiguous Arrest Memo  Ashish Kakkar vs Union Of India And Another CITATION:   2023 TAXSCAN (HC) 1172

The Allahabad High Court has granted bail to Ashish Kakkar, who was arrested in a GST Fraud case on charges of creating 92 fake GST Forms and passing off illegitimate Input Tax Credit (ITC) amounting to a staggering Rs. 88 crores citing ambiguity and lack of clarity in the arrest memo issued against him.
In conclusion, the Allahabad High Court highlighted the importance of upholding procedural safeguards in arrests made under the CGST Act and also emphasised the need for clarity and compliance with statutory provisions while arresting an individual protecting individual liberties.

 Relief to Blackberry India: Delhi HC rules Services Except in Rule 3(1) of Export of Services Rules falls under Ambit of Export of Taxable Services  PR. COMMISSIONER vs BLACKBERRY INDIA PRIVATE LIMITED CITATION:   2023 TAXSCAN (HC) 1173

In a major relief to Blackberry India Private Limited, the Delhi High Court ruled that services except in Rule 3(1) of Export of Services Rules falls under ambit of Export of Taxable Services.
The CESTAT has rightly concluded that all services except those specifically mentioned in Rule 3(1) of the Export of Services Rules, 2005 are covered within the scope of Export of Taxable Services. The Adjudicating Authority had clearly misread the said Rule” the Court concluded.

 Bombay HC directs to Refund Amount Attached from Assessee in Absence of  Proven Offence u/s 9(1) (b ) of FERA Act  Shri Abdul Aziz Ahmed Ansari vs Union of India CITATION:   2023 TAXSCAN (HC) 1180

The Bombay High Court directed to refund the amount attached from the assessee in the absence of proven offence under section 9(1) (b ) of the Foreign Exchange Regulation Act, 1973 (FERA).
While allowing the appeal, the division bench comprising G S Kulkarni & Rajesh S Patil ordered that “ an amount of Rs.1,48,000/- shall be refunded by the respondent to the petitioner within a period of four weeks from today with simple interest at the rate of 6% per annum from 12 May 1988.”

SC Condones Delay of 707 Days in Income Tax Refiling, Directs Delhi HC to Consider Appeal on Merits COMMISSIONER OF INCOME TAX vs M/S SURYA VINAYAKA INDUSTRIES LTD CITATION:   2023 TAXSCAN (SC) 203

The Supreme Court (SC) of India condoned a delay of 707 days in income tax refiling and directed the Delhi High Court (HC) to consider appeal on merits.

 In order to give an opportunity to the appellant(s) herein as well as the respondent(s) to seek hearing of the appeals on merits, the impugned order is set aside, the matter is remanded to the High Court while condoning the said delay of 707 days in refiling the appeals” the Bench concluded.

 Delhi HC Quashes Re-Assessment Order Mailed Without Mentioning Issuing Officers Name and Designation  JINDAL EXPORTS AND IMPORTS PRIVATE LIMITED vs DEPUTY COMMISSIONER OF INCOME TAX CIRCLE CITATION:   2023 TAXSCAN (HC) 1178

The Delhi High Court quashed the re-assessment order mailed without mentioning issuing officer’s name and designation. 
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia set aside the notices under Section 148A(b) of the Act and orders under Section 148A(d) of the Act. Further allowed the appeal by granting liberty to the respondent/revenue to take further steps following the law. 

 Value Fixed by Stamp Valuation Authority to be taken as Full Value of Consideration Calculating Capital Gains: Delhi HC Condemns Act of PCIT in Rubber Stamping Attempt of AO to Reopen Assessment  SH.MANUJENDRA SHAH vs COMMISSIONER OF INCOME TAX CITATION:   2023 TAXSCAN (HC) 1181

The Delhi High Court condemned act of Principal Commissioner of Income Tax (PCIT) in rubber stamping attempt of the Assessing Officer (AO) to reopen assessment and observed that the value fixed by the stamp valuation authority, which is the circle rate, should be taken as the full value of the consideration while calculating capital gains.
The Court concluded by noting that the PCIT i.e., the authority granting approval for reopening the reassessment proceedings, did not do better. PCIT, in fact, rubber-stamped the attempt of the AO to reopen the assessment.

 Paypal being the Payment System Operator shall comply with PMLA Requirements: Delhi HC  PAYPAL PAYMENTS PRIVATE LIMITED vs FINANCIAL INTELLIGENCE UNIT INDIA & ANR CITATION:   2023 TAXSCAN (HC) 1186

In a significant case, the Delhi High Court held that Paypal being a payment system operator shall comply with the Prevention of Money Laundering Act 2002 (PMLA) requirements.
While allowing the petition the Court held that “PayPal is liable to be viewed as a payment system operator and consequently obliged to comply with reporting entity obligations as placed under the PMLA. The imposition of penalty in terms of the impugned order dated 17 December 2020 is, however, and for reasons aforenoted, quashed. The impugned order shall stand set aside to the aforesaid extent.”

 Exemption claim u/s 2(15) of Income Tax Act not allowable on Services provided by GS1 India as it was for Benefit of Trade and Business: Delhi HC  COMMISSIONER OF INCOME TAX vs GS1 INDIA (FORMERLY EAN INDIA) CITATION:   2023 TAXSCAN (HC) 1185

The Delhi High Court has held that an exemption claim under section  2(15) of the Income Tax Act is not allowable on services provided by GS1 India as it was for the benefit of trade and business.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia has set aside the impugned order passed by the Tribunal, in light of the observation of the Supreme Court in Ahmedabad Urban Development Authority.

 Charges u/s 24 of PMLA Act on Fraudulent Obtain of Money cannot Exonerate Before a Full-Fledged Trial: Calcutta HC  Mili Ghosh vs Union of India & anr CITATION:   2023 TAXSCAN (HC) 1187

The Calcutta High Court has held that charges under section 24 of the Prevention of Money Laundering Act (PMLA ), 2002 on fraudulent obtaining of money cannot exonerate before a full-fledged trial.
As prima facie case is made out against the present petitioner in the facts and circumstances of the present case, she cannot be exonerated from the charges at this stage and before a full-fledged trial commences.”, the court held.

 No SCN issued Prior to upward Revision of Income: Delhi HC quashes Assessment Order u/s 147 of Income Tax Act  S.B. DISTRIBUTORS vs INCOME TAX OFFICER CITATION:   2023 TAXSCAN (HC) 1182

The Delhi High Court quashed assessment order issued under Section 147 of the Income Tax Act, 1961 as no Show Cause Notice (SCN) was issued prior to upward revision of income.
 For this purpose, the AO will issue a notice to the petitioner, whereby the date and time of the hearing will be indicated. Needless to say that the AO will pass a speaking assessment order, which would deal with the contentions embedded in the reply, if any, filed by the petitioner” the Bench concluded.

 Interest Allowable on Delayed Refunds from Central Excise Department on Deposit Made under Protest: Meghalaya HC  The Principal Commissioner of Central Goods and Service Tax vs M/s Green Valliey Industries Pvt Ltd CITATION:   2023 TAXSCAN (HC) 1189 

The Meghalaya High Court has held that interest shall be allowable to the assessee on the delayed refunds from the Central Excise Department on the deposit made “under protest”.
In result, the High Court of Meghalaya dismissed the Department’s appeal and upheld the decision of CESTAT, directing the Central Excise Department to pay interest to assessee on the delayed refund of the deposit made by the assessee “under Protest”.

 Non-violent Nature of Offence under PMLA: Punjab and Haryana HC Grants Bail to Rajiv Rattan Dhingra Arrested in Nature Heights Infra Scam  Rajiv Rattan Dhingra vs Enforcement Directorate, Jalandhar Zonal Office CITATION:   2023 TAXSCAN (HC) 1196

The Punjab and Haryana High Court granted bail to Rajiv Rattan Dhingra arrested in Nature Heights Infra Scam taking into consideration the non-violent nature of offence under the Prevention of Money Laundering Act, 2002 (PMLA).
That apart, the alleged crime purportedly committed by the petitioner is non-violent in nature. In case, he is released on bail, there is no likely threat to the society. Since challan has been filed and trial has commenced, petitioner is not required for any custodial interrogation” the Court said.

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