This weekly round-up analytically summarises the key tax judgments of the Supreme Court and all High Courts reported at Taxscan.in during the previous week from November 4 to November 10, 2023.
The Supreme Court directed the Reserve Bank India(RBI)to revoke the banking license and struck down the State declaration on Kerala State Co-Operative Agricultural And Rural Development Bank Ltd(KSCARDB) as a Cooperative Bank.
A two-judge bench comprising Justice Nagarathna and Justice Ujjal Bhuyan observed that “Although the appellant society is an apex cooperative society within the meaning of the State Act, 1984, it is not a co-operative bank within the meaning of Section 5(b) read with Section 56 of the BR Act, 1949.” The Court set aside the order of the Kerala High Court and allowed the appeal.
In a significant case the Kerala high court while allowing the revision petition filed by the petitioner observed that appeal against the offence punishable under Section 132 of the Custom Act 1962 disposed of without hearing the petitioner.
Therefore, the bench allowed the revision petition. S.Manu, Standing Counsel, Central Board Of Excise appeared for respondent and Advs. Manu Tom Balamurali K.P. K.R.Jithin M.B.Soori Shaji T.M. Renil Iqubal K. Haripriya.M appeared for the petitioner.
In a significant case, the Delhi high court observed that no proceedings should be initiated by State Goods and Service Tax / Union Goods and Service Tax officers if the Central Goods and State Tax initiates investigation on the same Matter.
It was observed by the court that where a proper officer under the CGST Act had initiated proceedings on a subject matter, no proceedings would be initiated by a proper officer authorized under the SGST Act or UGST Act on the same subject matter. Thus, the object of Section 6(2)(b) of the GST Act is to ensure that cross-empowerment of officers of central tax and state tax do not result in the taxpayers being subjected to parallel proceedings. However the court cannot accept the provisions of Section 6(2)(b) of the Act prescribing the transfer of investigations or proceedings as is contended on behalf of the petitioner. The object of Section 6(2)(b) of the Act is to avoid multiple proceedings by State Tax Officers and Central Tax Officers on the same subject matter. After analyzing the facts and arguments of the both parties, the division bench of Vibhu Bakhru and Amit Mahajan observed that the subject matter of the two investigations conducted by the DGGI and CGST Commissionerate is slightly different. Therefore, the CGST Commissionerate agreed to the DGGI continuing the investigation from the stage. Anjali Jha Manish, Priyadarshi Manish, Divya Rastogi and Anmol Arya, Advocates who appeared for petitioner. Ajit Kumar Kalia and Abhinav Kalia advocates appeared for CGST Commissionerate.
The Gujarat High Court has held that Section 56(2)(vii)(c) Income Tax Act, 1961 is not invokable when new shares are issued. The court held that the issue of new shares by the company as a right is a creation of property, and merely receiving such shares cannot be considered a transfer under Section 56(2)(vii)(c) of the act.
A division bench comprising Justice Biren Vaishnav and Justice Bhargav D Karia held that “no question of law, much less any substantial question of law would arise from the impugned common judgement and order passed by the Tribunal. Both the appeals are accordingly, dismissed with no orders as to costs. “
Vodafone Idea has received relief from the Bombay High Court, which has instructed the Income Tax authorities to reimburse the prepaid taxes amounting to Rs. 1128.47 crores. Additionally, the court invalidated the assessment order dated August 31, 2023, issued by the Faceless Assessing Officer (FAO) on the grounds of being time-barred.
The Court ruled that “we have no hesitation in holding that the assessment order dated 31st August 2023 passed by FAO two years after the DRP directions, is time barred and cannot be sustained. Consequently, the ROI as filed has to be accepted. Petitioner is entitled to receive the refund together with interest, in accordance with law. The procedure to be completed within 30 days of this order being unloaded. This would, however, not preclude revenue, should the need arise, from reopening the assessment by following due process and in accordance with law.” Further added that “we strongly recommend that a detailed enquiry be initiated on the failure on the part of the Faceless Assessing Officer concerned to act in accordance with the provisions of the Act and the lack of diligence on the part of officials concerned and the system itself insofar as it relates to the present assessment. Strict action should be taken against persons responsible for the laxity and lethargy displayed which has caused a huge loss to the exchequer and in turn to the citizens of this country.”
The Delhi Bench of High court has upheld the deletion of addition under Section 68 of Income Tax ACT 1961 holding that creditworthiness could be ascertained only from availability of funds and not from the period of existence and revenue earing.
The Bench further observed that the argument advanced by revenue, that the onus was on the respondent/company to further demonstrate creditworthiness of the source of source, was flawed as per the amendment in law with regard to the identifying source of source was inserted by way of a proviso to Section 68 of the Income Tax Act with effect from 01.04.2013. Therefore, this obligation in law could not be cast on the respondent/assessee, although it did identify the source of source. The Bench held that no interference was called for with the impugned order passed by the Tribunal as no substantial question of law arises for consideration.
The Orissa High Court simultaneously disposed of 245 writ petitions citing the Central Government notification on Goods and Services Tax (GST) appeals amnesty scheme. The bench of Acting Chief Justice Dr. B.R. Sarangi and Justice M.S. Raman had set aside all contested orders linked to these writ petitions, subsequently remanded the cases to the appellate tribunal.
The bench, noting the central government notification of GST appeals amnesty scheme concluded that “the impugned orders, against which the writ petitions are filed, are set aside and the matters are now remanded to the Appellate Authority to proceed with it in accordance with law. As such, by virtue of either of the interim order passed by this Court or in suo motu the Petitioners, who have deposited the entire amount of tax that should be taken into account while deciding the cases on merit and the refund, if any, would be subject to the outcome of the appeal itself.”
The Gauhati High Court Show Cause Notice (SCN) issued under the Central Goods and Services Tax Act, 2017 (CGST Act) lacks jurisdiction as an order under Section 65(6) of the Act had already been passed.
A single bench of Justice Manish Choudhury observed that if no order has been passed on or before 28.10.2023 or subsequent thereto till date, the status quo as regards the proceedings stated to be drawn up vide the Show Cause Notice dated 28.09.2023, be maintained till the next date of listing.
The Bombay High Court set aside order of Nashik Municipal Corporation wherein the tender on work of spraying and fogging was allowed based on a Fake Chartered Accountant (CA) certificate.
The Court held that “the decision-making process adopted in this case by the Additional Commissioner of the Nashik Municipal Corporation/ Respondent No.1 declaring Respondent No.2 to have technically qualified, was not fair or reasonable.” While allowing the Writ Petition, the court quashed the decision declaring Respondent No.2 to be technically qualified and respondent No.1 / Nashik Municipal Corporation is directed to reissue the tender and process the same in the minimum possible time as per the requirement. Mr. Mihir Desai, Senior Advocate appeared for the Petitioner, Mr. M.L. Patil appeared Respondent No.1 and Mr. R. S. Kohli appeared on behalf of Respondent No.2.
The Jharkhand High Court quashed the criminal proceedings under the Income Tax Act, 1961 as the income tax refund was adjusted against outstanding demands.
The Court of Justice Sanjay Kumar Dwivedi held that “the entire criminal proceedings arising out of Complaint Case No.09 of 2012 including the order taking cognizance dated 04.06.2012 passed by the learned Special Judge, Economic Offences, Ranchi, pending in the Court of the learned Special Judge VII, Economic Offences, Ranchi is quashed.”
In a significant case, the Calcutta High Court held that customs officers have no authority to declare title of properties of any kind. Vires could have been challenged in appropriate forum, exercising ordinary jurisdiction, this Court cannot decide on the same.
A single bench of Justice Sugato Majumdar observed that “Civil Court in exercise of ordinary jurisdiction cannot decide on the propriety of search and seizure; civil court in exercise of ordinary civil jurisdiction is neither authorized nor vested with such power. Similarly, the prohibitory order was passed in exercise of power conferred under the then existing Income Tax Act. Vires could have been challenged in appropriate forum. But exercising ordinary jurisdiction, this Court cannot decide on the same.”
The Andhra Pradesh High Court allowed a refund on rectification of mistake Vas the Vodafone was unable to claim Income Tax Credit (ITC) on Integrated Goods and Service Tax (IGST) paid due to an error.
A division bench of Justice C Praveen Kumar and Justice A V Ravindra Babu observed that as the Circular of the year 2019 restricted only electronic filing and as the contention of the respondents that the claim of the petitioner is barred by limitation is not acceptable, the respondents cannot retain the amount, which was paid by the petitioner. Under the circumstances, we are of the considered view that the petitioner is entitled to the relief. The Writ Petition is allowed setting aside the communication of the Superintendent of Central GST, Bhimavaram Range vide his Reference in OC No.151/2021, dated 26.02.2021, and directing the petitioner to make an application in manual form for refund of the amount to which he is entitled to and the respondents are directed to pass orders by law, within four (4) weeks.
In a significant case, the Gujarat High Court has held that penalty under section 271 (1)(c) of the Income Tax Act, 1961 cannot be invoked in the absence of material establishing concealing of income.
A division bench comprising of Justice Biren Vaishnav and Justice Mauna M Bhatt observed that “as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not.” “Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1) (c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c).”, the bench concluded The Court dismissed the appeals as there were no questions of law much less substantial questions of law involved.
The Jharkhand High Court has held that 7 Years for adjudication proceedings under section 73(1) of the Finance Act, 1994 is not a reasonable period.
A division bench comprising Justice Rongon Mukhopadhyay and Justice Deepak Roshan observed that a period of more than 7 years from the issuance of the impugned Show Cause Notice on 24-12-2014 cannot be said to be a reasonable period for taking up/concluding adjudication proceedings. Section 73(1)/ 73(4) of Chapter V of the Finance Act, 1994 provides 5 years as a maximum period which in any case should be taken as a reasonable period within which the adjudication should be completed. The Court quashed the impugned notice and allowed the appeal.
The Delhi High Court set aside the assessment order as the hearing before the Commissioner of Income Tax (Appeal) (CIT(A)) got disrupted as audio was absent during the video conference.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia set aside the impugned assessment orders. The Assessing Officer (AO) was given the liberty to pass a fresh assessment order after according personal hearing with the petitioner and/or his authorized representative.
The Delhi High Court in a recent case, stayed the time-barred notice issued under section 148 of the Income Tax Act, 1961.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia directed to list the matter on 17.10.2023 and there shall be a stay on the operation of the impugned notice dated 13.03.2023, till further directions of the court.
The Delhi High Court closed the appeal as the Income Tax dues were before the approval of the resolution plan by the National Company Law Tribunal (NCLT).
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the period before the approval of the resolution plan by the NCLT, in which no provision has been made for statutory dues, the continuation of this appeal would serve no purpose. The court in these matters adopted a “clean slate” approach and closed the appeal.
The Delhi High Court in the case of Nokia Corporation directed to issue an income tax refund based on an indemnity bond.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia disposed of the writ petition with a direction that the respondent/revenue will endeavour to locate the record and verify the claim. In case they are unable to locate their record, they will proceed with the information furnished by the petitioner and release the money based on the indemnity bond furnished by the petitioner. “Since respondents/revenue have already verified a part of the refund claim, amounting to Rs. 38,58,05,020/- (inclusive of interest), the respondents/revenue will ensure that remittance qua this amount is made to the petitioner/assessee within the next four (4) weeks. “, the bench concluded.
The Delhi High Court remanded the matter for re-adjudication of miscellaneous application to rectify the defect in the assessment of share valuation under the Income Tax Act, 1961.
A two-member bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia set aside the impugned order and the miscellaneous application was restored to its original number and position. The Tribunal is directed to pass a fresh order, after hearing the counsel for the parties.
The Delhi High Court directed the Central Board of Direct Taxes (CBDT) to decide on three alternatives for an Income tax refund after considering the revised return filed by the assessee.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia disposed of the writ petition with a direction to the CBDT to examine the three alternatives placed before us by the petitioner. The CBDT will, thereafter, decide as to what would be the best way forward. The CBDT is requested to pass a reasoned order. “Since the issue has been hanging fire for nearly one year, the CBDT is requested to decide this matter as expeditiously as possible though not later than ten (10) weeks from the date of receipt of a copy of the order.”, the bench concluded.
The Delhi High Court held that the notice issued under section 148 Income Tax Act, 1961 on the last date of the limitation period was not time barred and dismissed the petition.
The Court viewed that “one month from the end of the month in which the time available to the assessee to respond to the notice under Clause (b) of Section 148A expires, is available to the Assessing Officer to pass an order under clause (d) of Section 148A of the Act only within the rubric of Section 149 of Act, that is, within the overall time available in terms of Section 149(1) of the Act for issuance of a notice under Section 148 of the Act. This is because a notice under Section 148 of the Act which is not accompanied with the order under Clause (d) of Section 148 of the Act would be non-compliant with the Act. And, no such notice can be issued beyond the period as specified under Section 149(1) of the Act.” The Court dismissed the review petition as no ground to review the order.
The Delhi High Court upheld the deletion of disallowance under Section 80M of the Income Tax Act, 1961 thereby granting relief to SIL Investments Ltd.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia held that “This is a finding of fact that remains undisturbed and, therefore, in our view, the deletion of disallowance ordered by the CIT(A) and the Tribunal under Section 80M was correct.”
The Delhi High Court ruled that the power of the Enforcement Directorate (ED) to issue summons under Section 50 the Prevention of Money Laundering Act, 2002 (PMLA) does not include power to make arrest.
“The power under section 50 of the PMLA to issue summons to a person and to require the production of documents and record statements, which is akin to the powers of a civil court, is different and distinct from the power under section 19 to arrest a person. These are two separate and distinct provisions. The exercise of the powers under one, cannot be restrained on the apprehension that it could lead to the exercise of powers under the other. If that is permitted, any and every person summonsed under section 50 of the PMLA, to produce documents or give a statement on oath, could resist such summons expressing mere apprehension that he may face arrest at the hands of the ED, in exercise of the powers under section 19 of the PMLA. Such a position would be antithetic to the statutory scheme” the Court concluded.
Reopening of Closed Assessment which had reached Culmination: Delhi HC quashes Income Tax Notice ARUN KHANNA vs ITO 2023 TAXSCAN (HC) 1695
The Delhi High Court quashed income tax notice on the ground of reopening of closed assessment which had reached culmination.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “Thus, without any actionable material, the AO embarked on a journey to reopen, in a sense, a closed assessment which had reached culmination via order dated 22.03.2022, at least at the point in time when notice under Section 148A(b) of the Income Tax Act was issued.” “It is ordered accordingly. The impugned order dated 19.07.2022 passed under Section 148A(d) and the consequential notice of even date, i.e., 19.07.2022, issued under Section 148 of the Act shall stand quashed” the Court concluded.
The Delhi High Court upheld the Chinese National’s, Guangwen Kuang @ Andrew, remand to Enforcement Directorate in the much celebrated Vivo Prevention of Money Laundering Act, 2003 (PMLA) Case.
A Single Bench of Justice Swarana Kanta Sharma observed that “In these circumstances, this Court does not find any infirmity in the order of remand dated 10.10.2023 challenged before this Court as the same takes into account the mandate of compliance of provisions of Section 19 of PMLA as well as Section 45 of PMLA. It is also clear from the order and the remand application itself that the reasons and grounds for arrest of the present petitioner are not merely confined to their non-cooperation and evasive replies, but also record the grounds as discussed in the preceding paragraphs of this order.”
In a recent judgment the Kerala High Court directed to deposit arrears of tax in six equal monthly instalments on noticing GST dues.
A Single Bench of Justice Dinesh Kumar Singh observed that “the present writ petition is disposed of with a direction to the petitioner to deposit arrears of tax in six equal monthly instalments, the first of which shall be paid on or before 10.11.2023, and the other instalments shall be paid on or before 10th of every subsequent five months. If the petitioner commits default in making payment of any of the instalments, the respondents can initiate proceedings to collect the same.”
The Delhi High Court upheld the disallowance amounting to Rupees 5 crores on bad debts as they were obtained from predecessor-in-interest.
A Division Bench comprising Justice Rajiv Shakdher and Girish Kathpalia observed that “The Commissioner of Income Tax [“CIT(A)”] via his order dated 20.11.2015 has ruled in favour of the respondent/assessee. 6.1 This view has been sustained by the Tribunal. According to us, this issue is no longer res integra, given the factual matrix arising in the instant matter and in view of the judgment rendered by the Supreme Court in Commissioner of Income Tax v. T. Veerabhadra Rao. This view has also found resonance with a judgment rendered by the coordinate bench of this court in CIT v. Times Business Solution Ltd.” “Having regard to the factual position and the legal principles enunciated in the judgments referred to hereinabove, we are of the opinion that no interference is called for with the impugned order. The disallowance concerning bad debts amounting to Rs.5,96,20,438/- was correctly deleted” the Court noted.
The Delhi High Court has held that the exclusion of comparables become valid as failed to demonstrate a change in circumstance from the earlier financial year and dismissed the petition of the Income Tax department.
A division bench comprising of Justice Rajiv Shakdher and Justice Girish Kathpalia viewed that besides, the appellant/revenue has not been able to demonstrate change, if any, in circumstances qua the respondent/assessee and/or any of the comparables in the financial year in question vis-à-vis the earlier years. There is not even a whisper alleging any such change while calling upon a fresh analysis of comparability.
The Delhi High Court Resale Price Method (RPM) is the Most Appropriate Method(MOM) for Ascertaining Arm’s Length Price (ALP) as the distributor did not make any value addition to the goods.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia viewed that the tribunal concluded that the business of the assessee was merely that of a pure trader, and there was no value addition made before re-selling the particular products (i.e. the SIM cards), its consequent finding that RPM is the Most Appropriate Method, is irreproachable. The Court upheld the order of the Tribunal.
The Delhi High Court set aside the notice issued under section 148 of the Income Tax Act, 1961 in an allegation of bogus transaction in the absence of Corroborative Evidence is invalid.
A division bench Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the best option available to the AO would be to go back to the drawing board and if deemed necessary, reinitiate the proceedings against the petitioners/assessees, albeit, as per law. The Court set aside the impugned notices and ordered with liberty the AO to recommence the proceedings.
The Delhi High Court held that the expense of technology used to carry on business is revenue expenditure.
It was evident that the AO had in allowing the expenditure claimed by the respondent/assessee that the said amount had been spent in building a brand for future utilization which was, according to him, an intangible asset, as per the Accounting Standard-26 issued by the Institute of Chartered Accountants. The AO viewed that since there is no income chargeable under Section 28 of the Act, therefore, no expenses could be claimed by an assessee under Sections 30 to 37 of the Act, which was not correct. A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia upheld the order of the Tribunal and dismissed the Writ petition.
The Delhi High Court set aside the demand for a penalty as the deletion of the amount added u/s 68 of the Income Tax Act, 1961 in consonance with the National Company Law Tribunal (NCLT) order.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “Since the revenue failed to lodge its claims, the impugned demands raised by the revenue stand automatically extinguished.” It was held that the submission made on behalf of the revenue that it should be allowed to enforce the impugned orders and notices is misconceived in law.”
In a recent case, the Delhi High Court held that the entertainment tax is leviable on the payment received as admission fee in the form of tickets for fashion shows, theatre Shows, and movies.
The Bench observed that in the case of Hotel Rajdoot Pvt. Ltd, the court held that Section 2(3) of the U.P Entertainment and Betting Tax Act,1937 defined the word “entertainment” to include any exhibition, performance, amusement, game, or sport to which persons are admitted for payment. The Entertainment tax was leviable on the coverage/fixed entry charges to access the discotheque and the assessee may also be imposed with a levy of entertainment tax wherever people are allowed free of charge inside the complex under Section 14 of the Delhi Entertainment and Betting Tax Act. The two-member bench comprising Yashwant Varma, J, and Dharmesh Sharma, J held that the respondent is liable to pay entertainment tax for the charges received in the form of tickets of movies and fashion shows for the assessment years 1998 to 1999 while allowing the writ petition.
The Gujarat High Court upheld the discharge of oil companies decided by the Special Judge (CBI) for selling High-Speed Diesel (HSD) at a concessional rate of sales tax on the grounds of absence of grave suspicion.
A single-member bench Sandeep Bhatt held that the the accused are rightly discharged by the Special Judge (CBI) as there are no sufficient grounds for proceedings against them and the Special Criminal Applications fail merits and are dismissed.
The Delhi High Court has held that safe harbour rates and margins apply only if an assessee has opted for them.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the Tribunal has adverted to the notification dated 18.09.2013. This notification, on the face of it, can have no application in the instant case, as the period in issue is AY 2011-12. It was noted that the guidelines issued by the CBDT dated 20.12.2013 made it clear that safe harbour rates and margins would apply only if an assessee has opted for them. Further held that the safe harbour rules don’t have retrospective application. The appeal is closed as no substantial question of law arises for consideration.
The Delhi High Court held that disallowance under section 14A of Income Tax Act, 1961 Can be triggered where no exempt income has been earned and upheld the deletion of disallowance.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “the other issue, i.e., whether the Finance Act, 2022 could have retrospective effect, the said aspect also stands covered by the judgment rendered by a coordinate bench of this court in Principal Commissioner of Income Tax (Central)-2 v. M/s Era Infrastructure (India) Ltd. The Court dismissed the appeal as there was no substantial question of law arose for consideration.
In the case of Tata Steel Limited, the Delhi High Court held that revenue failed to lodge a claim under the Insolvency Bankruptcy Code (IBC) before the Resolution Process(RP) notice demanding income tax is not valid.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the claim in respect of the demand which is the subject matter of the present proceedings was not lodged by respondent no. 2 after public announcements were issued under Sections 13 and 15 of the IBC. As such, on the date on which the Resolution Plan was approved by the NCLT, all claims stood frozen, and no claim, which is not a part of the Resolution Plan, would survive. The Court set aside the impugned notice and order.
The Jharkhand High Court has held that the circulars or instructions issued by the Central Board of Indirect Taxes and Customs (CBIC) are legally binding and violation of the same can trigger legal action against the service tax department. The Commissioner was directed to take a fresh decision after giving an opportunity of hearing as the impugned order has been passed against the prescribed period as indicated in the Circular.
Since there was no prior notice served to the Petitioner for the alleged personal hearings on 20.01.2022 and 08.03.2022, both the alleged personal hearings are in contravention of Clause 14.3 of the said Circular. Thus, both the alleged personal hearings cannot be considered to be valid personal hearings. The last personal hearing, as provided in the Impugned Order, for which notice was served to the Petitioner was on 23.12.2021. The bench comprising Justice Rongon Mukhopadhyay and Justice Deepak Roshan remitted the matter back to respondent No.4 to pass a fresh order after giving the opportunity of a personal hearing to the petitioner and pass a fresh order.
In a recent case, the Kerala High Court held that the cooperative banks engaged in banking activity are subject to the overall control of the Reserve Bank of India.
A single-member bench Gopinath P held that Sections 14A and 74-H of the Kerala Co-operative Societies Act are not unconstitutional and beyond the legislative competence of the State Legislature cannot be granted.
In a significant legal development, the Gujarat High Court presided over by Justice Biren Vaishnav and Justice Mauna M. Bhat, stayed the Goods and Services Tax (GST) Show Cause Notice (SCN) in the case where the court is set to determine whether fantasy gaming should be categorised as an actionable claim related to skill-based activities or as betting and gambling. The court has issued a notice returnable on January 17, 2024.
The bench hearing both sides stated that “we are of the view that the question whether online gaming as so done by the petitioner would tantamount to betting/gambling requires to be considered in extenso.” Further added that “Hence, notice returnable on 17.01.2024. Pending the petition there shall be ad-interim relief inasmuch as the respondents are restrained from taking any further steps on the adjudication of the show cause notice. It shall however be open to the petitioner to file a response to the show cause notice.”
The Gujarat High Court quashed income tax notice issued on violation of natural justice principles, thereby granting relief to Triokaa Pharmaceuticals Limited.
A Division Bench of Justices Biren Vaishnav and Justice Bhargav D Karia observed that “The petitioner filed an application for adjournment which was updated on ITBA portal however the Assessment Order dated 19.09.2021 under Section 143(3) read with Section 144B and 147 of the Income Tax Act was passed by making an addition of the commission paid to foreign nationals / agents amounting to Rs.63,74,736/- without deduction of tax (TDS) and raised a demand of Rs.5,13,54,720 vide demand notice issued under Section 156 of the Income Tax Act,1961. The exercise on the face of it was undertaken in gross violation of principles of natural justice.” “The narration hereinabove would indicate that since the notice under Section 148 of the Income Tax Act,1961 dated 6.3.2020 was flawed for the reasons aforesaid, the consequential effect thereof would be that the order disposing off objections dated 31.8.2021 and the Assessment Order dated 19.09.2021 are held to be bad” the Court concluded.
The Allahabad High Court recently ruled that the scope of decision under Section 148A(d) of the Income Tax Act, 1961 is limited to existence or information that income chargeable to tax has escaped assessment.
A Division Bench comprising Justices Ashutosh Srivastava and Pritinker Diwaker observed that “Merits of the information referable to Section 148A thus remains subject to the reassessment proceedings initiated vide notice under Section 148 of the Act. It is for this reason that issues which require determination at the stage of reassessment proceedings and in respect of which departmental remedy is otherwise available are not required to be determined at the stage of decision by the assessing authority under Section 149A(d). The scope of decision under Section 148A(d) is limited to the existence or otherwise of information which suggests that income chargeable to tax has escaped assessment.”
The Kerala High Court directed to approach the appellate authority under Section 107 of the Goods and Service Tax Act, 2017 (GST Act) in a writ petition to grant permission to rectify error in affording Form GSTR-3B.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the facts that paragraph 4 of the circular No. 26/26/2017-GST has been read down and it has been stated that the assessee can rectify the mistake in respect of the period in which it is granted. Subsequently, this is the law which has been taken note in several judgments. Question here is of disputed question of fact and this Court cannot be expected to decide the disputed question of fact within the jurisdiction under Article 226 of the Constitution of India.” “Therefore, this writ petition is disposed of with liberty to the petitioner to approach the appellate authority under Section 107 of the GST Act against the impugned order. If the petitioner submits all the documents in his favour before the appellate authority, the authority will examine it in accordance with law and pass an order accordingly” the Court concluded.
The Delhi High Court confirmed no upward adjustment is required on the existence of international transaction on account of receivables.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “Insofar as the grievance with regard to the Tribunal remanding the issue of selected comparables to the file of TPO is concerned, we are informed by Mr Agrawal that in the appeal effect proceedings, the TPO via order dated 28.12.2019 after computing the adjustment on account of selection of comparables has concluded that no upward adjustment is required to be made” “Insofar as the other grievance is concerned, as indicated above, Mr Agrawal states that in the appeal effect proceedings, the adjustment was recomputed. Thus, the adjustment made for AY 2010-11 after rectification via order dated 10.08.2020, has been recomputed and pegged at Rs.4,42,972/-. Since the amount is small, Mr Agrawal says that the grievance as articulated above is not being carried forward by the appellant/assessee” the Court concluded.
The Delhi High Court quashed the order of the Customs Department classifying Imported Gold Coins under head ‘Coins’ of the Customs Tariff Act,1975 (CTA).
A Division Bench comprising Justices Yashwant Varma and Dharmesh Sharma observed that “We are thus of the firm opinion that the Principal Commissioner has clearly committed a manifest error while viewing the judgment rendered in Khandwala Enterprise and proceeding on the assumption that the contentions raised by the petitioner already stood conclusively answered by the Court. The aforesaid premise is clearly based on an incorrect reading of that decision. The Principal Commissioner has also clearly erred in failing to appreciate the import of the explanatory notes which stand placed along with CTH 7118 9000 and ignoring the binding character of those notes.”
In a major relief to M/s. TNS India Private Limited, the Telangana High Court quashed orders passed beyond period of limitation prescribed under sub-section (2A) of Section 153 of the Income Tax Act, 1961.
A Division Bench comprising Justice P Sam Koshy and Justice Laxmi Narayana Alishetty observed that “From plain reading of the judicial pronouncements and precedents in the preceding paragraphs and the findings given by this Court, we are of the considered opinion that the proceedings drawn, admittedly being beyond a period that is prescribed under sub-section (2A) of Section 153 and the consequential orders passed are all beyond the period of limitation prescribed under sub-section (2A) of Section 153. Hence, the same being not sustainable, deserves to be and is accordingly set aside/quashed.”
The Delhi High Court confirmed the penalty of the Indian Revenue Service Officer (Customs & Central Excise) for over staying study leave for almost 6 years.
A Division Bench comprising Justices V Kameswar Rao and Anoop Kumar Mendiratta observed that “We find that the order of the Tribunal is justified for more than one reason; (i) a charge sheet was issued to the petitioner for over staying the study leave for almost 6 years w.e.f. 2003; and (ii) he without prior permission undertook another course. The charge sheet resulted in the charges as proved, should be taken to its logical end and for that purpose the order dated June 10, 2013 was passed whereby, the Disciplinary Authority has imposed the penalty on the petitioner.” “Regrettably, for the reasons best known, the said order was not given effect to for almost 4 years when the order dated November 16, 2017 was issued. It appears that the same was issued on realising that the order dated June 10, 2013 has not been implemented. It is in furtherance of the order dated June 10, 2013 that the order dated November 16, 2017, was issued, surely suggest that the said order is for the implementation of order on misconduct committed by the petitioner. The misconduct having been proved, the same need to be taken to its logical end by imposing penalty and giving effect to the same” the Court concluded.
The writ petition filed against the Insolvency and Bankruptcy Board of India (IBBI) has been dismissed by a Single bench, Justice Subramonium Prasad of the Delhi High Court. The court’s decision rested on the absence of any evident miscarriage of justice and a lack of fault found in the board’s decision-making process.
The High Court finally observed that “this Court does not find that the decision making process adopted by the Board or the decision based on the final report is perverse or is contrary to law or against public interest, which would warrant interference from this Court under Article 226 of the Constitution of India. Court while exercising its jurisdiction under Article 226 of the Constitution of India while examining any enquiry report does not go into excruciating detailed facts nor does it substitute its conclusion to the one arrived at by the fact finding body. If the process adopted in the enquiry is fair, reasonable and transparent then the Writ Court does not interfere with the findings to substitute its own conclusion to the one arrived at by the authority simply because another view is possible.”
The Kerala High Court dismissed the writ petition, noting that the provision of appeal under Section 65 of the Kerala Value Added Tax Act, 2003 (KVAT Act) to be availed for filing appeal against assessment order.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the availability of remedy of appeal, this Court is not inclined to entertain this writ petition. Hence this writ petition is hereby dismissed. However, the petitioner is granted liberty to file appeal against the impugned order.” “If the petitioner files the appeal within fifteen days from today, he shall not be insisted upon for deposit 10% pre-deposit as according to the petitioner in the first round of appeal, he had already made deposit of 10%. If he had already deposited 10%, the second time against impugned order the petitioner shall not be insisted upon for making deposit of the 10%. If the petitioner files the appeal within fifteen days from today, the same shall be heard and decided expeditiously in accordance with law” the Court concluded.
Reassessment Proceedings can be Triggered only when Notice u/s 148 of Income Tax Act has been issued and served: Delhi HC THE PR. COMMISSIONER OF INCOME TAX vs MADHU GUPTA 2023 TAXSCAN (HC) 1669
The Delhi High Court observed that the reassessment proceedings can be triggered only when notice under Section 148 of Income Tax Act, 1961 has been issued and served.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “The reassessment proceedings can be triggered only when a notice under Section 148 of the Income Tax Act has been issued and served on the concerned assessee. This is a finding of fact. Both the CIT(A) as well as the Tribunal have come to a definitive conclusion that the service of notice under Section 148 of the Income Tax Act was not effected on the respondent/assessee.” “Therefore, according to us, no interference is called for with the impugned order dated 21.08.2020 passed by the Tribunal. The Tribunal has returned, as indicated above, a finding of fact. Thus, no substantial question of law arises for our consideration” the Court concluded.
The Delhi High Court upheld the order of the Income Tax Appellate Tribunal (ITAT) on deletion of disallowance of engineering fees as there was no material basis for discrediting debit notes.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “The respondent/assessee only remitted the engineering fee to the head office. There is no dispute with regard to the fact that the debit note provided sufficient information as noted above, not only concerning the names of the employees, but also as to the nature of duties and number of hours that they spent on the job assigned to them.” “The Tribunal is the final fact-finding authority, no interference is called for, especially in the circumstance where the appellant/revenue has not proposed any question which is indicative of the fact that any of the findings returned by the Tribunal is perverse” the Court concluded.
The Kerala High Court dismissed the writ petition on acceptance to approach authority concerned under GST Amnesty Scheme.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the said submission of the counsel for the petitioner, the writ petition is dismissed as withdrawn with liberty as above prayed for.”
A Single bench of the Delhi High Court, while disposing the writ petition, has overturned the dismissal order issued by the Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI). The committee had dismissed a complaint lodged by a financial services company under Section 21B of the Chartered Accountants Act, 1949, citing the non-appearance of the complainant’s directors.
The bench of Justice Subramonium Prasad observed that “To cut the matter short and with the consent of both sides, this Court deems it expedient to set aside the impugned order and direct the authorized representative of the company along with the Directors to appear before the Disciplinary Committee as and when a notice is received for the appearance by them. On receipt of the said notice, the authorized representative and the Directors of the company shall appear on the fixed date of hearing, as per the notice and the Respondent/Committee shall proceed further in the investigation as per the Rules, 2007.” Further, instructed the authorized representative of the company to bring all relevant documents in their possession to the Committee, including those already submitted before the committee for further proceedings. The court made clear that the court has not made any observation on the merits of the case.
Gujarat HC allows Concessional Tax Benefit as Form No.10-IC Couldn’t Uploaded on ITBA Portal Due to Technical Glitches PRINCIPAL COMMISSIONER OF INCOME TAX vs KGY GLASS INDUSTRIES (P) LTD 2023 TAXSCAN (HC) 1663
In a recent case, the Gujarat High Court upheld the allowance of concessional tax benefit by the Income Tax Appellate Tribunal(ITAT) as Form No.10-IC couldn’t uploaded on the ITBA portal due to technical glitches.
A division bench of Justice Biren Vaishnav and Justice Mauna M Bhatt observed that the assessee while filing a return of income opted to be taxed as per provisions of Section 115BBA of the Act. However, it could not upload Form No.10-IC on account of a technical problem on the ITBA portal at the relevant time. During the relevant period, the time to file Form 10IC was extended up to 30.06.2022. The assessee filed such a Form before the Assessing Officer on 29.06.2022. Further held that “since the assessee could not upload Form No.10-IC, on ITBA portal on account of technical error, there being no fault of the assessee, it could not be deprived of benefit particularly when this being the first year for availing such benefits.” The Court dismissed the writ petition.
The Gujarat High Court has stayed the order for recovery of dues because, as there was a challenge before the Goods and Service Tax Appellate Tribunal (GSTAT). It was found that the though the Tribunal is constituted, it is still not functioning.
A division bench of Justice Biren Vaishnav and Justice Mauna M Bhatt stayed the order initiating steps of recovery.
The Delhi High Court has upheld the deletion of penalty on the failure to clarify as to which limb of Section 271(1)(c) of the Income Tax Act attracted the imposition of penalty.
The Division Bench of Justice Rajiv Shakdher and Justice Girish Kathpalia noted that Section 271(1)(c) of the Income Tax Act, permits the AO to levy penalty, either for concealment of particulars of income or where the assessee furnishes inaccurate particulars of income. There was a third possibility, that was perhaps, the available to the AO to impose penalty on both counts if such facts in a given matter. A perusal of the notice would show, something which the Tribunal had also recorded, that the AO did not indicate to the respondent/assessee as to whether this was a case of concealment of particulars or furnishing inaccurate particulars or even, as indicated above, the case where both charges were sought to be levelled against the respondent/assessee. The Bench observed that the penalty order, as a matter of fact, injects greater confusion in this behalf.
The Delhi High Court while considering the revenue’s petition challenging the exclusion of comparables, had upheld the Order of Income Tax Appellate Tribunal (ITAT) excluding Comparables in Transfer of Pricing (TOP).
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia view that no interference with the impugned order is called for. Also, we find that no substantial question of law arises for our consideration.
The Delhi High Court in a recent judgement set aside the reassessment order under the Income Tax Act, 1961. The Reassessment was triggered mistakenly on a typographical error in the account number of the petitioner assessee.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia set aside the impugned order passed under Section 148A(d) and consequential notice issued under Section 148 of the Income Tax Act, 1961.
The Delhi High Court ruled that no penalty under the Income Tax Act, 1961 in the absence of concealment of Income and upheld the order of the Income Tax Appellate Tribunal (ITAT).
The AO fully allowed the deduction claimed by the respondent/assessee under Section 36(1)(viia) of the Income Tax Act, 1961. It is required to be noticed that, insofar as disallowance under Section 115(3) of the Act was concerned, the Tribunal, in quantum proceedings, in the order dated 30.01.2017, had directed the AO to recompute the same as per the formula mentioned in the order. Since the assessee had neither furnished inaccurate particulars nor did it conceal income, a penalty could not be levied on that score, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia agreed with the view of the Tribunal. As there is no substantial question of law arises for our consideration, the court closed the appeal.
The Delhi High Court upheld the order of the Income Tax Appellate Tribunal (ITAT) wherein it was held that training expenses on skill development were not to be disallowed treating it as a deferred expense.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia upheld that the view taken by the Tribunal is correct in light of the judgement in CIT(A) vs. Samsung India Electronic Limited. The Court closed the petition as the impugned order requires no interference.
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