This weekly round-up analytically summarizes the key stories related to the Supreme Court and High Courts reported at Taxscan.in during the previous week from July 24 to July 30, 2022
The division bench of the Delhi High Court has held that there was no proof of payment from the debtor and upholds deduction of bad debts u/s 36(1)(vii).The High Court observed that the amounts claimed as bad debts had been taken into account in computing the income of the assessee in the previous year and offered for taxation and the unrecovered amounts had been written off in the books of account, thus the assessee satisfies the two conditions under section 36(1)(vii) r/w Section 36(2) of the Act to claim deduction on account of bad debts.
The division bench of the Delhi High Court has held that no addition under sections 153A and 153C if no incriminating material is found during the course of the search. The Coram of Justice Manmohan and Justice Manmeet Pritam Singh Arora by relying on the decision of the division bench of Delhi High Court in Kabul Chawla observed that if no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C of the Act.
In a major relief to M/s Jones LNG Lasalle Property Consultants (India) Private Limited, the Delhi High Court has directed the income tax department to process a refund of Rs. 355 Crore after considering the rectification applications filed in last few years.Allowing relief to the assessee, the Court held that “Accordingly, this Court set asides the impugned order dated 16th May, 2022 and directs the Respondent No.2 to decide the rectification applications filed by the Petitioner, in accordance with law within six weeks. Needless to state that if any refund is due and payable to the Petitioner, the same shall be refunded not later than eight weeks from today, in accordance with law. This Court clarifies that it has not expressed any opinion on the merit of rectification application.”
The division bench of the Delhi High Court has held that Mr. Justice Manmohan and Ms. Justice Manmeet Pritam Singh Arora has dismissed the petition and the stay application. The High Court while dismissing the petition held that observed that the ownership of the CDB is a disputed question of fact that cannot be decided and it cannot be a matter of prima facie determination as it is the material fact to be determined in the appeal filed by the petitioner. The High Court further rejected the plea of hardship for payment of 20% of the disputed amount as the petitioner has not suffered any operational losses in the relevant financial year.
The Delhi High Court presided by Justice Manmohan and Justice Manmeet Pritam Singh Arora has upheld the deletion of addition without any cogent reasoning or working. The High Court further observed that the lower authorities clearly noticed that there was a clear connection between the money borrowed and its utilization for the purposes of the business of real estate and infrastructural development. The division bench has held that “the impugned order calls for no interference as it suffers from no perversity. No substantial questions of law arise in this matter. Accordingly, the present appeal and application are dismissed”.
The Punjab and Haryana High Court has stayed a show-cause notice issued by the GST department denying export refund to an exporter on ground of “erroneous refund”. Allowing interim relief to the petitioner, Justice Tejinder Singh Dhindsa and Justice Pankaj Jain observed that “It is argued that under such circumstances the impugned show cause notice dated 15.06.2022 (Annexure P-1) cannot sustain and suffers from jurisdictional infirmity inasmuch as “tax being erroneously refunded” has been erroneously assumed.”
A division bench of the Supreme Court has upheld the ‘twin conditions’ for granting bail under the Prevention of Money Laundering Act, 2002.“The reasons which weighed with this Court in Nikesh Tarachand Shah for declaring the twin conditions in Section 45(1) of the 2002 Act, as it stood at the relevant time, as unconstitutional in no way obliterated the provision from the statute book; and it was open to the Parliament to cure the defect noted by this Court so as to revive the same provision in the existing form. (b) We are unable to agree with the observations in Nikesh Tarachand Shah707 distinguishing the enunciation of the Constitution Bench decision in Kartar Singh708; and other observations suggestive of doubting the perception of Parliament in regard to the seriousness of the offence of money-laundering, including it, posing a serious threat to the sovereignty and integrity of the country,” the bench said.
A division bench of the Calcutta High Court has held that re-assessment under section 148A of the Income Tax Act, 1961 cannot be initiated without furnishing full information on the basis of which the assessment is initiated. Directing a fresh adjudication, the Court held that “For the above reason, the writ appeal as well as the writ petition is allowed. The order under Clause (d) of Section 148 A of the Act dated 07.04.2022 is set aside and the matter is remanded to the Assessing Officer to the position when he issued notice under Section 148A(b) of the Act dated 21.03.2022. The assessee is directed to take note of the information mentioned in the order dated 07.04.2022 passed under Clause (d) of Section 148A of the Act as the basis for reopening and submit their objections within 10 days from the date of receipt of server copy of this order and on receipt of the affidavit of opposition the Assessing Officer shall proceed to complete the assessment in accordance with law.”
The Madras High Court has recently allowed a Non-Resident Indian to release the gold seized by the customs department for non-declaration holding that the same can be released as per section 125 of the Customs Act, 1962.The Court further relied on the decision in Vaibhav Sampat More vs. National Investigation Agency, through its Chief Investigation Officer wherein it was held that import of gold is not prohibited, but restricted subject to prescribed quantity on payment of duty. “Thus, import of gold is not prohibited, but restricted subject to prescribed quantity on payment of duty,” the Court observed.
The Madras High Court, while quashing an assessment under the Tamil Nadu Value Added Tax Act, 2006 has directed the VAT department to follow the procedure to be followed in the cases of Mis-match. Quashing the order, the High Court held that “let the procedure set out in the aforesaid circular be applied to the present case as well. The impugned orders of assessment are set aside to enable both parties i.e. assessee as well as department to engage in finalisation of the issue in line with circular No.5. Let the petitioner be heard, the procedure as set out in the circular be followed scrupulously and orders of assessment be passed within a period of eight weeks from the date of receipt of a copy of this order.”
The Rajasthan High Court, on Monday issued an interim order protecting a person from arrest and directed him to appear before the authorities in response to the summon received under section 70 of the Central GST Act, 2017.
The Supreme Court, on Thursday has dismissed a bunch of petitions seeking exemption from the Goods and Services Tax for the Haj and Umrah services. The petition was filed by various private tour operators seeking GST exemption on the services provided by them to pilgrims travelling to Saudi Arabia.
In a significant tax-friendly ruling, the Delhi High Court has observed that the software of the income tax department for tax payment shall be tailor-made in accordance with the taxpayer’s requirements. Allowing the petitions, Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “In the opinion of this Court, as the petitioners have paid the taxes, they should be given the credit for the challans paid in Form 3 under the said Act. The order/communication dated 7th April, 2022 rejecting credit of taxes deposited under the DTVSV Act on the hyper-technical ground that challans have been deposited under the minor head ‘200’ instead of ‘400’ is unfair, illegal and contrary to the objective of enacting the DTVSV Act, 2020.”
While denying a bail application from application allegedly obtained fraudulent input tax credit worth approximately Rs.5 Crore, the Chhattisgarh High Court has observed that the economic offences cause a serious threat to the financial health of the country and the same shall be treated as grave offences.
The Telangana High Court, while partly allowing a writ petition, has held that the Customs Act provide its own mechanism to deal with the offences and therefore, the provisions of the Criminal Procedure Code, is not applicable to such offences. Rejecting the plea of the petitioners, Justice G. Radha Rani observed that “Whenever a statute creates a new offence and also sets up a machinery for dealing with it, the provisions of Cr. P. C. relating to the matters covered by such Statute would not be applicable to the said offences. The Customs Act was enacted in 1962 and had created the offences under Chapter-XVI and the manner of enquiry and investigation are prescribed in Chapter-XIII. The Customs Act is enforced only by the Customs Officers by its own machinery. The Customs Officers are empowered with the power of investigation as contemplated under Chapter-XIII of the Customs Act, 1962. The Customs Officer is not a police officer as per the judgment of the Hon’ble Apex Court in Barkat Ram’s case (4 supra) and the statement made before him by a person who is arrested or against whom an enquiry is made are not covered by Section 25 of the Indian Evidence Act.”
The Andhra Pradesh High Court has dismissed an application for anticipatory bail filed by a Chartered Accountant in connection with the Design Tech scam worth 371 Crores, holding that granting anticipatory bail in economic offenses at the stage of the investigation will hamper the effective investigation. Rakesh
The Bombay High Court has quashed a cryptic order passed by the tax department denying the benefit of amnesty under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS) 2019 holding the same as invalid.A division bench comprising Justice K. R. Shriram & Justice Milind N. Jadhav observed that “We have perused the Form SVLDRS-1 issued by respondent No.2 wherein the remarks it only states “investigation already initiated by department”.
A division bench of the Madhya Pradesh High Court has struck down clause 6.3 of the Trade Notice wherein the central excise officers are allowed to deny de-sealing of cigarette manufacturing machines and DG sets.
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