This Annual Case Digest analytically summarizes the key stories related to Tax judgements of various High Courts in India reported in Taxscan.in during the year 2023. These stories include judgements and observations of High Courts related to Income Tax, Goods and Service Tax(GST), Excise Duty, Service Tax, Customs Duty, etc.
The Kerala High Court observed that the administrative circular will not operate as a fetter on the commissioner as it is a quasi-judicial authority and dismissed the writ petition against the income tax order.
With aforesaid observation, the single bench of Justice Dinesh Kumar Singh disposed of the present writ petition and dismissed the Pending interlocutory application/s, if any, in the writ petition.
The Delhi High Court held that the claim of income tax is extinguished with post-approval of the resolution plan by the National Company Law Tribunal (NCLT).
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia disposed of the writ petition in terms of the CIT(A) order. The interim order dated 24.12.2019 shall stand vacated and the pending interlocutory applications are closed.
The Madras High Court directs the income tax department to lift the attachment of the pension account considering the age and ailment of the Pensioner.
The Court held that the appellant is entitled to operate the pension account and make all transactions with the amount lying therein, excluding a sum of Rs.1,35,000/- and the direction issued by the Judge in the order impugned was confirmed. Further directed the Appellate Commissioner to dispose of the appeals on merits and as per law, within three months.
The Sikkim High Court stayed the show cause notice issued under Rule 31 A of the Central Goods and Service Tax Rules (CGST Rules), 2017 as it is ultra vires of the Constitution of India.
The Deputy Solicitor General of India on behalf of respondent no.1 and the Additional Advocate General on behalf of respondent no.2 accept notice and waive formal notice thereof. Justice Bhaskar Raj Pradhan directed the respondents to file their response to the interim application praying for a stay of the proceedings within two weeks. The respondents shall maintain the status quo as of today. The counsel for the parties is requested not to delay the hearing of the interim application.
The Delhi High Court set aside the assessment order passed under the Income Tax Act,1961 whereby the request of hearing via video conferencing was denied. The Court directed the Assessing Officer to decide afresh.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia viewed that “the best way forward would be to set aside the impugned assessment order dated 18.05.2023 with liberty to the AO to pass a fresh order, albeit, as per law. The AO will have the liberty to pass a fresh assessment order after abiding by the principles of natural justice.”
The High Court of Kerala has issued a directive to expedite the resolution of the Kerala Goods and Services Tax (KGST) appeal and stay petition, thereby halting the enforcement of the demand notice against Mathew Scaria, the proprietor of Hotel Thushara International, Kodenchery, Kozhikode
The court’s directive has brought temporary relief to Mathew Scaria and his hotel business, as the enforcement of the demand notice has been put on hold. The ruling underscores the importance of expeditious consideration of appeals and stay applications, which is crucial in maintaining a fair and efficient tax adjudication process under the KGST system.
The Delhi High Court allowed the refund of Input Tax Credit (ITC) under Goods and Service Tax(GST) based on the shipping bill and invoices and set aside the rejection of the refund claim of ITC.
Since there was no controversy as to the evidence produced by the petitioner in respect of the exports before the Adjudicating Authority, the court allowed the writ petition and the respondents were directed to process the petitioner’s claim for refund along with applicable interest.
The Kerala High Court in a recent decision set aside the demand of balance tax deposit as assessee already remitted amount under section 55 of the Kerala Value Added Tax Act, 2023.
A division bench comprising Justice A Muhamed Mustaque & Justice Shoba Annamma Eapen set aside the condition imposed by the third respondent to deposit 10% of the balance tax demand for both years if the petitioner had already remitted the amount under section 55 of the KVAT Act.
The High Court of Kerala has extended the stay on coercive actions against the assessee P. Somarajan, the proprietor of Hotel Nila Palace in Cheerankavu, Kollam. The extension of the stay comes in light of the pending Value Added Tax (VAT) appeal before the 1st Appellate Authority.
The bench emphasised the importance of preserving the rights of individuals and business owners who may be subjected to coercive actions by government authorities while their legal appeals are pending. In result, the bench allowed the review petition filed by the petitioner and also extended the stay on coercive actions against the petitioner until November 30, 2023, due to the pending VAT appeal.
The Kerala High Court directed to consider condonation application for 234-day delay in filing an appeal on rectification application against the Rejection of the Foreign Tax Credit (FTC) Claim.
The single judge bench of Justice Dinesh Kumar Singh the appellate authority to consider the application for condonation of delay expeditiously, preferably within two months and if delay is condoned, the appellate authority should take up the stay application filed by the petitioner and dispose of the same expeditiously.
The Delhi High Court held that any order passed by the adjudicating authority can be appealed before an appellate tribunal under section 26 of the Prevention of Money Laundering Act, 2002 ( PMLA).
The bench comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad observed that “the Act provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. Kerala HC allows to Discharge of Road Tax liability Instalment Payment
The Kerala High Court allowed the petitioner to discharge the road tax liability instalment payment as the petitioner prayed for the same. Shahul Hameed, the petitioner filed the petition with the limited prayer to allow him to discharge the tax liability for the period from 01.04.2022 to 30.09.2023 in respect of the stage carriage KL-54-E-2642 in instalments.
It was further held that “If the petitioner fails to make payment of any of the instalments, the authorities would be free to take appropriate action for the realisation of the tax. “
The Kerala High Court held that the principal commissioner has revisional power to interfere assessment order even if it is pending before CIT(A) and dismissed the Writ petition.
The Single judge bench of Justice C.S. Dias held that “the first respondent has the revisional power to interfere with the assessment order as provided under Sec.263 of the Act, till the disposal of the appeal. Furthermore, I do not find any prejudice being caused to the petitioner because, if at all the petitioner is aggrieved by the order that is to be passed by the Assessing Officer, in compliance with the direction in Ext P5 order, the petitioner can very well challenge the said order also in an appeal, notwithstanding the pendency of the appeal filed against order.” The Court dismissed the writ petition, reserving the right of the petitioner to challenge the order by law.
The Delhi High Court held that Section 264 of the Income Tax Act, 1961 can be triggered for making corrections when the assessee fails to claim amenable deduction under the Income Tax Act, 1961.
Further held that “since the petitioner/assessee passed away during the pendency of the writ petition, necessary steps were taken for bringing the legal heirs of record. Similar steps will also be taken by Mr Krishanan to bring his legal heirs on record before the concerned statutory authorities. set aside the impugned order.”
The Kerala High Court has held that Section 220(2) of the Income Tax Act, 1961 has no retrospective effect and no liability to pay interest on tax crystallised. Smt.Nisha John, counsel appeared for the petitioner and Sri. Christopher Abraham, Standing Counsel appeared for the Income Tax Department.
As the Finance Act itself makes it clear it has come into effect from 01.10.2014 and therefore, by no stretch of imagination its operation cannot be said to be retrospective. Considering the said position of law, the court comprising Justice Dinesh Kumar Singh held that the petitioner cannot be held to default in making the payment of tax which was crystallized by order. Therefore, Section 220(2) would not empower the Department to levy interest on the tax assessed which has already been paid.be taken against the petitioner.”
The Delhi High Court upheld the order of the Income Tax Appellate Tribunal (ITAT) wherein it was held that Advertising, Marketing and Promotion (“AMP”) expenses incurred did not amount to international transactions. Since there has been no change in the circumstances concerning the respondent/assessee (something which has been noted by the Tribunal), the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia upheld the impugned order passed by the Tribunal.
The Delhi High Court has granted relief to Indus Towers by allowing the loan processing charges. The revenue has filed an appeal against deletions of additions made on account of disallowance of interest on loan, disallowance of depreciation and disallowance of upfront loan processing fee against Indus Towers Ltd.
The Division Bench of Justice Rajiv Shakdher and Justice Girish Kathpalia held that , “In view of the legal position discussed above, we have no hesitation to reiterate that it being undisputed that the loan in question was raised by the respondent/assessee only for the purposes of its business, merely because the loan processing charges though paid upfront but amortised over a period of five years, solely to be in consonance with the mercantile system of accounting, deduction of the entire charges in lump sum in the year in which the same were paid could not be denied to the respondent/assessee.”
The Kerala High Court has invited the retired judicial officers to translate Supreme Court judgments from English to Malayalam in work from home mode. This would be helpful for the judges who know malayalam. The engagement shall be purely on work performance basis.
Mere submission of application shall not confer any vested right on an applicant to get selected for the work of translation of judgments. In this regard, the High Court reserves the right to accept or reject any or all the applications without assigning any reason. Further, the work of translation and criteria i.e. per page basis shall be supervised by the AI-Assisted Legal Translation Advisory Committee of this High Court and it would not be in the discretion of the officer or the person translating it.
The Kerala High Court directed the Customs Department to consider the appeal expeditiously as the import of electric scooters was made in completely knockdown condition to claim benefit of customs notification. A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the limited prayer of the petitioner, the present writ petition is disposed of, with a direction to the 1st respondent to consider and decide appeal in accordance with law, preferably within a period of four months from the date of receipt of a certified copy of the judgment.”
The Delhi Bench of High Court has granted bail ruling against Directorate of Revenue Intelligence (DRI) holding that the prolonged incarceration of accused would override the statutory restriction contained in Section 37(1((b)(ii) of the the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS) Act.
A Single Bench of Justice Amit Sharma observed that in the present case, admittedly, public witnesses cited by the prosecution had turned hostile with regard to the identification of the vehicle from which substantial recovery of contraband was made. The recovery from the office premises of the present applicant, recorded as per the punchnama reflected that apart from the present applicant there were five other people who were signatories to the said panchnama. Out of the aforesaid persons only one person, i.e., Ashok Kumar (PW-6), i.e., seizing officer, had been partly examined by the prosecution and who was admittedly not been traceable for the last five years.
The Delhi High Court quashed the time-barred notice issued under section 142 (1) of the Income Tax Act, 1961. SMC Comtrade Ltd, the petitioner/assessee challenged the notice (“first notice”) issued under Section 143(2) and the notice issued under Section 142(1) of the Income-tax Act, 1961 [ “Act”] [“second notice”]. The petitioner’s/assessee’s principal submission, in support of the relief sought in the writ petition, is that the aforementioned impugned notices are barred by limitation.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the financial year, in the case of the petitioner’s/assessee’s original return, would have ended on 31.03.2017. Six (6) months, as mandated by the proviso, would have ended on 30.09.2017. Undoubtedly, the notice issued under Section 143(2) of the Act is time-barred. The Court quashed the notice under Section 142(1) of the Act.
The Delhi High Court quashed the Re assessment notice under section 148 of the Income Tax Act, 1961 triggered by the Assessing Officer (AO)without due application of mind.
A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the reassessment proceedings were triggered against the petitioner/assessee without due application of mind by the AO about the information received by him from the Kolkata Division of the Investigation Directorate. The court quashed the impugned notice issued under Section 148 of the Act.
In a major relief to Indus Towers, the Delhi High Court quashed assessment order under the Income Tax Act, 1961 on non compliance of natural justice. The grievance of the petitioner is that contrary to the proposal, via the impugned order dated 01.09.2023, the respondents/revenue have adjusted demands not only for AY 2018-19, which was one of the proposals, but also for AY 2017-18.
There are several other issues as well, which Mr Jain has raised before us, including the fact that the demand for AY 2022-23 has been stayed by this court vide order dated 21.08.2023 passed in W.P.(C) 11037/2023. Therefore, in our view, the best way forward would be to set aside the impugned order dated 01.09.2023, with liberty given to the concerned officer to take the next steps in the matter, albeit, as per law” the Court noted.
The Orissa High Court stayed the GST demand on non constitution of the Goods and Service Tax Appellate Tribunal (GSTAT) as there was deposit of 10% of the demanded tax amount.
A Division Bench of Acting Chief Justice Dr BR Sarangi and Justice MS Raman observed that “Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition.”
The Delhi High Court allowed income tax appeal in the matter of inclusion of comparable even if it clears the filters.
A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia noted that “Although Sachit Jolly, counsel, who appeared on behalf of respondent/assessee, had sought to demonstrate that the issue raised in this appeal did not call for interference by the court de hors the judgment rendered in Rampgreen Solution, he says that the appeal can be disposed of on the basis of statement made by Mr Meharchandani.”
The Kerala High Court directed the National Faceless Appeal Centre (NFAC) to decide appeal expeditiously in the matter of recovery proceedings on arrears of income tax.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the aforesaid facts, the present writ petition is disposed of, with a direction to the 2nd respondent to pass appropriate orders on series appeals. However, if it is not possible to decide series appeals, at least series stay applications of the petitioner should be decided in accordance with the law, expeditiously.”
The Kerala High Court dismissed writ petition being not maintainable on the ground of non- co-operation for concluding proceedings before the Value Added Tax Tribunal (VAT Tribunal).
A Single Bench comprising Justice Dinesh Kumar Singh observed that “The petitioner thereafter approached the Division Bench in I.A. No.2 of 2023 for extension of time. This Court vide Order dated 13.10.2023, two weeks further period allowed for conclusion of the proceedings by the Tribunal. However, the petitioner again in this writ petition has sought for extension of time. This Court cannot modify the Order passed by the Division Bench.”
In a major setback to Bharat Sanchar Nigam Limited (BSNL), the Kerala High Court upheld the assessment order passed by the GST Commissioner.
A Single Bench of Justice Dinesh Kumar Singh observed that “Therefore, without entering into the merits of the case, the present writ petition is dismissed with liberty to the petitioner to approach the appellate authority/Tribunal against the assessment order. If the appeal is filed, the appellate authority should proceed hearing of the appeal in accordance with law and dispose of the same expeditiously.
The Kerala High Court dismissed the writ petition filed by the petitioner on relinquishment of right to prove claim of Input Tax Credit (ITC). A Single Bench of Justice Dinesh Kumar Singh observed that “In the present case, the petitioner, despite show cause notice, chose not to provide any evidence in respect of his claim for the input tax credit, nor did he appear for a hearing on the date fixed. When the petitioner himself has given up his right to prove his claim for the input tax credit, this Court cannot help such an assessee by entertaining this writ petition. Therefore, I find no substance in the present writ petition, which is hereby rejected.”
In a major relief to the Oriental Bank of Commerce the Delhi High Court allowed depreciation on temporary wooden structures.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “A perusal of the said decision would show that the appellant/revenue did not raise any ground in the appeal with regard to the allowance of depreciation on temporary wooden structures. Therefore, applying the principle of consistency, in the AYs in issue, the respondent/assessee should have been allowed depreciation on temporary structures. In this regard, no interference is called for with the decision of the Tribunal.”
The Kerala High Court observed that there is no requirement of attachment of bank account on deposit of pre-deposit, and after numbering of service tax appeals.
A Single Judge Bench of Justice Dinesh Kumar Singh noted that “Since petitioner has made the pre-deposit, as also the appeals have been numbered, attachment/freezing of the bank accounts of the petitioner is no longer required, and therefore, the same are hereby lifted/de-frozen. However, the petitioner will provide list of its properties as demanded vide notice. It is also directed that during the pendency of the appeals before the CESTAT, no coercive measure shall be taken against the petitioner.”
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) 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.
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.
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