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The High Court held that the substantial questions of law were answered in favour of the assessee. Regarding the first question, the Court found that the amendment to Section 80IA by introducing sub-section (9A) was explicitly prospective, effective from April 1, 1999. It was neither declaratory nor clarificatory. Therefore, it could not be applied retrospectively to AY 1997-98. The Court relied on the Supreme Court decision in DCIT Vs. Core Health Ltd. and the CBDT Circular dated 23rd December, 1998, which clarified that the amendment was prospective. The Court noted that even if the Finance Bill initially proposed retrospective effect, the enacted Act made it prospective. Consequently, the assessee was entitled to claim deduction under Section 80IA without excluding the profits already claimed under Section 80HHC for the assessment year in question. Both substantial questions of law were answered in the negative, in favour of the assessee.
The High Court held that the Tribunal did not err in disallowing the expenditure. The court reasoned that while the Assessee presented an agreement for the employee to serve for ten years, this alone was insufficient to establish a nexus between the expenditure and the business activities. The Business Administration course undertaken by the son of a director was considered 'general' in nature and lacked a direct nexus to the company's specific business of manufacturing copper foils. The Assessee failed to provide detailed particulars, such as the employee's basic qualifications, the specific subjects studied in the administration course, and how these subjects related to the company's business. The court drew parallels with the cases of Shrinath Motors and Divyakant C. Mehta, where similar expenditures for higher education of directors' relatives were disallowed for lack of a direct business nexus. Therefore, the expenditure was not incurred wholly and exclusively for the purpose of the Assessee's business. The question of law was answered in the negative, in favour of the Revenue.
The High Court held that the impugned assessment order dated January 31, 2018, was passed without jurisdiction. The Court found that the petitioner, being a foreign company, is an eligible assessee under Section 144C of the Act and is entitled to the special procedure outlined therein. This procedure mandates the passing of a draft assessment order under Section 144C(1) before a final assessment order can be issued, allowing the eligible assessee to file objections before the Dispute Resolution Panel (DRP). The Court noted that the impugned order invoked Section 144C(13) without complying with the prerequisite of issuing a draft assessment order under Section 144C(1), thereby violating the mandatory provisions of Section 144C. The Court rejected the Revenue's contention that the order was merely giving effect to the Tribunal's order, stating that the "fresh adjudication" implied a decision on the lis. The Court followed the principle laid down in JCB India Ltd. v. Deputy Commissioner of Income-tax, holding that even in remand proceedings, the Assessing Officer is obliged to pass a draft assessment order if variations to the returned income are proposed. Consequently, the impugned order was quashed and set aside. The Court clarified that this would not prevent the Revenue from taking further steps in accordance with law.
The High Court held that the Income Tax Appellate Tribunal passed its order on findings of fact. The Court found considerable merit in the submission of the respondent assessee, noting that similar grounds raised in the present appeal were considered in Income Tax Appeal No. 62 of 2015, where the Division Bench dismissed the appeal finding no substantial question of law. The Court also referred to the judgment in Income Tax Appeal No. 1121 of 2009, which was upheld by the Apex Court. This judgment established that an assessee can maintain separate portfolios for investment and business dealing in shares, and that delivery-based transactions should be treated as investments, with profits classified as capital gains based on holding period. The Court concluded that the findings of fact by the ITAT did not warrant interference and no substantial question of law was raised in the appeal. Therefore, the appeal was dismissed.
The High Court held that the question of whether expenses were capital or revenue in nature depends on the business and activity, making it a mixed question of law and fact. If such a factual question is conceded by the assessee before the Assessing Officer, the Appellate Tribunal is not in error in refusing to consider the issue in view of the concession. The Court found the Tribunal's approach to be neither illegal nor beyond jurisdiction, and concluded that no substantial question of law arises. Consequently, the appeal was dismissed.
The High Court held that no substantial question of law arose for consideration in the present appeal. This decision was based on the fact that the issues involved were no longer res integra, having been conclusively decided by previous judgments. The Court noted that Tax Appeal No. 56/2016, filed against the husband of the present respondent and raising identical questions of fact and law from a common ITAT order, had been disposed of on March 28, 2018. This disposal followed an order dated July 24, 2017, in Tax Appeals Nos. 27 and 55 of 2016, wherein the Division Bench had dismissed those appeals. The reasoning in the July 24, 2017 order was that the appeals were covered by an earlier decision of the Apex Court in GE India Technology Centre Pvt. Ltd. vs. Commissioner of Income Tax, which held that tax is deductible only if the amounts payable result in income chargeable to tax in India. The ITAT had also relied on this proposition and a decision of its Coordinate Bench in Sesa Goa. Furthermore, the Full Bench of the High Court had also ruled on this issue in Commissioner of Income Tax vs. V.S. Dempo & Co. Pvt. Ltd. Consequently, the appeal was dismissed as covered by the aforementioned precedents.
The High Court held that the reopening of assessment for Assessment Year 2010-11, initiated after a period of four years from the end of the relevant assessment year, is without jurisdiction. The Court reiterated the settled legal position that for reopening under Sections 147 and 148 of the Income Tax Act after four years, it is a jurisdictional requirement that there must have been a failure on the part of the assessee to disclose material facts. The Petitioner had contended that all necessary documents were produced during the original assessment and that the reopening was based on a mere change of opinion. The Court found that the reasons recorded by the Assessing Officer, which cited 'absence of information' regarding depreciation and the allowability of certain debits, did not establish the required failure to disclose material facts by the assessee. The Court concluded that the action of the Respondents was completely without jurisdiction. Accordingly, the Rule was made absolute, quashing the notice and the impugned order. No costs were awarded.
The High Court held that the second substantial question of law did not arise for consideration. The Court noted that for a question of law to arise, particularly one alleging a failure of the Tribunal to give a decision, the issue must have been at least pleaded before the Tribunal. The Court found that nothing was shown to contradict the Respondent's submission that the issue concerning the shareholders was never urged before the ITAT. The grounds of appeal filed before the Tribunal were only in respect of the liability of the Respondent company. Therefore, the Court concluded that there was no finding by the Tribunal that interfered with the liberty granted by the CIT(Appeals) to take action in the hands of the shareholders. Since both substantial questions of law did not arise, the appeal was disposed of.
The High Court held that since the petitioner failed to appear on two separate occasions when the matter was called out, it indicated a lack of interest in prosecuting the writ petition. Consequently, the Court dismissed the petition for non-prosecution. No decision was made on the merits of the case or the underlying ITAT order. The operative direction was to dismiss the petition.
The Bombay High Court decided both questions. For question (i), it was held that the excise duty paid by the assessee is not to be excluded from the total turnover for the purposes of computation of deduction under Section 80HHC. This was answered in the negative, in favour of the assessee, based on the agreed position and the decision in CIT vs. Sudarshan Chemicals Industries Ltd. For question (ii), the High Court held that the expenditure on account of technical know-how incurred under the Agreement dated June 19, 1984, is classifiable under Section 35AB of the Act and not under Section 37(1). The reasoning was that the Supreme Court in Swaraj Engines Ltd. had not conclusively decided whether Section 35AB applied only to capital expenditure, leaving the issue open. The High Court, after construing the agreement, concluded that the expenditure was classifiable under Section 35AB. Thus, question (ii) was answered in the affirmative, in favour of the revenue and against the assessee. The reference was disposed of accordingly.
The High Court declined to exercise its writ jurisdiction and dismissed the writ petitions. The Court found that it could not be said that the reopening of assessment was solely based on a change of opinion. It observed that the petitioner failed to fully and truly disclose the fact that it did not possess Form 3CM under Section 35(2AB) of the IT Act. Had the petitioner disclosed this fact during the scrutiny assessment under Section 143(3) and the Assessing Officer had still allowed the deduction, then the petitioner would have been justified in challenging the reopening. However, this was not the case. The Court explicitly stated that it had not dealt with the merits of the contentions regarding the requirement of Form 3CM for claiming deduction under Section 35(2AB), and these would be decided by the Assessing Officer on their own merits. The reasons recorded by the Assessing Officer for reopening were based on the fact that the assessee did not possess Form 3CM for the relevant period and had not disclosed this fact during the scrutiny assessment. The Court noted that the Assessing Officer had elaborated reasons and supplied them to the assessee, forming a belief based on relevant material in good faith.
The High Court held that the reopening of the assessment under Section 148 was without jurisdiction. The Court found that the Assessing Officer's (AO) decision to reopen was based on a change of opinion, as no new tangible material had been discovered. The Court disagreed with the Revenue's contention that CBDT Circular No. 258 dated June 14, 1979, constituted new tangible material. The Petitioner had argued that this circular had lost its relevance due to subsequent amendments to the Income Tax Act, including the insertion of Explanation 3 to Section 2(1A) and the issuance of a subsequent circular dated March 27, 2009. The AO had failed to address these arguments in the order rejecting the Petitioner's objections, merely reiterating the circular's importance. The Court reasoned that if a circular had lost its efficacy or been substituted by a later one, it could not be considered new and tangible material. Therefore, the AO's action was based on a pre-existing circular whose relevance was disputed and not properly dealt with, amounting to a change of opinion. The Court also strongly criticized the AO's observations in the impugned order regarding the Petitioner's eligibility to file a writ petition, calling them objectionable and bordering on contempt, and directed a copy of the order to be sent to the Principal Chief Commissioner of Income Tax.
The High Court held that the ITAT Panaji should have considered the Special Bench decision in Vireet Investment (P.) Ltd. as it was directly relevant to the controversy. While not opining on whether it was appropriate for the ITAT to have pronounced its decision without considering the Special Bench ruling delivered in the interim, the Court acknowledged that the Special Bench's decision was binding. The Court found that the ITAT's decision was made without taking note of this binding precedent. Therefore, the High Court quashed and set aside the ITAT's order and restored the appeal to the file of the ITAT Panaji. The ITAT was directed to decide the appeal afresh after considering the Special Bench decision in Vireet Investment (P.) Ltd., on its own merits. No issue was expressly left undecided.
The High Court held that the ITAT Panaji Bench should reconsider the issue after taking note of the Special Bench decision in Assistant Commissioner of Income-tax, Circle 17(1), New Delhi v. Vireet Investment (P.) Ltd. The Court acknowledged that the Special Bench decision was directly relevant to the controversy. While not opining on whether it was appropriate for the ITAT to have proceeded without considering the Special Bench decision (as its attention might not have been drawn), the Court found it necessary for reconsideration. The High Court quashed and set aside the ITAT's order dated September 8, 2017, and restored the appeal to the file of the ITAT Panaji. The ITAT was directed to decide the appeal on its own merits after considering the Special Bench decision. No costs were awarded.
The High Court held that Section 40(3) of the Finance Act, 1983, is not ultra vires the Constitution. The court reasoned that while fiscal legislation is subject to Article 14, economic legislation is afforded greater latitude. The classification between companies in which the public is substantially interested and those in which it is not, and the distinction between land/buildings used for business purposes versus those not used for business purposes, were considered reasonable. The court noted that the Finance Minister's speech aimed to address tax avoidance by individuals transferring wealth to closely-held companies. The legislature's decision to tax land and buildings not used for business purposes in such companies, without delving into the source of acquisition, was a policy decision that could not be faulted under Article 14. The court found the challenge to Section 40(3) unsustainable and dismissed the petition. The interim order was vacated.
The High Court dismissed the appeal filed by the Revenue. The dismissal was based on the reasoning that the issue involved in the present appeal was already concluded by a judgment of a Full Bench of the High Court in the case of Commissioner of Income Tax vs. V.S. Dempo & Co. Pvt. Ltd., dated 5th February, 2016. The Court noted that the Tax Appeal Nos. 27 and 55 of 2016, dismissed on 24 July 2017, were covered by this earlier decision. The High Court found that no substantial question of law arose for consideration as the issues were no longer res integra. The operative direction was the dismissal of the appeal. No issue was expressly left undecided.
The Tribunal, considering the observations of the Commissioner (Appeals), held that Mr. S.G. Mittal had shown the amount of Rs. 3,61,500 as his income by way of interest received from the appellant. The authorities had safely concluded that the company had in fact paid this amount to Shri S.G. Mittal during assessment year 2008-2009 outside its books of account, which amounts to unexplained expenditure. The Tribunal found that the theory that interest was not paid could not be accepted. Given the concurrent findings of the authorities, the Tribunal concluded that no substantial question of law arose and dismissed the appeal.
The High Court held that the Commissioner (Appeals) and the Tribunal had correctly observed that the Assessing Officer's conclusion of concealment of income was erroneous. The Court noted that the assessee had clearly disclosed the retrofitment expenses in the profit and loss account and the provision for these expenses under 'current liabilities' in the balance sheet for the year ended March 31, 2007. Furthermore, the Court found that the explanation furnished by the assessee, indicating a dispute with M/s Atul Auto Ltd. and the subsequent reversal of the provision in the next assessment year after the suit was withdrawn, did not lead to a reasonable inference that the assessee's case was false. The Court concluded that the assessee's actions demonstrated bona fides and that the Assessing Officer was not justified in concluding concealment. Consequently, the Court found no error in the orders of the lower authorities and held that no substantial question of law was involved.
The High Court, applying the restrictive parameters of judicial review as laid down in Union of India vs. P. Gunasekaran, found itself doubtful whether the CAT was justified in interfering with the findings of fact recorded by the inquiry officer on Article I. However, the Court noted that the CAT had rightly agreed with the findings of the inquiry officer and accepted by the disciplinary, appellate, and revisional authorities concerning Articles II, III, and IV. The Court observed that no perversity had been demonstrated, and the petitioners' invitation was merely to reassess or re-appreciate the material. Therefore, the High Court saw no reason to take a contrary view or interfere with the CAT's impugned judgment and order. The Court also noted that the record regarding revisional/review authorities was not clear, but this did not affect the outcome as the findings on Articles II, III, and IV were consistently accepted. The petition was dismissed.
The High Court set aside the impugned orders of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The Court noted that the Commissioner and the Tribunal had not provided a finding on whether the Area Development Fund was utilized for its intended purpose. The Court referred to the Supreme Court's decision in Siddheshwar Sahakari Sakhar Karkhana Ltd. Vs. Commissioner of Income Tax, which highlighted that the Area Development Fund is meant for socio-economic services in the area of operation, with resolutions passed by the Board of Directors, sanction from the Director of Sugars, and approval from the General Body. The Supreme Court also observed that the fund is retained by the sugar factory and utilized as per government guidelines. The High Court found that the Tribunal and the Commissioner failed to consider the relevant aspects as observed by the Apex Court. Consequently, the matter was remanded back to the Commissioner (Appeals) for a fresh decision after hearing the parties and considering the Siddheshwar S.S.K. Ltd. case. The parties were directed to appear before the Commissioner on April 4, 2018.
The High Court held that the expression 'separate books of accounts' in Section 11(4A) of the Income Tax Act, 1961, means books of accounts that are different and distinct from the books maintained for charitable purposes. The Court emphasized that the language of the statute is plain and unambiguous, and it is not open to interpret it based on the supposed intent of the legislature or the purpose of the provision, especially when it would involve ignoring clear words. The Court found that the assessee had not maintained separate books of accounts for its business activity (IMTEX-92), which was considered incidental to its objects. Therefore, the assessee was not entitled to the benefit of Section 11 of the Act. The Court concluded that the holding of IMTEX-92 was a business venture, incidental to the Trust's objective of sharing knowledge. However, due to the failure to maintain separate books of accounts as mandated by Section 11(4A), the benefit of Section 11 was denied. The question was answered in favour of the revenue.
The High Court held that the Petitioner had placed all primary facts before the Assessing Officer during the original scrutiny assessment. The Petitioner had specifically responded to queries regarding the sale of shares of Goa Carbon Limited, explaining that the transfer to its wholly-owned subsidiary, Esmeralda Investments Private Limited, was not considered a transfer. The Court found that the AO had accepted this explanation. The Court noted that the requirement to furnish Form 29B under Section 115JB(4) pertains to the original assessment. The Court relied on the Supreme Court's decision in Gemini Leather Store, stating that once primary facts are before the AO, it is for him to draw inferences, and the assessee is not required to tell the AO what inferences to draw. The Court concluded that the AO was attempting to reopen the assessment after four years based on a mere change of opinion, and the non-furnishing of Form 29B was an excuse. Therefore, the jurisdictional requirements for invoking Sections 147 and 148 were not met as there was no failure to disclose material facts. The writ petition was allowed, quashing the notice and reassessment proceedings.
The High Court held that the appeal did not involve a question of law and was therefore not entertainable under Section 260A of the Income Tax Act. The Tribunal and Commissioner (Appeals) had concurrently found, after considering the material, that no additions were made to work-in-progress. This fact was not controverted by the Revenue. The Tribunal observed that the Revenue did not dispute the assessee's contention that the amount was advanced based on commercial expediency. Furthermore, the Revenue failed to demonstrate that inventories were acquired out of borrowings requiring capitalization of interest under AS-16. The Tribunal also noted that advances from customers (₹68.57 crores) exceeded closing work-in-progress (₹45.04 crores) as of March 31, 2012. These findings were considered purely factual. The Court found that the Revenue's reliance on British Paints India Ltd. was distinguishable due to amendments in Section 145(2) and the fact that the issues involved were essentially questions of fact. As the Revenue could not demonstrate how a question of law arose from the concurrent findings of fact, the appeal was dismissed.
The High Court held that the Assessing Officer was not justified in making the adjustment under Section 143(1)(a). The Court reasoned that the claim for provision for doubtful overdue installments was a debatable issue, especially since the assessee relied on a High Court decision. The judgment in Khatau Junkar Ltd. (supra) was cited, emphasizing that "prima facie inadmissible" in Section 143(1)(a)(iii) means the claim is not admissible on the face of it and requires no further inquiry. If a claim requires further inquiry, it cannot be disallowed without hearing the assessee. The Court noted that the AO himself acknowledged the issue was debatable when rejecting the Section 154 application. Furthermore, considering the retrospective amendment to Section 36(1)(vii) with the insertion of an Explanation, the Supreme Court's decision in Vijaya Bank (supra) was relevant, stating that mere debiting a provision to the P&L account is insufficient; it must be accompanied by a reduction on the asset side of the balance sheet. Therefore, the disallowance could not be made via intimation under Section 143(1)(a) as it required an opportunity for the assessee to establish its claim by producing evidence of how the provision was treated in accounts and the balance sheet. The question was answered in the negative, in favour of the assessee.
The High Court held that the writ petition was dismissed. The Court found that a condition precedent for availing the Samadhan Scheme was the existence of pending appeals and tax arrears as of March 31, 1998, and the date of filing the declaration. It was undisputed that no tax arrears were payable by the petitioner to the revenue as of these dates. The petitioner's argument that the adjustment of demand against refunds was invalid due to lack of intimation under Section 245 was rejected. The Court noted that the petitioner was aware of the adjustment on November 18, 1996, but made no grievance for over two years until the Samadhan Scheme was introduced. The Court held that the Samadhan Scheme does not contemplate unsettling settled matters or creating tax disputes to be settled under the Scheme. Furthermore, the Court ruled that the designated authority under the Samadhan Scheme, which is part of the Finance (No.2) Act, 1998, has no jurisdiction to set aside an order passed under the Income Tax Act, 1961. The Court respectfully disagreed with the High Court decisions relied upon by the petitioner, stating that the distinction between the two Acts was not brought to the notice of those courts. Finally, the Court observed that the petitioner's appeal before the Tribunal for assessment year 1991-1992 was heard and disposed of on merits on July 6, 2003, after the petition was admitted. This rendered the object of the Scheme (reducing litigation) moot, as the litigation had run its full course, and the status quo ante could not be restored for the Scheme to operate.
The High Court held that the Revenue's contentions were not in agreement with the Court's prior decisions. The Court noted that Income Tax Appeal No. 1688 of 2014, relied upon by the Revenue regarding Section 40(a)(ia) and Section 80IC, dealt with a different section and a distinct question of law. The Court found no justification for the Revenue to seek assistance from that order for the present appeals, which primarily revolved around the interpretation of Section 80IB(10). The Court reiterated its firm view, based on its previous judgments in similar matters, that the issues raised by the Revenue had already been dealt with and repeatedly decided. The Court dismissed the Revenue's appeals, following its judgment in Income Tax Appeal No. 441 of 2015 and connected appeals dated September 25, 2017.
The High Court disagreed with the Revenue on both counts. Regarding the applicability of Section 40(a)(ia), the Court found no justification for the Revenue to seek assistance from an order concerning Section 80IC (Lipid Technologies case), as the present appeals revolved around the interpretation of Section 80IB(10). The Court rejected the Revenue's contentions based on the Lipid Technologies order. On the main issues concerning Section 80IB(10), the Court noted that similar questions had been dealt with repeatedly by the Court. Following its own previous judgment dated September 25, 2017, in a batch of connected appeals (ITA Nos. 441, 444, 452, 479, 489, and 500 of 2015), which had dismissed the Revenue's appeals on identical grounds, the Court dismissed the present appeals. The Court found that the Revenue's attempts to distinguish those judgments were not accepted. Therefore, the appeals were dismissed, upholding the ITAT's decision.
The High Court dismissed the Revenue's appeals. The Court found that the substantial questions of law raised by the Revenue had already been dealt with and repeatedly decided by the Court in prior judgments, including a detailed judgment delivered on September 25, 2017, in a batch of connected appeals. The Court noted that the facts of the present case squarely applied to those earlier judgments. The Court rejected the Revenue's attempt to distinguish those judgments and also rejected the Revenue's reliance on the case of Lipid Technologies concerning Section 40(a)(ia), stating that the question in that case pertained to Section 80IC and was distinct from the interpretation of Section 80IB(10) in the present appeals. Therefore, following its own previous judgments, the Court dismissed all the appeals filed by the Revenue.
The Tribunal held that the issue is squarely covered by the judgment of the Apex Court in Commissioner of Income Tax Vs. M/s. Sun Engineering Works (P.) Ltd. (Supra). The Apex Court had held that proceedings under Section 147 of the Income Tax Act, 1961, cannot be allowed to be converted into a revision or review. Since a notice under Section 148 was issued in the present case, and the assessee had conceded to this position before the Tribunal, no substantial question of law arises. Therefore, the appeal was dismissed. The Tribunal did not expressly leave any issue undecided.
The High Court quashed and set aside the impugned order dated October 23, 2017, canceling the certificate of nil deduction of tax. The Court found that the cancellation order was not sustainable on two main grounds. Firstly, regarding the petitioner's financial status and accumulated losses, the Court noted that the impugned order did not provide any basis for concluding that future profits would be unrecoverable. In fact, the revenue's own affidavit, referencing newspaper reports and discussions with the CFO, supported the petitioner's claim of substantial carried forward losses and no likelihood of tax becoming payable. The Court reiterated that cancellation of a Section 197 certificate requires valid and cogent reasons supported by material on record, which were absent. Secondly, concerning the outstanding tax demand of Rs. 6.90 Crores, the Court observed that neither Section 197 nor Rule 28AA of the Rules mandates that a nil/lower rate certificate cannot be granted if any demand is outstanding. Rule 28AA(2) requires consideration of various aspects, including estimated tax payable and existing liability. The Court found that the impugned order failed to consider the petitioner's submissions that the demand was covered by a prior Tribunal decision, arose from a TRACES error, or could be adjusted against a refund. Therefore, the order was deemed a non-speaking order, unsustainable in facts and law.
The High Court, after considering the submissions of both parties, was of the view that the matter required to be remanded back to the Tribunal for a fresh decision. The Court noted the arguments regarding the amendments to Section 5A and Section 32 of the Income Tax Act and their applicability to the assessment year 1984-85. The Court found that the Tribunal had not adequately considered the law prevailing at the relevant time. Therefore, instead of answering the referred questions, the High Court decided to dispose of the reference by remanding the case to the Tribunal. The Tribunal is now directed to decide the issues afresh, taking into account the law as it stood during the assessment year in question. No specific finding was given on the questions of law, and the issue of depreciation on communion property for the relevant year remains undecided by the High Court.
The High Court held that the Tribunal had committed no illegality in reversing the order of the Commissioner (Appeals). The Court found that the transfer within the meaning of Section 2(47)(v) of the Income Tax Act, 1961, had indeed taken place only in the Assessment Year 2002-2003. This was because the actual possession of the property was given to the Developer vide the agreement dated April 30, 2001, and not on the basis of the earlier Power of Attorneys or any alleged oral agreement in 1993-94. The Court affirmed that the AO and the Tribunal had correctly appreciated and interpreted the Power of Attorney(s), the agreement dated April 30, 2001, and the stand taken by the assessees in their reply to the notice under Section 148. Consequently, the Tribunal's order was affirmed, finding no illegality or perversity warranting interference. The Court explicitly noted that a separate question regarding the adoption of fair market value was not involved in these appeals.
The High Court held that no case was made out to interfere with the concurrent findings of fact by the Commissioner (Appeals) and the ITAT. Both authorities correctly applied the law laid down by the Supreme Court in CIT vs. Rotork Controls India (P) Ltd. The court found that the outstanding expenses of Rs. 80 lakhs related to the completed project and that the liability had crystallized. The reasoning was that the expenses were incurred within three months of the year-end and related to a completed project, making them allowable under the mercantile system of accounting and the precedent set by the Supreme Court. The appeal was dismissed, affirming the deletion of the addition.
The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, was liable to be quashed and set aside. The Court reasoned that it is well-settled that reassessment proceedings under Section 148 cannot be initiated so long as the assessment proceedings pending on the basis of the return already filed have not been terminated. Since the impugned notice was issued before the expiry of the period for taking action under Section 143(2) of the Act, it was premature. The Court therefore set aside the impugned notice and the order rejecting the Petitioner's objection. The petition was allowed, and no order as to costs was made.
The High Court dismissed the writ petition. It held that the Petitioner's conduct during the pendency of the petition disentitled it to any relief under Article 226. The Court found that the Petitioner's letters dated December 20, 2017, and December 21, 2017, misrepresented that the Court had given oral directions on December 19, 2017. Crucially, the Petitioner withdrew Rs. 9.18 Crores from its attached bank accounts without any order or direction from the Court. This conduct was deemed an attempt to overreach the Court and established that the Petitioner did not approach the Court with clean hands. The Court also took suo motu notice of contempt against the Petitioner's President and the Tax Recovery Officer for alleged wilful disobedience and interference with judicial proceedings.