Bombay High Court Judgments — 2021

The High Court held that the assessment order dated 17/8/2021, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961, was quashed and set aside. The Court found that the Petitioner was denied the opportunity of a personal hearing, which is a mandatory procedural safeguard under Section 144B of the Act, especially when variations prejudicial to the assessee are proposed in the draft assessment order. The Court relied on its previous judgments in Golden Tobacco Ltd., Parimal Enterprises Limited, and Chander Arjandas Manwani, which emphasized that the procedure prescribed under Section 144B is mandatory and its neglect renders the assessment non-est. The Respondent's admission that the oral request for a personal hearing was turned down without reason further supported this finding. Consequently, the matter was remanded to the Respondent No.1 to complete the assessment proceedings by following the due procedure contemplated by Section 144B, including providing an opportunity for personal hearing (through Video-Conferencing) with advance notice, and completing the assessment within 3 months.

The High Court held that the petition lacked merit and dismissed it. The Court found that in both the first and second proceedings, prosecution was indeed instituted against the petitioner. For the first proceeding, the filing of an FIR was considered sufficient to constitute the institution of a prosecution. For the second proceeding, the court noted that cognizance had been taken. The Court rejected the petitioner's argument that Section 13(1)(d) and 13(2) of the PC Act were not applicable to them as a private person. Citing *Jitender Kumar Singh v. State of Madhya Pradesh*, the Court clarified that private persons can be tried for offences under the PC Act, either alone or in conjunction with public servants, by a Special Judge. The Court emphasized that the scheme of the PC Act allows for the trial of private persons involved in offences under Section 3(1) of the PC Act by a Special Judge, even in the absence of a public servant as an accused. Therefore, the petitioner was ineligible under Section 9(c) of the DTVSV Act due to the institution of prosecution against them under the PC Act. The Court also noted that these proceedings cast a shadow on the monies sought to be offered to tax.

The High Court, in view of the concession made by the counsel for the respondents, granted the petitioner's prayer clause (a). The Court quashed and set aside the impugned assessment order dated September 28, 2021, the notice of demand dated September 28, 2021, and the penalty notice dated September 28, 2021. The matter was remanded for denovo consideration. The Court directed the concerned authority to pass a fresh assessment order strictly complying with the mandatory provisions of Section 144B of the Income Tax Act, 1961. This included considering all submissions made by the petitioner and granting a personal hearing. The authority was instructed to provide at least seven days' notice for the personal hearing and to pass the assessment order within twelve weeks of the order being uploaded.

The High Court held that the prior approval under Section 151 of the Act is a mandatory safeguard against arbitrary exercise of power by the Assessing Officer and must be obtained before the issuance of a notice under Section 148. The Court found that the notice was issued at 2:40 p.m. on 31/03/2019, while the sanction was digitally signed at 2:55 p.m. on the same day. The explanation provided by the Revenue regarding physical approval followed by online approval was not supported by any material on record. The Court also noted that the sanction recorded by the Joint CIT, 'Yes, I am satisfied,' indicated a complete non-application of mind, citing precedents like Commissioner of Income-tax, Jabalpur Vs. S. Goyanka Line & Chemicals Ltd. and Chhugamal Rajpal Vs. S. P. Chaliha. Consequently, the jurisdictional condition of complying with Section 151 was not satisfied, rendering the notice under Section 148 invalid. The Court made the rule absolute, quashing the notice under Section 148, the order disposing of objections, and the notice dated 09/10/2019.

The High Court, in view of the concession made by the Revenue's counsel, granted the petitioner's prayer. The Court set aside the impugned Assessment Order for AY 2018-19 and remanded the matter back to the concerned authority for de novo consideration. The Court directed the authority to strictly comply with the mandatory provisions prescribed under Section 144B of the Income Tax Act, 1961. This includes considering all submissions made by the petitioner and granting a personal hearing. The notice for the personal hearing is to be given at least seven days in advance. The Assessment Order is to be passed within twelve weeks of the order being uploaded. The Court did not decide on the merits of the assessment itself but focused on the procedural irregularities.

The High Court held that the expression ‘regular assessment’ in the Income Tax Act refers to the first order of assessment under Section 143 or 144. Any consequential order passed to give effect to an order from a higher authority cannot be treated as a regular assessment. However, for Assessment Year 1985-86, interest under Section 215 was charged in the original regular assessment order dated March 28, 1988. Therefore, the AO had the power to charge interest under Section 215 while carrying out the reassessment. Regarding the waiver of interest, the Court noted that the Deputy Commissioner of Income Tax, by an order dated March 20, 1989, had already held that the delay in finalization of the assessment was not attributable to the assessee and waived interest beyond one year from the filing of the return, making the assessee liable for Rs.4,13,630/-. This order had attained finality as it was not challenged by either party. Consequently, the assessee was not entitled to the benefit of the High Court's judgment in CIT Vs. Bennett Coleman & Co. Ltd. for a complete waiver of interest for one year. The assessee was only entitled to the benefit of the order dated March 20, 1989, to the extent stated therein. The questions of law were answered accordingly, and the appeal was disposed of.

The High Court disposed of the Writ Petition. The Court noted the CBDT's order dated September 28, 2021, which, in exercise of powers under Section 119(2)(b) of the Income-tax Act, 1961, authorized the admission of settlement applications filed after January 31, 2021, and before September 30, 2021, by specific authorities. The petitioner's application was filed on March 15, 2021, which falls within this extended period. The respondents confirmed that the petitioner's application would be considered subject to other conditions being fulfilled. The Court did not delve into the merits of the settlement application itself but acknowledged the applicability of the CBDT's order and the respondents' statement regarding consideration of the application. No specific issue was left undecided; the petition was disposed of based on the stated facts and the respondents' submission.

The High Court of Judicature at Bombay disposed of the writ petition. The Court noted the CBDT's order dated September 28, 2021, which, in exercise of powers under Section 119(2)(b) of the Income-tax Act, 1961, authorized the Commissioner of Income-tax (posted as Secretary to the Settlement Commission prior to February 1, 2021) to admit settlement applications filed after January 31, 2021, and before September 30, 2021, and to treat them as valid and process them as 'pending applications' as defined in Section 245A(eb). The Court was informed that the petitioner's application was filed on March 1, 2021, which is before the extended date of September 30, 2021. The respondents stated that the petitioner's application would be considered subject to other conditions being fulfilled. Consequently, the petition was disposed of on this basis.

The High Court of Judicature at Bombay disposed of the writ petition. The Court noted the CBDT's order dated September 28, 2021, which, in exercise of powers under Section 119(2)(b) of the Income-tax Act, 1961, authorized Commissioners of Income-tax (posted as Secretary to the Settlement Commission prior to February 1, 2021) to admit settlement applications filed after January 31, 2021, and before September 30, 2021, and to treat them as valid pending applications as defined in Section 245A(eb). The revenue's counsel stated that the petitioner's application, filed on March 15, 2021 (which falls within the extended period), would be considered subject to other conditions being fulfilled in accordance with law. Based on this submission, the Court considered the petition disposed of.

The High Court disposed of the writ petition. The Court noted the CBDT order dated September 28, 2021, which, in exercise of powers under Section 119(2)(b) of the Income-tax Act, 1961, authorized the Commissioner of Income-tax posted as Secretary to the Settlement Commission to admit settlement applications filed after January 31, 2021, but before September 30, 2021, and treat them as valid pending applications. The Court acknowledged the petitioner's submission that their application was filed on March 15, 2021, which falls within this extended period. The respondents stated that the petitioner's application would be considered subject to other conditions being fulfilled. Based on these submissions and the CBDT order, the petition was disposed of.

The High Court granted the petitioner's request for leave to withdraw the writ petition. The court's reasoning was based entirely on the petitioner's expressed desire to withdraw. Consequently, the writ petition was dismissed as withdrawn. No decision was made on the merits of the underlying dispute that led to the writ petition. The operative direction was to dismiss the petition as withdrawn. No issues were expressly left undecided by the High Court, as the matter was disposed of on the procedural request for withdrawal.

The High Court dismissed the writ petition on the grounds that the petitioners approached the court with unclean hands. The Court noted that the petitioners' Chartered Accountant had informed the Revenue by a letter dated August 5, 1998, that a refund due to a partner of the firm should be adjusted against the demand for Petitioner No. 1. This material fact was suppressed in the writ petition. The Court emphasized the importance of truthfulness in court proceedings and cited several Supreme Court judgments (T. Arivandandam, Dalip Singh, S.P. Chengalvaraya Naidu, Oswal Fats and Oils Limited) to highlight that a litigant who attempts to pollute the stream of justice or resorts to falsehood and suppression of material facts is not entitled to any relief. Therefore, the Court was not inclined to entertain the petition based on the petitioners' conduct, without delving into the merits of the KVSS calculation.

The High Court held that it would not exercise its extraordinary jurisdiction under Article 226. Regarding the validity of the notice, the court referred to the Supreme Court's judgment in *Commissioner of Income Tax vs. Kelvinator of India Ltd.*, stating that the test is whether there was a reason to believe that income had escaped assessment and if the AO had tangible material. The court found that the reasons disclosed tangible material and that it would not be appropriate to prevent an inquiry. The court distinguished the reliance on *German Remedies Ltd.* by noting that there was nothing to indicate non-application of mind by the sanctioning authority, and the timing of information receipt and notice issuance did not automatically imply speculative or conjectural application of mind. Similarly, *Shodiman Investments (P) Ltd.* was distinguished based on its peculiar facts and the nature of assessment. Crucially, the court agreed with the revenue that the petitioner, having participated in the assessment proceedings after objections were rejected, could not at this stage challenge the notice. The court relied on *Amaya Infrastructure (P.) Ltd.*, stating that once a party participates in assessment proceedings, it is not open to contend that the court should prohibit further proceedings, especially when jurisdictional issues were raised before the AO. The court concluded that the orders passed by the AO are subject to effective alternative remedies under the Act.

The High Court held that for effective adjudication, the ingredients of Section 276C(1) must be fulfilled, which include a willful attempt to evade tax, penalty, or interest, or under-reporting of income. The Court noted that a prosecution can be initiated if any one of these ingredients is fulfilled. The sanction order indicated that prosecution was accorded after recording satisfaction that the petitioner attempted to evade tax by failing to substantiate claims of purchases, leading to additions for bogus purchases, which were confirmed by the CIT(A) and ITAT. The Court found that the sanctioning authority appeared to have applied its mind to the facts. Relying on the principles laid down in State of Haryana v. Bhajan Lal and Rajiv Thapar v. Madan Lal Kapoor, the Court stated that it cannot embark on an enquiry into the truthfulness of allegations at this stage. Based on the accusations in the complaint and the material on record, the Court was satisfied that, prima facie, the ingredients of the offence under Section 276C(1) were satisfied. Therefore, no interference under Article 226 was called for.

The High Court held that the impugned notice dated March 27, 2019, and the subsequent order dated September 21, 2019, were liable to be quashed and set aside. The Court found that the reasons for re-opening were based solely on a change of opinion by the new Assessing Officer and not on any failure by the Petitioner to disclose material facts. The Petitioner had fully and truly disclosed all material facts necessary for the assessment, and these facts were scrutinized, and income/deductions were reworked by the original Assessing Officer. The Court noted that the reasons for re-opening relied on the annual report and audited P&L account and balance sheet, admitting that various information/material were disclosed. The Court emphasized that when an Assessing Officer takes a view based on material facts during the original assessment, it is not open to re-open the assessment based on the very same material to take another view. Therefore, the rule was made absolute, quashing the notice and order.

The High Court disposed of the writ petition. The Court noted the petitioner's submission regarding the CBDT's order dated September 28, 2021, which allows for the admission and processing of settlement applications filed after January 31, 2021, but before September 30, 2021, by specific authorities. The revenue's representative suggested that the petitioner should raise all these points concerning their eligibility in their application to the Settlement Interim Board. The Board would then consider the case and pass an order in accordance with the law, provided other conditions are met. The Court did not make a determination on the merits of the petitioner's eligibility but directed that the matter be considered by the Settlement Interim Board based on the submissions made.

The High Court agreed with the petitioner that the respondents had been unfair in providing such a short time to respond. On this ground alone, the assessment order dated 30th September 2021 and the consequential orders (penalty notice under Section 274 and demand notice under Section 156) were quashed and set aside. The Court also found that the order on objections, dated 25th September 2021, had not considered all submissions made by the petitioner, and therefore, it was also set aside. The respondents were directed to consider the petitioner's objections submitted via letter dated 23rd September 2021, grant a personal hearing, and dispose of the objections within four weeks. The Court explicitly clarified that no observations were made on the merits of the case. The petition was disposed of.

The High Court held that the notice dated March 23, 2011, issued under Section 148 of the Income Tax Act, 1961, was issued after illegally assuming jurisdiction. The Court found that the reasons provided by the Revenue did not indicate any specific failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment. While acknowledging the Revenue's reliance on Crompton Greaves Ltd., the Court emphasized that there must be a cogent and clear indication of failure to disclose, which was absent here. The Court noted that the petitioner had disclosed the relevant information in its annual report and Form 3CEB, and these disclosures, along with the Transfer Pricing Officer's order, were considered during the original assessment. Therefore, the reopening was based on a change of opinion, which is not permissible. The petition was allowed, quashing the impugned notice and subsequent orders.

The High Court was satisfied that the petitioner was prevented by a sufficient cause from appearing for the hearing. Consequently, the order dated March 30, 2021, passed by the PCIT was quashed and set aside. The Court directed the PCIT to consider the condonation of delay application filed by the petitioner on its own merits. The PCIT was further directed to pass appropriate orders on both the condonation of delay application and the application filed under Section 264 of the Income Tax Act, 1961, in accordance with the law. The Court explicitly clarified that no observations were made on the merits of the matter, and all rights and contentions of the parties were kept open. The principle established is that if a party can demonstrate a genuine and unavoidable impediment, such as a severe illness or quarantine impacting their representative, the authorities should consider condoning the delay and hearing the matter on merits.

The High Court held that Section 50 of the SIDBI Act, with its non-obstante clause, provides a broad exemption from income tax for any income, profits, or gains derived or any amount received by SIDBI. The Court found that the charge under Section 115-O of the Income Tax Act is on the company's profits declared or distributed as dividend, not on the dividend income in the shareholder's hands. It reasoned that Section 115-O(1A) applies only when a company is chargeable to income tax under Section 4 of the IT Act. Since Section 50 of the SIDBI Act overrides other laws, SIDBI was not chargeable to income tax, and thus Section 115-O was not applicable. The Court concluded that the amounts distributed by way of dividend fall within the scope of Section 50 of the SIDBI Act, making SIDBI not liable for additional income tax. Consequently, the payments made under protest were ordered to be refunded. The impugned order dated 17/02/2003 was quashed and set aside.

The High Court held that the impugned order dated March 16, 2021, passed by the Joint Secretary (Revenue), Government of Goa, was unsustainable. The Court found that Article 70(1) of the Code of Communidade explicitly mandates that a personal hearing be afforded to the defendants in an inquiry. It was admitted by the Advocate General that no personal hearing was given to the petitioners. The Court emphasized that the dissolution of the Managing Committee and dismissal of its President carried serious civil consequences, including a bar from re-election for nine years as per Article 70(3) of the Code. Therefore, it was imperative for the Joint Secretary (Revenue) to provide a personal hearing. Relying on the principle of audi alteram partem and case law, the Court concluded that the failure to provide a hearing in terms of Article 70(1) rendered the order bad in law. The Court quashed and set aside the impugned order and remitted the matter back to the Joint Secretary (Revenue) to provide a hearing to all parties. The Court explicitly stated that it had not gone into the merits of the case, leaving all contentions open.

The High Court held that the notice dated 28/3/2005 issued under Section 148 of the Income Tax Act is liable to be quashed and set aside, along with the consequential order dated 20/2/2006. The Court found that the notice was issued after the expiry of four years from the end of the relevant assessment year (1998-1999). Crucially, the reasons recorded by the Assessing Officer did not contain even a whisper indicating a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Court emphasized that the reasons recorded by the Assessing Officer must be clear, unambiguous, and self-explanatory, disclosing his mind and the basis for his conclusion regarding the failure to disclose. The reasons cannot be supplemented by affidavits or oral submissions. Since the notice did not comply with the requirements of the proviso to Section 147, the Assessing Officer lacked the jurisdiction to reopen the concluded assessment. The rule was made absolute, quashing the impugned notice and consequential orders.

The High Court held that the notices for reopening the assessment were not sustainable. The Court reasoned that even if the Assessing Officer's interpretation of the agreements for reopening was accepted, the "Nil" TDS certificate issued by the ACIT (TDS) under Section 197 of the Act could not be invalidated. The Court emphasized that the Petitioner had legitimately acted upon the certificate issued by the Revenue. Furthermore, the Court noted the ITAT's prior finding for AY 1997-1998, which concluded that the Petitioner was not in default for acting on the "Nil" certificate and that Reuters UK did not have a permanent establishment in India. Consequently, the reasons recorded for reopening the assessment were not accepted. The Rule was made absolute, implying the quashing of the Section 148 notices.

The High Court held that the reopening of assessment under Section 147/148 beyond four years from the end of the relevant assessment year was not justified. The Court emphasized that for reopening beyond four years, there must be a failure on the part of the assessee to disclose truly and fully all material facts. It is also settled law that an assessment cannot be reopened based on a mere change of opinion, and tangible material is required. In this case, the Assessing Officer had raised a specific query during the original assessment proceedings under Section 142 regarding the eligibility for deduction under Section 80P, to which the assessee had responded. The original assessment order accepted the assessee's claim. The audit report in Form 3CA, mandated by Section 44AB, also disclosed the amount admissible for deduction under Section 80P. The Court found no tangible material to justify the reopening and noted that the AO's action was based on a change of opinion regarding the interpretation of Section 80P(2)(d), which is impermissible after four years when primary facts were fully disclosed. The Court relied on the judgment in Ananta Landmark (P.) Ltd. vs Deputy Commissioner of Income Tax. The impugned notice and order were quashed and set aside.

The High Court held that the Assessee was justified in claiming the travel expenses as a deduction. Following the mercantile system of accounting, the liability accrued when the incentive scheme was announced, irrespective of the actual payment date. The Court cited Calcutta Co. Ltd. V/s. Commissioner of Income Tax, West Bengal, emphasizing that an unconditional undertaking creates an accrued liability, even if to be discharged in the future, and estimated expenditure for such liabilities is deductible. Regarding Section 80IA, the Court held that the deduction is to be computed unit-wise, and profits of an eligible business cannot be reduced by losses from other businesses owned by the Assessee. Therefore, the deduction under Section 80IA cannot be denied based on the overall loss. For Section 36(1)(iii), the Court, referencing Deputy Commissioner of Income Tax V/s. Core Health Care Ltd., held that interest on borrowed capital is deductible if the capital was borrowed for business purposes, irrespective of whether the asset acquired from it was put to use. The Court found no perversity or incorrect application of principles by the ITAT and concluded that no substantial question of law arose.

The High Court disposed of the petition. The Court noted the CBDT's order dated September 28, 2021, which, in exercise of powers under Section 119(2)(b) of the Income-tax Act, 1961, authorized the admission of settlement applications filed after January 31, 2021, and before September 30, 2021, treating them as valid pending applications under Section 245A(eb) of the Act. The petitioner had filed his application on March 5, 2021, which falls within this extended period. The revenue's representative stated that the petitioner's application would be considered subject to other conditions being fulfilled. Therefore, the Court considered the petition as having served its purpose by bringing the matter to the Settlement Commission's attention within the extended timeframe permitted by the CBDT.

The High Court held that the reopening of assessment was not justified. The Court noted that the notice dated 14/8/2014 and the order sheet entry dated 4/10/2014 clearly indicated that the Assessing Officer had applied his mind to the issue of expenses incurred on advertisement and marketing by the Petitioner during the original assessment proceedings. Once the Assessing Officer had considered this aspect and taken a view, it was not open for him to reopen the assessment based on the very same material to take another view. The Court relied on its previous judgments in Ananta Landmark (P.) Ltd. vs Deputy Commissioner of Income Tax, Jainam Investments vs Assistant Commissioner of Income Tax, Aroni Commercial Limited vs Dy. CIT, and Marico Limited vs. The Assistant Commissioner of Income Tax, which held that reopening based on a mere change of opinion, without tangible material indicating escapement of income, is not permissible. Therefore, the notices and consequential orders were quashed and set aside. Other contentions raised by the Petitioner were kept open for adjudication in appropriate proceedings.

The High Court held that the AAR was not justified in concluding that a foreign trust is not covered under Sections 61 and 63 of the Income Tax Act, 1961. The Court reasoned that the Act, through its various return forms, implicitly acknowledges and requires disclosures regarding foreign trusts, indicating their applicability. Furthermore, the Supreme Court in 'Vikramsinghjit of Gondal' had applied provisions of the Act to a UK-settled trust. The Court found that ADIA, being the settlor and sole beneficiary of a revocable trust, had the right to reassume power over the trust assets. Consequently, the income arising from the trust's investments was to be assessed in the hands of ADIA. As ADIA is a resident of UAE and entitled to the benefits of the India-UAE DTAA, the income would be exempt from tax in India. Even if the trust structure were disregarded, the income would accrue directly to ADIA. Alternatively, if the income were taxed in the hands of the trustee, it would be in a representative capacity under Section 160(i)(iv) and taxed to the same extent as the beneficiary, ADIA, thus attracting the DTAA benefits. The ruling dated 18th March 2020 passed by the AAR was quashed.

The High Court held that the procedure laid down in Section 144B of the Income Tax Act, 1961, is mandatory, as indicated by sub-section (9) which renders an assessment non-est if not made in accordance with the prescribed procedure. The Court noted that the object behind the introduction of faceless assessment, such as promoting efficiency, transparency, and accountability, further supports the mandatory nature of these provisions. In the present case, it was not disputed that the draft assessment order was not served on the Petitioner and that the proposed variation was prejudicial to the assessee's interest. Therefore, the Court found that the Respondent had failed to issue a show-cause notice in the form of a draft assessment order. Citing its own previous judgment in Multiplier Brand Solutions Pvt. Ltd. Vs. Additional / Joint / Deputy / Assistant Commissioner of Income Tax Officer & Ors., the Court quashed and set aside the impugned assessment order and notice of demand. The matter was remanded to the Respondent No.1 to complete the assessment proceedings by strictly following the procedure contemplated by Section 144B of the Act within eight weeks.

The High Court held that the Authority for Advance Ruling (AAR) was not justified in concluding that Sections 61 and 63 of the Income Tax Act, 1961 (the Act) are not applicable to a foreign trust. The Court reasoned that the Act presupposes the existence and applicability of provisions to foreign trusts, as indicated by disclosure requirements in various income tax return forms. Furthermore, judicial precedents, such as Vikramsinghjit of Gondal, have applied provisions of the Act to trusts settled outside India. The Court found that ADIA, being the settlor and sole beneficiary, had the right to reassume power over the trust assets, making the contribution a revocable transfer under Section 61 of the Act. Consequently, the income arising to the trust should be assessed in ADIA's hands. As ADIA is a resident of UAE and entitled to benefits under Article 24 of the India-UAE DTAA, the income would be exempt from tax in India. Even if the trust structure were disregarded, the investment would be considered made by ADIA, and the income would be exempt. Alternatively, if the income were taxed in the hands of the trustee under Section 161 of the Act, it would be taxed in the 'like manner and to the same extent' as the beneficiary, ADIA, thus attracting the DTAA benefits. The ruling of the AAR dated 18th March 2020 was quashed.

The High Court held that no substantial question of law arises for its consideration. The Court noted that Section 36(1)(vii) requires the debt to be written off as irrecoverable in the assessee's accounts, which was not disputed by the Revenue. The core issue was the satisfaction of Section 36(2)(i). The Court reiterated that Section 36(2)(i) allows deduction if either of two conditions is met: (a) the debt or part thereof was taken into account in computing the income of the assessee for an earlier previous year, or (b) it represents money lent in the ordinary course of banking or money-lending business. The Court found that the interest income of Rs. 15,73,952/- relating to the deposit of Rs. 4,35,00,000/- for Assessment Year 2001-02 was taxed as business income. This satisfied the first part of Section 36(2)(i), meaning the advances were to be understood as having been done in the ordinary course of business. Therefore, the condition of the debt or part thereof being taken into account in computing income for an earlier Assessment Year was met. The Court explicitly stated that it had not opined on the second part of Section 36(2)(i) (whether the assessee is engaged in money lending) as the deduction was allowable based on the first part. The ITAT's decision was found to be without perversity or incorrect application of principles. The appeal was dismissed.

The High Court held that the pronouncements of co-ordinate benches on similar issues are binding. It was noted that in the present case, a query was raised by the AO in the original assessment regarding the waiver of loan on account of One Time Settlement, and the assessee had filed detailed submissions explaining why the principal amount waived was not taxable. Once a query is raised and detailed submissions are filed, it implies the AO applied his mind and took a view, even if not explicitly discussed in the assessment order. Therefore, the reopening based on a change of opinion without new tangible material is not permissible. The Court relied on the principles laid down in Commissioner of Income Tax vs. Kelvinator of India Limited and Aroni Commercials Ltd. vs. Assistant Commissioner of Income Tax, and a co-ordinate bench decision in Marico Ltd. vs. Assistant Commissioner of Income -tax. The Court found that no substantial question of law arose, and the appeal was dismissed.

The High Court did not decide the writ petition on its merits. Instead, it accepted the preliminary objection raised by the revenue regarding the availability of an alternative efficacious remedy. The Court granted the petitioner's request to withdraw the petition with liberty to file an appeal before the Commissioner of Income Tax (Appeal) within two weeks. The Court directed the Commissioner of Income Tax (Appeal) to decide the appeal expeditiously, preferably within twelve weeks from the date of receipt. No coercive steps were to be taken against the petitioner until then. The Court explicitly stated that all contentions of all parties were left open, and the petition was not heard on merits. The petitioner was also directed to serve a copy of the order on the Commissioner of Income Tax (Appeal) within two weeks.

The High Court held that the writ petitions were not maintainable. While acknowledging the Revenue's argument regarding the cascading effect and reliance on the Surya Herbal Ltd. case, the Court noted that the subject-matter of the present writ petitions did not fall within any of the exceptions listed in Clause 10 of CBDT Circular No.3 of 2018. The Court referred to the principles laid down in Radha Krishan Industries v. State of Himachal Pradesh, emphasizing that the power under Article 226 is discretionary and should not be invoked when an effective alternate remedy is available, unless specific exceptions are met. Since none of the exceptions were fulfilled in this case, and the Revenue had failed to avail the statutory remedy under Section 260A, the Court declined to exercise its extraordinary jurisdiction under Article 226. The petitions were dismissed.

The High Court held that the writ petitions filed under Article 226 of the Constitution were not maintainable. The Court reasoned that while the Revenue argued the issue had a cascading effect, which could potentially allow for invoking writ jurisdiction as per the Supreme Court's rulings in Surya Herbal Ltd. and S.R.M.B. Dairy Farming (P) Ltd., none of the exceptions to the rule of alternate remedy, as laid down in Radha Krishan Industries v. State of Himachal Pradesh, were fulfilled. The Court emphasized that the statutory remedy under Section 260A was available and that the Revenue had failed to avail it. The Court declined to exercise its extraordinary jurisdiction under Article 226, stating that the power under Article 226 cannot be invoked to direct a statutory authority to act contrary to law. The petitions were dismissed.

The High Court held that the writ petitions filed under Article 226 of the Constitution were not maintainable. The Court reasoned that while the Revenue argued the issue had a cascading effect, this contention did not fall within the exceptions outlined in Paragraph 10 of CBDT Circular No.3 of 2018, which would allow for appeals despite the low tax effect. The Court also referred to the Supreme Court's observations in Radha Krishan Industries v. State of Himachal Pradesh, which summarized the principles governing the exercise of writ jurisdiction in the presence of an alternate remedy. The Court found that none of the exceptions to the rule of alternate remedy, as laid down in Radha Krishan Industries, were fulfilled in the present case. Therefore, the Revenue ought to have availed the statutory remedy under Section 260A of the Act. The High Court declined to exercise its extraordinary jurisdiction under Article 226 of the Constitution.

The High Court held that the writ petitions were not maintainable. The Court reasoned that while the Revenue had a statutory remedy of appeal under Section 260A of the Income Tax Act, 1961, they chose to invoke the extraordinary writ jurisdiction under Article 226 of the Constitution. The Court referred to the principles laid down by the Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh, which emphasize that the High Court should ordinarily not entertain a writ petition when an effective alternate remedy is available, unless specific exceptions are met. The Court found that none of the exceptions, such as violation of principles of natural justice or the order being wholly without jurisdiction, were fulfilled in the present cases. The Court concluded that the Revenue's contention of a cascading effect, while a valid consideration for not strictly applying monetary limits, did not override the availability of a statutory appeal. Therefore, the High Court declined to exercise its extraordinary jurisdiction under Article 226 and dismissed the petitions.

The High Court held that the writ petitions were not maintainable. The Court noted that an appeal against an order passed by the ITAT under Section 234E of the Act is maintainable under Section 260A of the Act. While acknowledging that the existence of an alternate remedy does not always bar writ jurisdiction, the Court referred to the principles laid down by the Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh. The Court found that none of the exceptions to the rule of alternate remedy, such as enforcement of fundamental rights, violation of principles of natural justice, orders wholly without jurisdiction, or challenge to the vires of legislation, were fulfilled in the present case. The Court concluded that the Revenue had failed to avail the statutory remedy under Section 260A and that the argument of cascading effect, while noted, did not override the availability of an effective alternate remedy. Therefore, the High Court declined to exercise its extraordinary jurisdiction under Article 226 of the Constitution.

The High Court held that the writ petitions were not maintainable. While acknowledging the existence of a statutory remedy under Section 260A, the Court noted that the Revenue invoked Article 226, claiming a cascading effect. However, the Court found that the facts of the case did not fall within the exceptions to the rule of alternate remedy as laid down by the Supreme Court in Radha Krishan Industries v. State of Himachal Pradesh. The Court emphasized that the power under Article 226 cannot be invoked to direct a statutory authority to act contrary to law. Since the Revenue failed to avail the statutory remedy and its case did not fit any exceptions, the Court declined to exercise its extraordinary jurisdiction under Article 226. The petitions were dismissed.

The High Court held that the Revenue's writ petitions were not maintainable under Article 226 of the Constitution. The Court noted that an effective alternate remedy by way of statutory appeal under Section 260A was available. The Court referred to the Supreme Court's decision in Radha Krishan Industries v. State of Himachal Pradesh, which summarized the principles governing the exercise of writ jurisdiction in the presence of an alternate remedy. The Court found that none of the exceptions laid down in Radha Krishan Industries (e.g., enforcement of fundamental rights, violation of principles of natural justice, lack of jurisdiction, challenge to vires of legislation) were fulfilled in the present case. While the Revenue argued for a cascading effect, the Court found that this argument did not bring the case within the exceptions to the rule of alternate remedy. Therefore, the High Court declined to exercise its extraordinary jurisdiction under Article 226 and dismissed the petitions.

The High Court allowed the petition and quashed the impugned notices. The Court found that the only material relied upon by the assessing officer was the material supplied by the assessees themselves for AY 2015-16. This material did not constitute a ground for believing that there was a failure to disclose a material fact or that income had escaped assessment for AY 2010-11. The reasons stated by the assessing officer regarding the receipt of ₹3 crores during AY 2010-11 were virtually given up, and a new reason about "accrual" was sought to be put forward. The Court held that new reasons cannot be furnished, nor can there be additions to existing reasons. The decision in Kelvinator of India Ltd. was relied upon, stating that reopening requires tangible material and a live link with the formation of belief, and a mere change in opinion is insufficient. The Court found that the jurisdictional parameters were not satisfied, making it their duty to grant relief. The ratio is that reopening of assessment under Section 147/148 requires tangible material and a live link to the belief of escapement, and new reasons cannot be introduced after the issuance of notices.

The High Court allowed the petition, quashing and setting aside the notice dated March 26, 2019, issued under Section 148 and the order dated September 30, 2019. The Court found that the condition precedent for reopening the assessment beyond the period of four years, as stipulated by the proviso to Section 147, was not fulfilled. The Court relied on the principle that for reopening beyond four years, both the AO's reason to believe that income has escaped assessment and the reason to believe that such escapement occurred due to the assessee's failure to disclose fully and truly all material facts must co-exist. The Court noted that the statement in the reasons for reopening, attributing escapement to the assessee's failure to disclose, was an attempt to circumvent the proviso. Furthermore, another reason cited for reopening (no income offered under House Property despite showing constructed units) was not mentioned in the reasons for believing income escaped due to non-disclosure, thus failing to satisfy the condition precedent for reopening beyond four years. The Court held that the assessee had made a full and true disclosure of primary facts, and the AO's duty is to draw inferences, not the assessee's to communicate them.

The Tribunal held that the notice dated March 27, 2019, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2012-2013, and the subsequent order dated September 30, 2019, rejecting the assessee's objections, were quashed and set aside. The Tribunal found that the assessee had truly and fully disclosed all material facts necessary for the assessment. The original assessment was a scrutiny assessment where the Assessing Officer had all primary facts, including the computation of income from house property and eligibility for deduction under Section 80 IB, before him. The Assessing Officer had applied his mind and made necessary inquiries. The Tribunal observed that the reasons for reopening were based on the very same material that was on record during the original assessment, indicating a change of opinion by the Assessing Officer rather than a failure on the part of the assessee to disclose material facts. The Tribunal emphasized that where one view is conclusively taken by the Assessing Officer based on the material on record, it is not open to reopen the assessment based on the same material to take another view. The statement in the reasons for reopening regarding failure to disclose fully and truly all material facts was considered an attempt to circumvent the restrictions imposed by the proviso to Section 147, as no specific undisclosed material fact was identified. Therefore, the condition precedent for reopening an assessment beyond four years was not fulfilled. The petition was allowed.

The High Court allowed the writ petition, quashing the notice under Section 148 and the order rejecting the objections. The Court found that the assessee had made a full and true disclosure of all material facts necessary for the assessment. The original assessment under Section 143(3) had considered the capital reduction and allowed the long-term capital loss based on the assessee's accounts. The reasons for reopening, as stated by the Assessing Officer, relied on the same account books but sought to take a different view, which was impermissible. The Court held that this constituted a reopening based on a change of opinion, violating the proviso to Section 147 of the Act. The statement in the reasons for reopening that the assessee failed to disclose facts was deemed an attempt to circumvent the restrictions imposed by the proviso to Section 147. The Court relied on its previous decision in "Ananta Landmark Pvt.Ltd." to support the reasoning that an assessment cannot be reopened based on the same material to arrive at another view when a conclusive view was already taken.

The High Court held that the impugned order dated July 3, 2019, was liable to be quashed and set aside. The Court found that the intimation dated June 20, 2019, did not provide a reasonable opportunity of being heard as required by Section 127(2)(a). The intimation merely stated the petitioner was "connected to this group" without providing any specific details, rendering the show cause notice vague and preventing the assessee from effectively responding. The Court noted that the show cause notice was issued under Section 127(1) when the transfer involved officers not subordinate to the same Commissioner, making Section 127(2)(a) applicable. Furthermore, the impugned order failed to address all points raised by the petitioner in his reply, and a requested personal hearing was not granted. The Court also observed that the show cause notice was issued by an Income Tax Officer, not the Commissioner who exercised the power, rendering the notice defective. The Court directed the respondents to re-transfer the file and PAN card back to the original Assessing Officer in Mumbai and to provide all necessary details in any future show cause notice, along with granting a personal hearing.

The Tribunal held that the order of rejection of the petitioner's declaration under the VSV Act was bad in law. Firstly, the Tribunal found that the VSV Act, as enacted, does not contain any provision to exclude interest charged under Sections 234A, 234B, or 234C. It noted that Section 3 of the Act and the definitions of 'tax arrear' and 'disputed interest' clearly indicate that disputed interest is a valid subject for settlement under the Act. Secondly, regarding the pendency of the appeal, the Tribunal referred to its own previous decision in Writ Petition (lodging) No.12932 of 2021, which followed the Delhi High Court's ruling in Shyam Sunder Sethi Vs. PR. Commissioner of Income Tax-10 and ors. This precedent established that an appeal is considered 'pending' from the time it is filed until its disposal, and the VSV Act does not mandate that the appeal must be admitted before the specified date. The Tribunal also noted that the condonation of delay was communicated to the petitioner before the revised declaration was filed, and the revenue's affidavit did not reflect awareness of this. Therefore, the Tribunal directed the respondent to process the petitioner's declaration under the VSV Act.

The Tribunal held that the order of rejection of the VSV application was bad in law and set it aside. The Tribunal reasoned that the communication from the Commissioner of Income-tax (Appeals) inquiring about opting for the VSV Scheme or furnishing ground-wise submissions implied that the delay in filing the appeal had been condoned. Furthermore, the Tribunal agreed with the Delhi High Court's decision in Shyam Sunder Sethi Vs. PR. Commissioner of Income-Tax-10, which held that an appeal is considered 'pending' under Section 2(1)(a) of the VSV Act from the date of its filing until its disposal, and the Act does not mandate that the appeal must be admitted before the specified date. The Tribunal found that the petitioner's appeal, filed with a condonation application before the date of the CBDT Circular, would be deemed pending as required by the VSV Act. The Tribunal directed the respondent to process the petitioner's VSV forms.

The High Court held that the proceedings initiated under Section 153A of the Income Tax Act, 1961, could continue. However, it directed that the Assessing Officer shall not pass any final orders during the pendency of the Tax Appeals. This decision was made to provide interim relief to the assessees, ensuring that their appeals could be heard and decided on merits without the assessments being finalized prematurely. The Court clarified that this direction applied to the assessment years that are the subject matter of these appeals. The applications were disposed of with this clarification, and the appeals were listed for final hearing on November 26, 2021. No issue was expressly left undecided.

The High Court held that the amount of Rs. 7,06,590/-, which was adjusted or set off, constitutes a deemed payment amounting to actual payment within the meaning of Section 43B of the Act. The court reasoned that since the law permits the assessee to set off sales tax paid on raw materials against sales tax collected on finished goods, the assessee effectively retained sales tax already paid. This adjustment, by legal fiction, is deemed to be an actual payment of the tax liability. The court found support for this view in the Calcutta High Court's judgment in Commissioner of Income Tax Vs. National Standard Duncan Ltd. The court concluded that the disallowance for sales tax set-off was not correct. Therefore, Question No. 2 was answered in favour of the assessee. The court also noted that despite the revenue's contention that the issue was not pressed, it had framed Question No. 2, indicating its willingness to address the merits.

The High Court held that the reliance by the revenue on the Explanation to Section 7 of the VSV Act was misplaced. The restriction on payment of interest under Section 244A applies only when an assessee is eligible for a refund pursuant to making an application under the VSV Act, i.e., when the tax paid exceeds the amount payable under Section 3 of the VSV Act. In such cases, the assessee is entitled to a refund but without interest. However, in this case, the interest of Rs. 42,72,210/- was granted as per the assessment order passed well before the VSV declaration. The petitioner had not claimed interest under Section 244A on the amount of refund claimed in Form No. 1. The Explanation to Section 7 refers to amounts paid 'in respect of' tax arrears which are refunded under the VSV Act. The interest paid was on an undisputed part of the excess tax paid, not on the disputed tax. Therefore, the impugned Form No. 3 demanding the return of this interest was set aside. The Court directed the respondent to issue a revised Form No. 3.