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The Tribunal held that the Assessing Officer (AO) had no jurisdiction to issue the notice under Section 148 of the Income Tax Act, 1961, to reopen the assessment for AY 2012-2013. The reopening was sought more than four years after the original assessment order. The proviso to Section 147 requires that for reopening beyond four years, there must be an omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Tribunal found that the assessee had made a full and true disclosure of material facts during the original assessment proceedings. The reasons for reopening, as stated by the AO, were based on a change of opinion regarding the allowability of interest expenses under Section 57 of the Act, which was already considered during the original assessment. The Tribunal relied on the principles laid down in *Parashuram Pottery Works Co. Ltd. v. Income Tax Officer* and *3i Infotech Limited v. Assistant Commissioner of Income Tax*, emphasizing that reopening beyond four years cannot be based on a mere change of opinion or on the same material that was already on record and considered by the AO. The statement in the reasons for reopening that income had escaped assessment due to the assessee's failure to disclose fully and truly all material facts was considered an attempt to circumvent the restrictions imposed by the proviso to Section 147. Therefore, the notice under Section 148 and the subsequent order rejecting objections were quashed.
The High Court held that the Principal Commissioner of Income-Tax was not correct in rejecting the revision petition on the ground of a bar under Section 270AA(6) of the Income Tax Act, 1961. The Court reasoned that Section 270AA(6) only prohibits appeals under Section 246A or revision applications under Section 264 against the order of assessment or reassessment when an application under Section 270AA(1) has been accepted. It does not provide a bar against challenging an order passed by the Assessing Officer rejecting an application made under Section 270AA(1) seeking immunity from penalty. Therefore, the impugned order of the PCIT was set aside. The matter was remanded back to the PCIT to consider the Section 264 application de novo, after granting a personal hearing to the Petitioner, and to pass orders in accordance with law within six weeks.
The High Court held that the impugned notice dated March 29, 2019, under Section 148 and the subsequent order dated September 16, 2019, rejecting objections, were invalid and set aside. The Court reasoned that the reopening notice was issued more than four years after the end of AY 2012-13. Under the proviso to Section 147, such reopening requires a failure on the part of the assessee to disclose fully and truly all material facts. The reasons recorded for reopening explicitly stated that the assessee had added short-term capital gains of Rs. 9,42,03,318/-. Furthermore, the assessment order dated January 31, 2017, itself allowed the set-off of this amount. Therefore, there was no failure on the part of the assessee to disclose this fact. The Court emphasized that reasons for reopening cannot be supplemented or substituted by affidavits or oral submissions. Since the reasons recorded did not indicate any non-disclosure of material facts, the notice was issued without jurisdiction. The ratio is that for reopening after four years, specific failure to disclose material facts must be evident in the reasons recorded, not just a general assertion or later supplementation.
The High Court quashed and set aside the impugned orders in each of the writ petitions, all dated 10th February 2020. The Court remanded the matters back to the concerned authority for denovo consideration. The Court explicitly stated that it had not made any observations on the merits of the case and that the petitioners' rights and contentions were kept open. The concerned authority was directed to grant a personal hearing to the petitioners as per the rules and pass necessary orders within six weeks from the date of the order. The reasoning was based on the Revenue's concession that the one-day notice violated principles of natural justice. The ratio decidendi is that a procedural violation of natural justice, when conceded by the Revenue, warrants setting aside the order and remanding the matter for fresh consideration with proper procedural safeguards.
The High Court held that the pending appeal ITA No.3633/Mum/2007 is indeed a Revenue Appeal. Consequently, the first proviso to Section 3 of the DTVSV Act is applicable, meaning the Petitioner is liable to pay only 50% of the disputed tax. Regarding the recovery of interest, the Court found no provision in the DTVSV Act that authorizes the recovery of interest paid earlier under Section 244A of the IT Act by adding it to the amount of disputed tax. The Court relied on the principles from Harshad Shantilal Mehta and Arthur Anderson & Co. that 'tax' under Section 2(43) of the IT Act does not include interest, and the Gujarat High Court's decision in Vishwajit M. Mehta, which held that the Assessing Officer had no power to levy further interest under Section 215(3) in that context. The Court concluded that the addition of Rs. 7,75,272/- to the disputed tax in the impugned Form-3 is bad in law. The Court quashed Form-3 dated 26th March, 2021 and directed the Respondent No.1 to issue a fresh Form-3 within three weeks, determining the disputed tax in accordance with the judgment. The Petitioner was directed to make payment within two weeks of the revised Form-3. The Court noted that Section 6 of the DTVSV Act does not permit charging interest on tax arrears, but a complete prohibition from recovery might not be correct as the restraint is on instituting proceedings for an offence, not for recovery of interest on refund. The Court did not delve into whether the Revenue could recourse to Section 244A(3) or 234D of the IT Act.
The High Court held that the Petitioner is entitled to file a declaration in respect of its own appeal and avail the benefits of the DTVSV Act without being obliged to include the Department's appeal on the same issue. The Court relied on Circular No.9 of 2020 issued by the CBDT, particularly the answer to Question No. 40, which explicitly states that the appellant has the option to settle their appeal, the department's appeal, or both. The Court found that the Department's interpretation in its Affidavit-in-Reply was at variance with the CBDT clarification and that the circular is binding on the department. The Court also noted that the Department's appeal had been rejected under Rule 986. Consequently, the Court set aside Form No.3 issued by the designated authority and directed the authority to consider the Petitioner's declaration in Form 1 and issue a revised Form No.3 within two weeks. The Petitioner was then directed to pay the amount as per the revised Form No.3 within two weeks thereafter. Revised Form No.3 was also to be issued for Assessment Years 2007-2008 and 2010-2011.
The High Court held that the impugned notice dated October 11, 2018, under Section 148 and the subsequent order dated September 28, 2019, rejecting objections, were liable to be set aside. The Court found that the reasons for reopening, particularly concerning the five entities and penny stock trading, were not supported by fresh tangible material that came to the AO's notice after the original assessment. The reliance on a statement recorded prior to the original assessment and general statements about trade data analysis without specific details were insufficient to establish a 'reason to believe' that income had escaped assessment. The Court emphasized that reasons for reopening cannot be improved upon or supplemented by affidavits or oral submissions and must be based on the AO's own assessment of tangible material. The Court noted that the AO was aware of the alleged penny stock issue during the original assessment, negating the claim of fresh information. The principle cited is that the Assessing Officer must disclose sufficient details of tangible material received to justify reopening an assessment, and bald statements are not enough.
The High Court, referring to its previous judgments in Shamrao Sitaram Adhe and Urmila Sanjay Pawar, held that it would be inappropriate to compel the petitioner, a poor farmer, to undergo the cumbersome process of seeking a refund from the Income Tax Authorities, especially after spending approximately 10 years in litigation. The Court adopted the reasoning from Shamrao Sitaram Adhe, emphasizing the peculiar facts and the petitioner's status as a farmer. The Court directed the Principal Commissioner of Income Tax (Respondent No. 1) to refund the deducted amount of Rs. 26,894/- to the petitioner with interest, as normally paid on excess income tax, by 30.10.2021. The Court granted fees to the appointed advocate for the petitioner. No issue was expressly left undecided.
The High Court declined to interfere with the notice issued under Section 148 of the Income Tax Act, 1961. The Court held that the petitioner's attempt to challenge the notice via a writ petition on the same day of lodging an objection was an impermissible parallel remedy. The Court noted that an error of jurisdictional fact could be a point for judicial review without relegating the noticee to the issuing authority, but the petitioner had pursued the writ remedy after submitting to the Assistant Commissioner's jurisdiction. Prima facie, the petitioner's contention of an error of jurisdictional fact was not tenable. The Court relied on GKN Driveshafts (India) Ltd. and Rajesh Jhaveri Stock Brokers (P.) Ltd. to state that the petitioner should first lodge an objection with the Assessing Officer, who must dispose of it by a speaking order. The Court found that the Assessing Officer had cause or justification to believe income had escaped assessment, and therefore, it was not the appropriate stage for the High Court to examine the reasons. The petitioner was relegated to the forum before the Assistant Commissioner, and the notice was to be taken to its logical conclusion. Any adverse finding against the petitioner would need to be supported by reasons, after which the petitioner could explore further remedies. All contentions on the notice and proceedings were left open.
The High Court held that the view of the Income Tax Officer (International Taxation) was unreasonable and illogical. The Court endorsed the view of the Appellate Authority that commercial establishments or complexes are covered by the exclusion clause of Section 2(ea)(i)(5) of the Wealth Tax Act, 1957, and this exemption does not require the assessee to use the properties for their own business. Since the CIT(A)'s order for AY 2005-2006, which set aside the assessment on these grounds, was not challenged by the revenue, it was considered binding. The Court found it illogical for the revenue to deny refunds for subsequent years when assessment orders for those years had not even been passed, and the underlying issue regarding the exemption of commercial properties had been settled in favor of the assessee by the CIT(A). The Court directed the respondents to refund the wealth tax paid by the petitioner for AY 2006-2007 to 2009-2010, along with applicable interest.
The High Court held that the commercial properties owned by the petitioner were indeed in the nature of commercial establishments or complexes and were therefore excluded from the definition of 'assets' under Section 2(ea)(i)(5) of the Wealth Tax Act, 1957. The Court endorsed the view of the Appellate Authority that the exemption under this clause does not require the assessee to use the properties for their own business. Consequently, the initial assessment by the Wealth Tax Officer for AY 2005-2006 was erroneous. The Court found the Income Tax Officer's stance that separate appeals were required for AY 2006-2007 to 2009-2010 to be unreasonable and illogical, particularly as assessment orders for those years had not been passed. The Court directed the respondents to refund the wealth tax amounts paid by the petitioner for AY 2006-2007 to 2009-2010, along with applicable interest, within four weeks. The rule in terms of prayer clause (a) in all petitions was made absolute.
The High Court held that the commercial properties owned by the petitioner are indeed exempt from wealth tax. The Court endorsed the view of the Appellate Authority, stating that Section 2(ea)(i)(5) of the Wealth Tax Act, 1957, exempts any property in the nature of commercial establishments or complexes, and the exemption does not require such properties to be used by the assessee for their own purpose. Therefore, the initial assessment by the WTO for AY 2005-2006 was erroneous. The Court found the Income Tax Officer's reasoning for refusing the refund for subsequent years to be unreasonable and illogical. The Court noted that assessment orders for AY 2006-2007 to 2009-2010 had not even been passed, making the requirement for separate appeals for those years premature. The Court made the rule absolute in terms of prayer clause (a) in all petitions, directing the respondents to refund the wealth tax amounts paid by the petitioner for AY 2006-2007 to 2009-2010, along with interest at 12% per annum if not provided for by law, within four weeks.
The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, was bad in law. The Court reasoned that the basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that an amalgamating entity ceases to exist upon an approved scheme of amalgamation. The Court referred to the Supreme Court's judgment in Principal Commissioner of Income Tax V/s. Maruti Suzuki India Ltd., which reiterated that when jurisdiction is invoked based on something fundamentally at odds with legal principles, the notice is bad in law. The Court found that the respondent was aware of the merger, as evidenced by a previous notice for AY 2011-2012 issued correctly in the petitioner's name. The Court rejected the argument of human error under Section 292B, stating that it was a fundamental error, not a mere clerical one, especially given the prior knowledge of the merger. The Court allowed the petition, quashing the notice and the subsequent order rejecting objections.
The High Court held that the Income Tax Officer's view was unreasonable and illogical. The Court endorsed the view of the Appellate Authority that commercial establishments or complexes are covered by the exclusion clause of Section 2(ea)(i)(5) of the Wealth Tax Act, 1957, and this exemption does not require the assessee to use the properties for their own business. The Court found that the assessment orders for AY 2006-07 to 2009-10 had not been passed, making the requirement for separate appeals for these years premature and irrelevant. Since the Appellate Authority's order for AY 2005-06 had not been stayed, set aside, or appealed against, it was binding. Consequently, the Court made the rule absolute in terms of prayer clause (a) of all petitions, directing the respondents to refund the total wealth tax paid (Rs. 15,49,647) along with applicable interest within four weeks. If no statutory interest provision existed, 12% per annum interest was to be paid after the expiry of four weeks.
The Tribunal held that the adjustment of the refund was illegal. The court emphasized that Section 245 of the Income Tax Act, 1961, explicitly requires the Assessing Officer to give a written intimation to the assessee of the proposed action *before* setting off the refund against any outstanding demand. The judgment noted that the respondent admitted to issuing the intimation under Section 245 only on May 13, 2020, whereas the adjustment, as reflected in Form 26AS, was made on May 5, 2020. This failure to provide prior intimation was a violation of a mandatory procedural requirement, rendering the adjustment wholly illegal. The court found support for this view in the precedents of Suresh B. Jain Vs. A.N. Shaikh and Hindustan Unilever Limited Vs. Deputy Commissioner of Income-tax-1 (1). Furthermore, the court acknowledged that the petitioner had deposited 20% of the disputed demands for AY 2015-16 and AY 2016-17, leading to a stay of demand. This meant the time for payment was extended, and the petitioner was not in default. Consequently, the respondent was directed to refund the amounts due for AY 2019-20, along with statutory interest, within four weeks.
The High Court, having regard to the Full Bench's detailed judgment and order dated March 11, 2021, allowed both appeals. The Full Bench had answered the questions referred to it. Specifically, on Question No. 1, the Full Bench held that a mere defect in the notice, such as not striking off irrelevant matter, vitiates penalty proceedings because the notice must inform the assessee of the grounds and cannot draw strength from the assessment proceedings. It emphasized that penalty proceedings are distinct and must stand on their own. The Full Bench also held that omnibus notices betray non-application of mind, as per the Supreme Court's decision in Dilip N. Shroff. The Court found that the practice of issuing printed notices without deleting inapplicable parts is disapproved. Consequently, the additional substantial question of law framed was answered in favour of the assessee and against the revenue. The appeals were disposed of on these terms, with no order as to costs. Stamp Number (Appln.) No.425 of 2020 was also disposed of as not surviving.
The High Court held that the income earned from leasing out plant and machinery is squarely covered by the decisions in CIT Vs. K. Ravindranathan Nair (2007) 15 SCC 1 and Sesa Goa Ltd. Vs. CIT (Tax Appeal No. 53 of 2006). In Ravindranathan Nair's case, processing charges, considered independent income like rent, commission, etc., were held to be reduced by 90% from gross total income to arrive at business profits as per clause (baa) of Explanation to Section 80HHC. Similarly, in Sesa Goa Ltd., receipts from hiring barges were considered in the nature of rent or similar to rent, falling under clause (baa). The assessee has not been able to show any nexus between the leasing activity and export activity. Therefore, the income earned from hiring out plant and machinery must be deducted pursuant to Explanation (baa) to Section 80HHC. The substantial questions of law are answered in the affirmative. The appeals are disposed of accordingly, with no remittance to the authorities.
The High Court held that the Income Tax Appellate Tribunal (ITAT) was not in error in appreciating that the respondent-assessees are not primary co-operative banks pursuant to the Banking Regulation Act, 1949. Consequently, they are not disentitled from claiming deductions under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Court reasoned that a co-operative bank, for exclusion under Section 80P(4), must satisfy three cumulative conditions: its principal object must be the business of banking, its paid-up share capital and reserves must not be less than one lakh rupees, and its bye-laws must not permit the admission of any other co-operative society as a member. While the societies met the paid-up share capital criterion, the Revenue failed to demonstrate that their bye-laws prohibited the admission of other co-operative societies. Furthermore, the Court reiterated its consistent view, supported by Supreme Court pronouncements in Mavilayi Service Co-operative Bank Ltd. & ors. vs. Commissioner of Income Tax, Calicut and anr. (2021 SCC OnLine SC 16), that merely providing credit facilities to members does not transform a co-operative society into a co-operative bank under the Banking Regulation Act, 1949. The Supreme Court also noted that Section 80P is a benevolent provision and Section 80P(4) specifically excludes only co-operative banks possessing an RBI license to do banking business. The appeals were dismissed.
The High Court held that the substantial question of law framed at the time of admission was re-framed with the consent of both parties to specifically refer to ITA No.72/PNJ/2012. The Court noted that the ITAT's order in ITA No.72/PNJ/2012 had been tested by the High Court in Tax Appeal Nos. 13 and 14 of 2013 and 25 of 2014, which were dismissed on 7/5/2021. This dismissal confirmed that the assessee had correctly claimed the deduction. Consequently, there was no error in the assessee's claim, and therefore, no basis for imposing a penalty. The Court further stated that an erroneous claim simpliciter does not automatically attract a penalty; it requires deliberate misrepresentation or suppression of facts. Since the deduction was ultimately allowed, the penalty levy was unjustified. The concurrent findings of the lower authorities were upheld, and the appeal was dismissed.
The High Court held that the impugned draft assessment order dated April 22, 2021, is unsustainable in law. The Court found that the assessee had responded to the show-cause notice and had made requests for a personal hearing on multiple dates. The judgment emphasizes that Section 144B of the Income Tax Act, 1961, mandates adherence to the prescribed procedure, including principles of natural justice, and that assessments made in contravention of this procedure after April 1, 2021, would be considered non est. The Court noted that the petitioner was losing out on an opportunity available under clause (xxiii)(b) read with sub-section (7) and clause (vii) of Section 144B. Therefore, the Court allowed the petition, quashing the draft assessment order and remanding the matter back to the authorities to carry forward the assessment process in accordance with Section 144B, including providing the petitioner with an opportunity of hearing.
The High Court held that the procedure prescribed under Section 144C of the IT Act is mandatory and not directory. It found that the failure to follow the procedure under Section 144C(1), which requires the issuance of a draft assessment order before a final order when there is a proposed variation prejudicial to the assessee, constitutes a jurisdictional error. The Court noted that the petitioner is an eligible assessee and that the final assessment order was passed without a draft assessment order, depriving the petitioner of its right to file objections before the Dispute Resolution Panel (DRP). This omission was considered a breach of a mandatory provision and an incurable illegality, not curable under Section 292B of the IT Act. The Court reasoned that the legislature intended to provide an important opportunity to the assessee, which was taken away by the Assessing Officer's failure to follow the statutory mandate. Consequently, the final assessment order, demand notice, and penalty notice dated April 6, 2021, were quashed and set aside as void ab initio due to lack of jurisdiction.
The Tribunal held that the Petitioner's charge/mortgage over the said premises has priority over the dues of the Income Tax Department. The reasoning is based on the principle that the charge of a secured creditor would have priority over government dues under the Income Tax Act. The Tribunal noted that there is no provision in the Income Tax Act that grants paramountcy to the Income Tax department's dues over a secured debt. The Tribunal distinguished the case of Central Bank of India Vs. State of Kerala, relied upon by the Revenue, by observing that it was decided prior to the insertion of Section 31B in the RDB Act and Section 26E in the SARFAESI Act, which now provide for the priority of secured creditors. Consequently, the attachment dated January 17, 2013, by the TRO cannot impede the Petitioner's rights as a secured creditor. The Tribunal directed Respondent No. 1 to lift the attachment and issue a No Objection Certificate for the Petitioner to sell the premises within two weeks.
The High Court held that the substantial question of law framed did not arise in the matter. It noted that the specific issue regarding the market price as of March 31st versus the average market price was not clearly raised before the Assessing Officer or the CIT(Appeals). While the ITAT order mentioned a submission about the market price in March 2009 being ₹18,107/- versus the average market price of ₹24,721/-, this was not backed by a ground in the memo of appeal before the ITAT. Therefore, the question was not effectively raised or adjudicated by the lower authorities. Furthermore, the Court found that the AO, CIT(Appeals), and ITAT had recorded pure findings of fact, which could not be interfered with in a second appeal unless perversity was established. The assessee failed to produce cogent evidence to explain the variation between the cost price and market price, even before the ITAT. The Court relied on the Supreme Court's decision in CIT vs. British Paints India Ltd., which held that the AO has the power and duty to compute taxable income appropriately when accounts do not disclose the real cost of stock-in-trade, and that findings of fact based on cogent evidence should not be interfered with. Consequently, the appeal was dismissed.
The High Court held that the first substantial question of law (A) was declined for framing by its order dated 14.06.2017, as no such challenge was raised before the ITAT, and the authenticity of documents was not disputed. Regarding the second substantial question of law (B), the Court noted concurrent findings of fact by the CIT(A) and ITAT that the loans advanced to subsidiaries were not sham transactions but were for commercial expediency. These findings were supported by material on record, including the assessee being a holding company with major stakes, subsidiaries not earning interest income from these loans, and the assessee having reserves of over Rs. 1,000 crores. The Court distinguished the S.P. Jaiswal case, finding it factually different. It also relied on S.A. Builders, stating that commercial expediency can be established in various circumstances, including where a holding company has a deep interest in its subsidiary and the funds are used for business purposes. The Court found that the present case met the criteria for commercial expediency. The appeal was dismissed as the substantial question of law was answered against the Revenue.
The Tribunal held that the pending Appeal No. 4632/MUM/2006 before the ITAT is unequivocally the Revenue's appeal. This conclusion is supported by the procedural history: the Assessing Officer made an addition, the CIT(A) deleted it, and the Revenue appealed to the ITAT. The High Court's order, while setting aside the ITAT's order and restoring the appeal for fresh adjudication, specifically referred to the Revenue's appeal. The High Court's judgment dated 29th August 2018 also clearly indicated that the appeal pending before the ITAT was the Revenue's appeal. Therefore, the first proviso of Section 3 of the DTVSV Act, which stipulates payment of 50% of the disputed tax in cases where the appeal is by the Revenue, is applicable. The Tribunal quashed the impugned Form-3 dated 26th March 2021 and directed the respondent to issue a fresh Form-3 within two weeks, reflecting the amount payable at 50% of the disputed tax.
The High Court held that the exclusion of appeals arising from intimations under Section 143(1)(a)(i) or (ii) of the IT Act, as stipulated in Answer to Question No. 71 of Circular No. 21/2020, is unsustainable and unacceptable. The Court found that the DTVSV Act and its rules do not create such a classification, and the circular's distinction lacks any rationale or plausible basis, making it arbitrary, unreasonable, and discriminatory, thus violating Article 14 of the Constitution. The Court noted that the revenue could not provide any justification for this classification. The circular, issued under Sections 10 and 11 of the DTVSV Act, was intended to aid the scheme's operation, not to deviate from its object. Therefore, the Court set aside Answer to Question No. 71 of Circular No. 21/2020. Consequently, the writ petition was allowed, directing the respondent to issue Form No. 3 accepting the petitioner's application under the DTVSV Act.
The High Court held that both the ITAT Bangalore Bench's order dated March 19, 2020, and the President of ITAT's order dated August 20, 2020, were unsustainable in law and were accordingly set aside and quashed. The Court reasoned that the applications for transfer of appeals were made by authorities who were not parties to the appeals, making them incompetent to file such applications. Consequently, the transfer orders based on these invalid applications were void. The Court rejected the revenue's contention regarding Section 127, stating that its principles do not apply to the transfer of appeals between ITAT Benches. It also dismissed the preliminary objections regarding the territorial jurisdiction of the Bombay High Court and the maintainability of a writ petition over an appeal under Section 260A, clarifying that Section 260A applies to orders passed in appeal on merits, not procedural transfer orders. The ratio decidendi is that transfer orders of appeals between ITAT Benches are invalid if not initiated by parties to the appeal and based on valid applications. The operative direction was to quash the impugned orders and allow the writ petition.
The High Court held that the substantial questions of law are answered against the Revenue and for the Assessees. The Court found that the Assessee has consistently engaged in the same activities over the years, which were accepted by the AO in previous assessment years. The High Court had previously ruled in favour of the Assessee, declaring it a cooperative credit society entitled to Section 80P benefits. The Court saw no reason for the AO to adopt a different stance for the current assessment year. Furthermore, the Apex Court in Mavilayi (SC) has clarified that IT authorities cannot go behind the registration certificate of a cooperative society to examine its activities and determine its true nature. Since all Assessees are registered cooperative credit societies, and banking, as understood by the Revenue, is not their core activity, accepting deposits from non-members does not disqualify them from claiming benefits under Section 80P of the IT Act. The Court also noted that the AO's disallowance under Section 40(a)(ia) was deleted by the CIT(A) as the Assessee's case was covered by clause (v) to Section 194A(3). The disallowance of audit fees was upheld by the CIT(A). The operative direction is that the Revenue's appeals are dismissed.
The High Court held that all substantial questions of law were answered against the Revenue and in favour of the Assessee. Regarding the first substantial question of law concerning Section 14A, the Court relied on its earlier decision in CIT v. Sociedade De Fomento. The Court noted that in Sociedade De Fomento, the assessee had invested in exempted categories, earned income, and the issue was whether expenditure was incurred. The Court ruled in favour of the assessee, stating that if no expenditure is incurred, Section 14A cannot be invoked. The Court found that the AO accepted the assessee had not borrowed funds, the assessee had deducted proportionate expenditure which was not disputed, and the assessee received charge-free services from financial institutions, implying no expenditure. Therefore, the ratio of Sociedade De Fomento squarely applied, and the third substantial question of law (which pertained to Section 14A) was answered against the Revenue. Tax Appeals No. 14 of 2013 and 25 of 2013 were disposed of as the issues were covered by the decision in Tax Appeal No. 13 of 2013.
The High Court disposed of Writ Petition No.793 of 2005. Regarding the recovery notice dated 22.09.2004, the Court found it inadequate and set it aside, granting liberty to the respondents to issue a fresh notice in accordance with law to the legal heirs of the original assessee. The Court also addressed the prayer for the release of seized gold and other articles. It noted the complex legal heirship dispute of the original assessee, Shri C.S. Goenka, and the Supreme Court's decision identifying Sushila N. Rungta as the legal heir. The Court directed that if the petitioners (Nirajkumar N. Rungta and Bharti Saraf, as legal heirs of Sushila N. Rungta) place certified copies of relevant Supreme Court orders and probate orders on record to the satisfaction of the respondents, the seized articles (85617 grams of gold, jewellery, cash, and other valuable articles) shall be forthwith released to them. The judgment also stated that upon release, the petitioners would be liable for wealth tax assessment on the value of these articles. The release of seized gold was to occur within six weeks of the petitioners furnishing the required documents. The judgment did not decide the substantive wealth tax issues raised in the other appeals and references, as they were not elaborated upon in the provided text.
The High Court, in its judgment, addressed the writ petition concerning recovery proceedings and the release of seized articles. It set aside the recovery notice dated 22.09.2004, directing the revenue to issue a fresh notice in accordance with law, if permissible, to the legal heirs. Regarding the release of 85,617.80 grams of gold, jewellery, cash, and other valuable articles, the Court noted the complex history of legal heirship disputes in the Supreme Court. It directed that if the petitioners (Nirajkumar N. Rungta and Bharti Saraf, as legal heirs of Sushila N. Rungta) provide certified copies of relevant Supreme Court orders and probate to the satisfaction of the respondents, the seized articles shall be forthwith released to them. The judgment explicitly states that the petitioners will be liable for wealth tax assessment on the value of these articles once released. The Court did not decide on the wealth tax appeals themselves but disposed of the writ petition with these directions. The specific questions of law from the earlier references and appeals were not adjudicated upon in this judgment, as the focus was on the writ petition and the procedural aspects of asset release.
The High Court disposed of Writ Petition No.793 of 2005. It set aside the recovery notice dated 22.09.2004, granting liberty to the respondents to issue a fresh notice in accordance with law to the legal heirs of the original assessee. Regarding the release of seized gold and other articles, the Court directed that if the petitioners (legal heirs of Sushila N. Rungta) place certified copies of relevant Supreme Court orders and the probate order on record to the satisfaction of the respondents, the seized articles shall be forthwith released to the petitioners. The petitioners were also directed to place documentary evidence of being the legal heirs of Sushila N. Rungta. The Court noted that once the articles are released, the petitioners would be liable for wealth tax assessment on their value. The seized gold was to be released within six weeks of the furnishing of the required documents. The judgment did not decide the substantive wealth tax issues raised in the other applications and appeals, as they were not elaborated upon in the provided text.
The High Court held that the petitioner's case could not be regarded as a 'search case' under the DTVSV Act. The Court found that the assessment order was not based on any search initiated under Section 132 or requisitions under Section 132A of the Income-tax Act concerning the petitioner. The additions were made based on information obtained from searches on other entities, and the assessment order did not contain any allegations that the petitioner was involved in collusion or had booked artificial gains. Furthermore, no incriminating material belonging to the petitioner was obtained during any search. The Court noted that Circular No. 4/2021, which modified the answer to FAQ No. 70 in Circular No. 21/2020, further supported the petitioner's position that his case would not be considered a search case. Consequently, the order dated January 26, 2021, passed by the Designated Authority determining tax payable at 125% of the disputed tax was held to be unsustainable. The Court set aside the impugned order and directed the Designated Authority to pass a fresh order determining the tax payable as a non-search case, in accordance with the DTVSV Act and Circular No. 4/2021, within two weeks.
The High Court held that the notice dated March 30, 2019, issued under Section 148 of the Income Tax Act, 1961, and the subsequent assessment order dated December 31, 2019, passed under Section 144 read with Section 147 of the Act, both in the name of M/s. TecnovateEsolutions Pvt. Ltd. (TSPL), were without jurisdiction and void ab initio. The Court reasoned that TSPL had ceased to exist due to amalgamation effective April 1, 2010. Initiating assessment proceedings against a non-existent entity is a substantive illegality, not a procedural violation, and cannot be cured by provisions like Section 292B of the Act. The Court relied heavily on the Supreme Court's decision in Principal Commissioner of Income Tax, New Delhi Vs. Maruti Suzuki India Ltd., which held that an assessment order passed for an assessment year in the name of a non-existing entity after an approved scheme of amalgamation is a substantive illegality. The Court noted that mere participation in proceedings by the assessee does not confer jurisdiction or create estoppel against law. The petition was allowed in terms of prayer clause (a).
The High Court held that the Principal Commissioner erred in rejecting the revision petition under section 264. The Court interpreted section 264(4)(a) to mean that the Principal Commissioner is barred from revising an order if an appeal lies but has not been made AND the time for filing such appeal has not expired, OR if the assessee has not waived their right of appeal. In this case, the Petitioner had not filed an appeal against the section 143(1) order, and the time limit for filing such an appeal had expired. The Court found that once the time to file an appeal has expired, it is not necessary for the Petitioner to waive her right of appeal for the revision to be maintainable. The Court also rejected the Revenue's argument that the Petitioner could file an appeal with condonation of delay, stating that after the expiry of the statutory period, an appeal rests on the discretion of the Appellate Authority. The Court found the impugned order unsustainable and directed Respondent No. 2 to decide the section 264 application afresh on merits. The ratio is that if the time for filing an appeal has expired, the Principal Commissioner can entertain a revision petition under section 264 even if the assessee has not explicitly waived their right of appeal.
The Court partly allowed the Notice of Motion. It directed the defendants (No. 1 to 3) to pursue their claim with the Mumbai Municipal Corporation that the suit premises is exempt from payment of taxes, cess, and charges within two months. If they do not obtain a favorable declaration of exemption within this period, they are to pay the accumulated municipal dues up to March 31, 2021, and continue to pay future municipal taxes and charges as they fall due. The Court also stipulated that if any coercive action is taken by the Municipal Corporation during the intervening two months, the costs and consequences thereof shall be borne by the defendants. The rest of the prayers in the Notice of Motion were rejected. The Court noted that the legality of the taxes levied by the Municipal Corporation was not in question, but rather who was liable to pay them. It also observed that no restraint could be ordered against the Municipal Corporation as it was not a party to the proceedings, citing the Supreme Court's decision in Siliguri Municipality and others Vs. Amalendu Das and others.
The High Court held that the reasoning applied in the companion appeals concerning the spouses of the assessees should be followed. Consequently, the impugned judgments and orders of the ITAT were set aside, and the matters were remanded to the ITAT for fresh disposal. The Court found that the assessees did not need to file cross-objections to raise the jurisdictional issue regarding Section 154. Furthermore, the Court held that there was sufficient cause to condone the delay of 248 days in filing the cross-objections. Upon remand, the ITAT was directed to permit the assessees to urge the jurisdictional issues related to Sections 153C and 154, as well as the compliance with jurisdictional parameters before action was initiated against their spouses. All contentions of both parties were expressly kept open. The ITAT was requested to dispose of the appeals expeditiously.
The High Court held that the matter needed to be remanded to the ITAT for fresh consideration. The Court agreed with the Revenue that the matter should be remanded to the ITAT to permit the assessees to raise the issue of non-compliance with the jurisdictional parameters of Section 153C of the IT Act. The Court set aside the impugned judgment and order of the ITAT in so far as it concerned the present assessees and remanded the matters to the ITAT with a direction to allow the assessees to raise the issue of compliance or non-compliance with the jurisdictional parameters necessary to initiate action under Section 153C. The Court clarified that all contentions of all parties, including other contentions raised in the appeals, were expressly kept open and not decided. The reason for not adverting to other issues was that if the jurisdictional issue was upheld by the ITAT, it might not be necessary to decide them. The ITAT was requested to dispose of the appeals expeditiously, granting a full opportunity to both parties. The Court found that the ITAT had failed to advert to the principles laid down in N. Balakrishnan (supra) and misinterpreted Section 124 of the IT Act, thus answering substantial question of law No. 4 in favor of the assessees.
The High Court set aside the impugned judgment and order of the ITAT and remanded the matters back to the ITAT. The Court directed the ITAT to permit the assessees to raise the issue of compliance or non-compliance with the jurisdictional parameters necessary to initiate action under Section 153C of the IT Act. The Court clarified that all contentions of all parties, including other issues raised in the appeals, are expressly kept open and have not been decided. The reason for the remand was that if the jurisdictional issue under Section 153C is ultimately upheld by the ITAT, it may render the decision on other issues unnecessary. The ITAT was requested to dispose of the appeals expeditiously after granting a full opportunity to both parties. The Court noted that the ITAT had failed to advert to principles laid down by the Supreme Court in N. Balakrishnan and had misinterpreted Section 124 of the IT Act concerning issue No. 4, and that Rule 27 of the Appellate Tribunal Rules allowed assessees to support an order in their favor without cross-objections.
The High Court found no error in the CBDT's Circular No.2 of 2020 or the Commissioner's order, as fixing a 365-day limit for condoning delays in filing Form No.10B for AY 2018-19 onwards was neither arbitrary nor irrational. However, the Court noted that Section 119(2)(b) does not preclude the CBDT from passing a special order to condone delays beyond 365 days, even after issuing a general order. Therefore, the Court directed the petitioners to approach the CBDT under Section 119(2)(b) seeking a special order authorizing the Commissioner of Income Tax (Exemptions) to condone the delay in filing Form No.10B for AY 2018-19 beyond 365 days and to deal with the claim on merits. The CBDT was directed to pass an appropriate order within four weeks of receiving the application, which the petitioner was to file within three weeks. The writ petitions were disposed of with these directions.
The High Court held that the clarification given by the Revenue in response to Question No. 73 of Circular No. 21/2020 is not in consonance with Section 9(a)(ii) of the Vivad se Vishwas Act. The Court found the interpretation given in the clarification to be illogical and irrational, as it deviates from the statutory provision. Section 9(a)(ii) stipulates ineligibility for a declaration if prosecution has been instituted in respect of a 'tax arrear' relating to an assessment year. The Court reasoned that the prosecution initiated against the petitioner was for delayed payment of self-assessment tax, which does not qualify as a 'tax arrear' under Section 2(1)(o) of the Act. Therefore, debarring the petitioner from filing a declaration for the assessment year 2015-16, based on a prosecution unrelated to a tax arrear, would defeat the purpose of the Vivad se Vishwas Act. The Court quashed the said clarification and directed the Principal Commissioner of Income Tax to decide the petitioner's declaration dated 23.09.2020 in conformity with the provisions of the Vivad se Vishwas Act, disregarding the quashed clarification.
The High Court allowed the appellant's request to withdraw the Income Tax Appeal. The decision was based on the letter presented by the appellant's counsel, which conveyed instructions to withdraw the matter in accordance with relevant CBDT circulars. Consequently, the appeal was disposed of as withdrawn. The court also directed the refund of court fees as per rules. No issues on the merits of the assessment or the original appeal were decided.
The High Court allowed the appellant's request to withdraw the appeal. The Court noted that the learned counsel for the appellant tendered a letter indicating instructions to withdraw the matter pursuant to CBDT Circular No. 17/2019. In view of this, the Income Tax Appeal was disposed of as withdrawn. The Court also directed that the court fees be refunded as per rules. No substantive issues related to the income tax assessment were decided.
The High Court allowed the appellant's request to withdraw the Income Tax Appeal. The reasoning was based on the appellant's counsel presenting a letter indicating instructions from the Principal Commissioner of Income Tax to withdraw the matter, in accordance with CBDT Circular No. 17/2019. Consequently, the appeal was disposed of as withdrawn. The court also directed the refund of court fees as per rules. No substantive issues were decided on their merits, and therefore, no ratio decidendi on a point of law was established for future citation. No issues were expressly left undecided as the appeal was withdrawn.
The High Court held that the date appearing in the order dated 17th February 2021 should be corrected from '01-02-2021' to '09-02-2021'. This correction pertains to the date of the letter instructing the learned advocate to withdraw the matters. The Court directed that the correction be carried out and that the corrected date should be deemed part of the order dated 17th February 2021. The Court also clarified that the rest of the order dated 17th February 2021 remains the same. No substantive issues of the income tax appeals were decided.
The Tribunal allowed the appellant's request to withdraw the appeal. The reasoning was based on the appellant's submission of a letter indicating instructions to withdraw the matter in accordance with CBDT Circular No. 17/2019. The operative direction was to dispose of the Income Tax Appeal as withdrawn and refund the court fees as per rules. No issues on the merits of the case were decided.
The High Court held that the Commissioner of Income Tax (Exemptions) was justified in rejecting the application for exemption under Section 10(23C)(vi) for AY 2019-20 as it was filed beyond the prescribed time limit of September 30, 2019, and there was no provision for condonation of delay by the Commissioner for such applications. The Court noted that the CBDT order dated September 27, 2019, and Circular No. 19/2020 dated November 3, 2020, did not pertain to the condonation of delay in filing Form No. 56D for exemption under Section 10(23C)(vi). However, the Court found that the petitioner's application was for exemption from AY 2019-20 onwards. While the rejection for AY 2019-20 was correct, the Commissioner erred in not considering the application for subsequent assessment years (AY 2020-21 onwards), as the application filed on October 31, 2019, was before the due date of September 30, 2020, for AY 2020-21. The Court also suggested that the petitioner could approach the CBDT under Section 119(2)(b) for a special order to condone the delay for AY 2019-20. The Court directed the petitioner to file an application before the CBDT for condonation of delay for AY 2019-20, and if filed within three weeks, the CBDT should pass an order within four weeks. The Commissioner was directed to consider the application for AY 2020-21 onwards within eight weeks of receiving a copy of the order.
The High Court decided the substantial questions of law against the Revenue and in favour of the assessee. While acknowledging that the ITAT's order on the invocation of revisional jurisdiction under Section 263 might not be entirely agreed with, the Court found no reason to interfere with the ITAT's impugned order. This was primarily due to the ITAT's view being consistent with Supreme Court decisions in Chugandas & Co. and Cocanada Radhaswami Bank Ltd., and the High Court's own decision in Hickson and Dadajee (P.) Ltd. The Court noted that in Hickson and Dadajee (P.) Ltd., the Revenue had accepted the ITAT's decision in Digital Electronics Ltd., which held that unabsorbed business losses could be set off against capital gains under Section 72, as it was not a requirement for such gains to be taxable under the head 'profits and gains of business or profession'. Furthermore, the assessee, by concession, agreed to pay proportionate tax on an excess set-off of ₹22,34,366/-, as also noted by the ITAT. Therefore, the appeal was disposed of with the substantial questions of law answered against the Revenue, but with a direction for the assessee to pay proportionate tax on the conceded excess set-off.