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The High Court set aside the impugned order dated March 28, 2022. The Court granted liberty to the revenue to initiate the process afresh. The reasoning appears to be based on the acceptance of the Petitioner's primary contention that the notice under Section 148 was issued against the incorrect entity. By setting aside the order and allowing the revenue to restart the process, the Court implicitly acknowledged the defect in the initial notice. The ratio decidendi is that a notice issued under Section 148 against a non-existent or incorrect legal entity is liable to be quashed, and the revenue should follow the correct procedure if reassessment is to be pursued. No specific issue was left undecided; the petition was disposed of.
The High Court set aside the impugned order dated March 23, 2022. The Court granted liberty to the revenue to initiate the process afresh, implying that the notice under Section 148 would need to be reissued correctly. The primary reason for setting aside the order was the challenge raised by the petitioner regarding the notice being issued against the wrong entity. The Court did not delve into the merits of the reassessment proceedings themselves but rather addressed the procedural defect in the initiation of the process. The principle established is that a notice under Section 148 must be issued to the correct legal entity, and if a significant error in the entity's name is pointed out, the revenue may be required to rectify it by initiating the process anew.
The High Court held that the impugned notice dated 29.03.2019, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2012-13, could not be sustained. The Court found that the notice was issued after the expiry of four years from the end of the relevant AY. For such reopening, it is a jurisdictional prerequisite that the Assessing Officer must establish a failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. The Court noted that the reasons furnished for reopening did not even allege such a failure. The Petitioner had fully disclosed all material facts regarding the e-auctioned amount, including the timing of receipt of sale proceeds and its accounting in the subsequent AY. The Court relied on the principle that a distinction exists between a wrong claim made after disclosing true facts and a wrong claim made by withholding material facts. Since all material facts were disclosed, the Revenue was not entitled to reopen the assessment after four years. The Court quashed and set aside the impugned notice and the order rejecting objections.
The High Court held that the ITAT's view was correct and required no interference. The Court applied the ratio of judgments like Indo Rama Synthetic (I) Ltd. and Empire Jute Co. Ltd. It noted that the assessee was in the business of software development, and the endeavor to develop a new software was within its existing business line. Crucially, the product was abandoned, and no new asset of enduring benefit came into existence. Therefore, the expenditure was correctly treated as revenue in nature. The Court found no merit in the appeals filed by the revenue and dismissed them. The operative direction was the dismissal of the appeals, upholding the ITAT's decision.
The High Court held that the expenditure incurred by the assessee for the development of a new software was within its existing line of business, which is software development solutions and management. Since the product was abandoned and no new asset of enduring benefit came into existence, the expenditure was revenue in nature. The Court applied the ratio of judgments like Empire Jute Co. Ltd. and Indo Rama Synthetic (I) Ltd., emphasizing that expenditure for expansion within the existing business, even if for a new unit, is business expenditure. The 'enduring benefit test' is not mechanical and depends on the facts. The court found no merit in the appeals and upheld the ITAT's view, dismissing the appeals. No issue was expressly left undecided.
The High Court held that the Respondent authorities had not afforded the Petitioner a fair hearing. The Court noted that the Respondents ought to have either responded to the Petitioner's request for an extension of time to file her reply or, at the very least, responded to her request for an online hearing via video conferencing made on 19.02.2022. By failing to provide the Petitioner with an opportunity for a personal hearing through video conferencing, as required by Section 144B of the Act and as indicated in the show-cause notice dated 03.02.2022, the Respondents acted arbitrarily. Consequently, the Court set aside the assessment order dated 02.09.2022, the notice of demand under Section 156, and the show-cause notice for penalty proceedings under Section 270 read with Section 270A. The Court directed the Faceless Assessment Centre to grant the Petitioner a personal hearing through video conferencing and pass a fresh order after considering her response. The ratio decidendi is that a faceless assessment procedure must still adhere to principles of natural justice, including providing a hearing when requested and when the portal mechanism fails.
The High Court agreed with the CIT(Appeals) and the ITAT that if purchases are bogus, it would be impossible to complete the business transaction, and if the purchase is bogus, the corresponding sale must also be bogus. Unless the corresponding sale is held to be bogus, the purchase cannot be held to be bogus; rather, it would be a case of purchase from bogus entities/parties. Consequently, questions of law (a), (b), and (c) were not considered substantial questions of law. However, the Tribunal had not addressed the issue of adopting a gross profit rate of 5% on the alleged hawala purchases as against the declared rate of 0.69%, despite the CIT(Appeals) having specifically gone into this question. Therefore, the matter was remanded back to the Tribunal for a limited decision on this specific issue. The decision in ITA No. 673 of 2018 was to apply mutatis mutandis to ITA No. 750 of 2018. The appeals were disposed of accordingly.
The High Court dismissed the writ petition. The Court noted two significant circumstances disentitling the Petitioner from relief: firstly, the failure to file any returns for AY 2015-16, and secondly, the failure to respond to the notice dated 27.03.2021 within the allowed time. The Petitioner filed returns only after eight months, when the time limit for completing reassessment was nearing its end. The Court invoked Explanation (2) to Section 147, which deems income to have escaped assessment where no return was furnished, and the total income exceeded the maximum amount not chargeable to tax. The Court found that the Petitioner had not explained the amount of ₹2,15,107/-. While the Petitioner might have its own version regarding the receipt of ₹6.74 crores, these are matters to be examined during reassessment. The Court held that based on the material available with the respondents, it could not be said that they lacked a reason to believe or that their reasons were based on non-existent or irrelevant material. The Petitioner's contentions were deemed to be in the realm of merits, which could be addressed during reassessment, but they did not warrant interference with the impugned notices.
The High Court held that no substantial questions of law arise from the ITAT's order. The Court found the ITAT's order to be well-reasoned and taking into account all relevant facts. The ITAT had correctly held that it would not have been possible for the assessee to execute contract work for MCGM without purchasing materials. It also noted that the AO had not disputed the turnover of the contract work. The Tribunal's view that the entire purchase amount could not be added back as income, but only the profit element embedded therein, was considered reasonable. The High Court found no reason to interfere with the ITAT's order and accordingly dismissed the appeal. The cross-objections filed by the respondent (assessee) were not pressed and were disposed of.
The High Court held that the ITAT's order was well-reasoned and took into account all relevant facts. The Court found no substantial questions of law arising from the appeal. The ITAT had reasoned that it would not have been possible for the assessee to execute contract works for the Municipal Corporation of Greater Mumbai (MCGM) without purchasing materials and goods, even if not from the declared sources. Therefore, the Tribunal concluded that the entire purchase amount could not be added back as income, but only the profit element embedded therein should be treated as the assessee's income. The High Court found no reason to interfere with this order and accordingly dismissed the appeal. The Cross Objection filed by the respondent (assessee) was not pressed and was disposed of.
The High Court held that the petitioner ought to have been given an opportunity of being heard, especially since such an opportunity was sought. The Court found that the order impugned did not provide a justifiable reason for denying the requested hearing. The Court also noted that the petitioner would need to furnish material to determine if the communication dated 29th May 2018, sent to the erstwhile CFO's email, was actually known to the company. Consequently, the High Court set aside the order dated 9th September 2021 passed by the Principal Chief Commissioner of Income Tax and remanded the matter back for passing an appropriate order after affording the petitioner a personal hearing. The Court directed that appropriate orders be passed within three months from the communication of its order.
The High Court held that the Principal Commissioner of Income Tax had not adequately considered the petitioners' plea of financial stringency in deciding the stay applications. While the Assessing Officer rejected the stay without reasons, the Principal Commissioner, despite considering other aspects, failed to provide specific reasons regarding the financial hardship. The Court noted that the Principal Commissioner's orders did not apply the test of financial soundness or viability as laid down in precedents like Mumbai Metropolitan Region Development Authority v/s. Deputy Director of Income-tax (Exemption-1). Consequently, the Court directed the Principal Commissioner to rehear the petitioners on the specific plea of financial stringency, grant an opportunity of hearing, and pass an appropriate reasoned order within two months. Pending this fresh decision, the impugned demands were not to be acted upon. The Court clarified that it had not considered the maintainability of the petitions or delved into the merits of the appeals, keeping all contentions open.
The High Court held that the issue of whether investment banking services companies (Integrated Capital Services Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd.) can be compared to investment advisory services companies is no longer res integra. The Apex Court in Commissioner of Income-tax 10, Mumbai Vs. Carlyle India Advisors (P.) Ltd. and the Bombay High Court in Principal Commissioner of Income-tax-3 vs. Blackstone Advisors India (P.) Ltd. have held that investment advisors or sub-advisors cannot be compared with merchant bankers or investment bankers. Therefore, Integrated Capital Services Ltd. and Motilal Oswal Investment Advisors Pvt. Ltd. cannot be held as comparables. Regarding IDC India Limited, the court noted that this court in Commissioner of Income-tax-3, Mumbai Vs. General Atlantic (P.) Ltd. had adopted IDC India Ltd. as a comparable. For ICRA Management Consulting Services Ltd., the Tribunal relied on the decision in Temasek Holdings Advisors India Private Limited Vs. DCIT, holding it to be a good comparable as it offered consultation services and generated its entire revenue from consultation fees. The court found no interference warranted in the order passed by the Tribunal and dismissed the appeal. No issue was expressly left undecided.
The High Court held that no substantial questions of law arise in the appeal. Regarding the management fees, the Tribunal had upheld the CIT(A)'s view that Sandvik AB Sweden, as the 'providing party', represented group companies that actually provided management services. The Tribunal noted the TPO's remand report did not dispute that services were rendered by group entities in accordance with the agreement. The High Court found no reason to interfere with this finding. Concerning the provision for obsolete inventory, the High Court agreed with the Tribunal that the assessee consistently followed a scientific method for valuing obsolete stock, which was accepted by the Department in earlier and subsequent years. The principle of consistency was applied, and the reliance on the Rotork Controls Ltd. case was deemed appropriate by analogy. On the issue of EOU losses, the Court referred to the decision in Hindustan Lever Ltd. v. Dy. CIT, holding that Section 10B provides for a deduction, not an exemption, and there is no statutory prohibition against setting off losses from an EOU against other business income under Section 70. The appeal was accordingly dismissed.
The Tribunal agreed with the Petitioner's argument that the Respondent No. 2 ought to have taken into consideration FAQ No.25 of CBDT Circular No. 9 of 2020 while determining the disputed tax. The Tribunal noted that the CBDT circular addressed situations where an appeal was pending against an assessment order, but the assessment order itself could be rectified, leading to a reduction in demand. The Tribunal found that the Respondent No. 2 did not appear to be aware of Circular No. 9 of 2020 when rejecting the rectification application. Consequently, the writ petition was allowed. The rectification order dated 18 June 2021 and the impugned Certificate issued in Form No.3 dated 31 January 2021 were quashed and set aside. The Respondent No. 2 was directed to issue a fresh Form No.3 considering the rectification order dated 18 June 2021 under Section 154 of the Act read with FAQ No.25 of CBDT Circular No. 7 of 2020 within two months.
The High Court held that the Tribunal's order could not be faulted and that no error or perversity was apparent. The Court noted that the AO had indeed raised queries regarding the OTS write-off (under Section 142(1), item 34) and the Dindoshi project interest expenditure (under Section 142(1), item 26), and the assessee had provided replies and details. The Tribunal had found that this indicated an inquiry was made, and the AO had taken a possible view in favour of the assessee. The Court reiterated the settled position that prior to the insertion of Explanation 2 to Section 263 (effective June 1, 2015), the CIT's power under Section 263 was limited to cases of 'lack of inquiry', not 'inadequate inquiry'. Since the assessment year in question was 2006-07, the pre-amendment position applied. The Court found that this was not a case of lack of inquiry, but at best, inadequate inquiry, which did not give the CIT jurisdiction to invoke Section 263. Therefore, the appeal did not raise any substantial question of law and was dismissed.
The High Court held that the appeal does not raise any substantial questions of law and therefore stands dismissed. Regarding the disallowance under Section 40(a)(ia), the Court noted the concurrent findings of fact by the CIT(A) and the Tribunal that the TDS was deposited before the due date of filing the return, which was not disputed by the Revenue. The Court also observed that no material was brought forth to suggest that the deduction was granted twice to the assessee. The Court found no error or perversity in the Tribunal's order confirming the CIT(A)'s decision that no disallowance was called for under Section 40(a)(ia) due to the retrospective nature of the proviso to the said section. The disallowance of Rs. 5,30,91,745/- made by the Assessing Officer was therefore not sustainable. The Court did not explicitly leave any issue undecided.
The High Court allowed the writ petition, quashing the impugned order dated February 13, 2018, and the subsequent order dated February 12, 2019, passed under Section 264. The Court found that the procedure adopted by the Assessing Officer was violative of the principles of natural justice. Specifically, the notice under Section 179 did not inform the petitioner of the intention to treat CPML as a public company by invoking the principle of 'lifting the corporate veil,' nor did it provide an opportunity to be heard on this aspect. The Court also held that the show cause notice did not demonstrate satisfaction that tax dues could not be recovered from the company, as required by Section 179. The Court noted that the revenue's own affidavit indicated steps for sale of attached property would be initiated after valuation, nullifying the action under Section 179. However, the Court permitted the Assistant Commissioner to proceed afresh in accordance with law if tax dues are not fully satisfied upon the sale of the attached property, after giving the petitioner an opportunity of being heard.
The High Court held that the notice dated March 29, 2021, issued under Section 148 of the Income Tax Act, 1961, was bad in law and liable to be set aside. The Court reasoned that Section 151 of the Act clearly stipulates that a notice under Section 148 cannot be issued after four years from the end of the relevant assessment year unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, based on the A.O.'s reasons, that it is a fit case for issuing such a notice. In this case, the assessment year was 2015-16, making the notice dated March 29, 2021, fall beyond the four-year period. Therefore, the approval ought to have been granted by one of the specified higher authorities, not the Joint Commissioner. The A.O. erred in believing the case fell within the four-year period, which was apparently erroneous. Consequently, the writ petition was allowed, and the impugned notice was set aside.
The High Court disposed of the writ petition with a direction to the designated authority to decide the petitioner's application filed under the Income Declaration Scheme, 2016, preferably within four weeks from the date of the order. The Court observed that if such an application was filed, it ought to have been decided within a reasonable period, which had not happened. The Court further stated that if any cause of action survives after the application is decided on merits, the petitioner would be at liberty to approach the Court again to press all issues raised in the present petition. Until the designated authority takes a decision, the impugned order dated March 25, 2022, and the connected demand notice shall not be acted upon. The issue regarding the sustainability of the order dated March 25, 2022, in the absence of a Section 143(2) notice, was implicitly left undecided pending the decision on the Scheme application.
The High Court held that the order impugned, declaring the transfer of property in favour of the Petitioner as void under Section 281 of the Income Tax Act, 1961, was without jurisdiction. The Court followed the ratio of the Supreme Court judgment in Tax Recovery Officer V/s. Gangadhar Vishwanath Ranade, which held that a TRO cannot adjudicate whether a transfer is void under Section 281. Instead, if the department desires to have a transaction declared void, it must file a suit for such a declaration. The Court also noted that a co-ordinate bench of the Bombay High Court in Ms. Ruchi Mehta V/s Union of India had previously considered the same order dated 27th June, 2007, and declared it void and without jurisdiction. Accordingly, the impugned order was set aside. The Court clarified that the respondents are entitled to proceed in the matter by following the due procedure.
The High Court held that Section 80IB(10)(c) specifies the built-up area limit for a residential unit but does not explicitly state that non-compliance by even one unit would disqualify the entire project. The court interpreted the language of Section 80IB(10)(c) to mean that it qualifies an eligible residential unit, and if a unit conforms to the size requirement, the benefit of deduction cannot be denied for that unit, even if other units in the same project do not comply. The court found no provision remotely suggesting denial of deduction for eligible units at the cost of ineligible ones. Therefore, the ITAT's direction to the AO to work out pro rata deduction under Section 80IB(10) for eligible residential units was upheld. The appeal was dismissed as lacking merit.
The High Court held that the action of respondent No. 2 in adjusting the refund of Rs. 61,64,649/- and Rs. 1,61,25,293/- for assessment year 2008-09 against the alleged outstanding demands for assessment years 2014-15 and 2015-16 was illegal and bad in law. This was because the allegation that no prior intimation was given under Section 245 of the Income Tax Act, 1961, remained unrebutted, as the revenue failed to provide any proof of such intimation. The Court relied on its previous decisions in Suresh B. Jain and Hindustan Unilever Ltd., which held that prior intimation under Section 245 is mandatory to allow the assessee to point out factual errors or other relevant developments. The impugned action was quashed. However, the Court permitted respondent No. 2 to exercise its discretion to make an adjustment under Section 245 after providing prior intimation and considering any objections raised by the petitioner. If this is not done within eight weeks, the refund as determined for assessment year 2008-09 is to be granted.
The High Court allowed the appeal, setting aside the impugned order of the Tribunal. On the first issue, the Court held that the Tribunal's foundation for denying deduction, which was the retrospective operation of the explanation to Section 80HHC, was no longer valid in light of the Supreme Court's decision in P.R. Prabhakar v. CIT, which established the amendment as prospective. On the second issue, applying the principle from CIT v. Punjab Stainless Steel Industries, the Court found that receipts from storage and handling, which formed a major component, were independent of the export business of leather and molasses. The assessee's assertion that these activities were distinct businesses, supported by the authorities' own approach and an uncontroverted statement on oath, meant these receipts should not be included in the total turnover for Section 80HHC. Therefore, the assessee was entitled to succeed on both components of the question of law.
The High Court held that the notice for reopening the assessment and the order rejecting the objections were liable to be quashed and set aside. The Court found that the Assessing Officer had all the material facts before him when the original assessment was made, and a specific query regarding the expenditure in question was raised and replied to by the assessee. The Court relied on its previous decision in Ananta Landmark Pvt. Ltd. vs. Deputy Commissioner of Income-tax, which stated that after four years from the end of the relevant assessment year, the Assessing Officer must disclose tangible material to show escapement of income and failure to disclose material facts. In this case, the Court observed that the reasons for reopening did not specify what was not disclosed and that the reopening was based on a change of opinion regarding the computation of income, which is not permissible under the proviso to Section 147 of the Act. The Petitioner had truly and fully disclosed all material facts, which were scrutinized, and the figures were reworked by the Assessing Officer during the original assessment. Therefore, the petition was allowed.
The High Court held that the Petitioner was entitled to succeed based on the reasons supplied by the Revenue itself. The Court identified two fundamental errors. Firstly, the notice under Section 148 for AY 1998-99 did not contain any assertion that the Petitioner had failed to disclose fully and truly all material facts, which is a mandatory prerequisite for assuming jurisdiction under Section 147 of the Act. Secondly, the Respondent appeared to be proceeding on the ground that the Petitioner had applied the wrong method of depreciation, which constituted a clear 'change of opinion'. The Court found no failure on the part of the Petitioner to disclose facts. Therefore, in light of the settled law governing the exercise of powers under Sections 147 and 148, the Petitioner was entitled to succeed. The Rule was made absolute in terms of prayer clauses (a) and (b), quashing the notice and the order rejecting objections.
The High Court allowed the appeal, quashing and setting aside the impugned order of the ITAT. The Court found that the issues raised and dealt with by the Tribunal had been answered in favour of the assessee by the Supreme Court's decision in P.R. Prabhakar v. Commissioner of Income Tax. The Tribunal's finding that the 1991 amendment to Section 80HHC was retrospective was held to be incorrect, as the Supreme Court ruled it prospective. Consequently, the Tribunal's reasoning that commission income should be excluded from business profit, thereby disallowing the Section 80HHC deduction, did not survive. The Supreme Court also held that since the amendment was prospective, commission for export constituted export profits, entitling the assessee to deduction for Assessment Year 1991-92. The High Court noted that there was no debate that the assessee's commission was related to export, and even if there were, audited accounts showed it was received in foreign exchange and relatable to export. The matter was remanded to the Assessing Officer for further calculations.
The High Court held that all the writ petitions are disposed of in view of the directions passed by the Hon'ble Apex Court in Ashish Agarwal. Specifically, the Court directed that the impugned Section 148 notices issued under the unamended Section 148 of the IT Act shall be deemed to have been issued under Section 148A of the IT Act, as substituted by the Finance Act, 2021, and construed as show-cause notices in terms of Section 148A(b). The Assessing Officer is to provide information and material relied upon within thirty days, allowing assessees two weeks to reply. The requirement of conducting an enquiry under Section 148A(a) with prior approval is dispensed with as a one-time measure for notices issued under the unamended Act from April 1, 2021, till the date of the judgment. The Assessing Officers shall thereafter pass orders under Section 148A(d) and may issue notices under Section 148 as substituted. All defenses available to the assessees and the Revenue under the Finance Act, 2021, and in law shall continue to be available. Consequently, wherever assessment orders have been passed, they stand quashed and set aside, along with consequential orders/notices. The Revenue may restart the process as directed by the Apex Court. All rights and contentions of the parties are kept open.
The High Court quashed and set aside the assessment order dated January 22, 2022, and the consequent demand and penalty notices. The Court found that the assessment order did not even reference the petitioner's request for an adjournment, stating instead that the assessee had not availed of opportunities. This indicated a lack of consideration for the petitioner's circumstances. The matter was remanded for de novo consideration. The Assessing Officer was directed to pass a fresh assessment order by August 31, 2022, after providing a personal hearing to the petitioner. The notice for the personal hearing must be issued at least seven working days in advance. If the Assessing Officer intended to rely on any High Court or Tribunal orders, a list of these must be provided with the hearing notice to enable the petitioner to respond.
The High Court held that by virtue of the insertion of clause (d) to the proviso to Section 43(5) of the Income Tax Act, 1961, with effect from April 1, 2006, transactions in derivatives carried out on a recognized stock exchange, as prescribed in that clause, would not be considered speculative transactions. The Court referred to its own judgment in Commissioner of Income Tax Vs. Shri Bharat R. Ruia (HUF), which interpreted clause (d) to have prospective effect from April 1, 2006. Therefore, for the assessment year 2009-10 (financial year 2008-09), which falls after this amendment, the derivative transactions of the assessee were not speculative. Consequently, the assessee was entitled to set off the loss suffered in these derivative transactions against its business income from infrastructure under Section 70. The Court distinguished the judgments relied upon by the revenue, finding them not applicable to the facts of the case. The Tribunal's confirmation of the addition was deemed incorrect. The substantial questions of law were answered in favour of the assessee.
The High Court quashed the impugned notices issued under Section 148 and the order on objections. The Court held that the notices and the subsequent order on objections could not be sustained. The reasoning was based on the fact that the project was completed in AY 2003-04, and the income was offered to tax in that year, which had been accepted. Furthermore, prior disputes concerning the accounting method for earlier years had been decided in favour of the assessee by the Income Tax Appellate Tribunal, and the revenue had not challenged those orders. The Court found no justification for the revenue to re-assess income on a presumptive basis for the years in question, especially when the revenue recognized in AY 2003-04 was not questioned. The Court confirmed that the assessee had sufficiently discharged its onus in proving that it only worked for the specified societies and that the income was ultimately offered for taxation in AY 2003-04. The revenue failed to bring on record any cogent incriminating material to disprove the assessee's contentions. The Court also noted that the CIT(A) had decided the appeal on merits by following the directions of the ITAT in the first round of litigation.
The High Court, following the directions of the Hon'ble Apex Court in Union of India & Ors. vs. Ashish Agarwal, held that the notice issued under Section 148 of the Income Tax Act, 1961, even if dated March 31, 2021, and digitally signed on April 8, 2021, shall be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. It is to be construed as a show-cause notice in terms of Section 148A(b). The Assessing Officer is directed to provide the information and material relied upon to the assessee within thirty days, allowing the assessee two weeks thereafter to reply. The requirement of conducting an enquiry under Section 148A(a) is dispensed with as a one-time measure. The Assessing Officer shall thereafter pass orders under Section 148A(d) and, if necessary, issue a notice under Section 148 as substituted. All defenses available to the assessee, including under Section 149, and rights of the Revenue remain preserved. Consequently, the assessment order and consequential orders/notices were quashed and set aside, with liberty to the Revenue to restart the process as directed by the Apex Court.
The High Court held that the petition stands disposed of in view of the directions issued by the Hon'ble Apex Court in Union of India & Ors. vs. Ashish Agarwal. The Court quashed and set aside the assessment order and consequential orders/notices. Following the Apex Court's directions, the revenue was permitted to restart the process. Specifically, the impugned Section 148 notices issued to the assessee shall be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021, and construed as show-cause notices under Section 148A(b). The Assessing Officer is to provide information relied upon within thirty days, and the assessee will have two weeks to reply. The requirement of conducting an enquiry under Section 148A(a) is dispensed with as a one-time measure. Thereafter, the Assessing Officer shall pass orders under Section 148A(d) and, if necessary, issue a notice under the substituted Section 148. All defenses available to the assessee, including under Section 149, and rights and contentions of both parties under the Finance Act, 2021, and in law, shall continue to be available.
The High Court, following the directions of the Supreme Court in Union of India & Ors. vs. Ashish Agarwal, held that the notice issued under the unamended Section 148 of the Income Tax Act, 1961, dated March 31, 2021, and digitally signed in April 2021, shall be deemed to have been issued under Section 148A of the Act as substituted by the Finance Act, 2021. It was to be construed as a show-cause notice in terms of Section 148A(b). The Assessing Officer was directed to provide the information and material relied upon within thirty days, allowing the assessee two weeks to reply. The requirement of conducting an enquiry under Section 148A(a) was dispensed with as a one-time measure. The Assessing Officer was to thereafter pass orders under Section 148A(d) and, if necessary, issue a notice under the substituted Section 148. All defenses available to the assessee and Revenue under the Finance Act, 2021, and law were preserved. The assessment order and consequential orders/notices were quashed and set aside, allowing the Revenue to restart the process as directed by the Apex Court. The petition was disposed of.
The High Court held that notices issued under Section 148 of the Income Tax Act, 1961, after the death of the assessee cannot be proceeded with. The Court reasoned that the fundamental principle is that legal proceedings, including the issuance of statutory notices for reassessment, must be initiated against a living entity or their legal representatives, not a deceased individual. Since the assessee had expired prior to the issuance of the notices, the notices were rendered illegal and void ab initio. Consequently, the notices were quashed and set aside. The Court allowed the writ petitions, making the rule absolute. The respondents were granted liberty to proceed in accordance with law, implying they could initiate appropriate proceedings if permissible under the law, likely against the legal heir or estate.
The High Court held that the reopening of assessment was based purely on a change of opinion by the Assessing Officer. The Court noted that queries regarding share premium and investors were raised during the original assessment, and the petitioner provided all requested details, including workings that factored in the goodwill. The assessment order itself referred to notices issued under Sections 143(2) and 142(1) and confirmed receipt of all information. Relying on its own precedent in Aroni Commercials Ltd. Vs. Deputy Commissioner of Income Tax, the Court stated that if a query is raised and replied to, it is considered to have been under the Assessing Officer's consideration, even if not explicitly discussed in the order. The Court found no failure on the part of the petitioner to fully and truly disclose material facts, as all details were provided. The statement in the reasons recorded about such failure was deemed to be an attempt to overcome the restrictions of the proviso to Section 147. Consequently, the notice under Section 148 and the order on objections were quashed.
The High Court dismissed the appeals filed by the Revenue. The Court accepted the statement made by the learned counsel for the appellants-revenue that the issues involved were covered by the judgment of this Court in Income Tax Appeal No. 19 of 2013. The Court also accepted the joint submission that no reasons were required to be recorded. Following the reasoning in the judgment delivered on April 22, 2022, in identical matters (Income Tax Appeal No. 19 of 2013), the appeals were dismissed because the tax effect involved was less than the monetary limit prescribed in the earlier circulars. Consequently, the substantial questions of law formulated by the Court while admitting these appeals were not answered. No order as to costs was made.
The High Court dismissed the appeals filed by the revenue. This was based on the tax effect being below the prescribed monetary limit as per earlier circulars.
The High Court dismissed the appeals filed by the Revenue. The Court accepted the statement made by the learned counsel for the appellants-revenue that the issues involved were covered by the judgment of this Court in Income Tax Appeal No. 19 of 2013. The Court also accepted the joint submission that no reasons were required to be recorded. Following the reasoning in the judgment delivered on April 22, 2022, in identical matters (Income Tax Appeal No. 19 of 2013), the appeals were dismissed because the tax effect involved was less than the monetary limit prescribed in the earlier circulars. Consequently, the substantial questions of law formulated by the Court while admitting these appeals were not answered. No order as to costs was made.
The High Court dismissed the appeals filed by the Revenue. The Court accepted the statement made by the learned counsel for the appellants-revenue that the issues involved were covered by the judgment of this Court in Income Tax Appeal No. 19 of 2013. The Court also accepted the joint submission that no reasons were required to be recorded. Following the reasoning in the judgment delivered on April 22, 2022, in identical matters (Income Tax Appeal No. 19 of 2013), the appeals were dismissed because the tax effect involved was less than the monetary limit prescribed in the earlier circulars. Consequently, the substantial questions of law formulated by the Court while admitting these appeals were not answered. No order as to costs was made.
The High Court decided to modify its previous judgment dated 22.04.2022. The Court agreed to delete paragraph 68 of the original judgment. Consequently, paragraphs 72 and 73 were also deleted. The Court clarified that the petitioner retains the liberty to challenge any order passed by the assessing officer before the Commissioner of Income Tax (Appeals), as permitted by law. The Court directed the office to correct the paragraph numbers in the judgment and issue a fresh copy to both parties. The principle established is that the High Court can correct its own judgments to ensure clarity on procedural remedies available to parties, particularly concerning the appellate hierarchy within the Income Tax Act.
The High Court held that CBDT Circular No. 23/2019 dated September 6, 2019, read with the Office Memorandum dated September 16, 2019, does not have retrospective effect. The Court agreed with the Gujarat High Court's view in Principal Commissioner of Income-tax (Central), Ahmedabad Vs. Anand Natwarlal Sharda, stating that the circulars are prospective and apply to appeals filed after their issuance, unless a special order is passed by the CBDT. The Court found that the tax effect in the present bunch of appeals was less than the monetary limits prescribed in earlier CBDT circulars. Therefore, the appellant-revenue could not be allowed to pursue these appeals on merits, as the conditions for filing appeals under the circulars, especially concerning organized tax evasion, were not met retrospectively. The appeals were dismissed without prejudice to the revenue's right to approach the court afresh in future cases where special orders have been issued by the Board as an exception.
The High Court allowed the petition, quashing the notice under Section 148 dated March 31, 2021, and the subsequent proceedings. The Court found that the reasons recorded for reopening did not disclose what material fact the petitioner had failed to disclose. Furthermore, during the original assessment proceedings, the petitioner had responded to specific queries regarding share transactions, including those in JRI Industries and Infrastructure Limited, and provided all details. The Assessing Officer had accepted these transactions as bonafide and assessed accordingly. The Court noted that even if the Assessing Officer had no means to know the transactions were not bonafide, or had committed a mistake, reopening after four years is barred unless there was a failure by the assessee to disclose material facts. Relying on the principle in Gemini Leather Stores vs. The Income Tax Officer, the Court held that the assessment cannot be reopened to remedy an error when the Assessing Officer had the material facts before him during the original assessment. The operative direction was to quash the notice and set aside the assessment proceedings.
The Tribunal held that neither Circular No. 8/2021 nor Notification No. 74/2021 dated 25.06.2021, nor the press release dated 25.06.2021, would assist the Revenue. Circular No. 8/2021 only provided for an extension of time for filing objections to the DRP under Section 144-C, not for passing the final assessment order under Section 144-C(4). Even if it were to extend the time for passing orders, the deadline would have expired on 30.06.2021. The Tribunal found that Notification No. 74/2021 did not apply to assessments under Section 144-C, as it primarily dealt with extensions for assessments or re-assessments under Sections 153 or 153-B, and did not refer to Section 144-C. Furthermore, Section 144-C(4) explicitly states that the AO shall pass the assessment order notwithstanding anything contained in Section 153 or 153-B. The Tribunal concluded that the assessment order dated 27.09.2021 was passed beyond the prescribed time limit. Consequently, the petition was allowed, quashing and setting aside the final assessment order and the consequential penalty notice as non-est and barred by limitation.
The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, dated April 20, 2021, was bad in law and liable to be quashed. The reasoning was that the notice was issued after the Finance Act, 2021, came into effect on April 1, 2021, mandating a new procedure, yet the old procedure was followed. The court explicitly stated that such notices are bad in law and have to be quashed, referencing its prior ruling in Tata Communications Transformation Services Limited V/s. Assistant Commissioner of Income Tax. Consequently, the impugned notice was quashed and set aside. The court also noted that even if an assessment order had been passed, it would be non-est. The petition was disposed of accordingly.
The High Court held that while the Supreme Court in CIT vs. Amitabh Bachchan (supra) clarified that the power of revision under Section 263 is not contingent on a show-cause notice and that the CIT is not strictly confined to its terms, the crucial aspect is that the assessee must be given an opportunity of being heard before the CIT reaches a decision. In the present case, the ITAT had made a finding of fact that no issue regarding payments made to persons specified under Section 40A(2)(b) was ever raised by the CIT in the notice served upon the assessee, nor was the assessee confronted with this issue before the CIT passed the order. The High Court found that the ITAT's finding was not perverse and that the correct test was applied. Therefore, the appeal did not raise any substantial question of law.
The High Court held that notices issued under Section 148 of the Income Tax Act, 1961, which followed the old procedure after the Finance Act, 2021, came into effect, are bad in law and liable to be quashed. The Court relied on its previous decision in Tata Communications Transformation Services Limited V/s. Assistant Commissioner of Income Tax 14(1) & Ors. The notice impugned in the present petition was accordingly quashed and set aside. Consequently, the assessment order dated March 29, 2022, which was based on the invalid notice, could not be sustained and was also quashed and set aside. Any consequential orders or steps taken were also declared quashed. The Court did not leave any issue undecided.
The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, dated April 8, 2021, is bad in law and has to be quashed. The Court reasoned that the procedure followed was the old procedure, which was replaced by the Finance Act, 2021, with effect from April 1, 2021. The Court relied on its previous decision in Tata Communications Transformation Services Limited V/s. Assistant Commissioner of Income Tax 14(1) & Ors., where similar notices were held to be bad in law. Consequently, the impugned notice in the present petition was quashed and set aside. The Court also noted that even if an assessment order had been passed, it would be non-est as the notice itself was being set aside. The petition was disposed of accordingly.
The High Court held that the notice under Section 21 of the Expenditure Tax Act, 1987, dated October 1, 2002, was indeed defective because it was issued and signed by the Assistant Commissioner of Income Tax (HQ) and not by the Commissioner of Income Tax. Section 21 of the E.T. Act mandates that the Commissioner of Income Tax must apply his mind to the record and issue the notice himself. A subordinate officer cannot issue such a notice, and the Commissioner cannot pass a revision order based on a notice issued by his subordinate. The principle of waiver cannot be invoked to confer jurisdiction where it is lacking. Since the Assistant Commissioner had no jurisdiction to issue the notice under Section 21, all subsequent proceedings were without the authority of law. This aligns with the Supreme Court's decision in Sahni Silk Mills (P) Ltd. and this Court's decision in Lalitkumar Bardia, where notices issued by officers without the requisite authority were held to be bad. Therefore, the substantial question of law (A) was answered in the affirmative (in favor of the assessee), and question (D) was answered in the negative (in favor of the assessee). The appeal was disposed of accordingly.
The High Court held that the entire order passed by the ITAT was based on pure findings of fact. It noted that the Assessing Officer had examined the vendor, Shri Rajansingh Kuvarsingh Baisthkur, who was cross-examined by the appellant. The Assessing Officer also questioned the erstwhile purchaser, Shri Ayub Haji Abdul Rashid Qureshi. The evidence indicated that the erstwhile purchaser was ready to buy the land for Rs. 30,88,125/-, raising a discrepancy with the appellant's purchase price of Rs. 2 lakhs within two months. The vendor, in his cross-examination, admitted receiving Rs. 30.55 lakhs, with Rs. 2 lakhs by cheque and Rs. 23.50 lakhs in cash. The Court found no substantial question of law arising from the appeal filed under Section 260A and accordingly dismissed the appeal as devoid of merit.