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The High Court held that the rejection of the petitioner's declarations under the DTVSV Act was invalid. The Court found that the CBDT's clarification in Circular No. 21/2020, particularly the answer to question 73, was not in consonance with Section 9(a)(ii) of the DTVSV Act. The Court reasoned that the ineligibility to file a declaration under Section 9(a)(ii) is specifically linked to a prosecution instituted in respect of 'tax arrear' relatable to an assessment year as on the date of filing the declaration. The prosecution initiated against the petitioner under Section 276C(2) was for delayed payment of self-assessment tax, which the Court determined does not qualify as a 'tax arrear' as defined under Section 2(1)(o) of the Act. Therefore, such a prosecution could not be a basis for debarring the petitioner from the scheme. The Court quashed and set aside the CBDT's clarification and directed the PCIT to decide the petitioner's declarations in conformity with the DTVSV Act, disregarding the impugned clarification. The Court also noted that the petitioner had paid 20% of the demand and was not an assessee in default, and later paid the entire amount.
The High Court dismissed the Writ Petition, upholding the CAT's decision. The Court found that the Petitioner was not eligible for promotion on the dates he claimed retrospective promotion. The eligibility for promotion to Tax Assistant required passing a typing test or obtaining a certificate of exemption. The Petitioner only became eligible for consideration for promotion after obtaining exemption from the typing test in 2020. The Court reasoned that granting retrospective promotion is impermissible when an employee does not possess the basic qualifications on the claimed retrospective date, as established by Supreme Court judgments like Puran Das. Furthermore, retrospective promotion would necessitate disturbing the seniority of other employees who were validly appointed, which is not permissible without express provision in service rules and could adversely affect them. The Petitioner also failed to demonstrate the vacancy position on the dates he claimed promotion, and the grant of promotion is always preceded by a DPC decision. Therefore, the relief of retrospective promotion was rightly refused by the Administrative Tribunal.
The High Court disposed of the writ petition by directing Respondent No. 1, the Joint Commissioner of Income Tax, to treat the writ petition and the Petitioner's submitted chart/calculation sheet as a representation for the payment of interest amounting to ₹6,69,485/-. The Joint Commissioner was directed to dispose of this representation within three months from the date of the order. The Court also stipulated that the Joint Commissioner should consider granting an opportunity of hearing to the Petitioner or their representative before making a decision. The decision of the Joint Commissioner must be communicated to the Petitioner within the same three-month period. The Petitioner was granted liberty to file appropriate proceedings if aggrieved by the decision of the Joint Commissioner. No order as to costs was made.
The High Court held that the unregistered Joint Development Agreements dated 31.12.2008 did not constitute a transfer in terms of Section 2(47)(v) of the Income Tax Act. The Court reasoned that for a transaction to qualify as a transfer under Section 2(47)(v), it must involve allowing possession in part-performance of a contract referred to in Section 53A of the Transfer of Property Act, 1882. Since the JDAs were unregistered, they could not be enforced under Section 53A of the TP Act. The Court found that the decision in Balbir Singh Maini (supra) squarely applied, as in that case too, the Supreme Court held that parting with possession for the limited purpose of development does not amount to a transfer. The Court noted that the ownership of the capital asset was retained by the appellant throughout, and the clauses relating to parting of possession, at best, suggested possession was for a limited purpose of development. The Court also noted that the decisions relied upon by the Revenue (Dr. Joao Souza Proenca, Chatur bhuj Dwarkadas Kapadia, Dr. T.K. Dayalu) were either distinguishable or decided prior to the Supreme Court's decision in Balbir Singh Maini. The Court answered the second substantial question of law in favour of the appellant. The ITAT's order was set aside, and the Commissioner's order was restored. The Court did not propose to go into the other two substantial questions of law, including accrual of income, as the appeal was decided on the second substantial question.
The High Court held that the reopening of the assessment was invalid on multiple grounds. Firstly, the Revenue failed to comply with the mandatory requirement of furnishing the reasons recorded for reopening the assessment to the Petitioner, despite repeated requests and the Petitioner filing a return in response to the Section 148 notice. The Court emphasized that the reasons for reopening can only be tested based on those recorded at the time of issuing the notice, and the Revenue did not provide any document suggesting these reasons were furnished. Secondly, the Court found that the reopening was based on a change of opinion without any new tangible material. The original assessment order had already considered the facts related to capital gains and deductions under Sections 54 and 54(F). The Court concluded that the Petitioner had fully and truly disclosed all material facts necessary for the assessment, and there was no omission or failure on his part. Consequently, the notice dated March 26, 2021, the order disposing of objections, the assessment order, and the notices for penalty and demand dated March 24, 2022, were quashed and set aside. The rule was made absolute.
The High Court held that the issuance of notices under Section 153C for AY 2017-2018 was invalid. The original assessment had accepted the write-off of loans after due consideration. Reopening the assessment on the same grounds without any new tangible material constituted a change of opinion, which is not permissible under Section 153C. The court emphasized that Section 153C cannot override jurisdictional safeguards requiring new material and that the petitioner had not failed to disclose material facts. Therefore, the rule was made absolute for AY 2013-2014, 2014-2015, 2015-2016, and 2017-2018 on this ground. Regarding assessments beyond six years, the court found that the write-off of a bad debt does not qualify as "income represented in the form of an asset" as stipulated in the 4th proviso to Section 153A(1)(a). Furthermore, the share trading income had already been assessed. Consequently, the court held that assessments for AY 2011-2012, 2012-2013, and 2013-2014 were barred. The rule was made absolute for these years as well. All petitions were disposed of in terms of prayer clause (a).
The High Court held that the Assessing Officer (AO) lacked jurisdiction to issue notices under Section 153C for the Assessment Years (AY) 2011-12 to 2019-20. The Court found that the write-off of loans, which formed the basis for the reassessment, had already been considered and allowed in the original assessment for AY 2017-18. The subsequent actions by the AO were deemed a mere change of opinion, as no new tangible material was discovered that indicated a failure on the petitioner's part to disclose material facts. The Court emphasized that Section 153C cannot override jurisdictional safeguards and conditions precedent, such as the prohibition against reviewing a prior decision without new evidence. Regarding the second issue, the Court ruled that the write-off of a bad debt does not qualify as "income represented in the form of an asset" under the fourth proviso to Section 153A(1)(a). Consequently, assessments for AY 2011-12, 2012-13, and 2013-14 were barred. The Court made the rules absolute in terms of prayer clause (a) for the specified petitions, quashing the impugned assessment orders.
The Tribunal held that the reopening of the assessment for AY 2017-18 under Section 153C was impermissible as it constituted a change of opinion. The original assessment had accepted the write-off of loans after due consideration, and no new tangible material was presented to justify a different view. The Tribunal emphasized that Section 153C cannot be used to review or alter a prior decision without new evidence or failure to disclose by the assessee. Therefore, the rule was made absolute for AY 2013-14, 2014-15, 2015-16, and 2017-18 on this ground. Regarding the second issue, the Tribunal ruled that assessments beyond six years were not permissible. It reasoned that the write-off of a bad debt does not qualify as 'income represented in the form of an asset' as required by the 4th proviso to Section 153A(1). Additionally, the share transactions were already brought to tax. Consequently, the conditions for extending the assessment period beyond six years were not met. The rule was made absolute for AYs 2011-12, 2012-13, and 2013-14 on this ground as well. All petitions were disposed of in terms of prayer clause (a).
The High Court held that the impugned assessment orders under Section 153C were liable to be quashed. On the first issue, the Court found that the Assessing Officer's satisfaction note was based on a review of the original assessment, which had already accepted the write-off of loans. Since no new tangible material was discovered and there was no failure on the part of the petitioner to disclose material facts, the action constituted a change of opinion, which is impermissible under Section 153C. The Court cited its own decision in Urban Homes Realty V/s. Union of India for this principle. On the second issue, the Court ruled that assessments beyond six years under Section 153A(1) are permissible only if the escaped income is in the form of an asset exceeding Rs. 50 lakhs, as stipulated in the 4th proviso. The write-off of bad debts does not qualify as 'income represented in the form of an asset'. Furthermore, the share transactions were already taxed. Consequently, the assessments for AY 2011-2012, 2012-2013, and 2013-2014 were barred. The Court made the rules absolute in terms of the prayer clauses for the specified petitions.
The High Court held that the Assessing Officer's attempt to disallow the write-off of loans, which was accepted in the original assessment for AY 2017-18, constituted a change of opinion and a review of the original decision without any new tangible material or failure on the part of the petitioner to disclose facts. Therefore, the provisions of Section 153C could not override the jurisdictional safeguards. Regarding assessments beyond six years, the Court found that a write-off of bad debt cannot be considered 'income represented in the form of an asset' as required by the 4th proviso to Section 153A(1). Furthermore, the share trading income was already offered and taxed. Consequently, assessments for AY 2011-12, 2012-13, and 2013-14 were barred. The rule was made absolute in terms of prayer clause (a) for the specified assessment years.
The High Court held that the Assessing Officer lacked jurisdiction to issue notices under Section 153C for Assessment Year 2017-2018. The Court reasoned that the original assessment had already accepted the write-off of bad debts after due consideration of the petitioner's submissions. The subsequent action under Section 153C, based on information unearthed during search proceedings of Hubtown Limited, constituted a mere change of opinion and a review of the original decision without any new tangible material or failure on the part of the petitioner to disclose material facts. The Court emphasized that Section 153C cannot override jurisdictional safeguards against review or change of opinion without new material. Regarding the second issue, the Court held that the conditions stipulated in the fourth proviso to Section 153A(1) were not met for making assessments beyond six years. Specifically, the write-off of a bad debt was not considered income represented in the form of an asset escaping assessment, and the share transactions were already taxed. Therefore, assessments for Assessment Years 2011-2012, 2012-2013, and 2013-2014 were barred. The Court made the rules absolute in terms of the prayer clause (a) for the specified petitions.
The High Court held that the disallowance of the loan write-off for AY 2017-2018 constituted a change of opinion by the Assessing Officer, as the same write-off was accepted in the original assessment without any failure on the part of the petitioner to disclose material facts. The court found no new tangible material that would justify reopening the assessment on this ground, and Section 153C cannot override jurisdictional safeguards against a mere review or change of opinion. Therefore, the rule was made absolute for AYs 2013-2014, 2014-2015, 2015-2016, and 2017-2018 on this ground. Regarding the second issue, the court held that the write-off of a bad debt cannot be considered 'income represented in the form of an asset' as required by the 4th proviso to Section 153A(1). Furthermore, the share transactions were already recorded and taxed. Consequently, the conditions for assessment beyond six years were not met, barring assessments for AYs 2011-2012, 2012-2013, and 2013-2014. The rule was made absolute for these AYs as well. All petitions were disposed of in terms of prayer clause (a).
The High Court held that the failure to pass a draft assessment order under Section 144C(1) of the Income-tax Act, 1961, renders the final assessment order null and void. The Court agreed with the assessee's submission that Section 144C(1) is mandatory for eligible assessees when proposing variations prejudicial to their interest. The Court cited its own judgments in Principal Commissioner of Income-tax v. Andrew Telecommunications (P) Ltd. and ExxonMobil Company Private Limited v. The Deputy Commissioner of Income Tax, as well as the Andhra Pradesh High Court's decision in Zuari Cement Ltd. v. ACIT and the Delhi High Court's decision in JCB India Ltd. v. Dy. CIT, all of which reiterate that the absence of a draft assessment order makes the subsequent assessment illegal and without jurisdiction. The Court found no error in the Tribunal's order and held that no question of law arises. The Court rejected the revenue's request for remand, stating that the failure to pass the draft assessment order had rendered the assessment without jurisdiction. Consequently, the Rule was made absolute, quashing the impugned final assessment orders and notices.
The Tribunal held that the Assessing Officer (AO) lacked jurisdiction to issue notices under Section 153C for AY 2017-18. The write-off of bad debts had been accepted in the original assessment under Section 143(3) after due consideration of details provided by the Petitioner. The subsequent attempt to disallow it based on information from a search on Hubtown Limited, without any new tangible material or failure by the Petitioner to disclose facts, constituted a change of opinion, which is impermissible and violates jurisdictional safeguards. The Tribunal cited its own previous ruling in Urban Homes Realty V/s. Union of India. Therefore, the rule was made absolute for AY 2013-14, 2014-15, 2015-16, and 2017-18 on this ground. Regarding assessments beyond six years (AY 2011-12, 2012-13, 2013-14), the Tribunal held that the conditions in the 4th proviso to Section 153A(1) were not met. The write-off of a bad debt cannot be considered 'income represented in the form of an asset' as required by clause (a) of the proviso. Furthermore, the share transactions were already recorded and taxed. Consequently, assessments for these years were barred. The rule was made absolute for AY 2011-12, 2012-13, and 2013-14 on this ground.
The High Court held that the failure to issue a draft assessment order under Section 144C(1) of the Income-tax Act, 1961, when proposing variations prejudicial to an eligible assessee, renders the final assessment order null and void. The Court agreed with the Petitioner's submission that Section 144C(1) is mandatory. The reasoning was based on the established legal position that the procedure prescribed under Section 144C, including the issuance of a draft assessment order, provides a crucial right to the assessee to file objections. The failure to follow this mandatory procedure vitiates further proceedings. The Court cited judgments from its own bench and the Andhra Pradesh High Court, including International Air Transport Association v. Dy. CIT and Zuari Cement Ltd. v. ACIT, which held that orders passed without a draft assessment order are illegal and without jurisdiction. The Court also noted that the Revenue's counsel conceded this position in the ExxonMobil case. The Court rejected the Revenue's request for a remand, stating that the failure to pass the draft assessment order rendered the assessment without jurisdiction. The Rule was made absolute, quashing the impugned final assessment orders and notices.
The High Court held that the impugned assessment orders were liable to be quashed and set aside. On the first issue, the Court found that the AO's action constituted a clear change of opinion. The write-off of loans had been accepted in the original assessment under Section 143(3) after due verification. The subsequent proceedings under Section 153C, based on information unearthed during searches on Hubtown Limited, did not reveal any new tangible material that would justify revisiting the already accepted deduction. The Court emphasized that Section 153C cannot override jurisdictional safeguards like preventing a review or change of opinion without new material or failure to disclose by the assessee, referencing its own prior ruling in Urban Homes Realty. On the second issue, the Court ruled that assessments beyond six years were not permissible under Section 153A(1)(b) and its provisos. It reasoned that the write-off of a bad debt does not qualify as "income represented in the form of an asset" as required by the 4th proviso. Furthermore, the share transactions were already accounted for and taxed. Consequently, the conditions for extending the assessment period beyond six years were not met for AYs 2011-12, 2012-13, and 2013-14. The Court made the rule absolute in terms of the prayer clause (a) for the specified petitions.
The High Court made the rule absolute in terms of prayer clauses (a) and (b). The Court held that the Petitioner was entitled to the refund of the withholding tax deposited. The reasoning was that the Petitioner had borne the withholding tax from its own pocket, in addition to the full consideration paid to DAVY. Since this Court had previously held that the income received by DAVY was not taxable in India, the tax collected by the Department from the Petitioner was without the authority of law. The Court relied on Article 265 of the Constitution of India and the principle that taxes illegally levied must be refunded. The doctrine of unjust enrichment was considered, but the Court found it inapplicable in this scenario. The Court also referenced precedents like New India Industries Ltd & Anr. v Union of India & Anr., Nirmala L. Mehta v. A. Balasubramanian, and Balmukund Acharya v Deputy Commissioner of Income-tax, emphasizing that authorities are obligated to act in accordance with the law and ensure only legitimate taxes are collected. The Court directed the Prothonotary and Senior Master to release the deposited amount with interest to the Petitioner. The Petitioner undertook to pay income tax on the interest earned and to indemnify the Department against any claims from DAVY or its successor. The stay sought by the Revenue was refused.
The High Court held that the Assessing Officer and the Tribunal were not justified in disallowing part of the commission payment. The Court reasoned that the Assessee's business involves securing contracts from public sector undertakings and government entities, which necessitates engaging commission agents for information on tenders, competitive tenders, and follow-up actions for payment realization. The Court found that the Assessee's engagement of agents under written contracts for composite services, including follow-up for payment recovery, was a commercial activity. The Court noted that the Revenue had not contested the principle that it is not the function of the Tribunal to determine the quantum of remuneration. Furthermore, the fact that the AO and Tribunal allowed part of the commission indicated acceptance of the services rendered, making a contradictory disallowance of the remaining part impermissible. The Court also observed that the Assessing Officer's and Tribunal's action of disallowing part of the commission amounted to rewriting the agency agreement, which is not permissible. The appeal of the Assessee was allowed.
The High Court held that no substantial questions of law arise concerning the first four questions. It reasoned that the interpretation of Article 24 of the DTAA, particularly regarding the remittance basis of taxation in Singapore, has been addressed in previous judgments of the Bombay High Court (Citicorp Investment Bank (Singapore) Ltd.) and Gujarat High Court (M.T. Maersk Mikaje). These judgments, relying on certificates from the IRAS, established that if Singapore taxes income on an accrual basis, Article 24(1) of the DTAA, which links exemption to remittance, does not apply. The Court reiterated that certificates from Singapore tax authorities constitute sufficient evidence for accepting this legal position. Regarding the fifth question, the Court relied on its own judgment in Balaji Shipping UK Ltd. and a previous decision concerning the assessee (Director of Income Tax (IT)-I, Mumbai v. APL Co. Pte. Ltd.), holding that no substantial question of law arises. The Court dismissed the submission that an SLP admitted against Balaji Shipping UK Ltd. indicated doubt about its correctness. For the Assessment Year 2012-13 appeal, which was factually similar but involved a remand by the AO, the Court dismissed the appeal as it did not survive in view of the conclusions in the other appeal.
The High Court held that no substantial questions of law arise concerning the first four questions (A to D). The Court reiterated its previous decisions in Citicorp Investment Bank (Singapore) Ltd. and M.T. Maersk Mikaje, which analyzed Article 24 of the DTAA. These judgments established that Article 24(1) applies only when Singapore taxes income based on remittance. If Singapore taxes income on an accrual basis, regardless of remittance, then Article 24(1) does not apply. The Court found that certificates issued by the IRAS, confirming taxability in Singapore on an accrual basis, constitute sufficient evidence for this legal position. The ITAT's reliance on such certificates was therefore upheld. Regarding the fifth question (E), the Court relied on its prior judgment in Balaji Shipping UK Ltd. and another related case involving the assessee (APL Co. Pte. Ltd.), stating that no substantial question of law arises. The Court dismissed the appeal, notwithstanding the submission that an SLP was admitted against the Balaji Shipping UK Ltd. judgment, finding no reason to doubt its own prior ruling.
The High Court quashed and set aside the impugned order dated March 29, 2023. The court found that the petitioner, being an individual, was likely not served the notice before the date he was supposed to make submissions. Therefore, the matter was remanded to respondent no.1 for a fresh decision on merits. The court directed that respondent no.1 must provide a personal hearing to the petitioner, with at least five working days' advance notice via courier and email. During the hearing, the petitioner would be allowed to submit relevant documents and explanations, including legal precedents. The final order to be passed must be a reasoned order addressing all of the petitioner's submissions. The application is to be disposed of within twelve weeks from the date the order is uploaded. The court explicitly stated that no observations were made on the merits of the matter.
The High Court decided to dispose of all four appeals. It held that it would be appropriate to grant liberty to the parties/liquidator to seek revival of the appeals depending on the final order that the NCLT shall eventually make in the liquidation proceedings. This course of action was adopted by analogy with similar decisions from the Delhi High Court and the ITAT Mumbai Bench. The reasoning was based on the provisions of the IBC and the need to await the outcome of the liquidation proceedings before making a final determination on the tax appeals. The operative direction is to dispose of the appeals with liberty to seek revival.
The Court, noting the factual similarity to Writ Petition No. 4108 of 2022, quashed and set aside the impugned order dated 26th March 2021. The matter was remanded to Respondent No. 1 for de-novo consideration. Respondent No. 1 was directed to dispose of the application within eight weeks. Crucially, before passing any order, Respondent No. 1 must grant a personal hearing to the petitioner, with notice communicated at least five working days in advance. The order to be passed must be on merits, addressing the petitioner's claims and all submissions made by the petitioner. The principle derived is that where facts are identical to a previously decided matter and procedural fairness is lacking, a remand for de-novo consideration with a personal hearing is appropriate.
The High Court held that the Principal Commissioner erred in refusing to entertain the petitioner's application under Section 264 of the Income-tax Act. The Court distinguished the case of ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd., stating it dealt with reopening of assessment under Section 147 and not the scope of Section 264. The Court relied on its own decision in Hindustan Diamond Company Pvt. Ltd. v. CIT and the Delhi High Court's decision in Vijay Gupta v. CIT Delhi-III, emphasizing that the powers under Section 264 are very wide and not limited by the processing of returns under Section 143(1). The Court found that the petitioner had made the full payment under the IDS with interest, and as per Section 188 of the IDS, the undisclosed income should not be included in her total income. Therefore, the Commissioner should have exercised his power under Section 264 to decide the matter on merits. The impugned order was quashed and set aside, and the matter was remanded to the Principal Commissioner for a decision on merits after giving the petitioner a personal hearing.
The High Court quashed and set aside the impugned order dated March 26, 2021, and remanded the matter to the Principal Commissioner of Income Tax-1, Thane, for de-novo consideration. The Court found that there was no record to indicate that a notice under Section 139(9) was sent to the assessee. Even if such a notice was issued, the fact that the return was processed under Section 143(1) implied that any defect had been rectified. Regarding the personal hearing, the Court noted that only one working day's notice was given for a hearing scheduled on March 23, 2021, which was insufficient, particularly during the Covid-19 pandemic. The Court also observed that the respondent had delayed considering the revision application for over 14 months. Furthermore, the notice was sent to an outdated email address. The Court directed that the application be disposed of within eight weeks, with the Principal Commissioner providing personal hearing to the petitioner after giving at least five working days' advance notice. The order to be passed should be on merits, addressing all submissions made by the petitioner.
The High Court made the Rule absolute and allowed the petition. The Court held that the approval for issuing the notice under Section 148A(d) of the Act was not properly obtained. Specifically, the sanction ought to have been granted under Section 151(ii) of the Act, and not under Section 151(i). Consequently, the order passed thereunder and the consequent notice issued under Section 148 of the Act were quashed and set aside. The Court also found that the notice to reopen the assessment was issued on the basis of a change of opinion, which is not permissible. Since the petition was disposed of on these grounds, the Court did not consider the other grounds raised by the Petitioner. The ratio decidendi is that procedural requirements, particularly regarding approvals and sanctions under the Income Tax Act, must be strictly adhered to, and reopening based on a change of opinion is invalid.
The High Court held that the questions of law framed at the time of admission, specifically questions (A) to (F), were essentially questions of fact and did not give rise to substantial questions of law. The Court found no error in the Tribunal's findings that the financial transactions in question, particularly those exceeding certain financial limits, were not made in the ordinary course of business. Consequently, these transactions did not qualify as loans or advances to attract the provisions of Section 2(22)(e) of the Income Tax Act. The Court upheld the impugned order of the ITAT, dismissing all the appeals filed by the assessees. No issue was expressly left undecided.
The High Court held that the issue in the present case is squarely covered by the Division Bench judgment in *Footcandles Film Pvt Ltd and Anr.*. The Court found that while the Supreme Court in *Y. P. Chawala and Ors* did lay down that guidelines issued under Section 119(1) have a binding effect, that judgment did not deal with the effect of these guidelines on the powers of the authority under Section 279(2) for compounding offences. The Division Bench judgment in *Footcandles Film Pvt Ltd* directly addressed the issue of whether guidelines can supersede the powers under Section 279(2) and could not be distinguished. Consequently, the impugned order dated 11.08.2022 passed by Respondent No. 2 was set aside. The petition was allowed, and the parties were relegated back to the concerned authority for a fresh decision on the compounding application, to be decided on merits and without considering the delay.
The High Court held that the Tribunal was correct in both its findings. Regarding the first issue, the payment of Rs.12,60,00,000/- for the termination of the ASTA was correctly treated as revenue expenditure. The reasoning was that by terminating the agreement, the assessee not only saved the commission expense for the relevant year but also for subsequent years. This was considered a commercial expediency and did not result in the acquisition of an enduring benefit or an income-yielding asset, aligning with the principle in CIT v. Ashok Leyland Ltd. For the second issue concerning the Rs.19,40,00,000/- paid under the RCA, the Court held that the rights acquired by the assessee were in the nature of an intangible asset, eligible for depreciation under Section 32(1)(ii) of the Act. The expression 'any other business or commercial rights of similar nature' in Explanation 3 to Section 32(1)(ii) was held to be wide enough to include the non-compete rights acquired, which provided enduring benefits and protected the assessee's business against competition, as per decisions in Principal Commissioner of Income Tax v. Piramal Glass Ltd. and other similar cases.
The High Court held that the petitioner was justified in raising the grievance that no personal hearing was granted before the impugned order dated 24th September 2022 was passed. The Court noted the respondents' admission and the affidavit confirming that the petitioner's requests for e-hearing were not complied with by the National Faceless Assessment Centre. Consequently, the impugned Assessment Order dated 24th September 2022, along with the consequential notice of demand under Section 156 and the notice of penalty under Section 274 r/w. Section 270A, were quashed and set aside. The matter was remanded for de-novo hearing to the Faceless Assessing Officer, who was directed to pass a reasoned order after granting a personal hearing to the petitioner, with at least seven working days' notice. The Assessment Order was to be passed within twelve weeks from the date the order was uploaded. The Court explicitly clarified that no observations were made on the merits of the petition.
The Tribunal held that the notice dated March 27, 2021, issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2016-17, was based on a mere change of opinion by the Assessing Officer. The Tribunal reasoned that when a query is raised during assessment proceedings and the assessee provides a reply, it implies that the query was considered by the Assessing Officer. The assessment order does not necessarily need to record every query and the satisfaction thereof. The Tribunal found that the issue of taxability of sale of shares and the claim for depreciation on goodwill had been a subject of consideration during the original assessment proceedings, as evidenced by the correspondence. Therefore, a change of opinion does not constitute justification for reopening the assessment under Section 147/148 of the Act. The petition was allowed, quashing the impugned notice and order.
The High Court quashed and set aside the notice dated March 23, 2021, issued under Section 148 of the Income Tax Act, 1961, and the order dated January 18, 2022, rejecting the petitioner's objections. The Court held that the reopening was barred by the first proviso to Section 147 of the Act because the assessee had disclosed all necessary primary facts during the original assessment. The reasons recorded did not specify any primary facts that were not disclosed, and the reopening was based on materials already on record during the original assessment, thus amounting to a review without fresh tangible material. Furthermore, the Court found that the issues concerning provision for bad and doubtful debts and loss on sale of assets constituted a mere change of opinion by the Assessing Officer, which is not a valid ground for reopening under Section 147. The Court relied on precedents like First Source Solutions Ltd. and Indian & Eastern Newspaper Society to emphasize that the Assessing Officer must indicate specific non-disclosed material facts and cannot act merely on audit objections or a change of opinion. The operative direction was to quash the impugned notice and order.
The High Court held that the final assessment order for AY 2014-15, passed under Section 143(3) read with Section 144C(13), was time-barred. The Court reasoned that the non-obstante clause in Section 144C(13) is for the limited purpose of ensuring that the final order is passed within 30 days of receiving DRP directions, and it does not override the general limitation period prescribed by Section 153. The Court found that the AO failed to pass the final assessment order within the stipulated time, which was extended to September 30, 2021, due to various relaxations. Therefore, no final assessment order could be passed after this date. Similarly, for AY 2018-19, the original assessment orders were also found to be time-barred. The ratio decidendi is that the limitation period under Section 153 must be adhered to, and the provisions of Section 144C do not grant an indefinite extension for passing final assessment orders. The Court directed that the Returns of Income as filed by the petitioners be accepted. The Revenue was not precluded from taking other steps in accordance with law.
The High Court allowed the writ petition. The Court found that the reasons provided by the Assessing Officer for reopening the assessment, concerning Bad Debts Written Off, MAT computation, and Section 14A disallowance, did not demonstrate any failure on the part of the Petitioner to disclose material facts. The Court noted that these issues were specifically examined and discussed during the original assessment proceedings under Section 143(3), and the Assessment Order dated December 20, 2016, was a speaking order. The Court held that the reasons for reopening indicated a mere change of opinion by the Assessing Officer, rather than a failure to disclose material facts by the Petitioner. Furthermore, the impugned order dated January 13, 2022, rejecting the Petitioner's objections, failed to address the Petitioner's specific contention of full disclosure and did not provide any reasoning as to why the Petitioner had failed to disclose material facts, which is a prerequisite for reopening under Section 147. Consequently, the notice under Section 148 and the order rejecting objections were quashed.
The High Court held that the approval granted under Section 151 of the Act was not valid, and there was no evidence that the Principal Commissioner of Income Tax (PCIT) had granted any valid sanction. The Court found it to be an obvious case of utter non-application of mind by the PCIT, as he would not have granted sanction if he had properly read and applied his mind to the contents of box 9 of the approval form, which incorrectly stated the time limit for proceedings was under Section 149(1)(b) (more than 3 years but not more than 10 years). The Court observed that the Assessing Officer (Respondent No. 1) also failed to apply their mind. The Court concluded that if the PCIT had read the report carefully, he would not have found material to issue a notice under Section 148 or pass an order under Section 148A(d). The safeguards provided in Sections 148 and 151 were treated lightly. On this ground alone, the order under Section 148A(d) and the notice under Section 148 were quashed and set aside. The Court explicitly stated that it did not wish to delve into the issue of the want of a digital signature on the sanction order, leaving it to be considered in an appropriate case. The petition was disposed of accordingly.
The Bombay High Court quashed and set aside the impugned order dated 17th April 2023 passed under Section 148A(d) and the consequential notice dated 17th April 2023 issued under Section 148. The matter was remitted back to Respondent No.1 for denovo consideration by an officer other than Ms. Monica Pande. The Court directed that before passing any order, the petitioner must be given a personal hearing with at least 7 working days' advance notice. The petitioner would have three working days to file written submissions after the hearing. The order to be passed under Section 148A(d) must be a reasoned order addressing all submissions. The Court also expressed hope that the officer would consider whether the 'information' in possession of the Department prima facie satisfies the requirement of suggesting escapement from tax, and that issues decided by judicial precedent should not be revisited in reassessment. The revenue was directed to provide a list of queries, if any, along with the notice for personal hearing.
The High Court held that the Assessment Officer (AO) had not dealt with any of the petitioner's submissions. The petitioner had categorically denied purchasing the properties identified by the AO, suggested potential misuse of their PAN, and provided details of another property purchased with a home loan. The court found that the AO's order did not address these points. Furthermore, the petitioner's request for a personal hearing was not granted. Consequently, the impugned order dated May 13, 2023, was quashed and set aside. The matter was remanded to the respondents for fresh consideration. Before proceeding, the respondent-authority was directed to provide the petitioner with details and documentary evidence available with the Income Tax Department, as referred to in paragraph 5 of the Annexure to the notice dated April 5, 2022, issued under Section 142(1). Upon receiving these details, the petitioner would have two weeks to respond. Subsequently, a personal hearing notice, at least five working days in advance, must be given before any order is passed. Any order passed must be a reasoned order dealing with all of the petitioner's submissions.
The High Court held that the Tribunal erred in passing an order contrary to its own earlier decisions for identical facts and law. The Court found that the Tribunal was not justified in taking a different view for the assessment years under consideration when the material facts were not different from earlier years, citing the Supreme Court's decision in Radhasoami Satsang Vs. CIT. The Court agreed with the assessee that once the Tribunal had held that royalty payment for technology use was inextricably linked with manufacturing activity and should be aggregated for benchmarking, and TPOs had accepted this aggregation under identical agreements for subsequent years, the Tribunal should have followed its co-ordinate bench's order. Furthermore, the Court found the Tribunal's reliance on Magneti Marelli Power Train India P. Ltd. to be incorrect, as the principle from that case supported the assessee's argument that if TNMM was accepted as the most appropriate method for all transactions, it should not be disturbed for a single element like royalty. The Court concluded that the TPO, having accepted TNMM for all international transactions including royalty, could not then dispute its application for royalty alone and subject it to a different method like CUP. Therefore, the Tribunal should have applied TNMM to the royalty payment. The appeals were allowed.
The High Court held in favour of the assessee on all three questions. Firstly, it found that the ITAT erred in deviating from its own prior rulings on identical facts without referring the matter to a larger bench, citing the Supreme Court's decision in Radhasoami Satsang vs. CIT, which states that in the absence of changed material facts, a department is bound by previous decisions. Secondly, the Tribunal was incorrect in disregarding the consistent acceptance of the aggregation approach by TPOs and the Tribunal itself for numerous prior years under the same royalty agreement. The Court noted that neither the TPO nor the Dispute Resolution Panel (DRP) had indicated any change in facts. Thirdly, the Court agreed with the assessee that the ITAT's reliance on Magneti Marelli was misplaced. The Court reasoned, by quoting from Magneti Marelli, that once TNMM is accepted as the most appropriate method for all international transactions, it is not open to subject only one element, like royalty payment, to a different method (e.g., CUP). The Tribunal's reasoning that the royalty agreement was new was also found to be incorrect, as the agreement dated 16th September 2010 was in force for the years under consideration, and the TPO had accepted the aggregation approach even after this agreement was in place. The appeals were allowed.
The High Court held that the Tribunal erred in passing the impugned order. The Court found that the Tribunal's reasoning that the new agreement dated September 16, 2010, necessitated a different approach was flawed. It noted that even after this agreement, for AY 2011-12 to AY 2014-15, the TPO accepted the aggregation approach for royalty payments. The Tribunal failed to recognize that the royalty agreement for the years under consideration was the same as in earlier years, and neither the TPO nor the DRP had mentioned any differing facts. Citing the Supreme Court's decision in Radhasoami Satsang vs. CIT, the Court held that in the absence of a change in material facts, the department is bound by previous decisions. Furthermore, the Court agreed with the assessee that once the TPO accepted TNMM as the most appropriate method for all international transactions, including royalty, it was not open to the TPO to subject only the royalty payment to a different method (CUP). This principle, as laid down in Magneti Marelli Power Train India P. Ltd., was correctly applied. The Tribunal's earlier orders had established that royalty payments were inextricably linked to manufacturing activity and should be aggregated for benchmarking. Given the identical facts, agreement, and prior acceptance by the TPO, the Tribunal should have followed its coordinate bench's order. Consequently, all three questions of law were answered in favour of the assessee.
The Court held that the petitioners' second compounding application dated October 8, 2015, had not been considered or disposed of by the respondent authorities. The Court found that the department's communications, referencing a non-existent application date and an order of rejection that predated the application, demonstrated a total non-application of mind. Citing the Bombay High Court in Durgeshwari Hi-Rise & Farms (P) Ltd. and the Delhi High Court in Vikram Singh Vs. Union of India, the Tribunal clarified that a compounding application cannot be rejected on the ground of delay in filing or because it was not accompanied by the compounding fee upfront. The Court also noted that there is no restriction on the number of compounding applications that can be filed, provided the complaint is still pending, which was conceded by the revenue. The Court accepted the petitioners' statement that they are ready to pay any further compounding fees determined by the authorities and directed the respondent no.3 to consider and dispose of the application dated October 8, 2015, within eight weeks, issuing a reasoned order after providing a personal hearing. The proceedings before the Magistrate were stayed until the compounding application was disposed of. The amount of Rs. 7,39,984/- already paid would be given credit for.
The High Court quashed and set aside the notice of attachment dated June 13, 2023, issued to HDFC Bank, and the impugned order dated May 31, 2023, passed by the ACIT. The Court directed the Commissioner of Income Tax (Appeals) to consider and dispose of the petitioner's stay application and the appeal within a period of 16 weeks from the date of the order. Until then, no coercive steps were to be taken against the petitioner. The Court explicitly clarified that no observations were made on the merits of the matter. The ratio decidendi is that in cases where appeals and stay applications are pending, and the revenue consents to a direction for expeditious disposal, the High Court can intervene to set aside coercive measures and direct timely adjudication.
The High Court held that the notice issued under Section 148 was without jurisdiction. The Court found that the reasons for re-opening were based solely on a subsequent judicial pronouncement (Times Guaranty) and did not allege any failure on the part of the assessee to disclose fully and truly all material facts, which is a prerequisite for re-opening after four years. The Court noted that the Assessing Officer had considered and discussed the issue of unabsorbed depreciation during the original assessment under Section 143(3), indicating that the material facts were before him. Therefore, the re-opening constituted a mere change of opinion, which is impermissible. Citing the Apex Court's decision in Gemini Leather Stores V/s. Income Tax Officer, the Court held that if the Assessing Officer had all material facts before him during the original assessment, he cannot use Section 147 to remedy his own oversight. The Court concluded that the petitioner had truly and fully disclosed all material facts, and the Assessing Officer had the duty to draw the proper inference. The rule issued was made absolute, quashing the impugned notice.
The High Court held that the Petitioner had complied with the provisions of Section 245D(2D) of the Act by paying the additional tax and interest on the income disclosed in his applications before July 31, 2007, as per his calculations. The Court found it absurd to expect the Petitioner to know the exact figures calculated by the Revenue before the stipulated deadline, especially when the Revenue did not intimate any shortfall until much later. Therefore, the Court concluded that the ITSC's order holding the proceedings as abated under Section 245HA(1)(ii) was erroneous and contrary to Section 245D(2D). The Court quashed the ITSC's order and directed the matter to be placed before the Interim Board for Settlement for consideration on merits. The Petitioner was directed to file copies of the original applications within two weeks.
The High Court quashed and set aside the order dated March 31, 2023, passed under Section 148A(d) and the subsequent notice dated March 31, 2023, issued under Section 148. The Court found it difficult to understand how the Assessing Officer could conclude that the petitioner admitted to two transactions when he had clearly stated otherwise and raised concerns about double reporting. The Court also questioned how the entire sale consideration could be treated as capital gain without accounting for the cost of acquisition. The matter was remanded to the concerned officer to pass a correct order after properly considering the petitioner's reply dated March 2, 2023, and affording the petitioner a personal hearing. The Court explicitly kept open the petitioner's contention regarding the amount involved being less than Rs. 50,00,000/- and also allowed the respondent to make further inquiries and find evidence to justify the information in the original notice. The ratio is that an Assessing Officer must correctly record and consider the assessee's submissions and cannot arbitrarily treat the entire sale consideration as capital gain without accounting for costs.
The High Court quashed and set aside the notice dated March 19, 2019, issued under Section 148 of the Income Tax Act, 1961, along with the order rejecting the petitioner's objections and the subsequent assessment order dated September 7, 2021. The Court found that the issue regarding the subscription of shares by SHPL and SCPL had been thoroughly examined during the original assessment, and the addition made by the AO was deleted by the CIT(A) and upheld by the ITAT. The Court held that there was no failure on the part of the petitioner to disclose material facts fully and truly, which is a prerequisite for reopening under Section 147 after the expiry of four years from the end of the relevant assessment year. The Court noted that the reasons for reopening did not specify which material fact was not disclosed. Even if the revenue's case was that the petitioner should have disclosed the entries as bogus, there was nothing on record to indicate the petitioner's awareness of this fact. The Court observed that if the reopening had been within four years, the fresh information might have qualified as tangible material.
The High Court condoned the delay in filing the application under Section 264 of the Income Tax Act, 1961. The Court found that the assessee's explanation for the delay, stemming from her lack of awareness of the correct legal position under the India-USA DTAA, was plausible, and that the PCIT's refusal to condone the delay on the sole ground of insufficient supporting documents for this reason was not justified. Regarding the opportunity for hearing, the Court acknowledged the difficulties posed by the COVID-19 pandemic and the short notice given by the PCIT. It observed that the PCIT incorrectly recorded that the opportunity was not availed, as the assessee had communicated her inability to provide a detailed reply within the short timeframe due to the pandemic. Consequently, the Court quashed and set aside the impugned order of the PCIT and remanded the matter back to the PCIT for de novo consideration on merits. The PCIT was directed to grant a personal hearing to the assessee, with at least ten working days' advance notice. The Court explicitly stated that no observations were made on the merits of the matter.
The High Court held that the impugned order passed under Section 148-A(d) of the Income Tax Act, 1961, was liable to be quashed and set aside. The Court noted that the petitioner had submitted a belated reply on 23.03.2023, and the impugned order was passed on 28.03.2023, when this reply was already before the concerned authority. Relying on its previous judgment in Pradeep S/o Tukaram Kokadwar Vs. The Principal Chief Commissioner Income Tax-1, Nashik and Another, the Court stated that the law laid down in that case would also apply. The Court quashed and set aside the impugned order dated 28.03.2023 and permitted the respondent no.2 to consider the petitioner's reply dated 23.03.2023 and pass an appropriate reasoned order within 30 days. The parties would then be at liberty to take recourse to remedies permissible in law.
The High Court condoned the delay in filing the application under Section 264 of the Income Tax Act, 1961. The Court found that the assessee's explanation for the delay, stemming from her lack of awareness of the correct legal position under the India-USA DTAA, was plausible, and that the PCIT's refusal to condone the delay on the sole ground of insufficient supporting documents for this reason was not justified. Regarding the opportunity for hearing, the Court acknowledged the difficulties posed by the COVID-19 pandemic and the short notice given by the PCIT. It observed that the PCIT incorrectly recorded that the opportunity was not availed, as the assessee had communicated her inability to provide a detailed reply within the short timeframe due to the pandemic. Consequently, the Court quashed and set aside the impugned order of the PCIT and remanded the matter back to the PCIT for de novo consideration on merits. The PCIT was directed to grant a personal hearing to the assessee, with at least ten working days' advance notice. The Court explicitly stated that no observations were made on the merits of the matter.
The High Court held that the appeals did not raise any substantial question of law and no interference was called for in the ITAT's common order. The Court found that the ITAT had correctly arrived at its findings. The reasoning was that the Empowered Committee had reconsidered its earlier rejection and granted approval for the units on June 11, 2012, effective from May 12, 2006. This approval, along with the Assessee's clarification regarding the development of the Industrial Park by an individual and not a partnership firm, was considered crucial. The Court noted that the Ministry's initial rejection was based on an erroneous State Government Report. Once the Central Government grants approval, it is incumbent on the AO to grant the deduction. The Court also referred to its previous decision in M/s. Kolte Patil Developers Ltd. Vs. DCIT, which was dismissed by this Court, where it was held that an assessee fulfilling the requirements of Section 80IA(4) and other procedural requirements is entitled to the deduction. The CIT(A) had the power to accept the additional evidence of the June 11, 2012 letter, as it was not available to the AO when he passed his order. The operative direction was to dismiss the appeals.